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PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY, Petitioner, v.

NATIONAL tasked, among others, with the payment of their wages [See Article VII Sec. 3 of
LABOR RELATIONS COMMISSION, and ODIN SECURITY AGENCY, as the Contract for Security Services, supra and Bautista v. Inciong, G.R. No.
representative of its Security Guards, Respondents. 52824, March 16, 1988, 158 SCRA 556]. . . . The Wage Orders are statutory and
mandatory and can not be waived. The petitioner can not escape liability since
SYLLABUS the law provides the joint and solidary liability of the principal and the
1. LABOR AND SOCIAL LEGISLATIONS; PRINCIPAL AND CONTRACTOR; JOINTLY contractor for the protection of the laborers.
AND SEVERALLY LIABLE FOR PAYMENT OF UNPAID WAGES; TERM ‘EMPLOYER’
CONSTRUED. — Notwithstanding that the petitioner is a government agency, 3. ID.; ID.; ID.; DUE PROCESS OBSERVED IN CASE AT BAR. — The contention that
its liabilities, which are joint and solidary with that of the contractor, are it was deprived due process because no hearing was conducted does not
provided in Articles 106, 107 and 109 of the Labor Code. This places the deserve merit. A decision on the merits is proper where the issues raised by the
petitioner’s liabilities under the scope of the NLRC. Moreover, Book Three, Title parties did not involve intricate questions of law. (See Blue Bar Coconut Phils.
II on Wages specifically provides that the term "employer" includes any person Inc. v. Minister of Labor, 174 SCRA 25 [1989]) There can be no question that the
acting directly or indirectly in the interest of an employer in relation to an security guards are entitled to wage adjustments. The computation of the
employee and shall include the Government and all its branches, subdivisions amount due to each individual guard can be made during the execution of the
and instrumentalities, all government-owned or controlled corporation and decision where hearings can be held. (See Section 3, Rule VIII of the New Rules
institutions as well as non-profit private institutions, or organizations (Art. 97 of Procedure of the NLRC).
[b], Labor Code; Eagle Security Agency, Inc. v. NLRC, 173 SCRA 479 [1989];
Rabago v. NLRC, 200 SCRA 158 [1991]). Settled is the rule that in job 4. ID.; INDIRECT EMPLOYER; ESTOPPED FROM ASSAILING CONTRACT. —
contracting, the petitioner as principal is jointly and severally liable with the Petitioner assail the contract for security services for being void ab initio on the
contractor for the payment of unpaid wages. The statutory basis for the joint ground that it did not comply with the bidding requirements set by law.
and several liability is set forth in Articles 107, and 109 in relation to Article 106 Undeniably, services were rendered already and the petitioner benefitted from
of the Labor Code. said contract for two (2) years now. The petitioner is therefore estopped from
assailing the contract.
2. ID.; ID.; ID.; WAGE ORDERS, MANDATORY AND CANNOT BE WAIVED. — In
the case at bar, the action instituted by the private respondent was for the 5. ID.; PHIL. ASSOCIATION OF DETECTIVE AND PROTECTIVE AGENCY
payment of unpaid wage differentials under Wage Order No. 6. The liabilities of OPERATORS (PADPAO); PURPOSE FOR ITS CREATION. — In the complaint filed,
the parties were very well explained in the case of Eagle Security v. NLRC, supra the private respondent alleged that it requested the Regional Director, NCR
where the court held: . . . "The solidary liability of PTSI and EAGLE, however, Region of the Department of Labor and Employment for their intercession in
does not preclude the right of reimbursement from his co-debtor by the one connection with the illegal bidding and award made by the petitioner in favor
who paid [See Article 1217, Civil Code]. It is with respect to this right of of Triad Security Agency which was below the minimum wage law. Undeniably,
reimbursement that petitioners can find support in the aforecited contractual the private respondent is equally guilty when it entered into the contract with
stipulation and Wage Order provision. "That Wage Orders are explicit that the petitioner without considering Wage Order No. 6. The private respondent
payment of the increases are `to be borne’ by the principal or client.’To be tries to explain that the Philippine Association of Detective and Protective
borne’, however, does not mean that the principal, PTSI in this case, would Agency Operators (PADPAO) which fixes the contract rate of the security
directly pay the security guards the wage and allowance increases because agencies was unable to fix the new contract rate until May 12, 1986. We,
there is no privity of contract between them. The security guards’ contractual however, agree with the posture that the setting of wages under PADPAO is of
relationship is with their immediate employer, EAGLE. As an employer, EAGLE is no moment. The PADPAO memorandum was not necessary to make Wage
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Order No. 6 effective. The PADPAO memo was merely an internal agreement DECISION
among the operators to set the ceiling of the contract rates. It was aimed to The petitioner questions the resolution of the National Labor Relations
curb the practice of security agencies which were in cutthroat competition to Commission (NLRC) dated January 17, 1983 setting aside the order of dismissal
request for wage adjustments after proposals were accepted in good faith to issued by the Labor Arbiter and the resolution dated June 25, 1990 denying
the prejudice of the parties. petitioner’s motion for reconsideration.

6. ID.; SECURITY AGENCY; CANNOT ESCAPE LIABILITY FOR PAYMENT OF UNPAID The facts are as follows:
WAGES; PAYMENT OF WAGES TO EMPLOYEES GUARANTEED UNDER THE
CONSTITUTION. — it bears emphasis that it was the private respondent which The petitioner is a government-owned or controlled corporation created by
first deprived the security personnel of their rightful wage under Wage Order P.D. No. 977.
No. 6. The private respondent is the employer of the security guards and as the
employer, it is charged with knowledge of labor laws and the adequacy of the On November 11, 1985, it entered into a contract with the Odin Security
compensation that it demands for contractual services is its principal concern Agency for security services of its Iloilo Fishing Port Complex in Iloilo City. The
and not any other’s (Del Rosario & Sons Logging Enterprises, Inc. v. NLRC, 136 pertinent provision of the contract provides:chanrobles.com : virtual law library
SCRA 669 [1985]). Given this peculiar circumstance, the private respondent
should also be faulted for the unpaid wage differentials of the security guards. OBLIGATION OF THE FISHING PORT COMPLEX:chanrob1es virtual 1aw library
By filing the complaint in its own behalf and in behalf of the security guards,
the private respondent wishes to exculpate itself from liability on the strength 1. For and in consideration of the services to be rendered by the AGENCY to the
of the ruling in the Eagle case that the ultimate liability rests with the principal. FISHING PORT COMPLEX, the latter shall pay to the former per month for eight
Nonetheless, the inescapable fact is that the employees must be guaranteed (8) hours work daily as follows:chanrob1es virtual 1aw library
payment of the wages due them for the performance of any work, task, job or
project. They must be given ample protection as mandated by the Constitution OUTSIDE METRO MANILA
(See Article II, Section 18 and Article XIII, Section 3). Thus, to assure compliance Security Guard P1,990.00
with the provisions of the Labor Code including the statutory minimum wage, Security Supervisor 2,090.00
the joint and several liability of the contractor and the principal is mandated. Det. Commander 2,190.00.

7. ID.; SOLIDARY LIABILITY OF PRINCIPAL AND CONTRACTOR; WITHOUT The Security Group of the AGENCY will be headed by a detachment
PREJUDICE TO THE RIGHT OF REIMBURSEMENT TO EITHER PRINCIPAL OR commander whose main function shall consist of the administration and
DIRECT EMPLOYER AS WARRANTED. — We hold the petitioner and the private supervision control of the AGENCY’s personnel in the FISHING PORT COMPLEX.
respondent jointly and severally liable to the security guards for the unpaid There shall be one supervisor per shift who shall supervise the guards on duty
wage differentials under Wage Order No. 6. As held in the Eagle case, the during a particular shift.
security guards’ immediate recourse is with their direct employer, private
respondent Odin Security Agency. The solidary liability is, however, without The above schedule of compensation includes among others, the
prejudice to a claim for reimbursement by the private respondent against the following:chanrob1es virtual 1aw library
petitioner for only one-half of the amount due considering that the private
respondent is also at fault for entering into the contract without taking into (a) Minimum wage (Wage Order No. 5)
consideration the minimum wage rates under Wage Order No. 6. (b) Rest Day Pay
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(c) Night Differential Pay increases in the minimum wage and occupational benefits to workers. (Rollo, p.
(d) Incentive Leave Pay 46)
(e) 13th Month Pay
(f) Emergency Cost of Living Allowance (up to Wage Order No. 5) Requests for adjustment of the contract price were reiterated on January 14,
(g) 4% Contractor’s Tax 1988 and February 19, 1988 but were ignored by the petitioner.
(h) Operational Expenses
(i) Overhead (Rollo, pp. 197-198) Thus on June 7, 1988, the private respondent filed with the Office of the Sub-
Regional Arbitrator in Region VI, Iloilo City a complaint for unpaid amount of re-
The contract for security services also provided for a one year renewable adjustment rate under Wage Order No. 6 together with wage salary
period unless terminated by either of the parties. It reads: differentials arising from the integration of the cost of living allowance under
Wage Order No. 1, 2, 3 and 5 pursuant to Executive Order No. 178 plus the
9. This agreement shall take effect upon approval for a period of one (1) year amount of P25,000.00 as attorney’s fees and cost of litigation.
unless sooner terminated upon notice of one party to the other provided, that
should there be no notice of renewal within thirty (30) days before the expiry On July 29, 1988, the petitioner filed a Motion to Dismiss on the following
date, the same shall be deemed renewed, and provided further, that the party grounds:
desiring to terminate the contract before the expiry date shall give thirty (30)
days written advance notice to the other party. (Rollo, p. 198) (1) The Commission has no jurisdiction to hear and try the case;

On October 24, 1987, and during the effectivity of the said Security Agreement, (2) Assuming it has jurisdiction, the security guards of Odin Security Agency
the private respondent requested the petitioner to adjust the contract rate in have no legal personality to sue or be sued; and
view of the implementation of Wage Order No. 6 which took effect on
November 1, 1984. (3) Assuming the individual guards have legal personality the action involves
interpretation of contract over which it has no authority. (Rollo, p. 75)
The private respondent’s request for adjustment was anchored on the
provision of Wage Order No. 6 which states: On August 19, 1988, the Labor Arbiter issued an Order dismissing the complaint
stating that the petitioner’s being a government-owned or controlled
SECTION 9. In the case of contracts for construction projects and for security, corporation would place it under the scope and jurisdiction of the Civil Service
janitorial and similar services, the increases in the minimum wage and Commission and not within the ambit of the NLRC.
allowance rates of the workers shall be borne by the principal or client of the
construction/service contractor and the contracts shall be deemed amended This Order of dismissal was raised on Appeal to the NLRC and on January 17,
accordingly, subject to the provisions of Section 3(c) of this Order. (Rollo, p. 49) 1989 the NLRC issued the questioned resolution setting aside the order and
entered a decision granting reliefs to the private Respondent.
Section 7, par. c of the Security Services Contract which calls for an automatic
escalation of the rate per guard in case of wage increase also reads: A motion for reconsideration was subsequently filed raising among others that
the resolution is:
The terms and conditions herein set forth shall be modified by the applicable
provisions of subsequent laws or decrees, especially as they pertain to (1) In violation of the right of the respondent to due process under the
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Constitution; 106, 107 and 109 of the Labor Code. This places the petitioner’s liabilities under
the scope of the NLRC. Moreover, Book Three, Title II on Wages specifically
(2) Granting arguendo that the due process clause was observed, the resolution provides that the term "employer" includes any person acting directly or
granting relief is without any legal basis; and indirectly in the interest of an employer in relation to an employee and shall
include the Government and all its branches, subdivisions and
(3) Granting arguendo that there is legal basis for the award, the stipulation instrumentalities, all government-owned or controlled corporation and
under the contract allowing an increase of wage rate is void ab initio. (Rollo, p. institutions as well as non-profit private institutions, or organizations (Art. 97
86) [b], Labor Code; Eagle Security Agency, Inc. v. NLRC, 173 SCRA 479 [1989];
Rabago v. NLRC, 200 SCRA 158 [1991]). The NLRC, therefore, did not commit
On June 25, 1990, the motion for reconsideration was denied. grave abuse of discretion in assuming jurisdiction to set aside the Order of
The petitioner now comes to this Court reiterating substantially the same dismissal by the Labor Arbiter.
grounds it raised in its motion for reconsideration, to wit:
The underlying issue in this case is who should carry the burden of the wage
(1) The National Labor Relations Commission failed to observe due process. increases.

(2) Granting the award of the National Labor Relations Commission is valid, Settled is the rule that in job contracting, the petitioner as principal is jointly
reliefs granted are not legal. and severally liable with the contractor for the payment of unpaid wages. The
statutory basis for the joint and several liability is set forth in Articles 107, and
(3) Assuming the award complies with the requirements of due process, the 109 in relation to Article 106 of the Labor Code. (Del Rosario and Sons Logging
National Labor Relations Commission erred when it failed to declare the Enterprises, Inc. v. NLRC, 136 SCRA 669 [1985]; Baguio v. NLRC, 202 SCRA 465
contract for security services void. (Rollo, pp. 201-202) [1991]; Ecal v. NLRC, 195 SCRA 224 [1991]). In the case at bar, the action
The petitioner is a government-owned or controlled corporation with a special instituted by the private respondent was for the payment of unpaid wage
charter. This places it under the scope of the civil service (Art. XI [B] [1] and [2], differentials under Wage Order No. 6. The liabilities of the parties were very
1987 Constitution); Boy Scouts of the Philippines v. NLRC, 196 SCRA 176 [1991]; well explained in the case of Eagle Security v. NLRC, supra where the court
PNOC-Energy Development Corp. v. NLRC, 201 SCRA 487 [1991]). However, the held:chanrob1es virtual 1aw library
guards are not employees of the petitioner. The contract of services explicitly "The solidary liability of PTSI and EAGLE, however, does not preclude the right
states that the security guards are not considered employees of the petitioner of reimbursement from his co-debtor by the one who paid [See Article 1217,
(Rollo, p. 45). There being no employer-employee relationship between the Civil Code]. It is with respect to this right of reimbursement that petitioners can
petitioner and the security guards, the jurisdiction of the Civil Service find support in the aforecited contractual stipulation and Wage Order
Commission may not be invoked in this case. provision.

The contract entered into by the petitioner which is merely job contracting "The Wage Orders are explicit that payment of the increases are `to be borne’
makes the petitioner an indirect employer. The issue, therefore, is whether or by the principal or client.’To be borne’, however, does not mean that the
not an indirect employer is bound by the rulings of the NLRC. principal, PTSI in this case, would directly pay the security guards the wage and
allowance increases because there is no privity of contract between them. The
Notwithstanding that the petitioner is a government agency, its liabilities, security guards’ contractual relationship is with their immediate employer,
which are joint and solidary with that of the contractor, are provided in Articles EAGLE. As an employer, EAGLE is tasked, among others, with the payment of
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their wages [See Article VII Sec. 3 of the Contract for Security Services, supra now asking for an adjustment in the contract price pursuant to the wage order
and Bautista v. Inciong, G.R. No. 52824, March 16, 1988, 158 SCRA 556]. provision.

"Premises considered, the security guards’ immediate recourse for the Such action of the private respondent is rather disturbing and must not remain
payment of the increases is with their direct employer, EAGLE. However, in unchecked. In the complaint filed, the private respondent alleged that it
order for the security agency to comply with the new wage and allowance rates requested the Regional Director, NCR Region of the Department of Labor and
it has to pay the security guards, the Wage Order made specific provision to Employment for their intercession in connection with the illegal bidding and
amend existing contracts for security services by allowing the adjustment of award made by the petitioner in favor of Triad Security Agency which was
the consideration paid by the principal to the security agency concerned. What below the minimum wage law. Undeniably, the private respondent is equally
the Wage Orders require, therefore, is the amendment of the contract as to the guilty when it entered into the contract with the petitioner without considering
consideration to cover the service contractor’s payment of the increases Wage Order No. 6.
mandated. In the end, therefore, ultimate liability for the payment of the
increases rests with the principal." The private respondent tries to explain that the Philippine Association of
Detective and Protective Agency Operators (PADPAO) which fixes the contract
The Wage Orders are statutory and mandatory and can not be waived. The rate of the security agencies was unable to fix the new contract rate until May
petitioner can not escape liability since the law provides the joint and solidary 12, 1986.
liability of the principal and the contractor for the protection of the laborers.
The contention that it was deprived due process because no hearing was We, however, agree with the posture that the setting of wages under PADPAO
conducted does not deserve merit. A decision on the merits is proper where is of no moment. The PADPAO memorandum was not necessary to make Wage
the issues raised by the parties did not involve intricate questions of law. (See Order No. 6 effective. The PADPAO memo was merely an internal agreement
Blue Bar Coconut Phils. Inc. v. Minister of Labor, 174 SCRA 25 [1989]) There can among the operators to set the ceiling of the contract rates. It was aimed to
be no question that the security guards are entitled to wage adjustments. The curb the practice of security agencies which were in cutthroat competition to
computation of the amount due to each individual guard can be made during request for wage adjustments after proposals were accepted in good faith to
the execution of the decision where hearings can be held. (See Section 3, Rule the prejudice of the parties.chanrobles.com.ph : virtual law library
VIII of the New Rules of Procedure of the NLRC) Neither can the petitioner
assail the contract for security services for being void ab initio on the ground While it is true that security personnel should not be deprived of what is
that it did not comply with the bidding requirements set by law. Undeniably, lawfully due them, it bears emphasis that it was the private respondent which
services were rendered already and the petitioner benefitted from said first deprived the security personnel of their rightful wage under Wage Order
contract for two (2) years now. The petitioner is therefore estopped from No. 6. The private respondent is the employer of the security guards and as the
assailing the contract. employer, it is charged with knowledge of labor laws and the adequacy of the
compensation that it demands for contractual services is its principal concern
Quite noteworthy is the fact that the private respondent entered into the and not any other’s (Del Rosario & Sons Logging Enterprises, Inc. v. NLRC, 136
contract when Wage Order No. 6 had already been in force. The contract was Given this peculiar circumstance, the private respondent should also be faulted
entered into in November 11, 1985 one year after the effectivity of Wage Order for the unpaid wage differentials of the security guards. By filing the complaint
No. 6 which was on November 1, 1984. The rates of the security guards as in its own behalf and in behalf of the security guards, the private respondent
stipulated in the contract did not consider the increases in the minimum wage wishes to exculpate itself from liability on the strength of the ruling in the Eagle
mandated by Wage Order No. 6. Two years after, the private respondent is case that the ultimate liability rests with the principal. Nonetheless, the
5
inescapable fact is that the employees must be guaranteed payment of the ANTONIO W. IRAN (doing business under the name and style of Tones Iran
wages due them for the performance of any work, task, job or project. They Enterprises), petitioner, vs. NATIONAL LABOR RELATIONS
must be given ample protection as mandated by the Constitution (See Article II, COMMISSION (Fourth Division), GODOFREDO O. PETRALBA, MORENO
Section 18 and Article XIII, Section 3). Thus, to assure compliance with the CADALSO, PEPITO TECSON, APOLINARIO GOTHONG GEMINA, JESUS
provisions of the Labor Code including the statutory minimum wage, the joint BANDILAO, EDWIN MARTIN, CELSO LABIAGA, DIOSDADO GONZALGO,
and several liability of the contractor and the principal is mandated. FERNANDO M. COLINA, respondents.

We, therefore, hold the petitioner and the private respondent jointly and DECISION
severally liable to the security guards for the unpaid wage differentials under
Wage Order No. 6. As held in the Eagle case, the security guards’ immediate ROMERO, J.:
recourse is with their direct employer, private respondent Odin Security
Agency. The solidary liability is, however, without prejudice to a claim for Whether or not commissions are included in determining compliance with
reimbursement by the private respondent against the petitioner for only one- the minimum wage requirement is the principal issue presented in this
half of the amount due considering that the private respondent is also at fault petition.
for entering into the contract without taking into consideration the minimum Petitioner Antonio Iran is engaged in softdrinks merchandising and
wage rates under Wage Order No. 6.chanrobles lawlibrary : rednad distribution in Mandaue City, Cebu, employing truck drivers who double as
salesmen, truck helpers, and non-field personnel in pursuit thereof.Petitioner
WHEREFORE, the questioned resolutions of the National Labor Relations hired private respondents Godofredo Petralba, Moreno Cadalso, Celso Labiaga
Commission are hereby AFFIRMED with the modification that both the and Fernando Colina as drivers/salesmen while private respondents Pepito
petitioner and the private respondent are ORDERED to pay jointly and severally Tecson, Apolinario Gimena, Jesus Bandilao, Edwin Martin and Diosdado
the unpaid wage differentials under Wage Order No. 6 without prejudice to the Gonzalgo were hired as truck helpers. Drivers/salesmen drove petitioners
right of reimbursement for one-half of the amount which either the petitioner delivery trucks and promoted, sold and delivered softdrinks to various outlets
or the private respondent may have to pay to the security guards. Costs against in Mandaue City. The truck helpers assisted in the delivery of softdrinks to the
the petitioner. different outlets covered by the driver/salesmen.
As part of their compensation, the driver/salesmen and truck helpers of
SO ORDERED. petitioner received commissions per case of softdrinks sold at the following
rates:

SALESMEN:

Ten Centavos (P0.10) per case of Regular softdrinks.


Twelve Centavos (P0.12) per case of Family Size softdrinks.

TRUCK HELPERS:

Eight Centavos (P0.08) per case of Regular softdrinks.


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Ten Centavos (P0.10) per case of Family Size softdrinks. 8. Pepito Tecson 9,126.55
---------------
Sometime in June 1991, petitioner, while conducting an audit of his
operations, discovered cash shortages and irregularities allegedly committed by 74,116.63
private respondents. Pending the investigation of irregularities and settlement
of the cash shortages, petitioner required private respondents to report for Attorneys Fees (10%)
work everyday. They were not allowed, however, to go on their respective of the gross award 7,411.66
routes. A few days thereafter, despite aforesaid order, private respondents -------------
stopped reporting for work, prompting petitioner to conclude that the former
had abandoned their employment. Consequently, petitioner terminated their GRAND TOTAL AWARD P81,528.29
services. He also filed on November 7, 1991, a complaint for estafa against ========
private respondents.
On the other hand, private respondents, on December 5, 1991, filed The other claims are dismissed for lack of merit.
complaints against petitioner for illegal dismissal, illegal deduction,
underpayment of wages, premium pay for holiday and rest day, holiday pay, SO ORDERED.[1]
service incentive leave pay, 13th month pay, allowances, separation pay,
recovery of cash bond, damages and attorneys fees. Said complaints were Both parties seasonably appealed to the NLRC, with petitioner contesting
consolidated and docketed as Rab VII-12-1791-91, RAB VII-12-1825-91 and RAB the labor arbiters refusal to include the commissions he paid to private
VII-12-1826-91, and assigned to Labor Arbiter Ernesto F. Carreon. respondents in determining compliance with the minimum wage
requirement. He also presented, for the first time on appeal, vouchers
The labor arbiter found that petitioner had validly terminated private denominated as 13th month pay signed by private respondents, as proof that
respondents, there being just cause for the latters dismissal. Nevertheless, he petitioner had already paid the latter their 13th month pay. Private
also ruled that petitioner had not complied with minimum wage requirements respondents, on the other hand, contested the findings of the labor arbiter
in compensating private respondents, and had failed to pay private holding that they had not been illegally dismissed, as well as mathematical
respondents their 13th month pay. The labor arbiter, thus, rendered a decision errors in computing Jesus Bandilaos wage differentials. The NLRC, in its decision
on February 18, 1993, the dispositive portion of which reads: of December 21, 1994, affirmed the validity of private respondents dismissal,
but found that said dismissal did not comply with the procedural requirements
WHEREFORE, premises considered, judgment is hereby rendered ordering the for dismissing employees. Furthermore, it corrected the labor arbiters award of
respondent Antonio W. Iran to pay the complainants the following: wage differentials to Jesus Bandilao. The dispositive portion of said decision
reads:
1. Celso Labiaga P10,033.10
2. Godofredo Petralba 1,250.00 WHEREFORE, premises considered, the decision is hereby MODIFIED in that
3. Fernando Colina 11,753.10 complainant Jesus Bandilaos computation for wage differential is corrected
4. Moreno Cadalso 11,753.10 from P154.00 to P4,550.00. In addition to all the monetary claim (sic) originally
5. Diosdado Gonzalgo 7,159.04 awarded by the Labor Arbiter a quo, P1,000.00 is hereby granted to each
6. Apolinario Gimena 8,312.24
7. Jesus Bandilao 14,729.50
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complainants (sic)as indemnity fee for failure of respondents to observe standard laws is to negate the practice that a commission is granted after an
procedural due process. employee has already earned the minimum wage or even beyond it.[3]

SO ORDERED.[2] This holding is unsupported by law and jurisprudence. Article 97(f) of the
Labor Code defines wage as follows:
Petitioners motion for reconsideration of said decision was denied on July
31, 1995, prompting him to elevate this case to this Court, raising the following Art. 97(f) Wage paid to any employee shall mean the remuneration or earnings,
issues: however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other
1. THE HONORABLE COMMISSION ACTED WITH GRAVE ABUSE OF method of calculating the same, which is payable by an employer to an
DISCRETION AND CONTRARY TO LAW AND JURISPRUDENCE IN employee under a written or unwritten contract of employment for work done
AFFIRMING THE DECISION OF THE LABOR ARBITER A QUOEXCLUDING or to be done, or for services rendered or to be rendered and includes the fair
THE COMMISSIONS RECEIVED BY THE PRIVATE RESPONDENTS IN and reasonable value, as determined by the Secretary of Labor, of board,
COMPUTING THEIR WAGES; lodging, or other facilities customarily furnished by the employer to the
employee.
2. THE HONORABLE COMMISSION ACTED WITH GRAVE ABUSE OF
DISCRETION IN FINDING PETITIONER GUILTY OF PROCEDURAL LAPSES x x x x x x x x x. (Emphasis supplied)
IN TERMINATING PRIVATE RESPONDENTS AND IN AWARDING EACH OF
THE LATTER P1,000.00 AS INDEMNITY FEE; This definition explicitly includes commissions as part of wages. While
commissions are, indeed, incentives or forms of encouragement to inspire
3. THE HONORABLE COMMISSION GRAVELY ERRED IN NOT CREDITING THE employees to put a little more industry on the jobs particularly assigned to
ADVANCE AMOUNT RECEIVED BY THE PRIVATE RESPONDENTS AS PART them, still these commissions are direct remunerations for services rendered.
OF THEIR 13TH MONTH PAY. In fact, commissions have been defined as the recompense, compensation or
reward of an agent, salesman, executor, trustee, receiver, factor, broker or
The petition is impressed with merit. 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
The NLRC, in denying petitioners claim that commissions be included in salesman and the reason for such type of remuneration for services rendered
determining compliance with the minimum wage ratiocinated thus: demonstrate clearly that commissions are part of a salesmans wage or salary.[4]

Respondent (petitioner herein) insist assiduously that the commission should Thus, the commissions earned by private respondents in selling softdrinks
be included in the computation of actual wages per agreement. We will not fall constitute part of the compensation or remuneration paid to drivers/salesmen
prey to this fallacious argument. An employee should receive the minimum and truck helpers for serving as such, and hence, must be considered part of
wage as mandated by law and that the attainment of the minimum wage the wages paid them.
should not be dependent on the commission earned by an employee. A The NLRC asserts that the inclusion of commissions in the computation of
commission is an incentive for an employee to work harder for a better wages would negate the practice of granting commissions only after an
production that will benefit both the employer and the employee. To include employee has earned the minimum wage or over. While such a practice does
the commission in the computation of wage in order to comply with labor
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exist, the universality and prevalence of such a practice is questionable at respondents to report back for work and settle their accountabilities but the
best. In truth, this Court has taken judicial notice of the fact that some latter never reported for work. This instruction by the petitioner to report back
salesmen do not receive any basic salary but depend entirely on commissions for work and settle their accountabilities served as notices to private
and allowances or commissions alone, although an employer-employee respondents for the latter to explain or account for the missing funds held in
relationship exists.[5] Undoubtedly, this salary structure is intended for the trust by them before they disappeared.[9]
benefit of the corporation establishing such, on the apparent assumption that
thereby its salesmen would be moved to greater enterprise and diligence and Petitioner considers this return-to-work order as equivalent to the first
close more sales in the expectation of increasing their sales commissions. This, notice apprising the employee of the particular acts or omissions for which his
however, does not detract from the character of such commissions as part of dismissal is sought. But by petitioners own admission, private respondents
the salary or wage paid to each of its salesmen for rendering services to the were never told in said notice that their dismissal was being sought, only that
corporation.[6] they should settle their accountabilities. In petitioners incriminating words:
Likewise, there is no law mandating that commissions be paid only after
It should be emphasized here that at the time the misappropriation was
the minimum wage has been paid to the employee. Verily, the establishment of
discovered and subsequently thereafter, the petitioners first concern was not
a minimum wage only sets a floor below which an employees remuneration
effecting the dismissal of private respondents but the recovery of the
cannot fall, not that commissions are excluded from wages in determining
misappropriated funds thus the latter were advised to report back to work.[10]
compliance with the minimum wage law. This conclusion is bolstered
by Philippine Agricultural Commercial and Industrial Workers Union vs.
NLRC,[7] where this Court acknowledged that drivers and conductors who are As above-stated, the first notice should inform the employee that his
compensated purely on a commission basis are automatically entitled to the dismissal is being sought. Its absence in the present case makes the
termination of private respondents defective, for which petitioner must be
basic minimum pay mandated by law should said commissions be less than
their basic minimum for eight hours work. It can, thus, be inferred that were sanctioned for his non-compliance with the requirements of or for failure to
said commissions equal to or even exceed the minimum wage, the employer observe due process.[11] The twin requirements of notice and hearing constitute
the essential elements of due process, and neither of these elements can be
need not pay, in addition, the basic minimum pay prescribed by law. It follows
then that commissions are included in determining compliance with minimum disregarded without running afoul of the constitutional guarantee. Not being
wage requirements. mere technicalities but the very essence of due process, to which every
employee is entitled so as to ensure that the employers prerogative to dismiss
With regard to the second issue, it is settled that in terminating is not exercised arbitrarily,[12] these requisites must be complied with strictly.
employees, the employer must furnish the worker with two written notices
before the latter can be legally terminated: (a) a notice which apprises the Petitioner makes much capital of private respondents failure to report to
work, construing the same as abandonment which thus authorized the latters
employee of the particular acts or omissions for which his dismissal is sought,
and (b) the subsequent notice which informs the employee of the employers dismissal. As correctly pointed out by the NLRC, to which the Solicitor General
agreed, Section 2 of Book V, Rule XIV of the Omnibus Rules Implementing the
decision to dismiss him.[8] (Italics ours) Petitioner asseverates that no
procedural lapses were committed by him in terminating private respondents. Labor Code requires that in cases of abandonment of work, notice should be
sent to the workers last known address. If indeed private respondents had
In his own words:
abandoned their jobs, it was incumbent upon petitioner to comply with this
requirement. This, petitioner failed to do, entitling respondents to nominal
when irregularities were discovered, that is, when the misappropriation of
damages in the amount of P5,000.00 each, in accordance with recent
several thousands of pesos was found out, the petitioner instructed private
9
jurisprudence,[13] to vindicate or recognize their right to procedural due process case is REMANDED to the Labor Arbiter for a recomputation of the alleged
which was violated by petitioner. deficiencies. For non-observance of procedural due process in effecting the
dismissal of private respondents, said decision is MODIFIED by increasing the
Lastly, petitioner argues that the NLRC gravely erred when it disregarded
award of nominal damages to private respondents from P1,000.00 to P5,000.00
the vouchers presented by the former as proof of his payment of 13th month
each. No costs.
pay to private respondents. While admitting that said vouchers covered only a
ten-day period, petitioner argues that the same should be credited as amounts SO ORDERED.
received by private respondents as part of their 13th month pay, Section 3(e) of
the Rules and Regulations Implementing P.D. No. 851 providing that the
employer shall pay the difference when he pays less than 1/12th of the
employees basic salary.[14]
While it is true that the vouchers evidencing payments of 13th month pay
were submitted only on appeal, it would have been more in keeping with the
directive of Article 221[15] of the Labor Code for the NLRC to have taken the
same into account.[16] Time and again, we have allowed evidence to be
submitted on appeal, emphasizing that, in labor cases, technical rules of
evidence are not binding.[17] Labor officials should use every and all reasonable
means to ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure.[18]
It must also be borne in mind that the intent of P.D. No. 851 is the granting
of additional income in the form of 13th month pay to employees not as yet
receiving the same and not that a double burden should be imposed on the
employer who is already paying his employees a 13th month pay or its
equivalent.[19] An employer who pays less than 1/12th of the employees basic
salary as their 13th month pay is only required to pay the difference.[20]
The foregoing notwithstanding, the vouchers presented by petitioner
covers only a particular year. It does not cover amounts for other years claimed
by private respondents. It cannot be presumed that the same amounts were
given on said years. Hence, petitioner is entitled to credit only the amounts
paid for the particular year covered by said vouchers.
WHEREFORE, in view of the foregoing, the decision of the NLRC dated July
31, 1995, insofar as it excludes the commissions received by private
respondents in the determination of petitioners compliance with the minimum G.R. No. 204651 August 6, 2014 OUR HAUS REALTY DEVELOPMENT
wage law, as well as its exclusion of the particular amounts received by private CORPORATION, Petitioner, vs. ALEXANDER PARIAN, JAY C. ERINCO,
respondents as part of their 13th month pay is REVERSED and SET ASIDE. This ALEXANDER CANLAS, BERNARD TENEDERO and JERRY SABULAO,Respondents.
10
BRION, J.: Sometime in May 2010, Our Haus experienced financial distress. To alleviate its
condition, Our Haus suspended some of its construction projects and asked the
We resolve in this petition for review on certiorari1 the challenge to the May 7, affected workers, including the respondents, to take vacation leaves.8
2012 decision2 and the November 27, 2012 resolution3 (assailed CA rulings) of
the Court of Appeals (CA) in CA-G.R. SP No. 123273. These assailed CA rulings Eventually, the respondents were asked to report back to work but instead of
affirmed the July 20, 2011 decision4 and the December 2, 2011 doing so, they filed with the LA a complaint for underpayment of their daily
resolution5 (NLRC rulings) of the National Labor Relations Commission (NLRC) in wages. They claimed that except for respondent Bernardo N. Tenedero, their
NLRC LAC No. 02-000489-11 (NLRC NCR Case No. 06-08544-10). The NLRC wages were below the minimum rates prescribed in the following wage orders
rulings in turn reversed and set aside the December 10, 2010 decision6 of the from 2007 to 2010:
labor arbiter (LA).
1. Wage Order No. NCR-13, which provides for a daily minimum wage
Factual Antecedents rate of P362.00for the non-agriculture sector (effective from August 28,
2007 until June 13, 2008); and
Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and
Bernardo Tenederowere all laborers working for petitioner Our Haus Realty 2. Wage Order No. NCR-14, which provides for a daily minimum wage
Development Corporation (Our Haus), a company engaged in the construction rate of P382.00for the non-agriculture sector (effective from June 14,
business.The respondents’ respective employment records and daily wage 2008 until June 30, 2010).
rates from 2007 to 2010 are summarized in the table7 below:
The respondents also alleged thatOur Haus failed to pay them their holiday,
Date Years of Daily service incentive leave (SIL), 13th month and overtime pays.9
Name Year and Place of Assignment
Hired Service Rate
The Labor Arbitration Rulings
Alexander M. October
10 years 2007-2010- Quezon City P353.50
Parian 1999 Before the LA, Our Haus primarily argued that the respondents’ wages
January 2008- Quezon City 2009- complied with the law’s minimum requirement. Aside from paying the
Jay C. Erinco 10 years P342.00 monetary amount of the respondents’ wages, Our Haus also subsidized their
2000 Antipolo 2010- Quezon City
meals (3 times a day), and gave them free lodging near the construction project
Alexander R. they were assigned to.10 In determining the total amount of the respondents’
2005 5 years 2007-2010- Quezon City P312.00
Canlas daily wages, the value of these benefits should be considered, in line with
Article 97(f)11 of the Labor Code.
Jerry Q. August 2008- Quezon City 2009-
10 years P342.00
Sabulao 1999 Antipolo 2010- Quezon City
Our Haus also rejected the respondents’ other monetary claims for lack of
Bernardo N. proof that they were entitled to it.12
1994 16 years 2007-2010- Quezon City P383.50
Tenedero
On the other hand, the respondents argued that the value of their meals
should not be considered in determining their wages’ total amount since the

11
requirements set under Section 413 of DOLE14 Memorandum Circular No. the facility’s value will be deducted and will not be needed if it will merely be
215were not complied with. charged or included in the computation of wages.25 Our Haus claimed that it
did not actually deduct the values of the meals and housing benefits. It only
The respondents pointed out that Our Haus never presented any proof that considered these in computing the total amount of wages paid to the
they agreed in writing to the inclusion of their meals’ value in their respondents for purposes of compliance with the minimum wage law. Hence,
wages.16 Also, Our Haus failed to prove that the value of the facilities it the written authorization requirement should not apply.
furnished was fair and reasonable.17 Finally, instead of deducting the maximum
amount of 70% of the value of the meals, Our Haus actually withheld its full Our Haus also asserted that the respondents’ claim for SIL pay should be
value (which was Php290.00 per week for each employee).18 denied as this was not included in their pro formacomplaint. Lastly, it
questioned the respondents’entitlement to attorney’s fees because they were
The LA ruled in favor of Our Haus. He held that if the reasonable values of the not represented by a private lawyer but by the Public Attorney’s Office (PAO).
board and lodging would be taken into account, the respondents’ daily wages
would meet the minimum wage rate.19 As to the other benefits, the LA found The CA’s Ruling
that the respondents were not able to substantiate their claims for it.20
The CA dismissed Our Haus’ certiorari petition and affirmed the NLRC rulings in
The respondents appealed the LA’s decision to the NLRC, which in turn, toto. It found no real distinction between deduction and charging,26 and ruled
reversed it. Citing the case of Mayon Hotel & Restaurant v. Adana,21 the NLRC that the legal requirements before any deduction or charging can be made,
noted that the respondents did not authorize Our Haus in writing to charge the apply to both. Our Haus, however, failed to prove that it complied with any of
values of their board and lodging to their wages. Thus, the samecannot be the requirements laid down in Mabeza v. National Labor Relations
credited. Commission.27 Accordingly, it cannot consider the values of its meal and
housing facilities in the computation of the respondents’ total wages.
The NLRC also ruled that the respondents are entitled to their respective
proportionate 13th month payments for the year 2010 and SIL payments for at Also, the CA ruled that since the respondents were able to allege non-payment
least three years,immediately preceding May 31, 2010, the date when the of SIL in their position paper, and Our Haus, in fact, opposed it in its various
respondents leftOur Haus. However, the NLRC sustained the LA’s ruling that pleadings,28 then the NLRC properly considered it as part of the respondents’
the respondents were not entitled to overtime pay since the exact dates and causes of action. Lastly, the CA affirmed the respondent’s entitlement to
times when they rendered overtime work had not been proven.22 attorney’s fees.29

Our Haus moved for the reconsideration23 of the NLRC’s decision and Our Haus filed a motion for reconsideration but the CA denied its motion,
submitted new evidence (the five kasunduans) to show that the respondents prompting it to file the present petition for review on certiorari under Rule 45.
authorized Our Haus in writing to charge the values of their meals and lodging
to their wages. The Petition

The NLRC denied Our Haus’ motion, thus it filed a Rule 65 petition24 with the Our Haus submits that the CA erred in ruling that the legal requirements apply
CA. In its petition, Our Haus propounded a new theory. It made a distinction without distinction ―whether the facility’s value will be deducted or merely
between deduction and charging. A written authorization is only necessary if included in the computation of the wages. At any rate, it complied with the

12
requirements for deductibility of the value of the facilities. First, the five grave abuse of discretion in considering and appreciating the factual issues
kasunduans executed by the respondents constitute the written authorization before it.37
for the inclusion of the board and lodging’s values to their wages. Second, Our
Haus only withheld the amount of P290.00 which represents the food’s raw In ruling for legal correctness, we have to view the CA decision in the same
value; the weekly cooking cost (cook’s wage, LPG, water) at P239.40 per person context that the petition for certiorariit ruled upon was presented to it; we
is a separate expense that Our Haus did not withhold from the respondents’ have to examine the CA decision from the prism of whether it correctly
wages.30 This disproves the respondents’claim that it deducted the full amount determined the presence or absence of grave abuse of discretion in the NLRC
of the meals’ value. decision before it, not on the basis of whether the NLRC decision, on the merits
of the case, was correct. In other words, we have to be keenly aware that the
Lastly, the CA erred in ruling that the claim for SIL pay may still be granted CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision
though not raised in the complaint; and that the respondents are entitled to an challenged before it. This is the approach that should bebasic in a Rule 45
award of attorney’s fees.31 review of a CA ruling in a labor case. In question form, the question to ask in
the present case is: did the CA correctly determine that the NLRC did not
The Case for the Respondents commit grave abuse of discretion in ruling on the case?38 We rule that the CA
correctly did.
The respondents prayed for the denial of the petition.32 They maintained that
the CA did not err inruling that the values of the board and lodging cannot be No substantial distinction between deducting and charging a facility’s value
deducted from their wages for failure to comply with the requirements set by from the employee’s wage; the legal requirements for creditability apply to
law.33 And though the claim for SIL pay was not included in their pro forma both
complaint, they raised their claims in their position paper and Our Haus had the
opportunity to contradict it in its pleadings.34 To justify its non-compliance with the requirements for the deductibility of a
facility, Our Haus asks us to believe that there is a substantial distinction
Finally, under the PAO law, the availment of the PAO’s legal services does not between the deduction and the charging of a facility’s value to the wages. Our
exempt its clients from an award of attorney’s fees.35 Haus explains that in deduction, the amount of the wage (which may already
be below the minimum) would still be lessened by the facility’s value, thus
The Court’s Ruling needing the employee’s consent. On the other hand, in charging, there is no
We resolve to DENYthe petition. reduction of the employee’s wage since the facility’s value will just be
The nature of a Rule 45 petition ― only questions of law theoretically added to the wage for purposes of complying with the minimum
wage requirement.39
Basic is the rule that only questions of lawmay be raised in a Rule 45
petition.36 However, in this case, weare confronted with mixed questions of Our Haus’ argument is a vain attempt to circumvent the minimum wage law by
fact and law that are subsumed under the issue of whether Our Haus complied trying to create a distinction where none exists.
with the legal requirements on the deductibility of the value of facilities.
Strictly, factual issues cannot be considered under Rule 45 except in the course In reality, deduction and charging both operate to lessen the actual take-home
of resolving if the CA correctly determined whether or not the NLRC committed pay of an employee; they are two sides of the same coin. In both, the employee
receives a lessened amount because supposedly, the facility’s value, which is
part of his wage, had already been paid to him in kind. As there is no
13
substantial distinction between the two, the requirements set by law must lodging, electricity and water provisions to its employees, then Our Haus
apply to both. should not deduct its values from the respondents’ wages. Otherwise, this will
run contrary to the affiants’ claim that these benefits were traditionally given
As the CA correctly ruled, these requirements, as summarized in Mabeza, are free of charge.
the following:
Apart from company policy, the employer may also prove compliance with the
a. proof must be shown thatsuch facilities are customarily furnished by first requirement by showing the existence of an industry-wide practice of
the trade; furnishingthe benefits in question among enterprises engaged in the same line
b. the provision of deductiblefacilities must be voluntarily accepted in of business. If it were customary among construction companies to provide
writingby the employee; and board and lodging to their workers and treat their values as part of their wages,
c. The facilities must be charged at fair and reasonable value.40 we would have more reason to conclude that these benefits were really
facilities.
We examine Our Haus’ compliance with each of these requirements in
seriatim. However, Our Haus could not really be expected to prove compliance with the
first requirement since the living accommodation of workers in the
a. The facility must be customarily furnished by the trade construction industry is not simply a matter of business practice. Peculiar to the
construction business are the occupational safety and health (OSH) services
In a string of cases, we have concluded that one of the badges to show that a which the law itself mandates employers to provide to their workers. This isto
facility is customarily furnished by the trade is the existence of a company ensure the humane working conditions of construction employees despite their
policy or guideline showing that provisions for a facility were designated as part constant exposure to hazardous working environments. Under Section 16 of
of the employees’ salaries.41 To comply with this, Our Haus presented in its DOLE Department Order (DO) No. 13, series of 1998,43 employers engaged in
motion for reconsideration with the NLRC the joint sinumpaang salaysayof four the construction business are required to providethe following welfare
of its alleged employees. These employees averred that they were recipients of amenities:
free lodging, electricity and water, as well as subsidized meals from Our Haus.42
16.1 Adequate supply of safe drinking water
We agree with the NLRC’s finding that the sinumpaang salaysay statements
submitted by Our Haus are self-serving.1âwphi1 For one, Our Haus only 16.2 Adequate sanitaryand washing facilities
produced the documents when the NLRC had already earlier determined that
Our Haus failed to prove that it was traditionally giving the respondents their 16.3 Suitable living accommodation for workers, and as may be
board and lodging. This document did not state whether these benefits had applicable, for their families
been consistently enjoyed by the rest of Our Haus’ employees. Moreover, the
records reveal that the board and lodging were given on a per project basis. 16.4 Separate sanitary, washing and sleeping facilitiesfor men and
Our Haus did not show if these benefits were also provided inits other women workers. [emphasis ours]
construction projects, thus negating its claimed customary nature. Even
assuming the sinumpaang salaysay to be true, this document would still work Moreover, DOLE DO No. 56, series of 2005, which sets out the guidelines for
against Our Haus’ case. If Our Haus really had the practice of freely giving the implementation ofDOLE DO No. 13, mandates that the cost of the

14
implementation of the requirements for the construction safety and health of The law also prescribes that the computation of wages shall exclude whatever
workers, shall be integrated to the overall project cost.44 The rationale behind benefits, supplementsor allowances given to employees. Supplements are paid
this isto ensure that the living accommodation of the workers is not to employees on top of their basic pay and are free of charge.48 Since it does
substandard and is strictly compliant with the DOLE’s OSH criteria. not form part of the wage, a supplement’s value may not be includedin the
determination of whether an employer complied with the prescribed minimum
As part of the project cost that construction companies already charge to their wage rates.
clients, the value of the housing of their workers cannot be charged again to
their employees’ salaries. Our Haus cannot pass the burden of the OSH costs of In the present case, the board and lodging provided by Our Haus cannot be
its construction projects to its employees by deducting it as facilities. This is Our categorized asfacilities but as supplements. In SLL International Cables
Haus’ obligation under the law. Specialist v. National Labor Relations Commission,49 this Court was confronted
with the issue on the proper characterization of the free board and lodging
Lastly, even if a benefit is customarily provided by the trade, it must still pass provided by the employer. We explained:
the purpose testset by jurisprudence. Under this test, if a benefit or privilege
granted to the employee is clearly for the employer’s convenience, it will not The Court, at this point, makes a distinction between "facilities" and
be considered as a facility but a supplement.45 Here, careful consideration is "supplements". It is of the view that the food and lodging, or the electricity and
given to the nature of the employer’s business in relation to the work water allegedly consumed by private respondents in this case were not
performed by the employee. This test is used to address inequitable situations facilities but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big
wherein employers consider a benefit deductible from the wages even if the Wedge Co., the two terms were distinguished from one another in this wise:
factual circumstances show that it clearly redounds to the employers’ greater
advantage. "Supplements", therefore, constitute extra remuneration or special privileges
or benefits given to or received by the laborers overand above their ordinary
While the rules serve as the initial test in characterizing a benefit as a facility, earnings or wages. "Facilities", on the other hand, are items of expense
the purpose test additionally recognizes that the employer and the employee necessary for the laborer's and his family's existence and subsistence so thatby
do not stand at the same bargaining positions on benefits that must or must express provision of law (Sec. 2[g]), they form part of the wage and when
not formpart of an employee’s wage. In the ultimate analysis, the purpose test furnished by the employer are deductible therefrom, since if they are not so
seeks to prevent a circumvention of the minimum wage law. furnished, the laborer would spend and pay for them just the same.

a1. The purpose test in jurisprudence 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
Under the law,46 only the value of the facilities may be deducted from the supplement; and when said benefit or privilege is part of the laborers' basic
employees’ wages but not the value of supplements. Facilities include articles wages, it is a facility. The distinction lies not so much in the kind of benefit or
or services for the benefit of the employee or his family but exclude tools of item (food, lodging, bonus or sick leave) given, but in the purpose for which it is
the trade or articles or services primarily for the benefit of the employer or given.In the case at bench, the items provided were given freely by SLLfor the
necessary to the conduct of the employer’s business.47 purpose of maintaining the efficiency and health of its workers while they were
working attheir respective projects.50

15
Ultimately, the real difference lies not on the kind of the benefit but on the Based on these considerations, we conclude that even under the purpose test,
purpose why it was given by the employer. If it is primarily for the employee’s the subsidized meals and free lodging provided by Our Haus are actually
gain, then the benefit is a facility; if its provision is mainly for the employer’s supplements. Although they also work to benefit the respondents, an analysis
advantage, then it is a supplement. Again, this is to ensure that employees are of the nature of these benefits in relation to Our Haus’ business shows that
protected in circumstances where the employer designates a benefit as they were given primarily for Our Haus’ greater convenience and advantage. If
deductible from the wages even though it clearly works to the employer’s weighed on a scale, the balance tilts more towards Our Haus’ side. Accordingly,
greater convenience or advantage. their values cannot be considered in computing the total amount of the
respondents’ wages. Under the circumstances, the dailywages paid to the
Under the purpose test, substantial consideration must be given to the nature respondents are clearly below the prescribed minimum wage rates in the years
of the employer’s business inrelation to the character or type of work 2007-2010.
performed by the employees involved.
b. The provision of deductible facilities must be voluntarily accepted in writing
Our Haus is engaged in the construction business, a laborintensive enterprise. by the employee
The success of its projects is largely a function of the physical strength, vitality
and efficiency of its laborers. Its business will be jeopardized if its workers are In Mayon Hotel, we reiterated that a facility may only be deducted from the
weak, sickly, and lack the required energy to perform strenuous physical wage if the employer was authorized in writingby the concerned
activities. Thus, by ensuring that the workers are adequately and well fed, the employee.51 As it diminishes the take-home pay of an employee, the deduction
employer is actually investing on its business. must be with his express consent.

Unlike in office enterprises where the work is focused on desk jobs, the Again, in the motion for reconsideration with the NLRC, Our Haus belatedly
construction industry relies heavily and directly on the physical capacity and submitted five kasunduans, supposedly executed by the respondents,
endurance of its workers. This is not to say that desk jobs do not require muscle containing their conformity to the inclusion of the values of the meals and
strength; wesimply emphasize that in the construction business, bulk of the housing to their total wages. Oddly, Our Haus only offered these documents
work performed are strenuous physical activities. when the NLRC had already ruled that respondents did not accomplish any
written authorization, to allow deduction from their wages. These five
Moreover, in the construction business, contractors are usually faced with the kasunduans were also undated, making us wonder if they had reallybeen
problem ofmeeting target deadlines. More often than not, work is performed executed when respondents first assumed their jobs.
continuously, day and night, in order to finish the project on the designated
turn-over date. Thus, it will be more convenient to the employer if itsworkers Moreover, in the earlier sinumpaang salaysay by Our Haus’ four employees, it
are housed near the construction site to ensure their ready availability during was not mentioned that they also executed a kasunduanfor their board and
urgent or emergency circumstances. Also, productivity issues like tardiness and lodging benefits. Because of these surrounding circumstances and the
unexpected absences would be minimized. This observation strongly bears in suspicious timing when the five kasunduanswere submitted as evidence, we
the present case since three of the respondents are not residents of the agree withthe CA that the NLRC committed no grave abuse of discretion in
National Capital Region. The board and lodging provision might have been a disregarding these documents for being self serving.
substantial consideration in their acceptance of employment in a place distant
from their provincial residences. c. The facility must be charged at a fair and reasonable value

16
Our Haus admitted that it deducted the amount of P290.00 per week from Our Haus questions the respondents’ entitlement to SIL pay by pointing out
each of the respondents for their meals. But it now submits that it did not that this claim was not included in the pro forma complaint filed with the NLRC.
actually withhold the entire amount as it did not figure in the computation the However, we agree with the CA that such omission does not bar the labor
money it expended for the salary of the cook, the water, and the LPG used for tribunals from touching upon this cause of action since this was raised and
cooking, which amounts to P249.40 per week per person. From these, it discussed inthe respondents’ position paper. In Samar-Med Distribution v.
appears that the total meal expense per week for each person National Labor Relations Commission,53 we held:
is P529.40,making Our Haus’ P290.00 deduction within the 70% ceiling
prescribed by the rules. Firstly, petitioner’s contention that the validity of Gutang’s dismissal should not
be determined because it had not been included in his complaint before the
However, Our Haus’ valuation cannotbe plucked out of thin air. The valuation NLRC is bereft of merit. The complaint of Gutang was a mere checklist of
of a facility must besupported by relevant documents such as receipts and possible causes of action that he might have against Roleda. Such manner of
company records for it to be considered as fair and reasonable. In Mabeza, we preparing the complaint was obviously designed to facilitate the filing of
noted: complaints by employees and laborers who are thereby enabled to expediently
set forth their grievances in a general manner. But the non-inclusion in the
Curiously, in the case at bench, the only valuations relied upon by the labor complaint of the issue on the dismissal did not necessarily mean that the
arbiter in his decision were figures furnished by the private respondent's own validity of the dismissal could not be an issue.The rules of the NLRC require the
accountant, without corroborative evidence.On the pretext that records prior submission of verified position papers by the parties should they fail to agree
to the July 16, 1990 earthquake were lost or destroyed, respondent failed to upon an amicable settlement, and bar the inclusion of any cause of action not
produce payroll records, receipts and other relevant documents, where he mentioned in the complaint or position paper from the time of their
could have, as has been pointedout in the Solicitor General's manifestation, submission by the parties. In view of this, Gutang’s cause of action should be
"secured certified copies thereof from the nearest regional office of the ascertained not from a reading of his complaint alone but also from a
Department of Labor, the SSS or the BIR".52 [emphasis ours] consideration and evaluation of both his complaint and position paper.54

In the present case, Our Haus never explained how it came up with the valuesit The respondents’ entitlement to the other monetary benefits
assigned for the benefits it provided; it merely listed its supposed expenses
without any supporting document. Since Our Haus is using these additional Generally a party who alleges payment as a defense has the burden of proving
expenses (cook’s salary, water and LPG) to support its claim that it did not it.Particularly in labor cases, the burden of proving payment of monetary claims
withhold the full amount of the meals’ value, Our Haus is burdened to present rests on the employeron the reasoning that the pertinent personnel files,
evidence to corroborate its claim. The records however, are bereft of any payrolls, records, remittances and other similar documents — which will show
evidence to support Our Haus’ meal expense computation. Eventhe value it that overtime, differentials, service incentive leave and other claims of workers
assigned for the respondents’ living accommodations was not supported by any have been paid — are not in the possession of the worker but in the custody
documentary evidence. Without any corroborative evidence, it cannot be said and absolute control of the employer.55
that Our Haus complied withthis third requisite.
Unfortunately, records will disclose the absence of any credible document
A claim not raised in the pro forma complaint may still beraised in the position which will show that respondents had been paid their 13th month pay, holiday
paper. and SIL pays. Our Haus merely presented a handwritten certification from its
administrative officer that its employees automatically become entitled to five
17
days of service incentive leave as soon as they pass probation. This certification
was not even subscribed under oath. Our Haus could have at least submitted
its payroll or copies of the pay slips of respondents to show payment of these
benefits. However, it failed to do so.

Respondents are entitled to attorney’s fees.

Finally, we affirm that respondents are entitled to attorney’s fees. Our Haus’
asserts that respondents’ availment of free legal services from the PAO
disqualifies them from such award. We find this untenable.

It is settled that in actions for recovery of wages or where an employee was


forced to litigate and, thus, incur expenses to protect his rights and interest,
the award of attorney's fees is legally and morally justifiable.56Moreover, under
the PAO Law or Republic Act No. 9406, the costs of the suit, attorney's fees and
contingent fees imposed upon the adversary of the PAO clients after a
successful litigation shall be deposited in the National Treasury as trust fund
and shall be disbursed for special allowances of authorized officials and lawyers
of the PAO.57

Thus, the respondents are still entitled to attorney's fees. The attorney's fees
awarded to them shall be paid to the PAO. It serves as a token recompense to G.R. No. L-50999 March 23, 1990. JOSE SONGCO, ROMEO CIPRES, and
the PAO for its provision of free legal services to litigants who have no means AMANCIO MANUEL, petitioners, vs NATIONAL LABOR RELATIONS
of hiring a private lawyer. COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, and F.E.
ZUELLIG (M), INC., respondents.
WHEREFORE, in light of these considerations, we conclude that the Court of
Appeals correctly found that the National Labor Relations Commission did not MEDIALDEA, J.:
abuse its discretion in its decision of July 20, 2011 and Resolution of December
2, 2011.1âwphi1 Consequently we DENY the petition and AFFIRM the Court of This is a petition for certiorari seeking to modify the decision of the National
Appeals' decision dated May 7, 2012 and resolution dated November 27, 2012 Labor Relations Commission in NLRC Case No. RB-IV-20840-78-T entitled, "Jose
in CA-G.R. SP No. 123273. No costs. Songco and Romeo Cipres, Complainants-Appellants, v. F.E. Zuellig (M), Inc.,
Respondent-Appellee" and NLRC Case No. RN- IV-20855-78-T
SO ORDERED. entitled, "Amancio Manuel, Complainant-Appellant, v. F.E. Zuellig (M), Inc.,
Respondent-Appellee," which dismissed the appeal of petitioners herein and in
effect affirmed the decision of the Labor Arbiter ordering private respondent to

18
pay petitioners separation pay equivalent to their one month salary (exclusive Art. 284. Reduction of personnel. — The termination of employment of any
of commissions, allowances, etc.) for every year of service. employee due to the installation of labor saving-devices, redundancy,
retrenchment to prevent losses, and other similar causes, shall entitle the
The antecedent facts are as follows: employee affected thereby to separation pay. In case of termination due to
the installation of labor-saving devices or redundancy, the separation pay
Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed shall be equivalent to one (1) month pay or to at least one (1)
with the Department of Labor (Regional Office No. 4) an application seeking month pay for every year of service, whichever is higher. In case of
clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, retrenchment to prevent losses and other similar causes, the separation
and Amancio Manuel (hereinafter referred to as petitioners) allegedly on the pay shall be equivalent to one (1) month pay or at least one-half (1/2)
ground of retrenchment due to financial losses. This application was month pay for every year of service, whichever is higher. A fraction of at
seasonably opposed by petitioners alleging that the company is not suffering least six (6) months shall be considered one (1) whole year. (Emphasis
from any losses. They alleged further that they are being dismissed because of supplied)
their membership in the union. At the last hearing of the case, however,
petitioners manifested that they are no longer contesting their dismissal. The In addition, Sections 9(b) and 10, Rule 1, Book VI of the Rules Implementing the
parties then agreed that the sole issue to be resolved is the basis of the Labor Code provide:
separation pay due to petitioners. Petitioners, who were in the sales force of
Zuellig received monthly salaries of at least P40,000. In addition, they received Sec. 9(b). Where the termination of employment is due to retrechment
commissions for every sale they made. initiated by the employer to prevent losses or other similar causes, or
where the employee suffers from a disease and his continued employment
The collective Bargaining Agreement entered into between Zuellig and F.E. is prohibited by law or is prejudicial to his health or to the health of his co-
Zuellig Employees Association, of which petitioners are members, contains the employees, the employee shall be entitled to termination pay equivalent at
following provision (p. 71, Rollo): least to his one month salary, or to one-half month pay for every year of
service, whichever is higher, a fraction of at least six (6) months being
ARTICLE XIV — Retirement Gratuity considered as one whole year.

Section l(a)-Any employee, who is separated from employment due to old Sec. 10. Basis of termination pay. — The computation of the
age, sickness, death or permanent lay-off not due to the fault of said termination pay of an employee as provided herein shall be
employee shall receive from the company a retirement gratuity in an based on his latest salary rate, unless the same was reduced by
amount equivalent to one (1) month's salary per year of service. One the employer to defeat the intention of the Code, in which case
month of salary as used in this paragraph shall be deemed equivalent to the basis of computation shall be the rate before its deduction.
the salary at date of retirement; years of service shall be deemed (Emphasis supplied)
equivalent to total service credits, a fraction of at least six months being
considered one year, including probationary employment. (Emphasis On June 26,1978, the Labor Arbiter rendered a decision, the dispositive portion
supplied) of which reads (p. 78, Rollo):

On the other hand, Article 284 of the Labor Code then prevailing provides: RESPONSIVE TO THE FOREGOING, respondent should be as it is
hereby, ordered to pay the complainants separation pay
19
equivalent to their one month salary (exclusive of commissions, includes the fair and reasonable value, as determined by the
allowances, etc.) for every year of service that they have Secretary of Labor, of board, lodging, or other facilities
worked with the company. customarily furnished by the employer to the employee. 'Fair
reasonable value' shall not include any profit to the employer
SO ORDERED. or to any person affiliated with the employer.

The appeal by petitioners to the National Labor Relations Commission was Zuellig argues that if it were really the intention of the Labor Code as well as its
dismissed for lack of merit. implementing rules to include commission in the computation of separation
pay, it could have explicitly said so in clear and unequivocal terms.
Hence, the present petition. 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
On June 2, 1980, the Court, acting on the verified "Notice of Voluntary earnings.
Abandonment and Withdrawal of Petition dated April 7, 1980 filed by
petitioner Romeo Cipres, based on the ground that he wants "to abide by the Insofar as the issue of whether or not allowances should be included in the
decision appealed from" since he had "received, to his full and complete monthly salary of petitioners for the purpose of computation of their
satisfaction, his separation pay," resolved to dismiss the petition as to him. separation pay is concerned, this has been settled in the case of Santos v. NLRC,
et al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where We ruled that
The issue is whether or not earned sales commissions and allowances should "in the computation of backwages and separation pay, account must be taken
be included in the monthly salary of petitioners for the purpose of computation not only of the basic salary of petitioner but also of her transportation and
of their separation pay. emergency living allowances." This ruling was reiterated in Soriano v. NLRC, et
al., G.R. No. 75510, October 27, 1987, 155 SCRA 124 and recently, in Planters
The petition is impressed with merit. Products, Inc. v. NLRC, et al., G.R. No. 78524, January 20, 1989.

Petitioners' position was that in arriving at the correct and legal amount of We shall concern ourselves now with the issue of whether or not earned sales
separation pay due them, whether under the Labor Code or the CBA, their commission should be included in the monthly salary of petitioner for the
basic salary, earned sales commissions and allowances should be added purpose of computation of their separation pay.
together. They cited Article 97(f) of the Labor Code which includes commission
as part on one's salary, to wit; 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
(f) 'Wage' paid to any employee shall mean the remuneration law speaks in clear and categorical language, there is no room for
or earnings, however designated, capable of being expressed in interpretation or construction; there is only room for application (Cebu
terms of money, whether fixed or ascertained on a time, task, Portland Cement Co. v. Municipality of Naga, G.R. Nos. 24116-17, August 22,
piece, or commission basis, or other method of calculating the 1968, 24 SCRA 708; Gonzaga v. Court of Appeals, G.R.No. L-2 7455, June
same, which is payable by an employer to an employee under a 28,1973, 51 SCRA 381). A plain and unambiguous statute speaks for itself, and
written or unwritten contract of employment for work done or any attempt to make it clearer is vain labor and tends only to obscurity. How
to be done, or for services rendered or to be rendered, and ever, 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
20
9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. In what should be controlling in matters concerning termination
this regard, the Labor Arbiter rationalized his decision in this manner (pp. 74- pay should be the specific provisions of both Book VI of the
76, Rollo): Code and the Rules. At any rate, settled is the rule that in
matters of conflict between the general provision of law and
The definition of 'wage' provided in Article 96 (sic) of the Code that of a particular- or specific provision, the latter should
can be correctly be (sic) stated as a general definition. It is prevail.
'wage ' in its generic sense. A careful perusal of the same does
not show any indication that commission is part of salary. We On its part, the NLRC ruled (p. 110, Rollo):
can say that commission by itself may be considered a wage.
This is not something novel for it cannot be gainsaid that From the aforequoted provisions of the law and the
certain types of employees like agents, field personnel and implementing rules, it could be deduced that wage is used in its
salesmen do not earn any regular daily, weekly or monthly generic sense and obviously refers to the basic wage rate to be
salaries, but rely mainly on commission earned. ascertained on a time, task, piece or commission basis or other
method of calculating the same. It does not, however, mean
Upon the other hand, the provisions of Section 10, Rule 1, Book that commission, allowances or analogous income necessarily
VI of the implementing rules in conjunction with Articles 273 forms part of the employee's salary because to do so would
and 274 (sic) of the Code specifically states that the basis of the lead to anomalies (sic), if not absurd, construction of the word
termination pay due to one who is sought to be legally "salary." For what will prevent the employee from insisting that
separated from the service is 'his latest salary rates. emergency living allowance, 13th month pay, overtime, and
premium pay, and other fringe benefits should be added to the
x x x. computation of their separation pay. This situation, to our
mind, is not the real intent of the Code and its rules.
Even Articles 273 and 274 (sic) invariably use 'monthly pay or
monthly salary'. We rule otherwise. The ambiguity between Article 97(f), which defines the
term 'wage' and Article XIV of the Collective Bargaining Agreement, Article 284
The above terms found in those Articles and the particular of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, which
Rules were intentionally used to express the intent of the mention the terms "pay" and "salary", is more apparent than real. Broadly, the
framers of the law that for purposes of separation pay they word "salary" means a recompense or consideration made to a person for his
mean to be specifically referring to salary only. 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
.... Each particular benefit provided in the Code and other carries with it the fundamental idea of compensation for services rendered.
Decrees on Labor has its own pecularities and nuances and Indeed, there is eminent authority for holding that the words "wages" and
should be interpreted in that light. Thus, for a specific "salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent
provision, a specific meaning is attached to simplify matters Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481;
that may arise there from. The general guidelines in (sic) the 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium,"
formation of specific rules for particular purpose. Thus, that 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
21
meaning, that is, a reward or recompense for services performed. Likewise, Additionally, in Soriano v. NLRC, et al., supra, in resolving the issue of the salary
"pay" is the synonym of "wages" and "salary" (Black's Law Dictionary, 5th Ed.). base that should be used in computing the separation pay, We held that:
Inasmuch as the words "wages", "pay" and "salary" have the same meaning,
and commission is included in the definition of "wage", the logical conclusion, The commissions also claimed by petitioner ('override
therefore, is, in the computation of the separation pay of petitioners, their commission' plus 'net deposit incentive') are not properly
salary base should include also their earned sales commissions. includible in such base figure since such commissions must be
earned by actual market transactions attributable to petitioner.
The aforequoted provisions are not the only consideration for deciding the
petition in favor of the petitioners. Applying this by analogy, since the commissions in the present case were
earned by actual market transactions attributable to petitioners, these should
We agree with the Solicitor General that granting, in gratia argumenti, that the be included in their separation pay. In the computation thereof, what should
commissions were in the form of incentives or encouragement, so that the be taken into account is the average commissions earned during their last year
petitioners would be inspired to put a little more industry on the jobs of employment.
particularly assigned to them, still these commissions are direct remuneration
services rendered which contributed to the increase of income of Zuellig . The final consideration is, in carrying out and interpreting the Labor Code's
Commission is the recompense, compensation or reward of an agent, provisions and its implementing regulations, the workingman's welfare should
salesman, executor, trustees, receiver, factor, broker or bailee, when the same be the primordial and paramount consideration. This kind of interpretation
is calculated as a percentage on the amount of his transactions or on the profit gives meaning and substance to the liberal and compassionate spirit of the law
to the principal (Black's Law Dictionary, 5th Ed., citing Weiner v. Swales, 217 as provided for in Article 4 of the Labor Code which states that "all doubts in
Md. 123, 141 A.2d 749, 750). The nature of the work of a salesman and the the implementation and interpretation of the provisions of the Labor Code
reason for such type of remuneration for services rendered demonstrate including its implementing rules and regulations shall be resolved in favor of
clearly that commission are part of petitioners' wage or salary. We take judicial labor" (Abella v. NLRC, G.R. No. 71812, July 30,1987,152 SCRA 140; Manila
notice of the fact that some salesmen do not receive any basic salary but Electric Company v. NLRC, et al., G.R. No. 78763, July 12,1989), and Article 1702
depend on commissions and allowances or commissions alone, are part of of the Civil Code which provides that "in case of doubt, all labor legislation and
petitioners' wage or salary. We take judicial notice of the fact that some all labor contracts shall be construed in favor of the safety and decent living for
salesman do not received any basic salary but depend on commissions and the laborer.
allowances or commissions alone, although an employer-employee relationship
exists. Bearing in mind the preceeding dicussions, if we adopt the opposite ACCORDINGLY, the petition is hereby GRANTED. The decision of the
view that commissions, do not form part of wage or salary, then, in effect, We respondent National Labor Relations Commission is MODIFIED by including
will be saying that this kind of salesmen do not receive any salary and allowances and commissions in the separation pay of petitioners Jose Songco
therefore, not entitled to separation pay in the event of discharge from and Amancio Manuel. The case is remanded to the Labor Arbiter for the proper
employment. Will this not be absurd? This narrow interpretation is not in computation of said separation pay.
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 SO ORDERED.
employee thrown the the streets to face the harsh necessities of life.

22
of discretion amounting to lack of jurisdiction," by giving effect to Section 5 of
the Revised Guidelines on the implementation of the Thirteenth Month Pay
(Presidential Decree No. 851) promulgated by then Secretary of Labor and
Employment, Hon. Franklin Drilon, and overruling petitioner's contention that
said provision constituted a usurpation of legislative power because not
justified by or within the authority of the law sought to be implemented
besides being violative of the equal protection of the law clause of the
Constitution.

Resolution of the issue entails, first, a review of the pertinent provisions of the
s.

Sections 1 and 2 of Presidential Decree No. 851, the Thirteenth Month Pay Law,
read as follows:

G.R. No. 92174 December 10, 1993. BOIE-TAKEDA CHEMICALS, INC., Sec 1. All employees are hereby required to pay all their
petitioner, vs. HON. DIONISIO DE LA SERNA, Acting Secretary of the employees receiving basic salary of not more than P1,000.00 a
Department of Labor and Employment, respondent. month, regardless of the nature of the employment, a 13th
month pay not later than December 24 of every year.
G.R. No. L-102552 December 10, 1993
Sec. 2. Employers already paying their employees a 13th month
PHILIPPINE FUJI XEROX CORP., petitioner, vs. CRESENCIANO B. TRAJANO, pay or its equivalent are not covered by this Decree.
Undersecretary of the Department of Labor and Employment, and PHILIPPINE
FUJI XEROX EMPLOYEES UNION, respondents. The Rules and Regulations Implementing P.D. 851 promulgated by then Labor
Minister Blas Ople on December 22, 1975 contained the following relevant
Herrera, Laurel, De los Reyes, Roxas & Teehankee for Boie-Takeda Chemicals, provisions relative to the concept of "thirteenth month pay" and the employers
Inc. and Phil Xerox Corp. exempted from giving it, to wit:

The Solicitor General for public respondents. Sec. 2. Definition of certain terms. — . . .

NARVASA, C.J.: a) "Thirteenth month pay" shall mean one twelfth (1/12) of the basic salary
of an employee within a calendar year;
What items or items of employee remuneration should go into the
computation of thirteenth month pay is the basic issue presented in these b) "Basic Salary" shall include all remunerations or earnings paid by an
consolidated petitions. Otherwise stated, the question is whether or not the employer to an employee for services rendered but may not include cost of
respondent labor officials in computing said benefit, committed "grave abuse living allowances granted pursuant to Presidential Decree No. 525 or Letter

23
of Instructions No. 174, profit sharing payments, and all allowances and Sec. 4. Overtime pay, earnings and other remunerations which
monetary benefits which are not considered or integrated as part of the are not part of the basic salary shall not be included in the
regular or basic salary of the employee at the time of the promulgation of computation of the 13th month pay.
the Decree on December 16, 1975.
On August 13, 1986, President Corazon C. Aquino promulgated Memorandum
Sec. 3. Employers covered. — . . . (The law applies) to all employers except Order No. 28, which contained a single provision modifying Presidential Decree
to: No. 851 by removing the salary ceiling of P1,000.00 a month set by the latter,
as follows:
Employers already paying their employers a 13-month pay or more in
calendar year or is equivalent at the time of this issuance; Section 1 of Presidential Decree No. 851 is hereby modified to
the extent that all employers are hereby required to pay all
xxx xxx xxx their rank-and-file employees a 13th month pay not later than
December 24, of every year.
e) Employers of those who are paid on purely commission, boundary, or
task basis, and those who are paid a fixed amount for performing a specific Slightly more than a year later, on November 16, 1987, Revised Guidelines on
work, irrespective of the time consumed in the performance thereof, the Implementation of the 13th Month Pay Law were promulgated by then
except where the workers are paid on piece-rate basis in which case the Labor Secretary Franklin Drilon which, among other things, defined with
employer shall be covered by this issuance insofar as such workers are particularity what remunerative items were and were not embraced in the
concerned. concept of 13th month pay, and specifically dealt with employees who are paid
a fixed or guaranteed wage plus commission. The relevant provisions read:
xxx xxx xxx
4. Amount and payment of 13th Month Pay.
The term "its equivalent" as used in paragraph (c) shall include Christmas
bonus, mid-year bonus, profit-sharing payments and other cash bonuses The basic salary of an employee for the purpose of computing
amounting to not less than 1/12th of the basic salary but shall not include the 13th month pay shall include all remunerations or earnings
cash and stock dividends, cost of living allowances and all other allowances paid by the employer for services rendered but does not
regularly enjoyed by the employee, as well as non-monetary benefits. include allowances and monetary benefits which are not
Where an employer pays less than 1/12th of the employee's basic salary, considered or integrated as part of the regular or basic salary,
the employer shall pay the difference. such as the cash equivalent of unused vacation and sick leave
credits, overtime, premium, night differential and holiday pay,
Supplementary Rules and Regulations implementing P.D. 851 were and cost-of-living allowances. However, these salary-related
subsequently issued by Minister Ople which inter alia set out items of benefits should be included as part of the basic salary in the
compensation not included in the computation of the 13th month pay, viz.: computation of the 13th month pay if by individual or
collective agreement, company practice or policy, the same are
treated as part of the basic salary of the employees.

24
5. 13th Month Pay for Certain Types of Employees. Regional Director Luna C. Piezas directed Boie-Takeda to appear before his
Office on June 9 and 16, 1989. On the appointed dates, however, and despite
(a) Employees Paid by Results. — Employees who are paid on due notice, no one appeared for Boie-Takeda, and the matter had perforce to
piece work basis are by law entitled to the 13th month pay. be resolved on the basis of the evidence at hand. On July 24, 1989, Director
Piezas issued an Order 3directing Boie-Takeda:
Employees who are paid a fixed or guaranteed wage plus
commission are also entitled to the mandated 13th month pay . . . to pay . . . (its) medical representatives and its managers
based on their total earnings during the calendar year, i.e., on the total amount of FIVE HUNDRED SIXTY FIVE THOUSAND
both their fixed or guaranteed wage and commission. SEVEN HUNDRED FORTY SIX AND FORTY SEVEN CENTAVOS
(P565,746.47) representing underpayment of thirteenth (13th)
This was the state of the law when the controversies at bar arose out of the month pay for the years 1986, 1987, 1988, inclusive, pursuant
following antecedents: to the . . . revised guidelines within ten (10) days from receipt
of this Order.
(RE G.R. No. 92174) A routine inspection was conducted on May 2, 1989 in the
premises of petitioner Boie-Takeda Chemicals, Inc. by Labor A motion for reconsideration 4 was seasonably filed by Boie-Takeda under date
and Development Officer Reynaldo B. Ramos under Inspection Authority of August 3, 1989. Treated as an appeal, it was resolved on
No. 4-209-89. Finding that Boie-Takeda had not been including the January 17, 1990 by then Acting Labor Secretary Dionisio de la Serna, who
commissions earned by its medical representatives in the computation of their affirmed the July 24, 1989 Order with modification that the sales commissions
13th month pay, Ramos served a Notice of Inspection Results 1 on Boie-Takeda earned by Boie-Takeda's medical representatives before August 13, 1989, the
through its president, Mr. Benito Araneta, requiring Boie-Takeda within ten effectivity date of Memorandum Order No. 28 and its Implementing Guidelines,
(10) calendar days from notice to effect restitution or correction of "the shall be excluded in the computation of their 13th month pay. 5
underpayment of 13th month pay for the year(s) 1986, 1987 and 1988 of Med
Rep (Revised Guidelines on the Implementation of 13th month pay # 5) in the Hence the petition docketed as G.R. No. 92174.
total amount of P558,810.89."
(RE G.R. No. 102552) A similar Routine Inspection was conducted in the
Boie-Takeda wrote the Labor Department contesting the Notice of Inspection premises of Philippine Fuji Xerox Corp. on September 7, 1989 pursuant to
Results, and expressing the view "that the commission paid to our medical Routine Inspection Authority No. NCR-LSED-RI-494-89. In his Notice of
representatives are not to be included in the computation of the 13th month Inspection Results, 6 addressed to the Manager, Mr. Nicolas O. Katigbak, Senior
pay . . . (since the) law and its implementing rules speak of REGULAR or BASIC Labor and Employment Officer Nicanor M. Torres noted the following violation
salary and therefore exclude all other remunerations which are not part of the committed by Philippine Fuji Xerox Corp., to wit:
REGULAR salary." It pointed out that, "if no sales is (sic) made under the effort
of a particular representative, there is no commission during the period when Underpayment of 13th month pay of 62 employees, more or
no sale was transacted, so that commissions are not and cannot be legally less — pursuant to Revised Guidelines on the Implementation
defined as regular in nature. 2 of the 13th month pay law for the period covering 1986, 1987
and 1988.

25
Philippine Fuji Xerox was requested to effect rectification and/or restitution of of an employee, such as commissions, should not be considered in the
the noted violation within five (5) working days from notice. computation of the 13th month pay. This being the case, the Revised
Guidelines on the Implementation of the 13th Month Pay Law issued by then
No action having been taken thereon by Philippine Fuji Xerox, Secretary Drilon providing for the inclusion of commissions in the 13th month
Mr. Eduardo G. Gonzales, President of the Philxerox Employee Union, wrote pay, were issued in excess of the statutory authority conferred by P.D. 851.
then Labor Secretary Franklin Drilon requesting a follow-up of the inspection According to petitioners, this conclusion becomes even more evident when
findings. Messrs. Nicolas and Gonzales were summoned to appear before Labor considered in light of the opinion rendered by Labor Secretary Drilon himself in
Employment and Development Officer Mario F. Santos, NCR Office, "In Re: Labor Dispute at the Philippine Long Distance Telephone Company"
Department of Labor for a conciliation conference. When no amicable which affirmed the contemporaneous interpretation by then Secretary Ople
settlement was reached, the parties were required to file their position papers. that commissions are excluded from the basic salary. Petitioners further
contend that assuming that Secretary Drilon did not exceed the statutory
Subsequently, Regional Director Luna C. Piezas issued an Order dated August authority conferred by P.D. 851, still the Revised Guidelines are null and void as
23, 1990, 7 disposing as follows: they violate the equal protection of the law clause.

WHEREFORE, premises considered, Respondent PHILIPPINE FUJI XEROX is Respondents through the Office of the Solicitor General question the propriety
hereby ordered to restitute to its salesmen the portion of the 13th month of petitioners' attack on the constitutionality of the Revised Guidelines in a
pay which arose out of the non-implementation of the said revised petition for certiorari which, they contend, should be confined purely to the
guidelines, ten (10) days from receipt hereof, otherwise, correction of errors and/or defects of jurisdiction, including matters of grave
MR. NICANOR TORRES, the SR. LABOR EMPLOYMENT OFFICER is hereby abuse of discretion amounting to lack or excess of jurisdiction and not extend
Ordered to proceed to the premises of the Respondent for the purpose of to a collateral attack on the validity and/or constitutionality of a law or statute.
computing the said deficiency (sic) should respondent fail to heed his They aver that the petitions do not advance any cogent reason or state any
Order. valid ground to sustain the allegation of grave abuse of discretion, and that at
any rate, P.D. No. 851, otherwise known as the 13th Month Pay Law has
Philippine Fuji Xerox appealed the aforequoted Order to the Office of the already been amended by Memorandum Order No. 28 issued by President
Secretary of Labor. In an Order dated October 120, 1991, Undersecretary Corazon C. Aquino on August 13, 1986 so that commissions are now imputed
Cresenciano B. Trajano denied the appeal for lack of merit. Hence, the petition into the computation of the 13th Month Pay. They add that the Revised
in G.R. No. 102552, which was ordered consolidated with G.R. No. 92174 as Guidelines issued by then Labor Secretary Drilon merely clarified a gray area
involving the same issue. occasioned by the silence of the law as to the nature of commissions; and
worked no violation of the equal protection clause of the Constitution, said
In their almost identically-worded petitioner, petitioners, through common Guidelines being based on reasonable classification. Respondents point to the
counsel, attribute grave abuse of discretion to respondent labor officials case of Songco vs. National Labor Relations Commission, 183 SCRA 610,
Hon. Dionisio dela Serna and Undersecretary Cresenciano B. Trajano in issuing wherein the Court declared that Article 97(f) of the Labor Code is explicit that
the questioned Orders of January 17, 1990 and October 10, 1991, respectively. commission is included in the definition of the term "wage".
They maintain that under P.D. 851, the 13th month pay is based solely on basic
salary. As defined by the law itself and clarified by the implementing and We rule for the petitioners.
Supplementary Rules as well as by the Supreme Court in a long line of
decisions, remunerations which do not form part of the basic or regular salary
26
Contrary to respondents' contention, Memorandum Order No. 28 did not Under a later set of Supplementary Rules and Regulations
repeal, supersede or abrogate P.D. 851. As may be gleaned from the language Implementing Presidential Decree 851 Presidential Decree 851
of the Memorandum Order No. 28, it merely "modified" Section 1 of the decree issued by then Labor Secretary Blas Ople, overtime pay,
by removing the P1,000.00 salary ceiling. The concept of 13th Month Pay as earnings and other remunerations are excluded as part of the
envisioned, defined and implemented under P.D. 851 remained unaltered, and basic salary and in the computation of the 13th month pay.
while entitlement to said benefit was no longer limited to employees receiving
a monthly basic salary of not more than P1,000.00, said benefit was, and still is, The exclusion of the cost-of-living allowances under
to be computed on the basic salary of the employee-recipient as provided Presidential Decree 525 and Letter of Instructions No. 174, and
under P.D. 851. Thus, the interpretation given to the term "basic salary" as profit-sharing payments indicate the intention to strip basic
defined in P.D. 851 applies equally to "basic salary" under Memorandum Order salary of other payments which are properly considered as
No. 28. "fringe" benefits. Likewise, the catch-all exclusionary phrase
"all allowances and monetary benefits which are not
In the case of San Miguel Corp. vs. Inciong, 103 SCRA 139, this Court delineated considered or integrated as part of the basic salary" shows also
the coverage of the term "basic salary" as used in P.D. 851. We said at some the intention to strip basic salary of any and all additions which
length: may be in the form of allowances or "fringe" benefits.

Under Presidential Decree 851 and its implementing rules, the Moreover, the Supplementary Rules and Regulations
basic salary of an employee is used as the basis in the Implementing Presidential Decree 851 is even more emphatic
determination of his 13th month pay. Any compensations or in declaring that earnings and other remunerations which are
remunerations which are deemed not part of the basic pay is not part of the basic salary shall not be included in the
excluded as basis in the computation of the mandatory bonus. computation of the 13th-month pay.

Under the Rules and Regulations implementing Presidential While doubt may have been created by the prior Rules and
Decree 851, the following compensations are deemed not part Regulations Implementing Presidential Decree 851 which
of the basic salary: defines basic salary to include all remunerations or earnings
paid by an employer to an employee, this cloud is dissipated in
a) Cost-of-living allowances granted pursuant to Presidential the later and more controlling Supplementary Rules and
Decree 525 and Letter of Instructions No. 174; Regulations which categorically exclude from the definitions of
basic salary earnings and other remunerations paid by an
b) Profit-sharing payments; employer to an employee. A cursory perusal of the two sets of
Rules indicates that what has hitherto been the subject of a
c) All allowances and monetary benefits which are not broad inclusion is now a subject of broad exclusion. The
considered or integrated as part of the regular basic salary of Supplementary Rules and Regulations cure the seeming
the employee at the time of the promulgation of the Decree on tendency of the former rules to include all remunerations and
December 16, 1975. earnings within the definition of basic salary.

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The all embracing phrase "earnings and other remunerations" reason, it shall not be considered in the computation of the
which are deemed not part of the basic salary includes within 13th month pay.
its meaning payments for sick, vacation, or maternity leaves,
premium for works performed on rest days and special Quite obvious from the foregoing is that the term "basic salary" is to be
holidays, pays for regular holidays and night differentials. As understood in its common, generally-accepted meaning, i.e., as a rate of pay
such they are deemed not part of the basic salary and shall not for a standard work period exclusive of such additional payments as bonuses
be considered in the computation of the 13th-month pay. If and overtime. 8 This is how the term was also understood in the case of Pless
they were not excluded, it is hard to find any "earnings and v. Franks, 308 S.W. 2nd. 402, 403, 202 Tenn. 630, which held that in statutes
other remunerations" expressly excluded in the computation of providing that pension should not less than 50 percent of "basic salary" at the
the 13th month pay. Then the exclusionary provision would time of retirement, the quoted words meant the salary that an employee (e.g.,
prove to be idle and with no purpose. a policeman) was receiving at the time he retired without taking into
consideration any extra compensation to which he might be entitled for extra
This conclusion finds strong support under the Labor Code of work. 9
the Philippines. To cite a few provisions:
In remunerative schemes consisting of a fixed or guaranteed wage plus
Art. 87. Overtime Work. Work may be performed beyond eight commission, the fixed or guaranteed wage is patently the "basic salary" for this
(8) hours a day provided that the employee is paid for the is what the employee receives for a standard work period. Commissions are
overtime work, additional compensation equivalent to his given for extra efforts exerted in consummating sales or other related
regular wage plus at least twenty-five (25%) percent thereof. transactions. They are, as such, additional pay, which this Court has made clear
do not form part of the "basic salary."
It is clear that overtime pay is an additional compensation
other than and added to the regular wage or basic salary, for Respondents would do well to distinguish this case from Songco vs. National
reason of which such is categorically excluded from the Labor Relations Commission, supra, upon which they rely so heavily. What was
definition of basic salary under the Supplementary Rules and involved therein was the term "salary" without the restrictive adjective "basic".
Regulations Implementing Presidential Decree 851. Thus, in said case, we construed the term in its generic sense to refer to all
types of "direct remunerations for services rendered," including commissions.
In Article 93 of the same Code, paragraph In the same case, we also took judicial notice of the fact "that some salesmen
do not receive any basic salary but depend on commissions and allowances or
c) work performed on any special holiday shall be paid an commissions alone, although an employer-employee relationship exists," which
additional compensation of at least thirty percent (30%) of the statement is quite significant in that it speaks of a "basic salary" apart and
regular wage of the employee. distinct from "commissions" and "allowances". Instead of supporting
respondents' stand, it would appear that Songco itself recognizes that
It is likewise clear the premiums for special holiday which is at commissions are not part of "basic salary."
least 30% of the regular wage is an additional pay other than
and added to the regular wage or basic salary. For similar In including commissions in the computation of the 13th month pay, the
second paragraph of Section 5(a) of the Revised Guidelines on the
Implementation of the 13th Month Pay Law unduly expanded the concept of
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"basic salary" as defined in P.D. 851. It is a fundamental rule that implementing
rules cannot add to or detract from the provisions of the law it is designed to
implement. Administrative regulations adopted under legislative authority by a
particular department must be in harmony with the provisions of the law they
are intended to carry into effect. They cannot widen its scope. An
administrative agency cannot amend an act of Congress. 10

Having reached this conclusion, we deem it unnecessary to discuss the other


issues raised in these petitions.

WHEREFORE, the consolidated petitions are hereby GRANTED. The second


paragraph of Section 5 (a) of the Revised Guidelines on the Implementation of
the 13th Month Pay Law issued on November 126, 1987 by then Labor
Secretary Franklin M. Drilon is declared null and void as being violative of the
law said Guidelines were issued to implement, hence issued with grave abuse
of discretion correctible by the writ of prohibition and certiorari. The assailed
Orders of January 17, 1990 and October 10, 1991 based thereon are SET ASIDE.

SO ORDERED.

G.R. No. 81176 April 19, 1989

29
PLASTIC TOWN CENTER CORPORATION, petitioner, vs. NATIONAL LABOR workers are paid on daily basis, it computed the salary received
RELATIONS COMMISSION AND NAGKAKAISANG LAKAS NG MANGGAGAWA by the worker in a month as a month salary. In this case the
(NLM)-KATIPUNAN, respondents. salary of 26 days is a month salary.

An issue in this petition is the interpretation of certain provisions of the We agree with the respondent's interpretation. As daily wage
Collective Bargaining Agreement (CBA) between Plastic Town Center earner, there would be no instance that the worker would
Corporation and the respondent union. work for 30 days a month since work does not include Sunday
or rest days. In the mind of the daily worker in a month he
On September 7,1984, the respondent Nagkakaisang Lakas ng Manggagawa could not expect a month salary exceeding the equivalent of 26
(NLM)-Katipunan filed a complaint dated August 30, 1984 charging the days service. To award the daily wage earner pay for more than
petitioner with: 26 days is pay for days he does not work. But as regards the
monthly- paid workers he expects his monthly salary to be
a. Violation of Wage Order No. 5, by crediting the Pl.00 per day increase in the fixed which is a month salary. Hence, a distinction separates
CBA as part of the compliance with said Wage Order No. 5, and y instead of him with the daily wages.
thirty (30) days equivalent to one (1) month as gratuity pay to resigning
employees. (p. 3, Rollo) IN VIEW OF THE FOREGOING, the unfair labor practice charge
should be, as it is hereby dismissed for lack of legal and factual
b. Unfair labor practice thru violation of the CBA by giving only twenty-six (26) basis. (pp- 56-57, Rollo)
days pay instead of thirty (30) days equivalent to one (1) month as gratuity pay
to resigning employees. (p. 3, Rollo) On August 30, 1987, the respondent labor union appealed to the National
Labor Relations Commission.
On July 25,1985, Labor Arbiter Ruben Alberto ruled in favor of Plastic Town
Center Corporation. The pertinent portions of the decision read as follows: On June 30, 1987, the NLRC rendered the questioned decision with the
following dispositive portion:
... In this particular case, the P1.00 increase was ahead of the
implementation of the CBA provision or could be said was WHEREFORE, the appealed decision is hereby reversed and the
advantageous to complainant members, chronologically stated. respondent is ordered to grant Pl.00 increase for July 1, 1984
For the above cogent reason we can not fault respondent for and the equivalent of thirty days salary in gratuity pay, as
its refusal to grant a second Pl.00 increase on July 1, 1984. required by its CBA with the complainants. (p. 39, Rollo)

Complainant sustains the view that a month salary pertains to The motion for reconsideration of said decision was denied on December 7,
salary for 30 days, citing the provision of the Civil Code on the 1987. Hence, this petition.
matter.
The applicable provisions of the CBA read as follows:
Upon the other hand, respondents understanding of the
controverted provision is pragmatic or practical. Since the

30
Section 1 -The company agrees to grant permanent regular Section 2. It is the intention of both the COMPANY and the
rank and file workers covered by this Agreement who have UNION, that the grant of gratuity pay by the COMPANY herein
rendered at least one year of continuous service, across-the- set forth is to reward employees and laborers, who have
board wage increases as follows: rendered satisfactory and efficient service with the COMPANY.
THUS, in case of voluntary resignation, which is not covered by
a. Effective 1 July, 1983-Pl.00 per worked day; Section 1 above, the COMPANY nevertheless agrees to grant a
gratuity pay to the resigning employee or laborer as follows:
b Effective 1 July, 1984-Pl.00 per worked day;
1. Two to Five years of service : 1 month salary
c. Effective 1 July, 1985-Pl.00 per worked day; 2. Six (6) to Ten (10) yrs. of : Two and One-half (21/2)service
months salary
Section 3- It is agreed and understood by the parties herein 3 Eleven (ll) to Fifteen yrs. of service : 4 months salary
that the aforementioned increase in pay shall be credited 4 Sixteen (16) to twenty yrs. of : 5 months
against future allowances or wage orders hereinafter 5 Twenty one yrs. of service and above : Twelve (12) months
implemented or enforced by virtue of Letters of Instructions, salary.
Decrees and other labor legislation. (pp. 36-37, Rollo) (p. 38, Rollo)

Wage Order No. 4 provided for the integration of the mandatory emergency The petitioner alleges that one month salary for daily paid workers should be
cost of living allowances (ECOLA) under Presidential Decrees 1614,1634,1678 computed on the basis of twenty-six (26) days and not thirty (30) days since
and 1713 into the basic pay of all covered workers effective May 1, 1984. It daily wage workers do not work every day of the month including Sundays and
further provided that after the integration, the applicable statutory minimum holidays.
daily wage rate must be complied with, which in this case is P32.00.
The petition is devoid of merit.
The petitioner incurred a deficiency of P1.00 in the wage rate after integrating
the ECOLA with basic pay. So the petitioner advanced to May 1, 1984 or two The subject for interpretation in this petition for review is not the Labor Code
months earlier the implementation of the one-peso wage increase provided for or its implementing rules and regulations but the provisions of the collective
in the CBA starting July 1, 1984 for the benefit of the workers. bargaining agreement entered into by management and the labor union. As a
contract, it constitutes the law between the parties (Fegurin v. National Labor
The petitioner argues that it did not credit the Pl.00 per day across the board Relations Commission, 120 SCRA 910 [1983]) and in interpreting contracts, the
increase under the CBA as compliance with Wage Order No. 5 implemented on rules on contract must govern.
June 16,1984 since it gave an additional P3.00 per day to the basic salary
pursuant to said order. It, however, credited the Pl.00 a day increase to the Contracts which are not ambiguous are to be interpreted according to their
requirement under Wage Order No. 4 to which the private respondents literal meaning and should not be interpreted beyond their obvious
allegedly did not object. intendment (Herrera v. Petrophil Corp., 146 SCRA 385 [1986]).

The other controverted provision of the CBA reads:

31
In the case at bar, the petitioner alleges that on May 1, 1984, it granted a Pl.00 worked but payment of gratuity pay equivalent to one month
increase pursuant to Wage Order No. 4 which in consonance with Section 3 of or 30 days salary. (p. 29, Rollo)
the CBA was to be credited to the July 1, 1984 increase under the CBA. It was,
therefore, a July increase. Section 3 of the CBA, however, clearly states that Looking into the definition of gratuity, we find the following in
CBA granted increases shall be credited against future allowances or wage Moreno's Philippine Law Dictionary, to wit:
orders. Thus, the CBA increase to be effected on July 1, 1984 can not be
retroactively applied to mean compliance with Wage Order No. 4 which took Something given freely, or without recompense; a gift;
effect on May 1, 1984. The words of the contract are plain and readily something voluntarily given in return for a favor or services; a
understandable so we find no need for any further construction or bounty; a tip. -Pirovano v. De la Rama Steamship Co., 96 Phil.
interpretation petition (Dihiansan v. Court of Appeals, 153 SCRA 712 [1987]). 357.
Furthermore, we agree with the NLRC as it held:
That paid to the beneficiary for past services rendered purely
It is our finding that the respondent is bound by the CBA to out of the generosity of the giver or grantor.-Peralta v. Auditor
grant an increase on July 1, 1984. General, 100 Phil. 1054.

In this case, between July 1, 1983 and July 1, 1984, there were Salary or compensation. The very term 'gratuity' differs from
actually two increases mandated by Wage Order No. 4 on May the words 'salary' or 'compensation' in leaving the amount
1, 1984 and by Wage Order No. 5 on June 16,1984. The fact thereof, within the limits of reason, to the arvitrament of the
that the respondent had complied with Wage Order No. 4 and giver.-Herranz & Garriz v. Barbudo,12 Phil. 9.
Wage Order No. 5 does not relieve it of its obligation to grant
the P1.00 increase under the CBA. (pp. 37-38, Rollo) From the foregoing, gratuity pay is therefore, not intended to pay a worker for
actual services rendered. It is a money benefit given to the workers whose
With regards to the second issue, the petitioner maintains that under the purpose is "to reward employees or laborers, who have rendered satisfactory
principle of "fair day's wage for fair day's labor", gratuity pay should be and efficient service to the company." (Sec. 2, CBA) While it may be enforced
computed on the basis of 26 days for one month salary considering that the once it forms part of a contractual undertaking, the grant of such benefit is not
employees are daily paid. mandatory so as to be considered a part of labor standard law unlike the salary,
cost of living allowances, holiday pay, leave benefits, etc., which are covered by
We find no abuse of discretion on the part of the NLRC in granting gratuity pay the Labor Code. Nowhere has it ever been stated that gratuity pay should be
equivalent to one month or 30 days salary . based on the actual number of days worked over the period of years forming
its basis. We see no point in counting the number of days worked over a ten-
We quote with favor the NLRC decision which states: year period to determine the meaning of "two and one- half months' gratuity."
Moreover any doubts or ambiguity in the contract between management and
... To say that awarding the daily wage earner salary for more the union members should be resolved in the light of Article 1702 of the Civil
than 26 days is paying him for days he does not work misses Code that:
the point entirely. The issue here is not payment for days

32
In case of doubt, all labor legislation and all labor contracts
shall be construed in favor of the safety and decent living for
the laborer.

This is also in consonance with the principle enunciated in the Labor Code that
all doubts should be resolved in favor of the worker.

The Civil Code provides that when months are not designated by name, a
month is understood to be thirty (30) days. The provision applies under the
circumstances of this case.

In view of the foregoing, the public respondent did not act with grave abuse of
discretion when it rendered the assailed decision which is in accordance with
law and jurisprudence.

WHEREFORE, the petition is hereby DISMISSED for lack of merit.

SO ORDERED.

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