Cases Labor Law

Labor Standards: Case Digest (MIDTERM) Atty. Valerie Gayle J.
Patac
AY 2019 – 2020 UV-Gullas Law School
They work 10 hours for the first shift and 10

to 14 hours for the second shift, from
IV. WAGE AND WAGE Mondays to Fridays and on Saturdays, 8
RATIONALIZATION hours for both shifts. The refusal of the
workers to work more than 8-hours caused
substantial losses to the company. This led
SMC to file a complaint before NLRC against
1. Ilaw at Buklod ng Manggagawa vs. the Union. It sought to declare the strike or
NLRC slowdown illegal and to terminate the
G.R. No. 91980; June 27, 1991 employment of the union officers and shop
FACTS: stewards.
The controversy at bar had its origin in the ISSUE:
“wage distortions” affecting the employees of Whether or not the partial or limited strike,
respondent San Miguel Corporation with the purpose of correction of the wage
allegedly caused by RA 6727, otherwise distortion, of the Union is valid?
known as Wage Rationalization Act.
RULING:
Upon the effectivity of the said Act, the union
known as Ilaw at Buklod ng Mangagawa— SC ruled that the concerted activity of the
said to represent more or less 4, 500 Union is illegal.
employees of San Miguel Corporation who The partial strike or concerted refusal by the
are working at various plants, offices and Union members to follow the five-year-old
warehouses located at the National Capital work schedule which they had therefore
Region—presented to the Company a been observing, resorted to as a means of
“demand” for the correction of the “significant coercing correction of "wage distortions,"
distortion in the worker’s wages”. In that was therefore forbidden by law and contract
“demand”, the Union invoked Section 4(d) of and, on this account, illegal.
RA 6727. The provision provided that should
there be any dispute regarding wage Awareness by the Union of the proscribed
distortions, shall first be settled “voluntarily character of its members' collective activities,
between the parties and in the event of a is clearly connoted by its attempt to justify
deadlock, the same shall be finally resolved those activities as a means of protesting and
through compulsory arbitration such disputes obtaining redress against said members
by the regional branches of the NLRC having working overtime every day from Monday to
jurisdiction over the workplace”. But the “ Friday (on an average of 12 hours), and
demand” according to the Union has been every Saturday (on 8 hour shifts), rather than
ignored by the company. The Union averred as a measure to bring about rectification of
that the company offered a measly across- the wage distortions caused by RA 6727 —
the board wage increase of P7.00 per day, which was the real cause of its differences
per employee, as against the proposal of the with SMC. By concealing the real cause of
Union of P25.00 per day, per employee. their dispute with management (alleged
Later, the Union reduced its proposal to failure of correction of wage distortion), and
P15.00 per day, per employee by way of trying to make it appear that the controversy
amicable settlement. When the company involved application of the eight-hour labor
rejected the reduced proposal of the Union law, they obviously hoped to remove their
the members thereof in their own accord, the case from the operation of the rules
workers refused to render overtime services, implementing RA 6727 that "Any issue
most especially at the Beer Bottling Plans at involving wage distortion shall not be a
Polo. The work schedule of the workers ground for a strike/lockout." The stratagem
constitutes a built-in automatic overtime. cannot succeed.
Compiled by Jerald Oliver Macabaya (JD-4) Page | 1

Labor Standards: Case Digest (MIDTERM) Atty. Valerie Gayle J. Patac
In view of the foregoing factual and legal wage order. NWPC referred it to RTWPB.
considerations, it leads to the basic RTWPB in return clarified that
conclusion that the concerted acts of the establishments in Region 2 are covered by
members of petitioner Union in question are the wage order. Petitioner filed a petition with
violative of the law and their formal the CA and denied the petition.
agreement with the employer.
ISSUE:
Whether or not the wage order is void thus it
has no legal effect and the RTWPB acted in
2. Employers Confederation of the Phils. excess of its jurisdiction.
vs. NWPC RULING:
G.R. No. 96169; September 24, 1991
FACTS: SC finds that Section 1, Wage Order No.
R02-03 is void insofar as it grants a wage
On October 17, 1995, the Regional Tripartite increase to employees earning more than the
Wages and Productivity Board, Region II, minimum wage rate; and pursuant to the
Tuguegarao, Cagayan (RTWPB), by virtue of separability clause of the Wage Order,
Republic Act No. 6727 (R.A. No. 6727), Section 1 is declared valid with respect to
otherwise known as the Wage employees earning the prevailing minimum
Rationalization Act, issued Wage Order No. wage rate.
R02-03 (Wage Order), as follows: Section 1.
Upon effectivity of this Wage Order, all The powers of NWPC are enumerated in
employees/workers in the private sector ART. 121. Powers and Functions of the
throughout Region II, regardless of the status Commission. - The Commission shall have
of employment are granted an across-the- the following powers and functions: (d) To
board increase of P15.00 daily. review regional wage levels set by the
Regional Tripartite Wages and Productivity
The Wage Order was published in a Boards to determine if these are in
newspaper of general circulation on accordance with prescribed guidelines and
December 2, 1995 and took effect on national development plans; (f) To review
January 1, 1996. Its Implementing Rules plans and programs of the Regional Tripartite
were approved on February 14, 1996. Per Wages and Productivity Boards to determine
Section 13 of the Wage Order, any party whether these are consistent with national
aggrieved by the Wage Order may file an development plans; (g) To exercise technical
appeal with the National Wages and and administrative supervision over the
Productivity Commission (NWPC) through Regional Tripartite Wages and Productivity
the RTWPB within 10 calendar days from the Boards.
publication of the Wage Order.
R.A. No. 6727 declared it a policy of the State
Banker’s Council in a letter inquiry to NWPC to rationalize the fixing of minimum wages
requested for ruling to seek exemption from and to promote productivity-improvement
coverage of the wage order since the and gain-sharing measures to ensure a
members bank are paying more than the decent standard of living for the workers and
regular wage. NWPC replied that the their families; to guarantee the rights of labor
member banks are covered by the wage to its just share in the fruits of production; to
order and does not fall with the exemptible enhance employment generation in the
categories. countryside through industrial dispersal; and
to allow business and industry reasonable
In another letter inquiry, Metrobank asked for
returns on investment, expansion and
the interpretation of the applicability of the
growth.

In line with its declared policy, R.A. No. 6727

created the NWPC, vested with the power to
3. Mabeza vs. NLRC
prescribe rules and guidelines for the
determination of appropriate minimum wage G.R. No. 118506; April 18, 1997
and productivity measures at the regional, FACTS:
provincial or industry levels; and authorized
the RTWPB to determine and fix the Petitioner Norma Mabeza contends that on
minimum wage rates applicable in their the first week of May 1991, she and her co-
respective regions, provinces, or industries employees at the Hotel Supreme in Baguio
therein and issue the corresponding wage City were asked by the hotel's management
orders, subject to the guidelines issued by to sign an instrument attesting to the latter's
the NWPC. Pursuant to its wage fixing compliance with minimum wage and other
authority, the RTWPB may issue wage labor standard provisions of law. Petitioner
orders which set the daily minimum wage signed the affidavit but refused to go to the
rates, based on the standards or criteria set City Prosecutor's Office to swear to the
by Article 124 of the Labor Code. veracity and contents of the affidavit as
instructed by management. The affidavit was
The Court declared that there are two ways nevertheless submitted on the same day to
of fixing the minimum wage: the "floor-wage" the Regional Office of the Department of
method and the "salary-ceiling" method. The Labor and Employment in Baguio City.
"floor-wage" method involves the fixing of a
determinate amount to be added to the The affidavit was drawn by management for
prevailing statutory minimum wage rates. On the sole purpose of refuting findings of the
the other hand, in the "salary-ceiling" Labor Inspector of DOLE apparently adverse
method, the wage adjustment was to be to the private respondent. After she refused
applied to employees receiving a certain to proceed to the City Prosecutor's Office,
denominated salary ceiling. In other words, petitioner states that she was ordered by the
workers already being paid more than the hotel management to turn over the keys to
existing minimum wage (up to a certain her living quarters and to remove her
amount stated in the Wage Order) are also to belongings from the hotel premises.
be given a wage increase. According to her, respondent strongly chided
her for refusing to proceed to the City
In the present case, the RTWPB did not Prosecutor's Office to attest to the affidavit.
determine or fix the minimum wage rate by She thereafter reluctantly filed a leave of
the "floor-wage method" or the "salary-ceiling absence from her job which was denied by
method" in issuing the Wage Order. The management. When she attempted to return
RTWPB did not set a wage level nor a range to work on May 1991, the hotel's cashier
to which a wage adjustment or increase shall informed her that she should not report to
be added. Instead, it granted an across-the- work and, instead, continue with her
board wage increase of P15.00 to all unofficial leave of absence.
employees and workers of Region 2. In doing
so, the RTWPB exceeded its authority by Consequently, three days after her attempt to
extending the coverage of the Wage Order to return to work, petitioner filed a complaint for
wage earners receiving more than the illegal dismissal before the Arbitration Branch
prevailing minimum wage rate, without a of the National Labor Relations Commission
denominated salary ceiling. As correctly — CAR Baguio City. In addition to her
pointed out by the OSG, the Wage Order complaint for illegal dismissal, she alleged
granted additional benefits not contemplated underpayment of wages, non-payment of
by R.A. No. 6727. holiday pay, service incentive leave pay, 13th

month pay, night differential and other that they would not only be deprived of their
benefits. means of livelihood, but also possibly, their
personal liberty.
Responding to the allegations for illegal Granting that meals and lodging were
dismissal, private respondent Peter Ng provided and indeed constituted facilities,
alleged before Labor Arbiter that petitioner such facilities could not be deducted without
surreptitiously left her job without notice to the employer complying first with certain
the management and that she actually legal requirements. Without satisfying these
abandoned her work. He maintained that requirements, the employer simply cannot
there was no basis for the money claims for deduct the value from the employee's wages.
underpayment and other benefits as these First, proof must be shown that such facilities
were paid in the form of facilities to petitioner are customarily furnished by the trade.
and the hotel's other employees. Second, the provision of deductible facilities
must be voluntarily accepted in writing by the
Labor Arbiter dismissed the complaint. On employee. Finally, facilities must be charged
April 1994, respondent NLRC promulgated at fair and reasonable value. These
its assailed Resolution affirming the Labor requirements were not met in the instant
Arbiter's decision. case.
ISSUE: More significantly, the food and lodging, or
the electricity and water consumed by the
Whether or not the employer has exerted petitioner were not facilities but supplements.
pressure, in the form of restraint, interference A benefit or privilege granted to an employee
or coercion, against his employee's right to for the convenience of the employer is not a
institute concerted action for better terms and facility. The criterion in making a distinction
conditions of employment constitutes unfair between the two not so much lies in the kind
labor practice. (food, lodging) but the purpose. Considering
RULING: that hotel workers are required to work
different shifts and are expected to be
SC ruled that there was unfair labor practice. available at various odd hours, their ready
availability is a necessary matter in the
operations of a small hotel, such as the
Without doubt, the act of compelling
private respondent's hotel.
employees to sign an instrument indicating
that the employer observed labor standards
provisions of law when he might have not,
together with the act of terminating or 4. Joy Brothers Inc. vs. NWPC
coercing those who refuse to cooperate with
the employer's scheme constitutes unfair G.R. No. 122932; June 17, 1991
labor practice. The first act clearly preempts
the right of the hotel's workers to seek better FACTS:
terms and conditions of employment through
concerted action. For refusing to cooperate Wage Order No. NCR-03, providing for a
with the private respondent's scheme, twenty-seven peso wage increase for all
petitioner was obviously held up as an private sector workers and employees in the
example to all of the hotel's employees, that National Capital Region receiving one
they could only cause trouble to hundred fifty-four pesos (P154.00) and
management at great personal below daily, was approved November 29,
inconvenience. Implicit in the act of 1993.
petitioner's termination and the subsequent
filing of charges against her was the warning

On February 1994, petitioner applied for services —When accumulated losses for the
exemption from said wage order on the last 2 full accounting periods and interim
ground that it was a distressed period, if any, immediately preceding the
establishment. The RTWPB denied effectivity of the Order have impaired by at
petitioner's application for exemption after least 25 percent the: Paid-up capital at the
holding that the corporation accumulated end of the last full accounting period
profits amounting to P38,381.80 for the preceding the effectivity of the Order, in the
period under review. Petitioner's motion for case of corporations: Total invested capital at
reconsideration was likewise denied by the the beginning of the last full accounting
Wages and Productivity Board on January period preceding the effectivity of the Order
5, 1995. On appeal to the National Wages in the case of partnerships and single
and Productivity Commission, petitioner proprietorships. Establishments operating for
was again denied relief. less than two (2) years may be granted
exemption when accumulated losses for said
More specifically, petitioner contends that the
period have impaired by at least 25% the
interim period to be reckoned with is from
paid-up capital or total invested capital, as
January 1, 1993 to December 15, 1993 and
the case may be."
not merely up to September 30, 1993 as held
by respondent Commission. Significantly, Section 8, paragraph a, of the Rules
the period up to December 31, 1993 will Implementing Wage Order No. NCR-03
reflect losses in petitioner corporation's provides that exemption from compliance
books, but not if the covered interim period is with the wage increase may be granted to
only up to September 30, 1993. distressed establishments whose paid-up
capital has been impaired by at least twenty-
ISSUE:
five percent (25%) or which registers capital
Whether or not Petitioner Corporation falls deficiency or negative net worth.
within the exemption for distressed
establishments. The Guidelines expressly require interim
RULING: quarterly financial statements for the period
immediately preceding December 16, 1993.
SC ruled that petitioner company does not The last two full accounting periods here are
fall under the exemptions given to distressed 1991 and 1992, for which years petitioner
establishments. incurred net profits of P53,607.00 and
P60,188.00, respectively.
The petitioner company is not entitled to
exemption of the wage order since it is not
a distressed establishment. Under Section
5 of Wage Order No. NCR-03, distressed 5. Prubankers Assoc. vs. Prudential Bank
firms may be exempted from the provisions G.R. No. 131247; January 25, 1999
of the Order upon application with and due FACTS:
determination of the Board. NWPC
Guidelines No. 01, Series of 1992, providing On November, the RTWPB Region V issued
for the Revised Guidelines on Exemption Wage Order No. RB 05-03 which provided
indicate the criteria to qualify for exemption for a Cost of Living Allowance (COLA) to
as follows: workers in the private sector who had
rendered service for at least three (3) months
For Distressed Establishments: In the case before its effectivity, and for the same period
of a stock corporation, partnership, single thereafter, in the following categories:
proprietorship, non-stock, non-profit P17.50 in the cities of Naga and Legaspi;
organization or cooperative engaged in a P15.50 in the municipalities of Tabaco,
business activity or charging fees for its

Daraga, Pili and the city of Iriga; and P10.00 SC ruled that there is no wage distortion
for all other areas in the Bicol Region. since the wage order implementation covers
all the branches of the bank.
On November 1993, RTWPB Region VII
issued Wage Order No. RB VII-03, which
directed the integration of the COLA The hierarchy of positions was still
mandated pursuant to Wage Order No. RO preserved. The levels of different pay classes
VII-02-A into the basic pay of all workers. It was not eliminated. The statutory definition of
also established an increase in the minimum wage distortion is found in Article 124 of the
wage rates for all workers and employees in Labor Code, as amended by Republic Act
the private sector as follows: by Ten Pesos No. 6727, which reads: Standards/Criteria for
(P10.00) in the cities of Cebu, Mandaue and Minimum Wage Fixing — . . ."As used herein,
Lapulapu; Five Pesos (P5.00) in the a wage distortion shall mean a situation
municipalities of Compostela, Liloan, where an increase in prescribed wage results
Consolacion, Cordova, Talisay, Minglanilla, in the elimination or severe contraction of
Naga and the cities of Davao, Toledo, intentional quantitative differences in wage
Dumaguete, Bais, Canlaon, and Tagbilaran. or salary rates between and among
The bank granted a COLA of P17.50 to its employee groups in an establishment as to
employees at its Naga Branch, the only effectively obliterate the distinctions
branch covered by Wage Order No. RB 5-03, embodied in such wage structure based on
and integrated the P150.00 per month COLA skills, length of service, or other logical bases
into the basic pay of its rank-and-file of differentiation."
employees at its Cebu, Mabolo and P. del Wage distortion involves four elements: (1)
Rosario branches, the branches covered by An existing hierarchy of positions with
Wage Order No. RB VII-03. corresponding salary rates; (2) A significant
change in the salary rate of a lower pay class
On June 7, 1994, Prubankers Association without a concomitant increase in the salary
wrote the petitioner requesting that the Labor rate of a higher one; (3)The elimination of the
Management Committee be immediately distinction between the two levels and (4)
convened to discuss and resolve the alleged The existence of the distortion in the same
wage distortion created in the salary region of the country.
structure upon the implementation of the said
A disparity in wages between employees
wage orders. It demanded in the Labor
holding similar positions but in different
Management Committee meetings that the
regions does not constitute wage distortion
petitioner extend the application of the wage
as contemplated by law. As stated, it is the
orders to its employees outside Regions V
hierarchy of positions and the disparity of
and VII, claiming that the regional
their corresponding wages and other
implementation of the said orders created a
emoluments that are sought to be preserved
wage distortion in the wage rates of
by the concept of wage distortion.
petitioner's employees nationwide. As the
grievance could not be settled in the said
meetings, the parties agreed to submit the
matter to voluntary arbitration. 6. Millares et. al vs. NLRC
ISSUE: G.R. No. 122827; March 29, 1999
Whether or not a wage distortion resulted FACTS:
from respondent's implementation of the
Wage Orders. Petitioners numbering one hundred sixteen
occupied the positions of Technical Staff,
RULING: Unit Manager, Section Manager, Department
Manager, Division Manager and Vice

President in the mill site of respondent Paper the fair and reasonable value thereof, as
Industries Corporation of the Philippines determined by the Secretary of Labor and
(PICOP) in Bislig, Surigao del Sur. Employment, is included in "wage."
Customary is founded on long-established
In 1992 PICOP suffered a major financial
and constant practice connoting regularity.
setback allegedly brought about by the joint
The receipt of an allowance on a monthly
impact of restrictive government regulations
basis does not ipso facto characterize it as
on logging and the economic crisis. To avert
regular and forming part of salary because
further losses, it undertook a retrenchment
the nature of the grant is a factor worth
program and terminated the services of
considering. The court agrees with the
petitioners. Accordingly, petitioners received
observation of the Office of the Solicitor
separation pay computed at the rate of one
General that the subject allowances were
(1) month basic pay for every year of service.
temporarily, not regularly, received by
Believing however that the allowances they
petitioners. Although it is quite easy to
allegedly regularly received on a monthly
comprehend "board" and "lodging," it is not
basis during their employment should have
so with "facilities." Thus Sec. 5, Rule VII,
been included in the computation thereof
Book III, of the Rules Implementing the Labor
they lodged a complaint for separation pay
Code gives meaning to the term as including
differentials.
articles or services for the benefit of the
employee or his family but excluding tools of
the trade or articles or service primarily for
ISSUE:
the benefit of the employer or necessary to
the conduct of the employer's business.
Whether the allowances are included in the
definition of "facilities" in Art. 97, par. (f), of In determining whether a privilege is a
the Labor Code, being necessary and facility, the criterion is not so much its kind
indispensable for their existence and but its purpose. Revenue Audit Memo Order
subsistence. No. 1-87 pertinently provides —3.2…
transportation, representation or
RULING:
entertainment expenses shall not constitute
SC ruled that allowances are not part of the taxable compensation if: (a) It is for
wages of the employees. necessary travelling and representation or
entertainment expenses paid or incurred by
Wage is defined in letter (f) as the the employee in the pursuit of the trade or
remuneration or earnings, however business of the employer, and (b) The
designated, capable of being expressed in employee is required to, and does, make an
terms of money, whether fixed or ascertained accounting/liquidation for such expense in
on a time, task, piece, or commission basis, accordance with the specific requirements of
or other method of calculating the same, substantiation for such category or
which is payable by an employer to an expense.Board and lodging allowances
employee under a written or unwritten furnished to an employee not in excess of the
contract of employment for work done or to latter's needs and given free of charge,
be done, or for services rendered or to be constitute income to the latter except if such
rendered and includes the fair and allowances or benefits are furnished to the
reasonable value, as determined by the employee for the convenience of the
Secretary of Labor, of board, lodging, or employer and as necessary incident to
other facilities customarily furnished by the proper performance of his duties in which
employer to the employee. case such benefits or allowances do not
constitute taxable income.
When an employer customarily furnishes his
employee board, lodging or other facilities,

The Secretary of Labor and Employment hire or a local hire: (a) What is one's
under Sec. 6, Rule VII, Book III, of the Rules domicile? (b) Where is one's home
Implementing the Labor Code may from time economy? (c) To which country does one
to time fix in appropriate issuances the "fair owe economic allegiance? (d) Was the
and reasonable value of board, lodging and individual hired abroad specifically to work in
other facilities customarily furnished by an the School and was the School responsible
employer to his employees." Petitioners' for bringing that individual to the Philippines?
allowances do not represent such fair and Should the answer to any of these queries
reasonable value as determined by the point to the Philippines, the faculty member
proper authority simply because the is classified as a local hire; otherwise, he or
Staff/Manager's allowance and she is deemed a foreign-hire.
transportation allowance were amounts
The School grants foreign-hires certain
given by respondent company in lieu of
benefits not accorded local- hires. These
actual provisions for housing and
include housing, transportation, shipping
transportation needs whereas the Bislig
costs, taxes, and home leave travel
allowance was given in consideration of
allowance. Foreign-hires are also paid a
being assigned to the hostile environment
salary rate twenty-five percent (25%) more
then prevailing in Bislig. The inevitable
than local-hires. The School justifies the
conclusion is that subject allowances did not
difference on two "significant economic
form part of petitioners' wages.
disadvantages" foreign-hires have to endure,
namely: (a) the "dislocation factor" and (b)
limited tenure. The compensation scheme is
7. International School Alliance of simply the School's adaptive measure to
Educators vs. Quisumbing remain competitive on an international level
G.R. No. 128845; June 1, 2000 in terms of attracting competent
FACTS: professionals in the field of international
education.
International School, Inc., pursuant to
Presidential Decree 732, is a domestic ISSUE:
educational institution established primarily Whether or not local hire teachers should be
for dependents of foreign diplomatic granted the same salary as foreign hire
personnel and other temporary residents. To teachers
enable the School to continue carrying out its
educational program and improve its RULING:
standard of instruction, Section 2(c) of the SC ruled that local hire teachers should be
same decree authorizes the School to granted the same salary as that of foreign
employ its own teaching and management hire teachers.
personnel selected by it either locally or
Notably, the International Covenant on
abroad, from Philippine or other nationalities,
such personnel being exempt from otherwise Economic, Social, and Cultural Rights,
supra, in Article 7 thereof, provides: The
applicable laws and regulations attending
States Parties to the present Covenant
their employment, except laws that have
been or will be enacted for the protection of recognize the right of everyone to the
enjoyment of just and favorable conditions of
employees.
work, which ensure, in particular: ( a)
The School hires both foreign and local Remuneration which provides all workers, as
teachers as members of its faculty, a minimum, with: (i) Fair wages and equal
classifying the same into two: (1) foreign- remuneration for work of equal value without
hires and (2) local-hires. The School employs distinction of any kind, in particular women
four tests to determine whether a faculty being guaranteed conditions of work not
member should be classified as a foreign-

inferior to those enjoyed by men, with equal III and IV by nine hundred pesos (P900.00).
pay for equal work; Accordingly, the salaries of employees who
fell below the new minimum rates were also
The foregoing provisions impregnably
adjusted to reach such rates under their
institutionalize in this jurisdiction the long
levels.
honored legal truism of "equal pay for equal
work." Persons who work with substantially
equal qualifications, skill, effort and This made Bankard Employees Union-
responsibility, under similar conditions, WATU (petitioner), the duly certified
should be paid similar salaries. This rule exclusive bargaining agent of the regular
applies to the School. rank and file employees of Bankard, to
request for the increase in the salary of its
The School contends that petitioner has not old, regular employees. Bankard insisted
adduced evidence that local-hires perform that there was no obligation on the part of the
work equal to that of foreign-hires. The Court management to grant to all its employees the
finds this argument a little inconsiderate. If an same increase in an across-the-board
employer accords employees the same manner.
position and rank, the presumption is that
these employees perform equal work. If the Petioner filed a notice of strike. The strike
employer pays one employee less than the was averted when the dispute was certified
rest, it is not for that employee to explain why by the Secretary of Labor and Employment
he receives less or why the others receive for compulsory arbitration. NLRC finding no
more. The employer has discriminated wage distortion dismissed the case for lack
against that employee; it is for the employer of merit. Petitioner’s motion for
to explain why the employee is treated reconsideration of the dismissal of the case
unfairly. was denied.
In this case, the employer has failed to ISSUE:
discharge this burden. There is no evidence
here that foreign-hires perform 25% more Whether the unilateral adoption by an
efficiently or effectively than the local-hires. employer of an upgraded salary scale that
Both groups have similar functions and increased the hiring rates of new employees
responsibilities, which they perform under without increasing the salary rates of old
similar working conditions. Thus the employees resulted in wage distortion within
employees are entitled to same salary for the contemplation of Article 124 of the Labor
performance of equal work. Code.
RULING:
8. Bankard Employees Union vs. NLRC
G.R. No. 140689; February 17, 2004 The Court will not interfere in the
FACTS: management prerogative of the petitioner.
The employees are not precluded to
Bankard, Inc. classifies its employees by negotiate through the provisions of the CBA.
levels: Level I, Level II, Level III, Level IV,
and Level V. On May 1993, its Board of Upon the enactment of R.A. No. 6727
Directors approved a New Salary Scale, (WAGE RATIONALIZATION ACT,
made retroactive to April 1, 1993, for the amending, among others, Article 124 of the
purpose of making its hiring rate competitive Labor Code), the term "wage distortion" was
in the industry’s labor market. The New explicitly defined as... a situation where an
Salary Scale increased the hiring rates of increase in prescribed wage rates results in
new employees, to wit: Levels I and V by one the elimination or severe contraction of
thousand pesos (P1,000.00), and Levels II, intentional quantitative differences in wage

or salary rates between and among The wordings of Article 124 are clear. If it was
employee groups in an establishment as to the intention of the legislators to cover all
effectively obliterate the distinctions kinds of wage adjustments, then the
embodied in such wage structure based on language of the law should have been broad,
skills, length of service, or other logical bases not restrictive as it is currently phrased:
of differentiation.
Article 124. Standards/Criteria for Minimum
In the case of Prubankers Association v. Wage Fixing. Where the application of any
Prudential Bank and Trust Company, it laid prescribed wage increase by virtue of a law
down the four elements of wage distortion, to or Wage Order issued by any Regional
wit: (1.) An existing hierarchy of positions Boardresults in distortions of the wage
with corresponding salary rates; (2) A structure within an establishment, the
significant change in the salary rate of a employer and the union shall negotiate to
lower pay class without a concomitant correct the distortions. Any dispute arising
increase in the salary rate of a higher one; (3) from the wage distortions shall be resolved
The elimination of the distinction between the through the grievance procedure under their
two levels; and (4) The existence of the collective bargaining agreement and, if it
distortion in the same region of the country. remains unresolved, through voluntary
arbitration.
Normally, a company has a wage structure
or method of determining the wages of its Article 124 is entitled "Standards/Criteria for
employees. In a problem dealing with "wage Minimum Wage Fixing." It is found in
distortion," the basic assumption is that there CHAPTER V on "WAGE STUDIES, WAGE
exists a grouping or classification of AGREEMENTS AND WAGE
employees that establishes distinctions DETERMINATION"which principally deals
among them on some relevant or legitimate with the fixing of minimum wage. Article 124
bases. Involved in the classification of should thus be construed and correlated in
employees are various factors such as the relation to minimum wage fixing, the intention
degrees of responsibility, the skills and of the law being that in the event of an
knowledge required, the complexity of the increase in minimum wage, the distinctions
job, or other logical basis of differentiation. embodied in the wage structure based on
The differing wage rate for each of the skills, length of service, or other logical bases
existing classes of employees reflects this of differentiation will be preserved.
classification.
If the compulsory mandate under Article 124
Put differently, the entry of new employees to to correct "wage distortion" is applied to
the company ipso facto places them under voluntary and unilateral increases by the
any of the levels mentioned in the new salary employer in fixing hiring rates which is
scale which private respondent adopted inherently a business judgment prerogative,
retroactive to April 1, 1993. While seniority then the hands of the employer would be
may be a factor in determining the wages of completely tied even in cases where an
employees, it cannot be made the sole basis increase in wages of a particular group is
in cases where the nature of their work justified due to a re-evaluation of the high
differs. productivity of a particular group, or as in the
present case, the need to increase the
Moreover, for purposes of determining the competitiveness of Bankard’s hiring rate. An
existence of wage distortion, employees employer would be discouraged from
cannot create their own independent adjusting the salary rates of a particular
classification and use it as a basis to demand group of employees for fear that it would
an across-the-board increase in salary. result to a demand by all employees for a

similar increase, especially if the financial Whether or not the petitioners are entitled to
conditions of the business cannot address an money claims.
across-the-board increase.
RULING:
Wage distortion is a factual and economic
SC ruled that the petitioners are not entitled
condition that may be brought about by
to money claims or wage differentials.
different causes. The mere factual existence
of wage distortion does not, however, ipso
factoresult to an obligation to rectify it, absent The petitioners claim is based on Section 2,
a law or other source of obligation which Rule IV, Book III of the Implementing Rules
requires its rectification. and Policy Instructions No. 9 issued by the
Secretary of Labor which was declared null
9. Odango vs. NLRC and void since in the guise of clarifying the
Labor Code’s provisions on holiday pay, they
G.R. No. 147420; June 10, 2004 in effect amended them by enlarging the
FACTS: scope of their exclusion.
Petitioners are monthly-paid employees of Even assuming that Section 2, Rule IV of

ANTECO whose workdays are from Monday Book III is valid, their claim will still fail. The
to Friday and half of Saturday. After a routine basic rule in this jurisdiction is "no work, no
inspection, the Regional Branch of the pay." The right to be paid for un-worked days
Department of Labor and Employment found is generally limited to the ten legal holidays
ANTECO liable for underpayment of the in a year. Petitioners’ claim is based on a
monthly salaries of its employees. On mistaken notion that Section 2, Rule IV of
September 1989, the DOLE directed Book III gave rise to a right to be paid for un-
ANTECO to pay its employees wage worked days beyond the ten legal holidays.
differentials amounting to P1,427,412.75. Petitioners’ line of reasoning is not only a
ANTECO failed to pay. On various dates in violation of the "no work, no pay" principle, it
1995, thirty-three (33) monthly-paid also gives rise to an invidious classification,
employees filed complaints with the NLRC a violation of the equal protection clause.
praying for payment of wage differentials,
damages and attorney’s fees.
On November 1996, the Labor Arbiter 10. C. Planas Commercial vs. NLRC
rendered a Decision in favor of petitioners G.R. No. 144619; November 11, 2005
granting them wage differentials amounting
to P1,017,507.73 and attorney’s fees of 10%. FACTS:
ANTECO appealed the Decision to the In September 1993, Morente, Allauigan and
NLRC where it reversed the Labor Arbiter’s Ofialda and others filed a complaint for
Decision. The NLRC denied petitioners’ underpayment of wages, non payment of
motion for reconsideration. Petitioners then overtime pay, holiday pay, service incentive
elevated the case to CA where it dismissed leave pay, and premium pay for rest day and
the petition for failure to comply with Section holiday and night shift differential against
3, Rule 46 of the Rules of Court. The Court petitioners in the Arbitration Branch of NLRC.
of Appeals explained that petitioners failed to It alleged that Cohu is engaged in the
allege the specific instances where the business of wholesale of plastic products and
NLRC abused its discretion. The appellate fruits of different kinds with more than 24
court denied petitioners’ motion for employees. Respondents were hired on
reconsideration. Hence, this petition. January 1990, May 1990 and July 19991 as
ISSUE: laborers and were paid below the minimum

wage for the past 3 years. They were the Act provides for exemption from the
required to work for more than 8 hours a day coverage, thus: Sec. 4. (c) Exempted from
and never enjoyed the minimum benefits. the provisions of this Act are household or
Petitioners filed their comment stating that domestic helpers and persons employed in
the respondents were their helpers. the personal service of another, including
family drivers. Also, retail/service
The Labor Arbiter rendered a decision
establishments regularly employing not more
dismissing the money claims. Respondents
than ten (10) workers may be exempted from
filed an appeal with the NLRC where it
the applicability of this Act upon application
granted the money claims of Ofialda,
with and as determined by the appropriate
Morente and Allaguian. Petitioners appealed
Regional Board in accordance with the
with the CA but it was denied. It said that the
applicable rules and regulations issued by
company having claimed of exemption of the
the Commission. Whenever an application
coverage of the minimum wage shall have
for exemption has been duly filed with the
the burden of proof to the claim.
appropriate Regional Board, action on any
In the present petition, the Petitioners insist complaint for alleged non-compliance with
that C. Planas Commercial is a retail this Act shall be deferred pending resolution
establishment principally engaged in the sale of the application for exemption by the
of plastic products and fruits to the customers appropriate Regional Board.
for personal use, thus exempted from the
In the event that applications for exemptions
application of the minimum wage law; that it
are not granted, employees shall receive the
merely leases and occupies a stall in the
appropriate compensation due them as
Divisoria Market and the level of its business
provided for by this Act plus interest of one
activity requires and sustains only less than
percent (1%) per month retroactive to the
ten employees at a time. Petitioners contend
effectivity of this Act.
that private respondents were paid over and
above the minimum wage required for a retail Clearly, for a retail/service establishment to
establishment, thus the Labor Arbiter is be exempted from the coverage of the
correct in ruling that private respondents’ minimum wage law, it must be shown that the
claim for underpayment has no factual and establishment is regularly employing not
legal basis. Petitioners claim that since more than ten (10) workers and had applied
private respondents alleged that petitioners for exemptions with and as determined by
employed 24 workers, it was incumbent upon the appropriate Regional Board in
them to prove such allegation which private accordance with the applicable rules and
respondents failed to do. regulations issued by the Commission.
ISSUE:
Whether or not petitioner is exempted from 11. EJR Crafts Corp. vs. CA
the application of minimum wage law. G.R. No. 154101; March 10, 2006
RULING: FACTS:
The contention of the petitioners that they are
exempted by the law must be proven. The In 1997, private respondents filed a
petitioners have not successfully shown that complaint for underpayment of wages,
they had applied for the exemption. regular holiday pay, overtime pay,
nonpayment of 13th month pay and service
R.A. No. 6727 known as the Wage incentive leave pay against petitioner before
Rationalization Act provides for the statutory the Regional Office, NCR of the Department
minimum wage rate of all workers and of Labor and Employment (DOLE). Acting on
employees in the private sector. Section 4 of the complaint, Regional Director issued an

inspection authority to Senior Labor compliance, or the so-called "enforcement

Enforcement Officer. power" under Article 128(b) of P.D. No. 442
as amended, it is necessary that the
On 22 August 1997, an inspection was employer-employee relationship still exists.
conducted on the premises of petitioner’s
offices wherein the following violations of In support of its contention that it is the Labor
labor standards law were discovered, to wit: Arbiter and not the Regional Director who
non-presentation of employment records has jurisdiction over the claims of herein
(payrolls and daily time records); private respondents, petitioner contends that
underpayment of wages, regular holiday pay, at the time the complaint was filed, the
and overtime pay; and nonpayment of 13th private respondents were no longer its
month pay and service incentive leave pay. employees. Considering thus that there still
On the same day, the Notice of Inspection exists an employer-employee relationship
Result was received by and explained to the between petitioner and private respondents
manager of petitioner corporation Mr. Jae and that the case involves violations of labor
Kwan Lee, with the corresponding directive standard provisions of the Labor Code, we
that necessary restitution be effected within agree with the Undersecretary of Labor and
five days from said receipt. the appellate court that the Regional Director
has jurisdiction to hear and decide the instant
As no restitution was made, the Regional
case in conformity with Article 128(b) of the
Office thereafter conducted summary
Labor Code which states: Art. 128. Visitorial
investigations. However, despite due notice,
and Enforcement Power. –(b)
petitioner failed to appear for two
Notwithstanding the provisions of Articles
consecutive scheduled hearings. Petitioner
129 and 217 of this Code to the contrary, and
failed to question the findings of the Labor
in cases where the relationship of employer-
Inspector received by and explained to the
employee still exists, the Secretary of Labor
corporation’s manager. Petitioner then filed a
and Employment or his duly authorized
Motion for Reconsideration of said Order
representatives shall have the power to issue
arguing that the Regional Director has no
compliance orders to give effect to the labor
jurisdiction over the case as private
standards provisions of this Code and other
respondents were allegedly no longer
labor legislation based on the findings of
connected with petitioner corporation at the
labor employment and enforcement officers
time of the filing of the complaint and when
or industrial safety engineers made in the
the inspection was conducted, and that
course of inspection. The Secretary or his
private respondents’ claims are within the
duly authorized representatives shall issue
exclusive and original jurisdiction of the
writs of execution to the appropriate authority
Labor Arbiters.
for the enforcement of their orders, except in
cases where the employer contests the
ISSUE: findings of the labor employment and
enforcement officer and raises issues
supported by documentary proofs which
Whether or not the Regional Director has
were not considered in the course of
jurisdiction over the claims of herein private
inspection.
respondents.
RULING:
The Court favors the respondents in the 12. Pag Asa Steel Works vs. CA
money claims against the petitioner G.R. No. 166647; March 31, 2006
company. It is admitted that for the Regional
Director to exercise the power to order FACTS:

Petitioner Pag-Asa Steel Works, Inc. is a CBA or matter of practice by the company. It
corporation duly organized and existing is submitted that employers unless exempt
under Philippine laws and is engaged in the are mandated to implement the said wage
manufacture of steel bars and wire rods. order but limited to those entitled thereto.
Pag-Asa Steel Workers Union is the duly There is no legal basis to implement the
authorized bargaining agent of the rank-and- same across-the-board. A perusal of the
file employees. record shows that the lowest paid employee
before the implementation of Wage Order #8
RTWPB of NCR issued a wage order which
is P250.00/day and none was receiving
provided for a P 13.00 increase of the
below P223.50 minimum. This could only
salaries receiving minimum wages. The
mean that the union can no longer demand
Petitioner and the union negotiated on the
for any wage distortion adjustment. The
increase. Petitioner forwarded a letter to the
provision of wage order #8 and its
union with the list of adjustments involving
implementing rules are very clear as to who
rank and file employees. In September 1999,
are entitled to the P26.50/day increase, i.e.,
the petitioner and union entered into an
"private sector workers and employees in the
collective bargaining agreement where it
National Capital Region receiving the
provided wage adjustments namely P15,
prescribed daily minimum wage rate of
P25, P30 for three succeeding year. On the
P223.50 shall receive an increase of Twenty-
first year, the increase provided were
Six Pesos and Fifty Centavos (P26.50) per
followed until RTWPB issued another wage
day," and since the lowest paid is
order where it provided for a P25.50 per day
P250.00/day the company is not obliged to
increase in the salary of employees receiving
adjust the wages of the workers.
the minimum wage and increased the
minimum wage to P223.50 per day.
Petitioner paid the P25.50 per day increase The provision in the CBA that "Any Wage
to all of its rank-and-file employees. Order to be implemented by the Regional
Tripartite Wage and Productivity Board shall
On November 2000, Wage Order No. NCR- be in addition to the wage increase adverted
08 was issued where it provided the increase above" cannot be interpreted in support of an
of P26.50 per day. The union president across-the-board increase. If such were the
asked that the wage order be implemented intentions of this provision, then the company
where petitioner rejected the request could have simply accepted the original
claiming that there was no wage distortion demand of the union for such across-the-
and it was not obliged to grant the wage board implementation, as set forth in their
increase. The union submitted the matter for original proposal. The fact that the company
voluntary arbitration where it favored the rejected this proposal can only mean that it
position of the company and dismissed the was never its intention to agree, to such
complaint. The matter was elevated to CA across-the-board implementation. Wage
where it favored the respondents. Hence, Order No. NCR-08 clearly states that only
this petition. those employees receiving salaries below
ISSUE: the prescribed minimum wage are entitled to
the wage increase provided therein, and not
Whether or not the company was obliged to all employees across-the-board as
grant the wage increase under Wage Order respondent Union would want petitioner to
do. Considering therefore that none of the
No. NCR-08 as a matter of practice.
members of respondent Union are receiving
RULING: salaries below the P250.00 minimum wage,
petitioner is not obliged to grant the wage
The Court favors the petitioner that wage increase to them.
increase shall not be granted by virtue of

Moreover, to ripen into a company practice representing his back wages and the
that is demandable as a matter of right, the increases he should have received during
giving of the increase should not be by the time he was illegally dismissed. The
reason of a strict legal or contractual Bank opposed to Sadac’s computation. The
obligation, but by reason of an act of liberality Labor Arbiter favor Sadac’s computation.
on the part of the employer. Hence, even if NLRC, upon appeal by the bank, reversed
the company continuously grants a wage the decision. CA reversed the decision of
increase as mandated by a wage order or NLRC. Hence, this petition.
pursuant to a CBA, the same would not
ISSUE:
automatically ripen into a company practice.
13. Equitable Bank vs. Sadac Whether or not the computation of back
wages shall include the general increases.
G.R. No. 164772; June 8, 2006
RULING:
FACTS:
Ricardo Sadac was appointed Vice To resolve the issue, the court revisits its
President of the Legal Department of pronouncements on the interpretation of the
petitioner Bank effective 1 August 1981, and term backwages. Backwages in general are
subsequently General Counsel thereof on 8 granted on grounds of equity for earnings
December 1981. On June 1989, nine lawyers which a worker or employee has lost due to
of petitioner Bank’s Legal Department, in a his illegal dismissal. It is not private
letter-petition to the Chairman of the Board of compensation or damages but is awarded
Directors, accused respondent Sadac of in furtherance and effectuation of the public
abusive conduct and ultimately, petitioned objective of the Labor Code. Nor is it a
for a change in leadership of the department. redress of a private right but rather in the
On the ground of lack of confidence in nature of a command to the employer to
Sadac, under the rules of client and lawyer make public reparation for dismissing an
relationship, petitioner Bank instructed employee either due to the former’s
respondent Sadac to deliver all materials in unlawful act or bad faith.
his custody in all cases in which the latter
was appearing as its counsel of record. In In the case of Bustamante v. National Labor
reaction thereto, Sadac requested for a full Relations Commission, It said that the Court
hearing and formal investigation but the deems it appropriate to reconsider such
same remained unheeded. On 9 November earlier ruling on the computation of back
1989, respondent Sadac filed a complaint for wages by now holding that conformably with
illegal dismissal with damages against the evident legislative intent as expressed in
petitioner Bank and individual members of Rep. Act No. 6715, back wages to be
the Board of Directors thereof. After learning awarded to an illegally dismissed employee,
of the filing of the complaint, petitioner Bank should not, as a general rule, be diminished
terminated the services of respondent or reduced by the earnings derived by him
Sadac. Finally, on 10 August 1989, Sadac elsewhere during the period of his illegal
was removed from his office dismissal. The underlying reason for this
ruling is that the employee, while litigating
Labor Arbiter rendered decision that the legality (illegality) of his dismissal, must
Sadac’s termination was illegal and entitled still earn a living to support himself and
to reinstatement and payment of full back family, while full backwages have to be paid
wages. NLRC affirmed the decision upon by the employer as part of the price or
appeal by the Bank. Sadac filed for penalty he has to pay for illegally dismissing
execution of judgment where it gave its his employee. The clear legislative intent of
computation which amounted to P 6.03 M the amendment in Rep. Act No. 6715 is to

give more benefits to workers than was the RTWPB within 10 calendar days from the
previously given them. Thus, a closer publication of the Wage Order.
adherence to the legislative policy behind
Rep. Act No. 6715 points to "full Banker’s Council in a letter inquiry to NWPC
backwages" as meaning exactly that, i.e., requested for ruling to seek exemption from
without deducting from backwages the coverage of the wage order since the
earnings derived elsewhere by the members bank are paying more than the
concerned employee during the period of regular wage. NWPC replied that the
his illegal dismissal. member banks are covered by the wage
order and does not fall with the exemptible
There is no vested right to salary increases. categories.
Sadac may have received salary increases
In another letter inquiry, Metrobank asked for
in the past only proves fact of receipt but
the interpretation of the applicability of the
does not establish a degree of assuredness
wage order. NWPC referred it to RTWPB.
that is inherent in backwages. The
RTWPB in return clarified that
conclusion is that Sadac’s computation of
establishments in Region 2 are covered by
his full backwages which includes his
the wage order. Petitioner filed a petition with
prospective salary increases cannot be
the CA and denied the petition.
permitted.
ISSUE:
Whether or not the wage order is void thus it
has no legal effect and the RTWPB acted in
14. Metropolitan Bank vs. NWPC excess of its jurisdiction.
G.R. No. 144322; February 6, 2007
RULING:
FACTS:
The Court finds that Section 1, Wage Order
On October 17, 1995, the Regional Tripartite No. R02-03 is void insofar as it grants a wage
Wages and Productivity Board, Region II, increase to employees earning more than the
Tuguegarao, Cagayan (RTWPB), by virtue of minimum wage rate; and pursuant to the
Republic Act No. 6727 (R.A. No. 6727), separability clause of the Wage Order,
otherwise known as the Wage Section 1 is declared valid with respect to
Rationalization Act, issued Wage Order No. employees earning the prevailing minimum
R02-03 (Wage Order), as follows: Section 1. wage rate.
Upon effectivity of this Wage Order, all
employees/workers in the private sector The powers of NWPC are enumerated in
throughout Region II, regardless of the status ART. 121. Powers and Functions of the
of employment are granted an across-the- Commission. - The Commission shall have
board increase of P15.00 daily. the following powers and functions: (d) To
review regional wage levels set by the
The Wage Order was published in a Regional Tripartite Wages and Productivity
newspaper of general circulation on Boards to determine if these are in
December 2, 1995 and took effect on accordance with prescribed guidelines and
January 1, 1996. Its Implementing Rules national development plans; (f) To review
were approved on February 14, 1996. Per plans and programs of the Regional Tripartite
Section 13 of the Wage Order, any party Wages and Productivity Boards to determine
aggrieved by the Wage Order may file an whether these are consistent with national
appeal with the National Wages and development plans; (g) To exercise technical
Productivity Commission (NWPC) through and administrative supervision over the

Regional Tripartite Wages and Productivity the "floor-wage method" or the "salary-ceiling
Boards. method" in issuing the Wage Order. The
RTWPB did not set a wage level nor a range
R.A. No. 6727 declared it a policy of the State to which a wage adjustment or increase shall
to rationalize the fixing of minimum wages be added. Instead, it granted an across-the-
and to promote productivity-improvement board wage increase of P15.00 to all
and gain-sharing measures to ensure a employees and workers of Region 2. In doing
decent standard of living for the workers and so, the RTWPB exceeded its authority by
their families; to guarantee the rights of labor extending the coverage of the Wage Order to
to its just share in the fruits of production; to wage earners receiving more than the
enhance employment generation in the prevailing minimum wage rate, without a
countryside through industrial dispersal; and denominated salary ceiling. As correctly
to allow business and industry reasonable pointed out by the OSG, the Wage Order
returns on investment, expansion and granted additional benefits not contemplated
growth. by R.A. No. 6727.
In line with its declared policy, R.A. No. 6727

created the NWPC, vested with the power to V. WAGE ENFORCEMENT
prescribe rules and guidelines for the AND RECOVERY
determination of appropriate minimum wage
and productivity measures at the regional,
provincial or industry levels; and authorized
the RTWPB to determine and fix the 1. Rajah Humabon Hotel vs. Trajano
minimum wage rates applicable in their G.R. Nos. 100222-23 September 14, 1993
respective regions, provinces, or industries FACTS:
therein and issue the corresponding wage
orders, subject to the guidelines issued by
For redress in regard to underpaid wages
the NWPC. Pursuant to its wage fixing
and non-payment of benefits, the herein
authority, the RTWPB may issue wage
respondent-employees turned to the regional
orders which set the daily minimum wage
director of the Department of Labor and
rates, based on the standards or criteria set
Employment. The jurisdictional competence
by Article 124 of the Labor Code.
of such official is, however, disputed and
challenged by the employers in the instant
The Court declared that there are two ways petition who contend that it is the labor arbiter
of fixing the minimum wage: the "floor-wage" who may properly entertain the grievance.
method and the "salary-ceiling" method. The The aggregate claims of each of the twenty-
"floor-wage" method involves the fixing of a five employees of petitioner are above the
determinate amount to be added to the amount of P5,000.00 fixed by Republic Act
prevailing statutory minimum wage rates. On No. 6715.
the other hand, in the "salary-ceiling"
method, the wage adjustment was to be ISSUE:
applied to employees receiving a certain
denominated salary ceiling. In other words, Who between the Regional Director of the
workers already being paid more than the Department of Labor and Employment and
existing minimum wage (up to a certain the Labor Arbiter has jurisdiction over the
amount stated in the Wage Order) are also to complaint of private respondents.
be given a wage increase. RULING:
In the present case, the RTWPB did not The Labor Arbiter has exclusive jurisdiction
determine or fix the minimum wage rate by over the complaint of private respondents

which involves a money claim exceeding The Secretary of Labor received a letter-
P5,000. complaint requesting for an investigation of
petitioner's establishment, Copylandia
The principle of continuous jurisdiction of the
Services & Trading, for violation of labor
regional director, as applied by the Secretary
standards laws. Pursuant to the visitorial and
of Labor to the suit filed by herein private
enforcement powers of the Secretary of
respondents on March 14, 1989 prior to the
Labor and Employment or his duly
effectivity of Republic Act No. 6715, is
authorized representative under Article 128
therefore incorrect. To sustain otherwise
of the Labor Code, as amended, inspections
would sanction a situation where all
were conducted at Copylandia's outlets. The
employees' claims, regardless of amount,
inspections yielded the following violations
can be heard and determined by the
involving twenty-one (21) employees who
Secretary of Labor under his visitorial power.
are copier operators: (1) underpayment of
This does not, however, appear to be the
wages; (2) underpayment of 13th month pay;
legislative intent. The Secretary of Labor
and (3) no service incentive leave with pay.
should be held as possessed of his plenary
Thus, the Secretary of Labor ordered
visitorial powers to order the inspection of all
petitioner to pay the respondents. Petitioner
establishments where labor is employed, to
questioned the jurisdiction of the Regional
look into all possible violations of labor laws
Director 6715. He argued that the Regional
and regulations but the power to hear and
Director has no jurisdiction over the
decide employees' claims exceeding
complaint of the 21 employees since their
P5,000.00 for each employee should be left
individual monetary claims exceed the
to the Labor Arbiter as the exclusive
P5,000.00 limit. On the other hand, the
repository of the power to hear and decide
respondent Secretary held that the
such claims.
jurisdictional limitation imposed by Article
129 on his visitorial and enforcement power
Regional directors under Republic Act No. under Article 128 (b) of the Labor Code, as
6715, can try money claims only if the amended, has been repealed by Republic
following requisites concur: Act No. 7730. He pointed out that the
amendment "notwithstanding the provisions
✓ The claim is presented by an of Article 129 and 217 of the Labor Code to
employee or person employed in the contrary" erased all doubts as to the
domestic or household service, or amendatory nature of the new law.
househelper under the code;
ISSUE:
✓ the claimant, no longer being
employed, does not seek Whether or not the Secretary of Labor has
reinstatement; and, jurisdiction take cognizance of the instant
labor case.
✓ The aggregate money claim of the
employee or housekeeper does not RULING:
exceed five thousand pesos SC ruled in favor of the Secretary of Labor. It
(P5,000.00). overruled its previous ruling on the matter.
SC sustained the jurisdiction of the
respondent Secretary. As the respondent
2. Guico vs. Secretary of Labor correctly pointed out, this Court's ruling in
Servando — that the visitorial power of the
Secretary of Labor to order and enforce
G.R. No. 131750; November 16, 1998
compliance with labor standard laws cannot
FACTS: be exercised where the individual claim
exceeds P5,000.00, can no longer be applied

in view of the enactment of R.A. No. 7730 respondents for verification. They were,
amending Article 128(b) of the Labor Code. moreover, asked to submit, within 10 days,
proof of compliance or their position paper.
The Regional Director validly acquired
3. EJR Crafts Corp. vs. CA jurisdiction over EBVSAI. EBVSAI can no
longer question the jurisdiction of the
G.R. No. 154101; March 10, 2006 Regional Director after receiving the notices
Ibid. of hearing and after appearing before the
Regional Director.
Anent the second issue, the Regional

4. Ex-Bataan Veterans Security Agency
Director validly assumed jurisdiction over the
vs. Secretary of Labor et. al. money claims of private respondents even if
G.R. No. 152396; January 14, 2005 the claims exceeded P5,000 because such
FACTS: jurisdiction was exercised in accordance with
Article 128(b) of the Labor Code and the
case does not fall under the exception
Ex-Bataan Veterans Security Agency, Inc.
clause.
(EBVSAI) is in the business of providing
security services while private respondents
are EBVSAI's employees assigned to the In order to divest the Regional Director or his
National Power Corporation at Ambuklao representatives of jurisdiction, the following
Hydro Electric Plant, Bokod, Benguet elements must be present: (a) that the
(Ambuklao Plant). Private respondents led employer contests the findings of the labor
by Alexander Pocding (Pocding) instituted a regulations officer and raises issues thereon;
complaintfor underpayment of wages against (b) that in order to resolve such issues, there
EBVSAI before the Regional Office of the is a need to examine evidentiary matters;
Department of Labor and Employment and (c) that such matters are not verifiable in
(DOLE). The money claims exceeded the normal course of inspection. The rules
P5,000. also provide that the employer shall raise
such objections during the hearing of the
ISSUE: case or at any time after receipt of the notice
Whether the Secretary of Labor or his duly of inspection results.
authorized representatives acquired
jurisdiction over EBVSAI 5. Catholic Vicariate Baguio City vs. Hon.
Patricia Sto. Tomas G.R. No. 167334;
Whether or not the Director of DOLE has March 07, 2008
jurisdiction over the labor dispute o money
claims exceeding P5,000.
6. Sapio vs. Undaloc Construction et. al.

RULING:
G.R. No. 155034; May 22, 2008
Anent the first issue, EBVSAI does not deny
having received the notices of hearing. FACTS:
Evidence shows that petitioners received
notices of hearing. The notices of hearing The controversy started with a complaint filed
were sent to the petitioners’ Manila office. by petitioner against Undaloc Construction
They were also informed of EBVSAI's and/or Engineer Cirilo Undaloc for illegal
violations and were asked to present the dismissal, underpayment of wages and
employment records of the private nonpayment of statutory benefits.

Respondent Undaloc Construction, a single them to file a complaint for violation of labor
proprietorship owned by Cirilo Undaloc, is standards in the regional office of the
engaged in road construction business in Department of Labor and Employment in the
Cebu City. Petitioner avers that he was paid National Capital Region (DOLE-NCR).
a daily salary way below the minimum wage
provided for by law.His claim of salary Acting on the complaint, Manuel M.
differential represents the difference Cayabyab, a labor employment officer of the
between the daily wage he actually received DOLE-NCR, conducted an inspection of
and the statutory minimum wage. respondent security agency on October 30,
ISSUE: 2000. During the inspection, respondent
security agency failed to present its payroll
Whether or not petitioner is entitled to salary as well as the daily time records submitted by
differential after his termination. petitioners Agapay and Alonso, Jr. Such
RULING: failure was noted as a violation.
The total salary differential that petitioner is Respondents neither paid the claims of
lawfully entitled to amounts to P6,578.00 petitioners Agapay and Alonso, Jr. nor
However, pursuant to Section 12 of Republic questioned the labor employment officer’s
Act (R.A.) No. 6727, as amended by R.A. No. findings. Thus, in his May 10, 2001 order, the
8188. Respondents are required to pay Regional Director of the DOLE-NCR adopted
double the amount owed to petitioner, the findings and computation of Cayabyab as
bringing their total liability to P13,156.00. The to the unpaid benefits due to petitioners
employer concerned shall be ordered to pay Agapay and Alonso, Jr. Respondents filed an
an amount equivalent to double the unpaid appeal for the reduction of the surety/ cash
benefits owing to the employees: Provided, bond.
That payment of indemnity shall not absolve ISSUE:
the employer from the criminal liability
imposable under this Act. Whether or not there has been a perfected
appeal made by the respondents.
7. Secretary of Labor vs. Panay Veterans Whether or not a motion to reduce bond is
Security and Investigation Agency allowed in appeals to the Secretary of Labor.
RULING:
G.R. No. 167708; August 22, 2008
SC held that there has been no perfected
FACTS: appeal. SC also ruled that reduction of the
bond is not allowed in appeals before the
Petitioners Edgardo M. Agapay and Secretary of Labor.
Samillano A. Alonso, Jr.were hired by
respondent Panay Veteran’s Security and On the first issue—RESPONDENTS FAILED
Investigation Agency, Inc. as security guards TO PERFECT THEIR APPEAL
sometime in 1988. They were stationed at
the plant site of Food Industries, Inc. (FII) in The rule is that, to perfect an appeal of the
Sta. Rosa, Laguna until FII terminated its Regional Director’s order involving a
contract with respondent security agency on monetary award in cases which concern the
July 6, 2000. They were not given new visitorial and enforcement powers of the
assignments and their benefits (including Secretary of Labor and Employment, the
13th month pay, overtime pay and holiday appeal must be filed and the cash or surety
pay as well as wage differentials due to bond equivalent to the monetary award must
underpayment of wages) were withheld by be posted within ten calendar days from
respondent security agency. This prompted receipt of the order. Failure either to file the

appeal or post the bond within the prescribed By ruling that the rules of procedure of the
period renders the order final and executory. NLRC should be applied suppletorily to
respondents’ appeal to the Secretary of
The legislative intent to make the bond an
Labor of Employment, the CA effectively
indispensable requisite for the perfection of
amended the Rules on the Disposition of
an appeal by the employer is underscored by
Labor Standards Cases. In the process, it
the provision that “an appeal by the employer
encroached on the rule-making power of the
may be perfected only upon the posting of a
Secretary of Labor and Employment.
cash or surety bond.” The word “only” makes
it clear that the lawmakers intended the
posting of a cash or surety bond by the The posting of a cash or surety bond to
employer to be the exclusive means by which perfect an appeal of an order involving a
an employer’s appeal may be perfected. monetary award has a two-fold purpose: (1)
to assure the employee that, if he finally
prevails in the case, the monetary award will
In this case, respondents admit that they
be given to him upon dismissal of the
failed to post the required bond when they
employer’s appeal and (2) to discourage the
filed their appeal to the Secretary of Labor
employer from using the appeal to delay or
and Employment. Because of such failure,
evade payment of his obligations to the
the appeal was never perfected and the May
employee.
10, 2001 order of the DOLE-NCR Regional
Director attained finality.
8. National Mines and Allied Workers
Union vs. Marcopper Mining Corp.
On the second issue—MOTION TO
REDUCE APPEAL BOND IS NOT G.R. No. 174641; November 11, 2008
ALLOWED IN APPEALS TO THE FACTS:
SECRETARY OF LABOR
DENR ordered the indefinite suspension of
The jurisdiction of the NLRC is separate and MARCOPPER's operations for causing
distinct from that of the Secretary of Labor damage to the environment of the Province
and Employment. In the exercise of their of Marinduque by spilling the company's
respective jurisdictions, each agency is mine waste or tailings from an old
governed by its own rules of procedure. In underground impounding area into the Boac
other words, the rules of procedure of the River, in violation of its ECC. NAMAWU was
NLRC are different from (and do not apply in) the exclusive bargaining representative of
cases cognizable by the Secretary of Labor the rank-and-file workers of MARCOPPER. It
and Employment. filed a complaint with the NLRC against
MARCOPPER for nonpayment of wages,
Unlike the New Rules of Procedure of the separation pay, damages, and attorney's
NLRC, no provision in the Rules on the fees.
Disposition of Labor Standards Cases
governs the filing of a motion for the NAMAWU claimed that due to the indefinite
reduction of the amount of the bond. suspension of MARCOPPER's operations,
However, on matters that are not covered by its members were not paid the wages due
the Rules on the Disposition of Labor them for six months. It further claimed that its
Standards Cases, the suppletory application members are also entitled to be paid their
of the Rules of Court is authorized.In other separation pay pursuant to their collective
words, the Rules onthe Disposition of Labor bargaining agreement with MARCOPPER
Standards Cases does not sanction the and under existing implementing rules of the
suppletory resort to the rules of procedure of Labor Code. There had been an illegal strike
the NLRC. which occurred.

ISSUE: Management representative informed that

(Juezan) complainant is a drama talent hired
Whether or not it is necessary that
on a per drama ‘participation basis’ hence no
MARCOPPER file an appeal bond
employer-employer relationship existed
RULING: between them. As proof of this, management
presented photocopies of cash vouchers,
In the context of the NLRC appeal bond that billing statement, employments of specific
is directly at issue, MARCOPPER had every undertaking, etc. The management has no
reason to claim in its April 10, 2000 appeal to control of the talent if he ventures into
the NLRC that it should be excused from another contract with other broadcasting
filing an appeal bond with respect to the industries.
NAMAWU members who were no longer ISSUE:
company employees. The CA decision
decreeing the termination of employment of Whether or not the Secretary of Labor has
those involved in the illegal strike case had the power to determine the existence of an
already been issued at that time. We employer-employee relationship.
subsequently ruled on the same issue during HELD:
the time the environmental incident case was
pending before the NLRC. Thus, when the NO. Art. 128 (b) of the Labor Code, as
NLRC dismissed MARCOPPER's appeal for amended by R.A. 7730 reads:
failure to file the requisite appeal bond Notwithstanding the provisions of Articles
corresponding to the 615 NAMAWU 129 and 217 of this Code to the contrary, and
members, the termination of employment of in cases where the relationship of employer-
these NAMAWU members was already a employee still exists, the Secretary of Labor
settled matter that the NLRC was in no and Employment or his duly authorized
position to disregard. In this light, the CA was representatives shall have the power to issue
correct in reversing the dismissal of compliance orders to give effect to the labor
MARCOPPER's appeal for failure to file an standards provisions of this Code and other
appeal bond. Pursued to its logical end, the labor legislation based on the findings of
CA conclusions should lead to the dismissal labor employment and enforcement officers
of NAMAWU's complaint with respect to its or industrial safety engineers made in the
615 previously dismissed members. course of inspection.
9. People’s Broadcasting (Bombo Radyo The provision is explicit that the visitorial and
Phils) vs. Sec of DOLE et al enforcement power of the DOLE comes into
play only “in cases when the relationship of
GR No 179652, May 8, 2009
employer-employee still exists.” This clause
FACTS: signifies that the employer-employee
relationship must have existed even before
Jandeleon Juezan (“Juezan”) filed a
the emergence of the controversy.
complaint before the DOLE against Bombo
Necessarily, the DOLE’s power does not
Radyo Phils. (“Bombo Radyo”) for illegal
apply in two instances, namely: (i) where the
deduction, non-payment of service incentive
employer-employee relationship has ceased;
leave, 13th month pay, premium pay for
and (ii) where no such relationship has ever
holiday and rest day and illegal diminution of
existed.
benefits, delayed payment of wages and
non-coverage of SSS, PAG-IBIG and The first situation is categorically covered by
Philhealth. On the basis of the complaint, the Sec. 3, Rule 11 of the Rules on the
DOLE conducted a plant level inspection. Disposition of Labor Standards Cases issued
The Labor Inspector in his report wrote, by the DOLE Secretary. It reads:

Where employer-employee relationship no determination of the existence of employer-

longer exists by reason of the fact that it has employee relationship is still primarily lodged
already been severed, claims for payment of with the NLRC. This is the meaning of the
monetary benefits fall within the exclusive clause “in cases where the relationship of
and original jurisdiction of the labor arbiters. employer-employee still exists” in Art. 128
Accordingly, if on the face of the complaint, it (b).
can be ascertained that employer-employee
Thus, before the DOLE may exercise its
relationship no longer exists, the case,
powers under Art. 128, two important
whether accompanied by an allegation of
questions must be resolved: (i) Does the
illegal dismissal, shall immediately be
employer-employee relationship still exist, or
endorsed by the Regional Director to the
alternatively, was there ever an employer-
appropriate branch of the National Labor
employee relationship to speak of; and (ii)
Relations Commission (NLRC).
Are there violations of the Labor Code or of
The law accords a prerogative to the NLRC any labor law?
over the claim when the employer-employee
The existence of an employer-employee
relationship has terminated or such
relationship is a statutory prerequisite to and
relationship has not arisen at all. The
a limitation on the power of the Secretary of
existence of an employer-employee
Labor, one which the legislative branch is
relationship is a matter which is not easily
entitled to impose. The rationale underlying
determinable from an ordinary inspection
this limitation is to eliminate the prospect of
because the elements of such a relationship
competing conclusions of the Secretary of
are not verifiable from a mere ocular
Labor and the NLRC. If the Secretary of
examination. The intricacies and implications
Labor proceeds to exercise his visitorial and
of an employer-employee relationship
enforcement powers absent the first
demand that the level of scrutiny should be
requisite, his office confers jurisdiction on
far above the superficial. While documents,
itself which it cannot otherwise acquire.
particularly documents found in the
employer’s office are the primary source Nevertheless, a mere assertion of absence
materials, what may prove decisive are of employer-employee relationship does not
factors related to the history of the deprive the DOLE of jurisdiction over the
employer’s business operations, its current claim. At least a prima facie showing of such
state as well as accepted contemporary absence of relationship, as in this case, is
practices in the industry. More often than not, needed to preclude the DOLE from the
the question of employer-employee exercise of its power. Without a doubt,
relationship becomes a battle of evidence, Bombo Radyo, since the inception of this
the determination of which should be case had been consistent in maintaining that
comprehensive and intensive and therefore Juezan is not its employee. A preliminary
best left to the specialized quasi-judicial body determination, based on the evidence
of the NLRC. offered and noted by the Labor Inspector
during the inspection as well as submitted
It can be assumed that the DOLE in the
during the proceedings before the Regional
exercise of its visitorial and enforcement
Director puts in genuine doubt the existence
power somehow has to make a
of employer-employee relationship. From
determination of the existence of an
that point on, the prudent recourse on the
employer-employee relationship. However,
part of the DOLE should have been to refer
such determination cannot be coextensive
Juezan to the NLRC for the proper
with the visitorial and enforcement power
dispensation of his claims. Furthermore,
itself. Such is merely preliminary, incidental
even the evidence relied on by the Regional
and collateral to the DOLE’s primary function
Director in his order are mere self-serving
of enforcing labor standards provisions. The
declarations of Juezan, and hence cannot be

relied upon as proof of employer-employee Natividad (LSO Natividad) to conduct an

relationship. inspection of Dusit Hotel premises on 24
April 2002. LSO Natividad’s Inspection
10. PHIL. Hoteliers Inc. vs. National Results Report dated 2 May 2002 stated:
Union of Workers in Hotel, Restaurant Based on interviews/affidavits of employees,
and Allied Industries- Dusit Hotel Nikko they are receiving more than P290.00
Chapter average daily rate which is exempted in the
GR No. 181972, AUGUST 25, 2009 compliance of Wage Order NCR-09;
FACTS: Remarks: There is an ongoing negotiation
under Case # NCMB-NCR-NS-12-369-01 &
RTWPB issued Wage Order No. 9 that took
NCMB-NCR-NS-01-019-02 now forwarded
effect on November 5, 2001. It grants P30.00
to the NLRC office for the compulsory
ECOLA to particular employees and workers
arbitration.
of all private sectors, identified as follows in
Section 1 thereof: NOTE: Payrolls to follow later upon request
including position paper of [Dusit Hotel].
Section 1. Upon the effectivity of this Wage
Order, all private sector workers and By virtue of Rasing’s request for another
employees in the National Capital Region inspection, LSO Natividad conducted a
receiving daily wage rates of TWO second inspection of Dusit Hotel premises on
HUNDRED FIFTY PESOS (P250.00) up to 29 May 2002. In her Inspection Results
TWO HUNDRED NINETY PESOS Report dated 29 May 2002, LSO Natividad
(P290.00) shall receive an emergency cost of noted:
living allowance in the amount of THIRTY
*Non-presentation of records/payrolls
PESOS (P30.00) per day payable in two
tranches as follows: *Based on submitted payrolls & list of union
members by NUWHRAIN-DUSIT HOTEL
Amount of ECOLA Effectivity NIKKO Chapter, there are one hundred forty-
P15.00 5 November 2001 four (144) affected in the implementation of
Wage Order No. NCR-09-> ECOLA covering
P15.00 1 February 2002
the periods from Nov.5/01 to present.
Respondent National Union of Workers in
Accordingly, the DOLE-NCR issued a Notice
Hotel, Restaurant and Allied Industries-Dusit
of Inspection Result directing Dusit Hotel to
Hotel Nikko Chapter (Union), through its
effect restitution and/or correction of the
President, Reynaldo C. Rasing (Rasing),
noted violations within five days from receipt
sent a letter to Director Alex Maraan (Dir.
of the Notice, and to submit any question on
Maraan) of the Department of Labor and
the findings of the labor inspector within the
Employment-National Capital Region
same period, otherwise, an order of
(DOLE-NCR), reporting the non-compliance
compliance would be issued. The Notice of
of Dusit Hotel with WO No. 9, while there was
Inspection Result was duly received by Dusit
an on-going compulsory arbitration before
Hotel Assistant Personnel Manager Rogelio
the National Labor Relations Commission
Santos.
(NLRC) due to a bargaining deadlock
between the Union and Dusit Hotel; and In the meantime, the NLRC rendered a
requesting immediate assistance on this Decision dated 9 October 2002 in NLRC-
matter. Rasing sent Dir. Maraan another NCR-CC No. 000215-02 – the compulsory
letter following-up his previous request for arbitration involving the Collective
assistance. Bargaining Agreement (CBA) deadlock
between Dusit Hotel and the Union –
Acting on Rasing’s letters, the DOLE-NCR
granting the hotel employees the following
sent Labor Standards Officer Estrellita
wage increases, in accord with the CBA:

Effective January 1, 2001- P500.00/month of the NLRC decision and dismissing the
complaint of the Union against Dusit Hotel,
Effective January 1, 2002- P550.00/month
for non-compliance with WO No. 9, for lack
Effective January 1, 2003- P600.00/month of merit.
On 22 October 2002, based on the results of The Union appealed before the DOLE
the second inspection of Dusit Hotel Secretary maintaining that the wage
premises, DOLE-NCR, through Dir. Maraan, increases granted by the NLRC Decision of
issued the Order directing Dusit Hotel to pay 9 October 2002 should not be deemed as
144 of its employees the total amount of compliance by Dusit Hotel with WO No. 9.
P1,218,240.00, corresponding to their The DOLE, through Acting Secretary Manuel
unpaid ECOLA under WO No. 9; plus, the G. Imson, issued an Order granting the
penalty of double indemnity, pursuant to appeal of the Union. The DOLE Secretary
Section 12 of Republic Act No. 6727,11 as reasoned that the NLRC Decision dated 9
amended by Republic Act No. 8188. October 2002 categorically declared that the
The employer concerned shall be ordered to wage increase under the CBA finalized
pay an amount equivalent to double the between Dusit Hotel and the Union shall not
unpaid benefits owing to the employees: be credited as compliance with WOs No. 8
and No. 9. Furthermore, Section 1 of Rule IV
Provided, that payment of indemnity shall not
absolve the employer from the criminal of the Rules Implementing WO No. 9, which
liability under this Act. provides that wage increases granted by an
employer in an organized establishment
If the violation is committed by a corporation, within three months prior to the effectivity of
trust or firm, partnership, association or any said Wage Order shall be credited as
other entity, the penalty of imprisonment compliance with the ECOLA prescribed
shall be imposed upon the entity’s therein, applies only when an agreement to
responsible officers including but not limited this effect has been forged between the
to the president, vice president, chief parties or a provision in the CBA allowing
executive officer, general manager, such crediting exists.
managing director or partner.
Expectedly, Dusit Hotel sought
Dusit Hotel filed a Motion for Reconsideration reconsideration of the Order of the DOLE
of the DOLE-NCR Order dated 22 October Secretary. In an Order, the DOLE Secretary
2002, arguing that the NLRC Decision dated granted the Motion for Reconsideration of
9 October 2002, resolving the bargaining Dusit Hotel and reversed his Order dated 22
deadlock between Dusit Hotel and the Union, July 2004. The DOLE Secretary, in reversing
and awarding salary increases under the his earlier Order, admitted that he had
CBA to hotel employees retroactive to 1 disregarded therein that the wage increase
January 2001, already rendered the DOLE- granted by the NLRC in the latter’s Decision
NCR Order moot and academic. With the dated 9 October 2002 retroacted to 1
increase in the salaries of the hotel January 2001. The said wage increase,
employees ordered by the NLRC Decision of taken together with the hotel employees’
9 October 2002, along with the hotel share in the service charges of Dusit Hotel,
employees’ share in the service charges, the already constituted compliance with the WO
144 hotel employees, covered by the DOLE- No. 9.
NCR Order of 22 October 2002, would
already be receiving salaries beyond the It was then the turn of the Union to file a
coverage of WO No. 9. Motion for Reconsideration, but it was denied
by the DOLE Secretary. The DOLE
Acting on the Motion, DOLE-NCR issued a Secretary found that it would be unjust on the
Resolution setting aside its earlier Order for part of Dusit Hotel if the hotel employees
being moot and academic, in consideration were to enjoy salary increases retroactive to

1 January 2001, pursuant to the NLRC compliance with the ECOLA mandated by
Decision dated 9 October 2002, and yet said WO No. 9. Creditability means that Dusit
salary increases would be disregarded in Hotel would have been allowed to pay its
determining compliance by the hotel with WO employees the salary increases in place of
No. 9. the ECOLA required by WO No. 9. This,
however, is not what Dusit Hotel is after. The
The Union appealed the Orders dated 16
position of Dusit Hotel is merely that the
December 2004 and 13 October 2005 of the
salary increases should be taken into
DOLE Secretary with the Court of Appeals,
account in determining the employees’
the Court of Appeals promulgated its
entitlement to ECOLA. The retroactive
Decision ruling in favor of the Union.
increases could raise the hotel employees’
Referring to Section 13 of WO No. 9, the
daily salary rates above P290.00,
Court of Appeals declared that wage
consequently, placing said employees
increases/allowances granted by the
beyond the coverage of WO No. 9. Evidently,
employer shall not be credited as compliance
Section 13 of WO No. 9 on creditability is
with the prescribed increase in the same
irrelevant and inapplicable herein.
Wage Order, unless so provided in the law or
the CBA itself; and there was no such The Court agrees with Dusit Hotel that the
provision in the case at bar. The appellate increased salaries of the employees should
court also found that Dusit Hotel failed to be used as bases for determining whether
substantiate its position that receipt by its they were entitled to ECOLA under WO No.
employees of shares in the service charges 9. The very fact that the NLRC decreed that
collected by the hotel was to be deemed the salary increases of the Dusit Hotel
substantial compliance by said hotel with the employees shall be retroactive to 1 January
payment of ECOLA required by WO No. 9. 2001 and 1 January 2002, means that said
The Court of Appeals adjudged that Dusit employees were already supposed to
Hotel should be liable for double indemnity receive the said salary increases beginning
for its failure to comply with WO No. 9 within on these dates. The increased salaries were
five days from receipt of notice. The the rightful salaries of the hotel employees by
appellate court stressed that ECOLA is 1 January 2001, then again by 1 January
among the laborers’ financial gratifications 2002. Although belatedly paid, the hotel
under the law, and is distinct and separate employees still received their salary
from benefits derived from negotiation or increases.
agreement with their employer.
It is only fair and just, therefore, that in
The Motion for Reconsideration of Dusit determining entitlement of the hotel
Hotel was denied for lack of merit by the employees to ECOLA, their increased
Court of Appeals. salaries by 1 January 2001 and 1 January
2002 shall be made the bases. There is no
ISSUE:
logic in recognizing the salary increases for
Whether the 144 hotel employees were still one purpose (i.e., to recover the unpaid
entitled to ECOLA granted by WO No. 9 amounts thereof) but not for the other (i.e., to
despite the increases in their salaries, determine entitlement to ECOLA). For the
retroactive to 1 January 2001, ordered by Court to rule otherwise would be to sanction
NLRC in the latter’s Decision dated 9 unjust enrichment on the part of the hotel
October 2002. employees, who would be receiving
RULING: increases in their salaries, which would place
them beyond the coverage of Section 1 of
The reliance of the Union on Section 13 of WO No. 9, yet still be paid ECOLA under the
WO No. 9 in this case is misplaced. Dusit very same provision.
Hotel is not contending creditability of the
hotel employees’ salary increases as

The NLRC, in its Decision dated 9 October payment of ECOLA under WO No. 9.
2002, directed Dusit Hotel to increase the Undoubtedly, the hotel employees’ right to
salaries of its employees by P500.00 per their shares in the service charges collected
month, retroactive to 1 January 2001. After by Dusit Hotel is distinct and separate from
applying the said salary increase, only 82 their right to ECOLA; gratification by the hotel
hotel employees would have had daily salary of one does not result in the satisfaction of
rates falling within the range of P250.00 to the other.
P290.00. Thus, upon the effectivity of WO
SC finds no basis to hold Dusit Hotel liable
No. 9 on 5 November 2001, only the said 82
for double indemnity
employees were entitled to receive the first
tranch of ECOLA, equivalent to P15.00 per Under Section 2(m) of DOLE Department
day. Order No. 10, Series of 1998, the Notice of
Inspection Result "shall specify the violations
The NLRC Decision also ordered Dusit Hotel
discovered, if any, together with the officer’s
to effect a second round of increase in its
recommendation and computation of the
employees’ salaries, equivalent to P550.00
unpaid benefits due each worker with an
per month, retroactive to 1 January 2002. As
advice that the employer shall be liable for
a result of this increase, the daily salary rates
double indemnity in case of refusal or failure
of all hotel employees were already above
to correct the violation within five calendar
P290.00. Consequently, by 1 January 2002,
days from receipt of notice." A careful review
no more hotel employee was qualified to
of the Notice of Inspection Result dated 29
receive ECOLA.
May 2002, issued herein by the DOLE-NCR
The assertion of Dusit Hotel that the receipt to Dusit Hotel, reveals that the said Notice
by said hotel employees of their shares in the did not contain such an advice. Although the
service charges already constituted Notice directed Dusit Hotel to correct its
substantial compliance with the prescribed noted violations within five days from receipt
payment of ECOLA under WO No. 9. thereof, it was not sufficiently apprised that
failure to do so within the given period would
It must be noted that the hotel employees
already result in its liability for double
have a right to their share in the service
indemnity. The lack of advice deprived Dusit
charges collected by Dusit Hotel, pursuant to
Hotel of the opportunity to decide and act
Article 96 of the Labor Code of 1991, to wit:
accordingly within the five-day period, as to
“Article 96. Service charges. – All service avoid the penalty of double indemnity. By 22
charges collected by hotels, restaurants and October 2002, the DOLE-NCR, through Dir.
similar establishments shall be distributed at Maraan, already issued its Order directing
the rate of eighty-five percent (85%) for all Dusit Hotel to pay 144 of its employees the
covered employees and fifteen percent total amount of P1,218,240.00,
(15%) for management. The share of corresponding to their unpaid ECOLA under
employees shall be equally distributed WO No. 9; plus the penalty of double
among them. In case the service charge is indemnity, pursuant to Section 12 of
abolished, the share of the covered Republic Act No. 6727, as amended by
employees shall be considered integrated in Republic Act No. 8188.
their wages.”
SC – AFFIRMED WITH THE FOLLOWING
Since Dusit Hotel is explicitly mandated by MODIFICATIONS: (1) Dusit Hotel Nikko is
the afore-quoted statutory provision to pay its ORDERED to pay its 82 employees – who,
employees and management their after applying the salary increases for 1
respective shares in the service charges January 2001, had daily salaries of P250.00
collected, the hotel cannot claim that to P290.00 – the first tranch of Emergency
payment thereof to its 82 employees Cost of Living Allowance, equivalent to
constitute substantial compliance with the P15.00 per day, from 5 November 2001 to 31

December 2001, within ten (10) days from favor of any but those who are laboring men
finality of this Decision; and (2) the penalty or women in the sense that their work is
for double indemnity is DELETED. No costs. manual. Persons belonging to this class
usually look to the reward of a day's labor for
“Although the Court is mindful of the fact that
immediate or present support, and such
labor embraces individuals with a weaker
persons are more in need of the exemption
and unlettered position as against capital, it
than any others. Petitioner Rosario A. Gaa is
is equally mindful of the protection that the
definitely not within that class.
law accords to capital. While the Constitution
is committed to the policy of social justice
2. Nestle Phils. vs. NLRC
and the protection of the working class, it
should not be supposed that every labor G.R. No. 85197 March 18, 1991
dispute will be automatically decided in favor
of labor. Management also has its own rights FACTS:
which, as such, are entitled to respect and
enforcement in the interest of simple fair The private respondents were employed by
play.” the petitioner either as sales representatives
or medical representatives. By reason of the
nature of their work they were each allowed
VI. Wages Protection to avail of the company's car loan policy.
Provisions and Under that policy, the company advances the
Prohibitions Regarding purchase price of a car to be paid back by the
employee through monthly deductions from
Wages
his salary, the company retaining the
ownership of the motor vehicle until it shall
have been fully paid for. All of the private
1. Gaa vs. CA respondents availed of the petitioner's car
G.R. No. L-44169; December 3, 1985 loan policy.
FACTS:
Respondents were dismissed from service
Rosario Gaa is occupying a managerial/ because of their participation in the strike/
supervisory position in El Grande Hotel. A certain irregularities. As such, they filed a
Notice of Garnishment upon El Grande case of illegal dismissal before the NLRC. In
Hotel, where petitioner was then employed, the Notices of Dismissal, they were asked by
garnishing her "salary, commission and/or the Company to settle the accounts payable
remuneration." Petitioner then filed with the of their car loans or return the car for proper
Court of First Instance of Manila a motion to disposition. The Company filed a civil suit to
lift said garnishment on the ground that her recover possession of the cars. Private
"salaries, commission and, or remuneration respondents sought a temporary restraining
are exempted from execution under Article order in the NLRC to stop the company from
1708 of the New Civil Code. cancelling their car loans and collecting their
monthly amortizations pending the final
ISSUE:
resolution of their appeals in the illegal
Whether or not the renumeration of Gaa are dismissal case. NLRC granted the TRO.
exempted from execution or attachment
pursuant to Art. 1708 of the Civil Code. ISSUE:
RULING:
Whether or not NLRC is correct in granting
SC held that, “We do not think that the the TRO in favor of the respondents pending
legislature intended the exemption in Article the case of illegal dismissal.
1708 of the New Civil Code to operate in

RULING: of the law. Consequently, private

respondents are not entitled to the refund of
Nestlé's demand for payment of the private the P20.00 car wash payments they made. It
respondents' amortizations on their car will be noted that there was nothing to
loans, or, in the alternative, the return of the prevent private respondents from cleaning
cars to the company, is not a labor, but a civil, the taxi units themselves, if they wanted to
dispute. It involves debtor-creditor relations, save their P20.00.Car washing after a tour of
rather than employee-employer relations. duty is a practice in the taxi industry, and is,
The NLRC gravely abused its discretion and in fact, dictated by fair play.
exceeded its jurisdiction by issuing the writ of
injunction to stop the company from
enforcing the civil obligation of the private 4. Manila Electric Company v. Secretary
respondents under the car loan agreements of Labor
and from protecting its interest in the cars
which, by the terms of those agreements,
belong to it (the company) until their FACTS:
purchase price shall have been fully paid by This is a motion for partial modification
the employee. The terms of the car loan
regarding the ruling in the Meralco case of
agreements are not in issue in the labor
case. The rights and obligations of the February 22, 2000 wherein it ruled that the
parties under those contracts may be arbitral award would retroact to the date after
enforced by a separate civil action in the the expiration of the previous CBA.
regular courts, not in the NLRC.
The assailed resolution stated since labor
laws are silent as to when an arbitral award
3. Five J Taxi vs. NLRC in a dispute upon which the Secretary had
assumed jurisdiction shall retroact. The
G.R. No. 111474 August 22, 1994
Court thus ruled that the CBA arbitral awards
FACTS: granted after six months from the expiration
of the last CBA shall retroact to such time
Private respondents Domingo Maldigan and agreed upon by the employer and the
Gilberto Sabsalon were hired by the employees or their union. Absent an
petitioners as taxi drivers. Aside from the agreement as to retroactivity, the award shall
daily "boundary", they were also required to retroact first day after the six- month period
pay P20.00 for car washing, and to further
following the expiration of the last day of the
make a P15.00 deposit to answer for any
CBA; in the absence of a CBA, the Secretary
deficiency in their "boundary," for every
actual working day. shall have plenary discretionary powers to
determine the date of retroactivity. Petitioner
ISSUE: also alleges that the retroactive application of
Whether or not the car wash payment is an the arbitral will cost it no less than P800
illegal deduction as contemplated in the million.
Labor Code.
RULING:
ISSUE:
SC held that the amount doled out was paid
directly to the person who washed the unit, When should an arbitral retroact?
thus we find nothing illegal in this practice,
much more to consider the amount paid by
the driver as illegal deduction in the context

Due to financial losses, the Philippine

HELD: Veterans Bank was placed in receivership
pursuant to the order of the Central Bank of
The cases cited by petitioner involve articles the Philippines. Consequently, its
253-A in relation to Article 263(g). The case employees, including private respondent Dr.
of Union of Filipino Employees, it was ruled Jose Teodorico V. Molina, were terminated
that since the resolution was outside the six from work and given their respective
month period of the past CBA, the NLRC separation pay and other benefits. Dr. Molina
could give prospective effect to the CBA and filed a complaint before NLRC. He
that the two –year arbitral award should be demanded the implementation of the Wage
given prospective effect. There nothing that Orders No. 1 and 2. Both the Labor Arbiter
says the arbitral awards or renewals of and NLRC granted the petition of Molina.
collective bargaining agreements shall
always have retroact effect. Although ISSUE:
respondent MEWA (union) cites the St.
Lukes case, stating that the Secretary of Whether or not Molina is entitled to the
Labor has plenary and discretionary power to increase of his salary pursuant to Wage
Orders No. 1 and 2.
determine the effectivity of arbitral wards.
RULING:
The Court therefore issued the resolution
that: where an arbitral award granted beyond SC held that Molina’s salary is within the
six month after the expiration of the exiting coverage of the said wage orders. W.O. 1
CBA, and there is no agreement between the expressly states that employees having a
parties as the date of effectivity thereof, the monthly salary of not more than P3,802.08
are entitled to receive the mandated wage
arbitral award shall retract to the first day
increase. Undeniably, MOLINA was
after the six month period following the
receiving a monthly salary of P3,754.60. This
expiration of the last day of the CBA. fact alone leaves no doubt that he should
benefit from said wage order.On the other
In resolving the motions for reconsideration hand, W.O. 2 raised the ceiling for
in this case, the Court took into consideration entitlement to the wage increase. If MOLINA
the fact that petitioner belongs to an industry was covered by the earlier wage order, with
imbued with interest and cannot ignore the more reason should the later wage order
enormous cost in case of full retroaction of apply to him.
the arbitral award. Balancing this with the
interest of social justice; the arbitral award
this case would retroact to the first day after 6. Philippine Appliances Corp. vs. CA
the six- month period of the following the G.R. No. 149434; June 3, 2004
expiration of the last day CBA.
Parenthetically, during the period between FACTS:
the expiration of the economic provisions and Petitioner is a domestic corporation engaged
the date of effectivity of the arbitral award, in the business of manufacturing
the hold- over principle shall govern. refrigerators, freezers and washing
machines. Respondent United Philacor
5. Phil. Veterans Bank vs. NLRC Workers Union-NAFLU is the duly elected
collective bargaining representative of the
G.R. No. 130439 October 26, 1999
rank-and-file employees of petitioner. During
FACTS: the collective bargaining negotiations
between petitioner and respondent union in

1997 (for the last two years of the collective order such payment would be unfair and
bargaining agreement covering the period of unreasonable for petitioner.
July 1, 1997 to August 31, 1999), petitioner
Furthermore, we have consistently ruled that
offered the amount of four thousand pesos
a bonus is not a demandable and
(P4,000.00) to each employee as an "early
enforceable obligation.
conclusion bonus". Upon conclusion of the
CBA negotiations, petitioner accordingly
gave this early signing bonus. After the
7. Special Steel Products, Inc. vs.
expiration of the CBA, both parties
Villareal
negotiated for a new CBA. However, it
resulted to a deadlock. The respondent union
filed before the NCMB a notice of strike due Facts: Special Steel Products, Inc., is a
to bargaining deadlock. The Department of domestic corporation engaged in the
Labor and Employment took cognizance of
principal business of importation, sale, and
the case and ordered, among other things,
marketing of BOHLER steel products.
herein petitioner to award signing bonus.
Petitioner argued that the award of the Respondents worked for petitioner as
signing bonus was patently erroneous since assistant manager and salesman. Villareal
it was not part of the employees’ salaries or obtained a car loan from Bank of Commerce
benefits or of the collective bargaining with petitioner as surety wherein they are
agreement. It is not demandable or jointly and severally agreed to pay the bank
enforceable since it is in the nature of an in installment basis. In January 1997,
incentive. Villareal resigned and joined Hi-Grade
ISSUE: Industrial and Technical Products as
Executive vice-president.
Whether or not the award of a signing bonus
by the Secretary of Labor is correct. Respondent So was sponsored by petitioner
RULING: to attend a training course in Kapfenberg,
Austria conducted by BOHLER. It rewarded
SC held that the signing bonus must not be So’s outstanding sales performance. When
awarded. So returned, the petitioner asked respondent
So to sign a memorandum to work for the
The CBA negotiation between petitioner and company for three years. After 2 years and 4
respondent union failed notwithstanding the months, So resigned from the
intervention of the NCMB. Respondent union company. Petitioner ordered respondents an
went on strike for eleven days and blocked accounting of the various Christmas
the ingress to and egress from petitioner’s giveaways they received. In return,
two work plants. The labor dispute had to be respondents also demanded payment of
referred to the Secretary of Labor and their separation benefits, commissions,
Employment because neither of the parties monetary benefits but petitioner refused and
was willing to compromise their respective withheld the 13th month pay and other
positions regarding the four remaining items
benefits.
which stood unresolved. While we do not
fault any one party for the failure of the On April 16, 1997, respondents filed with the
negotiations, it is apparent that there was no Labor Arbiter; in due course, the Labor
more goodwill between the parties and that Arbiter rendered a Decision IN FAVOR OF
the CBA was clearly not signed through their
So and Villareal. Petitioner filed a motion for
mutual efforts alone. Hence, the payment of
reconsideration but was denied Hence,
the signing bonus is no longer justified and to
petitioner filed with the Court of Appeals a

petition for certiorari. On October 29, 1999, 8. Agabon vs. NLRC

the Court of Appeals rendered a Decision G.R. No. 158693; November 17, 2004
dismissing the petition and affirming the
assailed NLRC Decision. Petitioner filed a FACTS:
motion for reconsideration but was denied by
Private respondent Riviera Home
the Appellate Court in a Resolution dated
Improvements, Inc. is engaged in the
May 8, 2000. Hence, this petition. business of selling and installing ornamental
and construction materials. It employed
petitioners Virgilio Agabon and Jenny
Issue: WON the employer can withhold its Agabon as gypsum board and cornice
employee’s wages and benefits as lien to installers. Private respondents were
protect its interest as surety in the car loan terminated due to abandonment of work.
and for expenses in the training abroad. Virgilio’s wage was deducted for SSS loan
and the value of the shoes from petitioner
Virgilio Agabon's 13th month pay.
Held: No, the employer cannot withhold ISSUE:
respondent’s 13th month pay and other Whether or not the employer can deduct from
monetary benefits. Article 116 of the Labor its employees’ wage.
Code, as amended, provides:
Who will prove payment of wages—
employee or employer.
“Withholding of wages and kickbacks RULING:

prohibited. It shall be unlawful for any
SC held employers cannot deduct any
person, directly or indirectly, to
amount from the wage of its employees
withhold any amount from the wages
without their consent. Under Article 113of the
(and benefits) of a worker or induce Labor Code, employers are prohibited from
him to give up any part of his wages making any deductions without the
by force, stealth, intimidation, threat employee's knowledge and consent. In the
or by any other means whatsoever instant case, private respondent failed to
without the worker’s consent.” show that the deduction of the SSS loan and
the value of the shoes from petitioner Virgilio
Agabon's 13th month pay was authorized by
The above provision is clear and needs no the latter. The lack of authority to deduct is
further bolstered by the fact that petitioner
further elucidation. Indeed, petitioner has no
Virgilio Agabon included the same as one of
legal authority to withhold respondents’
his money claims against private respondent.
13th month pay and other benefits. What an
employee has worked for, his employer must As a general rule, one who pleads payment
pay. Thus, an employer cannot simply refuse has the burden of proving it. Even where the
to pay the wages or benefits of its employee employee must allege non-payment, the
general rule is that the burden rests on the
because he has either defaulted in paying a
employer to prove payment, rather than on
loan guaranteed by his employer; or violated
the employee to prove non-payment. The
their memorandum of agreement; or failed to reason for the rule is that the pertinent
render an accounting of his employer’s personnel files, payrolls, records,
property. remittances and other similar documents –
which will show that overtime, differentials,
service incentive leave and other claims of

workers have been paid – are not in the SC held that in order to resolve the issue.
possession of the worker but in the custody The said benefits must be considered
and absolute control of the employer.In the whether these are considered “bonus” or not.
case at bar, if private respondent indeed paid
petitioners' holiday pay and service incentive A bonus is an act of generosity granted by an
leave pay, it could have easily presented enlightened employer to spur the employee
documentary proofs of such monetary to greater efforts for the success of the
benefits to disprove the claims of the business and realization of bigger profits.
petitioners. But it did not, except with respect The granting of a bonus is a management
to the 13th month pay wherein it presented prerogative, something given in addition to
cash vouchers showing payments of the what is ordinarily received by or strictly due
benefit in the years disputed. the recipient. Thus, a bonus is not a
demandable and enforceable obligation,
except when it is made part of the wage,
9. American Wire & Cable Daily Rated salary or compensation of the employee.
Employees vs. American Wire
Based on the foregoing pronouncement, it is
G.R. No. 155059; April 29, 2005 obvious that the benefits/entitlements
FACTS: subjects of the instant case are all bonuses
which were given by the private respondent
American Wire and Cable Co., Inc., is a out of its generosity and munificence. The
corporation engaged in the manufacture of benefits given are all in excess of what the
wires and cables. There are two unions in law requires each employer to give its
this company, the American Wire and Cable employees. Since they are above what is
Monthly-Rated Employees Union (Monthly- strictly due to the members of petitioner-
Rated Union) and the American Wire and union, the granting of the same was a
Cable Daily-Rated Employees Union (Daily- management prerogative, which, whenever
Rated Union). management sees necessary, may be
withdrawn, unless they have been made a
An original action was filed before the NCMB part of the wage or salary or compensation of
of the Department of Labor and Employment the employees.
(DOLE) by the two unions for voluntary
arbitration. They alleged that the private
For a bonus to be enforceable, it must have
respondent, without valid cause, suddenly been promised by the employer and
and unilaterally withdrew and denied certain expressly agreed upon by the parties, or it
benefits and entitlements which they have
must have had a fixed amount and had been
long enjoyed. These are service award, 35%
a long and regular practice on the part of the
premium of an employee’s basic pay employer. The benefits/entitlements in
rendered during special days, Christmas
question were never subjects of any express
party and promotional increase.
agreement between the parties. They were
never incorporated in the Collective
Bargaining Agreement (CBA).
ISSUE:
10. Honda Philippines vs. Samahang
Whether or not the benefits/entitlements are Malayang Manggagawa sa Honda
in the nature of a bonus, and assuming they
are so, whether they are demandable and G.R. No. 145561; June 15, 2005
enforceable obligations. FACTS:
RULING: The Collective Bargaining Agreement (CBA)
of the parties contains stipulation regarding

13th and 14th month pay. The CBA which ambiguity in favor of labor as mandated by
contained such stipulation is effective until Article 1702 of the Civil Code.The Court of
2000. In the latter part of 1998, the parties Appeals affirmed the arbitrator’s finding and
started negotiations for the 4 th and 5th year of added that the computation of the 13th
their CBA. However, efforts failed which lead month pay should be based on the length of
to the union’s submission of a Notice of service and not on the actual wage earned
Strike on the ground of bargaining deadlock. by the worker.
Thereafter, Honda filed a Notice of Lockout.
It sought the intervention of Secretary of 11. Producers Bank vs. NLRC
DOLE. The Secretary ordered the striking G.R. No. 100701; March 28, 2001
workers to cease and desist from the strike
and to return back to work. After the strike, FACTS:
the Management issued a memorandum Private respondents charge petitioners for
stating that the pro-rated computation of the diminution of benefits, non-compliance with
bonuses. Its new computation of the 13th Wage Order No. 6 and non-payment of
and 14th month pay to be granted to all its holiday pay. It has been placed under
employees whereby the thirty-one (31)-day conservatorship by the Central Bank to
long strike shall be considered unworked recover to revitalize from its nets losses. As
days for purposes of computing said a result, there has been a reduction and/or
benefits. As per the company’s new formula, continuance of the said benefits to its
the amount equivalent to 1/12 of the employers.
employees’ basic salary shall be deducted
from these bonuses, with a commitment ISSUE:
however that in the event that the strike is Whether or not the removal/ and or
declared legal, Honda shall pay the amount discontinuance of the benefits is justified and
deducted. Aggrieved, the union filed a valid.
complaint against Honda.
RULING:
ISSUE:
With regards the bonuses given to its
Whether the pro-rated computation of the employees, SC ruled that the bank is justified
13th month pay and the other bonuses in in withdrawing the said bonus. It ratiocinated
question is valid and lawful. that the bank was not only experiencing a
decline in its profits, but was reeling from
tremendous losses triggered by a bank-run
RULING: which began in 1983. In such a depressed
financial condition, petitioner cannot be
It is not valid and lawful because it violates legally compelled to continue paying the
Article 100 of the Labor Code. This Court same amount of bonuses to its employees.
held that the grant of these benefits has Thus, the conservator was justified in
ripened into company practice or policy reducing the mid-year and Christmas
which cannot be peremptorily withdrawn. bonuses of petitioner's employees. To hold
otherwise would be to defeat the reason for
A cursory reading of the provisions will show the conservatorship which is to preserve the
that they did not state categorically whether assets and restore the viability of the
the computation of the 13th month pay, 14th financially precarious bank. These bonuses
month pay and the financial assistance credited for the mid-year bonus and
would be based on one full month’s basic Christmas bonus as part of the 13 th month
salary of the employees, or pro-rated based pay by the bank is justified.
on the compensation actually received. The
arbitrator thus properly resolved the

It is worth noting that a bonus is an amount and active members of the proposed union.
granted and paid to an employee for his Aggrieved, petitioners filed with the labor
industry and loyalty which contributed to the arbiter a complaint against private
success of the employer's business and respondent for unfair labor practice, illegal
made possible the realization of profits. It is dismissal and illegal deduction of washing
an act of generosity granted by an fees.
enlightened employer to spur the employee
ISSUE:
to greater efforts for the success of the
business and realization of bigger profits. Whether or not the taxi drivers are
The granting of a bonus is a management considered employees of the Goodman Taxi
prerogative, something given in addition to entitling them to full backwages.
what is ordinarily received by or strictly due RULING:
the recipient. Thus, a bonus is not a
demandable and enforceable obligation, SC ruled that the taxi drivers are employees
except when it is made part of the wage, of the company. Thus, they are entitled to full
salary or compensation of the employee. backwages.
However, an employer cannot be forced to Applying the 4-fold test, the owner exercised
distribute bonuses which it can no longer supervision and control over drivers. The
afford to pay. To hold otherwise would be to management of the business is in the
penalize the employer for his past owner's hands. Hence, petitioners are
generosity. undoubtedly employees of private
respondent because as taxi drivers they
12. Jardin vs. NLRC perform activities which are usually
G.R. No. 119268; February 23, 2000 necessary or desirable in the usual business
FACTS: or trade of their employer. With regard to the
amount deducted daily by private respondent
from petitioners for washing of the taxi units,
Petitioners were drivers of private
we view the same as not illegal in the context
respondent, Philjama International Inc., a
of the law. We note that after a tour of duty,
domestic corporation engaged in the
it is incumbent upon the driver to restore the
operation of "Goodman Taxi." Petitioners
unit he has driven to the same clean
used to drive private respondent's taxicabs
condition when he took it out. Car washing
every other day on a 24-hour work schedule
after a tour of duty is indeed a practice in the
under the boundary system. Under this
taxi industry and is in fact dictated by fair
arrangement, the petitioners earned an
play.Hence, the drivers are not entitled to
average of P400.00 daily. Nevertheless,
reimbursement of washing charges.
private respondent admittedly regularly
deducts from petitioners, daily earnings the
amount of P30.00 supposedly for the
washing of the taxi units. Believing that the 13. Manila Jockey’s Club Employees
deduction is illegal, petitioners decided to Labor Union vs. Manila Jockey Club
form a labor union to protect their rights and G.R. No. 167601; March 7, 2007
interests.
FACTS:
Upon learning about the plan of petitioners, Petitioner Manila Jockey Club Employees
private respondent refused to let petitioners Labor Union-PTGWO and respondent
drive their taxicabs when they reported for Manila Jockey Club, Inc., a corporation with
work on August 6, 1991, and on succeeding a legislative franchise to conduct, operate
days. Petitioners suspected that they were and maintain horse races, entered into a
singled out because they were the leaders Collective Bargaining Agreement (CBA). The

CBA governed the economic rights and management but to change the employees'
obligations of respondent’s regular monthly work schedule as there was no work to be
paid rank-and-file employees.In the CBA, the done in the morning. Evidently, the
parties agreed to a 7-hour work schedule adjustment in the work schedule of the
from 9:00 a.m. to 12:00 noon and from 1:00 employees is justified. While it is true that
p.m. to 5:00 p.m. on a work week of Monday Section 1, Article IV of the CBA provides for
to Saturday, as contained under Section 1, a 7-hour work schedule from 9:00 a.m. to
Article IV,of the same CBA. All work 12:00 noon and from 1:00 p.m. to 5:00 p.m.
performed in excess of seven (7) hours work from Mondays to Saturdays, Section 2,
schedule and on days not included within the Article XI, however, expressly reserves on
work week shall be considered overtime and respondent the prerogative to change
paid as such. Except those monthly existing methods or facilities to change the
compensation which includes work schedules of work.
performed during Saturday, Sunday, and
Holiday when races are held at the Club. An Manila Jockey Club was not obliged to allow
inter-office memorandum was issued all its employees to render overtime work
declaring that the hours of work of regular everyday for the whole year, but only those
monthly-paid employees shall be from 1:00 employees whose services were needed
p.m. to 8:00 p.m. when horse races are held, after their regular working hours and only
that is, every Tuesday and Thursday. The upon the instructions of management. The
memorandum, however, maintained the 9:00 overtime pay was not given to each
a.m. to 5:00 p.m. schedule for non-race days. employee consistently, deliberately and
Petitioners questioned the above office unconditionally, but as a compensation for
memorandum as violative of the prohibition additional services rendered. Thus, overtime
against non-diminution of wages and pay does not fall within the definition of
benefits guaranteed the CBA which specified benefits under Article 100 of the Labor Code
the work schedule of respondent's on prohibition against elimination or
employees to be from 9:00 a.m. to 5:00 p.m. diminution of benefits.
Petitioner claimed that as a result of the
memorandum, the employees are precluded 14. San Miguel Corp. et. al vs. Layoc Jr.
from rendering their usual overtime work et. al.
from 5:00 p.m. to 9:00 p.m.
G.R. No. 149640; October 19, 2007
ISSUE:
FACTS:
Whether or not the change in the work
schedule violated Article 100 of the Labor Respondents were among the “Supervisory
Code on the non-diminution of wages and Security Guards” of the Beer Division of the
benefits guaranteed under the parties’ CBA. San Miguel Corporation. From the
RULING: commencement of their employment, the
private respondents were required to punch
SC held in favor of Manila Jockey Club. It their time cards for purposes of determining
stated that the work schedule is justified, it the time they would come in and out of the
being a management prerogative. company’s work place. As such, the private
Respondent, as employer, cites the change respondents were availing the benefits for
in the program of horse races as reason for overtime, holiday and night premium duty
the adjustment of the employees’ work through time card punching. However, in the
schedule. It rationalizes that when the CBA early 1990’s, the San Miguel Corporation
was signed, the horse races started at 10:00 embarked on a Decentralization Program.
a.m. When the races were moved to 2:00 The Beer Division of the San Miguel
p.m., there was no other choice for Corporation implemented “no time card

policy” whereby the supervising security upon the instructions of their

guards of the Beer Division were no longer superiors. Respondents even differ as to the
required to punch their time cards. However, amount of overtime pay received on account
in lieu of the overtime pay and the premium of the difference in the additional hours of
pay, the personnel of the Beer Division of the services rendered.
petitioner San Miguel Corporation affected
by the “No Time Card Policy” were given a Aside from their allegations, respondents
10% across-the-board increase on their were not able to present anything to prove
basic pay while the supervisors who were that petitioners were obliged to permit
assigned in the night shift (6:00 p.m. to 6:00 respondents to render overtime work and
a.m.) were given night shift allowance give them the corresponding overtime
ranging from P2,000.00 to P2,500.00 a pay. Even if petitioners did not institute a “no
month. Aggrieved, respondents filed a time card policy,” respondents could not
complaint for unfair labor practice, violation demand overtime pay from petitioners if
of Article 100 of the Labor Code of the respondents did not render overtime
Philippines, and violation of the equal work. The requirement of rendering
protection clause and due process of law in additional service differentiates overtime pay
relation to paragraphs 6 and 8 of Article 32 of from benefits such as thirteenth month pay or
the New Civil Code of the Philippines. yearly merit increase. These benefits do not
require any additional service from their
beneficiaries. Thus, overtime pay does not
ISSUE: fall within the definition of benefits under
Whether or not the “No Time Card Policy” Article 100 of the Labor Code.
constitutes a violation of Article 100 of the
Labor Code.
RULING: 15. San Miguel Corp. vs. Pontillas
SC ruled in favor of the petitioners. G.R. No. 155178; May 7, 2008
Petitioners exercised management
FACTS:
prerogative in the implementation of the “No
Time Card Policy”.
San Miguel Corporation (petitioner)
employed Angel C. Pontillas (respondent) as
As a general rule, managerial employees are
a daily wage company guard. In 1984,
not entitled to overtime pay for services
respondent became a monthly-paid
rendered in excess of eight hours a
employee which entitled him to yearly
day. Respondents failed to show that the
increases in salary. Respondent alleged that
circumstances of the present case constitute
his yearly salary increases were only a
an exception to this general rule.
percentage of what the other security guards
Respondents assert that Article 100 of the received. On 19 October 1993, respondent
Labor Code prohibits the elimination or filed an action for recovery of damages due
diminution of benefits. However, contrary to to discrimination under Article 100 of the
the nature of benefits, petitioners did not Labor Code of the Philippines (Labor Code),
freely give the payment for overtime work to as amended, as well as for recovery of salary
respondents. Petitioners paid respondents differential and backwages. Pending the
overtime pay as compensation for services complaint of herein petitioner, a
rendered in addition to the regular work memorandum was sent out by the
hours. Respondents rendered overtime Management stating that there will be a
work only when their services were needed transfer from OroVerde Warehouse, where
after their regular working hours and only respondent is stationed, to VisMin Logistics

Operations. Claiming that he is waiting for respondent is the labor union of petitioner’s
the directive of his supervisor, respondent rank and file employees. Sometime in
continued reporting in the OroVerde December 2003, petitioner paid the 13 th
Warehouse. For alleged insubordination of month pay, bonus, and leave encashment of
the order, respondent was terminated. Thus, three union members in amounts
he filed an amended complaint. proportional to the service they
actually rendered in a year, which is less
ISSUE:
than a full twelve (12) months. Respondent
Whether or not the directive of transfer was protested the prorated scheme, claiming that
valid and reasonable. on several occasions petitioner did not
RULING: prorate the payment of the same benefits to
seven (7) employees who had not served
for the full 12 months. According to
SC held that the petitioner exercised
respondent, the prorated payment violates
management prerogative in its directive of
the rule against diminution of benefits under
transfer from the OroVerde Warehouse to
Article 100 of the Labor Code. Thus, they
VisMin Logistics Operation.
filed a complaint before the National
Conciliation and Mediation Board
The employer exercises the prerogative to (NCMB). The parties submitted the case for
transfer an employee for valid reasons and voluntary arbitration.
according to the requirements of its
business, provided the transfer does not ISSUE:
result in demotion in rank or diminution of the Whether or not the prorated payment of the
employee’s salary, benefits, and other benefits constitute a violation under Art. 100
privileges. In this case, we found that the of the Labor Code.
order of transfer was reasonable and lawful
considering the integration of Oro Verde RULING:
Warehouse with VisMin Logistics SC ruled in favor of the respondents. The
Operations. Respondent was properly voluntary grant of the benefits has been an
informed of the transfer but he refused to established company practice. It has been a
receive the notices on the pretext that he was company practice which grants full benefits
wary because of his pending case against to its employees regardless of the length of
petitioner. Respondent failed to prove that service rendered.
petitioner was acting in bad faith in effecting
the transfer. There was no demotion There is no doubt that in order to be entitled
involved, or even a diminution of his salary, to the full monetization of sixteen (16) days
benefits, and other privileges. Respondent’s of vacation and sick leave, one must have
persistent refusal to obey petitioner’s lawful rendered at least one year of service. The
order amounts to willful disobedience under clear wording of the provisions does not allow
Article 282 of the Labor Code. any other interpretation. Anent the 13th
month pay and bonus, we agree with the
findings of Labor Arbiter Mangabat that the
CBA provisions did not give any meaning
16. Arco Metal Products vs. Samahan ng different from that given by the law, thus it
Manggagawa sa Arco-Metal-NAFLU should be computed at 1/12 of the total
G.R. No. 170734; May 14, 2008 compensation which an employee receives
for the whole calendar year. The bonus is
FACTS: also equivalent to the amount of the 13 th
Petitioner is a company engaged in the month pay given, or in proportion to the
manufacture of metal products, whereas

actual service rendered by an employee the sick leave benefits to some intermittent
within the year. workers.
Any benefit and supplement being enjoyed
17. Genesis Transport Service Inc. vs.
by employees cannot be reduced,
diminished, discontinued or eliminated by the Unyon ng Malatang Manggagwa ng
employer. The principle of non-diminution of Genesis Transport
benefits is founded on the Constitutional GR No. 182114; April 5, 2010
mandate to "protect the rights of workers and
FACTS:
promote their welfare,” and “to afford labor
full protection.” Said mandate in turn is the Respondent Juan Taroy was hired by
basis of Article 4 of the Labor Code which petitioner Genesis Transport Service, Inc.
states that “all doubts in the implementation (Genesis Transport) as driver on commission
and interpretation of this Code, including its basis at 9% of the gross revenue per trip.
implementing rules and regulations shall be On May 10, 2002, Taroy was, after due
rendered in favor of labor.” Jurisprudence is notice and hearing, terminated from
replete with cases which recognize the right employment after an accident on April 20,
of employees to benefits which were 2002 where he was deemed to have been
voluntarily given by the employer and which driving recklessly.
ripened into company practice. Thus in
Davao Fruits Corporation v. Associated Taroy thus filed a complaint for illegal
Labor Unions, et al.where an employer had dismissal and payment of service incentive
freely and continuously included in the leave pay, claiming that he was singled out
computation of the 13th month pay those for termination because of his union
items that were expressly excluded by the activities, other drivers who had met
law, we held that the act which accidents not having been dismissed from
was favorable to the employees though not employment. Taroy later amended his
conforming to law had thus ripened into a complaint to implead his herein co-
practice and could not be withdrawn, respondent Unyon ng Malayang
reduced, diminished, discontinued or Manggagawa ng Genesis Transport (the
eliminated. In Sevilla Trading Company v. union) as complainant and add as grounds of
Semana, we ruled that the employer’s act of his cause of action unfair labor practice
including non-basic benefits in the (ULP), reimbursement of illegal deductions
computation of the 13th month pay was a on tollgate fees, and payment of service
voluntary act and had ripened into a incentive leave pay.
company practice which cannot be Respecting the claim for refund of illegal
peremptorily withdrawn. Meanwhile in deductions, Taroy alleged that in 1997,
Davao Integrated Port Stevedoring Services petitioner started deducting from his weekly
v. Abarquez, the Court ordered the payment earnings an amount ranging from P160 to
of the cash equivalent of the unenjoyed sick P900 representing toll fees, without his
leave benefits to its intermittent workers after consent and written authorization as required
finding that said workers had received these under Article 113 of the Labor Code and
benefits for almost four years until the grant contrary to company practice; and that
was stopped due to a different interpretation deductions were also taken from the bus
of the CBA provisions. We held that the conductor’s earnings to thus result to double
employer cannot deduction.
unilaterally withdraw the existing privilege
of commutation or conversion to cash given Genesis Transport countered that Taroy
to said workers, and as also noted that the committed several violations of company
employer had in fact granted and paid said rules for which he was given warnings or
cash equivalent of the unenjoyed portion of disciplined accordingly; that those violations,

the last of which was the April 20, 2002 Generally speaking, matters of judicial notice
incident, included poor driving skills, have three material requisites: (1) the matter
tardiness, gambling inside the premises, use must be one of common and general
of shabu, smoking while driving, knowledge; (2) it must be well and
insubordination and reckless driving;and that authoritatively settled and not doubtful or
Taroy’s dismissal was on a valid cause and uncertain; and (3) it must be known to be
after affording him due process. within the limits of the jurisdiction of the court.
The principal guide in determining what facts
The Labor Arbiter rendered dismissing
may be assumed to be judicially known is
instant complaint for illegal dismissal for lack
that of notoriety. Hence, it can be said that
of merit and was ordered to refund to
judicial notice is limited to facts evidenced by
complainant the underpayment/differential
public records and facts of general notoriety.
due him as a result of the deduction of the
Moreover, a judicially noticed fact must be
tollgate fees from the gross receipts. The
one not subject to a reasonable dispute in
NLRC affirmed the Labor Arbiter’s decision
that it is either: (1) generally known within the
with modification. It deleted the award to
territorial jurisdiction of the trial court; or (2)
Taroy of attorney’s fees.
capable of accurate and ready determination
The respondent challenged the decision on by resorting to sources whose accuracy
the CA questioning the Labor Arbiter’s failure cannot reasonably be questionable.
to pass on the propriety of his preventive
None of the material requisites for the Court
suspension, dismissal of his complaint for
to take judicial notice of a particular matter
constructive dismissal and ULP, and failure
was established by petitioners.
to award him service incentive leave pay.
The petitioners questioned the order for them Albeit the amounts representing tollgate fees
to refund "underpayment" and pay attorney’s were deducted from gross revenues and not
fees. directly from Taroy’s commissions, the labor
tribunal and the appellate court correctly held
ISSUE:
that the withholding of those amounts
Whether or not the respondent is entitled for reduced the amount from which Taroy’s 9%
a refund “underpayment” for the toll fees commission would be computed. Such a
deducted from his weekly earnings. computation not only marks a change in the
method of payment of wages, resulting in a
Whether or not the issue of preventive
suspension violated Taroy’s right to due diminution of Taroy’s wages in violation of
process. Article 113 vis-à-vis Article 100 of the Labor
Code, as amended. It need not be underlined
that without Taroy’s written consent or
HELD: authorization, the deduction is considered
illegal.
The Supreme Court affirmed CA decision
with the refund of underpayment with the The invocation of the rule on "company
modification that the award of nominal practice" is generally used with respect to the
damages to respondent Juan Taroy is grant of additional benefits to employees, not
deleted. on issues involving diminution of benefits.
First Issue: Second Issue:
The Court take judicial notice of petitioners’ Respecting the issue of statutory due
claim that the deduction of tollgate fees from process, the Court holds that Taroy’s right
the gross earnings of drivers is an accepted thereto was not violated.
and long-standing practice in the In any event, what the Rules require is that
transportation industry. Expertravel & Tours, the employer act on the suspended worker’s
Inc. v. Court of Appeals10 instructs: status of employment within the 30-day

period by concluding the investigation either overtime pay, 13th month pay, holiday pay,
by absolving him of the charges, or meting rest day pay, and five (5)-day service
the corresponding penalty if liable, or incentive leave pay; and for constructive
ultimately dismissing him. If the suspension dismissal.
exceeds the 30-day period without any
corresponding action on the part of the Petitioner conceded that his payment of
employer, the employer must reinstate the wages falls below the minimum wage law. He
employee or extend the period of averred that NLRC should have considered
suspension, provided the employee’s wages as forming a substantial part of private
and benefits are paid in the interim. respondents' total wages the cash value of
the tuna liver and intestines private
In the present case, petitioner company had
respondents were entitled to retrieve. He
until May 20, 2002 to act on Taroy’s case. It
argued that the combined value of the cash
did by terminating him through a notice dated
wage and monetary value of the tuna liver
May 10, 2002, hence, the 30-day
and intestines clearly exceeded the minimum
requirement was not violated even if the
wage fixed by law.
termination notice was received only on June
4, 2002, absent any showing that the delayed
Both the Labor Arbiter and the NLRC ruled in
service of the notice on Taroy was
favor of the respondents.
attributable to Genesis Transport.
Taroy’s statutory due process not having ISSUE:
been violated, he is not entitled to the award Whether or not the form of payment by
of nominal damages. Congson is valid pursuant to Article 102 of
the Labor Code.
RULING:
Petitioner's practice of paying the private
VII. Payment of Wages respondents the minimum wage by means of
legal tender combined with tuna liver and
intestines runs counter to the above cited
1. Congson vs. NLRC provision of the Labor Code. The fact that
G.R. No. 114250; April 5, 1995 said method of paying the minimum wage
was not only agreed upon by both parties in
FACTS: the employment agreement but even
expressly requested by private respondents,
Dominico C. Congson is the registered does not shield petitioner. Article 102 of the
owner of Southern Fishing Industry. Labor Code is clear. Wages shall be paid
Respondents were hired as piece-rate only by means of legal tender. The only
employees uniformly paid at a rate of P1.00 instance when an employer is permitted to
per tuna weighing thirty (30) to eighty (80) pay wages informs other than legal tender,
kilos per movement. They work for 7 days a that is, by checks or money order, is when
week. Due to alleged scarcity of tuna, the circumstances prescribed in the second
Congson notified his proposal to reduce the paragraph of Article 102 are present.
rate-per-tuna movement. When they
reported the following day, they found out 2. North Davao Mining vs. NLRC
that they were already replaced with new set G.R. No. 112546; March 13, 1996
of workers. They wanted to have a dialogue
with the management, but they waited in FACTS:
vain. Thus, they filed a case before NLRC for
underpayment of wages (violation of the Due to financial losses, North Davao Mining
minimum wage law) and non-payment of Corporation laid off workers. Respondent

Wilfredo Guillema is one among several The House of Sara Lee (petitioner) is
employees of North Davao who were engaged in the direct selling of a variety of
separated by reason of the company’s product lines for men and women, including
closure on May 31, 1992. It appears that, cosmetics, intimate apparels, perfumes,
during the life of the petitioner corporation, ready to wear clothes and other novelty
from the beginning of its operations in 1981 items, through its various outlets nationwide.
until its closure in 1992, it had been giving It employs Credit Administration Supervisors
separation pay equivalent to thirty (30) days’ (CAS) to supervise and monitor the credit
pay for every year of service. Moreover, collection of the Independent Business
inasmuch as the region where North Davao Managers (IBMs) and Independent Group
operated was plagued by insurgency and Supervisors (IGSs). A 38- or 52-day “rolling
other peace and order problems, the due date” is given to each of its IBMs and
employees had to collect their salaries at a IGSs. CAS is under the direct control and
bank in Tagum, Davao del Norte, some 58 supervision of Branch Operations Manager
kilometers from their workplace and about 2 (BOM). Cynthia Rey was a CAS at the
½hours’ travel time by public transportation; Cagayan de Oro Branch of the petitioner.
this arrangement lasted from 1981 up to She was later transferred to Butuan City.
1990. While respondent was still working in Butuan
City, she allegedly instructed the Accounts
ISSUE:
Receivable Clerk of the Cagayan de Oro
outlet, a certain Ms. Magi Caroline Mendoza,
Whether or not time spent in collecting
to change the credit term of one of the IBMs
wages in a place other than the place of
of the petitioner, a certain Ms. Mariam Rey-
employment is compensable
Petilla, who happens to be respondent’s
notwithstanding that the same is done during
sister-in-law, from the 52-day limit to an
official time.
“unauthorized” term of 60 days. Ms.
Mendoza reported the matter to the BOM
RULING:
Villagracia. Villagracia discreetly
SC, affirming the decision of the Labor investigated the matter and found out that it
Arbiter, finds that the hours spent by was not only Ms. Petilla who was given
complainants in collecting salaries at a bank extensions to the “rolling due dates” but other
in Tagum, Davao del Norte shall be IBMs as well.
considered compensable hours
worked. Considering further the distance On the basis of the hearing, the alleged
between Amacan, Maco to Tagum which is voluntary admissions of respondent, and the
2½ hours by travel and the risks in findings of the auditor’s report, the petitioner
commuting all the time in collecting formally dismissed the respondent for breach
complainants’ salaries, would justify the of trust and confidence. The dismissal lead to
granting of backwages equivalent to two (2) respondent’s filing of her Complaint for illegal
days in a month as prayed for. Corollary, we dismissal, backwages and damages, with the
likewise hold respondents liable for the Labor Arbiter.
transportation expenses incurred by
complainants at P40.00 round trip fare during Both Labor Arbiter and the NLRC ruled in
pay days. favor the respondent.
3. House of Sara Lee vs. Rey ISSUE:

Whether or not respondent was dismissed
G.R. No. 149013; August 31, 2006 for just cause.
FACTS: RULING:

SC held that respondent was dismissed for appeal by the Bank. Sadac filed for
just cause. In the present case, the execution of judgment where it gave its
respondent is not an ordinary rank-and-file computation which amounted to P 6.03 M
employee. The nature of her work requires a representing his back wages and the
substantial amount of trust and confidence increases he should have received during
on the part of the employer. Being the Credit the time he was illegally dismissed. The
Administration Supervisor of the Cagayan de Bank opposed to Sadac’s computation. The
Oro and Butuan City branches of the Labor Arbiter favor Sadac’s computation.
petitioner, respondent occupied a highly NLRC, upon appeal by the bank, reversed
sensitive and critical position and may thus the decision. CA reversed the decision of
be dismissed on the ground of loss of trust NLRC. Hence, this petition.
and confidence.
ISSUE:
4. Equitable Bank vs. Sadac Whether or not the computation of back

wages shall include the general increases.
G.R. No. 164772; June 8, 2006
RULING:
FACTS:
Ricardo Sadac was appointed Vice To resolve the issue, the court revisits its
President of the Legal Department of pronouncements on the interpretation of the
petitioner Bank effective 1 August 1981, and term backwages. Backwages in general are
subsequently General Counsel thereof on 8 granted on grounds of equity for earnings
December 1981. On June 1989, nine lawyers which a worker or employee has lost due to
of petitioner Bank’s Legal Department, in a his illegal dismissal. It is not private
letter-petition to the Chairman of the Board of compensation or damages but is awarded
Directors, accused respondent Sadac of in furtherance and effectuation of the public
abusive conduct and ultimately, petitioned objective of the Labor Code. Nor is it a
for a change in leadership of the department. redress of a private right but rather in the
On the ground of lack of confidence in nature of a command to the employer to
Sadac, under the rules of client and lawyer make public reparation for dismissing an
relationship, petitioner Bank instructed employee either due to the former’s
respondent Sadac to deliver all materials in unlawful act or bad faith.
his custody in all cases in which the latter
was appearing as its counsel of record. In In the case of Bustamante v. National Labor
reaction thereto, Sadac requested for a full Relations Commission, It said that the Court
hearing and formal investigation but the deems it appropriate to reconsider such
same remained unheeded. On 9 November earlier ruling on the computation of back
1989, respondent Sadac filed a complaint for wages by now holding that conformably with
illegal dismissal with damages against the evident legislative intent as expressed in
petitioner Bank and individual members of Rep. Act No. 6715, back wages to be
the Board of Directors thereof. After learning awarded to an illegally dismissed employee,
of the filing of the complaint, petitioner Bank should not, as a general rule, be diminished
terminated the services of respondent or reduced by the earnings derived by him
Sadac. Finally, on 10 August 1989, Sadac elsewhere during the period of his illegal
was removed from his office dismissal. The underlying reason for this
ruling is that the employee, while litigating
Labor Arbiter rendered decision that the legality (illegality) of his dismissal, must
Sadac’s termination was illegal and entitled still earn a living to support himself and
to reinstatement and payment of full back family, while full backwages have to be paid
wages. NLRC affirmed the decision upon by the employer as part of the price or

penalty he has to pay for illegally dismissing

his employee. The clear legislative intent of
the amendment in Rep. Act No. 6715 is to
give more benefits to workers than was
previously given them. Thus, a closer
adherence to the legislative policy behind
Rep. Act No. 6715 points to "full
backwages" as meaning exactly that, i.e.,
without deducting from backwages the
earnings derived elsewhere by the
concerned employee during the period of
his illegal dismissal.
There is no vested right to salary increases.

Sadac may have received salary increases
in the past only proves fact of receipt but
does not establish a degree of assuredness
that is inherent in backwages. The
conclusion is that Sadac’s computation of
his full backwages which includes his
prospective salary increases cannot be
permitted.

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Labor Standards: Case Digest (MIDTERM) Atty. Valerie Gayle J.

They work 10 hours for the first shift and 10

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In line with its declared policy, R.A. No. 6727

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Petitioners are monthly-paid employees of Even assuming that Section 2, Rule IV of

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inspection authority to Senior Labor compliance, or the so-called "enforcement

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In line with its declared policy, R.A. No. 6727

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Anent the second issue, the Regional

6. Sapio vs. Undaloc Construction et. al.

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ISSUE: Management representative informed that

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Where employer-employee relationship no determination of the existence of employer-

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relied upon as proof of employer-employee Natividad (LSO Natividad) to conduct an

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RULING: of the law. Consequently, private

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Due to financial losses, the Philippine

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petition for certiorari. On October 29, 1999, 8. Agabon vs. NLRC

“Withholding of wages and kickbacks RULING:

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policy” whereby the supervising security upon the instructions of their

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First Issue: Second Issue:

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3. House of Sara Lee vs. Rey ISSUE:

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4. Equitable Bank vs. Sadac Whether or not the computation of back

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penalty he has to pay for illegally dismissing