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TOPIC 4: WAGES AND WAGE FIXING mechanics, domestics or menial servants, and
laborers employed in manufactories,
28. Gaa vs CA et. al agriculture, mines, and other manual
occupation and usually employed to distinguish
the sums paid to persons hired to perform
 respondent Europhil Industries Corporation manual labor, skilled or unskilled, paid at stated
was formerly one of the tenants in Trinity times, and measured by the day, week, month,
Building at T.M. Kalaw Street, Manila, while or season," which is the ordinary acceptation of
petitioner Rosario A. Gaa was then the building the said term, and that "wages" in Spanish is
administrator. "jornal" and one who receives a wage is a
 The latter (Europhil) filed in the Court of First
Instance in Manila action for damages against  Hence, this petition for certiorari
petitioner "for having perpetrated certain acts
that Europhil Industries considered a trespass Issue:
upon its rights, namely, cutting of its electricity,
and removing its name from the building Was the CA was correct in their interpretation of Article
directory and gate passes of its officials and 1708 of the New Civil Code?
 The Court rendered judgment in favor of
respondent Europhil Industries. Yes, the CA was correct in their interpretation of Article
1708 of the New Civil Code, which reads:
 The said decision having become final and
ART. 1708. The laborer's wage shall not be subject to
executory, a writ of garnishment was issued
execution or attachment, except for debts incurred for
pursuant to which Deputy Sheriff Cesar A.
food, shelter, clothing and medical attendance.
Roxas, served a Notice of Garnishment upon
El Grande Hotel, where petitioner was then In the case at bar, the Supreme Court held that:
employed, garnishing her "salary, commission
and/or remuneration. 1) The word "laborer" includes everyone who
performs any kind of mental or physical labor,
 Petitioner then filed with the Court of First but as commonly and customarily used and
Instance (CFI) of Manila a motion to lift said understood, it only applies to one engaged in
garnishment on the ground that her "salaries, some form of manual or physical labor. That is
commission and, or remuneration are the sense in which the courts generally apply
exempted from execution under Article 1708 of the term as applied in exemption acts, since
the New Civil Code. persons of that class usually look to the reward
of a day's labor for immediate or present
 Said motion was denied, hence petitioner filed support and so are more in need of the
with the Court of Appeals a petition for exemption than are other.
certiorari against said order. The CA dismissed
said petition. It is beyond dispute that petitioner is not an
ordinary or rank and file laborer but "a
 the Court of Appeals held that petitioner is not responsibly place employee," of El Grande
a mere laborer as contemplated under Article Hotel, "responsible for planning, directing,
1708 as the term laborer does not apply to one controlling, and coordinating the activities of all
who holds a managerial or supervisory position housekeeping personnel" so as to ensure the
like that of petitioner, but only to those cleanliness, maintenance and orderliness of all
"laborers occupying the lower strata." guest rooms, function rooms, public areas, and
the surroundings of the hotel. Considering the
 It also held that the term "wages" means the importance of petitioner's function in El Grande
pay given" as hire or reward to artisans, Hotel, it is undeniable that petitioner is

Case Digest – Valentine Morales Page 1


occupying a position equivalent to that of a regularization process, which examination

managerial or supervisory position. revealed the following:

2) Article 1708 used the word "wages" and not Xxx

"salary" in relation to "laborer" when it b. Armando Dolina - After thorough evaluation
declared what are to be exempted from of the candidate's past records, his
attachment and execution. The term "wages" performance and the result of his medical
as distinguished from "salary", applies to the examination as submitted by the Medical Sub-
compensation for manual labor, skilled or Department, the Board finds Mr. A. Dolina not
unskilled, paid at stated times, and measured qualified for regular employment in the
by the day, week, month, or season, while Company.
"salary" denotes a higher degree of
employment, or a superior grade of services,  The Board recommended the termination of the
and implies a position of office: by contrast, the complainant pursuant to which PAL filed a
term wages " indicates considerable pay for a clearance application for Dolina's termination.
lower and less responsible character of
employment, while "salary" is suggestive of a  Dolina countered with a complaint for illegal
larger and more important service. dismissal, the Officer-in-Charge of the
Department of Labor Regional Office No. IV
"'Wages' are the compensation given to a hired lifted the preventive suspension, and ordered
person for service, and the same is true of petitioner to reinstate Dolina to his former
'salary'. The words seem to be synonymous, position with full backwages. The issue of
convertible terms, though we believe that use termination and damages was referred to the
and general acceptation have given to the word Executive Labor Arbiter for compulsory
'salary' a significance somewhat different from arbitration.
the word 'wages' in this: that the former is
understood to relate to position of office, to be  Petitioner appealed the order lifting Dolina's
the compensation given for official or other suspension to the Secretary of Labor.
service, as distinguished from 'wages', the
compensation for labor."  pending the resolution of petitioner's appeal,
the parties signed an agreement before the
29. Philippine Airlines, June 22, 1989 Undersecretary of Labor, the terms of which
are as follows:
Petitioner: PAL
Respondents: NLRC and Armando Dolina
The undersigned parties hereby agree to the
Facts: following:

 Private respondent Dolina was admitted to the 1 While pending final resolution of the
Philippine Airlines (PAL) Aviation School for complaint of Mr. Armando Dolina against the
training as a pilot, The training agreement Philippine Airlines, he shall be considered in
bound PAL to provide regular and permanent the payroll effective 1 October 1976.
employment to Dolina upon completion of the
training course. 2 The order of Regional Director Vicente
Leogardo for the reinstatement with backwages
 As a requirement for his appointment, Dolina of Mr. Dolina is hereby rendered moot and
took a psychological examination wherein his academic.
"Adaptability Rating" was found to be
"unacceptable". 3 The parties shall consider this arrangement
pending final resolution of the case by
 Complainant was again subjected to an arbitration.
examination and interview by the Pilot xxx xxx xxx
Acceptance Qualifications Board as part of the

Case Digest – Valentine Morales Page 2


must be restored to the payroll and paid for his

 The Acting Secretary of Labor issued an order salaries from 1 April 1979, the date he was
finding that the propriety of the suspension had dropped from the respondent's payroll.
been rendered moot and academic by the
above agreement and referred the case for  the Decision appealed from should be as it is
compulsory arbitration to the Executive Labor hereby affirmed in toto. However the
Arbiter. respondent is ordered to restore the
complainant to its payroll and to pay his
 the Labor Arbiter rendered its decision: salaries from 1 April 1979 until this case is
finally resolved.
considered opinion that there is merit on the  Hence, this petition, with a prayer for a
application for clearance, and therefore, the temporary restraining order.
same should be as it is hereby GRANTED.
Consequently, the oppositor's TERMINATION

Did the NLRC committed grave abuse of discretion in

Since the termination is upheld, perforce the
holding that private respondent Dolina was entitled to
claim for moral damages is denied. Besides
his salaries from 1 April 1979 "until this case is finally
pursuant to P.D. No. 1367 dated May 1, 1978,
this office is devoid of jurisdiction to entertain
said claim. Held:

 Dolina then appealed the Labor Arbiter's Yes, the NLRC committed grave abuse of discretion in
decision to the public respondent NLRC, and holding that private respondent Dolina was entitled to
there filed a motion praying that PAL be his salaries from 1 April 1979 "until this case is finally
ordered to return him to PAL's payroll, resolved."
contending that the Labor Arbiter's decision
was not yet final because of his timely appeal. In the case at bar, the Supreme Court held that:

1) Arbitration is the reference of a dispute to an

 PAL opposed the motion claiming that it was no
impartial third person, chosen by the parties or
longer obliged to return Dolina to its payroll
appointed by statutory authority to hear and
since the decision of the Labor Arbiter in its
decide the case in controversy. When the
favor was a final resolution of the case by
consent of one of the parties is enforced by
statutory provisions, the proceeding is referred
to as compulsory arbitration. In labor cases,
 public respondent NLRC rendered its decision:
compulsory arbitration is the process of
settlement of labor disputes by a government
xxx xxx xxx
agency which has the authority to investigate
In fine it is our considered view that the
and to make an award which is binding on all
respondent's application for clearance to
the parties.
dismiss the complainant has sufficiently
surmounted the test of validity.
Under the Labor Code, it is the Labor Arbiter
who is clothed with the authority to conduct
Be that as it may, we are not in accord with the
compulsory arbitration on cases involving
discontinuation of the payment of complainant's
termination disputes.
salaries. The agreement of the parties
stipulated in no uncertain terms that the
When the Labor Arbiter renders his decision,
complainant [Dolina] is to be carried in
compulsory arbitration is deemed terminated
respondent's payroll until this case is finally
because by then the hearing and determination
resolved. As things stand, the main issue is still
of the controversy has ended. Any appeal
being litigated. The complainant, therefore,
raised by an aggrieved party from the Labor

Case Digest – Valentine Morales Page 3


Arbiter's decision is already beyond the scope of backwages. The order of the NLRC for the
of arbitration since in the appeal stage, the continued payment of Dolina's salaries would
NLRC en banc merely reviews the Labor allow the latter to unjustly enrich himself at the
Arbiter's decision for errors of fact or law and expense of the petitioner. This Court has
no longer duplicates the proceedings before reiterated time and again that the law, in
the Labor Arbiter. Thus, the clause "pending protecting the rights of the laborer, authorizes
final resolution of the case by arbitration" neither oppression nor self-destruction of the
should be understood to be limited only to the employer
proceedings before the Labor Arbiter, such that
when the latter rendered his decision, the case The Court holds that respondent NLRC's order
was finally resolved by arbitration. for the continued payment of Dolina's salaries
from "l April 1979 until the case is finally
2) The fact that the NLRC's order for the resolved" is contrary to law and established
continued payment of Dolina's salaries is jurisprudence and the NLRC acted in excess of
inconsistent with its affirmance of the Labor its jurisdiction in issuing the assailed order.
Arbiter's decision upholding the validity of
Dolina's dismissal. Therefore, that part of the dispositive portion of
the decision of the National Labor Relations,
In finding of valid dismissal, the NLRC had no requiring petitioner to restore private
authority to order the continued payment of respondent to its payroll and ordering the
Dolina's salaries from 1 April 1979 until the payment of his salaries from 1 April 1979 until
case is finally resolved. The NLRC's order the case is finally resolved is hereby declared
would result in compensating Dolina for NULL and VOID and SET ASIDE.
services no longer rendered and when he is no
longer in PAL's employ. This is contrary to the
age-old rule of "a fair day's wage for a fair day's
30. International School Alliance of Educators vs.
labor" which continues to govern the relation
Hon. Leonardo Quisumbing,
between labor and capital and remains a basic
factor in determining employees' wages. So Facts:
that, if there is no work performed by the
employee there can be no wage or pay unless Petitioners work under private respondent International
the laborer was able, willing and ready to work School. The school hires both local and foreign hires.
but was prevented by management or was Foreign hires are granted with more benefits and higher
illegally locked out, suspended or dismissed. salary. Respondent says this is because of dislocation
Where the employee's dismissal was for a just factor and limited tenure. Petitioners contested the
cause, it would neither be fair nor just to allow difference in salary rates between foreign and local
the employee to recover something he has not hires. They claim that it is discriminatory to Filipinos
earned and could not have earned. and it constitutes racial discrimination.

In ordering the continued payment of Dolina's
Is the point-of-hire classification employed by the
salaries from 1 April 1979 until the case is
School is discriminatory to Filipinos and that the grant
finally resolved, the NLRC in effect ordered the
of higher salaries to foreign-hires constitutes racial
payment of backwages to Dolina
notwithstanding its finding of a valid dismissal.
The Court found this decision clearly Held:
untenable, because backwages in general are
granted on grounds of equity for earnings Yes, the point-of-hire classification employed by the
which a worker or employee has lost due to his School is discriminatory to Filipinos and that the grant
illegal dismissal. Where, as in this case, the of higher salaries to foreign-hires constitutes racial
dismissal was for a just cause, there is no discrimination.
factual or legal basis for ordering the payment

Case Digest – Valentine Morales Page 4


The Supreme Court held that there is violation of equal factor and limited tenure affecting foreign-hires are
protection. General principles of law include principles adequately compensated by certain benefits accorded
of equity. Equal pay for equal work, persons who work them which are not enjoyed by local-hires, such as
with substantially equal qualifications, skills, effort, and housing, transportation, shipping costs, taxes and
responsibility under similar conditions should be paid home leave travel allowances.
similar salaries. If an employer accords the same rank
and position, the presumption is that they perform equal The Constitution enjoins the State to "protect the rights
work. Here, both groups have similar functions which of workers and promote their welfare," "to afford labor
they perform under similar conditions. There is no full protection." The State, therefore, has the right and
evidence that foreign hires perform 25% more efficient duty to regulate the relations between labor and capital.
than local hires. The dislocation factor and tenure are These relations are not merely contractual but are so
properly accorded by the benefits they received. impressed with public interest that labor contracts,
collective bargaining agreements included, must yield
The International Covenant on Economic, Social, and to the common good. Should such contracts contain
Cultural Rights, supra, in Article 7 thereof, provides: stipulations that are contrary to public policy, courts will
not hesitate to strike down these stipulations.
The States Parties to the present Covenant recognize
the right of everyone to the enjoyment of just and Therefore, the Court find the point-of-hire classification
favourable conditions of work, which ensure, in employed by respondent School to justify the distinction
particular: in the salary rates of foreign-hires and local hires to be
an invalid classification. There is no reasonable
a.....Remuneration which provides all workers, as a distinction between the services rendered by foreign-
minimum, with: hires and local-hires. The practice of the School of
according higher salaries to foreign-hires contravenes
i.....Fair wages and equal remuneration for work of
public policy.
equal value without distinction of any kind, in particular
women being guaranteed conditions of work not inferior
to those enjoyed by men, with equal pay for equal work;
31. Atok-Big Wedge Mutual Benefit Association vs.
x x x. Atok-Big Wedge Mining Company, Incorporated

The School cannot invoke the need to entice foreign- Facts:

hires to leave their domicile to rationalize the distinction
in salary rates without violating the principle of equal  The petitioner labor union, the Atok-Big Wedge
work for equal pay. Mutual Benefit Association, submitted to the
Atok-Big Wedge Mining Co., Inc. (respondent
"Salary" is defined in Black's Law Dictionary (5th ed.) herein) several demands, among which was an
as "a reward or recompense for services performed." increase of P0.50 in daily wage.

"salary" means a recompense or consideration made to

 The matter was referred by the mining
a person for his pains or industry in another man's
company to the Court of Industrial Relations for
business. Whether it be derived from "salarium," or
arbitration and settlement (Case No. 523-V). In
more fancifully from "sal," the pay of the Roman soldier,
the course of conciliatory measures taken by
it carries with it the fundamental idea of compensation
the Court, some of the demands were granted,
for services rendered.
and others (including the demand for increased
The Court recognize the need of the School to attract wages) rejected, and so, hearings proceeded
foreign-hires, salaries should not be used as an and evidence submitted on the latter.
enticement to the prejudice of local-hires. The local-
hires perform the same services as foreign-hires and  The Court rendered a decision fixing the
they ought to be paid the same salaries as the latter. minimum wage at P2.65 a day with the rice
For the same reason, the "dislocation factor" and the ration, or P3.20 without rice ration; denying the
foreign-hires' limited tenure also cannot serve as valid deduction from such minimum wage, of the
bases for the distinction in salary rates. The dislocation value of housing facilities furnished by the
company to the laborers, as well as the

Case Digest – Valentine Morales Page 5


efficiency bonus given to them by the company; water, light, fuel, etc., equivalent to at least P85
and ordered that the award be made effective per day.
retroactively from the date of the demand,
From this decision, the mining company  It is understood that the said amount of
appealed to this Court. facilities valued at the abovementioned prices,
may be charged in full or partially by the Atok-
 Subsequently, an urgent petition was Big Wedge Mining Company, Inc., against
presented in Court by the Atok-Big Wedge laborer or employee, as it may see fit pursuant
Mining Company for authority to stop to the exigencies of its operation.
operations and lay off employees and laborers,
for the reason that due to the heavy losses,  Later, Case No. G.R. No. L-5276 was decided
increased taxes, high cost of materials, by this Court (promulgated March 3, 1953),
negligible quantity of ore deposits, and the affirming the decision of the Court of Industrial
enforcement of the Minimum Wage Law, the Relations fixing the minimum cash wage of the
continued operation of the company would lead laborers and employees of the Atok-Big Wedge
to its immediate bankruptcy and collapse. Mining Co. at P3.20 cash, without rice ration, or
P2.65, with rice ration.
 To avert the closure of the company and the
consequent lay-off of hundreds of laborers and  The labor union presented to the Court a
employees, the Court, instead of hearing the petition for the enforcement of the terms of the
petition on the merits, convened the parties for agreement of October 29, 1952, as allegedly
voluntary conciliation and mediation. modified by the decision of this Court in G.R.
No. L-5276 and the provisions of the Minimum
 The parties reached an agreement effective Wage Law, which has since taken effect,
from August 4, 1952 to December 31, 1954 praying for the payment of the minimum cash
The Agreement in part provides: wage of P3.45 a day with rice ration, or P4.00
I without rice ration, and the payment of
That the petitioner, Atok-Big Wedge Mining differential pay from August 4, 1952, when the
Company, Incorporated, agrees to abide by award became effective.
whatever decision that the Supreme Court may
render with respect to Case No. 523-V (G.R.  The mining company opposed the petition
5276) and Case No. 523-1 (10) (G.R. 5594). claiming that the Agreement of October 29,
xxx xxx xxx 1952 was entered into by the parties with the
end in view that the company's cost of
III production be not increased in any way, so that
xxx xxx xxx it was intended to supersede whatever decision
That the petitioner, Atok-Big Wedge Mining the Supreme Court would render in G.R. No. L-
Company, Incorporated, and the respondent, 5276 and the provisions of the Minimum Wage
Atok-Big Wedge Mutual Benefit Association, Law with respect to the minimum cash wage
agree that the following facilities heretofore payable to the laborers and employees.
given or actually being given by the petitioner
to its workers and laborers, and which  the Court of Industrial Relations, denied the
constitute as part of their wages, be valued as petition, upon the ground that when the
follows: Agreement of the parties of October 29, 1952
was entered into by them, they already knew
Rice ration P.55 per day the decision of said Court (although subject to
Housing facility P40 per day appeal to the Supreme Court) fixing the
minimum cash wage at P3.20 without rice
All other facilities such as recreation facilities, ration, or P2.65 with rice ration, as well as the
medical treatment to dependents of laborers, provisions of the Minimum Wage Law requiring
school facilities, rice ration during off-days, the payment of P4 minimum daily wage in the
provinces effective August 4, 1952; so that the

Case Digest – Valentine Morales Page 6


parties had intended to be regulated by their Relations, a compromise was reached whereby it
Agreement of October 29, 1952. was agreed that the company would pay the
minimum wage fixed by the law, but the facilities
 the Court issued another order, denying the then being received by the laborers would be
claim of the labor union for payment of an evaluated and charged as part of the wage, but
additional 50 per cent based on the basic wage without in any way reducing the P2.00 cash portion
of P4 for work on Sundays and holidays, of their wages which they were receiving prior to
holding that the payments being made by the the agreement.
company were within the requirements of the
law. In other words, while it was the objective of the
parties to comply with the requirements of the
 Its motion for the reconsideration of both orders Minimum Wage Law, it was also deemed important
having been denied, the labor union filed this that the mining company should not have to
petition for review by certiorari. increase the cash wages it was then paying its
laborers, so that its cost of production would not
Issue: also be increased, in order to prevent its closure
and the lay-off of employees and laborers.
1) Is the agreement to deduct certain facilities
received by the laborers from their employer a "it is this eventuality that the parties did not like to
waiver of the minimum wage fixed by the law? happen, when they have executed the said
agreement". Accordingly, after said agreement was
2) Is the Petitioner’s contention that to allow the entered into, the Company started paying its
deductions of the facilities appearing in the laborers a basic cash or "take-home" wage of
Agreement would be contrary to the mandate P2.20, representing the difference between P4
of section 19 of the Minimum Wage Law, that (minimum wage) and P1.80 (value of all facilities).
"nothing in this Act . . . justify an employer . . .
in reducing supplements furnished on the date 2) No, the Petitioner’s contention that to allow the
of enactment? deductions of the facilities appearing in the
Agreement would not be contrary to the
Held: mandate of section 19 of the Minimum Wage
Law, that "nothing in this Act . . . justify an
1) No, the agreement to deduct certain facilities employer . . . in reducing supplements
received by the laborers from their employer is furnished on the date of enactment.
not a waiver of the minimum wage fixed by the
law. The Supreme Court held that, the facilities
mentioned in the agreement of October 29, 1952
In the case at bar, the Supreme Court held that do not come within the term "supplements" as used
Wage, as defined by section 2 of Republic Act No. in Art. 19 of the Minimum Wage Law.
602, "includes the fair and reasonable value as
determined by the Secretary of Labor, of board, "Supplements", therefore, constitute extra
lodging, or other facilities customarily furnished by renumeration or special privileges or benefits given
the employer to the employee." Thus, the law to or received by the laborers over and above their
permits the deduction of such facilities from the ordinary earnings or wages. Facilities, on the other
laborer's minimum wage of P4, as long as their hand, are items of expense necessary for the
value is "fair and reasonable". laborer's and his family's existence and
subsistence, so that by express provision of the law
The Supreme Court further held that the agreement (sec. 2 [g]) they form part of the wage and when
was prompted by an urgent petition filed by the furnished by the employer are deductible therefrom
respondent mining company to close operations since if they are not so furnished, the laborer would
and lay-off laborers because of heavy losses and spend and pay for them just the same.
the full enforcement of the Minimum Wage Law in
the provinces, requiring it to pay its laborers the Therefore, the petition is hereby dismissed, with
minimum wage of P4; to avoid such eventuality, costs against the petitioner Atok-Big Wedge Mutual
through the mediation of the Court of Industrial Benefit Association.

Case Digest – Valentine Morales Page 7


32. Mabeza vs NLRC she actually abandoned her work. He

maintained that there was no basis for the
Petitioner: Norma Mabeza money claims for underpayment and other
benefits as these were paid in the form of
facilities to petitioner and the hotel's other

 Petitioner Norma Mabeza contends that  In a supplemental answer submitted eleven

she and her co-employees at the Hotel (11) months after the original complaint for
Supreme in Baguio City were asked by the illegal dismissal was filed, private
hotel's management to sign an instrument respondent raised a new ground, loss of
attesting to the latter's compliance with confidence, which was supported by a
minimum wage and other labor standard criminal complaint for Qualified Theft he
provisions of law. filed before the prosecutor's office of the
City of Baguio against petitioner.
 Petitioner signed the affidavit but refused to
go to the City Prosecutor's Office to swear  Labor Arbiter Pati rendered a decision
to the veracity and contents of the affidavit dismissing petitioner's complaint on the
as instructed by management. ground of loss of confidence.

 After she refused to proceed to the City His findings:

Prosecutor's Office - on the same day the It appears from the evidence of respondent
affidavit was submitted to the Cordillera that complainant carted away or stole one
Regional Office of DOLE - petitioner avers (1) blanket, 1 piece bedsheet, 1 piece
that she was ordered by the hotel thermos, 2 pieces towel;
management to turn over the keys to her
living quarters and to remove her In fact, this was the reason why respondent
belongings from the hotel premises. Peter Ng lodged a criminal complaint
against complainant for qualified theft and
 She thereafter reluctantly filed a leave of perjury. The fiscal's office finding a prima
absence from her job which was denied by facie evidence that complainant committed
management. When she attempted to the crime of qualified theft issued a
return to work, the hotel's cashier, resolution for its filing in court but
Margarita Choy, informed her that she dismissing the charge of perjury; As a
should not report to work. consequence, complainant was charged in
court for the said crime;
 Petitioner filed a complaint for illegal
dismissal before the Arbitration Branch of With these pieces of evidence, complainant
the National Labor Relations Commission - committed serious misconduct against her
CAR Baguio City. In addition to her employer which is one of the just and valid
complaint for illegal dismissal, she alleged grounds for an employer to terminate an
underpayment of wages, non-payment of employee (Article 282 of the Labor Code
holiday pay, service incentive leave pay, as amended).
13th month pay, night differential and other
benefits.  Respondent NLRC promulgated its
assailed Resolution[10] affirming the Labor
 Responding to the allegations made in Arbiter's decision. The resolution
support of petitioner's complaint for illegal substantially incorporated the findings of
dismissal, private respondent Peter Ng the Labor Arbiter.
alleged before Labor Arbiter Pati that
petitioner "surreptitiously left (her job)
without notice to the management" and that

Case Digest – Valentine Morales Page 8


 Unsatisfied, petitioner instituted the instant proffer evidence in support thereof but also to work for
special civil action for certiorari under Rule better terms and conditions of employment.
65 of the Rules of Court.
2) Yes, the NLRC committed a patent and
 The Solicitor General, in a Manifestation in palpable error amounting to grave abuse of
lieu of Comment dated August 8, 1995 discretion in adopting the ruling of the labor
rejects private respondent's principal arbiter that there was no underpayment of
claims and defenses and urges this Court wages and benefits.
to set aside the public respondent's
The Supreme Court held that, the labor arbiter's
assailed resolution.
evaluation of the money claims in this case incredibly
Issue: ignores existing law and jurisprudence on the matter.
Its blatant one-sidedness simply raises the suspicion
1) Is the dismissal by the private respondent of that something more than the facts, the law and
petitioner constitutes an unfair labor practice? jurisprudence may have influenced the decision at the
level of the Arbiter.
2) Did the NLRC committed a patent and palpable
error amounting to grave abuse of discretion in Labor Arbiter Pati accepted hook, line and sinker the
adopting the ruling of the labor arbiter that private respondent's bare claim that the reason the
there was no underpayment of wages and monetary benefits received by petitioner between 1981
benefits? to 1987 were less than minimum wage was because
petitioner did not factor in the meals, lodging, electric
consumption and water she received during the period
Held: in her computations.

1) Yes, dismissal by the private respondent of Granting that meals and lodging were provided and
petitioner constitutes an unfair labor practice. indeed constituted facilities, such facilities could not be
deducted without the employer complying first with
The Supreme Court held that, the pivotal question in certain legal requirements. Without satisfying these
any case where unfair labor practice on the part of the requirements, the employer simply cannot deduct the
employer is alleged is whether or not the employer has value from the employee's wages:
exerted pressure, in the form of restraint, interference
or coercion, against his employee's right to institute First, proof must be shown that such facilities are
concerted action for better terms and conditions of customarily furnished by the trade.
employment. Without doubt, the act of compelling
employees to sign an instrument indicating that the Second, the provision of deductible facilities must be
employer observed labor standards provisions of law voluntarily accepted in writing by the employee. Finally,
when he might have not, together with the act of facilities must be charged at fair and reasonable value.
terminating or coercing those who refuse to cooperate
These requirements were not met in the instant case.
with the employer's scheme constitutes unfair labor
Private respondent "failed to present any company
practice. The first act clearly preempts the right of the
policy or guideline to show that the meal and lodging . .
hotel's workers to seek better terms and conditions of
. (are) part of the salary;" he failed to provide proof of
employment through concerted action.
the employee's written authorization; and, he failed to
The Court agrees with the Solicitor General's show how he arrived at the valuations.
observation in his manifestation that "[t]his actuation...
More significantly, the food and lodging, or the
is analogous to the situation envisaged in paragraph (f)
electricity and water consumed by the petitioner were
of Article 248 of the Labor Code" which distinctly makes
not facilities but supplements. A benefit or privilege
it an unfair labor practice "to dismiss, discharge or
granted to an employee for the convenience of the
otherwise prejudice or discriminate against an
employer is not a facility. The criterion in making a
employee for having given or being about to give
distinction between the two not so much lies in the kind
testimony" under the Labor Code. For in not giving
(food, lodging) but the purpose. Considering, therefore,
positive testimony in favor of her employer, petitioner
that hotel workers are required to work different shifts
had reserved not only her right to dispute the claim and

Case Digest – Valentine Morales Page 9


and are expected to be available at various odd hours, Respondent brought the case to appeal and was
their ready availability is a necessary matter in the favored by CA, petitioner then sought the review by SC.
operations of a small hotel, such as the private It argued that a wage distortion exists, because the
respondent's hotel. implementation of the two Wage Orders has resulted in
the discrepancy in the compensation of employees of
Therefore, the RESOLUTION of the National Labor similar pay classification in different regions.
Relations Commission is REVERSED and SET ASIDE.
For clarity, the economic benefits due the petitioner are
hereby summarized as follows: WON two wage orders resulting in the discrepancy of
employees’ compensation in different regions also
1) Deficiency wages and the applicable ECOLA from results to a wage distortion.
May 13, 1988 up to the date of petitioner's illegal
dismissal; HELD:

2) Service incentive leave pay; night differential pay No.

and 13th month pay for the same period;
There is no wage distortion since the wage order
3) Separation pay equal to one month's salary for every implementation covers all the branches of the bank.
year of petitioner's continuous service with the private The hierarchy of positions was still preserved.
respondent starting with her job at the Belfront Hotel;
Also, petitioner’s claim of wage distortion must also be
4) Full backwages, without qualification or deduction, denied for one other reason. The difference in wages
from the date of petitioner's illegal dismissal up to the between employees in the same pay scale in different
date of promulgation of this decision pursuant to our regions is not the mischief sought to be banished by the
ruling in Bustamante vs. NLRC.[34] law. Republic Act No. 6727 (the Wage Rationalization
Act), recognizes “existing regional disparities in the cost
5) P1.000.00. of living” as provided in Section 2 of said law.

33. Prubankers Association vs Prudential ***Notes: The levels of different pay classes was not
Bank and Trust Company eliminated. The statutory definition of wage distortion is
found in Article 124 of the Labor Code, as amended by
FACTS: Republic Act No. 6727, which reads: Standards/Criteria
for Minimum Wage Fixing. ―As used herein, a wage
The Regional Tripartite Wages and Productivity Board distortion shall mean a situation where an increase in
(RTWPB) Region V issued Wage Order No. RB 05-03 prescribed wage results in the elimination or severe
which provided for a Cost of Living Allowance (COLA) contraction of intentional quantitative differences in
to workers in the private sector who had rendered wage or salary rates between and among employee
service for at least three (3) months before its groups in an establishment as to effectively obliterate
effectivity, and for the same period thereafter. RTWPB the distinctions embodied in such wage structure based
Region VII however followed suit but the COLA on skills, length of service, or other logical bases of
amounts in other cities nationwide were different from differentiation. Wage distortion involves four elements:
that issued by RTWPN region V. This caused (1) An existing hierarchy of positions with
Prubankers Association to write the petitioner corresponding salary rates; (2) A significant change in
requesting that the Labor Management Committee be the salary rate of a lower pay class without a
immediately convened to discuss and resolve the concomitant increase in the salary rate of a higher one;
alleged wage distortion created in the salary structure (3)The elimination of the distinction between the two
upon the implementation of the said wage orders. As levels and (4) The existence of the distortion in the
the grievance could not be settled in the meetings, the same region of the country.
parties agreed to submit the matter to voluntary
arbitration. A disparity in wages between employees holding
similar positions but in different regions does not

Case Digest – Valentine Morales Page 10


constitute wage distortion as contemplated by law. As Involved in the classification of employees are various
stated, it is the hierarch of positions and the disparity of factors such as the degrees of responsibility, the skills
their corresponding wages and other emoluments that and knowledge required, the complexity of the job, or
are sought to be preserved by the concept of wage other logical basis of differentiation. The differing wage
distortion. rate for each of the existing classes of employees
reflects this classification.the employees of private
respondent have been "historically" classified into
levels, i.e. I to V, and not on the basis of their length of
34. Bankard Employees Union-Workers service. Put differently, the entry of new employees to
Alliance Trade Union vs NLRC and the company ipso facto place[s] them under any of the
Bankard, Inc. levels mentioned in the new salary scale which private
respondent adopted retroactive [to] April 1, 1993.
Facts: Petitioner cannot make a contrary classification of
private respondent’s employees without encroaching
On May 28, 1993, Bankard's Board of Directors upon recognized management prerogative of
approved a "New Salary Scale", made retroactive to formulating a wage structure, in this case, one based
April 1, 1993, for the purpose of making its hiring rate on level.7 (Emphasis and underscoring supplied)
competitive in the industry’s labor market. The "New
Salary Scale" increased the hiring rates of new It is thus clear that there is no hierarchy of positions
employees, to wit: Levels I and V by one thousand between the newly hired and regular employees of
pesos (P1,000.00), and Levels II, III and IV by nine Bankard, hence, the first element of wage distortion
hundred pesos (P900.00). Accordingly, the salaries of provided in Prubankers is wanting.
employees who fell below the new minimum rates were
also adjusted to reach such rates under their
levels.Bankard’s move drew the Bankard Employees
Union-WATU (petitioner), the duly certified exclusive 35. Metrobak vs NLRC
bargaining agent of the regular rank and file employees
of Bankard, to press for the increase in the salary of its
old, regular employees. On 25 May 1989, the Metropolitan Bank & Trust
Company entered into a collective bargaining
Bankard took the position, however, that there was no
agreement with the Metropolitan Bank & Trust
obligation on the part of the management to grant to all
Company Employees Union MBTCEU, granting a
its employees the same increase in an across-the-
monthly P900 wage increase effective 01 January
board manner.The Second Division of the NLRC, by
1989. With the exclusion of the probationary
Order of May 31, 1995, finding no wage distortion,
dismissed the case for lack of merit.
Republic Act 6727 was enacted "an act to rationalize
Petitioner’s motion for reconsideration of the dismissal
wage policy determination be establishing the
of the case was, by Resolution of July 28, 1995,
mechanism and proper standards thereof, . . . fixing
new wage rates, providing wage incentives for
Issue: industrial dispersal to the countryside, and for other
purposes," took effect which provides for the
WHETHER OR NOT THE NEW SALARY SCALE OF agricultural or non-agricultural employees salary, be
BANKARD RESULTED IN WAGE DISTORTION increased by twenty-five pesos (P25) per day, . . .:
Provided, That those already receiving above the
Held: minimum wage rates up to one hundred
pesos(P100.00) shall shall also receive an increase of
No. Normally, a company has a wage structure or
twenty-five pesos (P25.00) per day, . . .
method of determining the wages of its employees. In a
problem dealing with "wage distortion," the basic Pursuant to the above provisions, the bank gave the
assumption is that there exists a grouping or P25 increase per day, or P750 a month, to its
classification of employees that establishes distinctions probationary employees and to those who had been
among them on some relevant or legitimate bases.6 promoted to regular or permanent status before 01 July

Case Digest – Valentine Morales Page 11


1989 but whose daily rate was P100 and below. The result of an increase in the prescribed wage rate, an
bank refused to give the same increase to its regular "elimination or severe contraction of intentional
employees who were receiving more than P100 per day quantitative differences in wage or salary rates" would
and recipients of the P900 CBA increase. occur "between and among employee groups in an
establishment as to effectively obliterate the distinctions
Contending that the bank's implementation of Republic embodied in such wage structure based on skills,
Act 6727 resulted in the categorization of the length of service, or other logical bases of
employees into (a) the probationary employees as of 30 differentiation." In mandating an adjustment, the law did
June 1989 and regular employees receiving P100 or not require that there be an elimination or total
less a day who had been promoted to permanent or abrogation of quantitative wage or salary differences; a
regular status before 01 July 1989, and (b) the regular severe contraction thereof is enough.
employees as of 01 July 1989, whose pay was over
P100 a day, and that, between the two groups, there We find the formula suggested then by Commissioner
emerged a substantially reduced salary gap. Bonto-Perez, which has also been the standard
considered by the regional Tripartite Wages and
The Union sought from the bank the correction of the Productivity Commission for the correction of pay scale
alleged distortion in pay by granting 750 increase in structures in cases of wage distortion, 15 to well be the
regular employees with above 100 pay and reciepient appropriate measure to balance the respective
of 900 CBA increase. To avoid strike the bank contentions of the parties in this instance. We also view
petitioned the secretary of Labor to assume jurisdiction, it as being just and equitable.
then assigned to Labor Arbiter for arbitration.
Minimum Wage = % x Prescribed = Distortion
The Labor arbiter sided with the Union, that such
salary increase resulted in the severe contraction of an —————— Increased Adjustment
intentional quantitative difference in wage between
employee groups. The bank appealed to the NLRC, Actual Salary
and the NLRC reversed the decision of the Labor
Arbiter in favour of Metrobank and Trust Company. 36. Ikaw at Buklod ng Manggagawa (IBM)
vs NLRC, et. al
Whether there has been a wage distortion, and a need
to grant the increase 750 to regular employees IBM representing 4500 employees of SMC working at
receiving above 100 peso per day. various plants, offices and warehouses in NCR
presented to the company a demand for correction of
Held: the significant distortion in the workers’ wages pursuant
to the Wage Rationalization Act. Demand unheeded by
There has been a wage distortion. However it is not
company hence the union members refused to render
conductive to grant the increase of P750 to regular
overtime services until the distortion has been
employees receiving above 100 peso per day.
corrected by SMC. It appears that the employees
The term "wage distortion", under the Rules working hours/schedule has been freely observed by
Implementing Republic Act 6727, is defined, thus: the employees for the past 5 years and due to the
abandonment of the longstanding schedule of work and
(p) Wage Distortion means a situation where an reversion to the eight-hour shift substantial losses were
increase in prescribed wage rates results in the incurred by SMC. SMC filed a complaint with arbitration
elimination or severe contradiction of intentional branch of NLRC then before the NLRC for the latter to
quantitative differences in wage or salary rates between declare the strike illegal. Union’s contention: workers’
and among employee groups in an establishment as to refusal to work beyond 8 hours was a legitimate means
effectively obliterate the distinctions embodied in such of compelling SMC to correct distortion. SMC: The
wage structure based on skills, length of service, or coordinated reduction by the Union’s members of the
other logical bases of differentiation. work time in order to compel SMC to yield to the
demand was an illegal and unprotected activity.
The definition of "wage distortion," 10 aforequoted,
shows that such distortion can so exist when, as a

Case Digest – Valentine Morales Page 12



W/N the strike was legal ISSUE:

HELD: Who between the Regional Director of DOLE and the

Labor Arbiter has jurisdictional competence over the
ILLEGAL. The strike invoking the issue of wage complaint of private respondents?
distortion is illegal. The legality of these activities
depends on the legality of the purposes sought to be HELD:
attained. These joint or coordinated activities may be
forbidden or restricted by law or contract. The Regional Director had no jurisdiction over the case.
legislative intent that solution of the problem of wage
Section 2 of EO No. 111, promulgated on December
distortions shall be sought by voluntary negotiation or
24, 1986, which amended Article 128(b) of the Labor
arbitration, and not by strikes, lockouts, or other
Code gives concurrent jurisdiction to both the Secretary
concerted activities of the employees or management,
of Labor (or the various regional directors) and the
is made clear in the rules implementing RA 6727 issued
labor arbiters over money claims among the other
by the Secretary of Labor and Employment pursuant to
cases mentioned by Article 217 of the Labor Code. This
the authority granted by Section 13 of the Act. Section
provision merely confirms/reiterates the
16, Chapter I of these implementing rules, after
enforcement/adjudication authority of the Regional
reiterating the policy that wage distortions be first
Director over uncontested money claims in cases
settled voluntarily by the parties and eventually by
where an employer-employee relationship still exists.
compulsory arbitration, declares that, “Any issue
involving wage distortion shall not be a ground for a However, with the enactment of Republic Act No. 6715,
strike/lockout.” which took effect on March 21, 1989 or seven days
after the complaint at bar was filed on March 14, 1989,
Articles 129 and 217 of the Labor Code were amended,
there is no doubt that the regional directors can try
37. Rajah Humabon Hotel v. Trajano
money claims only if the following requisites concur: (1)
FACTS: the claim is presented by an employee or person
employed in domestic or household service, or house
Subsequent to the initial pleading filed by respondent- helper under the code; (2) the claimant, no longer being
employees before the regional director of DOLE for employed, does not seek reinstatement; and (3) the
redress in regard to underpaid wages and non-payment aggregate money claim of the employee or
of benefits, petitioners were instructed to allow the housekeeper does not exceed five thousand pesos
inspection of the employment records of respondents (P5,000.00). Thus, the power to hear and decide
on April 4, 1989. employees' claims arising from employer-employee
relations, exceeding P5,000.00 for each employee
However, no inspection could be done on that date on should be left to the Labor Arbiter as the exclusive
account of the picket staged by other workers. At the repository of the power to hear and decide such claims.
re-scheduled examination after closure of petitioners'
business on April 16, 1989, instead of presenting the In the instant case, a simple examination of the labor
payrolls and daily time records of private respondents, arbiter's impugned order dated September 25, 1989
petitioner Peter Po submitted a motion to dismiss on readily shows that the aggregate claims of each of the
the supposition that the regional director has no twenty-five employees of petitioner are above the
jurisdiction over the case because the employer- amount of P5,000.00 fixed by Republic Act No. 6715.
employee relationship had been served as a result of Therefore, the regional director had no jurisdiction over
the closure of petitioners' business, apart from the fact the case. Hence, the petition is granted and the public
that each of the claims of private respondents respondent is directed to refer the workers' money
exceeded the jurisdictional limit of P5,000.00 pegged claims to the appropriate Labor Arbiter for proper
by Republic Act No. 6715 or the New Labor Relations disposition.

Case Digest – Valentine Morales Page 13


TOPIC 7: PROTECTION PROVISIONS & The voluntary arbitrator, Apron M. Mangabat, ruled in
PROHIBITIONS REGARDING WAGES favor of petitioner and found that the giving of the
contested benefits in full, irrespective of the actual
38. Five J Taxi v. NLRC service rendered within one year has not ripened into a
practice. He also interpreted the phrase "for each year
Facts: of service" found in the pertinent CBA provisions to
mean that an employee must have rendered one year
Private respondents Domingo Maldigan and Gilberto
of service in order to be entitled to the full benefits
Sabsalon were hired by the petitioners as taxi drivers.
provided in the CBA. Respondent filed a Petition for
Aside from the daily "boundary", they were also
Review before the Court of Appeals. The appellate
required to pay P20.00 for car washing, and to further
court found that petitioner had an existing voluntary
make a P15.00 deposit to answer for any deficiency in
practice of paying the aforesaid benefits in full to its
their "boundary," for every actual working day.
employees; thereby rejecting the claim that petitioner
erred in paying full benefits to its seven employees. The
appellate court noted that aside from the affidavit of
Whether or not the car wash payment is an illegal petitioner's officer, it has not presented any evidence in
deduction as contemplated in the Labor Code. support of its position that it has no voluntary practice of
granting the contested benefits in full and without
Held: regard to the service actually rendered within the year.

SC held that the amount doled out was paid directly to Issues:
the person who washed the unit, thus we find nothing
1. Whether or not the petitioners should grant 13th
illegal in this practice, much more to consider the
month pay, bonus and leave encashment in full
amount paid by the driver as illegal deduction in the
regardless of actual service rendered.
context of the law. Consequently, private respondents
are not entitled to the refund of the P20.00 car wash
2. Whether or not the prorated payment of the said
payments they made. It will be noted that there was benefits constitutes diminution of benefits under Article
nothing to prevent private respondents from cleaning 100 of the Labor Code.
the taxi units themselves, if they wanted to save their
P20.00.Car washing after a tour of duty is a practice in Held:
the taxi industry, and is, in fact, dictated by fair play.
On the first issue, according to petitioner, there is a
39. Arco Metal Products vs Salvador Uy one-year cutoff in the entitlement to the benefits
provided in the CBA, which is evident from the wording
Facts: of its pertinent provisions as well as of the existing law.
There is no doubt that in order to be entitled to the full
Petitioner is a company engaged in the manufacture of
monetization of sixteen (16) days of vacation and sick
metal products, whereas respondent is the labor union
leave, one must have rendered at least one year of
of petitioner's rank and file employees. Sometime in
service. The clear wording of the provisions does not
December 2003, petitioner paid the 13th month pay,
allow any other interpretation. Anent the 13th month
bonus, and leave encashment of three union members
pay and bonus, the CBA provisions did not give any
in amounts proportional to the service they actually
meaning different from that given by the law, thus it
rendered in a year, which is less than a full twelve (12)
should be computed at 1/12 of the total compensation,
months. Respondent protested the prorated scheme,
which an employee receives for the whole calendar
claiming that on several occasions petitioner did not
year. The bonus is also equivalent to the amount of the
prorate the payment of the same benefits to seven (7)
13th month pay given, or in proportion to the actual
employees who had not served for the full 12 months.
service rendered by an employee within the year.
According to respondent, the prorated payment violates
the rule against diminution of benefits under Article 100 On the second issue, it is a settled rule that any benefit
of the Labor Code. Thus, they filed a complaint before and supplement being enjoyed by employees cannot
the National Conciliation and Mediation Board (NCMB). be reduced, diminished, discontinued or eliminated by
The parties submitted the case for voluntary arbitration. the employer. The principle of non-diminution of
benefits is founded on the Constitutional mandate to

Case Digest – Valentine Morales Page 14


"protect the rights of workers and promote their

welfare," and "to afford labor full protection." Said
mandate in turn is the basis of Article 4 of the Labor
Code which states that "all doubts in the
implementation and interpretation of this Code,
including its implementing rules and regulations shall
be rendered in favor of labor."

In the years 1992, 1993, 1994, 1999, 2002 and 2003,

petitioner had adopted a policy of freely, voluntarily and
consistently granting full benefits to its employees
regardless of the length of service rendered.

Petitioner claims that its full payment of benefits

regardless of the length of service to the company does
not constitute voluntary employer practice. It points out
that the payments had been erroneously made and
they occurred in isolated cases in the years 1992,
1993, 1994, 1999, 2002 and 2003.

According to petitioner, it was only in 2003 that the

accounting department discovered the error. Petitioner
further argues that for a grant of a benefit to be
considered a practice, it should have been practiced
over a long period of time and must be shown to be
consistent, deliberate and intentional, which is not what
happened in this case. True, there were only a total of
seven employees who benefited from such a practice,
but it was an established practice nonetheless.
Jurisprudence has not laid down any rule specifying a
minimum number of years within which a company
practice must be exercised in order to constitute
voluntary company practice. Petitioner cannot shirk
away from its responsibility by merely claiming that it
was a mistake or an error, supported only by an
affidavit of its manufacturing group.

Hence, Petition denied.

Case Digest – Valentine Morales Page 15