1. MABEZA v. NLRC, G.R. No. 118506 April
xxx The rationale for this inhibition has
18, 1997


FACTS: The petitioner and her co-employees were
asked by their employer to sign an instrument
attesting to the latter’s compliance with minimum
wage and other labor standard provision, and that
they have no complaints against the management.
The petitioner signed the affidavit but refused to go
to the City’s Prosecutor’s Office to confirm the
veracity and contents of the affidavit as instructed
by management. That same day she was ordered
by the hotel management to turn over the keys to
her living quarters and to remove her belongings in
the hotel’s premises. She then filed a leave of
absence which was denied by her employer. She
attempted to return to work but the hotel’s cashier
told her that she should not report to work and
instead continue with her unofficial leave of
absence. The management defended upon a
ground of loss of confidence.
challenge the CA rulings and the NLRC resolution
ISSUE: Was the dismissal of the petitioner valid?
respondents.
HELD:  No. The pivotal question in any case where
unfair labor practice on the part of the employer is
alleged is whether or not the employer has exerted
pressure, in the form of restraint, interference or
coercion, against his employee’s right to institute
concerted action for better terms and conditions of
employment. Without doubt, the act of compelling
employees to sign an instrument indicating that the
employer observed labor standard provisions of
the law when he might not have, together with the
act of terminating or coercing those who refuse to
cooperate with the employers’ scheme constitutes
unfair labor practice.
BULLETIN PUBLISHING CORP. v. SANCHEZ, 144
SCRA 628
their daily wages claiming that except for
FACTS:  Supervisors  and managers in petitioner
company formed a union separate from that of the
rank-and-file union, petitioned for certification
election, and staged a strike against the petitioner,
prompting the latter to seek a permanent
injunction.
ISSUE:  Are supervisors or managers allowed by
law to form a union?
from paying the monetary amount of the
HELD:   No. The supervisory employees of
petitioner firm may not, under the law, form a
supervisors union, separate and distinct from the
existing bargaining unit (BEU), composed of the
rank-and-file employees of the Bulletin Publishing
Corporation. It is evident that most of the private
respondents are considered managerial
employees.
been stated to be, because if these managerial
employees would belong to or be affiliated with a
Union, the latter might not be assured of their
loyalty to the Union in view of evident conflict of
interests. The Union can also become company-
dominated with the presence of managerial
employees in Union membership.
2. C A S E : O U R H A U S R E A L T Y
DEVELOPMENT CORPORATION vs.
ALEXANDER PARIAN, JAY C. ERINCO,
ALEXANDER CANLAS, BERNARD
TENEDERO and JERRY SABULAO; G.R.
No. 204651; August 6, 2014
FACTS:
This is a petition for review on certiorari to
who reversed the LA’s decision to favor the herein
Respondents Alexander Parian, Jay C.
Erinco, Alexander Canlas, Bernard Tenedero and
Jerry Sabulao were all laborers working for
petitioner Our Haus Realty Development
Corporation, a company engaged in the
construction business.
On May 2010, the petitioner company
experienced financial distress and had to suspend
some of its construction projects to alleviate its
condition. The respondents were among those
who were affected who were asked to take
vacation leaves.
Eventually, these laborers were asked to
report back to work but instead of doing so, they
filed with the LA a complaint for underpayment of
Tenedero, their wages were below the minimum
rates prescribed in the following wage orders from
2007 to 2010. They also claimed that Our Haus
failed to pay them their holiday, Service Incentive
Leave (SIL), 13th month and overtime pays.
The LA ruled in favor of Our Haus who
claimed that the respondents’ wages complied
with the law’s minimum requirement because aside
respondents’ wages, Our Haus also subsidized
their meals (3 times a day), and gave them free
lodging near the construction project they were
assigned to. In determining the total amount of the
respondents’ daily wages, the value of these
benefits should be considered, in line with Article
97(f) of the Labor Code. LA did not give merit on
the laborers’ contention that that the value of their
meals should not be considered in determining
their wages’ total amount since the requirements
set under Section 413 of DOLE Memorandum
Circular No. 215 were not complied with. Besides,
Our Haus failed to present any proof that they
agreed in writing to the inclusion of their meals’
value in their wages.
3. ISAE vs. QUISUMBING G.R. No. 128845,
The laborers appealed LA’s decision to
NLRC who reversed it in favor of them. It ruled
that that the laborers did not authorize Our Haus in
writing to charge the values of their board and
lodging to their wages. Thus, the same cannot be
credited and further ruled that they are entitled to
their respective proportionate 13th month
payments for the year 2010 and SIL payments for
at least three years, immediately preceding May
31, 2010, the date when the respondents left Our
Haus. However, it maintains LA’s decision that they
are not entitled to overtime pay since the exact
dates and times when they rendered overtime work
had not been proven.
employment, except laws that have been or will be
Our Haus moved for the reconsideration of
the NLRC’s decision and submitted new evidence
(the five kasunduans) to show that the respondents
authorized Our Haus in writing to charge the values
of their meals and lodging to their wages. However,
NLRC denied this motion, thus, Our Haus filed a
Rule 65 petition with the CA propounding a new
theory that there is a distinction between
d e d u c t i o n a n d c h a rg i n g ; t h a t a w r i t t e n
authorization is only necessary if the facility’s value
will be deducted and will not be needed if it will
merely be charged or included in the computation
of wages. The CA dismissed Our Haus’ certiorari
petition and affirmed the NLRC rulings in toto
finding that there is no distinction between
deduction and charging and that the legal
requirements before any deduction or charging can
be made, apply to both. Our Haus filed a motion
for reconsideration but the CA denied its motion,
prompting it to file the present petition for review
on certiorari under Rule 45.
ISAE filed a notice of strike. Due to the failure to
ISSUE:
Whether or not the NLRC committed grave
abuse of discretion in its decision favoring the
herein respondents.
ISSUE:Whether the foreign-hires should be
HELD:
The Court ruled that there is no substantial
distinction between deducting and charging a
facility’s value from the employee’s wage; the legal
requirements for creditability apply to both. Herein
petitioner’s argument is a vain attempt to
circumvent the minimum wage law by trying to
create a distinction where none exists because in
reality, deduction and charging both operate to
lessen the actual take-home pay of an employee.
Thus, the Court held that NLRC did not commit
grave abuse of discretion in its rulings. It DENY
this petition and AFFIRMED CA’s decision.
June 1, 2000
FACTS:
Private respondent International School, Inc.
(School), pursuant to PD 732, is a domestic
educational institution established primarily for
dependents of foreign diplomatic personnel and
other temporary residents. The decree authorizes
the School to employ its own teaching and
management personnel selected by it either locally
or abroad, from Philippine or other nationalities,
such personnel being exempt from otherwise
applicable laws and regulations attending their
enacted for the protection of employees. School
hires both foreign and local teachers as members
of its faculty, classifying the same into two: (1)
foreign-hires and (2) local-hires.
The School grants foreign-hires certain benefits not
accorded local-hires. Foreign-hires are also paid a
salary rate 25% more than local-hires.
When negotiations for a new CBA were held on
June 1995, petitioner ISAE, a legitimate labor union
and the collective bargaining representative of all
faculty members of the School, contested the
difference in salary rates between foreign and
local-hires. This issue, as well as the question of
whether foreign-hires should be included in the
appropriate bargaining unit, eventually caused a
deadlock between the parties.
reach a compromise in the NCMB, the matter
reached the DOLE which favored the School.
Hence this petition.
included in bargaining unit of local- hires.
RULING: NO. The Constitution, Article XIII, Section
3, specifically provides that labor is entitled to
“humane conditions of work.” These conditions are
not restricted to the physical workplace – the
factory, the office or the field – but include as well
the manner by which employers treat their
employees.

Discrimination, particularly in terms of wages, is
frowned upon by the Labor Code. Article 248
declares it an unfair labor practice for an employer
to discriminate in regard to wages in order to
encourage or discourage membership in any labor
organization.
rights.
The Constitution enjoins the State to “protect the
rights of workers and promote their welfare, In
Section 18, Article II of the constitution mandates
“to afford labor full protection”. The State has the
right and duty to regulate the relations between
labor and capital. These relations are not merely
contractual but are so impressed with public
interest that labor contracts, collective bargaining
agreements included, must yield to the common
good.
BOARD-NCR, TRADE UNION CONGRESS OF
However, foreign-hires do not belong to the same
bargaining unit as the local-hires.
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.
employees in the private sector in
The factors in determining the appropriate
collective bargaining unit are (1) the will of the
employees (Globe Doctrine); (2) 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); (3) prior collective
bargaining history; and (4) similarity of employment
status. 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.
In the case at bar, 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 such as housing,
transportation, shipping costs, taxes and home
leave travel allowances. These benefits 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
WHEREFORE, the petition is GIVEN DUE
COURSE. The petition is hereby GRANTED IN
PART.
4. EMPLOYERS CONFEDERATION OF THE
PHILIPPINES vs. NATIONAL WAGES AND
PRODUCTIVITY COMMISSION AND REGIONAL
TRIPARTITE WAGES AND PRODUCTIVITY
THE PHILIPPINES; G.R. No. 96169 September
24, 1991
FACTS: ECOP questioned the validity of the wage
order issued by  the RTWPB, increasing the
minimum wage by P17.00/day in NCR. The Board
issued Wage Order No. NCR-01-A amending Wage
Order No. NCR-01, as follows:
Section 1. Upon the effectivity of
this Wage Order, all workers and
the National Capital Region already
receiving wages above the statutory
minimum wage rates up to one
hundred and twenty-five pesos
(P125.00) per day shall also receive
an increase of seventeen pesos
(P17.00) per day.
The wage order was made applicable to all
workers and  employees in the private sector,
including those who  are paid above the
statutory wage rate. The NWPC dismissed ECOP’s
petition. Hence the matter was elevated to the
Supreme Court. ECOP assails the board's grant of
an "across-the-board" wage increase to workers
already being paid more than existing minimum
wage rates (up to P125. 00 a day) as an alleged
excess of authority, and alleges that under the
Republic Act No. 6727, the boards may only
prescribe "minimum wages," not determine "salary
ceilings." ECOP likewise claims that Republic Act
No. 6727 is meant to promote collective bargaining
as the primary mode of settling wages, and in its
opinion, the boards can not preempt collective
bargaining agreements by establishing ceilings.
ECOP prays for the nullification of Wage Order No.
NCR 01-A and for the "reinstatement" of Wage
Order No. NCR-01.
The Solicitor General commented that the RTWPB
may  fix minimum wages according to  the salary
method, while ECOP insisted that the RTWPB may
do so only by adjusting floor wages. ECOP insists,
in its reply, that wage is a legislative function, and
Republic Act No. 6727 delegated to the regional
boards no more "than the power to grant minimum
wage adjustments"  7  and "in the absence of clear
statutory authority," 8 the boards may no more than
adjust "floor wages."
ISSUE: Whether or not the wage order is valid.
RULING: The Court is inclined to agree with the
Gover nment. In the National Wages and
Productivity Commission's Order of November 6,
1990, the Commission noted that the
determination of wages has generally involved two
methods, the "floor-wage" method and the "salary-
ceiling" method. As quoted by the Supreme Court,
“Historically, legislation involving the adjustment of
the minimum wage made use of two methods. The
first method involves the fixing of determinate
amount that would be added to the prevailing
statutory minimum wage. The other involves "the
salary-ceiling method" whereby the wage
adjustment is applied to employees receiving a
certain denominated salary ceiling.”
The Court is not convinced that the Regional
Board of the National Capital Region, in decreeing
an across-the-board hike, performed an unlawful
act of legislation. It is true that wage-fixing, like
rate constitutes an act Congress;  13 it is also true,
however, that Congress may delegate the power to
fix rates  14  provided that, as in all delegations
cases, Congress leaves sufficient standards. As
this Court has indicated, it is impressed that the
above-quoted standards are sufficient, and in the
light of the floor-wage method's failure, the Court
believes that the Commission correctly upheld the
Regional Board of the National Capital Region.
them to the Fish Stall of the petitioner Victoria
It is the Court's thinking, reached after the Court's
own study of the Act, that the Act is meant to
rationalize wages, that is, by having permanent
boards to decide wages rather than leaving wage
determination to Congress year after year and law
after law. The Court is not of course saying that the
Act is an effort of Congress to pass the buck, or
worse, to abdicate its duty, but simply, to leave the
question of wages to the expertise of experts. As
Justice Cruz observed, "[w]ith the proliferation of
specialized activities and their attendant peculiar
problems, the national legislature has found it more
necessary to entrust to administrative agencies the
power of subordinate legislation' as it is caned." 23
The concept of "minimum wage" is, however, a
different thing, and certainly, it means more than
setting a floor wage to upgrade existing wages, as
ECOP takes it to mean. "Minimum wages"
underlies the effort of the State, as Republic Act
No. 6727 expresses it, "to promote productivity-
improvement and gain-sharing measures to ensure
a decent standard of living for the workers and
their families; to guarantee the rights of labor to its
just share in the fruits of production; to enhance
employment generation in the countryside through
industry dispersal; and to allow business and
industry reasonable returns on investment,
expansion and growth,"  25 and as the Constitution
expresses it, to affirm "labor as a primary social
economic force."  26  As the Court indicated, the
statute would have no need for a board if the
question were simply "how much". The State is
concerned, in addition, that wages are not
distributed unevenly, and more important, that
social justice is subserved.
Wherefore petition is denied.
5. TIANGCO V. LEOGARDO, JR. GR 57636,
MAY 16, 1983
CONCEPCION, JR., J:
FACTS:
1. The petitioner, Reynaldo Tiangco, is a fishing
operator who owns the Reynaldo Tiangco Fishing
Company and a fleet of fishing vessels engaged in
deep-sea fishing which operates from Navotas,
Rizal.
2. His business is capitalized at P2,000,000.00,
while the petitioner, Victoria Tiangco, is a fish
broker whose business is capitalized at
P100,000.00.
3. Some of the private respondents were engaged
by Reynaldo Tiangco as batillos, who were tasked
to unload the fish catch from the vessels and take
Tiangco. The other private respondents were
batillos engaged by Victoria Tiangco.
4. They were all working as part-time since their
work were limited to days of arrival of the fishing
vessels and their working days in a month are
comparatively few. Their working hours average
four (4) hours a day.
5. The private respondents filed a complaint
against the petitioners with the Ministry of Labor
and Employment for non-payment of their legal
holiday pay and service incentive leave pay, as well
as underpayment of their emergency cost of living
allowances which used to be paid in full
irrespective of their working days, but which were
reduced effective February, 1980, in contravention
of Article 100 of the new Labor Code which
prohibits the elimination or diminution of existing
benefits.

6. The petitioners on the other hand, denied the
laborers’ contention and stated that in addition to
their regular daily wage, a daily extra pay in
amounts ranging from 30 centavos to 10 pesos
were given to offset the laborers' claim for service
incentive leave and legal holiday pay. They
however, admitted that they had discontinued their
practice of paying a fixed monthly allowance, and
allowances for non-working days. They invoked
the principle of “No work, no allowances” and said
that the payment of such allowances will cause
losses to their business.
every year of service or the sum of SIXTY SEVEN
7. The petitioners now filed a petition for certiorari
and prohibition, with preliminary mandatory
injunction and/or restraining order to annul and set
aside the order of the respondent Deputy Minister
of Labor which modified and affirmed the order of
Director of the National Capital Region of the
Ministry of Labor, which directed the petitioners to
pay the private respondents their legal holiday pay,
service incentive pay, and differentials in their
emergency cost of living allowances.
ISSUE Whether the Deputy Minister of Labor and
Employment acted in excess of jurisdiction in
deciding that there is diminution of benefits in the
discontinuance of giving of allowance.
from said date. He had been employed by
HELD The Deputy Minister of Labor and
Employment correctly ruled that, since the
petitioners had been paying the private
respondents a fixed monthly emergency allowance
since November, 1976 up to February, 1980, as a
mattter of practice and/or verbal agreement
between the petitioners and the private
respondents, the discontinuance of the practice
and/or agreement unilaterally by the petitioners
contravened the provisions of the Labor Code,
particularly Article 100 thereof which prohibits the
elimination or diminution of existing benefits.
Section 15 of the Rules on P.D. 525 and Section 16
pf the Rules on P.D. 1123 also prohibits the
diminution of any benefit granted to the employees
under existing laws, agreements and voluntary
employer practice. The decision of the Deputy
Minister of Labor was modified, taking into
consideration that the respondent employees are
employed by different individuals with varying
capitalization.
opposition to clearance application charging
6. G.R. No. L-55703 November 27, 1986;
PHILIPPINE OVERSEAS DRILLING AND
OIL DEVELOPMENT
CORPORATION, Petitioner, vs. THE HON.
MINISTRY OF LABOR, HON. FRANCISCO
L. ESTRELLA, Regional Director, Region
IV, Ministry of Labor and Employment,
MARIANO M. MELENDRES, JR., and
Sheriffs ABE ESTRADA and PERCIVAL
GRANADO,  Respondents. Augusto B.
Sunico for petitioner.
FERIA, J.:
This is a special civil action for certiorari under
Rule 65 of the Revised Rules of Court seeking to
declare the nullity on the ground of lack of
jurisdiction of the Order dated August 7, 1980
directing petitioner to pay private respondent
Mariano M. Melendres, Jr. "one (1) month pay for
THOUSAND FOUR HUNDRED (P67,400.00)
PESOS, as termination benefit as per company
policy" and of the corresponding writ of execution
dated November 28, 1980, both issued by
respondent Director Francisco L. Estrella, National
Capital Region, Ministry of Labor.
Briefly, the antecedent facts are as follows:
Petitioner is a domestic corporation engaged in
petroleum exploration and exploitation.
On August 29, 1979, private respondent Mariano
M. Melendres, Jr., hereinafter referred to as private
respondent, tendered his irrevocable resignation as
Chief Geologist of petitioner effective one month
petitioner in June, 1969.
On November 20, 1979, private respondent wrote
petitioner in inquiring whether any action had been
taken on his resignation and claiming separation
pay and other benefits which petitioner extended
to other employees who had earlier resigned.
On December 7, 1979, petitioner, without replying
to the letter dated November 20, 1979 of private
respondent, filed with the office of the Director of
Bureau of Labor Relations, National Capital
Region, Ministry of Labor, pursuant to Article 278
(b) of the Labor Code, as amended, and Rule XIV,
Book V of the Implementing Rules and
Regulations, a verified application for clearance to
terminate the employment of private respondent
effective September 29, 1979 due to the latter's
resignation. A copy thereof was received by private
respondent on December 12, 1979.
On December 18, 1979, private respondent filed
with the aforementioned office a verified complaint/
petitioner with unfair labor practice and undue
discrimination in refusing to grant him separation
pay.
The complaint/opposition to clearance application
was docketed in said office as Case No. NCR-
STF-12-7820-79 entitled  "Mariano M. Melendres,
Jr. vs. Philippine-Overseas Drilling And Oil
Development Corporation"  and was heard by
respondent Director Francisco L. Estrella, On December 10, 1980, petitioner filed with the
hereinafter referred to as respondent Director.
office of respondent Director a "Motion for
On August 7, 1980, respondent Director issued an Reconsideration and/or Appeal to the Secretary
Order which reads:
(now Minister) of Labor." According to the
Memorandum filed by the Solicitor General in
This is a complaint for unfair labor practice and behalf of public respondents, "this (date of filing) is
opposition to clearance application to terminate.
clearly shown by the stamp of receipt appearing on
Despite the parties' agreement to submit position page one thereof. " Petitioner has not denied this
papers, respondent failed to do so. Hence, this statement. It is significant to note that although
case is submitted for resolution on the basis of the petitioner, in its Reply to Comments of Public and
entire record.
Private Respondents, attached thereto a xerox
copy of the last page of its said motion showing
It appears that complainant was a Chief Geologist that it was allegedly verified on August 22, 1980, it
of the respondent since 1969 up to December 18, did not attach a xerox copy of the first page
1979, earning a monthly salary of P6,740.00. thereof which would have shown the date when
Admittedly, the complainant filed his resignation the motion was filed.

letter on August 29, 1979 effective September 30,

1979. For failure of respondent to act upon his
resignation, complainant wrote a letter on
November 20, 1979 requesting for the payment of
his retirement and/or separation benefits similarly
granted to employees per company's standing
policy. Much to complainant's dismay he received
instead a report of resignation from the respondent
In a lst Indorsement dated December 16, 1980,
Special Assistant Necitas A. Oblepias-Jeres, acting
for respondent Director, forwarded to the Minister
of Labor the entire record of Case No. NCR-
STF-12-7820-79 "with the information that
respondent (petitioner herein) filed an appeal."
However, no action was taken thereon.

on December 7, 1979, indicating his resignation on On the same date, December 16, 1980, petitioner
September 29, 1979.
filed with this Court the instant petition. On
Careful examination of the record disclosed that January 7, 1981, a temporary restraining order was
complainant is legally entitled to separation issued enjoining respondents from enforcing the
benefits of pay pursuant to company policy. The aforementioned writ of execution until further
documented evidence marked as Annexes 'A', 'B', orders from the Court.

'C', 'D', 'D-l', 'D-2', 'D-3', 'D-4', 'D-5' and 'D-6',
reflect payment of benefits to employees who were
similarly situated. Non-grant of the same benefit to
complainant would inferentially be interpreted as
unfair discrimination or ULP. Logically, the award of
this benefit as per company policy is warranted.
assuming  arguendo  that the Bureau of Labor
WHEREFORE, respondent is hereby directed to
pay the complainant one (1) month pay for every
year of service or the sum of SIXTY SEVEN
THOUSAND FOUR HUNDRED (P67,400.00)
PESOS, as termination benefit as per company
policy.
petitioner granting separation benefit or pay to its
The petition is anchored on two grounds: (1) that
the regular courts of justice and not the Bureau of
Labor Relations of the Ministry of Labor had
jurisdiction over the subject matter of Case No.
NCR-STF-12-7820-79; and, (2) that even
Relations had jurisdiction over the case,
n e v e r t h e l e s s , re s p o n d e n t D i re c t o r a c t e d
erroneously in granting separation benefit or pay to
private respondent, because the latter voluntarily
resigned and there was no company policy of
employees who voluntarily resigned.

Notice of the afore-quoted Order dated August 7,

1980 was received by the petitioner on August 13, The petition must fail.

1980.
Before discussing the merits of the grounds raised
On November 18, 1980, or more than three months by petitioner, attention should be called to the
after receipt by petitioner of notice of the afore- delay in filing the petition. As stated earlier, notice
quoted Order dated August 7, 1980, private of the afore-quoted Order dated August 7, 1980
respondent moved for the issuance of a writ of was received by the petitioner on August 13, 1980.

execution on the ground that no motion for It was only on December 10, 1980, almost four
reconsideration or appeal from said Order had months after notice of the Order dated August 7,
been filed.
1980, and after the issuance of the writ of
On November 28, 1980, respondent Director execution dated November 28, 1980, that
issued the corresponding writ of execution petitioner filed the instant petition. While it is true
directing the sheriff of the National Capital Region, that in the special civil action of certiorari, no time
Ministry of Labor, to collect from petitioner the sum frame is required except that it be filed within a
of P67,400.00 representing the termination benefit reasonable time (Contreras vs. Villaraza, 99 SCRA
to be paid to private respondent.
329; Toledo vs. Pardo, 118 SCRA 566), it cannot
be said that the petition in the case at bar was filed
within a reasonable time.
from receipt of the notice.
On the merits of the first ground, we rule that
respondent Director had jurisdiction over the case
in question.
It is a fundamental rule that the facts alleged in the
complaint or petition and the law in force at the
time of the commencement of the action determine
the jurisdiction of a court or tribunal. (Lim Bing It
vs. Ibañez, 92 Phil. 799; Rodriguez vs. Pecson, 92
Phil. 172; Salao vs. Crisostomo, 138 SCRA 17;
Tolentino vs. Social Security Commission, 138
SCRA 428)
and other terms and conditions of employment;
A reading of the complaint/opposition to clearance
application filed on December 18, 1979 with the
office of respondent Director would show that
private respondent charged petitioner with undue
discrimination in refusing to pay him separation
pay. And although private respondent did not seek
reinstatement, he demanded payment of his
separation pay on the basis of company policy.
Evidently, the dispute between petitioner and
private respondent was one arising from employer-
employee relations. (Sentinel Insurance Company,
Inc. vs. Bautista, February 20, 1984, 127 SCRA
623, 628) 
Code and divested the Labor Arbiters and the
The law on jurisdiction over all disputes arising
f ro m e m p l o y e r- e m p l o y e e re l a t i o n s i n a l l
workplaces on December 18, 1979 was the Labor
Code of the Philippines, the pertinent provisions of
which are quoted hereunder:
them by the Regional Directors. (Ebon vs. de
Art. 226. Bureau of Labor Relations. - The Bureau
of Labor Relations and the Labor relations
divisions in the regional offices of the Department
of Labor shall have original and exclusive authority
to act, at their own initiative or upon request of
either or both parties, on all inter-union and intra-
union conflicts, and all disputes, grievances or
problems arising from or affecting labor-
management relations in all workplaces whether
agricultural or non-agricultural, except those
arising from the implementation or interpretation of
collective bargaining agreements which shall be
the subject of grievance procedures and/or
voluntary arbitration.
respondent Director to issue on August 7, 1980 the
xxx xxx xxx
court or tribunal has already obtained and is
Art. 228. Indorsement of cases to Labor Arbiters. -
(a) Except as provided in paragraph (b) of this
Article, the Labor Arbiter shall entertain only cases
indorsed to him for compulsory arbitration by the
Bureau or by the Regional Director of the
Department of Labor. All parties to a case shall be
furnished by the Bureau or by the Regional
Director with a written notice of such indorsement
or non-indorsement. The indorsement or non-
indorsement of the Regional Director may be
appealed to the Bureau within ten working days
xxx xxx xxx
Art. 217. Jurisdiction of Labor Arbiters and the
National Labor Relations Commission.-(a) The
Labor Arbiters shall have exclusive jurisdiction to
hear and decide the following cases involving all
workers, whether agricultural or non-agricultural: 
(1) Unfair labor practice cases; 
(2) Unresolved issues in collective bargaining,
including those that involve wages, hours of work
and 
(3) All other cases arising from employer-employee
relations duly endorsed by the Regional Directors
in accordance with the provisions of this Code;
Provided, that the Regional Directors shall not
endorse and Labor Arbiters shall not entertain
claims for moral or other forms of damages. (As
amended by P.D. 1367, effective May 1, 1978) 
xxx xxx xxx
Presidential Decree No. 1367, which took effect on
May 1, 1978, amended Article 217 of the Labor
National Labor Relations Commission of
jurisdiction to award moral and other forms of
damages. But the Decree did not divest said
tribunals of jurisdiction to award claims for
backwages and separation pay duly endorsed to
Guzman, March 25, 1982, 113 SCRA 52, 56) 
Clearly, respondent Director had jurisdiction over
the case at the time of its commencement on
December 18, 1979.
The issuance on May 1, 1980 of Presidential
Decree No. 1691 vesting upon the Labor Arbiters
original and exclusive jurisdiction to hear and
decide all money claims of workers and all other
claims arising from employer-employee relations,
including separation pay and damages (Sagmit vs.
Sibulo, November 21, 1984, 133 SCRA 359,
362-363), did not affect the jurisdiction of
afore-quoted Order. It has been ruled that where a
exercising jurisdiction over a controversy, its
jurisdiction to proceed to the final determination of
the case is not affected by new legislation vesting
such jurisdiction on another tribunal, the exception
being where the statute expressly provides or is
construed to the effect that it is intended to apply
to actions pending before its enactment. (Bengzon
vs. Inciong, 91 SCRA 248; Ramos vs. Our Lady of
Peace School, December 26, 1984, 133 SCRA
741, 747) Such was not the intent, express or
implied, of P.D. No. 1691.

Moreover, petitioner never filed either a motion to
dismiss or an answer to the complaint/opposition
to clearance application. As a matter of fact,
despite the agreement of the parties to submit their
respective position papers, petitioner never did so.
Petitioner did not raise the question of jurisdiction
in its "Motion for Reconsideration and/or Appeal to
the Secretary of Labor". It assailed the jurisdiction
of respondent Director for the first time in this
petition.
who were similarly situated as private respondent,
Petitioner is now barred by estoppel from raising
the issue of jurisdiction, regardless of its merits. In
the case of Tijam vs. Sibonghanoy, April 15, 1968,
23 SCRA 29, the Court laid down the rule of
estoppel to raise the question of jurisdiction. This
rule was reiterated in numerous cases enumerated
in the decision in the case of Solicitor General vs.
Coloma promulgated on July 7, 1986. In the case
of  Akay Printing Press vs. Minister of Labor and
Employment, the Court ruled as follows:
Having found that there was a company policy to
When the illegal dismissal case was pending
before the MOLE Regional Director, petitioner did
not raise the issue of jurisdiction either during the
hearing or in its subsequent motion for
reconsideration. Its defense was a stout denial of
the dismissal of private respondents, who were
averred instead to have abandoned their work.
After the adverse decision of the Regional Director
and upon the elevation of the case on appeal to
the Ministry of Labor and Employment, still no
jurisdictional challenge was made. It was only
when petitioner moved to reconsider the MOLE
decision of affirmance that it assailed the
jurisdiction of the Regional Director. But then, it
was too late. Estoppel had barred him from raising
the issue, regardless of its merits. (December 6,
1985, 140 SCRA 381, 384)
DISMISSED for lack of merit. The temporary
On the merits of the second ground, we rule that
respondent Director did not act with grave abuse
of discretion in granting separation pay to private
respondent.
Neither can it be said that respondent Director
acted whimsically or capriciously in the exercise of
judgment, which action would have constituted
grave abuse of discretion correctible by certiorari.
Federation of Free Workers (FFW) were employed
In the case at bar, there is a more compelling
reason for rejecting the contention of petitioner. As
the Court has ruled: "Well-established is the
principle that findings of administrative agencies
which have acquired expertise because their
jurisdiction is confined to specific matters are
generally accorded not only respect but even
finality. Judicial review by this Court on labor cases
do not go so far as to evaluate the sufficiency of
the evidence upon which the Deputy Minister and
the Regional Director based their determinations
but are limited to issues of jurisdiction or grave
abuse of discretion." (Rosario Brothers, Inc. vs.
Ople, July 31, 1984, 131 SCRA 72, 80; Special
Events & Central Shipping Office Workers Union
vs. San Miguel Corporation, May 30, 1983, 122
SCRA 557, 568-569) 
Be that as it may, the finding of respondent
Director, that there was a company policy to grant
separation benefit or pay equivalent to one (1)
month pay for every year of service to employees
is supported by substantial evidence which means
"such relevant evidence as a reasonable mind
might accept as adequate to support a
conclusion." (Ang Tibay vs. CIR, 69 Phil. 635;
C a ñ e t e v s . Wo r k m e n ' s C o m p e n s a t i o n
Commission, May 8, 1985, 136 SCRA 302, 308).
Documents to this effect were presented by private
respondent at the hearing on January 24, 1980 as
Annexes "D" thru "D-7 " of his position paper.
that effect, respondent Director correctly held that
private respondent was legally entitled to a
separation benefit or pay equivalent to one (1)
month pay for every year of service,
notwithstanding the fact that he had voluntarily
resigned. He applied a basic principle permeating
the Labor Code and its Implementing Rules and
Regulations. (Tiangco vs. Leogardo, Jr., May 16,
1983, 122 SCRA 267, 272-273; Marcopper Mining
Corporation vs. Ople, June 11, 1981, 105 SCRA
75, 83; Oceanic Pharmacal Employees Union
[FFW] vs. Inciong, November 7, 1979, 94 SCRA
270, 275). After having served petitioner for ten
years, private respondent deserved his separation
benefit or pay.
WHEREFORE, premises considered, the petition is
restraining order is LIFTED and SET ASIDE. No
costs.
SO ORDERED.
7. Kamaya Point Hotel vs. NLRC GR 86200,
Feb 25, 1992
Facts: Respondent Memia Quiambao with thirty
others who are members of private respondent
by petitioner as hotel crew. On the basis of the
profitability of the company's business operations,
management granted a 14th month pay to its
employees starting in 1979. In January 1982,
operations ceased to give way to the hotel's
conversion into a training center for Libyan
scholars. . However, due to technical and financing
problems, the Libyans pre-terminated the program
on July 7, 1982, leaving petitioner without any
business, aside from the fact that it was not paid
for the use of the hotel premises and in addition
had to undertake repairs of the premises damaged
by the Libyan students. Although petitioner
reopened the hotel premises to the public, it was
not able to pick-up its lost patronage. In a couple
of months it effected a retrenchment program until
finally on January 7, 1984, it totally closed its
business. On April 18, 1983, private respondent
Federation of Free Workers (FFW); a legitimate
labor organization, filed a complaint against
petitioner for illegal suspension, violation of the
CBA and non-payment of the 14th month pay.
operations ceased to give way to the hotel's
Executive Labor Arbiter ordered Kamaya Point
Hotel to pay the 14th month pay for 1982 of all its
rank and file employees and to pay the monetary
equivalent of the benefits of then existing
Collective Bargaining Agreement which will expire
on 1 July 1984.
had to undertake repairs of the premises damaged
NLRC set aside the award of monetary benefits
under the CBA but affirmed the grant of the 14th
month pay for the reason that it already ripened
into a company practice which respondent
company cannot withdraw unilaterally without
violating article 100 of the Labor Code.
Issue: Whether or not respondents are entitled the
14th month pay in 1982?
of Free Workers (FFW); a legitimate labor
Ruling: There is no law that mandates the payment
of the 14th month pay neither is there stipulation
as to such extra remuneration in the CBA. The
granting of the 14th month pay is a management
prerogative which cannot be forced upon the
employer. It is patently obvious that Article 100 is
clearly without applicability. The date of effectivity
of the Labor Code is May 1, 1974. In the case at
bar, petitioner extended its 14th month pay
beginning 1979 until 1981. What is demanded is
payment of the 14th month pay for 1982.
Indubitably from these facts alone, Article 100 of
the Labor Code cannot apply.
-OR-
7. G.R. No. 75289 August 31, 1989 ;
KAMAYA POINT HOTEL,  petitioner,  vs.
N AT I O N A L L A B O R R E L AT I O N S
COMMISSION, FEDERATION OF FREE
WORKERS and MEMIA
QUIAMBAO,respondents.
FERNAN, C.J.:
This petition for review on certiorari filed by herein
petitioner Kamaya Point Hotel seeks to set aside
the decision  1of the National Labor Relations
Commission dated June 25, 1986 in NLRC Case
No. RAB III-4-1191-83 which affirmed with
modification the decision of the Labor Arbiter
dated May 31, 1984.
Respondent Memia Quiambao with thirty others
who are members of private respondent
Federation of Free Workers (FFW) were employed
by petitioner as hotel crew. On the basis of the
profitability of the company's business operations,
management granted a 14th month pay to its
employees starting in 1979. In January 1982,
conversion into a training center for Libyan
scholars. However, due to technical and financing
problems, the Libyans pre-terminated the program
on July 7, 1982, leaving petitioner without any
business, aside from the fact that it was not paid
for the use of the hotel premises and in addition
by the Libyan students. All in all petitioner allegedly
suffered losses amounting to P2 million.
Although petitioner reopened the hotel premises to
the public, it was not able to pick-up its lost
patronage. In a couple of months it effected a
retrenchment program until finally on January 7,
1984, it totally closed its business.2
On April 18, 1983, private respondent Federation
organization, filed with the Ministry of Labor and
Employment, Bataan Provincial Office, Bataan
Export Processing Zone, Mariveles, Bataan, a
complaint against petitioner for illegal suspension,
violation of the CBA and non-payment of the 14th
month pay.  3 Records however show that the case
was submitted for decision on the sole issue of
alleged non-payment of the 14th month pay for the
year 1982 . 4
After the hearing, Executive Labor Arbiter
Francisco M. Jose, Jr. rendered a decision dated
May 31, 1984, the dispositive portion of which
reads:
WHEREFORE, IN VIEW OF ALL THE
FOREGOING, judgment is hereby
rendered:
1. Ordering the respondent Kamaya
Point Hotel to pay the 14th month
pay for 1982 of all its rank and file
employees;
2. Ordering the same respondent to
pay the monetary equivalent of the
benefits mentioned in Section 6 of
Article XII and Sections I and 2 of
Article XII of the then existing
Collective Bargaining Agreement
which will expire on 1 July 1984. 5
On appeal, the National Labor Relations
Commission (NLRC) in its decision dated June 25,
1986 set aside the award of monetary benefits
under the CBA but affirmed the grant of the 14th
month pay adopting the Labor Arbiter's reasoning,
thus:
emphasized in the grant of exemption under
xxx xxx xxx
Presidential Decree 851 (13th Month Pay Law)
We agree with respondent that there
is no law granting a 14th month pay.
We likewise agree with respondent
that there is no provision in the
Collective Bargaining Agreement
granting a 14th month pay. Despite
all these,  however, we believe that
individual complainants herein are
still entitled to the 14th month pay
for 1982 because to our mind, the
granting of this 14th month pay has
already ripened into a company
practice which respondent company
cannot withdraw unilaterally. This
14th month pay is now an existing
benefit which cannot be withdrawn
without violating article 100 of the
Labor Code. To allow its withdrawal
now would certainly amount to a
diminution of existing benefits which
complainants are presently enjoying.
P re m i s e d o n t h e a b o v e , t h e
individual complainants are entitled
to the 14th month pay for 1982 and
respondent should pay the same.
(Emphasis supplied) 6
labor arbiter has put it. Having lost its catering
Before this Court, petitioner now seeks to reverse
the decision of the NLRC arguing that the latter
tribunal committed grave abuse of discretion when
it adopted the Labor Arbiter's decision saying that
the 14th month pay cannot be withdrawn without
violating Article 100 of the Labor Code which
states:
the employee's basic salaries or wages. 8
Prohibition against elimination or
diminution of benefits.- Nothing in
this Book shall be construed to
eliminate or in any way diminish
supplements, or other employee
benefits being enjoyed at the time of
promulgation of this Code.
We find it difficult to comprehend why the NLRC
and the Labor Arbiter, despite their admission that
the 14th month pay has no contractual or legal
basis, still chose to rule in favor of private
respondents. It is patently obvious that Article 100
is clearly without applicability. The date of
effectivity of the Labor Code is May 1, 1974. In the
case at bar, petitioner extended its 14th month pay
beginning 1979 until 1981. What is demanded is
payment of the 14th month pay for 1982.
Indubitably from these facts alone, Article 100 of
the Labor Code cannot apply.
GROUNDED ON THAT PUBLIC POLICY OF
Moreover, there is no law that mandates the
payment of the 14th month pay. This is
which states: "Employers already paying their
employees a 13th month pay or its equivalent are
not covered by this Decree." Necessarily then, only
the 13th month pay is mandated. Having enjoyed
the additional income in the form of the 13th
month pay, private respondents' insistence on the
14th month pay for 1982 is already an unwarranted
expansion of the liberality of the law.
Also contractually, as gleaned from the collective
bargaining agreement between management and
the union, there is no stipulation as to such extra
remuneration. Evidently, this omission is an
acknowledgment that such benefit is entirely
contilagent or dependent on the profitability of the
company's operations.
Verily, a 14th month pay is a misnomer because it
is basically a bonus and, therefore, gratuitous in
nature. The granting of the 14th month pay is a
management prerogative which cannot be forced
upon the employer. It is something given in
addition to what is ordinarily received by or strictly
due the recipient. It is a gratuity to which the
recipient has no right to make a demand. 7
This Court is not prepared to compel petitioner to
grant the 14th month pay solely because it has
allegedly ripened into a company practice" as the
business derived from Libyan students, Kamaya
Hotel should not be penalized for its previous
liberality.
An employer may not be obliged to assume a
"double burden" of paying the 13th month pay in
addition to bonuses or other benefits aside from
Restated differently, we rule that an employer may
not be obliged to assume the onerous burden of
granting bonuses or other benefits aside from the
employee's basic salaries or wages  8 in addition to
the required 13th month pay.
WHEREFORE, the petition is hereby GRANTED.
The portion of the decision of the National Labor
Relations Commission dated June 25, 1986
ordering the payment of 14th month pay to private
respondents is set aside.
SO ORDERED.
8. APEX MINING CO VS NLRC
1. LABOR LAW; WAGE ORDERS NOS. 5 AND 6;
C R E D I TA B I L I T Y P R O V I S I O N S T H E R E I N
ENCOURAGING EMPLOYERS TO GRANT
EMPLOYEES HIGHER WAGE INCREASES THAN
THOSE PRESCRIBED RATES. — Both Wage Order
No. 5 and Wage Order No. 6 expressly allowed the
crediting of increases in wages or allowances
granted under collective bargaining agreements
towards compliance with increases in ECOLA
requirements prescribed by those Wage Orders.
Section 7 of Wage Order No. 5 provided as
follows: "All increases in wages and/or allowances
granted by employers between February 1, 1984
and the effectivity of this order [16 June 1984] shall
be credited as compliance with the minimum wage
and allowance adjustments prescribed herein . . ..
Such increases shall not include anniversary wage
increases provided in collective bargaining
agreements unless the agreements expressly
provide otherwise. . . .." Section 4 of Wage Order
No. 6 had very similar language: "All increases in
wages and/or allowances granted by employers
between June 17, 1984 and the effectivity of this
order [November 1, 1984] shall be credited as
compliance with the minimum wage and allowance
adjustments prescribed herein, provided that
where the increases are less than the applicable
amount provided in this order, the employer shall
pay the difference. Such increases shall not
include anniversary wage increases provided in
collective bargaining agreements unless the
agreements expressly provide otherwise. This
Section shall not apply to merit wage increases
and those resulting from the regularization or
promotion of employees." It is important to note
that the creditability provisions in Wage Orders
Nos. 5 and 6 (as well as the parallel provisions in
Wage Orders Nos. 2, 3 and 4) are grounded in an
important public policy. That public policy may be
seen to be the encouragement of employers to
grant wage and allowance increases to their
employees higher than the minimum rates of
increases prescribed by statute or administrative
regulation. To obliterate the creditability provisions
in the Wage Orders through interpretation or
otherwise, and to compel employers simply to add
on legislated 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 statutorily prescribed minimum rates
of increases. Clearly, this would be counter-
productive so far as securing the interests of labor
is concerned. The creditability provisions in the
Wage Orders prevent the penalizing of employers
who are industry leaders and who do not wait for
statutorily prescribed increases in salary or
allowances and pay their workers more than what
the law or regulations require.
 No. 5 and Section 4 of Wage Order No. 6 expressly


2. ID.; ID.; INSTANCE WHEN "ANNIVERSARY
WAGE INCREASE" IS CREDITABLE TOWARDS
STATUTORY INCREASES. — Sandigan contends
that the 1 February 1984 P2.00 increase in basic
salary was actually an "anniversary wage
increase," and therefore not creditable under
Section 7 of Wage Order No. 5 and under Section
4 of Wage Order No. 6. The P2.00 increase was
given by petitioner Apex under Section 3, Rule VI
of the CBA which reads as follows: "SECTION 3.
The COMPANY agrees to grant general wage
increases to all employees within bargaining unit as
follows: a) Two Pesos (P2.00) general increase per
day upon the effectivity of this Agreement
(February 1, 1984); b) One Peso and Fifty Centavos
(P1.50) general increase per day effective on the
first anniversary date of this Agreement (February
1, 1985); c) One Peso and Fifty Centavos (P1.50)
general increase per day effective on the second
anniversary date of this Agreement (February 1,
1986)." It appears clear to the Court from an
inspection of the above-quoted Section 3 that the
P2.00 increase effective on 1 February 1984 was
distinguishable from the two (2) increases of P1.50
each, the first being effective on the first
anniversary date of the CBA (1 February 1985) and
the second being effective on the second
anniversary date (1 February 1986). In other words,
the two (2) increases of P1.50 each, one being
effective on 1 February 1985 and the second
effective on 1 February 1986 were precisely the
non-creditable "anniversary wage increases." Even
if it be assumed, however, that the 1 February 1984
P2.00 increase were regarded (improperly) an
"anniversary wage increase" still that P2.00
increase would be creditable towards the
statutorily mandated increases. For Wage Orders
Nos. 5 and 6 themselves allowed crediting of
"anniversary wage increases" stipulated in a CBA
towards statutory increases, if the CBA itself (as
here) expressly allowed such crediting.



3. ID.; ID.; TOTAL INCREASE CONTEMPLATED;
CREDITABLE INCREASES AS AUTHORIZED. —
When Wage Order No. 6 was promulgated, it
prescribed an increase of P3.00 in ECOLA. Apex
paid this mandatory increase and denominated all
of it as ECOLA. Thus, the apparent cumulated
increase was P15.00. Since, however, Apex had
previously increased the basic salary by P2.00
effective 1 February 1984, the aggregate actual
increase (in basic salary plus ECOLA) was P17.00,
the same total or cumulated increase
contemplated by Wage Orders Nos. 5 and 6. Thus,
again, Apex was actually in compliance with the
requirements of Wage Order No. 6, with the result
that no differential was actually due from it. It
remains only to note that Section 7 of Wage Order
authorized the crediting of all the increases "in
wages" or "allowances." Thus, the fact that Apex
has denominated the P2.00 increase effective 1
February 1984, as an increase in basic salary,
rather than in ECOLA, made no legal difference so
far as concerns the creditability of such increase.
Indeed, integration of the P2.00 into the basic
salary of the employees was more beneficial to
them than granting the P2.00 as part of their
ECOLA: the integration increased the base wage
for purposes of computation of such items as
overtime and premium pay, fringe benefits and
maternity pay. In fact, the Implementing Rules of
Wage Order No. 5, and Wage Order No. 6 itself,
expressly authorized increases in basic salary in
lieu of increases in ECOLA, provided the amounts
thereof were not less than the amounts required by
the Wage Orders.
 adjustments prescribed herein, provided that


4. ID.; ARTICLE 100 OF THE LABOR CODE; NOT
APPLICABLE TO SITUATIONS ARISING AFTER
ITS PROMULGATION DATE. — Sandigan argues
that to consider the P2.00 increase in basic salary
effective 1 February 1984 provided by the CBA as
compliance with the requirements of Wage Orders
Nos. 5 and 6, would be to violate Article 100 of the
Labor Code as well as Section 6 of the Rules
Implementing Wage Order No. 6. These provisions
read respectively: "Art. 100. Prohibition against
elimination or diminution of benefits — Nothing in
[Book Three — Conditions of Employment] shall be
construed to eliminate or in any way diminish
supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code."
"Section 6. Non-diminution of benefits. — The
statutory minimum wage rates shall be exclusive of
whatever supplements and other benefits the
workers are enjoying without cost at the time of the
effectivity of this Order." Clearly, the prohibition
against elimination or diminution of benefits set out
in Article 100 of the Labor Code is specifically
concerned with benefits already enjoyed at the
time of the promulgation of the Labor Code. Article
100 does not, in other words, purport to apply to
situations arising after the promulgation date of the
Labor Code. Section 6 of the Rules Implementing
Wage Order No. 6 relates to "supplements and
other benefits" which employees are already
"enjoying without cost at the time of the effectivity
of [Wage] Order [No. 6]." Such benefits which
employees are already enjoying "without cost"
could not, under Section 6, suddenly be ascribed
monetary value so as to offset or diminish
increases in the minimum wage rates prescribed
by statute.
 operations, between 1 November 1984 until 28


5. ID.; WAGE INCREASES; COULD BE INCLUDED
IN THE AWARD AND EXECUTION OF LABOR
ARBITER’S DECISION. — In Filipino Pipe Workers
(163 SCRA 789 (1988)), the NLRC ordered the
inclusion in its award in favor of the union of a
wage increase of P3.00 per day mandated by
Wage Orders Nos. 2 and 3, which took effect after
the finality of the Labor Arbiter’s decision but
pending its execution. In sustaining the award of
the NLRC, the Court, through former Chief Justice
Fernan, said: "In his Comment on the petition, the
Solicitor General stated that the said P3.00 a day
increase was made pursuant to Wage Orders Nos.
2 and 3, which took effect after the finality of the
Labor Arbiter’s decision but pending its execution.
A common section found in both Wage Orders
Nos. 2 and 3, as well as in the subsequent Wage
Orders Nos. 5 and 6 uniformly provides that all
increases and/or allowances granted by employers
within a specified period ‘shall be credited as
compliance with the minimum wage and allowance
where the increases are less than the applicable
amount provided in this Order, the employer shall
pay the difference. Such increases shall not
include anniversary wage increases provided in
collective bargaining agreements unless the
agreement expressly provide otherwise.’ We
interpret the above section to mean that every
grant of daily increase in statutory minimum wage
rates and living allowance must be considered as
independent, separate or apart from the wage
increases in the collective bargaining agreement
and must be integrated into the salary scale of the
employees to the end that the desired rates
decreed by the National Wages Council are
attained." It is apparent from the foregoing that the
issue of creditability of an increase in basic salary
or allowance given pursuant to a CBA towards
compliance with a statutorily prescribed increase in
emergency cost of living allowances (ECOLA) was
not at all involved and that the Court was not
striking down the creditability provisions in Wage
Orders Nos. 2, 3, 5 and 6. All that the NLRC was
saying was that a wage increase which had come
into effect after the Labor Arbiter’s decision could
be included in the award and execution for the
aggregate amounts due obtained. In fact, the
above underscored paragraph was entirely obiter
in character.
FELICIANO, J.:
Respondent Sandigan ng Manggagawang Pilipino
("Sandigan") filed before the Labor Arbiter a claim
for Emergency Cost of Living Allowance ("ECOLA")
differential against petitioner Apex Mining
Company, Inc. ("Apex") alleging that Apex had paid
its employees in its Maco, Davao del Norte
March 1985, an aggregate cumulative daily ECOLA
of only P15.00 which was P2.00 below the
cumulative minimum ECOLA of P17.00 (for non-
agricultural workers) established under Wage Order
No. 6; and that petitioner had belatedly granted the
additional P2.00 starting on 29 March 1985 only.



Apex denied having failed to comply with Wage
Order No. 6, contending that it had, by previous
agreement, incorporated the alleged P2.00
deficiency into the basic salary of its employees. In
turn, Sandigan denied that such an agreement had
been made, but conceded that a P2.00 increase in
basis salary had been made by Apex, in
compliance with a provision of the Collective
Bargaining Agreement ("CBA") then in force
between Apex and Sandigan, and not in fulfillment
of Apex’s obligation under Wage Order No. 6.
Sandigan pointed out that Wage Order No. 6 had
taken effect on 1 November 1984, several months
after the P2.00 had been integrated by Apex into
the basic salary of its employees.chanrobles law
library : red
 turn hinges on the question of whether or not the


In a supplemental memorandum, Apex reiterated
that the daily salary increase of P2.00 provided for
in the then current CBA, to take effect on 1
February 1984, had been subsequently credited as
partial compliance with the P5.00 increment
mandated by Wage Order No. 5 (which took effect
on 16 June 1984). Thus, Apex, in compliance with
Wage Order No. 5, accordingly increased the daily
ECOLA of its workers by P3.00 only (from P9.00 to
P12.00), or P2.00 less than the legislated ECOLA
increase of P5.00 (which would have increased the
total daily ECOLA from P9.00 to P14.00). Petitioner
Apex added that the integration of P2.00
allowance into the basic salary provided for in the
CBA had been conformed to by Vicente Arniego,
National President of Sandigan, and that in any
event, Wage Order No. 5 had itself authorized such
integration. Since petitioner Apex had integrated
P2.00 (out or the P5.00) ECOLA provided for in
Wage Order No. 5, when Apex complied with the
additional ECOLA increase mandated by Wage
Order No. 6, the resulting figure for the total or
cumulative ECOLA paid by Apex appeared to be
only P15.00, until one took into account the P2.00
(out of the P5.00 ECOLA increase mandated by
Wage Order No. 5) integrated into the employees’
basic salary. Finally, petitioner Apex explained, it
had granted members of Sandigan an additional
P2.00 effective 29 March 1985 not as an admission
that it had previously failed to pay something
legally due, but only as a measure diffuse the tense
atmosphere between management and the union
created by the misunderstanding over the
ostensible (as distinguished from the real) total
increase paid by petitioner Apex to its employees.



In a decision dated 19 May 1987, the Labor Arbiter
held that the wage increase given in accordance
with the CBA could not be credited as compliance
with increases mandated in the Wage Orders, and
ordered petitioner Apex to pay respondent
Sandigan the claimed ECOLA differential of P2.00
for the period from 1 November 1984 until 28
March 1985.



On appeals, the National Labor Relations
Commission ("NLRC") affirmed the Labor Arbiter’s
ruling.



There is no dispute that petitioner Apex, as the
Labor Arbiter had found out, had paid a P2.00
wage increase effective on 1 February 1984. There
is also no question that Apex raised the ECOLA of
its workers by P3.00 starting on the effectivity date
of Wage Order No. 6 on 1 November 1984. The
question to be resolved is whether or not Apex
complied with the increases mandated by Wage
Orders Nos. 5 and 6. Resolution of this issue in
P2.00 per day increase in basic salary effective
starting on 1 February 1984 granted by petitioner
Apex pursuant to the CBA, was lawfully credited
towards compliance with increases in ECOLA
required under Wage Orders Nos. 5 and 6.



1. The P2.00 increase integrated in the basic salary
of Apex’s employees, effective on and after 1
February 1984, was concededly given under the
provisions of the CBA. Section 4 of Article VI of the
CBA provided as follows:



"It is understood that the grant of these general
increases shall be as part of any increase in basic
pay and/or allowance that may hereafter be
decreed or imposed by law."



Both Wage Order No. 5 and Wage Order No. 6
expressly allowed the crediting of increases in
wages or allowances granted under collective
bargaining agreements towards compliance with
increases in ECOLA requirements prescribed those
Wage Orders. Section 7 of Wage Order No. 5
provided as follows:



"All increases in wages and/or allowances granted
by employers between February 1, 1984 and the
effectivity of this order [16 June 1984] shall be
credited as compliance with the minimum wage
and allowance adjustments prescribed herein . . .



Such increase shall not include anniversary wage
increases provided in collective bargaining
agreements unless the agreements expressly
provide otherwise.
x       x       x

"(Emphasis and brackets supplied).



Section 4 of Wage Order No. 6 had very similar
language:



"All increases in wages and/or allowances granted
by employers between June 17, 1984 and the
effectivity of this order [November 1, 1984] shall be
credited as compliance with the minimum wage
and allowance adjustments prescribed herein,
provided that where the increases are less than the
applicable amount provided in this order, the
employer shall pay the difference. Such increases
shall not include anniversary wage increases
provided in collective bargaining agreements
unless the agreements expressly provide
otherwise.
 the promulgation date of the Labor Code. Section


This Section shall not apply to merit wage
i n c re a s e s a n d t h o s e re s u l t i n g f ro m t h e
regularization or promotion of
employees." (Underscoring and brackets supplied).
 Such benefits which employees are already


It is important to note that the creditability
provisions in Wage Orders Nos. 5 and 6 (as well as
the parallel provisions in Wage Orders Nos. 2, 3
and 4) are grounded in an important public policy.
That public policy may be seen to be the
encouragement of employers to grant wage and
allowance increases to their employees higher than
the minimum rates of increases prescribed by
statute or administrative regulation. To obliterate
the creditability provisions in the Wage Orders
through interpretation or otherwise, and so compel
employers simply to add on legislated 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
statutorily prescribed minimum rates of increases.
Clearly, this would be counter-productive so far as
securing the interests of labor is concerned. The
creditability provisions in the Wage Orders prevent
the penalizing of employers who are industry
leaders and who do not wait for statutorily
prescribed increases in salary or allowances and
pay their workers more than what the law or
regulations require.
 increase per day effective on the first anniversary


2. Sandigan, however, argues that to consider the
P2.00 increase in basic salary effective 1 February
1984 provided by the CBA as compliance with the
requirements of Wage Orders Nos. 5 and 6, would
be to violate Article 100 of the Labor Code as well
as Section 6 of the Rules Implementing Wage
Order No. 6. These provisions read respectively:
 It appears clear to the Court from an inspection of


"Art. 100. Prohibition against elimination or
diminution of benefits — Nothing in [Book Three —
Conditions of Employment] shall be construed to
eliminate or in any way diminish supplements, or
other employee benefits being enjoyed at the time
of promulgation of this Code." (Emphasis supplied)
 anniversary dated (1 February 1986). In other


"Section 6. Non-diminution of benefits — The
statutory minimum wage rates shall be exclusive of
whatever supplements and other benefits the
workers are enjoying without cost at the time of the
effectivity of this Order." (Emphasis supplied).



Clearly, the prohibition against elimination or
diminution of benefits set out in Article 100 of the
Labor Code is specifically concerned with benefits
already enjoyed at the time of the promulgation of
the Labor Code. Article 100 does not, in other
words, purport to apply to situations arising after
6 of the Rules Implementing Wage Order No. 6
relates to "supplements and other benefits" which
employees are already "enjoying without cost at
the time of the effectivity of [Wage] Order [No. 6]."
enjoying "without cost" could not, under Section 6,
suddenly be ascribed monetary value so as to
offset or diminish increases in the minimum wage
rates prescribed by statute. Clearly, once more,
Section 6 does not relate to the problem at hand.



3. Sandigan further contends that the 1 February
1984 P2.00 increase in basic salary was actually an
"anniversary wage increase," and therefore not
creditable under Section 7 of Wage Order No. 5
and under Section 4 of Wage Order No. 6.



The P2.00 increase was given by petitioner Apex
under Section 3 Rule VI of the CBA which reads as
follows:

"SECTION 3. The COMPANY agrees to grant
general wage increases to all employees within
bargaining unit as follows:



a) Two Pesos (P2.00) general increase per day
upon the effectivity of this Agreement (February 1,
1984);



b) One Peso and Fifty Centavos (P1.50) general
date of this Agreement (February 1, 1985);



c) One Peso And Fifty Centavos (P1.50) general
increase per day effective on the second
anniversary date of this Agreement (February 1,
1986)." 1 (Emphasis supplied).



the above-quoted Section 3 that the P2.00
increase effective on 1 February 1984 was
distinguishable from the two (2) increases of P1.50
each, the first being effective on the first
anniversary date of the CBA (1 February 1985) and
the second being effective on the second
words, the two (2) increases of P1.50 each, one
being effective on 1 February 1985 and the second
effective on 1 February 1986 were precisely the
non-creditable "anniversary wage increases." Even
if it be assumed, however, that the 1 February 1984 

P2.00 increase were regarded (improperly) as an When Wage Order No. 6 was promulgated, it
"anniversary wage increase" still that P2.00 prescribed an increase of P3.00 in ECOLA. Apex
increase would be creditable towards the paid this mandatory increase and denominated all
statutorily mandated increases. For Wage Orders of it as ECOLA. Thus, the apparent cumulated
Nos. 5 and 6 themselves allowed crediting of increase was P15.00. Since, however, Apex had
"anniversary wage increases" stipulated in a CBA previously increased the basic salary by P2.00
towards statutory increases, if the CBA itself (as effective 1 February 1984, the aggregate actual
here) expressly allowed such crediting. Section 4, increase (in basic salary Plus ECOLA) was P17.00,
Article VI of the CBA, quoted earlier, authorized the the same total or cumulated increase
crediting of "general increases" towards statutorily contemplated by Wage Orders Nos. 5 and 6. Thus,
mandated increases in basic pay or allowance. At again, Apex was actually in compliance with the
the same time, Section 3 of Article VI of the CBA, requirements of Wage Order No. 6, with the result
quoted above, described the two (2) anniversary that no differential was actually due from it.

wage increases of P1.50 each, and the one-time 

P2.00 increase, as each constituting a "general It remains only to note that Section 7 of Wage
increase."
 Order No. 5 and Section 4 of Wage Order No. 6
4. What petitioner Apex did may perhaps be most expressly authorized the crediting of all the
economically presented in the following tabular increases "in wages" or "allowances." Thus, the
form:
 fact that Apex had denominated the P2.00

 increase effective 1 February 1984, as an increase
ECOLA Increases Statutorily Mandated
 in basic salary, rather than in ECOLA, made no

 legal difference so far as concerns the creditability
by Wage Orders Nos. 4, 5, and 6
 of such increase. Indeed, integration of the P2.00

 into the basic salary of the employees was more
(For non-agricultural workers outside
 beneficial to them than granting the P2.00 as part

 of their ECOLA: the integration increased the base
Metro Manila)
 wage for purposes of computation of such items

 as overtime and premium pay, fringe benefits and
Wage Mandatory Cumulated Apparent Actual maternity pay. In fact, the Implementing Rules of
Actual
 Wage Order No. 5, and Wage Order No. 6 itself, 4

 expressly authorized increases in basic salary in
Order Increase Cumulated Cumulated Differential
 lieu of increases in ECOLA, provided the amounts

 thereof were not less than the amounts required by
No. (P0.00) (P0.00) Increase 2 Increase 3 (P0.00)
 the Wage Orders.chanrobles.com : virtual law

 library

(P0.00) (P0.00)
 


 5. Lastly, Sandigan invokes Filipino Pipe Workers
4 9 9 9 9 0
 Union (NLU) v. Batario, Jr., 5 where the Court,

 through its Third Division, made the broad
5 5 14 12 14 0
 statement that statutory wage increases are to be

 considered separate from increases granted
6 3 17 15 17 0
 through the medium of CBAs.


 

The respondent Sandigan did not question the fact In Filipino Pipe Workers, the NLRC ordered the
that petitioner Apex was in compliance with the inclusion in its award in favor of the union of a
requirements of Wage Order No. 4
 wage increase of P3.00 per day mandated by

 Wage Orders Nos. 2 and 3, which took effect after
In respect of Wage Order No. 5, Apex credited the the finality of the Labor Arbiter’s decision but
P2.00 increase in basic salary, effective 1 February pending its execution. In sustaining the award of
1984, towards compliance with the statutorily the NLRC, the Court, through former Chief Justice
prescribed ECOLA increase of P5.00. Thus, the Fernan, said:

apparent cumulated increase in ECOLA, as shown 

in Apex’s books, was only P12.00. However, the "In his Comment on the petition, the Solicitor
actual increases — the composite of basic salary General stated that the said P3.00 a day increase
and ECOLA - aggregated P14.00. Since such was made pursuant to Wage Orders Nos. 2 and 3,
crediting was expressly allowed under Wage Order which took effect after the finality of the Labor
No. 5, it follows that petitioner Apex was in Arbiter’s decision but pending its execution. A
compliance with Wage Order No. 5. No differential common section found in both Wage Orders Nos.
was therefore due thereunder.
 2 and 3, as well as in the subsequent Wage Orders
Nos. 5 and 6 uniformly provides that all increases
and/or allowances granted by employers within a
specified period ‘shall be credited as compliance
with the minimum wage and allowance
adjustments prescribed herein, provided that
where the increases are less than the applicable
amount provided in this Order, the employer shall
pay the difference. Such increases shall not
include anniversary wage increases provided in
collective bargaining agreements unless the
agreement expressly provide
otherwise.’ (Emphasis in the original).
 withdrawn even if later on, they could no longer


We interpret the above section to mean that every
grant of daily increase in statutory minimum wage
In  Arco Metal Products Co. Inc.  v.  SAMARM-
NAFLU (GR  170734, May 14, 2008), the Honorable
Supreme Court ruled that “any benefit and
supplement being enjoyed by employees cannot
be reduced, diminished, discontinued or eliminated
by the employer. The principle of non-diminution of
benefits  is founded on the Constitutional mandate
to “protect the rights of workers and promote their
welfare,”  and  “to afford labor full protection.”
Though voluntarily given, these benefits provided
by the employers may not be unilaterally
afford providing for such. It must be noted that
such incident occurs whenever the giving of
benefits ripens into company practice.

rates and living allowance must be considered as

independent, separate or apart from the wage
increases in the collective bargaining agreement To constitute as company practice, it must be
and must be integrated into the salary scale of the shown that the giving of benefits by employers to
employees to the end that the desired rates employees: (1) has been done for a considerable
decreed by the National Wages Council are long period of time; (2) has been consistently and
attained." 6 (Emphasis supplied).
 intentionally done; and (3) has not been a product

 of erroneous interpretation or construction of a
It is apparent from the foregoing that the issue of doubtful or difficult question of law 

creditability of an increase in basic salary or

allowance given pursuant to a CBA towards //…………………………//

compliance with a statutorily prescribed increase in

emergency cost of living allowances (ECOLA) was
not at all involved and that the Court was not Facts:  Petitioner is a company engaged in the
striking down the creditability provisions in Wage manufacture of metal products, whereas
Orders Nos. 2, 3, 5 and 6. All that the NLRC was respondent is the labor union of petitioner’s rank
saying was that a wage increase which had come and file employees. Sometime in December 2003,
into effect after the Labor Arbiter’s decision could petitioner paid the 13th month pay, bonus, and
be included in the award and execution for the leave encashment of three union members in
aggregate amounts due obtained. In fact, the amounts proportional to the service they actually
above underscored paragraph was entirely obiter rendered in a year, which is less than a full twelve
in character.
 (12) months. Respondent protested the prorated

 scheme, claiming that on several occasions
Petitioner Apex having lawfully credited the P2.00 petitioner did not prorate the payment of the same
increase in basic salary towards compliance of the benefits to seven (7) employees who had not
increase in ECOLA prescribed by Wage Orders served for the full 12 months. According to
Nos. 5 and 6, it follows that respondent Sandigan’s respondent, the prorated payment violates the rule
claim to a differential in ECOLA lacks basis in fact against diminution of benefits under Article 100 of
and in law.
 the Labor Code. 



ACCORDINGLY, the Court Resolved to GRANT the Thus, they filed a complaint before the National
Petition for Certiorari. The Decision of the NLRC in Conciliation and Mediation Board (NCMB). 

Case No. 2915-MC-XI-86, dated 9 September

1988, and its Resolution dated 28 October 1988, Issue: Whether or not the grant of 13th month pay,
denying petitioner’s motion for reconsideration, are bonus, and leave encashment in full regardless of
h e re b y S E T A S I D E a n d A N N U L L E D . N o actual service rendered constitutes voluntary
pronouncement as to costs.
 employer practice and, consequently, whether or

 not the prorated payment of the said benefits
SO ORDERED.
constitute diminution of benefits under Article 100
of the Labor Code. 

9. ARCO METAL PRODUCTS CO. INC VS Ruling: Any benefit and supplement being enjoyed
SAMARM-NAFLU
by employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The
principle of non-diminution of benefits is founded
on the Constitutional mandate to "protect the
rights of workers and promote their welfare and to
afford labor full protection. Said mandate in turn is
the basis of Article 4 of the Labor Code which
states that all doubts in the implementation and
interpretation of this Code, including its
implementing rules and regulations shall be
rendered in favor of labor. 
Cynthia L. De Lara (De Lara) wrote a letter to Atty.
Jurisprudence is replete with cases which
recognize the right of employees to benefits which
were voluntarily given by the employer and which
ripened into company practice. Thus in
DavaoFruits Corporation v. Associated Labor
Unions, et al. where an employer had freely and
continuously included in the computation of the
13th month pay those items that were expressly
excluded by the law, we held that the act which
was favorable to the employees though not
conforming to law had thus ripened into a practice
and could not be withdrawn, reduced, diminished,
discontinued or eliminated. In Sevilla Trading
Company v. Semana, we ruled that the employer’s
act of including non-basic benefits in the
computation of the 13th month pay was a
voluntary act and had ripened into a company
practice which cannot be peremptorily withdrawn. 
Education Retirement Annuity Association (PERAA)
In the years 1992, 1993, 1994, 1999, 2002 and
2003, petitioner had adopted a policy of freely,
voluntarily and consistently granting full benefits to
its employees regardless of the length of service
rendered. True, there were only a total of seven
employees who benefited from such a practice,
but it was an established practice nonetheless.
Jurisprudence has not laid down any rule
specifying a minimum number of years within
which a company practice must be exercised in
order to constitute voluntary company practice.
Thus, it can be six (6) years, three (3) years, or even
as short as two (2) years. Petitioner cannot shirk
away from its responsibility by merely claiming that
it was a mistake or an error, supported only by an
affidavit of its manufacturing group head. Hence,
petition was denied.
university practice of granting its employees two
1 0 . W E S L E YA N U N I V E R S I T Y- P H I L V S
WESLEYAN UNIVERSITY PHIL FACULTY AND
STAFF ASSOC
Wesleyan University-Philippines (Petitioner), a non-
stock, non-profit educational institution duly
organized and existing under the laws of the
Philippines and Wesleyan University-Philippines
Faculty and Staff Association (Respondent), a duly
registered labor organization acting as the sole and
exclusive bargaining agent of all rank-and-file
faculty and staff employees of petitioner signed a
5-year CBA9 effective June 1, 2003 until May 31,
2008.



A Memorandum providing guidelines on the
implementation of vacation and sick leave credits
as well as vacation leave commutation was issued
by petitioner, through its President, Atty. Guillermo
T. Maglaya (Atty. Maglaya). Respondent President,
Maglaya informing him that respondent is not
amenable to the unilateral changes made by
petitioner and questioning the guidelines for being
contrary to the existing practices and the CBA.



Petitioner advised respondent to file a grievance
complaint on the implementation of the vacation
and sick leave policy during their Labor
Management Committee (LMC) Meeting. Petitioner
announced therein its plan of implementing a one-
retirement policy whichwas unacceptable to
respondent.



Unable to settle their differences at the grievance
level, the parties referred the matter to a Voluntary
Arbitrator. Respondent submitted affidavits
showing that there is an established practice of
giving two retirement benefits: one from the Private
Plan and another from the CBA Retirement Plan.



The Voluntary Arbitrator declared that the one-
retirement policy and the Memorandum dated
August 16, 2005 is contrary to law.



Petitioner appealed the case to the CA via a
Petition for Review under Rule 43 of the Rules of
Court. The CA affirmed the nullification of the one-
retirement policy and the Memorandum dated
August 16, 2005 on the ground that these
unilaterally amended the CBA without the consent
of respondent. Petitioner moved for
reconsideration but the CA denied the same.



ISSUES: Whether or not the Court of Appeals
committed grave and palpable error in ruling that a
(2) sets of Retirement Benefits had already been
established? Whether or not the Court of Appeals
committed grave and palpable error in revoking
petitioner Memorandum dated 16 August 2005 for
being contrary to extant policy?

HELD: Decision of the Court of Appeals is
sustained.



LABOR LAW: non-diminution rule



Article 100 of the Labor Code provides for the
Non-Diminution Rule. This rule prohibits the
employers from eliminating or reducing the
benefits received by their employees. It applies
only if the benefit is based on an express policy, a
written contract, or has ripened into a practice. To
be considered a practice, it must be consistently
and deliberately made by the employer over a long
period of time. However, this rule admits of an
exception and that is when the practice is due to
error in the construction or application of a
doubtful or difficult question of law. The error,
however, must be corrected immediately after its
discovery; otherwise, the rule on Non-Diminution
of Benefits would still apply.



In the case at bar, respondent presented
substantial evidence in the form of affidavits
supporting its claim that there are two retirement
plans. As gleaned from the affidavits, petitioner has
been giving two retirement benefits as early as
1997. Petitioner failed to present any evidence to
refute the veracity of said affidavits. Moreover, no
evidence was shown to prove petitioner contention
that there is only one retirement plan as the CBA
Retirement Plan and the PERAA Plan are one and
the same.
 declaring that additional compensation


LABOR LAW: collective bargaining agreement
cannot be unilaterally changed
 award effective from September 4, 1950 (the date


The Memorandum dated August 16, 2005 imposes
a limitation not agreed upon by the parties nor
stated in the CBA. Hence, it must be struck down.



It is provided in Sections 1 and 2 of Article XII of
the CBA that all covered employees are entitled to
15 days sick leave and 15 days vacation leave with
pay every year and that after the second year of
service, all unused vacation leave shall be
converted to cash and paid to the employee at the
end of each school year, not later than August 30
of each year. Whereas, it is provided in the
Memorandum dated August 16, 2005 that vacation
and sick leave credits are not automatic as leave
credits would be earned on a month-to-month
basis. The said Memorandum, therefore, limits the
available leave credits of an employee at the start
of the school year.
 wages, be valued as follows:
Basic is the rule that when the provisions of the
CBA is clear, the literal meaning of the stipulation
shall govern. Any doubt in its interpretation must
be resolved in favor of labor.
 All other facilities at least 85 per day
The present petition for review is DENIED.
11. ATOK BIG WEDGE MINING CO VS ATOK BIG
WEDGE MUTUAL BENEFIT ASSOC
July 19, 1955
FACTS:
1952.
On September 4, 1950, a demand was submitted
to petitioner by respondent union through its
officers for various concessions, among which
were:
(a) An increase of P0.50 in wages;
(b) Commutation of sick and vacation leave if not
enjoyed during the year;
(c) Various privileges, such as free medical care,
medicine, and hospitalization;
(d) Right to a closed shop, check off etc.;
(e) No dismissal without prior just cause and with a
prior investigation, etc.
Some of the demands were granted by petitioner
and the others were rejected. Hearings were held
in the Court of Industrial Relations. After the
hearing, the respondent court rendered a decision
fixing the minimum wage for the laborers at P3.20
without rice ration and 2.65 a day with rice ration,
representing efficiency bonus should not be
included as part of the wage, and making the
of the presentation of the original demand, instead
of from April 5, 1951, the date of the amended
demand).
Atok Company asked the Court for authority to
stop operations & lay off employees and laborers,
for the reason that due to the heavy losses,
increased taxes, high cost of materials, negligible
quantity of ore deports, and the enforcement of the
Minimum Wage Law, the continued operation of
the company and the consequent lay-off of
hundreds of laborers and employees.
The parties reached an agreement on October 29,
1952 after the SC decision which states agreement
that the following facilities heretofore given or
actually being given by petitioner to its workers
and laborers, and which constitute as part of their
Rice ration P.55 per day
Housing facility 40 per day
It is understood that the said amount of facilities
valued at the above mentioned prices, may be
charged in full or partially by the Company against
laborer or employee, as they may see fit pursuant
to the exigencies of its operation.
This was approved by the Court on December 26,

Later, another case was decided involving the 2 (1) Supplements, defined – extra remuneration or
parties giving the employees minimum cash wage special privileges or benefits given to or received
of 3.45 a day with rice ration or 4.00 without rice by the laborers over and above their ordinary
ration.
earnings or wages [vacation and holidays not
worked; paid sick leave or maternity leave;
ISSUES:
overtime rate in excess of what is required by law;
sick, pension, retirement and death benefits; profit
(1) Which of the two decisions would prevail? The sharing; family allowances; Christmas, war risk and
agreement or the subsequent decision giving the
cost of living bonuses or other bonuses other than
those paid as a reward for extra output or time
employees minimum case wage?, and;

spent on the job].

WON the Agreement of October 29, 1952 from the

(2) Facilities, defined – items of expense
minimum daily wage of P4 would be a waiver of
necessary for laborer’s and his family’s existence
the minimum wage fixed by the law and hence null
and subsistence, so that by express provision of
and void, since RA 602 sec. 20 provides that “no
the law, they form part of the wage and when
agreement or contract, oral or written, to accept a
furnished by the employer are deductible therefrom
lower wage or less than any other under this Act,
since if they are not so furnished, the laborer would
shall be valid”.

spend and pay for them just the same.

(2) WON additional compensation should be paid

by the Company to its workers for work rendered
on Sundays and holidays which should be based
on the minimum wage of 4.00 and not on the cash
portion which is 2.20. [Currently the company pays
additional compensation of 50% based on the 2.20
wage]

HELD:

(1) The Agreement subsists.

An agreement to deduct certain facilities received

by the laborers from their employer is not a waiver
of the minimum wage fixed by the law. Wage
includes the fair and reasonable value as
determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by
the employer to the employee (Sec 2 of RA 602).

Thus, the law permits the deduction of such

facilities from the laborer’s minimum wage of P4,
as long as their value is “fair and reasonable”

(2) NO. The Company is correct.

Section 4 of the Commonwealth Act No. 444 (Eight

Hour Labor Law) provides:

No person, firm, or corporations... shall compel an

employee or laborer to work during Sundays and
holidays, unless he is paid an additional sum of at
least 25% of his regular remuneration.

Thus, the Company even pays the laborers higher

wage than the minimum. Thus, no law is violated.

OTHER NOTES: DIFFERENCE BETWEEN A 12. SEVILLA TRADING COMPANY VS SEMANA

SUPPLEMENT and FACILITY



//…………………………………….//

In the 2004 case of Sevilla Trading Company vs. A.

V. A. Semana, G. R. No. 152456, April 28, 2004,
where the employer, for two to three years prior to
1999, added to the base figure, in its computation
of the 13th-month pay of its employees, the
amount of other benefits received by the
employees which are beyond the basic pay. These
benefits included overtime premium for regular
overtime, legal andspecial holidays; legal holiday
pay, premium pay for special holidays; night
premium; bereavement leave pay; union leave pay;
maternity leave pay;paternity leave pay; company
vacation and sick leave pay; and cash conversion
of unused company vacation and sick leave.
Petitioner-employer claimed that it entrusted the
preparation of the payroll to its office staff,
including the computation and payment of the
13th-month pay and other benefits. When it
changed its person in charge of the payroll in the
process of computerizing its payroll, and after
audit was conducted, it allegedly discovered the
error of including non-basic pay or other benefits in
the base figure used in the computation of the
13th-month pay of its employees.

The Supreme Court, however, was unconvinced. It

affirmed the ruling of the Voluntary Arbitrator that
petitioner’s stance of mistake or error in the
computation of the thirteenth month pay is
unmeritorious. Petitioner’s submission of financial
statements every year requires the services of a
certified public accountant to audit its finances. It
is quite impossible to suggest that they have
discovered the alleged error in the payroll only in
1999. This implies that in previous years it does not
know its cost of labor and operations. This is
merely basic cost accounting. Also, petitioner
failed to adduce any other relevant evidence to
support its contention. Aside from its bare claim of
mistake or error in the computation of the
thirteenth month pay, petitioner merely appended
to its petition a copy of the 1997-2002 Collective
Bargaining Agreement and an alleged “corrected”
computation of the thirteenth month pay. There
was no explanation whatsoever why its inclusion of
non-basic benefits in the base figure in the
computation of their 13th-month pay in the prior
years was made by mistake, despite the clarity of
statute and jurisprudence at that time. (Sevilla
Trading Company vs. A.V. A. Semana, et al.,)

13. ROYAL PLANT WORKERS UNION VS COCA PLANT

COLA BOTTLERS PHILIPPINES INC, CEBU



 


a long time is hazardous to one’s health. The report "prolonged workplace sitting is an emerging public
of VicHealth, Australia,12 disclosed that health and occupational health issue with serious
implications for the health of our working regardless of how much moderate to vigorous
population. Importantly, prolonged sitting is a risk exercise they had.

factor for poor health and early death, even among

those who meet, or exceed, national13 activity
guidelines." In another report,14 it was written:
time more often just by standing or with light
Workers needing to spend long periods in a seated
position on the job such as taxi drivers, call centre
and office workers, are at risk for injury and a
In addition, people who interrupted their sitting
activities such as housework, shopping, and
moving about the office had healthier blood sugar
and fat levels, and smaller waistlines than those
whose sitting time was not broken up.

variety of adverse health effects.

Of course, in this case, if the chairs would be

The most common injuries occur in the muscles, returned, no risks would be involved because of
bones, tendons and ligaments, affecting the neck the shorter period of working time. The study was
and lower back regions. Prolonged sitting:
cited just to show that there is a health risk in
prolonged sitting.

● reduces body movement making muscles more

likely to pull, cramp or strain when stretched No Violation of the CBA

suddenly, causes fatigue in the back and neck

muscles by slowing the blood supply and puts The CBA15 between the Union and CCBPI
high tension on the spine, especially in the low contains no provision whatsoever requiring the
back or neck, and
management to provide chairs for the operators in
the production/manufacturing line while performing
● causes a steady compression on the spinal discs their duties and responsibilities. On the contrary,
that hinders their nutrition and can contribute to Section 2 of Article 1 of the CBA expressly
their premature degeneration.
provides as follows:

Sedentary employees may also face a gradual Article I

deterioration in health if they do not exercise or do

not lead an otherwise physically active life. The SCOPE

most common health problems that these

employees experience are disorders in blood
circulation and injuries affecting their ability to
move. Deep Vein Thrombosis (DVT), where a clot
forms in a large vein after prolonged sitting (eg
after a long flight) has also been shown to be a
risk.
relationship between the COMPANY and such
Workers who spend most of their working time
seated may also experience other, less specific
adverse health effects. Common effects include
decreased fitness, reduced heart and lung
efficiency, and digestive problems. Recent
research has identified too much sitting as an
important part of the physical activity and health
equation, and suggests we should focus on the
harm caused by daily inactivity such as prolonged
sitting.
construed as establishing an obligation on the part
Associate professor David Dunstan leads a team at
the Baker IDI in Melbourne which is specifically
researching sitting and physical activity. He has
found that people who spend long periods of time
seated (more than four hours per day) were at risk
of:
who are similarly situated in a Department or in the
● higher blood levels of sugar and fats,
underscoring supplied]
SECTION 2. Scope of the Agreement. All the terms
and conditions of employment of employees and
workers within the appropriate bargaining unit (as
defined in Section 1 hereof) are embodied in this
Agreement and the same shall govern the
employees and/or workers. On the other hand, all
such benefits and/or privileges as are not
expressly provided for in this Agreement but which
are now being accorded, may in the future be
accorded, or might have previously been
accorded, to the employees and/or workers, shall
be deemed as purely voluntary acts on the part of
the COMPANY in each case, and the continuance
and repetition thereof now or in the future, no
matter how long or how often, shall not be
of the COMPANY. It is however understood that
any benefits that are agreed upon by and between
the COMPANY and the UNION in the Labor-
Management Committee Meetings regarding the
terms and conditions of employment outside the
CBA that have general application to employees
Plant shall be implemented. [emphasis and

● larger waistlines, and

As can be gleaned from the aforecited provision,
the CBA expressly provides that benefits and/or
● higher risk of metabolic syndrome
privileges, not expressly given therein but which
are presently being granted by the company and
enjoyed by the employees, shall be considered as
purely voluntary acts by the management and that
the continuance of such benefits and/or privileges,
no matter how long or how often, shall not be
understood as establishing an obligation on the
company’s part. Since the matter of the chairs is
not expressly stated in the CBA, it is understood
that it was a purely voluntary act on the part of
CCBPI and the long practice did not convert it into
an obligation or a vested right in favor of the Union.
We can only deduce that the other employee
No Violation of the general principles of justice and
fair play
considerations. Indeed, this could only be the most
The Court completely agrees with the CA ruling
that the removal of the chairs did not violate the
general principles of justice and fair play because
the bottling operators’ working time was
considerably reduced from two and a half (2 ½)
hours to just one and a half (1 ½) hours and the
break period, when they could sit down, was
increased to 30 minutes between rotations. The
bottling operators’ new work schedule is certainly
advantageous to them because it greatly increases
their rest period and significantly decreases their
working time. A break time of thirty (30) minutes
after working for only one and a half (1 ½) hours is
a just and fair work schedule.
operators may be sheltered under its mantle.21
No Violation of Article 100 of the Labor Code
Jurisprudence recognizes the exercise of
The operators’ chairs cannot be considered as one
of the employee benefits covered in Article 10016
of the Labor Code. In the Court’s view, the term
"benefits" mentioned in the non-diminution rule
refers to monetary benefits or privileges given to
the employee with monetary equivalents.
employees, but also the right of the employers.
Such benefits or privileges form part of the
employees’ wage, salary or compensation making
them enforceable obligations.
FACTS only:
This Court has already decided several cases
regarding the non-diminution rule where the
benefits or privileges involved in those cases
mainly concern monetary considerations or
privileges with monetary equivalents. Some of
these cases are: Eastern Telecommunication Phils.
Inc. v. Eastern Telecoms Employees Union,17
where the case involves the payment of 14th, 15th
and 16th month bonuses; Central Azucarera De
Tarlac v. Central Azucarera De Tarlac Labor Union-
NLU,18 regarding the 13th month pay, legal/
special holiday pay, night premium pay and
vacation and sick leaves; TSPIC Corp. v. TSPIC
Employees Union,19 regarding salary wage
increases; and American Wire and Cable Daily
Employees Union vs. American Wire and Cable
Company, Inc.,20 involving service awards with
cash incentives, premium pay, Christmas party
with incidental benefits and promotional increase.
s of sleeping while on duty. Not contented, CCBPI 
In this regard, the Court agrees with the CA when it
resolved the matter and wrote:
Let it be stressed that the aforequoted article
speaks of non-diminution of supplements and
other employee benefits. Supplements arc
privileges given to an employee which constitute
as extra remuneration besides his or her basic
ordinary earnings and wages. From this definition,
benefits spoken of by Article 100 pertain only to
those which are susceptible of monetary
plausible conclusion because the cases tackling
Article 100 involve mainly with monetary
considerations or privileges converted to their
monetary equivalents.
x x x x
Without a doubt, equating the provision of chairs
to the bottling operators Ds something within the
ambit of "benefits'' in the context of Article 100 of
the Labor Code is unduly stretching the coverage
of the law. The interpretations of Article 100 of the
Labor Code do not show even with the slightest
hint that such provision of chairs for the bottling
management prerogatives. Labor Jaws also
discourage interference with an employer's
judgment in the conduct of its business. For this
reason, the Court often declines to interfere in
legitimate business decisions of employers. The
law must protect not only the welfare of the
WHEREFORE, the petition is DENIED.
The bottling operators took issue with the removal 
of the chairs in as this would, according to the emp
loyer, hamper the efficient flow of operations.  After
initiating  the  grievance  machinery  of  the  CBA  in
Novermberr  2008,  the  parties  were  still  at  a
deadlock. Before submitting to arbitration the issue
,both parties availed of the NCMB Regional Branch
but still they failed to arrive at an amicable settlem
ent.
They then executed a Submission Agreement whic
h was accepted by the Arbitration Committee to re
solve the sole issue of whether the removal of chair
s  of  the  operators  assigned  at  the  production/
manufacturing line while performing their duties an
d responsibilities is valid or not. Arbitration Commit
tee rendered a decision in favor of the Union and a
gainst CCBPI as CCBPI failed to present evidence
filed a petition for review under Rule 43 before the  liberal construction of the CBA, the CA likewise
CA  which  set  aside  the  decision  of  the  Arbitration  sustained the NLRCs rulings on theissues
Committee. The Union argued that the proper reme
dy in challenging the decision of the Arbitration Co
mmittee before the CA is a petition for certiorari un
der Rule 65. The petition for review under Rule 43 r
esorted to by CCBPI should have been dismissed f
or being an improper remedy.
the burden to prove that the employees disease is
14. SUPREME STEEL CORP vs
NAGKAKAISANG MANGGAGAWA NG
SUPREME INDEPENDENT UNION
FACTS: On July 27, 2005, respondent filed a notice
of strike with the National Conciliation and
Mediation Board (NCMB) on the ground that
petitioner violated certain provisions of the CBA.
The parties failed to settle their dispute.
Consequently, the Secretary of Labor certified the
case to the NLRC for compulsory arbitration
pursuant to Article 263(g) of the Labor Code.
are clear and there is no doubt as to the intention
Respondent alleged eleven CBA violations,
enumerated as follows: (1) denial to four
employees of the CBA- provided wage increase,
(2) contracting-out labor, (3) failure to provide
shuttle service, (4) refusal to answer for medical
expenses incurred by three employees, (5) failure
to comply with time-off provision, (6) visitors free
access to company premises, (7) failure to comply
with reporting time-off provision, (8) dismissal of an
employee supposedly due to disease, (9) denial of
paternity leave benefit to two employees, (10)
discrimination and harassment, and (11) non-
implementation of COLA in Wage Order Nos.
RBIII-10 and 11.
Out of the eleven issues raised by respondent,
eight were decided in its favor; two (denial of
paternity leave benefit and discrimination of union
members) were decided in favor of petitioner; while
the issue on visitors free access to company
premises was deemed settled during the
mandatory conference. Petitioners appeal to the
CA was dismissed.
[2] the practice is consistent and deliberate;
According to the CA, petitioner failed to show that
the NLRC committed grave abuse of discretion in
finding that it violated certain provisions of the
CBA.With regard to wage increase, The CA
concluded that, based on the wording of the CBA,
which uses the words "general increase" and "over
and above," it cannot be said that the parties have
intended the anniversary increase to be given in
lieu of the CBA wage increase. The CA declared
that the withdrawal of the COLA under Wage Order
No. RBIII-10 from the employees who were not
minimum wage earners amounted to a diminution
of benefits because such grant has already ripened
into a company practice. Based on the principle of
pertaining to medical expenses, the shuttle
service, time-off for attendance in grievance
meetings/hearings, and time-off due to brownouts.
Finally, the CA affirmed the NLRCs finding that
Madayags dismissal was illegal. It emphasized that
of such nature or at such stage that it cannot be
cured within a period of six months rests on the
employer, who failed to prove such.
ISSUE: Did the CA err in affirming the NLRC?
HELD: It is a familiar and fundamental doctrine in
labor law that the CBA is the law between the
parties and compliance therewith is mandated by
the express policy of the law. If the terms of aCBA
of the contracting parties, the literal meaning of its
stipulation shall prevail. Moreover, the CBA must
be construed liberally rather than narrowly and
technically and the Court must place a practical
and realistic construction upon it. Any doubt in the
interpretation of any law or provision affecting
labor should be resolved in favor of labor. Upon
these well-established precepts, the CAs findings
and conclusions on all the issues are sustained,
except the issue pertaining to the denial of the
COLA under Wage Order No. RBIII-10 and 11 to
the employees who are not minimum wage
earners, which respondent avers as a diminution of
benefits.
Diminution of benefits is the unilateral withdrawal
by the employer of benefits already enjoyed by the
employees. There is diminution of benefits when it
is shown that:
[1] the grant or benefit is founded on a policy or
has ripened into a practice over a long period of
time;
[3] the practice is not due to error in the
construction or application of a doubtful or difficult
question of law; and
[4] the diminution or discontinuance is done
unilaterally by the employer.
The implementation of the COLA under Wage
Order No. RBIII-10 across the board, which only
lasted for less than a year, cannot be considered
as having been practiced "over a long period of
time." While it is true that jurisprudence has not
laid down any rule requiring a specific minimum
number of years in order for a practice to be
considered as a voluntary act of the employer, "diminution of benefits" under the law. PARTIALLY
under existing jurisprudence on this matter, an act GRANTED.

carried out within less than a year would certainly

not qualify as such. Hence, the withdrawal of the //……………..//

COLA Wage Order No. RBIII-10 from the salaries

of non-minimum wage earners did not amount to a



15. REPUBLIC PLANTERS BANK petitioner, 

v s . N AT I O N A L L A B O R R E L AT I O N S
COMMISSION and ANTONIO G. SANTOS, FACTS:

respondents. Private respondent Santos was employed as

G.R. No. 11746; January 6, 1997 Department Manager by Republic Planters Bank,
now known as PNB-Republic Bank (PNB-RB).
Upon retirement, he filed the instant suit for
underpayment of gratuity pay, non-payment of
accumulated sick and vacation leaves, mid-year
and year-end bonuses, financial assistance, at the
same time claiming damages and attorney’s fees.
technical operations' support manager in May
Private Respondent, "Imelda Salazar" was
employed as general systems analyst of Globe-
Mackay Cable and Radio Corp. (GMRC) While
Delfin Saldivar, her close friend, was employed as
1982.

The Labor Arbiter found for complainant Santos

and this finding was affirmed by the National Labor Petitioner GMRC investigated Saldivar's activities
Relations Commission (NLRC) on appeal. Hence due to the reports indicating that the company
this petition.
equipment and spare parts were in custody of
Saldivar. The internal audit report also indicated
Petitioner posits that as the CBA had long that Saldivar entered into a partnership with
expired,it could no longer be used as basis in Richard A. Yambao, owner and manager of Eledon
computing the gratuity pay of its retiring officers; Engineering Services (Elecon), a supplier often
instead, petitioner’s theory is that that the recommended by Saldivar to the petitioner. It also
computation of the benefits of private respondent appeared in the course of Maramara's
should be based on the 1982-85 CBA which was investigation that Imelda Salazar violated company
the one enforced at the time of his resignation. The regulations by involving herself in transactions with
1982-85 though was for the rank-and-file conflict of interest with the company. Evidence
employees.mPetitioner also invoked the salary showed that she signed as a witness to the articles
structure and criteria for promotion as basis for of partnership between Yambao and Saldivar, and
determining the amount of gratuity.
that she had full knowledge of the loss and
whereabouts of the missing air conditioner but she
ISSUE:
failed to inform her employer.

WON a CBA for rank-and-file employees which is

the existing CBA upon retirement of an officer, The Company placed Salazar under 1 month
instead of the expired CBA, should be used as preventive suspension, allowing her 30 days within
basis in computing the gratuity pay of its retiring which to explain her side. However, Salazar instead
officers.
filed a complaint against petitioner for illegal
suspension, which was later modified to illegal
HELD:
dismissal.

No.

Per a decided case: Prior to private respondent’s
resignation, there were other managerial
employees who resigned and/or retired from
p e t i t i o n e r ’s e m p l o y w h o r e c e i v e d t h e i r
corresponding gratuity benefits and the cash value
of their accumulated leave credits pursuant to the
provisions of the old CBA of 1971-73 despite its
The Labor arbiter ordered the company to reinstate
Salazar to her former and equivalent position and
to pay her full back wages and benefits, plus moral
damages. National Labor Relations Commission
(NLRC) affirmed the labor arbiter's decision but
limited back wages for only two years and deleted
the award of moral damages.

expiration in 1976.

Under Section 14(a), Rule 1 of the Rules and Issue:

Regulations Implementing Book VI of the Labor Whether or Not the action of dismissal would
Code, it is provided:
constitute a violation of Art. 279 of the Labor Code,
Sec. 14. Retirement Benefits. — (a) An employee which protects the security of tenure of an
who is retired pursuant to a bonafide retirement employee.

plan or in accordance with the applicable individual

or collective agreement or established employer Held:

policy shall be entitled to all the retirement benefits Positive. The Court did not agree on the
provided therein .
petitioner's action of suspension and eventual
dismissal of Salazar due to lack of evidence to
16. Globe-Mackay Cable and Radio Corporation show that Salazar was involved with the malicious
(GMRC), Petitioner Vs. National Labor Relations activities of Saldivar.

Commission (NLRC) and Imelda Salazar,

Respondents The wordings of the Labor Code is clear and
G.R. No. 82511, March 3, 1992 unambiguous "An employee who is unjustly
dismissed from work shall be entitled to
Facts:
reinstatement and full back wages." Under the
principle of Statutory Construction, if a statute is
clear, plain and free from ambiguity. It must be
given its literal meaning and applied without
attempted interpretation. The plain meaning rule or
Verba Legis derived from the maxim "Speech is the
index of intention" should be applied in this case.
Veneracion, Ganpolitely stated the matters stated
Since there is no evidence to show an authorized
or legal dismissal, and GMRC only relied to an
internal audit findings, Salazar, according to the
Labor Code, is entitled to reinstatement and full
back wages allowed by the Court.
not like the sales forecast and marketing programs
17 Gan v. Galderma
Respondent Galderma Philippines, Inc. (Galderma),
a wholly-owned subsidiary of Galderma Pharma
S.A., is
Galderma.
that he questioned the competence of Ganas
product manager. To appease the irritated
in his sales forecast and marketing programs are
merely his professional views and should the same
be unacceptable to Veneracion, the decision of the
latter would naturally prevail and be implemented
by Gan. Perhaps the reason why Veneracion did
submitted by Ganis because the Benzac Brand is
not within Gan’s expertise, being an ethical
product, and not among the products understood
by Ganto be covered by his responsibility as
product manager when he accepted the work in

engaged in the business of selling, marketing, and

distribution of Cetaphil Brand Product Lines Veneracion, however, did not accept the
(CBPL) that
explanation of Ganand started enumerating his
include Cetaphil liquid and bar cleansers, and dissatisfaction with Gan unfairly branding the latter
pharmaceutical products, such as Locetar, Benzac as - "slow, lacking in initiative and uncooperative".
and other
Not satisfied, Veneracion continued and then
prescription drugs. CBPL, which are over-the- asked Gan to reconsider his stay in Galderma (in
counter products sold and/or distributed through other words to leave or resign) because of his
supermarkets and health and beauty outlets, are aforementioned negative attitudes. Gan, naturally
handled by Galderma's Consumer Products and considering his excellent performance in
Division, while pharmaceutical products, which are 2001-2002 and his immense contribution to
mostly prescription drugs sold and/or distributed Galderma's success, refuted as false the unfair
through drug stores, are handled by its Ethical allegations of Veneracion.

Products Division.

Similar incidents happened subsequently. V


Petitioner Nelson B. Gan (Gan) was hired by for another employment. Surprised at Veneracion,
Galderma as Product Manager for its Consumer Gan replied that he was not looking for another
Products Division to handle the marketing of CBPL job. Veneracion replied that he was surprised that
effective March 1, 2001.
Gan was not planning to leave Galderma
The calvary of Gan in Galderma started in the considering their

morning of 4 March 2002, Gan was summoned by
Veneracion, who informed him of his disgust in
Gan's act of taking an emergency sick leave on 28
February 2002, immediately after availing of a five
(5)-day vacation leave from 21-27 February 2002.
surprise. Not satisfied with the humiliation inflicted
Veneracion also informed Gan that he disliked his
act in applying for the emergency sick leave, that
is, by merely "texting" (short message service or
SMS) Veneracion's executive secretary instead of
informing Veneracion himself. Ganapologized to
eneracion, thereafter, asked Gan if he has had any
luck in looking conflicts. Veneracion also asked
Gan if he has consulted a lawyer and when Gan
answered no, Veneracion again expressed his
on Gan, Veneracion for the nth time told Gan to
reconsider his stay in Galderma (in other words,
that Gan leave Galderma). Veneracion told Gan
that he would be given 15 days to look for another
job (in short, he would be terminated in 15 days),
as a gesture of his good will.

Veneracion and informed him that it will not be

repeated, as in fact it was never repeated.
The incentive scheme was also suddenly changed.
The second incident happened when Gan as Shocked and humiliated at the turn of events, Gan
previously required by Veneracion, submitted a five requested to talk privately with Veneracion (which
(5)-year sales forecast and marketing program for a request was granted). Gan, who had just lost his
Benzac brand anti-acne product (an ethical job (with the 15-day notice given by Veneracion)
product, thus not covered by the CBPL). notwithstanding his excellent performance record,
Veneracion wanted to include the said product wanted to talk privately with Veneracion in the
under the brand management functions of Ganin hope of salvaging a better term for his forced exit
the CBPL.
in Galderma (as Gan was of the belief, and

rightfully so, that Veneracion would not allow him
Veneracion did not like the sales forecast and to remain employed in Galderma as he had clearly
marketing program prepared by Ganto the point and numerously manifested). Finally, Veneracion
offered him the, as an alternative to him being
terminated in 15 days,to file his voluntary executed by Gan's former co-workers – Gerry M.
resignation that day, 11 April 2002, which Castro, Annalyn M. Gamboa, Winston M. Marquez,
resignation shall take effect on 15 July 2002 or 90 and Abigail R. Peralta – which were fully supportive
days thereafter.
of respondents’ defenses.

On April 11, 2002, Gan severed his employment NLRC: The NLRC affirmed the Labor Arbiter's
ties with Galderma. His resignation letter reads:

Decision. It said that Gan's resignation letter is

April 11, 2002
more determinative in the present controversy as it
Gerry Castro
 "distinctly speaks of his reasons for resigning x x x
Sr. Product Manager
in a mild and sober expression as to graciously
Please accept my resignation as OTC Product give [advance notice to Galderma without a tinge
Manager effective July 15, 2002.
of remorse on his part. The interchange of words
I am giving the company this notice in advance so and ideas between the parties herein appurtenant
that Galderma Philippines may have ample time to to Gan’s resignation does not in any manner show
find a suitable replacement for my position.
a color of frustration or an iota of anger by any of
I plan to pursue the establishment of my own the parties. Thus, We cannot see nor perceive that
business or explore opportunities with other Gan’s resignation letter is a sham or irregular on its
companies. (Signed)
face as the same is made by the forced dictation of
8 respondent Veneracion and is involuntary on the
NELSON GAN
part of Gan. For no reason is convincingly adduced
On the same day, Gerry M. Castro (Castro), his on record for us to rationally conclude that Gan
immediate superior at the time, accepted the was forced, threatened, intimidated or dictated
resignation tendered:
against his will in the absence of a substantial
April 11, 2002 G.M. Castro
evidence to the contrary. Indeed, Gan’s resignation
Marketing
letter speaks well of itself. Res ipsa loquitur.

Nelson Gan

c.c.: R.C. Veneracion W.M. Marquez

Issue: WHETHER OR NOT GAN VOLUNTARILY

RESIGNED AND WAS NOT ILLEGALLY OR
Acceptance
CONSTRUCTIVELY DISMISSED, AS EVIDENCED
This is to accept your resignation which will take SOLELY BY THE TENOR OF THE SUBJECT

effect on July 15, 2002. We appreciate your

gesture for providing the company three months Ruling:

advance notice to recruit and train suitable

replacement. We wish you success in your future Yes, to begin with, constructive dismissal is
endeavor.
defined as quitting or cessation of work because
(Signed)
 continued employment is rendered impossible,
GERRY M. CASTRO
unreasonable or unlikely; when there is a demotion
Three months passed, on July 25, 2002, Gan filed
in rank or a diminution of pay and other benefits. It
a Complaint for illegal constructive dismissal, full exists if an act of clear discrimination, insensibility,
backwages, separation pay, damages, attorney’s or disdain by an employer becomes so unbearable
fees, and cost of suit against respondents on the part of the employee that it could foreclose
Galderma and Veneracion.
any choice by him except to forego his continued
employment.There is involuntary resignation due to
LA: Labor Arbiter Manuel M. Manansala dismissed the harsh, hostile, and unfavorable conditions set
the complaint for constructive dismissal.He noted by the employer.The test of constructive dismissal
that Gan’s separation from Galderma was is whether a reasonable person in the employee's
voluntarily initiated and was concluded by the position would have felt compelled to give up his
written resignation letter which was accepted in a employment/position under the circumstances.

business-like manner through a formal office

correspondence. The text of Gan’s letter was
treated as conclusive, res ipsa loquitur. Agreeing
with respondents' contention, the Labor Arbiter
14
cited the case of St. Michael Academy v. NLRC
insofar as it enumerated the requisites of
intimidation which would vitiate one's consent, but
are wanting in Gan's case. Likewise pointed out
was the presence of the sworn affidavits separately
On the other hand, "resignation is the voluntary act
of an employee who is in a situation where one
believes that personal reasons cannot be
sacrificed in favor of the exigency of the service,
and one has no other choice but to dissociate
oneself from employment. It is a formal
pronouncement or relinquishment of an office, with
t h e i n t e n t i o n o f re l i n q u i s h i n g t h e o ffi c e
accompanied by the act of relinquishment. As the
intent to relinquish must concur with the overt act
of relinquishment, the acts of the employee before
and after the alleged resignation must be
considered in determining whether he or she, in
fact, intended to sever his or her employment.
cannot be considered as a form of harassment.
Since Gan submitted a resignation letter, it is
incumbent upon him to prove with clear, positive,
and convincing evidence that his resignation was
not voluntary but was actually a case of
constructive dismissal; that it is a product of
coercion or intimidation.He has to prove his
allegations with particularity.
necessarily called for a corresponding modification
Gan could not have been coerced. Coercion exists
when there is a reasonable or well-grounded fear
of an imminent evil upon a person or his property
or upon the person or property of his spouse,
descendants or ascendants.Neither do the facts of
this case disclose that Gan was intimidated.
with Gan that its immediate implementation, taking
First, the words allegedly uttered by Veneracion
which asked Gan to "reconsider his stay," "make
his move," or that "Galderma will be better off
without him," are ambivalent and susceptible of
varying interpretations depending on one’s
feelings, bias, and emotional threshold. All these
are subjective and highly speculative or even
presumptuous. Veneracion’s intent to dismiss Gan
cannot reasonably be inferred therefrom. Much
less, the words do not definitely show Veneracion's
firm resolve to act on such intent. At the most, the
remarks may be regarded as sarcastic or
suggestive of a plan of action which may or may
n o t i n c l u d e a p l o t t o a c t u a l l y, o r e v e n
constructively, dismiss Gan.
Second, Gan repeatedly boasts of his "excellent
performance" in and "immense contribution" to
Galderma's success. If that is the case, his proper
mindset towards Veneracion's attacks on his
purported work ethics (such as "slow," "lacking in
initiative," "uncooperative," "negative attitude,"
"remiss in duties as product manager," "negative
w o r k b e h a v i o u r, " " p o o r p e r f o r m a n c e , "
"incompetence," "distraction/liability in Galderma")
should have been to simply brush them aside and
continue doing what he is supposed to do as the
product manager of CBPL, Locetar and Benzac
brands. He should have thought that his "good
performance record" would speak for itself and
would stand the test of any baseless accusation,
whether it be hurled to him in close-door or in full
view of others. Gan did not see it this way. He
considered the comments as manifestations of
"harassment." His oversensitivity, which is rather
surprising for an experienced sales and marketing
manager who should have been so used to
customer rejection or indifference and to superior's
assertive or temperamental side due to constant
pressure of keeping up and beating market
competition, would not help him make a case.
Third, the revision of Gan’s 2002 incentive scheme
The change is not a diminution of benefits, since
Gan would have also received the same sum if he
achieved the desired targets for the Locetar and
Benzac brands, the two new products which were
added under his watch. Gan admitted that such
act is a valid exercise of management prerogative;
hence, he should have realized that their inclusion
of the incentive scheme so as to accurately
measure his effectiveness in handling all three
products, not just one or two of them.
Nonetheless, while this Court holds that the 2002
revised incentive scheme is a reasonable and valid
exercise of management prerogative, We agree
effect in April 2002, is improper for want of 30-day
prior notice. Thus, for April 2002, Gan should have
received the same monetary benefits granted
under the 2002 incentive scheme per December
14, 2001 Office Correspondence.
A pivotal argument raised by Gan in this petition is
that Veneracion’s 10th act of harassment – his
statement that Gan "would be given 15 days to
look for another job" – already constitutes actual
illegal dismissal, a termination without just or valid
cause. In support thereof, he cited the case of Far
East Agricultural Supply, Inc. v. Lebatique
We disagree.
Unlike in Gan's case, the employee involved in Far
East Agricultural Supply, Inc. did not submit a
resignation letter.
What is evident, therefore, is that Gan's resignation
is NOT "a case of adherence, not of choice," but
w a s a p ro d u c t o f a m u t u a l l y b e n e fi c i a l
arrangement. We agree with respondents that the
result of the negotiation leading to Gan's
resignation is a "win-win" solution for both parties.
On one hand, Gan was able to obtain a favorable
severance pay while getting flexible working hours
to implement his post-resignation career options.
On the other hand, Galderma was able to cut its
relation with an employee perceived to be unwilling
to perform additional product responsibilities while
being given ample time to look for an alternative to
hire and train. Indeed, Gan voluntarily resigned
from Galderma for a valuable consideration. He
negotiated for an improvement of the resignation
package offered and he managed to obtain an
acceptable one. As opposed to the case of San
Miguel Corporation v. NLRC, Gan was not tricked
or was "morally and psychologically hoodwinked”
to draft, sign, and tender his resignation letter. It
was not made without proper discernment and
time to reflect; nor was it a knee-jerk reaction that
left him with no alternative but to accede.
separation pay shall be equivalent to 1 month pay
18. NORTH DAVAO vs. NLRC
G.R. No. 112546; March 13, 1996
FACTS: North Davao Mining Corporation was
incorporated in 1974 as a 100% privately-owned
company. As of December 31, 1990 the national
government held 81.8% of the common stock and
100% of the preferred stock of said company.
due to business losses – as in the instant case, in
In May   1992, North Davao completely ceased
operations due to serious business reverses. When
it ceased operations, its remaining employees were
separated and given the equivalent of 12.5 days’
pay for every year of service, computed on their
basic monthly pay.
could no longer be continued precisely because
However, it appears that, during the life of the
petitioner corporation, from the beginning of its
operations in 1981 until its closure in 1992, it had
been giving separation pay equivalent to 30 days’
pay for every year of service.
Subsequently, a complaint was filed with
respondent LA by respondent Guillema and 271
other seperated employees for additional
separation pay of 17.5 days for every year of
service, among others.
ISSUE: Is a company which is forced by huge
business losses to close its business, legally
required to pay separation benefits to its
employees at the time of its closure in an amount
equivalent to the separation pay paid to those who
were separated when the company was still a
going concern?  
NOTES:
HELD: NO
controlled 81.8% of the common stock and 100%
LABOR CODE:
of the preferred stock of North Davao, it remains
“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
under-taking 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 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 1 month pay or to at least
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
or at least ½ month pay for every year of service,
whichever is higher.  A fraction of at least 6 months
shall be considered  whole year.”
The underscored portion of Art. 283 governs the
grant of sepAration benefits “in case of closures or
cessation of operation” of business establishments
“NOT due to serious business losses or financial
reverses x x x”. Where, however, the closure was
which the aggregate losses amounted to over P20
billion – the Labor Code does not impose any
obligation upon the employer to pay separation
benefits, for obvious reasons.
In the instant case, the company’s practice of
giving one month’s pay for every year of service
the company could not afford it anymore.   It was
forced to close down on account of accumulated
losses of over P20 billion.   North Davao gave 30-
days’ separation pay to its employees when it was
still a going concern even if it was already losing
heavily.   As a going concern, its cash flow could
still have sustained the payment of such separation
benefits.   But when a business enterprise
completely ceases operations, i.e., upon its death
as a going business concern, its vital lifeblood -its
cashflow – literally dries up.   Therefore, the fact
that less separation benefits were granted when
the company finally met its business death cannot
be characterized as discrimination.   Such action
was dictated not by a discriminatory management
option but by its complete inability to continue its
business life due to accumulated losses.   Indeed,
one cannot squeeze blood out of a dry stone. Nor
water out of parched land.
Even if the national government owned or
only a stockholder thereof, and under existing laws
and prevailing jurisprudence, a stockholder as a
rule is not directly, individually and/or personally
liable for the indebtedness of the corporation.  The
obligation of North Davao cannot be considered
the obligation of the national government, hence,
whether the latter be solvent or not is not material
to the instant case.   The respondents have not
shown that this case constitutes one of the
instances where the corporate veil may be pierced.
From another angle, the national government is not
the employer of private respondent and his co-
complainants, so there is no reason to expect any
kind of bailout by the national government under
existing law and jurisprudence.
 management to conduct its own business affairs to
19. Aguanza vs. Asian Terminal, Inc.                 achieve its purpose cannot be denied.

G.R. No. 163505, August 14, 2009                     

Facts:
may constitute constructive dismissal "when
Petitioner Gualberto Aguanza was employed with
respondent company Asian Terminal, Inc. from
April 15, 1989 to October 1997. He was initially
employed as Derickman or Crane Operator and
was assigned as such aboard Bismark IV, a floating
crane barge owned by Asian Terminals, Inc. based
at the port of Manila. Aside from his basic pay, he
On the other hand, the transfer of an employee
continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion
in rank and/or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an
employer becomes unbearable to the employee."
Aguanza’s situation is not within the purview of this
discussion.

received meal allowance, fixed overtime pay and

out-of port allowance [when the barge is assigned 20. Congson vs NLRC
outside Metro Manila].

Sometime in September 1997, the Bismark IV,
together with its crew, was temporarily assigned at
the Mariveles Grains Terminal in Mariveles, Bataan.
Then, on October 20, 1997, respondent James
Keith issued a memo to the crew of Bismark IV
stating that the barge had been permanently
Facts:
Private respondents were hired on various dates 3
by petitioner as regular piece-rate workers. They
were uniformly paid at a rate of P1.00 per tuna
weighing thirty (30) to eighty (80) kilos per
movement. They worked seven (7) days a week.

transferred to the Mariveles Grains terminal

beginning October 1, 1997 and because of that, its During the first week of June 1990, petitioner
crew would no longer be entitled to out of port notified his workers of his proposal to reduce the
benefits of 16 hours overtime and P200 a day out- rate-per-tuna movement due to the scarcity of
of port allowance.
tuna. Private respondents resisted petitioner's
proposed rate reduction. When they reported for
Because of the said development, Aguanza work the next day, they were informed that they
questioned the diminution of his benefits. Aguanza had been replaced by a new set of workers.

insisted on reporting to work in Manila although his

barge, Bismark IV, and its other crew were already On June 1990, private respondents filed a case
permanently based in Mariveles, Bataan. [Aguanza] a g a i n s t p e t i t i o n e r b e f o re t h e N L R C f o r
was not allowed to time in in Manila because his underpayment of wages (non-compliance with
work was in Mariveles, Bataan. He therefore was Rep. Act Nos. 6640 and 6727) and non-payment of
not able to render his services, and was overtime pay, 13th month pay, holiday pay, rest
accordingly not paid for doing nothing.
day pay, and five (5)-day service incentive leave
pay; and for constructive dismissal. With respect to
Issue:
their monetary claims, private respondents
Was Aguanza constructively dismissed?
charged petitioner with violation of the minimum
wage law, alleging that with petitioner's rates and
Ruling:
the scarcity of tuna catches, private respondents'
No. The transfer of operations is a valid exercise of average monthly earnings each did not exceed
management prerogative. Aguanza asserts that his ONE THOUSAND PESOS (P1,000.00). In addition
transfer constituted constructive dismissal, while to the amount of P1.00 per 'bariles' per movement
ATI asserts that Aguanza’s transfer was a valid herein complainants get the intestines and liver of
exercise of management prerogative.
the tuna as part of their salary. That for every tuna
delivered, herein complainants extract at least
ATI’s transfer of Bismark IV’s base from Manila to three (3) kilos of intestines and liver. That the
Bataan was, contrary to Aguanza’s assertions, a minimum prevailing price of tuna intestine and liver
valid exercise of management prerogative. The in 1986 to 1990 range from P15.00 to P20.00/kilo.
transfer of employees has been traditionally among The value of the tuna intestine and liver should be
the acts identified as a management prerogative computed in arriving at the daily wage of herein
subject only to limitations found in law, collective complainants because the very essence of the
bargaining agreement, and general principles of agreement between complainants and respondent
fair play and justice. Even as the law is solicitous of is: complainants shall be paid only P1.00 per tuna
the welfare of employees, it must also protect the per movement BUT the intestines and liver of the
right of an employer to exercise what are clearly tuna delivered shall go to the herein complainants.
management prerogatives. The free will of It should be noted that tuna intestines and liver are
easily disposed of in any public market. What they
are after, in truth and in fact is the tuna intestines
and liver which they can easily convert into cash."
Quite clearly, petitioner admits that the P1.00-per-
tuna movement is the actual wage rate applied to
private respondents as expressly agreed upon by
both parties. Petitioner further admits that private
respondents were entitled to retrieve the tuna
intestines and liver as part of their compensation.
able to generate sales worth P35,000,000.00, more
Issue: WON the means of payment of the wage is
valid.
then requested payment of his commissions, but
Held: The means of payment of wage is invalid.
advances chargeable to his commissions. Later
The Labor Code expressly provides:
stressing his supposed absences and tardiness. In
"Article 102. Forms of Payment. — No employer
shall pay the wages of an employee by means of,
promissory notes vouchers, coupons, tokens,
tickets, chits, or any object other than legal tender,
even when expressly requested by the employee.
Payment of wages by check or money order shall
be allowed when such manner of payment is
customary on the date of effectivity of this Code,
or is necessary because as specified in
appropriate regulations to be issued by the
Secretary of Labor or as stipulated in a collective
bargaining agreement."
a complaint for illegal dismissal.
Undoubtedly, petitioner's practice of paying the
private respondents the minimum wage by means
of legal tender combined with tuna liver and
intestines runs counter to the above cited provision
of the Labor Code. The fact that said method of
paying the minimum wage was not only agreed
upon by both parties in the employment agreement
but even expressly requested by private
respondents, does not shield petitioner. Article 102
of the Labor Code is clear. Wages shall be paid
only by means of legal tender. The only instance
when an employer is permitted to pay wages in
forms other than legal tender, that is, by checks or
money order, is when the circumstances
prescribed in the second paragraph of Article 102
are present.
suspension memoranda were given to employees
21. NETLINK COMPUTER INC. vs. DELMO
G.R. No. 160827; June 18, 2014
In the absence of a written agreement between the
employer and the employee that sales
commissions shall be paid in a foreign currency,
the latter has the right to be paid in such foreign
currency once the same has become an
established practice of the former. The rate of
exchange at the time of payment, not the rate of
exchange at the time of the sales, controls.
FACTS:
Netlink hired Delmo as account manager tasked to
canvass and source clients and convince them to
p u rc h a s e t h e p ro d u c t s a n d s e r v i c e s o f
Netlink. Delmo worked in the field most of the time.
He and his fellow account managers were not
required to accomplish time cards to record their
personal presence in the office of Netlink. He was
or less, from which he earned commissions
amounting to  P993,558.89 and US$7,588.30. He
Netlink refused and only gave him partial cash
on, Netlink began to nitpick and fault find, like
order to force him to resign, Netlink issued several
memoranda detailing his supposed infractions of
the company’s attendance policy. Despite the
memoranda, Delmo continued to generate huge
sales for Netlink.
On November 28, 1996, Delmo was shocked when
he was refused entry into the company premises
by the security guard pursuant to a memorandum
to that effect. His personal belongings were still
inside the company premises and he sought their
return to him. This incident prompted Delmo to file
In its answer to Delmo’s complaint, Netlink
countered that there were guidelines regarding
company working time and its utilization and how
the employees’ time would be recorded. Allegedly,
all personnel were required to use the bundy clock
to punch in and out in the morning, and in and out
in the afternoon. Excepted from the rules were the
company officers, and the authorized personnel in
the field project assignments. Netlink claimed that
it would be losing on the business transactions
closed by Delmo due to the high costs of
equipment, and in fact his biggest client had not
yet paid. Netlink pointed out that Delmo had
become very lax in his obligations, with the other
account managers eventually having outperformed
him. Netlink asserted that warning, reprimand, and
who violated company rules and regulations, but
such actions were considered as a necessary
management tool to instill discipline.
LA: Delmo was illegally and unjustly dismissed.
R e s p o n d e n t s w e re o rd e re d t o re i n s t a t e
complainant to his former position without loss of
seniority rights with full backwages and other
benefits. The reinstatement aspect is immediately
executory even pending appeal. In case
reinstatement is no longer feasible, complainant
shall be paid separation pay of one-month pay for
every year of service.
NLRC: Modified the decision of the LA by setting
aside the backwages and reinstatement decreed
by the Labor Arbiter due to the existence of valid
and just causes for the termination of Delmo’s
employment.
diminution of the commissions due and owing to
CA: Upholds NLRC’s ruling with modifications with
the awarding of commission and 13th month pay to
the respondent. Whole commission was not
awarded since commission is made to depend on
the future and uncertain event. As regard to 13th
month pay, petitioner was not made to pay
because employment was terminated based on
valid and just cause although he was not given due
process.
and thus incur expenses to protect her rights and
ISSUES:
(1) WON the payment of the commissions should
be in US dollars.
There is no doubt that in the present case, the
(2) WON the award of attorney’s fees was
warranted.
protection and enforcement of his right to his
RULING:
I. YES. As a general rule, all obligations shall be
paid in Philippine currency. However, the
contracting parties may stipulate that foreign
currencies may be used for settling obligations.
This is pursuant to Republic Act No. 8183 which
provides as follows:
FACTS:
“Section 1. All monetary obligations shall be
settled in the Philippine currency which is legal
tender in the Philippines. However, the parties may
agree that the obligation ortransaction shall be
settled in any other currency at the time of
payment.”
- In its questioned Order, the trial court held that
There was no written contract between Netlink and
Delmo stipulating that the latter’s commissions
would be paid in US dollars.1âwphi1 The absence
of the contractual stipulation notwithstanding,
Netlink was still liable to pay Delmo in US dollars
because the practice of paying its sales agents in
US dollars for their US dollar-denominatedsales
had become a company policy. This was impliedly
admitted by Netlink when it did not refute the
allegation that the commissions earned by Delmo
and its other sales agents had been paid in US
dollars. Instead of denying the allegation, Netlink
only sought a declaration that the US dollar
commissions be paid using the exchange rate at
the time of sale. The principle of non-diminution of
benefits, which has been incorporated in Article
10013  of the Labor Code, forbade Netlink from
unilaterally reducing, diminishing, discontinuing or
eliminating the practice. Verily, the phrase
"supplements, or other employee benefits" in
Article 100 is construed to mean the compensation
and privileges received by an employee aside from
regular salaries or wages.
f. A verified undertaking stating that the applicant:
With the payment of US dollar commissions having
ripened into a company practice, there is no way
that the commissions due to Delmo were to be
paid in US dollars or their equivalent in Philippine
currency determined at the time of the sales. To
rule otherwise would be to cause an unjust
Delmo.
II. YES. The award of attorney's fees must,
likewise, be upheld in line of (sic) the decision of
the Supreme Court in the case of Consolidated
Rural Bank (Cagayan Valley), Inc. vs. National
Labor Relations Commission, 301 SCRA 223, 235,
where it was held that "in actions for recovery of
wages or where an employee was forced to litigate
interests, even if not so claimed, an award of
attorney's fees equivalent to ten percent (10%) of
the total award is legally and morally justifiable.
private respondent has incurred expenses for the
commissions.
22. REPUBLIC V PERALTA
150 SCRA 37
FELICIANO; May 20, 1987
NATURE: Review on certiorari
- The Republic of the Philippines seeks the review
on certiorari of the Order of the CFI of Manila in its
Civil Case No. 108395
entitled "In the Matter of Voluntary Insolvency of
Quality Tobacco Corporation, Quality Tobacco.”
the above enumerated claims of USTC and FOITAF
(hereafter collectively
referred to as the "Unions") for separation pay of
their respective members embodied in final awards
of the NLRC were
to be preferred over the claims of the Bureau of
Customs and the BIR. The trial court, in so ruling,
relied primarily upon Article 110 of the Labor Code.
- The Solicitor General, in seeking the reversal of
the questioned Orders, argues that Article 110 of
the Labor Code is not applicable as it speaks of
"wages," a term which he asserts does not include
the separation pay claimed by the Unions.
"Separation pay," the Solicitor General contends:
is given to a laborer for a separation from
employment computed on the basis of the number
of years the laborer was employed by the 7 SEC.
1. Requirements for Issuance of License. Every
applicant for license to operate a private
employment agency or manning agency shall
submit a written application together with the
following requirements: xxx xxx
xxx xxx xxx
(3) Shall assume joint and solidary liability with the
employer for all claims and liabilities which may
arise in connection with the implementation of the
contract; including but not limited to payment of Article 97 (f) of the Labor Code defines "wages" in
wages, health and disability compensation and the following terms:

reparation. employer; it is a form of penalty or Wage' paid to any employee shall mean the
damage against the employer in favor of the remuneration or earnings,

employee for the latter's dismissal or separation however designated, capable of being expressed
from service
in terms of money,

ISSUE WON separation pay of their respective whether fixed or ascertained on a time, task, piece,
or commission basis, or

members embodied in final awards of the NLRC

other method of calculating the same, which is
were to be preferred over the claims of the Bureau
payable by an employer to
of Customs and the BIR (WON separation pay is
an employee under a written or unwritten contract
included in the term “wages”8)
of employment for work
HELD 1. YES Ratio For the specific purposes of
done or to be done, or for services rendered or to
Article 1109 and in the context of insolvency
be rendered, and includes

termination or separation pay is reasonably the fair and reasonable value, as determined by the
regarded as forming part of the remuneration or Secretary of Labor, of

other money benefits accruing to employees or board, lodging, or other facilities customarily
workers by reason of their having previously furnished by the employer to

rendered services to their employer; as such, they the employee. 'Fair and reasonable value' shall not
fall within the scope of "remuneration or earnings include any profit to the

— for services rendered or to be rendered — ." employer or to any person affiliated with the
Liability for separation pay might indeed have the employer.(emphasis supplied)

effect of a penalty, so far as the employer is 9

concerned. So far as concerns the employees, Article 110. Worker preference in case of
however, separation pay is additional remuneration bankruptcy — In the event of bankruptcy

to which they become entitled because, or liquidation of an employer's business, his

havingpreviously rendered services, they are workers shall enjoy first preference as

separated from the employer's service.

regards wages due them for services rendered
Reasoning - We note, in this connection, that in during the period prior to the

Philippine Commercial and Industrial Bank (PCIB) bankruptcy or liquidation, any provision of law to
us. National Mines and Allied Workers Union, the the contrary notwithstanding. Union

Solicitor General took a different view and there paid wages shall be paid in full before other
urged that the term "wages" under Article 110 of creditors may establish any claim to a

the Labor Code may be regarded as embracing share in the assets of the employer. (emphasis
within its scope severance pay or termination or supplied).

separation pay. In PCIB, this Court agreed with the

position advanced by the Solicitor General. We see 23. DEVELOPMENT BANK OF THE
no reason for overturning this particular position.
PHILIPPINES, petitioner, vs. THE NATIONAL
- The resolution of the issue of priority among the
LABOR RELATIONS COMMISSION, ONG PENG,
several claims filed in the insolvency proceedings
instituted by the Insolvent cannot, however, rest on ET AL., respondents.,G.R. No. 100264-81;     Jan
a reading of Article 110 of the labor Code alone.
29, 1993

- Article 110 of the Labor Code, in determining the

reach of its
FACTS: November 14, 1986, private respondents
terms, cannot be viewed in isolation. Rather, Article filed with DOLE- Daet, Camarines Norte, 17
110 must
individual complaints against Republic Hardwood
be read in relation to the provisions of the Civil Inc. (RHI) for unpaid wages and separation pay.
Code concerning
These complaints were thereafter endorsed to
the classification, concurrence and preference of Regional Arbitration Branch of the NLRC since the
credits, which
petitioners had already been terminated from
provisions find particular application in insolvency employment.

proceedings

where the claims of all creditors, preferred or non-

preferred,
RHI alleged that it had ceased to operate in 1983
may be adjudicated in a binding manner.
due to the government ban against tree-cutting
Disposition MODIFIED and REMANDED to the and that in May 24, 1981, its sawmill was totally
trial court for
burned resulting in enormous losses and that due
further proceedings in insolvency.
to its financial setbacks, RHI failed to pay its loan
with the DBP. RHI contended that since DBP
foreclosed its mortgaged assets on September
24,1985, then any adjudication of monetary claims
in favor of its former employees must be satisfied
against DBP. Private respondent impleaded DBP.
applies only to claims which do not attach to
Labor Arbiter   favored private respondents and
held RHI and DBP jointly and severally liable to
private respondents. DBP appealed to the NLRC.
NLRC affirmed LA’s judgment. DBP filed M.R. but it
was dismissed. Thus, this petition for certiorari.
insolvent debtor in favor of workers. It is but a
ISSUE: (1) Whether the private respondents are
entitled to separation pay.
application. It is a method adopted to determine
(2) Whether the private respondents’ separation
pay should be preferred than the DBP’s lien over
the RHI’s mortgaged assets.
debtor.
RULING:Yes. Despite the enormous losses
incurred by RHI due to the fire that gutted the
sawmill in 1981 and despite the logging ban in
1953, the uncontroverted claims for separation pay
show that most of the private respondents still
worked up to the end of 1985. RHI would still have
continued its business had not the petitioner
foreclosed all of its assets and properties on
September 24, 1985. Thus, the closure of RHI’s
business was not primarily brought about by
serious business losses. Such closure was a
consequence of DBP’s foreclosure of RHI’s assets.
The Supreme Court applied Article 283 which
provides:
repair of buildings, canals and other works, upon
“. . . 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 1 month pay
or at least 1/2 month pay for every year of service,
whichever is higher. . . .”
against RHI was executed prior to the amendment
(2) No. Because of the petitioner’s assertion that
LA and NLRC incorrectly applied the provisions of
Article 110 of the Labor Code, the Supreme Court
was constrained to grant the petition for certiorari.
kung may mortgage or wala ang ibang creditors ng
Article 110 must be read in relation to the Civil
Code concerning the classification, concurrence
and preference of credits, which is application in
insolvency proceedings where the claims of all
creditors, preferred or non-preferred, may be
adjudicated in a binding manner. Before the
workers’ preference provided by Article 110 may
be invoked, there must first be a declaration of
bankruptcy or a judicial liquidation of the
employer’s business.
NLRC committed grave abuse of discretion when it
affirmed the LA’s ruling. DBP’s  lien  on RHI’s
mortgaged assets, being a mortgage credit, is
a  special preferred credit  under Article 2242 of
the Civil Code while the workers’  preference  is
an ordinary preferred credit under Article 2244.
A distinction should be made between a
preference of credit and a lien. A preference
specific properties. A lien creates a charge on a
particular property. The right of first preference as
regards unpaid wages recognized by Article 110
does not constitute a lien on the property of the
preference of credit in their favor, a preference in
and specify the order in which credits should be
paid in the final distribution of the proceeds of the
insolvent’s assets. It is a right to a first preference
in the discharge of the funds of the judgment
Article 110 of the Labor Code does  not  create
a lien in favor of workers or employees for unpaid
wages either upon all of the properties or upon any
particular property owned by their employer.
Claims for unpaid wages do not therefore fall at all
within the category of specially preferred claims
established under Articles 2241 and 2242 of the
Civil Code, except to the extent that such claims
for unpaid wages are already covered by Article
2241, (6)- (claims for laborers’ wages, on the goods
manufactured or the work done); or by Article
2242,(3)- (claims of laborers and other workers
engaged in the construction, reconstruction or
said buildings, canals and other works.
Since claims for unpaid wages fall outside the
scope of Article 2241 (6) and 2242 (3), and not
attached to any specific property, they would come
within the category of ordinary preferred credits
under Article 2244.
(Note: SC favored DBP kasi yung mortgage nila
of Article 110. The amendment can’t be given
retroactive effect daw. Pero sa present, 1st  priority
na talaga ang laborer’s unpaid wages   regardless
employer)
Article 110 of the Labor Code has been amended
by R.A. No. 6715 and now reads:
“Article 110. Worker preference in case of
bankruptcy. – In the event of bankruptcy or
liquidation of an employers business, his workers
shall enjoy first preference as regards their unpaid
wages and other monetary claims, any provision of
law to the contrary notwithstanding. Such unpaid
wages, and monetary claims shall be paid in full
before the claims of the Government and other
creditors may be paid.”
The amendment “expands worker preference to
cover not only unpaid wages but also other
monetary claims to which even claims of the
Government must be deemed subordinate.”
Hence, under the new law, even mortgage credits
are subordinate to workers’ claims.
psychiatric report dated January 17,2006
R.A. No. 6715, however, took effect only on March
21, 1989. The amendment cannot therefore be
retroactively applied to, nor can it affect, the
mortgage credit which was secured by the
petitioner several years prior to its effectivity.
relation with his co-worker[s]." 
was suffering from schizophrenia. After
several consultations, Dr. Lee issued a
concluding and stating that Deoferio’s
psychotic symptoms are not curable
within a period of six months and "will
negatively affect his work and social

Even if Article 110 and its Implementing Rule, as 6. Pursuant to these findings, Intel issued
amended, should be interpreted to mean `absolute Deoferio a notice of termination on March
preference,’ the same should be given only 10, 2006.

prospective effect in line with the cardinal rule that 7. Deoferio filed an action against Intel for
laws shall have no retroactive effect, unless the illegal dismissal He denied that he ever had
contrary is provided. To give Article 110 retroactive mental illness and insisted that he
effect would be to wipe out the mortgage in DBP’s satisfactorily performed his duties as a
favor and expose it to a risk which it sought to product engineer. He argued that Intel
protect itself against by requiring a collateral in the violated his statutory right to procedural
form of real property.
due process when it summarily issued a
The public respondent, therefore, committed grave notice of termination.

abuse of discretion when it retroactively applied 8. Respondents argued that: Deoferio’s

the amendment introduced by R.A. No. 6715 to the d i s m i s s a l w a s b a s e d o n D r. L e e ’s
case at bar.
certification that: (1) his schizophrenia was
Petition GRANTED. Decision of NLRC SET ASIDE.
not curable within a period of six months
even with proper medical treatment; and (2)
his continued employment would be
24. MARLO A. DEOFERIO,  Petitioner,  vs. INTEL prejudicial to his and to the other
TECHNOLOGY PHILIPPINES, INC. and/or MIKE employees’ health.  The respondents also
WENTLING, Respondents.
insisted that Deoferio’s presence at Intel’s
G.R. No. 202996               June 18, 2014
premises would pose an actual harm to his
co-employees as shown by his previous
FACTS: TOPIC Disease
acts. On May 8, 2003, Deoferio emailed an
1. Intel employed Deoferio as product quality Intel employee with this message: "All
and reliability engineer with a monthly soul’s day back to work Monday WW45.1."
salary of P9,000.00. In July2001, Intel On January 18, 2005, he cut the mouse
assigned him to the United States as a cables, stepped on the keyboards, and
validation engineer for an agreed period of disarranged the desks of his co-employees.
two years and with a monthly salary of The respondents also highlighted that
US$3,000.00. On January 27, 2002, Deoferio incurred numerous absences from
Deoferio was repatriated to the Philippines work due to his mental condition,
after being confined at Providence St. specifically, from January 31, 2002 until
Vincent Medical Center for major February 28, 2002, from August 2002 until
d e p re s s i o n w i t h p s y c h o s i s . I n t h e September 2002, and from May 2003 until
Philippines, he worked as a product J u l y 2 0 0 3 .  D e o f e r i o a l s o t o o k a n
engineer with a monthly salary of administrative leave with pay from January
P23,000.00.
2005 until December 2005. respondents
2. Deoferio underwent a series of medical and further asserted that the twin-notice
psychiatric treatment at Intel’s expense requirement in dismissals does not apply to
after his confinement in the United States.
terminations under Article 284 of the Labor
3. In 2002, Dr. Elizabeth Rondain of Makati Code.

Medical Center diagnosed him to be 9. LA – valid dismissal. The LA gave weight to

suffering from mood disorder, major Dr. Lee’s certification that Deoferio had
depression, and auditory hallucination.
been suffering from schizophrenia and was
4. He was also referred to Dr. Norieta not fit for employment.

Balderrama, Intel’s forensic psychologist, 10. NLRC affirmed

and to a certain Dr. Cynthia Leynes who 11. CA affirmed, MR denied

both confirmed his mental condition 

12. Deoferio argues: that he was suffering from
5. On August 8, 2005, Dr. Paul Lee, a schizophrenia is belied by his subsequent
consultant psychiatrist of the Philippine employment at Maxim Philippines
General Hospital, concluded that Deoferio Operating Corp. and Philips
 Semiconductors Corp., which both offered
him higher compensations. He also asserts
that the Labor Code does not exempt the
employer from complying with the twin-
notice requirement in terminations due to
disease.
presence of:
ISSUE: W/N the twin-notice requirement in
dismissals applies to terminations due to disease –
YES. DUE PROCESS
by law or prejudicial to his health, as well as
HELD: The twin-notice requirement applies to
terminations under Article 284 of the Labor Code.
The Labor Code and its IRR are silent on the
procedural due process required in terminations
due to disease. Despite the seeming gap in the
law, Section 2, Rule 1, Book VI of the IRR
expressly states that the employee should be
afforded procedural due process in all cases of
dismissals. In Sy v. Court of Appeals  and Manly
Express, Inc. v. Payong, Jr.,  promulgated in 2003
and 2005, respectively, the Court finally
pronounced the rule that the employer must
furnish the employee two written notices in
terminations due to disease, namely: (1) the notice
to apprise the employee of the ground for which
his dismissal is sought; and (2) the notice informing
the employee of his dismissal, to be issued after
the employee has been given reasonable
opportunity to answer and to be heard on his
defense. These rulings reinforce the State policy of
protecting the workers from being terminated
without cause and without affording them the
opportunity to explain their side of the controversy.
Provided, That he is paid separation pay equivalent
In the current case, we agree with the CA that Dr.
Lee’s psychiatric report substantially proves that
Deoferio was suffering from schizophrenia, that his
disease was not curable within a period of six
months even with proper medical treatment, and
that his continued employment would be
prejudicial to his mental health. This conclusion is
further substantiated by the unusual and bizarre
acts that Deoferio committed while at Intel’s
employ.
with proper medical treatment. Without the medical
Employer has the right to discharge the employee
for authorized cause, like in this case, disease.
Thus, in termination cases, the law places the
burden of proof upon the employer to show by
substantial evidence that the termination was for a
lawful cause and in the manner required by law.
certification from a competent public health
In concrete terms, these qualifications embody the
due process requirement in labor cases -
substantive and procedural due process.
Substantive due process means that the
termination must be based on just and/or
authorized causes of dismissal. On the other hand,
procedural due process requires the employer to
effect the dismissal in a manner specified in the
Labor Code and its IRR.
termination due to disease requires (elements) the
(1) An employer has been found to be
suffering from any disease.
(2) His continued employment is prohibited
to the health of his co-employees.
(3) A competent public health authority
certifies that the disease is of such nature
or at such a stage that it cannot be cured
within a period of six months even with
proper medical treatment. With respect to
the first and second elements, the Court
liberally construed the phrase "prejudicial to
his health as well as to the health of his co-
employees" to mean "prejudicial to his
health or to the health of his co-
employees." We did not limit the scope of
this phrase to contagious diseases for the
reason that this phrase is preceded by the
phrase "any disease" under Article 284 of
the Labor Code, to wit:
Art. 284. Disease as ground for termination. – An
employer may terminate the services of an
employee who has been found to be suffering from
any disease and whose continued employment is
prohibited by law or is prejudicial to his health as
well as to the health of his co-employees:
to at least one (1) month salary or to one-half (1/2)
month salary for every year of service, whichever is
greater, a fraction of at least six (6) months being
considered as one (1) whole year.
The third element substantiates the contention that
the employee has indeed been suffering from a
disease that: (1) is prejudicial to his health as well
as to the health of his co-employees; and (2)
cannot be cured within a period of six months even
certificate, there can be no authorized cause for
the employee’s dismissal. The absence of this
element thus renders the dismissal void and illegal.
Simply stated, this requirement is not merely a
procedural requirement, but a substantive one. The
authority is precisely the substantial evidence
required by law to prove the existence of the
disease itself, its non-curability within a period of
six months even with proper medical treatment,
and the prejudice that it would cause to the health
of the sick employee and to those of his co-
employees.

In the current case, we agree with the CA that Dr.
Lee’s psychiatric report substantially proves that
Deoferio was suffering from schizophrenia, that his
disease was not curable within a period of six
months even with proper medical treatment, and
that his continued employment would be
was entered into with full knowledge by the
parties of their rights under the law and they
bound themselves not to conduct any
concerted action of whatsoever kind, otherwise
the grant of financial assistance as discussed
above will be withheld.

prejudicial to his mental health. This conclusion is 4. Solid Mills filed its Department of Labor and
further substantiated by the unusual and bizarre Employment termination report on September
acts that Deoferio committed while at Intel’s 2, 2003.

employ.
5. Later, Solid Mills, through Alfredo Jingco, sent
to Milan et.al individual notices to vacate SMI
WHEREFORE, premises considered, we partially Village.

grant the petition; the assailed February 24, 2012
decision and the August 2, 2012 resolution of the
Court of Appeals stand but respondent Intel
Technology Philippines, Inc. is ordered to pay
petitioner Marlo A. Deoferio nominal damages in
the amount of P30,000.00. We totally deny the
petition with respect to respondent Mike Wending.
who signed the memorandum of agreement
(relevant to topic disease: applicability of 2 notice
rule in disease, elements of disease)
constructed houses inside as condition for the
25, MILAN v. NLRC
G.R. No. 202961
6. Milan et.al. were no longer allowed to report for
work by October 10, 2003. They were required
to sign a memorandum of agreement with
release and quitclaim before their vacation and
sick leave benefits, 13th month pay, and
separation pay would be released.  Employees
were considered to have agreed to vacate SMI
Village, and to the demolition of the
release of their termination benefits and
separation pay. Milan et.al. refused to sign the
documents and demanded to be paid their
benefits and separation pay.

February 04, 2015

7. Hence, they filed complaints before the Labor
Petitioners: EMER MILAN, RANDY MASANGKAY, Arbiter for alleged non-payment of separation
W I L F R E D O J AV I E R , R O N A L D O D AV I D , pay, accrued sick and vacation leaves, and
BONIFACIO MATUNDAN, NORA MENDOZA, ET 13th month pay. They argued that their accrued
AL., (Milan et.al)
benefits and separation pay should not be
Respondents: NATIONAL LABOR RELATIONS withheld because their payment is based on
COMMISSION, SOLID MILLS, INC., AND/OR company policy and practice. Moreover, the
PHILIP ANG
13th month pay is based on law, specifically,
Ponente: LEONEN, J.
Presidential Decree No. 851. Their possession
of Solid Mills property is not an accountability
FACTS: that is subject to clearance procedures. They
1. Milan et.al are Solid Mills, Inc.’s (Solid Mills) had already turned over to Solid Mills their
employees. They are represented by the uniforms and equipment when Solid Mills
National Federation of Labor Unions (NAFLU), ceased operations.

their collective bargaining agent.

8. On the other hand, Solid Mills argued that
2. As Solid Mills’ employees, Milan et.al. and their Milan et.al.’s complaint was premature because
families were allowed to occupy SMI Village, a they had not vacated its property.

property owned by Solid Mills.  According to
Solid Mills, this was “[o]ut of liberality and for
the convenience of its employees . . . [and] on
the condition that the employees would vacate
the premises anytime the Company deems fit.”
agreement dated September 1, 2003 stated no
3. In September 2003, Milan et.al were informed
that effective October 10, 2003, Solid Mills
would cease its operations due to serious
business losses. NAFLU recognized Solid Mills’
closure due to serious business losses in the
memorandum of agreement dated September
9. The Labor Arbiter ruled in favor of Milan et.al. 
According to the Labor Arbiter, Solid Mills
illegally withheld petitioners’ benefits and
s e p a r a t i o n p a y. T h e m e m o r a n d u m o f
condition to the effect that petitioners must
vacate Solid Mills’ property before their
benefits could be given to them. Milan et.al.’s
possession should not be construed as
their“accountabilities” that must be cleared first
before the release of benefits. er.

1, 2003. The memorandum of agreement
provided for Solid Mills’ grant of separation pay
less accountabilities, accrued sick leave
benefits, vacation leave benefits, and 13th
month pay to the employees. The agreement
10. Silodd Mills appealed to the National Labor
Relations Commission. The National Labor
Relations Commission affirmed part of the
decision but reversed and set aside another
part and decided that Milan et.al.’s monetary
claims in the form of separation pay, accrued
 13th month pay for 2003, accrued vacation and
sick leave pays are held in abeyance pending
compliance of their accountabilities to
respondent company by turning over the
subject lots they respectively occupy at SMI
Village Sucat Muntinlupa City, Metro Manila to
Solid Mills. Linga and four other were already
paid their respective separation pays and
benefits. Meanwhile, Teodora Mahilom already
retired long before Solid Mills’ closure. She was
already given her retirement benefits.
deduction from the wages of his employees,
11. The National Labor Relations Commission
ruled that because of petitioners’ failure to
vacate Solid Mills’ property, Solid Mills was
justified in withholding their benefits and
separation pay.35  Solid Mills granted the
petitioners the privilege to occupy its property
on account of petitioners’ employment.36  It
had the prerogative to terminate such privilege.
37  The termination of Solid Mills and
petitioners’ employer-employee relationship
made it incumbent upon petitioners to turn
over the property to Solid Mills.
3. In cases where the employer is authorized by
12. The Court of Appeals ruled that Solid Mills’ act
of allowing its employees to make temporary
dwellings in its property was a liberality on its
part.  It may be revoked any time at its
discretion.
authorized to withhold wages for debts due: Article
ISSUE: Whether or not an employer is allowed to
withhold terminal pay and benefits pending the
employee’s return of its properties
employee to the employer.  It includes any
RULING/RATIO: Yes. The fact that majority of
NAFLU’s members were not occupants of
respondent Solid Mills’ property is evidence that
possession of the property was not contemplated
in the agreement. “Accountabilities” should be
interpreted to refer only to accountabilities that
were incurred by petitioners while they were
performing their duties as employees at the
worksite. Moreover, applicable laws, company
practice, or policies do not provide that 13th
month pay, and sick and vacation leave pay
benefits, may be withheld pending satisfaction of
liabilities by the employee.
categorically deny Solid Mills’ ownership of the


Requiring clearance before the release of last
payments to the employee is a standard procedure
among employers, whether public or private.  Commission, and the Court of Appeals is that Solid
Clearance procedures are instituted to ensure that
the properties, real or personal, belonging to the
employer but are in the possession of the
separated employee, are returned to the employer
before the employee’s departure.
demand the property at will.
As a general rule, employers are prohibited from
withholding wages from employees (Art. 116,
Labor Code). The Labor Code also prohibits the
elimination or diminution of benefits (Art. 100,
Labor Code).


However, our law supports the employers’
institution of clearance procedures before the
release of wages.  As an exception to the general
rule that wages may not be withheld and benefits
may not be diminished, the Labor Code provides:
Art. 113. Wage deduction. No employer, in his own
behalf or in behalf of any person, shall make any
except:
1. 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;
2. 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
law or regulations issued by the Secretary of
Labor and Employment.


The Civil Code provides that the employer is
1706. Withholding of the wages, except for a debt
due, shall not be made by the employer. “Debt” in
this case refers to any obligation due from the
accountability that the employee may have to the
employer.  There is no reason to limit its scope to
uniforms and equipment, as petitioners would
argue.


More importantly, respondent Solid Mills and
NAFLU, the union representing petitioners, agreed
that the release of petitioners’ benefits shall be
“less accountabilities.” Accountabilities of
employees are personal.  They need not be
uniform among all employees in order to be
included in accountabilities incurred by virtue of an
employer-employee relationship. Milan et.al. do not
property, and they do not claim superior right to it. 
What can be gathered from the findings of the
L a b o r A r b i t e r, N a t i o n a l L a b o r R e l a t i o n s
Mills allowed the use of its property for the benefit
of Milan et.al. as its employees.  Milan et.al were
merely allowed to possess and use it out of Solid
Mills’ liberality.  The employer may, therefore,
DISPOSITIVE: Solid Mills won.
DOCTRINE: An employer is allowed to withhold
terminal pay and benefits pending the employee’s
return of its properties. As a general rule, No
employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages
of his employees. The following cases are
considered exceptions:
salaries be offset against Lietz’ claim for liquidated
1. 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;
and the respondent employers' claim for damages
2. 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
from employment is not "rooted" in the alleged
3. In cases where the employer is authorized
by law or regulations issued by the
Secretary of Labor and Employment.
entitlement to the unpaid salaries is not even


26. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No.
196539, October 10, 2012
Doctrine: The "reasonable causal connection with
the employer-employee relationship" is a
requirement not only in employees' money claims
against the employer but is, likewise, a condition
when the claimant is the employer.
Facts: Marietta Portillo (Portillo) was promoted to
Sales Representative and received a
corresponding increase in basic monthly salary
sales and sales quota on her 10th year with Lietz,
Inc. In this regard, Portillo signed another letter
agreement containing a “Goodwill Clause.”
Three years thereafter, Portillo resigned from her
employment and demanded from Lietz Inc. for the
payment of her remaining salaries and
commissions not paid to her upon such
resignation. Later, within the 3-year prohibitory
period, Lietz learned that Portillo was hired by Ed
Keller Philippines, a direct competitor of Lietz, as
head of its Pharma Raw Material Department.
Portillo's demands from Lietz, Inc. for the payment
of her remaining salaries and commissions went
unheeded. Lietz, Inc. gave Portillo the run around,
on the pretext that her salaries and commissions
were still being computed. She filed a complaint
with the NLRC for non-payment of 1½ months’
salary, 2 months’ commission, 13th month pay,
plus moral, exemplary and actual damages and
attorney’s fees.
accounting department.
In its position paper, Lietz admitted liability for
Portillo’s money claims. However, Lietz raised the
defense of legal compensation, stating that
Portillo’s money claims should be offset against
her liability to Lietz for liquidated damages for
Portillo’s breach of the “Goodwill Clause” in the
employment contract when she became employed
with Ed Keller.
Issue: Should Portillo’s money claims for unpaid
damages?
Ruling: No. There is no causal connection between
the petitioner employees' claim for unpaid wages
for the alleged "Goodwill Clause" violation.
Portillo's claim for unpaid salaries did not have
anything to do with her alleged violation of the
employment contract as, in fact, her separation
contractual violation. She resigned from her
employment. She was not dismissed. Portillo's
contested. Indeed, Lietz, Inc.'s argument about
legal compensation necessarily admits that it owes
the money claimed by Portillo. The alleged
contractual violation did not arise during the
existence of the employer-employee relationship. It
was a post-employment matter, a post-
employment violation.
[ GR No. 192582, Apr 07, 2014 ]
27. BLUER THAN BLUE JOINT VENTURES
COMPANY v. GLYZA ESTEBAN +
REYES, J.:
"It is not the job title but the actual work that the
employee performs that determines whether he or
she occupies a position of trust and confidence."[1] 
In this case, while respondent's position was
denominated as Sales Clerk, the nature of her work
included inventory and cashiering, a function that
clearly falls within the sphere of rank-and-file
positions imbued with trust and confidence.

Facts of the Case
Respondent Glyza Esteban (Esteban) was
employed in January 2004 as Sales Clerk, and
assigned at Bluer Than Blue Joint Ventures
Company's (petitioner) EGG boutique in SM City
Marilao, Bulacan, beginning the year 2006.  Part of
her primary tasks were attending to all customer
needs, ensuring efficient inventory, coordinating
orders from clients, cashiering and reporting to the




In November 2006, the petitioner received a report
that several employees have access to its point-of-
sale (POS) system through a universal password
given by Elmer Flores (Flores).  Upon investigation,
it was discovered that it was Esteban who gave
Flores the password.  The petitioner sent a letter
memorandum to Esteban on November 8, 2006,
asking her to explain in writing why she should not 11/13/06 -
= 10.50 mos.
be disciplinary dealt with for tampering with the 9/28/07
company's POS system through the use of an
[P]350 x 26 [P]95,550.
unauthorized password.  Esteban was also placed =
under preventive suspension for ten days.
 x 10.50 00

 13th Month
In her explanation, Esteban admitted that she used
Pay
the universal password three times on the same
day in December 2005, after she learned of it from 1/12 of
two other employees who she saw browsing [P]95,550.0 = 7,962.50
through the petitioner's sales inquiry.  She inquired
0
how the employees were able to open the system
and she was told that they used the "123456" SILP
password.


 [P]350 x
On November 13, 2006, Esteban's preventive [P]105,043.
5/12 x = 1,531.25
suspension was lifted, but at the same time, a 75
10.50
notice of termination was sent to her, finding her
explanation unsatisfactory and terminating her b Separation
employment immediately on the ground of loss of ) Pay
trust and confidence.  Esteban was given her final
pay, including benefits and bonuses, less inventory 11/25/03 -
variances incurred by the store amounting to = 3 yrs.
12/6/06
P8,304.93.  Esteban signed a quitclaim and release
in favor of the petitioner.
 [P]350 x 26

 27,300.00
x3
On December 6, 2006, Esteban filed a complaint
for illegal dismissal, illegal suspension, holiday pay, c U n p a i d
rest day and separation pay.
 ) Salaries


In a Decision[2]  dated September 28, 2007, the 11/9 -
= 5 days
Labor Arbiter (LA) ruled in favor of Esteban and 13/06
found that she was illegally dismissed.  The LA
also awarded separation pay, backwages, unpaid [P]350 x 5 = 1,750.00
salary during her preventive suspension and
attorney's fees.  The dispositive portion of the LA [P]134,093.
decision provides:
 75

Te n ( 1 0 % )
WHEREFORE, a Decision is hereby rendered
P e r c e n t
declaring [Esteban] to have been illegally 13,409.37
dismissed.  Corollarily, she is entitled for the Attorney's
payment of separation pay as prayed for at one Fees
month salary for every year of service, plus
[P]147,503.
backwages from November 13, 2006 when she TOTAL
was dismissed up to the rendition of this Decision.
 12


Further, as [Esteban] was illegally suspended she is 

entitled to salaries during her suspension from SO ORDERED.[3]

November 9-13, 2006.
 The petitioner filed an appeal with the National

 Labor Relations Commission (NLRC), and in its
In addition, an attorney's fees equivalent to ten Decision[4]  dated September 23, 2008, the NLRC
(10%) percent of the total award is hereby granted, reversed the decision of the LA and dismissed the
computed as follows:
 case for illegal dismissal.  The dispositive portion
of the NLRC decision reads:



a
Backwages
) WHEREFORE, the decision appealed from is
hereby reversed and set aside and in its stead a
new one is rendered dismissing this case for lack AMOUNTING TO [P]8,304.93 IS
of merit.
 UNFOUNDED.[8]


 

[Petitioners] however are ordered to refund to The petitioner argues that it had just cause to
[Esteban] the amount of [P]8,304.93 which was terminate the employment of Esteban, that is, loss
illegally deducted from her salary.
 of trust and confidence.  Esteban, the petitioner

 believes, is a rank-and-file employee whose nature
SO ORDERED.[5]
of work is reposed with trust and confidence.  Her
unauthorized access to the POS system of the


company and her dissemination of the
Thus, Esteban went to the Court of Appeals (CA)
unauthorized password, which Esteban admitted,
on certiorari.  In the assailed Decision[6]  dated
is a breach of trust and confidence, and justifies
November 25, 2009, the CA granted Esteban's
her dismissal.[9]

petition and reinstated the LA decision, to wit:





The petitioner also contends that the CA failed to
appreciate the significance of Esteban's infraction
WHEREFORE, premises considered, the petition is when it ruled that suspension would have sufficed
hereby  GRANTED. The assailed Decision dated to discipline her.  Esteban's length of service
September 23, 2008 and Resolution dated should also not have been considered to mitigate
November 27, 2008 of public respondent National the penalty imposed, as her acts show a lack of
Labor Relations Commission are  ANNULLED and concern for her employer.  As regards her
SET ASIDE[.]  Accordingly, the Decision of the preventive suspension, the petitioner maintains
Labor Arbiter dated September 28, 2007 that it was justified in imposing the same despite
is  REINSTATED  with  MODIFICATION,  that the that the acts were committed almost a year before
award of separation pay is computed from January the investigation since it did not have any prior
2, 2004, and not from November 25, 2003.
 knowledge of the infraction.[10]


 

SO ORDERED.[7]
Finally, the petitioner contends that the deduction
on Esteban's wages of the negative variances in

 the sales is allowed by the Labor Code, and such
Hence, this petition with the following assignment practice has been widely recognized in the retail
of errors:
 industry.[11]


 

Esteban, on the other hand, avers that the
I. THE HONORABLE COURT OF APPEALS competency clause she signed with the petitioner
GRAVELY ABUSED  ITS  DISCRETION  merely states the following functions: (1) attend to
WHEN  IT  HELD  THAT RANK-AND-FILE and assist the customer in all their needs; (2)
EMPLOYEES CANNOT BE DISMISSED ON conduct physical inventory; (3) clean and tidy up
GROUND OF LOSS OF TRUST AND the merchandise and store; and (4) coordinate with
CONFIDENCE.
 the stockroom for orders.  As regards the
cashiering function, it merely states "to follow."[12] 
As such, her main task is that of a sales clerk.

II. THE HONORABLE COURT OF APPEALS 

GRAVELY ABUSED ITS DISCRETION IN Esteban also avers, albeit belatedly, that the notice
A P P LY I N G T H E P R I N C I P L E O F to explain given to her did not identify the acts or
REASONABLE PROPORTIONALITY ON omissions allegedly committed by her.  She also
THE WRONGFUL ACTS OF RESPONDENT contends that it was the company's fault in not
ESTEBAN.
 creating a strong password, and that she was
forced into signing the quitclaim and waiver,
III. THE HONORABLE COURT OF APPEALS among others.[13]

GRAVELY ABUSED ITS DISCRETION IN
H O L D I N G T H AT T H E P R E V E N T I V E Ruling of the Court

SUSPENSION OF RESPONDENT 

ESTEBAN WAS UNWARRANTED.
 The LA and the CA were one in ruling that Esteban
was illegally dismissed by the petitioner.  It was
IV. THE HONORABLE COURT OF APPEALS their finding that the position occupied by Esteban
GRAVELY ABUSED ITS DISCRETION IN was that of a rank-and-file employee and she is
HOLDING THAT THE WAGE DEDUCTION neither a supervisor, manager nor a cashier; thus,
F O R T H E N E G AT I V E V A R I A N C E she does not hold a position of trust and
confidence.[14]  The CA also affirmed the ruling of however, were more than that of a sales clerk. 
the LA that Esteban's preventive suspension was Aside from attending to customers and tending to
not warranted.[15]  The CA also upheld the finding the shop, Esteban also assumed cashiering
of the NLRC that the deduction of P8,304.93, duties.  This, she does not deny; instead, she
representing the store's negative variance, from insists that the competency clause provided that
Esteban's salary violates Article 113 of the Labor her tasks were that of a sales clerk and the
Code, which prohibits wage deduction.[16]
 cashiering function was labelled "to follow."[22]  A

 perusal of the competency clause, however, shows
The NLRC, on the other hand, found that Esteban that it is merely an attestation on her part that she
was dismissed for cause.  According to the NLRC, is competent to "meet the basic requirements
Esteban admitted that she violated the petitioner needed for the position [she] is applying for x x x". 
when she made an unauthorized access to the It does not define her actual duties.  As
POS system, and even shared the password to consistently ruled by the Court, it is not the job title
another employee.  The NLRC also rejected but the actual work that the employee performs
Esteban's assertion that her job as sales clerk that determines whether he or she occupies a
does not occupy a position of trust, and that her position of trust and confidence.[23]  In  Philippine
preventive suspension was not warranted.  With Plaza Holdings, Inc. v. Episcope,[24] the Court ruled
regard to her waiver and quitclaim, the NLRC that a service attendant, who was tasked to attend
upheld its validity as Esteban signed the same with to dining guests, handle their bills and receive
full awareness that she committed a wrong.[17]
 payments for transmittal to the cashier and was

 therefore involved in the handling of company
Loss of trust and confidence as a
 funds, is considered an employee occupying a
valid ground for dismissal from employment
 position of trust and confidence.  Similarly in

 Esteban's case, given that she had in her care and
The antecedent facts that gave rise to Esteban's custody the store's property and funds, she is
dismissal from employment are not disputed in this considered as a rank-and-file employee occupying
case.  The issue is whether Esteban's acts a position of trust and confidence.

constitute just cause to terminate her employment 

with the company on the ground of loss of trust Proceeding from the above conclusion, the pivotal
and confidence.
 question that must be answered is whether

 Esteban's acts constitute just cause to terminate
Loss of trust and confidence is premised on the her employment.

fact that the employee concerned holds a position 

of responsibility, trust and confidence.  The Loss of trust and confidence to be a valid cause
employee must be invested with confidence on for dismissal must be work related such as would
delicate matters, such as the custody, handling, show  the employee concerned to be unfit to
care and protection of the employer's property and continue working for the employer and it must
funds. [18]  "[W]ith respect to rank-and-file be based on a wilful breach of trust and
personnel, loss of trust and confidence as ground founded on clearly established facts.[25]  Such
for valid dismissal requires proof of involvement in breach is wilful if it is done intentionally, knowingly,
the alleged events in question, and that mere and purposely, without justifiable excuse as
uncorroborated assertions and accusations by the distinguished from an act done carelessly,
employer will not be sufficient."[19]
 thoughtlessly, heedlessly or inadvertently.[26]  The

 loss of trust and confidence must spring from the
Esteban is, no doubt, a rank-and-file employee.  voluntary or wilful act of the employee, or by
The question now is whether she occupies a reason of some blameworthy act or omission on
position of trust and confidence.
 the part of the employee.[27]


 

Among the fiduciary rank-and-file employees are In this case, the Court finds that the acts
cashiers, auditors, property custodians, or  those committed by Esteban do not amount to a wilful
who, in the normal exercise of their functions, breach of trust.  She admitted that she accessed
regularly handle significant amounts of money t h e P O S s y s t e m [ 2 8 ]  w i t h t h e u s e o f t h e
or property.[20]  These employees, though rank- unauthorized "123456" password.  She did so,
and-file, are routinely charged with the care and however, out of curiosity and without any obvious
custody of the employer's money or property, and intention of defrauding the petitioner.  As professed
are thus classified as occupying positions of trust by Esteban, "she was acting in good faith in
and confidence.[21]
 verifying what her co-staff told her about the

 opening of the computer by the use of the
In this case, Esteban was a sales clerk.  Her duties, "123456" password, x x x.  She even told her co-
staff not to open again said computer, and that almost a year before the investigation was
was the first and last time she opened said conducted, still, it should be pointed out that
computer."[29]  Moreover, the petitioner even Esteban was performing functions that involve
admitted that Esteban has her own password to handling of the petitioner's property and funds,
the POS system.  If it was her intention to and the petitioner had every right to protect its
manipulate the store's inventory and funds, she assets and operations pending Esteban's
could have done so long before she had investigation.[34]

knowledge of the unauthorized password.  But the 

facts on hand show that she did not.  The Sales negative variances as wage deductions

petitioner also failed to establish a substantial 

connection between Esteban's use of the The petitioner deducted the amount of P8,304.93
"123456" password and any loss suffered by the from Esteban's last salary.  According to the
petitioner.  Indeed, it may be true that, as posited petitioner, this represents the store's negative
by the petitioner, it is the fact that she used the variance for the year 2005 to 2006.  The petitioner
password that gives cause to the loss of trust and justifies the deduction on the basis of alleged trade
confidence on Esteban.  However, as ruled above, practice and that it is allowed by the Labor Code.

such breach must have been done intentionally, 

knowingly, and purposely, and without any Article 113 of the Labor Code provides that no
justifiable excuse, and not simply something done employer, in his own behalf or in behalf of any
c a r e l e s s l y, t h o u g h t l e s s l y, h e e d l e s s l y o r person, shall make any deduction from the wages
inadvertently.  To the Court's mind, Esteban's of his employees, except in cases where the
lapse is, at best, a careless act that does not merit employer is authorized by law or regulations issued
the imposition of the penalty of dismissal.
 by the Secretary of Labor and Employment, among

 others.  The Omnibus Rules Implementing the
The Court is not saying that Esteban is innocent of Labor Code, meanwhile, provides:

any breach of company policy.  That she relayed 

the password to another employee is likewise
demonstrative of her mindless appreciation of her SECTION 14. Deduction for loss or damage. Where
duties as a sales clerk in the petitioner's employ.  the employer is engaged in a trade, occupation or
But absent any showing that her acts were done business where the practice of making deductions
with "moral perverseness" that would justify the or requiring deposits is recognized to answer for
claimed loss of trust and confidence attendant to the reimbursement of loss or damage to tools,
her job,[30]  the Court must sustain the conclusion materials, or equipment supplied by the employer
that Esteban was illegally dismissed.  As stated by to the employee, the employer may make wage
the CA, "[s]uspension would have sufficed as deductions or require the employees to make
punishment, considering that the petitioner had deposits from which deductions shall be made,
already been with the company for more than 2 subject to the following conditions:

years, and the petitioner apologized and readily
admitted her mistake in her written explanation, (a) That the employee concerned is clearly shown
and considering that no clear and convincing to be responsible for the loss or damage;

evidence of loss or prejudice, which was suffered (b) That the employee is given reasonable
by the [petitioner] from [Esteban's] supposed opportunity to show cause why deduction should
infraction."[31]
 not be made;


 (c) That the amount of such deduction is fair and
Preventive suspension during
 reasonable and shall not exceed the actual loss or
investigation 
 damage; and


 (d) That the deduction from the wages of the
Preventive suspension is a measure allowed by law employee does not exceed 20 percent of the
and afforded to the employer if an employee's employee's wages in a week.

continued employment poses a serious and

imminent threat to the employer's life or property In this case, the petitioner failed to sufficiently
or of his co-workers.[32]  It may be legally imposed establish that Esteban was responsible for the
against an employee whose alleged violation is the negative variance it had in its sales for the year
subject of an investigation.[33]
 2005 to 2006 and that Esteban was given the

 opportunity to show cause the deduction from her
In this case, the petitioner was acting well within its last salary should not be made.  The Court cannot
rights when it imposed a 10-day preventive accept the petitioner's statement that it is the
suspension on Esteban.  While it may be that the practice in the retail industry to deduct variances
acts complained of were committed by Esteban from an employee's salary, without more.  In  Niña
Jewelry Manufacturing of Metal Arts, Inc. v. expense, more than five months of training
Montecillo,[35] the Court ruled that:
 consisting of ground schooling in Manila and flight

 simulation in Melbour ne, Australia. After
completing the  training course, Almario served as
[T]he petitioners should first establish that the A-300 First Officer of PAL, but after eight months
making of deductions from the salaries is of service as such, he tendered his resignation, for
authorized by law, or regulations issued by the ―personal reasons.‖ Despite a letter coming from
Secretary of Labor. Further, the posting of cash PAL to reconsider his resignation otherwise he will
bonds should be proven as a recognized practice bear the cost of training, Mr. Almario still
in the jewelry manufacturing business, or proceeded with his resignation.

alternatively, the petitioners should seek for the Later on, PAL filed a Complaint against Almario
determination by the Secretary of Labor through before the  Regional  Trial Court (RTC), for
the issuance of appropriate rules and regulations reimbursement of P851,107 worth of training
that the policy the former seeks to implement is costs, attorney‘s fees  equivalent  to 20% of the
necessary or desirable in the conduct of business.  said amount, and costs of litigation. PAL invoked
The petitioners failed in this respect.  It bears the existence of an innominate contract of do ut
stressing that without proofs that requiring facias (I give that you may do) with Almario in that
deposits and effecting deductions are recognized by spending for his training, he would render
practices, or without securing the Secretary of service to it until the costs of training
Labor's determination of the necessity or were  recovered  in at least three (3) years. Almario
desirability of the same, the imposition of new having resigned before the 3-year period, PAL
policies relative to deductions and deposits can be prayed that he should be ordered to reimburse the
made subject to abuse by the employers.  This is costs for his training. In his Answer, Almario denied
not what the law intends.[36]
the existence of any agreement with PAL that he
would have to render service to it for three years

 after his training failing which he would reimburse
WHEREFORE, the petition is  PARTIALLY the training costs. He pointed out that the
GRANTED.  The Decision dated November 25, Collective Bargaining Agreement (CBA) between
2009 and Resolution dated June 10, 2010 of the PAL and the Airline Pilot‘s Association of the
Court of Appeals in CA-G.R. SP No. 107573 Philippines (ALPAP), of which he was a member,
insofar as it reinstated with modification the carried no such agreement.

Decision of the Labor Arbiter dated September 28, Mr. Almario‘s contention was confirmed by the
2007 are  AFFIRMED.  Insofar as it affirmed RTC but was reversed by  the Court  of Appeals
respondent Glyza Esteban's preventive (CA). The CA found Almario liable under the CBA
suspension, the same are hereby REVERSED.
 between PAL and ALPAP and, in any event, under

 Article 22 of the Civil Code. Thus, this action for
The Labor Arbiter is hereby  ORDERED  to re- review on Certiorari by Mr. Almario.

compute the monetary award in favor of Glyza ISSUE:

Esteban and to exclude the award of backwages

Whether or not the act of Mr. Almario is in violation
during such period of preventive suspension, if
of the CBA.

any.


 HELD:

SO ORDERED.
 Article XXIII, Section 1 of the CBA provides that


 pilots fifty-seven (57) years of age shall be frozen in
Sereno, C.J., (Chairperson), Leonardo-De Castro, their position and shall not be permitted to occupy
Bersamin, and Villarama, Jr., JJ., concur.
 any position in the company‘s turbo-jet fleet.  The
reason why  pilots who are 57 years of age are no
28. VICENTE S. ALMARIO longer qualified to bid for a higher position is
v. PHILIPPINE AIRLINES, INC.
because they have only three (3) years left before
the mandatory retirement age of 60 and to send
532 SCRA 614 (2007)
them to training at that age, PAL would no longer
Courts will not allow one party to enrich himself at be able to  recover  whatever training expenses it
will have to incur.

the expense of another.

Simply put, the foregoing provision clearly and

On April 28, 1995, Almario, then about 39 years of
unequivocally recognizes the prohibitive training
age and a Boeing 737 (B-737) First Officer at PAL,
cost  principle  such that it will take a period of at
successfully bid for the higher position of Airbus
least three (3) years before PAL could recover from
300 (A-300) First Officer. Since said higher position
the training expenses it incurred.

required additional training, he underwent, at PAL‘s
Admittedly, PAL invested for the training of Almario
to enable him to acquire a higher level of  skill,
proficiency, or technical competence so that he
could efficiently discharge the position of A-300
First O ffi c e r. Given that,
PAL  expected  to  recover  the training costs by
availing of Almario‘s services for at least three
years. The expectation of PAL was not fully
realized, however, due to Almario‘s resignation
after only eight months of service following the
completion of his  training course. He cannot,
therefore, refuse to reimburse the costs of training
without violating the principle of unjust enrichment.