A.

CONCEPT AND DEFINITION

1. Tan v. Lagrama (August 15, 2002)

FACTS: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general
manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a
painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and
Crown Theaters for more than 10 years.

Sometime in 1998, private respondent Lagrama was summoned by Tan and accused him of urinating in
his work area. Lagrama denied the charge against him and claimed that he was not the only one who
entered the drawing area and that, even if the charge was true, it was a minor infraction to warrant his
dismissal. Nevertheless, Tan ordered Lagrama to get out of his sight as the latter tried to explain his side,
leaving him with no other choice but to leave the premises.

Lagrama filed a complaint and alleged that he had been illegally dismissed and sought reinvestigation
and payment of 13th month pay, service incentive leave pay, salary differential, and damages. Petitioner
Tan asserted that Lagrama was an independent contractor who did his work according to his methods,
while he (petitioner) was only interested in the result thereof. He cited the admission of Lagrama during
the conferences before the Labor Arbiter that he was paid on a fixed piece-work basis, i.e., that he was
paid for every painting turned out as ad billboard or mural, on the basis of a "no mural/billboard drawn, no
pay" policy. He submitted the affidavits of other cinema owners, an amusement park owner, and those
supervising the construction of a church to prove that the services of Lagrama were contracted by them.
He denied having dismissed Lagrama and alleged that it was the latter who refused to paint for him after
he was scolded for his habits.

The Labor Arbiter rendered a decision in favor of Lagrama. On appeal, the NLRC reversed the decision
finding Lagrama to be an independent contractor. Via petition for certiorari, the Court of Appeals found
that petitioner exercised control over Lagrama’s work by dictating the time when Lagrama should submit
his billboards and murals and setting rules on the use of the work area and rest room. It held that the work
performed to other cinema owners is a mere sideline insufficient to prove that he was not an employee of
Tan. It also found no evidence of any intention on the part of Lagrama to leave his job or sever his
employment relationship with Tan.

ISSUE:
1) WON an employer employee relationship existed
2) WON respondent Lagrama was illegally dismissed

RULING:

1) Yes, there is an employer employee relationship.

First, it was petitioner who engaged the services of Lagrama without the intervention of a third party.

Second, the evidence shows that the latter performed his work as painter under the supervision and
control of petitioner. Petitioner provided the workplace of Lagrama inside the Crown Theater of petitioner
and and the materials used for the paintings. Petitoner prescribed rules such as the observance of
cleanliness and hygiene and a prohibition against urinating in the work area and any place other than the
toilet or the rest rooms. Petitioner’s control also extended to the result of Lagrama’s work, and the manner
and means by which the work was to be accomplished.

Private respondent Lagrama claimed that he worked daily, from 8am to 5pm. Petitioner maintained that
he paid Lagrama P1,475.00 per week for the murals for the three theaters which the latter usually finished
in 3 to 4 days in one week. Even assuming this to be true, the fact that Lagrama worked for at least 3 to 4
days a week proves regularity in his employment by petitioner.
Third, by stating that he had the right to fire Lagrama, petitioner in effect acknowledged Lagrama to be his
employee. Petitioner himself said, he waited for Lagrama to report for work but the latter simply stopped
reporting for work reinforces the conviction that Lagrama was indeed an employee of petitioner.

Fourth, that Lagrama worked for Tan on a fixed piece-work basis is of no moment. Payment by result is a
method of compensation and does not define the essence of the relation. It is a method of computing
compensation, not a basis for determining the existence or absence of employer-employee relationship.
One may be paid on the basis of results or time expended on the work, and may or may not acquire an
employment status, depending on whether the elements of an employer-employee relationship are
present or not.

The Rules Implementing the Labor Code require every employer to pay his employees by means of
payroll. The payroll should show among other things, the employee's rate of pay, deductions made, and
the amount actually paid to the employee. In the case at bar, petitioner did not present the payroll to
support his claim that Lagrama was not his employee, raising speculations whether his failure to do so
proves that its presentation would be adverse to his case.

In this case, there is a reasonable connection between the job of Lagrama painting billboards and murals
and the business of petitioner. The fact that Lagrama was not reported as an employee to the SSS is not
conclusive on the employment relationship.

Lagrama as a regular employee is entitled to security of tenure. The claim that he abandoned his work is
not proved.

2. Yes, Lagrama is illegally dismissed. Urinating in a work place other than the one designated for the
purpose by the employer constitutes violation of reasonable regulations intended to promote a healthy
environment under Art. 282(1) of the Labor Code for purposes of terminating employment, but the same
must be shown by evidence. Here there is no evidence that Lagrama did urinate in a place other than a
rest room in the premises of his work. The Labor Arbiter found that the relationship between the employer
and the employee has been so strained that the latter’s reinstatement would no longer serve any purpose.
Hence, the grant of separation pay in lieu of reinstatement is appropriate. This is of course, in addition to
the payment of backwages, should be computed from the time of Lagrama’s dismissal up to the time of
the finality of this decision, without any deduction or qualification.

DOCTRINE:

The Bureau of Working Conditions classifies workers paid by results into two groups, namely; (1) those
whose time and performance is supervised by the employer, and (2) those whose time and performance
is unsupervised by the employer. The first involves an element of control and supervision over the
manner the work is to be performed, while the second does not. If a piece worker is supervised, there is
an employer-employee relationship, as in this case. However, such an employee is not entitled to service
incentive leave pay since, as pointed out in Makati Haberdashery v. NLRC33 and Mark Roche
International v. NLRC,34 he is paid a fixed amount for work done, regardless of the time he spent in
accomplishing such work. (this was the last paragraph of the ruling)

In determining whether there is an employer-employee relationship, we have applied a "four-fold test," to

wit: (1) whether the alleged employer has the power of selection and engagement of employees; (2)
whether he has control of the employee with respect to the means and methods by which work is to be
accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages.

Wages are defined as "remuneration or earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered."
This Court has held that if the employee has been performing the job for at least one year, even if not
continuously but intermittently, the repeated and continuing need for its performance is sufficient evidence
of the necessity, if not indispensability, of that activity to the business of his employer. Hence, the
employment is also considered regular, although with respect only to such activity, and while such activity
exists.

Abandonment requires two elements: (1) the failure to report for work or absence without valid or
justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second
element as the more determinative factor and being manifested by some overt acts.25 Mere absence is
not sufficient. What is more, the burden is on the employer to show a deliberate and unjustified refusal on
the part of the employee to resume his employment without any intention of returning.

The Implementing Rules of the Labor Code 29 provide that no worker shall be dismissed except for a just
or authorized cause provided by law and after due process. This provision has two aspects: (1) the
legality of the act of dismissal, that is, dismissal under the grounds provided for under Article 282 of the
Labor Code and (2) the legality in the manner of dismissal. The illegality of the act of dismissal constitutes
discharge without just cause, while illegality in the manner of dismissal is dismissal without due process.

DISPOSITIVE: WHEREFORE, based on the foregoing, the petition is DENIED for lack of showing that
the Court of Appeals committed any reversible error. The decision of the Court of Appeals, reversing the
decision of the National Labor Relations Commission and reinstating the decision of the Labor Arbiter, is
AFFIRMED.

3. Mabeza v. NLRC (April 18, 1997)

FACTS: Petitioner Norma Mabeza and her co-employees at the Hotel Supreme in Baguio City were
asked by the hotel’s management to sign an instrument attesting to the latter’s compliance with minimum
wage and other labor standard provision. The instrument provides that they have no complaints against
the management of the Hotel Supreme as they are paid accordingly and that they are treated well.

“4. That we have no complaints against the management of the Hotel Supreme as we are paid
accordingly and that we are treated well.

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

The petitioner signed the affidavit but refused to go to the City’s Prosecutor’s Office to confirm the veracity
and contents of the affidavit as instructed by management. That same day, the affidavit was submitted to
the Regional Office of the DOLE in Baguio. As gleaned from the affidavit, the same was drawn by
management for the sole purpose of refuting findings of the Labor Inspector of DOLE (in an inspection of
respondent's establishment on February 2, 1991) apparently adverse to the private respondent.

After she refused to go to the City Prosecutor’s Office, the same day the affidavit was submitted to the
Cordillera Regional Office of DOLE, she was ordered by the hotel management to turn over the keys to
her living quarters and to remove her belongings to the hotel’s premises. She then filed a leave of
absence which was denied by her employer. She attempted to return to work but the hotel’s cashier told
her that she should not report to work and instead continue with her unofficial leave of absence.

She filed a complaint against the management for illegal dismissal and alleged underpayment of wages,
non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other
benefits.
Private respondent Peter Ng alleged that petitioner "surreptitiously left (her job) without notice to the
management" and that she actually abandoned her work. He maintained that there was no basis for the
money claims for underpayment and other benefits as these were paid in the form of facilities to petitioner
and the hotel's other employee and pointing out to the affidavit, employees actually have no problems
with management. Private respondent raised a new ground, loss of confidence, which was supported by a
criminal complaint for Qualified Theft (1 blanket, 1 pc bedsheet, 1 pc thermos, 2 pcs. towel) he filed
before the prosecutor's office of the City of Baguio against petitioner.

The LA dismissed petitioner’s complaint on the ground of loss of confidence. The NLRC affirmed the
decision. The Solicitor General rejects private respondent's principal claims and defenses and urges this
Court to set aside the public respondent's assailed resolution.

ISSUE:
1) WON there was abandonment
2) WON Mabeza was illegally dismissed
3) WON there was unfair labor practice
4) WON less than minimum wage was paid to Mabeza

RULING:

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

1) No.

It is crystal clear that the circumstances upon which private respondent anchored his claim that petitioner
"abandoned" her job were not enough to constitute just cause to sanction the termination of her services.
The fact that she filed a leave of absence clearly indicates not an intention to abandon but an intention to
return to work after the period of her leave of absence, had it been granted, shall have expired.

While absence from work for a prolonged period may suggest abandonment in certain instances, mere
absence of one or two days would not be enough to sustain such a claim. In fact, several days after she
had been advised to take an informal leave, petitioner tried to resume working with the hotel, to no avail.

2) No. Loss of confidence should ideally apply only to cases involving employees occupying positions of
trust and confidence or to those situations where the employee is routinely charged with the care and
custody of the employer's money or property. Evidently, an ordinary chambermaid who has to sign out for
linen and other hotel property from the property custodian each day and who has to account for each and
every towel or bedsheet utilized by the hotel's guests at the end of her shift would not fall under any of
these two classes of employees for which loss of confidence would normally apply.

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

4) Yes. Private respondent's bare claim that the reason the monetary benefits received by petitioner were
less than minimum wage was because petitioner did not factor in the meals, lodging, electric consumption
and water she received during the period in her computations. In this case, the employer simply cannot
deduct the value from the employee's wages because: 1) private respondent failed to present any
company policy or guideline to show that the meal and lodging are part of the salary; 2) he failed to
provide proof of the employee's written authorization; and, 3) he failed to show how he arrived at the
valuations.

More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not
facilities but supplements. A benefit or privilege granted to an employee for the convenience of the
employer is not a facility. Hotel workers are required to work different shifts and are expected to be
available at various odd hours, their ready availability is a necessary matter in the operations of private
respondent's hotel.

DOCTRINE:

For abandonment to arise, there must be concurrence of two things: 1) lack of intention to work; 16 and 2)
the presence of overt acts signifying the employee's intention not to work.

Marina Port Services, Inc. vs. NLRC, has stated that: To be sure, every employee must enjoy some
degree of trust and confidence from the employer as that is one reason why he was employed in the first
place. One certainly does not employ a person he distrusts. Indeed, even the lowly janitor must enjoy that
trust and confidence in some measure if only because he is the one who opens the office in the morning
and closes it at night and in this sense is entrusted with the care or protection of the employer's property.
The keys he holds are the symbol of that trust and confidence. By the same token, the security guard
must also be considered as enjoying the trust and confidence of his employer, whose property he is
safeguarding. Like the janitor, he has access to this property. He too, is charged with its care and
protection. Notably, however, and like the janitor again, he is entrusted only with the physical task of
protecting that property. The employer's trust and confidence in him is limited to that ministerial function.
He is not entrusted, in the Labor Arbiter's words, 'with the duties of safekeeping and safeguarding
company policies, management instructions, and company secrets such as operation devices.' He is not
privy to these confidential matters, which are shared only in the higher echelons of management. It is the
persons on such levels who, because they discharge these sensitive duties, may be considered holding
positions of trust and confidence. The security guard does not belong in such category.

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

DISPOSITIVE: WHEREFORE, premises considered, the RESOLUTION of the National Labor Relations
Commission dated April 24, 1994 is REVERSED and SET ASIDE, with costs. For clarity, the economic
benefits due the petitioner are deficiency wages, service incentive leave pay, night differential pay and
13th month, separation pay, full backwages, P1.000.00 for violation of right to the 2-notice rule in
terminating an employee.

B. WAGE-FIXING

5. Nasipit Lumber Co. v. NWPC (April 27, 1998)

FACTS: The Region X [Tripartite Wages and Productivity] Board issued Wage Order No. RX-01 which
provides the increase in minimum wage rates applicable to workers and employees in the private sector
in Northern Mindanao (Region X) (P13.00/day for Agusan del Norte, Bukidnon, Misamis Oriental, and the
Cities of Butuan, Gingoog, and Cagayan de Oro; P11.00/day for Agusan del Sur, Surigao del Norte and
Misamis Occidental, and the Cities of Surigao Oroquieta, Ozamis and Tangub; and P9.00/day for
Camiguin).

Nasipit Lumber Company, Inc. (NALCO), Philippine Wallboard Corporation (PWC), and Anakan Lumber
Company (ALCO), claiming to be separate and distinct from each other but for expediency and practical
purposes, jointly filed an application for exemption from the Wage Orders as distressed establishments
and based the exemption on Guidelines No. 3 issued by the herein Board, specifically Sec. 3(2) thereof
which, among others, provides:
For purposes of this Guidelines the following criteria to determine whether the applicant-firm is
actually distressed shall be used.
xxxxxxxxx
2. Establishment belonging to distressed industry - an establishment that is engaged in an
industry that is distressed due to conditions beyond its control as may be determined by the
Board in consultation with DTI and NWPC.

Petitioners aver that they are engaged in logging and integrated wood processing industry but are
distressed due to conditions beyond their control, to wit: 1) Depressed economic conditions due to
worldwide recession; 2) Peace and order and other emergency-related problems causing disruption and
suspension of normal logging operations; 3) Imposition of environmental fee for timber production in
addition to regular forest charges; 4) Logging moratorium in Bukidnon; 5) A reduction in the
annual allowable volume of cut logs of NALCO& ALCO by 59%; 6) Highly insufficient raw material supply;
7) Extraordinary increases in the cost of fuel, oil, spare parts, and maintenance; 8) Excessive labor
cost/production ratio that is more or less 47%; and 9) Lumber export ban.

Private respondent unions jointly opposed the application for exemption on the ground that said
companies are not distressed establishments since their capitalization has not been impaired by 25%.

RTWPB approved the applicants’ joint application for exemption citing liquidity problems and business
decline in the wood-processing industry. Specifically, “Anakan Lumber Company, is confirmed to be
suffering from capital impairment by: 14:80% in 1988, 71.35% in 1989 and 100% in 1990. On the other
hand, NALCO had a capital impairment of 6.41%. 13.53% and 17.04% in 1988, 1989 and 1990,
respectively, while PWC had no capital impairment from 1988 to 1990. However, the Board also took
note of the fact that petitioners are claiming for exemption, not on the strength of capital impairment, but
on the basis of belonging to a distressed industry — an establishment that is engaged in an industry that
is distressed due to conditions beyond its control as may be determined by the Board in consultation with
DTI and NWPC.”

Private respondents lodged an appeal with the NWPC, which affirmed ALCO’s application but reversed
the applications of herein petitioners. Guidelines No. 3 could not be used as valid basis for granting their
application for exemption since it did not pass the approval of the NWPC. In the case at bar, after the
Commission Secretariat made some comments on said Guidelines No. 3, the same was never submitted
again for [the] Commission's approval either justifying its original provisions or incorporating the
comments made thereon. Until and unless said Guidelines No. 3 is approved by the Commission, it has
no operative force and effect.

Hence, this petition.

ISSUE: WON a guideline issued by an RTWPB without the approval of or, worse, contrary to the
guidelines promulgated by the NWPC is valid?

RULING: No. Article 121 of the Labor Code lists the powers and functions of the NWPC which includes
that the Commission has the power to (c) To prescribe rules and guidelines for the determination of
appropriate minimum wage and productivity measures at the regional, provincial or industry levels; (d) To
review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if
these are in accordance with prescribed guidelines and national development plans; among others.
Article 122 of the Labor Code, on the other hand, prescribes the powers of the RTWPB, one of which is
(b) to determine and fix minimum wage rates applicable in their region, provinces or industries therein and
to issue the corresponding wage orders, subject to guidelines issued by the Commission.

The foregoing clearly grants the NWPC, not the RTWPB, the power to "prescribe the rules and
guidelines" for the determination of minimum wage and productivity measures. While the RTWPB has the
power to issue wage orders under Article 122 (b) of the Labor Code, such orders are subject to the
guidelines prescribed by the NWPC. Significantly, the NWPC authorized the RTWPB to issue exemptions
from wage orders, but subject to its review and approval. Since the NWPC never assented to Guideline
No. 3 of the RTWPB, the said guideline is inoperative and cannot be used by the latter in deciding or
acting on petitioners' application for exemption.

To allow RTWPB Guideline No. 3 to take effect without the approval of the NWPC is to arrogate unto
RTWPB a power vested in the NWPC by Article 121 of the Labor Code, as amended by RA 6727. If a
discrepancy occurs "between the basic law and an implementing rule or regulation, it is the former that
prevails." This is so because the law cannot be broadened by a mere administrative issuance. It is
axiomatic that "[a]n administrative agency cannot amend an act of Congress." Article 122 (e) of the Labor
Code cannot be construed to enable the RTWPB to decide applications for exemption on the basis of its
own guidelines which were not reviewed and approved by the NWPC, for the simple reason that a
statutory grant of "powers should not be extended by implication beyond what may be necessary for their
just and reasonable execution. Official powers cannot be merely assumed by administrative officers, nor
can they be created by the courts in the exercise of their judicial functions."

The Insertion in Guideline No. 3 of "Distressed Industry" as a Criterion for Exemption Void. The Court
wishes to stress that the law does not automatically grant exemption to all establishments belonging to an
industry which is deemed "distressed." Thus, Guideline No. 3 is void not only because it lacks NWPC
approval and contains an arbitrarily inserted exemption, but also because it is inconsistent with the
avowed State policy “"to rationalize the fixing of minimum wages and to promote productivity-
improvement and gain-sharing measures to ensure a decent standard of living for the workers and their
families; to guarantee the rights of labor to its just share in the fruits of production; . . ."

To justify the exemption of a distressed establishment from effects of wage orders, the NWPC requires
the applicant, if a stock corporation like petitioners, to prove that its accumulated losses impaired its paid-
up capital by at least 25 percent in the last full accounting period preceding the application27 or the
effectivity of the order.28 In the case at bar, it is undisputed that during the relevant accounting period,
NALCO, ALCO and PWC sustained capital impairments of 1.89, 28.72, and 5.03 percent, respectively.29
Clearly, it was only ALCO which met the exemption standard.

DOCTRINE:

The Labor Code, as amended by the Wage Rationalization Act (RA 6727), grants the National Wages
and Productivity Commission (NWPC) the power to prescribe rules and guidelines for the determination of
appropriate wages in the country. Hence, the guidelines issued by the Regional Tripartite Wages and
Productivity Boards (RTWPB) without approval of or, worse, contrary to those promulgated by the NWPC
are ineffectual, void, and cannot be the source of rights and privileges.

RA 6727 (the Wage Rationalization Act), amending the Labor Code, created both the NWPC and the
RTWPB and defined their respective powers. Article 121 of the Labor Code lists the powers and functions
of the NWPC, as follows: (c) To prescribe rules and guidelines for the determination of appropriate
minimum wage and productivity measures at the regional, provincial or industry levels; and (d) To review
regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these
are in accordance with prescribed guidelines and national development plans.

Article 122 of the Labor Code, on the other hand, prescribes the powers of the RTWPB thus: Art. 122.
Creation of Regional Tripartite Wages and Productivity Boards. The Regional Boards shall have the
following powers and functions in their respective territorial jurisdiction: (b) To determine and fix minimum
wage rates applicable in their region, provinces or industries therein and to issue the corresponding wage
orders, subject to guidelines issued by the Commission.

The applicable guidelines on exemption therefore is that one issued by the Commission dated February
25, 1991, the pertinent portion of which reads: Sec. 3. CRITERIA FOR EXEMPTION
 2. Distressed Employers/Establishment:
a. In the case of a stock corporation, partnership, single proprietorship or non-stock, non-
profit organization engaged in business activity or charging fees for its services.

When accumulated losses at end of the period under review have impaired by at least 25 percent
the:
— Paid-up-capital at the end of the last full accounting period preceding the application,
in the case of corporations;
— Total invested capital at the beginning of the last full accounting period preceding the
application, in the case of partnership and single proprietorships (Emphasis supplied)

DISPOSITIVE: WHEREFORE, the petition is hereby DISMISSED. The assailed Decisions are hereby
AFFIRMED. Costs against petitioners.

7. Metropolitan Bank and Trust Company v. NWPC (February 6, 2007)

FACTS: The Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan issued
Wage Order No. R-02-03. Section 1 of the Order states as follows:

Sec. 1. Upon effectivity of this Wage Order, all employees/workers in the private sector
throughout Region II, regardless of the status of the employment are granted an across the board
increase of Php 15.00 daily.

The Bankers’ Council for Personnel Management (BCPM), on behalf of its member banks, requested for
a ruling on the eligibility of establishments with head offices outside Region II to seek exemption from the
coverage of the Wage Order since its member banks are already paying more than the prevailing
minimum wage rate in the National Capital Region (NCR), which is their principal place of business.
NWPC denied such request, RTWPB clarifying that the wage order covers all private establishments.

Metropolitan Bank and Trust Company later filed a petition with the CA seeking for the nullification of the
WO on grounds that RTWPB acted beyond its authority in issuing the WO without any ceiling or
qualification and that the implementation of the WO will cause the petitioner, and other similarly situated
employers, to incur huge financial losses and suffer labor unrest. The CA denied the petition.

Petitioner maintains that the RTWPB, in issuing said Wage Order, exceeded the authority delegated to it
under R.A. No. 6727, which is limited to determining and fixing the minimum wage rate within their
respective territorial jurisdiction and with respect only to employees who do not earn the prescribed
minimum wage rate; that the RTWPB is not authorized to grant a general across-the-board wage increase
for non-minimum wage earners; that Employers Confederation of the Philippines v. National Wages and
Productivity Commission (hereafter referred to as "ECOP") is not authority to rule that respondents have
been empowered to fix wages other than the minimum wage since said case dealt with an across-the-
board increase with a salary ceiling, where the wage adjustment is applied to employees receiving a
certain denominated salary ceiling; that the Wage Order is an unreasonable intrusion into its property
rights; that the Wage Order undermines the essence of collective bargaining; that the Wage Order fails to
take into account the rationale for a unified wage structure.

ISSUE: WON the wage order is valid

RULING: No, the wage order is void.

It has been said that when the application of an administrative issuance modifies existing laws or exceeds
the intended scope, as in this case, the issuance becomes void, not only for being ultra vires, but also for
being unreasonable.
In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-wage
method" or the "salary-ceiling method" in issuing the Wage Order. Instead, it granted an across-the-board
wage increase of ₱15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its
authority by extending the coverage of the Wage Order to wage earners receiving more than the
prevailing minimum wage rate, without a denominated salary ceiling. As correctly pointed out by the OSG,
the Wage Order granted additional benefits not contemplated by R.A. No. 6727.

Thus, the Court finds that Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase
to employees earning more than the minimum wage rate; and pursuant to the separability clause of the
Wage Order, Section 1 is declared valid with respect to employees earning the prevailing minimum wage
rate.

Employees, other than minimum wage earners, who received the wage increase mandated by the Wage
Order need not refund the wage increase received by them since they received the wage increase in
good faith, in the honest belief that they are entitled to such wage increase and without any knowledge
that there was no legal basis for the same.

DOCTRINE:

R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wages and to promote
productivity-improvement and gain-sharing measures to ensure a decent standard of living for the
workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to
enhance employment generation in the countryside through industrial dispersal; and to allow business
and industry reasonable returns on investment, expansion and growth. In line with its declared policy,
R.A. No. 672740 created the NWPC, vested with the power to prescribe rules and guidelines for the
determination of appropriate minimum wage and productivity measures at the regional, provincial or
industry levels; and authorized the RTWPB to determine and fix the minimum wage rates applicable in
their respective regions, provinces, or industries therein and issue the corresponding wage orders,
subject to the guidelines issued by the NWPC.

In ECOP, the Court declared that there are two ways of fixing the minimum wage: the "floor-wage"
method and the "salary-ceiling" method. The "floor-wage" method involves the fixing of a determinate
amount to be added to the prevailing statutory minimum wage rates. On the other hand, in the "salary-
ceiling" method, the wage adjustment was to be applied to employees receiving a certain denominated
salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a
certain amount stated in the Wage Order) are also to be given a wage increase. (To illustrate: under the
"floor wage method", it would have been sufficient if the Wage Order simply set ₱15.00 as the amount to
be added to the prevailing statutory minimum wage rates, while in the "salary-ceiling method", it would
have been sufficient if the Wage Order states a specific salary, such as ₱250.00, and only those earning
below it shall be entitled to the salary increase.)

DISPOSITIVE: WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of the Court of
Appeals is MODIFIED. Section 1 of Wage Order No. R02-03 is declared VALID insofar as the mandated
increase applies to employees earning the prevailing minimum wage rate at the time of the passage of
the Wage Order and VOID with respect to its application to employees receiving more than the prevailing
minimum wage rate at the time of the passage of the Wage Order.

C. WAGE DISTORTION

D. PAYMENT OF WAGES

10. Commando Security v. NLRC (July 20, 1992)

FACTS: Private respondent Nemesio Decierdo was a security guard of the petitioner since February
1981. Petitioner entered into a contract to provide guarding services to the ALSONS at its Aldevinco
Building for a period of one year, unless renewed under such terms and conditions as may be mutually
acceptable. Decierdo was one of the guards assigned to the Aldevinco Building by the petitioner.

The Properties Administration Head of ALSONS, requested the petitioner for a "periodic reshuffling" of
guards. Pursuant to that reasonable request of its client, Decierdo was recalled from his present post ar
Aldenvico Building and on the same date, an order was issued assigning Decierdo to the Pacific Oil
Company which he refused to accept as he said he is going to rest for a while. On the effective date of
the detail order when he was supposed to report for his assignment, Decierdo filed a complaint for illegal
dismissal, unfair labor practice, underpayment of wages, overtime pay, night premium, 13 th month pay,
holiday pay, rest day pay and incentive leave pay.

The LA rendered a decision dismissing the complaint for illegal dismissal, unfair labor practice, OT pay
and night premium but ordering petitioner to pay complainant his salary, holiday and rest day pay
differentials, 13th month pay differentials and SIL pay. The NLRC affirmed the LA’s decision with
modification. Hence, this petition.

ISSUE:
1) WON Decierdo abandoned his employment as he went AWOL and therefore is considered resigned
2) WON petitioner was deinied due process, or right to be heard
3) WON petitioner is entitled to a 25% share of his monthly salary as agreed between them

RULING:

1) Yes. The NLRC found that Decierdo had given up his job and chose separation pay in lieu of
reinstatement. Suffice it to state that there was no need for the Executive Labor Arbiter to fix a period
within which to require complainant to report for work considering that the latter is no longer interested in
his job and had claimed for separation benefits in lieu of reinstatement. As a result, the NLRC dismissed
the charge of illegal dismissal and unfair labor practice against petitioner and denied the claim for
separation pay.

2) No. We have time and again pointed out that procedural due process merely requires notice and
opportunity to be heard which the petitioner was given then it filed its position paper. The petitioner even
took part in the conference for amicable settlement of the case, and was made aware of the charges but
failed to refute them expecting that there will be a full blown hearing, so the LA proceeded to decide the
case based on the parties’ position papers, records submitted by the petitioner, and the report and the
computations regarding the sums which Decierdo was entitled to recover. The LA may, in his sound
discretion, dispense with a hearing and require, instead, the parties to file their respective position papers
together with supporting proofs.

3) No, the provision of the employment contract was illegal and inequitous, hence, null and void.

As correctly ruled by the NLRC, respondent may not deduct its so-called "share" from the salaries of its
guards without the latter's express consent and if such deductions are not allowed by law. This is
notwithstanding any previous agreement or understanding between them. Any such agreement or
contract is void ab initio being contrary to law and public policy (Mercury Drug Co. vs. Nardo Dayao, G.R.
No. 30432, September 30, 1982)

The constitutional provisions on social justice (Sections 9 and 10, Article II) and protection to labor (Sec.
18, Article II) in the declaration of Principles and State Policies, impose upon the courts the duty to be
ever vigilant in protecting the rights of workers who are placed in a contractually disadvantaged position
and who sign waivers or provisions contrary to law and public policy.

E. 13TH MONTH PAY

13. Dole Philippines v. Leogardo (October 23, 1982)

FACTS: STANFILCO, a company merged with petitioner Dole Philippines, Inc., entered into a collective
bargaining agreement with the Associated Labor Union, ALU for short, effective for a period of three
years. The CBA provided, among others, the grant of a year-end productivity bonus to all workers within
the collective bargaining unit equivalent to ten (10) days of the worker’s basic daily wage if eighty percent
(80%) or more of the average total banana production for the two (2) preceding calendar years together
with the current year's estimate is attained. The 80% production level stated in Article XVII of said CBA
having been attained in 1975, the workers were paid the stipulated year-end productivity bonus on
December 11, 1975.

Shortly thereafter, or on December 16, 1975, Presidential Decree 851 took effect. Section 1 thereof
required all employers to pay their employees receiving a basic salary of not more than P1,000.00 a
month, regardless of the nature of their employment, a 13th month pay not later than December 24 of
every year. Section 2 of the law, however, exempted from its coverage those employers already paying
their employees a 13th month pay or its equivalent.

Section 3(c) of the Rules and Regulations Implementing the PD 851 provides that the term "its equivalent"
... shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses
amounting to not less than 1/12th of the basic salary but shall not include rash and stock dividends, cost
of living allowance and other allowances regularly enjoyed by the employee as well as non-monetary
benefits ... The rules further added that "where an employer pays less than 1/12th of the employee's basic
salary, the employer shall pay the difference."

To comply with the provision of P.D. 851 on the 13th month pay, STANFILCO paid its workers on
December 29, 1975 the difference between 1/12th of their yearly basic salary and their year-end
productivity bonus. In doing so, STANFILCO relied on Section 2 of the decree, as interpreted by the
MOLE's implementing rules. The same method of computation was followed in the payment of the year-
end productivity bonus and the 13th month pay for the years 1976, 1977 and 1978.

Questioning the procedure, ALU and STANFILCO technical employees as well as its rank and file
workers filed a complaint for unfair labor practice and non-implementation of the CBA provision. Oscar
Rabino, Oscar Serenuela, Raul Montejo and all the rank-and-file workers of STANFILCO instituted
another complaint charging the company with non-payment of the production incentive bonus for the
years 1975, 1976, 1977 and 1978.

The Regional Director of MOLE sustained respondents' position that the year-end productivity bonus,
being a contractual commitment, is separate and distinct from the 13th month pay and must, therefore, be
paid separately in full, ORDERING respondent to pay the bonuses under the CBA for the years 1975,
1976, 1977 and 1978.

On appeal, the Deputy Minister of Labor affirmed the order.

ISSUE: WON employers who are already paying their employees 13 th month pay or its equivalent are
expressly exempted by the law from its coverage

RULING: Yes.

In "National Federation of Sugar Workers versus Ovejera, et al.", to resolve the growing number of
controversies stemming from the interpretation of Section 2, PD No. 851, this Court in the above-cited
case, speaking thru Justice Plana, established definitely the legal equivalent of the 13th month pay in this
wise:
The evident intention of the law, as revealed by the law itself, was to grant an additional income in
the form of a 13th month pay to employees not already receiving the same. Otherwise put, the
intention was to grant some relief — not to all workers — but only to the unfortunate ones not
actually paid a 13th month salary or what amounts to it, by whatever name caned; but 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, and, in the latter case, regardless of the conditional character of the grant
(such as making the payment dependent on profit), so long as there is actual payment.
Otherwise, what was conceived to be a 13th month salary would in effect become a 14th or
possibly 15th month pay.”

It becomes clear that the year-end productivity bonus granted by petitioner to private respondents
pursuant to their CBA is, in legal contemplation, an integral part of their 13th month pay, notwithstanding
its conditional nature. When, therefore, petitioner, in order to comply with the mandate of PD No. 851,
credited the year-end productivity bonus as part of the 13th month pay and adopted the procedure of
paying only the difference between said bonus and 1/12th of the worker's yearly basic salary, it acted well
within the letter and spirit of the law and its implementing rules. For in the event that "an employer pays
less than one-twelfth of the employees' basic salary, all that said employer is required to do under the law
is to pay the difference."

WHEREFORE, this petition is hereby granted and, accordingly, the order of respondent Deputy Minister
of Labor, dated October 26, 1981, is set aside. No costs.

15. San Miguel Corporation v. Inciong (February 24, 1981)

FACTS: Cagayan Coca-Cola Free Workers Union, private respondent herein, filed a complaint against
San Miguel Corporation (Cagayan Coca-Cola Plant), petitioner herein, alleging failure or refusal of the
latter to include in the computation of 13th- month pay such items as sick, vacation or maternity leaves,
premium for work done on rest days and special holidays, including pay for regular holidays and night
differentials.

Regional Office No. X, where the complaint was filed, issued an order requiring herein petitioner "to pay
the difference of whatever earnings and the amount actually received as 13th month pay excluding
overtime premium and emergency cost of living allowance. "

On appeal, the Deputy Minister of Labor Amado G. Inciong affirmed the Order of Regional Office No. X.
Petitioner's motion for reconsideration having been denied, it filed the instant petition.

ISSUE: WON in the computation of the 13 th month pay under P.D. 851, payments for sick, vacation or
maternity leaves, premium for work done on rest days and special holidays, including pay for regular
holidays and night differentials should be considered

RULING: Petition is meritorious.

Section 1 of Presidential Decree 851 and provides:

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 the employment, a 13th-month pay not later than
December 24 of every year.

Section 2 of the Rules and Regulations for the implementation of Presidential Decree 851 provides:
a) Thirteenth-month pay shall mean one twelfth (1/12) of the basic salary of an employee within a
calendar year
b) Basic salary shall include all remunerations on 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.

Under the Rules and Regulations Implementing Presidential Decree 851, the following compensations are
deemed not part of the basic salary:
 a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letter of
Instructions No. 174;
b) Profit sharing payments;
c) All allowances and monetary benefits which are not considered or integrated as part of the
regular basic salary of tile employee at the time of the promulgation of the Decree on December
16, 1975.

Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as the
basis in the determination of his 13th-month pay. Any compensations or remunerations which are
deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus.

The all-embracing phrase "earnings and other renumeration" which are deemed not part of the basic
salary includes within its meaning payments for sick, vacation, or maternity leaves, maternity premium for
works performed on rest days and special holiday pays for regular holidays and night differentials. As
such they are deemed not part of the basic salary and shall not be considered in the computation of the
13th-month.

Overtime pay and special holiday pay are additional compensation other than and added to the basic
salary. Thus, it shall not be considered in the computation of the 13 th month pay.

WHEREFORE, the Orders of the Deputy Labor Minister are hereby set aside and a new one entered as
above indicated.

17. Boie-Takeda Chemicals v. Dela Serna (December 10, 1993)

FACTS: President Corazon C. Aquino promulgated Memorandum Order No. 28, which contained a single
provision modifying Presidential Decree No. 851 by removing the salary ceiling of P1,000.00 a month set
by the latter, as follows:
Section 1 of Presidential Decree No. 851 is hereby modified to the extent that all employers are
hereby required to pay all their rank-and-file employees a 13th month pay not later than
December 24, of every year.

Subsequently, the Revised Guidelines on the Implementation of the 13th Month Pay Law were
promulgated by then Labor Secretary Franklin Drilon, the relevant provision of which:
5. 13th Month Pay for Certain Types of Employees.
(a) Employees Paid by Results. — Employees who are paid on piece work basis are by law
entitled to the 13th month pay.
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.

G.R. No. 92174 (Boie-Takeda Chemicals v. Acting Secretary of the DOLE)

A routine inspection was conducted in the premises of petitioner Boie-Takeda Chemicals and found that
Boie-Takeda had not been including the commissions earned by its medical representatives in the
computation of their 13th month pay. A Notice of Inspection Results were issued requiring Boie-Takeda to
effect restitution or correction of "the underpayment of 13th month pay based on the Revised Guidelines
on the Implementation of 13th month pay # 5.

The Regional Director issued the same order. On appeal, then Acting Labor Secretary affirmed the Order
with modification that the sales commissions earned by Boie-Takeda's medical representatives before the
effectivity date of Memorandum Order No. 28 and its Implementing Guidelines, shall be excluded in the
computation of their 13th month pay. Hence the petition docketed as G.R. No. 92174.

G.R. No. 102552 (Philippine Fuji Xerox v. Undersec of DOLE, Philippine Fuji Xerox Employees Union)
A similar Routine Inspection was conducted in the premises of Philippine Fuji Xerox Corp.. The Notice of
Inspection Results noted the underpayment of 13th month pay of 62 employees, more or less. Philippine
Fuji Xerox was requested to effect rectification and/or restitution. The Regional Director issued the same
order of restitution. On appeal to the Office of the Secretary of Labor, it denied the appeal for lack of
merit. Hence, the petition in G.R. No. 102552, which was ordered consolidated with G.R. No. 92174 as
involving the same issue.

ISSUE: WON the respondent labor officials in computing the 13th month pay committed "grave abuse of
discretion amounting to lack of jurisdiction," by giving effect to Section 5 of the Revised Guidelines on the
implementation of the Thirteenth Month Pay

RULING: We rule for the petitioners.

Memorandum Order No. 28 merely "modified" Section 1 of the decree by removing the P1,000.00 salary
ceiling. Thus, the interpretation given to the term "basic salary" as defined in P.D. 851 applies equally to
"basic salary" under Memorandum Order No. 28.

In the case of San Miguel Corp. vs. Inciong, the basic salary of an employee is used as the basis in the
determination of his 13th month pay. Any compensations or remunerations which are deemed not part of
the basic pay is excluded as basis in the computation of the mandatory bonus.

The term "basic salary" is to be understood in its common, generally-accepted meaning, i.e., as a rate of
pay for a standard work period exclusive of such additional payments as bonuses and overtime. This is
how the term was also understood in the case of Pless v. Franks, which held that in statutes providing
that pension should not less than 50 percent of "basic salary" at the time of retirement, the quoted words
meant the salary that an employee (e.g., a policeman) was receiving at the time he retired without taking
into consideration any extra compensation to which he might be entitled for extra work.

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."

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.

WHEREFORE, the consolidated petitions are hereby GRANTED. The second paragraph of Section 5 (a)
of the Revised Guidelines 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

F. SERVICE CHARGE

G. NON-DIMINUTION

19. Servilla Trading Co. v. Semana (April 28, 2004)

FACTS: For 2 to 3 years, Servilla Trading added to the base figure in its computation of the 13 th month
pay of its employees, the amount of other benefits received which are beyond the basic pay. When it
changed its person in charge of the payroll in the process of computerizing its payroll, and after audit was
conducted, it allegedly discovered the error of including non-basic pay or other benefits in the base figure
used in the computation of the 13th-month pay of its employees. It excluded the other benefits which are
beyond the basic pay, hence, the new computation reduced the employees’ 13 th month pay.
The Union alleged that petitioner violated the rule prohibiting the elimination or diminution of employees’
benefits as provided for in Art. 100 of the Labor Code, as amended. They claimed that paid leaves, like
sick leave, vacation leave, paternity leave, union leave, bereavement leave, holiday pay and other leaves
with pay in the CBA should be included in the base figure in the computation of their 13th-month pay.
The Accredited Voluntary Arbitrator Semana of the National Conciliation and Mediation Board decided in
favor of the Union. On appeal, the CA dismissed the petition. Hence, this appeal.

ISSUE: WON the old computation of the 13 th month pay shall be upheld on the basis that it had ripened
into practice

RULING: Yes.

Petitioner failed to adduce any other relevant evidence to support its contention of mistake or error in the
computation of the 13th month pay despite the clarity of statute and jurisprudence at that time.

Distinguising from Globe Mackay Cable and Radio Corp. v. NLRC, the petitioner corporation increased its
COLA of its monthly paid employees. In answering the Union’s contention of company practice, the
payment in full by the petitioner of the COLA should not be construed as voluntary employer practice. The
grant by the employer of benefits through an erroneous application of the law due to absence of clear
administrative guidelines is not considered a voluntary act which cannot be unilaterally discontinued.

In the case at bar, as early as 1981, the Court already held in San Miguel v. Inciong, the Supplementary
Rules and Regulations Implementing Presidential Decree 851 declared that earnings and other
remunerations which are not part of the basic salary shall not be included in the computation of the 13th-
month pay. In the light of the clear ruling of this Court, there is, thus no reason for any mistake in the
construction or application of the law. By including over the years non-basic benefits of its employees in
the computation of the 13th-month pay, this may only be construed as a voluntary act on its part.

In Davao Fruits Corporation v. Associated Labor Unions, the petitioner therein continued its practice
of computing and paying the 13 th month pay without excluding the non-basic benefits after the
promulgation of the San Miguel decision and the Supplementary Rules and Regulations Implementing
P.D. No. 851 which puts rest all doubts in the computation of the 13 th month pay.

From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation the
non-basic benefits. The considerable length of time the questioned items had been included by petitioner
indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of mistake. A
company practice favorable to the employees had indeed been established and the payments made
pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being enjoyed
by the employees cannot be reduced, diminished, discontinued or eliminated by the employer, by virtue of
Sec. 10 of the Rules and Regulations Implementing P.D. No. 851, and Art. 100 of the Labor Code of the
Philippines which prohibit the diminution or elimination by the employer of the employees’ existing
benefits.

With regard to the length of time the company practice should have been exercised to constitute voluntary
employer practice which cannot be unilaterally withdrawn by the employer, we hold that jurisprudence has
not laid down any rule requiring a specific minimum number of years.

In the case at bar, petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid
leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at least
two (2) years. This, we rule likewise constitutes voluntary employer practice which cannot be unilaterally
withdrawn by the employer without violating Art. 100 of the Labor Code.

IN VIEW WHEREOF, the petition is DENIED.

21. Globe Mackay Cable v. NLRC (June 29, 1988)

FACTS: By virtue of Wage Order No. 6, which took effect on 30 October 1984, the cost-of-living
allowance of non-agricultural workers in the private sector was increased. Petitioner corporation by
multiplying the P 3.00 daily COLA by 22 days, which is the number of working days in the company.

Respondent Union disagreed and alleged that prior to the effectivity of Wage Order No. 6, Petitioner
Corporation had been computing and paying the monthly COLA on the basis of thirty (30) days per month
and that this constituted an employer practice, which should not be unilaterally withdrawn.

The Union filed a complaint against Petitioner Corporation for illegal deduction, underpayment, unpaid
allowances, and violation of Wage Order No. 6. Labor Arbiter sustained the position of Petitioner
Corporation that the monthly COLA should be computed on the basis of twenty two (22) days, since the
evidence showed that there are only 22 paid days in a month for monthly-paid employees in the
company.
To compel the respondent company to use 30 days in a month to compute the allowance and retain 22
days for vacation and sick leave, overtime pay and other benefits is inconsistent and palpably unjust.

On appeal, the NLRC reversed the Labor Arbiter and held that Petitioner Corporation was guilty of illegal
deductions and that the workers paid on a monthly basis are entitled to COLA on Saturdays, Sundays
and legal holidays "even if unworked;" that the full allowance enjoyed by Petitioner Corporation's monthly-
paid employees before the CBA executed between the parties in 1982 constituted voluntary employer
practice, which cannot be unilaterally withdrawn. Hence, this Petition.

ISSUE: WON the computation of COLA on the basis of 30 days per month constitutes a company
practice which should not be unilaterally withdrawn.

RULING: The Court is constrained to reverse the reversal.

The payment of COLA is mandated only for the days that the employees are paid their basic wage, even
if said days are unworked. As held in University of Pangasinan Faculty Union vs. University of
Pangasinan, the Court held the principle of 'No Pay, No ECOLA. Pursuant to the Collective Bargaining
Agreement (CBA) between Petitioner Corporation and Respondent Union, the monthly basic pay is
computed on the basis of five (5) days a week, or twenty two (22) days a month. The CBA is the law
between the parties and, if not acceptable, can be the subject of future re-negotiation.

Payment in full by Petitioner Corporation of the COLA before the execution of the CBA in 1982 and in
compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be construed as
constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner. To
be considered as such, it should have been practiced over a long period of time, and must be shown to
have been consistent and deliberate. It must be paid knowing fully well that it is not covered by the law.

Moreover, before Wage Order No. 4, there was lack of administrative guidelines for the implementation of
the Wage Orders. It was only when the Rules Implementing Wage Order No. 4 were issued on 21 May
1984 that a formula for the conversion of the daily allowance to its monthly equivalent was laid down.
Absent clear administrative guidelines, Petitioner Corporation cannot be faulted for erroneous application
of the law. Payment may be said to have been made by reason of a mistake in the construction or
application of a "doubtful or difficult question of law." Since it is a past error that is being corrected, no
vested right may be said to have arisen nor any diminution of benefit under Article 100 of the Labor Code
may be said to have resulted by virtue of the correction.

WHEREFORE, certiorari is granted, the Decision of the NLRC is SET ASIDE, and the Decision of the LA
is hereby REINSTATED.

23. Asis v. Minister of Labor (March 15, 1989)

FACTS: Petitioner was appointed as Legal Counsel of the Central Azucera de Pilar, and later was also
appointed as Head of its Manpower and Services Department. He was given basic salaries and granted a
200 liters of gas allowance and a small LPG tank every month. Some 5 years later, this was temporarily
revoked as a cost reduction measure of the Central.

The petitioner and other officials adversely affected moved for reconsideration but was denied. This lead
Asis to commence an action with MOLE seeking restoration of the monthly ration that were temporarily
suspended. He also filed an action for illegal dismissal complaining against the memorandum ordaining
his relief (by being placed on leave of absence).

The Regional Director ruled for petitioner’s reinstatement and the delivery of his monthly benefits. The
Deputy Minister of Labor reversed the decision on appeal. It found that the suspension of the ration was
caused by unavoidable financial constraints; that such a suspension did not in truth effect any significant
diminution of said benefits, since the petitioner was nevertheless entitled to reimbursement of the actual
amount of gas consumed; that petitioner had encouraged his co-employees to file complaints against the
Central over the rations issue and that under the circumstances, petitioner's discharge as the Central's
Legal Counsel and Head of the Manpower & Services Department was justified due to loss of confidence.

ISSUE: WON the removal of monthly ration of fuel benefit was valid? (YES)

RULING:As regards the temporary revocation of the petitioner's monthly ration of fuel, suffice it to point
out that, as the Solicitor General stresses, this bad been occasioned by unavoidable financial constraints.
The monthly ration was not a part of his basic salary and is not indeed found in any of the management
payroll vouchers pertinent to the petitioner. Moreover, the adverse consequences of the suspension of the
monthly rations had been largely if not entirely negated by the Central's undertaking to reimburse the
petitioner for his actual consumption of fuel during the period of suspension.

WHEREFORE, the petition is DISMISSED for lack of merit, with costs against petitioner.

25. Royal Plant Workers Union v. Coca Cola Brothers (April 15, 2013)

FACTS: Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in the

manufacture, sale and distribution of softdrink products. In each bottling plant, there are bottling
operators. In Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there are 12-
14 bottling operators who work for Bottle Line 2. All of them are male and they are members of the Royal
Plant Workers Union (ROPWU). In Bottling Line 1, 10 operators for each shift while in Bottline Line 2, 6 -7
operators per shift. Each shift has rotations of work and break time. Before September 2008, the rotation
is: after 2 1⁄2 hours of work, operators are given a 30-minute break and this goes on until the shift ends. In
Sept. 2008 up to the present, the rotation has changed and operators are now given a 30 minute break
after 1 1⁄2 hours of work.

In 1974, the operators of Bottling Line 2 were provided chairs upon request. In 1988, the operators of
Bottling Line 1 followed suit. In Sept 2008, the chairs were removed pursuant to a national directive of
CCBPI in line to the “I Operate, I Maintain, I Clean” program of CCBPI wherein the operators are given
the responsibility to keep the machinery and equipment assigned to him clean and safe. The program
focuses the duty of operators to constantly move in the exercise of their duties. Since they are expected
to constantly move, the operators no longer need a chair. Moreover, the removal of the chairs is
implemented so that operators would avoid sleeping in order to prevent personal injuries, since if they fall
asleep and the machines are moving, it might result to injury.

Through the ROPWU, they initiated a grievance machinery of the CBA in November 2008. Sadly, they
only reached a deadlock with CCBPI, insisting on the removal of the chairs. Thus, ROPWU initiated
arbitration proceedings.
Arbitration Committee decided in favor of ROPWU stating that the use of chairs by the operators had
been a company practice for 34 years in Bottling Line 2 and 20 years in Bottling Line 1 and that it ripened
into a benefit enjoyed by the employees, thus, it cannot be reduced by the employer under Article 100 of
the Labor Code.

CA reversed the Arbitration Decision. CA held that the removal of the chairs by the CCBPI is within the
province of management prerogatives and that it was part of his inherent right to control and manage its
enterprise effectively and was adopted as measure or means to optimize the efficiency of its employees.
The removal of the chairs was motivated by the best intentions. Hence, this appeal.

ISSUE: W/N the CCBPI’s decision to remove the chairs was valid

RULING: Yes. Petition is denied.

A valid exercise of management Prerogative

The chairs were not removed indiscriminately. They were carefully studied with due regard to the welfare
of the members of the Union. The removal of the chairs was compensated by a reduction of the operating
hours of the bottling operators and an increase of the break period. The decision to remove the chairs
was done with good intentions and was designed to increase work efficiency. Hence, CCBPI’s exercise of
its management prerogative was made in good faith without doing any harm to the workers’ rights.

No violation of Labor Laws

There is no law that requires employers to provide chairs for bottling operators. The CA correctly ruled
that the Labor Code, specifically Article 132 thereof, only requires employers to provide seats for women.
No similar requirement is mandated for men or male workers. It must be stressed that all concerned
bottling operators in this case are men. There was no violation either of the Health, Safety and Social
Welfare Benefit provisions as it was compensated by reduction of the working hours and increase in rest
period.

No violation of the CBA

The CBA expressly provides that benefits and/or privileges, not expressly given therein but which are
presently being granted by the company and enjoyed by the employees, shall be considered as purely
voluntary acts by the management and that the continuance of such benefits and/or privileges, no matter
how long or how often, shall not be understood as establishing an obligation on the company’s part. Since
the matter of the chairs is not expressly stated in the CBA, it is understood that it was a purely voluntary
act on the part of CCBPI and the long practice did not convert it into an obligation or a vested right in
favor of the Union.

No violation of the general principles of justice and fair play because their working hours were reduced,
and the break period was increased.

No violation of Article 100 of the Labor Code

The term "benefits" mentioned in the non-diminution rule refers to monetary benefits or privileges given to
the employee with monetary equivalents which form part of the employees’ wage, salary or compensation
making them enforceable obligations. The article speaks of non-diminution of supplements and other
employee benefits. Supplements are privileges given to an employee which constitute as extra
remuneration besides his or her basic ordinary earnings and wages. Article 100 involve mainly with
monetary considerations or privileges converted to their monetary equivalents.

Equating the provision of chairs to the bottling operators is something within the ambit of "benefits'' in the
context of Article 100 of the Labor Code is unduly stretching the coverage of the law.

WHEREFORE, the petition is DENIED.

H. WORKER’S PREFERENCE

I. ATTORNEY’S FEES