G.R. No. 121439.

January 25, 2000]

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

LABOR RELATIONS COMMISSION (Fourth Division), RODOLFO M. RETISO and 165
OTHERS,[1] respondents.

Facts:

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

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

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

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

Labor Arbiter dismissed the complaints. On appeal, NLRC reversed and set aside the LAs
decision and ruling that private respondents are entitled to unpaid wages. NLRC based its
conclusion on the following: (a) the letter of Leyson, Office Manager of AKELCO addressed to
AKELCOs General Manager, Atty. Mationg, requesting for the payment of private respondents
unpaid wages from June 16, 1992 to March18, 1993; (b) the memorandum of said Atty. Mationg
in answer to the letter request of Leyson where he made an assurance that he will recommend
such request; (c) the private respondents own computation of their unpaid wages.

Issue: Whether or not private respondents are entitled to compensation

Held:

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

The above bases of the NLRC does not constitute substantial evidence to support the
conclusion that private respondents are entitled to the payment of wages from June 16, 1992 to
March18, 1993. Substantial evidence is that amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion. These evidences relied upon by public
respondent did not establish the fact that private respondents actually rendered services in the
Kalibo office during the stated period. It has been established that the petitioners business office
was transferred to Kalibo and all its equipments, records and facilities were transferred thereat
and that it conducted its official business in Kalibo during the period in question. It was incumbent
upon private respondents to prove that they indeed rendered services for petitioner, which they
failed to do.

The age-old rule governing the relation between labor and capital, or management and
employee of a "fair days wage for a fair days labor" remains as the basic factor in determining
employees wages. If there is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but was illegally locked out,
suspended or dismissed, or otherwise illegally prevented from working, a situation which is not
present in the instant case. It would neither be fair nor just to allow private respondents to recover
something they have not earned and could not have earned because they did not render services
at the Kalibo office during the stated period.

Hence, the Supreme Court reversed NLRCs decision, and affirmed the Labor Arbiters
decision.
[G.R. No. 128845. June 1, 2000]

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

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

Facts:

Private respondent International School, Inc. (the School, for short), pursuant to
Presidential Decree 732, is a domestic educational institution established primarily for dependents
of foreign diplomatic personnel and other temporary residents. To enable the School to continue
carrying out its educational program and improve its standard of instruction, the School hires both
foreign and local teachers as members of its faculty, classifying the same into two: (1) foreignhires
and (2) local-hires.The School grants foreign-hires certain benefits not accorded local-hires.
These include housing, transportation, shipping costs, taxes, and home leave travel allowance.
Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The
School justifies the difference on two "significant economic disadvantages" foreign-hires have to
endure, namely: (a) the "dislocation factor" and (b) limited tenure.

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

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

for reconsideration.

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

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

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

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

There is no evidence here that foreignhires perform 25% more efficiently or effectively
than the local-hires. Both groups have similar functions and responsibilities, which they perform
under similar working conditions. The School cannot invoke the need to entice foreign-hires to
leave their domicile to rationalize the distinction in salary rates without violating the principle of
equal work for equal pay. While we recognize the need of the School to attract foreign-hires,
salaries should not be used as an enticement to the prejudice of local-hires. The local-hires
perform the same services as foreign-hires and they ought to be paid the same salaries as the
latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also
cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited
tenure affecting foreign-hires are adequately compensated by certain benefits accorded them
which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and
home leave travel allowances.
[G.R. No. 140689. February 17, 2004]

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS, petitioner,

vs. NATIONAL LABOR RELATIONS COMMISSION and BANKARD,
INC., respondents.

Facts:

Bankard, Inc. (Bankard) classifies its employees by levels I, II, III, IV, and V. On May 28,
1993, its Board of Directors approved a New Salary Scale, made retroactive to April 1, 1993, for
the purpose of making its hiring rate competitive in the 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.

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

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

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

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

Held:

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

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

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

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

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

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

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

Petitioner cannot make a contrary classification of private respondents employees without

encroaching upon recognized management prerogative of formulating a wage structure, in this
case, one based on level. While seniority may be a factor in determining the wages of employees,
it cannot be made the sole basis in cases where the nature of their work differs. Moreover, for
purposes of determining the existence of wage distortion, employees cannot create their own
independent classification and use it as a basis to demand an across-the-board increase in salary.

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

Moreover, Bankards right to increase its hiring rate, to establish minimum salaries for
specific jobs, and to adjust the rates of employees affected thereby is embodied under Section 2,
Article V (Salary and Cost of Living Allowance) of the parties Collective Bargaining Agreement
(CBA).
Petition is hereby DENIED.
[ GR No. 104523, Mar 08, 1993 ]

ARMS TAXI v. NATIONAL LABOR RELATIONS COMMISSION

Facts:

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

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

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

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

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

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

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

Held:

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

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

As petitioner's dismissal was effected without prior notice and investigation of the charges
against him, in violation of his right to due process, his employers should indemnify him for
damages in the sum of One Thousand Pesos (P1,000.00) pursuant to Rule XIV. Secs. 2, 5 and
6 of the rules implementing Batas Pambansa Blg. 130.
 [G.R. No. 121927. April 22, 1998]

IRAN VS NLRC

Facts:

Petitioner Antonio Iran is engaged in softdrinks merchandising and distribution in Mandaue

City, Cebu, employing truck drivers who double as salesmen, truck helpers, and non-field
personnel in pursuit thereof. Iran hired private respondents Godofredo Petralba, Moreno Cadalso,
Celso Labiaga and Fernando Colina as drivers/salesmen while private respondents Pepito
Tecson, Apolinario Gimena, Jesus Bandilao, Edwin Martin and Diosdado Gonzalgo were hired
as truck helpers.

Drivers/salesmen drove petitioners delivery trucks and promoted, sold and delivered
softdrinks to various outlets in Mandaue City. The truck helpers assisted in the delivery of
softdrinks to the different outlets covered by the driver/salesmen. As part of their compensation,
the driver/salesmen and truck helpers of petitioner received commissions per case of softdrinks
sold at a following rates.

Sometime in June 1991, Antonio Iran, while conducting an audit of his operations,
discovered cash shortages and irregularities allegedly committed by private
respondents. Pending the investigation of irregularities and settlement of the cash shortages,
petitioner required private respondents to report for work everyday. They were not allowed,
however, to go on their respective routes. A few days thereafter, despite aforesaid order, private
respondents stopped reporting for work, prompting Antonio Iran to conclude that the former had
abandoned their employment. Consequently, petitioner terminated their services. He also filed on
November 7, 1991, a complaint for estafa against private respondents.

Furthermore, private respondents filed complaints against petitioner for illegal dismissal, illegal
deduction, underpayment of wages, premium pay for holiday and rest day, holiday pay, service
incentive leave pay, 13th month pay, allowances, separation pay, recovery of cash bond, damages
and attorneys fees.

The labor arbiter found that petitioner had validly terminated private respondents, there being
just cause for the latters dismissal. Nevertheless, he also ruled that petitioner had not complied
with minimum wage requirements in compensating private respondents, and had failed to pay
private respondents their 13th month pay.

The NLRC, in its decision of December 21, 1994, affirmed the validity of private respondents
dismissal, but found that said dismissal did not comply with the procedural requirements for
dismissing employees. Furthermore, it corrected the labor arbiters award of wage differentials to
Jesus Bandilao.
Issue: Whether or not commissions are included in determining compliance with the minimum
wage requirement.

Held:

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

Art. 97(f) Wage paid to any employee shall mean the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of calculating the same, which is payable
by an employer to an employee under a written or unwritten contract of employment for work done
or to be done, or for services rendered or to be rendered and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee.

The Court has taken judicial notice of the fact that some salesman do not receive any
basic salary but depend entirely on commissions and allowances or commissions alone, although
an employer-employee relationship exists.

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

While commissions are, indeed, incentives or forms of encouragement to inspire

employees to put a little more industry on the jobs particularly assigned to them, still these
commissions are direct remunerations for services rendered. In fact, commissions have been
defined as the recompense, compensation or reward of an agent, salesman, executor, trustee,
receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of
his transactions or on the profit to the principal. The nature of the work of a salesman and the
reason for such type of remuneration for services rendered demonstrate clearly that commissions
are part of a salesmans wage or salary.

Thus, the commissions earned by private respondents in selling softdrinks constitute part
of the compensation or remuneration paid to drivers/salesmen and truck helpers for serving as
such, and hence, must be considered part of the wages paid them.

In one case it was acknowledged that drivers and conductors who are compensated
purely on a commission basis are automatically entitled to the basic minimum pay mandated by
law should said commission be less than their basic minimum for eight hours work. It can thus be
inferred that where said commissions equal to or even exceed the minimum wage, the employer
need not pay, in addition, the basic minimum pay prescribed by law. It follow then that
commissions are included in determining compliance with minimum wage requirements.

There is no law mandating that commissions be paid only after the minimum wage has
been paid to the employee. Verily, the establishment of a minimum wage only sets a floor below
which an employees remuneration cannot fall, not that commissions are excluded from wages in
determining compliance with the minimum wage law.

WHEREFORE, in view of the foregoing, the decision of the NLRC dated July 31, 1995,
insofar as it excludes the commissions received by private respondents in the determination of
petitioners compliance with the minimum wage law, as well as its exclusion of the particular
amounts received by private respondents as part of their 13th month pay is REVERSED and SET
ASIDE. This case is REMANDED to the Labor Arbiter for a recomputation of the alleged
deficiencies. For non-observance of procedural due process in effecting the dismissal of private
respondents, said decision is MODIFIED by increasing the award of nominal damages to private
respondents from P1,000.00 to P5,000.00 each. No costs.
Millares vs. National Labor Relations Commission, 305 SCRA 500 (1999)

Facts:

Petitioners numbering one hundred sixteen (116)[1] occupied the positions of Technical
Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice
President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP)
in Bislig, Surigao del Sur. In 1992 PICOP suffered a major financial setback allegedly brought
about by the joint impact of restrictive government regulations on logging and the economic
crisis. To avert further losses, it undertook a retrenchment program and terminated the services
of petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1)
month basic pay for every year of service. Believing however that the allowances they allegedly
regularly received on a monthly basis during their employment should have been included in the
computation thereof they lodged a complaint for separation pay differentials.

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

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

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

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

Held:

No. Customary is founded on long established and constant practice connoting

regularity. The receipt of allowance on a monthly basis does not ipso facto characterize it as
regular and forming part of salary because the nature of the grant is a factor worth considering.

In this petition for certiorari, petitioners submit that their allowances are included in the
definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable
for their existence and subsistence. Furthermore they claim that their availment of the monetary
equivalent of those "facilities" on a monthly basis was characterized by permanency, regularity
and customariness. And to fortify their arguments they insist on the applicability
of Santos,[8] Soriano,[9] The Insular Life Assurance Company,[10] Planters Products, Inc.[11] and
Songco[12] which are all against the NLRC holding that the salary base in computing separation
pay includes not just the basic salary but also the regular allowances.

We correlate Art. 283 with Art. 97 of the same Code on definition of terms. "Pay" is not
defined therein but "wage." In Songco the Court explained that both words (as well as salary)
generally refer to one and the same meaning, i.e., a reward or recompense for services
performed. Specifically, "wage" is defined in letter (f) as the remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of calculating the same, which is payable
by an employer to an employee under a written or unwritten contract of employment for work done
or to be done, or for services rendered or to be rendered and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging, or other facilities
customarily furnished by the employer to the employee.

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

In the case of the housing allowance, once a vacancy occurs in the company-provided
housing accommodations, the employee concerned transfers to the company premises and his
housing allowance is discontinued. On the other hand, the transportation allowance is in the form
of advances for actual transportation expenses subject to liquidation given only to employees who
have personal cars. The Bislig allowance is given to Division Managers and corporate officers
assigned in Bislig, Surigao del Norte. Once the officer is transferred outside Bislig, the allowance
stops.

The Staff /Manager's allowance may fall under "lodging" but the transportation and Bislig
allowances are not embraced in "facilities" on the main consideration that they are granted as well
as the Staff/Manager's allowance for respondent PICOP's benefit and convenience, i.e., to insure
that petitioners render quality performance.

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

The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules
Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and
reasonable value of board, lodging and other facilities customarily furnished by an employer to
his employees." Petitioners' allowances do not represent such fair and reasonable value as
determined by the proper authority simply because the Staff/Manager's allowance and
transportation allowance were amounts given by respondent company in lieu of actual provisions
for housing and transportation needs whereas the Bislig allowance was given in consideration of
being assigned to the hostile environment then prevailing in Bislig.

The inevitable conclusion is that, as reached by the NLRC, subject allowances did not form
part of petitioners' wages

WHEREFORE, the petition is DISMISSED. The resolution of public respondent National

Labor Relations Commission dated 7 October 1994 holding that the Staff /Manager's,
transportation and Bislig allowances did not form part of the salary base used in computing the
separation pay of petitioners, as well as its resolution dated 26 September 1995 denying
reconsideration, is AFFIRMED. No costs.
Songco v. NLRC (1990)
G.R. Nos. 50999-51000

Facts:

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

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

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

The Labor Arbiter rendered his decision directing the company to pay the complainants
separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.)
for every year of service that they have worked with the company. The petitioners appealed to
the NLRC but the Labor Arbiters decision was sustained. Petitioner Romeo Cipres filed a Notice
of Voluntary Abandonment and Withdrawal of petition contending that he had received, to his full
and complete satisfaction, his separation pay. Hence, this petition.

Issue: Whether or not earned sales commissions and allowances should be included in the
monthly salary of Songco, et al. for the purpose of computing their separation pay.
Held:

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

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

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

In Soriano v. NLRC, it is ruled then that, the commissions also claimed by petitioner
(override commission plus net deposit incentive) are not properly includible in such base figure
since such commissions must be earned by actual market transactions attributable to petitioner.
Applying this by analogy, since the commissions in the present case were earned by actual market
transactions attributable to petitioners, these should be included in their separation pay. In
the computation thereof, what should be taken into account is the average commissions earned
during their last year of employment.
[ GR No. 92174, Dec 10, 1993 ]

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

Facts:

A routine inspection was conducted in the premises of petitioner Boie-Takeda

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

Issue: Whether or not commissions are included in the computation of 13-month pay.

Held:
No. The Supreme Court said that, including commissions in the computation of the 13th
month pay, the second paragraph of Section 5(a) of the Revised Guidelines on the
Implementation of the 13th Month Pay Law unduly expanded the concept of "basic salary" as
defined in P.D. 851. It is a fundamental rule that implementing rules cannot add to or detract from
the provisions of the law it is designed to implement. Administrative regulations adopted under
legislative authority by a particular department must be in harmony with the provisions of the law
they are intended to carry into effect. They cannot widen its scope. An administrative agency
cannot amend an act of Congress.
 Contrary to respondents contention, M.O No. 28 did not repeal, supersede or abrogate
P.D. 851. As may be gleaned from the language of MO No. 28, it merely modified Section 1 of
the decree by removing the P 1,000.00 salary ceiling. The concept of 13th Month pay as
envisioned, defined and implemented under P.D. 851 remained unaltered, and while entitlement
to said benefit was no longer limited to employees receiving a monthly basic salary of not more
than P 1,000.00 said benefit was, and still is, to be computed on the basic salary of the employee-
recipient as provided under P.D. 851.
Thus, the interpretation given to the term basic salary was defined in PD 851 applies
equally to basic salary under M.O. No. 28. The term basic salary is to be understood in its
common, generally accepted meaning, i.e., as a rate of pay for a standard work period exclusive
of such additional payments as bonuses and overtime. In remunerative schemes consists of a
fixed or guaranteed wage plus commission, the fixed or guaranteed wage is patently the basic
salary for this is what the employee receives for a standard work period. Commissions are given
for extra efforts exerted in consummating sales of other related transactions. They are, as such,
additional pay, which the SC has made clear do not from part of the basic salary.
G.R. No. 110068 November 11, 1993

PHILIPPINE DUPLICATORS, INC., petitioner,

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

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

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

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

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

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

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

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

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

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

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

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

employees of Fuji Xerox Co. were not included in the term basic salary because these were paid
as productivity bonuses which is not included in the computation of 13th month pay.
[G.R. No. 146530. January 17, 2005]

PEDRO CHAVEZ, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, SUPREME

PACKAGING, INC. and ALVIN LEE, Plant Manager, respondents.

Facts:

The respondent company, Supreme Packaging, Inc., is in the business of manufacturing

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

The petitioner expressed to respondent Alvin Lee, respondent companys plant

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

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

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

Wages are defined as remuneration or earnings, however designated, capable of being

expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission
basis, or other method of calculating the same, which is payable by an employer to an employee
under a written or unwritten contract of employment for work done or to be done, or for service
rendered or to be rendered. That the petitioner was paid on a per trip basis is not significant. This
is merely a method of computing compensation and not a basis for determining the existence or
absence of employer-employee relationship. One may be paid on the basis of results or time
expended on the work, and may or may not acquire an employment status, depending on whether
the elements of an employer-employee relationship are present or not. In this case, it cannot be
gainsaid that the petitioner received compensation from the respondent company for the services
that he rendered to the latter.

Moreover, under the Rules Implementing the Labor Code, every employer is required to pay
his employees by means of payroll. The payroll should show, among other things, the employees
rate of pay, deductions made, and the amount actually paid to the employee. Interestingly, the
respondents did not present the payroll to support their claim that the petitioner was not their
employee, raising speculations whether this omission proves that its presentation would be
adverse to their case.
 The Court agrees with the following findings and conclusion of the Labor Arbiter that
complainant in his right senses will not just abandon for that reason alone his work especially so
that it is only his job where he depends chiefly his existence and support for his family if he was
not aggrieved by the respondent when he was told that his services as driver will be terminated
on February 23, 1995.

Thus, the lack of a valid and just cause in terminating the services of the petitioner renders
his dismissal illegal. Under Article 279 of the Labor Code, an employee who is unjustly dismissed
is entitled to reinstatement, without loss of seniority rights and other privileges, and to the payment
of full backwages, inclusive of allowances, and other benefits or their monetary equivalent,
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.[29] However, as found by the Labor Arbiter, the circumstances obtaining in this case
do not warrant the petitioners reinstatement. A more equitable disposition, as held by the Labor
Arbiter, would be an award of separation pay equivalent to one month for every year of service
from the time of his illegal dismissal up to the finality of this judgment in addition to his full
backwages, allowances and other benefits.

WHEREFORE, the instant petition is GRANTED. The Resolution dated December 15, 2000
of the Court of Appeals reversing its Decision dated April 28, 2000 in CA-G.R. SP No. 52485 is
REVERSED and SET ASIDE. The Decision dated February 3, 1997 of the Labor Arbiter in NLRC
Case No. RAB-III-02-6181-5, finding the respondents guilty of illegally terminating the
employment of petitioner Pedro Chavez, is REINSTATED.