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Antonio W.

delivery of softdrinks to the different outlets covered by

the driver/salesmen.
Iran v. NLRC
 As part of their compensation, the driver/salesmen and
(G.R. No. 121927 April 22, 1998) truck helpers of petitioner received commissions per
case of softdrinks sold at the following rates:

III. Labor Standards
A. Wages Ten Centavos (P0.10) per case of
4. Commissions Regular softdrinks.
PRINCIPLE: Twelve Centavos (P0.12) per case of
Family Size softdrinks.
Commissions are included in determining compliance with the
minimum wage requirement. TRUCK HELPERS:

Eight Centavos (P0.08) per case of Regular

FACTS: softdrinks.
Ten Centavos (P0.10) per case of Family Size
 Petitioner Antonio Iran is engaged in softdrinks softdrinks.
merchandising and distribution in Mandaue City, Cebu,
employing truck drivers who double as salesmen, truck  Sometime in June 1991, petitioner, while conducting an
helpers, and non-field personnel in pursuit thereof. audit of his operations, discovered cash shortages and
irregularities allegedly committed by private
 Petitioner hired private respondents Godofredo Petralba, respondents. Pending the investigation of irregularities
Moreno Cadalso, Celso Labiaga and Fernando Colina as and settlement of the cash shortages, petitioner required
drivers/salesmen while private respondents Pepito private respondents to report for work everyday. They
Tecson, Apolinario Gimena, Jesus Bandilao, Edwin were not allowed, however, to go on their respective
Martin and Diosdado Gonzalgo were hired as truck routes. A few days thereafter, despite aforesaid order,
helpers. private respondents stopped reporting for work,
prompting petitioner to conclude that the former had
 Drivers/salesmen drove petitioner’s delivery trucks and abandoned their employment. Consequently, petitioner
promoted, sold and delivered softdrinks to various
terminated their services. He also filed on November 7,
outlets in Mandaue City. The truck helpers assisted in the
1991, a complaint for estafa against private respondents.
 On the other hand, private respondents filed complaints Art. 97(f) Wage paid to any employee shall
against petitioner for illegal dismissal, illegal deduction, mean the remuneration or earnings, however
underpayment of wages, premium pay for holiday and designated, capable of being expressed in terms
rest day, holiday pay, service incentive leave pay, of money, whether fixed or ascertained on a
13th month pay, allowances, separation pay, recovery of time, task, piece, or commission basis, or other
cash bond, damages and attorney’s fees. method of calculating the same, which is
payable by an employer to an employee under a
 The labor arbiter found that petitioner had validly written or unwritten contract of employment for
terminated private respondents, there being just cause for work done or to be done, or for services
the latter’s dismissal. Nevertheless, he also ruled that rendered or to be rendered and includes the fair
petitioner had not complied with minimum wage and reasonable value, as determined by the
requirements in compensating private respondents, and Secretary of Labor, of board, lodging, or other
had failed to pay private respondents their 13th month facilities customarily furnished by the employer
pay. to the employee.
 The NLRC, in its decision of December 21, 1994,
affirmed the validity of private respondents dismissal,  While commissions are, indeed, incentives or forms of
but found that said dismissal did not comply with the encouragement to inspire employees to put a little
procedural requirements for dismissing more industry on the jobs particularly assigned to
employees. Furthermore, it corrected the labor arbiters them, still these commissions are direct
award of wage differentials to Jesus Bandilao. remunerations for services rendered. In fact,
commissions have been defined as the recompense,
compensation or reward of an agent, salesman,
ISSUE: executor, trustee, receiver, factor, broker or bailee,
when the same is calculated as a percentage on the
Whether or not commissions are included in amount of his transactions or on the profit to the
determining compliance with the minimum wage requirement. principal. The nature of the work of a salesman and
the reason for such type of remuneration for services
rendered demonstrate clearly that commissions are
RULING: part of a salesmans wage or salary.
Yes. The petition is impressed with merit.  Thus, the commissions earned by private respondents
in selling softdrinks constitute part of the
 Article 97(f) of the Labor Code defines wage as follows: compensation or remuneration paid to
drivers/salesmen and truck helpers for serving as
such, and hence, must be considered part of the wages G.R. No. 123938 May 21, 1998
paid them.
Labor Congress of the Philippines vs.
 Likewise, there is no law mandating that commissions be
paid only after the minimum wage has been paid to the NLRC
employee. Verily, the establishment of a minimum
wage only sets a floor below which an employees Ponente: J. Davide, Jr.
remuneration cannot fall, not that commissions are
excluded from wages in determining compliance with Doctrine:
the minimum wage law. Application of LC Article 286(n) in determination of status of
 WHEREFORE, in view of the foregoing, the decision piece workers as regular workers versus LC Article 86 definition
of the NLRC dated July 31, 1995, insofar as it excludes
the commissions received by private respondents in the Facts:
determination of petitioners compliance with the The 99 persons (Ana Marie Ocampo, Mary Intal, et al) as private
minimum wage law, as well as its exclusion of the petitioners in the proceeding (represented by the Labor Congress
particular amounts received by private respondents as of the Phils.) were rank-and-file employees of private
part of their 13th month pay is REVERSED and SET respondent Empire Food Products (a food and fruit processing
ASIDE. This case is REMANDED to the Labor Arbiter company), hired on various dates.
for a recomputation of the alleged deficiencies. For non-
observance of procedural due process in effecting the Ocampo et al filed against Empire an NLRC complaint for
dismissal of private respondents, said decision payment of money claims and for violation of labor standards
is MODIFIED by increasing the award of nominal laws. Alongside this they also filed a petition for direct
damages to private respondents from P1,000.00 to certification for the Labor Congress to be their bargaining
P5,000.00 each. No costs. representative. On Oct. 23, 1990, petitioners represented by
LCP, and private respondents Gonzalo and Evelyn Kehyeng
(Kehyeng spouses) entered into a Memorandum of Agreement,
recognizing the following:

 Status of LCP as sole and exclusive Bargaining Agent

and Representative for all rank and file employees of the
Empire Food Products regarding "wages, hours of work,
and other terms and conditions of employment";
 With regard to the NLRC complaint, all parties agree to
resolve the issues during the Collective Bargaining NLRC (Part 1):
Agreement;  Remanded case to Labor Arbiter for further proceedings
 Proper adjustment of wages, withdrawal of case from due to overlooking “…the testimonies of some of the
the Calendar of NLRC, non-interference or any ULP act, individual complainants which are now on record”.
Labor Arbiter (Part 2):
On Oct. 24, 1990, the Mediator Arbiter approved the  Complainants failed to present with definiteness and
memorandum and certified LCP as the sole and exclusive clarity the particular act or acts constitutive of unfair
bargaining agent for the rank-and-file employees of Empire. labor practice.
 Declaration of ULP connotes a finding of prima facie
On November 1990, LCP President Navarro submitted to evidence of probability that a criminal offense may have
Empire a proposal for collective bargaining. However, on been committed so as to warrant the filing of a criminal
January 1991, the private petitioners Ana Marie et al filed a information before the regular court.
complaint for:  As regards the issue of harassment, threats and
 Unfair Labor Practices via Illegal Lockout and interference with the rights of employees to self-
Dismissal; organization which is actually an ingredient of unfair
 Union-Busting through harassment, threats and labor practice, complainants failed to specify what type
interference to the right for self-organization; of threats or intimidation was committed and who
 Violation of the Oct. 23, 1990 memorandum committed the same.
 Underpayment of wages
 Actual, moral and exemplary damages NLRC (Part 2):
 Affirmed LA decision Part 2.
Labor Arbiter (Part 1):
 Absolved Empire for ULP, union busting, violation of Petitioners:
the memorandum of agreement, underpayment of wages  The fact that they are piece workers does not imply that
and denied petitioners' prayer for actual, moral and they are not regular employees entitled for reinstatement.
exemplary damages.  LA and NLRC decisions were not supported by
 Denied prayer for actual, moral and exemplary damages substantial evidence;
 Directed reinstatement of complainants, due to the fact  Abandonment of work was not proved by substantial
that Empire did not keep its payroll records as per evidence;
requirement of the DOLE. Admonition to Empire given  Much credit given to the Kehyeng spouses’ self-serving
as well re: further harassment and intimidation. arguments.
of a food processing company. With more reason would
Respondents: the job of food packers be necessary for the day-to-day
 Ana Marie, et al were piece workers hence they are operations of a food processing plant.
exempt from labor standards benefits b) Ana Marie et al worked throughout the year, with their
employment being independent from a specific project
Issues: or season.
1. [RELEVANT] WON the petitioners are entitled to labor c) The length of time that petitioners fulfilled the
standard benefits, considering their status as piece rate requirement of Article 286(n).
2. WON the actions of Ana Marie, et al constituted Therefore, the SC considered the employees as regular
abandonment of work. employees despite their status as piece workers, according them
benefits such as holiday pay, premium pay, 13th month pay and
Held: service incentive leave.
1. YES, petitioners are entitled to labor standards benefits,
namely, holiday pay, premium pay, 13th month pay and The Rules Implementing the Labor Code exclude certain
service incentive leave. employees from receiving benefits such as nighttime pay,
2. NO, failure to appear to work did not constitute holiday pay, service incentive leave and 13th month pay, inter
abandonment, alia, "field personnel and other employees whose time and
performance is unsupervised by the employer, including those
Ratio: who are engaged on task or contract basis, purely commission
Supreme Court decision cites that Ana Marie, et al, despite being basis, or those who are paid a fixed amount for performing work
“pakyao” or piece workers does not imply that they are not irrespective of the time consumed in the performance thereof."
regular employees entitled to reinstatement. Applying the two- However, petitioners as piece-rate workers do not fall within this
fold test from LC Article 286(n) [Art. 280 (old)], the SC found group. Not only did the employees labor under the control of
that the supposedly piece workers had three factors in their Empire, the employees also worked throughout the year to fulfil
favor: their quota as “basis for compensation”.
a) The nature of the tasks of Ana Marie, et al of repacking
snack food items was NECESSARY and DESIRABLE Further, in Section 8 (b), Rule IV, Book III, piece workers are
in the usual business of Empire Foods, which is a food specifically mentioned as being entitled to holiday pay.
and fruit processing company. According to Tabas vs
California Manufacturing, merchandisers of processed Sec. 8. Holiday pay of certain employees.
food who coordinates for sales of processed food was a (b) Where a covered employee is paid by results or
necessity and was desirable for the day-to-day operations output, such as payment on piece work, his holiday pay
shall not be less than his average daily earnings for the their output rates are in accordance with the standards
last seven (7) actual working days preceding the regular prescribed under Sec. 8, Rule VII, Book III, of these
holiday: Provided, however, that in no case shall the regulations, or where such rates have been fixed by the
holiday pay be less than the applicable statutory Secretary of Labor in accordance with the aforesaid
minimum wage rate. section, are not entitled to receive overtime pay.”

In addition, the Revised Guidelines on the Implementation of the In this case, Empire Foods did not allege that they
13th Month Pay Law, in view of the modifications to P.D. No. adhered
set forth
 Sec. 8, Rule
851 19 by Memorandum Order No. 28, clearly exclude the VII, Book III,
employer of piece rate workers from those exempted from nor
paying 13th month pay, to wit: 
Labor. Therefore, even though they are piece workers, they
are entitled to overtime pay
2. EXEMPTED EMPLOYERS - The following
employers are still not covered by P.D. No. 851: With regard to the issue of abandonment of work, the SC cited
d. Employers of those who are paid on the Office of Solicitor General’s observations:
purely commission, boundary or task basis, and In finding that petitioner employees abandoned their
those who are paid a fixed amount for performing work, the Labor Arbiter and the NLRC relied on the
specific work, irrespective of the time consumed testimony of Security Guard Rolando Cairo that on
in the performance thereof, except where the January 21, 1991, petitioners refused to work. As a result
workers are paid on piece-rate basis in which of their failure to work, the cheese curls ready for
case the employer shall grant the required 13th repacking on said date were spoiled…
month pay to such workers.
… The failure to work for one day, which resulted in the
However, the Revised Guidelines as well as the Rules and spoilage of cheese curls does not amount to
Regulations identify those workers who fall under the piece-rate abandonment of work. In fact two (2) days after the
category as those who are paid a standard amount for every piece reported abandonment of work or on January 23, 1991,
or unit of work produced that is more or less regularly replicated, petitioners filed a complaint for, among others, unfair
without regard to the time spent in producing the same. labor practice, illegal lockout and/or illegal dismissal.

They should also be paid for overtime pay, even though Sec. Furthermore, the SC stressed that the burden of proving the
2(e), Rule I, Book III of the Implementing Rules states that: existence of just cause for dismissing an employee, such as
“…workers who are paid by results including those who abandonment, rests on the employer. According to the SC,
are paid on piece-work, takay, pakiao, or task basis, if
Empire Foods failed to discharge this burden as basis for AUTHOR: TIGLAO
dismissing the employees.
Archilles Q: Why are the respondents
Manufacturing entitled to 13th month pay?
Also, the SC considered that, in terminating the employees for A: Even if you worked even just for
abandonment of work, Empire failed to serve to the employees Corporation v. a month during one calendar year,
a written notice of termination (as required by the Two-Notice NLRC you are entitled to 13th month pay.
rule and Section 2, Rule XIV, Book V of the Omnibus Rules),
[G.R. No. 107225 | 02
violating the employees’ right to security of tenure and the
June 1995]
constitutional right to due process.
TOPIC: 13th Month Pay
Made by: | PONENTE: J.
John Michael Vida Bellosillo
Although the reinstatement aspect of the decision is
immediately executory, it does not follow that it is self
executory. There must be a writ of execution issued in order
to allow the employer to exercise his option to merely
reinstate the employee in the payroll under Article 223 of the
Labor Code.
 Private respondents were employed by Archilles to work
in its steel factory. They receive a daily wage of Php 96.00.
 Within the steel factory, there is a bunkhouse where
employees, such as responents, may rest.
 In 1988, a mauling incident occurred involving a relative of
an employee. This resulted to Archilles ordering its
employees to desist from bringing their relatives into the
bunkhouse. Respondents ignored this directive.
 In May 1990, Archilles ordered the respondents to remove
their families from the bunkhouse. They complied;
however, respondents failed to report this to the
management, as required.
 Instead, they chose to absent themselves from work.  Archilles now prays for the Court to partially annul the
Hence, on 18 May 1990, they were terminated in violation decision insofar as the above quoted portion is concerned.
of the bunkhouse order.
 Respondents filed for illegal dismissal against Archilles. ISSUE(S):
 LA: In favor of respondents. Ordered their reinstatement 1. W/N a writ of execution is necessary despite pending
and payment of backwages and 13th month pay for 1990. appeal.
 NLRC: Respondents filed a motion for execution pending 2. W/N the award of 13th month pay was proper.
appeal. Petitioners opposed.
 NLRC ruled in favor of Archilles, stating that the dismissal HELD: In both cases, the ruling is on the affirmative.
was valid because of the violation of the bunkhouse order.
 IMPORTANT: While the NLRC ruled in favor of Archilles, RATIO:
the latter filed a motion for partial reconsideration insofar Although the reinstatement aspect of the decision is
as this part of the decision is concerned immediately executory, it does not follow that it is self-
“NLRC ordered ARCHILLES to pay private executory. There must be a writ of execution which may be
respondents their "withheld" salaries from 19 issued motu proprio or on motion of an interested party.
September 1991 when it filed its opposition to (Maranaw Hotel Resort Corporation v. NLRC)
the motion for issuance of a writ of execution
until the promulgation of the NLRC Decision It is important to note that the motions of private
(11 August 1992) on the ground that the order respondents for the issuance of a writ of execution were not
of reinstatement of the Labor Arbiter was acted upon by NLRC. It was not shown that respondent
immediately executory, even pending appeal. exerted efforts to have their motions resolved. They are
And since ARCHILLES in its opposition alleged deemed to have abandoned their motions for execution
that actual reinstatement was no longer pending appeal. They cannot now ask that the writ of
possible as it would affect the peace and order execution be issued since their dismissal was found to be for
situation in the steel factory, clearly, cause.
ARCHILLES had opted for payroll
reinstatement of private respondents. NLRC On the second issue, which refers to the propriety of the
also ordered ARCHILLES to pay their award of a 13th month pay, paragraph 6 of the Revised
proportionate 13th month pay for 1990 and Guidelines on the Implementation of the 13th Month Pay
P12,351.30 representing 10% of the total Law (P. D. 851) provides that "(a)n employee who has
judgment award of P123,513.00 as attorney's resigned or whose services were terminated at any time
fees” before the payment of the 13th month pay is entitled to this
monetary benefit in proportion to the length of time he at the option of the employer, merely reinstated in the
worked during the year, reckoned from the time he started payroll. The posting of the bond by the employer shall not
working during the calendar year up to the time of his stay the execution for reinstatement provided herein.
resignation or termination from the
service . . . The payment of the 13th month pay may be
demanded by the employee upon the cessation of
employer-employee relationship. This is consistent with the
principle of equity that as the employer can require the
employee to clear himself of all liabilities and property
accountability, so can the employee demand the payment
of all benefits due him upon the termination of the

Furthermore, Sec. 4 of the original Implementing Rules of

P.D. 851 mandates employers to pay their employees a 13th
month pay not later than the 24th of December every year
provided that they have worked for at least one (1) month
during a calendar year. In effect, this statutory benefit is
automatically vested in the employee who has at least
worked for one month during the calendar year. As correctly
stated by the Solicitor General, such benefit may not be lost
or forfeited even in the event of the employee's subsequent
dismissal for cause without violating his property rights.
Article 223(3), Labor Code:
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall be immediately
executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or,
Framanlis Farms, Inc., et. al. v. employer to pay all non-pakyaw workers their claim for holiday
and incentive leave pay for the years 1977, 1978, all 'pakyaw'
Hon. Minister of Labor, et. al. workers their pay differentials for the same period on days they
G.R. No. 72616-17 March 8, 1989 worked for at least eight (8) hours and earned below P8.06 daily,
and all complainants their 13th month pay for the years 1978 and
1979. The Deputy Minister clarified that pakyaw workers were
Case Doctrine: Productivity Standards
excluded from holiday and service incentive leave pay.
Minister did not err in requiring the petitioners to pay wage
differentials to their pakyaw workers who worked for at least
Issue: Whether awarding pay differentials, holiday and service
eight hours daily and earned less than P8.00 per day.
incentive leave for pakyaw workers who are not regular
employees but are merely paid on piece-rate, contrary to Art. 82
Under Section 3 of PD No. 851, such benefits in the form of food
of the Labor Code;
or free electricity, assuming they were given, were not a proper
substitute for the 13th month pay required by law. Neither may
Whether or not Framanlis Farm is required to pay 13th month
year-end rewards for loyalty and service be considered in lieu of
pay despite the fact that they had substantially complied with the
13th month pay.
requirement by extending yearly bonuses and other benefits in
kind and in cash to the complainants, pursuant to Section 3(c) of
Facts: Eighteen (18) employees of Framanlis Farms, Inc. filed
PD 851 which exempts the employer from paying 13th month
against their employer two labor standard cases alleging that in
pay when its equivalent has already been given;
1977 to 1979 they were not paid emergency cost of living
allowance (ECOLA) minimum wage, 13th month pay, holiday
pay, and service incentive leave pay.
In their answer, Framanlis Farms alleged that the employees
were not regular workers on their hacienda but were migratory
In 1976, PD No. 928 fixed a minimum wage of P7.00 for
(sacadas) or pakyaw workers who worked on-and-off and were
agricultural workers in any plantation or agricultural enterprise
hired seasonally, or only during the milling season, to do piece-
irrespective of whether or not the worker was paid on a piece-
work on the farms, hence, they were not entitled to the benefits
rate basis. However, effective July 1, 1978, the minimum wage
claimed by them.
was increased to P8.00 (Sec. 1, PD 1389). Subsequently, PD
1614 provided for a P2.00 increase in the daily wage of all
The Minister of Labor directed Framanlis Farms to pay the
workers effective April 1, 1979. The petitioners admit that those
deficiency payment of emergency living allowance and service
were the minimum rates prevailing then. Therefore, the
incentive leave pay, holiday pay and social amelioration bonus
respondent Minister did not err in requiring the petitioners to pay
for 3 years for 1977 to 1979. Upon the petitioners' appeal of that
wage differentials to their pakyaw workers who worked for at
Order, the Deputy Minister of Labor modified it by ordering the
least eight hours daily and earned less than P8.00 per day in 1978 provides for the prohibition against reduction or elimination of
to 1979. benefits or favorable practice being enjoyed by the employee.

With regard to the 13th month pay, petitioners admitted that they
failed to pay their workers 13th month pay in 1978 and 1979.
However, they argued that they substantially complied with the
law by giving their workers a yearly bonus and other non-
monetary benefits amounting to not less than 1/12th of their
basic salary, in the form of food and free electricity.

Unfortunately, under Section 3 of PD No. 851, such benefits in

the form of food or free electricity, assuming they were given,
were not a proper substitute for the 13th month pay required by
law. PD 851 provides:

Section 3. Employees covered — The Decree

shall apply to all employees except to:


The term 'its equivalent' as used in paragraph (c)

hereof shall include Christmas bonus, mid-year
bonus, profit-sharing payments and other cash
bonuses amounting to not less than 1/12 of the
basic salary but shall not include cash and stock
dividends, cost of living allowances and all other
allowances regularly enjoyed by the employee,
as well as non-monetary

Neither may year-end rewards for loyalty and service be

considered in lieu of 13th month pay. Section 10 of the Rules
and Regulations Implementing Presidential Decree No. 851
JPL MARKETING v. NLRC ET On 13 August 1996, JPL notified private respondents that
AL DIGEST CMC would stop its direct merchandising activity in the Bicol
Region, Isabela, and Cagayan Valley effective 15 August
1996. They were advised to wait for further notice as they
JPL MARKETING PROMOTIONS v. would be transferred to other clients. However, on 17 October
NATIONAL LABOR RELATIONS 1996, private respondents Abesa and Gonzales filed before the
COMMISSION, NOEL GONZALES, NLRC complaints for illegal dismissal, praying for separation
RAMON ABESA III and FAUSTINO pay, 13th month pay, service incentive leave pay and payment
ANINIPOT, for moral damages. Aninipot filed a similar case thereafter.

G.R. No. 151966/July 8, 2005/Tinga, J.:

It must be noted that private respondents were not given their
FACTS: JPL Marketing and Promotions (hereinafter referred 13th month pay and service incentive leave pay while they
to as “JPL”) is a domestic corporation engaged in the business were under the employ of JPL. Instead, JPL provided salaries
of recruitment and placement of workers. On the other hand, which were over and above the minimum wage.
private respondents Noel Gonzales, Ramon Abesa III and
Faustino Aninipot were employed by JPL as merchandisers on
separate dates and assigned at different establishments in Naga ISSUE: Whether or not the 13th month pay and service
City and Daet, Camarines Norte as attendants to the display of incentive leave pay should be computed from the start of
California Marketing Corporation (CMC), one of petitioner’s employment up to the finality of the NLRC resolution.
RULING: Service incentive leave, as provided in Art. 95 of dismissal in this case. Besides, it would be unfair to require
the Labor Code, is a yearly leave benefit of five (5) days with JPL to pay private respondents the said benefits beyond 15
pay, enjoyed by an employee who has rendered at least one August 1996 when they did not render any service to JPL
year of service. Unless specifically excepted, all beyond that date. These benefits are given by law on the basis
establishments are required to grant service incentive leave to of the service actually rendered by the employee, and in the
their employees. The term “at least one year of service” shall particular case of the service incentive leave, is granted as a
mean service within twelve (12) months, whether continuous or motivation for the employee to stay longer with the
broken reckoned from the date the employee started employer. There is no cause for granting said incentive to one
working. The Court has held in several instances that “service who has already terminated his relationship with the employer.
incentive leave is clearly demandable after one year of

While computation for the 13th month pay should properly

begin from the first day of employment, the service incentive
leave pay should start a year after commencement of
service, for it is only then that the employee is entitled to
said benefit. On the other hand, the computation for both
benefits should only be up to 15 August 1996, or the last day
that private respondents worked for JPL. To extend the period
to the date of finality of the NLRC resolution would negate the
absence of illegal dismissal, or to be more precise, the want of
EN BANC Labor, respondent Amado G. Inciong, on July 25, 1979,
reversed such order. He explicitly stated that the bonuses
[ GR No. 51254, Jun 11, 1981 ] under the collective bargaining agreement are "by their very
nature of a different character from the 13th month pay
ordained by the Decree." He went on to say: "Foremost to
consider and in point is, Section 10 of the Rules and
Regulations Implementing PD No. 851 which deals on
prohibition against reduction or elimination of the benefits
DECISION provided by the Decree. Said section provides as
192 Phil. 368 follows: 'Nothing herein shall be construed to authorize any
employer to eliminate, or diminish in any way, supplements, or
FERNANDO, C.J.: other employee benefits or favorable practice being enjoyed by
It is in pursuance of the constitutional principle of the the employee at the time of the promulgation of this issuance.'
enjoyment by the people of a decent standard of living[1] that a Both the mid-year and year-end bonuses are benefits being
Presidential Decree[2] was issued by way of response to the enjoyed by complainants at the time of the promulgation of PD
ravages of world-wide inflation, causing extreme difficulty to 851, hence, covered by the foregoing prohibition. In fact, said
laborers and wage-earners. It reads thus: "Section 1. All benefits were negotiated and re-incorporated in subsequent
employers are hereby required to pay all their employees collective bargaining agreement which gives them a character
receiving a basic salary of not more than P1,000 a month, separate and distinct from the 13th month pay. By reason of
regardless of the nature of their employment, a 13th-month pay the collective bargaining agreement, complainants acquired a
not later than December 24 of every year. Sec. 2. Employers vested right over such benefits on a mutual and contractual
already paying their employees a 13th-month pay or its understanding. Any subsequent grant of benefit, extended by
equivalent are not covered by this Decree Sec. 3. This Decree law, will not operate to disturb the existing agreement and to
shall take effect immediately."[3] Relying on the above Decree, construe otherwise will result to the prejudice of the
private respondent Marcopper Employees Labor Union filed a workers. If we must consider deeper the grant of the bonuses,
complaint before the National Labor Relations Commission for we will find that it is a voluntary gesture on the part of the
the payment of the 13th-month salary. Petitioner Marcopper respondent irrespective of the amount of salary of the
Mining Corporation opposed on the ground that in view of its employees and does not form part of their pay. It is likewise
then existing collective bargaining agreement adopted on conditional in that the same could be availed of only when
October 8, 1977 which granted the employees belonging to profit in business has been realized. Once profit is declared,
private respondent midyear and year-end bonuses, it was then bonuses must be automatically granted in the amount to be
exempt from the operation of such Decree. Its opposition determined by the company. On the other hand, the grant of
prevailed with a regional director, who, on March 29, 1979,
dismissed the complaint. On appeal, then Deputy Minister of
13th month pay to employees is mandatory, irrespective of loss required under said Decree. In other words, all employee
or profit by the company."[4] monetary benefits provided in the CBA are in addition to, and
may not be taken as substitute for, the employee benefits
Hence this petition. It was alleged that there was a grave abuse granted by law, otherwise there would be no reason for the
of discretion as under the term of the Decree, in relation to a execution of the CBA."[8]
section cited,[5] petitioner is excluded from its coverage and
that there was lack of jurisdiction of respondent Inciong. In the The petition must be dismissed. Such a conclusion is
answer of public respondents submitted by Solicitor General unavoidable in the light of the mandatory language of the
Estelito Mendoza,[6] the above contentions were characterized Presidential Decree, the conditional character of the contractual
as devoid of merit. Reference was made to the inability of obligation under the collective bargaining agreement, and on
petitioner to demonstrate that it clearly falls under the the construction that should be fastened on statutes or decrees
exempting clause of the above Decree, citing not only the intended to promote social and economic rights.
section of the implementing rules and regulations relied upon
by petitioner, but a later section which reads thus: "Nothing 1. The Decree is specific and mandatory. Employers,
herein shall be construed to authorize any employer to without exception, are required to pay their employees
eliminate or diminish in any way, supplements, or other receiving a basic salary of not more than P1,000 a month
employee benefits or favorable practice being enjoyed by the irrespective of the nature of employment, a 13th-month pay not
employee at the time of promulgation of this issuance."[7] The later than December 24 of every year. That is the plain and
answer discussed the matter further thus: "In the case at bar, specific command. That is an obligation imposed by law and
must be obeyed. Where the employers, however, actually grant
the payment of the mid-year and Christmas bonuses in those
such for the 13th-month pay, they could be exempted from the
years when petitioner's operation is profitable is a matter of
operation of the Decree. To fall within the exempting clause, it
contractual obligation on the part of the petitioner. It should be
must be shown that there is such actual payment. There is no
noted that the CBA clearly states that petitioner 'shall grant
such showing here. Instead, reliance of petitioner corporation
mid-year and end-year bonuses to employees following years
is on a clause in the existing bargaining contract which in its
in which it had profitable operations.' The only thing that is left
opinion amounts to the fulfillment of its duty under the
to the discretion of petitioner is the amount of such mid-year
Decree. The memorandum of Solicitor General Mendoza
and end-year bonuses; but there is no question that petitioner
makes clear why such a submission is unwarranted. Thus: "In
has to grant such bonuses. Since said bonuses
the case at bar, the payment of mid-year and Christmas bonuses
granted in fulfillment of petitioner's contractual obligations
in the years when petitioner's operation is profitable is a matter
under the CBA are employee benefits enjoyed by petitioner's
of contractual obligation on the part of the petitioner. The only
employees at the time PD 851 took effect and since the
thing that is left to the discretion of petitioner is the amount of
payment of such bonuses is obligatory on the part of petitioner,
such mid-year and end-year bonuses; but there is no question
the petitioner does not come under the exempting clause of PD
that petitioner has to grant such bonuses. Since said bonuses
851 and it has to pay its employees the 13th month pay
granted in fulfillment of petitioner's contractual obligations bonuses and benefits are not part of wages but merely
under the CBA are employee benefits enjoyed by petitioner's supplements or fringe benefits."[10] On the authority of Atok-
employees at the time PD No. 851 took effect and since the Big Wedge Association v. Atok-Big Wedge Co.[11] it is
payment of such bonuses is obligatory on the part of the contended, and correctly, by the Solicitor General that clearly
petitioner, then the petitioner does not come under the "the bonuses and other benefits granted to the employees by the
exempting clause of PD No. 851 and it has to pay its petitioner under the current CBA are 'supplements' and do not
employees the 13th month pay required under said Decree. On form part of wages."[12]
the other hand, if the company earns no profit in a particular
year, then it is not obligated, under the CBA, to grant bonuses 2. There is no vagueness in the Decree. At the most, there
to its employees. If it grants bonuses notwithstanding the fact could be ambiguity by the use of the word "equivalent" in
that it is not in profitable operation, the grant thereof is a purely Section 2 thereof. If it were a 13th-month pay, then obviously
voluntary gesture on the part of the company, and the company petitioner is entitled to be exempted. Thus it is understandable
is then entitled to credit the same as the 13th month salary why it made much of Section 3 of the implementing rules and
under the Decree. In other words, all employee monetary regulations, referring, as already noted, to a Christmas bonus as
benefits provided in the CBA are in addition to, and may not be well as a mid-year bonus. That would be, though, as was
taken as substitute for, the employee benefits granted by law, pointed out by the Solicitor General, to ignore an even clearer
otherwise there would be no reason for the execution of the provision in the implementing rules, namely Section 10
CBA."[9] The Solicitor General then went on to state that a thereof. Thus: "Nothing herein shall be construed to authorize
bonus under the collective bargaining agreement and the 13th- any employer to eliminate or diminish in any way,
month pay are of different category. For while the former is an supplements, or other employee benefits or favorable practice
obligation created by contract, the other is created by law; being enjoyed by the employee at the time of promulgation of
while the former is contractual in character, only if there are this issuance."[13] The purpose that animated the Decree is thus
profits, the latter is absolute and mandatory on the part of the rendered even clearer. It was issued in the expectation that
employer; while the former benefits only those earning P1,000 "whatever employee benefits or favorable practice being
or less a month, the latter applies to all rank and file enjoyed by the employee" when it was promulgated should not
workers. It is clear, therefore, that a 13th-month pay is in the be eliminated or diminished. If it were otherwise, it would lose
nature of wages while the bonuses provided for are mere its character as a measure intended to cope with the problems
supplements or fringe benefits. Further the memorandum that the low salaried employees face in view of the inflationary
continues: "The 13th month pay is, by its nature and purpose, state of the economy. The situation, instead of improving, has
part of wages, considering the express recitals in PD No. 851 grown worse the past six years, the Decree being issued in
that 'it is necessary to protect the level of real wages from the 1975. It would be, therefore, to defeat the purpose of the
ravage of world-wide inflation' and 'there has been no increase Decree if the contention urged by petitioner would be
in the legal minimum wage rates since 1970' * * * CBA sustained.
3. The conclusion reached by the Court receives an even more involved, this Court in Alfanta v. Noe,[20] through Justice
compelling justification from the Constitution. The 1935 Antonio, stated: "In the environment of a new social order We
Constitution enshrined the concepts of social justice[14] and can do no less. Thus, under the new Constitution, property
protection to labor.[15] Even then, there was a realization of ownership has been impressed with a social function. This
their importance in vitalizing a regime of liberty not just as implies that the owner has the obligation to use his property not
immunity from governmental restraint but as the assumption by only to benefit himself but society as well. Hence, it provides
the State of an obligation to assure a life of dignity for all, under Section 6 of Article II thereof, that in the promotion of
especially the poor and the needy. The expanded social social justice, the State 'shall regulate the acquisition,
justice[16] and protection to labor provisions[17] of the present ownership, use, enjoyment, and disposition of private property,
Constitution lend added emphasis to the concern for social and and equitably diffuse property ownership and profits.' The
economic rights. The memorandum of the Solicitor General Constitution also ensures that the worker shall have a just and
quoted this excerpt from La Mallorca v. Workmen's living wage which should assure for himself and his
Compensation Commission:[18] "A decisive consideration, family an existence worthy of human dignity and give him
much more compelling in character,precludes acceptance of the opportunities for a better life."[21] Such a sentiment finds
view now pressed by petitioner. Time and time again, we have expression in subsequent opinions.[22]
stressed that statutes intended to benefit labor should be
accorded the most hospitable scope to attain their dominant 4. The second point raised in the petition is the allegation that
purpose. Thereby fidelity is manifested to the constitutional respondent Deputy Minister was without jurisdiction. This
policy embodied in the principle of social justice and the contention on its face clearly lacks support in law. As far back
mandate of protection to labor. They cannot be made to yield a as Philippine American Management & Financing Co., Inc. v.
meaning that would emasculate their terms or allow Management & Supervisors Association of the Philippine-
evasion. To do so could even give rise to serious constitutional American Management & Financing Co., Inc.,[23] decided in
questions, for the legislative body would then be deemed to 1972, this Court left no doubt as to the labor tribunal, then the
have enacted measures which, rather than translate into reality Court of Industrial Relations, being vested with competence to
such worthy constitutional objective, would frustrate it. Such pass upon a declaratory relief petition for the interpretation of a
an approach certainly cannot find any favor with courts, if the collective bargaining agreement, not a Court of First
oft-repeated doctrine that no interpretation is allowable that Instance. There is no justification for a departure from the
would bring doubts as to the validity of any statutory provision principle which was announced in the light of a careful study of
for repugnancy to the fundamental law were to be, as it should previous decisions and precisely enunciated to settle all doubts
be, respected."[19]That was so under the 1935 on the matter.[24] The allegation that this is a money claim
Constitution. Such an approach is even more valid now. As a falsifies reality. What is involved here and what persuaded this
matter of fact, in the first case after the applicability of the Court to give due course to this petition is that a serious
1973 Constitution where social and economic rights were question of the applicability of Presidential Decree No. 851
was raised in the light of the stipulation in the collective
bargaining contract between petitioner and respondent union as PHIMCO INDUSTRIES,
to the mid-year and Christmas bonus.
WHEREFORE, the petition is dismissed for lack of merit. No
G.R. No. 120751 March 17, 1999

FACTS: On March 9, 1995, the private respondent, Phimco

Industries Labor Association (PILA), duly certified collective
bargaining representative of the daily paid workers of the
petitioner PHIMCO filed a notice of strike with the NCMB
against PHIMCO, a corporation engaged in the production of
matches, after a deadlock in the collective bargaining and
negotiation. Parties failed to resolve their differences PILA
(during the conciliation conferences), composed of
352 members, staged a strike.

PHIMCO sent notice of termination to some 47 workers

including several union officers.

Secretary Brillantes assumed jurisdiction over the labor

dispute; issued a return-to-work order.

Hence, petitioner files this petition.

ISSUE: whether or not the public respondent acted with grave While the case at bar appears on its face not to fall within the
abuse of discretion amounting to lack or excess of jurisdiction strict categorization of cases imbued with “national interest”,
in assuming jurisdiction over subject labor dispute. this office believes that the obtaining circumstances warrant the
exercise of the powers under Article 263 (g) of the Labor Code,
as amended. 12
HELD: YES, the petition is impressed with merit.
The private respondent did not even make any effort to
touch on the indispensability of the match factory to the
Art. 263, paragraph (g) of the Labor Code, provides: national interest. It must have been aware that a match
factory, though of value, can scarcely be considered as an
(g) When, in his opinion, there exist a labor dispute causing or industry “indispensable to the national interest” as it cannot
likely to cause a strike or lockout in an industry indispensable be in the same category as “generation and distribution of
to the national interest, the Secretary of Labor and Employment energy, or those undertaken by banks, hospitals, and export-
may assume jurisdiction over the dispute and decide it or oriented industries.” 13 Yet, the public respondent assumed
certify the same to the Commission for compulsory arbitration . jurisdiction thereover.
.. To uphold the action of the public respondent under the
premises would be stretching too far the power of the Secretary
of Labor as every case of a strike or lockout where there are
The Labor Code vests in the Secretary of Labor the discretion inconveniences in the community, or work disruptions in an
to determine what industries are indispensable to the national industry though not indispensable to the national interest,
interest. Accordingly, upon the determination by the Secretary would then come within the Secretary’s power. It would be
of Labor that such industry is indispensable to the national practically allowing the Secretary of Labor to intervene in
interest, he will assume jurisdiction over the labor dispute in any Labor dispute at his pleasure.
the said industry. 8 This power, however, is not without any
It stressed in the case of Free telephone Workers Union This is precisely why the law sets and defines the standard:
vs. Honorable Minister of Labor and Employment, et al., 10 the even in the exercise of his power of compulsory arbitration
limitation set by the legislature on the power of the Secretary of under Article 263 (g) of the Labor Code, the Secretary must
Labor to assume jurisdiction over a labor dispute, thus: follow the law.
xxx cannot be any clearer, the coverage being limited to
“strikes or lockouts adversely affecting the national interest. 11 PETITION GRANTED.
In this case at bar, however, the very admission by the public
respondent draws the labor dispute in question out of the ambit
From Atty. Bayani^^
of the Secretary’s prerogative, to wit.