ECOP V NATIONAL WAGES AND PRODUCTIVITY COMMISSION & REGIONAL TRIPARTITE WAGES AND

PRODUCTIVITY BOARD-NCR, TRADE UNION CONGRESS OF THE PHILIPPINES

 The Orders of the Commission (as well as Wage Order No. NCR-01-A) are the subject of this petition, in
which, ECOP assails the board’s grant of an “across-the-board” wage increase to workers already being
paid more than existing minimum wage rates (up tp P125 a day) as an alleged excess of authority, and
alleges that under the RA 6727, the boards may only prescribe “minimum wages,” not determine “salary
ceilings”
 SC: We agree with the Sol Gen. In the National Wages and Productivity Commission’s Order, the
Commission noted that the determination of wages has generally involved in 2 methods – floor wage &
salary wage method.
o Floor wage method involves the fixing of determinate amount that would be added to the
prevailing statutory minimum wage
o Salary-ceiling method whereby the wage adjustment is applied to employees receiving a certain
denominated salary ceiling.
 Precisely, RA No. 6727 was intended to rationalize wages, first, by providing for full-time boards to
police wages round-the-clock, and second, by giving the boards enough powers to achieve this
objective.
 The Court is of the opinion that Congress meant the boards to be creative in resolving the annual
question of wages without labor and management knocking on the legislature’s door at every turn.
 The Court’s opinion is that if RA 6727 intended the boards alone to set floor wages, the Act would have
no need for a board but an accountant to keep track of the latest consumer price index, or better, would
have Congress done it as the need arises, as the legislature, prior to the Act, has done so for years.
 The fact of the matter is that the act sought “thinking” group of men and women bound by statutory
standards.

 The Court is not convinced that the Regional Board of the National Capital Region, in decreeing an
across-the board hike, performed an unlawful act of legislation.
 It is true that wage-fixing, like rate constitutes an act of Congress; it is also true, however, that Congress
may delegate the power to fix rates provided that, as in all delegations cases, Congress leaves sufficient
standards.

 It is the Court’s thinking, reached after the Court’s own study of the Act, that the Act is meant to
rationalize wages, that is, by having permanent boards to decide wages rather than leaving wage
determination to Congress year after year and law after law.
 The Court is not of course saying that the Act is an effort of Congress to pass the buck, or worse, to
abdicate its duty, but simply, to leave the question of wages to the expertise of experts.
FACTS: Hilaro Rada was employed by PhilNor in three separate renewals of “Contract of Employment for a
Definite Period” from 1977 to 1985, the third and last Contract having been extended for four years. He worked
as a driver for a North Luzon Extension construction project, which was repeatedly extended as well due to lack
in budgets (hence the renewals and extensions of his contract). In 1985, the phase of the project for which he
was hired having been finished, his employment was terminated. Now he claims illegal dismissal from Philnor
and claims separation pay as well as overtime pay.

ARGUMENT/S OF THE PETITIONER:

1. He was a regular employee entitled to security of tenure
2. He was not a project employee since Philnor is not engaged in the construction business as to be
covered by Policy Instructions No. 20
3. The contract of employment for a definite period executed between him and Philnor is against public
policy and a clear circumvention of the law designed merely to evade any benefits or liabilities under the
statute
4. His position as driver was essential, necessary and desirable to the conduct of the business of Philnor
5. He rendered overtime work until 6:00 p.m. daily except Sundays and holidays for a period of three
years and therefore, he was entitled to overtime pay

ARGUMENT/S OF THE RESPONDENT:

Rada already signed the "Personnel Clearance" form for P3,796.20 representing conversion to cash of unused
leave credits and financial assistance and also a "Release, Waiver and Quitclaim" which also released Philnor
from all obligations and/or claims. He did not render overtime work and neither did he demand for overtime
pay. He was not a regular employee, as he was merely employed during the duration of the phase of the
construction contract PhilNor was finishing.

RULING OF THE LOWER COURTS:

Labor Arbiter for Rada – reinstatement with overtime pay. His assigned task as driver was necessary and
desirable in the usual trade/business of the respondent employer, and having so worked for 8 years more or
less, he is entitled to tenure.
NLRC for PhilNor- reversed LA’s decision

ISSUES:
1. WON the NLRC erred in accepting the appeal of PhilNor despite its failure to post a supersedeas bond
within ten days of receipt of the LA’s decision -NO
2. WON the NLRC erred in upholding the termination of Rada -NO
3. WON Rada was entitled to overtime pay -YES

RATIO:
1. Despite being late, what was important was PhilNor did pay. The broader interests of justice and the
desired objective of resolving controversies on the merits demands that the appeal be given due course.
Art 221, Labor Code: "In any proceeding before the Commission or any of the Labor Arbiters, the rules of
evidence prevailing in Courts of law or equity shall not be controlling and it is the spirit and intention of this
Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to
ascertain the facts in each case speedily and objectively without regard to technicalities of law or procedure, all
in the interest of due process
 2. Quiwa v. PhilNor- upheld workers as project employees
Cartagenas, et al. vs. Romago Electric Company- upheld electrical contractors as project employees
Project employees, as distinguished from regular or non-project employees, are mentioned in section
281 of the Labor Code as those "where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee."
Project employees are those employed in connection with a particular construction project. Project
employees are not entitled to termination pay if they are terminated as a result of the completion of the project
or any phase thereof in which they are employed, regardless of the number of projects in which they have been
employed by a particular construction company. Moreover, the company is not required to obtain clearance
from the Secretary of Labor in connection with such termination.
The fact that Rada does not belong to a "work pool" from which the company would draw workers for
assignment to other projects at its discretion (as opposed to in-company groups of carpenters, laborers and
masons) means that he is merely a project worker.

3. It is usually the project driver who is tasked with picking up or dropping off his fellow employees. If
driving these employees to and from the project site is not really part of petitioner's job, then there
would have been no need to find a replacement driver to fetch these employees. But since the assigned
task of fetching and delivering employees is indispensable and consequently mandatory, then he is
doing overtime work and should be paid for such

RULING: NLRC decision upheld, except PhilNor ordered to pay Rada overtime pay.
NATIONAL DEVELOPMENT COMPANY vs. COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE
WORKERS UNION, respondents.

FACTS: At the National Development Co., a government-owned and controlled corporation, there were four
shifts of work. One shift was from 8 a.m. to 4 p.m., while the three other shifts were from 6 a.m. to 2 p.m;
then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In each shift, there was a one-hour mealtime
period, to wit: From (1) 11 a.m. to 12 noon for those working between 6 a.m. and 2 p.m. and from (2) 7 p.m.
to 8 p.m. for those working between 2 p.m. and 10 p.m.

(Petitioner does not want to pay for the 1 hour lunch time) The records disclose that although there was a
one-hour mealtime, petitioner nevertheless credited the workers with eight hours of work for each shift and
paid them for the same number of hours. However, since 1953, whenever workers in one shift were required
to continue working until the next shift, petitioner instead of crediting them with eight hours of overtime
work, has been paying them for six hours only, petitioner that the two hours corresponding to the mealtime
periods should not be included in computing compensation.

CIR: Mealtime should be counted in the determination of overtime work

ISSUE: WON mealtime breaks should be considered working time

HELD: YES
The legal working day for any person employed by another shall be of not more than eight hours daily. When
the work is not continuous, the time during which the laborer is not working and can leave his working place
and can rest completely shall not be counted. (Sec. 1, Com. Act No. 444)

It will be noted that, under the law, the idle time that an employee may spend for resting and during which he
may leave the spot or place of work though not the premises of his employer, is not counted as working time
only where the work is broken or is not continuous.

In this case, the CIR’s finding that work in the petitioner company was continuous and did not permit
employees and laborers to rest completely is not without basis in evidence and following our earlier rulings,
shall not disturb the same.

The time cards show that the work was continuous and without interruption. There is also the evidence
adduced by the petitioner that the pertinent employees can freely leave their working place nor rest
completely. There is furthermore the aspect that during the period covered the computation the work was on
a 24-hour basis and previously stated divided into shifts.

From these facts, the CIR correctly concluded that work in petitioner company was continuous and therefore
the mealtime breaks should be counted as working time for purposes of overtime compensation.
1. MINIMUM WAGE LAW; NON-WORKING HOURS, CONSTRUED; PERIOD NOT COUNTED IF
REQUISITES ARE COMPLIED WITH. — A laborer need not leave the premises of the factory,
shop or boat in order that his period of rest shall not be counted, it being enough that he "cease to
work", may rest completely and leave or may leave at his will the spot where he actually stays
while working, to go somewhere else, whether within or outside the premises of said factory, shop
or boat. If these requisites are complied with, the period of such rest shall not be counted.

2. ACTION TO RECOVER COMPENSATION FOR PAST OVERTIME WORK; ESTOPPEL AND

LACHES, NOT DEFENSES. — The principles of estoppel and laches cannot be invoked against
employees or laborers in an action for the recovery of compensation for past overtime work. In the first
place, it would be contrary to the spirit of the Eight Hour Labor Law, under which the laborers cannot
waive their right to extra compensation. In the second place, the law principally obligates the employer
to observe it, so much so that it punishes the employer for its violation and leaves the employee free
and blameless. In the third place, the employee or laborer is in such a disadvantageous position as to be
naturally reluctant or even apprehensive in asserting a claim which may cause the employer to devise a
way for exercising his right to terminate the employment. Moreover, an employee or laborer, who can
not expressly renounce the right to extra compensation under the Eight-Hour Labor Law, may be
compelled to accomplish the same thing by mere silence or lapse of time, thereby frustrating the
purpose of the law by indirection. (Manila Terminal Co. v. Court of Industrial Relations Et. Al., 91 Phil.,
625, 48 Off. Gaz. 2725.) However, there may be cases in which the silence of the employee or laborer
who lets the time go by for quite a long period without claiming or asserting his right to overtime
compensation may favor the inference that he may not have worked any such overtime or that his extra
work has been duly compensated, but this is not so in the case at bar.
3. OVERTIME PAY IN ARREARS RETROACTS TO THE DATE WHEN SERVICES WERE
ACTUALLY RENDERED. — The employee, in rendering extra services at the request of his
employer, has a right to assume that the latter has complied with the requirements of the law and
therefore has obtained the required permission from the Department of Labor (Gotamco Lumber
Co. v. Ct. 8 Industrial Relations, 85 Phil., 242, 47 Off. Gaz., 3421). Fear of possible unemployment
sometimes is a very strong factor that gags the workingman from demanding payment for such
extra services and it may take him months or years before he could be made to present a claim
against his employer. To allow the workingman to be compensated only from the date of the filing
of the petition with the court would be to penalize him for his acquiescence of silence which is
beyond the intent of the law. It is not just and humane that he should be deprived of what is
lawfully his under the law, for the true intendment of Commonwealth Act No. 444 is to compensate
the worker for services rendered beyond the statutory period and this should be made to retroact
to the date when such services were actually performed.

4. COURT OF INDUSTRIAL RELATIONS; NATURE AND POWERS OF; POWER TO MODIFY OR

ALTER JUDGMENT SO AS TO CONFORM WITH LAW AND EVIDENCE. — For procedural
purposes, the Court of Industrial Relations is a court with well-defined powers vested by the law
creating it with such other powers as generally pertain to a court of justice (Sec. 20, Com. Act. No.
103). As such, the general rule that before a judgment becomes final, the Court that rendered the
same may alter or modify it so as to conform with the law and the evidence, is applicable to the
Court of Industrial Relations (Connel Bros. Co. (Phil.) v. National Labor Union, G. R. No. L-3631,
prom. January 30, 1956).
LUSTEVECO V LUZON

FACTS: Luzon Marine Department Union filed a petition with the Court of Industrial Relations against
petitioner Luzon Stevedoring Co., Inc for full recognition of the right of COLLECTIVE bargaining, close
shop and check off. However, on July 18, 1948, while the case was still pending with the CIR, said labor
union declared a strike which was ruled down as illegal by the SC. In view of said ruling, the Union filed a
“Constancia” with the Court of Industrial Relations praying that the remaining unresolved demands of the
Union presented in their original petition, be granted.

One of those claims was that the work performed in excess of eight (8) hours he paid an overtime pay of
50 per cent the regular rate of pay, and that work performed on Sundays and legal holidays be paid double
the regular rate of pay.

TRIAL COURT: Petitioner gave said employees 3 free meals every day and about 20 minutes rest after
each mealtime; that they worked from 6:00 am. to 6:00 p.m. every day including Sundays and holidays, and
for work performed in excess of 8 hours, the officers, patrons and radio operators were given overtime
pay in the amount of P4 each and P2 each for the rest of the crew up to March, 1947, and after said date,
these payments were increased to P5 and P2.50, respectively, until the time of their separation or the
strike of July 19, 1948; that when the tugboats underwent repairs, their personnel worked only 8 hours a
day excluding Sundays and holidays; that although there was an effort on the part of claimants to show
that some had worked beyond 6:00 p.m., the evidence was uncertain and indefinite and that demand was,
therefore, denied; that respondent Company, by the nature of its business and as defined by law is
considered a public service operator by the Public Service Commission, and, therefore, exempt from paying
additional remuneration or compensation for work performed on Sundays and legal holidays.

CIR: Ruled that the 20 minutes’ rest given the claimants after mealtime should not be deducted from the 4
hours of overtime worked performed by said claimants

The company though insists that the rules on the 8 hours work of land based jobs should be different from
their seamen counterparts.

ISSUE: WON the rest periods given to the claimants (after each meal) should be deducted from their
overtime pay.

HELD: NO. The SC finds no reason to set for seamen a criterion different from that applied to laborers on
land.
Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor Law, provides:
SEC. 1. The legal working day for any person employed by another shall be of not more than eight hours
daily. When the work is not continuous, the time during which the laborer is not working AND CAN
LEAVE HIS WORKING PLACE and can rest completely, shall not be counted.
The only thing to be done is to determine the meaning and scope of the term “working place” used therein.
As We understand this term, a laborer need not leave the premises of the factory, shop or boat in
order that his period of rest shall not be counted, it being enough that he “cease to work”, may rest
completely and leave or may leave at his will the spot where he actually stays while working, to go
somewhere else, whether within or outside the premises of said factory, shop or boat. If these
requisites are complied with, the period of such rest shall not be counted.

In the case at bar We do not need to look into the nature of the work of claimant mariners to ascertain the
truth of petitioners allegation that this kind of seamen have had enough “free time”, a task of which we are
relieved, for although after an ocular inspection of the working premises of the seamen affected in this
case, the TRIAL COURT declared in his decision that the Company gave the complaining laborers 3 free
meals a day with a recess of 20 minutes after each meal, this decision was specifically amended by the CIR,
wherein it held that the claimants herein rendered services to the Company from 6:00 a.m. to 6:00 p.m.
including Sundays and holidays, which implies either that said laborers were not given any recess at all,
or that they were not allowed to leave the spot of their working place, or that they could not rest
completely. And such resolution being on a question essentially of fact, this Court is now precluded to
review the same.
PRISCO

Facts: PRISCO Worker's Union (the union) filed with the CIR a petition praying that PRISCO be ordered to pay its present employees to pay
its present employees, claimants-members of the said Union, (1) their basic pay and at least 25 per cent additional compensation for one hour
overtime work they had previously rendered as security guards of petitioner, from April 17, 1953 to January 13, 1954, and (2) the additional
compensation of at least 25 per cent for the work they have been rendering on Sundays and legal holidays, from March 7, 1954 and on.

PRISCO filed an answer denying Union's claim and asserted that such overtime, if rendered, was not authorized; some claimants that had
rendered work in Sundays and legal holidays had already been paid; and that some claims have been withdrawn.

CIR - issued an order requiring petitioner to pay the claimants, members of the Union, their basic pay and 25 percent additional compensation
for one hour overtime work they had rendered from April 16, 1953 to January 13, 1954 (to the security guards). However, for lack of evidence
and some claimants withdrawing their claim for pay for work performed on Sundays and legal holidays, the court dismissed this second claim.

Petitioner filed for motion of reconsideration but was denied (3 voted for denial - 2 voted to set aside the order due to lack of jurisdiction by
the court)

Issues:
1) Whether the CIR has jurisdiction over the present claim
2) Whether the CIR correctly applied Articles 1393 and 1396 of the New Civil Code to the case

Held: CIR decision affirmed

Ratio:
1) In the case of PAFLU vs Tan, the CIR has jurisdiction over cases when: the dispute affects an industry which is indispensable in the national
interest and is so certified by the President to the industrial court, when the controversy refers to the minimum wage under the Minimum
Wage Law, when it involves hours of employment under the Eight-Hour Labor Law, and when it involves an unfair labor practice. In the case of
Detective and Protective Bureau Incorporated vs Felipe Guevarra, et al, the Court held that the CIR has jurisdiction inasmuch as the claimants
were all employees at the time of the filing of their claims.

One significant principle in determining CIR's jurisdiction is that where the employer-employee relationship is still existing or is sought to be
reestablished because of its wrongful severance, the CIR has jurisdiction over all claims arising out of, or in connection with employment. After
the termination of the relationship and no reinstatement is sought, such claims become mere money claims, and come within the jurisdiction of
the regular courts. In the present case, the claimants are, or at least were, at the time of presenting their claims, actually in the employ of
PRISCO, therefore the CIR correctly took cognizance of the case.

2) In this case, the security guards who were employed were divided into three shifts of 8 hours each. They received a memorandum from the
Assistant Chief Security Officer of PRISCO, directing them to reports for duty 2 hours in advance, until the order was revoked after a
change of management. Petitioner contends that the said memorandum was issued without authority and they are not bound to pay for the
alleged overtime.

CIR found that after the enforcement of the memorandum, the guards protested to the management and instead of revoking said memorandum
on the grounds that it was unauthorized, General Manager De la Cruz told the guards why it was being enforced, being a was to discipline them
and that their work was only light and that 1 hour is of no importance. CIR held that it amounted to a tacit ratification of the memorandum, and
applying Articles 1393 and 1396 of the New Civil Code, that any defect in the memorandum was corrected by that ratification. Petitioner urges
that these articles refer to voidable contracts.

SC states that a contract of employment exists between parties. When the guards were required to render an additional hour work, and
complying (non-compliance was punishable by disciplinary action), a supplemental contractual obligation was created both under the terms of the
original contract of employment and of the Eight-Hour Labor Law, that such additional work was to be compensated. The memorandum was
originally authorized and was not illegal to the extent of not being capable of ratification by the General manager. Therefore, the CIR
correctly applied Articles 1393 and 1396.
Philippine Inter-fashion

In January 1980, the Philippines Inter-Fashion, Inc. decided to retrench 40 employees due
to alleged lack of available work for employees. As a result, the labor union therein, the Philippine
Inter-Fashion Workers Union (affiliated with the National Federation of Labor Unions {NAFLU}),
staged a strike.
Philippines Inter-Fashion then filed a case of illegal strike against said employees.
In February 1980, the employees obtained a return to work order from the Minister of Labor. But
instead of being accepted back to work, Philippines Inter-Fashion locked them out. As a result, the
union filed a case of illegal lockout against Philippines Inter-Fashion.
In October 1980, 150 employees offered to voluntarily leave the strike and return back to work.
They were admitted back by Philippines Inter-Fashion. This leaves 114 employees still on strike.
Consequently, Philippines Inter-Fashion dropped its case of illegal strike against the 150
employees it re-admitted. However, it continued its case against the remaining 114 strikers.
Eventually, the National Labor Relations Commission (NLRC) ruled that Philippines Inter-Fashion
should re-admit the 114 remaining strikers and pay them three-months worth of backwages. The
NLRC ruled that since Philippines Inter-Fashion re-admitted the 150 striking employees, it had, in
effect, condoned the illegal strike committed by the remaining strikers.
ISSUE: Whether or not the re-admission of some strikers in an illegal strike operates as a
condonation of the illegal strike as a whole.
HELD: No. There is only condonation insofar as the admitted employees are concerned or in this
case, the 150 employees which were re-admitted by Philippines Inter-Fashion after said
employees voluntarily offered to leave the strike.
In this case, it was not disputed that the strike by the union was illegal (not clear in the facts as to
why it was illegal – it could be because there was no permit or that they continued to strike despite
the return to work order). The 150 employees offered to return to work and at the same time
withdrew their case of illegal lockout against their employer. On the other hand, Philippines Inter-
Fashion unconditionally accepted the offer of the employees, hence this operates as a condonation
on its part of the illegal strike done by the said 150 employees.
Such unconditional acceptance by Philippines Inter-Fashion does not include a condonation of the
illegal strike which the remaining 114 employees continued to take part in at that time.
However, since Philippines Inter-Fashion and the union are in pari delicto (both at fault), the status
quo prior to the illegal strike and illegal lockout must be sustained. Here, there was also a finding
that Philippines Inter-Fashion engaged in illegal lockout. Hence, the other 114 employees must be
reinstated but they are not entitled to backwages under the general rule that strikers are not
entitled to their salary (save in some instances not present in this case) and under the principle of
“no work, no pay”.
University of Pangasinan

Facts: Petitioner is a labor union composed of faculty members of the respondent University of Pangasinan, an
educational institution duly organized and existing by virtue of the laws of the Philippines.

The petitioner filed a complaint against the private respondent with the Arbitration Branch of the NLRC-
Dagupan City seeking: (a) the payment of Emergency Cost of Living Allowances (ECOLA) for November 7 to
December 5, 1981, a semestral break; (b) salary increases from the 60% of the incremental proceeds of increased
tuition fees; and (c) payment of salaries for suspended extra loads.

The petitioner’s members are full-time professors, instructors, and teachers of respondent University. The teachers
in the college level teach for a normal duration of 10 months a school year, divided into 2 semesters of 5 months
each, excluding the 2 months summer vacation. These teachers are paid their salaries on a regular monthly basis.
During the semestral break (Nov. 7- Dec. 5, 1981), they were not paid their ECOLA. The private respondent
claims that the teachers are not entitled thereto because the semestral break is not an integral part of the school
year and there being no actual services rendered by the teachers during said period, the principle of “No work, no
pay” applies.

During the same school year (1981-1982), the private respondent was authorized by the Ministry of Education
and Culture to collect, from its students a 15% increase of tuition fees. Petitioner’s members demanded a salary
increase effective the first semester of said schoolyear to be taken from the 60% percent incremental proceeds of
the said increased tuition fees as mandated by the PD 451. Private respondent refused.
WON PETITIONER’S MEMBERS ARE ENTITLED TO ECOLA DURING THE SEMESTRAL BREAK
FROM NOV. 7 – DEC. 5, 1981 OF THE 1981-82 SCHOOL YEAR.

WON 60% OF THE INCREMENTAL PROCEEDS OF INCREASED TUITION FEES SHALL BE DEVOTED
EXCLUSIVELY TO SALARY INCREASE,

1. Yes. According to various Presidential Decrees on ECOLAs “Allowances of Fulltime Employees . . .”

that “Employees shall be paid in full the required monthly allowance regardless of the number of their
regular working days if they incur no absences during the month. If they incur absences without pay, the
amounts corresponding to the absences may be deducted from the monthly allowance . . .”; and on “Leave
of Absence Without Pay”, that “All covered employees shall be entitled to the allowance provided herein
when they are on leave of absence with pay.”

The petitioner’s members are full-time employees receiving their monthly salaries irrespective of the number of
working days or teaching hours in a month. However, they find themselves in a situation where they are forced to
go on leave during semestral breaks. These semestral breaks are in the nature of work interruptions beyond the
employees’ control. As such, these breaks cannot be considered as absences within the meaning of the law for
which deductions may be made from monthly allowances. The “No work, no pay” principle does not apply in the
instant case. The petitioner’s members received their regular salaries during this period. It is clear from the
provision of law that it contemplates a “no work” situation where the employees voluntarily absent themselves.
Petitioners, in the case at bar, do not voluntarily absent themselves during semestral breaks. Rather, they are
constrained to take mandatory leave from work. For this they cannot be faulted nor can they be begrudged that
which is due them under the law.

The intention of the law is to grant ECOLA upon the payment of basic wages. Hence, we have the principle of “No pay, no
ECOLA” the converse of which finds application in the case at bar. Petitioners cannot be considered to be on leave without
pay so as not to be entitled to ECOLA, for, as earlier stated, the petitioners were paid their wages in full for the months of
November and December of 1981, notwithstanding the intervening semestral break.

Although said to be on forced leave, professors and teachers are, nevertheless, burdened with the task of working during a
period of time supposedly available for rest and private matters. There are papers to correct, students to evaluate, deadlines to
meet, and periods within which to submit grading reports. Although they may be considered by the respondent to be on leave,
the semestal break could not be used effectively for the teacher’s own purposes for the nature of a teacher’s job imposes upon
him further duties which must be done during the said period of time. Arduous preparation is necessary for the delicate task
of educating our children. Teaching involves not only an application of skill and an imparting of knowledge, but a
responsibility which entails self dedication and sacrifice. It would be unfair for the private respondent to consider these
teachers as employees on leave without pay to suit its purposes and, yet, in the meantime, continue availing of their services
as they prepare for the next semester or complete all of the last semester’s requirements.

Thus, the semestral break may also be considered as “hours worked.” For this, the teachers are paid regular
salaries and, for this, they should be entitled to ECOLA. The purpose of the law is to augment the income of
employees to enable them to cope with the harsh living conditions brought about by inflation; and to protect
employees and their wages against the ravages brought by these conditions

2. With regard to the second issue, under Section 3 of Presidential Decree 451, “no increase in tuition or
other school fees or charges shall be approved 60% of the proceeds is allocated for increase in salaries or
wages of the members of the faculty and all other employees of the school concerned, and the balance for
institutional development, student assistance and extension services, and return to investments: Provided,
That in no case shall the return to investments exceed twelve (12%) per centum of the incremental proceeds;
. . .”
Such allowances must be taken in resources of the school not derived from tuition fees.
If the school happen to have no other resources to grant allowances and benefits, either mandated by law or secured by
collective bargaining, such allowances and benefits should be charged against the return to investments referred.

The law is clear. The 60% incremental proceeds from the tuition increase are to be devoted entirely to wage or salary
increases which means increases in basic salary. The law cannot be construed to include allowances which are benefits over
and above the basic salaries of the employees. To charge such benefits to the 60% incremental proceeds would be to reduce
the increase in basic salary provided by law.
Law provides that 60% of tuition fee increase should go to wage increases and 40% to institutional developments, student
assistance, extension services, and return on investments. Framers of the law intended this portion (return on investments) of
the increases in tuition fees to be a general fund to cover up for the university’s miscellaneous expenses.

Petition for certiorari is GRANTED.

CEBU AUTOBUS CO., vs UNITED CEBU AUTOBUS EMPLOYEES ASSN.

FACTS: The company used to pay to its drivers and conductors, who were assigned outside of the City limits,
aside from their regular salary, a certain percentage of their daily wage, as allowance for food. Upon the
effectivity of the Minimum Wage Law, however, that privilege was stopped by the company. The order of CIR
to the company to continue granting this privilege, was upheld by this Court.

The shipping company argue that the furnishing of meals to the crew before the effectivity of Rep. Act No.
602, is of no moment, because such circumstance was already taken into consideration by Congress, when it
stated that “wage” includes the fair and reasonable value of boards customarily furnished by the employer to
the employees.

ISSUE: WON “wage” includes the fair and reasonable value of boards customarily furnished by the employer
to the employees.

HELD: No. If We are to follow the theory of the herein petitioners, then a crew member, who used to receive a
monthly wage of P100.00, before August 4, 1951, with no deduction for meals, after said date, would receive
only P86.00 monthly (after deducting the cost of his meals at P.40 per meal), which would be very much less
than the P122.00 monthly minimum wage, fixed in accordance with the Minimum Wage Law. Instead of
benefiting him, the law will adversely affect said crew member. Such interpretation does not conform with the
avowed intention of Congress in enacting the said law
Bankard

FACTS:
The issue started when Bankard implemented Manpower Rationalization Program (MRP), to further enhance
its efficiency and be more competitive in the credit card industry, invitating to the employees to tender th
eir voluntary resignation, with entitlement to separation pay. Thereafter, majority of one division availed of
the MRP. Thus, Bankard contracted an independent agency to handle its call center needs.

The Union filed before the NCMB its first Notice of Strike (NOS) alleging commission of unfair labor prac
tices by petitioner Bankard, Inc. . Labor Secretary of the DOLE issued the order certifying the labor dispu
te to the NLRC upon the Bankard’s request. The Union filed its second NOS the day after it declared deadl
ock, alleging bargaining in bad faith on the part of Bankard. Bankard then again asked the Office of the Se
cretary of Labor to assume jurisdiction, which was granted and certified the labor dispute to the NLRC.

ISSUE: Whether job contractualization or outsourcing or contracting-out is an unfair labor practice

considering there was no bad faith.
RULING: No. Aside from the bare allegations of the Union, nothing in the records strongly proves that Ban
kard intended its program, the MRP, as a tool to drastically and deliberately reduce union membership. Cont
rary to the findings and conclusions of both the NLRC and the CA, there was no proof that the program was
meant to encourage the employees to disassociate themselves from the Union or to restrain them from joi

ning any union or organization. There was no showing that it was intentionally implemented to stunt the grow
th of the Union or that Bankard discriminated, or in any way singled out the union members who had availed
of the retirement package under the MRP. True, the program might have affected the number of union me
mbership because of the employees’ voluntary resignation and availment of the package, but it does not nec
essarily follow that Bankard indeed purposely sought such result. It must be recalled that the MRP was
implemented as a valid cost-cutting measure, well within the ambit of the so-called management
prerogatives. Bankard contracted an independent agency to meet business exigencies. In the absence of
any showing that Bankard was motivated by ill will, bad faith or malice, or that it was aimed at interfering
with its employees’ right to self-organize, it cannot be said to have committed an act of unfair labor
practice. The Court has ruled that the prohibited acts considered as ULP relate to the workers’ right to
self-organization and to the observance of a CBA. It refers to “acts that violate the workers’ right to
organize.” Without that element, the acts, even if unfair, are not ULP. Thus, an employer may only be held
liable for unfair labor practice if it can be shown that his acts affect in whatever manner the right of his
employees to self-organize.
Law on unfair labor practices is not intended to deprive employers of their fundamental right to prescribe
and enforce such rules as they honestly believe to be necessary to the proper, productive and profitable op
eration of their business. Contracting out of services is an exercise of business judgment or management pr
erogative. Absent any proof that management acted in a malicious or arbitrary manner, the Court will not in
terfere with the exercise of judgment by an employer.

1. Wage orders 3, 4, 5 & 6 were implemented for a year which effectively icnreased the statutory minimum
wages of workers. In the private respondent's company (Franklin Baker Corp.) the wage rates of the
regular employees and casuals were such that there wasa positive differential between 2 in the amount of
P4.56. After Wage Order No. 5, this differential is not zero. As a result, grievance meetings were held
between the parties. It resulted to the following action on the part of the employer: a) regularization of
casual employees, b) increase in the wages of the regular employees, and the c) grant of across the board
increase of P2 to all the regular employees.

2. The company experienced output slowdown resulting to the dismissal of 205 employees. The petitioner
union went on strike and demand the rectification of the wage distortion. The NLRC in its decision found
the existence of a wage distortion and ordered the respondent company to increase wage by P1.00.
However, the NLRC Fifth division held (after an MR) that the wage distortion only existed for 15 days and
has ceased.

Issue: W/N it is within management prerogative or discretion to implement a new

classification of its employees

RULING: Yes. It is a decision that lies outside the concept of 'wage distortion.' It is a decision
that the company must make either in conjuction with employee negotiation. It is not therefore
within the power of the NLRC to impose unilaterally a new scheme for the classification of
employees under the guise of rectifying a wage distortion when none has been established either
by CBA or by management decision.

The court held that wage increases given by employers either unilaterally or as a result of
collective bargaining negotiations should be validated as an action on the part of the employer to
correct the wage distortion caused by the implementation of the wage orders.

Moreover, the regularization of the casual employees with the increases in the wages of the
regulars made the issue on wage distortion academic
Songco v NLRC

FACTS: Zuelig filed an application for clearance to terminate the services of Songco, and others, on the ground of retrenchment due
to financial losses. During the hearing, the parties agreed that the sole issue to be resolved was the basis of the separation pay due.
The salesmen received monthly salaries of at least P400.00 and commission for every sale they made.

The Collective Bargaining Agreements between Zuelig and the union of which Songco, et al. were members contained the following
provision: "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."

The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to their one month salary (exclusive of commissions,
allowances, etc.) for every year of service with the company.

The National Labor Relations Commission sustained the Arbiter.

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

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

Even if the commissions were in the form of incentives or encouragement, so that the salesman would be inspired to put a little more
industry on jobs particularly assigned to them, still these commissions are direct remunerations for services rendered which

contributed to the increase of income of the employee. Commission is the recompense compensation or reward of an agent, salesman,
executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or
on the profit to the principal. The nature of the work of a salesman and the reason for such type of remuneration for services
rendered demonstrate that commissions are part of Songco, et al's wage or salary.
The Court takes judicial notice of the fact that some salesmen do not receive any basic salary, but depend on commissions and
allowances or commissions alone, although an employer-employee relationships exists.

If the opposite view is adopted, i.e., that commissions do not form part of the wage or salary, then in effect, we will be saying that
this kind of salesmen do not receive any salary and, therefore, not entitled to separation pay in the event of discharge from
employment. This narrow interpretation is not in accord with the liberal spirit of the labor laws, and considering the purpose of
separation pay which is, to alleviate the difficulties which confront a dismissed employee thrown to the streets to face the harsh
necessities of life.

In Soriano vs. NLRC (155 SCRA 124), we held that the commissions also claimed by the employee (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 the petitioner [salesman]. Since the commissions in the present case were earned by actual transactions attributable
to Song, et al., these should be included in their separation pay. In the computation thereof, what should be taken into account is the
average commission earned during their last year of employment.
Ruga v NLRC

FACTS: Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned and
operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing business.They
were paid in percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent, 13% of
the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during the
fishing trip, otherwise, 10% of the total proceeds of the sale.

After some time, they were dismissed alleging that they sold some of their fish-catch at midsea to the prejudice of
private respondent. Consequently, they filed illegal dismissal case to the DOLE Arbitration Branch. De Guzman said that
there was no employer-employee relationship between them; rather it was a joint venture. After the parties failed to
reach an amicable settlement, the Labor Arbiter heard the case and dismissed the cases filed by the petitioners on
finding that it was really a joint venture. NLRC affirmed.

ISSUE: Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of
its owner-operator, De Guzman Fishing Enterprises, and if so, whether or not they were illegally dismissed from their
employment.

RULING:
Yes. From the four (4) elements of employer-employee relationship, the Court has generally relied on the so-called
right-of-control test where the person for whom the services are performed reserves a right to control not only the
end to be achieved but also the means to be used in reaching such end. According to the testimony of Alipio Ruga, they
are under the control and supervision of private respondent’s operations manager. Matters dealing on the fixing of the
schedule of the fishing trip and the time to return to the fishing port were shown to be the prerogative of private
respondent. While performing the fishing operations, petitioners received instructions via a single-side band radio from
private respondent’s operations manager who called the patron/pilot in the morning.

Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of private respondent virtually
resulting in their dismissal evidently contradicts private respondent’s theory of “joint fishing venture” between the
parties herein. A joint venture, including partnership, presupposes generally a parity of standing between the joint co-
venturers or partners, in which each party has an equal proprietary interest in the capital or property contributed and
where each party exercises equal lights in the conduct of the business. It would be inconsistent with the principle of
parity of standing between the joint co-venturers as regards the conduct of business, if private respondent would
outrightly exclude petitioners from the conduct of the business without first resorting to other measures consistent
with the nature of a joint venture undertaking, Instead of arbitrary unilateral action, private respondent should have
discussed with an open mind the advantages and disadvantages of petitioners’ action with its joint co-venturers if
indeed there is a “joint fishing venture” between the parties.
ATOK-BIG WEDGE MUTUAL BENEFIT ASSOC VS ATOK-BIG WEDGE MINING COMPANY

 Petitioner argues that to allow the deductions stipulated in the Agreement of October 29, 1952
from the minimum daily wage of P4 would be a waiver of the minimum wage fixed by the law
and hence null and void, since RA 602, Sec 20 provides that “no agreement or contract, oral or
written, to accept a lower wage or less than any other under this Act, shall be valid”. – An
agreement to deduct certain facilities received by the labourers is not a waiver of the minimum
wage. Wage, as defined by Sec 2 o RA 602, “includes the fair and reasonable value as
determined by the Sec of Labor, of board, lodging, or other facilities customarily furnished by the
employer to the employee” Thus, the law permits the deduction of such facilities from the
laborer’s minimum wage, as long as their value is “fair and reasonable”

 “Supplements” constitute extra remuneration or special privileges or benefits given to or

received by the labourers over and above their ordinary earnings or wages. Facilities are iems of
expense necessary for the laborer’s and his family’s existence and subsistence, so that by
express provision of the law, they form part of the wage and when furnished by the employer
are deductible therefrom since if they are not so furnished, the labourer would spend and pay
for them just the same. It is thus clear that the facilities mentioned in the agreement do not
come within the the term “supplements as used in Art. 19 of the Minimum Wage Law.
STATES MARINE CORP VS CEBU SEAMEN’S ASSOC INC

 It is argued that the food or meals given to the deck officers, marine engineers and unlicensed crew
members in question, were mere “facilities” which should be deducted from wages, and not
“supplements” which, according to said section 19, should not be deducted from such wages, because it
is provided therein: “Nothing in this Act shall deprive an employee of the right to such fair wage … or in
reducing supplements furnished on the date of enactment.” In the case of Atok-Big Wedge Assn. v. Atok-
Big Wedge Co., L-7349, July 19, 1955; 51 O.G. 3432, the two terms are defined as follows —

 “Supplements”, therefore, constitute extra remuneration or special privileges or benefits given to or

received by the laborers over and above their ordinary earnings or wages. “Facilities”, on the other hand,
are items of expense necessary for the laborer’s and his family’s existence and subsistence so that by
express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer are
deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the
same.

 Facilities may be charged to or deducted from wages. Supplements, on the other hand, may not be so
charged. Thus, when meals are freely given to crew members of a vessel while they were on the high seas,
not as part of their wages but as a necessary matter in the maintenance of the health and efficiency of the
crew personnel during the voyage, the deductions made therefrom for the meals should be returned to
them, and the operator of the coastwise vessels affected should continue giving the same benefit.

TRADERS ROYAL BANK VS NLRC & TRADERS ROYAL BANK UNION

 a bonus is “a gratuity or act of liberality of the giver which the recipient has no right to demand
as a matter of right” (Aragon v Cebu Portland) “It is something given in addition to what is
ordinarily received by or strictly due the recipient” The granting of a bonus is basically a
management prerogative which cannot be forced upon the employer “who may not be
obliged to assume the onerous burden of granting bonuses or other benefits aside from the
employee’s basic salaries or wages”
 The matter of giving them bonuses over and above their lawful salaries and allowances is
entirely dependent on the profits, if any, realized by the Bank from its operations during the past
year.
 The contention of he Union that the granting of bonuses to the employees had ripened into a
company practice that may not be adjusted to the prevailing financial condition of the Bank
has no legal and moral bases. Its fiscal condition having declined, the Bank may not be forced
to distribute bonuses which it can no longer afford to pay and, in effect, be penalized for its past
generosity to its employees.
 Private respondent’s contention that the decrease in the midyear and yer-end bonuses
constituted a diminution of the employees’ salaries, is not correct, for bonuses are not part of
labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave
benefits, which are provided by the Labor Code.
GAA VS CA - ISSUE: Whether or not salaries may be garnished.

Yes. Article 1708 of the Civil Code reads: The laborer’s wage shall not be subject to execution or attachment,
except for debts incurred for food, shelter, clothing and medical attendance.

Gaa’s functions as El Grande Hotel’s manager include “responsible for planning, directing, controlling, and
coordinating the activities of all housekeeping personnel”; “ensure the cleanliness, maintenance and
orderliness of all guest rooms, function rooms, public areas, and the surroundings of the hotel.” Gaa is a
responsibly placed employee and not a mere laborer. As such, Gaa is not receiving a laborer’s wage. She is
receiving salary.

In its broadest sense, the word “laborer” includes everyone who performs any kind of mental or physical
labor, but as commonly and customarily used and understood, it only applies to one engaged in some form
of manual or physical labor. That is the sense in which the courts generally apply the term as applied in
exemption acts, since persons of that class usually look to the reward of a day’s labor for immediate or
present support and so are more in need of the exemption than are other.

Article 1708 used the word “wages” and not “salary” in relation to “laborer” when it declared what are to be
exempted from attachment and execution. The term “wages” as distinguished from “salary”, applies to the
compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week,
month, or season, while “salary” denotes a higher degree of employment, or a superior grade of services,
and implies a position of office: by contrast, the term wages ” indicates considerable pay for a lower and less
responsible character of employment, while “salary” is suggestive of a larger and more important service.

Only wages, according to the law, are exempt from execution. Salaries may be subject to execution.
ECOP VV NWPC

Facts: Petitioners ECOP questioned the validity of the wage order issued by the RTWPB dated October
23, 1990 pursuant to the authority granted by RA 6727. The wage order increased the minimum wage
by P17.00 daily in the National Capital Region.

The wage order is applied to all workers and employees in the private sector of an increase of P 17.00
including those who are paid above the statutory wage rate. ECOP appealed with the NWPC but
dismissed the petition.

The Solicitor General in its comment posits that the Board upon the issuance of the wage order fixed minimum
wages according to the salary method. Petitioners insist that the power of RTWPB was delegated, through RA 6727,
to grant minimum wage adjustments and in the absence of authority, it can only adjust floor wages.

Issue: Whether or not the wage order issues by RTWPB dated October 23, 1990 is valid.

Ruling: The Court agrees with the Solicitor General. It noted that there are two ways in the determination of wage,
these are floor wage method and salary ceiling method. The floor wage method involves the fixing of determinate
amount that would be added to the prevailing statutory minimum wage while the salary ceiling method involves
where the wage adjustment is applied to employees receiving a certain denominated salary ceiling.

RA 6727 gave statutory standards for fixing the minimum wage.

ART. 124. Standards/Criteria for Minimum Wage Fixing — The regional minimum wages to be established by the
Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living
necessary for the health, efficiency and general well-being of the employees within the framework of the national
economic and social development program. In the determination of such regional minimum wages, the Regional
Board shall, among other relevant factors, consider the following:

(a) The demand for living wages; (j) The equitable distribution of income and wealth
along the imperatives of economic and social
(b) Wage adjustment vis-a-vis the consumer price development."
index;

(c) The cost of living and changes or increases

therein;

(d) The needs of workers and their families;

(e) The need to induce industries to invest in the

countryside;

(f) Improvements in standards of living;

(g) The prevailing wage levels;

(h) Fair return of the capital invested and capacity to

pay of employers;

(i) Effects of employment generation and family

income; and
METROPOLITAN BANK & TRUST vs. NLRC and METROPOLITAN BANK and TRUST COMPANY
1. LABOR LAW; NATIONAL LABOR RELATIONS COMMISSION; TERM "WAGE DISTORTION,"DEFINED. — The term
"wage distortion", under the Rules Implementing Republic Act 6727,is defined, thus: "(p) Wage Distortion
means a situation where an increase in prescribed wage rates results in the elimination or severe contraction
of intentional quantitative differences in wage or salary rates between and among employee groups in an
establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation."

2. FACTUAL FINDINGS THEREOF GENERALLY ACCORDED RESPECT AND FINALITY;EXCEPTIONS. — The issue of
whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain
employees, we agree, is, by and large, a question of fact the determination of which is the statutory function
of the NLRC. Judicial review of labor cases, we may add, does not go beyond the evaluation of the
sufficiency of the evidence upon which the labor officials' findings rest. As such, factual findings of the NLRC
are generally accorded not only respect but also nality provided that its decisions are supported by
substantial evidence and devoid of any taint of unfairness or arbitrariness.When, however, the members of
the same labor tribunal are not in accord on those aspects of a case, as in this case, this Court is well
cautioned not to be as so conscious inpassing upon the sufficiency of the evidence, let alone the conclusions
derived therefrom.

3. WAGE DISTORTION ACTUALLY EXISTS IN CASE AT BAR; ALL DOUBTS IN THE INTERPRETATION AND
IMPLEMENTATION OF LABOR LAWS MUST BE RESOLVED IN FAVOR OF LABOR. — In this case, the majority of the
members of the NLRC, as well as its dissenting member, agree that there is a wage distortion arising from the
bank's implementation of the P25 wage increase; they do differ, however, on the extent of the distortion that
can warrant the adoption of corrective measures required by the law. The"intentional quantitative
differences" in wage among employees of the bank has been set by the CBA to about P900 per month as of
01 January 1989. It is intentional as it has been arrived at through the collective bargaining process to which
the parties are thereby concluded. The Solicitor General, in recommending the grant of due course to the
petition, has correctly emphasized that the intention of the parties, whether the benets under a collective
bargaining agreement should be equated with those granted by law or not,unless there are compelling
reasons otherwise, must prevail and be given effect. In keeping then with the intendment of the law and the
agreement of the parties themselves, along with the often repeated rule that all doubts in the interpretation
and implementation of labor laws should be resolved in favor of labor, we must approximate an acceptable
quantitative difference between and among the CBA agreed work levels.

4. CORRECTION OF PAY SCALE STRUCTURE IN CASE OF WAGE DISTORTION,WARRANTED. — We, however, do

not subscribe to the labor arbiter's exacting prescription in correcting the wage distortion. Like the majority of
the members of the NLRC, we are also of the view that giving the employees an across-the-board increase of
P750 may not be conducive to the policy of encouraging "employers to grant wage and allowance
increases to their employees higher than the minimum rates of increases prescribed by statute or
administrative regulation," particularly in this case where both Republic Act 6727 and the CBA allow a credit
for voluntary compliance. We nd the formula suggested thenby Commissioner Bonto-Perez, which has also
been the standard considered by the Regional Tripartite Wages and Productivity Commission for the
correction of pay scale structures in cases of wage distortion, to well be the appropriate measure to balance
the respective contentions of the parties in this instance. We also view it as being just and equitable.

Minimum Wage = % x Prescribed = Distortion

——————-- Increased Adjustment
Actual Salary
NATIONAL FEDERATION OF LABOR, et.al. vs. NLRC ET AL DIGEST

ISSUE: WON an employer that was compelled to cease its operation because of the compulsory
acquisition by the government of its land for purposes of agrarian reform, is liable to pay separation pay
to its affected employees

HELD: NO

"ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installation of labor saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a
written notice on the workers and the Ministry of Labor and Employment at least one (1) month before
the intended date thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his
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 in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the separation pay
shall be equivalent to one (1) month pay or at least one-half () month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year."
It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction
of personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an
establishment nor a reduction of personnel as contemplated under the aforesaid article. When the
Patalon Coconut Estate was closed because a large portion of the estate was acquired by DAR
pursuant to CARP, the ownership of that large portion of the estate was precisely transferred to PEARA
and ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article
283 of the Labor Code is not applicable to the case at bench.

In other words, Article 283 of the Labor Code does not contemplate a situation where the closure of the
business establishment is forced upon the employer and ultimately for the benefit of the employees.

Capital and management sectors must also be protected under a regime of justice and the rule of law.
HONDA PHILS vs. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA 1

FACTS: The case stems from the Collective Bargaining Agreement (CBA) forged between petitioner Honda and
respondent union Samahan ng Malayang Manggagawa sa Honda (respondent union) which contained the
following provisions:

Section 3. 13th Month Pay

The COMPANY shall maintain the present practice in the implementation [of] the 13th month pay.

Section 6. 14th Month Pay

The COMPANY shall grant a 14th Month Pay, computed on the same basis as computation of 13th Month Pay.

Section 7. The COMPANY agrees to 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 the latter part of 1998, the parties started re-negotiations for the fourth and
fifth years of their CBA. When the talks between the parties bogged down, respondent union filed a Notice of Strike
on the ground of bargaining deadlock. Thereafter, Honda filed a Notice of Lockout. [To cut the story short,
Secretary assumed jurisdiction; second notice of strike; Sec. again assumed jurisdiction]

The management of Honda subsequently issued a memorandum 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 company’s 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.
Respondent union opposed the pro-rated computation of the bonuses in a letter. Honda sought the opinion of the
Bureau of Working Conditions (BWC) on the issue. BWC agreed with the pro-rata payment of the 13th month pay as
proposed by Honda.

The matter was brought before the Grievance Machinery in accordance with the parties’ existing CBA but when
the issue remained unresolved, it was submitted for voluntary arbitration, the latter invalidated Honda’s
computation. Motion for Partial Reconsideration by Honda denied. CA dismissed for lack of merit. Hence, this
petition for review.

ISSUE: WON the pro-rated computation of the 13th month pay and the other bonuses in question is valid and lawful.

HELD: The petition lacks merit.

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.8 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.9 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.
In some instances, however, the provisions of a CBA may become contentious, as in this case.
HONDA PHILS vs. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA 1

We agree with the findings of the arbitrator that the assailed CBA provisions are far from being unequivocal. A
cursory reading of the provisions will show that they did not state categorically whether the computation of the 13th
month pay, 14th month pay and the financial assistance would be based on one full month’s basic salary of the
employees, or pro-rated based on the compensation actually received. The arbitrator thus properly resolved the
ambiguity in favor of labor as mandated by Article 1702 of the Civil Code.11 The Court of Appeals affirmed the
arbitrator’s finding and added that the computation of the 13th month pay should be based on the length of
service and not on the actual wage earned by the worker.

Under the Revised Guidelines on the Implementation of the 13th month pay issued on November 16, 1987, the
salary ceiling of P1,000.00 under P.D. No. 851 was removed. It further 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 guidelines pertinently provides:

The “basic salary” of an employee for the purpose of computing the 13th month pay shall include all remunerations
or earnings paid by his employer for services rendered but does not include 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.
For employees receiving regular wage, we have interpreted “basic salary” to mean, not the amount actually
received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a
given calendar year.
The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or separation from
work. As the rules state, under these circumstances, an employee is entitled to a pay in proportion to the length of
time he worked during the year, reckoned from the time he started working during the calendar year.

Considering the foregoing, the computation of the 13th month pay should be based on the length of service and
not on the actual wage earned by the worker. In the present case, there being no gap in the service of the workers
during the calendar year in question, the computation of the 13th month pay should not be pro-rated but should be
given in full.

The memorandum dated November 22, 1999 which Honda issued shows that it was the first time a pro-rating
scheme was to be implemented in the company. That a full month payment of the 13th month pay is the
established practice at Honda is further bolstered by the affidavits executed by Feliteo Bautista and Edgardo
Cruzada. Both attested that when they were absent from work due to motorcycle accidents, and after they have
exhausted all their leave credits and were no longer receiving their monthly salary from Honda, they still received
the full amount of their 13th month, 14th month and financial assistance pay.

This, we rule likewise constitutes voluntary employer practice which cannot be unilaterally withdrawn by the
employer without violating Art. 100 of the Labor Code.

Petition Denied.
 RUGA V. NLRC

FACTS: Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned and operated by
private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing business with port and office at
Camaligan, Camarines Sur. Petitioners rendered service aboard said fishing vessel in various capacities, as follows: Alipio Ruga
and Jose Parma patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin, master fisherman;
Nicanor Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin, fishermen.

For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners were paid on
percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent. As agreed upon, they received
thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil
consumed during the fishing trip, otherwise, they received ten percent (10%) of the total proceeds of the sale. The patron/pilot,
chief engineer and master fisherman received a minimum income of P350.00 per week while the assistant engineer, second
fisherman, and fisherman-winchman received a minimum income of P260.00 per week.

On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private
respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the report that they sold some of
their fish-catch at midsea to the prejudice of private respondent. Petitioners denied the charge claiming that the same was a
countermove to their having formed a labor union and becoming members of Defender of Industrial Agricultural Labor
Organizations and General Workers Union (DIALOGWU) on September 3, 1983.

During the investigation, no witnesses were presented to prove the charge against petitioners, and no criminal charges were
formally filed against them.

Notwithstanding, private respondent refused to allow petitioners to return to the fishing vessel to resume their work on the same
day, September 11, 1983.

On September 22, 1983, petitioners individually filed their complaints for illegal dismissal and non-payment of 13th month pay,
emergency cost of living allowance and service incentive pay, with the then Ministry (now Department) of Labor and
Employment, Regional Arbitration Branch No. V, Legaspi City, Albay. They uniformly contended that they were arbitrarily dismissed
without being given ample time to look for a new job.

ISSUE/S: Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of its owner-
operator, De Guzman Fishing Enterprises, and if so, whether o r not they were illegally dismissed from their employment.

HELD: YES. We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that
are generally considered are the following (a) the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employer’s power to control the employee with respect to the means and methods by which
the work is to be accomplished. The employment relation arises from contract of hire, express or implied. In the absence of hiring,
no actual employer-employee relation could exist.

From the four (4) elements mentioned, We have generally relied on the so-called right-of-control test where the person for whom
the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching
such end. The test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the
right.

The case of Pajarillo vs. SSS, supra, invoked by the public respondent as authority for the ruling that a “joint fishing venture” existed
between private respondent and petitioners is not applicable in the instant case. There is neither right of control nor actual
exercise of such right on the part of the boat-owners in the Pajarillo case, where the Court found that the pilots therein are not
under the orders of the boat-owners as regards their employment; that they go out to sea not upon directions of the boat-owners,
but upon their own volition as to when, how long and where to go fishing; that the boat-owners do not in any way control the
crew-members with whom the former have no relationship whatsoever; that they simply join every trip for which the pilots allow
them, without any reference to the owners of the vessel; and that they only share in their own catch produced by their own
efforts.

WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned resolution of the National Labor Relations
Commission dated May 30, 1985 is hereby REVERSED and SET ASIDE. Private respondent is ordered to reinstate petitioners to their
former positions or any equivalent positions with 3-year backwages and other monetary benefits under the law. No
pronouncement as to costs.
Norma Mabeza vs NLRC

Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991, an inspection was
made by the DOLE at Hotel Supreme and the DOLE inspectors discovered several violations by
the hotel management. Immediately, the owner of the hotel, Peter Ng, directed his employees to
execute an affidavit which would purport that they have no complaints whatsoever against Hotel
Supreme.But Mabeza refused to certify said affidavit with the fiscal’s office so this led to her
dismissal. She sued Peter Ng and one of her complaints against him is underpayment because
her wage was less than the minimum wage. Peter Ng argued that the reason for such low payment
was because she was being given free lodging, water, electricity and water consumption by the
hotel.

ISSUE: Whether or not such amenities provided by the hotel be considered as facilities which
are deductible from Mabeza’s wage.

HELD: No. There are requisites before such can be done and they are:
1. Proof must be shown that such facilities are customarily furnished by the trade.
 2. The provision of deductible facilities must be voluntarily accepted in writing by
the employee.
3. Facilities must be charged at fair and reasonable value.

None of these were complied with in the case at bar. More significantly, the food and lodging, or
the electricity and water consumed by Mabeza were not facilities but supplements. A benefit or
privilege granted to an employee for the convenience of the employer is not a facility. The
criterion in making a distinction between the two not so much lies in the kind (food, lodging) but
the purpose. Considering, therefore, that hotel workers are required to work different shifts and
are expected to be available at various odd hours,their ready availability is a necessary matter in
the operations of a small hotel, such as Hotel Supreme.
Cebu Institute of Technology vs Ople as Minister of Labor and Employment, et al. 1

Facts: The case centers on the interpretation of section 3(a) of Pres. Decree No. 451 which states, “That
no increase in tuition or other school fees or charges shall be approved unless sixty (60%) per centum of
the proceeds is allocated for increase in salaries or wages of the members of the faculty and all other
employees of the school concerned, and the balance for institutional development, student assistance
and extension services, and return to investments.”

On September 11, 1982, Batas Pambansa Blg. 232 (Education Act of 1982) was promulgated,
stating “Each private School shall determine its rate of tuition and other school fees or charges. The
rates and charges adopted by schools pursuant to this provision shall be collectible, and their
application or use authorized subject to rules and regulations promulgated by the Ministry of Education,
Culture and Sports.”

In a nutshell, the present controversy was precipitated by the claims of some school personnel for
allowances and other benefits and the refusal of the private schools concerned to pay said allowances
and benefits on the ground that said items should be deemed included in the salary increases they had
paid out of the 60% portion of the proceeds from tuition fee increases provided for in PD 451. They are
assailing the rules and regulations promulgated by the Ministry of Education, Culture, and Sports, which
deviates from the provisions of such law. section 3 (a) of Pres. Decree No. 451.
Petitioner: The line of reasoning of the petitioner appears to be based on the major premise that under
said decree and rules, 60% of the incremental proceeds from tuition fee increases may be applied to
salaries, allowances and other benefits of teachers and other school personnel. In support of this major
premise, petitioner cites various implementing rules and regulations of the then Minister of Education,
Culture and Sports, to the effect that 60% of the incremental proceeds may be applied to salaries,
allowances and other benefits for members of the faculty and other school personnel.

Respondents: The Solicitor General, on the other hand, argues in support of the Order of the public
respondent that Pres. Dec. No. 451 allocates the 60% proceeds of tuition fee increases exclusively for
salary increases of teachers and non- teaching supportive personnel of the school concerned, and that
the Decree does not provide that said salary increases would take the place of the COLA. Public
respondents Deputy Minister of Labor and Employment and Regional Director of the MOLE (Region V)
likewise attack the validity of the Revised Implementing Rules and Regulations of Pres. Dec. No. 451
cited by the petitioner insofar as said rules direct the allotment of the 60% of incremental proceeds from
tuition fee hikes for retirement plan, faculty development and allowances. They argue that said rules
and regulations were invalid for having been promulgated in excess of the rule-making authority of the
then Minister of Education under Pres. Dec. No. 451 which mandates that the 60% of incremental
proceeds from tuition fee hikes should be allotted solely for salary increases.
Cebu Institute of Technology vs Ople as Minister of Labor and Employment, et al. 2

Issues:
1. Whether or not the implementing rules and regulations promulgated by MECS pursuant to PD 451 is
valid.
2. Whether or not the implementing rules and regulations promulgated by MECS pursuant to BP232 is
valid.

Held:
1. No. The alleged implementing rules and regulations promulgated by the then MECS to the effect that
allowances and other benefits may be charged against the 60% portion of the proceeds of tuition fee
increases provided for in Section 3(a) of Pres. Dec. No. 45 1, suffice it to say that these were issued ultra
vires, and therefore not binding upon this Court.
The rule-making authority granted by Pres. Dec. No. 451 is confined to the implementation of the
Decree and to the imposition of limitations upon the approval of tuition fee increases, to wit:

SEC. 4. Rules and Regulations. — The Secretary of Education and Culture is hereby
authorized, empowered and directed to issue the requisite rules and regulations for the
effective implementation of this Decree. He may, in addition to the requirements and
limitations provided for under Sections 2 and 3 hereof, impose other requirements and
limitations as he may deem proper and reasonable.
The power does not allow the inclusion of other items in addition to those for which 60% of the proceeds
of tuition fee increases are allocated under Section 3(a) of the Decree.
Rules and regulations promulgated in accordance with the power conferred by law would have the
force and effect of law if the same are germane to the subjects of the legislation and if they conform
with the standards prescribed by the same law. Since the implementing rules and regulations cited by
the private schools adds allowances and other benefits to the items included in the allocation of 60% of
the proceeds of tuition fee increases expressly provided for by law, the same were issued in excess of
the rule-making authority of said agency, and therefore without binding effect upon the courts. At best
the same may be treated as administrative interpretations of the law and as such, they may be set
aside by this Court in the final determination of what the law means.

2. Yes. The statutory grant of rule-making power to administrative agencies like the Secretary of
Education is a valid exception to the rule on non-delegation of legislative power provided two
conditions concur, namely: 1) the statute is complete in itself, setting forth the policy to be executed by
the agency, and 2) said statute fixes a standard to which the latter must conform.

Given the abovementioned policies and objectives, there are sufficient standards to guide the Minister
of Education in promulgating rules and regulations to implement the provisions of the Education Act of
1982, As in the Ericta and Tablarin cases, there is sufficient compliance with the requirements of the non-
delegation principle.
ISAE vs. QUISUMBING

FACTS: Private respondent International School, Inc. is a domestic educational institution

established primarily for dependents of foreign diplomatic personnel and other temporary
residents. To enable the School to continue carrying out its educational program and improve
its standard of instruction, the School hires both foreign and local teachers as members of its
faculty, classifying the same into two: (1) foreign-hires and (2) local-hires.

The School grants foreign-hires certain benefits not accorded local-hires. These include
housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires
are also paid a salary rate twenty-five percent (25%) more than local-hires. Petitioner claims
that the point-of-hire classification employed by the School is discriminatory to Filipinos and
that the grant of higher salaries to foreign-hires constitutes racial discrimination.

ISSUE: Whether there is indeed a discrimination thus a violation of Equal Protection Clause.

HELD: Public policy abhors inequality and discrimination. The Constitution directs the State to
promote “equality of employment opportunities for all.” Similarly, the Labor Code provides
that the State shall “ensure equal work opportunities regardless of sex, race or creed.”
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135,
for example, prohibits and penalizes the payment of lesser compensation to a female
employee as against a male employee for work of equal value. Article 248 declares it an
unfair labor practice for an employer to discriminate in regard to wages in order to encourage
or discourage membership in any labor organization. The foregoing provisions impregnably
institutionalize in this jurisdiction the long honored legal truism of “equal pay for equal
work.” Persons who work with substantially equal qualifications, skill, effort and responsibility,
under similar conditions, should be paid similar salaries. This rule applies to the School, its
“international character” notwithstanding. In this case, employees should be given equal pay
for work of equal value. That is a principle long honored in this jurisdiction. That is a principle
that rests on fundamental notions of justice. That is the principle we uphold today.
SMTFM-UWP vs. NLRC

1.LABOR AND SOCIAL LEGISLATION; LABOR CODE; LABOR RELATIONS; COLLECTIVE BARGAINING
AGREEMENT; WHERE A PROPOSAL RAISED BY A CONTRACTING PARTY DOES NOT FIND PRINT IN THE
COLLECTIVE BARGAINING AGREEMENT, IT IS NOT A PART THEREOF AND THE PROPONENT HAS NO CLAIM
WHATSOEVER TO ITS IMPLEMENTATION; CASE AT BAR. — The CBA is the law between the contracting
parties

— the collective bargaining representative and the employer-company. Compliance with a CBA is
mandated by the expressed policy to give protection to labor. In the same vein, CBA provisions should
be "construed liberally rather than narrowly and technically, and the courts must place a practical and
realistic construction upon it, giving due consideration to the context in which it is negotiated and
purpose which it is intended to serve." This is founded on the dictum that a CBA is not an ordinary
contract but one impressed with public interest. It goes without saying, however, that only provisions
embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a
contracting party does not find print in the CBA, it is not a part thereof and the proponent has no claim
whatsoever to its implementation.

2. EXECUTION OF COLLECTIVE BARGAINING AGREEMENT IS PROOF OF GOOD FAITH BARGAINING; CASE

AT BAR. — With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of
the parties thereto. All provisions in the CBA are supposed to have been jointly and voluntarily
incorporated therein by the parties. This is not a case where private respondent exhibited an indifferent
attitude

towards collective bargaining because the negotiations were not the unilateral activity of petitioner
union. The CBA is proof enough that private respondent exerted "reasonable effort at good faith
bargaining."

3. WAGE DISTORTION; IS A QUESTION OF FACT THAT IS WITHIN THE JURISDICTION OF THE QUASI-JUDICIAL TRIBUNALS;
CASE AT BAR. — The issue of whether or not a wage distortion exists is a question of fact that is within the jurisdiction
of the quasi-judicial tribunals below. Factual findings of administrative agencies are accorded respect and even
finality in this Court if they are supported by substantial evidence. Thus, in Metropolitan Bank and Trust Company,
Inc. v. NLRC, the Court said: "The issue of whether or not a wage distortion exists as a consequence of the grant of a
wage increase to certain employees, we agree, is, by and large, a question of fact the determination of which is
the statutory function of the NLRC. Judicial review of labor cases, we may add, does not go beyond the evaluation
of the sufficiency of the evidence upon which the labor officials' findings rest. As such, the factual findings of the
NLRC are generally accorded not only respect but also finality provided that its decisions are supported by
substantial evidence and devoid of any taint of unfairness or arbitrariness. When, however, the members of the
same labor tribunal are not in accord on those aspects of a case, as in this case, this Court is well cautioned not to
be as so conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived therefrom.
Unlike in above-cited case where the Decision of the NLRC was not unanimous, the NLRC Decision in this case
which was penned by the dissenter in that case, Presiding Commissioner Edna Bonto-Perez, unanimously ruled that
no wage distortions marred private respondent's implementation of the wage orders.