ATOK-BIG WEDGE MUTUAL BENEFIT ASSOC VS ATOK-BIG WEDGE MINING COMPANY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ruling: The Court agrees with the Solicitor General. It noted that there are two ways in the determination of wage,
these are floor wage method and salary ceiling method. The floor wage method involves the fixing of determinate
amount that would be added to the prevailing statutory minimum wage while the salary ceiling method involves
where the wage adjustment is applied to employees receiving a certain denominated salary ceiling.
RA 6727 gave statutory standards for fixing the minimum wage.

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

(a) The demand for living wages; (f) Improvements in standards of living;

(b) Wage adjustment vis-a-vis the consumer price
index;
(c) The cost of living and changes or increases
therein;
(d) The needs of workers and their families;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity
to pay of employers;
(i) Effects of employment generation and family
income; and

(e) The need to induce industries to invest in the (j) The equitable distribution of income and wealth
countryside; along the imperatives of economic and social
development."

The wage order was not acted in excess of board’s authority. The law gave reasonable limitations to the
delegated power of the board.
METROPOLITAN BANK & TRUST vs. NLRC and METROPOLITAN BANK and TRUST COMPANY
1. LABOR LAW; NATIONAL LABOR RELATIONS COMMISSION; TERM "WAGE DISTORTION,"DEFINED. — The term
"wage distortion", under the Rules Implementing Republic Act 6727,is defined, thus: "(p) Wage Distortion
means a situation where an increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure
based on skills, length of service, or other logical bases of differentiation."

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

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

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

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

Minimum Wage = % x Prescribed = Distortion

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

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

HELD: NO

"ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any
employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1 )
month before the intended date thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay
or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and
in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half () month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year."

It is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction of personnel. The
peculiar circumstances in the case at bar, however, involves neither the closure of an establishment nor a reduction of
personnel as contemplated under the aforesaid article. When the Patalon Coconut Estate was closed because a large
portion of the estate was acquired by DAR pursuant to CARP, the ownership of that large portion of the estate was precisely
transferred to PEARA and ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article
283 of the Labor Code is not applicable to the case at bench.

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

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

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

Section 3. 13th Month Pay

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

Section 6. 14th Month Pay

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

Section 7. The COMPANY agrees to continue the practice of granting, in its discretion, financial assistance
to covered employees in December of each year, of not less than 100% of basic pay.

This CBA is effective until year 2000. In the latter part of 1998, the parties started re-negotiations for the
fourth and fifth years of their CBA. When the talks between the parties bogged down, respondent union
filed a Notice of Strike on the ground of bargaining deadlock. Thereafter, Honda filed a Notice of Lockout.
[To cut the story short, Secretary assumed jurisdiction; second notice of strike; Sec. again assumed
jurisdiction]

The management of Honda subsequently issued a memorandum announcing its new computation of the
13th and 14th month pay to be granted to all its employees whereby the thirty-one (31)-day long strike
shall be considered unworked days for purposes of computing said benefits. As per the company’s new
formula, the amount equivalent to 1/12 of the employees’ basic salary shall be deducted from these
bonuses, with a commitment however that in the event that the strike is declared legal, Honda shall pay
the amount deducted.

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

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

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

HELD: The petition lacks merit.

A collective bargaining agreement refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit.8 As in all contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy.9 Thus, where the CBA is clear and unambiguous, it
becomes the law between the parties and compliance therewith is mandated by the express policy of the
law.
In some instances, however, the provisions of a CBA may become contentious, as in this case.
HONDA PHILS vs. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA

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

Under the Revised Guidelines on the Implementation of the 13th month pay issued on November 16, 1987,
the salary ceiling of P1,000.00 under P.D. No. 851 was removed. It further provided that the minimum 13th
month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an
employee within a calendar year. The guidelines pertinently provides:

The “basic salary” of an employee for the purpose of computing the 13th month pay shall include all
remunerations or earnings paid by his employer for services rendered but does not include allowances
and monetary benefits which are not considered or integrated as part of the regular or basic salary, such
as the cash equivalent of unused vacation and sick leave credits, overtime premium, night differential
and holiday pay, and cost-of-living allowances.
For employees receiving regular wage, we have interpreted “basic salary” to mean, not the amount
actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of
service within a given calendar year.
The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or
separation from work. As the rules state, under these circumstances, an employee is entitled to a pay in
proportion to the length of time he worked during the year, reckoned from the time he started working
during the calendar year.

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

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

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

Petition Denied.
 RUGA V. NLRC

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

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

On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman,
president of private respondent, to proceed to the police station at Camaligan, Camarines Sur, for
investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private
respondent. Petitioners denied the charge claiming that the same was a countermove to their having
formed a labor union and becoming members of Defender of Industrial Agricultural Labor Organizations
and General Workers Union (DIALOGWU) on September 3, 1983.
During the investigation, no witnesses were presented to prove the charge against petitioners, and no
criminal charges were formally filed against them.

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

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

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

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

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

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

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