Labor Law 1

NATIONAL MINES AND ALLIED WORKERS UNION V

SAN ILDEFEONSO COLLEGE, ETC.
299 SCRA 24
DAVIDE JR; November 20, 1998
NATURE
Petition for certiorari seeking to set aside an NLRC decision and
resolution denying a motion for reconsideration
FACTS
- National Mines and Allied Workers Union is the certified
bargaining agent of the rank and file employees of respondent
College. Petitioner Juliet Arroyo was the president of the San
Ildefonso College Association of Faculty and Personnel, an
affiliate of NAMAWU. Private respondent Lloren is the directress
of the College.
- In February, 1991, ARROYO, a tenured teacher who later
became a part-time teacher, asked that she be allowed to teach
on a full-time basis. The COLLEGE denied her request for her
failure to make use of the privilege of her study leave in the
two years she was allowed to do so. The next month, the other
individual petitioners, who were issued yearly appointment,
were informed of the non-renewal of their respective contracts.
- In April, 1991, the SICAFP was formalized into a labor union
affiliated with NAMAWU.
- The petitioners and NAMAWU filed a complaint for illegal
dismissal, unfair labor practice, forced resignation, harassment,
underpayment of wages, non-payment of service incentive
leave pay, and violation of Waeg Order No. IV-1. They
demanded reinstatement and payment of back wages.
- The Labor Arbiter held private respondents guilty of illegal
dismissal, unfair labor practice interfering with the organization
of the labor union. The contracts of employment were not
bilateral agreements, but letters of appointment. When the
College opted not to renew the appointments it merely invoked
the expiration of the period fixed in the appointments without
giving any other reason or granting the teachers concerned an
opportunity to explaint heir side. The probationary employees
were not even informed of their performance rating when they
were denied renewal of their appointment. The non-renewal
was timely made while individual petitioners were in the
process of organizing themselves into a union. These acts of
the College amounted to union busting.
- The Office of the Solicitor General moves for the dismissal of
the petition except as to ARROYO; that all petitioners except
ARROYO were legally dismissed. The reason why she failed to
complete her masters degree could not be solely attributed to
her. She initially requested a leave of absence, but the
COLLEGE suggested that she teach on a part-time basis
because it was in need of teachers at that time. Also, her
dismissal was without due process.
ISSUE
1. WON ARROYO was legally dismissed
2. WON the other petitioners were permanent employees
HELD
1. NO
Reasoning
- it is undisputed that Arroyo had been teaching in the COLLEGE
since 1965 and had obtained a permanent status; she became
a part-time teacher, however, from June 1988 to March 1991.
- She did not lose her permanent status when she requested to
teach on a part-time basis. The reason for the request was that
she wanted to pursue a master's degree. The COLLEGE
approved the request, and the study leave was extended for
another year. It would have been unjust and unreasonable to
allow ARROYO to pursue her master's degree, from which the
COLLEGE would have also benefited in terms of her higher
learning and experience, and at the same time penalize her
with the loss of permanent status. It would as well be absurd
and illogical to maintain that by teaching on a part-time basis

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after obtaining the permission to take up a master's degree,

ARROYO relinquished her permanent status.
- When ARROYO subsequently requested that she continue
teaching on a full-time basis, private respondents in its letter of
27 March 1991 refused, citing as reason her failure "to make
use of the privilege granted [her] by the administration
regarding [her] study leave in the past four semesters." This
letter served as notice of ARROYO's termination from
employment. No further notice was served. It must be
emphasized that the letter did not indicate that a master's
degree was necessary for ARROYO to continue her service, as
now claimed by the COLLEGE. In fact, apart from its mere
allegation, the COLLEGE failed to prove that a master's degree
was a pre-requisite for ARROYO's teaching position. ARROYO, a
permanent teacher, could only be dismissed for just cause and
only after being afforded due process, in light of paragraph (b),
Article 277 of the Labor Code.
- Arroyos dismissal was substantively and procedurally flawed.
It was effected without just cause and due process. Thus, her
termination was void. She is therefore entitled to reinstatement
to her former position without loss of seniority rights and other
privileges, full backwages inclusive of allowances, and other
benefits computed from the date of her actual dismissal to the
date of reinstatement
2. NO
Reasoning
- On the issue of whether the individual petitioners were
permanent employees, it is the Manual of Regulations for
Private Schools, and not the Labor Code, which is applicable.
This was settled in University of Sto. Tomas v. NLRC, where we
explicitly ruled that for a private school teacher to acquire
permanent status in employment and, therefore, be entitled to
security of tenure, the following requisites must concur: (1) the
teacher is a full-time teacher; (2) the teacher must have
rendered three (3) consecutive years of service; and (3) such
service must have been satisfactory.
- Eleven of the individual petitioners were full-time teachers
during the school year 1990-1991, but only two, namely, Odiste
and Buan had rendered three consecutive years of service.
There is no showing, however, that the two were on a full-time
basis during those three years and that their services were
satisfactory. Evidently, not one of the said teachers can be
considered to have acquired a permanent status.
Disposition
the decision of the National Labor Relations
Commission in NLRC Case No. RAB-IV-4-3710-91-RI is
AFFIRMED, subject to the modification that private respondent
San Ildefonso College is DIRECTED to (1) reinstate petitioner
JULIETA ARROYO to her former position at the time of her
dismissal, or to any equivalent position if reinstatement to such
position is no longer feasible, without of loss of seniority rights
and benefits that may be due her; and (2) pay her back wages
from the date of her actual dismissal to the date of her actual
reinstatement.

CIELO V NLRC
193 SCRA 410
CRUZ; January 28, 1991
NATURE
Petition for certiorari to review decision of NLRC setting aside
decision of Labor Arbiter for the reinstatement with backwages
of Zosimo Cielo.
FACTS
Henry Lei Trucking hired Zosimo Cielo as a truck driver under 6month Agreement with stipulations that the term is can be
earlier terminated at the option of either party. The Agreement
also stipulated that there was no employer-employee
relationship between the parties and that the nature of the
relationship is merely contractual. Lei asked Cielo to sign an
affidavit of having received full payment of wages, which Cielo
refused to sign. A week before the Agreement was supposed to
end, Lei notified Cielo of the termination of his services.

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Apparently in the Agreements with the drivers, Lei merely fills
in the blanks with the corresponding data such as the drivers
name and address, etc.
ISSUE
WON the Agreement was valid
HELD
NO
Ratio Where from the circumstances it is apparent that the
periods were imposed in order to preclude the acquisition of
tenurial security by the employee, they should be struck down
or disregarded for being contrary to public policy, morals,etc.
Reasoning
- The Agreement is void ab initio for having a purpose contrary
to public policy. The agreement was a clear attempt to exploit
the employee and deprive him of the protection of the Labor
Code by making it appear that the stipulations are governed by
the Civil Code as in ordinary private transactions. In reality the
agreement was a contract of employment into which were read
the provisions of the Labor Code and the social justice policy of
the Constitution. That Cielo refused to sign the affidavit was not
a just cause for his termination as he was only protecting his
interest against unguarded waiver of the benefits due him
under the Labor Code. Said affidavit which stipulated payment
of wages even suggested that there was indeed an employeremployee relationship.
Disposition NLRC decision set aside. LA decision reinstated.

GENERAL MILLING CORPORATION V TORRES

196 SCRA 215
FELICIANO; April 22, 1991
NATURE
Petition for certiorari review.
FACTS
- DOLE NCR issued Alien Employment Permit in favor of
petitioner Earl Timothy Cone, a United States citizen, as sports
consultant and assistant coach for GMC. GMC and Cone entered
into a contract of employment whereby the latter undertook to
coach GMC's basketball team. Board of Special Inquiry of the
Commission on Immigration and Deportation approved
petitioner Cone's application for a change of admission status
from temporary visitor to prearranged employee.
- On 9 February 1990, petitioner GMC requested renewal of
petitioner Cone's alien employment permit. GMC also requested
that it be allowed to employ Cone as full-fledged coach. The
DOLE Regional Director, Luna Piezas, granted the request. Alien
Employment Permit was issued.
- Private respondent Basketball Coaches Association of the
Philippines ("BCAP") appealed the issuance of said alien
employment permit to the respondent Secretary of Labor who
issued a decision ordering cancellation of petitioner Cone's
employment permit on the ground that there was no showing
that there is no person in the Philippines who is competent, able
and willing to perform the services required nor that the hiring
of petitioner Cone would redound to the national interest.
ISSUES
1. WON Secretary of Labor gravely abused his discretion when
he revoked petitioner Cone's alien employment permit
2. WON Section 6 (c), Rule XIV, Book I of the Omnibus Rules
Implementing the Labor Code is null and void as it is in violation
of the enabling law as the Labor Code does not empower
respondent Secretary to determine if the employment of an
alien would redound to national interest
HELD
1. NO
- Petitioners have failed to show any grave abuse of discretion
or any act without or in excess of jurisdiction on the part of

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respondent Secretary of Labor in rendering his decision,

revoking petitioner Cone's Alien Employment Permit.
- The alleged failure to notify petitioners of the appeal filed by
private respondent BCAP was cured when petitioners were
allowed to file their Motion for Reconsideration before
respondent Secretary of Labor.
2. NO
- The Labor Code itself specifically empowers respondent
Secretary to make a determination as to the availability of the
services of a "person in the Philippines who is competent, able
and willing at the time of application to perform the services for
which an alien is desired." In short, the Department of Labor is
the agency vested with jurisdiction to determine the question of
availability of local workers.
- Under Article 40 of the Labor Code, an employer seeking
employment of an alien must first obtain an employment permit
from the Department of Labor. Petitioner GMC's right to choose
whom to employ is, of course, limited by the statutory
requirement of an alien employment permit.
- Petitioners will not find solace in the equal protection clause of
the Constitution. As pointed out by the Solicitor-General, no
comparison can be made between petitioner Cone and Mr.
Norman Black as the latter is "a long time resident of the
country," and thus, not subject to the provisions of Article 40 of
the Labor Code which apply only to "non-resident aliens." In any
case, the term "non-resident alien" and its obverse "resident
alien," here must be given their technical connotation under our
law on immigration.
- Neither can petitioners validly claim that implementation of
respondent Secretary's decision would amount to an
impairment of the obligations of contracts. The provisions of the
Labor Code and its Implementing Rules and Regulations
requiring alien employment permits were in existence long
before petitioners entered into their contract of employment. It
is firmly settled that provisions of applicable laws, especially
provisions relating to matters affected with public policy, are
deemed written into contracts. Private parties cannot
constitutionally contract away the otherwise applicable
provisions of law.
- In short, the Department of Labor is the agency vested with
jurisdiction to determine the question of availability of local
workers. The constitutional validity of legal provisions granting
such jurisdiction and authority and requiring proof of nonavailability of local nationals able to carry out the duties of the
position involved, cannot be seriously questioned.
- Petitioners apparently suggest that the Secretary of Labor is
not authorized to take into account the question of whether or
not employment of an alien applicant would "redound to the
national interest" because Article 40 does not explicitly refer to
such assessment. This argument (which seems impliedly to
concede that the relationship of basketball coaching and the
national interest is tenuous and unreal) is not persuasive. In the
first place, the second paragraph of Article 40 says: "[t]he
employment permit may be issued to a non-resident alien or to
the applicant employer after a determination of the nonavailability of a person in the Philippines who is competent, able
and willing at the time of application to perform the services for
which the alien is desired."
- The permissive language employed in the Labor Code
indicates that the authority granted involves the
exercise of discretion on the part of the issuing
authority. In the second place, Article 12 of the Labor Code
sets forth a statement of objectives that the Secretary of Labor
should, and indeed must, take into account in exercising his
authority and jurisdiction granted by the Labor Code.
Disposition
Court Resolved to DISMISS the Petition for
Certiorari for lack of merit.

MANILA TERMINAL COMPANY INC V CIR(MANILA

TERMINAL RELIEF AND MUTUAL AID ASSN)
91 PHIL 625
PARAS; July 16, 1952

Labor Law 1
FACTS
- Manila Terminal Co undertook arrastre service in Port Area,
under control of US Army. It hired watchmen on 12 hr shifts.
- Manila Terminal began post-war operation of arrastre service
under control of Bureau of Customs. The watchmen continued
in the service, with salary raise.
A member of the Manila Terminal Relief and Mutual Aid
Association wrote to Dept of Labor requesting that the matter of
overtime pay be investigated, but nothing happened.
- Members of the Association filed demand with Department of
Labor, including overtime pay, but nothing happened.
- Manila Terminal Company instituted system of strict 8 hr
shifts.
- The Association was organized for the first time, and an
amended petition was filed with CIR praying that the petitioner
be ordered to pay its watchmen or police force overtime pay.
- The petitioners police force was consolidated with the Manila
Harbor Police of the Customs Patrol Service, a govt agency
under Commissioner of Customs and Secretary of Finance.
- CIR, while dismissing other demands, ordered the petitioner to
pay its police force regular or base pay and overtime
compensation.
With reference to overtime pay after the
watchmen had been integrated into the Manila Harbor Police,
the judge ruled that court has no jurisdiction because it affects
the Bureau of Customs.
- In a separate opinion, Judge Lanting ruled:
> decision should be affirmed in so far as it grants
compensation for overtime on regular days
> as to compensation for work on Sundays and legal holidays,
petitioner should pay compensation that corresponds to the
overtime at the regular rate only
> watchmen are not entitled to night differential
ISSUE
WON overtime pay should be granted to the workers
HELD
YES
- Petitioner stressed that the contract between it and the
Association stipulates 12 hrs a day at certain rates including
overtime, but the record does not bear out these allegations.
- In times of acute employment, people go from office to office
to search for work, and the workers here found themselves
required to render 12 hrs a day. True, there was an agreement,
but did the workers have freedom to bargain much less insist in
the observance of the Eight Hour Labor Law?
- We note that after petitioner instituted 8 hr shifts, no
reduction was made in salaries which its watchmen received
under the 12 hr agreement.
- Petitioners allegation that the Association had acquiesced in
the 12 hr shifts for more than 18 mos is not accurate. Only one
of the members entered in September 1945. The rest followed
during the next few months.
- The Association cant be said to have impliedly waived the
right to overtime pay, for the obvious reason that it could not
have expressly waived it.
- Estoppel and laches cant also be invoked against Association.
First, it is contrary to spirit of the Eight Hour Labor Law.
Second, law obligates employer to observe it. Third, employee
is at a disadvantage as to be reluctant in asserting any claim.
- The argument that the nullity of the employment contract
precludes recovery by the Association of overtime pay is
untenable. The employer may not be heard to plead its own
neglect as exemption or defense.
- Also, Commonwealth Act 444 expressly provides for payment
of extra compensation in cases where overtime services are
required.
- The point that payment of overtime pay may lead to ruin of
the petitioner cant be accepted. It is significant that not all
watchmen should receive back overtime pay for the whole
period, since the members entered the firm in different times.
- The Eight-Hour Labor Law was designed not only to safeguard
the health and welfare of the laborer or employee, but in a way

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to minimize unemployment by forcing employers, in cases

where more than 8-hour operation is necessary, to utilize
different shifts of laborers or employees working only for eight
hours each.

AKLAN ELECTRIC COOPERATIVE INC V NLRC

(RETISO)
323 SCRA 258
GONZAGA-REYES; January 25, 2000
NATURE
Petition for certiorari and prohibition with prayer for writ of
preliminary injunction and/or temporary restraining order
FACTS
- January 22, 1991 by way of a resolution of the Board of
Directors of AKELCO it allowed the temporary holding of office
at Amon Theater, Kalibo, Aklan upon the recommendation of
Atty. Leovigildo Mationg, then project supervisor, on the ground
that the office at Lezo was dangerous and unsafe.
- Majority of the employees including the herein complainants,
continued to report for work at Lezo, Aklan and were paid of
their salaries. The complainants claimed that transfer of office
from Lezo, Aklan to Kalibo, Aklan was illegal because it failed to
comply with the legal requirements under P.D. 269, thus the
they remained and continued to work at the Lezo Office until
they were illegally locked out therefrom by the respondents.
Despite the illegal lock out however, complainants continued to
report daily to the location of the Lezo Office, prepared to
continue
in
the
performance
of
their
regular
duties.Complainants who continuously reported for work at
Lezo, Aklan were not paid their salaries from June 1992 up to
March 18, 1993.
- LA dismissed the complaints
- NLRC reversed and set aside the LAs decision and held that
private respondents are entitled to unpaid wages from June 16,
1992 to March 18, 1993
- Petitioner claims:
> compensable service is best shown by timecards, payslips
and other similar documents and it was an error for public
respondent to consider the computation of the claims for wages
and benefits submitted merely by private respondents as
substantial evidence.
ISSUE
WON private respondents are entitled to payment of wages for
the period of June 1992 up to March 18,1993 (what is their
proof)
HELD
NO
- NLRC based its conclusion on the following: (a) the letter of
Leyson, Office Manager of AKELCO addressed to AKELCO's
General Manager, Atty. Mationg, requesting for the payment of
private respondents' unpaid wages from June 16, 1992 to March
18, 1993; (b) the memorandum of said Atty. Mationg in answer
to the letter request of Leyson where he made an assurance
that he will recommend such request; (c) the private
respondents' own computation of their unpaid wages.
- We find that the foregoing does not constitute substantial
evidence to support the conclusion that private respondents are
entitled to the payment of wages from June 16, 1992 to March
18, 1993.
- Substantial evidence is that amount of relevant
evidence which a reasonable mind might accept as
adequate to justify a conclusion. These evidences relied
upon by public respondent did not establish the fact that

Labor Law 1
private respondents actually rendered services in the Kalibo
office during the stated period.
a. Letter of Pedrito Leyson to Atty. Mationg
> Pedrito Leyson is one of the herein private respondents who
are claiming for unpaid wages and we find his actuation of
requesting in behalf of the other private respondents for the
payment of their backwages to be biased and self-serving, thus
not credible.
> On the other hand, petitioner was able to show that private
respondents did not render services during the stated period.
Petitioner's evidences show that on January 22, 1992,
petitioner's Board of Directors passed a resolution temporarily
transferring the Office from Lezo, Aklan to Amon Theater,
Kalibo, Aklan .With the transfer of petitioner's business office
from its former office, Lezo, to Kalibo, Aklan, its equipments,
records and facilities were also removed from Lezo and brought
to the Kalibo office where petitioner's official business was
being conducted; thus private respondents' allegations that
they continued to report for work at Lezo to support their claim
for wages has no basis.
b. Response of Atty. Mationg to the letter-request of
office manager Leyson
> Mationg's offer to recommend the payment of private
respondents' wages is hardly approval of their claim for wages.
It is just an undertaking to recommend payment. Moreover, the
offer is conditional. It is subject to the condition that petitioner's
Board of Directors will give its approval and that funds were
available. Mationg's reply to Leyson's letter for payment of
wages did not constitute approval or assurance of payment. The
fact is that, the Board of Directors of petitioner rejected private
respondents demand for payment (Board Resolution No. 496, s.
1993).
c. the private respondents' own computation of their
unpaid wages
> We hold that public respondent 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 actually 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 equipments, records
and facilities were transferred thereat and that it conducted its
official business in Kalibo during the period in question. It was
incumbent upon private respondents to prove that they indeed
rendered services for petitioner, which they failed to do.

SSS V CA (AYALDE)
348 SCRA 1
YNARES-SANTIAGO; December 14, 2000
NATURE
Petition for review on certiorari
FACTS
- In a petition before the Social Security Commission, Margarita
Tana, widow of the late Ignacio Tana, Sr., alleged that her
husband was, before his demise, an employee of Conchita
Ayalde as a farmhand in the two (2) sugarcane plantations she
owned in Pontevedra, La Carlota City (Hda. B-70) and leased
from the University of the Philippines (Hda. B-15-M). She further
alleged that Tana worked continuously six (6) days a week, four
(4) weeks a month, and for twelve (12) months every year
between January 1961 to April 1979. For his labor, Tana
allegedly received a regular salary according to the minimum
wage prevailing at the time.
- She further alleged that throughout the given period, social
security contributions, as well as medicare and employees
compensation premiums were deducted from Tana's wages. It
was only after his death that Margarita discovered that Tana
was
never
reported
for
coverage,
nor
were
his
contributions/premiums remitted to the SSS. Consequently, she
was deprived of the burial grant and pension benefits accruing
to the heirs of Tana had he been reported for coverage.

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- She prayed for the Commission to issue an order directing

respondents Conchita Ayalde and Antero Maghari as her
administrator to pay the premium contributions of the deceased
Ignacio Tana, Sr. and report his name for SSS coverage; and for
the SSS to grant petitioner Margarita Tana the funeral and
pension benefits due her.
- The SSS revealed that neither Hda. B-70 nor respondents
Ayalde and Maghari were registered members-employers of the
SSS, and consequently, Ignacio Tana, Sr. was never registered
as a member-employee. Likewise, SSS records reflected that
there was no way of verifying whether the alleged premium
contributions were remitted since the respondents were not
registered members-employers.
- Respondent Antero Maghari raised the defense that he was a
mere employee who was hired as an overseer of Hda. B-70
sometime during crop years 1964-65 to 1971-72, and as such,
his job was limited to those defined for him by the employer
which never involved matters relating to the SSS.
- For her part, respondent Ayalde belied the allegation that
Ignacio Tana, Sr. was her employee, admitting only that he was
hired intermittently as an independent contractor to plow,
harrow, or burrow Hda. No. Audit B-15-M. Tana used his own
carabao and other implements, and he followed his own
schedule of work hours. Ayalde further alleged that she never
exercised control over the manner by which Tana performed his
work as an independent contractor. Moreover, Ayalde averred
that way back in 1971, the University of the Philippines had
already terminated the lease over Hda. B-15-M and she had
since surrendered possession thereof to the University of the
Philippines. Consequently, Ignacio Tana, Sr. was no longer
hired to work thereon starting in crop year 1971-72, while he
was never contracted to work in Hda. B-70.
- SSS ruled in favor of Tana. CA ruled in favor of Ayalde.
ISSUE
WON an agricultural laborer who was hired on "pakyaw" basis
can be considered an employee entitled to compulsory
coverage and corresponding benefits under the Social Security
Law
HELD
- The mandatory coverage under the SSS Law (Republic Act No.
1161, as amended by PD 1202 and PD 1636) is premised on the
existence of an employer-employee relationship, and Section
8(d) defines an "employee" as "any person who performs
services for an employer in which either or both mental and
physical efforts are used and who receives compensation for
such services where there is an employer-employee
relationship." The essential elements of an employer-employee
relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the power of control with regard to the means
and methods by which the work is to be accomplished, with the
power of control being the most determinative factor.
- There is no question that Tana was selected and his services
engaged by either Ayalde herself, or by Antero Maghari, her
overseer.
Corollarily, they also held the prerogative of
dismissing or terminating Tana's employment. The dispute is in
the question of payment of wages. Claimant Margarita Tana
and her corroborating witnesses testified that her husband was
paid daily wages "per quincena" as well as on "pakyaw" basis.
Ayalde, on the other hand, insists that Tana was paid solely on
"pakyaw" basis. To support her claim, she presented payrolls
covering the period January of 1974 to January of 1976 and
November of 1978 to May of 1979.
- A careful perusal of the records readily show that the exhibits
offered are not complete, and are but a mere sampling of
payrolls. While the names of the supposed laborers appear
therein, their signatures are nowhere to be found. And while
they cover the years 1975, 1976 and portions of 1978 and
1979, they do not cover the 18-year period during which Tana
was supposed to have worked in Ayalde's plantations. Also an
admitted fact is that these exhibits only cover Hda. B70, Ayalde

Labor Law 1
having averred that all her records and payrolls for the other
plantation (Hda. B-15-M) were either destroyed or lost.
- To our mind, these documents are not only sadly lacking, they
are also unworthy of credence. The fact that Tana's name does
not appear in the payrolls for the years 1975, 1976 and part of
1978 and 1979, is no proof that he did not work in Hda. B70 in
the years 1961 to 1974, and the rest of 1978 and 1979. The
veracity of the alleged documents as payrolls are doubtful
considering that the laborers named therein never affixed their
signatures to show that they actually received the amounts
indicated corresponding to their names. Moreover, no record
was shown pertaining to Hda. B-15-M, where Tana was
supposed to have worked. Even Ayalde admitted that she hired
Tana as "arador" and sometimes as laborer during milling in
Hda. B-15-M.[16] In light of her incomplete documentary
evidence, Ayalde's denial that Tana was her employee in Hda.
B-70 or Hda. B-15-M must fail. In contrast to Ayalde's evidence,
or lack thereof, is Margarita Tana's positive testimony,
corroborated by two (2) other witnesses.
- The witnesses did not waver in their assertion that while Tana
was hired by Ayalde as an "arador" on "pakyaw" basis, he was
also paid a daily wage which Ayalde's overseer disbursed every
fifteen (15) days. It is also undisputed that they were made to
acknowledge receipt of their wages by signing on sheets of
ruled paper, which are different from those presented by Ayalde
as documentary evidence. In fine, we find that the testimonies
of Margarita Tana and the two other witnesses prevail over the
incomplete and inconsistent documentary evidence of Ayalde.
- No particular form of evidence is required to prove the
existence of an employer-employee relationship.
Any
competent and relevant evidence to prove the relationship may
be admitted. For, if only documentary evidence would be
required to show that relationship, no scheming employer
would ever be brought before the bar of justice, as no employer
would wish to come out with any trace of the illegality he has
authored considering that it should take much weightier proof
to invalidate a written instrument.
- The testimonial evidence of the claimant and her witnesses
constitute positive and credible evidence of the existence of an
employer-employee relationship between Tana and Ayalde. As
the employer, the latter is duty-bound to keep faithful and
complete records of her business affairs, not the least of which
would be the salaries of the workers.
- The assertion that Tana is an independent contractor is
specious because (1) while Tana was sometimes hired as an
"arador" or plower for intermittent periods, he was hired to do
other tasks in Ayalde's plantations. It is indubitable, as testified
by the witnesses, that Tana worked continuously for Ayalde, not
only as "arador" on "pakyaw" basis, but as a regular farmhand,
doing backbreaking jobs for Ayalde's business. There is no
shred of evidence to show that Tana was only a seasonal
worker, much less a migrant worker. All witnesses, including
Ayalde herself, testified that Tana and his family resided in the
plantation. If he was a mere "pakyaw" worker or independent
contractor, then there would be no reason for Ayalde to allow
them to live inside her property for free. The only logical
explanation is that he was working for most part of the year
exclusively for Ayalde, in return for which the latter gratuitously
allowed Tana and his family to reside in her property; and, (2)
Ayalde made much ado of her claim that Tana could not be her
employee because she exercised no control over his work hours
and method of performing his task as "arador." A closer scrutiny
of the records, however, reveals that while Ayalde herself may
not have directly imposed on Tana the manner and methods to
follow in performing his tasks, she did exercise control through
her overseer.
- Under the circumstances, the relationship between Ayalde and
Tana has more of the attributes of employer-employee than
that of an independent contractor hired to perform a specific
project.
- Lastly, as a farm laborer who has worked exclusively for
Ayalde for eighteen (18) years, Tana should be entitled to
compulsory coverage under the Social Security Law, whether
his service was continuous or broken.

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Disposition
reinstated.

Disini

Decision of CA reversed. Decision of SSS

MANTRADE/FMMC DIVISION EMPLOYEES AND

WORKERS UNION V BACUNGAN
144 SCRA 510
FERIA; September 30, 1986
NATURE
Petition for Certiorari and Mandamus
FACTS
- Petitioner employees question the validity of the pertinent
section of the Rules and Regulations Implementing the Labor
Code as amended on which respondent arbitrator Froilan M.
Bacungan based his decision ruling that Mantrade Devt Corp is
not under legal obligation to pay holiday pay (as provided for in
Article 94 of the Labor Code) to its monthly paid employees who
are uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the
statutory or established minimum wage, and that this rule is
applicable not only as of March 2, 1976 but as of November 1,
1974.
- Respondent corporation contends, among others that
petitioner is barred from pursuing the present action in view of
(1) Article 263 of the Labor Code; (2) the pertinent provision of
the CBA between petitioner and respondent corporation; and
(3) Article 2044 of the Civil Code; that the special civil action of
certiorari does not lie because respondent arbitrator is not an
"officer exercising judicial functions" within the contemplation
of Rule 65, Section 1, of the Rules of Court; that the instant
petition raises an error of judgment on the part of respondent
arbitrator and not an error of jurisdiction; that it prays for the
annulment of certain rules and regulations issued by the DOLE,
not for the annulment of the voluntary arbitration proceedings;
and that appeal by certiorari under Section 29 of the Arbitration
Law, Republic Act No. 876, is not applicable to the case at bar
because arbitration in labor disputes is expressly excluded by
Section 3 of said law.
ISSUES
1. WON decisions of arbitrators are subject to judicial review
2. WON Mantrade employees are entitled to holiday pay
3. WON mandamus lies in the case at bar
HELD
1. YES
- Oceanic Bic Division (FFW) vs. Romero (July 16, 1984): The
decisions of voluntary arbitrators must be given the highest
respect and as a general rule must be accorded a certain
measure of finality. It is not correct, however, that this respect
precludes the exercise of judicial review over their decisions.
Article 262 of the Labor Code making voluntary arbitration
awards final, inappealable and executory, except where the
money claims exceed P100,000.00 or 40% of the paid-up
capital of the employer or where there is abuse of discretion or
gross incompetence refers to appeals to the National Labor
Relations Commission and not to judicial review. Judicial review
still lies where want of jurisdiction, grave abuse of discretion,
violation of due process, denial of substantial justice, or
erroneous interpretation of the Law are brought to SCs
attention.
2. YES

Labor Law 1
- Under Art. 94 of the Labor Code, monthly salaried employees
are not among those excluded from receiving holiday pay. But
they appear to be excluded under Sec. 2, Rule IV, Book III of the
Rules and Regulations implementing said provision.
- Insular Bank of Asia and America Employees' Union (IBAAEU)
vs. Inciong (October 24, 1984): Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9, issued by the
then Secretary of Labor are null and void since in the guise of
clarifying the Labor Code's provisions on holiday pay, they in
effect amended them by enlarging the scope of their exclusion.
- Chartered Bank Employees Association vs. Ople (August 28,
1985): An administrative interpretation which diminishes the
benefits of labor more than what the statute delimits or
withholds is obviously ultra vires.
3. YES
- While it is true that mandamus is not proper to enforce a
contractual obligation, the remedy being an action for specific
performance, in view of the above cited subsequent decisions of
this Court clearly defining the legal duty to grant holiday pay to
monthly salaried employees, mandamus is an appropriate
equitable remedy.
Disposition Questioned decision of respondent arbitrator is
SET ASIDE and respondent corporation is ordered to GRANT
holiday pay to its monthly salaried employees. No costs.

STATES MARINE CORP V CEBU SEAMENS ASSN

[PAGE 126]
MILLARES V NLRC
[PAGE 79]

TIPS
ACE NAVIGATION CO INC V CA (NLRC, ALONSAGAY)
338 SCRA 380
PUNO; August 15, 2000

NATURE
Petitioner for review of the resolutions that dismissed the
petition for certiorari (Ang kulit no? na-dismiss na nga yung
certiorari eh pume-petition pa!)
FACTS
- In June 1994, Ace Navigation Co., Inc. recruited private
respondent Orlando Alonsagay to work as a bartender on board
the vessel M/V "Orient Express" owned by Conning Shipping
Ltd. Under their POEA approved contract of employment,
Orlando shall receive a monthly basic salary of four hundred
fifty U.S. dollars (U.S. $450.00), flat rate, including overtime pay
for 12 hours of work daily plus tips of two U.S. dollars (U.S.
$2.00) per passenger per day. He, was also entitled to 2.5 days
of vacation leave with pay each month. The contract was to last
for one (1) year.
- Petitioners alleged that on June 13, 1994, Orlando was
deployed and boarded M/V "Orient Express" at the seaport of
Hong Kong.
- After the expiration of the contract, Orlando returned to the
Philippines and demanded from Ace Nav his vacation leave pay.
- Ace Nav did not pay him immediately. It told him that he
should have been paid prior to his disembarkation and
repatriation to the Philippines.
- Conning did not remit any amount for his vacation leave pay.
Ace Nav promised to verify the matter and asked Orlando to
return after a few days. Orlando never returned.
- On November 25, 1995, Orlando filed a complaint before the
labor arbiter for vacation leave pay of four hundred fifty U.S.
dollars and unpaid tips amounting to thirty six, thousand U.S.
dollars

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Disini

- On November 15, 1996, Labor Arbiter Felipe P. Pati ordered

Ace Nav and Conning to pay jointly and severally Orlando his
vacation leave pay of US$450.00. The claim for tips of Orlando
was dismissed for lack of merit.
- Orlando appealed to the NLRC on February 3, 1997. In a
decision penned by Commissioner Vicente S.E. Veloso and
concurred in by Commissioner Alberto R. Quimpo the NLRC
ordered Ace Nav and Conning to pay the unpaid tips of Orlando
which amounted to US$36,000.00 in addition to his vacation
leave pay.
- Ace Nav and Conning filed a motion for reconsideration on
February 2, 1998 which was denied on May 20, 1999.
- On July 2, 1999, Ace Nav and Conning filed a petition for
certiorari before the Court of Appeals
- On July 28, 1999, the Court of Appeals promulgated a threepage resolution and concurred in by Associate Justices Eubulo
G. Verzola and Elvi John S. Asuncion dismissing the petition.
- Their motion for reconsideration filed was denied.
Petitioners:
> Petitioners argued that the Court of Appeals erred in rigidly
and technically applying Section 13, Rule 1310- Proof of
personal service shall consist of a written admission of the
party served, or the official return of the server, or the affidavit
of the party serving, containing a full statement of the date,
place and manner of service. If the service is by ordinary mail,
proof thereof shall consist of an affidavit of the person mailing
or facts showing compliance with section 7 of this Rule. If
service is made by registered mail, proof shall be made by such
affidavit and the registry receipt issued by the mailing office.
The registry return card shall be filed immediately upon its
receipt, or in lieu thereof of the unclaimed letter together with
the certified or sworn copy of the notice given by the
postmaster to the addressee.
> Section 1, Rule 6511 Section 1.-- When any tribunal, board or
officer exercising judicial or quasi judicial functions has acted
without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction,
and there is no appeal, or any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court, alleging
the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings of such tribunal, board,
officer, and granting such incidental reliefs as law and justice
may require.
> They also contend that the respondent court erred in ruling
that they are the ones liable to pay tips to Orlando. They point
out that if tips will be considered as part of the salary of
Orlando, it will make him the highest paid employee on M/V
"Orient Express." It will create an unfavorable precedent
detrimental to the future recruitment, hiring and deployment of
Filipino overseas workers specially in service oriented
businesses. It will also be a case of double compensation that
will unjustly enrich Orlando at the expense of petitioners.
> They also stress that Orlando never complained that they
should pay him the said tips.
- Respondent filed a two-page comment to the petition adopting
the resolution of the Court of Appeals dated July 28, 1999.
ISSUES
1. WON the CA erred in rigidly applying Sec 1310
2. WON the CA erred in ruling that they are the ones liable to
pay tips to petitioner (Orlando)
HELD
1. YES
Ratio Rules of procedure are used to help secure and not
override substantial justice. [Heirs of Francisco Guballa Sr. vs.
Court of Appeals] Even the Rules of Court mandates a liberal
construction in order to promote their objective of securing a
just, speedy and inexpensive disposition of every action and
proceeding. Since rules of procedure are mere tools designed to
facilitate the attainment of justice, their strict and rigid
application which would result in technicalities that tend to
frustrate rather than promote substantial justice must always

Labor Law 1
be avoided. Thus, the dismissal of an appeal on purely technical
ground is frowned upon especially if it will result to unfairness.
Reasoning
- We apply these sound rules in the case at bar. Petitioners'
petition for certiorari before the Court of Appeals contained the
certified true copy of the NLRC's decision dated November 26,
1997. Its order dated May 2, 199917 and the sworn certification
of non-forum shopping. Petitioners also explained that their
counsel executed an affidavit of proof of service and
explanation in the afternoon of July 1, 1999. However, he forgot
to attach it when he filed their petition the following day
because of the volume and pressure of work and lack of office
personnel. However, the Registry which is the proof of mailing
to Orlando's counsel, issued by the Central Post Office was
attached on the original petition they filed with the respondent
court. It was also stamped by the NLRC which is proof of receipt
of the petition by the latter. The affidavit of service, which was
originally omitted, was attached on their motion for
reconsideration. Significantly, it was dated July 1, 1999.
- the subsequent filing of the affidavit of service may be
considered as substantial compliance with the rules.
2. NO
Reasoning
- The word tip has several meanings. It is more frequently
used to indicate additional compensation, and in this sense "tip"
is defined as meaning a gratuity; a gift; a present; a fee; money
given, as to a servant to secure better or more prompt service.
- Tipping is done to get the attention and secure the immediate
services of a waiter, porter or others for their services. Since a
tip is considered a pure gift out of benevolence or friendship, it
can not be demanded from the customer. Whether or not tips
will be given is dependent on the will and generosity of the
giver. Although a customer may give a tip as a consideration for
services rendered, its value still depends on the giver. They are
given in addition to the compensation by the employer. A
gratuity given by an employer in order to inspire the employee
to exert more effort in his work is more appropriately called a
bonus.
- The contract of employment between petitioners and Orlando
is categorical that the monthly salary of Orlando is US$450.00
flat rate. This already included his overtime pay which is
integrated in his 12 hours of work. The words "plus tips of
US$2.00 per passenger per day" were written at the line for
overtime. Since payment for overtime was included in the
monthly salary of Orlando, the supposed tips mentioned in the
contract should be deemed included thereat.
- The actuations of Orlando during his employment also show
that he was aware his monthly salary is only US$450.00, no
more no less. He did not raise any complaint about the nonpayment of his tips during the entire duration of his
employment. After the expiration of his contract, he demanded
payment only of his vacation leave pay. He did not immediately
seek the payment of tips. He only asked for the payment of tips
when he filed this case before the labor arbiter. This shows that
the alleged non-payment of tips was a mere afterthought to
bloat up his claim. The records of the case do not show that
Orlando was deprived of any monthly salary. It will now be
unjust to impose a burden on the employer who performed the
contract in good faith.
- Furthermore, it is presumed that the parties were aware of the
plain, ordinary and common meaning of the word "tip." As a
bartender, Orlando can not feign ignorance on the practice of
tipping and that tips are normally paid by customers and not by
the employer.
- However, Orlando should be paid his vacation leave pay.
Petitioners denied this liability by raising the defense that the
usual practice is that vacation leave pay is given before
repatriation. But as the labor arbiter correctly observed,
petitioners did not present any evidence to prove that they
already paid the amount. The burden of proving payment was
not discharged by the petitioners.
Disposition Reversed and set aside

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CASH WAGE/COMMISSIONS
SONGCO V NLRC (AGUAS, F.E. ZUELLIG INC)
183 SCRA 610
MEDIALDEA; March 23, 1990
FACTS
- Private respondent F.E. Zuellig (M), Inc., filed with the
Department of Labor an application seeking clearance to
terminate the services of petitioners Jose Songco, Romeo
Cipres, and Amancio Manuel allegedly on the ground of
retrenchment due to financial losses.
- This application was seasonably opposed by petitioners
alleging that the company is not suffering from any losses. They
alleged further that they are being dismissed because of their
membership in the union.
- At the last hearing of the case, however, petitioners
manifested that they are no longer contesting their dismissal.
The parties then agreed that the sole issue to be resolved is the
basis of the separation pay due to petitioners.
- Petitioners, who were in the sales force of Zuellig received
monthly salaries of at least P40,000. In addition, they received
commissions for every sale they made.
- The CBA entered into between Zuellig and F.E. Zuellig
Employees Association, of which petitioners are members,
contains the following provision:
ARTICLE XIV Retirement Gratuity
Section l(a)-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 one (1) month's salary per year of service.
One month of salary as used in this paragraph shall be
deemed equivalent to the salary at date of retirement;
years of service shall be deemed equivalent to total service
credits, a fraction of at least six months being considered
one year, including probationary employment.
- On the other hand, Article 284 of the Labor Code then
prevailing provides:
Art. 284. Reduction of personnel. The termination of
employment of any employee due to the installation of
labor saving-devices, redundancy, retrenchment to prevent
losses, and other similar causes, shall entitle the employee
affected thereby to separation pay. In case of termination
due to the installation of labor-saving devices or
redundancy, the separation pay shall be equivalent to one
(1) month pay or to at least one (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 one (1) month
pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.
- In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules
Implementing the Labor Code provide:
Sec. 9(b). Where the termination of employment is due to
retrechment initiated by the employer to prevent losses or
other similar causes, or where the employee suffers from a
disease and his continued employment is prohibited by law
or is prejudicial to his health or to the health of his coemployees, the employee shall be entitled to termination
pay equivalent at least to his one month salary, or to onehalf month pay for every year of service, whichever is
higher, a fraction of at least six (6) months being
considered as one whole year.
Sec. 10. Basis of termination pay. The computation of
the termination pay of an employee as provided herein
shall be based on his latest salary rate, unless the same
was reduced by the employer to defeat the intention of the
Code, in which case the basis of computation shall be the
rate before its deduction. (Emphasis supplied)

Labor Law 1
- The Labor Arbiter rendered a decision ordering the respondent
to pay the complainants separation pay equivalent to their onemonth salary (exclusive of commissions, allowances, etc.) for
every year of service that they have worked with the company.
- The appeal by petitioners to the National Labor Relations
Commission was dismissed for lack of merit.
- Petitioners' Arguments
> In arriving at the correct and legal amount of separation pay
due them, whether under the Labor Code or the CBA, their basic
salary, earned sales commissions and allowances should be
added together. They cited Article 97(f) of the Labor Code which
includes commission as part on one's salary, to wit;
(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. 'Fair
reasonable value' shall not include any profit to the
employer or to any person affiliated with the employer.
- Respondents Comments
> If it were really the intention of the Labor Code as well as its
implementing rules to include commission in the computation of
separation pay, it could have explicitly said so in clear and
unequivocal terms. Furthermore, in the definition of the term
"wage", "commission" is used only as one of the features or
designations attached to the word remuneration or earnings.
ISSUE
WON earned sales commissions and allowances should be
included in the monthly salary of petitioners for the purpose of
computation of their separation pa
HELD
YES
- Article 97(f) by itself is explicit that commission is included in
the definition of the term "wage". It has been repeatedly
declared by the courts that where the law speaks in clear and
categorical language, there is no room for interpretation or
construction; there is only room for application.
- The ambiguity between Article 97(f), which defines the term
'wage' and Article XIV of the Collective Bargaining Agreement,
Article 284 of the Labor Code and Sections 9(b) and 10 of the
Implementing Rules, which mention the terms "pay" and
"salary", is more apparent than real.
- Broadly, the word "salary" means a recompense or
consideration made to a person for his pains or industry in
another man's 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. "Salary," the
etymology of which is the Latin word "salarium," is often used
interchangeably with "wage", the etymology of which is the
Middle English word "wagen". Both words generally refer to one
and the same meaning, that is, a reward or recompense for
services performed.
- Likewise, "pay" is the synonym of "wages" and "salary".
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.
- 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

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Disini

remuneration services rendered which contributed to the

increase of income of Zuellig.
- Commission is the recompense, compensation or reward of an
agent, salesman, executor, trustees, receiver, factor, broker or
bailee, when the same is calculated as a percentage on the
amount of his transactions or on the profit to the principal. The
nature of the work of a salesman and the reason for such type
of remuneration for services rendered demonstrate clearly that
commission are part of petitioners' wage or salary.
- 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, are part of petitioners' wage
or salary. Also, that some salesman do not received any basic
salary but depend on commissions and allowances or
commissions
alone,
although
an
employer-employee
relationship exists.
- Bearing in mind the preceding discussions, if the opposite view
is adopted that commissions, do not form part of wage or
salary, then, in effect, this kind of salesmen do not receive any
salary and therefore, not entitled to separation pay in the event
of discharge from employment. 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 the the
streets to face the harsh necessities of life.
- Additionally, in Soriano v. NLRC, et al., supra, in resolving the
issue of the salary base that should be used in computing the
separation pay, the Court held that:
The commissions also claimed by petitioner ('override
commission' plus 'net deposit incentive') are not properly
includible in such base figure since such commissions must
be earned by actual market transactions attributable to
petitioner.
- Applying this by analogy, since the commissions in the present
case were earned by actual market transactions attributable to
petitioners, these should be included in their separation pay. In
the computation thereof, what should be taken into account is
the average commissions earned during their last year of
employment.
- In carrying out and interpreting the Labor Code's provisions
and its implementing regulations, the workingman's welfare
should be the primordial and paramount consideration. This
kind of interpretation gives meaning and substance to the
liberal and compassionate spirit of the law as provided for in
Article 4 of the Labor Code which states that "all doubts in the
implementation and interpretation of the provisions of the Labor
Code including its implementing rules and regulations shall be
resolved in favor of labor", and Article 1702 of the Civil Code
which provides that "in case of doubt, all labor legislation and
all labor contracts shall be construed in favor of the safety and
decent living for the laborer.
Disposition The petition was granted.

IRAN V NLRC (RETRALBA)

106 SCRA 444
ROMERO; April 22, 1998
FACTS
- 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.
He
hired
private
respondents
as
drivers/salesmen and 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.
- Sometime in June 1991, Iran discovered cash shortages and
irregularities allegedly committed by private respondents.
Pending the investigation of irregularities and settlement of the

Labor Law 1
cash shortages, Iran required private respondents to report for
work everyday. They were not allowed, however, to go on their
respective routes. A few days thereafter, despite aforesaid
order, private respondents stopped reporting for work,
prompting Iran to conclude that the former had abandoned
their employment. Consequently, Iran terminated their services.
He also filed a complaint for estafa against them.
- Private respondents filed complaints against Iran for illegal
dismissal, illegal deduction, underpayment of wages, premium
pay for holiday and rest day, holiday pay, service incentive
leave pay, 13th month pay, allowances, separation pay,
recovery of cash bond, damages and attorneys fees.
- Said complaints were consolidated, and assigned to Labor
Arbiter Ernesto F. Carreon. He found that Iran had validly
terminated private respondents, there being just cause for the
latters dismissal. Nevertheless, he also ruled that Iran had not
complied with minimum wage requirements in compensating
private respondents, and had failed to pay private respondents
their 13th month pay.
- On appeal, NLRC affirmed the validity of private respondents
dismissal, but found that said dismissal did not comply with the
procedural requirements for dismissing employees. MR denied.
ISSUES
1. WON commissions are included in determining compliance
with the minimum wage requirement
2. WON Iran is guilty of procedural lapses in terminating private
respondents
If yes, WON P1,000.00 indemnity fee to each of the private
respondents is proper
3. WON the advance amount received by private respondents
should be credited as part of their 13th month pay
HELD
1. YES
- 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.
- Article 97(f), LC 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.
- 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.
- SC has taken judicial notice of the fact that some salesmen do
not receive any basic salary but depend entirely on
commissions and allowances or commissions alone, although an
employer-employee relationship exists. Undoubtedly, this salary
structure is intended for the benefit of the corporation
establishing such, on the apparent assumption that thereby its
salesmen would be moved to greater enterprise and diligence
and close more sales in the expectation of increasing their sales
commissions. This, however, does not detract from the
character of such commissions as part of the salary or wage
paid to each of its salesmen for rendering services to the
corporation.
- 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.
- Philippine Agricultural Commercial and Industrial Workers
Union vs. NLRC: 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. 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.

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2. YES
- In terminating employees, the employer must furnish the
worker with two written notices before the latter can be legally
terminated: (a) a notice which apprises the employee of the
particular acts or omissions for which his dismissal is sought,
and (b) the subsequent notice which informs the employee of
the employers decision to dismiss him.
- First notice informing the employee that his dismissal is being
sought is absent in the present case. This makes the
termination of private respondents defective, for which Iran
must be sanctioned for his non-compliance with the
requirements of or for failure to observe due process.
- Section 2 of Book V, Rule XIV of the Omnibus Rules
Implementing the 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 Iran to comply
with this requirement. This, Iran failed to do, entitling
respondents to nominal damages in the amount of P5,000.00
each, in accord with recent jurisprudence, to vindicate or
recognize their right to procedural due process which was
violated by Iran.
3. YES
- Iran is entitled to credit only the amounts paid for the
particular year covered by said vouchers.
- While it is true that the vouchers evidencing payments of 13th
month pay were submitted only on appeal, it would have been
more in keeping with the directive of Article 221 of the Labor
Code for the NLRC to have taken the same into account.
- In labor cases, technical rules of evidence are not binding.
Labor officials should use every and all reasonable means to
ascertain the facts in each case speedily and objectively,
without regard to technicalities of law or procedure.
- The intent of P.D. No. 851 is the granting of additional income
in the form of 13th month pay to employees not as yet receiving
the same and not that a double burden should be imposed on
the employer who is already paying his employees a 13 th month
pay or its equivalent. An employer who pays less than 1/12th of
the employees basic salary as their 13th month pay is only
required to pay the difference.
Disposition NLRC decision modified. Case remanded to the
Labor Arbiter for a recomputation of the alleged deficiencies. No
costs.

WAGES AND SALARY

GAA V CA (EUROPHIL INDUSTRIES CORP.)
140 SCRA 304 (85)
PATAJO; December 31, 1985
NATURE
A petition for review on certiorari of the decision of the Court of
Appeals affirming the decision of the Court of First Instance of
Manila.
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.
- December 12, 1973: Europhil Industries commenced an action
in CFI 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." Court ruled in favor of Europhil.
- A writ of garnishment was issued pursuant to which Deputy
Sheriff Cesar A. Roxas served a Notice of Garnishment upon El
Grande Hotel, where petitioner was then employed, garnishing
her "salary, commission and/or remuneration." Gaa filed with
the CFI a motion to lift said garnishment on the ground that her

Labor Law 1
"salaries, commission and or remuneration" are exempted from
execution under Article 1708 of the New Civil Code.
- CA dismissed the petition, saying that Gaa is not a mere
laborer as contemplated under Article 1708. The term laborer
does not apply to one who holds a managerial or supervisory
position like that of petitioner, but only to those "laborers
occupying the lower strata."
ISSUE
WON Gaa is a laborer falling under the exception of Art. 1708 of
the Civil Code
HELD
NO, Gaa is not a laborer as contemplated by the Civil Code.
Ratio 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.
Reasoning
- The legislature intended the exemption in Article 1708 of the
New Civil Code to operate in favor of 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.
LABORER: 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.
WAGE: 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."
- Petitioner is not an ordinary or rank and file laborer but "a
responsibly-placed employee," of El Grande Hotel, "responsible
for planning, directing, controlling, and coordinating the
activities of all housekeeping personnel" to ensure the
cleanliness, maintenance and orderliness of all guest rooms,
function rooms, public areas, and the surroundings of the hotel.
Petitioner is occupying a position equivalent to that of a
managerial or supervisory position.
Disposition Decision of the CA affirmed, with costs against the
petitioner.

EQUITABLE BANKING CORP V SADAC

490 SCRA 380
CHICO-NAZARIO; June 8, 2006
NATURE
Petition for Review on Certiorari, with Motion to Refer the
Petition to the Court En Banc, seeking to reverse the Decision
and Resolution of the CA which reversed and set aside the
Resolutions of the NLRC.
FACTS
- Respondent Sadac was appointed Vice President of the Legal
Department of petitioner Bank and subsequently General
Counsel thereof. Nine lawyers of petitioner Banks Legal
Department accused Sadac of abusive conduct and petitioned
for a change in leadership of the department. On the ground of
lack of confidence in Sadac, under the rules of client and lawyer
relationship, petitioner Bank instructed him to deliver all
materials in his custody in all cases in which the latter was
appearing as its counsel of record.
- Sadac requested for a full hearing and formal investigation but
the same remained unheeded. He filed a complaint for illegal
dismissal with damages against petitioner Bank and individual
members of the Board of Directors thereof. After learning of the
filing of the complaint, petitioner Bank terminated his services.

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Finally, Sadac was removed from his office and ordered

disentitled to any compensation and other benefits. Labor
Arbiter Jovencio Ll. Mayor, Jr., dismissed the complaint for lack
of merit. On appeal, the NLRC reversed the Labor Arbiter and
declared Sadacs dismissal as illegal.
ISSUE
1. WON Sadac is entitled to full backwages including salary
increases
2. WON Sadac is entitled to receive certain benefits
3. WON the CA erred in awarding attorneys fees to Sadac
4. WON Sadac is entitled to legal interest
5. WON the petition should be heard by the court en banc
HELD
1. NO
Ratio The outstanding feature of backwages is the degree of
assuredness to an employee that he would have had them as
earnings had he not been illegally terminated from his
employment. Salary increases, however, are a mere
expectancy. There is no vested right to salary increases.
Reasoning
- That respondent Sadac may have received salary increases in
the past only proves fact of receipt but does not establish a
degree of assuredness that is inherent in backwages. The mere
fact that petitioner had been previously granted salary
increases by reason of his excellent performance does not
necessarily guarantee that he would have performed in the
same manner and, therefore, qualify for the said increase later.
When there is an award of backwages this actually refers to
backwages without qualifications and deductions. An
unqualified award of backwages means that the employee is
paid at the wage rate at the time of his dismissal. The base
figure to be used in the computation of backwages due to the
employee should include not just the basic salary, but also the
regular allowances that he had been receiving.
Obiter
Broadly, the word "salary" means a recompense or
consideration made to a person for his pains or industry in
another mans business. It carries with it the fundamental idea
of compensation for services rendered. In labor law, the
distinction between salary and wage appears to be merely
semantics. That wage and salary are synonymous has been
settled. Both words generally refer to one and the same
meaning, that is, a reward or recompense for services
performed. Likewise, "pay" is the synonym of "wages" and
"salary".
2. NO
Ratio Sadac did not present any evidence to prove entitlement
to these claims.
Reasoning
- Petitioner Banks computation contains no acknowledgment of
herein claimed benefits, namely, check-up benefit, clothing
allowance, and cash conversion of vacation leaves. We cannot
sustain the rationalization that the acknowledgment by
petitioner Bank in its computation of certain benefits granted to
Sadac means that the latter is also entitled to the other benefits
as claimed by him but not acknowledged by the Bank.
3. NO
Ratio The decision of the CA AFFIRMED with MODIFICATION the
NLRC decision, which modification did not touch upon the award
of attorneys fees as granted, hence, the award stands.
Reasoning
- When a final judgment becomes executory, it thereby
becomes immutable and unalterable. The CAs decision became
final and executory. This renders moot whatever argument
petitioner Bank raised against the grant of attorneys fees to
Sadac.
4. YES
Ratio The legal interest of 12% per annum shall be imposed
from the time judgment becomes final and executory, until full
satisfaction thereof.
Reasoning

Labor Law 1
- The CA was not in error in imposing the same notwithstanding
that the parties were at variance in the computation of Sadacs
backwages. What is significant is that the decision which
awarded backwages to Sadac became final and executory.
Therefore, petitioner Bank is liable to pay interest from the date
of finality of the decision.
5. NO
Ratio The instant case is not one that should be heard by the
Court en banc.
Reasoning
- We are not herein modifying or reversing a doctrine or
principle laid down by the Court en banc or in a division.
Disposition The petition is PARTIALLY GRANTED and
PARTIALLY DENIED. The decision of the CA is hereby MODIFIED.

GRATUITY AND WAGES

PLASTIC TOWN CENTER CORPORATION V NLRC
(NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)KATIPUNAN)
172 SCRA 380
GUTIERREZ; April 19,1989
NATURE
Petition for review of the decision of the NLRC
FACTS
- There are 2 provisions of the CBA in question in this case.
1) P1 increase in salary is granted every July 1. Also, section 3
provides: It is agreed and understood by the parties herein that
the aforementioned increase in pay shall be credited against
future allowances or wage orders hereinafter implemented or
enforced by virtue of Letters of Instructions, Decrees and other
labor legislation.
- Wage order number 4, effective on May 1 1984, provided for
the integration of the emergency cost of living allowances
(ECOLA). It also provided that the minimum daily wage rate be
P32. Petitioner Plastic Town incurred a deficiency of P1 after
integrating the ECOLA. They then advanced the implementation
of the wage increase as provided for by the CBA. The petitioner
argues that it did not credit the Pl.00 per day across the board
increase under the CBA as compliance with Wage Order No. 5
implemented on June 16,1984 since it gave an additional P3.00
per day to the basic salary pursuant to said order. It, however,
credited the Pl.00 a day increase to the requirement under
Wage Order No. 4 to which the private respondents allegedly
did not object.
2) gratuity pay to resigning employees
- Gratuity pay is based on the monthly salary. Petitioner argues
that the computation of the monthly salary should be the
equivalent of 26 days of salary, not 30 days as the respondents
aver.
ISSUES
1. WON the petitioners can credit the P1 increase in the CBA as
compliance with wage order number 4
2. WON the monthly salary is equivalent to 26 days
HELD
1. NO.
- In the case at bar, the petitioner alleges that on May 1, 1984,
it granted a Pl.00 increase pursuant to Wage Order No. 4 which
in consonance with Section 3 of the CBA was to be credited to
the July 1, 1984 increase under the CBA. It was, therefore, a July
increase. Section 3 of the CBA, however, clearly states that CBA
granted increases shall be credited against future allowances or
wage orders. Thus, the CBA increase to be effected on July 1,
1984 can not be retroactively applied to mean compliance with
Wage Order No. 4 which took effect on May 1, 1984.
2. NO. It should be 30 days
- To say that awarding the daily wage earner salary for more
than 26 days is paying him for days he does not work misses

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the point entirely. The issue here is not payment for days
worked but payment of gratuity pay equivalent to one month or
30 days salary
- From the foregoing, gratuity pay is therefore, 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." (Sec. 2, CBA) 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 the salary, cost of living allowances, holiday
pay, leave benefits, etc., which are covered by the Labor Code.
Nowhere has it ever been stated that gratuity pay should be
based on the actual number of days worked over the period of
years forming its basis. We see 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 the light of Article
1702 of the Civil Code that:
- In case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living for
the laborer
Disposition Decision affirmed

13TH MONTH PAY

AGABON V NLRC
[PAGE 35]

B. PAYMENT OF WAGES

9.03 FORM
FULL PAYMENT
LOPEZ SUGAR CORPORATION V FRANCO
458 SCRA 515
CALLEJO; May 16, 2005
NATURE
Petition for review on certiorari of the Decision of the Court of
Appeals (CA)
FACTS
- Franco, Pabalan, Perrin and Candelario were supervisory
employees of the Lopez Sugar Corporation (the Corporation, for
brevity). Franco was barely 20 years old when he was employed
in 1974 as Fuel-in-Charge. His co-employee, Pabalan, was
about 28 years old when he was hired by the Corporation as
Shift Supervisor in the Sugar Storage Department in 1975.
Perrin and Candelario were employed in 1975 and 1976,
respectively, as Planter Service Representatives (PSRs), who
rose from the ranks and, by 1994, occupied supervisory
positions in the Corporations Cane Marketing Section.
- The supervisory employees of the Corporation, spearheaded
by Franco, Pabalan, Perrin and Candelario, decided to form a
labor union called Lopez Sugar Corporation Supervisors
Association. Franco was elected president and Pabalan as
treasurer. Perrin and Candelario, on the other hand, were
among its active members.The officers of the union and the
management held a meeting, which led to the submission of
the unions proposals for a CBA on July 24, 1995.
- The Corporations president issued a Memorandum to the vicepresident and department heads for the adoption of a special
retirement program for supervisory and middle level managers.
He emphasized that the management shall have the final say
on who would be covered, and that the program would be
irrevocable once approved.

Labor Law 1
Perrin and Candelario were on leave when they were invited by
Juan Masa, Jr., head of the Cane Marketing Section, to the
Northeast Beach Resort in Escalante, Negros Occidental. The
latter informed them that they were all included in the special
retirement program and would receive their respective notices
of dismissal shortly.
- Masa, Pabalan, Franco, Perrin and Candelario received copies
of the Memorandum dated August 25, 1995 from the
Corporations Vice-President for Administration and Finance,
informing them that they were included in the special
retirement program for supervisors and middle level
managers; hence, their employment with the Corporation was
to be terminated effective September 29, 1995, and they would
be paid their salaries until September 27, 1995. The private
respondents received their respective separation pays and
executed their respective Release Waiver and Quitclaim after
receiving their clearances from the Corporation.
- The private respondents filed separate complaints against the
corporation with the NLRC for illegal dismissal, unfair labor
practice, reinstatement and damages.
- The Corporation maintained that the termination of the
employment of the complainants was in response to the
challenges brought about by the General Agreement on Tariff
and Trade (GATT), the AFTA and other international trade
agreements, which greatly affected the local sugar industry and
a study done by Sycip, Gorres, Velayo and Company (SGV)
regarding the Corporation and its operations to identify changes
that could be implemented to achieve cost effectiveness and
global competitiveness
- Labor Arbiter rendered judgment in favor of the Corporation
and ordered the dismissal of the complainants.
The
complainants appealed to the NLRC that granted their appeal
and reversed the decision of the Labor Arbiter. The CA rendered
judgment dismissing the petition, on the ground that the NLRC
did not commit grave abuse of discretion in rendering judgment
against the Corporation.
ISSUES
1. WON there was proof of redundancy in the fulfillment of the
jobs of the employees and whether there is a criteria, guideline,
or standard for selection. If not whether it was meant to
intimidate the union
2. WON the waiver and quitclaim was valid
HELD
1. NO
- The SC agreed with the ruling of the CA that the petitioner
illegally dismissed the private respondents from their
employment by including them in its special retirement
program, thus, debilitating the union, rendering it pliant by
decapacitating its leadership. As such, the so-called
downsizing of the Cane Marketing Department and SMSD
based on the SGV Study Report was a farce capricious and
arbitrary.
- Complainants are not in a position to anticipate how
respondent will present its case for redundancy particular[ly]
because no standard, criteria or guidelines for the selection of
dismissed employees was made known to them, and all that
they were told was that you were selected as among those
who will be separated from the service; nonetheless, this early,
it is possible to point out certain facts which throw light on the
plausibility or want of it, of the ground relied upon.
1. No contingency has occurred, of the kind mentioned by the
Supreme Court in the Wiltshire case, (over-hiring of workers,
decreased volume of business or dropping of a particular
service line) which would explain the dismissal on the ground of
redundancy; over-hiring of workers cannot conceivably occur in
the level of the supervisors; on the other hand, it would have
required an event of cataclysmic proportion to justify the
dismissal for redundancy of a full one-third of the supervisors in
an establishment, and if such an event were to occur it would
have resulted in tremendous losses which is not true here
because the dismissal is not on account of or to prevent losses;

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2. In no other category of employees did positions suddenly

become redundant except among the supervisors who have just
organized themselves into a labor union and were working for
their first-ever CBA in the establishment;
3. The dismissal came at the precise time when the Lopez
Sugar Central Supervisors Association (LSCA) had presented its
CBA proposals and was expecting the companys reply as
mandated by law; in fact, the reply was overdue, being required
to be submitted by management within ten (10) days from
receipt of the union proposal; there is no better proof that the
dismissals have served their hidden purpose than that the CBA
negotiation has ended to all intents and purpose, before
management
could even present its counterproposal.
Certainly, it would be farfetched to say that the remaining union
officers and members have abandoned its objective of having a
CBA for reasons other than the fear of suffering the fate of
those who had been dismissed.
- The absence of criteria, guidelines, or standard for selection of
dismissed employees renders the dismissals whimsical,
capricious and vindictive; in the case of the complainants
Franco and Pabalan, who are the Union President and
Treasurer, respectively, the reason for their inclusion is obvious.
Additionally, it must be mentioned that in the case of Pabalan,
there were three shift supervisors, one for each 8-hour shift
before the program was implemented, namely, Pabalan,
Bitera and Lopez; Pabalan and Bitera (a union director) were
terminated, leaving Lopez alone, who worked on 12-hour shift
duty with Henry Villa, department head who was forced to
perform the work of shift supervisor; Pabalan was offered to be
rehired as an employee of BUGLAS, a labor-only contractor but
he refused; an employee, Eugenio Bolanos was assigned from
another department to do the work of shift supervisor and three
of them (Lopez, Villa and Bolanos) now divide shift duties
among themselves. There is no explanation why among the
shift supervisors it was Pabalan and Bitera who were included in
the program.
- In the case of complainants [P]errin and Candelario, both
Planter Service Representatives, the manipulation is even more
apparent; one year before the program was instituted, two
new PSRs were hired (Labrador and Cambate) bringing to six
the total number of PSRs; after the termination of [P]errin and
Candelario, who have served for nearly 20 years, two new PSRs
were hired (Oropel and Jeres) on contractual basis and whose
compensation is based on pakiao; additionally, Candelario was
hired after his dismissal under the same arrangement as Oropel
and Jeres, which lasted only up to January 1996 when
management learned of the filing of the first of these cases;
[P]errin, on his part, was offered the same arrangement but he
refused.
- The rehiring of dismissed employees through a labor-only
contractor exposes the program as a circumvention of the
law. This is true in the case of the following supervisors who
were terminated with complainant but were subsequently
employed to do exactly the same work, but as employees of
BUGLAS, a labor-only contractor which supplies laborers to
respondent LSC. The above re-hiring in addition to other
circumstances earlier mentioned, such as the hiring of 2 men
PSRs after Candelario and [P]errin were terminated; the shortlived rehiring of the former and the offer to hire the latter which
he refused, all indicate that there was no redundancy.
- None of the work has been phased out or rendered obsolete
by any event that took place. As to duplication of functions, it
must be mentioned that the positions of complainants have
existed for a long time judging from their years of service with
respondent; the observation of the Supreme Court in the
Wiltshire case to the effect that in a well-organized
establishment, duplication of functions is hardly to be expected
is pertinent.
- Foremost, the petitioner failed to formulate fair and
reasonable criteria in ascertaining what positions were declared
redundant and accordingly obsolete, such as preferred status,
efficiency or seniority. It, likewise, failed to formulate fair and
reasonable parameters to determine who among the
supervisors and middle-level managers should be retired for

Labor Law 1
redundancy. Using the SGV report as anchor, the petitioner
came out with a special retirement program for its 108
supervisors and middle-level managers, making it clear that its
decision to eliminate them was final and irrevocable. Moreover,
the private respondents were not properly apprised of the
existence of the special retirement program, as well as the
criteria for the selection of the supervisors to be retired, and
those to be retained or transferred or demoted.
- Contrary to its submissions, the petitioner downsized the Cane
Marketing Department by eliminating private respondents
Perrin and Candelario; and Franco and Candelario from the
Sugar and Molasses Storage Department. The downsizing of
personnel was not among the foregoing recommendations, and
yet this was what the petitioner did, through its special
retirement program, by including private respondents Franco
and Pabalan, thereby terminating their employment. It is too
much of a coincidence that the two private respondents were
active members of the union.
Recommendations were made relating to the Cane Marketing
Department, the report recommended the beefing up of the
petitioners planter service representative force, while
eliminating those who were ineffective. There is no showing in
the record that respondents Perrin and Candelario were
eliminated solely because they were inefficient. Neither is there
any substantial evidence on record that the private
respondents performance had been deteriorating;
on the
contrary, they had been so far so efficient that they had been
given promotions from time to time during their employment.
Yet, the petitioner eliminated private respondents Perrin and
Candelario and retained three PSRs, namely, Danilo Villanueva,
Roberto Combate and Danilo Labrador, who were employed
with the petitioner from one to three years and transferred
Raymundo de la Rosa, who had been working there for only six
years. Again, it is too much of a coincidence that Franco and
Pabalan, the President and Treasurer, respectively, of the union,
were included in the special retirement program.
- As may be expected, the dismissals generated a general
perception that management was sending a strong message
that all employees hold their position at its pleasure, and that it
was within its power to dismiss anyone anytime. With the
dismissal of the union officers and with the membership now
effectively threatened, the union virtually collapsed as an
organization. Out of fear, no one would even assume the
position of union President. An indication of this sad state of
affairs into which the union has fallen is that nothing came out
of its CBA proposal. It has been a year and three months as of
this writing since the respondent informed the union that its
proposal had been referred to the companys external counsel,
but no counter-proposal has been submitted and no single
conference has been held since then.
- Redundancy exists when the service capability of the work
force is in excess of what is reasonably needed to meet the
demands on the enterprise. A redundant position is one
rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a
particular product line previously manufactured by the
company or phasing out of a service activity priorly undertaken
by the business. Under these conditions, the employer has no
legal obligation to keep in its payroll more employees than are
necessary for the operation of its business.
- As seen in the case it was seen that contrary to the
petitioners claim, the employer must comply with the following
requisites to ensure the validity of the implementation of a
redundancy program: (1) a written notice served on both the
employees and the Department of Labor and Employment at
least one month prior to the intended date of retrenchment; (2)
payment of separation pay equivalent to at least one month
pay or at least one month pay for every year of service,
whichever is higher; (3) good faith in abolishing the redundant
positions; and (4) fair and reasonable criteria in ascertaining
what positions are to be declared redundant and accordingly
abolished.
- And as emphasized in the case of Panlilio v. National Labor
Relations Commission that it is imperative for the employer to

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have fair and reasonable criteria in implementing its

redundancy program, such as but not limited to (a) preferred
status; (b) efficiency; and (c) seniority.
- The general rule is that the characterization by an employer of
an employees services as no longer necessary or sustainable is
an exercise of business judgment on the part of the employer.
The wisdom or soundness of such characterization or decision is
not, as a general rule, subject to discretionary review on the
part of the Labor Arbiter, the NLRC and the CA. Such
characterization may, however, be rejected if the same is found
to be in violation of the law or is arbitrary or malicious.
2. NO
- While it may be true that the private respondents signed
separate Deeds of Release Waiver and Quitclaim and received
separation pay, nonetheless, we find and so hold that the NLRC
did not err in nullifying the decision of the Labor Arbiter.
- The Release Waiver and Quitclaim were not verified by the
complainants. Under prevailing jurisprudence, the fact that an
employee has signed a satisfaction receipt of his claims does
not necessarily result in the waiver thereof. The law does not
consider as valid any agreement whereby a worker agrees to
receive less compensation than what he is entitled to recover.
A deed of release or quitclaim cannot bar an employee from
demanding benefits to which he is legally entitled. We have
herefore (sic) explained that the reason why quitclaims are
commonly frowned upon as contrary to public policy and why
they are held to be ineffective to bar claims for the full
measures of the workers legal rights is the fact the employer
and the employee obviously do not stand on the same footing.
The employer drove the employees to the wall. The latter must
have to get hold of the money. Because out of job, they had to
face the harsh necessities of life. x x x (Marcos vs. NLRC, G.R.
No. 111744, September 8, 1995). The private respondents had
no other recourse but to execute the said Release Waiver and
Quitclaim because the petitioner made it clear in its
Memorandum dated August 8, 1995 that it had the final say on
who would be included in its special retirement program. Their
dismissal from the petitioner corporation was a fait accompli,
solely because they organized a union that would bargain for
reasonable terms and conditions of employment sought to be
included in a CBA. In fine, the private respondents were left to
fend for themselves, with no source of income from then on;
prospects for new jobs were dim. Their backs against the wall,
the private respondents were forced to sign the said documents
and receive their separation pay.
Disposition petition is DENIED for lack of merit.

G&M INC V BATOMALAGUE

[PAGE 116]

PAYROLL PAYMENT
CHAVEZ V NLRC
[PAGE 59]
PHIL GLOBAL COMMUNICATIONS INC V DE VERA
[PAGE 52]

CASH WAGE
CONGSON V NLRC
243 SCRA 260
PADILLA; April 5, 1995
NATURE
Appeal from a decision of NLRC
FACTS
- Petitioner Dominico C. Congson is the registered owner of
Southern Fishing Industry. Private respondents Bargo, Himeno,

Labor Law 1
Badagos, et al were hired on various dates by Congson as
regular piece-rate workers. They were uniformly paid at a rate
of P1 per tuna weighing 30-80 kilos per movement, that is
from the fishing boats down to petitioner's storage plant at a
load/unload cycle of work until the tuna catch reached its final
shipment/destination. They did the work of unloading tuna from
fishing boats to truck haulers; unloading them again at
petitioner's cold storage plant for filing, storing, cleaning, and
maintenance; and finally loading the processed tuna for
shipment. They worked 7 days/week.
- In June 1990, Congson notified his workers of his proposal to
reduce the rate-per-tuna movement due to the scarcity of tuna.
Private respondents resisted Congson's proposed rate
reduction. 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, they
were instructed to wait for further notice. They waited for the
notice of dialogue for a full week but in vain.
- So private complainant workers filed complaint against
Congson for underpayment of wages, non-payment of overtime
pay, 13th month pay, holiday pay, rest day pay, and 5-day
service incentive leave pay; and for constructive dismissal.
Labor Arbiter and NLRC ruled in favor of private respondent
workers. NLRC found Congson guilty of illegal dismissal. It held
that private respondents did not abandon their work, but that
Congson replaced private respondents with a new set of
workers without just cause and the required notice and hearing.
It also affirmed Labor Arbiters findings and monetary awards.
Hence, this appeal.
ISSUES
1. WON there was grave abuse of discretion on the part of
respondent NLRC in upholding Labor Arbiters award of salary
differentials
2. WON NLRC was correct in affirming LAs award of separation
pay
HELD
1. NO
- Petitioner Congson argues that despite the fact that private
respondents' 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 private
respondents were entitled to retrieve. Petitioner therefore
argues that the combined value of private respondents' cash
wage and the monetary value of the tuna liver and intestines
clearly exceeded the minimum wage fixed by law.
- Rule: Congsons practice of paying the private respondents the
minimum wage by means of legal tender combined with tuna
liver and intestines runs counter to the above cited 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 1021 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 informs 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.
2. YES
- Congson contends that: assuming arguendo that Labor
Arbiter's findings were proper as to private respondents' illegal
dismissal, it did not state the reason why instead of
reinstatement, separation pay has to be awarded. Petitioner
submits that under existing laws and jurisprudence, whenever
there is a finding of illegal dismissal, the available and logical
1

Article 102. 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 as
specified in appropriate regulations to be issued by the Secretary of Labor or as
stipulated in a collective bargaining agreement.

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remedy is reinstatement. As a permissible exception to the

general rule, separation pay may be awarded to the employee
in lieu of reinstatement, by reason of strained relationship
between the employer and employee. Since there was no
finding or even allegation of strained relationship between
.petitioner and private respondents, NLRC should have deleted
the award of separation pay.
- A careful scrutiny of the records of the case discloses the
existence of strained relationship between the petitioner
Congson and private respondents: [a] petitioner consistently
refused to re-admit private respondents in his establishment.
Petitioner even replaced private respondents with a new set of
workers to perform the tasks of private respondents [b] private
respondents themselves, from the very start, had already
indicated their aversion to their continued employment in
petitioner's establishment.
Disposition Petition DISMISSED. Challenged decision of NLRC
AFFIRMED.

PAYROLL ENTRIES
KAR ASIA V CORONA
437 SCRA 184
YNARES-SANTIAGO; August 24, 2004
FACTS
- Respondents, regular employees of petitioner KAR ASIA, Inc.,
an automotive dealer in Davao City, filed on September 24,
1997 claimubg that they were not paid their cost of living
allowance (COLA) for the months of December 1993 and
December 1994.
- Petitioner company and its president Celestino Barretto
countered by saying that respondents had already been paid
their COLA for the said periods. Petitioners presented in
evidence the payrolls for December 1993 and December 1994
showing that the respondents acknowledged in writing the
receipt of their COLA, and the affidavits of Ermina Daray and
Cristina Arana, cashiers of KAR ASIA, refuting respondents
claim that they were made to sign blank pieces of paper.
- Labor Arbiter rendered a decision in favor of petitioners. NLRC
affirmed the decision of the Labor Arbiter. Court of Appeals
reversed the decision of the NLRC and ordered petitioner
company to pay the respondents the P25.00 per day COLA for
the period December 1 to 31, 1994, plus interest thereon at the
rate of 1% per month computed from the time the same was
withheld from respondents up to the time they were actually
paid the respective sums due them
ISSUE
WON not the petitioner company paid the respondents the
COLA for December 1993 and December 1994 as mandated by
RTWPB XI Wage Order No. 3
HELD
YES
Ratio A close scrutiny of the payroll for the December 1993
COLA readily disclose the signatures of the respondents
opposite their printed names and the numeric value of P654.00.
Respondents averment that the petitioner company harassed
them into signing the said payroll without giving them its cash
equivalent cannot be given credence. He who asserts not he
who denies must prove; unfortunately, the respondents
miserably failed to discharge this burden
Reasoning
- The payrolls for December 1 to 15, 1994 and December 16 to
31, 1994 indicate an allowance of P327.00 for each period, or a
total of P654.00 for the entire month. However, a casual
observation of the payroll for the December 1993 COLA will also
show that the respondents signed for the amount of P654.00.
Also, the allowances appearing in the two separate payslips for
December 1 to 15, 1994 and December 16 to 31, 1994 sum up
to a total of P654.00. Although the numeric figures in the

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December 1994 payroll and the payslips for the same period
were denominated merely as allowances while those in the
December 1993 payroll were specifically identified as COLA, the
fact that they add up to the same figure, i.e., P654.00, is not a
coincidence
- While ordinarily a payslip is only a statement of the gross
monthly income of the employee, his signature therein coupled
by an acknowledgement of full compensation alter the legal
complexion of the document. The payslip becomes a substantial
proof of actual payment. Moreover, there is no hard-and-fast
rule requiring that the employees signature in the payroll is the
only acceptable proof of payment. By implication, the
respondents,
in
signing
the
payslips
with
their
acknowledgement of full compensation, unqualifiedly admitted
the receipt thereof, including the COLA for December 1994

9.04 TIME PAYMENT

9.05 PLACE PAYMENT
LABOR ADVISORY ON PAYMENT OF SALARIES
THRU AUTOMATED TELLER MACHINE (ATM)
- Article 104 of the Labor Code, as amended, requires that
payment of wages shall be made at or near the place of
undertaking, except as otherwise provided by such regulations
as the Secretary of Labor and Employment may prescribe under
conditions that would ensure prompt payment and protection of
wages.
- Based on Article 104, as well as the provisions of Sec. 4, Rule
VIII, Book III of the Codes Implementing Rules and considering
present-day
circumstances,
practices
and
technology,
employers may adopt a system of payment other than in the
workplace, such as through automated teller machine (ATM) of
banks, provided that the following conditions are met:
1. The ATM systems of payment is with the written consent of
the employees concerned.
2. The employees are given reasonable time to withdraw their
wages from the bank facility which time, if done during
working hours, shall be considered compensable hours
worked.
3. The system shall allow workers to receive their wages within
the period or frequency and in the amount prescribed under
the Labor Code, as amended.
4. There is a bank or ATM facility within a radius of one
kilometer to the place of work.
5. Upon request of the concerned employee/s, the employer
shall issue a record of payment of wages, benefits and
deductions for particular period.
6. There shall be no additional expenses and no diminution of
benefits and privileges as a result of the ATM system of
payment.
7. The employer shall assume responsibility in case the wage
protection provisions of law and regulations are not complied
with under the arrangement.
- Done in the City of Manila, this 25th day of November 1996.
Sgd. Leonardo A. Quisumbing
Secretary.

9.06 DIRECT PAYMENT

9.07
CONTRACTOR
CONTRACTOR

SUB-

C. PROHIBITION REGARDING WAGES

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9.08
NON-INTERFERRENCE
DISPOSAL OF WAGES

9.09 WAGE DEDUCTION

WAGE DEDUCTION
RADIO COMMUNICATIONS OF THE PHILS INC V SEC
OF LABOR
169 SCRA 38
REGALADO; January 9, 1989
FACTS
- On May 4, 1981, petitioner, a domestic corporation engaged in
the telecommunications business, filed with the National Wages
Council an application for exemption from the coverage of
Wage Order No. 1. The application was opposed by respondent
United RCPI Communications Labor Association (URCPICLAFUR), a labor organization affiliated with the Federation of
Unions of Rizal (FUR).
- On May 22, 1981, the National Wages Council disapproved
said application and ordered petitioner to pay its covered
employees the mandatory living allowance of P2.00 daily
effective March 22, 1981.
- As early as March 13, 1985, before the aforesaid case was
elevated to this Court, respondent union filed a motion for the
issuance of a writ of execution, asserting therein its claim to
15% of the total backpay due to all its members as "union
service fee" for having successfully prosecuted the latter's
claim for payment of wages and for reimbursement of expenses
incurred by FUR and prayed for the segregation and remittance
of said amount to FUR thru its National President.
- On October 24, 1985, without the knowledge and consent of
respondent union, petitioner entered into a compromise
agreement with Buklod ng Manggagawa sa RCPI-NFL (BMRCPINFL) as the new bargaining agent of oppositors RCPI
employees.
- Thereupon, the parties filed a joint motion praying for the
dismissal of the decision of the National Wages Council for it
had already been novated by the Compromise Agreement redefining the rights and obligations of the parties. Respondent
Union on November 7, 1985 countered by opposing the motion
and alleging that one of the signatories thereof- BMRCPI-NFL is
not a party in interest in the case but that it was respondent
Union which represented oppositors RCPI employees all the way
from the level of the National Wages Council up the Supreme
Court. Respondent Union therefore claimed that the
Compromise Agreement is irregular and invalid, apart from the
fact that there was nothing to compromise in the face of a final
and executory decision.
- Director Severo M. Pucan issued an Order dated November 25,
1985 awarding to URCPICLA-FUR and FUR 15% of the total
backpay of RCPI employees as their union service fees, and
directing RCPI to deposit said amount with the cashier of the
Regional Office for proper disposition to said awardees.
- Despite said order, petitioner paid in full the covered
employees on November 29, 1985, without deducting the union
service fee of 15%.
- In an order dated May 7, 1986, NCR officer-in-charge found
petitioner RCPI and its employees jointly and severally liable for
the payment of the 15% union service fee amounting to
P427,845.60 to private respondent URCPICLA-FUR and
consequently ordered the garnishment of petitioner's bank
account to enforce said claim.
- Secretary of Labor and Employment issued an order on August
18, 1986 modifying the order appealed from by holding

Labor Law 1
petitioner solely liable to respondent union for 10% of the
awarded amounts as attorney's fees
ISSUE
WON public respondents acted with grave abuse of discretion
amounting to lack of jurisdiction in holding the petitioner solely
liable for "union service fee' to respondent URCPICLA-FUR
HELD
NO. Attorney's fee due the oppositor is chargeable against RCPI.
Ratio The defaulting employer or government agency remains
liable for attorney's fees because it compelled the complainant
to employ the services of counsel by unjustly refusing to
recognize the validity of the claim. (Cristobal vs. ECC)
Reasoning
- It is undisputed that oppositor (private respondent herein) was
the counsel on record of the RCPI employees in their claim for
EC0LA under Wage Order No. 1 since the inception of the
proceedings at the National Wages Council up to the Supreme
Court. It had therefore a valid claim for attorney's fee which it
called union service fee.
- As is evident in the compromise agreement, petitioner was
bound to pay only 30% of the amount due each employee on
November 30, 1985, while the balance of 70% would still be the
subject of renegotiation by the parties. Yet, despite such
conditions beneficial to it, petitioner paid in full the backpay of
its employees on November 29, 1985, ignoring the service fee
due the private respondent.
- Worse, petitioner supposedly paid to one Atty. Rodolfo M.
Capocyan the 10% fee that properly pertained to herein private
respondent, an unjustified and baffling diversion of funds.
- Finally, petitioner cannot invoke the lack of an individual
written authorization from the employees as a shield for its
fraudulent refusal to pay the service fee of private respondent.
Be that as it may, the lack thereof was remedied and supplied
by the execution of the compromise agreement whereby the
employees, expressly approved the 10% deduction and held
petitioner RCPI free from any claim, suit or complaint arising
from the deduction thereof. When petitioner was thereafter
again ordered to pay the 10% fees to respondent union, it no
longer had any legal basis or subterfuge for refusing to pay the
latter.
- We agree that Article 222 of the Labor Code requiring an
individual written authorization as a prerequisite to wage
deductions seeks to protect the employee against unwarranted
practices that would diminish his compensation without his
knowledge and consent. However, for all intents and purposes,
the deductions required of the petitioner and the employees do
not run counter to the express mandate of the law since the
same are not unwarranted or without their knowledge and
consent. Also, the deductions for the union service fee in
question are authorized by law and do not require individual
check-off authorizations.
Disposition the order of the Secretary of Labor of August 16,
1986 is hereby AFFIRMED and the petition at bar is DISMISSED,
with double costs against petitioner. The temporary restraining
order issued pursuant to the Resolution of the Court of June 22,
1987 is LIFTED and declared of no further force and effect.

APODACA V NLRC (MIRASOL, INTRANS PHILS)

172 SCRA 442
GANCAYCO; April 18, 1989
NATURE
Special civil action for certiorari
FACTS
- Petitioner was employed in respondent corporation
- 1975: petitioner was appointed President and General
Manager of respondent corporation
- 1985: Respondent Mirasol persuaded petitioner to subscribe
to 1,500 shares of respondent corporation at P100 per share

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(total of P150,000). He made an initial payment of P37,500.

- January, 1986: petitioner resigned
- December, 1986: petitioner instituted with NLRC a complaint
for the payment of his unpaid wages, his cost of living
allowance, the balance of his gas and representation expenses,
and his bonus compensation for 1986.
- Private respondents admitted there is due to the petitioner
P17,060, but this was applied to the unpaid balance of his
subscription in the amount of P95,439.93
- Petitioner questioned the set off since there was no call or
notice for the payment of the unpaid subscription, and that the
alleged obligation is not enforceable.
- 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 other
due to petitioner is not contrary to law, morals, public policy
ISSUE
1. WON the NLRC has jurisdiction to resolve a claim for nonpayment of stock subscriptions to a corporation
2. WON an obligation arising from the non-payment of stock
subscription can be offset against a money claim of any
employee against an employer
HELD
1. NO
Reasoning
- 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 is within the exclusive
jurisdiction of the Securities and Exchange Commission.
2. NO
Reasoning
- Assuming arguendo that the NLRC may exercise jurisdiction in
this case, the unpaid subscriptions are not due and payable
until a call is made by the corporation for payment. It does not
appear that a notice of such call has been sent to petitioner.
The records only show that the respondent corporation
deducted the amount due to petitioner from the amount
receivable from him from for the unpaid subscriptions. This setoff was without lawful basis. As there was no notice or call for
payment, the same is not yet due or payable.
- Assuming that there had been a call for payment, the NLRC
still cannot validly set it off against the wages and other
benefits due petitioner.
- Art. 113 of the Labor code allows such a deduction from the
wages of the employees by employer in only 3 instances: (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.
Disposition The petition is GRANTED and the questioned
decision of the NLRC dated September 18, 1987 is hereby set
aside and another judgment is hereby rendered ordering
private respondents to pay petitioner the amount of P17,060.07
plus legal interest computed from the time of the filing of the
complaint on December 19, 1986, with costs against private
respondents.

CHECK OFF
MANILA TRADING & SUPPLY CO V MANILA TRADING
LABOR ASSN
93 PHIL 288
REYES; April 29, 1953
NATURE

Labor Law 1
Petition for certiorari to set aside decision of CIR.
FACTS
- On October 10, 1950, the Manila Trading Labor Association,
composed of workers of Manila Trading and Supply Co., made a
demand upon said company for increase of wages, increase of
personnel, Christmas bonus, and other gratuities and privileges.
As the demand was refused and the Department of Labor whose intervention had been sought by the association - failed
to effect an amicable settlement, the Head of the Department
certified the dispute to the Court of Industrial Relations on
October 25, and there it was docketed as case No. 521-V. The
company, on its part, on that same day applied to the Court of
Industrial Relations for authority to lay off 50 laborers due to
"poor business," the application being docketed as Case No.
415-V (4).
- To resolve the disputes involved in the two cases the Court of
Industrial Relations conducted various hearings between
October 26, 1950, and January 18, 1951. Of their own volition
the president and vice-president of the association attended
some if not all of the hearings, and though they absented
themselves from work for that reason they afterwards claimed
that they were entitled to their wages. The Court of Industrial
Relations found merit in the claim, and at their instance,
ordered the company to pay them their wages corresponding to
the days they were absent from work while in attendance at the
hearings.
- Contending that the industrial court had no authority to issue
such an order, the company asks this Court to have it annulled.
Opposing the petition, the association, on its part, contends that
the order comes within the broad powers of the industrial court
in the settlement of disputes between capital and labor.
ISSUE
WON Court of Industrial Relations may require an employer to
pay the wages of officers of its employees' labor union while
attending the hearing of cases between the employer and the
union

HELD
Ratio When in case of strikes, and according to the CIR even if
the strike is legal, strikers may not collect their wages during
the days they did not go to work, for the same reasons if not
more, laborers who voluntarily absent themselves from work to
attend the hearing of a case in which they seek to prove and
establish their demands against the company, the legality and
propriety of which demands is not yet known, should lose their
pay during the period of such absence from work.
Reasoning
- 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.
- The respondent association, however, claims that it was not
the one that brought the cases to the Court of Industrial
Relations, and the point is made that "if the laborer who is
dragged to court is deprived of his wages while attending court
hearings, he would in effect be denied the opportunity to
defend himself and protect his interests and those of his fellow
workers." But while it is true that it was the Secretary of Labor
who certified the dispute involved in case No. 521-V to the
Court of Industrial Relations, the fact remains that the dispute
was initiated by a demand from the labor association. The truth,
therefore, is that while one of the cases was filed by the
employer, the offer was initiated by the employees. It may be
conceded that the employer is in most cases in a better position
to bear the burdens of a litigation than the employees. But as
was said in the case of J. P. Heilbronn Co. vs. National Labor

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Union, supra, "It is hardly fair for an employee or laborer to fight

or litigate against his employer on the employer's time." The
most that could be conceded in favor of the claimants herein is
to have the absences occasioned by their attendance at the
hearings charged against their vacation leave if they have any,
or as suggested by three of the Justices who signed the decision
in the case just cited, to have the wages they failed to earn
charged as damages in the event the cases whose hearings
they attended are decided in favor of the association. But the
majority of the Justices make no commitment on this latter
point.
Disposition Petition for certiorari is granted and the order
complained of set aside.

9.10 DEPOSIT
DENTECH MANUFACTURING V NLRC (MARBELLA)
172 SCRA 588
GANCAYCO; April 19, 1989
FACTS
- Dentech Manufacturing Corporation is a domestic corporation
organized under Philippine laws owned and managed by the
petitioner Jacinto Ledesma. The firm is engaged in the
manufacture and sale of dental equipment and supplies.
- Private respondents Benjamin Marbella, Armando Torno,
Juanito Tajan, Jr. and Joel Torno are members of the
Confederation of Citizens Labor Union (CCLU), a labor
organization registered with the DOLE. They used to be the
employees of Dentech, working as welders, upholsterers and
painters. They were already employed with the company when
it was still a sole proprietorship. They were dismissed from the
firm beginning February 14, 1985.
- They filed a Complaint with the NLRC against Dentech and
Ledesma for, among others, illegal dismissal and violation of PD
851. They were originally joined by another employee, one
Raymundo Labarda, who later withdrew his Complaint. At first,
they only sought the payment of their 13th month pay under PD
851 as well as their separation pay, and the refund of the cash
bond they filed with the company at the start of their
employment. Later on, they sought their reinstatement as well
as the payment of their 13th month pay and service incentive
leave pay, and separation pay in the event that they are not
reinstated. It is alleged that they were dismissed from the firm
for pursuing union activities.
- Dentech argued that they are not entitled to a 13th month
pay. They maintained that each of the private respondents
receive a total monthly compensation of more that P1,000 and
that under Section 1 of PD 851, such employees are not entitled
to receive a 13th month pay. Also, the company is in bad
financial shape and that pursuant to Section 3, the firm is
exempted from complying with the provisions of the Decree.
Dentech also contended that the refund of the cash bond filed
by the Marbella, et al., is improper inasmuch as the proceeds of
the same had already been given to a certain carinderia to pay
for their outstanding accounts.
ISSUES
1. WON the private respondents are entitled as a matter of right
to a 13th month pay
2. WON the refund of the cash bond is proper
HELD
1. YES
Reasoning
- PD 851 was signed into law in 1975 by then President
Ferdinand Marcos. Under the original provisions of Section 1, all
employers are required to pay all their employees receiving a
basic salary of not more than P1,000 a month, regardless of the
nature of their employment, a 13th month pay not later than
December 24 of every year. Under Section 3 of the rules and

Labor Law 1
regulations implementing PD 851, financially distressed
employers, i.,e., those currently incurring substantial losses, are
not covered by the Decree. Section 7 requires, however, that
such distressed employers must obtain the prior authorization
of the Secretary of Labor before they may qualify for such
exemption.
- On May 1, 1978, PD 1364 was signed into law. The Decree
enjoined the DOLE to stop accepting applications for exemption
under PD 851. On August 13, 1986, President Corazon Aquino
issued Memorandum Order No. 28 which modified Section 1 of
PD 851. The said issuance eliminated the P1,000 salary ceiling.
- It clearly appears that Dentech has no basis to claim that it is
exempted from complying with the provisions of the law
relating to the 13th month pay. The P1,000 salary ceiling
provided in PD 851 pertains to basic salary, not total monthly
compensation. Dentech admits that Marbella, at al., work only
five days a week and that they each receive a basic daily wage
of P40 only. A simple computation of the basic daily wage
multiplied by the number of working days in a month results in
an amount of less than P1,000. Thus, there is no basis for the
contention that the company is exempted from the provision of
PD 851 which mandated the payment of 13th month
compensation to employees receiving less than P1,000 a
month. [NOTE: Corys Memo (1986) is not yet applicable as of
the time Marbella, et al., were dismissed (1985).]
- Even assuming, arguendo, that Marbella, et al., are each paid
a monthly salary of over P1,000, Dentech is still not in a
position to claim exemption. The rules and regulations
implementing PD 851 provide that a distressed employer shall
qualify for exemption from the requirements of the Decree only
upon prior authorization from the Secretary of Labor. No such
prior authorization had been obtained by Dentech.
2. YES
Reasoning
- The refund of the cash bond is in order. Article 114 of the
Labor Code prohibits an employer from requiring his employees
to file a cash bond or to make deposits, subject to certain
exceptions.
- Art. 114. Deposits for loss or damage. - No employer
shall require his worker to make deposits from which
deductions shall be made for the reimbursement of loss
of or damage to tools, materials, or equipment supplied
by the employer, except when the employer is engaged
in such trades, occupations or business where the
practice of making deductions or requiring deposits is a
recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate
rules and regulations.
- Dentech has not satisfactorily disputed the applicability of this
provision to the case at bar. Considering further that it failed to
show that it is authorized by law to require Marbella, et al., to
file the cash bond in question, the refund is in order.
- The allegation that the proceeds of the cash bond had already
been given to a certain carinderia to pay for the accounts of the
private respondents does not merit serious consideration. No
evidence or receipt has been shown to prove such payment.
Disposition Petition is hereby DISMISSED for lack of merit.

FIVE J TAXI V NLRC

235 SCRA 556
REGALADO; August 22, 1994
NATURE
Special civil action for certiorari to annul NLRC decision
FACTS
- Maldigan and Sabsalon were hired by the petitioners as taxi
drivers. They paid daily "boundary" of P700 for air-conditioned
or P450 for non-air-conditioned taxi, P20 for car washing, and a
P15 deposit to answer for any deficiency in their "boundary," for
every actual working day.
- In less than 4 months, Maldigan already failed to report for
work. Later, petitioners learned that he was working for "Mine of

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Gold" Taxi Company. - Sabsalon was held up by his armed

passenger who took all his money and stabbed him. After his
hospital discharge, he went to his home province to recuperate.
He was re-admitted by petitioners after 4 years under the same
terms and conditions, but he was only allowed to drive only
every other day. However, on several occasions, he failed to
report for work during his schedule.
-Sept. 1991: Sabsalon failed to remit his "boundary" for the
previous day. Also, he abandoned his taxicab in Makati without
fuel refill worth P300. He adamantly refused to report to work
despite demands. Afterwards it was revealed that he was
driving a taxi for "Bulaklak Company."
- 1989: Maldigan requested petitioners for the reimbursement
of his daily cash deposits for 2 years, but petitioners told him
that nothing was left of his deposits as these were not even
enough to cover the amount spent for the repairs of the taxi he
was driving
- When Maldigan insisted on the refund, petitioners terminated
his services. Sabsalon claimed that his termination from
employment was effected when he refused to pay for the
washing of his taxi seat covers. They filed a complaint for illegal
dismissal and illegal deductions
- Labor arbiter dismissed case holding that the unreasonable
delay in filing the case (two years) was not consistent with the
natural reaction of a person who claimed to be unjustly treated.
- NLRC: Private respondents dismissal was legal since they
voluntarily left to work for another company. The deductions
were held illegal and it ordered petitioners to reimburse the
accumulated deposits and car wash payments, plus interest
thereon at the legal rate from the date of promulgation of
judgment to the date of actual payment, and 10% of the total
amount as and for attorney's fees
ISSUE
WON private respondents are entitled to the refund of deposits
HELD
YES
- NLRC held that the daily deposits made by respondents to
defray any shortage in their "boundary" is covered by the
general prohibition in Article 114 of the Labor Code and that
there is no showing that the Secretary of Labor has recognized
the same as a "practice" in the taxi industry.
Art. 114. Deposits for loss or damage. No employer shall
require his worker to make deposits from which deductions
shall be made for the reimbursement of loss of or damage to
tools, materials, or equipment supplied by the employer,
except when the employer is engaged in such trades,
occupations or business where the practice of making
deposits is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate rules and
regulations.
- Article 114 does not apply to or permit deposits 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. In other case, any balance due to
private respondents after proper accounting must be returned
to them with legal interest.
-The evidence shows that Sabsalon was able to withdraw his
deposits through vales or he incurred shortages, such that he is
even indebted to petitioners in the amount of P3,448.00. With
respect to Maldigan's deposits, nothing was mentioned
questioning the same. Since the evidence shows that he had
not withdrawn the same, he should be reimbursed the amount
of his accumulated cash deposits.
- On car wash payment: No refund. There was nothing to
prevent private respondents from cleaning the taxi units
themselves, if they wanted to save their P20. Also, car washing
after a tour of duty is a practice in the taxi industry, and is, in
fact, dictated by fair play.
- On attorneys fees: Article 222 of the Labor Code, as amended
by Section 3 of PD. 1691, states that non-lawyers may appear

Labor Law 1
before the NLRC or any labor arbiter only (1) if they represent
themselves, or (2) if they represent their organization or the
members thereof. While it may be true that Guillermo H. Pulia
was the authorized representative of private 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 attorney's fees.
Disposition NLRC decision MODIFIED by deleting the awards
for reimbursement of car wash expenses and attorney's fees
and directing NLRC to order and effect the computation and
payment by petitioners of the refund for Maldigan's deposits,
plus legal interest thereon from the date of finality of this
resolution up to the date of actual payment thereof.

9.11 WITHHOLDING OF WAGES;

RECORD KEEPING

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Disini

- 160 -

attached for debts incurred for food, shelter, clothing and

medical attendance. The writ of garnishment issued by the
court, while it purports to include all moneys and properties
belonging to the employing company, cannot, in any manner,
touch or affect what said company has in its possession to pay
the wages of its laborers.
- When CFI issued writ of garnishment, its scope could not have
been extended to include money intended to pay the wages of
members of labor union.
- But before the order of the respondent court can be enforced
there is need of lifting the garnishment by presentation of a
motion to that effect by the labor union.
- Petitioner's contention that the motion should be denied
because it is predicated on a labor contract entered into
between the petitioner and the Pacific Customs Brokerage
Workers Union has no foundation in fact, it appearing that the
members of the two labor unions are one and the same. The
members of the Pacific Customs Brokerage Workers' Union are
the same laborers now members of the petitioner union.

SPECIAL STEEL CORP V VILLAREAL

[PAGE 32]

GAA V CA
[PAGE 148]

RECORD-KEEPING

PACIFIC CUSTOMS BROKERAGE V INTER-ISLAND

DOCKMEN AND LABOR UNION AND CIR
89 PHIL 722
BAUTISTA ANGELO; August 24, 1951
NATURE
Petition for review on certiorari
FACTS
- Inter-island Dockmen and Labor Union filed petition in CIR
against Pacific Customs Brokerage praying that said company
be ordered to desist from dismissing members of said union, to
turn over to the treasurer of union all dues and fees withheld by
the company and to reinstate with backpay the workers.
- A motion was filed by labor union praying that Pacific Customs
Brokerage be ordered to pay union members their wages which
was allegedly withheld by it for certain alleged damages caused
by said members for staging a strike. To this motion, Pacific
objected.
ISSUE
WON Pacific Customs Brokerage can be compelled by CIR to
pay wages of the union members in spite of the writ of
garnishment issued by CFI in civil case, directing the sheriff to
levy upon moneys of Pacific Customs Brokerage Workers Union
which are in the possession of Pacific Customs Brokerage
HELD
YES
- Pacific Customs Brokerage contends otherwise because the
moneys having been garnished, are in custodia legis, and cant
be controlled by CIR. The Court noticed that this is the same
argument advanced by petitioner before the respondent court
in its effort to frustrate the purpose of the motion of the labor
union, and the respondent court found said argument
untenable. Art 1708 of new Civil Code provides, Laborers
wages shall not be subject to execution or attachment, except
for debts incurred for food, shelter, clothing, medical
attendance.
- Pacific Customs Brokerage doesnt dispute that money
garnished is intended to pay wages of members of labor union.
There is nothing to show that such money was garnished or

SOUTH MOTORISTS ENTERPRISES V TOSOC [SEC

OF DOLE]
181 SCRA 386
MELENCIO-HERRERA; January 23, 1990
NATURE
Certiorari
FACTS
- January 1983, complaints for non-payment of emergency cost
of living allowances were filed by 46 workers, Tosoc, et als.,
against SOUTH MOTORISTS(SM) before the Naga City District
Office of Regional Office No. 5 of the then Ministry of Labor
- 10 January 1983 a Special Order was issued by the District
Labor Officer directing its Labor Regulation Officers to conduct
an inspection and verification of SOUTH MOTORISTS'
employment records.
- On the date of the inspection and verification, SOUTH
MOTORISTS was unable to present its employment records on
the allegation that they had been sent to the main office in
Manila.
- The case was then set for conference on 25 January 1983 but
was reset twice.
- SM kept on requesting for postponements on the ground that
the documents were still being prepared and collated and that a
formal manifestation or motion would follow. Nothing did.
- After the submission of an Inspection Report on the basis of
which an Order dated 14 April 1983 was issued by Labor Officer
Domingo Reyes directing SMto pay Tosoc, et als., the total
amount of P184,689.12 representing the latter's corresponding
emergency cost of living allowances.
- SM FILED a M for R BUT was denied.
- 11 July 1988, the Secretary of Labor and Employment affirmed
the appealed Order.
- 28 July 1988, SM FILED another MR BUT WAS DENIED; FILED
ANOTHER MR BUT WAS STILL DENIED.
CLAIMS:
- SOUTH MOTORISTS: this falls under the original and exclusive
jurisdiction of Labor Arbiters (LA- a trier of facts, may determine
after hearing such questions as WON an ER-EE relp exists;
WON the workers were project workers; WON the employees
worked continuously or WON they should receive emergency
cost of living allowances and if entitled, how much each should
receive..)
- TOSOC et al: maintain otherwise.

Labor Law 1
ISSUE
WON Regional Directors of DOLE have jurisdiction to validly act
on/ award money claims
HELD
YES
Ratio Regional Directors are empowered to hear and decide, in
a summary proceeding, claims for recovery of wages and other
monetary claims and benefits, including legal interest, subject
to the concurrence of the following requisites:
1) the claim is presented by an employee or person employed
in domestic or household service, or househelper under the
Code;
2) the claim arises from employer-employee relations;
3) the claimant no longer being employed, does not seek
reinstatement; and
4) the aggregate money claim of each employee or househelper
does not exceed P5,000.00 (Art. 129, Labor Code, as amended
by R.A. 6715).
But where these requisites do not concur, the Labor Arbiters
shall have exclusive original jurisdiction over claims arising from
employer-employee relationship except claims for employees'
compensation, social security, medicare and maternity benefits
(parag. 6, Art. 217, Labor Code as amended by R.A. 6715).
Reasoning
- Two provisions of law are crucial to the issueA129 and A217
of the LC, as recently amended by Republic Act No. 6715,
approved on 2 March 1989. Said amendments, being curative in
nature, have retroactive effect and, thus, should apply in this
case (BRIAD AGRO vs. DE LA CERNA, G.R. No. 82805, and
CAMUS ENGINEERING vs. DE LA CERNA, G.R. No. 83225, 9
November 1989).
- The aforesaid Articles, as amended, respectively read as
follows:
Art. 129. Recovery of wages, simple money claims and other
benefits. Upon complaint of any interested party, the
Regional Director of the Department of Labor and
Employment or any of the duly authorized hearing officers of
the Department is empowered, through summary proceeding
and after due notice, to hear and decide cases involving the
recovery of wages and other monetary claims and benefits,
including legal interest, owing to an employee or person
employed in domestic or household service and househelper
under this Code, arising from employer-employee relations:
Provided, That such complaint does not include a claim for
reinstatement: Provided, further, That the aggregate claim
of each employee or househelper does not exceed five
thousand pesos (P5,000.00). . . .
and
Art. 217. Jurisdiction of Labor Arbiters and the Commission.
(a) Except as otherwise provided under this Code, the
Labor Arbiters shall have original and exclusive jurisdiction
to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or
non-agricultural:
xxx xxx xxx
(6) Except claims for employees compensation, social
security, medicare and maternity benefits, all other claims
arising from employer-employee relations, including those of
persons in domestic or household service, involving an
amount exceeding five thousand pesos (P5,000),
whether or not accompanied with a claim for
reinstatement.
xxx xxx xxx
- In accordance said articles, those awards in excess of
P5,000.00, particularly those given to Gavino, Euste, Brequillo,
Cis, Agreda, Galona, Tosoc, Guinoo, Cea, Guinoo, and Osoc,
each of which exceeds P5,000.00, should be ventilated in a
proceeding before the LAs.
- SM also caused the resetting of all subsequent hearings on the
ground that the documents were still being prepared and
collated. - Having been given the opportunity to put forth its

A2010

- 161 -

Disini

case, SM has only itself to blame for having failed to avail of the
same
- What is more, its repeated failure to attend the hearings, and
to submit any motion as manifested may be construed as a
waiver of its right to adduce evidence to controvert the worker's
claims.
Disposition
The award P l84,689.12 was MODIFIED. The
individual claims of Gavino, Euste ,Brequillo, Cis, Agreda,
Galona, Tosoc, Guinoo, Cea, Guinoo, and Osoc, each of which
exceeds P5,000.00, were remanded to the LA for proper
disposition. All other individual awards not in excess of
P5,000.00 were AFFIRMED.

D. OTHER FORMS OF RENUMERATIO N

9.12 SERVICE CHARGES

SERVICE CHARGES
MARANAW HOTELS AND RESORT CORPORATION V
NLRC (DAMALERIO)
303 SCRA 540
PURISIMA; February 23, 1999
NATURE
Special Civil Action in the Supreme Court
FACTS
- Damalerio, a room attendant of the Century Park Sheraton
Hotel, operated by Maranaw Hotel and Resort Corporation, was
seen by hotel guest Glaser with left hand inside the latter's
suitcase. Confronted with what he was doing, Damalerio
explained that he was trying to tidy up the room. Not satisfied
with the explanation of Damalerio, Glaser lodged a written
complaint before Despuig, shift-in-charge of security of the
hotel. Glaser also reported that Damalerio had previously asked
from him souvenirs, cassettes, and other giveaways. The
complaint was later brought by Despuig to the attention of
Major Buluran, Chief of Security of the hotel.
- Damalerio was given a Disciplinary Action Notice (DAN ). The
next day, an administrative hearing was conducted on the
matter. Among those present at the hearing were the room
attendant, floor supervisor, chief of security, personnel
representative, and senior floor supervisor, and union
representative.
- Damalerio received a memorandum issued by San Gabriel, Sr.
Floor Supervisor, bearing the approval of Kirit, Executive
Housekeeper, stating that he (Damalerio) was found to have
committed qualified theft in violation of House Rule No. 1,
Section 3 of Hotel Rules and Regulations. The same
memorandum served as a notice of termination of his
employment.
- Damalerio filed with the Labor Arbiter a Complaint for illegal
dismissal against the petitioner. After the parties had sent in
their position papers, Labor Arbiter rendered judgment finding
the dismissal of complainant to be illegal and ordering the
respondents to reinstate him to his former or equivalent
position without loss of seniority rights and with backwages
from April 15, 1992 when he was preventively suspended up to
actual reinstatement and other benefits, including but not
limited to his share in the charges and/or tips which he failed to
receive, and all other CBA benefits that have accrued since his
dismissal.
- From the aforesaid Labor Arbiter's disposition, the petitioner
appealed to the NLRC, which modified the appealed decision by
giving petitioner the option of paying Damalerio a separation
pay equivalent to one month pay for every year of service,
instead of reinstating him.
- Petitioner interposed a motion for reconsideration but to no
avail. NLRC denied the same. Undaunted, petitioner brought
this matter to the Court.

Labor Law 1
ISSUES
WON respondent NLRC committed grave abuse of discretion in
not reversing that portion of the decision of the labor arbiter
ordering petitioner to pay private respondent his share in the
service charge which was collected during the time he was not
working in the hotel
HELD
NO
- Damalerio is entitled not only to full backwages but also to
other benefits, including a just share in the service charges, to
be computed from the start of his preventive suspension until
his reinstatement.
- However, mindful of the animosity and strained relations
between the parties, emanating from this litigation, we uphold
the ruling a quo that in lieu of reinstatement, separation pay
may be given to the private respondent, at the rate of one
month pay for every year of service. Should petitioner opt in
favor of separation pay, the private respondent shall no longer
be entitled to share in the service charges collected during his
preventive suspension.
Disposition Petition dismissed

TIPS
ACE NAVIGATION CO INC V CA
[PAGE 146]

9.13 THIRTEENTH MONTH PAY

[PD 851]
COVERAGE
ULTRA VILLA FOOD HAUS V GENISTON
309 SCRA 17
KAPUNAN; June 23, 1999.
FACTS
- Geniston claims he is employed as a do it all guy in the
UVFH owned by Rosie Tio. He claims he was employed as a
waiter, driver and maintenance guy in the restaurant. Tio claims
Geniston is her personal driver. Tio works as a manager of the
CFC Corporation.
- On May 12, 1992, Tio called Genistons house to ask him to
report for work even though it was a holiday because she
needed to do something important in the office. (The election
that year was on May 11. May 11 & 12 were holidays.) His wife
took the call and informed Tio that he wasnt there as he was
working as a poll watcher.
- Tio says that Geniston abandoned his work. Geniston was
dismissed. He filed case for illegal dismissal and asked for
benefits, including 13th month pay. LA found that he wasnt an
employee of UVFH, but instead was a personal driver of Tio. It
found that his claim of being a waiter isnt true because the
positions of waiter and driver are incongruent --- as a waiter he
would have to be at the resto all day; as a driver, he would have
to be away from the resto. LA also told Tio to indemnify
Geniston for P1k for failing to comply with the due process
requirement. NLRC reversed LAs decision.
ISSUES
1. WON Geniston was a personal driver and not an employee of
UVHF
2. WON personal drivers are entitled to 13th month pay,
according to the law
3. WON Geniston abandoned his work
HELD

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Disini

1. YES
- The facts support Tios claim that Geniston was her personal
driver. He was not in the payroll of UVFH; UVFH employees
attested that he was not one of them; warehousemen of CFC
Corp described Genistons relationship to Tio, ie, he brings her
to work, waits/sleeps in her car until she goes out for lunch,
brings her back after lunch, then waits/sleeps in her car until
she goes home.
2. NO
- Art 141 of the LC defines Domestic or household service as
to include services of family drivers.
- The Revised Guidelines on the Implementation of the 13th
Month Pay Law excludes employers of household helpers from
the coverage of PD 851, thus:
2.. Exempted Employers
The following employers are still not covered by P.D. No. 851:
a. . . .;
b. Employers of household helpers . . .;
c. . . .;
d. . . .
- BUT Geniston was awarded 13th month pay in view of Tios
practice of according private respondent such benefit. Indeed,
petitioner admitted that she gave private respondent 13th
month pay every December.
3. NO
- To constitute abandonment, two requisites must concur: (1)
the failure to report to work or absence without valid or
justifiable reason, and (2) a clear intention to sever the
employer-employee relationship as manifested by some overt
acts, with the second requisite as the more determinative
factor. The burden of proving abandonment as a just cause for
dismissal is on the employer. Petitioner failed to discharge this
burden.
Note
- The court also found that Geniston is not entitled to the other
benefits he was asking for because Art 82 (LC) excludes
domestic helpers from the mandatory grant of overtime pay,
holiday pay, premium pay and service incentive leave.
Disposition NLRC decision is reversed.

PETROLEUM SHIPPING V NLRC

[PAGE 79]

MANNER OF WAGE PAYMENT

JACKSON BLDG V NLRC (GUMOGDA)
246 SCRA 329
QUIASON; July 14, 1995
FACTS
- Ferdinand Gumogda underwent an appendectomy. Because
his doctor advised him to rest for at least 30 days, Gumogda
filed for a 45-day LOA. He came back 50 days after the
operation but to his surprise, her wasnt allowed to return to
work because according to petitioners, Gumogda had
abandoned his work. The Labor Arbiter and NLRC ruled in favor
of Gumogda. Petitioners appealed.
ISSUES
1. WON private respondent abandoned his work;
2. WON petitioners are liable for the payment of private
respondent's back wages, differential pay, thirteenth-month pay
and service-incentive leave pay for 1991
HELD
1. NO
- For abandonment to be a valid ground for dismissal, two
requisites must be copresent: the intention by an employee to
abandon coupled with an overt act from which it may be
inferred that the employee had no more intention to resume his
work (People's Security, Inc. vs. National Labor Relations
Commission, 226 SCRA 146 [1993]).

Labor Law 1
- In the instant case, the said requisites are not present.
2. YES
- Gumogda heeded doctors advise and even exceeded the
number of days recommended by his doctor for his
recuperation. In fact, he reported back for work 50 days after
his operation. This would clearly show that private respondent
was ready to assume his responsibilities considering that he
had fully recovered from the operation. Furthermore, the filing
of a complaint from illegal dismissal by private respondent is
inconsistent with the allegation of petitioners that he had
abandoned his job. Surely, an employee's posture will be
illogical if he abandons his work and then immediately files an
action for his reinstatement. Article 279 of the Labor Code of
the Philippines provides that "an employee who is unjustly
dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full back
wages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual
reinstatement." Also, Gumogda is likewise entitled to the
thirteenth-month pay. Presidential Degree No. 851, as
amended by Memorandum Order No. 28, provides that
employees are entitled to the thirteenth-month pay
benefit regardless of their designation and irrespective
of the method by which their wages are paid.
Disposition Petition is DISMISSED.

WAGE DIFFERENCE
JPL MARKETING PROMOTIONS V CA (GONZALES,
ABESA & ANNIPOT)
463 SCRA 136
TINGA; July 8, 2005
NATURE
Petition for review of the decision of the CA
FACTS
- JPL Marketing and Promotions is a domestic corporation
engaged in the business of recruitment and placement of
workers.
- Gonzales, Abesa III and Aninipot were employed by JPL as
merchandisers on separate dates and assigned at different
establishments in Naga City and Daet, Camarines Norte as
attendants to the display of California Marketing Corporation
(CMC), one of petitioners clients.
- On 13 August 1996, JPL notified private respondents that CMC
would stop its direct merchandising activity effective 15 August
1996.
- They were advised to wait for further notice as they would be
transferred to other clients.
- On 17 October 1996, Abesa and Gonzales filed before the
NLRC complaints for illegal dismissal, praying for separation
pay, 13th month pay, service incentive leave pay and payment
for moral damages. Aninipot filed a similar case thereafter.
- Labor Arbiter Gelacio L. Rivera, Jr. dismissed the complaints
for lack of merit.
- The Labor Arbiter held that:
1. The private respondents may be deemed to have severed
their relation with JPL, and cannot charge JPL with illegal
dismissal, as they applied for different jobs even before the
lapse of the six (6)-month period given by law to JPL to provide
them with new assignments.
2. The claims for 13th month pay and service incentive
leave pay should be denied since private respondents
were paid way above the applicable minimum wage
during their employment.
- NLRC affirmed the finding that there was no illegal dismissal,
but ordered the payment of separation pay, service incentive
leave pay, and13th month pay.

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- 163 -

Disini

- JPL filed a petition with the CA, claiming that private

respondents were not entitled to the separation pay, service
incentive leave pay and 13th month pay.
- CA affirmed in toto the NLRC resolution. While conceding that
there was no illegal dismissal, it justified the award of
separation pay on the grounds of equity and social justice. The
Court of Appeals rejected JPLs argument that the
difference in the amounts of private respondents
salaries and the minimum wage in the region should be
considered as payment for their service incentive leave
and 13th month pay.
- MFR denied, hence, this petition
ISSUES
1. WON private respondents were illegally dismissed, and thus
entitled to separation pay
2. WON private respondents are entitled to 13th month pay and
service incentive leave pay
HELD
1. NO
- Under Arts. 283 and 284 of the Labor Code, separation pay is
authorized only in cases of dismissals due to any of these
reasons: (a) installation of labor saving devices; (b) redundancy;
(c) retrenchment; (d) cessation of the employer's business; and
(e) when the employee is suffering from a disease and his
continued employment is prohibited by law or is prejudicial to
his health and to the health of his co-employees. However,
separation pay shall be allowed as a measure of social justice in
those cases where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral
character, but only when he was illegally dismissed.
- The common denominator of the instances where payment of
separation pay is warranted is that the employee was dismissed
by the employer
- In the instant case, there was no dismissal to speak of. What
they received from JPL was not a notice of termination of
employment, but a memo informing them of the termination of
CMCs contract with JPL. More importantly, they were advised
that they were to be reassigned. At that time, there was no
severance of employment to speak of.
- Art. 286 of the Labor Code allows the bona fide suspension of
the operation of a business or undertaking for a period not
exceeding six (6) months, wherein an employee/employees are
placed on the so-called floating status.
- As clearly borne out by the records of this case, private
respondents sought employment from other establishments
even before the expiration of the six (6)-month period provided
by law. JPL did not terminate their employment; they
themselves severed their relations with JPL. Thus, they are not
entitled to separation pay.
2. YES
- JPL cannot escape the payment of 13th month pay and service
incentive leave pay to private respondents. Said benefits are
mandated by law and should be given to employees as a matter
of right.
- Admittedly, private respondents were not given their 13th
month pay and service incentive leave pay while they were
under the employ of JPL. Instead, JPL provided salaries which
were over and above the minimum wage.
- The Court rules that the difference between the minimum
wage and the actual salary received by private respondents
cannot be deemed as their 13th month pay and service
incentive leave pay as such difference is not equivalent to or of
the same import as the said benefits contemplated by law.
Thus, as properly held by the Court of Appeals and by the NLRC,
private respondents are entitled to the 13th month pay and
service incentive leave pay.
Disposition Petition granted in part. Award of separation pay
deleted.

HOUSEHELPERS

Labor Law 1
ULTRAVILLA FOOD HOUSE V GENISTON
[PAGE 157]

GOVERNMENT EMPLOYEES
ALLIANCE OF GOVERNMENT WORKERS V MINISTER
OF LABOR (PNB)
124 SCRA 1
GUTIERREZ JR; August 3, 1983
NATURE
Petition to review decision of the Minister of Labor and
Employment
FACTS
- Petitioner Alliance of Government Workers (AGW) is a
registered labor federation while the other petitioners are its
affiliate unions with members who are employees of PNB,
MWSS, GSIS, SSS, PVTA, PNC, PUP, and PGEA.
- PD 851 was enacted:
WHEREAS, it is necessary to further protect the level of real
wages from the ravage of world-wide inflation;
WHEREAS, there has been no increase case in the legal
minimum wage rates since 1970;
WHEREAS, the Christmas season is an opportune time for
society to show its concern for the plight of the working
masses so they may properly celebrate Christmas and New
Year.
NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue of the
powers vested in me by the Constitution do hereby decree as
follows:
SECTION 1. All employers are hereby required to pay all their
employees receiving a basic salary of not more than Pl,000 a
month, regardless of the nature of their employment, a 13thmonth pay not later than December 24 of every year.
SECTION 2. Employers already paying their employees a
13th-month pay or its equivalent are not covered by this
Decree.
SECTION 3. This Decree shall take effect immediately. Done
in the City of Manila, this 16th day of December 1975.
- According to the petitioners, P.D. No. 851 requires all
employers to pay the 13th-month pay to their employees with
one sole exception found in Section 2. BUT Sec.3 of the Rules
and Regulations Implementing PD 851 included other types of
employers not exempted by the decree. (1) Distressed
employees, (2) Government employees2, (3) Those already
paying 13th month pay, (4) Household helpers, (5) Those paid on
purely commission, boundary or task basis.
- Sec 3 is then challenged as a substantial modification by rule
of a Presidential Decree and an unlawful exercise of legislative
power.
- Sol Gen: What the P.D. No. 851 intended to cover are only
those in the private sector whose real wages require protection
from world-wide inflation. This is emphasized by the "whereas"
clause which states that 'there has been no increase in the legal
minimum wage rates since 1970'. This could only refer to the
private sector, and not to those in the government service
because at the time of the enactment of PD 851 in 1975, only
the employees in the private sector had not been given any
increase in their minimum wage. The employees in the
government service had already been granted in 1974 a ten
percent across-the-board increase.
ISSUE
WON
the
branches,
agencies,
subdivisions,
and
instrumentalities of the Government, including GOCCs are
required to pay all their employees receiving a basic salary of
2

b) The Government and any of its political subdivisions, including governmentowned and controlled corporations, except)t those corporation, operating essentially
as private, ,subsidiaries of the government

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Disini

- 164 -

not more than P1,000.00 a month, a 13th month pay (not later
than December 24 of every year)
HELD
NO
Ratio Since the terms and conditions of government
employment are fixed by law, government workers cannot use
the same weapons employed by workers in the private sector to
secure concessions from their employers. Subject to the
minimum requirements of wage laws and other labor and
welfare legislation, the terms and conditions of employment in
the unionized private sector are settled through the process of
collective bargaining. In government employment, however, it
is the legislature and, where properly given delegated power,
the administrative heads of government which fix the terms and
conditions of employment.
Reasoning
- An analysis of the "whereases" of P.D. No. 851 shows that the
President had in mind only workers in private employment
when he issued the decree. There was no intention to cover
persons working in the government service.
- Under the present Constitution, govemment-owned or
controlled corporations are specifically mentioned as embraced
by the civil service. The amendment was intended to correct
the situation where more favored employees of the government
could enjoy the benefits of two worlds. They were protected by
the laws governing government employment.
- Why are the GOCCs part of the Civil Service?
(1) Nature of the public employer and peculiar character of
public service: the Govt protects the interests of ALL people in
the public service, hence there would never be conflicting
interests.
(2) Govt agencies have a right to demand undivided allegiance.
(3) Governmental machinery must be impartial and nonpolitical.
(4) To meet increasing social challenges of the times- the
tendency towards a greater socialization of economic forces.
- Section 63, Article XII-B of the Constitution gives added
reasons why the government employees represented by the
petitioners cannot expect treatment in matters of salaries
different from that extended to all others government
personnel.
- The Solicitor-General correctly points out that to interpret P.D.
No. 851 as including government employees would upset the
compensation levels of government employees in violation of
those fixed.
Disposition Petition is DISMISSED for lack of merit.

SEPARATE OPINION
FERNANDO [concur pro hac vice]

- The approach taken by opinion of the Court is distinguished by

its conformity to the prevailing doctrine of statutory
construction that unless so specified, the government does not
fall within the terms of any legislation or decree.
- "Since the terms and conditions of government employment
are fixed by law, government workers cannot use the same
weapons employed by workers in the private sector to secure
concessions from their employers.
- In government employment, however, it is the legislature and,
where properly given delegated power, the administrative
heads of government which fix the terms and conditions of
employment. This is effected through statutes or administrative
circulars, rules, and regulations, not through collective
bargaining agreements.

MAKASIAR [dissent]
3

SEC. 6. The National Assembly shall provide for the standardization of

compensation of government officials and employees, including those in
government-owned or controlled corporations, taking into account the nature of the
responsibilities pertaining to, and the qualifications required for the positions
concerned.

Labor Law 1
- It will be noted that the PD 851 provides only one exception in
its Section 2: "Employers already paying their employees a
13th-month pay or its equivalent..." Hence, all other employers,
whether of the private sectors or of GOCCs and government
agencies, are thereunder obligated to pay their employees.
- If the President intended to favor only employees of the
private sector, he could have easily inserted the phrase "in the
private sector between the words "wages" and "from" in the
first WHEREAS, and between the words masses" and "so" in the
third WHEREAS; or the President could have included the other
four classes of employers in the questioned Section 3.
- The position taken by public respondents is repugnant to the
social justice guarantee under the new Constitution. The
laboring masses of the government- owned and -controlled
agencies are entitled to such dignity, welfare and security as
well as an equitable share in the profits of respondents which
will inevitably contribute to enhancing their dignity, welfare and
security, as much as those of the workers and employees of the
private sector.
- Basic rule is that all doubts should be interpreted in favor of
labor.
- To deny them this right would render the State culpable of
failing to "afford protection to labor, promote... equality in
employment as well as "just and humane conditions of
work."

TERMINATED EMPLOYEES
ARCHILLES MANUFACTURING CORP V NLRC
(MANUEL, ET AL)
244 SCRA 750
BELLOSILLO; June 2, 1995
NATURE
Appeal on certiorari
FACTS
- Private respondents Geronimo Manuel, Arnulfo Diaz, Jaime
Carunungan and Benjamin Rindon were employed by Archilles
Manufacturing Corporation, (Alberto Yu - Chairman) and (Adrian
Yu-VP) as laborers in its steel factory located in Bulacan, each
receiving a daily wage of P96.00.
- ARCHILLES was maintaining a bunkhouse in the work area
which served as resting place for its workers. In 1988 a mauling
incident nearly took place involving a relative of an employee.
As a result, ARCHILLES prohibited its workers from bringing any
member of their family to the bunkhouse. But despite this
prohibition, private respondents continued to bring their
respective families to the bunkhouse, causing annoyance and
discomfort to the other workers. This was brought to the
attention of ARCHILLES.
- The management ordered private respondent to remove their
families from the bunkhouse and to explain their violation of the
company rule. Private respondents removed their families from
the premises but failed to report to the management as
required; instead, they absented themselves from 14 to 18 May
1990. Consequently, ARCHILLES terminated their employment
for abandonment and for violation of the company rule
regarding the use of the bunkhouse. 3
- Private respondents filed a complaint for illegal dismissal. The
Labor Arbiter found the dismissal of private respondents illegal
and ordered their reinstatement as well as the payment to them
the backwages, proportionate 13th month pay for the year
1990 and attorney'sfees. ARCHILLES appealed.
- NLRC set aside the decision of the LA and ruled that the
dismissal of private respondents was valid. However, it ordered
ARCHILLES to pay private respondents their "withheld" salaries
from 19 September 1991and to pay their proportionate 13th
month pay for 1990.
ISSUE

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WON dismissal for cause results in the forfeiture of the

employee's right to a 13th month pay
HELD
NO
- Paragraph 6 of the Revised Guidelines on the Implementation
of the 13th Month Pay Law (P. D. 851) provides that "an
employee who has resigned or whose services were terminated
at any time before the payment of the 13th month pay is
entitled to this monetary benefit in proportion to the length of
time he worked during the year, reckoned from the time he
started working during the calendar year up to the time of his
resignation or termination from the service . . . The payment of
the 13th month pay may be demanded by the employee upon
the cessation of employer-employee relationship. This is
consistent with the principle of equity that as the employer can
require the employee to clear himself of all liabilities and
property accountability, so can the employee demand the
payment of all benefits due him upon the termination of the
relationship."
- Furthermore, Sec. 4 of the original Implementing Rules of P.D.
851 mandates employers to pay their employees a 13th month
pay not later than the 24th of December every year provided
that they have worked for at least one (1) month during a
calendar year. In effect, this statutory benefit is
automatically vested in the employee who has at least
worked for one month during the calendar year. As
correctly stated by the Solicitor General, such benefit may
not be lost or forfeited even in the event of the
employee's subsequent dismissal for cause without
violating his property rights.

RATIONALE PD 851 WHEREAS

CLAUSE AND LIMITATIONS
BASIC WAGE/COMMISSIONS
BOIE TAKEDA V DELA SERNA
228 SCRA 329
NARVASA; December 10, 1993
NATURE
Petition for review via certiorari and for issuance of writ of
prohibition (consolidated)
FACTS
(HISTORY OF 13TH MONTH PAY PD 851)
- Initially, PD 851 ordered the payment of 13th month pay to
workers receiving basic salary of not more than P1,000.00 a
month, regardless of the nature of the employment.
- DECEMBER 22, 1975: Rules and Regulations Implementing P.D.
851 promulgated by Labor Minister Ople, defined 13th month
pay, and basic salary as including all remunerations 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; and exempted employers of those who are paid on
purely commission, boundary, or task basis, and those
who are paid a fixed amount for performing a specific
work from payment of 13th month pay
- Supplementary Rules and Regulations implementing P.D. 851
were subsequently issued by Minister Ople, which enumerated
items not included in the computation of the 13th month pay:
overtime pay, earnings and other remunerations which
are not part of the basic salary
- AUGUST 13, 1986: President Corazon C. Aquino promulgated
Memorandum Order No. 28 which modified PD 851 by

Labor Law 1
removing the salary ceiling of P1,000.00 a month set by
the latter,
NOVEMBER
16,
1987: Revised
Guidelines
on the
Implementation of the 13th Month Pay Law were promulgated
by Sec. Drilon which, among other things, enumerated
remunerative items not embraced in the concept of 13th
month pay (allowances and monetary benefits which are not
considered or integrated as part of the regular or basic salary,
such as the cash equivalent of unused vacation and sick leave
credits, overtime, premium, night differential and holiday pay,
and cost-of-living allowances), and specifically dealt with
employees who are paid a fixed or guaranteed wage plus
commission (Employees who are paid a fixed or guaranteed
wage plus commission are also entitled to the mandated
13th month pay based on their total earnings during the
calendar year, i.e., on both their fixed or guaranteed wage
and commission)
- DOLE conducted a routine inspection in the premises of both
Boie Takeda and Philippine Fuji Xerox Corp. It was found that
both companies failed to pay the 13th month pay of their
employees for the years 1986, 1987, and 1988. Both companies
were ordered to restitute the said underpayment within 5-10
days. Both companies appealed but were denied.
- BASIC CONTENTION OF THE PETITIONERS: commissions should not be
included in the computation of the basic salary as basis for the
13th month pay
- BASIC CONTENTION OF THE RESPONDENTS: Commissions are now
included in the computation for the 13th month pay, as clarified
by the Revised Guidelines issued by Sec. Drilon
ISSUE
WON the Revised Guidelines on the Implementation of the 13th
Month Pay Law issued by Labor Sec. Drilon should be
declared null and void as being violative of the law said
Guidelines were issued to implement, hence issued with grave
abuse of discretion correctible by the writ of prohibition and
certiorari (Thus, commissions should not be included in the
computation for basic salary as basis for 13th month pay)
HELD
YES
- 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.
Ratio. 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."
Reasoning
- San Miguel Corp. vs. Inciong discussion on history of 13th
Month Pay Law. The exclusion of all allowances and monetary
benefits such as profit-sharing payments, COLA, overtime pay,
premiums for special holiday, and the like indicate the intention
to strip basic salary of other payments, and any and all
additions which may be in the form of allowances or fringe
benefits. If they were not excluded, it is hard to find any
earnings and other remunerations (exclusionary phrase)
expressly excluded in the computation of the 13th month pay.
Then the exclusionary provision would prove to be idle and with
no purpose.
Disposition the consolidated petitions are hereby GRANTED.
The second paragraph of Section 5 (a) of the Revised Guidelines

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on the Implementation of the 13th Month Pay Law issued on

November 126, 1987 by then Labor Secretary Franklin M. Drilon
is declared null and void as being violative of the law said
Guidelines were issued to implement, hence issued with grave
abuse of discretion correctible by the writ of prohibition and
certiorari. The assailed Orders of January 17, 1990 and October
10, 1991 based thereon are SET ASIDE. SO ORDERED

PHIL DUPLICATORS V NLRC (PHIL DUP. EMPLOYEES

UNION)
241 SCRA 380
FELICIANO; February 15, 1995
FACTS
- The Court rendered a decision dismissing a petition for
certiorari by Phil. Duplicators, Inc (PDI). The Court upheld the
decision of public respondent NLRC ordering PDI to pay 13th
month pay to private respondent employees computed on the
basis of their fixed wages plus sales commissions.
- PDI filed an MFR, invoking the decisions in the 2 consolidated
cases of Boie-Takeda Chem. vs Hon. Dionisio de la Serna and
Phil. Fuji Xerox Corp. vs Hon. Cresenciano Trajano. PDI alleged
that the decision in the Duplicators case should be reversed
since the Boie-Takeda decision went directly opposite and
contrary to the conclusion reached in the former further
seeking to dismiss the money claims of private respondent
union. In view of the nature of the issues raised, the Court
considered the MFR and accepted it as a banc case.
ISSUES
1. WON the Duplicators decision goes against the Boie-Takeda
decision
2. WON the sales commission earned by the salesmen of PDI
constitute a part of their wage and should be included in the
computation of 13th month pay
HELD
1. NO
- The doctrines enunciated in the 2 cases present different
factual situations. The so-called commissions received by the
Boie-Takeda medical reps or by the rank and file employees of
Fuji were characterized as productivity bonuses. These are
additional monetary benefits generally tied to the capacity for
revenue production of a corporation. As such, they more closely
resemble profit-sharing payments and are not directly related
to the amount of work actually done by an employee.
-The commissions paid to the medical reps were not sales
commissions in the same sense as in the Duplicators case.
Medical representatives are not salesmen; they merely promote
products and leave samples with physicians. As such, no actual
sales are made placing the commissions in the nature of a
profit-sharing bonus.
2. YES
- The commissions received by every duplicating machine sold
constitute part of the basic compensation of PDIs salesmen,
apart from a small fixed wage. It is important to note that the
fixed portion of their salaries represent only 15-30% of an
employees total earnings in a year. Considering this, the sales
commissions were an integral part of PDIs basic salary
structure and not mere profit-sharing payments or fringe
benefits.
-The Supplementary Rules and Regulations Implementing P.D.
851(The 13th Month Pay Law) clarifies the scope of items
excluded in the computation of 13th month pay. Section 4 of the
Law states that 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. What
constitutes other remunerations not part of basic salary is a

Labor Law 1
question to be resolved on a case-to-case basis. In the instant
case, it is important to distinguish the productivity bonuses
granted in Boie-Takeda from the sales commissions of the
Duplicators case.
- A productivity bonus is something extra given to an employee
for which no specific additional services are rendered. Since a
bonus is a gratuity of the employer, the recipient cannot
demand its payment as a matter of right. If an employer cannot
be compelled to pay a productivity bonus to his employees,
then it follows that the bonus should not fall under basic
salary when computing 13th month pay.
- Sales commissions, on the other hand, are directly
proportional to the extent or energy of an employees work.
Such commissions are paid upon the specific results achieved
by a salesman and form an integral part of his basic pay and
should thus be included in the computation of 13th month pay.
Disposition MFR is denied for lack of merit

IRAN V NLRC
[PAGE 148]
HONDA PHILS INC V SAMAHAN NG MALAYANG
MANGGAGAWA SA HONDA
460 SCRA 186
YNARES-SANTIAGO; June 15, 2005
FACTS
- A Collective Bargaining Agreement (CBA) was forged between
petitioner Honda and respondent union Samahan ng Malayang
Manggagawa sa Honda (respondent union). Among others, the
CBA provides that the Company will maintain the present
practice in the implementation of the 13th month pay, shall
grant a 14th Month Pay, computed on the same basis as
computation of 13th Month Pay and shall continue the practice
of granting, in its discretion, financial assistance to covered
employees in December of each year, of not less than 100% of
basic pay. This CBA is effective until year 2000.
- In 1998, the two parties started re-negotiations for the 4 th and
5th years of their CBA (meaning for yr 1999 to 2000). However,
the talks bogged down. The union filed a Notice of Strike on the
ground of bargaining deadlock. Thereafter, Honda filed a Notice
of Lockout. DOLE intervened and ordered the parties to cease
and desist from committing acts that would aggravate the
situation. Both parties complied accordingly.
- On May 11, 1999, however, respondent union filed a second
Notice of Strike on the ground of unfair labor practice alleging
that Honda illegally contracted out work to the detriment of the
workers.
The DOLE again intervened and the striking
employees were ordered to return to work and the
management accepted them back under the same terms prior
to the strike staged.
- On November 22, 1999, the management of Honda issued a
memorandum[4] announcing its new computation of the 13th
and 14th month pay to be granted to all its employees whereby
the thirty-one (31)-day long strike shall be considered unworked
days for purposes of computing said benefits. As per the
companys new formula, the amount equivalent to 1/12 of the
employees basic salary shall be deducted from these bonuses,
with a commitment however that in the event that the strike is
declared legal, Honda shall pay the amount deducted (In effect,
this enabled them to devise a formula using 11/12 of the total
annual salary as base amount for computation instead of the
entire amount for a 12-month period.
- The union opposed the pro-rated computation of the bonuses.
ISSUE
WON the pro-rated computation of the 13th month pay and the
other bonuses in question is valid and lawful
HELD
NO
Reasoning

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- The said pro-rated computation is violative of the provisions of

the CBA. A collective bargaining agreement refers to the
negotiated contract between a legitimate labor organization
and the employer concerning wages, hours of work and all
other terms and conditions of employment in a bargaining unit.
As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem
convenient provided these are not contrary to law, morals, good
customs, public order or public policy. Thus, where the CBA is
clear and unambiguous, it becomes the law between the parties
and compliance therewith is mandated by the express policy of
the law.
- It is violative of the provision of P.D. No. 851 which, provided
that the minimum 13th month pay required by law shall not be
less than one-twelfth (1/12) of the total basic salary earned by
an employee within a calendar year.
- The act has ripened into a practice and therefore can no
longer be withdrawn, reduced, diminished, discontinued or
eliminated. Honda did not adduce evidence to show that the
13th month, 14th month and financial assistance benefits were
previously subject to deductions or pro-rating or that these
were dependent upon the companys financial standing.
- It is more in keeping with the underlying principle for the grant
of this benefit. It is primarily given to alleviate the plight of
workers and to help them cope with the exorbitant increases in
the cost of living. To allow the pro-ration of the 13th month pay
in this case is to undermine the wisdom behind the law and the
mandate that the workingmans welfare should be the
primordial and paramount consideration.
- To rule otherwise inevitably results to dissuasion, if not a
deterrent, for workers from the free exercise of their
constitutional rights to self-organization and to strike in
accordance with law.
Disposition Denied.

SUBSTITUTE PAYMENTS
FRAMANLIS FARMS INC V MOLE
171 SCRA 87
GRINO-AQUINO; March 8, 1989
NATURE
Petition for certiorari to reverse the denied MFR denied by MOLE
order.
FACTS
(The facts are difficult to digest because they involved numbers.
For recitation purposes, the reasoning is enough.)
- Employees of the petitioners filed against their employer and
the other petitioners 2 labor standard cases in the RTC alleging
that they were not paid emergency cost of living allowance
(ECOLA), minimum wage 13th month pay, holiday pay, and
service incentive leave pay.
- Petitioners, in an answer to the amended complaint, alleged
that (1) the private respondents were not regular workers, but
were migratory (sacadas) or pakyaw workers who were hired
seasonally, or only during the milling season, to so piece-of
work on the farms, hence they were not entitled to benefits
being claimed, (2) they applied for an exception to pay for the
living allowance although the MOLE has no ruling yet.
- The claims for holiday pay, service incentive pay, social
amelioration bonus and underpayment fo minimum wage were
not controverted. On the other claims, the petitioners submitted
only random payrolls which showed that the women workers
were, although the male workers received P10 more or less, per
day.
- In an Order, the Minister of Labor (MOLE), through Assistant
Regional
Director
Dante
Ardivilla,
adopting
the
recommendations of the Chief of the Labor Regulation Section,
Bacolod District Office, directed the respondents (now
petitioners) to pay: (1) deficiency payments under PD 925,PD
1614 , under Ministry Order No. 5, under PD 1678, service

Labor Law 1
incentive leave pay, holiday pay and social amelioration bonus
and 13th month pay and emergency living allowance under PD
1123
- Upon the petitioners' appeal of that Order, the Deputy MOLE
modified it ordering the employer to all non-pakyaw workers
their claim for holiday and incentive leave pay, their 13th
month pay, pay differentials and ECOLA excluding the pakyaw
workers from holiday and service incentive leave pay
- Framanlis filed for MFR, which was denied hence, this petition
for certiorari
ISSUE
1. WON Minister erred in requiring the petitioners to pay wage
differentials to their pakyaw workers who worked for at least
eight hours daily
2. WON benefits in form of food and electricity are equivalent to
the 13th month pay
HELD
1. NO
- In 1976, PD No. 928 fixed a minimum wage for agricultural
workers in any plantation or agricultural enterprise irrespective
of WON the worker was paid on a piece-rate basis. However,
effective July 1, 1978, the minimum wage was increased (Sec.
1, PD 1389). Subsequently, PD 1614 provided for another
increase in the daily wage of all workers effective April 1, 1979.
The petitioners admit that those were the minimum rates
prevailing then. Therefore, the respondent Minister did not err
in requiring the petitioners to pay wage differentials to their
pakyaw workers who worked for at least eight hours daily and
earned less than P8.00 per day in 1978 to 1979.
2. NO
- With regard to the 13th month pay, petitioners admitted that
they failed to pay their workers 13th month pay. However, they
argued that they substantially complied with the law by giving
their workers a yearly bonus and other non-monetary benefits
amounting to not less than 1/12th of their basic salary in weekly
subsidy of choice pork meat, free choice pork meat and free
light or electricity which were allegedly "the equivalent" of the
13th month pay.
- Under Section 3 of PD No. 8514, such benefits in the form of
food or free electricity, assuming they were given, were not a
proper substitute for the 13th month pay required by law.
- Neither may year-end rewards for loyalty and service be
considered in lieu of 13th month pay according to Section 10 of
the Rules and Regulations Implementing Presidential Decree
No.
- The failure of the Minister's decision to identify the pakyaw
and non-pakyaw workers does not render said decision invalid.
The workers may be identified or determined in the proceedings
for execution of the judgment.
Disposition petition for certiorari is dismissed with costs
against the petitioners.

14th MONTH PAY

4

Section 3. Employees covered The Decree shall apply to all employees except to:
xxx
xxx
xxx
"The term 'its equivalent' as used in paragraph (c) hereof shall include Christmas
bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting
to not less than 1/12 of the basic salary but shall not include cash and stock
dividends, cost of living allowances and all other allowances regularly enjoyed by the
employee, as well as non-monetary benefits.
"Where an employer pays less than 1/12 of the employee's basic salary the employer
shall pay the difference."

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KAMAYA PORT HOTEL V NLRC (FEDERATION OF

FREE WORKERS)
177 SCRA 87
FERNAN; August 31, 1989
NATURE
Petition for review on certiorari
FACTS
- Respondent Memia Quiambao with thirty others who are
members of the Federation of Free Workers (FFW) were
employed by Kamaya as hotel crew. On the basis of the
profitability of the company's business operations,
management granted a 14th month pay to its employees
starting in 1979. In January 1982, the hotel converted into a
training center for Libyan scholars.
Hoever, the Libyans
preterminated their program
leaving Kamayan without any business, aside from the fact that
it was not paid for the use of the hotel premises. All in all
Kamayan allegedly suffered losses amounting to P2 million.
- Although Kamayan reopened the hotel premises to the public,
it was not able to pick-up its lost patronage. In a couple of
months it effected a retrenchment program until finally, it
totally closed its business.
- FFW then filed with the Ministry of Labor and Employment a
complaint against petitioner for illegal suspension, violation of
the CBA and non-payment of the 14th month pay. Records
however show that the case was submitted for decision on the
sole issue of alleged non-payment of the 14th month pay for
the year 1982.
- The LA rendered a decision ordering Kamaya to pay the 14th
month pay. On appeal, the NLRCaffirmed the grant of the 14th
month pay on the ground that the granting of this 14th month
pay has already ripened into a company practice which
respondent company cannot withdraw unilaterally. This 14th
month pay is now an existing benefit which cannot be
withdrawn without violating article 100 of the Labor Code. To
allow its withdrawal now would certainly amount to a diminution
of existing benefits which complainants are presently enjoying.
ISSUE
WON the latter tribunal committed grave abuse of discretion
when it adopted the Labor Arbiter's decision saying that the
14th month pay cannot be withdrawn without violating Article
100 of the Labor Code
HELD
YES
- Art. 100 of the LC states: 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.
- It is patently obvious that Article 100 is clearly without
applicability. The date of effectivity of the Labor Code is May 1,
1974. In the case at bar, petitioner extended its 14th month
pay beginning 1979 until 1981. What is demanded is payment
of the 14th month pay for 1982. Indubitably from these facts
alone, Article 100 of the Labor Code cannot apply.
- Moreover, there is no law that mandates the payment of the
14th month pay. This is emphasized in the grant of exemption
under Presidential Decree 851 (13th Month Pay Law) which
states: "Employers already paying their employees a 13th
month pay or its equivalent are not covered by this Decree."
Necessarily then, only the 13th month pay is mandated. Having
enjoyed the additional income in the form of the 13th month
pay, private respondents' insistence on the 14th month pay for
1982 is already an unwarranted expansion of the liberality of
the law.
- Verily, a 14th month pay is a misnomer because it is basically
a bonus and, therefore, gratuitous in nature. The granting of the

Labor Law 1
14th month pay is a management prerogative which cannot be
forced upon the employer. It is something given in addition to
what is ordinarily received by or strictly due the recipient. It is a
gratuity to which the recipient has no right to make a demand.
- This Court is not prepared to compel petitioner to grant the
14th month pay solely because it has allegedly ripened into a
company practice" as the labor arbiter has put it. Having lost its
catering business derived from Libyan students, Kamaya Hotel
should not be penalized for its previous liberality.
An employer may not be obliged to assume a "double burden"
of paying the 13th month pay in addition to bonuses or other
benefits aside from the employee's basic salaries or wages.
Restated differently, we rule that an employer may not be
obliged to assume the onerous burden of granting bonuses or
other benefits aside from the employee's basic salaries or
wages in addition to the required 13th month pay.
Disposition petition is hereby GRANTED. The portion of the
decision of the National Labor Relations Commission dated June
25, 1986 ordering the payment of 14th month pay to private
respondents is set aside.

DIMINUTION
DAVAO FRUITS CORP V ASSOCIATED LABOR
UNIONS
[PAGE 3]

MANAGEMENT FUNCTION
BUSINESSDAY INFORMATION SYSTEMS AND
SERVICES INC V NLRC (MOYA)
221 SCRA 9
GRIO-AQUINO; April 5, 1993
NATURE
PETITION for certiorari of the decision of the National Labor
Relations Commission.
FACTS
- BSSI was engaged in the manufacture and sale of computer
forms. Due to financial reverses, its creditors, the Development
Bank of the Philippines (DBP) and the Asset Privatization Trust
(APT), took possession of its assets, including a manufacturing
plant in Marilao, Bulacan.
- As a retrenchment measure, some plant employees, including
the private respondents, were laid off on May 16, 1988, after
prior notice, and were paid separation pay equivalent to onehalf (1/2) month pay for every year of service. Upon receipt on
her separation may, the private respondents signed individual
releases and quitclaims in favor of BSSI.
- BSSI retained some employees in an attempt to rehabilitate its
business as a trading company.
- However, barely two and a half months later, these remaining
employees were likewise discharged because the company
decided to cease business operations altogether. Unlike the
private respondents, that batch of employees received
separation pay equivalent to a full month's salary for every year
of service plus mid-year bonus.
- Protesting against the discrimination in the payment of their
separation benefits, the twenty-seven (27) private respondents
filed complaints against the BSSI and Raul Locsin.
ISSUES
1. WON there was unlawful discrimination in the payment of
separation benefits to the employees.
2. WON the company is obliged to pay mid-year bonus.
3. WON Locsin should be held liable.
HELD

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1. YES
- Petitioners' right to terminate employees on account of
retrenchment to prevent losses or closure of business
operations, is recognized by law, but it may not pay separation
benefits unequally for such discrimination breeds resentment
and ill-will among those who have been treated less generously
than others.
- The respondents cited financial business difficulties to justify
their termination of the complainants' employment. They were
given one-half (1/2) month of their salary for every year of
service. Due to continuing looms, they closed operations where
they dismissed the second batch of employees who were given
one (1) month pay for every year they served. The third batch
of employees were terminated and were likewise given one (1)
monthly pay for every year of service. The business climate
when the complainants were terminated did not at all defer
improvement-wise. The interval between the dates of
termination was so close to each other, so that, no
improvement in business maybe likely expected.
- The law requires the granting of the same amount of
separation benefits to the affected employees in any of the
cases. The respondent argued that the giving of more
separation benefit to the second and third batches of
employees separated was their expression of gratitude and
benevolence to the remaining employees who have tried to
save and make the company viable in the remaining lays of
operations. This justification is not plausible. There are workers
in the first batch who have rendered more years of service and
more efficient than those separated subsequently, yet, they did
not receive the same recognition.
- There was impermissible discrimination against the private
respondents in the payment of their separation benefits. The
law requires an employer to extend equal treatment to its
employees. It may not, in the guise of exercising management
prerogatives, grant greater benefits to some and less to others.
Management prerogatives are not absolute prerogatives but are
subject to legal limits, collective bargaining agreements, or
general principles of fair play and justice
2. NO
- The grant of a bonus is a prerogative, not an obligation, of the
employer. The matter of giving a bonus over and above the
worker's lawful salaries and allowances is entirely dependent on
the financial capability of the employer to give it. The fact that
the company's business was no longer profitable (it was in fact
moribund) plus the fact that the private respondents did not
work up to the middle of the year (they were discharged in May
1993) were valid reasons for not granting them a mid-year
bonus.
3. NO
- A corporate officer is not personally liable for the money
claims of discharged corporate employees unless he acted with
evident malice and bad faith in terminating their employment.
There is no evidence in this case that Locsin acted in bad faith
or with malice in carrying out the retrenchment and eventual
closure of the company, hence, he may not be held personally
and solidarily liable with the company for the satisfaction of the
judgment in favor of the retrenched employees.
Disposition The resolution of the NLRC ordering the petitioner
company to pay separation pay differentials to the private
respondents is AFFIRMED. However, the award of mid-year
bonus to them is hereby deleted and set aside. Petitioner Raul
Locsin is absolved from any personal liability to the respondent
employees. No costs.

ASIAN TRANSUNION CORP V CA

[PAGE 45]

NATURE BONUS WHEN

DEMANDABLE

Labor Law 1
AMERICAN WIRE AND CABLE DAILY RATED
EMPLOYEES UNION V AMERICAN WIRE AND CABLE
CO INC
[PAGE 4]
LUZON STEVEDORING CORP V CIR
15 SCRA 660
BENGZON; December 31, 1965
NATURE
Appeal from judgment and order of the Court of Industrial
Relations
FACTS
- The appeal is a consolidation of three actions filed for or
against Luzon
Stevedoring Corporation and Luzteveco Employees Association
in connection with a strike called by the Union on January 2,
1959. The atrike came after another strike in 1958 and which
was just decided on by the said Court.
- In any case, the strike was declared illegal due to four factors
cited as follows:
a. the strike was declared without prior notice
b. the reduction from fifteen to ten days Christmas bonus
could not be unfair labor practice considering the
nature of
the collective bargaining contracts then
existing between the parties
c. the strike, being not only illegal, was conducted in a
manner not sanctioned by law, specially the commission of
illegal acts at he picket line
d. the workers at the Pandacan Bulk Oil Terminal are bound
by the provisions of the no strike clause of the CBA.
ISSUE
WON the reduction of the bonus constituted unfair labor
practice (the issue is being limited to this as this is the only
issue called to be discussed under the outline)
HELD
NO
- As a rule a bonus is an amount granted and paid to an
employee for his industry and loyalty which contributed to the
success of the employers business and made possible the
realization of profits. It is an act of generosity for which the
employee ought to be thankful and grateful. From a legal point
of view, a bonus is not a demandable and enforceable
obligation. It would be different if this bonus was made part of
the wage, salary, or compensation.
Reasoning
- There was no showing that the Christmas bonus was pat of
the CBA as part of the salary or compensation. Thus, the grant
of this is contingent upon the profits being realized. The
reduced bonus in 1958 was a necessary consequence of a
reduced profit in that year. and there being no clear showing
that the reduction was aimed to discriminate against the Union,
the finding of the CIR stands.
Disposition Ruling of the CIR is affirmed

LIBERATION STEAMSHIP CO INC V CIR

23 SCRA 1105
REYES JBL; June 27, 1968
NATURE
PETITIONS for review by certiorari of a resolution of the Court of
Industrial Relations.
FACTS
- Petitions filed separately by the Liberation Steamship Co., Inc.
(LISTCO) and the National Development Company (NDC) for the

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review of the CIR resolution en banc of September 2, 1965

modifying the decision of the trial Judge of May 13, 1964
- NDC, a government-owned and controlled corporation, in 1961
was the owner and operator of the vessels M/S "Doa Alicia",
"Doa Nati" and "Doa Aurora". It can be gathered from the
records that prior to April 15, 1961, said corporation decided to
dispose of these three vessels; and in the bidding that ensued,
LISTCO won. The crew members of the three vessels, through
the Philippine Maritime Industrial Union (PMIU), made
representations with both the seller and the purchaser to retain
them in the service of' the vessels. And when in the final deed
of sale no provision on the hiring of the complement of the
vessels was included, the crew-members declared a strike on
April 15, 1961. On April 25, 1961, the dispute was certified by
the President to the CIR
- April 29, 1961 - the Industrial Court ordered that the three
Doa vessels mentioned in the presidential certification had
already been sold by the government to the Liberation
Steamship Company. Hence, the said company is indispensable
party in this litigation, without whom no final determination of
this case can be had.
- May 3, 1961- acting upon NDC's petition, alleging that the
strike was causing the corporation an actual loss of about
P15,000.00 daily, the court issued a return-to-work order, the
pertinent part of which reads:
"During the pendency of this case, the management shall
refrain from dismissing any employee or laborer, unless with
the express authority of this Court.
- June 17, 1961 (Over a month arid a half after this order) representatives of the LISTCO posted notices around the M/S
"Doha Alicia" to the effect that the officers and members of the
crew not otherwise appointed by the said new owner will be
ejected. On the same day, 30 security guards and about 50
men with luggages came aboard the said vessels and never
departed therefrom until the vessel left port on June 21, 1961,
only after the remaining members of the original crew had been
sent down.
- The unlicensed crew members of the three "Doa" vessels
thus petitioned the Industrial Court for an order to restrain
LISTCO from carrying out its ejection threat of the officers
and/or crew members of the M/S "Doha Alicia" and of the two
other "Doa" vessels upon their delivery to the new owner.
- June 30, 1961 - restraining order was issued against NDC and
LISTCO, directing the maintenance of status quo during the
pendency of the dispute.
- Petitioners' demands included
To NDC
> payments by NDC of a gratuity equivalent to one month
salary for every year of service from their employment up to
the termination of their services on account of the sale of the
vessels to LISTCO
> payment of strike-duration pay
> commutation of accumulated vacation and sick leaves
> unpaid overtime services rendered from the dates of their
employment
> gratuity and accumulated vacation and sick leaves to the
officers and/or crew members who were on leave and were
required by the NDC to man the Pew cargo liners from Japan to
the Philippines.
To LISTCO
> retention as officers and/or crew members of the "Doa"
vessels
> observance or continuation of the collective bargaining
contract between NDC and the union until its expiration in June,
1962,
> separation pay for any officer and/or crew members retained
but separated by LISTCO from the service within one year from
the turnover of the vessels.
- May 13, 1964 - the TRIAL COURT rendered judgment:
> demand gratuity pay was denied
> entitled to accumulation of sick and vacation leaves with pay
not exceeding 5 months
> claim for unpaid overtime was ruled out on the ground of
prescription

Labor Law 1
> denied the demand for gratuity because gratuity is
essentially voluntary and the management cannot be
compelled to give the same.
> NDC responsible for the ejection of the crew of the M/S "Doa
Alicia", in view of its failure to incorporate in the deed of sale in
favor of LISTCO a provision on the retention of the services of
the complement of the vessels, in spite of the latter's requests
therefor prior to the consummation of the sale.
> NDC ordered to pay the back wages of the ejected crew up to
the date of their actual reinstatement.
> LISTCO was completely exonerated from any liability, the trial
court reasoning that the lay off of the crew of the M/S "Doa
Alicia" was committed on June 21, 1961, or before said
respondent became subject to the restraining order of June 30,
1961.
- September 2, 1965 CIR, upon the MFR of NDC, modified the
decision of the trial Judge
> NDC and LISTCO solidarity liable for payment of the
backwages
> LISTCO equally responsible, the court en banc took into
account the fact that as of April 29, 1961, it was already an
indispensable party to the case. Thus, with knowledge of the
restraining order of May 3, 1961 to the "management" against
unauthorized dismissal of employees and laborers, the court
held that LISTCO could not claim to have acted in good faith
when it ejected the crew of the M/S "Doa Alicia" on June 21,
1961.
> increased the allowable accumulated vacation and sick
leaves with pay of the petitioners, from 5 to 10 months because
of RA1081.
> new sale of the "Doa" vessels had taken place during the
pendency of the motion for reconsideration, the case was
ordered reopened, but only for the purpose of determining the
merits of the demand for gratuity pay.
- LISTCO assails
> ruling on paying, jointly and severally with the NDC, back
wages to the affected officers and crew members of the M/S
"Doa Alicia", claiming
(1) that the Industrial Court was without jurisdiction over its
persons, LISTCO not being a party to the labor dispute certified
to it by the President;
(2) that the restraining order of May 3, 1961 did not include this
petitioner; and
(3) that it cannot legally be compelled to retain the services of
the original crew of the M/S "Doa Alicia"
- NDC raises
(1) legality of the strike staged by the crews of the three
vessels and of their right to strike-duration pay
(2) liability for such strike-duration pay and for reinstatement of
the officers and crew-members who were not reemployed after
the conclusion of the Agreement of November 28, 1961
(3) jurisdiction of' the Court of Industrial Relations over the
officers of the vessels
(4) legality of the ruling that the crew-members are entitled to
accumulated sick and vacation leaves with pay
(5) correctness of the order of the court en banc to reopen the
case, insofar as the union's demands for gratuity are concerned
ISSUES
1. WON CIR has jurisdiction over the case since, at that time,
LISTCO is not an employer of the petitioners
2. WON LISTCO is bound by the TRO
3. WON NDC is liable for backwages
4. WON crew-members are entitled to accumulated sick and
vacation leaves with pay
5. WON crew-members are entitled to gratuity
HELD
1. YES
- It cannot be denied that when the certification was made by
the President on April 25, 1961, and the Court of Industrial
Relations assumed jurisdiction over the case, the three "Doa"
vessels were still owned and operated by the NDC.
Understandably, the presidential certification mentioned only

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the crew of the vessels and the NDC as parties to the dispute.
Although not originally named as respondent. the court,
informed of the consummation of the sale, ordered the inclusion
of LISTCO as an indispensable party.
- LISTCO cannot contest the authority of the trial judge in
ordering it to be impleaded in the proceeding.
(1) this being a certified case, the CIR, in the exercise of its
arbitration power, can direct the inclusion or exclusion of
parties therefrom; it is clothed with authority to issue such
order or orders as may be necessary to make effective the
exercise of its jurisdiction, which may include the bringing in of
parties into the case.
(2) what confers jurisdiction on the Industrial Court is not the
form or manner of certification by the President, but the referral
to said court of the industrial dispute between the employer and
the employee. Thus, the court is not deprived of jurisdiction
over a case simply because the certification of the President is
erroneous. That LISTCO was not so named in the certification
would not make it any less the employer of the petitioning
employees within the contemplation of law, since by the
transfer of ownership of the vessels it actually became such
employer.
2. YES
- April 29, 1961 LISTCO, as the new owner of the vessels, was
included as an indispensable party in the litigation, "without
which no final determination of this case can be had." It was,
therefore, made of record that LISTCO was then already the
owner and operator of the ships, there having been no showing
that the management thereof was lodged in another; it was a
party against which any appropriate order shall be binding and
enforceable. The order of the trial judge to "the management",
to reinstate the strikers under the last terms existing before the
dispute arose and to refrain from dismissing any employee or
laborer, could not have been directed solely against the NDC
but also to LISTCO which had the power to admit or discharge
employees.
3. YES
- there is no reason for exempting the NDC from liability for
payment of the employees' back wages. CIRs back to work
order simultaneously ordering management to refrain from
dismissing laborers without the labor court's authority was
already in full force, having been issued since May 3. Yet, in its
letter dated June 17, 1961 and sent to the Master of the M/S
"Doa Alicia", the General Manager of the NDC "enjoined" the
officers and crew members thereof, who were not selected by
the new owner to debark. This letter, in effect, was a defiance
of the Industrial Court's injunction, just as the LISTCO's
replacement of the "Doa Alicia" crew was in disregard of the
same order. This cooperation and concordant action of both
appellants, plainly contrary to the express CIR order of May 3,
justifies their being held solidarily liable for the back wages of
the officers and crew of said motor vessel.
4. YES
- RIGHT TO ACCUMULATION OF SICK AND VACATION LEAVES
WITH PAY - The lower court's recognition of the right of the
employees of the NDC, admittedly a government-owned and
controlled corporation to accumulation of sick and vacation
leaves with pay is based on the provisions of Government
Enterprises Counsel Circular No. 4 of March 1948 and of
Sections 294-286 of the Administrative Code as amended by
Republic Act No. 1081, which increased the allowable
accumulated vacation and sick of government employees to
10 months. The fact that the officers and unlicensed members
of the crew of the vessel had a collective bargaining contract
that did not contain any provision on the payment of
accumulated leaves does not by itself bar the employees' resort
to the Leave Law. The rule is that the law forms part of, and
into, every contract, unless clearly excluded therefrom in those
cases where such exclusion is allowed.
5. There should be a reopening of the case to determine
whether such conditions operated in the instant case
- GRANT OF GRATUITY; NORMALLY DISCRETIONARY BUT MAY
BECOME
PART
OF
COMPENSATION.While
normally
discretionary, the grant of a gratuity or bonus by reason of its

Labor Law 1
long and regular concession may become regarded as part of
regular compensation. (Phil. Education Co., Inc., vs. C.I.R., 92
Phil., 382, 385). For this reason, where there is a resale of the
vessels to another party during the pendency of the motion for
reconsideration, the court may order the reopening of the case
insofar as the demands for gratuity are concerned, in order to
determine whether aforecited conditions operated in the instant
case.
Disposition resolution appealed from is hereby affirmed

MARCOS V NLRC (INSULAR LIFE ASSURANCE CO

LTD)
248 SCRA 146
REGALADO; September 8, 1995
NATURE
Petition for certiorari
FACTS
- Petitioners were regular employees of private respondent
Insular Life Assurance Co., Ltd., but they were dismissed when
their positions were declared redundant. A special redundancy
benefit was paid to them. However, not included in this
redundancy benefit were their respective service awards and
other prorated bonuses which they had earned at the time they
were dismissed. Because of this, petitioners questioned the
redundancy package. Nevertheless, they signed a Release and
Quitclaim but with a written protest reiterating their previous
demand that they were nonetheless entitled to receive their
service awards.
- Petitioners inquired from the Legal Service of the Department
of Labor and Employment whether respondent corporation
could legally refuse the payment of their service awards as
mandated in their Employee's Manual.
- DOLE ruled in their favor.
However, this decision was
overturned by the NLRC affirming the validity of the Release
and Quitclaim which consequently bar the petitioners to
demand for service awards and other bonuses. Thus, this
petition.
ISSUE
WON respondent NLRC committed reversible error or grave
abuse of discretion in affirming the validity of the "Release and
Quitclaim" and, consequently, that petitioners are not entitled
to payment of service awards and other bonuses

HELD
YES
Ratio On Release and Quitclaim - The fact that an
employee has signed a satisfaction receipt for his claims does
not necessarily result in the waiver thereof. The law does not
consider as valid any agreement whereby a worker agrees to
receive less compensation than what he is entitled to recover. A
deed of release or quitclaim cannot bar an employee from
demanding benefits to which he is legally entitled. Renuntiatio
non praesumitur. While there may be possible exceptions to
this holding, we do not perceive any in the case at bar.
Reasoning
a.
The element of total voluntariness in executing that
instrument is negated by the fact that they expressly stated
therein their claim for the service awards, a manifestation
equivalent to a protest and a disavowal of any waiver thereof.
b. Petitioners even sought the opinion of the Department of
Labor and Employment to determine where and how they stood
in the controversy. This act only shows their adamant desire to
obtain their service awards and to underscore their
disagreement with the "Release and Quitclaim" they were
virtually forced to sign in order to receive their separation pay.

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c. While rights may be waived, the same must not be contrary

to law, public order, public policy, morals or good customs or
prejudicial to a third person with a right recognized by law.
- Article 6 of the Civil Code renders a quitclaim agreement void
ab initio where the quitclaim obligates the workers concerned to
forego their benefits while at the same time exempting the
employer from any liability that it may choose to reject. This
runs counter to Art. 22 of the Civil Code which provides that no
one shall be unjustly enriched at the expense of another.
Ratio
On Service Awards and other Bonuses - The
petitioners are entitled to receive service awards and other
bonuses. The contention of the respondent that service award is
a bonus and therefore is an act of gratuity which the
complainants have no right to demand and service awards are
governed by respondent's employee's manual and (are)
therefore contractual in nature is not impressive.
Reasoning
a. Anniversary and performance bonuses have ripened into a
company practice therefore become demandable. It is not
disputed that it is respondent's practice to give an anniversary
bonus every five years from its incorporation. The prerogative
of the employer to determine who among its employees shall
be entitled to receive bonuses which are, as a matter of
practice, given periodically cannot be exercised arbitrarily.
b. Pursuant to their policies on the matter, the service award
differential is given at the end of the year to an employee who
has completed years of service divisible by 5.
c. A bonus is not a gift or gratuity, but is paid for some
services or consideration and is in addition to what would
ordinarily be given. The term "bonus" as used in employment
contracts, also conveys an idea of something which is
gratuitous, or which may be claimed to be gratuitous, over and
above the prescribed wage which the employer agrees to
pay.
- If one enters into a contract of employment under an
agreement that he shall be paid a certain salary by the week or
some other stated period and, in addition, a bonus, in case he
serves for a specified length of time, there is no reason for
refusing to enforce the promise to pay the bonus, if the
employee has served during the stipulated time, on the ground
that it was a promise of a mere gratuity.
Disposition
The assailed decision and resolution of
respondent National Labor Relations Commissions are hereby
SET ASIDE and the decision of Labor Arbiter Alex Arcadio Lopez
is REINSTATED.

PHILIPPINE NATIONAL CONSTRUCTION CORP V

NLRC (ANGELES, PABLO, JR)
307 SCRA 218
18 May 1999
NATURE
Petition for certiorari of a decision of NLRC.
FACTS
- ANGELES and PABLO, JR. [COMPLAINANTS, for brevity] were
employed by PNCC as tollway guards. Acting on a private
complaint regarding mulcting activities of some of its tollway
personnel, PNCC created an investigating team. During its
investigation, said team saw COMPLAINANTS accept cash and a
dog from a motorist.
- After due investigation, COMPLAINANTS were dismissed by
PNCC for serious misconduct. When the COMPLAINANTS
complaint for illegal dismissal reached NLRC, the latter held
that COMPLAINANTS act of receiving a sum of money and a dog
from motorists constituted bribery which was a sufficient
ground for their dismissal. NLRC, nonetheless, ordered PNCC to
pay COMPLAINANTS their mid-year bonus for 1994, among
others. Hence, the present petition.
ISSUE
WON COMPLAINANTS entitled to the disputed mid-year bonus

Labor Law 1

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HELD
NO
Ratio A bonus is a gift from the employer and the grant
thereof is a management prerogative. A bonus becomes a
demandable or enforceable obligation only when it is made part
of the compensation of the employee. Whether a bonus
forms part of wages depends upon the circumstances for its
payment. If it is additional compensation which the employer
promised and agreed to give without any conditions imposed
for its payment, such as success of business or greater
production or output, then it is part of the wage. But if it is paid
only if profits are realized or if a certain level of productivity is
achieved, it cannot be considered part of the wage. Where it
is payable only to some employees and only when their
labor becomes more efficient or more productive, it is only an
inducement for efficiency, a prize therefor, not a part of the
wage [citing Metro Transit vs NLRC, 245 SCRA 767 (1995)].
YEAR

MIDBONUS

previous
years

YEAR

CHRISTMAS
BONUS

13TH
PAY

MO.

one mo. basic

one mo. basic

one mo. Basic

1984

[one mo. basic]

-none-

one-half
Basic

mo.

1985

one-half
basic

mo.

-none-

one-half
Basic

mo.

1986

one-half
basic

mo.

one-half
basic

mo.

one mo. Basic

1987

one-half
basic

mo.

one-half
basic

mo.

one mo. basic

- COMPLAINANTS neither alleged nor adduced evidence to show

that the bonus they are claiming is a regular benefit which has
become part of their compensation. Thus, the presumption is
that it is not a demandable obligation from the employer and
the latter may not be compelled to grant the same to
undeserving employees.
Disposition NLRC decision set aside.

PRODUCERS BANK OF THE PHILIPPINES V NLRC

(PRODUCERS BANK EMPLOYEES ASSN)
355 SCRA 489
GONZAGA-REYES; March 28, 2001
NATURE
A special civil action for certiorari with prayer for preliminary
injunction and/or restraining order seeking the nullification of
the decision of NLRC
FACTS
- The present petition originated from a complaint filed by
private respondent with the Arbitration Branch, National Capital
Region, National Labor Relations Commission (NLRC), charging
petitioner with diminution of benefits, non-compliance with
Wage Order No. 6 and non-payment of holiday pay. In addition,
private respondent prayed for damages.
- Labor Arbiter Nieves found private respondent's claims to be
unmeritorious and dismissed its complaint.

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Disini

- NLRC4 granted all of private respondent's claims, except for

damages ordering respondent- appellee to pay complainantappellant:
1. The unpaid bonus (mid-year and Christmas bonus) and 13th
month pay;
2. Wage differentials under Wage Order No. 6 for November 1,
1984 and the corresponding adjustment thereof; and
3. Holiday pay under Article 94 of the Labor Code, but not to
exceed three (3) years.
- Petitioner now contends that the NLRC gravely abused its
discretion in ruling as it did for the succeeding reasons stated in
its Petition
ISSUES
1. WON petitioner should pay the unpaid bonus
2. WON petitioner should pay the 13th month pay
3. WON petitioner complied with Wage Order No.6
4. WON petitioner complied with Art.94 of the Labor Code on
holiday pay

HELD
1. NO
Ratio A bonus is an amount granted and paid to an employee
for his industry and loyalty which contributed to the success of
the employer's business and made possible the realization of
profits. It is an act of generosity granted by an enlightened
employer to spur the employee to greater efforts for the
success of the business and realization of bigger profits. The
granting of a bonus is a management prerogative, something
given in addition to what is ordinarily received by or strictly due
the recipient.13 Thus, a bonus is not a demandable and
enforceable obligation, except when it is made part of the
wage, salary or compensation of the employee.
- However, an employer cannot be forced to distribute bonuses
which it can no longer afford to pay. To hold otherwise would be
to penalize the employer for his past generosity.
Reasoning
- private respondent declared in its position papers filed with
the NLRC that Producers Bank of the Philippines has been
providing several benefits to its employees since 1971 when it
started its operation. Among the benefits it had been regularly
giving is a mid-year bonus equivalent to an employee's onemonth basic pay and a Christmas bonus equivalent to an
employee's one whole month salary (basic pay plus allowance).
However, it has changed this practice. In a tabular form, here
are the bank's violations:
- Private respondent argues that the mid-year and Christmas
bonuses, by reason of their having been given for thirteen
consecutive years, have ripened into a vested right and, as
such, can no longer be unilaterally withdrawn by petitioner
without violating Art.100 of PD No. 4429 which prohibits the
diminution or elimination of benefits already being enjoyed by
the employees.
- Petitioner was not only experiencing a decline in its profits, but
was reeling from tremendous losses triggered by a bank-run
which began in 1983. In such a depressed financial condition,
petitioner cannot be legally compelled to continue paying the
same amount of bonuses to its employees. Thus, the
conservator was justified in reducing the mid-year and
Christmas bonuses of petitioner's employees. To hold otherwise
would be to defeat the reason for the conservatorship which is
to preserve the assets and restore the viability of the financially
precarious bank.
2. NO
Ratio The intention of the law was to grant some relief - not to
all workers - but only to those not actually paid a 13th month
salary or what amounts to it, by whatever name called. It was
not envisioned that a double burden would be imposed on the
employer already paying his employees a 13th month pay or its
equivalent whether out of pure generosity or on the basis of a
binding agreement. To impose upon an employer already giving

Labor Law 1
his employees the equivalent of a 13th month pay would be to
penalize him for his liberality and in all probability, the
employer would react by withdrawing the bonuses or resist
further voluntary grants for fear that if and when a law is
passed giving the same benefits, his prior concessions might
not be given due credit.
Reasoning
- Petitioner argues that it is not covered by PD 851 since the
mid-year and Christmas bonuses it has been giving its
employees from 1984 to 1988 exceeds the basic salary for one
month (except for 1985 where a total of one month basic salary
was given). Hence, this amount should be applied towards the
satisfaction of the 13th month pay, pursuant to Section 2 of PD
851. PD 851, which was issued by President Marcos on 16
December 1975, requires all employers to pay their employees
receiving a basic salary of not more than P 1,000 a month,
regardless of the nature of the employment, a 13th month pay,
not later than December 24 of every year.30 However,
employers already paying their employees a 13th month pay or
its equivalent are not covered by the law.
- It is noted that, for each and every year involved, the total
amount given by petitioner would still exceed, or at least be
equal to, one month basic salary and thus, may be considered
as an "equivalent" of the 13th month pay mandated by PD 851.
Thus, petitioner is justified in crediting the mid-year bonus and
Christmas bonus as part of the 13th month pay.
3. YES
Ratio The creditability provision in Wage Order No. 6 is based
on important public policy, that is, the encouragement of
employers to grant wage and allowance increases to their
employees higher than the minimum rates of increases
prescribed by statute or administrative regulation. To obliterate
the creditability provisions in the Wage Orders through
interpretation or otherwise, and to compel employers simply to
add on legislated increases in salaries or allowances without
regard to what is already being paid, would be to penalize
employers who grant their workers more than the statutorily
prescribed minimum rates of increases. Clearly, this would be
counter-productive so far as securing the interest of labor is
concerned. The creditability provisions in the Wage Orders
prevent the penalizing of employers who are industry leaders
and who do not wait for statutorily prescribed increases in
salary or allowances and pay their workers more than what the
law or regulations require.
Reasoning
- Wage Order No.6, which came into effect on 1 November
1984, increased the statutory minimum wage of workers, with
different increases being specified for agricultural plantation
and non-agricultural workers. The bone of contention, however,
involves Section 4 thereof5
- On 16 November 1984, the parties entered into a CBA
providing for the following salary adjustments6
- Petitioner argues that it complied with Wage Order No. 6
because the first year salary and allowance increase provided
for under the collective bargaining agreement can be credited
against the wage and allowance increase mandated by such
wage order.

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- It would be inconsistent with the above stated rationale

underlying the creditability provision of Wage Order No. 6 if,
after applying the first year increase to Wage Order No. 5, the
balance was not made chargeable to the increases under Wage
Order No. 6 for the fact remains that petitioner actually granted
wage and allowance increases sufficient to cover the increases
mandated by Wage Order No. 5 and part of the increases
mandated by Wage Order No. 6.
4. YES
Ratio We agree with the labor arbiter that the reduction of the
divisor to 303 was done for the sole purpose of increasing the
employees' overtime pay, and was not meant to exclude
holiday pay from the monthly salary of petitioner's employees.
In fact, it was expressly stated in the inter-office memorandum
that the divisor of 314 will still be used in the computation for
cash conversion and in the determination of the daily rate.
Thus, based on the records of this case and the parties' own
admissions, the Court holds that petitioner has complied with
the requirements of Article 94 of the Labor Code
Reasoning
- Article 94 of the Labor Code provides that every worker shall
be paid his regular daily wage during regular holidays and that
the employer may require an employee to work on any holiday
but such employee shall be paid a compensation equivalent to
twice his regular rate.
- In this case, the Labor Arbiter found that the divisor used by
petitioner in arriving at the employees' daily rate for the
purpose of computing salary-related benefits is 314. However,
the divisor was reduced to 303 by virtue of an inter-office
memo.
- the acting Conservator approved the use of 303 days as
divisor in the computation of Overtime pay.
- Corollarily, the Acting Conservator also approved the increase
of meal allowance from P25.00 to P30.00 for a minimum of four
(4) hours of work for Saturdays.
- the Labor Arbiter observed that the reduction of the divisor to
303 was for the sole purpose of increasing the employees'
overtime pay and was not meant to replace the use of 314 as
the divisor in the computation of the daily rate for salary-related
benefits.
As to private respondent's claim for damages, the NLRC was
correct in ruling that there is no basis to support the same.
Disposition Decision of public respondent is SET ASIDE, with
the exception of public respondent's ruling on damages.

PHIL DUPLICATORS INC V NLRC

[PAGE 161]
MANILA ELECTRIC CO V QUISUMBING
[PAGE 19]
PHILIPPINE APPLIANCE CORPORATION (PHILACOR)
V CA (PHILACOR WORKERS UNION)
430 SCRA 525
YNARES-SANTIAGO; June 3, 2004

All wage increase in wage and/or allowance granted by employers between June
17, 1984 and the effectivity of this Order shall be credited as compliance with the
minimum wage and allowance adjustments prescribed herein, provided that where
the increases are less than the applicable amount provided in this Order, the
employer shall pay the difference. Such increases shall not include anniversary wage
increases provided in collective bargaining agreements unless the agreement
expressly provide otherwise.

Article VIII. Section 1. Salary Adjustments. ...(i) Effective March 1, 1984 - P225.00
per month as salary increase plus P100.00 per month as increase in allowance to
employees within the bargaining unit on March 1, 1984.
(ii) Effective March 1,1985 -P125.00 per month as salary increase plus P100.00 per
month as increase in allowance to employees within the bargaining unit on March
1,1985.
(iii) Effective March 1,1986 -P125.00 per month as salary increase plus P100.00 per
month as increase in allowance to employees within the bargaining unit on March 1,
1986.
- In addition, the collective bargaining agreement of the parties also included a
provision on the chargeability of such salary or allowance increases against
government-ordered or legislated income adjustments

NATURE
Appeal by Certiorari to set aside CA decision denying
petitioners partial appeal as well as CA resolution denying the
MFR.
FACTS
- Petitioner is a domestic corp. engaged in manufacturing
refrigerators, freezers, and washing machines. Respondent
United Philacor Workers Union NAFLU is the duly elected
collective bargaining representative of the rank and file
employees of petitioner.
- During one collective bargaining negotiation, petitioner offered
P4000 to each employee as an early conclusion bonus, or a
unilateral incentive for the speeding up of negotiations between
the parties and to encourage respondent union to exert their

Labor Law 1
best efforts to conclude a CBA. Upon conclusion of the CBA
negotiations, petitioner accordingly gave this early signing
bonus.
- After this CBA expired in Aug.1999, the 2 parties began
negotiations for a new CBA but after 11 meetings, respondent
union declared a deadlock and a few days later filed a notice of
strike. A conciliation and mediation conference was held but it
still left the ff. issues unresolved: wages, rice subsidy, signing
and retroactive bonus. Failure to come to an agreement led
respondent union to go on an 11-day strike which resulted in
stoppage of manufacturing operations as well as losses for
petitioner. This constrained petitioner to file a petition before
the DOLE and the Labor Secretary Laguesma resolved the
dispute by issuing an order which, among others, granted a
signing bonus of P3,000 to the union.
- Petitioner filed a MFR, stating that it accepted the decision but
took exception to the award of the signing bonus, claiming that
it is not demandable or enforceable since it is in the nature of
an incentive. Labor Sec. denied this motion. Petitioner then filed
for Certiorari with the CA which was dealt with similarly. The
Labor Secs award of signing bonus was affirmed since
petitioner itself offered the same incentive to expedite the CBA
negotiations, which they did not withdraw and was still
outstanding when the dispute reached the DOLE. Petitioner filed
a MFR which was again denied, leading to this petition.
ISSUE
WON the signing bonus awarded by the Labor Secretary (and
affirmed by respondent CA) was proper
HELD
NO
Ratio A signing bonus may not be demanded as a matter of
right if it is not agreed upon by the parties or unilaterally
offered as an additional incentive. It is not a demandable and
enforceable obligation. The condition for awarding it must be
duly satisfied.
Reasoning
- 2 things militate against the grant of the signing bonus: first,
the non-fulfillment of the condition for which it was offered, i.e.,
the speedy and amicable conclusion of the CBA negotiations;
and second, the failure of respondent union to prove that the
grant of the said bonus is a long established tradition or a
regular practice on the part of petitioner. Petitioner admits,
and respondent union does not dispute, that it offered an early
conclusion bonus or an incentive for a swift finish to the CBA
negotiations.
- A signing bonus is justified by and is the consideration paid for
the goodwill that existed in the negotiations that culminated in
the signing of a CBA. In the case at bar, the CBA negotiation
between petitioner and respondent union failed. Respondent
union went on strike for eleven days and blocked the ingress to
and egress from petitioners work plants. The labor dispute had
to be referred to the Secretary of Labor and Employment
because neither of the parties was willing to compromise their
respective positions regarding the four remaining items which
stood unresolved. While we do not fault any one party for the
failure of the negotiations, it is apparent that there was no more
goodwill between the parties and that the CBA was clearly not
signed through their mutual efforts alone. Hence, the payment
of the signing bonus is no longer justified and to order such
payment would be unfair and unreasonable for petitioner.
- We have consistently ruled that although a bonus is not a
demandable and enforceable obligation, it may nevertheless be
granted on equitable considerations as when the giving of such
bonus has been the companys long and regular practice. To be
considered a regular practice, however, the giving of the
bonus should have been done over a long period of time, and
must be shown to have been consistent and deliberate. The test
or rationale of this rule on long practice requires an indubitable
showing that the employer agreed to continue giving the
benefits knowing fully well that said employees are not covered
by the law requiring payment thereof. Respondent does not
contest the fact that petitioner initially offered a signing bonus

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Disini

only during the previous CBA negotiation. Previous to that,

there is no evidence on record that petitioner ever offered the
same or that the parties included a signing bonus among the
items to be resolved in the CBA negotiation. Hence, the giving
of such bonus cannot be deemed as an established practice
considering that the same was given only once.
Disposition petition is GRANTED. CA decision affirming the
Order of the Secretary of Labor and Employment is REVERSED
and SET ASIDE.

9.15 PRODUCTIVITY INCENTIVES

ACT OF 1990 RA 6971
E. WAGE RECOVERY, LIABILITIES, AND
WORKER PREFERENCE
EMPLOYER, INDEPENDENT CONTRACTOR
AND SUB-CONTRACTOR AND LABOR
ONLY CONTRACTING
SENTINEL SECURITY AGENCY INC V NLRC
[PAGE 140]
LAPANDAY AGRICULTURA DEVT CORP V CA
[PAGE 7]
OSM SHIPPING V NLRC (GUERRERO)
398 SCRA 606
PANGANIBAN; March 5, 2003
FACTS
- Fermin Guerrero was hired by OSM for and in behalf of its
principal, Phil Carrier Shipping Agency Services Co. (PCSASCO)
as a Master Mariner of M/V Princess Hoa for a contract period of
10 months. Guerrero alleged that for almost 7 months (from
start of his work in July 1994 until Jan 1995), despite the
services he rendered, no compensation or remuneration was
ever paid to him. He was forced to disembark because he
cannot even buy his basic personal necessities (wawa naman!).
He filed for illegal dismissal and non-payment of wages, etc.
- OSM: Philippine Carrier Shipping Lines Co. (PCSLC) is the
disponent owner/employer, and PCSLC is now responsible for
the payment of complainant's wages (Because Concorde
Pacific, an American company w/c owns M/V Princess Hoa,
decided to use ship in the coastwise trade. Since the M/V
Princess Hoa was a foreign registered vessel and could not be
used in the coastwise trade, the shipowner converted the vessel
to Philippine registry on Sept 28, 1994 by way of bareboat
chartering it out to another entity named Philippine Carrier
Shipping Lines Co. [PCSLC]. To do this, the shipowner had to
terminate its management agreement with PCSASCO on Sept
28, 1994 by a letter of termination. Consequently, PCSASCO
terminated its crew agreement with OSM in a letter dated Dec
5, 1994. Because of the bareboat charter of the vessel to PCSLC
and its subsequent conversion to Philippine registry and use in
coastwise trade as well as to the termination of the
management agreement and crew agency agreement, a
termination of contract ensued whereby PCSLC, the bareboat
charterer, became the disponent owner/employer of the crew.)
- NLRC: OSM Shipping Phils. Inc. and its principal, PCSASCO are
jointly and severally ordered to pay complainant
ISSUE
WON OSM is liable for the payment of unpaid salary of Guerrero
HELD

Labor Law 1
YES
- Petitioner, as manning agent, is jointly and severally liable
with its principal, PCSASCO, for private respondent's claim. This
conclusion is in accordance with Section 1 of Rule II of the POEA
Rules and Regulations7.
- Joint and solidary liability is meant to assure aggrieved
workers of immediate and sufficient payment of what is due
them. The fact that petitioner and its principal have already
terminated their agency agreement does not relieve the former
of its liability. The reason for this ruling was given by this Court
in Catan National Labor Relations Commission, which we
reproduce in part as follows:
"This must be so, because the obligations covenanted in the
[manning] agreement between the local agent and its foreign
principal are not coterminus with the term of such agreement
so that if either or both of the parties decide to end the
agreement, the responsibilities of such parties towards the
contracted employees under the agreement do not at all end,
but the same extends up to and until the expiration of the,
employment contracts of the employees recruited and
employed pursuant to the said recruitment agreement.
Otherwise, this will render nugatory the very purpose for
which the law governing the employment of workers for
foreign jobs abroad was enacted."
Disposition NLRC Decision REINSTATED and AFFIRMED

MANILA ELECTRIC CO V BENAMIRA

[PAGE 62]

9.17 WORKER PREFERENCE

BANKRUPTCY
CIVIL CODE LABOR CODE
REPUBLIC V PERALTA
150 SCRA 37
FELICIANO; May 20, 1987
NATURE:
Review on certiorari
FACTS:
- The Republic of the Philippines seeks the review on certiorari
of the Order of the CFI of Manila in its Civil Case No. 108395
entitled "In the Matter of Voluntary Insolvency of Quality
Tobacco Corporation, Quality Tobacco.
- In its questioned Order, the trial court held that the aboveenumerated claims of USTC and FOITAF (hereafter collectively
referred to as the "Unions") for separation pay of their
respective members embodied in final awards of the NLRC were
to be preferred over the claims of the Bureau of Customs and
the BIR. The trial court, in so ruling, relied primarily upon Article
110 of the Labor Code.
- The Solicitor General, in seeking the reversal of the questioned
Orders, argues that Article 110 of the Labor Code is not
applicable as it speaks of "wages," a term which he asserts
does not include the separation pay claimed by the Unions.
"Separation pay," the Solicitor General contends: is given to a
laborer for a separation from employment computed on the
basis of the number of years the laborer was employed by the

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Disini

ISSUE
WON separation pay of their respective members embodied in
final awards of the NLRC were to be preferred over the claims of
the Bureau of Customs and the BIR (WON separation pay is
included in the term wages8)
HELD
1. YES
Ratio For the specific purposes of Article 1109 and in the
context of insolvency termination or separation pay is
reasonably regarded as forming part of the remuneration or
other money benefits accruing to employees or workers by
reason of their having previously rendered services to their
employer; as such, they fall within the scope of "remuneration
or earnings for services rendered or to be rendered ."
Liability for separation pay might indeed have the effect of a
penalty, so far as the employer is concerned. So far as concerns
the employees, however, separation pay is additional
remuneration to which they become entitled because, having
previously rendered services, they are separated from the
employer's service.
Reasoning
- We note, in this connection, that in Philippine Commercial and
Industrial Bank (PCIB) us. National Mines and Allied Workers
Union, the Solicitor General took a different view and there
urged that the term "wages" under Article 110 of the Labor
Code may be regarded as embracing within its scope severance
pay or termination or separation pay. In PCIB, this Court agreed
with the position advanced by the Solicitor General. We see no
reason for overturning this particular position.
- The resolution of the issue of priority among the several
claims filed in the insolvency proceedings instituted by the
Insolvent cannot, however, rest on a reading of Article 110 of
the labor Code alone.
- Article 110 of the Labor Code, in determining the reach of its
terms, cannot be viewed in isolation. Rather, Article 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 in a binding manner.
Disposition MODIFIED and REMANDED to the trial court for
further proceedings in insolvency.

PHILIPPINE EXPORT V CA (DIEHL)

251 SCRA 354
VITUG; December 12, 1995
NATURE
Petition for review on certiorari
FACTS
8

Article 97 (f) of the Labor Code defines "wages" in the following terms:
Wage' paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, piece, or commission basis, or
other method of calculating the same, which is payable by an employer to
an employee under a written or unwritten contract of employment for work
done or to be done, or for services rendered or to be rendered, and includes
the fair and reasonable value, as determined by the Secretary of Labor, of
board, lodging, or other facilities customarily furnished by the employer to
the employee. 'Fair and reasonable value' shall not include any profit to the
employer or to any person affiliated with the employer.(emphasis supplied)

SEC. 1. Requirements for Issuance of License. Every applicant for license to operate
a private employment agency or manning agency shall submit a written application
together with the following requirements:
xxx
xxx
f. A verified undertaking stating that the applicant:
xxx
xxx
xxx
(3)
Shall assume joint and solidary liability with the employer for all claims and
liabilities which may arise in connection with the implementation of the contract;
including but not limited to payment of wages, health and disability compensation
and reparation.

- 176 -

employer; it is a form of penalty or damage against the

employer in favor of the employee for the latter's dismissal or
separation from service

Article 110. Worker preference in case of bankruptcy 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. (emphasis supplied).

Labor Law 1
- On 13 May 1988, private respondent Raimund Diehl, a
resident alien, lodged a complaint for illegal dismissal against
the Philippine German Wire Mesh Reinforcing Corporation
("FILFORCE") with the National Labor Relations Commission
("NLRC"). Parenthetically, five (5) years earlier, or on 28 July
1983, FILFORCE had mortgaged its plant and other property
located at EPZA, Mariveles, Bataan, in favor of herein petitioner
Philippine Export and Foreign Loan Guarantee Corporation
("PHILGUARANTEE"), a government owned and controlled
corporation, to secure a guarantee which the latter executed in
favor of Kuwait Asia Bank, E.C., over fifty one percent (51%) of
the US$1,357,600.00 loan which had been extended to
FILFORCE by the bank.
- The Labor Arbiter rendered a judgment favorable to Diehl.
Since no appeal was filed, the decision became final and the
Labor Arbiter issued a writ of execution directing NLRC Sheriff to
execute the judgment against FILFORCE and Basilio Sison.
Failing to collect the sum due, the Sheriff was directed to cause
the satisfaction of the award by levying on the property of
FILFORCE. The Deputy Sheriff effected the levy and scheduled a
public auction sale.
- Since the assets had previously been mortgaged to it,
PHILGUARANTEE filed a third-party claim which resulted in the
suspension of the scheduled auction sale. Upon the submission
by Diehl of an indemnity bond issued by Plaridel Surety and
Insurance Company, with a face value of P1,320,772.11, the
Deputy Sheriff issued a notice resetting the auction sale.
PHILGUARANTEE promptly filed a petition/manifestation before
the Labor Arbiter questioning, among other things, the integrity
of the indemnity bond posted by Diehl and, at the same time,
asserting its superior right and prior lien over the levied
property. Deputy Sheriff proceeded, nonetheless, with the
auction sale at which Diehl was declared the sole and winning
bidder.
- PHILGUARANTEE went to the Regional Trial Court of Makati
and there filed a complaint for "Annulment of Sale, Recovery of
Possession and Injunction with Urgent Prayer for the Issuance of
a Writ of Preliminary Injunction and/or Temporary Restraining
Order and/or Status Quo Order".
ISSUE
WON CA can issue a preliminary injunction
HELD
- The appellate court did not commit error. The question of
whether or not the trial court below was in any good position to
take cognizance over the complaint filed by PHILGUARANTEE
and to issue an injunctive relief depended, in turn, on whether
or not the acts complained of arose out of, or were connected
or interwoven with, cases falling under the exclusive jurisdiction
of the Labor Arbiter or the NLRC. While, ostensibly, the
complaint filed with the trial court was for the annulment of
sale, recovery of possession and injunction, in essence,
however, the action challenged the legal propriety of the
execution sale, as well as the acts performed by the Labor
Arbiter and the Deputy Sheriff in the conduct thereof, and the
subsequent issuance of an alias writ of execution. In reality,
petitioner's action to annul the execution sale was a motion to
quash the writ of execution on a case aptly within the
jurisdiction of the Labor Arbiter. The case brought before the
trial court, being a matter growing out of the labor dispute
decided by the Labor Arbiter, clearly fell outside the
competence of the trial court.
- Another reason that militates against the trial court's
assumption of jurisdiction over the case is Article 254 of the
Labor Code which states:
Art. 254. Injunction prohibited. No temporary or permanent
injunction or restraining order in any case involving or
growing out of labor disputes shall be issued by any court or
other entity,
The Court, however, cannot end its ponencia on this simple
case without calling attention to serious lapses in the
proceedings before the Labor Arbiter concerning the third party
claim of PHILGUARANTEE. Section 2, Rule VI, of the Manual of

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Instructions for Sheriffs of the NLRC prescribes in detail the

procedure that must be followed in the event that the property
levied upon to satisfy a final judgment is claimed by any person
other than the losing party, viz.:
Sec. 2. Proceedings. If property levied upon be claimed by
any person other than the losing party or his agent, such
person shall make an affidavit of his title thereto or right to
the possession thereof, stating the grounds of such right or
title and shall file the same with the sheriff and copies thereof
served upon the Labor Arbiter or proper officer issuing the
writ and upon the prevailing party. Upon receipt of the third
party claim, all proceedings with respect to the execution of
the property subject of the third party claim shall
automatically be suspended and the Labor Arbiter or proper
officer issuing the writ shall conduct a hearing with due notice
to all parties concerned and resolve the validity of the claim
within ten (10) working days from receipt thereof and his
decision is appealable to the Commission within ten (10)
working days from notice, and the Commission shall likewise
resolve the appeal within the same period.
However, should the prevailing party put up an indemnity
bond in a sum not less than the value of the property levied,
the execution shall proceed. In case of disagreement as to
such value, the same shall be determined by the Labor
Arbiter, National Labor Relations Commission or the Philippine
Overseas Employment Administration issuing the writ, as the
case may be.
Evidently, the Court's exhortation in Guimoc v. Rosales, i.e.,
that "(i)n executing an order, resolution, or decision of the
NLRC, the sheriff of the Commission, or other officer acting as
such, must be guided strictly by the Sheriff's Manual . . .," was
not properly heeded.
- We could consider the following:
1. The Manual requires that the indemnity bond that must be
posted up by the prevailing party should be in a sum not less
than the value of the property levied. Here, Diehl has put up
a bond of only P1,320,772.11; the appraised value, however,
totals P4,934,000.00.
2. The Manual provides that in case of disagreement on the
value of the property levied, the matter shall be determined
by the Labor Arbiter. Not only did PHILGUARANTEE promptly
challenge the integrity of the bond submitted by Diehl but it
also did question the amount of the bond. Since the
difference is substantial, it should have behooved the Labor
Arbiter to take more than just a passing glance on the claim
of PHILGUARANTEE.
- A final observation. On 21 March 1989, Article 110 of the
Labor Code was amended by Republic Act No. 6715 so as to
read:
Art. 110. Worker preference in case of bankruptcy. In the
event of bankruptcy or liquidation of an employer's business,
his workers shall enjoy first preference as regards their wages
and other monetary claims, any provisions of law to the
contrary notwithstanding. Such unpaid wages and monetary
claims shall be paid in full before claims of the Government
and other creditors may be paid.
- In Development Bank of the Philippines vs. National Labor
Relations Commission (183 SCRA 328, 336-339), the Court has
said:
The amendment expands worker preference to cover not only
unpaid wages but also other monetary claims to which even
claims of the Government must be deemed subordinate.
xxx xxx xxx
Notably, the terms "declaration" of bankruptcy or "judicial"
liquidation have been eliminated. Does this mean then that
liquidation proceedings have been done away with?
We opine in the negative, upon the following considerations:
1. Because of its impact on the entire system of credit, Article
110 of the Labor Code cannot be viewed in isolation but must
be read in relation to the Civil Code scheme on classification
and preference of credits.
xxx xxx xxx
2. In the same way that the Civil Code provisions on
classification of credits and the Insolvency Law have been

Labor Law 1
brought into harmony, so also must the kindred provisions of
the Labor Law be made to harmonize with those laws.
3. In the event of insolvency, a principal objective should be
to effect an equitable distribution of the insolvent's property
among his creditors. To accomplish this there must first be
some proceeding where notice to all of the insolvent's
creditors may be given and where the claims of preferred
creditors may be bindingly adjudicated (De Barretto vs.
Villanueva, No. L-14938, December 29, 1962, 6 SCRA 928).
The rationale therefore has been expressed in the recent
case of DBP vs. Secretary of Labor (G.R. No. 79351, 28
November 1989), which we quote:
xxx xxx xxx
4. A distinction should be made between a preference of
credit and a lien. A preference applies only to claims which do
not attach to specific properties. A lien creates a charge on a
particular property. The right of first preference as regards
unpaid wages recognized by Article 110 does not constitute a
lien on the property of the insolvent debtor in favor of
workers. It is but a preference of credit in their favor, a
preference in application. It is a method adopted to
determine and specify the order in which credits should be
paid in the final distribution of the proceeds of the insolvent's
assets. It is a right to a first preference in the discharge of the
funds of the judgment debtor.
xxx xxx xxx
6. Even if Article 110 and its implementing Rule, as amended,
should be interpreted to mean "absolute preference," the
same should be given only prospective effect in line with the
cardinal rule that laws shall have no retroactive effect, unless
the contrary is provided (Article 4, Civil Code). Thereby, any
infringement on the constitutional guarantee on nonimpairment of the obligation of contracts (Section 10, Article
III, 1987 Constitution) is also avoided. In point of fact, DBP's
mortgage credit antedated by several years the amendatory
law, RA No. 6715. To give Article 110 retroactive effect would
be to wipe out the mortgage in DBP's favor and expose it to a
risk which it sought to protect itself against by requiring a
collateral in the form of real property.
In fine, the right to preference given to workers under Article
110 of the Labor Code cannot exist in any effective way prior
to the time of its presentation in distribution proceedings. It
will find application when, in proceedings such as insolvency,
such unpaid wages shall be paid in full before the "claims of
the Government and other creditors" may be paid. But, for an
orderly settlement of a debtor's assets, all creditors must be
convened, their claims ascertained and inventoried, and
thereafter the preferences determined in the course of
judicial proceedings which have for their object the subjection
of the property of the debtor to the payment of his debts or
other lawful obligations. Thereby, an orderly determination of
preference of creditors' claims is assured (Philippine Savings
Bank vs. Lantin, No. L-33929, September 2, 1983, 124 SCRA
476); the adjudication made will be binding on all parties-ininterest, since those proceedings are proceedings in rem; and
the legal scheme of classification, concurrence and
preference of credits in the Civil Code, the Insolvency Law,
and the Labor Code is preserved in harmony.
Disposition
Petition DENIED. Assailed decision of the CA
AFFIRMED.

BARAYOGA V ASSET PRIVATIZATION TRUST

473 SCRA 690
PANGANIBAN; October 24, 2005
NATURE
Petition for review of the decision of the CA reversing the
findings of the NLRC
FACTS
- Bisudeco-Philsucor Corfarm Workers Union is composed of
workers of Bicolandia Sugar Development Corporation

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(BISUDECO), a sugar plantation mill located in Himaao, Pili,

Camarines Sur.
- On December 8, 1986, Respondent Asset Privatization Trust
(APT), a public trust was created under Proclamation No. 50, as
amended, mandated to take title to and possession of,
conserve, provisionally manage and dispose of non-performing
assets of the Philippine government identified for privatization
or disposition.
- Pursuant to Section 23 of Proclamation No. 50, former
President Corazon Aquino issued Administrative Order No. 14
identifying certain assets of government institutions that were
to be transferred to the National Government and among the
assets transferred was the financial claim of the Philippine
National Bank against BISUDECO in the form of a secured loan.
- Consequently, by virtue of a Trust Agreement executed
between the National Government and APT on February 27,
1987, APT was constituted as trustee over BISUDECOs account
with the PNB. Sometime later, on August 28, 1988, BISUDECO
contracted the services of Philippine Sugar Corporation
(Philsucor) to take over the management of the sugar
plantation and milling operations until August 31, 1992.
- Meanwhile, because of the continued failure of BISUDECO to
pay its outstanding loan with PNB, its mortgaged properties
were foreclosed and subsequently sold in a public auction to
APT, as the sole bidder. On April 2, 1991, APT was issued a
Sheriffs
Certificate
of
Sale.
- On July 23, 1991, the union filed a complaint for unfair labor
practice, illegal dismissal, illegal deduction and underpayment
of wages and other labor standard benefits plus damages.
- On March 2, 1993, the union filed an amended complaint,
impleading as additional party respondents APT and Pensumil,
the company that took over its sugar milling operations.
- In their Position Paper, the union alleged that when Philsucor
initially took over the operations of the company, it retained
BISUDECOs existing personnel under the same terms and
conditions of employment. Nonetheless, at the start of the
season sometime in May 1991, Philsucor started recalling
workers back to work, to the exception of the union members.
Management told them that they will be re-hired only if they
resign from the union. Just the same, thereafter, the company
started to employ the services of outsiders under the pakyaw
system.
- BISUDECO, Pensumil and APT all interposed the defense of
lack of employer-employee relationship.
ISSUE
WON APT is liable for the claims of petitioners against their
former employer
HELD
NO
- Responsibility for the liabilities of a mortgagor towards its
employees cannot be transferred via an auction sale to a
purchaser who is also the mortgagee-creditor of the foreclosed
assets and chattels. Clearly, the mortgagee-creditor has no
employer-employee relations with the mortgagors workers.
The mortgage constitutes a lien on the determinate properties
of the employer-debtor, because it is a specially preferred credit
to which the workers monetary claims is deemed subordinate.
- The duties and liabilities of BISUDECO, including its monetary
liabilities to its employees, were not all automatically assumed
by APT as purchaser of the foreclosed properties at the auction
sale. Any assumption of liability must be specifically and
categorically agreed upon. In Sundowner Development Corp. v.
Drilon the Court ruled that, unless expressly assumed, labor
contracts like collective bargaining agreements are not
enforceable against the transferee of an enterprise. Labor
contracts are in personam and thus binding only between the
parties.
- No succession of employment rights and obligations can be
said to have taken place between the two. Between the
employees of BISUDECO and APT, there is no privity of contract

Labor Law 1
that would make the latter a substitute employer that should be
burdened with the obligations of the corporation.
- The rule has been laid down that the sale or disposition must
be motivated by good faith as an element of exemption from
liability. Indeed, an innocent transferee of a business
establishment has no liability to the employees of the transferor
to continue employing them. Nor is the transferee liable for
past unfair labor practices of the previous owner, except, when
the liability therefor is assumed by the new employer under the
contract of sale, or when liability arises because of the new
owners participation in thwarting or defeating the rights of the
employees.
- The liabilities of the previous owner to its employees are not
enforceable against the buyer or transferee, unless (1) the
latter unequivocally assumes them; or (2) the sale or transfer
was made in bad faith. Thus, APT cannot be held responsible
for the monetary claims of petitioners who had been dismissed
even before it actually took over BISUDECOs assets.
- it should be remembered that APT merely became a
transferee of BISUDECOs assets for purposes of conservation
because of its lien on those assets -- a lien it assumed as
assignee of the loan secured by the corporation from PNB.
Subsequently, APT, as the highest bidder in the auction sale,
acquired
ownership
of
the
foreclosed
properties.
- Relevant to this transfer of assets is Article 110 of the Labor
Code, as amended by Republic Act No. 6715, which reads:
Article 110. Workers preference in case of bankruptcy. In
the event of bankruptcy or liquidation of the employers
business, his workers shall enjoy first preference as regards
their unpaid wages and other monetary claims shall be paid
in full before the claims of the Government and other
creditors may be paid.
- This Court has ruled in a long line of cases that under
Articles 2241 and 2242 of the Civil Code, a mortgage
credit is a special preferred credit that enjoys
preference with respect to a specific/determinate
property of the debtor. On the other hand, the workers
preference under Article 110 of the Labor Code is an
ordinary preferred credit. While this provision raises the
workers money claim to first priority in the order of
preference established under Article 2244 of the Civil
Code, the claim has no preference over special preferred
credits.
- Thus, the right of employees to be paid benefits due them
from the properties of their employer cannot have any
preference over the latters mortgage credit. In other words,
being a mortgage credit, APTs lien on BISUDECOs mortgaged
assets is a special preferred lien that must be satisfied first
before the claims of the workers.
- In Development Bank of the Philippines v. NLRC the rationale
of this ruling was explained as follows:
A preference applies only to claims which do not attach to
specific properties. A lien creates a charge on a particular
property. The right of first preference as regards unpaid
wages recognized by Article 110 does not constitute a lien on
the property of the insolvent debtor in favor of workers. It is
but a preference of credit in their favor, a preference in
application. It is a method adopted to determine and specify
the order in which credits should be paid in the final
distribution of the proceeds of the insolvents assets. It is a
right to a first preference in the discharge of the funds of the
judgment debtor. Furthermore, workers claims for unpaid
wages and monetary benefits cannot be paid outside of a
bankruptcy or judicial liquidation proceedings against the
employer. It is settled that the application of Article 110 of
the Labor Code is contingent upon the institution of those
proceedings, during which all creditors are convened, their
claims ascertained and inventoried, and their preferences
determined. Assured thereby is an orderly determination of
the preference given to creditors claims; and preserved in
harmony is the legal scheme of classification, concurrence
and preference of credits in the Civil Code, the Insolvency
Law, and the Labor Code. The Court hastens to add that the
present Petition was brought against APT alone. In holding

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that the latter, which has never really been an employer of

petitioners, is not liable for their claims, this Court is not
reversing or ruling upon their entitlement to back wages and
other unpaid benefits from their previous employer.
Disposition Petition denied

RECEIVERSHIP
RUBBERWORLD (PHILS) INC V NLRC
336 S 433
PARDO; July 26, 2000
NATURE
Petition to annul the resolution of the National Labor Relations
Commission
FACTS
- Aquilino Magsalin, Pedro Manibo, Ricardo Borja, Benjamin
Camitan, Alicia M. San Pedro, and Felomena Tolin were
employed as dispatcher, warehouseman, issue monitor,
foreman, jacks cementer and outer sole attacher, respectively.
On August 26, 1994, Rubberworld filed with the Department of
Labor and Employment a notice of temporary shutdown of
operations to take effect on September 26, 1994. Before the
effectivity date, however, Rubberworld was forced to
prematurely shutdown its operations. On November 11, 1994,
private respondents filed with the National Labor Relations
Commission a complaint against petitioner for illegal dismissal
and non-payment of separation pay.On November 22, 1994,
Rubberworld filed with the Securities and Exchange Commission
(SEC) a petition for declaration of suspension of payments with
a proposed rehabilitation plan
- On December 28, 1994, SEC issued the following order:
"Accordingly, with the creation of the Management Committee,
all actions for claims against Rubberworld Philippines, Inc.
pending before any court, tribunal, office, board, body,
Commission
or
sheriff
are
hereby
deemed
SUSPENDED."Consequently,
all
pending
incidents
for
preliminary injunctions, writ or attachments, foreclosures and
the like are hereby rendered moot and academic.
- On January 24, 1995, petitioners submitted to the labor arbiter
a motion to suspend the proceedings invoking the SEC order
dated December 28, 1994. The labor arbiter did not act on the
motion and ordered the parties to submit their respective
position papers.
- On December 10, 1995, the labor arbiter rendered a decision,
which provides: "In the light of the foregoing, respondents are
hereby declared guilty of Illegal Shurtdown. On February 5,
1996, petitioners appealed to the National Labor Relations
Commission (NLRC) alleging abuse of discretion and serious
errors in the findings of facts of the labor arbiter. On August 30,
1996, NLRC issued a resolution affirming the decision with
modification in that the award of moral and exemplary damages
were deleted
ISSUE
WON the Department of Labor and Employment, the Labor
Arbiter and the National Labor Relations Commission may
legally act on the claims of respondents despite the order of the
Securities and Exchange Commission suspending all actions
against a company under rehabilitation by a management
committee created by the Securities and Exchange
Commission.
HELD
NO
- The petition is hereby granted. The decision of the labor arbiter
dated December 10, 1995 and the NLRC resolution dated August
30, 1996, are SET ASIDE.
Ratio Presidential Decree No. 902-A is clear that "all actions for
claims against corporations, partnerships or associations under
management or receivership pending before any court, tribunal,
board or body shall be suspended accordingly." The law did not

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make any exception in favor of labor claims. The justification for

the automatic stay of all pending actions for claims is to enable
the management committee or the rehabilitation receiver to
effectively exercise its/his powers free from any judicial or extra
judicial interference that might unduly hinder or prevent the
'rescue' of the debtor company. To allow such other actions to
continue would only add to the burden of the management
committee or rehabilitation receiver, whose time, effort and
resources would be wasted in defending claims against the
corporation instead of being directed toward its restructuring
and rehabilitation. Thus, the labor case would defeat the
purpose of an automatic stay. To rule otherwise would open the
floodgates to numerous claims and would defeat the rescue
efforts of the management committee.
- This finds ratiocination in that the power to hear and decide
labor disputes is deemed suspended when the Securities and
Exchange Commission puts the corporation under rehabilitation.
Thus, when NLRC proceeded to decide the case despite the SEC
suspension order, the NLRC acted without or in excess of its
jurisdiction to hear and decide cases. As a consequence, any
resolution, decision or order that it rendered or issued without
jurisdiction is a nullity.

9.18 WAGE RECOVERY

ATTORNEYS FEES

AND

PLACEWELL INTERNATIONAL V CAMOTE

[PAGE 117]

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