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Facts: The employees of Ambassador Hotel filed before
NLRC several complaints against the manager, Yolanda
Chan for violation of labor standards. This prompted an
investigation which resulted into the finding of said
violation. The management was ordered to pay the
money claims of employees. The management was
purportedly angered and retaliated by suspending and/or
constructively dismissing the employees by drastically
reducing their work days through a rotation/work
reduction scheme. Cases for estafa were also filed
against them but were dismissed for lack of merit.
LA Chan is guilty of illegal dismissal
NLRC Chan is guilty of illegal and constructive
CA Reversed NLRC because workers simply
disappeared from work upon learning of the work
reduction/rotation scheme. The scheme is a valid
management prerogative due to business reverses and
not done out of vengeance.

Facts: Respondents were regular employees of Unicorn

who normally worked 6 times a week and were paid on
a weekly basis. They were also officers of a union. In
1998, Unicorn GM Hilario Yulo issued a Memorandum
informing respondents that their workdays will be
reduced due to economic considerations (i.e. sales
decrease, production cost, devaluation of peso and
increased minimum wage). Respondents protested and
expressed doubts surmising that the management was
just getting back at them for forming a union and that only
union officers were affected by the Memorandum.
Another Memorandum was issued reducing work days
from 6 to 3. Upon protest, the management reasoned
that it was a management prerogative. Hence,
respondents filed a case before NLR for constructive
dismissal and ULP. After several letters exchanged and
the plight of employees unheeded, the employees
decided not to report for work.
LA - Respondents not constructively dismissed. If
respondents strongly opposed the scheme, they could
have filed a case for illegal rotation. The case against
ULP was dismissed for lack of basis.
NLRC Sustained LA. The Waiver, Release and
Quitclaim was not signed under duress

Issue: a) WON the work reduction/rotation scheme is a

valid exercise of management prerogative; b) WON the
employees abandoned their work.

CA Partially granted the petition for reinstatement and

payment but did not make a contrary finding on the
charge of ULP for lack of clear cut evidence.

Held: a) No. Records failed to show documentary proof

that the scheme was adopted due to business reverses.
The Memorandum which informed the employees did not
mention such reason. However, it was shown based
from the LA/NLRC and as admitted by the management
that several complaints were filed against them for
violation of labor standards. Though some of them were
already partially settled, the scheme was implemented.
The managements sudden and unfounded
implementation of the scheme greatly reduced the
employees salaries which is tantamount to constructive

Issue: WON there is constructive dismissal

b) No. Abandonment of work, burden of proof rests on

the management. This was not proven by the
management. Abandonment occurs only if: a) there
absence without valid reason; and b) intent to sever EER
as manifested by overt acts. In the case, the employees
who took steps to protest their dismissal cannot be said
to have abandoned his work.

Held: Yes. Unicorns unbending stance on the

implementation of the scheme was an indication that it
was implemented for reasons other than business
necessity. Despite attempts of respondents to have a
dialogue with Yulo but this was ignored.
Management prerogative is not absolute. It must be
exercised in good faith and with due regard to rights of
labor. In the case, the management was keen on
summarily implementing the scheme and it was
obviously directed only to the union officers. The
managements lack of interest to hear the plea of
respondents creates an unjust situation which justifies
the latter not to report for work.
The charge of abandonment for work does not hold
water when taken in light of the complaint for
constructive dismissal. Respondents cannot be said to
have abandoned work when the root cause of their
protest is their demand to maintain their regular work


Facts: Lutgardo Villlareal and Frederick Go worked for
the management as assistant sales manager and
salesman respectively. In 1993, Villlareal obtained a car
loan from Bank of Commerce with the company as
surety (as shown by continuing surety agreement and
promissory note wherein they jointly and severally
agreed to pay the amount in 72 monthly installments). In
1997, Villareal resigned and joined Hi-Grade Industrial
as executive vice president.
In 1994, the company sponsored So to attend a 9-month
training course of BOHLER (the managements principal
company) in Austria as a reward for his outstanding
sales performance. Upon return, he was signed a
memorandum requiring that BOHLER requires trainees
to continue working with the company for 3 years,
otherwise, he shall refund BOHLER $6000 by set-off.
After 2 years and 4 months, So resigned.
The company ordered So and Villareal to render and
accounting of its various Christmas giveaways they
received for distribution to customers. So and Villareal
protested and demanded payment of their pay and
benefits. The company withheld their 13th month pay and
LA/NLRC/CA Ordered the company to pay So and
Issue: WON the employer may withhold employees
wages and benefits as lien to protect its interest as a
surety in the latters car loan and for expenses incurred
in a training abroad.
Held: No. Under Art. 116 which states that it shall be
unlawful for any person, directly or indirectly, to withhold
any amount of wages and benefits of a worker without
the latters consent, the company has not authority to
withhold the 13th month pay and benefits. What an
employee has worked for, the employer must pay. It
simply cannot refuse to pay wages because the
employee defaulted in the payment of loan guaranteed
by employer, or violated an agreement, or failed to
render an accounting of his employers property.
As to So, the lump sum, He has to refund it to BOHLER
and not to the company.
NG HONDA (2005)
Facts: In 1998, Honda and the employees union started
re-negotiations for the 4th and 5th years of their CBA but
ended upon on a deadlock. A Notice of Strike was filed,

while Honda filed a Notice of Lockout. DOLE assumed

jurisdiction and ordered the parties to cease and desist
which were complied.
In 1999, the union filed a second notice of strike on the
ground of ULP on the ground that Honda contracted out
work to their detriment. A strike was staged for 31 days
until DOLE assumed jurisdiction and the case was
brought for voluntary arbitration.
Honda issued a Memorandum announcing the pro-rata
computation of the 13th and 14th month pay wherein the
31 days striker shall be considered. The amount
equivalent of 1 & of the basic salary shall be deducted
from the bonuses, provided that in case the strike will be
considered legal, Honda shall pay the amount deducted.
The union opposed the computation.
Voluntary Arbiter/CA the computation is invalid
Issue: WON the pro-rated computation of the 13th/14th
month pay and other benefits are lawful.
Held: No. The provision of CBA is contentious. Honda
wanted to implement a pro-rated computation on a no
work-no pay rule. However, it was not stated
categorically whether the computation be based on 1 full
month basic salary or on the actual compensation
actually received.
PD851 or the 13th Month Pay Law not less than 1/12 of
the basic salary earned within a calendar year. It shall
not include allowances and monetary benefits not part of
basic salary.
For employees with regular wage basic salary is the
1/12 of the standard monthly wage x length of service
within calendar year. In the present case, 13th month pay
should be based on length of service and not on actual
wage earned by a worker.
Honda admitted that it was the 1st time that Honda
implemented pro-rated computation because of the
strike. It was implied that a full moth basic pay
computation was given as a practice by virtue of CBA.
To allow the pro-ration of the 13th month pay in this case
is to undermine the wisdom behind the law and the
mandate that the workingmans welfare should be the
primordial and paramount consideration. What is more,
the factual milieu of this case is such that to rule
otherwise inevitably results to dissuasion, if not a
deterrent, for workers from the free exercise of their
constitutional rights to self-organization and to strike in
accordance with law.


Facts: Petitioner is engaged in the manufacture of steel
bars and wire rods while Pag-Asa Steel Workers Union
is the duly authorized bargaining agent of the rank-andfile employees.
In 1998, RTWPB of NCR issued a wage order which
provided for a P 13.00 increase of the salaries receiving
minimum wages. The Petitioner and the union
negotiated on the increase. Petitioner forwarded a letter
to the union with the list of adjustments involving rank
and file employees. In September 1999, the petitioner
and union entered into a CBA where it provided wage
adjustments namely P15, P25, P30 for three succeeding
year. On the first year, the increase provided were
followed until RTWPB issued another wage order where
it provided for a P25.50 per day increase in the salary of
employees receiving the minimum wage and increased
the minimum wage to P223.50 per day. Petitioner paid
the P25.50 per day increase to all of its rank-and-file
On November 2000, Wage Order No. NCR-08 was
issued where it provided the increase of P26.50 per day.
The union president asked that the wage order be
implemented where petitioner rejected the request
claiming that there was no wage distortion and it was not
obliged to grant the wage increase since no employees
are receiving below P250.
Voluntary Arbiter In favor of the company
CA in favor of the respondents
Issue: WON the company was obliged to grant the wage
increase under the Wage Order as a matter of practice.
Held: No. The company is not obliged to grant the wage
increase. It is submitted that employers, unless exempt,
are mandated to implement the said wage order but
limited to those entitled thereto. The record shows that
the lowest paid employee before the implementation of
Wage Order #8 is P250.00/day and none was receiving
below P223.50 minimum. This could only mean that the
union can no longer demand for any wage distortion
adjustment. The provision of wage order #8 and its
implementing rules are very clear as to who are entitled
to the P26.50/day increase, i.e., "private sector workers
and employees in the National Capital Region receiving
the prescribed daily minimum wage rate of P223.50 shall
receive an increase of Twenty-Six Pesos and Fifty
Centavos (P26.50) per day," and since the lowest paid is
P250.00/day, the company is not obliged to adjust the
wages of the workers.

The provision in the CBA that "Any Wage Order to be

implemented by the Regional Tripartite Wage and
Productivity Board shall be in addition to the wage
increase adverted above" cannot be interpreted in
support of an across-the-board increase. Wage Order
No. NCR-08 clearly states that only those employees
receiving salaries below the prescribed minimum
wage are entitled to the wage increase provided
therein, and not all employees across-the-board as
respondent Union would want petitioner to do.
Considering therefore that none of the members of
respondent Union are receiving salaries below the
P250.00 minimum wage, petitioner is not obliged to grant
the wage increase to them.
Moreover, to ripen into a company practice that is
demandable as a matter of right, the giving of the
increase should not be by reason of a strict legal or
contractual obligation, but by reason of an act of liberality
on the part of the employer. Hence, even if the company
continuously grants a wage increase as mandated by a
wage order or pursuant to a CBA, the same would not
automatically ripen into a company practice.
Facts: KPMG Mananghaya hired Protacio as Tax
Manager in 1996. He was promoted as Senior Tax
Manager and then Tax Principal in 1997. He resigned in
1999. On the same the year, Protacio wrote to the
company demanding the payment of his 13th month pay,
cash commutation of leave credits and the issuance of
1999 Certificate of Income Tex Withheld on
Compensation. He sent two more letters under pain of
legal action, but the company failed to act on the
demand. Protactio then filed before NLRC a complaint.
Among those sought is the P674, 756.7 lump sum pay
for FY1999. During the pendency of the case, the
company sent check payments but Protacio disputed the
computation of his vacation leave credits and
reimbursement claims.
LA ordered the company to pay reimbursement claims,
cash payment of leave credits and the P573, 000 year
end lump sum payment. The lump sum is based on the
company policy granting such to Protacio during all the
years of service.
NLRC affirmed LA with modification on amount of
claims. Affirmed the lump sum.
CA Affirmed but further reduced the claims. Also held
that the payment of lump sum is contingent on the
financial condition of the company.

Issue: WON Protaction is entitled to year end lump sum

as part of his compensation package.
Held: No. The payment to non-partners like the petitioner
was discretionary on the part of the chairman and
managing chairman coming from their authority to fix
compensation of any employee based on a share in the
partnerships net income. The distribution being merely
discretionary, the year-end lump sum payment may
properly be considered as a year-end bonus or incentive.
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 employers business and made
possible the realization of profits. Generally, a bonus
is not a demandable and enforceable obligation. It is
so only when it is made part of the wage or salary or
compensation. When considered as part of the
compensation and therefore demandable and
enforceable, the amount is usually fixed. If the
amount would be dependent upon the realization of
profits, the bonus is also not demandable and
Thus, petitioners claim that the year-end lump sum
represented the balance of his total compensation
package is incorrect. The fact remains that the amount
paid to petitioner on the two occasions varied and
were always dependent upon the firms financial
position. If the bonus is paid only if profits are realized
or a certain amount of productivity achieved, it cannot be
considered part of wages. Only when the employer
promises and agrees to give without conditions
imposed for its payment does the bonus become
part of the wage.
The company was also justified in declining to give the
bonus to Protacio on account of the latters
unsatisfactory performance. The granting of the yearend lump sum bonus was discretionary and
conditional, thus, petitioner may not question the basis
for the granting of a mere privilege.
Held: An employer cannot be forced to distribute
bonuses which it can no longer afford to pay, a bonus is
an amount granted and paid to an employee for his

industry and loyalty which contributed to the success of

the employers business and made possible the
realization of profile. It is an act of generosity and is a
management prerogative, given in addition to what is
ordinarily received by or strictly due the recipient. Thus,
it is not a demandable and enforceable obligation, except
when it is made part of the wage, salary or compensation
of the employee.
The conservator was justified in reducing the mid-year
and Christmas bonuses of petitioners employees.
Ultimately, it is to the employees advantage that the
conservatorship achieve its purposes otherwise, the
closure of the company would result in the employees
losing their jobs.
PD 851 requires all employees to pay their employees a
basic salary of not more than P1, 000 at 13th monthly
pay. However, employees already paying their
employees a 13th month pay are not covered by the law.
The term equivalent shall be constructed to include
Christmas bonus, mid year bonus, cash bonuses and
other payments amounting to not less than 1 /12 of the
basic salary. The intention was to grant relief to those not
actually paid a bonus, by whatever name called. Thus,
petitioner is justified in crediting the mid year bonus and
Christmas bones as part of the 13th month pay.
The divisor used by petitioner in arriving at the
employees daily rate for the purpose of computing
salary related benefits is 314 days. This finding was not
disputed by the NLRC. However, the divisor was for the
sole purpose of increasing the employees overtime pay
and was not meant to replace the use of 314 as the
divisor in the computation of the daily rate for salary
related benefits.