Aklan Electric Cooperative, Inc. vs. NLRC AUTHOR: Miguel M.

Consing
[G.R. No. 121439. January 25, 2000] NOTES:
TOPIC: Wages, No Work No Pay. Employer Aklan Electric Cooperative, Inc. (AKELCO)
PONENTE: Gonzaga - Reyes, J. Employee/s Private Respondents
CASE LAW/DOCTRINE:
It is not for employees to declare that the managements act of temporarily transferring its office is an illegal act.
A labor tribunal errs in merely relying on the computations of compensable services submitted by the employeesthere must be competent proof, such as
time cards or office records to show that they rendered compensable service during the stated period to entitle them to wages.
No Work, No Pay
FACTS:
On Jan. 22, 1992, AKELCO transferred its office from Lezo, Aklan to Kalibo, Aklan, because the office at Lezo was dangerous and unsafe. The private
respondents claimed that the transfer was illegal because it failed to comply with the legal requirements under P.D. 269. Thus, they remained in Lezo and
continued to work there until they were illegally locked out by the AKELCO.
Despite the lock out, the private respondents continued to report daily to the location of the Lezo Office, prepared to continue in the performance of their
regular duties. AKELCO dismissed these private respondents on Jan. 31, 1992 for refusing to report to the Kalibo office, but eventually accepted them back
on March 1993. These same private respondents were not paid their salary from June 1992, to March 1993 [Because they were dismissed during that time],
hence, they filed a claim for unpaid salaries with the Labor Arbiter for those months they were not paid their salary on the ground that they rendered work
during that time.
LA: Dismissed the complaints and ruled in favor of AKELCO. It was not for private respondents to declare the managements act of temporarily transferring
the AKELCO office to Kalibo as an illegal act. There is no allegation nor proof that the transfer was made in bad faith or with malice.
NLRC: Reversed the above and held that the private respondents did in fact report to work, hence they were entitled to their wages. This was based on (a)
the letter of AKELCOs Office Manager addressed to AKELCOs General Manager, requesting for the payment of private respondents unpaid wages from
June 16, 1992 to March 18, 1993; (b) the memorandum of AKELCOs General Manager in answer to the above letter request where he made an assurance
that he will recommend such request; and (c) the private respondents own computation of their unpaid wages.
AKELCO filed a petition for Certiorari, hence this case.
ISSUE(S) & HELD/RATIO:
First Issue: May the SC reexamine the findings of the NLRC? [Procedural Issue]
In this case, YES. While administrative findings of fact are accorded great respect, and even finality when supported by substantial evidence, nevertheless,
when it can be shown that administrative bodies grossly misappreciated evidence of such nature as to compel a contrary conclusion, this court had not
hesitated to reverse their factual findings.
Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness; Where the findings of the National
Labor Relations Commission contradict those of the labor arbiter, the Supreme Court, in the exercise of its equity jurisdiction, may look into the records of
the case and reexamine the questioned findings.
Second Issue: Are the Private Respondents entitled to their wages from June 1992 to March 1993? [Main Issue]
NO. Essentially, the private respondents did not render services during the stated period because they did not report to the Kalibo office, the place where
AKELCOs official business was being conducted. Their allegations that they continued to report for work at Lezo to support their claim for wages has no
basis.
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 we find 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.
[Corollary ratio to the above ruling]
They cannot use the excuse that the transfer of the office to Kalibo was illegal because it was not for them to make such a conclusion. The transfer was
made pursuant to management prerogatives and there is no allegation nor proof that the transfer was made in bad faith or with malice.
The letter submitted by the Office Manager could not be considered substantial evidence because the Office Manager who submitted the letter IS one of
the private respondents, hence it is self-serving and not credible.
The NLRC erred in merely relying on the computations of compensable services submitted by private respondents. There must be competent proof such as
time cards or office records to show that they rendered compensable service during the stated period to entitle them to wages. It has been established that
the petitioner's business office was transferred to Kalibo and all its equipment, 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.

CASE TITLE Social Security System v. SSS Supervisors' Union [G.R. L-31832; October 23, 1982] AUTHOR: De Leon
TOPIC: No work, no pay/ a fair days wage for a fair days labor PONENTE:
CASE LAW/ DOCTRINE: 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, dismissed or suspended.
FACTS:
This case is an offshoot of Case No. 46-IPA (49) certified to the CIR by the President of the Philippines for compulsory arbitration of labor dispute between the
SSS and the PAFLU concerning the interpretation of certain provisions of their Collective Bargaining Agreement. The PAFLU had staged a strike in defiance of
the CIR Order of August 29, 1968 "enjoining the parties, for the sake of industrial peace . . . to maintain the status quo-the Union not to declare any strike and
the Management not to dismiss nor suspend any of its employees nor to declare any lockout." On 3 September 1968, in that same case, the SSS filed an Urgent
Petition to declare the strike illegal.
On 26 September 1968, respondent Union (the SSS Supervisors' Union) filed a Motion for Intervention in the said case averring, that it had not participated in
the strike: that its members wanted to report for work but were prevented by the picketers from entering the work premises; that under the circumstances,
they were entitled to their salaries corresponding to the duration of the strike, which could be deducted from the accrued leave credits of their members.
intervention was allowed by respondent Court (Court of industrial relations), and pending resolution of the claim for salaries, the SSS was directed to pay the
same, chargeable in the meantime to the accrued leave credits of the members pending the determination of the question of the illegality of the strike.
Reconsideration of that Order sought by the SSS was denied on 6 November 1969.
On 24 November 1969, respondent Court issued an Order directing the CIR Examining Division to compute immediately the money equivalent of the salaries
of the members of respondent Union as well as the salaries of those employees who were not members of the striking Union (PAFLU) and to deposit the
amount computed, for further disposition.
SSS- certiorari impossibility of compliance. denied by SC
 Respondent Court, through Judge Joaquin M. Salvador, issued the Order of 3 March 1970, ordering the payment of salaries of the members of respondent
Union during the strike period, but not to be chargeable to accrued leave credits. The reasons given were that this Court had already declared the strike
premature, and that the members of respondent Union had not participated in the strike and had actually manifested their desire to work but could not
cross the heavy picket lines during the height of the strike. MR denied
SSS certiorari to annul the order
ISSUE(S): W/N the union should be paid their salaries
HELD: No
The age-old rule governing the relation between labor and capital or management and employee is that of a 'fair day's wage for a fair day's labor.' 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, dismissed or suspended. It is hardly fair or just for an employee or laborer to fight or litigate against his employer on the employer's time.
In this case, the failure to work on the part of the members of respondent Union was due to circumstances not attributable to themselves. But neither
should the burden of the economic loss suffered by them be shifted to their employer, the SSS, which was equally faultless, considering that the situation
was not a direct consequence of the employer's lockout or unfair labor practice. Under the circumstances, it is but fair that each party must bear his own
loss.
Considering, therefore, that the parties had no hand or participation in the situation they were in, and that the stoppage of the work was not the direct
consequence of the company's lockout or unfair labor practice, 'the economic loss should not be shifted to the employer.' Justice and equity demand that
each must have to bear its own loss, thus placing the parties in equal footing where none should profit from the other there being no fault of either.

03. INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) vs. HON. AUTHOR: DELFIN
LEONARDO A. QUISUMBING NOTES:
G.R. No. 128845. June 1, 2000
TOPIC: EQUAL PAY FOR WORK FOR EQUAL VALUE
PONENTE: KAPUNAN
CASE LAW/ DOCTRINE:
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.
FACTS:
The International School, Inc. (IS) is a domestic educational institution which was 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, Presidential Decree 732,Section 2(c)
authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities.
These personnel will be exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted
for the protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The
School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire:
(1) What is one's domicile?
(2) Where is one's home economy?
(3) To which country does one owe economic allegiance?
(4) Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines?
If the answer to these question point to the Phils then they are 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.
The School explains:
1. A foreign-hire would necessarily have to uproot himself from his home country, leave his family and friends, and take the risk of deviating from a
promising career path-all for the purpose of pursuing his profession as an educator, but this time in a foreign land. The new foreign hire is faced
with economic realities: decent abode for oneself and/or for one's family, effective means of transportation, allowance for the education of one's
children, adequate insurance against illness and death, and of course the primary benefit of a basic salary/retirement compensation.
2. Because of a limited tenure, the foreign hire is confronted again with the same economic reality after his term: that he will eventually and
inevitably return to his home country where he will have to confront the uncertainty of obtaining suitable employment after a long period in a
foreign land.
3. The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting
competent professionals in the field of international education.
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.
On September 7, 1995, petitioner filed a notice of strike. The National Conciliation and Mediation Board failed to bring the parties to a compromise so DOLE
assumed jurisdiction over the dispute.
On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order in favor of the School. The ISAE filed an MR which Secretary
Leonardo A. Quisumbing subsequently denied. Thus this petition.
ISSUE(S): WON the point of hire scheme of the school is discriminatory?
HELD: Yes, the scheme is discriminatory both by Phil and international laws.
The Constitution 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.
While the need of the School to attract foreign-hires is recognized, 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.
The Constitution enjoins the State to "protect the rights of workers and promote their welfare," "to afford labor full protection." The State, therefore, has
the right and duty to regulate the relations between labor and capital.
These relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements included, must
yield to the common good.[28] Should such contracts contain stipulations that are contrary to public policy, courts will not hesitate to strike down these
stipulations.
In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the salary rates of foreign-hires and local hires
to be an invalid classification. There is no reasonable distinction between the services rendered by foreign-hires and local-hires. The practice of the School of
according higher salaries to foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court.

4 G.R. No. 104523. March 8, 1993. AUTHOR: Enriquez

ARMS TAXI AND/OR DOROTHEA TANONGON, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND LUDIVICO C. CULLA, NOTES:
respondents.
[G.R. No. 104526. March 8, 1993.]
LUDIVICO C. CULLA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER, SPOUSES NORBERTO
TANONGON AND DOROTHEA TANONGON and/or ARMS TAXI and AIDA DELA CRUZ, respondents.
TOPIC: Minimum Wages; Rule; Form: Agreement for compensation of services
PONENTE: GRIO-AQUINO
CASE LAW/ DOCTRINE: 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.
FACTS:
The spouses 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 5k plus commission on the daily or monthly gross income of the business in addition to the payment of his 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. They
removed his personal belongings and brought them to his residence.
Thus, 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
480k with legal interest, plus moral, nominal and exemplary damages in the total sum of 300k and actual or compensatory damages and litigation
expenses.
In their defense, the Tanongon spouses denied:
That they were the operators of the Arms Taxi and Lin-lin Taxi.
The existence of an employer-employee relationship between them and Culla.
That Arms Taxi is owned and operated by Aida dela Cruz;
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. She denied that she hired Culla, 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 Arbiters Decision:
Culla was an employee of the Tanongon spouses who operate some units of the Arms Taxi and Lin-lin Taxi under the "kabit" system;
Culla was illegally dismissed from employment and that Aida dela Cruz should be considered an indirect employer of Culla
Denied Culla's claim for 15% commission on the gross earnings of the taxi business as Culla failed "to substantially prove the same by some precise,
concrete and convincing evidence"
The agreement on the commission "should have been in writing, note or memorandum, and subscribed by the parties, to be enforceable"
The parties appealed to the NLRC. Culla was disastified with the monetary awards, because he was not given full backwages nor the 15% commission, incentive
leave pay, damages, and attorney's fees.
On the other hand, the Tanongon spouses assailed the Labor Arbiter's finding that Culla was their employee. They alleged that Culla was an independent contractor
doing mainly the work of a mechanic who was paid on a piece-work basis; that he was free to accept repair jobs from other customers, that he had no regular hours
of work and they had no control over his work except to indicate what part of a taxicab needed to be repaired.
NLRC affirmed the LA. It denied Culla's claim for the 15% commission on the ground 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."

Hence, this separate petitions for certiorari both filed by Culla and Arms Taxi against the NLRC. : 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.
ISSUE(S):
Whether Culla is entitled to the commissions? No. (ISSUE RELEVANT TO THE TOPIC)
Whether there was an employee-employer relationship? Yes.
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 5k monthly salary to Culla 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 different 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, Culla should have proven that he
had received a commission, or part of it, in the past.
 Furthermore, as aptly noted by the NLRC, if it were true that there had been an agreement regarding the payment of a 15% commission to him, Culla would
not have waited almost six (6) years to claim it. Considerable delay in asserting one's right is strongly persuasive of the lack of merit of one's claim.
Employer-employee relationship
Culla was not a project employee. He was a garage supervisor, liaison man, dispatcher, mechanic and driver, a jack of all trades, doing work that was necessary
and desirable in the taxi business of the Tanongon spouses. As such, he was a regular employee entitled to security of tenure. His employment may be
terminated only in accordance with law. Because he was summarily dismissed from his job, he is entitled to reinstatement without loss of seniority and other
privileges and to receive three (3) years backwages. In view, however, of the strained relations between the petitioner and the Tanongon spouses, making his
reinstatement no longer advisable nor feasible, Culla should receive separation pay in addition to three years backwages.
The full backwages claimed by Culla and provided in Section 34 of Republic Act No. 6715, which took effect on March 21, 1989, cannot be granted to him for
his summary dismissal occurred on June 11, 1986, three (3) years before R.A. No. 6715 took effect. The new law may not be applied retroactively.

05 Philippine Fisheries Development Authority vs. NLRC [G.R. No. 94825 September 4, 1992] AUTHOR: Garcia
TOPIC: Minimum Wage - Coverage PONENTE: Guttierez, Jr., J. Basahin niyo din yung mga just in case. Especially
yung about why kupal si Odin.
CASE LAW/ DOCTRINE: Notwithstanding that the petitioner is a government agency, its liabilities, which are joint and solidary with that of the contractor, are
provided in Articles 106, 107 and 109 of the Labor Code. This place the petitioners liabilities under the scope of the NLRC
FACTS:
Philippine Fisheries Development Authority (petitioner) is a government-owned or controlled corporation created by P.D. No. 997.
November 11, 1985 it entered into a contract with the Odin Security Agency (Odin) for security services of its Iloilo Fishing Port Complex.
The compensation schedule includes among others: (a) Minimum Wage (Wage Order No. 5)
October 24, 1987 Odin requested the petitioner to adjust the contract rate in view of the implementation of Wage Order No. 6 which took effect on
November 1, 1984.
Wage Order No. 6
Section 9. In the case of contracts for construction projects and for security, janitorial and similar services, the increases in the minimum wage
and allowance rates of the workers shall be borne by the principal or client of the construction/service contractor and the contracts shall be
deemed amended accordingly, subject to the provisions of Section 3(c) of this Order.
Section 7 par. C of the Security Services Contract calls for an automatic escalation of the rate per guard in case of wage increase.
Request for adjustment of the contract price were reiterated on January 14, 1988 and February 19, 1988 but were ignored by the petitioner.
June 7, 1988 Odin filed with the office of the Sub-Regional Arbitraror a complaint for unpaid amount of readjustment rate under Wage No. 6. Petitioner
filed a Motion to Dismiss.
LA issued an Order dismissing the complaint stating that the petitioner, being a government-owned or controlled corporation would place it under the
scope and jurisdiction of the Civil Service Commission and not within the ambit of the NLRC.
NLRC issued the questioned resolution setting aside the order and entered a decision granting reliefs to the private respondent. MR was denied
ISSUE(S): Whether or not an indirect employer is bound by the rulings of the NLRC
HELD: Yes.
The contract entered into by the petitioner which is merely job contracting makes the petitioner an indirect employer.
The petitioner is a government-owned or controlled corporation with a special charter. This places it under the scope of the civil service. However, the guards
are not employees of the petitioner. The contract of services explicitly states that the security guards are not considered employees of the petitioner. There
being no employer-employee relationship between the petitioner and the security guards, the jurisdiction of the Civil Services Commission may not be invoked
in this case.
Notwithstanding that the petitioner is a government agency, its liabilities, which are joint and solidary with that of the contractor, are provided in Articles 106,
107 and 109 of the Labor Code. This place the petitioners liabilities under the scope of the NLRC. Moreover, Book 3, Title II on Wages specifically provides that
the term employer includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the Government
and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions as well as non-profit private
institutions, or organization.
Just in case tanungin niya:
Who should carry the burden of the wage increases?
In job contracting, the petitioner as principal is jointly and severally liable with the contractor for the payment of unpaid wages. The statutory basis for the
joint and several liability is set forth in Articles 107 and 109 in relation to Article 106 of the Labor Code.
Were the security guards entitled to wage adjustment?
Yes. The Wage Orders are statutory and mandatory and cannot be waived. The petitioner cannot escape liability since the law provides the joint and solidary
liability of the principal and the contractor for the protection of the laborers.
Why is Odin Agency Kupal?
Quite noteworthy is the fact that the Odin entered into the contract when Wage Order No. 6 had already been in force. The rates of the security guards as
stipulated in the contract did not consider the increases in the minimum wage mandated by Wage Order No. 6. 2 years after, the private respondent is now
asking for an adjustment in the contract price pursuant to the wag order provision.
Such action of the Odin is rather disturbing and must not remain unchecked. Odin is equally guilty when it entered into the contract with the petitioner without
considering Wage Order No. 6.
It was Odin which first deprived the security personnel of their rightful wage under Wage Order No. 6. Odin is the employer of the security guards and as the
employer, it is charged with knowledge of labor laws and the adequacy of the compensation that it demands for contractual services is its principal concern
and not any others.
Odin should also be faulted for the unpaid wage differentials of the security guards.
The Court holds the petitioner and Odin jointly and severally liable to the security guards for the unpaid wage differentials under Wage Order No. 6.

06 Antonio Iran (doing business under the name Tones Iran Enterprises) vs. NLRC, et al. [G.R. No.121927, April 22, 1998] AUTHOR: Tristan
TOPIC: Commissions are included in the determination of compliance with minimum wage PONENTE: Romero NOTES:
CASE LAW/ DOCTRINE:
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.
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. Petitioner 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. (P0.10 per case)
Sometime in June 1991, petitioner, 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. A few days thereafter, despite aforesaid order, private respondents stopped reporting for work, prompting petitioner to conclude that the former
had abandoned their employment. Consequently, petitioner terminated their services.
Private respondents (employees) filed complaints against petitioner for illegal dismissal, illegal deduction etc.
LA: 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.
NLRC: Affirmed LA. RATIO: An employee should receive the minimum wage as mandated by law and that the attainment of the minimum wage should not be
dependent on the commission earned by an employee. A commission is an incentive for an employee to work harder for a better production that will benefit
both the employer and the employee. To include the commission in the computation of wage in order to comply with labor standard laws is to negate the
practice that a commission is granted after an employee has already earned the minimum wage or even beyond it.
ISSUE (S): WoN commissions are included in determining compliance with the minimum wage requirement
HELD: YES. Petition is Granted. but petitioner lost with regard to the issue of proper dismissal.
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.
This definition explicitly includes commissions as part of wages. 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.
Likewise, 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. This conclusion is bolstered by Philippine Agricultural Commercial and Industrial Workers Union vs. NLRC, where this
Court 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 commissions be less than their basic minimum for eight hours work. It can, thus, be inferred that were 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 follows then that commissions are
included in determining compliance with minimum wage requirements.
RE: Dismissal:
Said dismissal did not comply with the procedural requirements for dismissing employees.Tthe Labor Code requires that in cases of abandonment of work,
notice should be sent to the workers last known address. If indeed private respondents had abandoned their jobs, it was incumbent upon petitioner to comply
with this requirement. This, petitioner failed to do, entitling respondents to nominal damages in the amount of P5,000.00 each, in accordance with recent
jurisprudence, to vindicate or recognize their right to procedural due process which was violated by petitioner.

7. Millares v NLRC [G.R. No. 122827. March 29, 1999] AUTHOR: LAURETA
TOPIC: Facilities/supplements allowance PONENTE: BELLOSILLO, J. NOTES:
CASE LAW/ DOCTRINE:
When an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary
of Labor and Employment, is included in "wage."
"Customary" is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto
characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering.
FACTS:
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.
116 Petitioners occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice President
To avert further losses, it undertook a retrenchment program and terminated the services of petitioners.
Received separation pay computed at the rate of one (1) month basic pay for every year of service.
Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the
computation thereof they lodged a complaint for separation pay differentials.
The allowances in question pertained to the following -
1. Staff/Manager's Allowance -
PICOP provides free housing facilities, free water and electric consumption to supervisory and managerial employees. Owing however to shortage of such
facilities, it was constrained to grant Staff allowance instead to those who live in rented houses outside but near the vicinity of the mill site. But the allowance
ceases whenever a vacancy occurs in the company's housing facilities. The former grantee is then directed to fill the vacancy.

2. Transportation Allowance -
It grants transportation allowance to key officers and Managers assigned in the mill site who use their own vehicles in the performance of their duties. They are
required to liquidate it by submitting a report with a detailed enumeration of expenses incurred.

3. Bislig Allowance -
The Bislig Allowance is given to Division Managers and corporate officers assigned in Bislig on account of the hostile environment prevailing therein.
Applying Art.,97, par. (f), of the Labor Code which defines if wage," the Executive Labor Arbiter opined that the subject allowances, being customarily furnished by
respondent PICOP and regularly received by petitioners, formed part of the latter's wages.
Santos v. NLRC and Soriano v. NLR- in the computation of separation pay account should be taken not just of the basic salary but also of the regular
allowances that the employee had been receiving, he concluded that the allowances should be included in petitioners' base pay.
PICOP was ordered to pay P4,481,000representing separation pay differentials plus ten per cent (10%) thereof as attorney's fees.
NLRC set aside the assailed decision by decreeing that the allowances did not form part of the salary base used in computing separation pay.
Its ruling was based on the finding that the cases relied upon by the Executive Labor Arbiter were inapplicable since they involved illegal dismissal where
separation pay was granted in lieu of reinstatement which was no longer feasible.
Instead, what it considered in point was Estate of the late Eugene J. Kneebone v. NLRC where the Court held that representation and transportation
allowances were deemed not part of salary and should therefore be excluded in the computation of separation benefits. Relating the present case with
Art. 97, par. (f), of the Labor Code, the NLRC likewise found that petitioners' allowances were contingency-based and thus not included in their salaries. On
26 September 1995 reconsideration was denied.

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.
ISSUE(S): W/N above benefits form part of the salary base used in computing the separation pay? NO
HELD: DISMISSED. The resolution NLRC 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 is AFFIRMED.
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
berendered 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.
We invite attention to the above-underlined clause. Stated differently, when an employer customarily furnishes his employee board, lodging or other
facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." In order to ascertain
whether the subject allowances form part of petitioner's "wages," we divide the discussion on the following - "customarily furnished;" "board, lodging
or other facilities;" and, "fair and reasonable value as determined by the Secretary of Labor."
"Customary" is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso
facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering.
We agree with the observation of the Office of the Solicitor General- that the subject allowances were temporarily, not regularly, received by petitioners
because
o 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 x x x x
o Transportation allowance is in the form of advances for actual transportation expenses subject to liquidation x x x given only to employees
who have personal cars.
o 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
o Petitioners' continuous enjoyment of the disputed allowances was based on contingencies the occurrence of which wrote finis to such
enjoyment.
Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor
Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service
primarily for the benefit of the employer or necessary to the conduct of the employer's business.
The Staff /Manager's allowance may fall under "lodging" but the transportation and Bislig allowances are not embraced in "facilities" on the main
consideration that they are granted as well as the Staff/Manager's allowance for respondent PICOP's benefit and convenience, i.e., to insure that
petitioners render quality performance.
In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose.
That the assailed allowances were for the benefit and convenience of respondent company was supported by the circumstance that they were not
subjected to withholding tax.

Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and
transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance
was given in consideration of being assigned to the hostile environment then prevailing in Bislig.
The inevitable conclusion is that, as reached by the NLRC, subject allowances did not form part of petitioners' wages.

8.) SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners, AUTHOR: PELAYO
vs. NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ, NOTES: Showing na ata yung moana.
EDGARDO ZUIGA and DANILO CAETE, Respondents.
PONENTE: MENDOZA, J.:
TOPIC: Facilities and supplements/allowances
CASE LAW/ DOCTRINE: Moreover, before the value of facilities can be deducted from the employees wages, the following requisites must all be attendant: 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; and finally, facilities must be charged at reasonable value. Mere availment is not sufficient to allow deductions from employees wages.
FACTS:
Around 1996, and January 1997, private respondents Lopez, Caete & Zuiga (3) were hired by petitioner Lagon as apprentice or trainee cable/lineman.
The three 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.
FIRST WORK March 15, 1997 until December 1997 the 3 were engaged as project employees by the petitioners in their Islacom project in Bohol after
their training. Upon the completion of their project, their employment was also terminated. Private respondents received the amount of P145.00, the
 minimum prescribed daily wage for Region VII. In July 1997, the amount of P145 was increased to P150.00 by the Regional Wage Board (RWB) and in
October of the same year, the latter was increased to P155.00.
SECOND WORK March 1998, Zuiga and Caete were engaged again by Lagon as project employees for its PLDT Antipolo, Rizal project, which ended
sometime in (sic) the late September 1998. As a consequence, Zuiga and Caetes employment was terminated. For this project, Zuiga and Caete
received only the wage of P145.00 daily. The minimum prescribed wage for Rizal at that time was P160.00.
THIRD WORK November 1998, private respondents re-applied in the Racitelcom project of Lagon in Bulacan. Zuiga and Caete were re-employed.
Lopez was also hired for the said specific project. For this, private respondents received the wage of P145.00. Again, after the completion of their project
in March 1999, private respondents went home to Cebu City.
FOURTH WORK May 21, 1999, private respondents worked with Lagons project in Camarin, Caloocan City with Furukawa Corporation as the general
contractor. Their contract would expire on February 28, 2000, the period of completion of the project. From May 21, 1997-December 1999, private
respondents received the wage of P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In January to February 28, the three
received the wage of P165.00. The existing rate at that time was P213.00.
For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project was not completed on the scheduled date
of completion. Facedwith economic problems, Lagon was constrained to cut down the overtime work of its workers, including private respondents. Thus,
when requested by private respondents on February 28, 2000 to work overtime, Lagon 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
The case was brought before the Labor Arbiter, on a complaint for illegal dismissal, non-payment of wages, non-payment of 13th month pay, among
other things, against the employer.
The employer reasoned that the employees were project employees, since they were employed for a specific undertaking, and thus were not regular
employees entitled to minimum wage. Further, the employer reasoned that the employees were actually paid above the minimum wage, since the
allowances for snacks, lodging house, electricity, water, and transportation should be included in the wages.
LA private respondents were regular employees because they were repeatedly hired by petitioners and they performed activities which were usual,
necessary and desirable in the business or trade of the employer. With regard to the underpayment of wages, the LA found that private respondents
were underpaid. It 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. The LA, however, found that petitioners were not liable for illegal dismissal. The LA
viewed private respondent's act of going home as an act of indifference when petitioners decided to prohibit overtime work.
NLRC and CA affirmed and ruled against the employer.

ISSUE(S):
1. WON the employees were entitled to minimum wage
2. WON the respondents were given wages higher than the prescribed minimum.
3. WON the free board and lodging, electricity, water, and food enjoyed by the employees should be included in the computation of the wages
HELD: The petition is denied.
1. Preliminarily, the Court noted that the case involves factual disputes decided by the trial courts, whose decisions the Court cannot disturb. Settled is the
fact that decisions by labor arbiters, due to their expertise, cannot be disturbed and are accorded respect and finality when supported by substantial
evidence.
Thus it cannot decide on the issue of whether the employees are project or regular employees, and must affirm the ruling that they are regular employees.
In any case, project employees are entitled to the minimum wage, since they are not among the exclusions enumerated in the Labor Code Implementing
Rules.
2. 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. Thus, petitioners utterly failed to discharge the onus probandi.
Private respondents, on the other hand, are entitled to be paid the minimum wage, whether they are regular or non-regular employees.
Section 3, Rule VII of the Rules to Implement the Labor Code specifically enumerates those who are not covered by the payment of minimum wage.
Project employees are not among them.
3. On whether the value of the facilities should be included in the computation of the "wages" received by private respondents, 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 that 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.
A four-pronged test must be completed: 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; and finally, facilities must be charged at reasonable value. Mere
availment is not sufficient to allow deductions from employees wages.
These requirements, however, have not been met in this case. SLL 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 Court makes a distinction between "facilities" and "supplements." 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.
"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. (Atok-Big Wedge Assn. vs. Atok-Big Wedge Co)

WHEREFORE, the challenged decision of the NLRC dated May 31, 1980 is REVERSED and SET ASIDE. The POEA decision dated July 24, 1989 is REINSTATED, with costs
against the private respondents. SO ORDERED.

09 Our Haus Realty Development Corporation v. A. Parian, et al [G.R. No. 204641; 6 August 2014] AUTHOR: Pineda
TOPIC: facilities and supplies allowance PONENTE: Brion, J. NOTES:
CASE LAW/ DOCTRINE:
Under the purpose test, if a benefit granted to the employee is for the employees own benefit, it will be considered as a facility (chargeable/deductible),
not as a supplement. The distinction between a facility and supplement lies not so much in the kind of benefit, but for the purpose it is given.
o Facilities are items of expense necessary for the laborers and his familys existence and subsistence. They form part of the wage and are
deductible therefrom.
o Supplements constitute extra remuneration or benefits given to laborers over and above their ordinary earning, as they are for the employers
advantage.
FACTS:
Respondents are laborers working for Our Haus construction business
Our Haus provides them with housing and meals
Our Haus filed a complaint for underpayment of wages, as their take home pay was below what was prescribed in the wage orders
o Our Haus trying to justify underpayment by claiming the value of board and lodging should be considered as part of the employees
wages. P290 was withheld from the wages. When added to the takehome pay, such amount meets the minimum wage.
o Respondents: Do not include value of board and lodging in the determination of compliance with minimum wage requirement. Also,
there was no agreement between Our Haus and employees as regards facilities allowance (See discussion below)
Rulings before SC:
o LA: in favor of Our Haus
o NLRC, CA, SC (eventually): Our Haus was not authorized to charge value of board and lodging to wages of Respondents.

ISSUE(S): W/N Our Haus can unilaterally withhold the value of board and lodging from the minimum amount of wages due to Respondents
HELD: NO. Order Our Haus to pay underpayment.
Deduction and charging are two sides of the same coin. They are interchangeable terms. When you deduct amount for expenses from wages, it is the
same as charging an expense to the wages.
Requirements for Deduction or Charging:
o Proof must be shown that such facilities are customarily furnished by the trade: company policy and industry-wide practice
In construction, housing of workers is not industry practice
Our Haus has no company policy on housing
o Voluntary acceptance by employee of deductions, as it diminishes take-home pay
No agreement by employees as regards deducting expenses from their wages
o Facility must be charged at a fair and reasonable value, supported by relevant documents
Our Haus failed to support amount with relevant documents.
As regards the first requirement above (Proof must be shown that such facilities are customarily furnished by the trade: company policy and industry-
wide practice), it must further pass the purpose test. Under the purpose test, if a benefit granted to the employee is for the employees own benefit, it
will be considered as a facility (chargeable/deductible), not as a supplement. The distinction between a facility and supplement lies not so much in the
kind of benefit, but for the purpose it is given.
o Facilities are items of expense necessary for the laborers and his familys existence and subsistence. They form part of the wage and are
deductible therefrom.
o Supplements constitute extra remuneration or benefits given to laborers over and above their ordinary earning, as they are for the employers
advantage.

10 CASE TITLE: Songco v. NLRC [G.R. No. 50999-51000. March 23, 1990.] AUTHOR: Mendoza
TOPIC: Commission PONENTE: Medialdea NOTES: Sorry mahaba ratio important kasi
Petitioners- Jose Songco, Romeo Cipres, Amanciono Manuel
CASE LAW/ DOCTRINE:
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 Purpose of separation pay is to alleviate the difficulties which confront a dismissed employee thrown to the streets to face the harsh necessities of life.
Article 97(f) by itself is explicit that commission is included in the definition of the term wage.
FACTS:
Private respondent F.E. Zuellig Inc., (Zuellig) filed with the DOLE Regional Office No. 4 an application seeking clearance to terminate the services of petitioners
allegedly on the ground of retrenchment due to financial losses. At first the petitioners opposed the application alleging that the company is not suffering
from any losses and that they are being dismissed because of their membership in the union.
However, at the last hearing of the case, 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
P400.00. In addition, they received commissions for every sale they made.
According to Article XIV- Retirement Gratuity of their CBA: Any employee, who is separated from employment due to old age, sickness, death or permanent
lay-off not due to the fault of said employee shall receive from the company a retirement gratuity in an amount equivalent to 1 months salary per year of
service.
On the other hand, Article 284 of the Labor Code states that: In case of termination due to the installation of labor-saving devices or redundancy, the
separation pay shall be equivalent to 1 month pay or to at least 1 month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and other similar causes, the separation pay shall be equivalent to 1 month pay or at least 1/2 month pay for every year of service, whichever is higher.
The LA rendered a decision that the petitioners separation pay should be computed similar to what was stated in the CBA or equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for every year of service that they have worked.
The NLRC dismissed the petitioners appeal. Hence, this petition for certiorari in the SC.
ISSUE(S): WON earned sales, commissions and allowances should be included in the monthly salary of petitioners for the purpose of computation of their
separation pay.
HELD: Yes. Earned sales, commissions and allowances should be included in computing their separation pay. Petition granted.
1.Why earned sales, commissions and allowances should be included in computing the separation pay
Inasmuch 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.
Further, according to the OSG, 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 remunerations for
 services rendered which contributed to the increase of income of Zuellig.
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; there is only room for application.
And even if there was an ambiguity on the meaning of salary in the CBA and the Labor Code, the word salary means a recompense or consideration
made to a person for his pains or industry in another mans business. Whether it be derived from salarium or more fancifully from sal the pay of the
Roman soldier, it carries with it the fundamental idea of compensation for services rendered. Indeed, there is eminent authority for holding that the
words wages and salary are in essence synonymous.
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 petitioners wage or salary. The Court took 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 relationship exists.
2. The Purpose of separation pay is to alleviate the difficulties which confront a dismissed employee thrown to the streets to face the harsh necessities of life.
If the Court adopted the opposite view that commissions do not form part of wage or salary, then, in effect, it will be saying that this kind of salesmen
do not receive any salary and therefore, not entitled to separation pay in the event of discharge from employment. Will this not be absurd? This narrow
interpretation is not in accord with the liberal spirit of our labor laws and considering the purpose of separation pay which is, to alleviate the difficulties
which confront a dismissed employee thrown to the streets to face the harsh necessities of life.
Decision as regards Cipres (one of the petitioners)
Acting on the verified Notice of Voluntary Abandonment and Withdrawal of Petition 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.

11 BOIE-TAKEDA CHEMICALS, INC. V HONORABLE DIONISIO DE LA SERNA [G.R. No. 92174 December 10, 1993] AUTHOR: PAGCALIWAGAN
TOPIC: Cash Wage/Commission PONENTE: Narvasa, C.J. NOTES: 2 consolidated cases
CASE LAW/ DOCTRINE:
In remunerative schemes consisting 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 or other related transactions. They
are, as such, additional pay, which this Court has made clear do not form part of the "basic salary."
FACTS:
G.R. No. 92174
May 2, 1989 A routine inspection was conducted in the premises of petition Boie-Takeda Chemicals, Inc. (BOIE) by Labor and Development Officer
Reynaldo Ramos under an Inspection Authority.
Found that BOIE had not been including the commissions earned by its medical representatives in the computation of their 13th month pay
Ramos served a Notice of Inspection Results on BOIE through its President, Mr. Benito Araneta
Required BOIE within 10 days from notice to effect restitution or correction of underpayment of 13th month pay for the years 1986, 1987 and
1988 in the amount of P558,810.89
BOIE wrote the Labor Department contesting the Notice of Inspection Results, stating that:
the commission paid to our medical representatives are not to be included in the computation of the 13th month pay since the law and its
implementing rules speak of REGULAR or BASIC salary and therefore exclude all other remunerations which are not part of the REGULAR salary.
if no sales is made under the effort of a particular representative, there is no commission during the period when no sale was transacted, so
that the commissions are not and cannot be legally defined as regular in nature.
Regional Director Luna Piezas directed BOIE to appear before his office
Despite due notice, no one appeared for BOIE, thus matter had to be resolved on the basis of evidence at hand
Order was issued directing BOIE to pay its medical representatives and its managers the underpaid 13th month pay for the years 1986, 1987,
1988 within 10 days from receipt of order
Acting Labor Secretary Dionisio de la Serna: Affirmed the order with modification that the sales commissions earned by BOIEs medical representatives before
August 13, 1989 (effectivity date of Memorandum Order 28 and its Implementing Guidelines) shall be excluded in the computation of their 13th month pay

G.R. No. 102552

September 7, 1989 Routine inspection was conducted in Philippine Fuji Xerox Corporation (FUJI) pursuant to a Routine Inspection Authority
Found underpayment of 13th month pay of 62 employees for the years 1986, 1987, 1988
FUJI was requested to effect restitution of violation within 5 days from notice
No action was taken by FUJI
Regional Director Luna Piezas issued an order directing FUJI to pay the underpaid 13th month pay
Appealed to the Office of the Secretary of Labor
Undersecretary Cresenciano Trajano: Denied appeal for lack of merit

Petitioners Contentions:
Under P.D. 851, the 13th month pay is based solely on basic salary.
Remunerations which do not form part of the basic or regular salary of an employee, such as commissions, should not be considered in the
computation of the 13th month pay.
Revised Guidelines on the Implementation of the 13th Month Pay Law issued by then Secretary Drilon providing for the inclusion of commissions in the
13th month pay, were issued in excess of the statutory authority conferred by P.D. 851.
Assuming that Secretary Drilon did not exceed the statutory authority conferred by P.D. 851, still the Revised Guidelines are null and void as they
violate the equal protection of the law clause.

Respondents Contentions:
P.D. No. 851, otherwise known as the 13th Month Pay Law has already been amended by Memorandum Order No. 28 issued by President Corazon C.
Aquino on August 13, 1986 so that commissions are now imputed into the computation of the 13th Month Pay.
Revised Guidelines issued by then Labor Secretary Drilon merely clarified a gray area occasioned by the silence of the law as to the nature of
commissions; and worked no violation of the equal protection clause of the Constitution, said Guidelines being based on reasonable classification.
Songco vs. National Labor Relations Commission Court declared that Article 97(f) of the Labor Code is explicit that commission is included in the
definition of the term "wage"
ISSUE(S): WON commissions should be included in the computation of 13th month pay.
HELD: NO.
 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 consisting 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 or other related transactions.
They are, as such, additional pay, which this Court has made clear do not form part of the "basic salary."
Respondents would do well to distinguish this case from Songco vs. National Labor Relations Commission, supra, upon which they rely so heavily. What was
involved therein was the term "salary" without the restrictive adjective "basic". Thus, in said case, we construed the term in its generic sense to refer to all
types of "direct remunerations for services rendered," including commissions. In the same case, we also took 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 relationship exists," which
statement is quite significant in that it speaks of a "basic salary" apart and distinct from "commissions" and "allowances". Instead of supporting respondents'
stand, it would appear that Songco itself recognizes that commissions are not part of "basic salary."
In 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.

PHILIPPINE DUPLICATORS, INC. v. NLRC, PHILIPPINE DUPLICATORS EMPLOYEES UNION-TUPAS [G.R. 110068 Feb 15, 1995] AUTHOR: RAMOS
TOPIC: Minimum wages and wage-fixing machinery PONENTE: Feliciano NOTES:
CASE LAW/ DOCTRINE: sales commission and should be included in the term "basic salary" for the computation of their 13th month pay
FACTS:
Previously (1993), the Court rendered a decision through its 3rd division directing Phil. Duplicators to pay 13th month pay to its employees computed on the
basis of their fixed wages plus sales commissions.
Phil. Duplicators now contend that the decision in Boie-Takeda Chemicals, Inc. vs. Hon. Dionisio de la Serna should be used as precedent for this case under
the doctrine of stare decisis.
o Via (a) a Motion for Leave to Admit 2nd Motion for Reconsideration and (b) a 2nd MR
o Petitioner: decision in the Duplicators case should now be considered as abandoned or reversed by the Boie-Takeda decision, considering that the
latter went "directly opposite and contrary to" the conclusion reached in the former
Boie-Takeda case
o NOTE: the similar issue in this case and in Boie-Takeda is the commission of the employees in form of bonuses and WON they should be
deemed part of the basic salary in the computation of the 13th month pay.
o nullified the Sec 5(a), 2nd par. of the Revised Guidelines on the implementation of the 13th month pay law issued by Secretary of Labor Drilon
ISSUE(S): WON the doctrine in Boie-Takeda should be applied in this case [NO]
HELD: Motions for (a) Leave to File a Second Motion for Reconsideration and the (b) aforesaid Second Reconsideration are DENIED for lack of merit. No further
pleadings will be entertained
Boie-Takeda was promulgated a month after SC (Third Division) rendered the decision in the instant case
o Also, the petitioner's (first) MR of the decision (10 Nov 1993) had already been DENIED with finality, on 15 Dec 1993 [before the Boie-Takeda
decision became final on 5 Jan 1994]
Petitioner Duplicators did not put in issue the validity of the Revised Guidelines on the implementation of the 13th Month Pay Law and in fact relied upon
these Guidelines and asserted their validity in opposing the decision rendered by public respondent NLRC
Decision in Boie-Takeda is NOT "directly opposite or contrary to" the decision in the present

FACTS OF PHIL. DUPLICATORS FACTS OF BOIE-TAKEDA

Employees were salesmen
Make or close a sale of duplicating machines
Phil. Duplicators pays its salesmen a small fixed or guaranteed wage
Sales commissions received for every duplicating machine sold
constituted part of the basic compensation or remuneration of the
salesmen of Philippine Duplicators for doing their job
Portion of the salary structure representing commissions simply
comprised an automatic increment to the monetary value initially
assigned to each unit of work rendered by a salesman
The greater part of the salesmen's wages or salaries being composed of
the sales or incentive commissions (sales commissions) earned on
actual sales closed by them (70-85% of their wage)
Employees were medical representatives (NOT salesmen they do not
effect sales at all)
Engaged in the promotion of pharmaceutical products or medical
devices manufactured by their employer.
They commonly leave medical samples with each physician visited but
those samples are not sold" to the physician and the physician is as a
matter of professional ethics, prohibited from selling such samples to
their patients
They had a guaranteed wage
Commissions paid to or received by medical representatives were
productivity bonuses

If an employer cannot be compelled to pay a productivity bonus to his employees, it should follow that such productivity bonus, when given, should not be
deemed to fall within the "basic salary" of employees when the time comes to compute their 13th month pay.
Although both productivity bonus and sales commission have an incentive effect, it is still important to distinguish one from the other.

SALES COMMISSIONS PRODUCTIVITY BONUSES

intimately related to or directly proportional to the extent or energy of an Generally tied to the productivity or profit generation of the employer
employee's endeavors corporation.
Paid upon the specific results achieved by a salesman-employee. Not directly dependent on the extent an individual employee exerts himself
 Percentage of the sales closed by a salesman and operates as an integral part Is an extra - no specific additional services are rendered by any particular
of such salesman's basic pay employee and hence not legally demandable, absent a contractual
undertaking to pay it.

The case of Phil. Duplicators is that of a sales commission and should thus be included in the "basic salary" for the computation of their 13th month pay.
o Sales commissions were an integral part of the basic salary structure of Philippine Duplicators' employees salesmen.
o These commissions are NOT overtime payments, nor profit-sharing payments nor any other fringe benefit.
o Thus, the salesmen's commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, were properly
included in the term "basic salary" for purposes of computing their 13th month pay.
Supplementary Rules and Regulations Implementing P.D. No. 851 (later issued by former Labor Minister Ople) sought to clarify the scope of items excluded
in the computation of the 13th month pay: Sec. 4. Overtime pay, earnings and other remunerations which are NOT part of the basic salary shall not be
included in the computation of the 13th month pay.
o 3rd item excluded from "basic salary" is cast in open ended and circular terms (other remunerations which are not part of the basic salary)
o However, what particular types of earnings and remuneration are or are not properly included or integrated in the basic salary are questions to
be resolved on a case to case basis, in the light of the specific and detailed facts of each case.
o In principle, where these earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing payments, they are
properly EXCLUDED in computing the 13th month pay.
o Sales commissions (an integral portion of the basic salary structure of an employee), shall be included in determining his 13th month pay.
Boie-Takedas nullification of the Sec 5(a), 2nd par. of the Revised Guidelines on the implementation of the 13th month pay law is properly understood as
holding that that 2nd par. provides NO legal basis for including within the term "commission" there used additional payments to employees which are, as a
matter of fact, in the nature of profit-sharing payments or bonuses.
o If and to the extent that such second paragraph is so interpreted and applied, it must be regarded as invalid as having been issued in excess of the
statutory authority of the Secretary of Labor.
o That same second paragraph however, correctly recognizes that commissions, like those paid in Duplicators, may constitute part of the basic
salary structure of salesmen and hence should be included in determining the 13th month pay (to this extent, 2nd par. remains VALID)

CASE TITLE: Plastic Town AUTHOR: REYES

Corporation V. NLRC and NOTES:
Nagkakaisang Lakas ng Section 2. It is the intention of both the COMPANY and the UNION, that the grant of gratuity pay by the COMPANY herein set
Manggagawa. forth is to reward employees and laborers, who have rendered satisfactory and efficient service with the COMPANY. THUS, in
[G.R. No. Date] case of voluntary resignation, which is not covered by Section 1 above, the COMPANY nevertheless agrees to grant a gratuity pay
TOPIC: Gratuity/Salary to the resigning employee or laborer as follows:
Orders, Differences 1. Two to Five years of service : 1 month salary
PONENTE: Guiterrez 2. Six (6) to Ten (10) yrs. of : Two and One-half (21/2)service months salary
3 Eleven (ll) to Fifteen yrs. of service : 4 months salary
4 Sixteen (16) to twenty yrs. of : 5 months
5 Twenty one yrs. of service and above : Twelve (12) months salary.
FACTS:
On Sept 1984, respondent Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed a complaint against petitioner Plastic Town Center Corporation with:
Violation of CBA by crediting the P1.00 per day increase (pursuant to Wage Order 5) in gratuity pay to resigning employees instead of 30 days
equivalent to one month
Unfair labor practice by giving only 26 days pay instead of 30 days equivalent to one month as gratuity pay to resigning employees.
In the CBA, it was provided that: Company agreed to grant regular workers who rendered at least one year of continuous service of P1.00 per worked day.
That the Company agreed to grant gratuity pay to a resigning employee or laborer amounting to, among others, one month salary for those who rendered
two to five years of service.
Plastic Town Center Corporation maintained that under the principle of fair days wage for fair days labor, gratuity pay should be computed on the basis of
26 days for one month salary considering that the employees are paid on a daily basis.
Labor Arbiter Ruben Alberto: Ruled in favor of PTC holding that as a daily wage earner, there would be no instance that the worker would work for 30 days a
month since work does not include Sundays or rest days.
NLRC: Reversed the decision of Labor Arbiter and held that PTC should grant gratuity pay equivalent of thirty days salary.
PTC filed a motion for reconsideration but it was denied.
PTC filed a petition with the SC
ISSUE(S): Whether the PTCs contention that the gratuity pay should be computed on the basis of 26 days for one month salary instead of 30 days is valid
HELD: No, PTCs contention does not hold merit in this case.
Gratuity pay is not intended to pay a worker for actual services rendered. It is a money benefit given to the workers whose purpose is to reward employees
or laborers who have rendered satisfactory and efficient service to the company.
While it may be enforced once it forms part of a contractual undertaking, the grant of such benefit is not mandatory so as to be considered a part of labor
standard law unlike salary, which are covered in Labor Code.
Nowhere has it ever been stated that gratuity pay should be based on actual number of days worked over the period of years forming its basis. Court saw
no point in counting the number of days worked over a ten-year period to determine the meaning of two and one- half months gratuity.
Moreover any doubts or ambiguity in the contract between management and the union members should be resolved in favor of the laborer. When months
are not designated by name, a month is understood to be 30 days.
As such, NLRC did not act with grave abuse of discretion when it decided that the gratuity pay should be equivalent to 30 days.

14. Davao Fruits Corporation v. Associated Labor Unions (ALU) in behalf of all the rank-and-file workers/employees of DAVAO FRUITS AUTHOR: S A Y O
CORPORATION and NATIONAL LABOR RELATIONS COMMISSION [G.R. No. 85073 August 24, 1993] NOTES:
TOPIC: Effect on Benefits PONENTE: Quiason
CASE LAW/ DOCTRINE: Payment for sick, vacation and maternity leaves, premium for work done on rest days and special holidays as well as pay for regular holidays
are likewise excluded in computing the basic salary for the purpose of determining the thirteenth month pay.In other words, whatever compensation an employee
receives for an eight-hour work daily or the daily wage rate is the basic salary. Any compensation or remuneration other than the daily wage rate is excluded. It
follows therefore, that payments for sick, vacation and maternity leaves, premium for work done on rest days and special holidays, as well as pay for regular holidays,
are likewise excluded in computing the basic salary for the purpose of determining the thirteenth month pay.
FACTS:
This is a petition for certiorari to set aside the resolution of the NLRC dismissing for lack of merit petitioner's appeal from the decision of the Labor Arbiter.
December 28, 1982- Respondent Associated Labor Unions (ALU), for and in behalf of all the rank-and-file workers and employees of petitioner, filed a before
the Ministry of Labor and Employment against petitioner, for "Payment of the Thirteenth-Month Pay Differentials."
Respondent ALU sought to recover from petitioner the thirteenth month pay differential for 1982 of its rank-and-file employees, equivalent to their sick,
vacation and maternity leaves, premium for work done on rest days and special holidays, and pay for regular holidays which petitioner, allegedly in disregard
of company practice since 1975, excluded from the computation of the thirteenth month pay for 1982.
In its answer, petitioner claimed that it erroneously included items subject of the complaint in the computation of the thirteenth month pay for the years
prior to 1982, upon a doubtful and difficult question of law.
According to petitioner, this mistake was discovered only in 1981 after the promulgation of the Supreme Court decision in the case of San Miguel
Corporation v. Inciong (103 SCRA 139).
LA: in favor of ALU. (Petitioner thus appealed)
NLRC: affirmed the said decision accordingly dismissed the appeal for lack of merit.
Petitioner elevated the matter to this Court in a petition for review under Rule 45 of the Revised Rules of Court.
ISSUE(S): WON, in the computation of the thirteenth month pay under PD 851, payments of sick, vacation and maternity leaves, premiums for work done on rest
days, etc. may be excluded despite long-standing company practice- NO
Presidential Decree No. 851, promulgated on December 16, 1975, mandates all employers to pay their employees a thirteenth month pay. How this pay shall be
computed is set forth in Section 2 of the "Rules and Regulations Implementing Presidential Decree No. 851," thus:

SECTION 2. . . .
(a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year.
(b) "Basic Salary" shall include all renumerations or earnings paid by an employer to an employee for services rendered but may not include cost of living allowances
granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not
considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.

The Department of Labor and Employment issued on January 16, 1976 the "Supplementary Rules and Regulations Implementing P.D. No. 851" which in paragraph
4 thereof further defines the term "basic salary," thus:
4. Overtime pay, earnings and other renumerations which are not part of the basic salary shall not be included in the computation of the 13th month pay.

Clearly, the term basic salary includes all remunerations or earnings paid by the employer to the employee, but excludes cost-of-living allowances, profit-sharing
payments, and all allowances and monetary benefits which have not been considered as part of the basic salary of the employee as of December 16, 1975. The
exclusion of cost-of-living allowances and profit sharing payments shows the intention to strip basic salary of payments which are otherwise considered as fringe
benefits. This intention is emphasized in the catch all phrase all allowances and monetary benefits which are not considered or integrated as part of the basic
salary. Basic salary, therefore does not merely exclude the benefits expressly mentioned but all payments which may be in the form of fringe benefits or
allowances (San Miguel Corporation v. Inciong, supra, at 143-144).

The basis of the computation has already ripened into a company practice

A company practice favorable to the employees had indeed been established and the payments made pursuant thereto, ripened into benefits enjoyed by them.
And any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer, by virtue of
Section 10 of the Rules and Regulations Implementing P.D. No. 851, and Article 100 of the Labor Code of the Philippines, which prohibit the diminution or
elimination by the employer of the employees existing benefits.

15 Nasipit Lumber Company, Inc. and Philippine Wallboard Corporation vs. National Wages and Productivity Commission (NWPC), Western AUTHOR: SOLIS
Agusan Workers Union (WAWU-ULGWP Local 101), Tungao Lumber Workers Union (TULWU-ULGWP Local 102) and United Workers Union NOTES:
(UWU-ULGWP Local 103) [G.R. No. 113097. April 27, 1998]
TOPIC: Minimum Wages and Wage Fixing Machinery PONENTE: Panganiban, J.
CASE LAW/ DOCTRINE: The law grants the NWPC, not the Regional Wage Board, the power to prescribe the rules and guideline for the determination of minimum
wage and productivity measures. While the Regional Wage Board has the power to issue wage orders, such wage orders are subject to the guidelines prescribed by
the NWPC. Since the Regional Wage Boards Guideline No. 3 was not approved by the NWPC and is contrary to NWPCs guidelines, the said guideline issued by the
Regional Wage Board is inoperative and cannot be used by the latter in deciding on the applications for exemption.
FACTS:
20 Oct 1990Region X Tripartite Wages and Productivity Board issued Wage Order No. RX-01 which provides as follows:
Section 1. Upon the effectivity of this Wage Order, the increase in minimum wage rates applicable to workers and employees in the private sector in
Northern Mindanao (Region X) shall be as follows:
(a) The provinces of Agusan del Norte, Bukidnon, Misamis Oriental, and the Cities of Butuan, Gingoog, and Cagayan de Oro---P13.00/day
(b) The provinces of Agusan del Sur, Surigao del Norte and Misamis Occidental, and the Cities of Surigao Oroquieta, Ozamis and Tangub---P9.00/day
(c) The province of Camiguin P9.00/day
Subsequently, a supplementary Wage Order No. RX-01-A was issued by the Board on November 6, 1990 which provides as follows:
Section 1. Upon the effectivity of the original Wage Order RX-01, all workers and employees in the private sector in Region X already receiving wages
above the statutory minimum wage rates up to one hundred and twenty pesos (P120.00) per day shall also receive an increase of P13, P11, P9 per day,
as provided for under Wage Order No. RX-01;
Applicants-appellees Nasipit Lumber Company, Inc. (Nasipit Lumber) and Philippine Wallboard Corporation (PWO) are engaged in logging and integrated
wood processing industry but are distressed due to conditions beyond their control. It applied for an exemption that such Wage Orders be applied to them.
Citing liquidity problems and business decline in the wood-processing industry, the RTWPB the applicants joint application for exemption.
Under the Regional Wage Boards guideline, a corporation is a distressed establishment if it is engaged in an industry that is distressed due to conditions
beyond its control.
Western Agusan Workers Union, Tungao Lumber Workers Union and United Workers Union jointly opposed the application for exemption on the ground
that said companies are not distressed establishments since their capitalization has not been impaired by 25%.
Dissatisfied with the RTWPBs Decision, the Unions lodged an appeal with the NWPC, which affirmed ALCOs application but reversed the applications of
herein petitioners.
 Clearly, it is the Commission that is empowered to set the criteria on exemption from compliance with wage orders. While the Boards may issue
supplementary guidelines on exemption, the same should first pass the Commission for the purpose of determining its conformity to the latters general
policies and guidelines relative thereto.
The applicable guidelines on exemption therefore is that one issued by the Commission, the pertinent portion of which reads:
Sec. 3. CRITERIA FOR EXEMPTION
2. Distressed Employers/Establishment:
a. In the case of a stock corporation, partnership, single proprietorship or non-stock, non-profit organization engaged in business
activity or charging fees for its services.
When accumulated losses at end of the period under review have impaired by at least 25 percent the:
Paid-up-capital at the end of the last full accounting period preceding the application, in the case of corporations;
Total invested capital at the beginning of the last full accounting period preceding the application, in the case of partnership
and single proprietorships (Emphasis supplied)
A perusal of the financial documents on record shows that for the year 1990, which is the last full accounting period preceding the applications for
exemption, appellees NALCO, ALCO, and PWC incurred a capital impairment of 1.89%, 28.72%, and 5.03%, respectively. Accordingly, based on the criteria
set forth above in the NWPC Guideline on Exemption, only the application for the exemption of ALCO should be approved in view of its capital impairment
of 28.72%
Petitioners MR was denied. Hence, this recourse.
ISSUE(S): Should the application be granted pursuant to the Regional Wage Boards guidelines?
HELD: NO, the applications should be denied.
The law grants the NWPC, not the Regional Wage Board, the power to prescribe the rules and guideline for the determination of minimum wage and
productivity measures. While the Regional Wage Board has the power to issue wage orders, such wage orders are subject to the guidelines prescribed by the
NWPC. Since the Regional Wage Boards Guideline No. 3 was not approved by the NWPC and is contrary to NWPCs guidelines, the said guideline issued by
the Regional Wage Board is inoperative and cannot be used by the latter in deciding on the applications for exemption.
The Court wishes to stress that the law does not automatically grant exemption to all establishments belonging to an industry which is deemed "distressed."
Hence, RX-O1, Section 3 (4), must not be construed to automatically include all establishments belonging to a distressed industry. The fact that the wording
of a wage order may contain some ambiguity would not help petitioners. Basic is the rule in statutory construction that all doubts in the implementation and
the interpretation of the provisions of the Labor Code, as well as its implementing rules and regulations, must be resolved in favor of labor. By exempting all
establishments belonging to a distressed industry, Guideline No. 3 surreptitiously and irregularly takes away the mandated increase in the minimum wage
awarded to the affected workers. In so acting, the RTWPB proceeded against the declared policy of the State, enshrined in the enabling act, "to rationalize
the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and
their families; to guarantee the rights of labor to its just share in the fruits of production; . . ." Thus, Guideline No. 3 is void not only because it lacks NWPC
approval and contains an arbitrarily inserted exemption, but also because it is inconsistent with the avowed State policies protective of labor.

16. Employers Confederation of the Philippines vs National Wages and AUTHOR: The Talio
Productivity Commission and Regional Tripartite Wages and Productivity Board- NOTES:
NCR, and Trade Union Congress of the Philippines ECOP Employers Confederation of the Phiippines
[G.R. No. 96169; September 24, 1991] NWPC - National Wages and Productivity Commission and Regional Tripartite
TOPIC: 18.2.4.1.2 Salary Ceiling Method Wages and Productivity Board-NCR,
PONENTE: Sarmiento, J. TUCP - Trade Union Congress of the Philippines
PMAP Personal Management Association of the Philippines
CASE LAW/ DOCTRINE:
It is the Court's thinking, reached after the Court's own study of the Act, that the Act is meant to rationalize wages, that is, by having permanent boards to
decide wages rather than leaving wage determination to Congress year after year and law after law.
"Minimum wages" underlies the effort of the State, as RA 6727 expresses it, "to promote productivity-improvement and gain-sharing measures to ensure a
decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance
employment generation in the countryside through industry dispersal; and to allow business and industry reasonable returns on investment, expansion and
growth," and as the Constitution expresses it, to affirm "labor as a primary social economic force."
FACTS:
Oct. 15, 1990 - the Regional Board of the NCR issued Wage Order No. NCR-01, increasing the minimum wage by Php 17 daily in the NCR. TUCP moved for
reconsideration; so did the PMAP. ECOP opposed.
Oct. 23, 1990 - the Board issued Wage Order No. NCR-01-A amending Wage Order No. NCR-01, as follows:
o Sec. 1. Upon the effectivity of this Wage Order, all workers and employees in the private sector in the NCR already receiving wages above the
statutory minimum wage rates up to Php 125 per day shall also receive an increase of Php 17 per day.
ECOP appealed to the NWPC. On Nov. 6, 1990, NWPC promulgated an Order, dismissing the appeal for lack of merit. On Nov. 14, 1990, NWPC denied
reconsideration.
The Orders of the NWPC (as well as Wage Order No. NCR-01-A) are the subject of this petition. ECOP prays for the nullification of Wage Order No. NCR 01-A
and for the "reinstatement" of Wage Order No. NCR-01 because:
o the board's grant of an "across-the-board" wage increase to workers already being paid more than existing minimum wage rates (up to Php 125)
as an alleged excess of authority;
o under the RA 6727, the boards may only prescribe "minimum wages," not determine "salary ceilings."; and
o RA 6727 is meant to promote collective bargaining as the primary mode of settling wages, and in its opinion, the boards can not preempt collective
bargaining agreements by establishing ceilings.
The Court directed the Solicitor General to comment on behalf of the Government, and in the Solicitor General's opinion, the Board, in prescribing an across-
the-board hike did not, in reality, "grant additional or other benefits to workers and employees, such as the extension of wage increases to employees and
workers already receiving more than minimum wages ..." but rather, fixed minimum wages according to the "salary-ceiling method."
ECOP insists, in its reply, that wage is a legislative function, and RA 6727 delegated to the regional boards no more "than the power to grant minimum wage
adjustments" and "in the absence of clear statutory authority," the boards may no more than adjust "floor wages."
The Solicitor General, in his rejoinder, argues that RA 6727 is intended to correct "wage distortions" and the salary-ceiling method (of determining wages) is
meant, precisely, to rectify wage distortions.
ISSUE: WON Wage Order No. NCR-01 should be reinstated/WON the boards may only prescribe minimum wages and not determine salary ceilings.
HELD: No!
 The Court is inclined to agree with the Government. In the National Wages and Productivity Commission's Order of Nov. 6, 1990, the Commission noted that
the determination of wages has generally involved two methods, the "floor-wage" method and the "salary-ceiling" method. We quote:
Historically, legislation involving the adjustment of the minimum wage made use of two methods. The first method involves the fixing of determinate
amount that would be added to the prevailing statutory minimum wage. The other involves "the salary-ceiling method" whereby the wage adjustment
is applied to employees receiving a certain denominated salary ceiling. The first method was adopted in the earlier wage orders, while the latter method
was used in R.A. Nos. 6640 and 6727. Prior to this, the salary-ceiling method was also used in no less than eleven issuances mandating the grant of cost-
of-living allowances (P.D. Nos. 525, 1123, 1614, 1634, 1678, 1713 and Wage Order Nos. 1, 2, 3, 5 and 6). The shift from the first method to the second
method was brought about by labor disputes arising from wage distortions, a consequence of the implementation of the said wage orders. Apparently,
the wage order provisions that wage distortions shall be resolved through the grievance procedure was perceived by legislators as ineffective in checking
industrial unrest resulting from wage order implementations. With the establishment of the second method as a practice in minimum wage fixing, wage
distortion disputes were minimized.
As the Commission noted, the increasing trend is toward the second mode, the salary-cap method, which has reduced disputes arising from wage distortions
(brought about, apparently, by the floor-wage method). Of course, disputes are appropriate subjects of collective bargaining and grievance procedures, but
as the Commission observed and as we are ourselves agreed, bargaining has helped very little in correcting wage distortions. Precisely, RA 6727 was intended
to rationalize wages, first, by providing for full-time boards to police wages round-the-clock, and second, by giving the boards enough powers to achieve this
objective. The Court is of the opinion that Congress meant the boards to be creative in resolving the annual question of wages without labor and management
knocking on the legislature's door at every turn. The Court's opinion is that if RA 6727 intended the boards alone to set floor wages, the Act would have no
need for a board but an accountant to keep track of the latest consumer price index, or better, would have Congress done it as the need arises, as the
legislature, prior to the Act, has done so for years.
The Court is not convinced that the Regional Board of the NCR, in decreeing an across-the-board hike, performed an unlawful act of legislation. It is true that
wage-fixing, like rate constitutes an act Congress; it is also true, however, that Congress may delegate the power to fix rates provided that, as in all delegations
cases, Congress leaves sufficient standards. As this Court has indicated, it is impressed that the above-quoted standards are sufficient, and in the light of the
floor-wage method's failure, the Court believes that the Commission correctly upheld the Regional Board of the NCR.
Apparently, ECOP is of the mistaken impression that RA 6727 is meant to "get the Government out of the industry" and leave labor and management alone in
deciding wages. The Court does not think that the law intended to deregulate the relation between labor and capital for several reasons: (1) The Constitution
calls upon the State to protect the rights of workers and promote their welfare; (2) the Constitution also makes it a duty of the State "to intervene when the
common goal so demands" in regulating property and property relations; (3) the Charter urges Congress to give priority to the enactment of measures, among
other things, to diffuse the wealth of the nation and to regulate the use of property; (4) the Charter recognizes the "just share of labor in the fruits of
production;" (5) under the Labor Code, the State shall regulate the relations between labor and management; (6) under RA 6727 itself, the State is interested
in seeing that workers receive fair and equitable wages; and (7) the Constitution is primarily a document of social justice, and although it has recognized the
importance of the private sector, it has not embraced fully the concept of laissez faire or otherwise, relied on pure market forces to govern the economy; We
can not give to the Act a meaning or intent that will conflict with these basic principles.
It is the Court's thinking, reached after the Court's own study of the Act, that the Act is meant to rationalize wages, that is, by having permanent boards to
decide wages rather than leaving wage determination to Congress year after year and law after law. The Court is not of course saying that the Act is an effort
of Congress to pass the buck, or worse, to abdicate its duty, but simply, to leave the question of wages to the expertise of experts. As Justice Cruz observed,
"with the proliferation of specialized activities and their attendant peculiar problems, the national legislature has found it more necessary to entrust to
administrative agencies the power of subordinate legislation' as it is caned."
The Labor Code defines "wage" as follows:
"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
reasonably 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.
The concept of "minimum wage" is, however, a different thing, and certainly, it means more than setting a floor wage to upgrade existing wages, as ECOP
takes it to mean. "Minimum wages" underlies the effort of the State, as RA 6727 expresses it, "to promote productivity-improvement and gain-sharing
measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production;
to enhance employment generation in the countryside through industry dispersal; and to allow business and industry reasonable returns on investment,
expansion and growth," and as the Constitution expresses it, to affirm "labor as a primary social economic force." As the Court indicated, the statute would
have no need for a board if the question were simply "how much". The State is concerned, in addition, that wages are not distributed unevenly, and more
important, that social justice is subserved.

17 METROPOLITAN BANK and TRUST COMPANY, INC. vs. NWPC [G.R. No. 144322 February 6, 2007] AUTHOR: TAN
TOPIC: VALIDITY (OF WAGE ORDER) PONENTE: AUSTRIA-MARTINEZ, J. NOTES:
CASE LAW/ DOCTRINE: Pursuant to its wage fixing authority, the Regional Tripartite Wages and Productivity Board (RTWPB) may issue wage orders which set the
daily minimum wage rates, based on the standards or criteria set by Article 124 of the Labor Code.
FACTS:
The Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan (RTWPB), by virtue of R.A. No. 6727 issued Wage Order No. R02-03
(Wage Order):
Section 1. Upon effectivity of this Wage Order, all employees/workers in the private sector throughout Region II, regardless of the status of employment
are granted an across-the-board increase of P15.00 daily.
The Wage Order was published in a newspaper of general circulation on December 2, 1995 and took effect on January 1, 1996. Its Implementing Rules were
approved on February 14, 1996. Per Section 13 of the Wage Order, any party aggrieved by the Wage Order may file an appeal with the National Wages and
Productivity Commission (NWPC) through the RTWPB within 10 calendar days from the publication of the Wage Order.
In a letter-inquiry to the NWPC dated May 7, 1996, the Bankers Council for Personnel Management (BCPM), on behalf of its member-banks, requested for a
ruling on the eligibility of establishments with head offices outside Region II to seek exemption from the coverage of the Wage Order since its member-banks
are already paying more than the prevailing minimum wage rate in the National Capital Region (NCR), which is their principal place of business.
The NWPC replied that the member-banks of BCPM are covered by the Wage Order and do not fall under the exemptible categories listed under the Wage
Order.
In a letter-inquiry to the NWPC dated July 23, 1996, METROBANK sought for interpretation of the applicability of said Wage Order. The NWPC referred
petitioners inquiry to the RTWPB.
The RTWPB clarified that the Wage Order covers all private establishments situated in Region II, regardless of the voluntary adoption by said establishments
of the wage orders established in Metro Manila and irrespective of the amounts already paid by the petitioner.
On October 15, 1996, the petitioner filed a Petition for Certiorari and Prohibition with the CA seeking the nullification of the Wage Order on grounds:
 1. That the RTWPB acted without authority when it issued the questioned Wage Order;
2. That even if the RTWPB was vested with the authority to prescribe an increase, it exceeded its authority when it did so without any ceiling or
qualification;
3. That the implementation of the Wage Order will cause the petitioner, and other similarly situated employers, to incur huge financial losses and
suffer labor unrest.
The CA denied the petition.
Hence, the present petition.
Metrobank:
1. The RTWPB, in issuing said Wage Order, exceeded the authority delegated to it under R.A. No. 6727, which is limited to determining and fixing the
minimum wage rate within their respective territorial jurisdiction and with respect only to employees who do not earn the prescribed minimum
wage rate;
2. The RTWPB is not authorized to grant a general across-the-board wage increase for non-minimum wage earners;
3. Employers Confederation of the Philippines v. National Wages and Productivity Commission (hereafter referred to as ECOP) is not authority to rule
that respondents have been empowered to fix wages other than the minimum wage since said case dealt with an across-the-board increase with
a salary ceiling, where the wage adjustment is applied to employees receiving a certain denominated salary ceiling;
4. The Wage Order is an unreasonable intrusion into its property rights;
5. The Wage Order undermines the essence of collective bargaining;
6. The Wage Order fails to take into account the rationale for a unified wage structure.
NWPC:
1. The present petition is fatally defective from inception since no appeal from the Wage Order was filed by petitioner;
2. The letter-query to the NWPC did not constitute the appeal contemplated by law;
3. The validity of the Wage Order was never raised before the respondents; that the implementation of the Wage Order had long become fait
accompli for prohibition to prosper.
4. Even if petitioners procedural lapses are disregarded, the Wage Order was issued pursuant to the mandate of R.A. No. 6727 and in accordance
with the Courts pronouncements in the ECOP case;
5. The Wage Order is not an intrusion on property rights since it was issued after the required public hearings; that the Wage Order does not
undermine but in fact recognizes the right to collective bargaining;
6. The Wage Order did not result in wage distortion.
ISSUE(S): Whether Wage Order No. R02-03 is void and of no legal effect.
HELD: Section 1 of the wage order is VOID insofar as it grants a wage increase to employees earning more than the minimum wage rate; and pursuant to the
separability clause of the Wage Order, Section 1 is declared VALID with respect to employees earning the prevailing minimum wage rate.
The powers of NWPC are enumerated in ART. 121. Powers and Functions of the Commission. - The Commission shall have the following powers and functions:
(d) To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with
prescribed guidelines and national development plans;
(f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national
development plans;
(g) To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards.
R.A. No. 6727 declared it a policy of the State
o To rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of
living for the workers and their families;
o to guarantee the rights of labor to its just share in the fruits of production;
o to enhance employment generation in the countryside through industrial dispersal; and
o to allow business and industry reasonable returns on investment, expansion and growth.
In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power to prescribe rules and guidelines for the determination of appropriate
minimum wage and productivity measures at the regional, provincial or industry levels; and authorized the RTWPB to determine and fix the minimum wage
rates applicable in their respective regions, provinces, or industries therein and issue the corresponding wage orders, subject to the guidelines issued by the
NWPC. Pursuant to its wage fixing authority, the RTWPB may issue wage orders which set the daily minimum wage rates, based on the standards or criteria
set by Article124 of the Labor Code.
The Court declared that there are two ways of fixing the minimum wage:
o the "floor-wage" method and
o the "salary-ceiling" method.
The "floor-wage" method involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates.
On the other hand, in the "salary-ceiling" method, the wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In
other words, workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage
increase.
In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-wage method" or the "salary-ceiling method" in issuing the
Wage Order. The RTWPB did not set a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-the-board
wage increase of P15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage
Order to wage earners receiving more than the prevailing minimum wage rate, without a denominated salary ceiling. As correctly pointed out by the OSG, the
Wage Order granted additional benefits not contemplated by R.A. No. 6727.
Where the legislature has delegated to an executive or administrative officers and boards authority to promulgate rules to carry out an express legislative
purpose, the rules of administrative officers and boards, which have the effect of extending, or which conflict with the authority-granting statute, do not
represent a valid exercise of the rule-making power but constitute an attempt by an administrative body to legislate.
It has been said that when the application of an administrative issuance modifies existing laws or exceeds the intended scope, as in this case, the issuance
becomes void, not only for being ultra vires, but also for being unreasonable.

18 Nasigpit Integrated Arrastre and Stevedoring Services v. NELU-ALU-TCP AUTHOR: TIGLAO

[G.R. No. 162411 | 27 June 2008] NOTES:
TOPIC: Minimum Wages | PONENTE: J. Velasco
CASE LAW/ DOCTRINE:
Expressio unius est exclusio alterius. The express mention of one person, thing, act, or consequence excludes all others. The beneficent, operative provision of WO
RXIII-02 is specific enough to cover only minimum wage earners. Necessarily excluded are those receiving rates above the prescribed minimum wage.
FACTS:
NIASSI is a domestic corporation with office at Talisay, Nasipit, Agusan del Norte. Respondent Nasipit Employees Labor Union (Union) was the collective
bargaining agent of the rank-and-file employees of NIASSI and is a local chapter of the Associated Labor Union. The dispute started when, in October 1999,
the Regional Tripartite Wages and Productivity Board (Wage Board) of Caraga Region in Northeastern Mindanao issued Wage Order No. (WO) RXIII-02 which
granted an additional PhP 12 per day cost of living allowance to the minimum wage earners in that region. Owing allegedly to NIASSIs failure to implement
the wage order, the Union filed a complaint before the Department of Labor and Employment (DOLE) Caraga Regional Office for the inspection of NIASSIs
records and the enforcement of WO RXIII-02. A DOLE inspection team was accordingly dispatched to NIASSI. In its reports dated May 30, 2000 and
November 28, 2000, the inspection team stated that WO RXIII-02 was not applicable to NIASSIs employees since they were already receiving a wage rate
higher than the prescribed minimum wage.
Upon motion by the Union, the DOLE Regional Director indorsed the case to the National Labor Relations Commission (NLRC) Regional Arbitration Branch for
further hearing.
Voluntary Arbitrator Jesus G. Chavez rendered a decision granting the Unions prayer for the implementation of WO RXIII-02 on the rationale that WO RXIII-
02 did not specifically prohibit the grant of wage increase to employees earning above the minimum wage. On the contrary, Chavez said, the wage order
specifically enumerated those who are outside its coverage, but did not include in the enumeration those earning above the minimum wage. On appeal, CA
affirmed.
ISSUE(S): Whether the WO RXIII-02 may be made to apply and cover Nasipits employees who, at the time of the issuance and effectivity of the wage order, were
receiving a wage higher than the prevailing minimum wage
HELD: No. WO RXIII-02 and its IRR provide that only minimum wage earners are entitled to the wage increase.
The only situation when employees receiving a wage rate higher than that prescribed by the WO RXIII-02 may still benefit from the order is, as indicated in
Sec. 1 (c) of the IRRs, through the correction of wage distortions. In any case, it would be highly irregular for the Wage Board to issue an across-the-board
wage increase, its mandate being limited to determining and fixing the minimum wage rates within its area of concern, in this case the Caraga Region, and to
issue the corresponding wage orders and implementing rules.
In the same case, the Court held that a RTWPB commits an ultra vires act when, instead of setting a minimum wage rate, it prescribes a wage increase
cutting across all levels of employment and wage brackets:
The RTWPB did not determine or fix the minimum wage rate by the floor-wage method or the salary- ceiling method in issuing the Wage Order. The RTWPB
did not set a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-the-board wage increase of P15.00
to all employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage Orders to wage earners
receiving more than the prevailing minimum wage rate, without a denominated salary ceiling.
Only employees receiving salaries below the prescribed minimum wage are entitled to the wage increase set forth under WO RXIII-02, without prejudice, to
the grant of increase to correct wage distortions consequent to the implementation of such wage order. Considering that NIASSIs employees are
undisputedly already receiving a wage rate higher than that prescribed by the wage order, NIASSI is not legally obliged to grant them wage increase. Decision
of the arbitrator is reversed.

Cagayan Sugar Mlling vs. Secretary of Labor, Martinez, and Carsumco AUTHOR:Valera
Employees Union NOTES:
[G.R. No. 128399. January 15, 1998] Cagayan Sugar Million Corp: CSMC
Validity of Wage Order: Puno
CASE LAW/ DOCTRINE
In wage-fixing, factors such as fair return of capital, the need to induce industries to invest in the countryside and the capacity of employers to pay are ,among
others into consideration, thus the legislators provide for the creation of the Regional tripartite Boards composed of representatives from the Govt, the
workers and the employers to determine the appropriate wage rates per region to ensure that all sides are heard.
For such reason Art 123 of the LC provides that in the performance of their wage determining functions, the Regional Board shall conduct public hearings and
consultations giving notices to interested parties. Moreover, it mandates that the Wage Order shall take effect only after publication in a newspaper of general
circulation in the region.
It is a fundamental rule borne out of a sense of fairness, that the public is first notified of a law or wage order before in can be held liable for violation thereof.
FACTS:
On Nov 6, 1993, the Regional Tripartite Wage and Productivity Board, issued Regional Wage Order No. RO2-02 which provided that the minimum wage
applicable to Region 11 be increased by 14php per day.
"Section 1. Upon effectivity of this Wage Order, the statutory minimum wage rates applicable to workers and employees in the private sector in
Region II shall be increased as follows:
xxx
1.2 P14.00 per day .... Cagayan
x x x"
On Sept 12 and 13, 1994, Labor inspectors from the DOLE Regional Office examined the books of CSMC to determine its compliance with the said wage
order, the Labor Inspectors found that CSMC violated the wage order as it did not implement an across the board increase in the salaries of its employees.
At the hearing for the said violation, CSMC maintained that they have complied with the wage order by paying the mandated increase
On Dec 16, 1994, An order issued by the Regional Director Martinez, ruling that the petitioner violated the Wage Order RO2-02 by failing to implement an
across the board increase in the salary of its employees. CSMC was ordered to pay the deficient salary in the amount of 555,133.41
On Jan 6, 1995 ,CSMC appealed to the Labor Secretary, Quisumbing, on the same day the Regional Wage Board issued Wage Order No RO2-02-A amending
the earlier wage order stating in section 2. That This amendment is curative in nature and shall retroact to the date of the effectivity of Wage Order No.
RO2-02."
"Section 1. Section 1 of Wage Order No. RO2-02 shall now read as, "Upon effectivity of this Wage Order, the workers and employees in the private
sector in Region 2 shall receive an across the board wage increase as follows:
xxx
1.2 P14.00 per day .... Cagayan
xxx
"Section 2. This amendment is curative in nature and shall retroact to the date of the effectivity of Wage Order No. RO2-02."

On Oct 6, 1996, the Secretary of Labor dismissed the CSMC appeal and affirmed the Order of RD Martinez.
On Feb 12, 1997, the Union of the workers of CSMC, moved for execution of the Dec 16, 1994 Order, which the RD Martinez granted and issued the writ of
execution
 On March 4, 1997, CSMC MR but the DOLE on March 5 served CSMC a notice of garnishment of its account with the Far East Bank through its regional
sheriff.
On March 10, the sheriff seized CSMCs dump truck and scheduled its sale.
CSMC filed a petition with the SC with a prayer for the issuance of a TRO.
On April 3, 1997, the SC issued a TRO enjoining respondents from enforcing the writ of execution. And on July 16, on CSMCs motion, they amended the
TRO by also enjoining respondents from enforcing the Secretary of Labor and conducting further proceedings until further orders from the SC.
CSMC contends the ff:
1.) That the said wage order is null and void for being issued in violation of the procedure provided by law and in violation of CSMCs right to due process
of Law.
2.) The sad wage order clearly provided for the fixing of a statutory minimum wage rate and not an across the board wage increase.
3.) The decision of the Secretary of Labor and Employment is null and void for lack of any legal basis.
ISSUE(S): WON the said wage order is null and void?
HELD: YES.
Wage Order No. RO2-02, passed on November 16, 1993, provided for an increase in the statutory minimum wage rates for Region II. More than a year later,
or on January 6, 1995, the Regional Board passed Wage Order RO2-02-A amending the earlier wage order and providing instead for an across the board
increase in wages of employees in Region II, retroactive to the date of effectivity of Wage Order RO2-02.
CSMC assails the validity of Wage Order RO2-02-A on the ground that it was passed without the required public consultation and newspaper publication.
Thus, petitioner claims that public respondent Labor Secretary Quisumbing abused his discretion in upholding the validity of said wage order.
The court agrees with CSMC
rticle 123 of the Labor Code provides:
"ART. 123. Wage Order. -- Whenever conditions in the region so warrant, the Regional Board shall investigate and study all pertinent facts, and,
based on the standards and criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued. Any such Wage Order shall
take effect after fifteen (15) days from its complete publication in at least one (1) newspaper of general circulation in the region.
"In the performance of its wage-determining functions, the Regional Board shall conduct public hearings/consultations, giving notices to
employees' and employers' groups and other interested parties. x x x"
The record shows that there was no prior public consultation or hearings and newspaper publication insofar as wage Order No RO2-02-A is concerned. In
fact, these allegations were not denied by the respondents in their Comment
Sec of Labors position is that there was no need to comply with the legal requirements of consultation and newspaper publication as Wage Order No.
RO2-02-A merely clarified the ambiguous provision of the original wage order.
The SC does not agree
Since there was no ambiguity in the provisions of the former wage order as it provided in clear and categorical terms for an increase in statutory
minimum wage of workers in the region
Thus the subsequent passage of the RO-02-A providing instead for an across the board increase in wage did not clarify the earlier Order but amended
the same. It changed the essence of the Original Order.
In passing RO2-02A w/o going through the process of public consultation and hearings., the Regional Board deprived CSMC and the other employers of
due process as they were not given the opportunity to ventilate their positions re the proposed wage increase.
In wage-fixing, factors such as fair return of capital, the need to induce industries to invest in the countryside and the capacity of employers to pay
are ,among others into consideration, thus the legislators provide for the creation of the Regional tripartite Boards composed of representatives from
the Govt, the workers and the employers to determine the appropriate wage rates per region to ensure that all sides are heard.
For such reason Art 123 of the LC provides that in the performance of their wage determining functions, the Regional Board shall conduct public hearings
and consultations giving notices to interested parties. Moreover, it mandates that the Wage Order shall take effect only after publication in a newspaper
of general circulation in the region.
It is a fundamental rule borne out of a sense of fairness, that the public is first notified of a law or wage order before in can be held liable for violation
thereof.
In the case, it is indisputable that there was no public consultation or hearing conducted prior to the passage of RO2-02-A and neither was it published
in a newspaper of general circulation. Even if in the minutes of the meeting of the Regional Wage board that the non-publication was by consensus of
all the board members. Hence, RO2-02-A must be struck down for violation of Art. 123 of the LC.
WON the earlier order(RO2-02) is valid?
Yes, the and CSMC has not committed acts in violation of it since it merely provided for an increase in statutory minimum wage rates for employees in
Region II It is not just to expect CSMC to interpret the saide wage order to mean that it granted an across the board increase as such interpretation is
not sustained by its text.

20 PRUBANKERS ASSOCIATION v. PRUDENTIAL BANK & TRUST AUTHOR: ACIDO

COMPANY [G.R. No. 131247, January 25, 1999] NOTES: Haha i-full text niyo na lang guys jk: The Arbitration Committee formed for that purpose
TOPIC: Wage Distortion PONENTE: Panganiban, J. was composed of the following: public respondent Froilan M. Bacungan as Chairman, with Attys.
Domingo T. Anonuevo and Emerico O. de Guzman as members.
CASE LAW/ DOCTRINE:
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

Wage distortion presupposes an increase in the compensation of the lower ranks in an office hierarchy without a corresponding raise for higher-tiered employees
in the same region of the country, resulting in the elimination or the severe diminution of the distinction between the two groups. Such distortion does not arise
when a wage order gives employees in one branch of a bank higher compensation than that given to their counterparts in other regions occupying the same pay
scale, who are not covered by said wage order. In short, the implementation of wage orders in one region but not in others does not in itself necessarily result in
wage distortion.
FACTS:
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 had rendered service for at least 3 months before its effectivity, and for the same period thereafter,
 in the following categories: P17.50 in the cities of Naga and Legaspi; P15.50 in the municipalities of Tabaco, Daraga, Pili, and the city of Iriga; and P10.00 for
all other areas in the Bicol Region.
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 P10.00 in the cities of Cebu, Mandaue, and Lapulapu; P5.00 in the municipalities of
Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga, and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran.
Prudential Bank & Trust Company 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.
June 7, 1994: Prubankers Association wrote PBTC 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.
o Prubankers demanded in the Labor Management Committee meetings that PBTC 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 petitioner's employees nationwide. As the grievance could not be settled in the said meetings, the parties agreed to
submit the matter to voluntary arbitration. The issue presented before the Committee was whether or not the bank's separate and
regional implementation of Wage Order No. 5-03 at its Naga Branch and Wage Order No. VII-03 at its Cebu, Mabolo, and P. del
Rosario branches, created a wage distortion in the bank nationwide.
Arbitration Committee: Ruled that the Bank's separate and regional implementation of Wage Order No. VII-03 at its Cebu, Mabolo, and P. del Rosario
branches created a wage distortion in the Bank nationwide which should be resolved in accordance with Art. 124 of the Labor Code.
CA: Reversed, stating that the variance in the salary rates of employees in different regions of the country was justified by RA 6727; noting 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"; "the distinctions between each employee group
in the region are maintained, as all employees were granted an increase in minimum wage rate.
ISSUE: Whether or not a wage distortion resulted from respondent's implementation of the aforecited Wage Orders.
HELD: No. Petition denied; decision affirmed.
Procedural issue: There is forum-shopping, as PBTC failed to inform the SC of the pendency of the voluntary arbitration case entitled "In Re: Voluntary
Arbitration between Prudential Bank and Prubankers Association.
o There is identity of parties. As to identity of issues: although the respective issues and reliefs prayed for in the two cases are stated differently,
both actions boil down to one single issue: the validity of the Bank's regionalization of its wage structure based on RA 6727. Even if the
voluntary arbitration case calls for striking, down the Bank's regionalized hiring scheme while the instant petition calls for the correction of
the alleged wage distortion caused by the regional implementation of Wage Order No. VII-03, the ultimate relief prayed for in both cases is
the maintenance of the Bank's national wage structure. Hence, the final disposition of one would constitute res judicata in the other.
o Even if summary dismissal of both actions are warranted, the Court deemed it appropriate to pass upon the main issue on its merit in view of
its importance.
Main issue: The statutory definition of wage distortion is found in Article 124 of the Labor Code, as amended by Republic Act No. 6727 (the Wage
Rationalization Act), which reads:
Art. 124. Standards/Criteria for Minimum Wage Fixing . . .
As used herein, a wage distortion shall mean a situation where an increase in prescribed wage results in the elimination of 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.
National Federation of Labor v. NLRC: 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. . . . . The concept of a 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.
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. The Court is not persuaded. A wage
parity between employees in different rungs, is not at issue here, but a wage disparity between employees in the same rung but located in different
regions of the country.
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.
RA 6727 RATIONALIZATION: Petitioner's 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." a disparity in wages between employees with similar positions in different regions
is necessarily expected. In insisting that the employees of the same pay class in different regions should receive the same compensation, petitioner has
apparently misunderstood both the meaning of wage distortion and the intent of the law to regionalize wage rates. It must be understood that varying
in each region of the country are controlling factors such as the cost of living; supply and demand of basic goods, services and necessities; and the
purchasing power of the peso. Other considerations underscore the necessity of the law. Wages in some areas may be increased in order to prevent
migration to the National Capital Region and, hence, to decongest the metropolis. 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, the Court, in its decisions, merely enforces the law. It has no power to pass upon its wisdom or propriety.
 EQUAL PAY FOR EQUAL WORK: Petitioner also avers that the implementation of the Wage Order in only one region violates the equal-pay-for-equal-
work principle. This is not correct. RA 6727 mandates that wages in every region must be set by the particular wage board of that region, based on the
prevailing situation therein. Necessarily, the wages in different regions will not be uniform.
MEANING OF ESTABLISHMENT: Establishment" "refers to an economic unit which engages in one or predominantly one kind of economic activity with a
single fixed location", NOT all branches and offices in different regions.
MANAGEMENT PRACTICES: The nationwide uniform wage policy of the Bank had been adopted prior to the enactment of RA 6727. After the passage of
said law, the Bank was mandated to regionalize its wage structure. Although the Bank implemented Wage Order Nos. NCR-01 and NCR-02 nationwide
instead of regionally even after the effectivity of RA 6727, the Bank at the time was still uncertain about how to follow the new law. In any event, that
single instance cannot be constitutive of "management practice."

21 P.I. Manufacturing, Inc., v. P.I. Manufacturing Supervisors and Foremen AUTHOR: Adre
Association NOTES: The case is a motion for reconsideration of our Resolution dated April 18,
[543 SCRA 613 (2008)] 2005 denying the present petition for review on certiorari for failure of the
TOPIC: Wage Distortion petitioner to show that a reversible error has been committed by the Court of
PONENTE: SANDOVAL-GUTIERREZ, J Appeals in its earlier decisions.
FACTS:
Parties: P.I. Manufacturing, Inc. (PI) domestic corp engaged in the manufacture and sale of household appliances | P.I, Manufacturing Supervisors and
Foreman Association (PIMASUFA) - an organization of PIs supervisors and foremen, joined in this case by its federation, the National Labor Union (NLU).
Dec. 10, 1987: RA 6640 (AN ACT PROVIDING FOR AN INCREASE IN THE WAGE OF PUBLIC OR GOVERNMENT SECTOR EMPLOYEES ON A DAILY WAGE BASIS
AND IN THE STATUTORY MINIMUM WAGE AND SALARY RATES OF EMPLOYEES AND WORKERS IN THE PRIVATE SECTOR AND FOR OTHER PURPOSES) was
signed into law by the President which provided for an increase in the statutory minimum wage and salary rates of employees and workers in the private
sector
In Sec. 2 of RA 6640: The statutory minimum wage rates of workers and employees in the private sector, whether agricultural or non-agricultural, shall be
increased by ten pesos (P10.00) per day, except non-agricultural workers and employees outside Metro Manila who shall receive an increase of eleven pesos
(P11.00) per day: Provided, That those already receiving above the minimum wage up to one hundred pesos (P100.00) shall receive an increase of ten pesos
(P10.00) per day. Excepted from the provisions of this Act are domestic helpers and persons employed in the personal service of another.
A new CBA was entered into by the parties (1987 CBA) where the supervisors were granted an increase of 625/month and the foreman, 475/month.
The said increases were made retroactive prior to the passage of RA 6440 and every year thereafter until July 26, 1989.
January 26, 1989: PIMASUFA and NLU filed a complaint with the Arbitration Branch of the NLRC, charging P.I. with violation of R.A. No. 6640. They attached
to their complaint a numerical illustration of wage distortion resulting from the implementation of R.A. No. 6640
LA: in favor of PIMAFUSA (give the members of respondent PIMASUFA wage increases equivalent to 13.5% of their basic pay they were receiving prior
to December 14, 1987.)
NLRC: AFFIRMED THE LA
CA: AFFIRMED NLRCs decision but modified the increase to 18.5%
ISSUE(S): WON the implementation of R.A. No. 6640 resulted in a wage distortion and whether such distortion was cured or remedied by the 1987 CBA
HELD: YES.
R.A. No. 6727, otherwise known as the Wage Rationalization Act, explicitly defines wage distortion 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 this case, the Court of Appeals correctly ruled that a wage distortion occurred due to the implementation of R.A. No. 6640.
The 1987 CBA increased the monthly salaries of the supervisors by P625.00and the foremen, by P475.00, eective May 12, 1987. These increases re-established
and broadened the gap, not only between the supervisors and the foremen, but also between them and the rank-and-le employees. Signicantly, the 1987
CBA wage increases almost doubled that of the P10.00 increase under R.A. No. 6640. TheP625.00/month means P24.03 increase per day for the supervisors,
while theP475.00/month means P18.26 increase per day for the foremen. These increases were to be observed every year, starting May 12, 1987 until July
26, 1989. Clearly, the gap between the wage rates of the supervisors and those of the foremen was inevitably re-established. It continued to broaden through
the years. Interestingly, such gap as re-established by virtue of the CBA is more than a substantial compliance with R.A. No.6640. To direct petitioner to grant
an across-the-board increase to all of them, regardless of the amount of wages they are already receiving, would be harsh and unfair to the former.

22 Congson v. NLRC AUTHOR: Castro

[G.R. No. 114250. April 5, 1995] NOTES:
TOPIC: Form of Payment Article102. Forms of Payment. No employer shall pay the wages of an employee by means of, promissory notes, vouchers,
PONENTE: Padilla, J. coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee.
Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of
effectivity of this Code, or is necessary because as specified in appropriate regulations to be issued by the Secretary of Labor
or as stipulated in a collective bargaining agreement.
CASE LAW/ DOCTRINE: Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance when an employer is permitted
to pay wages in forms other than legal tender, that is, by checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are
present.
FACTS:
Petitioner Dominico Congson is the registered owner of Southern Fishing Industry.
Private respondents (Bargo, Himeno, Badagos, Salvador, Bargo, Mendoza, and Calixihan) were hired as regular piece-rate workers.
Actual wage rate: P1.00-per-tuna movement. Workers were paid P1.00 per bariles per movement [from the fishing boats to the truck hauler; from the truck
hauler down to the cold storage; then finally, from the cold storage to the vessel]
o They were uniformly paid at a rate of P1.00 per tuna weighing thirty (30) to eighty (80) kilos per movement. They worked seven (7) days a week.
In the first week of June 1990, petitioner notified his workers of his proposal to reduce the rate- per-tuna movement due to the scarcity of tuna, to which
the private respondents resisted.
When they reported for work the next day, they were informed that they had been replaced by a new set of workers. When they requested for a dialogue
with the management, it was unheeded as they were only made to wait for further notice.
On 15 June 1990, private respondents filed a case against petitioner before the NLRC Sub-Regional Arbitration for underpayment of wages (non-compliance
with Rep. Act Nos. 6640 and 6727) and non-payment of overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)- day service incentive leave pay;
and for constructive dismissal. With respect to their monetary claims, private respondents charged petitioner with violation of the Minimum Wage Law,
 alleging that with petitioners rates and the scarcity of tuna catches, private respondents average monthly earnings each did not exceed ONE THOUSAND
PESOS (P1,000.00).
Labor Arbiter: In holding petitioner guilty of constructive dismissal, Labor Arbiter Aponesto granted the monetary claims (for a 3-year period) of complainants
for wage differentials (P42, 120 each), 13th month pay and service incentive leave pay payment.
NLRC: affirmed Labor Arbiter Aponestos findings and monetary awards.
Congson alleges that the computation of wage differentials is erroneous.
o According to Congson, in addition to the amount of P1.00 per bariles per movement, complainants get the intestines and liver of the tuna as
part of their salary. That for every tuna delivered, herein complainants extract at least three (3) kilos of intestines and liver. That the minimum
prevailing price of tuna intestine and liver in 1986 to 1990 range from P15.00 to P20.00/kilo. The value of the tuna intestine and liver should be
computed in arriving at the daily wage of herein complainants because the very essence of the agreement between complainants and respondent
is: complainants shall be paid only P1.00 per tuna per movement BUT the intestines and liver of the tuna delivered shall go to the herein
complainants. It should be noted that tuna intestines and liver are easily disposed of in any public market. Complainants themselves would not
have agreed and would not have served respondent that long period of time if they are only paid P1.00 per tuna movement. What they are after,
in truth and in fact is the tuna intestines and liver which they can easily convert into cash.

Congsons contention: The combined value of private respondents cash wage and the monetary value of the tuna liver and intestines exceeded the minimum wage
fixed by law.

Notwithstanding the fact that the actual cash wage fell below the minimum wage fixed by law, respondent NLRC should have considered as forming a substantial
part of private respondents total wages the cash value of the tuna liver and intestines they were entitled to retrieve.
ISSUE: Whether tuna intestines and liver are valid forms of compensation
HELD: No
The Labor Code expressly provides:
Article102. Forms of Payment. No employer shall pay the wages of an employee by means of, promissory notes, vouchers, coupons, tokens,
tickets, chits, or any object other than legal tender, even when expressly requested by the employee.
Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of effectivity of this Code, or is
necessary because as specified in appropriate regulations to be issued by the Secretary of Labor or as stipulated in a collective bargaining agreement.
Undoubtedly, petitioners practice of paying the private respondents the minimum wage by means of legal tender combined with tuna liver and intestines
runs counter to the abovecited provision of the Labor Code. The fact that said method of paying the minimum wage was not only agreed upon by both parties
in the employment agreement but even expressly requested by private respondents, does not shield petitioner. Article 102 of the Labor Code is clear. Wages
shall be paid only by means of legal tender. The only instance when an employer is permitted to pay wages in forms other than legal tender, that is, by checks
or money order, is when the circumstances prescribed in the second paragraph of Article 102 are present.
There is no grave abuse of discretion on the part of respondent NLRC in upholding Labor Arbiter Aponestos award of salary differentials.

23 National Federation of Labor, et al vs. CA, et al AUTHOR: Miguel M. Consing

[G.R. No. 149464; October 19, 2004] Employer SDPI
TOPIC: Wages; form of payment. Employee/s Petitioners
PONENTE: Callejo, Sr., J Labor Union National Federation of Labor (NFL); all the petitioners are members of the union
CASE LAW/DOCTRINE:
In cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay of
employees shall be equivalent to one-month pay or to at least one-half month pay for every year of service, whichever is higher.
The only instance when an employer is permitted to pay wages in forms other than legal tender, that is, by checks or money order, is when the
circumstances prescribed in the second paragraph of Article 102 are present.
FACTS:
SDPI and NFL executed a collective bargaining agreement (CBA) in which they agreed that in case of permanent or temporary lay-off, workers affected would
be entitled to termination pay as provided by the Labor Code (Art. 283). The petitioners were employees of SDPI and members of the NFL
ARCI and SDPI entered into a Farm Management Agreement in 1986. In 1988, the Comprehensive Agrarian Reform Law was passed; it mandated the
compulsory acquisition of all lands of public domain leased, held or possessed by multinational corporations or association or private non-governmental
corporations, devoted to agro-industrial enterprises. Because of this, SDPI terminated the Farm Management Agreement and ceased operations, effective
Jan. 17, 1998.
On Dec. 17, 1997, SDPI dismissed the Petitioners because it was ceasing operations. The Petitioners demanded separation pay equivalent to one month for
every year of employment of the employees, based on company policy. However, each of the petitioners received his separation pay equivalent to one-half
month pay for every year of service, and other benefits which were all lumped in one Metrobank check. They also executed quitclaims in favor of the
company. Nevertheless, they filed a complaint with the Labor Arbiter claiming deficiency in their separation pay.
LA: Dismissed the complaint. the termination of the petitioners employment was based on authorized cause, namely, the closure of SDPI because of the
implementation of CARL. Consequently, pursuant to the CBA in relation to Article 283 of the Labor Code, the dismissed employees should receive separation
pay at the rate of one-half month pay per year of service. He also held that the petitioners had no right to invoke company policy of paying separation pay
equivalent to one month pay for every year of employment granted by SDPI for its retrenched employees in its plantations. He also ruled that the petitioners
were estopped from demanding for separation pay differentials because they voluntarily and willingly executed their respective deeds of quitclaim.
NLRC: Affirmed the above ruling. Also, it is important to note that the petitioners questioned the payment of their separation pay in the form of checks at
this stage of the proceedings. Regarding this newly raised issue, the NLRC upheld the payment via check. It held that (a) the check is a legal tender; and (b)
the statement allows payment of wages in check in special circumstances, as in the present case where the individual complainants were paid large amounts
of monetary benefits.
ISSUE(S) & HELD/RATIO:
First Issue: Are the petitioners entitled to separation pay equivalent to one month for every year of employment?
No. Pursuant to the 1995 CBA between the SDPI and its daily-paid rank-and-file employees, permanent or temporary lay-off workers affected would be
entitled to termination pay as provided by the Labor Code. The parties did not incorporate in the CBA a specific provision providing that employees
terminated from employment due to the closure of business operations would be entitled to separation pay equivalent to one-month pay for every year of
service.
The Labor Code provides in Art. 283 that x x x x in cases of closures or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay of employees shall be equivalent to one-month pay or to at least one-half month pay for every year of
service, whichever is higher.
 Unless annulled, the CBA, as a contract governing the employer and the employees respecting the terms of employment, should prevail.

Second Issue: Is payment of separation pay by check prohibited?

No. Art. 102 of the Labor Code provides:
Payment by checkpayment of wages by bank checks, postal checks or money orders is allowed where such manner of wage payment is customary on the
date of the effectivity of the Code, where it is stipulated in a collective bargaining agreement, or where all the following conditions are met:
o There is a bank or other facility for encashment within a radius of one (1) kilometer from the workplace;
o The employer, or any of his agents or representatives, does not receive any pecuniary benefit directly or indirectly from the arrangement;
The employee are given reasonable time during banking hours to withdraw their wages from the bank which time shall be considered as compensable hours
worked if done during working hours; and
The payment by check is with the written consent of the employees concerned if there is no collective agreement authorizing the payment of wages by bank
checks.
The only instance when an employer is permitted to pay wages in forms other than legal tender, that is, by checks or money order, is when the
circumstances prescribed in the second paragraph of Article 102 are present.
In the present case, the petitioners separation pay, other benefits, and the wages from January 1 to 17 were paid in check. Strictly speaking, SDPI violated
the Labor Code when it included wages from January 1 to 17, 1998 in the check. Considering, however, the amount of other monetary benefits to be paid,
payment in check was the most convenient form for both the petitioners and SDPI. Further, as pointed out by SDPI, the petitioners are deemed estopped
from questioning the legality of payment of wages from January 1 to 17, 1998 in check because the same was raised for the first time only in their appeal
before the NLRC.

CASE TITLE Bermiso v Escano AUTHOR: De Leon

[G.R. No. Date] G.R. No. L-11606 February 28, 1959
TOPIC: Direct payment of wages
PONENTE: LABRADOR, J.
CASE LAW/ DOCTRINE: No ground for requiring the respondent Hijos de F. Escao to pay back wages. The latter respondent did not deal with the petitioners
individually, entering into a contract of employment with them. Said respondent dealt with the group thru its leaders. If the group, thru its leaders, did not allow
the petitioners to work and share in the price paid therefor, the one responsible is not the respondent Escao but the leader thru whom the group itself made the
contract for work and apportioned the time of work for each member and the pay therefor.
FACTS:
The Hijos de F. Escao, Inc., hereafter referred to as Escao or Company, is a domestic engaged in the business of carrying or transporting passengers and
goods by water for compensation within the Philippines.
The Katubsanan sa Mamumuo, hereafter called the Union or simply Katubsanan, is a labor organization duly registered with the Department of Labor and with
office address in Cebu City. It is composed mainly of laborers from the Visayas and Mindanao. Its members in Cebu are numerous and divided into several
groups, sometimes called chapters. One of them is headed by respondent Sabay as its foreman or "Cabo" and known as the Sabay group. To this group, in
which there are no less than 50 men, formerly belonged some or all of the 45 petitioners.
One of the carriers for whom the Sabay men regularly serve as stevedores is the Escao. Their relation had its inception in 1947 when, through the
representation made by Muaa and Sabay, Salvador Sala, general manager of said carrier, permitted the Sabay group to do the work of loading and unloading
its vessels to the exclusion of all other persons. From the beginning the Company has not directly paid Muaa, Sabay or the group any compensation for the
loading or unloading services rendered by Sabay men. Neither has it received any payment for the exclusive privilege enjoyed by the group. The practice which
they have continuously followed is that the group collects from the shippers and consignees the charges for the handling of the cargo based on a schedule of
rates which appears to have been previously approved by all the parties affected by the work, while the Company receives or collects from the shippers or
consignees only the freightage for the cargo.
The amount collected from the shippers and consignees is considered as the gross income of the group. From this income are deducted its expenses if any, for
gasoline and spare parts of trucks used, damage to, loss or destruction of, cargo not imputable to any particular individual or individuals, meals, recreation,
wages of casual workers, and an amount equivalent of two per centum for the Katubsanan for the maintenance of the union clinic and newspaper. The net
income is then divided into equal shares in accordance with the sharing plan under which each common laborers is entitled to one share and the rest, including
the sub-capataces, capataces, Sabay and the other officers of the group, to one and one-fourth, one and one-half, one and three-fourths, two, three, or more
each, depending on the lenght of membership and importance of the position held in the group. This division of the group's income is done every Saturday
and the shares received by the participating members constitute their wages for the week.
Petitioners instituted an action before the Court of Industrial Relations, praying for reinstatement with back wages, direct payment of wages to the laborers
instead of through the union, payment of accrued overtime pay and wage differentials, prohibition from carrying load in excess of 50 kilos, minimum daily
wage of P5.00, vacation and sick leave, free hospitalization, accident insurance, free choice of labor union and grievance committee.
Of the original petitioners only five continued to take interest in the action, the other having desisted therefrom. After hearing the Court of Industrial Relations
ordered the reinstatement of the said five laborers to their former work and positions in the Sabay group, but without back wages, but dismissed the other
claims.
Petitioners argue that the decision violates the law on direct payment of wages.
(basically, gusto lang nila direct sa members yung payment, kesa sa union muna then distribute)
ISSUE(S): W/N there should be direct payment of wages
HELD: No
With respect to the direct payment of wages to the laborers, the court found that there was no reason for changing the practice of apportioning the wages for
their joint labor and sharing therein, because of the 150 members only 5 were dissatisfied.

Petitioners argue before us that the decision violates the law on direct payment of wages. The law relied upon by them is Section 10, par. (b) of Republic Act No.
602, which provides as follows:

SEC. 10. (b) Wages, including wages which may be paid retroactively for whatever reason, shall be paid directly to the employee to whom they are due, except:
1. In cases where the employee is insured with his consent by the employer, the latter shall entitled to deduct from the wage of the employee the amount paid
by the employer for premiums on the insurance;
2. In cases of force majeure rendering such payments impossible; and
3. In cases where the right of the employee or his union to check-off has been recognized by the employer or authorized in writing by the individual employees
concerned.
There is no question that the work of stevedoring was undertaken by the laborers, not in their individual capacities, but as a group. The contract to perform the
service was made by the leader of the group, for and on behalf of the latter, not for each and every one of them individually. For the sake of convenience it was
necessary that the group must be large enough to be able to perform the task of loading and unloading in as short time as possible. As the group undertook to
render service for vessels other than those of the Hijos de F. Escao, it was absolutely necessary that some sort of leadership be instituted in the group to
determine which of the members will work for one vessel and which for another. Leadership is also essential to obtain work for the group as employers naturally
prefer to deal with a leader of a group than with each member individually. Leadership was, therefore, essential not only to secure work for the group but to
arrange the laborers who are to perform the service. The leadership must be paid for and it was not shown that the head of the groups got the lion's share of the
cost of the service rendered. Under the circumstances we are not prepared to say that the provision of law on direct payment of wages has been violated. The
lower court did not find sufficient evidence to show that racketeering was employed by the leaders. If any existed the remedy can not be found in this court; it is
for the group or organize into a closely knitted union which would secure the privileges that the selves who would not exploit them.

Lastly, the respondent Hijos de F. Escao did not pay for the stevedoring charges. These were collected by the group from the shippers themselves, without the
intervention of the respondent Escao. How can the court order the latter to pay the charges to the group or its members, when the charges were collected by
the latter from the shippers, in accordance with the practice of the group itself?

We also find no ground for requiring the respondent Hijos de F. Escao to pay back wages. The latter respondent did not deal with the petitioners individually,
entering into a contract of employment with them. Said respondent dealt with the group thru its leaders. If the group, thru its leaders, did not allow the
petitioners to work and share in the price paid therefor, the one responsible is not the respondent Escao but the leader thru whom the group itself made the
contract for work and apportioned the time of work for each member and the pay therefor. Again as stated above, the remedy must be sought not in the tribunals
of the country but in the laborers themselves who should organized and thru such organization as they may establish, as envisioned by the Industrial Peace Act,
secure the privileges demanded.

25 ERNESTO M. APODACA, vs.NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS PHILS., INC AUTHOR: Delfin
G.R. No. 80039 April 18, 1989
TOPIC: Prohibition against wage deduction PONENTE: GANCAYCO NOTES:
CASE LAW/ DOCTRINE:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees,
except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium
on the insurance;
(b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by the employer or authorized in writing by the individual
worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor
FACTS:
Apodaca was employed in Intrans Phils. On August 28, 1985, respondent Jose M. Mirasol persuaded Apodaca to subscribe to 1,500 shares of Intrans Phils
at P100.00 per share or a total of P150,000.00.
Apodaca made an initial payment of P37,500.00 and was subsequently appointed as President and General Manager of Intrans Phils but he eventually
resigned on 1986.
On December 19, 1986, Apodaca instituted with the NLRC a complaint against Mirasol and Intrans for the payment of his unpaid wages, his cost of living
allowance, the balance of his gasoline and representation expenses and his bonus compensation for 1986.
Both parties submitted their position papers to the labor arbiter. The private respondents admitted that there is due to petitioner the amount of
P17,060.07 but this was applied to the unpaid balance of his subscription in the amount of P95,439.93.
Apodaca questioned the set-off alleging that there was no call or notice for the payment of the unpaid subscription and that, accordingly, the alleged
obligation is not enforceable.
The labor arbiter sustained the claim of petitioner for P17,060.07 on the ground that the employer has no right to withhold payment of wages already
earned under Article 103 of the Labor Code.
The private respondents appealed with NLRC. It reversed the LA decision.
The NLRC held that a stockholder who fails to pay his unpaid subscription on call becomes a debtor of the corporation and that the set-off of said
obligation against the wages and others due to petitioner is not contrary to law, morals and public policy.

ISSUE: WON a set-off of an obligation from wages due can be done as ordered by the NLRC in this case?
HELD: No, wage deduction can only be done in certain circumstances and this is not one of those.
the NLRC has no jurisdiction to determine such intra-corporate dispute between the stockholder and the corporation as in the matter of unpaid
subscriptions. This controversy is within the exclusive jurisdiction of the Securities and Exchange Commission
Secondly, assuming arguendo that the NLRC may exercise jurisdiction over the said subject matter under the circumstances of this case, the unpaid
subscriptions are not due and payable until a call is made by the corporation for payment. Private respondents have not presented a resolution of the
board of directors of respondent corporation calling for the payment of the unpaid subscriptions. It does not even appear that a notice of such call has
been sent to petitioner by the respondent corporation.
What the records show is that the respondent corporation deducted the amount due to petitioner from the amount receivable from him for the unpaid
subscriptions. No doubt such set-off was without lawful basis, if not premature. As there was no notice or call for the payment of unpaid subscriptions,
the same is not yet due and payable.
Lastly, assuming further that there was a call for payment of the unpaid subscription, the NLRC cannot validly set it off against the wages and other
benefits due petitioner. Article 113 of the Labor Code allows such a deduction from the wages of the employees by the employer, only in three
instances, to wit:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium
on the insurance;
(b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by the employer or authorized in writing by the individual
worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.
26 G.R. No. 202961 February 4, 2015 AUTHOR: Enriquez
EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID, NOTES:
BONIFACIO MATUNDAN, NORA MENDOZA, et al., Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, SOLID MILLS, INC., and/or
PHILIP ANG, Respondents.
TOPIC: Wage Prohibitions; Prohibition against wage deductions
PONENTE: Leonen
CASE LAW/ DOCTRINE: An employer is allowed to withhold terminal pay and benefits pending the employee's return of its properties
FACTS: Petitioners are employees of Solid Mills. They are represented by the National Federation of Labor Unions (NAFLU), their collective bargaining agent.

As Solid Mills employees, petitioners and their families were allowed to occupy SMI Village, a property owned by Solid Mills. According to Solid Mills, this was "out
of liberality and for the convenience of its employees and on the condition that the employees would vacate the premises anytime the Company deems fit."

In September 2003, petitioners were informed that Solid Mills would cease its operations due to serious business losses. NAFLU recognized Solid Mills closure due
to serious business losses in the memorandum of agreement which provided for Solid Mills grant of separation pay less accountabilities, accrued sick leave benefits,
vacation leave benefits, and 13th month pay to the employees.

Petitioners were no longer allowed to report for work by October 10, 2003. They were required to sign a memorandum of agreement with release and quitclaim
before their vacation and sick leave benefits, 13th month pay, and separation pay would be released. Employees who signed the memorandum of agreement were
considered to have agreed to vacate SMI Village, and to the demolition of the constructed houses inside as condition for the release of their termination benefits
and separation pay. Petitioners refused to sign the documents and demanded to be paid their benefits and separation pay.

Hence, petitioners filed complaints before the Labor Arbiter for alleged non-payment of separation pay, accrued sick and vacation leaves, and 13th month pay. They
argued that:
their accrued benefits and separation pay should not be withheld because their payment is based on company policy and practice
the 13th month pay is based on law
their possession of Solid Mills property is not an accountability that is subject to clearance procedures
they had already turned over to SolidMills their uniforms and equipment when Solid Mills ceased operations

On the other hand, Solid Mills argued that petitioners complaint was premature because they had not vacated its property.

LAs Decision: In favor of Petitioners.

Solid Mills illegally withheld petitioners benefits and separation pay.
Petitioners right to the payment of their benefits and separation pay was vested by law and contract.
The memorandum of agreement stated no condition to the effect that petitioners must vacate Solid Mills property before their benefits could be given
to them.
Petitioners possession should not be construed as petitioners "accountabilities" that must be cleared first before the release of benefits.
Their possession "is not by virtue of any employer-employee relationship." It is a civil issue, which is outside the jurisdiction of the Labor Arbiter.

NLRC reversed and held that because of petitioners failure to vacate Solid Mills property, Solid Mills was justified in withholding their benefits and separation pay.
Solid Mills granted the petitioners the privilege to occupy its property on account of petitioners employment. It had the prerogative to terminate such privilege.
The termination of Solid Mills and petitioners employer-employee relationship made it incumbent upon petitioners to turn over the property to Solid Mills.
CA affirmed and held that that Solid Mills act of allowing its employees to make temporary dwellings in its property was a liberality on its part. It may be revoked
any time at its discretion.\ As a consequence of Solid Mills closure and the resulting termination of petitioners, the employer-employee relationship between them
ceased to exist. There was no more reason for them to stay in Solid Mills property. Moreover, the memorandum of agreement between Solid Mills and the union
representing petitioners provided that Solid Mills payment of employees benefits should be "less accountabilities."
Hence, this petition for certiorari to the SC.
ISSUE(S): Whether Solid Mills act of withholding petitioners benefits was proper
HELD: Yes.
RATIO: Institution of clearance procedures has legal bases
Requiring clearance before the release of last payments to the employee is a standard procedure among employers, whether public or private. Clearance procedures
are instituted to ensure that the properties, real or personal, belonging to the employer but are in the possession of the separated employee, are returned to the
employer before the employees departure.
As a general rule, employers are prohibited from withholding wages from employees. The Labor Code provides:
Art. 116. Withholding of wages and kickbacks prohibited.It shall be unlawful for any person, directly or indirectly, to withhold any amount
from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means
whatsoever without the workers consent.
The Labor Code also prohibits the elimination or diminution of benefits. Thus:
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be construed to eliminate or in any way diminish
supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.
However, our law supports the employers institution of clearance procedures before the release of wages. As an exception to the general rule that wages may not
be withheld and benefits may not be diminished, the Labor Code provides:
Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his
employees, except:
1. 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;
2. 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
3. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.
The Civil Code provides that the employer is authorized to withhold wages for debts due:
Article 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.
"Debt" in this case refers to any obligation due from the employee to the employer. It includes any accountability that the employee may have to the employer.
There is no reason to limit its scope to uniforms and equipment, as petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that the release of petitioners benefits shall be "less
accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. The ordinary meaning of the term "accountability" does not limit the definition of accountability
to those incurred in the worksite. As long as the debt or obligation was incurred by virtue of the employer-employee relationship, generally, it shall be included in
the employees accountabilities that are subject to clearance procedures.
It may be true that not all employees enjoyed the privilege of staying in respondent Solid Mills property. However, this alone does not imply that this privilege when
enjoyed was not a result of the employer-employee relationship. Those who did avail of the privilege were employees of respondent Solid Mills. Petitioners
possession should, therefore, be included in the term "accountability."
Accountabilities of employees are personal. They need not be uniform among all employees in order to be included in accountabilities incurred by virtue of an
employer-employee relationship. Petitioners do not categorically deny respondent Solid Mills ownership of the property, and they do not claim superior right to it.
What can be gathered from the findings of the Labor Arbiter, National Labor Relations Commission, and the Court of Appeals is that respondent Solid Mills allowed
the use of its property for the benefit of petitioners as its employees. Petitioners were merely allowed to possess and use it out of respondent Solid Mills liberality.
The employer may, therefore, demand the property at will.

The return of the propertys possession became an obligation or liability on the part of the employees when the employer-employee relationship ceased. Thus,
respondent Solid Mills has the right to withhold petitioners wages and benefits because of this existing debt or liability.
For these reasons, we cannot hold that petitioners are entitled to interest of their withheld separation benefits. These benefits were properly withheld by
respondent Solid Mills because of their refusal to return its property.

27 Five J Taxi v. NLRC [G.R. No. 111474 August 22, 1994] AUTHOR: Garcia
TOPIC: Prohibition against wage deduction PONENTE: Regalado, J. NOTES:
CASE LAW/ DOCTRINE:
Article 114. Deposits for loss or damage. No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement
of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business
where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and
regulation.
FACTS:
Domingo Maldigan and Gilberto Sabsalon were hired by Five J Taxi as taxi drivers:
o 4 days weekly on a 24-jpir shifting schedule
o Daily Boundary: P700.00 for air-conditioned taxi or P450.00 for non-air-conditioned taxi
o Car washing: P20.00
o Deposit: P15.00 for any deficiency in their boundary.
Maldigan failed to report for work for unknown reasons. Later, Five J learned that he was working for Mine of Gold Taxi Company
Sabsalon, while driving a taxicab of Five J, he was held up by his armed passenger who took all his money and thereafter stabbed him. He was
hospitalized and after his discharge, he went to his home province to recuperate.
January, 1987 Sabsalon was re-admitted as a taxi driver, but his working schedule was made on an alternative basis, that is, he drove only
every other day. On several occasions, he failed to report for work during his schedule.
September 22, 1991 Sabsalon failed to remit his boundary for the previous day. Also, he abandoned his taxi in Makati without fuel refill worth
P300.090. He refused to report for work despite repeated request. It was revealed that he was driving a taxi for Bulaklak Company.
Maldigan requested for the reimbursement of his daily cash deposits for 2 years, but Five J Taxi told him that not a single centavo was left of his
deposits as these are not even enough to cover the amount spent for the repairs of the taxi he was driving.
When Maldigan insisted on the refund, his services were terminated. Sabsalon on his part, claimed this termination from employment was effected
when he refused to pay for the washing of his taxi seat covers.
November 27, 1991 Sabsalon and Maldigan filed a complaint charging the Five J and Armamento with illegal dismissal and illegal deductions.
The complaint was dismissed. The LA held that it took private respondents 2 years to file. NLRC concurred in the findings. MR was denied.
ISSUE(S):
1. Whether or not Sabsalon and Mandigan are entitled to refund.
2. Whether or not the P20.00 carwash fee was valid.
3. Whether or not their representative is entitled to attorneys fees.
HELD:
1. Only Sabsalon is entitled
2. Yes.
3. No.
RATIO:
With regard to entitlement to a refund / illegal deduction.
Article 114 of the Labor Code
o Article 114. Deposits for loss or damage. No employer shall require his worker to make deposits from which deductions shall be made for the
reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such
trades, occupations or business where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the
Secretary of Labor in appropriate rules and regulation.
The same does not apply to or permit deposits not to defray any deficiency which the taxi driver may incur in the remittance of his boundary. Also, when
private respondents stopped working for petitioners, the alleged purpose for which petitioners required such unauthorized deposits no longer existed.
Any balance due to private respondents after proper accounting must be returned to them with legal interest.
Sabalon was able to withdraw his deposits through valesor he incurred shortages, such that he is even indebted to petitioners in the amount of P3,448.00
With respect to Maldigans deposits, nothing was questioned was mentioned questioning the same even in the present.
Since the evidence shows that he had not withdrawn the same he should be reimbursed the amount of his accumulated cash deposits.
Respondents are not entitled to the refund of the P20.00 car wash payments they made.
Car washing a tour of duty is a practice in the taxi industry, and is, in fact, dictated by fair play.
With regard to carwash fee.
 There is no dispute that as a matter of practice in the taxi industry, after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the
same clean condition when he took it out, and as acclaimed by the respondents, complaints were made to shoulder the expenses for washing, the amount
doled out was paid directly to the person who washed the unit, thus we find nothing illegal in this practice, much more to consider the amount paid by the
driver as illegal deduction in the context of the law.
Car washing after a tour of duty is a practice in the taxi industry, and is, in fact, dictated by fair play,
With regard to attorneys fees
Article 222 Section 3 of PD No. 1691 states that non-lawyers may appear before the NLRC or any labor arbiter only if they represent themselves, or if they
represent their organization or the members thereof. While it may be true that Pulia was the authorized representative of respondents, he was a non-lawyer
who did not fall in either of the foregoing categories. Hence, by clear mandate of the law, he is not entitled to attorneys fees.
No attorney-client relationship.

NIA Jewelry Mfg. Inc. and Elisea Abella vs. Madeline Montecillo, Liza Trinidad AUTHOR: Tristan
[G.R. No.188169, Nov. 28, 2011] NOTES:
TOPIC: Wage Prohibitions Prohibition against requirement to make deposits
for loss or damage PONENTE: Reyes
CASE LAW/ DOCTRINE:
In the making of deductions from the salaries, it must be established that it is authorized by law, or there are regulations issued by the Secretary of Labor. Further,
the posting of cash bonds should be proven as a recognized practice in the petitioners business, or alternatively, the petitioners should seek for the determination
by the Secretary of Labor through the issuance of appropriate rules and regulations that the policy the former seeks to implement is necessary or desirable in the
conduct of business.
FACTS:
Madeline Montecillo and Liza Trinidad, hereinafter referred to collectively as the respondents, were first employed as goldsmiths by the petitioner Nia Jewelry
Manufacturing of Metal Arts, Inc. (Nia Jewelry) Petitioner Elisea Abella (Elisea) is Nia Jewelry's president and general manager.
There were incidents of theft involving goldsmiths in Nia Jewelry's employ.
Nia Jewelry imposed a policy for goldsmiths requiring them to post cash bonds or deposits in varying amounts but in no case exceeding 15% of the latter's
salaries per week. The deposits were intended to answer for any loss or damage which Nia Jewelry may sustain by reason of the goldsmiths' fault or negligence
in handling the gold entrusted to them. The deposits shall be returned upon completion of the goldsmiths' work and after an accounting of the gold received.
On August 14, 2004, the respondents no longer reported for work.
September 7, 2004, the respondents filed against Nia Jewelry complaints for illegal dismissal. The respondents alleged that they were constructively dismissed
by Nia Jewelry as their continued employments were made dependent on their readiness to post the required deposits.
Nia Jewelry alleged that the goldsmiths were given the option not to post deposits, but to sign authorizations allowing the former to deduct from the latter's
salaries amounts not exceeding 15% of their take home pay should it be found that they lost the gold entrusted to them.
Respondents Position: Citing Labor Code Art. 113/114 and Sections 12, 13 and 14, Book III, Rule VIII of the Omnibus Rules Implementing the Labor Code
(Omnibus Rules), Salary deductions made prior to the occurrence of loss or damage are illegal and constitute as undue interferences in the workers' disposal
of their wages.
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:(a) In
cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium
on the insurance;(b) For union dues, in cases where the right of the worker or his union to 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.
Article 114. Deposits for loss or damage. No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of
loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business
where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and
regulations.
Petitioners defense: Point out that Section 14, Book III, Rule VIII of the Omnibus Rules does not define the circumstances when the making of deposits is
deemed recognized, necessary or desirable. The petitioners then argue that the intention of the law is for the courts to determine on a case to case basis what
should be regarded as recognized, necessary or desirable and to test an employer's policy of requiring deposits on the bases of its reasonableness and necessity.
ISSUE (S):
1. WoN respondents were constructively dismissed amounting to illegal dismissal. NO
2. WoN the policy requiring the posting of cash bonds/deposits in this case complied with the requirements of the law. NO
HELD: YES. Petition is Partially Granted. Nia Jewelry Won the case. The court held that the respondents were not illegally dismissed however, imposition of Nia
Jewelrys new policy was held to lack legal basis.
1. RE: NO Illegal Dismissal
The petitioners did not whimsically or arbitrarily impose the policy to post cash bonds or make deductions from the workers' salaries. As attested to by
the respondents' fellow goldsmiths in their Joint Affidavit, the workers were convened and informed of the reason behind the implementation of the
new policy. Instead of airing their concerns, the respondents just promptly stopped reporting for work. Besides, as stressed by the petitioners, the new
policy was intended to merely curb the incidences of gold theft in the work place.
We find no grounds to hold that the respondents were dismissed expressly or even constructively by the petitioners. It was the respondents who merely
stopped reporting for work. While it is conceded that the new policy will impose an additional burden on the part of the respondents, it was not intended
to result in their demotion. Neither is a diminution in pay intended because as long as the workers observe due diligence in the performance of their
tasks, no loss or damage shall result from their handling of the gold entrusted to them, hence, all the amounts due to the goldsmiths shall still be paid in
full.
2. RE: Posting of cash bonds/Deductions from Salaries lacked legal basis (TOPIC)
Article 113 of the Labor Code is clear that there are only three exceptions to the general rule that no deductions from the employees'salaries can be
made. The exception which finds application in the instant petition is in cases where the employer is authorized by law or regulations issued by the
Secretary of Labor to effect the deductions. On the other hand, Article 114 states that generally, deposits for loss or damages are not allowed except in
cases where the employer is engaged in such trades, occupations or business where the practice of making deposits is a recognized one, or is necessary
or desirable as determined by the Secretary of Labor in appropriate rules or regulations.
Petitioners Nia Jewelry had failed to prove that their imposition of the new policy upon the goldsmiths under Nia Jewelry's employ falls under the
exceptions specified in Articles 113 and 114 of the Labor Code.
Articles 113 and 114 of the Labor Code are clear as to what are the exceptions to the general prohibition against requiring deposits and effecting
deductions from the employees' salaries. Hence, a statutory construction of the aforecited provisions is not called for.
 While the petitioners are not absolutely precluded from imposing the new policy, they can only do so upon compliance with the requirements of the law.
In other words, the petitioners should first establish that the making of deductions from the salaries is authorized by law, or regulations issued by the
Secretary of Labor. Further, the posting of cash bonds should be proven as a recognized practice in the jewelry manufacturing business, or alternatively,
the petitioners should seek for the determination by the Secretary of Labor through the issuance of appropriate rules and regulations that the policy the
former seeks to implement is necessary or desirable in the conduct of business. The petitioners failed in this respect. It bears stressing that without proofs
that requiring deposits and effecting deductions are recognized practices, or without securing the Secretary of Labor's determination of the necessity or
desirability of the same, the imposition of new policies relative to deductions and deposits can be made subject to abuse by the employers.

29. SHS Perforated Materials, Inc., Winfried Hartmannshenn, and Hinrich AUTHOR: The Talio (edited by Laureta)
Johann Schumacher vs Jose Manuel F. Diaz [G.R. No. 185814; Oct 13, 2010] PEZA Philippine Economic Zone Authority
TOPIC: Prohibition against withholding of wages PONENTE: Mendoza, J. ECCP European Chamber of Commerce of the Philippines
CASE LAW/ DOCTRINE:
Although management prerogative refers to "the right to regulate all aspects of employment," it cannot be understood to include the right to temporarily
withhold salary/wages without the consent of the employee.
Petitioners withheld respondents salary in the sincere belief that respondent did not work for the period in question and was, therefore, not entitled to it.
There was no dishonest purpose or ill will involved hence corporate officers cannot be held personally liable for the corporate obligations of SHS.
FACTS:
SHS is a start-up Philippine Corporation registered with the PEZA, with Hartmannshenn (a German) as its president and Schumacher (also a
German) as its treasurer. Schumacher is also the Executive Vice President (EVP) of the ECCP.
SHS and ECCP have an agreement wherein ECCP will handle the payroll requirements of SHS to help in its business operations and to limit
operational expenses. As such, the wages of SHS Employees are paid out by ECCP through its accounting department headed by Juliet Taguiang.
Diaz (respondent) was hired by SHS as the manager for business development located at Lot C3-2A, Phase I, Camelray Industrial Park II, Calamba,
Laguna. He had a probationary status (July 18, 2005 to January 18, 2006) with a monthly salary of Php 100k. His work hours were from 8am-5pm,
subject to the requirements of the job.
(YOU CAN SKIP THIS IF YOU WANT BUT JUST IN CASE) The daily/general duties of Diaz were to:
o Represent the company in any event organized by the PEZA;
o Perform sales or marketing functions;
o Monitor and follow-up customers inquiry on employers services;
o Monitor on-going job orders/projects;
o Submit requirements as needed in application/renewal of necessary permits;
o Liaise closely with the other commercial and technical staff of the company;
o Accomplish PEZA documents/requirements for every sales made, with legal assistance where necessary at the employers expense;
and
o Perform other related duties and responsibilities.
Diaz was also instructed by Hartmannshenn to report to the SHS office and plant at least 2 days every work week to observe technical processes involved in
the manufacturing of perforated materials, and to learn about the products of the company, which Diaz would have to market and sell.
During Diazs employment, Hartmannshenn was often abroad. His instructions were thus being sent to Diaz through e-mail or through phone. Whenever he
is in the country, he would have meetings with Diaz.
During one of the meetings, Hartmannshenn expressed his dissatisfaction with the poor performance of Diaz (failure to make any concrete business proposal
or implement any specific measure to improve the productivity of the SHS office and plant and failure to deliver sales except for a meager Php 2500 for a
sample product).
Hartmannshenn alleged that Diaz acknowledged his poor performance and offered to resign from the company through e-mail. However, Diaz denied sending
such e-mail. But he admitted that he had reported to the office only 8 times from July 18 to Nov. 30, 2005.
On Nov. 29, 2005, Hartmannshenn instructed Taguiang not to release the salary of Diaz. The next day, Diaz served SHS a demand letter and his resignation
letter. The resignation letter demanded for his unpaid and withheld salary of Php 50k from Nov. 16-30 and stated that it is because of such illegal and unfair
labor practices that he is resigning.
Hartmannshenn alleged that he met with Diaz in the evening of Nov. 30 accepted his resignation and informed the latter that his salary would be released
upon explanation of his failure to report to work and upon proof that he did work for the period covered by his withheld salary (Nov. 16-30). Diaz agreed to
such conditions but later sent an e-mail on Dec. 1, 2005 asking for the release of his salary.
Diaz, however, claimed that the meeting took place in the evening of Dec. 1, during which, he was repeatedly insulted and was demanded to accept Php 25k
instead of his accrued salary and to stop working for SHS. He then sent an e-mail asking for the release of his salary. A second e-mail was sent the following
day demanding, in addition, his 13th month pay, moral and exemplary damages, and attorneys fees.
On Dec. 9, Diaz filed a complaint for illegal dismissal and non-payment of salaries/wages and 13th month pay with prayer for reinstatement and full backwages.
LABOR ARBITER: Ruled in favour of Diaz (Php 704,166.67 as backwages; Php 50k for unpaid wages; Php 37,083.33 as unpaid 13 th month pay). Diaz was
constructively dismissed because the withholding of his salary was contrary to Art. 116 of the Labor Code because it was not one of the exceptions for allowable
wage deduction by the employer under Art. 113. His probationary status was also deemed regularized because Petitioners failed to conduct a prior evaluation
of his performance and to give notice 2 days prior to his termination as required by the Probationary Contract of Employment and Art. 281.
NLRC: Reversed the decision of the LA. The withholding of the salary of Diaz was A VALID exercise of management prerogative. The act was deemed justified
as it was reasonable to demand an explanation for failure to report to work and to account for his work accomplishments. Diaz could not be deemed to have
been regularized due to voluntarily resigning prior to the completion of the probationary period.
CA: Reversed the decision of the NLRC. The withholding of salary was NOT A VALID exercise of management prerogative as there is no such thing as a
management prerogative to withhold wages temporarily. Diazs alleged failure to report to work were found to be unsubstantiated allegations not
corroborated by any other evidence, insufficient to justify the withholding of salary and lacking in probative value.
ISSUE(S): WON the temporary withholding of respondents salary/wages was valid?
HELD: No, it is not.
Management prerogative refers "to the right of an employer to regulate all aspects of employment, such as the freedom to prescribe work assignments,
working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and
recall of work." Although management prerogative refers to "the right to regulate all aspects of employment," it cannot be understood to include the right to
temporarily withhold salary/wages without the consent of the employee.
Sanctioning such would run contrary to Art. 116 of the Labor Code:
ART. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a
worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers consent.
 Any withholding of an employees wages by an employer may only be allowed in the form of wage deductions under the circumstances provided in Art. 113:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium
on the insurance;
(b) For union dues, in cases where the right of the worker or his union to 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.
The Court finds petitioners evidence insufficient to prove that respondent did not work from November 16 to November 30, 2005. As can be gleaned from
respondents Contract of Probationary Employment and the exchanges of electronic mail messages between Hartmannshenn and respondent, the latters duties
as manager for business development entailed cultivating business ties, connections, and clients in order to make sales. Such duties called for meetings with
prospective clients outside the office rather than reporting for work on a regular schedule. In other words, the nature of respondents job did not allow close
supervision and monitoring by petitioners. Neither was there any prescribed daily monitoring procedure established by petitioners to ensure that respondent
was doing his job.

Although it cannot be determined with certainty whether respondent worked for the entire period from Nov. 16-30, 2005, the consistent rule is that if doubt
exists between the evidence presented by the employer and that by the employee, the scales of justice must be tilted in favor of the latter in line with the
policy mandated by Art. 2 and 3 of the Labor Code to afford protection to labor and construe doubts in favor of labor. For petitioners failure to satisfy their
burden of proof, respondent is presumed to have worked during the period in question and is, accordingly, entitled to his salary. Therefore, the withholding
of respondents salary by petitioners is contrary to Art. 116 of the Labor Code and, thus, unlawful.
Petitioners withheld respondents salary in the sincere belief that respondent did not work for the period in question and was, therefore, not entitled to it.
There was no dishonest purpose or ill will involved as they believed there was a justifiable reason to withhold his salary. Thus, although they unlawfully
withheld respondents salary, it cannot be concluded that such was made in bad faith. Accordingly, corporate officers, Hartmannshenn and Schumacher, cannot
be held personally liable for the corporate obligations of SHS.

EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID, AUTHOR: PELAYO
BONIFACIO MATUNDAN, NORA MENDOZA, ET AL., (Milan et.al), Petitioner vs. NOTES: Guys nood kayo Moana
NLRC, SOLID MILLS, INC., AND/OR PHILIP ANG, Respondents.
G.R. No. 202961 February 04, 2015
PONENTE: LEONEN, J. TOPIC: Prohibition against withholding of wages
CASE LAW/ DOCTRINE:
An employer is allowed to withhold terminal pay and benefits pending the employees return of its properties. As a general rule, No employer, in his own behalf or
in behalf of any person, shall make any deduction from the wages of his employees. The following cases are considered exceptions:
1. 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;
2. 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
3. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.
EMERGENCY:
FACTS:
Milan et.al are Solid Mills, Inc.s (SM) employees. Represented by National Federation of Labor Unions (NAFLU), their collective bargaining agent.
As SM employees, Milan et.al. and their families were allowed to occupy SMI Village, a property owned by SM.
According to SM, this was [o]ut of liberality and for the convenience of its employees . . . [and] on the condition that the employees would vacate the
premises anytime the Company deems fit.
September 2003 Milan et.al were informed that effective October 10, 2003, SM would cease its operations due to serious business losses. NAFLU
recognized SMs closure due to serious business losses in the memorandum of agreement (MOA) dated September 1, 2003 which provided for SMs
grant of separation pay less accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th month pay to the employees.
The agreement was entered into with full knowledge by the parties of their rights under the law and they bound themselves not to conduct any concerted
action of whatsoever kind, otherwise the grant of financial assistance as discussed above will be withheld.
SM filed its DOLE termination report on September 2, 2003.
Later, SM, through Alfredo Jingco, sent to Milan et.al individual notices to vacate SMI Village.
Milan et.al. were no longer allowed to report for work by October 10, 2003. They were required to sign a MOA with release and quitclaim before their
vacation and sick leave benefits, 13th month pay, and separation pay would be released.
Employees who signed the MOA were considered to have agreed to vacate SMI Village, and to the demolition of the constructed houses inside as
condition for the release of their termination benefits and separation pay. Milan et.al. refused to sign the documents and demanded to be paid their
benefits and separation pay.
Hence, they filed complaints before the Labor Arbiter for alleged non-payment of separation pay, accrued sick and vacation leaves, and 13th month pay.
ARGUMENT OF MILAN ET AL: Accrued benefits and separation pay should not be withheld because their payment is based on company policy and
practice. Moreover, the 13th month pay is based on law, specifically, Presidential Decree No. 851. Their possession of SM property is not an accountability
that is subject to clearance procedures. They had already turned over to SM their uniforms and equipment when SM ceased operations.
ARGUMENT OF SM: Milan et.al.s complaint was premature because they had not vacated its property.
LA In favor of Milan et.al. SM illegally withheld petitioners benefits and separation pay. The MOA dated September 1, 2003 stated no condition to the
effect that petitioners must vacate SMs property before their benefits could be given to them. Milan et.al.s possession should not be construed as their
accountabilities that must be cleared first before the release of benefits. They appealed to the NLRC
NLRC affirmed part of the decision but reversed and set aside another part and decided that Milan et.al.s monetary claims in the form of separation
pay, accrued 13th month pay for 2003, accrued vacation and sick leave pays are held in abeyance pending compliance of their accountabilities to
respondent company by turning over the subject lots they respectively occupy at SMI Village Sucat Muntinlupa City, Metro Manila to SM Linga and four
other were already paid their respective separation pays and benefits. Meanwhile, Teodora Mahilom already retired long before SMs closure. She was
already given her retirement benefits.
NLRC ruled that because of petitioners failure to vacate SMs property, SM was justified in withholding their benefits and separation pay. SM granted
the petitioners the privilege to occupy its property because petitioners employment. It had the prerogative to terminate such privilege. The termination
of SM and petitioners employer-employee relationship made it incumbent upon petitioners to turn over the property to SM.
 CA - ruled that SMs act of allowing its employees to make temporary dwellings in its property was a liberality on its part. It may be revoked any time at
its discretion.
ISSUE(S): WON an employer is allowed to withhold terminal pay and benefits pending the employees return of its properties
HELD: YES
The fact that majority of NAFLUs members were not occupants of respondent Solid Mills property is evidence that possession of the property was not
contemplated in the agreement. Accountabilities should be interpreted to refer only to accountabilities that were incurred by petitioners while they
were performing their duties as employees at the worksite. Moreover, applicable laws, company practice, or policies do not provide that 13th month
pay, and sick and vacation leave pay benefits, may be withheld pending satisfaction of liabilities by the employee.
Requiring clearance before the release of last payments to the employee is a standard procedure among employers, whether public or private. Clearance
procedures are instituted to ensure that the properties, real or personal, belonging to the employer but are in the possession of the separated employee,
are returned to the employer before the employees departure.
As a general rule, employers are prohibited from withholding wages from employees (Art. 116, Labor Code). The Labor Code also prohibits the elimination
or diminution of benefits (Art. 100, Labor Code).
However, our law supports the employers institution of clearance procedures before the release of wages. As an exception to the general rule that
wages may not be withheld and benefits may not be diminished, the Labor Code provides: Art. 113. Wage deduction. No employer, in his own behalf or
in behalf of any person, shall make any deduction from the wages of his employees, except:
a. In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid
by him as premium on the insurance;
b. For union dues, in cases where the right of the worker or his union to 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 and Employment.
The Civil Code provides that the employer is authorized to withhold wages for debts due: Article 1706. Withholding of the wages, except for a debt due,
shall not be made by the employer. Debt in this case refers to any obligation due from the employee to the employer. It includes any accountability
that the employee may have to the employer. There is no reason to limit its scope to uniforms and equipment, as petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that the release of petitioners benefits shall be less
accountabilities. Accountabilities of employees are personal. They need not be uniform among all employees in order to be included in accountabilities
incurred by virtue of an employer-employee relationship. Milan et.al. do not categorically deny Solid Mills ownership of the property, and they do not
claim superior right to it. What can be gathered from the findings of the Labor Arbiter, National Labor Relations Commission, and the Court of Appeals
is that Solid Mills allowed the use of its property for the benefit of Milan et.al. as its employees. Milan et.al were merely allowed to possess and use it
out of Solid Mills liberality. The employer may, therefore, demand the property at will.
Solid Mills won.

31 South Motorists Enterprises v. Roque Tosoc et al AUTHOR: Pineda

[G.R. No. 87449; 23 January 1990] NOTES:
TOPIC: prohibition against keeping employee records in a place other than the
working place PONENTE: Melancio-Herrera
CASE LAW/ DOCTRINE:
Section 11 of Rule X, Book II of Omnibus Rules Implementing the Labor Code: All employment records of the EE of the ER shall be kept and maintained in or about
the premises of the workplace. The premises of a workplace shall be understood to mean the main or branch office or establishment, if any, depending, upon where
the EEs are regularly assigned. The keeping of EEs records in another place is prohibited.
FACTS:
Respondent-employees of South Motorists Enterprises (SME) filed a complaint with the DOLE Regional District Office (RDO), alleging the non-payment of
emergency cost of living allowances (COLA).
During the RDO visit, SME was unable to present employment records, starting that such were unavailable, as they were transferred to another branch.
RDO issued an order directing SME to redress the non-payment. SOLE affirmed reward
SME filed Certiorari (Rule 65), contending that RDO had no jurisdiction to make such monetary awards + SOLE erred in affirming RDO, as RDO based its
decision only on a mere inspection report.
ISSUE(S): W/N SME liable to pay Respondents
HELD: Yes. SOLE did not err in affirming RDO decision. SME withheld records, and thus cannot now question the basis used by RDO in reaching a decision.
As to jurisdiction, RDO had jurisdiction for awards P5000 or less. For the awards more than P5000, it did not have jurisdiction; the Labor Arbiter does under Labor
Code.
Labor Arbiter has jurisdiction over money claims, arising from ER-EE relationship, if the amount is more than P5000.
SMEs failure to present employment records was due to their violation of DOLE Rules:
o Section 11 of Rule X, Book II of Omnibus Rules Implementing the Labor Code: All employment records of the EE of the ER shall be kept and
maintained in or about the premises of the workplace. The premises of a workplace shall be understood to mean the main or branch office
or establishment, if any, depending, upon where the EEs are regularly assigned. The keeping of EEs records in another place is prohibited.

CASE TITLE: Gaa v. Court of Appeals AUTHOR: Mendoza

[G.R. No. L-44169 Date December 3, 1985] Article 1708. The laborer' s wage shall not be subject to execution or
TOPIC: Prohibition against Garnishment attachment, except for debts incurred for food, shelter, clothing and medical
PONENTE: Patajo attendance."
CASE LAW/ DOCTRINE:
Article 1708 of the Civil Code which exempts "laborer's wage" from attachment or execution does not apply to a responsibly placed employee, supervisory or
managerial employee, but only to the rank and file.
In its broadest sense, the word "laborer" includes everyone who performs any kind of mental or physical labor, but as commonly and customarily used and
understood, it only applies to one engaged in some form of manual or physical labor. That is the sense in which the courts generally apply the term as applied in
exemption acts, since persons of that class usually look to the reward of a day's labor for immediate or present support and so are more in need of the exemption
than are other.
Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared what are to be exempted from attachment and execution. The term
"wages" as distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week,
month, or season, while "salary" denotes a higher degree of employment, or a superior grade of services, and implies a position of office: by contrast, the term
"wages" indicates considerable pay for a lower and less responsible character of employment, while "salary" is suggestive of a larger and more important service.
FACTS:
Respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building at T.M. Kalaw Street, Manila while Petitioner-Rosario A. Gaa
was then the building administrator.
Europhil filed an action with the CFI against Gaa for damages against petitioner for having perpetrated certain acts that Europhil Industries (considered a
trespass upon its rights, namely, cutting of its electricity, and removing its name from the building directory and gate passes of its officials and employees). CFI
ruled in favor of Europhil and ordered Gaa to pay the former a total of P20, 000 as damages.
The CFIs decision became final and executory and a writ of garnishment was issued against Gaa. Sheriff Cesar Roxas served a Notice of Garnishment upon
El Grande Hotel, where Gaa was then employed, garnishing her salary, commission and/or remuneration.
Gaa filed with the CFI Manila a motion to lift said garnishment on the ground that her "salaries, commission and/or remuneration" are exempted from
execution under Art 1708 NCC. Gaas motion was denied. CA dismissed her petition for Certiorari.
According to the CA: 1. Gaa is not a mere laborer as contemplated under Article 1708 as the term laborer does not apply to one who holds a managerial or
supervisory position like hers, but only to those "laborers occupying the lower strata; and 2. It also held that the term "wages" means the pay given "as hire
or reward to artisans, mechanics, domestics or menial servants, and laborers employed in manufactories, agriculture, mines, and other manual occupation
and usually employed to distinguish the sums paid to persons hired to perform manual labor, skilled or unskilled, paid at stated times, and measured by the
day, week, month, or season.
ISSUE(S): Whether or not the CA correctly interpreted the application of Article 1708 of the Civil Code.
HELD: Yes. Gaas petition to lift the notice of garnishment was denied.
RATIO:
Gaa is not an ordinary or rank and file laborer but "a responsibly place employee," of El Grande Hotel, "responsible for planning, directing, controlling, and
coordinating the activities of all housekeeping personnel" so as to ensure the cleanliness, maintenance and orderliness of all guest rooms, function rooms, public
areas, and the surroundings of the hotel. Considering the importance of her function in El Grande Hotel, it is undeniable that she is occupying a position equivalent
to that of a managerial or supervisory position.
Further, Gaa is not within the class pertained in Article 1708. Because the legislature intended the exemption in Article 1708 to operate in favor of any but those
who are laboring men or women in the sense that their work is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or
present support, and such persons are more in need of the exemption than any others.

33 DEVELOPMENT BANK OF THE AUTHOR: PAGCALIWAGAN

PHILIPPINES V SECRETARY OF LABOR NOTES:
G.R. No. 79351 November 28, 1989 Article 110. WORKER PREFERENCE IN CASE OF BANKRUPTCY.In the event of bankruptcy or liquidation of an
TOPIC: Workers Preference in the Event of employer's business, his workers shall enjoy first preference as regards wages due them for services rendered during
Bankruptcy the period prior to the bankruptcy or liquidation, any provision of law to the contrary notwithstanding. Unpaid wages
PONENTE: Cortes, J. shall be paid in full before other creditors may establish any claim to a share in the assets of the employer [Emphasis
supplied].
Section 10. PAYMENT OF WAGES IN CASE OF BANKRUPTCY. Unpaid wages earned by the employees before the
declaration of bankruptcy or judicial liquidation of the employer's business shall be given first preference and shall be
paid in full before other creditors may establish any claim to a share in the assets of the employer.
CASE LAW/ DOCTRINE:
What Article 110 of the Labor Code establishes is not a lien, but a preference of credit in favor of employees. This simply means that during bankruptcy, insolvency
or liquidation proceedings involving the existing properties of the employer, the employees have the advantage of having their unpaid wages satisfied ahead of
certain claims which may be proved therein. It bears repeating that a preference of credit points out solely the order in which creditors would be paid from the
properties of a debtor inventoried and appraised during bankruptcy, insolvency or liquidation proceedings. Moreover, a preference does not exist in any effective
way prior to, and apart from, the institution of these proceedings, for it is only then that the legal provisions on concurrence and preference of credits begin to
apply. Unlike a lien, a preference of credit does not create in favor of the preferred creditor a charge or proprietary interest upon any particular property of the
debtor. Neither does it vest as a matter of course upon the mere accrual of a money claim against the debtor. Certainly, the debtor could very well sell, mortgage
or pledge his property, and convey good title thereon, to third parties free from such preference.
FACTS:
Development Bank of the Philippines (DBP) seeks the nullification of the order issued by the Undersecretary of Labor and Employment, affirming that of the NCR
Officer-in-Charge Romeo Young. Order directs the DBP to deliver the properties of Riverside Mills Corporation (RMC) which it had in its possession to the Ministry
of Labor and Employment for proper disposition in the Labor Case pursuant to Article 110 of the Labor Code.

The Labor Case involves a complaint for illegal dismissal, unfair labor practice, illegal deductions from salaries and violation of the minimum wage law filed
by private respondents against RMC.
July 3, 1985 Director of the NCR MOLE ordered RMC to pay private respondents backwages and separation benefits
October 22, 1985 Writ of execution was issued directing the sheriff to collect P1,256,678.76 from RMC and in case of failure to collect, to execute
the writ by selling the goods and chattel of RMC not exempt from execution or, in case of insufficiency, the real or immovable properties of RMC
Writ of execution was returned unserved and unsatisfied, with the information that the company premises of RMC had been padlocked and foreclosed by
DBP
DBP had instituted extra-judicial foreclosure proceedings as early as 1983 on the properties and other assets of RMC as a result of the latters
failure to meet its obligations on the loans it secured from RMC.
Private respondents filed with the MOLE a Motion for Delivery of Properties of the RMC in the Possession of DBP to the MOLE for Proper Disposition stating
that pursuant to Article 110 of the Labor Code, they enjoy 1st preference over the mortgaged properties of RMC for the satisfaction of the judgment rendered
in their favor notwithstanding the foreclosure of the same by DBP as mortgage creditor.
DBP filed its opposition
Officer-in-Charge Romeo Young signed order granting private respondents motion based on the finding that Article 110 of the Labor Code and the ruling laid
down in Philippine Commercial and Industrial Bank (PCIB) v Natural Mines and Allied Workers (NAMAWU-MIF) support the conclusion that private
respondents enjoyed a preferential lien for the payment of their backwages and separation benefits over the properties of RMC which were foreclosed by
DBP.
DBP filed its MR contending that Article 110 of the Labor Code has no application in this case because:
The properties sought to be delivered have ceased to belong to RMC in view of the fact that DBP had foreclosed on the mortgage, and the
properties have been sold and delivered to 3rd parties;
The requisite condition for the application of Article 110 of the Labor Code is not present since no bankruptcy or insolvency proceedings over
RMC properties and assets have been undertaken.
 Hence, petition for certiorari.
ISSUE(S): WON Secretary of Labor acted with grave abuse of discretion in enforcing private respondents right of preference under Article 110 of the Labor Code
notwithstanding the absence of bankruptcy, liquidation or insolvency proceedings against RMC.
HELD: YES. It is clear from the wording of the law that the preferential right accorded to employees and workers under Article 110 may be invoked only during
bankruptcy or judicial liquidation proceedings against the employer. The law is unequivocal and admits of no other construction.
Respondents contend that the terms "bankruptcy" or "liquidation" are broad enough to cover a situation where there is a cessation of the operation of the
employer's business as in the case at bar. Court laid down the ruling that Article 110 of the Labor Code, which cannot be viewed in isolation of, and must always be
reckoned with the provisions of the Civil Code on concurrence and preference of credits, may not be invoked by employees or workers of RMC like private
respondents herein, in the absence of a formal declaration of bankruptcy or a judicial liquidation order of RMC (DBP v Hon. Labor Arbiter Santos).

The rationale for making the application of Article 110 of the Labor Code contingent upon the institution of bankruptcy or judicial liquidation proceedings against
the employer is premised upon the very nature of a preferential right of credit. A preference of credit bestows upon the preferred creditor an advantage of having
his credit satisfied first ahead of other claims which may be established against the debtor. Logically, it becomes material only when the properties and assets of
the debtor are insufficient to pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how can the necessity exist to determine which
of his creditors shall be paid first or whether they shall be paid out of the proceeds of the sale of the debtor's specific property? Indubitably, the preferential right
of credit attains significance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been
established

DBP had extra-judicially foreclosed the subject properties from RMC as early as 1983 and purchased the same at public auction, and that RMC had failed to exercise
its right to redeem. Thus, when Officer-in-Charge Young issued on December 11, 1986 the order which directed the delivery of these properties to the MOLE, RMC
had ceased to be the absolute owner thereof. Consequently, the order was directed against properties which no longer belonged to the judgment debtor RMC.

What Article 110 of the Labor Code establishes is not a lien, but a preference of credit in favor of employees. This simply means that during bankruptcy, insolvency
or liquidation proceedings involving the existing properties of the employer, the employees have the advantage of having their unpaid wages satisfied ahead of
certain claims which may be proved therein. It bears repeating that a preference of credit points out solely the order in which creditors would be paid from the
properties of a debtor inventoried and appraised during bankruptcy, insolvency or liquidation proceedings. Moreover, a preference does not exist in any effective
way prior to, and apart from, the institution of these proceedings, for it is only then that the legal provisions on concurrence and preference of credits begin to
apply. Unlike a lien, a preference of credit does not create in favor of the preferred creditor a charge or proprietary interest upon any particular property of the
debtor. Neither does it vest as a matter of course upon the mere accrual of a money claim against the debtor. Certainly, the debtor could very well sell, mortgage
or pledge his property, and convey good title thereon, to third parties free from such preference.

REPUBLIC (BOC & BIR) v. PERALTA (CFI judge), QUALITY TABACCO CORP., FOITAF (long Spanish AUTHOR: RAMOS
name), USTC EMPLOYEES ASSOCIATION WORKERS UNION-PTGWO [G.R. L-56568 May 20, 1987] NOTES: Sorry, feel ko important yung POC outline. Included
TOPIC: Workers Preference in the Event of Bankruptcy PONENTE: Feliciano, J. most of it. If naaalala nyo pa naman, skip to the next parts
CASE LAW/ DOCTRINE: LC does not modify the overriding preference of taxes, BUT it does modify the order of preference under NCC Art 2244
a) firstly, by removing the one year limitation found in Article 2244 (2); and
b) secondly, by moving up claims for unpaid wages of laborers or workers of the Insolvent from second priority to first priority in the order of preference
established by Article 2244
FACTS:
May 1977: Quality Tabacco commenced voluntary insolvency proceedings. Creditors made their claims
i. P2,806,729.92, by the USTC Association of Employees and workers Union-PTGWO USTC as separation pay for their members (+ P280,672.99 as
attorney's fees awarded by NLRC in a prior case)
ii. P53,805.05 by Federacion de la Industria Tabaquera y Otros Trabajadores de Filipinas ("FOITAF) as separation pay for their members (also
awarded by NLRC in the same case)
iii. P1,085,188.22 by BIR for tobacco inspection fees (1 Oct 1967 to 28 Feb 1973)
iv. P276,161.00 by BOC for customs duties and taxes payable on various importations by the Insolvent. These obligations are secured by surety
bonds. (some imported items are still in customs custody)
CFI Manila (Nov 17, 1980): claims of USTC and FOITAF ("Unions") for separation pay of their respective members as awarded by the NLRC were to be
preferred over the claims of the BOC and the BIR. In so ruling, it relied on LC Art 110:
o In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards wages due them for
services rendered during the period prior to the bankruptcy or liquidation, any provision of law to the contrary notwithstanding. Union paid
wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer.
Sol Gen: LC Art 110 is NOT applicable, as it speaks of "wages" which does NOT include the separation pay claimed by the Unions
o SEPARATION PAY - given to a laborer for a separation from employment computed on the basis of the number of years the laborer was
employed by the employer; it is a form of penalty or damage against the employer in favor of the employee for the latter's dismissal or
separation
o WAGES - 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
ISSUE(S):
1. WON wages embrace separation/termination pay [YES, it does]
2. What impact does LC Art 110 have on the NCCs scheme for the classification, concurrence, and preference of credits? [See discussion below]
HELD: Petition GRANTED. CFI orders dated 17 Nov 1980 and 19 Jan 1981 are MODIFIED accordingly. Case is REMANDED to CFI for further proceedings in
insolvency compatible with the rulings set forth above.
1. Separation/termination pay fall within the definition of wages
In the context of insolvency, termination or separation pay is forms part of the remuneration or other money benefits accruing to employees or workers
by reason of their having previously rendered services to their employer
o Liability for separation pay might have the effect of a penalty, so far as the employer is concerned.
o So far as concerns the employees, separation pay is additional remuneration to which they become entitled (due to prior services rendered),
when they are separated from the employer's service.
 o The relationship between separation pay and services rendered is underscored by the fact that separation pay is measured by the amount
(i.e., length) of the services rendered.
Doubts assuming that substantial, rather than frivolous doubts remain in the interpretation of the LC and its IRRs shall be "resolved in favor of labor."

LC Art 110 must be read in relation to the provisions of the Civil Code concerning the classification, concurrence and PREFERENCE OF CREDITS, which
provisions find particular application in insolvency proceedings where the claims of all creditors, preferred or non-preferred, may be adjudicated
o begin by outlining the scheme constituted by the provisions of the Civil Code
o classify credits against a particular insolvent into 3 general categories
a) special preferred credits listed in Articles 2241 and 2242,
b) ordinary preferred credits listed in Article 2244; and
c) common credits under Article 2245.
o NCC Art 2241 and 2242: these credits constitute liens or encumbrances on the specific property to which they relate.
o Art 2241 and 2242, jointly with Art 2246 to 2249, establish a Two-Tier Order of Preference.
1st tier: includes only taxes, duties and fees due on specific movable or immovable property.
duties, taxes and fees due [on insolvents specific movable property] to the State or its subdivisions (Art 2241 [1]) and
taxes due upon insolvent's land or building (2242 [1])stand first in preference in respect of the particular property
taxed
[T]axes in number 1, Art 2241 and number 1, Art 2242 shall first be satisfied.
2nd tier: All other special preferred credits, satisfied pari passu and pro rata from the residual value of the specific property they
relate to
Other claims (numbers 2 to 13 in Art 2241 and 2 to 10 in Art 2242), all come after taxes in order of precedence
such claims enjoy their privileged character as liens and may be paid ONLY to the extent that taxes have been paid
from the proceeds of the specific property (or from any other sources) and ONLY in respect of the remaining balance
of such proceeds.
these other credits, although constituting liens attaching to particular property, are NOT preferred one over another
inter.
Provided tax liens shall have been satisfied, non-tax liens in specific property are to be treated on an equal basis and
to be satisfied concurrently and proportionately.
o Art 2243: credits "shall be considered as mortgages or pledges of real or personal property, or liens within the purview of provisions on
insolvency."
o Credits which are specially preferred (tax or non-tax lien) in turn, take precedence over ordinary preferred credits so far as concerns the
property to which the liens have attached.
The specially preferred credits must be discharged first out of the proceeds of the property to which they relate, before ordinary
preferred creditors may lay claim to any part of such proceeds.
o If the value of the specific property involved is greater than the all of the tax liens and other specially preferred credits, the residual value will
form part of the "free property" of the insolvent
o If the value of the specific movable or immovable is less than the aggregate of the tax liens and other specially preferred credits
unsatisfied balance of the tax liens and other such credits are to the treated as ordinary credits under Art 2244 and to be paid in
the order of preference there set up
Art 2244 creates no liens on determinate property which follow such property only in respect of the insolvent's "FREE PROPERTY"
Art 2244 creates only simply rights in favor of certain creditors to have the insolvents assets applied in a certain sequence or
priority
certain taxes and assessments also figure but these do not have the same kind of overriding preference that Art 2241 (1) and 2242
(1)
a) taxes and assessments due to the national government, excluding those which result in tax liens under Art 2241 (1) and
2242 (1) but including the balance thereof not satisfied out of the movable or immovable property to which such liens
attached, are 9th in priority;
b) taxes and assessments due any province, excluding those impressed as tax liens under Art 2241 (1) and 2242 (1), but
including the balance thereof not satisfied out of the movable or immovable property to which such liens attached, are
tenth in priority; and
c) taxes and assessments due any city or municipality, excluding those impressed as tax liens under Art 2241 (1) and 2242
(2) but including the balance thereof not satisfied out of the movable or immovable property to which such liens
attached, are 11th in priority.

CLAIM OF THE BOC (unpaid customs and duties)

o Sec 1204, Tariff and Customs Code: liability of an importer for duties, taxes and fees and other charges attaching on importation constitute a
personal debt due from the importer to the government which can be discharged only by payment in full of all duties, taxes, fees and other
charges legally accruing It also constitutes a lien upon the articles imported which may be enforced while such articles are in the custody or
subject to the control of the government.
o BOCs claim for unpaid customs duties and taxes has the status of a specially preferred credit under NCC Art 2241 (1) ONLY in respect of the
articles imported which resulted in the assessment of the unpaid taxes and duties, and which are still in BOCs custody or control
Goods imported on one occasion are NOT subject to a lien for duties and taxes assessed upon other importations
ties and taxes which remain unsatisfied after levy upon the imported articles on which such duties and taxes are due, would have
to be paid out of the Insolvent's "free property," per Art 2244 (9) 9th in priority
CLAIM OF THE BIR (Tabacco Inspection Fees)
o Old NIRC Sec 315 (later Sec 301 of the Tax Code of 1977): unpaid "internal revenue tax," together with related interest, penalties and costs,
constitutes a lien in favor of the Government from the time an assessment therefor is made and until paid, "upon all property and rights to
property belonging to the taxpayer."
Tobacco inspection fees are one of the miscellaneous taxes collected both as a regulatory measure and as a revenue-raising
measure: half of the accrues to the Tobacco Inspection Fund, while the other half accrues to the Cultural Center of the Philippines
"tax" is used in Sec 315 of the old Tax Code is used in a broad sense, encompassing all government revenues collectible by the CIR
under said Code, whether involving taxes, in the strict technical sense thereof, or not
 o This claim of the BIR constitutes a claim for unpaid internal revenue taxes which gives rise to a tax lien upon ALL the assets, movable and
immovable, of the Insolvent as taxpayer. Under NCC Art 2241 (1), 2242 (1), and 2246-2249, this tax claim must be given preference over any
other claim of any other creditor, in respect of any and all properties of the Insolvent
CLAIM OF THE UNIONS (Separation Pay)
o LC Art 110 does NOT purport to create a lien in favor of workers or employees for unpaid wages either upon all of the properties or upon any
particular property owned by their employer.
Claims for unpaid wages do NOT fall at all within the category of specially preferred claims established under NCC Art 2241 and
2242,
EXCEPT to the extent that such claims for unpaid wages are already covered by Art 2241 (6): "claims for laborers' wages,
on the goods manufactured or the work done;" or by Art 2242, (3): "claims of laborers and other workers engaged in
the construction, reconstruction or repair of buildings, canals and other works, upon said buildings, canals or other
works."
To the extent that claims for unpaid wages fall outside the scope of Art 2241 (6) and 2242 (3), they would come within the ambit
of the category of ordinary preferred credits under Art 2244
o Applying NCC Art 2241 (6) here, the claims for separation pay of their members constitute liens attaching to the processed leaf tobacco,
cigars and cigarettes and other products produced or manufactured by the Insolvent, but NOT to other assets owned by the Insolvent.
Even in respect of such tobacco and tobacco products produced by the Insolvent, the claims of the Unions may be given effect
only AFTER the BIR's claim for unpaid tobacco inspection fees have been satisfied out of the products manufactured by the
Insolvent
o Art 2242 (3) also creates a lien upon a building or other real property of the Insolvent in favor of workmen who constructed or repaired
such building or other real property. (NOT relevant here, since the union members arent involved in such work)
Thus, the Unions' claims do NOT therefore constitute a lien or encumbrance upon any immovable property owned by the Insolvent,
but rather, upon the Insolvent's existing inventory (processed tobacco and tobacco products)

2. LC does not modify the overriding preference of taxes, BUT it does modify the order of preference under NCC Art 2244
o LC Art 110 did NOT sweep away the overriding preference accorded under the scheme of the Civil Code to tax claims of the government or any
subdivision thereof which constitute a lien upon properties of the Insolvent.
Taxes are the lifeblood of government. Its effective collection is of highest importance for the sovereign. It is critical for its own survival.
As such, the language of a much higher degree of specificity than that exhibited in LC Art 110 of the Labor Code is necessary to set aside the
intent and purpose of the legislator that shines through the precisely crafted provisions of the Civil Code.
It CANNOT be assumed simpliciter that the legislative authority, by using in LC Art 110 the words "first preference" and "any provision of law
to the contrary notwithstanding" intended to disrupt the elaborate and symmetrical structure set up in the Civil Code.
NEITHER can it be assumed casually that LC Art 110 intended to subsume the sovereign itself within the term "other creditors" in stating that
"unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of employer."
o LC Art 110 nonetheless makes an impact on the NCC provisions.
Bearing in mind the overriding precedence given to taxes, duties and fees by the Civil Code and the fact that the Labor Code does not impress
any lien on the property of an employer, the use of the phrase "first preference" in Art 110 indicates that what it intended to modify is the
order of preference found in NCC Art 2244
order relates to property of the Insolvent that is NOT burdened with the liens created or recognized by Art 2241 and 2242.
LC Art 110 has modified NCC Art 2244 in two respects:
a) firstly, by removing the one year limitation found in Article 2244 (2); and
b) secondly, by moving up claims for unpaid wages of laborers or workers of the Insolvent from second priority to first priority in the
order of preference established by Article 2244

REMAND ORDER: trial court should inventory the properties of the Insolvent so as to determine specifically:
a) whether the assets of the Insolvent before the trial court includes stocks of processed or manufactured tobacco products; and
If the Insolvent has inventories of processed or manufactured tobacco products,
such must first satisfy the claim of the BIR for unpaid tobacco inspection fees.
The remaining value of such inventories after satisfaction of such fees (or should such inspection fees be satisfied out
of other properties of the Insolvent) will be subject to a lien in favor of the Unions by virtue of Art 2241 (6).
If the Insolvent no longer has any inventory of processed or manufactured product,
claim of the Unions for separation pay would have to be satisfied out of the "free property" of the Insolvent under
NCC Art 2244, as modified by LC Art 110
b) whether the BOC still has in its custody or control articles imported by the Insolvent and subject to the lien of the government for unpaid
customs duties and taxes
should the BOC no longer have any importations by the Insolvent still within customs custody or control, OR should the importations
still held by the Bureau of Customs be or have become insufficient in value for the purpose, customs duties and taxes remaining
unpaid would have only 9th priority by virtue of NCC Art 2244 (9).
In respect therefore of the Insolvent's "free property, " the claims of the Unions will enjoy 1st priority under NCC Art 2244 as
modified and will be paid ahead of the claims of the BOC for any customs duties and taxes still remaining unsatisfied
o NOTE: claims of the Unions do NOT include the 10% claim for atty's fees. Atty's fees do not stand on the same footing as separation pay
SEPARATE OPINION: Cruz, J. (Dissenting)
Main decision reads an exception that is not there. The language of the law is clear that it intended to apply regardless of any other provision of law. Preference
of wages in case of bankruptcy should be given preference over even taxes. If the law intended for an exception, it would have so stated.
LC was promulgated later than NCC, the Insolvency Law, and the NIRC. It should prevail over the others.
Power of taxation, while indispensable, is NOT absolute and may be subordinated to the demands of Social justice

CASE TITLE: Balladares V. Peak Ventures Corp. AUTHOR: REYES

[G.R. No. Date] NOTES:
TOPIC: Jursidiction in Wage Recovery Cases PONENTE: Nachura
DOCTRINE
Yes. The Supreme Court ruled that the visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with
labor standard laws can be exercised even when the individual claim exceeds P5,000.
However, if the labor standards case is covered by the exception clause in Article 128 (b) of the Labor Code, then the Regional Director will have
to endorse the case to the appropriate Arbitration Branch of the NLRC
In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present:
That the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is
a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection.

FACTS:

Petitioners Nestor J. Balladares et al., were employed by respondent Peak Ventures Corp as security guards and were assigned at the premises of
respondent YMOAA.
They filed a complaint for underpayment of wages against their employer, Peak Ventures, with the DOLE. Acting on the complaint, DOLE conducted an
inspection of Peak Ventures and the following violations were noted: underpayment of the minimum wage and other auxiliary benefits; pertinent
employment records were not available at the time of inspection.
A Notice of Inspection Result was issued to Peak Ventures instructing them to effect restitution and/or file its objections within five working days from
receipt thereof. Respondent failed to correct the violations or contest the findings as required, hence, the parties were summoned for hearing.
Peak Ventures moved to implead its client YMOAA, claiming that any underpayment of wages arose from the failure of YMOAA to pay Peak Ventures the
amount due petitioners as prescribed by various wage orders.
After the hearing, DOLE Regional Director Maximo Lim rendered judgment in favor of petitioners and ruled that the contractor was jointly and severally
liable with the principal. Lim averred that because Peak Ventures failed to controvert the complaint and its repeated denial to give access to records, it
is deemed to have waived its constitutional right to due process.
Petitioners were awarded P1,106,298. Peak Ventures filed a motion for reconsideration, but the same was denied prompting them to appeal to the CA.

CA RULING:
The CA granted the petition, ruling that the Regional Director had no jurisdiction to hear and decide the case, because the claims of each of the petitioners
exceeded P5,000.00, and the power to adjudicate such claims belonged to the Labor Arbiter, pursuant to Servandos, Inc. v. Secretary of Labor
The appellate court ratiocinated that this exclusive jurisdiction of the Labor Arbiters was confirmed by Article 129 of the Labor Code, which excludes from
the jurisdiction of the Regional Directors or any hearing officer of the DOLE the power to hear and decide claims of employees arising from employer-
employee relations exceeding the amount of P5,000.00 for each employee

ISSUE(S): Does DOLE Regional Director has jurisdiction to even though the claims of the complainants exceeded P5,000?

HELD: Yes

RATIO:
Yes. The Supreme Court ruled that the visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with
labor standard laws can be exercised even when the individual claim exceeds P5,000.
However, if the labor standards case is covered by the exception clause in Article 128 (b) of the Labor Code, then the Regional Director will have
to endorse the case to the appropriate Arbitration Branch of the NLRC
In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present:
That the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is
a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection.
The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of
inspection results. In the case at bar, Peak Ventures did not contest the findings of the labor regulations officer during the hearing or after receipt
of notice of the inspection results.
Accordingly, we find no sufficient reason to warrant the certification of the instant case to the LA and divest the Regional Director of jurisdiction.
Respondent did not contest the findings of the labor regulations officer. Even during the hearing, respondent never denied that petitioners were
not paid correct wages and benefits

CASE LAW/ DOCTRINE:

36. Meteoro v. Creative Creatures, Inc., AUTHOR: S A Y O

G.R. No. 171275, July 13, 2009 NOTES:
TOPIC: Wage Recovery/ Jurisdiction
PONENTE: NACHURA
CASE LAW/ DOCTRINE:
The power of the Regional Director to hear and decide the monetary claims of employees is not absolute. The last sentence of Article 128 (b) of the Labor
Code, otherwise known as the exception clause, provides an instance when the Regional Director or his representatives may be divested of jurisdiction over
a labor standards case.
Under prevailing jurisprudence, the so-called exception clause has the following elements, all of which must concur: (a) that the employer contests the
findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and
(c) that such matters are not verifiable in the normal course of inspection.
FACTS:
Respondent is a domestic corporation engaged in the business of producing, providing, or procuring the production of set designs and set construction services
for television exhibitions, concerts, theatrical performances, motion pictures and the like.
 It primarily caters to the production design requirements of ABS-CBN Broadcasting Corporation in Metro Manila and nationwide
Petitioners were hired by respondent on various dates as artists, carpenters and welders. They were tasked to design, create, assemble, set-up and dismantle
props, and provide sound effects to respondents various TV programs and movies.

Petitioners filed their respective complaints for non-payment of night shift differential pay, overtime pay, holiday pay, 13thmonth pay, premium pay for
Sundays and/or rest days, service incentive leave pay, paternity leave pay, educational assistance, rice benefits, and illegal and/or unauthorized deductions
from salaries against respondent, before the DOLE-NCR.

Respondent:

claimed that petitioners were contractual employees and/or independent talent workers; and that petitioners were required to punch their cards.
argued that the DOLE-NCR had no jurisdiction over the complaint of the petitioners because of the absence of an employer-employee relationship (petitioners
were free-lance individuals, performing special services with skills and expertise inherently exclusive to them like actors, actresses, directors, producers, and
script writers, such that they were treated as special types of workers)

Petitioners:
averred that they were employees of respondent, as the elements of an employer-employee relationship existed.
filed a complaint for illegal dismissal against petitioner, with prayer for payment of overtime pay, premium pay for holiday and rest day, holiday pay, service
incentive leave pay, 13th month pay and attorneys fees before the National Labor Relations Commission (NLRC

DOLE Regional Director:

issued an Order directing respondent to pay petitioners the total amount of P2,694,709.00. (representing the unpaid benefits)
sustained existence of employer- employee relationship (petitioners worked for more than one year doing same routine work)
upheld the DOLE-NCRs jurisdiction to hear and determine cases in violation of labor standards law.

(On appeal) DOLE Secretary:

affirmed the Regional Directors findings. (on jurisdiction: Secretary of Labor or his duly authorized representative is allowed to use his visitorial and
enforcement powers to give effect to labor legislation)

CA: REVERSED (respondent had consistently disputed the existence of employer-employee relationship, thereby placing the case beyond the jurisdiction of the
Regional Director)
Petitioners now come before this Court in this petition for review on certiorari
ISSUE(S): WON CA erred in ruling that the Regional Director has no jurisdiction thus annulling the orders of both the Director and the Secretary
HELD: NO (NLRC has jurisdiction)
As it is now worded, and as consistently held in a number of cases, the visitorial and enforcement powers of the Secretary, exercised through his
representatives, encompass compliance with all labor standards laws and other labor legislation, regardless of the amount of the claims filed by workers.
This notwithstanding, the power of the Regional Director to hear and decide the monetary claims of employees is not absolute. The last sentence of Article
128 (b) of the Labor Code, otherwise known as the exception clause, provides an instance when the Regional Director or his representatives may be divested
of jurisdiction over a labor standards case.
In the present case, the CA aptly applied the exception clause. At the earliest opportunity, respondent registered its objection to the findings of the labor
inspector.The labor inspector, in fact, noted in its report that respondent alleged that petitioners were contractual workers and/or independent and talent
workers without control or supervision and also supplied with tools and apparatus pertaining to their job.
In its position paper, respondent again insisted that petitioners were not its employees. It then questioned the Regional Directors jurisdiction to entertain the
matter before it, primarily because of the absence of an employer-employee relationship. Finally, it raised the same arguments before the Secretary of Labor
and the appellate court. It is, therefore, clear that respondent contested and continues to contest the findings and conclusions of the labor inspector.
We would like to emphasize that to contest means to raise questions as to the amounts complained of or the absence of violation of labor standards laws;
or, as in the instant case, issues as to the complainants right to labor standards benefits. To be sure, raising lack of jurisdiction alone is not the contest
contemplated by the exception clause.
It is necessary that the employer contest the findings of the labor regulations officer during the hearing or after receipt of the notice of inspection results.
More importantly, the key requirement for the Regional Director and the DOLE Secretary to be divested of jurisdiction is that the evidentiary matters be not
verifiable in the course of inspection. Where the evidence presented was verifiable in the normal course of inspection, even if presented belatedly by the
employer, the Regional Director, and later the DOLE Secretary, may still examine it; and these officers are not divested of jurisdiction to decide the case.

37 Tangga-an vs, Philippine Transmarine Carriers, Inc., Universe Tankship AUTHOR: SOLIS
Delaware LLC, and Carlos C. Salinas NOTES:
[G.R. No. Date]
TOPIC: Minimum Wages and Wage Fixing Machinery
PONENTE: Del Castillo, J.
CASE LAW/ DOCTRINE:

FACTS:
Tangga-an entered into an overseas employment contract with Philippine Transmarine Carriers, Inc. (PTC) for and in behalf of its foreign employer, Universe
Tankship Delaware, LLC. Under the employment contract, he was to be employed for a period of 6 months as chief engineer of the vessel the S.S. Kure. He
was to be paid a basic salary of US$5,000.00; vacation leave pay equivalent to 15 days a months or US$2,500.00 per month and tonnage bonus in the amount
of US$700.00 a month

11 Feb 2002Tangga-an was deployed. One day, while loading liquid cargo at Cedros, Mexico, the vessel suddenly listed too much at the bow. At that particular
time both the master and the chief mate went on shore leave together, which under maritime standard was prohibited. To avoid any conflict, he chose to
ignore the unbecoming conduct of the senior officer of the vessel.

13 March 2002While their vessel was at sea, their master informed Tangga-an and the rest of the Filipino Engineer Officers that they would be repatriated
on account of the delay in the cargo discharging in Japan, which was principally a duty belonging to the deck officers. The master imputed the delay to the
 non-readiness of the turbo generator and the inopertion of the boom. It was alleged that while they were docked in Japan, discharging, both the master and
the chief mate again went on shore leave together 4:00 PM and returned to the vessel only after midnight. To save face, they harped on the Engine Department
for their mistake.

Herein defendants contends the following:

March 2002-- Tanga-an and his assistant engineers spent 3 hours trying to start the generator but failed. It was only the third assistant engineer
who previously served in the same vessel who was able to turn on the generator. When the master tried to call the engine room to find out the
problem, Tangga-an did not answer and merely hang up. The master proceeded to the engine room to find out the problem by Tanga-an and his
assistant engineers were running around trying to appear busy.
At another time, during a cargo discharging operation requiring the use of a generator system and the conveyor boom, Tangga-an was nowhere
to be found. Apparently, he went on shore leave resulting in a delay of 2 hours because the machine could not be operated well.
Tangga-an failed to give an explanation to both instances, thus, a notice of dismissal was issued against Tanga-an.

Lorenzo Tangga-an filed a case for illegal dismissal with a claim for the payment of salaries corresponding to the unexpired term of the contract
against Philippine Transmarine Carriers, Inc., Universe Tankship Delaware LLC, and Carlos C. Salinas

LA Gutierrez: finding Tangga-an to have been illegally dismissed. As regards Tangga-ans claim for back salaries, the LA found petitioner entitled not to 4 months
which is equivalent to the unexpired portion of his contract, but only to 3 months, inclusive of vacation leave pay and tonnage bonus (US$8,200 x 3 months =
US$24,600) pursuant to Section 10 of RA 8042 or The Migrant Workers and Overseas Filipinos Act of 2005

NLRC: affirmed the finding of illegal dismissal. On the issue covering the award of vacation leave pay and tonnage bonus, the NLRC struck down respondents
arguments and held that in illegal dismissal cases, the employee is entitled to all the salaries allowances and other benefits or their monetary equivalents from
the time his compensation is withheld from him until he is actually reinstated, in effect citing Article 279 of the Labor Code. It held that vacation leave pay and
tonnage bonus are provided in petitioners employment contract, which thus entitles the latter to the same in the event of illegal dismissal.

CA: It adhered to the finding of illegal dismissal. It ordered that Tangga-an is entiled to 3 moths salary representing the unexpired portion of his contract in the
total amount of US$15,000.00.
Hence this petition.
o Petitioner contends that the CA erred in excluding his vacation leave pay and tonnage bonus in the computation of his back salaries as they form
part of his salaries and benefits under his employment contract with the respondents, a covenant which is deemed to be the law governing their
relations. He adds that under Article 279 of the Labor Code, he is entitled to full backwages inclusive of allowances and other benefits or their
monetary equivalent form the time his compensation was withheld up to the time he is actually reinstated.
ISSUE(S): WON Tangga-an is entitled to the reinstatement of the monetary awards as decreed in the LAs Decision, or in the alternative, the grant of back salaries
equivalent to 4 months which corresponds to the unexpired portion of the contract, inclusive of vacation leave pay and tonnage bonus.
HELD: YES. GRANTS the petition.
We cannot subscribe to the view that Tanga-an is entitled to 3 month salary only. A plain reading of Section 10 clearly reveals that the choice of which amount
to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract or 3 months salary
for every year of the unexpired term, whichever is less, comes into play only when the employment contract concerned has a term of at least 1 year or more.
This is evident from the wording for every year of the unexpired term which follows the wording salaries x x x for three months. To follow petitioners
thinking that private respondent is entitled to 3 months salary only simply because it is the lesser amount is to completely disregard and overlook some words
used in the statute while giving effect to some. This is contrary to the well-established rule in legal hermeneutics that in interpreting a statute, care should be
taken that every part or word thereof be given effect since the lawmaking body is presumed to know the meaning of the words employed in the statute and
to have used them advisedly.
Petitioner must be awarded his salaries corresponding to the unexpired portion of his 6-months employment contract, or equivalent to 4 months. This includes
all his corresponding monthly vacation leave pay and tonnage bonuses which are expressly provided and guaranteed in his employment contract as part of his
monthly salary and benefit package. These benefits were guaranteed in his employment contract as part of his monthly salary and benefit package. These
benefits were guaranteed to be paid on a monthly basis, and were not made contingent. In fact, their monetary equivalent was fixed under the contract:
US$2,500 for vacation leave pay and US$700 for tonnage bonus each month. Thus, petitioner is entitled to back salaries of US$32,800 (US$5,000 + US$2,500
+ US$700 = US$8,200 x 4 months). Article 279 of the Labor Code mandates that an employees full backwages shall be inclusive of allowances and other
benefits or their monetary equivalent. As we have time and again held, it is the obligation of the employer to pay an illegally dismissed employee or worker
the whole amount of the salaries or wages, plus all other benefits and bonuses and general increases, to which he would have been normally entitled had he
not been dismissed and had not stopped working. This well-defined principle has likewise been lost on the CA in the consideration of the case.

38. Noriel R. Montierro vs Rickmers Marine Agency Phils, Inc. AUTHOR: The Talio
[G.R. No. 210634; January 14, 2015] NOTES:
TOPIC: 18.6 Wage Recovery/Jurisdiction RMAPI Rickmers Marine Agency Phils., Inc.
PONENTE: Sereno, C.J.
CASE LAW/ DOCTRINE:
The Court has already delineated the effectivity of the Crystal Shipping and Vergara rulings in the 2013 case Kestrel Shipping Co. Inc. v. Munar
Based on Kestrel, if the maritime compensation complaint was filed prior to Oct. 6, 2008, the 120-day rule applies; if, on the other hand, the complaint was
filed from Oct. 6, 2008 onwards, the 240-day rule applies.
In this case, Montierro filed his Complaint on Dec. 3, 2010, which was after the promulgation of Vergara. Hence, it is the 240-day rule that applies to this case,
and not the 120-day rule.
FACTS:
RMAPI, on behalf of its foreign principal, Global Management Ltd., hired Montierro as an Ordinary Seaman with a basic monthly salary of $420. He was
assigned to work on board the vessel MIV CSAV Maresias.

May 2010 - While on board the vessel and going down from a crane ladder, Montierro lost his balance and twisted his legs, thus injuring his right knee. He was
examined in Livorno, Spain by Dr. Roberto Santini, who recommended surgical treatment at home and found him unfit for duty. Montierro was repatriated
to the Philippines for further medical treatment.
 June 4, 2010 - 2 days after his repatriation, Montierro reported to Dr. Natalio G. Alegre II, the company-designated physician. He underwent an MRI scan of
his right knee. The MRI showed he had "meniscal tear, posterior horn of the medical meniscus, and minimal joint fluid." Upon the recommendation of Dr.
Alegre, Montiero underwent arthroscopic partial medical meniscectomy of his right knee at St. Lukes Medical Center.

Aug. 20, 2010 - Montierro had his 2nd check-up with Dr. Alegre, who noted that his surgical wounds had healed, but that there was still pain and limitation of
motion on his right knee on gaits and squats. The doctor advised him to undergo rehabilitation medicine and continue physical therapy.

Sept. 3, 2010 - The 91st day of Montierros treatment, Dr. Alegre issued an interimdisability grade of 10 for "stretching leg of ligaments of a knee resulting in
instability of the joint." He advised Montierro to continue with the latters physical therapy and oral medications.

Sept. 17 Dec. 28, 2010 - Montierro further underwent sessions of treatment and evaluation.

Jan. 3, 2011 - The 213th day of Montierros treatment, Dr. Alegre issued a final assessment as follows:
Subjective Complaints: Assessment: Plan:
o Cannot flex the knee to 100% o Medial Meniscal Tear, Knee Right o Disability Grade of 10 is given based on Sec. 32 of the
o No swelling noted o S/P Arthroscopic Meniscectomy POEA contract.
o Limited range of motion of right knee o Lower Extremities #20, stretching leg of the ligaments of a
knee resulting in instability of the joint.

Dec. 3, 2010 - Meanwhile, 1 month before Dr. Alegres issuance of the final disability grading, Montierro filed with the labor arbiter a complaint for recovery
of permanent disability compensation in the amount of $89K, $2.1K as sickness allowance, plus moral and exemplary damages and attorneys fees. To support
his claim for total permanent disability benefits, Montierro relied on a Medical Certificate dated Dec. 3, 2010 issued by his physician of choice, Dr. Manuel C.
Jacinto, recommending total permanent disability grading, and explaining the formers medical condition as follows:
o Patients condition started at work when he accidentally fell from a ladder causing his (R) knee to be twisted. Patients symptoms of pain and limited
flexion of (R) knee persisted, thus he was assessed to be physically unfit to go back to work.

LA: Held that Montierro was entitled to permanent total disability benefits under the POEA-SEC. The LA relied on the 120-day rule introduced by the 2005
case Crystal Shipping, Inc. v. Natividad. The rule equates the inability of the seafarer to perform work for more than 120 days to permanent total disability,
which entitles a seafarer to full disability benefits. The LA also awarded 1-month sickness allowance and attorneys fees.
NLRC: Affirmed the decision of the LA.
CA: Rendered a Decision partially granting the Petition. It affirmed the NLRC ruling insofar as the latter awarded Montierro 1-month sickness allowance. The
CA held, however, that he was entitled merely to "Grade 10" permanent partial disability benefits because his disability could not be deemed total and
permanent under the 240-day rule established by the 2008 case Vergara v. Hammonia Maritime Services, Inc. Vergara extends the period to 240 days when,
within the first 120-day period (reckoned from the first day of treatment), a final assessment cannot be made because the seafarer requires further medical
attention, provided a declaration has been made to this effect.

The CA pointed out that only 215 days had lapsed from the time of Montierros medical repatriation on June 2, 2010 until Jan. 3, 2011, when the company-
designated physician issued a "Grade 10" final disability assessment. It justified the extension of the period to 240 days on the ground that Dr. Alegre issued an
interim disability grade of "10" on Sept. 3, 2010, the 91st day of Montierros treatment, which was within the initial 120-day period. Further, the CA upheld the
jurisprudential rule that, in case of conflict, it is the recommendation issued by the company-designated physician that prevails over the recommendation of the
claimants physician of choice.
Montierro filed a Rule 45 Petition with the SC. He contends in the main that he is entitled to full disability benefits. To support this thesis, he argues:
o the 120-day rule laid down in the 2005 case Crystal Shipping, and not the 240-day rule introduced by the 2008 case Vergara, applies to this case.
He cites the more recent cases Wallem Maritime Services, Inc., v. Tanawan, Maersk Filipinas Crewing, Inc. v. Mesina, and Valenzona v. Fair Shipping
Corp., all of which applied the Crystal Shipping doctrine despite the fact that they were promulgated after Vergara.
ISSUE(S): WON the 120-day rule is applicable.
HELD: Nooooooo..
The Court has already delineated the effectivity of the Crystal Shipping and Vergara rulings in the 2013 case Kestrel Shipping Co. Inc. v. Munar, by explaining
as follows:
Nonetheless, Vergara was promulgated on Oct. 6, 2008, or more than 2 years from the time Munar filed his complaint and observance of the principle
of prospectivity dictates that Vergara should not operate to strip Munar of his cause of action for total and permanent disability that had already accrued
as a result of his continued inability to perform his customary work and the failure of the company-designated physician to issue a final assessment.
Thus, based on Kestrel, if the maritime compensation complaint was filed prior to Oct. 6, 2008, the 120-day rule applies; if, on the other hand, the complaint
was filed from Oct. 6, 2008 onwards, the 240-day rule applies.
In this case, Montierro filed his Complaint on Dec. 3, 2010, which was after the promulgation of Vergara. Hence, it is the 240-day rule that applies to this case,
and not the 120-day rule.
Montierro cannot rely on the cases that he cited, a survey of which reveals that all of them involved Complaints filed before Oct. 6, 2008. Wallem Maritime
Services involved a Complaint for disability benefits filed on Nov. 26 1998. In Maersk Filipinas Crewing, while the Decision did not mention the date the
Complaint was filed, the LAs Decision was rendered on Apr. 14, 2008. Lastly, in Valenzona, the Complaint was filed sometime before Jan. 31, 2003. It thus
comes as no surprise that the cases Montierro banks on followed the 120-day rule.
Applying the 240-day rule to this case, we arrive at the same conclusion reached by the CA. Montierros treatment by the company doctor began on June 4,
2010. It ended on Jan. 3, 2011, when the company doctor issued a "Grade 10" final disability assessment. Counting the days from the said dates, the assessment
by the company doctor was made on the 213th day, well within the 240-day period. The extension of the period to 240 days is justified by the fact that Dr.
Alegre issued an interimdisability grade of "10" on Sept. 3, 2010, the 91st day of Montierros treatment, which was within the 120-day period. Thus, the CA
correctly ruled that Montierros condition cannot be deemed a permanent total disability.