P.I. MANUFACTURING, INC. v. P.I.

MANUFACTURING SUPERVISORS AND

FOREMAN
ASSOCIATION and the NATIONAL LABORUNION
G.R. No. 167217 February 4, 2008

DOCTRINE:
The Court adopts the policy that requires recognition and validation of wage increases
given by employers either unilaterally or as a result of collective bargaining negotiations in an
effort to correct wage distortions.

FACTS:
P.I. Manufacturing, Inc. is a domestic corporation engaged in the manufacture and sale of
household appliances. P.I. Manufacturing Supervisors and Foremen Association (PIMASUFA) is
an organization of supervisors and foremen, joined in this case by its federation, the National
Labor Union (NLU). In 1987, the President signed into law RA 6640 providing, among others,
an increase in the statutory minimum wage and salary rates of employees and workers in the
private sector.
Section 2 provides: The statutory minimum wage rates of workers and employees in the
private sector, whether agricultural or non-agricultural, shall be increased by ten pesos (P10.00)
per day, except non-agricultural workers and employees outside Metro Manila who shall receive
an increase of eleven pesos (P11.00) per day: Provided, that those already receiving above the
minimum wage up to one hundred pesos (P100.00) shall receive an increase of ten pesos
(P10.00) per day. Excepted from the provisions of this Act are domestic helpers and persons
employed in the personal service of another.
P.I. and PIMASUFA entered into a new Collective Bargaining Agreement (1987 CBA)
whereby the supervisors were granted an increase of P625.00 per month and the foremen,
P475.00 per month. The increases were made retroactive prior to the passage of R.A. No. 6640,
and every year thereafter until July 26, 1989.
In 1989, PIMASUFA and NLU filed a complaint with the Arbitration Branch of
the NLRC, charging P.I. with violation of R.A. No. 6640. They attached to their complaint a
numerical illustration of wage distortion resulting from the implementation of R.A. No. 6640.

Ruling of the Labor Arbiter: In favor of PIMASUFA.

Ruling of the National Labor Relations Commission: Affirmed the Labor Arbiters judgment.

COURT OF APPEAL RULING: Affirmed the Decision of the NLRC with modification by
raising the 13.5% wage increase to 18.5%.
ISSUE:
Whether the increase resulting from any wage distortion caused by the implementation of
Republic Act 6640 is waivable.

SUPREME COURT RULING:

YES. R.A. No. 6727, otherwise known as the Wage Rationalization Act, explicitly
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 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 this case, the Court of Appeals correctly ruled that a wage distortion occurred due to
the implementation of R.A. No. 6640. Significantly, the 1987 CBA wage increases almost
doubled that of the P10.00 increase under R.A. No. 6640. Clearly, the gap between the wage
rates of the supervisors and those of the foremen was inevitably reestablished. It continued to
broaden through the years. Interestingly, such gap as re-established by virtue of the CBA is more
than a substantial compliance with R.A. No. 6640. The CA erred in not taking into account the
provisions of the CBA viz-a-viz the wage increase under the said law. To direct petitioner to
grant an across-the-board increase to all of them, regardless of the amount of wages they are
already receiving, would be harsh and unfair to the former.
To compel employers simply to add on legislative increases in salaries or allowances
without regard to what is already being paid, would be to penalize employers who grant their
workers more than the statutory prescribed minimum rates of increases. Clearly, this would be
counter-productive so far as securing the interests of labor is concerned. This juncture, it must be
stressed that a CBA constitutes the law between the parties when freely and voluntarily entered
into. Here, it has not been shown that respondent PIMASUFA was coerced or forced to sign the
1987 CBA. All of its 13 officers signed the CBA with the assistance of respondent NLU.

FOOTNOTES:
1. National Federation of Labor V. National Labor Relations Commission, G.R. No.
103586, July 21, 1994, 234 SCRA 311.
2. An Act Providing for an Increase in the Wage of Public or Government Sector Employees
on a Daily Wage Basis and in the Statutory Minimum Wage and Salary Rates of
Employees and Workers in the Private Sector and for other Purposes. Official Gazette,
Vol. 84, No. 7, February 15, 1988, pp. 759-761.
3. Record, National Labor Relations Commission, pp. 172-173.
4. G.R. No. 130866, September 16, 1998, 295 SCRA 494, ruling that all references in the
amended Section 9 of B.P. No. 129 to supposed appeals from the NLRC to the Supreme
Court are interpreted and hereby declared to mean and refer to petitions for certiorari
under Rule 65. Consequently, all such petitions should henceforth be initially filed in the
 Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the
appropriate forum for the relief desired.
5. Azucena, The Labor Code with Comments and Cases, Vol. 1, p. 301.
6. Manila Mandarin Employees Union v. National Labor Relations Commission, G.R. No.
108556, November 19, 1996, 264 SCRA 320.
7. G.R. No. 102636, September 10, 1993, 226 SCRA 269.
8. G.R. No. 122653, December 12, 1987, 283 SCRA 133.
9. Mactan Workers Union v. Aboitiz, G.R. No. L-30241, June 30, 1972, 45 SCRA 577,
citing Shell Oil Workers Union v. Shell Company of the Philippines, 39 SCRA 276
(1971).
10. Werne, Law and Practice of the Labor Contract, Volume 1 Origin and Operation
Disputes, 1957, p. 20.
11. Werne, Law and Practice of the Labor Contract, Volume 1 Origin and Operation
Disputes, 1957, p. 180.
 ABDULJUAHID R. PIGCAULAN, * Petitioner, vs. SECURITY and
CREDIT NVESTIGATION, INC. and/or RENE AMBY REYES, Respondents.
G.R. No. 173648 January 16, 2012

DOCTRINE:
ART. 94. RIGHT TO HOLIDAY PAY. – (a) Every worker shall be paid his regular daily
wage during regular holidays, except in retail and service establishments regularly employing
less than ten (10) workers;
While Article 95 of the Labor Code provides:
ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. – (a) Every employee who has rendered
at least one year of service shall be entitled to a yearly service incentive of five days with pay.
Consistent with the rule that all money claims arising from an employer-employee relationship
shall be filed within three years from the time the cause of action accrued, Pigcaulan can only
demand the amounts due him for the period within three years preceding the filing of the
complaint in 2000.

Ruling of the Labor Arbiter:

Giving credence to the itemized computations and representative daily time records
submitted by Canoy and Pigcaulan, Labor Arbiter Manuel P. Asuncion awarded them their
monetary claims in his Decision [10] dated June 6, 2002. The Labor Arbiter held that the payroll
listings presented by the respondents did not prove that Canoy and Pigcaulan were duly paid as
same were not signed by the latter or by any SCII officer. The 13th month payroll was, however,
acknowledged as sufficient proof of payment, for it bears Canoy’s and Pigcaulan’s signatures.
Thus, without indicating any detailed computation of the judgment award, the Labor Arbiter
ordered the payment of overtime pay, holiday pay, service incentive leave pay and proportionate
13th month pay for the year 2000 in favor of Canoy and Pigcaulan, viz:
WHEREFORE, the respondents are hereby ordered to pay the complainants: 1) their salary
differentials in the amount of P166,849.60 for Oliver Canoy and P121,765.44 for Abduljuahid
Pigcaulan; 2) the sum of P3,075.20 for Canoy and P2,449.71 for Pigcaulan for service incentive
leave pay and;) the sum of P1,481.85 for Canoy and P1,065.35 for Pigcaulan as proportionate
13th month pay for the year 2000. The rest of the claims are dismissed for lack of sufficient basis
to make an award.
SO ORDERED.

Ruling of the National Labor Relations Commission:

Respondents appealed to the NLRC. They alleged that there was no basis for the awards made
because aside from the self-serving itemized computations, no representative daily time record
was presented by Canoy and Pigcaulan. On the contrary, respondents asserted that the payroll
listings they submitted should have been given more probative value. To strengthen their cause,
they attached to their Memorandum on Appeal payrolls [12] bearing the individual signatures of
Canoy and Pigcaulan to show that the latter have received their salaries, as well as copies of
transmittal letters [13] to the bank to show that the salaries reflected in the payrolls were directly
deposited to the ATM accounts of SCII’s employees.
The NLRC, however, in a Resolution [14] dated March 23, 2004, dismissed the appeal
and held that the evidence show underpayment of salaries as well as non-payment of service
incentive leave benefit. Accordingly, the Labor Arbiter’s Decision was sustained. The motion for
reconsideration thereto was likewise dismissed by the NLRC in a Resolution [15] dated June 14,
2004.

Ruling of the Court of Appeals:

In respondents’ petition for certiorari with prayer for the issuance of a temporary
restraining order and preliminary injunction [16] before the CA, they attributed grave abuse of
discretion on the part of the NLRC in finding that Canoy and Pigcaulan are entitled to salary
differentials, service incentive leave pay and proportionate 13th month pay and in arriving at
amounts without providing sufficient bases therefor. The CA, in its Decision [17] dated February
24, 2006, set aside the rulings of both the Labor Arbiter and the NLRC after noting that there
were no factual and legal bases mentioned in the questioned rulings to support the conclusions
made. Consequently, it dismissed all the monetary claims of Canoy and Pigcaulan on the
following rationale:
First. The Labor Arbiter disregarded the NLRC rule that, in cases involving money
awards and at all events, as far as practicable, the decision shall embody the detailed and full
amount awarded.
Second. The Labor Arbiter found that the payrolls submitted by SCII have no probative
value for being unsigned by Canoy, when, in fact, said payrolls, particularly the payrolls from
1998 to 1999 indicate the individual signatures of Canoy.
Third. The Labor Arbiter did not state in his decision the substance of the evidence adduced by
Pigcaulan and Canoy as well as the laws or jurisprudence that would show that the two are
indeed entitled to the salary differential and incentive leave pays.
Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment of the
claimed salaries and benefits despite the absence of proof that Reyes deliberately or maliciously
designed to evade SCII’s alleged financial obligation; hence the Labor Arbiter ignored that SCII
has a corporate personality separate and distinct from Reyes. To justify solidary liability, there
must be an allegation and showing that the officers of the corporation deliberately or maliciously
designed to evade the financial obligation of the corporation. [18]
Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA
in a Resolution [19] dated June 28, 2006.Hence, the present Petition for Review on Certiorari.

FACTS:
Canoy and Pigcaulan were both employed by SCII as security guards and were assigned
to SCII’s different clients. Subsequently, however, Canoy and Pigcaulan filed with the Labor
Arbiter separate complaints for underpayment of salaries and non-payment of overtime, holiday,
rest day, service incentive leaves and 13th month pays. Respondents, however, maintained that
Canoy and Pigcaulan were paid their just salaries and other benefits under the law; that the
salaries they received were above the statutory minimum wage and the rates provided by the
Philippine Association of Detective and Protective Agency Operators (PADPAO) for security
guards; that their holiday pay were already included in the computation of their monthly salaries;
that they were paid additional premium of 30% in addition to their basic salary whenever they
were required to work on Sundays and 200% of their salary for work done on holidays; and, that
Canoy and Pigcaulan were paid the corresponding 13th month pay for the years 1998 and 1999.
Labor arbiter favored to the Petitioner and NLRC affirmed the decision of the labor arbiter.
Respondent appeal to the Court of Appeals set aside the ruling of the NLRC and Labor Arbiter.
Hence, the present Petition for Review on Certiorari.

ISSUES:
I. The Honorable Court of Appeals erred when it dismissed the complaint on mere alleged failure
of the Labor Arbiter and the NLRC to observe the prescribed form of decision, instead of
remanding the case for reformation of the decision to include the desired detailed computation.
II. The Honorable Court of Appeals erred when it [made] complainants suffer the consequences
of the alleged non-observance by the Labor Arbiter and NLRC of the prescribed forms of
decisions considering that they have complied with all needful acts required to support their
claims.
III. The Honorable Court of Appeals erred when it dismissed the complaint allegedly due to
absence of legal and factual [bases] despite attendance of substantial evidence in the records.
[20]

RULING:
The Verification and Certification of Non-Forum Shopping attached to the petition was
executed by Pigcaulan alone, it was plainly and particularly indicated under the name of the
lawyer who prepared the same, Atty. Josefel P. Grageda, that he is the “Counsel for Petitioner
Adbuljuahid Pigcaulan” only. In view of these, there is therefore, no doubt, that the petition was
brought only on behalf of Pigcaulan. Since no appeal from the CA Decision was brought by
Canoy, same has already become final and executory as to him. Canoy failed to show any
reasonable cause for his failure to join Pigcaulan to personally sign the Certification of Non-
Forum Shopping. It is his duty, as a litigant, to be prudent in pursuing his claims against SCII,
especially so, if he was indeed suffering from financial distress.
The Labor Arbiter and the NLRC erred in this regard. The handwritten itemized computations
are self-serving, unreliable and unsubstantial evidence to sustain the grant of salary differentials,
particularly overtime pay. Unsigned and unauthenticated as they are, there is no way of verifying
the truth of the handwritten entries stated therein. Written only in pieces of paper and solely
prepared by Canoy and Pigcaulan, these representative daily time records, as termed by the
Labor Arbiter, can hardly be considered as competent evidence to be used as basis to prove that
the two were underpaid of their salaries. We find nothing contention that he had rendered service
beyond eight hours to entitle him to overtime pay and during Sundays to entitle him to rest day
pay. Hence, in the absence of any in the records which could substantially support Pigcaulan’s
concrete proof that additional service beyond the normal working hours and days had indeed
been rendered, we cannot affirm the grant of overtime pay to Pigcaulan. Pigcaulan is entitled to
holiday pay, service incentive leaves pay and proportionate 13th month pay for year 2000.
Article 94 of the Labor Code provides that Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly employing less than
ten (10) workers. While Article 95 of the Labor Code provides Every employee who has
rendered at least one year of service shall be entitled to a yearly service incentive of five days
with pay. Hence for he rendered service for more than a year already. Furthermore, under
Presidential Decree No. 851, [31] he should be paid his 13th month pay. As employer, SCII has
the burden of proving that it has paid these benefits to its employees. The CA is not correct in
dismissing Pigcaulan’s claims in its entirety.
Consistent with the rule that all money claims arising from an employer-employee
relationship shall be filed within three years from the time the cause of action accrued, [34]
Pigcaulan can only demand the amounts due him for the period within three years preceding the
filing of the complaint in 2000. Furthermore, since the records are insufficient to use as bases to
properly compute Pigcaulan’s claims, the case should be remanded to the Labor Arbiter for a
detailed computation of the monetary benefits due to him.

FOOT NOTES:

* Originally captioned as Oliver Canoy and Abduljuahid Pigcaulan, petitioners vs.

Security and Credit Investigation Inc. and/or Rene Amby Reyes, respondents. The Court,
however, drops Oliver Canoy from the caption consistent with the Court’s ruling herein.

** Per raffle dated January 10, 2012.

1
Rollo, pp. 10-26.
2
CA rollo, pp. 219-225; penned by Associate Justice Santiago Javier Ranada and
concurred in by Associate Justices Roberto A. Barrios and Mario L. Guariña III.
3
Id. at 18-25; penned by Commissioner Tito F. Genilo and concurred in by Presiding
Commissioner Lourdes C. Javier and Commissioner Ernesto C. Verceles.
4
Id. at 27-28.
5
Id. at 250.
6
Id. at 229-234.
7
Canoy’s complaint was docketed as NLRC-NCR Case No. 00-03-01409-2000 while
Pigcaulan’s complaint was docketed as NLRC-NCR Case No. 00-03-01782-2000.
8
Annex "1" of SCII’s Position Paper, CA rollo, pp. 59-63 and 70-76.
9
Annex "2" of SCII’s Position Paper, id. at 64-65 and 77-78.
10
Id. at 83-87.
11
Id. at 87.
12
Annex "2"-"2-OO" of SCII’s Memorandum on Appeal, id. at 101-142.
13
Annex "4"-"31" of SCII’s Memorandum on Appeal, id. at 150-205.
14
Id. at 18-25.
15
Id. at 27-28.
16
Id. at 2-16.
17
Id. at 219-225.
18
Id. at 223-224.
19
Id. at 250.
20
Rollo, p. 18.
 Nina Jewelry v. Trinidad
G.R. No. 188169, November 28, 2011

DOCTRINE:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except:
a. In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
b. For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
c. In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor.

FACTS:
Respondents, Madeline Monticello (Madeline) and Liza Trinidad (Liza) were first hired
as goldsmiths by Nia Jewelry (NIA). Madeline and Liza’s week rate are P1,500.00 and
P2,500.00, respectively.
On August 13, 2004, Nia Jewelry imposed a policy for goldsmiths requiring them to post
cash bonds or deposits in varying amounts but in no case exceeding 15% of the latter's salaries
per week. The deposits were intended to answer for any loss or damage which Nia Jewelry may
sustain by reason of the goldsmiths' fault or negligence in handling the gold entrusted to them.
The deposits shall be returned upon completion of the goldsmiths' work and after an accounting
of the gold received.
Nia Jewelry alleged that the goldsmiths were given the option not to post deposits, but to
sign authorizations allowing the former to deduct from the latter's salaries amounts not exceeding
15% of their take home pay should it be found that they lost the gold entrusted to them.
Madeline and Liza claimed otherwise that they had no option but to post the deposits.
They alleged that they were constructively dismissed by Nia Jewelry as their continued
employments were made dependent on their readiness to post the required deposits.
Nia Jewelry averred that on August 14, 2004, the respondents no longer reported for work
and signified their defiance against the new policy which at that point had not even been
implemented yet.
Respondents filed a complaint against Nia for illegal dismissal and for the award of separation
pay but later amended the complaints and rather seek for reinstatement, back wages, attorneys
fee and 13th month pay.
The LA dismissed the complaint for lack of merit but ordered Nia to pay Madeline the
sum ofP3,750.00, and Liza, P6,250.00, representing their proportionate entitlements to 13th
month pay for the year 2004. On appeal, NLRC affirmed LA’s decision but deleted the award of
the 13th month pay due to unpaid loans to Nia and ratiocinated that it was the complainants who
refused to work when they were required to post cash bond or sign an authorization for deduction
for the gold material they received and to be manufactured into various jewelries. x x x We find
it logically sound for the latter [Nia Jewelry] to innovate certain policy or rule to protect its own
business. To deprive them of such prerogative [management prerogative] will be likened to
'killing the goose that lays the golden eggs.
Respondents filed for a petition for Certiorari before the CA when NLRC ruled that it was not
illegal dismissal but abandonment of work.
CA reversed the decision of the LA and NLRC citing Art 113 of the Labor Code in case
of wage deduction and Art 114 of the same code on Deposits for loss or damages. Before
petitioners may be required to deposit cash or agree to a salary deduction proportionate to the
value of gold delivered to them, the employer must comply with the relevant conditions imposed
by law. Hence, the latter must prove that there is an existing law or regulation authorizing it to
impose such burden on its employees. And, in case of deposit, that it is engaged in a trade,
occupation or business where such requirement is a recognized practice. Nia obviously failed in
this respect but mere invoke on management prerogative.

ISSUE:
Whether or not the herein respondents are illegally dismissed.

HELD:
No. Although the propriety of requiring cash bonds seems doubtful, the court find no grounds to
hold that the respondents were dismissed expressly or even constructively by the petitioners. It
was the respondents who merely stopped reporting for work. While it is conceded that the new
policy will impose an additional burden on the part of the respondents, it was not intended to
result in their demotion. Neither is a diminution in pay intended because as long as the workers
observe due diligence in the performance of their tasks, no loss or damage shall result from their
handling of the gold entrusted to them, hence, all the amounts due to the goldsmiths shall still be
paid in full. Further, the imposition of the new policy cannot be viewed as an act tantamount to
discrimination, insensibility or disdain against the respondents. For one, the policy was intended
to be implemented upon all the goldsmiths in Nia Jewelry's employ and not solely upon the
respondents. Besides, as stressed by the petitioners, the new policy was intended to merely curb
the incidences of gold theft in the work place. The new policy can hardly be said to be disdainful
or insensible to the workers as to render their continued employment unreasonable, unlikely or
impossible.
In the findings of the LA and the NLRC that no constructive dismissal occurred are
supported by substantial evidence, the CA thus erred in giving due course to and granting the
petition filed before it. Hence, it is not even necessary anymore to resolve the issue of whether or
not the policy of posting cash bonds or making deductions from the goldsmiths' salaries is
proper. However, considering that there are other goldsmiths in Nia Jewelry’s employ upon
whom the policy challenged by the respondent its remain to be enforced, in the interest of justice
and to put things to rest, we shall resolve the issue.
 Article 113 of the Labor Code is clear that there are only three exceptions to the
general rule that no deductions from the employees' salaries can be made. The exception
which finds application in the instant petition is in cases where the employer is authorized
by law or regulations issued by the Secretary of Labor to effect the deductions. On the
other hand, Article 114 states that generally, depo sits for loss or damages are not
allowed except in cases where the employer is engaged in such trades, occupations or
business where the practice of making deposits is a recognized one, or is necessary or
desirable as determined by the Secretary of Labor in appropriate rules or regulations.
While employers should generally be given leeways in their exercise of
management prerogatives, the court with the respondents and the CA that in the case at
bar, the petitioners had failed to prove that their imposition n of the new policy upon the
goldsmiths under Nia Jewelry's employ falls under the exceptions specified in Articles 113
and 114 of the Labor Code.
Articles 113 and 114 of the Labor Code are clear as to what are the exceptions to the
general prohibition against requiring deposits and effecting deductions from the employees'
salaries. Hence, a statutory construction of the affricated provisions is not called for. Even
if we were however called upon to interpret the provisions, our inclination would still be
to strictly construe the same against the employer because evidently, the posting of cash
bonds and the making of deductions from the wages would inarguably impose an
additional burden upon the employees.
While the petitioners are not absolutely precluded from imposing the new policy, they
can only do so upon compliance with the requirements of the law. In other words, the
petitioners should first establish that the making of deductions from the salaries is
authorized by law, or regulations issued by the Secretary of Labor. Further, the posting of
cash bonds should be proven as a recognized practice in the jewelry manufacturing
business, or alternatively, the petitioners should seek for the determination by the Secretary
of Labor through the issuance of appropriate rules and regulations that the policy the
former seeks to implement is necessary or desirable in the conduct of business. The
petitioners failed in this respect. It bears stressing that without proofs that requiring
deposits and effecting deduction ns are recognized practices, or without securing the
Secretary of Labor's determination of the necessity or desirability of the same, the
imposition of new policies relative to deductions and deposits can be made subject to
abuse by the employers.

FOOTNOTES:
1. Penned by Associate Justice Amy C. Lazaro-Javier, with Associate Justices Francisco P.
Acosta and Rodil V. Zalameda, concurring; id. at 12-20.
2. G.R. No. 171392, October 30, 2006, 506 SCRA 256, 260-261.
3. Far East Agricultural Supply, Inc. v. Lebatique, G.R. No. 162813, February 12, 2007, 515
SCRA 491.
4. De Guzman v. NLRC, G.R. No. 167701, December 12, 2007, 540 SCRA 21, 34.
5. Please see the Joint Affidavit of Generoso Fortunoba, Erdie Pilares and Crisanto Ignacio,
id. at 161-162.
6. Art. 115. Limitations. – No deduction from the deposits of an employee for the actual
amount of the loss or damage shall be made unless the employee has been heard thereon,
and his responsibility has been clearly shown.
7. Citing San Miguel Corporation v. Ubaldo, G.R. No. 92859, February 1, 1993, 218 SCRA
293.
8. Sec. 12. Non-interference in disposal of wages. No employer shall limit or otherwise
interfere with the freedom of any employee to dispose of his wages and no employer
shall in any manner oblige any of his employees to patronize any store or avail of the
services offered by any person.
9. Sec. 13. Wage deduction. Deductions from the wages of the employees may be made by
the employer in any of the following cases:
(a) When the deductions are authorized by law, including deductions for the
insurance premiums advanced by the employer in behalf of the employee as well
as union dues where the right to check-off has been recognized by the employer
or authorized in writing by the individual employee himself;
(b) When the deductions are with the written authorization of the employees for
payment to a third person and the employer agrees to do so, provided that the
latter does not receive any pecuniary benefit, directly or indirectly, from the
transaction.
10. Sec. 14. Deductions for loss or damages. – Where the employer is engaged in a trade,
occupation or business where the practice of making deductions or requiring deposits is
recognized, to answer for the reimbursement of loss or damage to tools, materials, or
equipment supplied by the employer to the employee, the employer may make wage
deductions or require the employees to make deposits from which deductions shall be
made, subject to the following conditions:
(a) That the employee concerned is clearly shown to be responsible for the loss or
damage;
(b) That the employee is given reasonable opportunity to show cause why deduction
should not be made;
(c) That the amount of such deductions is fair and reasonable and shall not exceed the
actual loss or damage; and
(d) That the deduction from the wages of the employee does not exceed 20% of the
employee's wages in a week.
11. G.R. No. 183572, April 13, 2010, 618 SCRA 218, citing Montoya v. Transmed Manila
Corporation, G.R.
12. AMA Computer College-East Rizal, et al. v. Allan Raymond Ignacio, G.R. No. 178520,
June 23, 2009, 590 SCRA 633, 651.
13. Supra note 33, citing Protacio v. Laya Mananghaya & Co., G.R. No. 168654, March 25,
2009, 582 SCRA
14. G.R. No. 175201, April 23, 2008, 552 SCRA 589, citing Montemayor v. Bundalian, 453
Phil 158, 167 (2003).
15. Odilon Martinez v. B&B Fish Broker, G.R. No. 179985, September 18, 2009, 600 SCRA
691.
16. Fe La Rosa, et al. v. Ambassador Hotel, G.R. No. 177059, March 13, 2009, 581 SCRA
340, 346-347.
17. Dentech Manufacturing Corporation, et al. v. NLRC, et al., 254 Phil 595 (1989).
 NORKIS UNION VS. NORKIS TRADING PETITIONER

GR NO. 157098 JUNE 30, 2005

DOCTRINES:

FACTS:

The instant case arose as a result of the issuance of Wage Order No. ROVII-06 by the
Regional Tripartite Wages and Productivity Board (RTWPB) increasing the minimum daily wage
by P10.00, effective October 1, 1998. Prior to said issuance, herein parties entered into a
Collective Bargaining Agreement (CBA) effective from August 1, 1994 to July 31, 1999.

Sec. 1. Salary Increase. The Company shall grant a FIFTEEN (P15.00) PESOS per day
increase to all its regular or permanent employees effective August 1, 1994.

Sec. 2. Minimum Wage Law Amendment. In the event that a law is enacted increasing
minimum wage, an across-the-board increase shall be granted by the company according to the
provisions of the law. On January 27, 1998, a re-negotiation of the CBA was terminated and
pursuant to which a Memorandum of Agreement was forged between the parties. It was therein
stated that petitioner shall grant a salary increase to all regular and permanent employees as
follows:

Ten (10) pesos per day increase effective August 1, 1997; Ten (10) pesos per day increase
effective August 1, 1998.

Pursuant to said Memorandum of Agreement, the employees received wage increases of

P10.00 per day effective August 1, 1997 and P10.00 per day effective August 1, 1998. As a
result, the agreed P10.00 re-negotiated salary increase effectively raised the daily wage of the
employees to P165.00 retroactive August 1, 1997; and another increase of P10.00, effective
August 1, 1998, raising the employees daily wage to P175.00.

On March 10, 1998, the Regional Tripartite Wage Productivity Board (RTWPB) of
Region VII issued Wage Order ROVII-06 which established the minimum wage of P165.00, by
mandating a wage increase of five (P5.00) pesos per day beginning April 1, 1998, thereby raising
the daily minimum wage to P160.00 and another increase of five (P5.00) pesos per day
beginning October 1, 1998, thereby raising the daily minimum wage to P165.00 per day.

In accordance with the Wage Order and Section 2, Article XII of the CBA, [petitioner]
demanded an across-the-board increase. [Respondent], however, refused to implement the Wage
Order, insisting that since it has been paying its workers the new minimum wage of P165.00
even before the issuance of the Wage Order, it cannot be made to comply with said Wage Order.
 Thus, [respondent] argued that long before the passage of Wage Order ROVII-06 on
March 10, 1998, and by virtue of the Memorandum of Agreement it entered with herein
[petitioner], [respondent] was already paying its employees a daily wage of P165.00 per day
retroactive on August 1, 1997, while the minimum wage at that time was still P155.00 per day.
On August 1, 1998, [respondent] again granted an increase from P165.00 per day to P175.00, so
that at the time of the effectivity of Wage Order No. 06 on October 1, 1998 prescribing the new
minimum wage of P165.00 per day, [respondents] employees were already receiving P175.00 per
day.

COURT OF APPEAL RULED:

In favor of the respondent. The CA noted that the grant of an across-the-board increase, provided
under Section 2 of Article XII of the CBA, was qualified by the phrase "according to the
provisions of the law." It thus stressed the necessity of determining the import of Wage Order
No. ROVII-06, the law involved in the present controversy. Taking into consideration the
opinion of the RTWPB, Region VII, the appellate court held that respondent had sufficiently
complied with Wage Order No. ROVII-06. The Board had opined that "since adjustments
granted are only to raise the minimum wage or the floor wage as a matter of policy, x x x wages
granted over the above amount set by this Board is deemed a compliance."

The CA added that the policy and intent of the Wage Order was to cushion the impact of the
regional economic crisis upon both the workers and the employers, not to enrich the employees
at the expense of the employers. Further, it held that to compel respondent to grant an across-
the-board wage increase, notwithstanding that it was already paying salaries to its employees
above the minimum wage, would be to penalize generous employers and effectively make them
"wait for the passage of a new wage order before granting any increase. This would be counter-
productive [insofar] as securing the interests of labor is concerned."[9]

The appellate court said that the Wage Order exempted from compliance those enterprises
already paying salaries equal to or more than the prescribed minimum wage; thus, the Order
effectively made the previous voluntary increases given by respondent to its employees
creditable against the law-mandated increase. Consequently, there was no need for the
Collective Bargaining Agreement (CBA) to provide expressly for such creditability.

Finally, the CA sustained respondent's explanation that the across-the-board increases provided
in the CBA was required only when a minimum wage law caused a distortion in the wage
structure.

Hence, this Petition. [10]

ISSUE:

WON respondent violated the CBA in its refusal to grant its employees an across-the
board increase as a result of the passage of Wage Order No. ROVII-06

HELD:

No, we hold that the issue here is not about creditability, but the applicability of Wage
Order No. ROVII-06 to respondent’s employees. The Wage Order was intended to fix a new
minimum wage only, not to grant across-the-board wage increases to all employees in Region
VII. The intent of the Order is indicated in its title, Establishing New Minimum Wage Rates, as
well as in its preamble: the purpose, reason or justification for its enactment was to adjust the
minimum wage of workers to cushion the impact brought about by the latest economic crisis not
only in the Philippines but also in the Asian region.

Parenthetically, there are two methods of adjusting the minimum wage. In Employers
Confederation of the Phil’s. v. National Wages and Productivity Commission, these were
identified as the floor wage and the salary-ceiling methods. The floor wage method involves the
fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On
the other hand, in the salary-ceiling method, the wage adjustment was to be applied to employees
receiving a certain denominated salary ceiling. In other words, workers already being paid more
than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be
given a wage increase.

A cursory reading of the subject Wage Order convinces us that the intention of the
Regional Board of Region VII was to prescribe a minimum or floor wage; not to determine a
salary ceiling. Had the latter been its intention, the Board would have expressly provided
accordingly. The text of Sections 2 and 3 of the Order states:

Section 2. AMOUNT AND MANNER OF INCREASE. Upon the effectivity of this

Order, the daily minimum wage rates for all the workers and employees in the private
sector shall be increased by Ten Pesos (P10.00) per day to be given in the following
manner:

i. Five Pesos (P5.00) per day effective April 1, 1998, and

ii. ii. Additional Five Pesos (P5.00) per day effective October 1, 1998.
Section 3. UNIFORM WAGE RATE PER AREA CLASSIFICATION. To effect a
uniform wage rate pursuant to Section 1 hereof, the prescribed minimum wage after full
implementation of this Order for each area classification shall be as follows:

Area Classification Non-Agriculture Sector Agriculture Sector

*Class A 165.00 150.00 *Class B 155.00 140.00Class

 *C 145.00 130.00 Class *D 135.00 120.00

At the risk of being repetitive, we stress that the employees are not entitled to the claimed
salary increase, simply because they are not within the coverage of the Wage Order, as they were
already receiving salaries greater than the minimum wage fixed by the Order. Concededly, there
is an increase necessarily resulting from raising the minimum wage level, but not across the-
board. Indeed, a double burden cannot be imposed upon an employer except by clear provision
of law. It would be unjust, therefore, to interpret Wage Order No. ROVII-06 to mean that
respondent should grant an across-the-board increase.

In the resolution of labor cases, this Court has always been guided by the State policy
enshrined in the Constitution: social justice and the protection of the working class. Social justice
does not, however, mandate that every dispute should be automatically decided in favor of labor.
In every case, justice is to be granted to the deserving and dispensed in the light of the
established facts and the applicable law and doctrine. WHEREFORE, the Petition is DENIED,
and the assailed Decision and Resolution AFFIRMED

FOOTNOTES:

[1] Rollo, pp. 3-24.

[2] Annex "A" of Petition; id., pp. 26-39. Penned by Justice Eriberto U. Rosario Jr. and
concurred in by Justices Oswaldo D. Agcaoili (chairman, Special Fifteenth Division) and Danilo
B. Pine (member).
[3] Annex "B" of Petition; id., p. 42. Penned by Justice Danilo B. Pine and concurred in by
Justices Romeo A. Brawner (acting chairman, Special Former Special Fifteenth Division) and
Oswaldo D. Agcaoili.
[4] CA Decision, p. 13; rollo, p. 38.
[5] Annex "G" of Petition; id., pp. 117-129.
[6] Office of the Voluntary Arbitrator, Cebu City.
[7] Annex "T" of Petition, p. 6; rollo, p. 114.
[8] CA Decision, pp. 1-5; id., pp. 26-30.
[9] Id., pp. 11 & 36.
[10] This case was deemed submitted for decision on December 22, 2003, upon this Court's
receipt of petitioner's Memorandum, signed by Atty. Armando M. Alforque. Respondent's
Memorandum -- signed by Attys. Anastacio T. Muntuerto Jr., Arturo C. Fernan, Deolito L.
Alvarez and Arlan Richard S. Alvarez -- was received by this Court on December 1, 2003.
[11] Petitioner's Memorandum, p. 7; rollo, p. 421. Original in uppercase.
[12] Article 1374, New Civil Code.
[13] Article 1370, New Civil Code.
[14] 284 SCRA 150, January 15, 1998.
[15] 264 SCRA 320, November 19, 1996.
[16] 201 SCRA 759, September 24, 1991.
[17] Rollo, p. 249.
[18] Bocobo v. Commission on Elections, 191 SCRA 576, November 21, 1990.
[19] City Government of Makati v. Civil Service Commission, 426 Phil. 631, February 6, 2002.
[20] Samahang Manggagawa sa Top Form Manufacturing v. NLRC, 356 Phil. 480, September 7,
1998.
[21] Article 1700 of the Civil Code provides: "The relation between capital and labor are not
merely contractual. They are so impressed with public interest that labor contracts must yield to
the common good. Therefore, such contracts are subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of
labor and similar subjects.
[22] 246 SCRA 289, July 14, 1995.
[23] Vassar Industries, Inc. v. Vassar Industries Employees Union, 177 SCRA 323, September 7,
1989.
[24] Cagayan Sugar Milling Company v. Secretary of Labor and Employment, 284 SCRA 150,
January 15, 1998.
[25] Section 10, Article II, 1987 Constitution.
[26] Section 18, Article II, 1987 Constitution.
[27] Lawin Security Services, Inc. v. NLRC, 339 Phil. 330, June 9, 1997.
 ZAYBER JOHN B. PROTACIO, Petitioner, vs. LAYA MANANGHAYA & CO.
and/or MARIO MANANGHAYA, Respondents
G.R. No. 168654 March 25, 2009

DOCTRINE:

Ruling of the Labor Arbiter:

The Labor Arbiter awarded petitioner’s reimbursement claims on the ground that
respondent firm’s refusal to grant the same was not so much because the claim was baseless but
because petitioner had failed to file the requisite reimbursement forms. He held that the formal
defect was cured when petitioner filed several demand letters as well as the case before him.14

The Labor Arbiter held that petitioner was not fully paid of the cash equivalent of the leave
credits due him because respondent firm had erroneously based the computation on a basic pay
of ₱61,000.00. He held that the evidence showed that petitioner’s monthly basic salary was
₱95,000.00 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 ₱95,000.00; thus, the cash commutation of the leave credits should also be based on
this figure.15

The Labor Arbiter also ruled that petitioner was entitled to a year-end payment of ₱573,000.00
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 the
year 1999 without any explanation.16

Aggrieved, respondent firm appealed to the NLRC. On 21 August 2003, the NLRC rendered a
modified judgment,17 the dispositive portion of which states:

WHEREFORE, the Decision dated June 7, 2002 is hereby Affirmed with the modification that
the complainant is only entitled to receive ₱2,301.00 as reimbursement claims. The award of
₱12,681.00 representing the reimbursement claims of complainant is set aside for lack of basis.

SO ORDERED.18

Ruling of the National Labor Relations Commission:

the NLRC affirmed the findings of the Labor Arbiter.

Respondents filed a motion for reconsideration20 but the NLRC denied the motion for lack of
merit.21 Hence, respondents elevated the matter to the Court of Appeals via a petition for
certiorari.22

In the assailed Decision dated 19 April 2005, the Court of Appeals further reduced the total
money award to petitioner, to wit:
WHEREFORE, in the light of the foregoing, the assailed resolution of public respondent NLRC
dated August 21, 2003 in NLRC NCR Case No. 30-12-00927-99 (CA No. 032304-02) is
hereby MODIFIED, ordering petitioner firm to pay private respondent the following:

(1) ₱2,301.00 representing private respondent’s reimbursement claims;

(2) ₱9,802.83 representing the underpayment of the cash equivalent of private

respondent’s unused leave credits;

(3) ₱10,000.00 attorney’s fees.

SO ORDERED.23

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.

ISSUE:
Whether or not petitioner is entitled to the year-end lump sum as part of his compensation
package.

HELD:
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.
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 his 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 yearend 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 pays ofP15,000, transportation allowance of P15,000, and representation
allowance of P4,000, totaling 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 13thmonth 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.

FOOTNOTES:
14
Id. at 80. Nunal v. Commission on Audit, G.R. No. 78648, 24 January 1989, 169 SCRA
356, 362.
15
Id. at 78-79. Soriano, Jr. v. National Labor Relations Commission, G.R. No. 165594,
23 April 2007, citing Danzas Intercontinental, Inc. v. Daguman, 456 SCRA 382.
16
Id. at 79. See Philippine Pizza, Inc., v. Bungabong, G.R. No. 154315, 09 May 2005,
458 SCRA 288; Danzas Intercontinental, Inc. v. Daguman, G.R. No. 154368, 15 April
2005, 456 SCRA 382; Go v. Court of Appeals, G.R. No. 158922, 28 May 2004, 430
SCRA 358.
17
Id. at 83-96. Section 8, Article IX of respondent firm’s Amended Articles of Partnership
states: Nothing in this Agreement shall prevent the Chairman and Managing Partner, from
fixing the just compensation of any employee of the Firm, fully or partially, on the basis
of a share in the Partnership’s net profits.
18
Id. at 96. The Manila Banking Corp. v. NLRC, 345 Phil. 105, 125 (1997).
19
Id. at 94. The Manila Banking Corp. v. NLRC, 345 Phil. 105, 126 (1997).
20
CA rollo, pp. 175-200.
21
Id. at 42. Sec. 2. Status of employees paid by the month. ― Employees who are
uniformly paid by the month, irrespective of the number of working days therein, with a
salary not less than the statutory or established minimum wage shall be presumed to be
paid for all days in the month whether worked or not.

For this purpose, the monthly minimum wage shall not be less than the statutory
minimum wage multiplied by 365 days divided by twelve.

22
Id. at 2-39. Daily rate (monthly compensation / 26 working days): ₱95,000.00 / 26 =
₱3,653.85
23
Rollo, pp. 53-54. Cash commutation of leave credits (Daily rate x 23.5): ₱3,653.85 x
23.5 = ₱85,865.48