1.) G.R. No.

172295 December 23, 2008

LILIA LABADAN VS. FOREST HILLS ACADEMY

Lilian L. Labadan (petitioner) was hired by private respondent Forest Hills

Mission Academy (Forest Hills) in July 1989 as an elementary school
teacher. From 1990 up to 2002, petitioner was registrar and secondary
school teacher.

On August 18, 2003, petitioner filed a complaint 1 against respondent Forest

Hills and its administrator respondent Naomi Cabaluna for illegal dismissal,
non-payment of overtime pay, holiday pay, allowances, 13 th month pay,
service incentive leave, illegal deductions, and damages.

Petitioners Contention:
She was allowed to go on leave by the Forest Hills Academy
She exceeded her approved leave period
The school impliedly approved her leave extension as she received no
warning or reprimand and even retained her payroll up to 2002
Since 1990, tithes to the Seventh Day Adventist Church have been
illegally deducted from her salary
She was not paid overtime pay for overtime service, 13 th month pay,
five days service incentive leave pay, and holiday pay; and that her
SSS contributions have not been remitted.
Respondents Contention:
In July 2001, Labadan was permitted to go on leave for two weeks but
did not return after expiration of the period until the end of SY 2001-
2002
The school hired a temporary employee to accomplish the needed
reports
When petitioner returned, classes for SY 2002-2003 were already on-
going
LA: Forest Hills illegally dismissed Labadan and was directed to pay her P
152,501.02 for her monetary award.
NLRC: Reversed and set aside the decision of LA finding that he
misappreciated the facts of the case. NLRC dismissed the complaint.
CA: Dismissed the petition for deficient amount of appellate docket fee, non-
attachment of Affidavit of Service, absence of written explanation why the
petition was filed through registered mail instead of through personal
service, and non-attachment of copies of the Complaint and the Answer filed
before the Labor Arbiter

ISSUE: WON Labadan was illegally dismissed and has a claim for the
holiday pay, 13th month pay, service incentive leave, illegal
deductions, and damages

HELD: Petition is granted insofar as claims for illegal deductions,

holiday pay, SIL pay, 13th month pay, and non-remittance of SSS
contributions are concerned.
1. ILLEGAL DISMISSAL- there has been no substantial proof, therefore she
is not entitled to separation pay or backwages.
2. HOLIDAY PAY- Labadan is entitled to this claim as the provision implies
that regular rate on holidays applies even if the employee did not go to work.
Article 94 of the Labor Code provides:
(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[.]
3. SERVICE INCENTIVE LEAVE- applies to Labadan as she has been
employed by the respondent since 1989.

Article 95 of the Labor Code which provides that

(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 establishment exempted
from granting this benefit by the Secretary of Labor after
considering the viability or financial condition of such establishment.

x x x x,

4. 13th MONTH PAY- entitled based on P.D. 851

5. OVERTIME PAY denied,no concrete proof of entitlement

6. ILLEGAL DEDUCTIONS (10% tithe) - declared illegal as it was in

contrary to the provisions of:

ART. 113 (Labor Code). 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 check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or

regulations issued by the Secretary of Labor,

as does Rule VIII, Section 10 of the Rules Implementing Book III of the Labor
Code reading:

SEC. 10. Deductions from the wages of the employees may be

made by the employer in any of the following cases:

(a) When the deductions are authorized by law, including

deductions for the insurance premiums advanced by the employer
in behalf of the employee as well as union dues where the right to
check-off has been recognized by the employer or authorized in
writing by the individual employee himself;

(b) When the deductions are with the written authorization of the
employees for payment to a third person and the employer agrees
to do so, provided that the latter does not receive any pecuniary
benefit, directly or indirectly, from the transaction. (Emphasis and
underscoring supplied)

7. NON-REMITTANCE OF SSS CONTRIBUTIONS- granted. Villar vs. NLRC:

 x x x [T]he burden of proving payment of monetary claims rests on
the employer. x x x

The reason for the rule is that the pertinent personnel files,
payrolls, records, remittances and other similar documents which
will show that overtime, differentials, service incentive leave and
other claims of workers have been paid are not in the possession
of the worker but in the custody and absolute control of the
employer.26 (Underscoring supplied)

2.) IMBUIDO vs NLRC

G.R. No. 114734. March 31, 2000

Petitioner: Vivian Y. Embuido

Respondents: NLRC, International Information Services, Inc. and Gabriel Librando

Ponente: Buena, J.

Topic: Service Incentive Leaves

FACTS:

Petition: Special civil action for certiorari.

August 26, 1988

o Vivian Embuido was employed by the private respondent as a data encoder

During the course of her employment, she entered into thirteen (13) separate employment
contracts with the respondent each lasting for three (3) months. Hence, she was only a project
based employee.

Each contract contained her basic hourly rate, specific job contract number and period of
employment. It also contained terms and conditions which stated that:

a) the project/job contract shall only run within the period stipulated and shall be terminated
immediately thereafter unless when the job has been completed earlier, when the client
withdraws from the contract, or when the employee is dismissed by just causes which will
result to automatic termination of the contract
 b) the employee should abide with the rules and regulations of the company

c) rendering overtime with pay may be required because of the nature of the job

September 1991

o Embuido and twelve (12) other employees agreed to filing a petition for *certification
election involving rank-and-file employees of the company

October 8, 1991

o Lakas Manggagawa sa Pilipinas (LAKAS) filed a petition for certification election with the
Bureau of Labor Relations (BLR)

October 18, 1991

o Petitioner received a termination letter from the Administrative Officer, Edna Kasilag, due
to low volume of work

May 25, 1992

o Petitioner filed a complaint for illegal dismissal with prayer for service incentive leave pay
and 13th month differential pay, with the National Labor Relations Commission

Petitioners arguments (Position paper, August 3, 1992):

Her termination was not due to the alleged low volume of work but because "signed a petition for
certification election among the rank and file employees hence, alleging that the private
respondent committed unfair labor practices.

She also complained of non-payment of service incentive leave benefits and underpayment of
13th month pay.

Respondents arguments (Position paper, July 16, 1992):

The company maintained that it had valid reasons to terminate petitioners employment stressing
that its business "relies heavily on companies availing of its services and that retention by client
companies with particular emphasis on data encoding is on a project to project basis," usually
lasting for a period of "two (2) to five (5) months."

Respondent disclaimed any knowledge of the existence or formation of a union among its rank-
and-file employees at the time petitioners services were terminated

Private respondent also averred that petitioners employment was for a "specific project with a
specified period of engagement" explaining that "the certainty of the expiration of complainants
engagement has been determined at the time of their engagement (until 27 November 1991) or
 when the project is earlier completed or when the client withdraws," which was provided in the
contract and that the completion of the project has materialized, thus, her contract of employment
is deemed terminated.

Respondent argued that petitioners claims for non-payment of overtime time and service
incentive leave benefits are without factual and legal basis.

LABOR ARBITERS RULING (LA Raul T. Aquino, August 25, 1992 decision):

The ruling was in favor of the petitioner. He ordered the reinstatement of the petitioner as a
regular employee to the former position without loss of seniority rights and privileges, and the
payment of back wages and service incentive leave pay amounting to P32,950.64. However, due
to failure to substantiate and argue, he rejected petitioners claim for 13 th month pay.

The LA found that the petitioner is a regular employee because even if she had been hired for a
fixed period or for a specific project only, her job is usually necessary and desirable in the usual
business of the respondents.

He also explained that the purpose of the respondent in requiring the petitioner to execute series
of contracts was to evade the true intent and spirit of the labor laws for the workingmen.

Further, he concluded that the petitioner was illegally dismissed because the reason for
termination is not among the just causes for termination recognized by law.

NLRCS RULING (September 27, 1993 decision):

The LAs decision was reversed. The NLRC agreed that the petitioner is a regular employee
based on the function and/or work she was hired but it is not a guarantee of tenurial security
beyond the period stipulated.

It also held that the guarantee is only statutory or only up to the time the project was completed
hence, based on the stipulations on the contract, petitioner has no valid reason to charge
petitioner of illegal dismissal.

Motion for reconsideration of petitioner was denied by NLRC on January 11, 1994.

ISSUE/S:

a) Whether or not the petitioner is a regular employee and can only be dismissed for just and
authorized cause since she is entitled to security of tenure.

b) Whether or not she is entitled to service incentive leave.

HELD:

a) Yes, Vivian Embuido is a regular employee and can only be dismissed for a just and
authorized cause.

While the Court agreed with NLRC that petitioner is a project employee insofar as the
duration and scope of the job is concerned, the Court ruled that in the recent case of Maraguinot,
Jr. vs. NLRC, it held that "[a] project employee or a member of a work pool may acquire the status
of a regular employee when the following concur:

1) There is a continuous rehiring of project employees even after [the] cessation of a

project; and

2) The tasks performed by the alleged "project employee" are vital, necessary and
indispensable to the usual business or trade of the employer."

The evidence on record reveals that petitioner was employed by private respondent as a
data encoder, performing activities which are usually necessary or desirable in the usual business
or trade of her employer, continuously for a period of more than three (3) years, from August 26,
1988 to October 18, 1991 and contracted for a total of thirteen (13) successive projects. The
Court previously ruled that the length of time during which the employee was continuously re-
hired is not controlling, but merely serves as a badge of regular employment but based on the
foregoing, the Court concludes that petitioner has attained the status of a regular employee of
private respondent.

Being a regular employee, petitioner is entitled to security of tenure and could only be
dismissed for a just or authorized cause, as provided in Article 279 of the Labor Code.

The alleged causes of petitioners dismissal (low volume of work and belatedly,
completion of project) are not valid causes for dismissal under Articles 282 and 283 of the Labor
Code. Thus, petitioner is entitled to reinstatement without loss of seniority rights and other
privileges, and to her full back wages, inclusive of allowances, and to her other benefits or their
monetary equivalent computed from the time her compensation was withheld from her up to the
time of her actual reinstatement. However, complying with the principles of "suspension of work"
and "no work, no pay" between the end of one project and the start of a new one, in computing
petitioners back wages, the amounts corresponding to what could have been earned during the
periods from the date petitioner was dismissed until her reinstatement when private respondent
was not undertaking any project, should be deducted.

b) Yes, she is entitled to service incentive leave benefits.

The Court agrees with the Labor Arbiter that petitioner is entitled to service incentive
leave pay, as provided in Article 95 of the Labor Code, which reads:

Article 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.

xxx xxx xxx

Having already worked for more than three (3) years at the time of her unwarranted
dismissal, petitioner is undoubtedly entitled to service incentive leave benefits, computed from
1989 until the date of her actual reinstatement.

The Court in the recent case of Fernandez vs. NLRC ruled that "[s]ince a service
incentive leave is clearly demandable after one year of service whether continuous or broken or
its equivalent period, and it is one of the "benefits" which would have accrued if an employee was
not otherwise illegally dismissed, it is fair and legal that its computation should be up to the date
of reinstatement as provided under Section [Article] 279 of the Labor Code, as amended, which
reads:

"ART. 279. Security of Tenure. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full
back wages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation is withheld from him up to the time
of his actual reinstatement."

RULING:

The Supreme Court granted the instant petition for certiorari, annulled and set aside the decision
of NLRC and reinstated with modification the decision of the Labor Arbiter.

* "Certification Election" or "Consent Election" refers to the process of determining through secret ballot
the sole and exclusive representative of the employees in an appropriate bargaining unit for purposes of
collective bargaining or negotiation. A certification election is ordered by the Department, while a consent
election is voluntarily agreed upon by the parties, with or without the intervention by the Department.

3.) MANSION PRINTING CENTER and CLEMENT CHENG, VS.

DIOSDADO BITARA, JR.

G.R. No. 168120

PEREZ, J.:
 Facts:

Parties

Petitioner Respondent

Mansion Printing Center is a single Diosdado Bitara, Jr. is a helper (kargador)

proprietorship registered under the name of
its president and co-petitioner Clement
Cheng.
It is engaged in the printing of quality self-
adhesive labels, brochures, posters, stickers,
packaging and the like.
(August 1998) and was later promoted as the
companys sole driver tasked to pick-up raw
materials for the printing business, collect
account receivables and deliver the products
to the clients within the delivery schedules

Petitioners aver that the timely delivery of

the products to the clients is one of the
foremost considerations material to the
operation of the business.It being so, they
closely monitored the attendance of
respondent. They noted his habitual tardiness
and absenteeism.

On 23 June 1999, petitioners issued a Memorandum requiring respondent to submit a written

explanation why no administrative sanction should be imposed on him for his habitual tardiness.

Several months after, respondents attention on the matter was again called to which he replied:
29 NOV. 1999

MR. CLEMENT CHENG

SIR:

I UNDERSTAND MY TARDINESS WHATEVER REASON I HAVE AFFECTS

SOMEHOW THE DELIVERY SCHEDULE OF THE COMPANY, THUS
 DISCIPLINARY ACTION WERE IMPOSED TO ME BY THE MANAGEMENT. AND
ON THIS END, ACCEPT MY APOLOGIES AND REST ASSURED THAT I WILL
COME ON TIME (ON OR BEFORE 8:30 AM) AND WILLINGNESS TO EXTEND MY
SERVICE AS A COMPANY DRIVER. WHATEVER HELP NEEDED. (sic)

RESPECTFULLY YOURS,

(SGD.) DIOSDADO BITARA, JR.

Despite respondents undertaking to report on time, however, he continued to disregard attendance

policies. His weekly time record for the first quarter of the year 2000 revealed that he came:
late nineteen (19) times out of the forty-seven (47) times

nineteen (19) absences out of the sixty-six (66) working days

His absences without prior notice and approval from March 11-16, 2000 were considered to be the
most serous infraction of all because of its adverse effect on business operations.

Davis Cheng, General Manager of the company and son of petitioner Cheng, issued on 17 March
2000 another Memorandum (Notice to Explain) requiring respondent to explain why his services
should not be terminated. He personally handed the Notice to Explain to respondent
Respondent after reading the directive, refused to acknowledge receipt thereof. He did not submit
any explanation and, thereafter, never reported for work.
On 21 March 2000, Davis Cheng personally served another Memorandum (Notice of Termination)
upon him informing him that the company found him grossly negligent of his duties, for which
reason, his services were terminated effective 1 April 2000.
Respondent met with the management requesting for reconsideration of his termination from the
service.
After hearing Respondents position, the management decided to implement the 21 March 2000
Memorandum. The management, out of generosity, offered respondent financial assistance in the
amount of P6,110.00 equivalent to his one month salary.
Respondent demanded that he be given the amount equivalent to two (2) months salary but the
management declined as it believed it would, in effect, reward respondent for being negligent of his
duties.
On 27 April 2000, respondent filed a complaint for illegal dismissal against the petitioners before the
Labor Arbiter. He prayed for his reinstatement and for the payment of full backwages, legal holiday
pay, service incentive leave pay, damages and attorneys fees.
Arguments
Petitioner
The management found his explanation
unacceptable and offered him an amount
equivalent to his one (1) month salary as
separation pay but respondent refused
the offer because he wanted to keep the
job.
Labor Arbiters Decision
Dismissed the complaint for lack of merit.
National Labor Relations Commissions Decision
AFFIRMED the Labor Arbiters Decision en toto.
Reasons:
1. There was no abuse of discretion as to compel a reversal.
Respondent
Respondent claimed that he took a leave
of absence from March 17-23, 2000 due
to an urgent family problem.
He returned to work on 24 March 2000
but Davis Cheng allegedly refused him
admission because of his unauthorized
absences.
Respondent was summoned by Davis
Cheng on April 1, 2000 who introduced
him to a lawyer, who, in turn, informed
him that he will no longer be admitted to
work because of his 5-day unauthorized
absences.
Respondent explained that he was
compelled to immediately leave for the
province on 17 March 2000 due to the
urgency of the matter and his wife
informed the office that he will be absent
for a week.
Respondent averred that he rejected the
offer because he wanted an amount
equivalent to one and a half months pay.
 2. Appellant failed to adduce convincing evidence to show that the Labor Arbiter in rendering
the assailed decision has acted in a manner inconsistent with the criteria set forth in the
foregoing pronouncement.
Court of Appeals Decision

The Court of Appeals found for the respondent and reversed the findings of the Commission.

Diosdado Bitara, Jr. to have been Illegally Dismissed and, thus, entitled to the following:

1. Reinstatement or if no longer feasible, Separation Pay to be computed from the commencement of

his employment in August 1988 up to the time of his termination on April 1, 2000, including his
imputed service from April 1, 2000 until the finality of this decision, based on the salary rate
prevailing at the said finality;
2. Backwages, inclusive of allowances and other benefits, computed from April 1, 2000 up to the
finality of this decision, without qualification or deduction; and
3. 5-day Service Incentive Leave Pay for every year of service from the commencement of his
employment in August 1988 up to its termination on April 1, 2000.
Issue:

The core issue in this case is whether or not the Court of Appeals correctly found that the
Commission acted without and/or in excess of jurisdiction and with grave abuse of discretion amounting
to lack or excess of jurisdiction (a) in upholding the termination of respondents employment and (b) in
affirming the denial of his claim for non-payment of holiday pay, service incentive leave pay, moral and
exemplary damages.

Supreme Courts Decision

The Court affirms the ruling of the National Labor Relations Commission that the dismissal was
valid. However, respondent is entitled to the money equivalent of the five-day service incentive leave pay
for every year of service from the commencement of his employment in August 1988 up to its termination
on 1 April 2000.

To validly dismiss an employee, the employer is required to observe both substantive and
procedural aspects the termination of employment must be based on a just or authorized cause of
dismissal and the dismissal must be effected after due notice and hearing.
Substantive Due Process

Respondent was considered for termination of employment because of his previous infractions
capped by his recent unauthorized absences from March 11-16, 2000 and the recent absences were
unauthorized were satisfactorily established by petitioners.

Two (2) employees of the company belied the claim of respondents wife Mary Ann Bitara that
she called the office on 11 March 2000, and, through a certain Delia, as allegedly later identified by
respondent, informed petitioners that her husband would take a leave of absence for a week because he
went to the province.

Delia Abalos, a binder/finisher of the company, stated in her Affidavit that she never received
a call from respondent nor his wife regarding his absences from March 11-16 and 17-23 during the
month of March 2000.

On the other hand, Ritchie Distor, a messenger of the company, narrated in his Affidavit that, upon
instruction of the Management, he went to respondents house on 13 March 2000 to require him to
report for work. Instead of relaying the message to him, as respondent would have it, the wife informed
him that respondent had already left the house but that she did not know where he was going.

Petitioners have repeatedly called the attention of respondent concerning his habitual
tardiness. The Memorandum dated 23 June 1999 of petitioner Cheng required him to explain his
tardiness. Also in connection with a similar infraction, respondent even wrote petitioner Cheng a letter
dated 29 November 1999 where he admitted that his tardiness has affected the delivery schedules of
the company, offered an apology, and undertook to henceforth report for duty on time. Despite this
undertaking, he continued to either absent himself from work or report late during the first quarter of
2000.

In Valiao, it defined gross negligence as want of care in the performance of ones duties and
habitual neglect as repeated failure to perform ones duties for a period of time, depending upon the
circumstances.These are not overly technical terms, which, in the first place, are expressly sanctioned by
the Labor Code of the Philippines, to wit:
 ART. 282. Termination by employer. - An employer may terminate an employment for any
of the following causes:

(a) xxx

(b) Gross and habitual neglect by the employee of his duties;

xxx

Clearly, even in the absence of a written company rule defining gross and habitual neglect of duties,
respondents omissions qualify as such warranting his dismissal from the service.

We cannot simply tolerate injustice to employers if only to protect the welfare of undeserving
employees. As aptly put by then Associate Justice Leonardo A. Quisumbing:

Needless to say, so irresponsible an employee like petitioner does not deserve a

place in the workplace, and it is within the managements prerogative xxx to terminate his
employment. Even as the law is solicitous of the welfare of employees, it must also protect
the rights of an employer to exercise what are clearly management prerogatives. As long
as the companys exercise of those rights and prerogative is in good faith to advance its
interest and not for the purpose of defeating or circumventing the rights of employees
under the laws or valid agreements, such exercise will be upheld.

And, in the words of then Associate Justice Ma. Alicia Austria-Martinez in Philippine Long
Distance and Telephone Company, Inc. v. Balbastro:

While it is true that compassion and human consideration should guide the
disposition of cases involving termination of employment since it affects one's source or
means of livelihood, it should not be overlooked that the benefits accorded to labor do not
include compelling an employer to retain the services of an employee who has been shown
to be a gross liability to the employer. The law in protecting the rights of the employees
authorizes neither oppression nor self-destruction of the employer. It should be made clear
that when the law tilts the scale of justice in favor of labor, it is but a recognition of the
inherent economic inequality between labor and management. The intent is to balance the
scale of justice; to put the two parties on relatively equal positions. There may be cases
where the circumstances warrant favoring labor over the interests of management but
never should the scale be so tilted if the result is an injustice to the employer. Justitia
nemini neganda est (Justice is to be denied to none).
Procedural Due Process

Procedural due process entails compliance with the two-notice rule in dismissing an employee,
to wit:

(1) the employer must inform the employee of the specific acts or omissions for which his dismissal is
sought; and

(2) after the employee has been given the opportunity to be heard, the employer must inform him of the
decision to terminate his employment.

In Bughaw v. Treasure Island Industrial Corporation, this Court, in verifying the veracity of the
allegation that respondent refused to receive the Notice of Termination, essentially looked for the
following:

(1) affidavit of service stating the reason for failure to serve the notice upon the recipient; and
(2) a notation to that effect, which shall be written on the notice itself. Thus:
xxx Bare and vague allegations as to the manner of service and the circumstances
surrounding the same would not suffice. A mere copy of the notice of termination
allegedly sent by respondent to petitioner, without proof of receipt, or in the very least,
actual service thereof upon petitioner, does not constitute substantial evidence. It was
unilaterally prepared by the petitioner and, thus, evidently self-serving and insufficient to
convince even an unreasonable mind.

Davis Cheng, did both.

First, he indicated in the notices the notation that respondent refused to sign together with the
corresponding dates of service.

Second, he executed an Affidavit dated 29 July 2000 stating that:

(1) he is the General Manager of the company;

(2) he personally served each notice upon respondent, when respondent went to the office/factory on
17 March 2000 and 21 March 2000, respectively; and
(3) on both occasions, after reading the contents of the memoranda, respondent refused to acknowledge
receipt, thus the notices have been validly served.
 Premises considered, the Court finds that respondent was accorded both substantive and
procedural due process.

II

As to respondents monetary claims, petitioners did not deny respondents entitlement to service
incentive leave pay as, indeed, it is indisputable that he is entitled thereto. In Fernandez v. NLRC, this
Court elucidated:

The clear policy of the Labor Code is to grant service incentive leave pay to
workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of
the Implementing Rules and Regulations provides that [e]very employee who has
rendered at least one year of service shall be entitled to a yearly service incentive leave of
five days with pay. Service incentive leave is a right which accrues to every employee
who has served within 12 months, whether continuous or broken reckoned from the date
the employee started working, including authorized absences and paid regular holidays
unless the working days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in which case said period
shall be considered as one year. It is also commutable to its money equivalent if not
used or exhausted at the end of the year.In other words, an employee who has served for
one year is entitled to it. He may use it as leave days or he may collect its monetary
value. xxx (Emphasis supplied.)

Be that as it may, petitioners failed to establish by evidence that respondent had already used
the service incentive leave when he incurred numerous absences notwithstanding that employers have
complete control over the records of the company so much so that they could easily show payment of
monetary claims against them by merely presenting vouchers or payrolls, or any document showing the
off-setting of the payment of service incentive leave with the absences, as acknowledged by the absentee,
if such is the company policy. Petitioners presented none.

We thus quote with approval the findings of the Court of Appeals on the following:

[P]rivate respondents (Clement Cheng) bear the burden to prove that employees
have received these benefits in accordance with law. It is incumbent upon the employer to
present the necessary documents to prove such claim. Although private respondents
labored to show that they paid petitioner his holiday pay, no similar effort was shown with
regard to his service incentive leave pay. We do not agree with the Labor Arbiters
conclusion that petitioners service incentive leave pay has been used up by his numerous
absences, there being no proof to that effect.
 As to the payment of holiday pay, we are convinced that respondent had already received the same based
on the cash vouchers on record

4.)Integrated Contractor vs NLRC

GR 152427 August 9, 2005

SERVICE INCENTIVE LEAVE

Facts: Petitioner is a plumbing contractor. Its business depends on the number and
frequency of the projects it is able to contract with its clients. Private respondent,
Glen Solon worked for petitioner. His employment records is as follows:

December 14, 1994 up to January 14, 1995 St. Charbel Warehouse

February 1, 1995 up to April 30, 1995 St. Charbel Warehouse

May 23, 1995 up to June 23, 1995 St. Charbel Warehouse

August 15, 1995 up to October 31, 1995 St. Charbel Warehouse

November 2, 1995 up to January 31, 1996 St. Charbel Warehouse

May 13, 1996 up to June 15, 1996 Ayala Triangle

August 27, 1996 up to November 30, 1996 St. Charbel Warehouse

July 14, 1997 up to November 1997 ICPWI Warehouse

November 1997 up to January 5, 1998 Cathedral Heights

January 6, 1998 Rockwell Center

While Solon was about to log out from work, he was informed by the
warehouseman that the main office had instructed them to tell him it was his last
day of work as he had been terminated. He thus filed a complaint alleging that he
was illegally dismissed without just cause and without due process.

LA ruled that private respondent was a regular employee and could only be
removed for cause. Petitioner was ordered to reinstate private respondent to his
former position with full backwages from the time his salary was withheld until his
actual reinstatement, and pay him service incentive leave pay, and 13th month
pay for three years in the amount of P2,880 and P14,976, respectively.
 NLRC affirmed with modification LA decision. CA dismissed the appeal of
petitioner.

Issues:

(1) Whether or not the respondent is a regular employee.

(2) Whether or not Solon is entitled for 13 th month pay for the entire year of 1997
and service incentive leave pay.

Held: Yes to both. Article 280 of the Labor Code states:

The provisions of written agreement of the contrary notwithstanding and

regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the
season (Italics supplied.)

We concur with the NLRC that while there were several employment contracts
between private respondent and petitioner, in all of them, private respondent
performed tasks which were usually necessary or desirable in the usual business or
trade of petitioner. A review of private respondents work assignments patently
showed he belonged to a work pool tapped from where workers are and assigned
whenever their services were needed. In a work pool, the workers do not receive
salaries and are free to seek other employment during temporary breaks in the
business. They are like regular seasonal workers insofar as the effect of temporary
cessation of work is concerned. This arrangement is beneficial to both the employer
and employee for it prevents the unjust situation of coddling labor at the expense of
capital and at the same time enables the workers to attain the status of regular
employees.[15] Nonetheless, the pattern of re-hiring and the recurring need for his
services are sufficient evidence of the necessity and indispensability of such
services to petitioners business or trade.[16]

In Maraguinot, Jr. v. NLRC[17] we ruled that once a project or work pool employee
has been: (1) continuously, as opposed to intermittently, re-hired by the same
employer for the same tasks or nature of tasks; and (2) these tasks are vital,
necessary and indispensable to the usual business or trade of the employer, then
the employee must be deemed a regular employee.
 The test to determine whether employment is regular or not is the reasonable
connection between the particular activity performed by the employee in relation to
the usual business or trade of the employer. Also, if the employee has been
performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing
need for its performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business. [18] Thus, we held that where the
employment of project employees is extended long after the supposed
project has been finished, the employees are removed from the scope of
project employees and are considered regular employees.

While length of time may not be the controlling test for project employment, it is
vital in determining if the employee was hired for a specific undertaking or tasked to
perform functions vital, necessary and indispensable to the usual business or trade
of the employer. Here, private respondent had been a project employee several
times over. His employment ceased to be coterminous with specific projects when
he was repeatedly re-hired due to the demands of petitioners business. [20] Where
from the circumstances it is apparent that periods have been imposed to preclude
the acquisition of tenurial security by the employee, they should be struck down as
contrary to public policy, morals, good customs or public order. [21]

Further, Policy Instructions No. 20 requires employers to submit a report of an

employees termination to the nearest public employment office every time his
employment was terminated due to a completion of a project. The failure of the
employer to file termination reports is an indication that the employee is
not a project employee.[22] Department Order No. 19 superseding Policy
Instructions No. 20 also expressly provides that the report of termination is one of
the indications of project employment. [23] In the case at bar, there was only one list
of terminated workers submitted to the Department of Labor and Employment. [24] If
private respondent was a project employee, petitioner should have submitted a
termination report for every completion of a project to which the former was
assigned.

Juxtaposing private respondents employment history, vis the requirements in

the test to determine if he is a regular worker, we are constrained to say he is.

As a regular worker, private respondent is entitled to security of tenure

under Article 279 of the Labor Code[25] and can only be removed for cause.
We found no valid cause attending to private respondents dismissal and found also
that his dismissal was without due process.

The failure of the petitioner to comply with these procedural guidelines renders
its dismissal of private respondent, illegal. An illegally dismissed employee is
entitled to reinstatement with full backwages, inclusive of allowances, and to his
 other benefits computed from the time his compensation was withheld from him up
to the time of his actual reinstatement, pursuant to Article 279 of the Labor Code.

However, we note that the private respondent had been paid his 13 th month pay
for the year 1997. The Court of Appeals erred in granting the same to him.

Article 95(a) of the Labor Code governs the award of service incentive leave. It
provides that 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, and Section 3, Rule
V, Book III of the Implementing Rules and Regulations, defines the term at least one
year of service to mean service within 12 months, whether continuous or
broken reckoned from the date the employee started working, including authorized
absences and paid regular holidays, unless the working days in the establishment
as a matter of practice or policy, or that provided in the employment contract is less
than 12 months, in which case said period shall be considered as one year.
Accordingly, private respondents service incentive leave credits of five days for
every year of service, based on the actual service rendered to the petitioner, in
accordance with each contract of employment should be computed up to the date
of reinstatement pursuant to Article 279 of the Labor Code. [26]

5.) JPLMarketingvsCA

Facts:

Private respondents, Gonzales, Abesa and Aninipot, were employed by JPL as

merchandisers on separate dates and different establishments as attendants to the
display of California Marketing Corp (CMC), one of petitioners clients. On Aug 13,
1996, JPL notified respondents that CC would stop its direct merchandising activity
effective on Aug 15 and they were advised to wait for further notice as they would
be transferred to other clients. However, on Oct 17, 1997, respondents filed a
complaint for illegal dismissal.

JPL claimed that the difference in the amounts of respondents salaries should be
considered as payment for their SIL and 13th month pay. Additionally, the case does
not fall under any of the circumstances where separation pay is due.

Respondents maintained that their dismissal while not illegal, was tainted in bad
faith and they were deprived of procedural due process because the alleged notice
of termination was sent 2 days before the actual termination. At the most, JPL only
offered payment of separation pay of seven days for every year of service.

JPL replied that they were not bound to observe the notice rule because there was
no termination to speak of. The notice was made for transfer but the respondents
sought employment with another establishment instead.
 LA:
Dismissed the complaint. LA found that Gonzales and Abesa applied with and were
employed by the store where they were originally assigned by JPL even before the
lapse of 6-month period given by law to JPL to provide respondents a new
assignment. It was incumbent upon private respondents to wait until they were
reassigned by JPL, and if after 6 months they were not reassigned, they can file for
separation but not for illegal dismissal. Claims for 13th month pay and SIL was
denied because they are already paid way above the applicable minimum wage
during their employment.

NLRC:
Affirmed LAs ruling but held that respondents are entitled to separation pay
because they were unable to be reassigned. Separation pay, 13th month and SIL
must be computed from first day of their employment up to the finality of the
judgment.

CA:
Affirmed NLRCs ruling and justified the award on the grounds of equity and social
justice.

Issue:
W/N respondents are entitled of Separation pay, 13th month pay, and SIL, and if
granted, what should be the reckoning point of computation.

Held:
Modified.

SC held that separation pay is only warranted if the employee was dismissed. In the
case at bar, there was no dismissal. The notice was for reassignment within 6
months or so-called floating status. Since they sought employment from other
establishments even before the expiration of 6 months, they are not entitled to
separation pay. Since theres no termination, they are not bound to comply with the
notice rule, thus, JPL is not liable to pay for any damages for any non-compliance to
the due process.

However, JPL was still liable for the payment of 13th month and SIL to the
respondents. The difference between the minimum wage and actual salary received
cannot be deemed as their 13th month pay and SIL, but 13th month should be
computed from the first day of employment, the SIL should be a year after
commencement of service up to the last day of respondents to JPL because of the
absence of illegal dismissal.

6.) PNCC V. PNCC

FACTS:

Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organization
(PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment (DOLE).
Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and by virtue of the
laws of the Philippines.
In their Collective Bargaining Agreement (CBA), it included vacation leave and expenses for security license
provisions.
Stating:

[b] The company shall schedule the vacation leave of employees during the year taking into
consideration the request of preference of the employees

[c] Any unused vacation leave shall be converted to cash and shall be paid to the employees on the first
week of December each year.

Section 6. Security License All covered employees must possess a valid License [Security Guard License]
issued by the Chief, Philippine National Police or his duly authorized representative, to perform his duties
as security guard. All expenses of security guard in securing/renewing their licenses shall be for their
personal account.

Respondent published a memorandum for the scheduled vacation leave of its TMSD personnel, providing:

The 17 days (15 days SVL plus 2-day-off) scheduled vacation leave (SVL) with pay
for the year 2004 had been published for everyone to take a vacation with pay which will be
our opportunity to enjoy quality time with our families and perform our other activities
requiring our personal attention and supervision. Swapping of SVL schedule is allowed on a
one-on-one basis by submitting a written request at least 30 days before the actual schedule
of SVL duly signed by the concerned parties. However, the undersigned may consider the re-
scheduling of the SVL upon the written request of concerned TMSD personnel at least 30
days before the scheduled SVL. Re-scheduling will be evaluated taking into consideration
the TMSDs operational requirement.

Petitioner argued:

Objected the implementation of the said memorandum. It insisted that the individual members of the union
have the right to schedule their vacation leave. It opined that the unilateral scheduling of the employees'
vacation leave was done to avoid the monetization of their vacation leave.
Demanded that the expenses for the required in-service training of its member security guards, as a
requirement for the renewal of their license, be shouldered by the respondent

DOLE-NCMB in preventive mediation:

a) The scheduling of all vacation leaves under Article VIII, Section 6, thereof, shall be under the
discretion of the union members entitled thereto, and the management to convert them into cash
all the leaves which the management compelled them to use.

b) To pay the expenses for the in-service-training of the company security guards, as a requirement
for renewal of licenses, shall not be their personal account but that of the company.

All other claims are dismissed for lack of merit.

Respondent filed a Petition for Certiorari with Prayer for Temporary Restraining Order and/or Writ of Preliminary
Injunction with the CA

CA:

annulling and setting aside the decision and order of the voluntary arbitrator. The CA ruled that since the
provisions of the CBA were clear, the voluntary arbitrator has no authority to interpret the same beyond what was
expressly written.
ISSUE:
1) THE MANAGEMENT HAS THE SOLE DISCRETION TO SCHEDULE THE VACATION
LEAVE OF HEREIN PETITIONER.
2) THE MANAGEMENT IS NOT LIABLE FOR THE IN-SERVICE-TRAINING OF THE
SECURITY GUARDS.

HELD:

The SC PARTIALLY GRANTED.

1. As to the issue on vacation leaves, the same has no merit.

In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of the
CBA categorically provides that the scheduling of vacation leave shall be under the option of the employer. The
preference requested by the employees is not controlling because respondent retains its power and prerogative to
consider or to ignore said request.

Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulation shall prevail. In fine, the CBA must be strictly adhered to and respected if its ends have to
be achieved, being the law between the parties.

As correctly found by the CA:

It must be noted the grant to management of the right to schedule vacation leaves is not
without good reason. Indeed, if union members were given the unilateral discretion to schedule
their vacation leaves, the same may result in significantly crippling the number of key employees
of the petitioner manning the toll ways on holidays and other peak seasons, where union members
may wittingly or unwittingly choose to have a vacation. Put another way, the grant to
management of the right to schedule vacation leaves ensures that there would always be
enough people manning and servicing the toll ways, which in turn assures the public plying
the same orderly and efficient toll way service.
Although the preferred vacation leave schedule of petitioner's members should be given priority, they cannot
demand, as a matter of right, that their request be automatically granted by the respondent . If the petitioners
were given the exclusive right to schedule their vacation leave then said right should have been incorporated in the
CBA. In the absence of such right and in view of the mandatory provision in the CBA giving respondent the right to
schedule the vacation leave of its employees, compliance therewith is mandated by law.

In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose conditions on
the entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a
prerogative of management. It is a mere concession or act of grace of the employer and not a matter of right on the
part of the employee. Thus, it is well within the power and authority of an employer to impose certain conditions, as
it deems fit, on the grant of vacation leaves, such as having the option to schedule the same.

Along that line, since the grant of vacation leave is a prerogative of the employer, the latter can compel its
employees to exhaust all their vacation leave credits. Of course, any vacation leave credits left unscheduled by
the employer, or any scheduled vacation leave that was not enjoyed by the employee upon the employer's directive,
due to exigencies of the service, must be converted to cash, as provided in the CBA. However, it is incorrect to
award payment of the cash equivalent of vacation leaves that were already used and enjoyed by the
employees. By directing the conversion to cash of all utilized and paid vacation leaves, the voluntary
arbitrator has licensed unjust enrichment in favor of the petitioner and caused undue financial burden on the
respondent. Evidently, the Court cannot tolerate this.
The purpose of a vacation leave is to afford a laborer a chance to get a much-needed rest to replenish his
worn-out energy and acquire a new vitality to enable him to efficiently perform his duties, and not merely to
give him additional salary and bounty.

Accordingly, the vacation leave privilege was not intended to serve as additional salary, but as a non-
monetary benefit. To give the employees the option not to consume it with the aim of converting it to cash at
the end of the year would defeat the very purpose of vacation leave.

Petitioner's contention that labor contracts should be construed in favor of the laborer is without basis and, therefore,
inapplicable to the present case. This rule of construction does not benefit petitioners because, as stated, there is here
no room for interpretation. Since the CBA is clear and unambiguous, its terms should be implemented as they are
written.

2. We find the petition meritorious.

Although it is a rule that a contract freely entered into between the parties should be respected, since a contract is the
law between the parties, there are, however, certain exceptions to the rule, specifically Article 1306 of the Civil
Code, which provides:

The contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals, good customs, public
order, or public policy.

Moreover, the relations between capital and labor are not merely contractual. They are so impressed with
public interest that labor contracts must yield to the common good. The supremacy of the law over contracts
is explained by the fact that labor contracts are not ordinary contracts; they are imbued with public interest
and therefore are subject to the police power of the state. However, it should not be taken to mean that provisions
agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification. If the provisions in the
CBA run contrary to law, public morals, or public policy, such provisions may very well be voided.

In the present case, Article XXI, Section 6 of the CBA provides that All expenses of security guards in securing
renewing their licenses shall be for their personal account. However, the 1994 Revised Rules and Regulations
Implementing Republic Act No. 5487 provides the following:

Section 17. Responsibility for Training and Progressive Development. It is the primary
responsibility of all operators private security agency and company security forces to maintain and
upgrade the standards of efficiency, discipline, performance and competence of their personnel. To
attain this end, each duly licensed private security agency and company security force shall
establish a staff position for training and appoint a training officer whose primary functions are to
determine the training needs of the agency/guards in relation to the needs of the client/ market/
industry, and to supervise and conduct appropriate training requirements. All private security
personnel shall be re-trained at least once very two years.

Section 12. In service training. - a. To maintain and/or upgrade the standard of efficiency,
discipline and competence of security guards and detectives, company security force and private
security agencies upon prior authority shall conduct-in-service training at least two (2) weeks
duration for their organic members by increments of at least two percent (2%) of their total
strength. Where the quality of training is better served by centralization, the CSFD Directors
may activate a training staff from local talents to assist. The cost of training shall be pro-rated
among the participating agencies/private companies. All security officer must undergo in-service
training at least once every two (2) years preferably two months before his or her birth month.

Since it is the primary responsibility of operators of company security forces to maintain and upgrade the standards
of efficiency, discipline, performance and competence of their personnel, it follows that the expenses to be incurred
 therein shall be for the personal account of the company. Further, the intent of the law to impose upon the employer
the obligation to pay for the cost of its employees training is manifested in the aforementioned laws provision
that Where the quality of training is better served by centralization, the CFSD Directors may activate a training
staff from local talents to assist. The cost of training shall be pro-rated among the participating agencies/private
companies. It can be gleaned from the said provision that cost of training shall be pro-rated among participating
agencies and companies if the training is best served by centralization. The law mandates pro-rating of
expenses because it would be impracticable and unfair to impose the burden of expenses suffered by all
participants on only one participating agency or company. Thus, it follows that if there is no centralization,
there can be no pro-rating, and the company that has its own security forces shall shoulder the entire cost for such
training. If the intent of the law were to impose upon individual employees the cost of training, the provision on the
pro-rating of expenses would not have found print in the law.

WHEREFORE, the petition is PARTIALLY GRANTED.

7.) WAGES (Preliminary Matters)

RUFINA SORIANO, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION and KINGLY
COMMODITIES TRADERS AND MULTI-RESOURCES, INC., respondents.

Facts: Petitioner started working with respondent commodities trading Corporation in November 1977 as
Investment Counselor and eventually became Vice-President, Marketing. On 18 September 1984, petitioner was
charged with allowing or failing to supervise and monitor certain activities of investment counselors in her
department, which included the signing of a contract opening an account for a client by an investment counselor
without authority from the client, transfers of funds from one account to another without the knowledge and
authority of the clients involved, unauthorized transactions in foreign currency with clients of the respondent
Corporation, unauthorized approval of leave for members of her department, and resulting in loss of confidence in
petitioner. Petitioner was preventively suspended and required to explain her acts or failure to act. Two (2) days
later, petitioner submitted her detailed answer or explanation. On 27 September, 1984, the Executive Vice-President
and General Manager of respondent Corporation found petitioner's written explanation unsatisfactory and notified
petitioner that the Corporation had lost confidence on her ability to discharge the functions of her office and
accordingly terminated her services. Petitioner filed a complaint for illegal suspension and dismissal.

LA: Ruled in favour of Petitioner.

NLRC: Modified LAs ruling and deleted the award of moral and exemplary damages. Respondent was ordered to
pay P21,000.00 for separation pay and 9,00.00 for backwages.
Hence, this appeal.

Issue: WON the computation of separation pay and backwages made by the NLRC was wrongly done.

Ruling: Petition is dismissed because of lack of merit (re: Illegal Dismissal).

NLRC erred in computing the separation pay and backwages. The Decision of NLRC is modified. Respondent
is awarded a total amount of P55,000.00.

**1. WAGES- Article 97 defines Wage as: "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 and Employment, 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.

Turning to the specific award made by respondent NLRC, the salary base properly used in computing the
separation pay and the backwages due to petitioner should include not just the basic salary but also the
regular allowances that petitioner had been receiving (See Santos v. National Labor Relations Commission G.R.
No. 76721, 21 September 1987). In petitioner's case, the base figure properly includes her: (a) basic salary of
P3,000.00 a month; and (b) living allowance of P2,400 a month (petitioner's Affidavit, dated 12 April 1985,
Exhibit "G", Rollo, p. 105). 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. Neither should "travels equivalent" [an unusual and unexplained term;
P10,000.00 a month] and "commission in trading personal clients" P3,000.00 a month] be included in such base
figure.

Thus, the appropriate computation would be:

A. Separationpay-P5,400.00/month 7 = P37,800.00 (in view of petitioner's seven (7) years of service)

B. Backwages-P5,400.00/month x 3 mos. = P16,200.00

Sub-Total P54,000.00
plus nominal attorney's fees 1,500.00

TOTAL P55,500.00

2. Preventive Suspension- Petitioner claims that respondent violated her right to due process by suspending her
immediately without the benefit of hearing. She argues that the notice of preventive suspension served her on 18
September 1986 was "living proof" that the corporation had already concluded she was guilty of the charges levelled
against her even before she could submit her written explanation.

The Supreme Court ruled that preventive suspension does not in itself prove that the company had prejudged
that petitioner was guilty of the charges she was asked to answer and explain. Preventive suspension may be
necessary for the protection of the company, its operations and assets, pending investigation of the alleged
malfeasance or misfeasance on the part of officers or employees of the company and pending a decision on the
part of the company (See Sec. 3 of Rule XIV, Book V, of the Omnibus Rules Implementing the Labor Code).
Considering the very senior and sensitive character of petitioner's position as head of a Department, a fine position
as distinguished from a staff or planning position, and considering the unauthorized transactions then just discovered
by the respondent Corporation, we do not believe that the preventive suspension was an arbitrary and capricious act
amounting to bad faith on the part of the respondent Corporation.

3. Illegal Dismissal- The Court finds that petitioner was dismissed for a valid cause. Appellants stressed the point
that complainant, as vice president, marketing, is actually a department head of one of the company's sales
department (sic). As such, her basic function is the supervision and monitoring the daily activities of her
department and the employees she supervises (sic). By the nature of the company's business, complainant as a
department head should see to it that the clients' trust and confidence in the company is upheld through
above-board transactions, untainted relations, satisfactory servicing and unquestioned integrity of its officers
and staff, aside from the promotion of cordial employee relations among her personnel through unbiased and
uniform implementation of company policies affecting employee benefits and welfare.

According to the appellants, the finding of the Labor Arbiter that 'complainant is not expected to keep an eye or be
aware of all day-to-day transactions of her workers particularly Investment Consultants in her department' does not
conform to the facts prevailing in this case. The Supreme Court is not impressed.

As head of one of the company's sales department (sic) and a managerial employee at that, complainant is expected
to monitor the daily activities of the investment counselors and the transactions of clients in her department. As a
matter of practice and procedure, complainant, as vice-president marketing, is always informed of new clients
for her to be personally acquainted with the client. We agree with the appellants that had the complainant
adhered to this procedure, she could have immediately noticed the unauthorized signature by Sofia Nazareno that
enabled her to transfer funds from one account to another. Likewise, since the complainant approved the payment
instruction for P25,000.00 on July 13, 1984, the transfer of P4,052.59 on August 6, 1984 from the account of Ramon
Lopez to Panemanglor's account, and the withdrawal of the transferred amount on August 7, 1984, she could have
easily suspected that something was irregular with the transaction Yet, it took several months before she knew of
 the anomaly and it took her superior, respondent Guil Rivera, to bring the matter to her attention. Under the
circumstances, it cannot be truthfully said that complainant has not been without any fault whatsoever . For
this reason, the basis for the award of the moral and exemplary damages has not been suffiiciently or satisfactorily
against the erring employee. gently or satisfactorily established by the complainant. And besides the dismissal of
the complainant by the respondent was done in good faith. ...

8.) Songco vs NLRC

FACTS:

Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the
Department of Labor (Regional Office No. 4) an application seeking clearance to terminate
the services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel (hereinafter
referred to as petitioners) allegedly on the ground of retrenchment due to financial losses.
This application was seasonably opposed by petitioners alleging that the company is not
suffering from any losses. They alleged further that they are being dismissed because of
their membership in the union. At the last hearing of the case, however, petitioners
manifested that they are no longer contesting their dismissal. The parties then agreed that
the sole issue to be resolved is the basis of the separation pay due to petitioners.
Petitioners, who were in the sales force of Zuellig received monthly salaries of at least
P40,000. In addition, they received commissions for every sale they made.

LABOR ARBITER:
Respondent should be as it is hereby, ordered 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.

(Additional) LA RATIONALE: , it may be argued that if We correlate Article 97(f) with Article XIV
of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the
Implementing Rules, there appears to be an ambiguity. In this regard, the Labor Arbiter rationalized
his decision in this manner:

The definition of 'wage' provided in Article 96 (sic) of the Code can be correctly be (sic)
stated as a general definition. It is 'wage ' in its generic sense. A careful perusal of the same
does not show any indication that commission is part of salary. We can say that commission
by itself may be considered a wage. This is not something novel for it cannot be gainsaid
that certain types of employees like agents, field personnel and salesmen do not earn any
regular daily, weekly or monthly salaries, but rely mainly on commission earned.

Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the
implementing rules in conjunction with Articles 273 and 274 (sic) of the Code
specifically states that the basis of the termination pay due to one who is sought to be
legally separated from the service is 'his latest salary rates.

NATIONAL LABOR RELATIONS COMMISSION:

The appeal by petitioners to the National Labor Relations Commission was dismissed for lack
of merit.

NLRC RATIONALE: it could be deduced that wage is used in its generic sense and obviously
refers to the basic wage rate to be ascertained on a time, task, piece or commission basis or other
method of calculating the same. It does not, however, mean that commission, allowances or
analogous income necessarily forms part of the employee's salary because to do so would
lead to anomalies (sic), if not absurd, construction of the word "salary." For what will prevent the
employee from insisting that emergency living allowance, 13th month pay, overtime, and premium
pay, and other fringe benefits should be added to the computation of their separation pay. This
situation, to our mind, is not the real intent of the Code and its rules.

Hence, the present petition.

On June 2, 1980, the Court, acting on the verified "Notice of Voluntary Abandonment and
Withdrawal of Petition dated April 7, 1980 filed by petitioner Romeo Cipres, based on the
ground that he wants "to abide by the decision appealed from" since he had "received, to his
full and complete satisfaction, his separation pay," resolved to dismiss the petition as to him.
The petition is impressed with merit.

Petitioners' position was that in arriving at the correct and legal amount of separation pay
due them, whether under the Labor Code or the CBA, their basic salary, earned sales
commissions and allowances should be added together. They cited Article 97(f) of the Labor
Code which includes commission as part on one's salary.

Zuellig argues that if it were really the intention of the Labor Code as well as its
implementing rules 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.

ISSUE:
The issue is whether or not earned sales commissions and allowances should be included in
the monthly salary of petitioners for the purpose of computation of their separation pay.

SC RULLING:
YES. Article 97(f) by itself is explicit that commission is included in the definition of the term
"wage". It has been repeatedly declared by the courts that where the law speaks in clear
and categorical language, there is no room for interpretation or construction.

The Court appreciated the following considerations for deciding the petition in favor of the
petitioners.

1. The word "salary" means a recompense or consideration made to a person for his
pains or industry in another man's business. As the words "wages", "pay" and
"salary" have the same meaning, and commission is included in the definition
of "wage", the logical conclusion, therefore, is, in the computation of the separation
pay of petitioners, their salary base should include also their earned sales
commissions.

2. We agree with the Solicitor General that granting, in gratia argumenti, that the
commissions were in the form of incentives or encouragement, so that the
petitioners would be inspired to put a little more industry on the jobs
particularly assigned to them, still these commissions are direct
remuneration services rendered which contributed to the increase of
income of Zuellig . Commission is the recompense, compensation or reward of an
agent, salesman, executor, trustees, 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 (Black's Law Dictionary, 5th Ed., citing Weiner v. Swales, 217 Md. 123, 141
A.2d 749, 750). The nature of the work of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly that commission are part of
petitioners' wage or salary. We take judicial notice of the fact that some salesmen do
not receive any basic salary but depend on commissions and allowances or
commissions alone, are part of petitioners' wage or salary. We take judicial notice of
 the fact that some salesman do not received any basic salary but depend on
commissions and allowances or commissions alone, although an employer-employee
relationship exists.

3. Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary base
that should be used in computing the separation pay, We held 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.

4. The final consideration is, in carrying out and interpreting the Labor Code's
provisions and its implementing regulations, the workingman's welfare should be the
primordial and paramount consideration. This kind of interpretation gives meaning
and substance to the liberal and compassionate spirit of the law as provided for in
Article 4 of the Labor Code which states that "all doubts in the implementation and
interpretation of the provisions of the Labor Code including its implementing rules
and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R. No. 71812,
July 30,1987,152 SCRA 140; Manila Electric Company v. NLRC, et al., G.R. No. 78763,
July 12,1989), and Article 1702 of the Civil Code which provides that "in case of
doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.

ACCORDINGLY, the petition is hereby GRANTED. The decision of the respondent National
Labor Relations Commission is MODIFIED by including allowances and commissions in
the separation pay of petitioners Jose Songco and Amancio Manuel. The case is remanded
to the Labor Arbiter for the proper computation of said separation pay.

9.) **Inthia (insert here Javier v. Fly Ace)

10.)SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ, EDGARDO ZUIGA
and DANILO CAETE

SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ, EDGARDO ZUIGA
and DANILO CAETE

FACTS:

The respondents were hired by the petitioner on January 1997 as trainee cablemen. They were
hired as project employees and assigned in various places/sites in the Philippines. They were
paid the full minimum wage and other benefits but since they were only trainees, they did not
report for work regularly but came in as substitutes to the regular workers or in undertakings that
needed extra workers to expedite completion of work.

Their actual employment commenced on March 15, 1997 and ended on December 1997. Upon
the completion of the project, their contracts were terminated, but were subsequently rehired by
the petitioners based on assigned tasks. The period of the respondents employment and places
of assignment are as follows:

DATES PLACE OF PRESCRIBED MINIMUM

ASSIGNMENT WAGE

March 15, 1997 December Region IV P 155.00

1997

March 1998 September 1998 Rizal, Antipolo P160.00

November 1998 March 1999 Bulacan P145.00

May 21, 1999 February 2000 Caloocan City P 213.00

However, the petitioner consistently paid the respondents with only P145.00/day regardless of
the place of their assignment. On January February 2000, the respondents were paid
P165.00/day.

For reasons of delay on the delivery of imported materials from their contractor, the project was
not completed on the scheduled date of completion, which is February 2000. Faced with
economic problems, the petitioner was constrained to cut down the overtime work of its workers,
including private respondents. Thus, when the respondents on February 28, 2000 to work
overtime in order to complete the project, the petitioner refused and told private respondents
that if they insist, they would have to go home at their own expense and that they would not be
given anymore time nor allowed to stay in the quarters. This prompted private respondents to
leave their work and went home to Cebu.

On March 3, 2000, private respondents filed a complaint for illegal dismissal, non-payment of
wages, holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well
as damages and attorneys fees.

LA: In favor of private respondents

- Respondents were underpaid. The petitioner asserts that the respondents actually
received higher wages than the prescribed wage in Rizal because they were given
 P63.00 food allowance (145.00 + P63.00 = P208.00), free board lodging, electricity, etc.
LA ruled that the free board and lodging, electricity, water, and food enjoyed by them
could not be included in the computation of their wages because these were given
without their written consent.

- Respondents were regular employees of the petitioner, because they were subsequently
rehired and they performed functions which were the regular and usual business of
petitioners. Respondents were clearly members of a work pool from which petitioners
drew their project employees

- Petitioners were not liable of illegal dismissal. LA viewed private respondents act of
going home as an act of indifference when petitioners decided to prohibit overtime work

NLRC: Affirmed the all the findings of the LA

- NLRC added that not a single report of project completion was filed with the nearest
Public Employment Office as required by the Department of Labor and Employment
(DOLE) Department Order No. 19, Series of 1993.

CA: Affirmed the findings of NLRC and some of the findings of LA

- It affirmed the findings that the private respondents were regular employees.
Respondents were clearly members of a work pool from which petitioners drew their
project employees.

- The failure of petitioners to comply with the simple but compulsory requirement to submit
a report of termination to the nearest Public Employment Office every time private
respondents employment was terminated was proof that the latter were not project
employees but regular employees

- Private respondents were underpaid. It ruled that the board and lodging, electricity,
water, and food enjoyed by the private respondents could not be included in the
computation of their wages because these were given without their written consent

- The private respondents were entitled to 13th month pay.

- Affirmed the NLRC that there was no illegal dismissal. The CA opined that it was the
petitioners prerogative to grant or deny any request for overtime work and that the
private respondents act of leaving the workplace after their request was denied was an
act of abandonment.

ISSUE/S:

1.) WON private respondents received higher wages than the prescribed minimum
2.) WON the food allowance, lodging, electricity, etc that were being enjoyed by the
respondents is a facility or a supplement
 3.) WON the value of the facilities should be included in the computation of the "wages"
received by private respondents

RULING:

1.) NO. As a general rule, on payment of wages, a party who alleges payment as a defense
has the burden of proving it. Specifically with respect to labor cases, the burden of
proving payment of monetary claims rests on the employer, the rationale being that the
pertinent personnel files, payrolls, records, remittances and other similar documents
which will show that overtime, differentials, service incentive leave and other claims of
workers have been paid are not in the possession of the worker but in the custody
and absolute control of the employer.

In this case, petitioners, aside from bare allegations that private respondents
received wages higher than the prescribed minimum, failed to present any evidence,
such as payroll or payslips, to support their defense of payment.

Private respondents, on the other hand, are entitled to be paid the minimum wage,
whether they are regular or non-regular employees

2. SUPPLEMENT. The Court further distinguished the difference between the

supplements and facilities

Supplements It constitutes extra remuneration or special privileges or benefits

given to or received by the laborers over and above their ordinary earnings or wages.
The benefit or privilege given to the employee which constitutes an extra
remuneration above and over his basic or ordinary earning or wage is supplement

Facilities - items of expense necessary for the laborer and his family's existence
and subsistence so that by express provision of law, they form part of the wage and
when furnished by the employer are deductible therefrom, since if they are not so
furnished, the laborer would spend and pay for them just the same. When said
benefit or privilege is part of the laborers' basic wages, it is a facility.

In case at bar, It is of the view that the food and lodging, or the electricity and water
allegedly consumed by private respondents in this case were not facilities but
supplements

3. NO. Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may
provide subsidized meals and snacks to his employees provided that the subsidy shall
not be less than 30% of the fair and reasonable value of such facilities.
 In such cases, the employer may deduct from the wages of the employees not more
than 70% of the value of the meals and snacks enjoyed by the latter, provided that
such deduction is with the written authorization of the employees concerned.

Before the value of facilities can be deducted from the employees wages, the
following requisites must all be attendant:

1.) Proof must be shown that such facilities are customarily furnished by the trade
2.) The provision of deductible facilities must be voluntarily accepted in writing by the
employee
3.) The facilities must be charged at reasonable value. Mere availment is not
sufficient to allow deductions from employees wages.

In case at bar, the requirements are not met by the petitioners. The Petitioners failed
to present any company policy or guideline showing that provisions for meals and
lodging were part of the employees salaries. It also failed to provide proof of the
employees written authorization, much less show how they arrived at their
valuations. At any rate, it is not even clear whether private respondents actually
enjoyed said facilities.

The petitioner failed to present any company policy or guideline showing that
provisions for meals and lodging were part of the employees salaries.

It also failed to provide proof of the employees written authorization, much less show
how they arrived at their valuations. At any rate, it is not even clear whether private
respondents actually enjoyed said facilities.

The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or
sick leave) given, but in the purpose for which it is given. In the case at bench, the
items provided were given freely by SLL for the purpose of maintaining the efficiency
and health of its workers while they were working at their respective projects.

11.) G.R. No. 157634 May 16, 2005

MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO LAM VS.
ROLANDO ADANA, et. al.

Petitioner Mayon Hotel & Restaurant is a single proprietor business registered in the name of
petitioner Pacita O. Po, whose mother, petitioner Josefa Po Lam, manages the
establishment. The hotel and restaurant employed about sixteen (16) employees.
Due to the expiration and non-renewal of the lease contract for the rented space occupied by
the said hotel and restaurant at Rizal Street, the hotel operations of the business were
suspended on March 31, 1997.
 The operation of the restaurant was continued in its new location at Elizondo Street, Legazpi
City, while waiting for the construction of a new Mayon Hotel & Restaurant at Pearanda
Street, Legazpi City. Only nine (9) of the sixteen (16) employees continued working in the
Mayon Restaurant at its new site.
On various dates of April and May 1997, the 16 employees filed complaints for
underpayment of wages and other money claims against petitioners.

LA: Labor Arbiter awarded substantially all of respondent;s money claims. Also, LA held that
Loveres, Macandog and Llarena were entitled to separation pay while Guades, Nicerio and
Alamares to retirement pay; Josefa Po Lam is the owner/ proprietor of Mayon.
NLRC: LA decision reversed and all claims were dismissed.
CA: Reversed NLRCs decision because findings of facts were not supported by substantial
evidence; upheld LAs finding that respondents were illegally dismissed and that they should be
awarded of damages; Pacita Po is the owner of the business establishment.

ISSUES:
1. Was it correct for petitioner Josefa Po Lam to be held liable as the owner of petitioner
Mayon Hotel & Restaurant, and the proper respondent in this case?
2. Were respondents Loveres, Guades, Macandog, Atractivo, Llarena and Nicerio
illegally dismissed?
3. Are respondents entitled to their money claims due to underpayment of wages, and
nonpayment of holiday pay, rest day premium, SILP, COLA, overtime pay, and night
shift differential pay?
HELD: Petition denied.
LA and CA affirmed with modifications:
(1) Granting separation pay of one-half (1/2) month for every year of service to
respondents Loveres, Macandog and Llarena;
(2) Granting retirement pay for respondents Guades, Nicerio, and Alamares;
(3) Removing the deductions for food facility from the amounts due to all respondents;
(4) Awarding moral damages of P20,000.00 each for respondents Loveres, Macandog,
Llarena, Guades, Nicerio, Atractivo, and Broola;
(5) Deleting the award of exemplary damages of P10,000.00 from all respondents except
Loveres, Macandog, Llarena, Guades, Nicerio, Atractivo, and Broola; and
(6) Granting attorney's fees of P10,000.00 each to all respondents.
The reversal of the NLRCs decision was in order precisely because it was not supported by
substantial evidence. It is explicit in Castillo v. NLRC that factual findings of administrative
bodies like the NLRC are affirmed only if they are supported by substantial evidence that is
manifest in the decision and on the records.
1. OWNERSHIP BY JOSEFA PO LAM-
Josefas failure to submit necessary documents to clearly establish the ownership of the
hotel despite the LAs order, the testimonies of the respondents and the failure of Pacita
 Po to submit her own position paper made the CA decide that she is the owner of Mayon
Hotel & Restaurant.
The ruling of the Supreme Court in Metropolitan Bank and Trust Company v. Court of
Appeals applies to Josefa Po Lam which is stated in this wise:
When the evidence tends to prove a material fact which imposes a liability on a
party, and he has it in his power to produce evidence which from its very nature
must overthrow the case made against him if it is not founded on fact, and he
refuses to produce such evidence, the presumption arises that the evidence[,] if
produced, would operate to his prejudice, and support the case of his adversary.
2. ILLEGAL DISMISSAL
The records are unequivocal that since April 1997, when petitioner Mayon Hotel &
Restaurant suspended its hotel operations and transferred its restaurant operations in
Elizondo Street, respondents Loveres, Macandog, Llarena, Guades and Nicerio have not
been permitted to work for petitioners. Respondent Alamares, on the other hand, was also
laid-off when the Elizondo Street operations closed, as were all the other respondents. Since
then, respondents have not been permitted to work nor recalled, even after the construction
of the new premises at Pearanda Street and the reopening of the hotel operations with the
restaurant in this new site.
Article 286 of the Labor Code is clear there is termination of employment when an
otherwise bona fide suspension of work exceeds six (6) months. The cessation of
employment for more than six months was patent and the employer has the burden of
proving that the termination was for a just or authorized cause
The termination was found to be permanent based on substantial evidence that the
petitioners made no mention of any intent to recall the respondents to wok upon completion
of the new premises. They merely intended to dismiss all respondents and used termination
of the lease (on Rizal Street) as a means by which they could terminate their employees.
When there is no showing of a clear, valid and legal cause for termination of employment,
the law considers the case a matter of illegal dismissal.
3. MONETARY CLAIMS
It was the petitioners burden to prove that they have paid these money claims
petitioners failed to do it despite the Labor Arbiters Order.
The cost of meals and snacks purportedly provided to respondents cannot be deducted as
part of respondents minimum wage because of non-compliance with certain legal
requirements.
As stated in Mabeza vs. NLRC, the employer simply cannot deduct the value from the
employees wage without satisfying the following: (a) proof that such facilities are
customarily furnished by the trade; (b) the provision of deductible facilities is voluntarily
accepted in writing by the employee; and (c) the facilities are charged at fair and
reasonable value.
As ruled in Mabeza, food or snacks or other conveience provided by the employer are
deemed supplements if they are granted for the convenience of the employer.
 91
Considering, therefore, that hotel workers are required to work different shifts and are
expected to be available at various odd hours, their ready availability is a necessary
matter in the operations of a small hotel, such as petitioners' business.

12.) MABEZA vs NLRC

G.R. No. 118506. April 18, 1997

Petitioner: Norma Mabeza

Respondents: National Labor Relations Commission, Peter Ng/Hotel Supreme

Ponente: Kapunan, J.

Topic: Facilities and Supplements

FACTS:

Petition: Special civil action for certiorari

Norma Mabeza was an employee of Hotel Supreme in Baguio City.

February 2, 1991

o An inspection was made by the Department of Labor and Employment (DOLE) at Hotel
Supreme and the DOLE inspectors discovered several violations by the hotel
management.

May 7, 1991

o Thereafter, petitioner and seven other co-employees were asked by the hotels
management to sign an instrument attesting to the latters compliance with minimum
wage and other labor standard provisions.

o The Joint Affidavit contains the following stipulations:

1. That we are employees of Mr. Peter L. Ng of his Hotel Supreme situated at No. 416
Magsaysay Ave., Baguio City;

2. That the said Hotel is separately operated from the Ivy's Grill and Restaurant;

3. That we are all (8) employees in the hotel and assigned in each respective shifts;
 4. That we have no complaints against the management of the Hotel Supreme as we
are paid accordingly and that we are treated well.

5. That we are executing this affidavit voluntarily without any force or intimidation and
for the purpose of informing the authorities concerned and to dispute the alleged
report of the Labor Inspector of the Department of Labor and Employment conducted
on the said establishment on February 2, 1991.

o Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to
the truthfulness and contents of the affidavit as instructed by management. The affidavit
was nevertheless submitted on the same day to the Regional Office of the Department of
Labor and Employment in Baguio City.

Petitioners arguments:

o Because of her refusal, on the same day, petitioner avers that avers that she was ordered
by the hotel management to turn over the keys to her living quarters and to remove her
belongings from the hotel premises. She unwillingly filed a leave of absence but was
denied by the management.

May 10, 1991

o Petitioner attempted to return to work but was told by the hotels cashier, Margarita Choy,
that her that she should not report to work and, instead, continue with her unofficial leave
of absence.

May 13, 1991

o Petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the
National Labor Relations Commission - CAR Baguio City. In addition to her complaint for
illegal dismissal, she alleged underpayment of wages, non-payment of holiday pay,
service incentive leave pay, 13th month pay, night differential and other benefits.

Respondents arguments:

Peter Ng alleged before Labor Arbiter Pati that petitioner "surreptitiously left (her job) without
notice to the management" and that she actually abandoned her work maintaining that there was
no basis for the money claims for underpayment and other benefits as these were paid in the
form of facilities (free lodging, water, electricity and consumption) to petitioner and the hotel's
other employees.

Pointing to the Affidavit of May 7, 1991, the private respondent asserted that his employees
actually have no problems with management.

In a supplemental answer submitted eleven (11) months after the original complaint for illegal
dismissal was filed, private respondent raised a new ground, loss of confidence, which was
 supported by a criminal complaint for Qualified Theft he filed before the prosecutor's office of the
City of Baguio against petitioner on July 4, 1991.

LABOR ARBITERS RULING (LA Felipe P. Pati, May 14, 1993 decision):

Labor Arbiter Pati rendered a decision dismissing petitioner's complaint on the ground of loss of
confidence. His discussions in support of his conclusion stated that based on the evidence of
respondent that complainant carted away or stole 1 blanket, 1 piece bedsheet, 1 piece thermos, 2
pieces towels.

He further stated that it was the reason why respondent Peter Ng lodged a criminal complaint
against complainant for qualified theft and perjury and that the fiscal's office finding a prima
facie evidence that complainant committed the crime of qualified theft issued a resolution for its
filing in court but dismissing the charge of perjury. As a consequence, complainant was charged
in court for the said crime.

He also stated that complainant committed serious misconduct against her employer which is one
of the just and valid grounds for an employer to terminate an employee (Article 282 of the Labor
Code as amended).

NLRCS RULING (April 28, 1994 decision):

On appeal, NLRC affirmed the decision of the Labor Arbiter.

SOLICITOR GENERALS COMMENT (August 8, 1995):

Solicitor General rejects private respondent's principal claims and defenses and urges the Court
to set aside the public respondent's assailed resolution.

ISSUE/S:

1. Whether or not the abandonment of job is present.

2. Whether or not loss of confidence as ground for dismissal applies in the case at bar.

3. Whether or not the dismissal constitutes to unfair labor practice.

4. Whether or not such amenities provided by the hotel be considered as facilities which are
deductible from petitioners wage.

HELD:

1. No. Norma Mabeza did not abandon her job.

 It is settled that in termination cases the employer bears the burden of proof to show that
the dismissal is for just cause, the failure of which would mean that the dismissal is not justified
and the employee is entitled to reinstatement.

In the case at bar, the private respondent initially claimed that petitioner abandoned her
job when she failed to return to work on May 8, 1991. Additionally, in order to strengthen his
contention that there existed sufficient cause for the termination of petitioner, he belatedly
included a complaint for loss of confidence, supporting this with charges that petitioner had stolen
a blanket, a bedsheet and two towels from the hotel.

From the evidence on record, it is crystal clear that the circumstances upon which private
respondent anchored his claim that petitioner "abandoned" her job were not enough to constitute
just cause to sanction the termination of her services under Article 283 of the Labor Code. For
abandonment to arise, there must be concurrence of two things: 1) lack of intention to work; and
2) the presence of overt acts signifying the employee's intention not to work.

Respondent did not dispute the fact that petitioner tried to file a leave of absence when
she learned that the hotel management was displeased with her refusal to attest to the
affidavit. The fact that she made this attempt clearly indicates not an intention to abandon but an
intention to return to work after the period of her leave of absence, had it been granted, shall have
expired.

Furthermore, while absence from work for a prolonged period may suggest abandonment
in certain instances, mere absence of one or two days would not be enough to sustain such a
claim. The overt act (absence) ought to unerringly point to the fact that the employee has no
intention to return to work, which is patently not the case here. In fact, several days after she had
been advised to take an informal leave, petitioner tried to resume working with the hotel, to no
avail. It was only after she had been repeatedly rebuffed that she filed a case for illegal
dismissal. These acts militate against the private respondent's claim that petitioner abandoned
her job.

As the Solicitor General in his manifestation observed: Petitioner's absence on that day
should not be construed as abandonment of her job. She did not report because the cashier told
her not to report anymore, and that private respondent Ng did not want to see her in the hotel
premises. But two days later or on the 10th of May, after realizing that she had to clarify her
employment status, she again reported for work. However, she was prevented from working by
private respondents.

2. No. Loss of confidence cannot be considered a valid ground for petitioners dismissal.

Loss of confidence as a just cause for dismissal was never intended to provide
employers with a blank check for terminating their employees. Such a vague, all-encompassing
pretext as loss of confidence, if unqualifiedly given the seal of approval by this Court, could
readily reduce to barren form the words of the constitutional guarantee of security of
tenure. Having this in mind, loss of confidence should ideally apply only to cases involving
employees occupying positions of trust and confidence or to those situations where the employee
is routinely charged with the care and custody of the employer's money or property. To the first
class belong managerial employees, i.e., those vested with the powers or prerogatives to lay
down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees or effectively recommend such managerial actions; and to the second class
belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine
exercise of their functions, regularly handle significant amounts of money or property. Evidently,
an ordinary chambermaid who has to sign out for linen and other hotel property from the property
custodian each day and who has to account for each and every towel or bedsheet utilized by the
hotel's guests at the end of her shift would not fall under any of these two classes of employees
for which loss of confidence, if ably supported by evidence, would normally apply.

In Marina Port Services, Inc. vs. NLRC, the Court stated that:

To be sure, every employee must enjoy some degree of trust and confidence
from the employer as that is one reason why he was employed in the first place. One
certainly does not employ a person he distrusts. Indeed, even the lowly janitor must enjoy
that trust and confidence in some measure if only because he is the one who opens the
office in the morning and closes it at night and in this sense is entrusted with the care or
protection of the employer's property.

The keys he holds are the symbol of that trust and confidence. By the same
token, the security guard must also be considered as enjoying the trust and confidence of
his employer, whose property he is safeguarding. Like the janitor, he has access to this
property. He too, is charged with its care and protection.

Notably, however, and like the janitor again, he is entrusted only with
the physical task of protecting that property. The employer's trust and confidence in him is
limited to that ministerial function. He is not entrusted, in the Labor Arbiter's words, 'with
the duties of safekeeping and safeguarding company policies, management instructions,
and company secrets such as operation devices.' He is not privy to these confidential
matters, which are shared only in the higher echelons of management. It is the persons
on such levels who, because they discharge these sensitive duties, may be considered
holding positions of trust and confidence. The security guard does not belong in such
category.

More importantly, the Court have repeatedly held that loss of confidence should not be
simulated in order to justify what would otherwise be, under the provisions of law, an illegal
dismissal. "It should not be used as a subterfuge for causes which are illegal, improper and
unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad
faith."

In the case at bar, the suspicious delay in private respondent's filing of qualified theft
charges against petitioner long after the latter exposed the hotel's scheme (to avoid its obligations
as employer under the Labor Code) by her act of filing illegal dismissal charges against the
private respondent would hardly warrant serious consideration of loss of confidence as a valid
ground for dismissal. Notably, the Solicitor General has himself taken a position opposite the
public respondent and has observed that:
 If petitioner had really committed the acts charged against her by private
respondents (stealing supplies of respondent hotel), private respondents should have
confronted her before dismissing her on that ground. Private respondents did not do
so. In fact, private respondent Ng did not raise the matter when petitioner went to see
him on May 9, 1991, and handed him her application for leave. It took private
respondents 52 days or up to July 4, 1991 before finally deciding to file a criminal
complaint against petitioner, in an obvious attempt to build a case against her.

Clearly, the efforts to justify petitioner's dismissal - on top of the private respondent's
scheme of inducing his employees to sign an affidavit absolving him from possible violations of
the Labor Code - taints with evident bad faith and deliberate malice petitioner's summary
termination from employment.

3. Yes. Respondent committed unfair labor practice.

The pivotal question in any case where unfair labor practice on the part of the employer is
alleged is whether or not the employer has exerted pressure, in the form of restraint, interference
or coercion, against his employee's right to institute concerted action for better terms and
conditions of employment. Without doubt, the act of compelling employees to sign an instrument
indicating that the employer observed labor standards provisions of law when he might have not,
together with the act of terminating or coercing those who refuse to cooperate with the employer's
scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's
workers to seek better terms and conditions of employment through concerted action.

We agree with the Solicitor General's observation in his manifestation that the actuation
is analogous to the situation envisaged in paragraph (f) of Article 248 of the Labor Code which
distinctly makes it an unfair labor practice "to dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or being about to give testimony" under the
Labor Code. For in not giving positive testimony in favor of her employer, petitioner had reserved
not only her right to dispute the claim and proffer evidence in support thereof but also to work for
better terms and conditions of employment.

For refusing to cooperate with the private respondent's scheme, petitioner was obviously
held up as an example to all of the hotel's employees, that they could only cause trouble to
management at great personal inconvenience. Implicit in the act of petitioner's termination and
the subsequent filing of charges against her was the warning that they would not only be deprived
of their means of livelihood, but also possibly, their personal liberty.

4. No. The amenities provided to the petitioner which respondent considered as facilities
should not be deducted to her wage.

Granting that meals and lodging were provided and indeed constituted facilities, such
facilities could not be deducted without the employer complying first with certain legal
requirements. Without satisfying these requirements, the employer simply cannot deduct the
 value from the employee's wages. First, proof must be shown that such facilities are customarily
furnished by the trade. Second, the provision of deductible facilities must be voluntarily accepted
in writing by the employee. Finally, facilities must be charged at fair and reasonable value.

These requirements were not met in the instant case. Private respondent failed to
present any company policy or guideline to show that the meal and lodging are part of the
salary; he failed to provide proof of the employee's written authorization; and, he failed to show
how he arrived at the valuations.

More significantly, the food and lodging, or the electricity and water consumed by the
petitioner were not facilities but supplements. A benefit or privilege granted to an employee for the
convenience of the employer is not a facility. The criterion in making a distinction between the two
not so much lies in the kind (food, lodging) but the purpose. Considering, therefore, that hotel
workers are required to work different shifts and are expected to be available at various odd
hours, their ready availability is a necessary matter in the operations of a small hotel, such as the
private respondent's hotel.

RULING:

The Court reversed and set aside the NLRC decision with costs and ordered the respondent to
pay the petitioner:

1. Deficiency wages and the applicable ECOLA from May 13, 1988 up to the date of
petitioner's illegal dismissal

2. Service incentive leave pay; night differential pay and 13th month pay for the same
period

3. Separation pay equal to one month's salary for every year of petitioner's continuous
service with the private respondent starting with her job at the Belfront Hotel because
reinstatement is not possible anymore due to strained relations

4. Full backwages, without qualification or deduction, from the date of petitioner's illegal
dismissal up to the date of promulgation of this decision pursuant to our ruling in
Bustamante vs. NLRC

5. P1,000 for violation of petitioners constitutional right to due process

13.) OUR HAUS REALTY v. PARIAN

G.R. No. 204651 August 6, 2014
FACTS: Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao
and Bernardo Tenedero were all laborers working for petitioner Our Haus Realty
Development Corporation (Our Haus), a company engaged in the construction
business. Sometime in May 2010, Our Haus experienced financial distress. To alleviate its
condition, Our Haus suspended some of its construction projects and asked the affected
workers, including the respondents, to take vacation leaves.
Eventually, the respondents were asked to report back to work but instead of doing
so, they filed with the LA a complaint for underpayment of their daily wages. They
claimed that their wages were below the minimum rates of P362.00 (effective from August
28, 2007 until June 13, 2008) and P382.00 (effective from June 14, 2008 until June 30, 2010).
The respondents also alleged that Our Haus failed to pay them their holiday, service
incentive leave (SIL), 13th month and overtime pays.
Our Haus primarily argued that the respondents wages complied with the laws
minimum requirement. Aside from paying the monetary amount of the respondents wages,
Our Haus also subsidized their meals (3 times a day), and gave them free lodging near
the construction project they were assigned to. It alleges that in determining the total
amount of the respondents daily wages, the value of these benefits should be considered, in
line with Article 97(f) of the Labor Code. Our Haus also rejected the respondents other
monetary claims for lack of proof that they were entitled to it.
The LA ruled in favor of Our Haus. The NLRC reversed LA Ruling. Upon NLRC
denial of motion, Our Haus filed a Rule 65 petition with the CA. In its petition, Our Haus
propounded a new theory. It made a distinction between deduction and charging. A
written authorization is only necessary if the facilitys value will be deducted and will not be
needed if it will merely be charged or included in the computation of wages. Our Haus
claimed that it did not actually deduct the values of the meals and housing benefits. It only
considered these in computing the total amount of wages paid to the respondents for
purposes of compliance with the minimum wage law. Hence, the written authorization
requirement should not apply.
Our Haus also asserted that the respondents claim for SIL pay should be denied as
this was not included in their pro forma complaint. Lastly, it questioned the respondents
entitlement to attorneys fees because they were not represented by a private lawyer but by
the Public Attorneys Office (PAO).
The CA dismissed Our Haus certiorari petition and affirmed the NLRC
rulings in toto, hence this petition for review on certiorari under Rule 45.

ISSUES:
1. Whether or not CA erred in ruling that the legal requirements apply without distinction
whether the facilitys value will be deducted or merely included in the computation of
the wages.
2. Whether or not the respondents are entitled to (a) SIL; (b) other monetary benefits; and
(c) attorneys fees.

HELD: We resolve to DENY the petition.

1. No substantial distinction between deducting and charging a facilitys value

from the employees wage; the legal requirements for creditability apply to
both
In reality, deduction and charging both operate to lessen the actual take-home pay of
an employee; they are two sides of the same coin. In both, the employee receives a
lessened amount because supposedly, the facilitys value, which is part of his wage, had
already been paid to him in kind. As there is no substantial distinction between the two, the
requirements set by law must apply to both.

We examine Our Haus compliance with each of these requirements in detail.

a. The facility must be customarily furnished by the trade
In a string of cases, we have concluded that one of the badges to show that a facility
is customarily furnished by the trade is the existence of a company policy or guideline
showing that provisions for a facility were designated as part of the employees salaries. To
comply with this, Our Haus presented in its motion for reconsideration with the NLRC the
joint sinumpaang salaysay of four of its alleged employees. These employees averred that
they were recipients of free lodging, electricity and water, as well as subsidized meals from
Our Haus.
We agree with the NLRCs finding that the sinumpaang salaysay statements
submitted by Our Haus are self-serving. For one, Our Haus only produced the documents
when the NLRC had already earlier determined that Our Haus failed to prove that it was
traditionally giving the respondents their board and lodging. This document did not state
whether these benefits had been consistently enjoyed by the rest of Our Haus employees.
Moreover, the records reveal that the board and lodging were given on a per project basis.
Our Haus did not show if these benefits were also provided in its other construction projects,
thus negating its claimed customary nature. Even assuming the sinumpaang salaysay to be
true, this document would still work against Our Haus case. If Our Haus really had the
practice of freely giving lodging, electricity and water provisions to its employees, then Our
Haus should not deduct its values from the respondents wages. Otherwise, this will run
contrary to the affiants claim that these benefits were traditionally given free of charge.
Apart from company policy, the employer may also prove compliance with the first
requirement by showing the existence of an industry-wide practice of furnishing the
benefits in question among enterprises engaged in the same line of business. If it were
customary among construction companies to provide board and lodging to their workers and
treat their values as part of their wages, we would have more reason to conclude that these
benefits were really facilities.
However, Our Haus could not really be expected to prove compliance with the first
requirement since the living accommodation of workers in the construction industry is not
simply a matter of business practice. Peculiar to the construction business are the
occupational safety and health (OSH) services which the law itself mandates employers to
provide to their workers. This is to ensure the humane working conditions of construction
employees despite their constant exposure to hazardous working environments. Under
Section 16 of DOLE Department Order (DO) No. 13, series of 1998, 43 employers engaged in
the construction business are required to provide among others the separate sanitary,
washing and sleeping facilities for men and women workers.
Moreover, DOLE DO No. 56, series of 2005, which sets out the guidelines for the
implementation of DOLE DO No. 13, mandates that the cost of the implementation of the
requirements for the construction safety and health of workers, shall be integrated to the
overall project cost. As part of the project cost that construction companies
already charge to their clients, the value of the housing of their workers cannot
be charged again to their employees salaries. Our Haus cannot pass the burden of
the OSH costs of its construction projects to its employees by deducting it as facilities. This
is Our Haus obligation under the law.
Lastly, even if a benefit is customarily provided by the trade, it must still pass the
purpose test set by jurisprudence. Under this test, if a benefit or privilege granted to the
employee is clearly for the employers convenience, it will not be considered as a facility but
a supplement. Here, careful consideration is given to the nature of the employers business
in relation to the work performed by the employee. This test is used to address inequitable
situations wherein employers consider a benefit deductible from the wages even if the
factual circumstances show that it clearly redounds to the employers greater advantage.

In the ultimate analysis, the purpose test seeks to prevent a circumvention of the
minimum wage law.
a1. The purpose test in jurisprudence
 Under the law,46 only the value of the facilities may be deducted from the
employees wages but not the value of supplements. Facilities include articles or
services for the benefit of the employee or his family but exclude tools of the trade or
articles or services primarily for the benefit of the employer or necessary to the conduct of
the employers business.47
The law also prescribes that the computation of wages shall exclude whatever
benefits, supplements or allowances given to employees. Supplements are paid to
employees on top of their basic pay and are free of charge. 48 Since it does not form part of
the wage, a supplements value may not be included in the determination of whether an
employer complied with the prescribed minimum wage rates.
In the present case, the board and lodging provided by Our Haus cannot be
categorized as facilities but as supplements. In the case of Atok-Big Wedge Assn. v.
Atok-Big Wedge Co., the two terms were distinguished from one another in this wise:
"Supplements", therefore, constitute extra remuneration or special privileges or
benefits given to or received by the laborers over and above their ordinary earnings or
wages. "Facilities", on the other hand, are items of expense necessary for the laborer's and
his family's existence and subsistence so that by express provision of law (Sec. 2[g]), they
form part of the wage and when furnished by the employer are deductible therefrom, since if
they are not so furnished, the laborer would spend and pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an extra
remuneration above and over his basic or ordinary earning or wage is supplement; and when
said benefit or privilege is part of the laborers' basic wages, it is a facility. The distinction lies
not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in
the purpose for which it is given.
Ultimately, the real difference lies not on the kind of the benefit but on the
purpose why it was given by the employer. If it is primarily for the employees gain, then
the benefit is a facility; if its provision is mainly for the employers advantage, then it is a
supplement. Again, this is to ensure that employees are protected in circumstances where
the employer designates a benefit as deductible from the wages even though it clearly
works to the employers greater convenience or advantage.
Under the purpose test, substantial consideration must be given to the nature of the
employers business in relation to the character or type of work performed by the employees
involved.
Our Haus is engaged in the construction business, a labor intensive enterprise. The
success of its projects is largely a function of the physical strength, vitality and efficiency of
its laborers. Its business will be jeopardized if its workers are weak, sickly, and lack the
required energy to perform strenuous physical activities. Thus, by ensuring that the workers
are adequately and well fed, the employer is actually investing on its business.
Moreover, in the construction business, contractors are usually faced with the
problem of meeting target deadlines. More often than not, work is performed continuously,
day and night, in order to finish the project on the designated turn-over date. Thus, it will be
more convenient to the employer if its workers are housed near the construction site to
ensure their ready availability during urgent or emergency circumstances. Also, productivity
issues like tardiness and unexpected absences would be minimized. This observation
strongly bears in the present case since three of the respondents are not residents of the
National Capital Region. The board and lodging provision might have been a substantial
consideration in their acceptance of employment in a place distant from their provincial
residences.
Based on these considerations, we conclude that even under the purpose test,
the subsidized meals and free lodging provided by Our Haus are actually
supplements. Although they also work to benefit the respondents, an analysis of the
nature of these benefits in relation to Our Haus business shows that they were given
primarily for Our Haus greater convenience and advantage. If weighed on a scale, the
balance tilts more towards Our Haus side. Accordingly, their values cannot be
considered in computing the total amount of the respondents wages. Under the
circumstances, the daily wages paid to the respondents are clearly below the prescribed
minimum wage rates in the years 2007-2010.

b. The provision of deductible facilities must be voluntarily accepted in writing by

the employee
In Mayon Hotel, we reiterated that a facility may only be deducted from the wage if
the employer was authorized in writing by the concerned employee. 51 As it diminishes the
take-home pay of an employee, the deduction must be with his express consent.
Again, in the motion for reconsideration with the NLRC, Our Haus belatedly submitted
five kasunduans, supposedly executed by the respondents, containing their conformity to
the inclusion of the values of the meals and housing to their total wages. Oddly, Our Haus
only offered these documents when the NLRC had already ruled that respondents did not
accomplish any written authorization, to allow deduction from their wages. These five
kasunduans were also undated, making us wonder if they had really been executed when
respondents first assumed their jobs.
Moreover, in the earlier sinumpaang salaysay by Our Haus four employees, it was
not mentioned that they also executed a kasunduan for their board and lodging benefits.
Because of these surrounding circumstances and the suspicious timing when the five
kasunduans were submitted as evidence, we agree with the CA that the NLRC
committed no grave abuse of discretion in disregarding these documents for
being self serving.

c. The facility must be charged at a fair and reasonable value

The valuation of a facility must be supported by relevant documents such as receipts
and company records for it to be considered as fair and reasonable.
In the present case, Our Haus never explained how it came up with the values it
assigned for the benefits it provided; it merely listed its supposed expenses without any
supporting document. Since Our Haus is using these additional expenses (cooks salary,
water and LPG) to support its claim that it did not withhold the full amount of the meals
value, Our Haus is burdened to present evidence to corroborate its claim. The records
however, are bereft of any evidence to support Our Haus meal expense computation. Even
the value it assigned for the respondents living accommodations was not supported by any
documentary evidence. Without any corroborative evidence, it cannot be said that
Our Haus complied with this third requisite.

2.(a) Respondents are entitled to SIL. A claim not raised in the pro forma
complaint may still be raised in the position paper.
Our Haus questions the respondents entitlement to SIL pay by pointing out that this claim
was not included in the pro forma complaint filed with the NLRC. However, we agree with the
CA that such omission does not bar the labor tribunals from touching upon this cause of
action since this was raised and discussed in the respondents position paper.

2.(b) The respondents are entitled to the other monetary benefits.

Generally a party who alleges payment as a defense has the burden of proving it.
Particularly in labor cases, the burden of proving payment of monetary claims rests on the
employer on the reasoning that the pertinent personnel files, payrolls, records, remittances
and other similar documents which will show that overtime, differentials, service incentive
leave and other claims of workers have been paid are not in the possession of the worker
but in the custody and absolute control of the employer.55
Unfortunately, records will disclose the absence of any credible document which will
show that respondents had been paid their 13th month pay, holiday and SIL pays. Our Haus
merely presented a handwritten certification from its administrative officer that its
employees automatically become entitled to five days of service incentive leave as soon as
they pass probation. This certification was not even subscribed under oath. Our Haus could
have at least submitted its payroll or copies of the pay slips of respondents to show payment
of these benefits. However, it failed to do so.

2.(c) Respondents are entitled to attorneys fees.

It is settled that in actions for recovery of wages or where an employee was forced to
litigate and, thus, incur expenses to protect his rights and interest, the award of attorney's
fees is legally and morally justifiable. 56Moreover, under the PAO Law or Republic Act No.
9406, the costs of the suit, attorney's fees and contingent fees imposed upon the adversary
of the PAO clients after a successful litigation shall be deposited in the National Treasury as
trust fund and shall be disbursed for special allowances of authorized officials and lawyers of
the PAO. Thus, the respondents are still entitled to attorney's fees.

14.) MANILA MANDARIN EMPLOYEES UNION, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, Second Division, and the MANILA MANDARIN HOTEL,
respondents.

G.R. No. 108556.

November 19, 1996

NARVASA, C.J.:
Facts
Petitioner Private Respondent
Exclusive bargaining agent of the
rank-and-file employees of the
Manila Mandarin Hotel, Inc.
Filed with the NLRC Arbitration
Branch a complaint in its members
behalf to compel Private Respondent
to pay the salary differentials of the
individual employees concerned
because of wage distortions in their
salary structure allegedly created by
the upward revisions of the minimum
wage pursuant to various Presidential
Decrees and Wage Orders, and the
failure of MANDARIN to implement
the corresponding increases in the
basic salary rate of newly-hired
employees
The relevant Presidential Decrees and Wage Orders were specified by the UNION as follows:
a. PD 1389, amending PD 928, mandating an increase in the statutory minimum wage
by P3.00 spread out over a period of three years, as follows: P1.00 starting July 1, 1978;
P1.00 starting May 1, 1979; and P1.00 starting May 1, 1980.
b. PD 1614, providing that workers covered by PD 1389, whether agricultural or non-
agricultural, should receive an increase of P2.00 in their statutory minimum wage
effective April 1, 1979, the same representing an acceleration of the remaining increases
under PD 1389; and that all non-agricultural workers in Metro Manila shall receive a
minimum wage of P12.00;
c. PD 1713, issued on august 18, 1980 providing an increase in the minimum daily
wage rates and for additional allowance; increasing the minimum daily wage rates by
P1.00 and providing that all private employers shall pay their employees with wages or
salaries not exceeding P1,500.00 a month, an additional mandatory living allowance of
P60.00 a month for non-agricultural workers, P45.00 for plantation workers and P30.00
a month for agricultural non-plantation workers;
d. PD 1751, issued on December 14, 1980, increasing the statutory daily minimum
wages by integrating the P4.00 mandatory allowance under PD 525 and PD 1123 into
the basic pay of all covered workers;
e. Wage Order No. 1, issued on March 26, 1981, increasing the mandatory emergency
living allowance of all workers with salaries or wages of P1,500.00 a month by P2.00 a
day for non-agricultural workers, P1.50 a day for agricultural plantation workers, P1.00
a day for agricultural non-plantation workers, effective March 22, 1981;
f. Wage Order No. 2 issued on July 6, 1983 increasing the mandatory basic minimum
wage and living allowance for non-agricultural and agricultural workers in the
following manner:
1) For non-agricultural employees, receiving not more than P1,800.00 monthly,
P1.00 a day as minimum wage and P1.50 a day as cost of living allowance;
2) For plantation agricultural employees, P1.00 a day as minimum wage and
P0.50 a day as cost of living allowance subject to the same salary ceiling
provided in the immediately preceding section; and
3) For non-plantation agricultural employees, P1.00 a day as minimum wage;
and
also, providing that effective October 1, 1983, the living allowances rates as adjusted in
the preceding section shall be further increased subject to the same salary ceiling, for
non-agricultural employees, by P1.00.
 g. Wage Order No. 3 issued November 7, 1983 increasing the statutory minimum wage
rates for workers in the private sector by P1.00 per day effective November 1, 1983, and
also increasing the statutory wage rates by P1.00 per day, effective December 1, 1983;
h. Wage Order No. 4 issued on May 1, 1984 increasing the statutory daily minimum
wages, after integrating the mandatory living allowance under PDs 1614, 1634, 1678
and 1713 into the basic pay of all covered employees, effective May 1, 1984; -- after the
integration, the minimum daily wage rate was increased by P11.00 for non-agricultural
workers.
i. Wage Order No. 5 issued on June 11, 1984 increasing the statutory daily minimum
wage rates and living allowances of workers in the private sector by P3.00 effective
June 16, 1984 -- the minimum daily wage rates became P35.00 for Metro Manila and
P34.00 for outside Metro Manila; and
j. Wage Order No. 6, effective November 1, 1984, increasing the statutory minimum
wage rate by P2.00 per day.
Labor Arbiters Decision
The Labor Arbiter eventually ruled in favor of the Petitioners, holding that there were in fact
wage distortions entitling its members to salary adjustments totalling P26,173,601.25 -- for 541
employees -- as well as underpayments amounting to P1,978,296.18 -- 182 employees.
National Labor Relations Commission
Dismissed the complainant of the Petitioners and set aside the Labor Arbiters judgment.
Issues
Whether or not a wage distortion exists as a consequence of the grant of a wage increase to
certain employees
Supreme Courts Ruling

The Court held that it was incorrect for the UNION to claim that all its members became
automatically entitled to across-the-board increases upon the effectivity of the Decrees and Wage
Orders in question.

And even if there were wage distortions, which is not the case here, the appropriate remedy
thereunder prescribed is for

1. the employer and the union to negotiate to correct them; or,

2. if the dispute be not thereby resolved, to thresh out the controversy through the
grievance procedure in the collective bargaining agreement, or through conciliation
or arbitration.
Wage distortion:
Prior to the effectivity on June 9, 1989 of On June 9, 1989, upon the enactment of
Republic Act No. 6727 which, among
others, amended Article
(Standards/Criteria for Minimum Wage
Fixing) of the Labor Code, the concept to
wage distortion was relatively obscure.
In National Federation of Labor vs. the procedure found in the same
NLRC, a case involving the same subject provision are to be followed where wage
Wage Orders:
We note that neither the Wage
Orders noted above, nor the
Implementing Rules
promulgated by the Department
of Labor and Employment, set
forth a clear and specific notion
of wage distortion. What the
Wage Orders and the
Implementing Rules did was
simply to recognize that
implementation of the Wage
Orders could result in a
distortion of the wage structure
of an employer, and to direct the
employer and the union to
negotiate with each other to
correct the distortion. Thus,
Section 6 of Wage Order No. 3,
R.A. No. 6727 (Wage Rationalization
124 Act, amending, among others, Article 124
of the Labor Code), that the term wage
distortion came to be explicitly defined
as:
** a situation where an increase
in 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.
distortion arises from the implementation
of a wage increase prescribed by law or
ordered by a Regional Wage Board, viz.:
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.
dated 7 November 1983, EXCEPTION
provided as follows:
Unless otherwise agreed by the
Section 6. Where the parties in writing, such dispute
application of the shall be decided by the
minimum wage rate voluntary arbitrator or panel of
prescribed herein results voluntary arbitrators within ten
in distortions of the (10) calendar days from the time
wage structure of an said dispute was referred to
establishment, the voluntary arbitration.
employer and the union
In cases where there are no
shall negotiate to correct
collective agreements or
the distortions. Any
recognized labor unions, the
dispute arising from
employers and workers shall
wage distortions shall be
endeavor to correct such
resolved through the
distortions. Any dispute arising
grievance procedure
therefrom shall be settled
under their collective
through the National
bargaining agreement
Conciliation and Mediation
of through conciliation.
Board and, if it remains
In case where there is no unresolved after ten (10)
collective bargaining calendar days of conciliation,
agreement or shall be referred to the
recognized labor appropriate branch of the
organization, the National Labor Relations
employer shall endeavor Commission (NLRC). It shall be
to correct such mandatory for the NLRC to
distortions in conduct continuous hearings and
consultation with their decide the dispute within twenty
workers. Any dispute (20) calendar days from the time
arising from wage said dispute is submitted for
distortions shall be compulsory arbitration.
resolved through
The pendency of a dispute
conciliation by the
arising from a wage distortion
appropriate Regional
shall not in any way delay the
Office of the Ministry
applicability of any increase in
of Labor and
prescribed wage rates pusurant
Employment or
to the provisions of law or Wage
through arbitration by
Order.
the NLRC Arbitration
 Branch having
jurisdiction over the
work-place.
(Underscoring supplied)

In Metro Transit Organization,

Inc. vs. NLRC, et al. an
opportune to re-state the general
principles enunciated as
summarized by: (a) The concept
of wage distortion assumes an
existing grouping or
classification of employees
which establishes distinctions
among such employees on
some relevant or legitimate
basis. This classification is
reflected in a differing wage rate
for each of the existing classes
of employees.
(b) Wage distortions have often
been the result of government-
decreed increases in minimum
wages.
There are, however, other causes
of wage distortions, like the
merger of two (2) companies
(with differing classification of
employees and different wage
rates) where the surviving
company absorbs all the
employees of the dissolved
corporation. (In the present
Metro case, as already noted, the
wage distortion arose because
the effectivity dates of wage
increases given to each of the
two (2) classes of employees
 (rank-in-file and supervisory)
had not been synchronized in
their respective CBAs.)
(c) Should a wage distortion
exist, there is no legal
requirement that, in the
rectification of that distortion by
re-adjustment of the wage rates
of the differing classes of
employees, the gap which had
previously or historically existed
be restored in precisely the same
amount. In other words,
correction of a wage distortion
may be done by re-establishing a
substantial or significant gap (as
distinguished from the historical
gap) between the wage rates of
the differing classes of
employees.
(d) The re-establishment of a
significant difference in wage
rates may be the result of resort
to grievance procedures or
collective bargaining
negotiations.

The issue is questions of fact, as a rule, factual findings in labor cases, where grounded on
substantial evidence, are not reviewed. However, a disharmony such as exists here, between the
factual findings of the Labor Arbiter and those of the NLRC, opens the door to a review thereof
by the Court.
Labor Arbiter NLRC
ruled that a wage distortion existed, and declared in its decision that there was no
that the only and logical way to correct wage distortion arising from the
** (it) in the salary structure of the implementation of said Presidential
employees of respondent Hotel is to Decrees and Wage Orders such as
apply the corresponding increase made warranted across-the-board increases to
by way of revising upward the minimum all employees:
wage or integration of the ECOLA into
the basic wage as embodied in the
On the issue of wage distortion,
various Presidential Decrees and Wage
we have examined the various
Orders, across-the-board, so that
presidential decrees and wage
employees whose salaries are above the
orders referred to by the
minimum set by law who have already
complainant and in the Labor
been long in the service will not be
Arbiters decision and we found
discriminated against
nothing therein that would
justify the award of across-
the-board increases to all
employees. The apparent
intention of the law is only to
upgrade the salaries or wages of
the employees receiving lower
than the minimum daily wage
set therein.
For example, Section 1 of Wage
Order No. 6 provides that
effective November 1, 1984, the
statutory minimum daily wage
rates workers in the private
sector shall be increased by
P2.00. Also, Section 1 of
Presidential Decree 1389
provides that Presidential
Decree 928 is hereby amended
by increasing all existing
statutory minimum wages in the
country by Three Pesos (P3.00)
spread equally over a period of
three years, as follows: 1)One
Peso (P1.00) starting July 1,
1978; 2)One Peso(P1.00)
starting May 1, 1979; and One
Peso (P1.00) starting May 1,
1980. Thus, it is clear that the
presidential decrees and wage
orders merely provide for a floor
wage to be observed by the
employers in the private sector.
 It indeed appears that the clear mandate of those issuances was merely to increase the
prevailing minimum wages of particular employee groups. There were no across-
the-board increases to all employees; increases were required only as regards those
specified therein.
A review of the records convinces this Court that respondent NLRC committed no grave
abuse of discretion in holding that no wage distortion was demonstrated by the UNION.
It was, to be sure, incumbent on the UNION to prove by substantial evidence its assertion
of the existence of a wage distortion. This it failed to do. It presented no such evidence to
establish, as required by the law, what, if any, were the designed quantitative differences
in wage or salary rates between employee groups, and if there were any severe
contractions or elimination of these quantitative differences.
Respondent Commission however found that as explained by respondents, such disparity
was due simply to the fact that the employees mentioned had been hired on different
dates and were thus receiving different salaries; or that an employee was hired initially
at a position level carrying a hiring rate than the others; or that an employee failed to
meet the cut-off date in the grant of yearly CBA increase; or that the union did not get the
correct data on salaries.
Respondent Commission correctly concluded that these did not represent cases of wage
distortion contemplated by the law (Article 124, Labor Code, as amended), i.e., a
situation where an increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates between and
among employees groups in an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of service, or other logical basis
of differentation.
Finally, the records show that the matter of wage distortion, actual or imputed under the
various issuances up to Wage Order No. 6, had been settled by the parties as early as July
30, 1985. On that day they executed a Compromise Agreement with the assistance of the
then Regional Director of the National Capital Region, Severo M. Pucan in which they
affirmed that with the implementation by MANDARIN of Wage Order Nos. 4 and 6 as
well as P.D. 1634, the latter was deemed for all legal and purposes to have fully satisfied
all its legal and contractual obligations to its employees under all presidential issuances
on wages
The Compromise Agreement pertinently states:
1. That the respondent shall implement Wage Order No. 6 effective July 1, 1985,
without prejudice to the outcome of the application for exemption as distressed
employer filed by said respodent with the National Wage Council as regards benefits
that might be due between November 1, 1985 and June 30, inclusive;
2. The the respondent shall also implement effective August 1, 1985 the integration of
the P90.00 a month cost of living allowance under P.D. 1634 into the basic wages of its
 employees as called for under Wage Order No. 4 in accordance with the Guidelines
contained in the Explanatory Bulletin issued by the Bureau of Working Conditions on
August 8, 1985;
3. That as soon as the respondent shall have complied with the above terms of this
Compromise Agreement, said respondent shall be deemed for all legal intents and
puposes to have fully satisfied all the legal and contractual obligations to its employees
under all presidential issuances on wages, including Wage Orders No. 4 and 6, and
Article XI of the collective bargaining agreement,

The Labor Code recognizes the conclusiveness of compromises as a means to settle and
end labor disputes. Article 227 provides that (a)ny compromise settlement, including
those involving labor standard laws, voluntary agreed upon by the parties with the
assistance of the Bureau or the regional office of the Department of Labor, shall be final
and binding upon the parties. The National Labor Relations Commission or any court
shall not assume jurisdiction over issues involved therein except in case of non-
compliance thereof or if there is prima facie evidence that the settlement was obtained
through fraud, misrepresentation or coercion. In Olaybar vs. NLRC, this Court had
occasion, in a labor dispute, to apply the rule that compromises and settlements have the
effect and conclusiveness of res judicata upon the parties.
Thus, and again assuming arguendo the existence of a wage distortion, this was corrected
under the fully implemented Compromise Agreement; and such correction having been
explicitly acknowledge by the UNION, it is now estopped from claiming that a distortion
still subsists. In the same manner, when the UNION entered into a new collective
agreement with MANDARIN, providing for wage increases in 1987, it is deemed to have
thereby settled any remaining question of wage distortion, since the subject of wages and
wage distortions were plainly and unavoidably an economic issue and the proper subject
of collective bargaining.

15.) National Federation of Labor vs NLRC

Facts:
NFL is a labor org employed by Patalon Coconut Estate engaged in growing
agricultural products and livestock. Pursuant to CARP which mandated the
compulsory acquisition of all covered agricultural lands for distribution to
qualified farmer beneficiariess, the Patalon Coconut Estate was awarded to
the Patalon Estate Agrarian Reform Association (PEARA) of which NFL are
members and co-owners. As a result, respondents shut down the operation
of Patalon Coconut Estate which terminated the employment of NFL without
separation pay on July 31, 1994. On August 1, 1994, PEARA take over the
estate and NFL became part-owners of the land. On Apr 25, 1995, petitioners
through NFL, filed a case for illegal dismissal against the previous owners of
Patalon Coconut Estate.

RAB: Held to dismiss the complaints but ordered to pay separation pay to the
petitioners and 13th month differential pay for cessation of operations or
forced sale. Claims for Muslim Holiday, overtime pay and rest day pay should
be dismissed.

NLRC: Modified. Petitioners are not illegally dismissed. Respondents

cessation of operation was not due to a unilateral action on their part
resulting in the cutting off of the employment relationship between the
parties. The severance of employer-employee relationship between the
parties came about involuntarily, as a result of an act of the State.
Consequently, complainants are not entitled to any separation pay.

The award of 13th month pay differential is, however, Set Aside. Any award
of 13th month pay differentials to complainants should be computed strictly
based on their reduced pay, equivalent to six (6) hours work, Monday to
Friday, pursuant to what the parties agreed in the November 18, 1991
Compromise Agreement.

Issue:
W/N the petitioners were illegally dismissed because of cessation of
operations in virtue of CARP and should receive separation pay.

Held:
Petition is dismissed and affirmed the decision of NLRC.
Art 283 of Labor Code refers to the closure of establishment and reduction of
personnel. It cannot be applied in the case at bar because Patalon Coconut
Estate was closed because a large portion os estate was acquired in
pursuant to CARP and the ownership was transferred to PEARA and to the
petitioners as agrarian lot beneficiaries. Additionally, Art 283 does not
involve forced closure of business for the employer merely for the benefit of
its employees. Therefore, they are not entitled for separation pay because
the termination of their employment was not caused by their employer.

16.) Bankard Employees Union vs NLRC (2004) G.R. 140689

Facts:

Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III,
Level IV, and Level V. On May 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 industrys 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.

This made Bankard Employees Union-WATU (petitioner), the duly certified

exclusive bargaining agent of the regular rank and file employees of
Bankard, to request for the increase in the salary of its old, regular
employees. Bankard insisted 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.

Petioner filed a notice of strike. The strike was averted when the dispute was
certified by the Secretary of Labor and Employment for compulsory
arbitration. NLRC finding no wage distortion dismissed the case for lack of
merit. Petitioners motion for reconsideration of the dismissal of the case was
denied.

NLRC: finding no wage distortion, dismissed the case for lack of merit..
Court of Appeals: denied the same for lack of merit.
Issue: Whether the unilateral adoption by an employer of an upgraded
salary resulted in wage distortion within the contemplation of Article 124 of
the Labor Code.

Held: There exists a wage distortion but the Court will not interfere in the
management prerogative of the petitioner.

Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT,

amending, among others, Article 124 of the Labor Code), the term "wage
distortion" was explicitly defined as... a situation where an increase in
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.

In the case of Prubankers Association v. Prudential Bank and Trust Company,

it 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. Involved in the classification of employees are various
factors such as the degrees of responsibility, the skills and knowledge
required, the complexity of the job, or other logical basis of differentiation.
The differing wage rate for each of the existing classes of employees reflects
this classification.

Put differently, the entry of new employees to the company ipso facto places
them under any of the levels mentioned in the new salary scale which
private respondent adopted retroactive to April 1, 1993. 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 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. 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 Bankards 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.

Wage distortion is a factual and economic condition that may be brought

about by different causes. 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.

WHEREFORE, the present petition is hereby DENIED.

17.) WAGE DISTORTION

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.

On June 7, 1994, 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.

CA: There was no wage distortion. The Court of Appeals held that the
variance in the salary rates of employees in different regions of the country
was justified by RA 6727. . It noted that the underlying considerations in
issuing the wage orders are diverse, based on the distinctive situations and
needs existing in each region. Hence, there is no basis to apply the salary
increases imposed by Wage Order No. VII-03 to employees outside of Region
VII. Furthermore, the Court of Appeals ruled that the distinctions between
each employee group in the region are maintained, as all employees were
granted an increase in minimum wage rate

Hence, this appeal.

Issue: WON a wage distortion resulted from respondents implementation of

the aforecited Wage Orders.

Ruling: The petition is Denied. The Supreme Court affirmed CAs decision.

1. Wage Distortion- As used herein, a 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.

Elaborating on this statutory definition, this Court ruled: Wage distortion

presupposes a classification of positions and ranking of these
positions at various levels. One visualizes a hierarchy of positions with
corresponding ranks basically 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. xxx. The concept of wage distortion
assumes an existing grouping or classification of employees which
establishes distinctions among such employees on some relevant or
legitimate basis. This classification is reflected in a differing wage rate for
each of the existing classes of employees

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. Put differently, the distinction
between Pay Class 1 and Pay Class 2, for example, was not eliminated as a
result of the implementation of the two Wage Orders in the said
region. Hence, it cannot be said that there was a wage distortion.

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.

2. R.A. 6727- 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. In fact, Republic Act No. 6727 (the Wage Rationalization Act),
recognizes existing regional disparities in the cost of living. The Court is not
persuaded.

RA 6727 recognizes that there are different needs for the different situations
in different regions of the country. The fact that a person is receiving more in
one region does not necessarily mean that he or she is better off than a
person receiving less in another region. We must consider, among others,
such factors as cost of living, fulfillment of national economic goals, and
standard of living. In any event, this Court, in its decisions, merely enforces
the law. It has no power to pass upon its wisdom or propriety.

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 frame work of the national economic and social
development program. From the above-quoted rationale of the law, as well
as the criteria enumerated, a disparity in wages between employees with
similar positions in different regions is necessarily expected.

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.