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271 SCRA 670 – Labor Law – Labor Standards – Wages – Facilities vs Supplements
Norma Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991, an inspection
was made by the Department of Labor and Employment (DOLE) at Hotel Supreme and the
DOLE inspectors discovered several violations by the hotel management. Immediately, the
owner of the hotel, Peter Ng, directed his employees to execute an affidavit which would purport
that they have no complaints whatsoever against Hotel Supreme. But Mabeza refused to certify
said affidavit with the fiscal’s office so this led to her dismissal. She sued Peter Ng and one of
her complaints against him is underpayment because her wage was less than the minimum wage.
Peter Ng argued that the reason for such low payment was because she was being given free
lodging, water, electricity, and water consumption by the hotel.
ISSUE: Whether or not such amenities provided by the hotel be considered as facilities which
are deductible from Mabeza’s wage.
HELD: No. There are requisites before such can be done and they are:

1. Proof must be shown that such facilities are customarily furnished by the trade.
2. The provision of deductible facilities must be voluntarily accepted in writing by the employee.
3. Facilities must be charged at fair and reasonable value.

None of these were complied with in the case at bar. More significantly, the food and lodging, or
the electricity and water consumed by Mabeza were not facilities but supplements. A benefit or
privilege granted to an employee for the convenience of the employer is not a facility. The
criterion in making a distinction between the two not so much lies in the kind (food, lodging) but
the purpose. Considering, therefore, that hotel workers are required to work different shifts and
are expected to be available at various odd hours, their ready availability is a necessary matter in
the operations of a small hotel, such as Hotel Supreme.


Davao Fruits Corporation vs Associated Labor Unions, G.R. No. 85073, August 24, 1993; 225
SCRA 562
(Labor Standards – Fringe benefits not included in 13th month pay)
Facts: Respondent ALU for and in behalf of all the rank-and-file workers and employees of
petitioner sought to recover from the latter the 13th month pay differential for 1982 of said
employees, equivalent to their sick, vacation and maternity leaves, premium for work done on
rest days and special holidays, and pay for regular holidays which petitioner, allegedly in
disregard of company practice since 1975, excluded from the computation of the 13th month pay
for 1982.
Issue: WON in the computation of the 13th month pay under PD No. 851, payments for sick,
vacation and maternity leaves, premiums for work done on rest days and special holidays, and
pay for regular holidays may be excluded in the computation and payment thereof.
Held: Yes. Basic salary does not merely exclude the benefits expressly mentioned but all
payments which may be in the form of fringe benefits or allowances.
Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851 provides that
“overtime pay, earnings and other remunerations which are not part of the basic salary shall not
be included in the computation of the 13th month pay.
Whatever compensation an employee receives for an 8 hour work daily or the daily wage rate is
the basic salary. Any compensation or remuneration other than the daily wage rate is excluded. It
follows therefore, that payments for sick, vacation and maternity leaves, premiums for work
done on rest days and special holidays, as well as pay for regular holidays, are likewise excluded
in computing the basic salary for the purpose of determining the 13th month pay.


Producers Bank of the Philippines vs. NLRC Case Digest

Producers Bank of the Philippines vs. NLRC

355 SCRA 506

Facts: Petitioner was placed by Central Bank of the Philippines (Bangko Sentral ng Pilipinas)
under a conservator for the purpose of protecting its assets. When the respondents ought to
implement the CBA (Sec. 1, Art. 11) regarding the retirement plan and pertaining to uniform
allowance, the acting conservator of the petition expressed objection resulting an impasse
between the petitioner bank and respondent union. The deadlock continued for at least six
months. The private respondent, to resolve the issue filed a case against petitioner for unfair
labor practice and flagrant violation of the CBA.

The Labor Arbiter dismissed the petition. NLRC reversed the findings and ordered the
implementation of the CBA.

Issue: Whether or not the employees who have retired have no personality to file an action since
there is no longer an employer-employee relationship.

Ruling: The Court rules that employees who have retired still have the personality to file a

Retirement results from a voluntary agreement between the employer and the employee whereby
the latter after reaching a certain age agrees to sever his employment with the former. The very
essence of retirement is the termination of employer-employee relationship.
Retirement of the employee does not in itself affect his employment status especially when it
involves all rights and benefits due to him, since these must be protected as though there had
been no interruption of service. It must be borne in mind that the retirement scheme was part of
the employment package and the benefits to be derived therefrom constituted as it were a
continuing consideration of services rendered as well as an effective inducement foe remaining
with the corporation. It is intended to help the employee enjoy the remaining years of his life.

When the retired employees were requesting that their retirement benefits be granted, they were
not pleading for generosity but merely demanding that their rights, embodied in the CBA, be
recognized. When an employee has retired but his benefits under the law or CBA have not yet
been given, he still retains, for the purpose of prosecuting his claims, the status of an employee
entitled to the protection of the Labor Code, one of which is the protection of the labor union.

Producer’s Bank of the Philippines v. NLRC [GR 100701, March 28, 2001]
Wednesday, January 28, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Labor Law

An employer cannot be forced to distribute bonuses which it can no longer afford to pay, a bonus
is an amount granted and paid to an employee for his industry and loyalty which contributed to
the success of the employers business and made possible the realization of profile. It is an act
ofgenerosity and is a management prerogative, given in addition to what is ordinarily received by
or strictly due the recipient. Thus, it is not a demandable and enforceable obligation, except when
it is made part of the wage, salary or compensation of the employee.

The conservator was justified in reducing the mid-year and Christmas bonuses of
petitioner’s employees. Ultimately, it is to the employee’s advantage that the conservatorship
achieve its purposes otherwise, the closure of the company would result in the employees losing
their jobs.

PD 851 requires all employees to pay their employees a basic salary of not more than P1, 000 at
13th monthly pay. However, employees already paying their employees a 13th month pay are not
covered by the law. The term “equivalent” shall be constructed to include Christmas bonus, mid
year bonus, cash bonuses and other payments amounting to not less than 1 /12 of the basic
salary. The intention was to grant relief to those not actually paid a bonus, by whatever name
called. Thus, petitioner is justified in crediting the mid year bonus and Christmas bones as part of
the 13th month pay.
The divisor used by petitioner in arriving at the employee’s daily rate for the purpose of
computing salary related benefits is 314 days. This finding was not disputed by the NLRC.
However, the divisor was for the solepurpose of increasing the employee’s overtime pay and was
not meant to replace the use of 314 as the divisor in the computation of the daily rate for salary –
related benefits.



G.R. No. 100701 March 28, 2001


FACTS: The present petition originated from a complaint filed by private respondent on 11
February 1988 with the Arbitration Branch, NLRC, charging petitioner with diminution of
benefits, non-compliance with Wage Order No. 6 and non-payment of holiday pay. In addition,
private respondent prayed for damages.
Labor arbiter dismissed the complaint for lack of merit. NLRC, however, granted all of private
respondent’s claims, except for damages. Petition filed a Motion for Partial Reconsideration,
which was denied by the NLRC. Hence, recourse to this Court.
Petitioner contends: that the NLRC gravely abused its discretion in ruling as it did for the
succeeding reasons stated: (1) it contravened the Supreme Court decision in Traders Royal Bank
v. NLRC, et al., G.R. No. 88168, promulgated on August 30, 1990, (2) its ruling is not justified
by law and Art. 100 of the Labor Code, (3) its ruling is contrary to the CBA, and (4) the so-
called “company practice invoked by it has no legal and moral bases” (4) petitioner,
under conservatorship and distressed, is exempted under Wage Order No. 6.

ISSUE: WON respondent is entitled for the payment of the above-mentioned monetary claims,
particularly BONUS.[Hindi ko na po sinama ung ibang issues]
HELD: As to the bonuses, private respondent declared in its position papers filed with the
NLRC that –

1. Producers Bank of the Philippines, a banking institution, has been providing several benefits
to its employees since 1971 when it started its operation. Among the benefits it had been
regularly giving is a mid-year bonus equivalent to an employee’s one-month basic pay and a
Christmas bonus equivalent to an employee’s one whole month salary (basic pay plus
2. When P.D. 851, the law granting a 13thmonth pay, took effect, the basic pay previously being
given as part of the Christmas bonus was applied as compliance to it (P.D. 851), the
allowances remained as Christmas bonus;
3. From 1981 up to 1983, the bank continued giving one month basic pay as mid-year bonus,
one month basic pay as 13thmonth pay but the Christmas bonus was no longer based on the
allowance but on the basic pay of the employees which is higher;
4. In the early part of 1984, the bank was placed under conservatorship but it still provided the
traditional mid-year bonus;
5. By virtue of an alleged Monetary Board Resolution No. 1566, bank only gave a one-half (1/2)
month basic pay as compliance of the 13thmonth pay and none for the Christmas bonus.
Respondent’s Contention: that the mid-year and Christmas bonuses, by reason of their having
been given for thirteen consecutive years, have ripened into a vested right and, as such, can no
longer be unilaterally withdrawn by petitioner without violating Article 100 of Presidential
Decree No. 4429 which prohibits the diminution or elimination of benefits already being enjoyed
by the employees. Although private respondent concedes that the grant of a bonus is
discretionary on the part of the employer, it argues that, by reason of its long and regular
concession, it may become part of the employee’s regular compensation.
Petitioner asserts: that it cannot be compelled to pay the alleged bonus differentials due to its
depressed financial condition, as evidenced by the fact that in 1984 it was placed under
conservatorship by the Monetary Board. According to petitioner, it sustained losses in the
millions of pesos from 1984 to 1988, an assertion which was affirmed by the labor arbiter.
Moreover, petitioner points out that the collective bargaining agreement of the parties does not
provide for the payment of any mid-year or Christmas bonus. On the contrary, section 4 of the
collective bargaining agreement states that –
Acts of Grace. Any other benefits or privileges which are not expressly provided in this
Agreement, even if now accorded or hereafter accorded to the employees, shall be deemed
purely acts of grace dependent upon the sole judgment and discretion of the BANK to grant,
modify or withdraw.
A bonus is an amount granted and paid to an employee for his industry and loyalty which
contributed to the success of the employer’s business and made possible the realization of
profits. It is an act of generosity granted by an enlightened employer to spur the employee to
greater efforts for the success of the business and realization of bigger profits.12 The granting
of a bonus is a management prerogative, something given in addition to what is ordinarily
received by or strictly due the recipient.13 Thus, a bonus is not a demandable and
enforceable obligation,14 except when it is made part of the wage, salary or compensation
of the employee.15
However, an employer cannot be forced to distribute bonuses which it can no longer afford
to pay. To hold otherwise would be to penalize the employer for his past generosity. Thus,
in Traders Royal Bank v. NLRC,16 we held that –
It is clear x x x that the petitioner may not be obliged to pay bonuses to its employees. The
matter of giving them bonuses over and above their lawful salaries and allowances is entirely
dependent on the profits, if any, realized by the Bank from its operations during the past year.
In light of these submissions of the petitioner, the contention of the Union that the granting of
bonuses to the employees had ripened into a company practice that may not be adjusted to the
prevailing financial condition of the Bank has no legal and moral bases. Its fiscal condition
having declined, the Bank may not be forced to distribute bonuses which it can no longer afford
to pay and, in effect, be penalized for its past generosity to its employees. –
Private respondent’s contention, that the decrease in the mid-year and year-end bonuses
constituted a diminution of the employees’ salaries, is not correct, for bonuses are not part of
labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave
benefits, which are provided by the Labor Code.
This doctrine was reiterated in the more recent case of Manila Banking Corporation v. NLR1
Petitioner was not only experiencing a decline in its profits, but was reeling from
tremendous losses triggered by a bank-run which began in 1983. In such a depressed
financial condition, petitioner cannot be legally compelled to continue paying the same
amount of bonuses to its employees. Thus, the conservator was justified in reducing the
mid-year and Christmas bonuses of petitioner’s employees. To hold otherwise would be to
defeat the reason for the conservatorship which is to preserve the assets and restore the
viability of the financially precarious bank. Ultimately, it is to the employees’ advantage
that the conservatorship achieve its purposes for the alternative would be petitioner’s
closure whereby employees would lose not only their benefits, but their jobs as well.


Vinoya v. NLRC [G.R. No. 126596, February 2, 2000]

Tuesday, January 27, 2009 Posted by Coffeeholic Writes
Labels: Case Digests, Labor Law

FACTS: Petitioner Vinoya was hired by RFC as sales representative. He avers that he was
transferred by RFC to PMCI, an agency which provides RFC with additional contractual
workers. In PMCI, he was reassigned to RFC as sales representative and then later informed by
the personnel manager of RFC that his services were terminated. RFCmaintains that no
employer-employee relationship existed between petitioner and itself. Petitioner
filed complaint for illegal dismissal. RFC alleges that PMCI is an independent contractor as the
latter is a highly capitalized venture.

ISSUE: Whether or not petitioner was an employee of RFC and thereby, illegally dismissed.

HELD: Yes. PMCI was a labor-only contractor. Although the Neridoctrine stated that it was
enough that a contractor had substantial capital to show it was an independent contractor, the
case of Fuji Xerox clarified the doctrine stating that an independent business must undertake the
performance of the contract according to its own manner and method free from the control of the
principal. In this case, PMCI did not even have substantial capitalization as only a small amount
of its authorized capital stock was actually paid-in. Also, PMCI did not carry on an independent
business or undertake the performance of its contract according to its own manner and method.
Furthermore, PMCI was not engaged to perform a specific and special job or service, which is
one of the strong indicatorsthat is an independent contractor. Lastly, in labor-only contracting,
theemployees supplied by the contractor perform activities, which are directly related to the main
business of its principal. It is clear that in this case, the work of petitioner as sales representative
was directly related to the business of RFC. Since due to petitioner’s length of service, he
attained the status of regular employee thus cannot be terminated without just or valid cause.
RFC failed to prove that his dismissal was for cause and that he was afforded procedural due
process. Petitioner is thus entitled to reinstatement plus full backwages from his dismissal up to
actual reinstatement.