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SET

4:
1. Auto Bus Transport System Inc. v. Bautista [May 16, 2005]
2. Jose Sangco, et. al. v. NLRC, et. al [Mar 23, 1990]
3. Douglas Millares and Rogelio Lagda v. NLRC [Jul 29, 2002]
4. SLL International Cables Specialist v. NLRC [Mar 2, 2011]
5. American Wire & Cable Co Daily Rate EU v. American Wire &
Cable Co [Apr 29, 2005]
6. TSPIC Co. v. TSPIC EU [ Feb 13, 2008]
7. Lepanto Ceramics, Inc. v. Lepanto Ceramics Employees Assoc
[Mar 2, 2010]
8. Eastern Telecommunications Phils Inc. v. Eastern Telecom EU
[Feb. 8, 2012]

[G.R. No. 156367. May 16, 2005.]
AUTO BUS TRANSPORT SYSTEMS, INC., vs. ANTONIO
BAUTISTA,
CHICO-NAZARIO, J p

Facts:
Antonio Bautista has been employed by petitioner Auto Bus
Transport Systems, Inc. (Autobus), as driver-conductor paid on
commission basis, seven percent (7%) of the total gross income
per travel, on a twice a month basis. On 03 January 2000, while
respondent was driving Autobus No. 114 along Sta. Fe, Nueva
Vizcaya, the bus he was driving accidentally bumped the rear
portion of Autobus No. 124, as the latter vehicle suddenly stopped
at a sharp curve without giving any warning. Respondent averred
that the accident happened because he was compelled by the
management to go back to Roxas, Isabela, although he had not
slept for almost twenty-four (24) hours, as he had just arrived in
Manila from Roxas, Isabela. Respondent further alleged that he
was not allowed to work until he fully paid the amount of
P75,551.50, representing thirty percent (30%) of the cost of
repair of the damaged buses and that despite respondent's pleas
for reconsideration, the same was ignored by management. After a
month, management sent him a letter of termination.
Thus, on 02 February 2000, respondent instituted a Complaint for
Illegal Dismissal with Money Claims for nonpayment of 13th
month pay and service incentive leave pay against Autobus.
Petitioner, on the other hand, maintained that respondent's
employment was replete with offenses involving reckless
imprudence, gross negligence, and dishonesty. To support its
claim, petitioner presented copies of letters, memos, irregularity
reports, and warrants of arrest pertaining to several incidents
wherein respondent was involved. aEHIDT
Furthermore, petitioner avers that in the exercise of its
management prerogative, respondent's employment was
terminated only after the latter was provided with an opportunity
to explain his side regarding the accident on 03 January 2000.

Labor Arbiter Monroe C. Tabingan: DISMISSED Complaint for
Illegal Dismissal but ordered Autobus to pay 13th month pay and
SIL
NLRC: MODIFIED by deleting the award of 13th month pay. The
other findings are AFFIRMED

Issue: W/N RESPONDENT IS ENTITLED TO SIL
HELD: YES.
RATIO: Generally, Service Incentive Leave shall not apply to
employees classified as "field personnel." The phrase "other
employees whose performance is unsupervised by the employer"
must not be understood as a separate classification of employees
to which service incentive leave shall not be granted. Rather, it
serves as an amplification of the interpretation of the definition of
field personnel under the Labor Code as those "whose actual

hours of work in the field cannot be determined with reasonable


certainty."

Likewise, employees engaged on task or contract basis or paid on
purely commission basis are not automatically exempted from the
grant of service incentive leave, unless, they fall under the
classification of field personnel.

Therefore, petitioner's contention that respondent is not entitled
to the grant of service incentive leave just because he was paid on
purely commission basis is misplaced. What must be ascertained
in order to resolve the issue of propriety of the grant of service
incentive leave to respondent is whether or not he is a field
personnel.

According to Article 82 of the Labor Code, "field personnel" shall
refer to non-agricultural employees who regularly perform their
duties away from the principal place of business or branch office
of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. As a general rule,
[field personnel] are those whose performance of their
job/service is not supervised by the employer or his
representative, the workplace being away from the principal office
and whose hours and days of work cannot be determined with
reasonable certainty; hence, they are paid specific amount for
rendering specific service or performing specific work. If required
to be at specific places at specific times, employees including
drivers cannot be said to be field personnel despite the fact that
they are performing work away from the principal office of the
employee

In order to conclude whether an employee is a field employee, it is
also necessary to ascertain if actual hours of work in the field can
be determined with reasonable certainty by the employer. In so
doing, an inquiry must be made as to whether or not the
employee's time and performance are constantly supervised by
the employer.

As LA observed: It is of judicial notice that along the routes that are
plied by these bus companies, there are its inspectors assigned at
strategic places who board the bus and inspect the passengers, the
punched tickets, and the conductor's reports. There is also the
mandatory once-a-week car barn or shop day, where the bus is
regularly checked as to its mechanical, electrical, and hydraulic
aspects, whether or not there are problems thereon as reported by
the driver and/or conductor. They too, must be at specific place as
[sic] specified time, as they generally observe prompt departure and
arrival from their point of origin to their point of destination. In
each and every depot, there is always the Dispatcher whose function
is precisely to see to it that the bus and its crew leave the premises
at specific times and arrive at the estimated proper time. These, are
present in the case at bar. The driver, the complainant herein, was
therefore under constant supervision while in the performance of
this work. He cannot be considered a field personnel.

We agree in the above disquisition. Therefore, as correctly
concluded by the appellate court, respondent is not a field
personnel but a regular employee who performs tasks usually
necessary and desirable to the usual trade of petitioner's business.
Accordingly, respondent is entitled to the grant of service
incentive leave. His cause of action to claim the payment of his
accumulated service incentive leave thus accrued from the time
when his employer dismissed him and failed to pay his
accumulated leave credits.


AKD|LABSTAN|DIGEST|2016|PAGE 1

[G.R. Nos. 50999-51000. March 23, 1990.]


JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, vs.
NATIONAL LABOR RELATIONS COMMISSION (FIRST
DIVISION), LABOR ARBITER FLAVIO AGUAS, and F.E. ZUELLIG
(M), INC.,
MEDIALDEA, J p:
LABOR LAW; NATIONAL LABOR RELATIONS COMMISSION;
SEPARATION PAY; ALLOWANCES AND EARNED COMMISSIONS
INCLUDED IN THE MONTHLY SALARY IN THE COMPUTATION
THEREOF. Insofar as the issues of whether or not allowances
should be included in the monthly salary of petitioners for the
purpose of computation of their separation pay is concerned, this
has been settled in the case of Santos v. NLRC, where We ruled
that "in the computation of backwages and separation pay,
account must be taken not only of the basic salary of petitioner but
also of her transportation and emergency living allowances." This
ruling was reiterated in Soriano v. NLRC and recently, in Planters
Products, Inc. v. NLRC. Inasmuch as the words "wages", "pay" and
"salary" have the same meaning, and commission is included in
the definition of "wage", the logical conclusion, therefore, is, in the
computation of the separation pay of petitioners, their salary base
should include also their earned sales commissions.

2. ID.; ID.; TERM "WAGES" INCLUDE COMMISSIONS. Article
97(f) by itself is explicit that commission is included in the
definition of the term "wage". It has been repeatedly declared by
the courts that where the law speaks in clear and categorical
language, there is no room for interpretation or construction;
there is only room for application. A plain and unambiguous
statute speaks for itself, and any attempt to make it clearer is vain
labor and tends only to obscurity.

3. ID.; ID.; SYNONYMOUS TO "SALARY" AND "PAY". The
ambiguity between Article 97(f), which defines the term 'wage'
and Article XIV of the Collective Bargaining Agreement, Article
284 of the Labor Code and Sections 9(b) and 10 of the
Implementing Rules, which mention the terms "pay" and "salary",
is more apparent than real. Broadly, the word "salary" means a
recompense or consideration made to a person for his pains or
industry in another man's business. Whether it be derived from
"salarium," or more fancifully from "sal," the pay of the Roman
soldier, it carries with it the fundamental idea of compensation for
services rendered. Indeed, there is eminent authority for holding
that the words "wages" and "salary" are in essence synonymous.
"Salary," the etymology of which is the Latin word "salarium," is
often used interchangeably with "wage", the etymology of which is
the Middle English word "wagen". Both words generally refer to
one and the same meaning, that is, a reward or recompense for
services performed. Likewise, "pay" is the synonym of "wages"
and "salary"

4. ID.; ID.; ID.; COMMISSION; DEFINED. We agree with the
Solicitor General that granting, in gratia argumenti, that the
commissions were in the form of incentives or encouragement, so
that the petitioners would be inspired to put a little more industry
on the jobs particularly assigned to them, still these commissions
are direct remunerations for services rendered which contributed

to the increase of income of Zuellig. Commission is the


recompense, compensation or reward of an agent, salesman,
executor, trustees, receiver, factor, broker or bailee, when the
same is calculated as a percentage on the amount of his
transactions or on the profit to the principal. The nature of the
work of a salesman and the reason for such type of remuneration
for services rendered demonstrate clearly that commissions are
part of petitioners' wage or salary.

5. ID.; ID.; ID.; ID.; BASIS IN THE COMPUTATION THEREOF. In
Soriano v. NLRC, et al., supra, in resolving the issue of the salary
base that should be used in computing the separation pay, We
held that: "The commissions also claimed by petitioner ('override
commission' plus 'net deposit incentive') are not properly
includible in such base figure since such commissions must be
earned by actual market transactions attributable to petitioner."
Applying this by analogy, since the commissions in the present
case were earned by actual market transactions attributable to
petitioners, these should be included in their separation pay. In
the computation thereof, what should be taken into account is the
average commissions earned during their last year of
employment.


Facts:
Zuellig filed with the Department of Labor (Regional Office No. 4)
an application seeking clearance to terminate the services of
petitioners Jose Songco, Romeo Cipres, and Amancio Manuel
(hereinafter referred to as petitioners) allegedly on the ground of
retrenchment due to financial losses. This application was
seasonably opposed by petitioners alleging that the company is
not suffering from any losses. They alleged further that they are
being dismissed because of their membership in the union. At the
last hearing of the case, however, petitioners manifested that they
are no longer contesting their dismissal. The parties then agreed
that the sole issue to be resolved is the basis of the separation pay
due to petitioners. Petitioners, who were in the sales force of
Zuellig received monthly salaries of at least P400.00. In addition,
they received commissions for every sale they made.

Labor Arbiter rendered a decision ordering Zuellig to pay the
complainants separation pay equivalent to their one month salary
(exclusive of commissions, allowances, etc.) for every year of
service that they have worked with the company.

The appeal by petitioners to the National Labor Relations
Commission was dismissed for lack of merit.

ISSUE: whether or not earned sales commissions and
allowances should be included in the monthly salary of
petitioners for the purpose of computation of their
separation pay.

HELD: YES.

RATIO:Petitioners' position was that in arriving at the correct and
legal amount of separation pay due them, whether under the
AKD|LABSTAN|DIGEST|2016|PAGE 2

Labor Code or the CBA, their basic salary, earned sales


commissions and allowances should be added together. They cited
Article 97(f) of the Labor Code which includes commission as part
of one's salary.
"(f) 'Wage' paid to any employee shall mean the remuneration or
earnings, however designated, capable of being expressed in terms
of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or
for services rendered or to be rendered, and 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. 'Fair and reasonable value' shall not include any
profit to the employer or to any person affiliated with the employer."

Zuellig argues that if it were really the intention of the Labor Code
as well as its implementing rules to include commission in the
computation of separation pay, it could have explicitly said so in
clear and unequivocal terms. Furthermore, in the definition of the
term "wage", "commission" is used only as one of the features or
designations attached to the word remuneration or earnings.

Insofar as the issue of whether or not allowances should be
included in the monthly salary of petitioners for the purpose of
computation of their separation pay is concerned, this has been
settled in the case of Santos v. NLRC, et al, where We ruled that "in
the computation of backwages and separation pay, account must
be taken not only of the basic salary of petitioner but also of her
transportation and emergency living allowances." This ruling was
reiterated in Soriano v. NLRC, et al., and recently, in Planters
Products, Inc. v. NLRC, et al..

Article 97(f) by itself is explicit that commission is included in the
definition of the term "wage". It has been repeatedly declared by
the courts that where the law speaks in clear and categorical
language, there is no room for interpretation or construction;
there is only room for application. A plain and unambiguous
statute speaks for itself, and any attempt to make it clearer is vain
labor and tends only to obscurity. However, it may be argued that
if We correlate Article 97(f) with Article XIV of the Collective
Bargaining Agreement, Article 284 of the Labor Code and Sections
9(b) and 10 of the Implementing Rules, there appears to be an
ambiguity.

The ambiguity between Article 97(f), which defines the term
'wage' and Article XIV of the Collective Bargaining Agreement,
Article 284 of the Labor Code and Sections 9(b) and 10 of the
Implementing Rules, which mention the terms "pay" and "salary",
is more apparent than real.

The nature of the work of a salesman and the reason for such type
of remuneration for services rendered demonstrate clearly that
commissions are part of petitioners' wage or salary. We take
judicial notice of the fact that some salesmen do not receive any
basic salary but depend on commissions and allowances or
commissions alone, although an employer-employee relationship

exists. Bearing in mind the preceding discussions, if We adopt the


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

Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue
of the salary base that should be used in computing the separation
pay, We held that: "The commissions also claimed by petitioner
('override commission' plus 'net deposit incentive') are not properly
includible in such base figure since such commissions must be
earned by actual market transactions attributable to petitioner."

Applying this by analogy, since the commissions in the present
case were earned by actual market transactions attributable to
petitioners, these should be included in their separation pay. In
the computation thereof, what should be taken into account is the
average commissions earned during their last year of
employment.

ACCORDINGLY, the petition is hereby GRANTED. The decision of
the respondent National Labor Relations Commission is
MODIFIED by including allowances and commissions in the
separation pay of petitioners.




























AKD|LABSTAN|DIGEST|2016|PAGE 3

[G.R. No. 110524. July 29, 2002.]


DOUGLAS MILLARES and ROGELIO LAGDA, vs. NATIONAL
LABOR RELATIONS COMMISSION, TRANS-GLOBAL MARITIME
AGENCY, INC. and ESSO INTERNATIONAL SHIPPING CO., LTD.,
KAPUNAN, J p:

LABOR AND SOCIAL LEGISLATION; LABOR CODE; SEAFARERS
CONSIDERED CONTRACTUAL EMPLOYEES; REASONS. It is
clear that seafarers are considered contractual employees. They
can not be considered as regular employees under Article 280 of
the Labor Code. Their employment is governed by the contracts
they sign everytime they are rehired and their employment is
terminated when the contract expires. Their employment is
contractually fixed for a certain period of time. They fall under the
exception of Article 280 whose employment has been fixed for a
specific project or undertaking the completion or termination of
which has been determined at the time of engagement of the
employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the
season. We need not depart from the rulings of the Court in the
two aforementioned cases which indeed constitute stare
decisis with respect to the employment status of seafarers. . .
Moreover, it is an accepted maritime industry practice that
employment of seafarers are for a fixed period only. Constrained
by the nature of their employment which is quite peculiar and
unique in itself, it is for the mutual interest of both the seafarer
and the employer why the employment status must be contractual
only or for a certain period of time. Seafarers spend most of their
time at sea and understandably, they can not stay for a long and an
indefinite period of time at sea. Limited access to shore society
during the employment will have an adverse impact on the
seafarer. The national, cultural and lingual diversity among the
crew during the COE is a reality that necessitates the limitation of
its period.

FACTS:
Petitioner Douglas Millares was employed by private respondent
ESSO International Shipping Company, LTD. (Esso International,
for brevity) through its local manning agency, private respondent
Trans-Global Maritime Agency, Inc. (Trans-Global, for brevity) on
November 16, 1968 as a machinist. In 1975, he was promoted as
Chief Engineer which position he occupied until he opted to retire
in 1989. Millares' request for optional retirement after filing LOA
was denied by ESSO on the following grounds, to wit: (1) he was
employed on a contractual basis; (2) his contract of enlistment
(COE) did not provide for retirement before the age of sixty (60)
years; and (3) he did not comply with the requirement for
claiming benefits under the CEIP, i.e., to submit a written advice to
the company of his intention to terminate his employment within
thirty (30) days from his last disembarkation date. On September
26, 1989, respondent Esso International, advised petitioner
Millares that in view of his absence without leave, which is
equivalent to abandonment of his position, he had been dropped
from the roster of crew members effective September 1, 1989.
Petitioner Lagda was employed by private respondent Esso
International as wiper/oiler in June 1969. He was promoted as

Chief Engineer in 1980, a position he continued to occupy until his


last COE expired on April 10, 1989.

Petitioners, seamen and overseas contract workers who, have
rendered twenty (20) years of service, filed an illegal dismissal
case against private respondents Esso International and Trans-
Global, before the POEA. POEA and the NLRC dismissed the
complaint for lack of merit. Petitioners elevated the case to the
Supreme Court, claiming that "Filipino seafarers are considered
regular employees within the context of Article 280 of the Labor
Code. "The Court promulgated a decision dated March 14, 2000
reversing the NLRC, thus, ordering petitioners' reinstatement with
full backwages and/or separation pay.
Subsequently, on motions for reconsideration filed by private
respondents and intervenor Filipino Association of Mariners
Employment (FAME), contend that: (a) the ruling holding
petitioners as regular employees was not in accord with the
decision in Coyoca v. NLRC, 243 SCRA 190; (b) Art. 280 is not
applicable as what applies is the POEA Rules and Regulations
Governing Overseas Employment; (c) seafarers are not regular
employees based on international maritime practice; (d) grave
consequences would result on the future of seafarers and manning
agencies if the ruling is not reconsidered; (e) there was no
dismissal committed; (f) a dismissed seafarer is not entitled to
back wages and reinstatement, that being not allowed under the
POEA rules and the Migrant Workers Act; and, (g) petitioners are
not entitled to claim the total amount credited to their account
under the CEIP.

ISSUE: W/N PETITIONERS ARE REGULAR EMPLOYEES
ENTITLED TO REINSTATEMENT WITH BACKWAGES OR
SEPARATION PAY.

HELD: NO.

RATIO:
In Brent School Inc. v. Zamora, the Supreme Court stated that
Article 280 of the Labor Code does not apply to overseas
employment.

Regular and Casual Employment The provisions of written
agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer except where the employment
has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be
employee is seasonal in nature and the employment is for the
duration of the season.

An employment shall be deemed to be casual if it is not covered by
the preceding paragraph; provided that, any employee who has
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee
AKD|LABSTAN|DIGEST|2016|PAGE 4

with respect to the activity in which he is employed and his


employment shall continue while such actually exists.

Some familiar examples may be cited of employment contract which
may be neither for seasonal work nor for specific projects, but to
which a fixed term is an essential and natural appurtenance:
overseas employment contracts, for one, to which, whatever the
nature of the engagement, the concept of regular employment with
all that it implies does not appear ever to have been applied.

Again, in Pablo Coyoca v. NLRC, the Court also held that a seafarer
is not a regular employee and is not entitled to separation pay. His
employment is governed by the POEA Standard Employment
Contract for Filipino Seamen.
. . .. In this connection, it is important to note that neither does the
POEA standard employment contract for Filipino seamen provide
for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and
Regulations Governing Overseas Employment and the said Rules
do not provide for separation or termination pay.

From the foregoing cases, it is clear that seafarers are considered
contractual employees. They can not be considered as regular
employees under Article 280 of the Labor Code. Their
employment is governed by the contracts they sign every time
they are rehired and their employment is terminated when the
contract expires. Their employment is contractually fixed for a
certain period of time. They fall under the exception of Article 280
whose employment has been fixed for a specific project or
undertaking the completion or termination of which has been
determined at the time of engagement of the employee or where
the work or services to be performed is seasonal in nature and the
employment is for the duration of the season. We need not depart
from the rulings of the Court in the two aforementioned cases
which indeed constitute stare decisis with respect to the
employment status of seafarers

Petitioners insist that they should be considered regular
employees, since they have rendered services which are usually
necessary and desirable to the business of their employer, and
that they have rendered more than twenty (20) years of service.
While this may be true, the Brent case has, however, held that
there are certain forms of employment which also require the
performance of usual and desirable functions and which exceed
one year but do not necessarily attain regular employment status
under Article 280. 20Overseas workers including seafarers fall
under this type of employment which are governed by the mutual
agreements of the parties.

In this jurisdiction and as clearly stated in the Coyoca case, Filipino
seamen are governed by the Rules and Regulations of the
POEA.The Standard Employment Contract governing the
employment of All Filipino Seamen on Board Ocean-Going Vessels
of the POEA, particularly in Part I, Sec. C specifically provides that
the contract of seamen shall be for a fixed period. And in no case
should the contract of seamen be longer than 12 months.

Moreover, it is an accepted maritime industry practice that


employment of seafarers are for a fixed period only. Constrained
by the nature of their employment which is quite peculiar and
unique in itself, it is for the mutual interest of both the seafarer
and the employer why the employment status must be contractual
only or for a certain period of time. Undeniably, this circumstance
of continuous re-hiring was dictated by practical considerations
that experienced crew members are more preferred. Petitioners
were only given priority or preference because of their experience
and qualifications but this does not detract the fact that herein
petitioners are contractual employees

From all the foregoing, we hereby state that petitioners are not
considered regular or permanent employees under Article 280 of
the Labor Code. Petitioners' employment have automatically
ceased upon the expiration of their contracts of enlistment (COE).
Since there was no dismissal to speak of, it follows that petitioners
are not entitled to reinstatement or payment of separation pay or
backwages, as provided by law.

RULING: IN VIEW OF THE FOREGOING, the Court Resolved to
Partially GRANT Private Respondent's Second Motion for
Reconsideration and Intervenor FAMES' Motion for
Reconsideration in Intervention. The Decision of the National
Labor Relations Commission dated June 1, 1993 is hereby
REINSTATED with MODIFICATION. The Private Respondents,
Trans-Global Maritime Agency, Inc. and Esso International
Shipping Co., Ltd. are hereby jointly and severally ORDERED to
pay petitioners One Hundred Percent (100%) of their total
credited contributions as provided under the Consecutive
Enlistment Incentive Plan (CEIP).


























AKD|LABSTAN|DIGEST|2016|PAGE 5

[G.R. No. 172161. March 2, 2011.]


SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, vs.
NATIONAL LABOR RELATIONS COMMISSION, ROLDAN LOPEZ,
EDGARDO ZUIGA and DANILO CAETE
MENDOZA, J p:
Facts:
Sometime in 1996, and January 1997, private respondents Roldan Lopez
and Danilo Caete and Edgardo Zuiga were hired by petitioner Lagon as
apprentice or trainee cable/lineman. The three were paid the full
minimum wage and other benefits but since they were only trainees, they
did not report for work regularly but came in as substitutes to the regular
workers or in undertakings that needed extra workers to expedite
completion of work. After their training, Zuiga, Caete and Lopez were
engaged as project employees:
1. in Bohol, upon the completion of their project, their employment was
also terminated. Private respondents received the amount of P145.00,
the minimum prescribed daily wage for Region VII.
2. in March 1998, Zuiga and Caete were engaged again by Lagon as
project employees for its PLDT Antipolo, Rizal project, which ended
sometime in the late September 1998. As a consequence, Zuiga and
Caete's employment was terminated. For this project, Zuiga and
Caete received only the wage of P145.00 daily. The minimum
prescribed wage for Rizal at that time was P160.00.
3. in late November 1998, private respondents re-applied in the
Racitelcom project of Lagon in Bulacan. Zuiga and Caete were re-
employed. Lopez was also hired for the said specific project. For this,
private respondents received the wage of P145.00. Again, after the
completion of their project in March 1999, private respondents went
home to Cebu City.
4. On May 21, 1999, private respondents for the 4th time worked with
Lagon's project in Camarin, Caloocan City with Furukawa Corporation
as the general contractor. Their contract would expire on February 28,
2000, the period of completion of the project. From May 21, 1997-
December 1999, private respondents received the wage of P145.00. At
this time, the minimum prescribed rate for Manila was P198.00. In
January to February 28, the three received the wage of P165.00. The
existing rate at that time was P213.00. For reasons of delay on the
delivery of imported materials from Furukawa Corporation, the
Camarin project was not completed on the scheduled date of
completion. Faced with economic problems, Lagon was constrained to
cut down the overtime work of its workers, including private
respondents. Thus, when requested by private respondents on
February 28, 2000 to work overtime, Lagon refused and told private
respondents that if they insist, they would have to go home at their
own expense and that they would not be given anymore time nor
allowed to stay in the quarters. This prompted private respondents to
leave their work and went home to Cebu.

On March 3, 2000, private respondents filed a complaint for illegal
dismissal, non-payment of wages, holiday pay, 13th month pay for 1997
and 1998 and service incentive leave pay as well as damages and
attorney's fees. In their answers, petitioners admit employment of private
respondents but claimed that the latter were only project employees, for
their services were merely engaged for a specific project or undertaking
and the same were covered by contracts duly signed by private
respondents. Petitioners further alleged that the food allowance of P63.00
per day as well as private respondents allowance for lodging house,
transportation, electricity, water and snacks allowance should be added to
their basic pay. With these, petitioners claimed that private respondents
received higher wage rate than that prescribed in Rizal and Manila.

Labor Arbiter Reynoso Belarmino (LA) rendered his decision declaring
that his office had jurisdiction to hear and decide the complaint filed by
private respondents. The LA opined that private respondents were regular
employees because they were repeatedly hired by petitioners and they
performed activities which were usual, necessary and desirable in the
business or trade of the employer. With regard to the underpayment of
wages, the LA found that private respondents were underpaid. It ruled that
the free board and lodging, electricity, water, and food enjoyed by them
could not be included in the computation of their wages because these
were given without their written consent. LA, however, found that
petitioners were not liable for illegal dismissal.

the NLRC affirmed the findings of the LA.


When the matter was elevated to the CA on a petition for certiorari, it
affirmed the findings that the private respondents were regular
employees. It considered the fact that they performed functions which
were the regular and usual business of petitioners. According to the CA,
they were clearly members of a work pool from which petitioners drew
their project employees. The CA also stated that the failure of petitioners
to comply with the simple but compulsory requirement to submit a report
of termination to the nearest Public Employment Office every time private
respondents' employment was terminated was proof that the latter were
not project employees but regular employees. The CA likewise found that
the private respondents were underpaid. It ruled that the board and
lodging, electricity, water, and food enjoyed by the private respondents
could not be included in the computation of their wages because these
were given without their written consent. The CA added that the private
respondents were entitled to 13th month pay.

ISSUE: W/N RESPONDENTS ARE REGULAR EMPLOYEES; W/N
ENTITLED TO MINIMUM WAGE; W/N EMPLOYEES WERE UNDERPAID

HELD: YES RESPONDENTS ARE ENTITLED TO MINIMUM WAGE AND
WERE UNPAID.

RATIO: Private respondents, on the other hand, are entitled to be paid the
minimum wage, whether they are regular or non-regular employees.
Section 3, Rule VII of the Rules to Implement the Labor Code specifically
enumerates those who are not covered by the payment of minimum wage.
Project employees are not among them.

Section 1 of DOLE Memorandum Circular No. 2 provides that an employer
may provide subsidized meals and snacks to his employees provided that
the subsidy shall not be less that 30% of the fair and reasonable value of
such facilities. In such cases, the employer may deduct from the wages of
the employees not more than 70% of the value of the meals and snacks
enjoyed by the latter, provided that such deduction is with the written
authorization of the employees concerned.
Moreover, before the value of facilities can be deducted from the
employees' wages, the following requisites must all be attendant: first,
proof must be shown that such facilities are customarily furnished by the
trade; second, the provision of deductible facilities must be voluntarily
accepted in writing by the employee; and finally, facilities must be charged
at reasonable value. Mere availment is not sufficient to allow deductions
from employees' wages. These requirements, however, have not been met
in this case. SLL failed to present any company policy or guideline showing
that provisions for meals and lodging were part of the employee's salaries.
It also failed to provide proof of the employees' written authorization,
much less show how they arrived at their valuations. At any rate, it is not
even clear whether private respondents actually enjoyed said facilities.

The Court makes a distinction between "facilities" and "supplements." It is
of the view that the food and lodging, or the electricity and water allegedly
consumed by private respondents in this case were not facilities but
supplements. "Supplements," therefore, constitute extra remuneration or
special privileges or benefits given to or received by the laborers over and
above their ordinary earnings or wages. "Facilities," on the other hand, are
items of expense necessary for the laborer's and his family's existence and
subsistence so that by express provision of law (Sec. 2[g]), they form part
of the wage and when furnished by the employer are deductible
therefrom, since if they are not so furnished, the laborer would spend and
pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes
an extra remuneration above and over his basic or ordinary earning or
wage is supplement; and when said benefit or privilege is part of the
laborers' basic wages, it is a facility. The distinction lies not so much in the
kind of benefit or item (food, lodging, bonus or sick leave) given, but in the
purpose for which it is given. In the case at bench, the items provided were
given freely by SLL for the purpose of maintaining the efficiency and health
of its workers while they were working at their respective projects.

RULING: WHEREFORE, the petition is DENIED. The temporary restraining
order issued by the Court on November 29, 2006 is deemed, as it is hereby
ordered, DISSOLVED

AKD|LABSTAN|DIGEST|2016|PAGE 6

[G.R. No. 155059. April 29, 2005.]


AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES
UNION vs. AMERICAN WIRE AND CABLE CO., INC. and CA
CHICO-NAZARIO, J:

Facts:
American Wire and Cable Co., Inc., is a corporation engaged in the
manufacture of wires and cables. There are two unions in this
company, the American Wire and Cable Monthly-Rated Employees
Union (Monthly-Rated Union) and the American Wire and Cable
Daily-Rated Employees Union (Daily-Rated Union).

On 16 February 2001, an original action was filed before the
NCMB of the Department of Labor and Employment (DOLE) by the
two unions for voluntary arbitration. They alleged that the private
respondent, without valid cause, suddenly and unilaterally
withdrew and denied certain benefits and entitlements they have
long enjoyed. These are the following:
a. Service Award;
b. 35% premium pay of an employee's basic pay for the work
rendered during Holy Monday, Holy Tuesday, Holy Wednesday,
December 23, 26, 27, 28 and 29;
c. Christmas Party; and
d. Promotional Increase.

A promotional increase was asked by the petitioner for fifteen
(15) of its members who were given or assigned new job
classifications. According to petitioner, the new job classifications
were in the nature of a promotion, necessitating the grant of an
increase in the salaries of the said 15 members.

Decision was rendered by Voluntary Arbitrator Angel A. Ancheta
in favor of the private respondent where she declared that the
Company is not guilty of violating Article 100 of the Labor Code, as
amended, or specifically for withdrawing the service award,
Christmas party and 35% premium for work rendered during
Holy Week and Christmas season and for not granting any
promotional increase to the alleged fifteen (15) Daily-Rated Union
Members in the absence of a promotion. The Company however, is
directed to grant the service award to deserving employees in
amounts and extent at its discretion, in consultation with the
Unions on grounds of equity and fairness. VA denied MR.

On appeal to CA: petitioners averred that Voluntary Arbitrator
Angel A. Ancheta erred in finding that the company did not violate
Article 100 of the Labor Code, as amended, when the subject
benefits were unilaterally withdrawn. Further, it asserts, the
Voluntary Arbitrator erred in adopting the company's unaudited
Revenues and Profitability Analysis for the years 1996-2000 in
justifying the latter's withdrawal of the questioned benefits.
Petition is hereby DENIED DUE COURSE and accordingly
DISMISSED, for lack of merit. The Decision of Voluntary Arbitrator
is AFFIRMED.

ISSUE: W/N RESPONDENT IS GUILTY OF VIOLATING ART 100
OF LC.

HELD: NO.
RATIO: Respondent corporation avers that the grant of all subject
benefits has not ripened into practice that the employees
concerned can claim a demandable right over them. The grant of
these benefits was conditional based upon the financial
performance of the company and that conditions/circumstances
that existed before have indeed substantially changed thereby
justifying the discontinuance of said grants. The company's

financial performance was affected by the recent political turmoil


and instability that led the entire nation to a bleeding economy.

The Court to resolve the issue presented found it critical that a
determination must be first made on whether the
benefits/entitlements are in the nature of a bonus or not, and
assuming they are so, whether they are demandable and
enforceable obligations. In the case of Producers Bank of the
Philippines v. NLRC :
A bonus is an amount granted and paid to an employee for his
industry and loyalty which contributed to the success of the
employer's business and made possible the realization of profits.
It is an act of generosity granted by an enlightened employer to
spur the employee to greater efforts for the success of the
business and realization of bigger profits. The granting of a bonus
is a management prerogative, something given in addition to what
is ordinarily received by or strictly due the recipient. Thus, a
bonus is not a demandable and enforceable obligation, except
when it is made part of the wage, salary or compensation of the
employee.

Based on the foregoing pronouncement, it is obvious that the
benefits/entitlements subjects of the instant case are all bonuses
which were given by the private respondent out of its generosity
and munificence.

For a bonus to be enforceable, it must have been promised by the
employer and expressly agreed upon by the parties, or it must
have had a fixed amount, and had been a long and regular practice
on the part of the employer.

The benefits/entitlements in question were never subjects of any
express agreement between the parties. They were never
incorporated in the Collective Bargaining Agreement (CBA). As
observed by the Voluntary Arbitrator, the records reveal that
these benefits/entitlements have not been subjects of any express
agreement between the union and the company, and have not yet
been incorporated in the CBA. In fact, the petitioner has not
denied having made proposals with the private respondent for the
service award and the additional 35% premium pay to be made
part of the CBA. The Christmas parties and its incidental benefits,
and the giving of cash incentive together with the service award
cannot be said to have fixed amounts. What is clear from the
records is that over the years, there had been a downtrend in the
amount given as service award. To hold that an employer should
be forced to distribute bonuses which it granted out of kindness is
to penalize him for his past generosity.

On the alleged promotion of 15 members of the petitioner union
that should warrant an increase in their salaries, the factual
finding of the Voluntary Arbitrator is revealing that Considering
that the Union was unable to adduce proof that a promotion
indeed occur[ed] with respect to the 15 employees, the Daily
Rated Union's claim for promotional increase likewise fall[s] there
being no promotion established under the records at hand.

RULING: the decision of the Voluntary Arbitrator, are hereby
AFFIRMED.







AKD|LABSTAN|DIGEST|2016|PAGE 7

[G.R. No. 163419. February 13, 2008.]


TSPIC CORPORATION, petitioner, vs. TSPIC EMPLOYEES UNION,
VELASCO, JR., J p:

FACTS:
TSPIC is engaged in the business of designing, manufacturing, and
marketing integrated circuits to serve the communication, automotive,
data processing, and aerospace industries. Respondent TSPIC Employees
Union (FFW) (Union), on the other hand, is the registered bargaining agent
of the rank-and-file employees of TSPIC. Respondents are all members of
the union.

In 1999, TSPIC and the Union entered into a Collective Bargaining
Agreement (CBA) for the years 2000 to 2004. The CBA included a
provision on yearly salary increases starting January 2000 until January
2002. The wage/salary increases for the years 2001 and 2002 shall be
deemed inclusive of the mandated minimum wage increases under future
Wage Orders, that may be issued after Wage Order No. NCR-07, and shall
be considered as correction of any wage distortion that may have been
brought about by the said future Wage Orders. Thus the wage/salary
increases in 2001 and 2002 shall be deemed as compliance to future wage
orders after Wage Order No. NCR-07. Consequently, on January 1, 2000, all
the regular rank-and-file employees of TSPIC received a 10% increase in
their salary. Accordingly, the following nine (9) respondents (first group)
who were already regular employees received the said increase in their
salary.

The CBA also provided that employees who acquire regular employment
status within the year but after the effectivity of a particular salary
increase shall receive a proportionate part of the increase upon attainment
of their regular status. Then on October 6, 2000, the Regional Tripartite
Wage and Productivity Board, National Capital Region, issued Wage Order
No. NCR-08 10 (WO No. 8) which raised the daily minimum wage from
PhP223.50 to PhP250 effective November 1, 2000. Conformably, the
wages of 17 probationary employees, (second group), were increased to
PhP250.00 effective November 1, 2000. On various dates during the last
quarter of 2000, the above named 17 employees attained regular
employment 11 and received 25% of 10% of their salaries as granted
under the provision on regularization increase under Article X, Sec. 2 of
the CBA.

In January 2001, TSPIC implemented the new wage rates as mandated by
the CBA. As a result, the nine employees (first group), who were senior to
the above-listed recently regularized employees, received less wages. On
January 19, 2001, a few weeks after the salary increase for the year 2001
became effective, TSPIC's Human Resources Department notified 24
employees that due to an error in the automated payroll system, they were
overpaid and the overpayment would be deducted from their salaries in a
staggered basis, starting February 2001. TSPIC explained that the
correction of the erroneous computation was based on the crediting
provision of CBA.

Union, on the other hand, asserted that there was no error and the
deduction of the alleged overpayment from employees constituted
diminution of pay. TSPIC and the Union agreed to undergo voluntary
arbitration on the solitary issue of whether or not the acts of the
management in making deductions from the salaries of the affected
employees constituted diminution of pay.

On September 13, 2001, Arbitrator Jimenez rendered a Decision, holding
that the unilateral deduction made by TSPIC violated Art. 100 13 of the
Labor Code.

TSPIC filed before the CA a petition for review. The appellate court,
through its October 22, 2003 Decision, dismissed the petition and affirmed
in toto the decision of the voluntary arbitrator. The CA declared TSPIC's
computation allowing PhP287 as daily wages to the newly regularized
employees to be correct, noting that the computation conformed to WO
No. 8 and the provisions of the CBA. According to the CA, TSPIC failed to
convince the appellate court that the deduction was a result of a system
error in the automated payroll system.

ISSUE: W/N TSPIC violated Art. 100

HELD: NO.
RATIO:According to TSPIC, it is specifically provided in the CBA that "the
salary/wage increase for the year 2001 shall be deemed inclusive of the
mandated minimum wage increases under future wage orders that may be
issued after Wage Order No. 7." The Union, on the other hand, insists that
the "crediting" provision of the CBA finds no application in the present
case, since at the time WO No. 8 was issued, the probationary employees
(second group) were not yet covered by the CBA, particularly by its
crediting provision.

As a general rule, in the interpretation of a contract, the intention of the
parties is to be pursued. Littera necat spiritus vivificat. An instrument
must be interpreted according to the intention of the parties. It is the duty
of the courts to place a practical and realistic construction upon it, giving
due consideration to the context in which it is negotiated and the purpose
which it is intended to serve. Absurd and illogical interpretations should
also be avoided. Considering that the parties have unequivocally agreed to
substitute the benefits granted under the CBA with those granted under
wage orders, the agreement must prevail and be given full effect.

it may be reasonably concluded that TSPIC granted the salary increases
under the condition that any wage order that may be subsequently issued
shall be credited against the previously granted increase. The intention of
the parties is clear: As long as an employee is qualified to receive the 12%
increase in salary, the employee shall be granted the increase; and as long
as an employee is granted the 12% increase, the amount shall be credited
against any wage order issued after WO No. 7.

To compute for the increase in wage rates for the year 2001, get the
increase of 12% of the employees' salaries as of December 31, 2000; then
subtract from that amount, the amount increased in salaries as granted
under WO No. 8 in accordance with the crediting provision of the CBA, to
arrive at the increase in salaries for the year 2001 of the recently
regularized employees. Add the result to their salaries as of December 31,
2000 to get the proper salary beginning January 1, 2001. With these
computations, the crediting provision of the CBA is put in effect, and the
wage distortion between the first and second group of employees is cured.

TSPIC also maintains that charging the overpayments made to the 16
respondents through staggered deductions from their salaries does not
constitute diminution of benefits. We agree with TSPIC.

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; (2) the practice is consistent
and deliberate; (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.

As correctly pointed out by TSPIC, the overpayment of its employees was a
result of an error. This error was immediately rectified by TSPIC upon its
discovery. We have ruled before that an erroneously granted benefit may
be withdrawn without violating the prohibition against non-diminution of
benefits. Hence, any amount given to the employees in excess of what they
were entitled to, as computed above, may be legally deducted by TSPIC
from the employees' salaries. TSPIC, in turn, must refund to individual
respondents any amount deducted from their salaries which was in excess
of what TSPIC is legally allowed to deduct from the salaries based on the
computations discussed in this Decision.

RULING: WHEREFORE, premises considered, the September 13, 2001
Decision of the Labor Arbitrator in National Conciliation and Mediation
Board Case No. JBJ-AVA-2001-07-57 and the October 22, 2003 CA Decision
in CA-G.R. SP No. 68616 are hereby AFFIRMED with MODIFICATION.
TSPIC is hereby ORDERED to pay respondents their salary increases in
accordance with this Decision.






AKD|LABSTAN|DIGEST|2016|PAGE 8

[G.R. No. 180866. March 2, 2010.]


LEPANTO CERAMICS, INC., vs. LEPANTO CERAMICS EMPLOYEES
ASSOCIATION,
PEREZ, J p:

Facts:
Petitioner Lepanto Ceramics, Incorporated is a duly organized
corporation whose business is primarily to manufacture, make, buy
and sell, on wholesale basis, among others, tiles, marbles, mosaics and
other similar products. Respondent Lepanto Ceramics Employees
Association (respondent Association) is a legitimate labor
organization duly registered with the Department of Labor and
Employment. It is the sole and exclusive bargaining agent in the
establishment of petitioner.

In December 1998, petitioner gave a P3,000.00 bonus to its
employees, members of the respondent Association. Subsequently, in
September 1999, petitioner and respondent Association entered into a
Collective Bargaining Agreement (CBA) which provides for, among
others, the grant of a Christmas gift package/bonus to the members of
the respondent Association. The Christmas bonus was one of the
enumerated "existing benefit, practice of traditional rights" which
"shall remain in full force and effect."

In the succeeding years, 1999, 2000 and 2001, the bonus was not in
cash. Instead, petitioner gave each of the members of respondent
Association Tile Redemption Certificates equivalent to P3,000.00. The
bonus for the year 2002 is the root of the present dispute. Petitioner
gave a year-end cash benefit of Six Hundred Pesos (P600.00) and
offered a cash advance to interested employees equivalent to one (1)
month salary payable in one year. The respondent Association
objected to the P600.00 cash benefit and argued that this was in
violation of the CBA it executed with the petitioner.

Respondent Association insisted that it has been the traditional
practice of the company to grant its members Christmas bonuses
during the end of the calendar year, each in the amount of P3,000.00
as an expression of gratitude to the employees for their participation
in the company's continued existence in the market. The bonus was
either in cash or in the form of company tiles. In 2002, in a speech
during the Christmas celebration, one of the company's top executives
assured the employees of said bonus. However, the Human Resources
Development Manager informed them that the traditional bonus
would not be given as the company's earnings were intended for the
payment of its bank loans. Respondent Association argued that this
was in violation of their CBA.
The petitioner averred that the complaint for nonpayment of the 2002
Christmas bonus had no basis as the same was not a demandable and
enforceable obligation. It argued that the giving of extra compensation
was based on the company's available resources for a given year and
the workers are not entitled to a bonus if the company does not make
profits.

Voluntary Arbitrator rendered a Decision dated 2 June 2003, declaring
that petitioner is bound to grant each of its workers a Christmas
bonus of P3,000.00 for the reason that the bonus was given prior to
the effectivity of the CBA between the parties and that the financial
losses of the company is not a sufficient reason to exempt it from
granting the same. It stressed that the CBA is a binding contract and
constitutes the law between the parties. The Voluntary Arbitrator
further expounded that since the employees had already been given
P600.00 cash bonus, the same should be deducted from the claimed
amount of P3,000.00, thus leaving a balance of P2,400.00.

Petitioner elevated the case to the Court of Appeals erroneously via a
Petition for Certiorari, the Court of Appeals affirmed in toto the
decision of the Voluntary Arbitrator.

ISSUE: whether or not the Court of Appeals erred in affirming the
ruling of the voluntary arbitrator that the petitioner is obliged to

give the members of the respondent Association a Christmas


bonus in the amount of P3,000.00 in 2002

HELD: NO.

RATIO:
By definition, a "bonus" is a gratuity or act of liberality of the giver. It
is something given in addition to what is ordinarily received by or
strictly due the recipient. A bonus is granted and paid to an employee
for his industry and loyalty which contributed to the success of the
employer's business and made possible the realization of profits.

A bonus is also granted by an enlightened employer to spur the
employee to greater efforts for the success of the business and
realization of bigger profits.

Generally, a bonus is not a demandable and enforceable obligation.
For a bonus to be enforceable, it must have been promised by the
employer and expressly agreed upon by the parties. Given that the
bonus in this case is integrated in the CBA, the same partakes the
nature of a demandable obligation. Verily, by virtue of its
incorporation in the CBA, the Christmas bonus due to respondent
Association has become more than just an act of generosity on the
part of the petitioner but a contractual obligation it has undertaken.

A CBA refers to a negotiated contract between a legitimate labor
organization and the employer, concerning wages, hours of work and
all other terms and conditions of employment in a bargaining unit. As
in all other contracts, the parties to a CBA may establish such
stipulations, clauses, terms and conditions as they may deem
convenient, provided these are not contrary to law, morals, good
customs, public order or public policy.

It is a familiar and fundamental doctrine in labor law that the CBA is
the law between the parties and they are obliged to comply with its
provisions. This principle stands strong and true in the case at bar.
A reading of the provision of the CBA reveals that the same provides
for the giving of a "Christmas gift package/bonus" without
qualification. Terse and clear, the said provision did not state that the
Christmas package shall be made to depend on the petitioner's
financial standing. The records are also bereft of any showing that the
petitioner made it clear during CBA negotiations that the bonus was
dependent on any condition. Indeed, if the petitioner and respondent
Association intended that the P3,000.00 bonus would be dependent
on the company earnings, such intention should have been expressed
in the CBA.

The rule is settled that any benefit and supplement being enjoyed by
the 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 to promote their welfare and to afford labor full
protection.

Hence, absent any proof that petitioner's consent was vitiated by
fraud, mistake or duress, it is presumed that it entered into the CBA
voluntarily and had full knowledge of the contents thereof and was
aware of its commitments under the contract.
The Court is fully aware that implementation to the letter of the
subject CBA provision may further deplete petitioner's resources.
Petitioner's remedy though lies not in the Court's invalidation of the
provision but in the parties' clarification of the same in subsequent
CBA negotiations.

RULING: WHEREFORE, Premises considered, the petition
is DENIED for lack of merit. The Decision of the Court of Appeals
dated 5 April 2006 and the Resolution of the same court dated 13
December 2007 are AFFIRMED

AKD|LABSTAN|DIGEST|2016|PAGE 9

[G.R. No. 185665. February 8, 2012.]


EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., vs.
EASTERN TELECOMS EMPLOYEES UNION
MENDOZA, J p:

FACTS:
Eastern Telecommunications Phils., Inc. (ETPI) is a corporation
engaged in the business of providing telecommunications
facilities, particularly leasing international date lines or circuits,
regular landlines, internet and data services, employing
approximately 400 employees.

Eastern Telecoms Employees Union (ETEU) is the certified
exclusive bargaining agent of the company's rank and file
employees with a strong following of 147 regular members. It has
an existing collecti[ve] bargaining agreement with the company to
expire in the year 2004 with a Side Agreement signed on
September 3, 2001.

In essence, the labor dispute was a spin-off of the company's plan
to defer payment of the 2003 14th, 15th and 16th month bonuses
sometime in April 2004. The company's main ground in
postponing the payment of bonuses is due to alleged continuing
deterioration of company's financial position which started in the
year 2000. However, ETPI while postponing payment of bonuses
sometime in April 2004, such payment would also be subject to
availability of funds.

The union strongly opposed the deferment in payment of the
bonuses by filing a preventive mediation complaint with the
NCMB on July 3, 2003, the purpose of which complaint is to
determine the date when the bonus should be paid.

After agreement that payment shall be made on April 2004, the
company made a sudden turnaround in its position by declaring
that they will no longer pay the bonuses until the issue is resolved
through compulsory arbitration.

Acting on the certified labor dispute, a hearing was called on July
16, 2004 wherein the parties have submitted that the issues for
resolution are (1) unfair labor practice and (2) the grant of 14th,
15th and 16th month bonuses for 2003, and 14th month bonus for
2004.

ETEU posited that by reason of its long and regular concession, the
payment of these monetary benefits had ripened into a company
practice which could no longer be unilaterally withdrawn by ETPI.
ETEU added that this long-standing company practice had been
expressly confirmed in the Side Agreements of the 1998-2001 and
2001-2004 Collective Bargaining Agreements (CBA)which
provided for the continuous grant of these bonuses in no
uncertain terms. ETEU theorized that the grant of the subject
bonuses is not only a company practice but also a contractual
obligation of ETPI to the union members.
ETEU contended that the unjustified and malicious refusal of the
company to pay the subject bonuses was a clear violation of the

economic provision of the CBA and constitutes unfair labor


practice (ULP).

ETPI maintained that the complaint for nonpayment of 14th, 15th
and 16th month bonuses for 2003 and 14th month bonus for 2004
was bereft of any legal and factual basis. It averred that the subject
bonuses were not part of the legally demandable wage and the
grant thereof to its employees was an act of pure gratuity and
generosity on its part, involving the exercise of management
prerogative and always dependent on the financial performance
and realization of profits. It posited that it resorted to the
discontinuance of payment of the bonuses due to the unabated
huge losses that the company had continuously experienced. It
claimed that it had been suffering serious business losses since
2000 and to require the company to pay the subject bonuses
during its dire financial straits would in effect penalize it for its
past generosity. It alleged that the non-payment of the subject
bonuses was neither flagrant nor malicious and, hence, would not
amount to unfair labor practice. Further, ETPI argued that the
bonus provision in the 2001-2004 CBA Side Agreement was a
mere affirmation that the distribution of bonuses was
discretionary to the company, premised and conditioned on the
success of the business and availability of cash. It submitted that
said bonus provision partook of the nature of a "one-time" grant
which the employees may demand only during the year when the
Side Agreement was executed and was never intended to cover
the entire term of the CBA.

On April 28, 2005, the NLRC issued its Resolution dismissing
ETEU's complaint and held that ETPI could not be forced to pay
the union members the 14th, 15th and 16th month bonuses for
the year 2003 and the 14th month bonus for the year 2004
inasmuch as the payment of these additional benefits was
basically a management prerogative, being an act of generosity
and munificence on the part of the company and contingent upon
the realization of profits. The NLRC pronounced that ETPI may not
be obliged to pay these extra compensations in view of the
substantial decline in its financial condition. Likewise, the NLRC
found that ETPI was not guilty of the ULP charge elaborating that
no sufficient and substantial evidence was adduced to attribute
malice to the company for its refusal to pay the subject bonuses.

Aggrieved, ETEU filed a petition for certiorari before the CA
ascribing grave abuse of discretion on the NLRC. In its assailed
June 25, 2008 Decision, the CA declared that the Side Agreements
of the 1998 and 2001 CBA created a contractual obligation on
ETPI to confer the subject bonuses to its employees without
qualification or condition. It also found that the grant of said
bonuses has already ripened into a company practice and their
denial would amount to diminution of the employees' benefits. It
held that ETPI could not seek refuge under Article 1267 of the
Civil Code because this provision would apply only when the
difficulty in fulfilling the contractual obligation was manifestly
beyond the contemplation of the parties, which was not the case
therein. The CA, however, sustained the NLRC finding that the
allegation of ULP was devoid of merit.

AKD|LABSTAN|DIGEST|2016|PAGE 10

ISSUE: W/N ETPI VIOLATED ART. 100 BY NON-PAYMENT OF


14TH, 15TH & 16TH MONTH PAY.

HELD: YES.
RATIO: From a legal point of view, a bonus is a gratuity or act of
liberality of the giver which the recipient has no right to demand
as a matter of right. The grant of a bonus is basically a
management prerogative which cannot be forced upon the
employer who may not be obliged to assume the onerous burden
of granting bonuses or other benefits aside from the employee's
basic salaries or wages.

A bonus, however, becomes a demandable or enforceable
obligation when it is made part of the wage or salary or
compensation of the employee. Particularly instructive is the
ruling of the Court in Metro Transit Organization, Inc. v. National
Labor Relations Commission, where it was written: Whether or not
a bonus forms part of wages depends upon the circumstances and
conditions for its payment. If it is additional compensation which the
employer promised and agreed to give without any conditions
imposed for its payment, such as success of business or greater
production or output, then it is part of the wage. But if it is paid only
if profits are realized or if a certain level of productivity is achieved,
it cannot be considered part of the wage. Where it is not payable to
all but only to some employees and only when their labor becomes
more efficient or more productive, it is only an inducement for
efficiency, a prize therefore, not a part of the wage.
In the case at bench, it is indubitable that ETPI and ETEU agreed
on the inclusion of a provision for the grant of 14th, 15th and 16th
month bonuses in the 1998-2001 CBA Side Agreement, 16 as well
as in the 2001-2004 CBA Side Agreement, 17 which was signed on
September 3, 2001.

A reading of the above provision reveals that the same provides
for the giving of 14th, 15th and 16th month bonuses without
qualification. The wording of the provision does not allow any
other interpretation. There were no conditions specified in the
CBA Side Agreements for the grant of the benefits contrary to the
claim of ETPI that the same is justified only when there are profits
earned by the company. Terse and clear, the said provision does
not state that the subject bonuses shall be made to depend on the
ETPI's financial standing or that their payment was contingent
upon the realization of profits. Neither does it state that if the
company derives no profits, no bonuses are to be given to the
employees. In fine, the payment of these bonuses was not related
to the profitability of business operations.

The records are also bereft of any showing that the ETPI made it
clear before or during the execution of the Side Agreements that
the bonuses shall be subject to any condition. Indeed, if ETPI and
ETEU intended that the subject bonuses would be dependent on
the company earnings, such intention should have been expressly
declared in the Side Agreements or the bonus provision should
have been deleted altogether. In the absence of any proof that
ETPI's consent was vitiated by fraud, mistake or duress, it is
presumed that it entered into the Side Agreements voluntarily,
that it had full knowledge of the contents thereof and that it was

aware of its commitment under the contract. Verily, by virtue of its


incorporation in the CBA Side Agreements, the grant of 14th, 15th
and 16th month bonuses has become more than just an act of
generosity on the part of ETPI but a contractual obligation it has
undertaken. Moreover, the continuous conferment of bonuses by
ETPI to the union members from 1998 to 2002 by virtue of the
Side Agreements evidently negates its argument that the giving of
the subject bonuses is a management prerogative.

The Court finds no merit in ETPI's contention that the bonus
provision confirms the grant of the subject bonuses only on a
single instance because if this is so, the parties should have
included such limitation in the agreement. Nowhere in the Side
Agreement does it say that the subject bonuses shall be conferred
once during the year the Side Agreement was signed.

Granting arguendo that the CBA Side Agreement does not
contractually bind petitioner ETPI to give the subject bonuses,
nevertheless, the Court finds that its act of granting the same has
become an established company practice such that it has virtually
become part of the employees' salary or wage. A bonus may be
granted on equitable consideration when the giving of such bonus
has been the company's long and regular practice.

The records show that ETPI, aside from complying with the
regular 13th month bonus, has been further giving its employees
14th month bonus every April as well as 15th and 16th month
bonuses every December of the year, without fail, from 1975 to
2002 or for 27 years whether it earned profits or not. The
considerable length of time ETPI has been giving the special
grants to its employees indicates a unilateral and voluntary act on
its part to continue giving said benefits knowing that such act was
not required by law. Accordingly, a company practice in favor of
the employees has been established and the payments made by
ETPI pursuant thereto ripened into benefits enjoyed by the
employees.

The giving of the subject bonuses cannot be peremptorily
withdrawn by ETPI without violating Article 100 of the Labor
Code. The rule is settled that any benefit and supplement being
enjoyed by the 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 to promote their welfare and to
afford labor full protection.

RULING: WHEREFORE, the petition is DENIED. The June 25, 2008
Decision of the Court of Appeals and its December 12, 2008
Resolution are AFFIRMED

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