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Davao Fruits Corporation vs Associated Labor Unions, G.R. No.

August 24, 1993; 225 SCRA 562
Posted by Pius Morados on November 10, 2011

(Labor Standards Fringe benefits not included in 13th month pay)

Facts: Respondent ALU for and in behalf of all the rank-and-file workers and
employees of petitioner sought to recover from the latter the 13th month pay
differential for 1982 of said employees, equivalent to their sick, vacation and
maternity leaves, premium for work done on rest days and special holidays, and pay
for regular holidays which petitioner, allegedly in disregard of company practice
since 1975, excluded from the computation of the 13th month pay for 1982.

Issue: WON in the computation of the 13th month pay under PD No. 851, payments
for sick, vacation and maternity leaves, premiums for work done on rest days and
special holidays, and pay for regular holidays may be excluded in the computation
and payment thereof.

Held: Yes. Basic salary does not merely exclude the benefits expressly mentioned
but all payments which may be in the form of fringe benefits or allowances.

Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851

provides that overtime pay, earnings and other remunerations which are not part
of the basic salary shall not be included in the computation of the 13th month pay.

Whatever compensation an employee receives for an 8 hour work daily or the daily
wage rate is the basic salary. Any compensation or remuneration other than the
daily wage rate is excluded. It follows therefore, that payments for sick, vacation
and maternity leaves, premiums for work done on rest days and special holidays, as
well as pay for regular holidays, are likewise excluded in computing the basic salary
for the purpose of determining the 13th month pay.

Atok Big Wedge Mutual Benefit Association v Atok Big Wedge Mining Co.
Inc (1955)

Atok Big Wedge Mutual Benefit Association v Atok Big Wedge Mining Co. Inc.
GR No. L-7349
July 19, 1955

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, declaring that additional
compensation representing efficiency bonus should not be included as part of the
wage, and making the award effective from September 4, 1950 (the date 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
wages, be valued as follows:

Rice ration P.55 per day

Housing facility 40 per day
All other facilities at least 85 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, 1952.

Later, another case was decided involving the 2 parties giving the employees
minimum cash wage of 3.45 a day with rice ration or 4.00 without rice ration.


(1) Which of the two decisions would prevail? The agreement or the subsequent
decision giving the
employees minimum case wage?, and;
WON the Agreement of October 29, 1952 from the minimum daily wage of P4 would
be a waiver of the minimum wage fixed by the law and hence null and void, since
RA 602 sec. 20 provides that no agreement or contract, oral or written, to accept a
lower wage or less than any other under this Act, shall be valid.

(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]

(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 laborers 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.


(1) Supplements, defined extra remuneration or special privileges or benefits

given to or received by the laborers over and above their ordinary earnings or
wages [vacation and holidays not worked; paid sick leave or maternity leave;
overtime rate in excess of what is required by law; sick, pension, retirement and
death benefits; profit sharing; family allowances; Christmas, war risk and cost of
living bonuses or other bonuses other than those paid as a reward for extra output
or time spent on the job].

(2) Facilities, defined items of expense necessary for laborers and his familys
existence and subsistence, so that by express provision of the law, they form part of
the wage and when furnished by the employer are deductible therefrom since if
they are not so furnished, the laborer would spend and pay for them just the same

State Marine Corporation vs. Cebu Seamens Association [G.R. No. L-12444
February 28, 1963]
Post under case digests, labor law at Monday, April 09, 2012 Posted by
Schizophrenic Mind
Facts: The petitioners were engaged in the business of marine coastwise
transportation. They had a CBA with the Cebu Seamens Association. On September
12, 1952, the respondent union filed a complaint against the petitioners alleging
that the officers and men working on board the petitioners vessels have not been
paid their sick leave, vacation leave and overtime pay; that the petitioners
threatened then to accept the reduction of salaries, observed by other shipowners;
that after the Minimum Wage Law had taken effect, the petitioners required their
employees on board their vessels, to pay the sum of P0.40 for every meal, while the
masters and officers were required to pay their meals and that because the captain
had refused to yield to the general reduction of salaries, the petitioners dismissed
the captain. The petitioner, on their defense, stated that they have suffered a
financial losses in the operation of their vessels and there is no law which provides
for the payment of sick leave or vacation leave to employees of private firms; that
with regards to their overtime pay, they have always observed the Eight-hour labor
Law and that overtime does not apply to those who provide means of
transportation. The decision ruled in favor of the respondent union. Hence, this

Issue: Whether or not the required meals which the petitioner company deducted
from the salary of the employees is considered as facilities, and not supplements.

Held: Supplements 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
laborers and his familys existence and subsistence so that by express provisions of
law, 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 them
just the same. It is argued that the food or meal given to the deck officers, marine
engineers and unlicensed crew members in question, were mere facilities which
should be deducted from wages, and not supplements which, according to Section

19 of the Minimum Wage Law, should not be deducted from such wages. It was
found out that the meals were freely given to crew members prior to the effectivity
of the Minimum Wage Law while they were on the high seas not as part of their
wages but as a necessary matter in the maintenance of the health and efficiency of
the crew members during the voyage. The deductions therein made for the meals
given after August 4, 1951, should be returned to them, and the operator of the
coastwise vessels should continue giving the benefits. Wherefore, the petition is
dismissed, finding out that the meals or food in question are not facilities but


G.R. No. 157634
May 16, 2005


Petitioner Mayon Hotel & Restaurant (MHR) hired herein 16 respondents as

employees in its business in Legaspi City. Its operation was suspended on March 31,
1997 due to the expiration and non-renewal of the lease contract for the space it
rented. While waiting for the completion of the construction of its new site, MHR
continued its operation in another site with 9 of the 16 employees. When the new
site constructed and MHR resumed its business operation, none of the 16
employees was recalled to work.

MHR alleged business losses as the reason for not reinstating the respondents. On
various dates, respondents filed complaints for underpayment of wages, money
claims and illegal dismissal.


1. Whether or not respondents were illegally dismissed by petitioner;

2. Whether or not respondents are entitled to their money claims due to

underpayment of wages, and nonpayment of holiday pay, rest day premium, SILP,
COLA, overtime pay, and night shift differential pay.


1. Illegal Dismissal: claim for separation pay

Since April 1997 until the time the Labor Arbiter rendered its decision in July 2000,
or more than three (3) years after the supposed temporary lay-off, the
employment of all the respondents with petitioner had ceased, notwithstanding that
the new premises had been completed and the same resumed its operation. This is
clearly dismissal or the permanent severance or complete separation of the
worker from the service on the initiative of the employer regardless of the reasons
Article 286 of the Labor Code is clear there is termination of employment when
an otherwise bona fide suspension of work exceeds six (6) months. The cessation of
employment for more than six months was patent and the employer has the burden
of proving that the termination was for a just or authorized cause.

While we recognize the right of the employer to terminate the services of an

employee for a just or authorized cause, the dismissal of employees must be made
within the parameters of law and pursuant to the tenets of fair play. And in
termination disputes, the burden of proof is always on the employer to prove that
the dismissal was for a just or authorized cause. Where there is no showing of a
clear, valid and legal cause for termination of employment, the law considers the
case a matter of illegal dismissal.

If doubts exist between the evidence presented by the employer and the employee,
the scales of justice must be tilted in favor of the latter the employer must
affirmatively show rationally adequate evidence that the dismissal was for a
justifiable cause. It is a time-honored rule that in controversies between a laborer
and his master, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writing should be resolved in the former's favor.
The policy is to extend the doctrine to a greater number of employees who can avail
of the benefits under the law, which is in consonance with the avowed policy of the
State to give maximum aid and protection of labor.

2. Money claims

The Supreme Court reinstated the award of monetary claims granted by the Labor

The cost of meals and snacks purportedly provided to respondents cannot be

deducted as part of respondents' minimum wage. As stated in the Labor Arbiter's
Even granting that meals and snacks were provided and indeed constituted
facilities, such facilities could not be deducted without compliance with certain legal
requirements. As stated in Mabeza v. NLRC, the employer simply cannot deduct the
value from the employee's wages without satisfying the following: (a) proof that
such facilities are customarily furnished by the trade; (b) the provision of deductible
facilities is voluntarily accepted in writing by the employee; and (c) the facilities are
charged at fair and reasonable value. The law is clear that mere availment is not
sufficient to allow deductions from employees' wages.

As for petitioners repeated invocation of serious business losses, suffice to say that
this is not a defense to payment of labor standard benefits. The employer cannot
exempt himself from liability to pay minimum wages because of poor financial
condition of the company. The payment of minimum wages is not dependent on the
employer's ability to pay.

Pag -asa Steel Works v. CA[G.R. No. 166647. March 31, 2006]
Facts :
RTWPB issued a Wage Order providing for an increase of 13 pesos in the
salaries of employees receiving the minimum wage and a consequent
increase in the rate to 198. Subsequent to this, petitioner-company and the
Union entered into a Collective Bargaining Agreement which granted an increase of
15 pesos for the first year, 25 for the second year and 30 for the third year. Months
later, a wage order was issued by the NCR providing for a 25 pesos increase
in the salary of employees receiving the minimum wage and increased the
minimum wage to 223.50. Petitioner paid the 25 pesos increase to all its
employees. A year after, the employees were granted the second year
increase provided in the CBA. On that same year, a wage order was issued
which provided for the setting of the new minimum wage at 250.00 or an increase
of 26 pesos. The Union then requested the company to implement the latest
wage order. Petitioner company rejected, claiming that since none of the
employees were receiving a daily salary rate lower than 250 and there was no wage
distortion, it was not obliged to grant the wage increase.

Whether or not the company was obliged to grant the wage increase under the
Wage Order issued as a matter of practice
No. It is not obliged to grant the wage increase. The wage order provides
that only those in the private sector in the NCR receiving the daily minimum
wage rate of 223 per day would receive an increase, thereby setting the
wage rate to 250 pesos. There is no dispute that when the wage order was
issued, the lowest paid employee of the company was receiving a wage
higher than 250 pesos. As such, employees had not right to demand for the