LABOR STANDARDS deviating from a promising career path-all

for the purpose of pursuing his profession as

WAGE AND WAGE RATIONALIZATION ACT
an educator, but this time in a foreign land.
23) INTERNATIONAL SCHOOL VS. b. Limited tenure: He will eventually and
QUISUMBING, JUNE 1, 2000 inevitably return to his home country where
he will have to confront the uncertainty of
International School Alliance of Educators v.
obtaining suitable employment after a long
Quisumbing
period in a foreign land.
Doctrine: The basic test of an asserted bargaining unit's
c. The School explains further that: The
acceptability is whether or not it is fundamentally the
compensation scheme is simply the School's
combination which will best assure to all employees the
adaptive measure to remain competitive on
exercise of their collective bargaining rights.
an international level in terms of attracting
competent professionals in the field of
FACTS:
international education.
1. International School pursuant to PD 732 is a
6. When negotiations for a new collective bargaining
domestic educational institution established
agreement were held on June 1995, International
primarily for dependents of foreign diplomatic
School Alliance of Educators (ISAE), a legitimate
personnel and other temporary residents. Sec. 2(c)
labor union and the collective bargaining
of said PD authorizes the School to employ its own
representative of all faculty members of the School,
teaching and management personnel selected by it
contested the difference in salary rates between
either locally or abroad, from Philippine or other
foreign and local hires.
nationalities.
2. The school hires both foreign and local teachers as
ISSUE:
members of its faculty, classifying the same into
WON the point-of-hire classification employed by the
two: foreign hires and local hires.
school is discriminatory to Filipinos. - YES.
3. The School employs four tests to determine
whether a faculty member should be classified as a
WON the foreign hires and the local hires can be
foreign or local hire:
grouped together for the purpose of collective
a. What is one’s domicile?
bargaining? – NO
b. Where is one’s home economy?
c. To which country does one owe economic
HELD:
allegiance?
1. Public policy abhors inequality and discrimination.
d. Was the individual hired abroad specifically
The Constitution, Article 19 of the Civil Code,
to work in the School and was the School
General Principles of law such as principles of
responsible for bringing that individual to
equity, The Universal Declaration of Human
the Philippines?
Rights, the International Covenant on Economic,
4. Should the answer to any of these queries point to
Social, and Cultural Rights, the International
the Philippines, the faculty member is classified as
Convention on the Elimination of All Forms of
a local hire; otherwise, he or she is deemed a
Racial Discrimination, the Convention against
foreign hire.
Discrimination in Education, the Convention (No.
5. The School grants foreign hires certain benefits not
111) Concerning Discrimination in Respect of
accorded local hires: housing, transportation,
Employment and Occupation — all embody the
shipping costs, taxes, home leave travel allowance
general principle against discrimination, the
and a salary rate of 25% more than local hires. The
very antithesis of fairness and justice. Similarly, the
school justifies the difference on 2 “significant
Constitution, the Labor Code and the International
economic disadvantages” foreign hires have to
Covenant on Economic, Social, and Cultural
endure: dislocation factor and limited tenure.
Rights impregnably institutionalize in this
a. The "dislocation factor": Would need to
jurisdiction the long honored legal truism of
uproot himself from his home country, leave
"equal pay for equal work."
his family and friends, and take the risk of
2. 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.
3. The School contends that petitioner has not
adduced evidence that local-hires perform work
equal to that of foreign-hires.
a. The argument is without merit. If an
employer accords employees the same
position and rank, the presumption is that
these employees perform equal work. The
employer in this case has failed to discharge
this burden. There is no evidence that
foreign- hires perform 25% more efficiently
or effectively than the local-hires. Both
groups have similar functions and
responsibilities, which they perform under
similar working conditions.
b. Salaries should not be used as an enticement
to the prejudice of local-hires. The local-
hires perform the same services as foreign-
hires and they ought to be paid the same
salaries as the latter. The dislocation factor
and limited tenure affecting foreign-hires are
adequately compensated by certain benefits
which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes
and home leave travel allowances.
4. In this case, the point-of-hire classification
employed by Int’l School to justify the distinction
in the salary rates of foreign-hires and local hires is
an invalid classification. There is no reasonable
distinction between the services rendered by
foreign-hires and local-hires. The practice of the
School of according higher salaries to foreign-hires
contravenes public policy.
5. As for bargaining unit, foreign hires do not belong
to the same bargaining unit as the local hires.
6. A bargaining unit is "a group of employees of a
given employer, comprised of all or less than all of
the entire body of employees, consistent with
equity to the employer indicate to be the best suited
to serve the reciprocal rights and duties of the
parties under the collective bargaining provisions
of the law.
7. The factors in determining the appropriate
collective bargaining unit are
a. the will of the employees (Globe Doctrine)
b. affinity and unity of the employees' interest,
such as substantial similarity of work and
duties, or similarity of compensation and
working conditions (Substantial Mutual
Interests Rule)
c. prior collective bargaining history; and
d. similarity of employment status
8. The basic test of an asserted bargaining unit's
acceptability is whether or not it is
fundamentally the combination which will best
assure to all employees the exercise of their
collective bargaining rights
9. It does not appear that foreign-hires have indicated
their intention to be grouped together with local-
hires for purposes of collective bargaining. The
collective bargaining history in the School also
shows that these groups were always treated
separately. Foreign-hires have limited tenure;
local-hires enjoy security of tenure. Although
foreign-hires perform similar functions under the
same working conditions as the local-hires,
foreign-hires are accorded certain benefits not
granted to local-hires. These benefits, such as
housing, transportation, shipping costs, taxes, and
home leave travel allowance, are reasonably related
to their status as foreign-hires, and justify the
exclusion of the former from the latter. To include
foreign-hires in a bargaining unit with local-hires
would not assure either group the exercise of their
respective collective bargaining rights.
24) METROBANK VS. NLRC, SEPTEMBER 10,
1993
Metropolitan Bank & Trust Company Employees
Union-ALU-TUCP vs. National Labor Relations
Commission, 226 SCRA 268 , September 10, 1993
Labor Law; National Labor Relations Commission;
Wages; The issue of whether or not a wage distortion
exists as a consequence of the grant of a wage increase to
certain employees is a question of fact the determination
of which is the statutory function of the NLRC.—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 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.
Same; Same; Same; Same; In mandating an adjustment,
the law did not require that there be an elimination or total
abrogation of quantitative wage or salary differences, a
severe contraction thereof is enough.—The definition of
“wage distortion,” aforequoted, shows that such distortion
can so exist when, as a result of an increase in the
prescribed wage rate, an “elimination or severe
contraction of intentional quantitative differences in wage
or salary rates” would occur “between and among
employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage
structure based on skills, length of service, or other logical
bases of differentiation.” In mandating an adjustment, the
law did not require that there be an elimination or total
abrogation of quantitative wage or salary differences; a
severe contraction thereof is enough. As has been aptly
observed by Presiding Commissioner Edna Bonto-Perez
in her dissenting opinion, the contraction between
personnel groupings comes close to eighty-three (83%),
which cannot, by any stretch of imagination, be
considered less than severe.
Same; Same; Same; Same; Same; The Solicitor General
has correctly emphasized that the intention of the parties,
whether the benefits 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.—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 benefits 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.
DIGEST:
Metrobank Union vs NLRC
G.R. No. 102636
VITUG, J.:p
Facts:
Metrobank entered into a CBA with Petitioner,
granting a P900 increase in wages. Subsequently, a law
was passed increasing the minimum wage. Metrobank
classified employees into those receiving less than 100
per day and those receiving more. Those receiving more
were not covered by the implementation of the new law
but only the increase as agreed upon in the CBA.
Petitioners argue that the method of implementation
created a wage distortion within the employees of
Metrobank because the differences in the salaries of the
employee classifications were substantially reduced.
Issue:
Whether or not there was wage distortion?
Held:
There was wage distortion.
Ratio Decidendi:
Wage Distortion means a situation where an
increase in prescribed wage rates results in the elimination
or severe contradiction 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.
25) BANKARD VS. NLRC, FEBRUARY 17, 2004
Facts: Bankard, Inc. classifies its employees by levels, to
wit: Level I, Level II,
Level III, Level IV, Level V. On November 28, 1993, its
Board of Directors approved a “New Salary Scale” , made
retroactive to April 1, 1993, for the purpose of making its
hiring rate competitive in the industry’s labor market.
Bankard’s move drew the Bankard Employees
Union_WATU, the duly certified exclusive bargaining
agent of the regular rank and file employees of Bankard
to press for the increase in the salary of its old, regular
employees. It’s request remained unheeded. So it filed a
Notice of Strike on August 26, 1993 on the ground of
discrimination and other acts of Unfair Labor Practice.
Petitioner maintains that for purposes of wage distortion,
the classification is not one based on “levels” or “ranks”
but on two groups of employees, the newly hired and the
old, in each and every level, and not between and among
the different ranks in the salary structure.
Issue: Whether the unilateral adoption by an employer of
an upgraded salary scale that increased the hiring rates of
new employees without increasing the salary rates of old
employees resulted in wage distortion within the
contemplation of Article 124 of the Labor Code.
Ruling: Prubankers Association v. Prudential Bank and
Trust Company laid down the four elements of wage
distortion, to wit: (1) An existing hierarchy of position
with corresponding salary rates, (2) A significant change
in the salary rate of a lower pay class without a
concomitant increase in the salary rate of a higher one; (3)
The elimination of the distinction between the two levels;
(4) The existence of the distortion in the same region of
the country.
Involved in the classification of employees are various
factors such as the degrees of responsibility, the skills and
knowledge required, the complexity of the job, or other
logical basis of differentiation.
To determine the existence of wage distortion, the
“historical” classification of the employees prior to the
wage increase must be established. Likewise, it must be
shown that as between the different classification of
employees, there exists a “historical” gap or difference.
In the present case, the employees of private respondent
have been
“historically” classified in levels I to IV and not on the
basis of their length of service. The entry of new
employees to the company ipso facto places them under
any of the level mentioned in the new salary scale which
private respondent adopted. Petition cannot make a
contrary classification of private respondent’s employees
without encroaching upon recognized management
prerogative of formulating a wage structure. In this case,
one based on level.
It is thus clear that there is no hierarchy of positions
between the newly hired and regular employees of
Bankard, hence, the first element of wage distortion
provided in the Prubankers case is wanting. While
seniority may be a factor in determining the wages of
employees, it cannot be made the sole basis in cases where
the nature of their work differs.
For purposes of determining the existence of wage
distortion, employees cannot create their own
independent classification and use it as a basis to demand
an across-the-board increase in salary.
Even assuming that there is a decrease In the wage gap
between the pay of the old employees and the newly hired
employees, to the court’s mind the gap is NOT significant
as to obliterate or result in severe contraction of the
intentional quantitive differences in the salary rates
between the employee group./
Aside from that the alleged “wage distortion” as the
increase in the wages and salaries of new-hires was not
due to a prescribed law or wage order.
If the compulsory mandate under Article 124 of the Labor
Code to correct “wage distortion” is applied to voluntary
and unilateral increases by the employer in fixing hiring
rates which is inherently a business judgment prerogative,
then the hands of the employer would be completely tied
even in cases where an increase in wages of a particular
group is justified.
In fine, absent any indication that the voluntary increase
of salary rates by an employer was done arbitrarily and
illegally for the purpose of circumventing the laws or was
devoid of any legitimate purpose other than to
discriminate against the regular employees, this Court
will not step in to interfere with this management
prerogative.
ANOTHER DIGEST:
Bankard Employees Union-Workers Alliance Trade
Unions v. NLRC
Facts:
The Board of Directors of Bankard, Inc. approved a “New
Salary Scale” which increased the hiring rates of new
employees. Accordingly, the salaries of employees who
fell below the new minimum rates were also adjusted to
reach such rates under their levels.
Bankard Employees Union-WATU pressed for an
increase in the salary of its old, regular employees, but
Bankard took the position that it had no obligation to grant
an across-the-board salary increase.
Issue:
Does wage distortion exist in this situation?
Ruling:
Article 124 of the Labor Code defines“wage distortion”
as a situation where an increase in prescribed wage rates
results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates
between & 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.
The four elements of wage distortion are: 1)An existing
hierarchy of positions with corresponsing salary rates
2) A significant change in the salary rate of a lower pay
class without concomitant increase in the salary rate of a
higher one
3)The elimination of the distinction between the two
levels
4) The existence of the distortion in the same region of the
country.
Bankard’s wage structure is based on level, and not
seniority; hence there is no hierarchy of positions. Even
assuming that there is a decrease in the wage gap of the
old and new employees, the Court finds that the gap is not
so significant so as to satisfy the the 2nd and 3rd elements
of wage distortion.
In addition, Article 124 (LC) refers to a wage distortion
resulting from a prescribed wage increase by virtue of a
law or Wage Order issued by any Regional Board.
Clearly, Bankard’s New Salary Scale is neither of the two.
The mere factual existence of wage distortion does not,
ipso facto result to an obligation to rectify it, absent a law
or other source of obligation which requires its
rectification. This Court will not step in to interfere with
Bankard’s management prerogative.
The is no wage distortion in the instant case.
AND ANOTHER DIGEST……. HAHAHA
G.R. No. 140689 February 17, 2004
BANKARD EMPLOYEES UNION-WORKERS
ALLIANCE TRADE UNIONS, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and
BANKARD, INC., respondents.
FACTS:
Bankard, Inc. classifies its employees according to level:
Level I, Level II, Level III, Level IV and Level V (See
Note #1 for corresponding salary rates). On May 28,
1993, the directors of respondent Bankard, Inc. approved
a new salary scale for the purpose of making its hiring rate
competitive in the labor market. The new salary scale
increased the hiring rates of new employees, to wit:
Levels I and V were increased by P1,000.00 while Levels
II, III and IV were increased by P900.00 (see Note # 1).
The salaries of employees who fell below the new
minimum rates were also adjusted accordingly to reach
such rates under their levels. As a result, Bankard
Employees Union-Workers Alliance Trade Unions
(Bankard Union) demanded for salary increase of its old,
regular employees. Bankard refused on the ground that it
had no obligation to grant all its employees the same
increase. Bankard Union filed a Notice of Strike on the
ground of discrimination and other acts of Unfair Labor
Practice. This was initially treated as a preventive
mediation case on the ground that the issues raised were
not strikable. Upon the second notice of strike, the dispute
was certified for compulsory arbitration. The NLRC
dismissed the case for lack of merit, finding no wage
distortion. The CA denied the same for lack of merit.
Hence, this petition.
ISSUE:
Whether the unilateral adoption by an employer of an
upgraded salary scale that increased the hiring rates of
new employees without increasing the salary rates of old
employees resulted in wage distortion within the
contemplation of Article 124 of the Labor Code.
RULING:
No. The Court held that wage distortion does not exist in
this case as all the elements were not met. There are four
elements of wage distortion (See note #2), namely: (1) An
existing hierarchy of positions with corresponding salary
rates, (2) a significant change in the salary rate of a lower
pay class without a concomitant increase in the salary rate
of a higher one, (3) the elimination of the distinction
between the two levels and (4) the existence of the
distortion in the same region of the country. In a problem
dealing with "wage distortion," the basic assumption is
that there exists a grouping or classification of employees
that establishes distinctions among them on some relevant
or legitimate bases. Various factors such as the degrees of
responsibility, the skills and knowledge required, the
complexity of the job, or other logical basis of
differentiation are involved in such classifications.
According to the NLRC, to determine the existence of
wage distortion, the "historical" classification of the
employees prior to the wage increase must be established.
In this case, the employees of Bankard have been
“historically” classified into levels (I-V), and not on the
basis of their length of service. New employees are
automatically placed under any of these levels upon their
entry. This is the wage structure formulated by Bankard,
a recognized management prerogative which Bankard
Union may not encroach upon by creating their own
independent classification (ie, based on newly hired and
old employees) to use as a basis for demanding an across-
the-board salary increase. According to established
jurisprudence, the formulation of a wage structure
through the classification of employees is a matter of
management judgment and discretion.
Based on the wage structure, there is no hierarchy of
positions between the newly hired and regular employees
of Bankard since it is a structure which is based on level,
not seniority. The first element of wage distortion is
therefore lacking.
Second, the third element of wage distortion ie the
elimination of the distinction between the two levels, is
also missing. Even if there was indeed a resulting
decrease in the wage gap between the salary of the old and
new employees, the gap was held to be insignificant as to
result in severe contraction of the intentional quantitave
differences in the salary rates between the employee
group as the classification under the wage structure is
based on rank, and not seniority.
Third, pursuant to Article 124 of the Labor Code, Bankard
cannot be legally obligated to correct the alleged “wage
distortion”, should it have existed in this case, because the
increase in the wages and salaries of the newly-hired was
not due to a prescribed law or wage order. (See Note #3)
The fixing of hiring rates which resulted to wage increases
was a voluntary and unilateral increase made by Bankard.
The Court held that Article 124 is to be construed in
relation to minimum wage fixing, the intention of the law
being that in case of an increase in minimum wage, the
distinctions in the wage structure will be preserved. The
case of Metro Transit Organization Inc. v. NLRC (See
Note #4) is not applicable in this case as in the former,
there was no CBA but instead, an existing company
practice "that whenever rank-and-file employees were
paid a statutorily mandated salary increase, supervisory
employees were, as a matter of practice, also paid the
same amount plus an added premium.” The mere
existence of a wage distortion does not ipso facto result to
an obligation to rectify it, absent a law or other source of
obligation which requires its rectification. Furthermore,
Bankard’s right to increase its hiring rate, to establish
minimum salaries for specific jobs, and to adjust the rates
of employees affected thereby is embodied under the
parties’ CBA (See Note #5). The CBA is a valid and
legally enforceable source of rights between the parties
and as such, will not be interfered with by the Courts
absent any bad faith on the part of the employer.
ADJUDICATION:
WHEREFORE, the present petition is hereby DENIED.
SO ORDERED.
26) PRUBANKERS ASSOCIATION VS.
PRUDENTIAL BANK, JANUARY 25, 1999
Prubankers Association vs Prudential Bank (1999)
302 SCRA 74
Facts:
The RTWPB Region V issued Wage Order No. RB 05-03
which provided for a Cost of Living Allowance (COLA)
to workers in the private sector who had rendered service
for at least three (3) months before its effectivity, and for
the same period thereafter, in the following categories:
P17.50 in the cities of Naga and Legaspi; P15.50 in the
municipalities of Tabaco, Daraga, Pili and the city of
Iriga; and P10.00 for all other areas in the Bicol Region.
On November 1993, RTWPB Region VII issued Wage
Order No. RB VII-03, which directed the integration of
the COLA mandated pursuant to Wage Order No. RO
VII-02-A into the basic pay of all workers. It also
established an increase in the minimum wage rates for all
workers and employees in the private sector as follows:
by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and
Lapulapu; Five Pesos (P5.00) in the municipalities of
Compostela, Liloan, Consolacion, Cordova, Talisay,
Minglanilla, Naga and the cities of Davao, Toledo,
Dumaguete, Bais, Canlaon, and Tagbilaran.
The bank granted a COLA of P17.50 to its employees at
its Naga Branch, the only branch covered by Wage Order
No. RB 5-03, and integrated the P150.00 per month
COLA into the basic pay of its rank-and-file employees at
its Cebu, Mabolo and P. del Rosario branches, the
branches covered by Wage Order No. RB VII-03.
On June 7, 1994, Prubankers Association wrote the
petitioner requesting that the Labor Management
Committee be immediately convened to discuss and
resolve the alleged wage distortion created in the salary
structure upon the implementation of the said wage
orders. It demanded in the Labor Management Committee
meetings that the petitioner extend the application of the
wage orders to its employees outside Regions V and VII,
claiming that the regional implementation of the said
orders created a wage distortion in the wage rates of
petitioner's employees nationwide. As the grievance
could not be settled in the said meetings, the parties
agreed to submit the matter to voluntary arbitration.
Issue: WON a wage distortion resulted from respondent's
implementation of the Wage Orders.
Ruling: The court ruled that there is no wage distortion
since the wage order implementation covers all the
branches of the bank.
The hierarchy of positions was still preserved. The levels
of different pay classes was not eliminated. The statutory
definition of wage distortion is found in Article 124 of the
Labor Code, as amended by Republic Act No. 6727,
which reads: Standards/Criteria for Minimum Wage
Fixing — . . ."As used herein, a wage distortion shall
mean a situation where an increase in prescribed wage
results in the elimination 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."
Wage distortion involves four elements: (1) An existing
hierarchy of positions with corresponding salary rates; (2)
A significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a
higher one; (3)The elimination of the distinction between
the two levels and (4) The existence of the distortion in
the same region of the country.
A disparity in wages between employees holding similar
positions but in different regions does not constitute wage
distortion as contemplated by law.
As stated, it is the hierarchy of positions and the disparity
of their corresponding wages and other emoluments that
are sought to be preserved by the concept of wage
distortion.
27) MANILA MANDARIN VS. NLRC, NOVEMBER
19, 1996
FACTS:
The Union filed with NLRC Arbitration Branch
a complaint on wage distortions. The Labor Arbiter ruled
in favor of the Union while the NLRC Commissioner
Zapanata reversed the same. The Union contends that the
Mandarin hotel file its appeal three days beyond the
reglementary period.
ISSUE:
Whether or not NLRC acquired jurisdiction to
take cognizance of Mandarin’s appeal from Labor
Arbiter?
RULING:
The court rules that the Commission acted
correctly in accepting and acting on Mandarin’s appeal.
The employee who was authorized to receive payment so
the respondent was allowed to pay docketing fee on the
next business day which was February 4, 1991. In review
of the considerations and in the interest of justice was
quite served when Mandarin’s appeal was given due
course despite delayed payment of fees… the
reglementary period confers a directory, not a mandatory,
power to dismiss an appeal…
ANOTHER DIGEST:
G.R. No. 108556 November 19, 1996
MANILA MANDARIN EMPLOYEES UNION,
petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
Second Division, and the MANILA MANDARIN
HOTEL, respondents.
ISSUE:
On October 30, 1986, the Manila Mandarin Employees
Union (hereafter UNION), as exclusive bargaining agent
of the rank-and-file employees of the Manila Mandarin
Hotel, Inc. (hereafter MANDARIN), filed with the NLRC
Arbitration Branch a complaint in its members' behalf to
compel MANDARIN to pay the salary differentials of the
individual employees concerned because of wage
distortions in their salary structure allegedly created by
the upward revisions of the minimum wage pursuant to
various Presidential Decrees and Wage Orders, and the
failure of MANDARIN to implement the corresponding
increases in the basic salary rate of newly-hired
employees.
The relevant Presidential Decrees and Wage Orders were
invoked during the said trial.
On January 15, 1987, the UNION filed its Position Paper
amplifying the allegations of its complaint and setting
forth the legal bases of its demands against MANDARIN;
and on March 25, 1987, it filed an Amended Complaint
presenting an additional claim for payment of salary
differentials to the union members affected, allegedly
resulting from underpayment of wages.
The Labor Arbiter eventually ruled in favor of the
UNION, however it was later reversed by the
Commission, Hence this petition.

ISSUE:
WHETHER OR NOT WAGE DISTORTION EXIST.
HELD:
There was no wage distortion that existed. Wage
distortion is 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. A
review of the records convinces this Court that respondent
NLRC committed no grave abuse of discretion in holding
that no wage distortion was demonstrated by the UNION.
VIOLATION OF WAGE ORDERS/WAGE
ENFORCEMENT AND RECOVERY
28) CIRINEO BOWLING PLAZA VS. SENSING,
JAN. 14, 2005
Before us is a special civil action for certiorari filed by
petitioner assailing the Resolution of the Court of Appeals
(CA) which dismissed petitioner’s petition for certiorari;
and the Resolution which denied petitioner’s motion for
reconsideration.
FACTS:
Eligio Paolo, Jr., an employee of petitioner, filed a letter
complaint with the Department of Labor and Employment
(DOLE for short), Dagupan District Office, Dagupan
City, requesting for the inspection/investigation of
petitioner for various labor law violations like
underpayment of wages, 13th month pay, non-payment of
rest day pay, overtime pay, holiday pay and service
incentive leave pay.
Pursuant to the visitorial and enforcement powers of the
Secretary of Labor and Employment, his duly authorized
representative under Article 128 of the Labor Code, as
amended, conducted inspections on petitioner’s
establishment the following day. In his inspection
report,Labor and Employment Officer III, Crisanto Rey
Dingle, found that petitioner has thirteen5 employees and
had committed the following violations: underpayment of
minimum wage, 13th month pay, holiday premiums,
overtime premiums, and non-payment of rest day. The
findings in the inspection report were explained to
petitioner’s officer-in-charge, Ma. Fe Boquiren, who
signed the same.
An Order was issued by the DOLE Regional Office, the
dispositive portion of which reads:
WHEREFORE, premises considered and considering
further that the amount computed constitutes part of the
lawful remunerations of thirteen affected employees,
respondent is hereby ordered to pay them the total amount
of THREE HUNDRED SEVENTY SEVEN
THOUSAND FIVE HUNDRED PESOS AND 58/100.
(P377,500.58), representing their unpaid/underpaid
wages, 13th month pay, holiday premiums, rest day pay
and overtime premiums.
And to submit the proof of payment to this Office within
ten (10) days from receipt hereof. Otherwise, a Writ of
Execution will be issued to enforce this order.
Respondent is further ORDERED to adjust the salaries of
its employees to the applicable daily minimum wages and
to submit the proof thereof within the same period.
Petitioner’s representative, Carmen Zapata, appeared
before the DOLE Regional Office and submitted the
quitclaims, waivers and releases of employees-awardees,
Lamberto Solano, Jovelyn Quinto, Manuel Benitez,
Edgar Dizon, Ronillo Tandoc, Eligio Paolo, Jr., and Dario
Benitez. Later, however, Benitez, Tandoc, Quinto and
Dizon wrote DOLE a letter denying having received any
amount from petitioner. Thus, DOLE’s inspector Dingle
went to petitioner’s establishment to confirm the
authenticity of the quitclaims and releases and talked to
the employees concerned who stated that they signed the
document without knowing its contents but they are
willing to settle if they will be given the amount computed
by DOLE.
Luisito Cirineo and a certain Fe Cirineo Octaviano, owner
of Esperanza Seafoods Kitchenette stationed in
petitioner’s establishment, wrote DOLE a letter
requesting that the case be endorsed to the National Labor
Relations Commission since the resolution of the case
required evidentiary matters not disclosed or verified in
the normal course of inspection. They also submitted
documents to show that petitioner and Esperanza
Seafoods Kitchenette are separate and distinct business
entities and that some of the employees-awardees are
actually employees of the Esperanza Seafoods
Kitchenette.
DOLE issued its Order stating among others:
Records show that respondent, Luisito Cirineo and his
representative appeared before this Office during the
summary investigation of this instant case but they never
once mentioned the issue of separate juridical
personalities. Respondent had always been bent on
settling the respective claims of all thirteen (13)
concerned employees. In the process, however, he
acknowledged being their employer. He cannot at this
juncture therefore say, that some of the awardees in our
ORDER are employees of another business entity. This
being the case, we cannot grant his request for
indorsement to the NLRC.
WHEREFORE, premises considered, the case of
employees Eligio Paolo, Jr. and Lamberto Solano whose
respective claims had been settled by respondent is hereby
DISMISSED. The ORDER for the payment of the
monetary claims of the eleven (11) other cash awardees
STANDS. Let execution follow immediately.
DOLE Regional Director Maximo B. Lim issued a writ of
execution. Petitioner filed a motion to quash the writ of
execution.
In an Order, DOLE Regional Director Lim denied
petitioner’s motion to quash the writ of execution.
Petitioner filed its Memorandum of Appeal to the
Secretary of Labor and Employment who dismissed the
appeal on the ground that same was filed out of time. On
motion for reconsideration, the appeal was granted and
the appeal was given due course.
DOLE Undersecretary Jose Español dismissed the appeal
and affirmed the order of the DOLE Regional Director.
In support thereof, respondent alleges that it had only
eight (8) employees as the “other claimants of labor
benefits . . . are employees of Fe Esperanza Octaviano
doing business under the name and style “Esperanza
Seafoods Kitchenette.” Thus, it points out that:
Hence, under the Labor Code, Article 94 thereof the
employees of the appellant are not entitled to holiday pay
and holiday premium pay.
Under Republic Act 6727 and its Implementing Rules,
Chapter 1, Section 1 thereof, establishments employing
less than ten (10) employees are exempted from
compliance with minimum wage rates. Hence, the wages
given to respondents do not constitute under payments.
As to their claims for overtime pay and rest day pay, there
is no proof that respondents rendered overtime or restday
work, hence they are not entitled to the same.
We do not agree.
The records show that during the summary investigation
respondent never refuted the findings of the labor
inspector particularly the identity of the thirteen (13)
concerned employees nor raised the issue of separate
juridical personalities of respondent Cirineo and
Esperanza Seafoods Kitchenette.
The documents submitted to this Office by respondent
could be interpreted as a desperate attempt to mislead this
Office and to evade liability.
On the issue of jurisdiction, we rule that the Regional
Director has jurisdiction over the instant case.
The old rule limiting the jurisdiction of the Secretary of
Labor and Employment or his duly authorized
representatives to money claims not exceeding P5,000.00
has been repealed by the passage of R.A. No. 7730,
Section 1.
Pursuant to R.A. 7730, the jurisdictional limitations
imposed by Article 129 on the visitorial and enforcement
powers of this Office under Article 128 of the Labor
Code, have been repealed. The phrase “notwithstanding
the provision of Articles 129 and 217 of the Labor Code
to the contrary,” erases all doubts as to the amendatory
nature of R.A. No. 7730. The amendment, in effect,
overturned the rulings in the Aboitiz and Servandos cases
insofar as the restrictive effect of Article 129 on the use
of the power under Article 128 is concerned.
Petitioner’s motion for reconsideration was denied in a
Resolution dated April 18, 2000.
Petitioner filed a petition for certiorari with prayer for the
issuance of temporary restraining order with the CA.
The CA dismissed the petition for failure of petitioner to
(1) attach a copy of the letter complaint filed by
petitioner’s employees and the Order dated February 7,
1997 of the DOLE Regional Director and (2) state the
material date when the assailed Orders/Resolutions were
received pursuant to Section 1 of Rule 65 and Section 3
of Rule 46 of the 1997 Rules of Civil Procedure.
Petitioner filed a motion for reconsideration which was
also denied by the CA.
ISSUE:
WHETHER PUBLIC RESPONDENT ACTED WITH
GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION WHEN IT
DISMISSED THE INSTANT PETITION AND
OUTRIGHT DISMISSAL OF PETITIONER’S
MOTION FOR RECONSIDERATION DUE TO MERE
TECHNICALITIES.
HELD:
We dismiss the petition.
We find no grave abuse of discretion committed by the
CA in issuing the assailed resolutions. The CA dismissed
the petition for certiorari for failure of petitioner to attach
certain documents and to state the material date. Section
3. Contents and filing of petition; effect of non-
compliance with requirements.-
In actions filed under Rule 65, the petition shall further
indicate the material dates showing when the notice of the
judgment or final order or resolution subject thereof was
received, when a motion for new trial or reconsideration,
if any, was filed and when notice of the denial thereof was
received.
The failure of the petitioner to comply with any of the
foregoing requirements shall be sufficient ground for the
dismissal of the petition.
It bears stressing that the timely perfection of an appeal is
a mandatory requirement, which cannot be trifled with as
a “mere technicality” to suit the interest of a party.
Even if we disregard technicality, we find the arguments
raised by petitioner without merit. As correctly held by
the DOLE Regional Director and sustained by the DOLE
Undersecretary, records show that petitioner never
refuted the findings of the labor inspector as to the identity
of the thirteen employees nor raised the issue of separate
juridical personalities of petitioner Cirineo and Esperanza
Seafoods Kitchenette during the investigation and on the
hearings conducted.
Likewise, we sustain the jurisdiction of the DOLE
Regional Director. The visitorial and enforcement powers
of the DOLE Regional Director to order and enforce
compliance with labor standard laws can be exercised
even where the individual claim exceeds P5,000.00
(Art. 128. Visitorial and enforcement power is cited)
An order issued by the duly authorized representative of
the Secretary of Labor and Employment under this article
may be appealed to the latter. In case said order involved
a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited
by the Secretary of Labor and Employment in the amount
equivalent to the monetary award in the order appealed
from.
The aforequoted provision explicitly excludes from its
coverage Articles 129 and 217 of the Labor Code by the
phrase “(N)otwithstanding the provisions of Articles 129
and 217 of this Code to the contrary . . .” thereby retaining
and further strengthening the power of the Secretary of
Labor or his duly authorized representative to issue
compliance orders to give effect to the labor standards
provisions of said Code and other labor legislation based
on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course
of inspection.
In the case at bar, the Office of respondent Regional
Director conducted inspection visits at petitioner’s
establishment on February 9 and 14, 1995 in accordance
with the above-mentioned provision of law. In the course
of said inspection, several violations of the labor standard
provisions of the Labor Code were discovered and
reported by Senior Labor Enforcement Officer Eduvigis
A. Acero in his Notice of Inspection Results. It was on the
bases of the aforesaid findings (which petitioner did not
contest), that respondent Regional Director issued the
assailed Order for petitioner to pay private respondents
the respective wage differentials due them.
Clearly, as the duly authorized representative of
respondent Secretary of Labor, and in the lawful exercise
of the Secretary’s visitorial and enforcement powers
under Article 128 of the Labor Code, respondent Regional
Director had jurisdiction to issue his impugned Order.
We dismiss the petition. Pursuant to Section 1 of Republic
Act 7730 [Approved on June 2, 1994] which amended
Article 128 (b) of the Labor Code, the Secretary of Labor
and Employment or his duly authorized representative, in
the exercise of their visitorial and enforcement powers,
are now authorized to issue compliance orders to give
effect to the labor standards provisions of this Code and
other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety
engineers made in the course of inspection, sans any
restriction with respect to the jurisdictional amount of
P5,000.00 provided under Article 129 and Article 217 of
the Code.
The instant case therefore falls squarely within the
coverage of the aforecited amendment as the assailed
order was issued to en nn orce compliance with the
provisions of the Code with respect to the payment of
proper wages. Hence, petitioner’s claim of lack of
jurisdiction on the part of public respondent is bereft of
merit.
WHEREFORE, the instant petition is DISMISSED for
lack of merit.
29) PEOPLE’S BROADCASTING VS. SECRETARY
OF LABOR, MAY 8, 2009
People’s Broadcasting v. Sec. of DOLE
G.R. no. 179652. May 8, 200
Facts:
Jandeleon Juezan (respondent) filed a complaint
against People’s Broadcasting Service, Inc. (Bombo
Radyo Phils., Inc) (petitioner) for illegal deduction, non-
payment of service incentive leave, 13th month pay,
premium pay for holiday and rest day and illegal
diminution of benefits, delayed payment of wages and
non-coverage of SSS, PAG-IBIG and Philhealth before
the Department of Labor and Employment (DOLE)
Regional Office No. VII,Cebu City.
On the basis of the complaint, the DOLE
conducted a plant level inspection on 23 September 2003.
In the Inspection Report Form, the Labor Inspector wrote
under the heading “Findings/Recommendations” “non-
diminution of benefits” and “Note: Respondent deny
employer-employee relationship with the complainant-
see Notice of Inspection results.”
Petitioner was required to rectify/restitute the
violations within five (5) days from receipt. No
rectification was effected by petitioner; thus, summary
investigations were conducted, with the parties eventually
ordered to submit their respective position papers.
In his Order dated 27 February 2004, DOLE
Regional Director Atty. Rodolfo M. Sabulao (Regional
Director) ruled that respondent is an employee of
petitioner, and that the former is entitled to his money
claims amounting to P203, 726.30. Petitioner sought
reconsideration of the Order, claiming that the Regional
Director gave credence to the documents offered by
respondent without examining the originals, but at the
same time he missed or failed to consider petitioner’s
evidence. Petitioner’s motion for reconsideration was
denied.[ On appeal to the DOLE Secretary, petitioner
denied once more the existence of employer-employee
relationship.
In its Order dated 27 January 2005, the Acting
DOLE Secretary dismissed the appeal on the ground that
petitioner did not post a cash or surety bond and instead
submitted a Deed of Assignment of Bank Deposit.
Petitioner maintained that there is no employer-employee
relationship had ever existed between it and respondent
because it was the drama directors and producers who
paid, supervised and disciplined respondent. It also added
that the case was beyond the jurisdiction of the DOLE and
should have been considered by the labor arbiter because
respondent’s claim exceeded P5,000.00.
Issue:
Does the Secretary of Labor have the power to
determine the existence of an employer-employee
relationship?
Held:
No.
Clearly the law accords a prerogative to the NLRC
over the claim when the employer-employee relationship
has terminated or such relationship has not arisen at all.
The reason is obvious. In the second situation especially,
the existence of an employer-employee relationship is a
matter which is not easily determinable from an ordinary
inspection, necessarily so, because the elements of such a
relationship are not verifiable from a mere ocular
examination.
The intricacies and implications of an employer-
employee relationship demand that the level of scrutiny
should be far above the cursory and the mechanical.
While documents, particularly documents found in
the employer’s office are the primary source materials,
what may prove decisive are factors related to the history
of the employer’s business operations, its current state as
well as accepted contemporary practices in the industry.
More often than not, the question of employer-employee
relationship becomes a battle of evidence, the
determination of which should be comprehensive and
intensive and therefore best left to the specialized quasi-
judicial body that is the NLRC.
It can be assumed that the DOLE in the exercise of its
visitorial and enforcement power somehow has to make a
determination of the existence of an employer-employee
relationship. Such prerogatival determination, however,
cannot be coextensive with the visitorial and enforcement
power itself.
Indeed, such determination is merely preliminary,
incidental and collateral to the DOLE’s primary function
of enforcing labor standards provisions. The
determination of the existence of employer-employee
relationship is still primarily lodged with the NLRC. This
is the meaning of the clause “in cases where the
relationship of employer-employee still exists” in Art.
128 (b).
Thus, before the DOLE may exercise its powers
under Article 128, two important questions must be
resolved: (1) Does the employer-employee relationship
still exist, or alternatively, was there ever an employer-
employee relationship to speak of; and (2) Are there
violations of the Labor Code or of any labor law?
The existence of an employer-employee
relationship is a statutory prerequisite to and a limitation
on the power of the Secretary of Labor, one which the
legislative branch is entitled to impose. The rationale
underlying this limitation is to eliminate the prospect of
competing conclusions of the Secretary of Labor and the
NLRC, on a matter fraught with questions of fact and law,
which is best resolved by the quasi-judicial body, which
is the NRLC, rather than an administrative official of the
executive branch of the government. If the Secretary of
Labor proceeds to exercise his visitorial and enforcement
powers absent the first requisite, as the dissent proposes,
his office confers jurisdiction on itself which it cannot
otherwise acquire.
Reading of Art. 128 of the Labor Code reveals that
the Secretary of Labor or his authorized representatives
was granted visitorial and enforcement powers for the
purpose of determining violations of, and enforcing, the
Labor Code and any labor law, wage order, or rules and
regulations issued pursuant thereto. Necessarily, the
actual existence of an employer-employee relationship
affects the complexion of the putative findings that the
Secretary of Labor may determine, since employees are
entitled to a different set of rights under the Labor Code
from the employer as opposed to non-employees. Among
these differentiated rights are those accorded by the “labor
standards” provisions of the Labor Code, which the
Secretary of Labor is mandated to enforce. If there is no
employer-employee relationship in the first place, the
duty of the employer to adhere to those labor standards
with respect to the non-employees is questionable.
At least a prima facie showing of such absence
of relationship, as in this case, is needed to preclude the
DOLE from the exercise of its power. The Secretary of
Labor would not have been precluded from exercising the
powers under Article 128 (b) over petitioner if another
person with better-grounded claim of employment than
that which respondent had. Respondent, especially if he
were an employee, could have very well enjoined other
employees to complain with the DOLE, and, at the same
time, petitioner could ill-afford to disclaim an
employment relationship with all of the people under its
aegis.
The most important consideration for the
allowance of the instant petition is the opportunity for the
Court not only to set the demarcation between the
NLRC’s jurisdiction and the DOLE’s prerogative but also
the procedure when the case involves the fundamental
challenge on the DOLE’s prerogative based on lack of
employer-employee relationship.
As exhaustively discussed here, the DOLE’s prerogative
hinges on the existence of employer-employee
relationship, the issue is which is at the very heart of this
case. And the evidence clearly indicates private
respondent has never been petitioner’s employee. But the
DOLE did not address, while the Court of Appeals
glossed over, the issue. The peremptory dismissal of the
instant petition on a technicality would deprive the Court
of the opportunity to resolve the novel controversy.
WHEREFORE, the petition is GRANTED.
30) JETHRO INTELLIGENCE VS. SECRETARY
OF LABOR, AUGUST 14, 2009
Facts: Petitioner Jethro Intelligence and Security
Corporation (Jethro) is a security service contractor with
a security service contract agreement with co-petitioner
Yakult Phils., Inc. (Yakult). The Department of Labor
and Employment (DOLE)-Regional Office No. IV
conducted an inspection at Yakult’s premises in Calamba,
Laguna in the course of which several labor standards
violations were noted, including keeping of payrolls and
daily time records in the main office, underpayment of
wages, overtime pay and other benefits, and non-
registration with the DOLE as required under Department
Order No. 18-02.
The DOLE Regional Director, noting petitioners’ failure
to rectify the violations noted during the above-stated
inspection within the period given for the purpose, found
them jointly and severally liable to herein respondents for
the aggregate amount of EIGHT HUNDRED NINE
THOUSAND TWO HUNDRED TEN AND 16/100
PESOS (P809,210.16) representing their wage
differentials, regular holiday pay, special day premium
pay, 13th month pay, overtime pay, service incentive
leave pay, night shift differential premium and rest day
premium. Petitioners were also ordered to submit proof
of payment to the claimants within ten calendar days,
failing which the entire award would be doubled, pursuant
to Republic Act No. 8188, and the corresponding writs of
execution and garnishment would be issued.
Jethro and Yakult appealed to the Secretary of Labor
(SOLE). Then SOLE Patricia A. Sto. Tomas partially
granted petitioner Jethro’s appeal by affirming with
modification the Regional Director’s Order dated
September 9, 2004 by deleting the penalty of double
indemnity and setting aside the writs of execution and
garnishment, without prejudice to the subsequent
issuance by the Regional Director of the writs necessary
to implement the said Decision. They filed a Motion for
Reconsideration the SOLE Decision, which was denied.
They then filed a petition for certiorari before the Court
of Appeals. The CA denied the petition. They filed
another Motion for Reconsideration which was denied so
they filed a petition for review on certiorari with the
Supreme Court.
Issue: W/N certiorari should be granted (w/n there was
grave abuse of discretion on the part of the SOLE and
W/N the writs of execution and garnishment subsequently
issued were not in order since Petitioners have filed the
required bond equivalent to the judgment award, and the
Regional Director’s Order was not served on their counsel
of record.
Ruling: The petition is bereft of merit.
The sole office of a writ of certiorari is the correction of
errors of jurisdiction including the commission of grave
abuse of discretion amounting to lack of jurisdiction. It
does not include the correction of a tribunal’s evaluation
of the evidence and factual findings thereon, especially
since factual findings of administrative agencies are
generally held to be binding and final so long as they are
supported by substantial evidence in the record of the
case.
In dismissing petitioners’ petition for certiorari and thus
affirming the SOLE Decision, the appellate court did not
err. The scope of the visitorial powers of the SOLE and
his/her duly authorized representatives was clarified in
Allied Investigation Bureau, Inc. v. Secretary of Labor
and Employment,[12] viz:
While it is true that under Articles 129 and 217 of the
Labor Code, the Labor Arbiter has jurisdiction to hear and
decide cases where the aggregate money claims of each
employee exceeds P5,000.00, said provisions do not
contemplate nor cover the visitorial and enforcement
powers of the Secretary of Labor or his duly authorized
representatives.
Rather, said powers are defined and set forth in Article
128 of the Labor Code (as amended by R.A. No. 7730)
thus:
Art. 128. Visitorial and enforcement power.—
xxxx
(b) Notwithstanding the provisions of Articles 129 and
217 of this Code to the contrary, and in cases where the
relationship of employer-employee exists, the Secretary
of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance
orders to give effect to the labor standards provisions of
this Code and other labor legislation based on the findings
of labor employment and enforcement officers or
industrial safety engineers made in the course of
inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the
appropriate authority for the enforcement of their orders,
except in cases where the employer contests the finding
of the labor employment and enforcement officer and
raises issues supported by documentary proofs which
were not considered in the course of inspection.
[Emphasis, underscoring and italics supplied]
In the case at bar, the Secretary of Labor correctly
assumed jurisdiction over the case as it does not come
under the exception clause in Art. 128(b) of the Labor
Code. While petitioner Jethro appealed the inspection
results and there is a need to examine evidentiary matters
to resolve the issues raised, the payrolls presented by it
were considered in the ordinary course of inspection.
While the employment records of the employees could
not be expected to be found in Yakult’s premises in
Calamba, as Jethro’s offices are in Quezon City, the
records show that Jethro was given ample opportunity to
present its payrolls and other pertinent documents during
the hearings and to rectify the violations noted during the
ocular inspection. It, however, failed to do so, more
particularly to submit competent proof that it was giving
its security guards the wages and benefits mandated by
law.
Jethro’s failure to keep payrolls and daily time records in
Yakult’s premises was not the only labor standard
violation found to have been committed by it; it likewise
failed to register as a service contractor with the DOLE,
pursuant to Department Order No. 18-02 and, as earlier
stated, to pay the wages and benefits in accordance with
the rates prescribed by law.
Lastly, Sec. 5, Rule V (Execution) of the Rules on
Disposition of Labor Standards Cases in Regional Offices
provides that the filing of a petition for certiorari shall not
stay the execution of the appealed order or decision,
unless the aggrieved party secures a temporary restraining
order (TRO) from the Court. In the case at bar, no TRO
or injunction was issued, hence, the issuance of the
questioned writs of execution and garnishment by the
DOLE-Regional Director was in order.
31) REPUBLIC OF THE PHILS. VS. ASIAPRO
COOPERATIVE, NOV. 23, 2007
Facts:
Respondent Asiapro Cooperative is composed of owners-
members with primary objectives of providing them
savings and credit facilities and livelihood services. In
discharge of said objectives, Asiapro entered into several
service contracts with Stanfilco. Sometime later, the
cooperative owners-members requested Stanfilco’s help
in registering them with SSS and remitting their
contributions. Petitioner SSS informed Asiapro that being
actually a manpower contractor supplying employees to
Stanfilco, it must be the one to register itself with SSS as
an employer and remit the contributions. Respondent
continuously ignoring the demand of SSS the latter filed
before the SSC. Asiapro alleges that there exists no
employer-employee relationship between it and its
owners-members. SSC ruled in favor of SSS. On appeal,
CA reversed the decision.
Issue:
Whether or not there is employer-employee relationship
between Asiapro and its owners-members.
Ruling: YES.
In determining the existence of an employer-employee
relationship, the following elements are considered: (1)
the selection and engagement of the workers; (2) the
payment of wages by whatever means; (3) the power of
dismissal; and (4) the power to control the worker‘s
conduct, with the latter assuming primacy in the overall
consideration. All the aforesaid elements are present in
this case.
First. It is expressly provided in the Service Contracts that
it is the respondent cooperative which has the exclusive
discretion in the selection and engagement of the owners-
members as well as its team leaders who will be assigned
at Stanfilco.
Second. It cannot be doubted then that those stipends or
shares in the service surplus are indeed wages, because
these are given to the owners-members as compensation
in rendering services to respondent cooperative‘s client,
Stanfilco.
Third. It is also stated in the above-mentioned Service
Contracts that it is the respondent cooperative which has
the power to investigate, discipline and remove the
owners-members and its team leaders who were rendering
services at Stanfilco.
Fourth. In the case at bar, it is the respondent cooperative
which has the sole control over the manner and means of
performing the services under the Service Contracts with
Stanfilco as well as the means and methods of work. Also,
the respondent cooperative is solely and entirely
responsible for its owners-members, team leaders and
other representatives at Stanfilco. All these clearly prove
that, indeed, there is an employer-employee relationship
between the respondent cooperative and its owners-
members.
32) EJR CRAFTS VS. CA, MARCH 10, 2006
Facts:
In 1997, private respondents filed a complaint for
underpayment of wages, regular holiday pay, overtime
pay, non-payment of 13th month pay and service
incentive leave pay against petitioner before the Regional
Office, NCR of the Department of Labor and
Employment (DOLE). Acting on the complaint, Regional
Director issued an inspection authority to Senior Labor
Enforcement Officer.
On August 1997, an inspection was conducted on the
premises of petitioner’s offices wherein the following
violations of labor standards law were discovered, to wit:
non-presentation of employment records (payrolls and
daily time records); underpayment of wages, regular
holiday pay, and overtime pay; and non-payment of 13th
month pay and service incentive leave pay.
On the same day, the Notice of Inspection Result was
received by and explained to the manager of petitioner
corporation Mr. Jae Kwan Lee, with the corresponding
directive that necessary restitution be effected within five
days from said receipt. As no restitution was made, the
Regional Office thereafter conducted summary
investigations.
However, despite due notice, petitioner failed to appear
for two consecutive scheduled hearings. Petitioner failed
to question the findings of the Labor Inspector received
by and explained to the corporation’s manager. Petitioner
then filed a Motion for Reconsideration of said Order
arguing that the Regional Director has no jurisdiction over
the case as private respondents were allegedly no longer
connected with petitioner corporation at the time of the
filing of the complaint and when the inspection was
conducted, and that private respondents’ claims are within
the exclusive and original jurisdiction of the Labor
Arbiters.
Issue:
WON the Regional Director has jurisdiction over the
claims of the private respondents.
Held:
Regional Director has jurisdiction to hear and decide the
instant case. The Court favors the respondents in the
money claims against the petitioner company. It is
admitted that for the Regional Director to exercise the
power to order compliance, or the so-called "enforcement
power" under Article 128(b) of P.D. No. 442 as amended,
it is necessary that the employer-employee relationship
still exists.
In support of its contention that it is the Labor Arbiter and
not the Regional Director who has jurisdiction over the
claims of herein private respondents, petitioner contends
that at the time the complaint was filed, the private
respondents were no longer its employees. Considering
thus that there still exists an employer-employee
relationship between petitioner and private respondents
and that the case involves violations of labor standard
provisions of the Labor Code, we agree with the
Undersecretary of Labor and the appellate court that the
Regional Director has jurisdiction to hear and decide the
instant case in conformity with Article 128(b) of the
Labor Code which states:
Art. 128. Visitorial and Enforcement Power
. –(b) Notwithstanding the provisions of Articles 129 and
217 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based
on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course
of inspection.
The Secretary or his duly authorized representatives shall
issue writs of execution to the appropriate authority for
the enforcement of their orders, except in cases where the
employer contests the findings of the labor employment
and enforcement officer and raises issues supported by
documentary proofs which were not considered in the
course of inspection.
33) BAY HAVEN VS. ABUAN, JULY 30, 2008
BAY HAVEN, INC., JOHNNY T. CO, and VIVIAN TE-
FERNANDEZ, Petitioners,
vs.
FLORENTINO ABUAN, et al, Respondents.
FACTS:
Upon complaint of Florentino Abuan, one of herein
respondents, the DOLE, in the exercise of its visitorial,
inspection and enforcement powers, through its Regional
Director for the National Capital Region (NCR), issued
an Order commanding petitioners to pay respondents a
total of P638,187.15 corresponding to the latter’s claims
for underpayment as petitioners’ workers.
The Regional Director based his Order on the results of
the inspection conducted by one of its inspectors who
found that petitioner New Bay Haven Restaurant, located
at the Army and Navy Club, Kalaw St., Manila, under the
ownership or management of petitioner Te, committed
violations of Labor Standards Law:
Underpayment of minimum wage.
Underpayment of thirteenth month pay.
Underpayment of regular holiday pay.
Underpayment of special holiday pay.
Non-payment of night shift differential pay.
Occupational Safety and Health Standards.
Non-registration of the firm under Rule 1020 of OSHS.4
New Bay-Haven Restaurant and its co-petitioner Te filed
with the DOLE-NCR Regional Office a Motion for
Reconsideration of order, alleging that the office had no
jurisdiction over the case and that the order was issued in
denial of petitioners’ right to due process. They argued
that jurisdiction over the case was lodged with the
National Labor Relations Commission (NLRC), and not
the DOLE-NCR, due to the amount of the claims
involved. They added that their right to due process was
also denied because the order was issued without them
being furnished copies of the complaint and the inspection
report and without being notified of the hearings held in
the case.
The DOLE-NCR Assistant Regional Director, acting for
the Regional Director, issued an Order granting
petitioners’ motion for reconsideration as he found merit
in petitioners’ allegation of absence of due process in the
issuance of the first order. The order, however, stated that
the DOLE had jurisdiction over the case, pursuant to the
Labor Code, as amended by Republic Act (R.A.) No.
7730, that intends to strengthen the visitorial and
enforcement powers of the Secretary of Labor and
Employment. Consequently, another hearing for the case
was set.
During the hearing, petitioners submitted their Position
Paper attaching thereto payroll sheets and waivers and
quitclaims allegedly signed by the respondents to prove
that petitioner properly paid respondents the amounts due
them.
Respondents Florentino Abuan, Francisco Abentajado,
Mario Guray, Juan Villaruz, Jerry Asense and Joselito
Razon, however, outrightly denied the validity of the
payroll sheets and quitclaims. In their Joint Affidavit ,
respondents claimed that the actual daily pay they
received was much smaller than the amounts stated in the
payroll and they denied having received the cash amount
stated in the quitclaims. They added that they were merely
forced to sign the payrolls and quitclaims in blank and in
one sitting after they were accepted as applicants for their
positions.
The DOLE-NCR Regional Director, giving credence to
the affidavit of the respondents denying the validity of the
payroll sheets and quitclaims, issued an Order denying
petitioners’ motion for reconsideration of the Order . The
Order held petitioners New Bay Haven Restaurant, Bay
Haven, Inc., its President Johnny T. Co, and/or Vivian Te
as the ones liable as employers of respondents. However,
the liability of petitioners was reduced to P468,444.16.13
Petitioners filed a Motion for Reconsideration of the
Order. In the motion, petitioners insisted that their
documentary evidence proved that their obligations to
respondents had been discharged and that the DOLE had
no jurisdiction over the case.
Treating the motion for reconsideration as an appeal, the
DOLE Undersecretary issued a Resolution , denying the
appeal filed by petitioners,16 upholding the Regional
Director’s finding that the quitclaims could not be relied
upon to deny respondents’ claims, and reiterating that the
DOLE had jurisdiction to decide the case.
Petitioners filed a Motion for Reconsideration of
Resolution which was denied by DOLE Secretary Sto.
Tomas in a Resolution.
Aggrieved, petitioners filed a Petition for Certiorari under
Rule 65 of the Rules of Court with the CA, seeking to
annul and set aside the Resolutions.
The CA rendered its Decision, dismissing the petition,
ruling that the DOLE had jurisdiction over the labor
standards case and that petitioners did not present enough
evidence to refute the claims made by respondents.
Petitioners filed a Motion for Reconsideration of the
Decision which the CA denied in its Resolution.
Respondents did not file a comment on the petition, but
instead filed a Memorandum simultaneous with
petitioners’ filing of their Memorandum.
In their Memorandum, respondents aver that the decision
of the DOLE-NCR, as upheld by the DOLE Secretary,
was rendered in the exercise of its jurisdiction,
specifically its visitorial and enforcement powers as
conferred by law. They also allege that petitioners were
given the opportunity to present evidence to refute
respondents’ claims, but failed to do so.
ISSUE:
1) whether the DOLE Secretary and her authorized
representatives have jurisdiction to impose the monetary
liability against petitioners; and 2) whether the DOLE-
NCR, as upheld by the DOLE Secretary and the CA
committed an error in awarding the claims of respondents.
RULING:
We deny the petition.
The DOLE Secretary and her authorized representatives
such as the DOLE-NCR Regional Director, have
jurisdiction to enforce compliance with labor standards
laws under the broad visitorial and enforcement powers
conferred by Article 128 of the Labor Code, and expanded
by R.A. No. 7730.
The Court has held that the visitorial and enforcement
powers of the Secretary, exercised through his
representatives, encompass compliance with all labor
standards laws and other labor legislation, regardless of
the amount of the claims filed by workers. This has been
the rule since R.A. No. 7730 was enacted on June 2, 1994,
amending Article 128(b) of the Labor Code, to expand the
visitorial and enforcement powers of the DOLE
Secretary. Under the former rule, the DOLE Secretary had
jurisdiction only in cases where the amount of the claim
does not exceed P5,000.00.
The records also clearly indicate that the Regional
Director and the DOLE Secretary resolved the case based
on violations found by the labor inspection officer, which
do not include illegal dismissal.
The said violations are within the jurisdiction of the
DOLE Secretary and his representatives to address. The
questioned Orders dated December 29, 1998, April 18,
2000 and September 19, 2001 did not mention illegal
dismissal, and properly so, because there was no such
finding in the inspector’s report.31 Being in the nature of
compliance orders, said orders, under Art. 128(b) of the
Labor Code, are strictly based on “the findings of labor
employment and enforcement officers x x x made in the
course of inspection,” and not on any complaint filed.
Though a complaint may initiate the case or an inspection,
its allegations may not necessarily be upheld by the labor
inspector or the Regional Director.
Petitioners fail to persuade. The mere disagreement by the
employer with the findings of the labor officer, or the
simple act of presenting controverting evidence, does not
automatically divest the DOLE Secretary or any of his
authorized representatives such as the regional directors,
of jurisdiction to exercise their visitorial and enforcement
powers under the Labor Code.
Under prevailing jurisprudence, the so-called exception
clause in Art. 128(b) of the Labor Code has the following
elements, which must all concur to divest the regional
director of jurisdiction over workers’ claims:
(a) that the employer contests the findings of the labor
regulations officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to
examine evidentiary matters; and
(c) that such matters are not verifiable in the normal
course of inspection.37
Thus, the key requirement for the Regional Director and
the DOLE Secretary to be divested of jurisdiction is that
the evidentiary matters are not verifiable in the course of
inspection. Where the evidence presented was verifiable
in the normal course of inspection, even if presented
belatedly by the employer, the Regional Director, and
later the DOLE Secretary, may still examine them; and
these officers are not divested of jurisdiction to decide the
case.
In the present case, petitioners’ pieces of evidence of the
alleged contract of lease, payroll sheets, and quitclaims
were all verifiable in the normal course of inspection and,
granting that they were not examined by the labor
inspector, they have nevertheless been thoroughly
examined by the Regional Director and the DOLE
Secretary. For these reasons, the exclusion clause of Art.
128(b) does not apply.
In addition, the findings of the said officers on the
invalidity or low probative value of these documents are
findings of a factual nature which this Court will accord
with great respect.
Anent the second issue, There is merit in petitioners’
contentions.
However, we do not sustain petitioners’ allegation that the
Regional Director and the DOLE Secretary erroneously
awarded overtime pay to the respondents, despite the lack
of proof that overtime work had been rendered. Suffice it
to state that petitioners’ own evidence, which are the
payroll sheets they submitted to the Regional Director,48
show that respondents indeed rendered overtime work.
This amounts to an admission by petitioners, which may
be used in evidence against them.49 Aptly, this then
became one of the bases of the Regional Director’s award
of overtime pay to respondents.
In summary, we hold that only the awards granted to the
following respondents be affirmed:
Juan Villaruz
Francisco Abentajado
Jerry Asense
Mario Guray
Joselito Razon
The award in favor of Florentino Abuan is deleted, as his
claim for illegal dismissal is within the original and
exclusive jurisdiction of the Labor Arbiter, and outside of
the jurisdiction of the DOLE Secretary and the Regional
Director. The awards granted to the rest of the
respondents are likewise deleted for lack of evidence to
prove petitioners’ liability as to them.
WHEREFORE, the decision appealed from is
AFFIRMED, with the MODIFICATION that only
respondents Juan Villaruz, Francisco Abentajado, Jerry
Asense, Mario Guray, and Joselito Razon be GRANTED
their monetary awards while the awards given to the rest
of the respondents are DELETED.
34) ST. JOSEPH’S COLLEGE VS. ST. JOSEPH’S
COLLEGE ASSOCIATION, JAN. 17, 2005
FACTS:
Petitioner is a non-stock, non-profit Catholic educational
institution while respondent is a legitimate labor
organization which is currently the official bargaining
representative of all employees of petitioner except the
faculty and consultants of the Graduate School,
managerial employees and those who occupy confidential
positions. Respondent has an existing CBA with
petitioner for the period from June 1, 1999 to May 31,
2004. For the SY 2000-2001, petitioner increased its
tuition fees for all its departments. Based on petitioner’s
computation, the incremental proceeds from the tuition
fees increase for SY 2000-2001 is P1,560,942.74, 85% of
which is equivalent to P1,326,801.33. Consequently,
respondent averred that 85% of P4,906,307.58, which is
P4,170,360.59 should have been released to its members
as provided for in their CBA effective June 1, 2000.
ISSUE: How should the 70%-30% tuition fee increase be
allocated?
RULING:
The law allows an increase in school tuition fees on the
condition that 70 percent of the increase shall go to the
payment of personnel benefits. Plainly unsupported by the
law or jurisprudence is petitioner’s contention that the
payment of such benefits should be based not only on the
rate of tuition fee increases, but also on other factors like
the decrease in the number of enrollees; the number of
those exempt from paying the fees, like scholars; the
number of dropouts who, as such, do not pay the whole
fees; and the bad debts incurred by the school. The
financial dilemma of petitioner may deserve sympathy
and support, but its remedy lies not in the judiciary but in
the lawmaking body.
The law plainly states that 70 percent of the tuition fee
increase shall be allotted for the teaching and the
nonteaching personnel; and that the payment of other
costs of operation, together with the improvement of the
school’s infrastructure, shall be taken only from the
remaining 30 percent. The law does not speak, directly or
indirectly, of the contention of petitioner that in the event
that its total tuition income is lesser than that in the
previous year, then the whole amount of the increase in
tuition fee, and not merely up to 30 percent as provided
by law, may be used for the improvement and
modernization of infrastructure and for the payment of
other costs of operation.
35) CATHOLIC VICARIATE BAGUIO CITY VS.
STO. TOIMAS, MARCH 7, 2008
Petitioner contracted KUNHWA to construct the
retaining wall of the Baguio Cathedral. KUNWHA, in
turn, subcontracted CEREBA Builders (CEREBA) to do
the formworks of the church. The contract between
KUNWHA and CEREBA lasted up to the completion of
the project or on 8 September 2000, KUNWHA failed to
pay CEREBA. Consequently, the latter failed to pay its
employees.
Agbucay, along with 81 other employees, lodged a
complaint against CEREBA, KUNWHA and petitioner
before the DOLE-CAR Regional Office for nonpayment
of wages, special and legal holiday premium pay. An
inspection of the premises resulted in the discovery of
violations of labor standards law, such as nonpayment of
wages and holiday pay from 28 June 2000 to 5 September
2000, non-presentation of employment records, and
others. Petitioner, KUNWHA and CEREBA were given
five (5) days from receipt of the notice of inspection
results to rectify its violations. Despite the notice, the
parties failed to comply.
A hearing was set wherein CEREBA manifested its
willingness to pay the affected employees on the
condition that KUNWHA would pay its obligation to
CEREBA. Petitioner meanwhile manifested that the
retention fee due to KUNWHA was sufficient to pay the
deficiencies due the affected employees.
On March 2001, the DOLE-CAR Regional Director
issued an Order holding CEREBA, KUNWHA and
petitioner jointly and severally liable to the 82 affected
workers in the amount ofP1,029,952.80 or P12,560.40 for
each employee. During the pendency of its motion for
reconsideration, KUNWHA voluntarily settled the
deficiencies due the 23 affected workers amounting to
P84,544.00
The Regional Director dismissed the complaint by reason
of the said settlement. He also advised the other
employees to ventilate their claims in an appropriate
forum considering that no employer-employee
relationship exists between the parties.
Issue: Whether the Secretary of Labor acquired
jurisdiction over the appeal considering that this case falls
within the exception stated in Article 128(b) of the Labor
Code.
Held: Secretary of Labor acquired jurisdiction over the
appeal and petitioner is barred by estoppel from raising
the issue of jurisdiction.
In resolving this jurisdictional issue, the Secretary of
Labor relied on the limitations set forth in Article 128(b)
of the Labor Code and ruled, thus:
It is worthy to note that as regards the power granted to
Regional Director by Article 128 of the Labor Code, as
amended, only two (2) limitations are set forth: first,
where the employer contests the findings of the labor
regulations officer, and raises issues which cannot be
resolved without considering evidentiary matters that are
not verifiable in the normal course of inspection, and
second, where the employer-employee relationship no
longer exists.
x x x Both of the above-stated limitations are wanting in
this case. Records show that, when this case was filed on
August 29, 2000, complainants were still employed with
the respondent CEREBA working for KUNWHA’s
project with the Vicariate. There was no proof that the
subcontracting agreement between KUNWHA LUZON
CONSTRUCTION and CEREBA Builders was
terminated as of July 2000. The letters showing the poor
performance of CEREBA Builders cannot be considered
as a notice of termination of the Subcontracting
Agreement for the same do not state so.x x x
Succinctly put, since no written notice was served to
respondent CEREBA Builders terminating the
Subcontracting Agreement, the employer-employee
relationship between KUNWHA and complainants
existed until the completion of the subcontracting
agreement on September 18, 2000. Considering this,
when the complainants filed this case on August 29, 2000,
the Regional Director validly acquired jurisdiction over
the case. And, jurisdiction once acquired is not lost upon
the instance of the parties but continues until the case is
terminated.x x x
It is also equally important to note that, during the initial
hearing of this case at the Regional Office, the
respondents failed to contest the findings of the Labor
Employment and Enforcement Officer. The respondents
failed to present employment records and any evidence to
controvert the findings despite the reasonable period of
time afforded them. It was only when respondent
KUNWHA filed its Motion for Reconsideration from the
Order dated March 12, 2001 of the Regional Director that
it submitted documents which the Vicariate now alleged
to be not verifiable in the summary nature of the labor
inspection
Moreover, the issue of jurisdiction is clearly intertwined
with the existence of employer-employee relationship. It
is undisputed that the existence of an employer-employee
relationship is ultimately a question of fact.
Assuming arguendo the absence of an employer-
employee relationship between the parties, the Secretary
of Labor, invoking Odin Security Agency v. De la Serna,
correctly declared that petitioner is now estopped from
questioning the jurisdiction of the Regional Director
when it actively participated in the proceedings held
therein. In said case, petitioner also submitted to the
jurisdiction of the Regional Director by taking part in the
hearings before him and by submitting a position paper.
Similarly, it was only when the order of the Regional
Director was modified did petitioner question the
former’s jurisdiction to hear and decide the case.
36) URBANES VS. SECRETARY OF LABOR, NOV.
16, 1998 (MISSING)
URBANES VS. SEC. OF LABOR (2003)
FACTS:
Petitioner Placido O. Urbanes, Jr., doing business under
the name and style of Catalina Security Agency, entered
into an agreement1 to provide security services to
respondent Social Security System (SSS).
petitioner, by letter of May 16, 1994, requested the SSS
for the upward adjustment of their contract rate in view of
Wage Order No. NCR-03 which was issued by the
Regional Tripartite Wages and Productivity Board-NCR
pursuant to Republic Act 6727 otherwise known as the
Wage Rationalization Act
On June 24, 1994, petitioner pulled out his agency’s
services from the premises of the SSS and another
security agency, Jaguar, took over.
On June 29, 1994, petitioner filed a complaint with the
DOLE-NCR against the SSS seeking the implementation
of Wage Order No. NCR-03.
In its position paper,7 the SSS prayed for the dismissal of
the complaint on the ground that petitioner is not the real
party in interest and has no legal capacity to file the same.
In any event, it argued that if it had any obligation, it was
to the security guards.
The SSS moved to reconsider the September 16, 1994
Order of the Regional Director, praying that the
computation be revised.
By Order of December 9, 1994, the Regional Director
modified his September 16, 1994 Order by reducing the
amount payable by the SSS to petitioner.
The Secretary of Labor, by Order of June 22, 1995, set
aside the order of the Regional Director and remanded the
records of the case "for recomputation of the wage
differentials using P 5,281.00 as the basis of the wage
adjustment." And the Secretary held petitioner’s security
agency "JOINTLY AND SEVERALLY liable for wage
differentials, the amount of which should be paid
DIRECTLY to the security guards concerned."
Petitioner’s Motion for Reconsideration of the DOLE
Secretary’s Order of June 22, 1995 having been denied by
Order of October 10, 1995, the present petition was filed,
petitioner contending that the DOLE Secretary committed
grave abuse of discretion
Petitioner thus contends that as the appeal of SSS was
filed with the wrong forum, it should have been
dismissed.
The SSS, on the other hand, contends that Article 128, not
Article 129, is applicable to the case. Article 128
provides:
ISSUE:
Whether or not NLRC has jurisdiction over the
said case.
HELD:
We agree with the respondent that the RTC has
jurisdiction over the subject matter of the present case. It
is well settled in law and jurisprudence that where no
employer-employee relationship exists between the
parties and no issue is involved which may be resolved by
reference to the Labor Code, other labor statutes or any
collective bargaining agreement, it is the Regional Trial
Court that has jurisdiction. In its complaint, private
respondent is not seeking any relief under the Labor Code
but seeks payment of a sum of money and damages on
account of petitioner's alleged breach of its obligation
under their Guard Service Contract. The action is within
the realm of civil law hence jurisdiction over the case
belongs to the regular courts. While the resolution of the
issue involves the application of labor laws, reference to
the labor code was only for the determination of the
solidary liability of the petitioner to the respondent where
no employer-employee relation exists.
WAGE PROTECTION PROVISIONS & records show any documentary proof that the hotel
PROHIBITIONS REGARDING WAGES
37) LA ROSA VS. AMBASSADOR HOTEL,
MARCH 13, 2009
Case law holds that constructive dismissal occurs when
there is cessation of work because continued employment
is rendered impossible, unreasonable or unlikely; when
there is a demotion in rank or diminution in pay or both;
or when a clear discrimination, insensibility, or disdain by
an employer becomes unbearable to the employee.
Petitioners Fe La Rosa, Ofelia Velez, Cely Domingo,
Jona Natividad and Edgar De Leon (La Rosa, et al.), were
employees of respondent Ambassador Hotel. La Rosa, et
al. filed before the National Labor Relations Commission
(NLRC) several complaints for illegal dismissal, illegal
suspension, and illegal deductions against the hotel and
its manager. La Rosa, et al. alleged that after filing their
complaints with the Department of Labor, the latter
inspected the hotel’s premises. The hotel was thereafter
found to have been violating labor standards laws.
Consequently, after such incident, the management of the
hotel retaliated by suspending and/or constructively
dismissing them by drastically reducing their work days
through the adoption of a work reduction/rotation scheme.
The hotel however countered that such reduction/rotation
scheme was an exercise of its management prerogative
due to business losses.
The labor arbiter found the hotel and its manager guilty of
illegal dismissal. The hotel appealed to the NLRC but the
latter affirmed the labor arbiter’s ruling with
modification. The hotel appealed and prayed for the
issuance of an injunctive writ before the Court of Appeals.
The appellate court reversed the NLRC decision and
dismissed the petitioners’ complaints, stating that there
was no constructive dismissal.
ISSUES:
Whether or not La Rosa et al. were constructively
dismissed
HELD:
The records fail, however, to show any documentary
proof that the work reduction scheme was adopted due to
Ambassador’s business reverses. The hotel’s
memorandum dated April 5, 2000 (sic, should be 2002)
informing La Rosa et al. of the adoption of a two-day
work scheme effective April 5, 2002 made no mention
why such scheme was being adopted. Neither do the
suffered financial losses to justify its adoption of the said
scheme to stabilize its operations.
What is undisputed, as found by both the labor arbiter and
the NLRC and admitted by respondent itself, is that the
complaints for violation of labor standards laws were filed
by La Rosa et al. against Ambassador Hotel at the DOLE-
NCR, some of which complaints were partially settled;
and that almost immediately after the partial settlement of
the said complaints, the work reduction/rotation scheme
was implemented.
Case law holds that constructive dismissal occurs when
there is cessation of work because continued employment
is rendered impossible, unreasonable or unlikely; when
there is a demotion in rank or diminution in pay or both;
or when a clear discrimination, insensibility, or disdain by
an employer becomes unbearable to the employee. The
hotel’s sudden, arbitrary and unfounded adoption of the
two-day work scheme which greatly reduced La Rosa, et
al.’s salaries renders it liable for constructive dismissal.
Upon the other hand, La Rosa et al.’s immediate filing of
complaints for illegal suspension and illegal dismissal
after the implementation of the questioned work scheme,
which scheme was adopted soon after petitioners’
complaints against respondent for violation of labor
standards laws were found meritorious, negates
respondent’s claim of abandonment. An employee who
takes steps to protest his dismissal cannot by logic be said
to have abandoned his work
38) UNICORN SAFETY GLASS VS. BASARTE,
NOV. 25, 2004
Unicorn Safety Glass Inc., vs. Rodrigo Basarte GR No.
154689, Nov. 25, 2004
Constructive Dismissal or a constructive discharge has
been defined as quitting because continued employment
is rendered impossible, unreasonable or unlikely, as an
offer involving a demotion in rank and a diminution in
pay. Constructive dismissal, however, does not always
take the form of a diminution. In several cases, we have
ruled that an act of clear discrimination, insensibility, or
disdain by an employer may become so unbearable on the
part of the employee so as to foreclose an choice on his
part except to resign from such employment. This
constitutes constructive dismissal.
Immediate filing of complaint negates abandonment. In a
2004 case, it was ruled that the immediate filing of
complaint for illegal dismissal by the employees praying
for their reinstatement, negates the finding of
abandonment.
They cannot, by any reasoning, be said to have abandoned
their work, for as the Supreme Court had consistently
ruled, the filing by an employee of a complaint for illegal
dismissal is proof enough of his desire to return to work,
thus negating the employer’s charge of abandonment.
(Unicorn Safety Glass, Inc. vs. Basarte, G. R. No. 154689,
Nov. 25, 2004)
DIGEST:
UNICORN SAFETY GLASS v. BASARTE (2004)
Facts:
Respondents were regular employees of Unicorn who
normally worked 6 times a week and were paid on a
weekly basis. They were also officers of a union. In 1998,
Unicorn GM Hilario Yulo issued a Memorandum
informing respondents that their workdays will be
reduced due to economic considerations (i.e. sales
decrease, production cost, devaluation of peso
andincreased minimum wage).
Respondents protested and expressed doubts surmising
that the management was just getting back at them for
forming a union and that only union officers were affected
by the Memorandum.
Another Memorandum was issued reducing work days
from 6 to 3. Upon protest, the management reasoned that
it was a management prerogative. Hence, respondents
filed a case before NLR for constructive dismissal and
ULP. After several letters exchanged and the plight of
employees unheeded, the employees decided not to report
for work.
LA - Respondents not constructively dismissed. If
respondents strongly opposed the scheme, they could
have filed a case for illegal rotation. The case against ULP
was dismissed for lack of basis.
NLRC – Sustained LA. The Waiver, Release and
Quitclaim was not signed under duress
CA – Partially granted the petition for reinstatement and
payment but did not make a contrary finding on the charge
of ULP for lack of clear cut evidence.
Issue: WON there is constructive dismissal
Held:
Yes. Unicorn’s unbending stance on the implementation
of the scheme was an indication that it was implemented
for reasons other than business necessity. Despite
attempts of respondents to have a dialogue with Yulo but
this was ignored.
Management prerogative is not absolute. It must be
exercised in good faith and with due regard to rights of
labor. In the case, the management was keen on
summarily implementing the scheme and it was obviously
directed only to the union officers. The management’s
lack of interest to hear the plea of respondents creates an
unjust situation which justifies the latter not to report for
work.
The charge of abandonment for work does not hold water
when taken in light of the complaint for constructive
dismissal. Respondents cannot be said to have abandoned
work when the root cause of their protest is their demand
to maintain their regular work hours.
39) SPECIAL STEEL PRODUCTS VS.
VILLAREAL, JULY 8, 2004
Special Steel Products vs. Lutgardo Villareal & Frederick
So
G.R. No.143304. July 8, 2004
Facts: Special Steel Products, Inc., is a domestic
corporation engaged in the principal business of
importation, sale, and marketing of BOHLER steel
products. Respondents worked for petitioner as assistant
manager and salesman. Villareal obtained a car loan from
Bank of Commerce with petitioner as surety wherein they
are jointly and severally agreed to pay the bank in
installment basis. In January 1997, Villareal resigned and
joined Hi-Grade Industrial and Technical Products as
Executive vice-president.
Respondent So was sponsored by petitioner to attend a
training course in Kapfenberg, Austria conducted by
BOHLER. It rewarded So’s outstanding sales
performance. When So returned, the petitioner asked
respondent So to sign a memorandum to work for the
company for three years. After 2 years and 4 months, So
resigned from the company. Petitioner ordered
respondents an accounting of the various Christmas
giveaways they received. In return, respondents also
demanded payment of their separation benefits,
commissions, monetary benefits but petitioner refused
and withheld the 13th month pay and other benefits.
Issue: Whether or not the employer can withhold its
employee’s wages and benefits as lien to protect its
interest as surety in the car loan and for expenses in the
training abroad.
Ruling: The employer cannot withhold respondent’s 13th
month pay and other monetary benefits.
Article 116 of the Labor Code, as amended, provides:
“Withholding of wages and kickbacks prohibited. – It
shall be unlawful for any person, directly or indirectly, to
withhold any amount from the wages (and benefits) of a
worker or induce him to give up any part of his wages by
force, stealth, intimidation, threat or by any other means
whatsoever without the worker’s consent.”
The above provision is clear and needs no further
elucidation. Indeed, petitioner has no legal authority to
withhold respondents’ 13th month pay and other benefits.
What an employee has worked for, his employer must
pay. Thus, an employer cannot simply refuse to pay the
wages or benefits of its employee because he has either
defaulted in paying a loan guaranteed by his employer; or
violated their memorandum of agreement; or failed to
render an accounting of his employer’s property.
40) HONDA PHILS. INC. VS. SAMAHAN NG
MANGGAGAWA NG HONDA, JUNE 2005
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.10
In some instances, however, the provisions of a CBA may
become contentious, as in this case
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.
ANOTHER VERSION YES….
Honda Phils., Inc., vs Samahan ng Malayang
Manggagawa sa Honda (2005) G.R. 145561
Facts:
The case stems from the collective bargaining agreement
between Honda and the respondent union that it granted
the computation of 14th month pay as the same as 13th
month pay. Honda continues the practice of granting
financial assistance covered every December each year of
not less than 100% of the basic salary. In the latter part of
1998, the parties started to re-negotiate for the fourth and
fifth years of the CBA. The union filed a notice of strike
on the ground of unfair labor practice for deadlock.
DOLE assumed jurisdiction over the case and certified it
to the NLRC for compulsory arbitration. The striking
employees were ordered to return to work and
management to accept them back under the same terms
prior to the strike staged. Honda issued a memorandum of
the new computation of the 13th month and 14th month
pay to be granted to all its employees whereby the 31 long
strikes shall be considered unworked days for purpose of
computing the said benefits. The amount equivalent to ½
of the employees’ basic salary shall be deducted from
these bonuses, with a commitment that in the event that
the strike is declared legal, Honda shall pay the amount.
The respondent union opposed the pro-rated computation
of bonuses. This issue was submitted to voluntary
arbitration where it ruled that the company’s
implementation of the pro-rated computation is invalid.
Issue: WON the pro-rated computation of the 13th and
14th month pays and other bonuses in question is valid
and lawful.
Held: The pro-rated computation is invalid.
The pro-rated computation of Honda as a company policy
has not ripened into a company practice and it was the
first time they implemented such practice.
The payment of the 13th month pay in full month payment
by Honda has become an established practice. The length
of time where it should be considered in practice is not
being laid down by jurisprudence. The voluntary act of
the employer cannot be unilaterally withdrawn without
violating Article 100 of the Labor Code.
The court also rules that the withdrawal of the benefit of
paying a full month salary for 13th month pay shall
constitute a violation of Article 100 of the Labor Code.
41) PAG-ASA STEEL WORKS VS. CA, MARCH
2006
FACTS:
Petitioner Pag-Asa Steel Works, Inc. is a corporation duly
organized and existing under Philippine laws and is
engaged in the manufacture of steel bars and wire rods.
Pag-Asa Steel Workers Union is the duly authorized
bargaining agent of the rank -and-file employees of
petitioner. The CBA between the company and the union
provided for a wage adjustment every July 1st for the
years 1999- 2000. In October of 1999, Wage Order #
NCR -07 was issued providing for a Php25.50 per day
increase in the salary of minimum wage earners. This
wage increase was paid accordingly by the petitioner. In
July 2000, the rank and file employees were again given
an increase in accordance with the provision of the CBA.
In November 2000, Wage Order # NCR -08 was issued
providing for a Php26.50 per day increase in the salary of
minimum wage earners, making the minimum wage
Php250/day. The Union President requested for the
implementation of the wage order in favor of the rank and
file employees. Petitioner however refused because none
of the employees were receiving a daily salary rate lower
than Php250, there was no wage distortion and it is not
obliged to grant the wage increase.
ISSUE:
Whether or not management is obliged to grant wage
increase in accordance with a wage order as a matter of
practice even if its employees are receiving salaries higher
than the minimum wage?
HELD:
No, management is not obliged to grant the wage increase
under the wage order, either by virtue of the CBA, or as a
matter of company practice. Wage Order No. NCR-08
clearly states that only those employees receiving salaries
below the prescribed minimum wage are entitled to the
wage increase provided therein, and not all employees
across-the- board as respondent Union would want
petitioner to do. Considering that none of the members of
respondent Union are receiving salaries below the
P250.00 minimum wage, petitioner is not obliged to grant
the wage increase to them. The claim that the grant of a
wage-order mandated increase to all the employees
regardless of their salary rates on an agreement collateral
to the CBA had ripened into company practice is not
supported by evidence. Respondent Union failed to
adduce proof on the salaries of the employees prior to the
issuance of each wage order to establish its allegation that,
even if the employees were receiving salaries above the
minimum wage and there was no wage distortion, they
were still granted salary increase. It is only when
examples offered to establish pattern of conduct or habit
are numerous enough to lose an inference of systematic
conduct that.
LONGER VERSION:
PAGASA STEEL WORKS V. CA - MONTEALTO
FACTS:
1. Pagasa steel works is a corporation duly
organized and existing under PH laws. They are engaged
in the manufacture of steel bars and wire rods.
2. Pagasa steel workers Union is the duly authorized
bargaining agent of the rank-and-file employees of
petitioner.
3. Regional Tripartite Wages and Productivity
Board (RTWPB) issued Wage order no. NCR-60 which
provided for an increase of 13pesos per day in the salaries
of employees receiving the minimum wage. And a
consequent increase in the minimum wage rate to 198 per
day.
4. Petitioner and the Union negotiated on how to go
about the wage adjustments. Petitioner forwarded a letter
with the list of the salary adjustments of the rank-and file
employees.
5. On 1999, petitioner and union entered into a
CBA. Sec. 1, Article VI of said CBA provides:
Section 1. WAGE ADJUSTMENT - The COMPANY
agrees to grant all the workers, who are already regular
and covered by this AGREEMENT at the effectivity of
this AGREEMENT, a general wage increase as follows:
July 1, 1999 . . . . . . . . . . . P15.00 per day per employee
July 1, 2000 . . . . . . . . . . . P25.00 per day per employee
July 1, 2001 . . . . . . . . . . . P30.00 per day per employee
The aforesaid wage increase shall be implemented across
the board. Any Wage Order to be implemented by the
Regional Tripartite Wage and Productivity Board shall be
in addition to the wage increase adverted to above.
However, if no wage increase is given by the Wage Board
within six (6) months from the signing of this
AGREEMENT, the Management is willing to give the
following increases, to wit:
July 1, 1999 . . . . . . . . . . . P20.00 per day per employee
July 1, 2000 . . . . . . . . . . . P25.00 per day per employee
July 1, 2001 . . . . . . . . . . . P30.00 per day per employee
6. On Oct. 1999, wage order 7 was issued which
provided for 25pesos increase in the salary of employees
receiving minimum wage. Petitioner paid the increase.
7. On 2000, there was again another increase based
on the Sec.1 of the CBA.
8. On Nov 1, 2000, Wage order 8 was issued which
provides an increase of 26.50pesos per day, setting a new
minimum wage in NCR of 250pesos per day.
9. Union requested petitioner to implement the
increase under Wage order 8.
10. Petitioner rejected the request claiming that none
of the employees were receiving a daily salary rate lower
than P250 and there was no wage distortion, it was not
obliged to grant the wage increase.
11. Union elevated it to the NCMB. The union
alleged that it has been the company’s practice to grant
wage increase under a government issued wage order,
aside from the yearly wage increases in the CBA
a. That petitioner paid the salary increases under the
previous wage orders in full, regardless of whether there
was a resulting wage disorder or whether Union
member’s salaries were above the minimum wage rate.
b. That an established practice cannot be
discontinued without running afoul Art. 100 of Labor
Code on non-dimunition of benefits.
12. Petitioner alleged that there is no such company
practice and that it complied with the previous wage
orders. It asserted that at present, all its employees enjoy
regular status and that none receives a daily wage lower
than the P250 minimum wage rate prescribed under Wage
Order 8.
a. That that the full implementation of the previous
wage orders did not give rise to a company practice as it
was not given to the workers within the bargaining unit
on a silver platter, but only per request of the Union and
after a series of negotiations. In fact, during CBA
negotiations, it steadfastly rejected the following proposal
of the Union’s counsel, Atty. Florente Yambot, to include
an across-the-board implementation of the wage orders
13. The Union, however, insisted that there was such
a company practice. It pointed out that despite the fact that
all the employees were already receiving salaries above
the minimum wage, the CBA still provided for the
payment of a wage increase using wage orders as the
yardstick. It claimed that the parties intended that
petitioner would pay the additional increases apart from
those in the CBA.
14. VA: dismissed the case. No company practice of
granting a wage order increase to employees across-the-
board, and that there is no provision in the CBA that
would oblige petitioner to grant the wage increase under
Wage Order No. 08 across-the-board
15. CA: reversed. CBA is the law between parties. It
is clear that the petitioner should grant the wages. CA also
held that the employer has no valid reason not to
implement the wage increase mandated by Wage Order
No. NCR-08 because prior thereto, it had been paying the
wage increase provided for in the CBA even though the
employees concerned were already receiving wages way
above the applicable minimum wage
ISSUE: WON the company was obliged to grant the wage
increase under Wage Order 8 as a matter of practice? NO.
HELD:
1. Petitioner is not obliged to grant the wage
increase under Wage Order No. 8 either by virtue of the
CBA, or as matter of company practice.
2. There is no legal basis to implement the same
across-the-board. A perusal of the record shows that the
lowest paid employee before the implementation of Wage
Order #8 is P250.00/day and none was receiving below
P223.50 minimum.
a. This could only mean that the union can no longer
demand for any wage distortion adjustment. Neither could
they insist for an adjustment of P26.50 increase under
Wage Order #8.
3. The provision of wage order #8 and its
implementing rules are very clear as to who are entitled to
the P26.50/day increase, i.e., "private sector workers and
employees in the National Capital Region receiving the
prescribed daily minimum wage rate of P223.50 shall
receive an increase of Twenty-Six Pesos and Fifty
Centavos (P26.50) per day,"
a. since the lowest paid is P250.00/day the company
is not obliged to adjust the wages of the workers.
4. The increases granted under the Wage Orders
were obtained thru request and negotiations because of
the existence of wage distortion and not as company
practice as what the union would want.
5. Neither does the court find merit in the argument
that under the CBA, such increase should be implemented
across-the board.
a. The provision in the CBA that "Any Wage Order
to be implemented by the RTWPB shall be in addition to
the wage increase adverted above" cannot be interpreted
in support of an across-the-board increase. If such were
the intentions of this provision, then the company could
have simply accepted the original demand of the union for
such across-the-board implementation, as set forth in their
original proposal.
6. The error of the CA lies in its considering only
the CBA in interpreting the wage adjustment provision,
without taking into account Wage Order No. 8, and the
fact that the members of respondent Union were already
receiving salaries higher than P250.00 a day when it was
issued.
a. The CBA cannot be considered independently of
the wage order which respondent Union relied on for its
claim.
7. Respondent Union relied on a collateral
agreement between it and petitioner, an agreement
extrinsic of the CBA based on an alleged established
practice of the latter as employer. This is based on Art.
XXVII of the CBA (see annex 1)
a. The court held that To allow alleged collateral
agreements or parol/oral agreements would be violative
of the CBA provision afore-quoted
8. Habit, custom, usage or pattern of conduct must
be proved like any other facts. Courts must contend with
the caveat that, before they admit evidence of usage, of
habit or pattern of conduct, the offering party must
establish the degree of specificity and frequency of
uniform response that ensures more than a mere tendency
to act in a given manner but rather, conduct that is semi-
automatic in nature.
9. The offering party must allege and prove specific,
repetitive conduct that might constitute evidence of habit.
The examples offered in evidence to prove habit, or
pattern of evidence must be numerous enough to base on
inference of systematic conduct.
a. Mere similarity of contracts does not present the
kind of sufficiently similar circumstances to outweigh the
danger of prejudice and confusion.
10. In determining whether the examples are
numerous enough, and sufficiently regular, the key
criteria are adequacy of sampling and uniformity of
response.
11. No evidence to prove that the grant of a wage-
order-mandated increase to all the employees regardless
of their salary rates on an agreement collateral to the CBA
had ripened into company practice before the effectivity
of Wage Order No. NCR-08.
PROCEDURAL ISSUE:
1. issues not raised below cannot be raised for the
first time on appeal. the ambiguity of the CBA and its
failure to express the true intention of the parties has not
been expressly raised before the voluntary arbitration
proceedings. The parties specifically confined the issue
for resolution by the VA to whether or not the petitioner
is obliged to grant an increase to its employees as a matter
of practice.
a. However, the court held that respondent Union
nevertheless raised the same issues in its pleadings. In its
Position Paper, it asserted that the CBA consistently
contained a collateral agreement to pay the equivalent of
the wage orders across-the-board; in its Reply, it claimed
that such provision clearly provided that petitioner would
pay the additional increases apart from the CBA and that
the wage order serves only as a measure of said increase.
These assertions indicate that respondent Union also
relied on the CBA to support its claim for the wage
increase
42) PROTACIO VS. LAYA MANANGHAYA,
MARCH 2009
FACTS:
Respondent KPMG Mananghaya & Co. hired petitioner
Zayber John B. Protacio as Tax Manager in 1996. He was
subsequently promoted as Senior Tax Manager then as
Tax Principal in 1 October 1997. However, petitioner
resigned effective 30 September 1999. On 1 December
1999, petitioner sent a letter to responded firm demanding
the immediate payment of his 13th month pay, the cash
commutation of his leave credits and the issuance of his
1999 Certificate of Income Tax Withheld on
Compensation. He sent two more demand letters for the
payment of his reimbursement claims under pain of a
legal action.
Respondent firm failed to act upon the demand letters.
Thus, on 15 December 1999, petitioner filed before the
NLRC a complaint for the non-issuance of petitioner’s W-
2 tax form for 1999 and the non-payment of the following
benefits: 1) cash equivalent of petitioner’s leave credits in
the amount of P55,467.60; 2) proportionate 13th month
pay for 1999; 3) reimbursement claims of P19,012; and 4)
lump sum pay for the FY 1999 of P674,756.7. He also
sought moral and exemplary damages and attorney’s fees.
During the pendency of the case, respondent firm on three
occasions sent check payments to petitioner in the
following amounts: 1) P17,250 13th month pay; 2)
P54,824.18 cash equivalent of his leave credits and
reimbursement claims; and 3) P10,762.57 refund of taxes
withheld on his vacation leave credits. Petitioner
acknowledged the receipt of the 13th month pay but
disputed the computation of the cash value of his vacation
leave credits and reimbursement claims.
The Labor Arbiter rendered a decision, ordering
respondent to pay complainant the following: P12,681
reimbursement claims; P28,407.08 for underpayment of
cash equivalent of the unused leave credits; P573,000
year-end lump sum payment for 1999, and; 10% of total
judgment awards way of attorney’s fees.
The Labor Arbiter held that the respondent firm had
erroneously based the computation of the cash equivalent
of the leave credits on a basic pay of P61,000. He held
that evidence showed that petitioner’s monthly basic
salary was P95,000 inclusive of the other benefits that
were deemed included and integrated in the basic salary
and that respondent firm had computed petitioner’s 13th
month pay based on a monthly basic pay of P95,000, thus
the cash commutation of the leave credits should also be
based on this figure.
The Labor Arbiter also ruled that petitioner was entitled
to a year-end payment of P573,000 on the basis of the
company policy of granting yearly lump sum payments to
petitioner during all the years of service and that
respondent firm had failed to give petitioner the same
benefit for 1999 without any explanation.
Respondent firm appealed to the NLRC which rendered a
judgment affirming its earlier ruling with the modification
that complainant is only entitled to receive P2,301 as
reimbursement claims. The award of P12,681 was set
aside for lack of basis while affirming the findings on the
issues of lump sum payments and cash equivalents of
leave credits. After being denied by NLRC its petition for
reconsideration, respondent elevated the matter to the
Court of Appeals.
The CA further reduced total money award to petitioner
to P2,301 for reimbursement claims, P9,8012.83 for
underpayment of cash equivalent of unused leave credits,
and P10,000 attorney’s fees.
With respect to the award of the year-end lump sum, the
CA held that while the lump sum payment which
petitioner was entitled, the payment thereof was
contingent upon the financial position of the firm.
Petitioner brought the matter to the Supreme Court.
ISSUE:
Whether or not petitioner is entitled to the year-end lump
sum as part of his compensation package.
RULING:
The evidence on record establishes that aside from the
basic monthly compensation, petitioner received a yearly
lump sum amount during the first two years of his
employment, with payments made to him after the annual
net incomes of the firm had been determined. Thus, the
amounts thereof varied and were dependent on the firm’s
cash position and financial performance. In one of the
letters of Mananghaya to petitioner, the amount was
referred to as petitioner’s “share in the incentive
compensation program.”
While the amount was drawn from the annual net income
of the firm, the distribution to non-partners of employees
of the firm was not a profit-sharing arrangement contrary
to CA’s finding. The payment to non-partners like the
petitioner was discretionary on the part of the chairman
and managing chairman coming from their authority to fix
compensation of any employee based on a share in the
partnership’s net income.
The distribution being merely discretionary, the year-end
lump sum payment may properly be considered as a year-
end bonus or incentive. Contrary to petitioner’s claim, the
granting of the year-end lump sum amount was payable
only after the firm’s annual net income and cash position
were determined.
A “bonus” is a gratuity, or act of liberality of the giver. It
is something given in addition to what is ordinarily
received by or strictly due the recipient. A bonus is
granted and paid to an employee for his industry and
loyalty which contributed to the success of the employer’s
business and made possible the realization of profits.
Generally, a bonus is not a demandable and enforceable
obligation. It is so only when it is made part of the wage
or salary or compensation. When considered as part of the
compensation and therefore demandable and enforceable,
the amount is usually fixed. If the amount would be
dependent upon the realization of profits, the bonus is also
not demandable and enforceable.
Thus, petitioner’s claim that the year-end lump sum
represented the balance of his total compensation package
is incorrect. The fact remains that the amount paid to
petitioner on the two occasions varied and were always
dependent upon the firm’s financial position.
In Philippine Duplicators, Inc. v. NLRC, the Court held
that if the bonus is paid only if profits are realized or a
certain amount of productivity achieved, it cannot be
considered part of wages. Only when the employer
promises and agrees to give without any conditions
imposed for its payment, does the bonus become part of
the wage.
The granting of the bonus is basically a management
prerogative which cannot be enforced upon the employer
who may not be obliged to assume the onerous burden of
granting bonuses or other benefits aside from the
employees’ basic salaries or wages.
Respondents had consistently maintained that petitioner
was not entitled to the bonus as a matter of right. The
payment of the year-end lump sum bonus based upon the
firm’s productivity or the individual performance of tis
employees was well within respondent firm’s prerogative.
Thus, respondent was also justified in declining to give
the bonus to petitioner on account of the latter’s
unsatisfactory performance. The granting of the year-end
lump sum bonus was discretionary and conditional, thus,
petitioner may not question the basis for the granting of a
mere privilege.
The monthly compensation of P71,250 used as base
figure by the CA is totally without basis. As correctly held
by the Labor Arbiter and the NLRC, the evidence on
record reveals that petitioner was receiving a monthly
compensation of P95,000 consisting of a basic salary of
P61,000, advance incentive pay of P15,000,
transportation allowance of P15,000, and representation
allowance of P4,000, totalling to P95,000 and are all
deemed part of petitioner’s monthly compensation
package, and as such, should be the basis in the cash
commutation of his leave credits. These allowances were
customarily furnished by respondent firm and regularly
received by the petitioner on top of the basic monthly pay
of P61,000. Moreover, respondent firm’s act of paying
petitioner a 13th month pay at the rate of P95,000 was as
admission that petitioner’s basic monthly salary was
P95,000.
The Court was also perplexed on the use of the CA, the
Labor Arbiter and the NLRC of a 30-working day divisor
instead of 26 days which petitioner insists and which even
the respondent firm used in the cash commutation of leave
credits. The reliance of CA on Section 2, Rule IV, Book
III of the Implementing Rules of Labor Code in using the
30-day working divisor is inapplicable to the instant case
because it referred to the computation of holiday pay for
monthly-paid employees.
Thus, with a monthly compensation of P95,000 and using
a 26-working day divisor, petitioner’s daily rate is
P3,653.85. Based on this rate, petitioner’s cash equivalent
of his leave credits of 23.5 is P85,865.48. Since he has
already received the amount of P46,009.67, a balance of
P39,855.80 remains payable to petitioner.
Wherefore, the instant petition for review on certiorari is
partly granted. The Decision of the CA is affirmed with
the modification that respondents are liable for the
underpayment of the cash equivalent of petitioner’s leave
credits in the amount of P39,855.80.
43) PRODUCERS BANK OF THE PHILS. VS.
NLRC, MARCH 2001
FACTS: The present petition originated from a complaint
filed by private respondent on 11 February 1988 with the
Arbitration Branch, NLRC, charging petitioner with
diminution of benefits, non-compliance with Wage Order
No. 6 and non-payment of holiday pay. In addition,
private respondent prayed for damages.
Labor arbiter dismissed the complaint for lack of merit.
NLRC, however, granted all of private respondent’s
claims, except for damages. Petition filed a Motion for
Partial Reconsideration, which was denied by the NLRC.
Hence, recourse to this Court.
Petitioner contends: that the NLRC gravely abused its
discretion in ruling as it did for the succeeding reasons
stated: (1) it contravened the Supreme Court decision in
Traders Royal Bank v. NLRC, et al., G.R. No. 88168,
promulgated on August 30, 1990, (2) its ruling is not
justified by law and Art. 100 of the Labor Code, (3) its
ruling is contrary to the CBA, and (4) the so-called
“company practice invoked by it has no legal and moral
bases” (4) petitioner, under conservatorship and
distressed, is exempted under Wage Order No. 6.
ISSUE: WON respondent is entitled for the payment of
the above-mentioned monetary claims, particularly
BONUS.[Hindi ko na po sinama ung ibang issues]
HELD:
As to the bonuses, private respondent declared in its
position papers filed with the NLRC that –
Producers Bank of the Philippines, a banking institution,
has been providing several benefits to its employees since
1971 when it started its operation. Among the benefits it
had been regularly giving is a mid-year bonus equivalent
to an employee’s one-month basic pay and a Christmas
bonus equivalent to an employee’s one whole month
salary (basic pay plus allowance);
When P.D. 851, the law granting a 13thmonth pay, took
effect, the basic pay previously being given as part of the
Christmas bonus was applied as compliance to it (P.D.
851), the allowances remained as Christmas bonus;
From 1981 up to 1983, the bank continued giving one
month basic pay as mid-year bonus, one month basic pay
as 13thmonth pay but the Christmas bonus was no longer
based on the allowance but on the basic pay of the
employees which is higher;
In the early part of 1984, the bank was placed under
conservatorship but it still provided the traditional mid-
year bonus;
By virtue of an alleged Monetary Board Resolution No.
1566, bank only gave a one-half (1/2) month basic pay as
compliance of the 13thmonth pay and none for the
Christmas bonus.
Respondent’s Contention: that the mid-year and
Christmas bonuses, by reason of their having been given
for thirteen consecutive years, have ripened into a vested
right and, as such, can no longer be unilaterally withdrawn
by petitioner without violating Article 100 of Presidential
Decree No. 4429 which prohibits the diminution or
elimination of benefits already being enjoyed by the
employees. Although private respondent concedes that
the grant of a bonus is discretionary on the part of the
employer, it argues that, by reason of its long and regular
concession, it may become part of the employee’s regular
compensation.
Petitioner asserts: that it cannot be compelled to pay the
alleged bonus differentials due to its depressed financial
condition, as evidenced by the fact that in 1984 it was
placed under conservatorship by the Monetary Board.
According to petitioner, it sustained losses in the millions
of pesos from 1984 to 1988, an assertion which was
affirmed by the labor arbiter. Moreover, petitioner points
out that the collective bargaining agreement of the parties
does not provide for the payment of any mid-year or
Christmas bonus. On the contrary, section 4 of the
collective bargaining agreement states that –
Acts of Grace. Any other benefits or privileges which are
not expressly provided in this Agreement, even if now
accorded or hereafter accorded to the employees, shall be
deemed purely acts of grace dependent upon the sole
judgment and discretion of the BANK to grant, modify or
withdraw.
A bonus is an amount granted and paid to an employee for
his industry and loyalty which contributed to the success
of the employer’s business and made possible the
realization of profits. It is an act of generosity granted by
an enlightened employer to spur the employee to greater
efforts for the success of the business and realization of
bigger profits.12 The granting of a bonus is a management
prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient.13
Thus, a bonus is not a demandable and enforceable
obligation,14 except when it is made part of the wage,
salary or compensation of the employee.15
However, an employer cannot be forced to distribute
bonuses which it can no longer afford to pay. To hold
otherwise would be to penalize the employer for his past
generosity. Thus, in Traders Royal Bank v. NLRC,16 we
held that –
It is clear x x x that the petitioner may not be obliged to
pay bonuses to its employees. The matter of giving them
bonuses over and above their lawful salaries and
allowances is entirely dependent on the profits, if any, respondent union. The deadlock continued for at least six
realized by the Bank from its operations during the past months. The private respondent, to resolve the issue filed
year. a case against petitioner for unfair labor practice and
flagrant violation of the CBA.
xxx
The Labor Arbiter dismissed the petition. NLRC reversed
In light of these submissions of the petitioner, the
the findings and ordered the implementation of the CBA.
contention of the Union that the granting of bonuses to the
employees had ripened into a company practice that may Issue: WON the employees who have retired have no
not be adjusted to the prevailing financial condition of the personality to file an action since there is no longer an
Bank has no legal and moral bases. Its fiscal condition employer-employee relationship.
having declined, the Bank may not be forced to distribute
Held: Employees who have retired still have the
bonuses which it can no longer afford to pay and, in effect,
personality to file a complaint.
be penalized for its past generosity to its employees. –
Retirement results from a voluntary agreement between
Private respondent’s contention, that the decrease in the
the employer and the employee whereby the latter after
mid-year and year-end bonuses constituted a diminution
reaching a certain age agrees to sever his employment
of the employees’ salaries, is not correct, for bonuses are
with the former. The very essence of retirement is the
not part of labor standards in the same class as salaries,
termination of employer-employee relationship.
cost of living allowances, holiday pay, and leave benefits,
which are provided by the Labor Code Retirement of the employee does not in itself affect his
employment status especially when it involves all rights
This doctrine was reiterated in the more recent case of
and benefits due to him, since these must be protected as
Manila Banking Corporation v. NLR1
though there had been no interruption of service. It must
Petitioner was not only experiencing a decline in its be borne in mind that the retirement scheme was part of
profits, but was reeling from tremendous losses triggered the employment package and the benefits to be derived
by a bank-run which began in 1983. In such a depressed therefrom constituted as it were a continuing
financial condition, petitioner cannot be legally consideration of services rendered as well as an effective
compelled to continue paying the same amount of inducement foe remaining with the corporation. It is
bonuses to its employees. Thus, the conservator was intended to help the employee enjoy the remaining years
justified in reducing the mid-year and Christmas bonuses of his life.
of petitioner’s employees. To hold otherwise would be to
When the retired employees were requesting that their
defeat the reason for the conservatorship which is to
retirement benefits be granted, they were not pleading for
preserve the assets and restore the viability of the
generosity but merely demanding that their rights,
financially precarious bank. Ultimately, it is to the
embodied in the CBA, be recognized. When an employee
employees’ advantage that the conservatorship achieve its
has retired but his benefits under the law or CBA have not
purposes for the alternative would be petitioner’s closure
yet been given, he still retains, for the purpose of
whereby employees would lose not only their benefits,
prosecuting his claims, the status of an employee entitled
but their jobs as well.
to the protection of the Labor Code, one of which is the
protection of the labor union.
SHORTER VERSION:
Producers Bank vs NLRC () 335 SCRA 506
Facts:
Petitioner was placed by Central Bank of the Philippines
(Bangko Sentral ng Pilipinas) under a conservator for the
purpose of protecting its assets. When the respondents
ought to implement the CBA (Sec. 1, Art. 11) regarding
the retirement plan and pertaining to uniform allowance,
the acting conservator of the petition expressed objection
resulting an impasse between the petitioner bank and