WAGES AND WAGE RATIONALIZATION ACT;

VIOLATION OF WAGE ORDER

S.I.P. Food House et al., vs. Batolina

Doctrine: REQUISITES TO ESTABLISH EMPLOYEE-EMPLOYER RELATIONSHIP; WHEN IS BOARD ANG LODGING

(FACILITIES) DEDUCTIBLE FROM WAGE

Facts: GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the Government Service Insurance
System (GSIS). GMPC wanted to operate a canteen in the new GSIS Building. Since it had no capability and expertise in said
business, it contracted the services of SIP, owned by Spouses Pablo. The respondents worked as waiters and waitresses in the
canteen. In Feb 2004, GMPC terminated SIPs concession contract. This termination led to the dismissal of the respondents, hence
they filed for illegal dismissal with money claims.

RESPONDENTS’ CONTENTION:

SIP did not implement Wage Orders 5 to 11 for the years of 1997 to 2004; 2) they did not receive overtime pay for work rendered
from 6:30 am to 5:30 pm; 3) other benefits (service incentive, maternity benefit of Flordeliza Matias, non-remittance of their SSS
contribution.

SIP’S CONTENTION:

SIP claimed that the respondents were not its employees but of GMPC’s, since it only operated the canteen in behalf of GMPC.
When the concession contract was terminated, GMPC already operated the canteen on its own.

LABOR ARBITER’S DECISION:

Complaint was dismissed for lack of merit. LA found that respondents were GMPC’s employees, and not SIP’s as there existed a
labor-only contracting relationship between the two entities. Money claims were dismissed since SIP is not liable for unpaid salaries
because it had complied with the minimum statutory requirement and had extended better benefits than GMPC (free board and
lodging). No overtime pay as it was improbable that respondents regularly worked beyond 8 hours a day.

NLRC DECISION:

SIP was the respondent’s employer, but they were not illegally dismissed since the termination of the concession contract constituted
an authorized cause for the severance of employer-employee relations. Nevertheless, respondents were awarded with the claimed
benefits, except overtime pay (no evidence that they rendered 2 hours overtime work), because SIP failed to present proof of
compliance with the law of wage, 13th month pay and service incentive leave.

CA DECISION:
It affirmed the award. However, it found merit in SIP’s objection that in a government agency (GSIS), there are only 20 official
business days in a month and not 26. Nevertheless, it affirmed the NLRC decision finding that SIP is the employer of the
respondents. The motion for recon of SIP was denied, hence the petition.

Issue:

WON there is Employer-Employee relationship between respondents and SIP - YES

WON the furnished board and lodging can be deducted from the respondents’ wage- NO

Ruling:

SIP WAS THE EMPLOYER OF RESPONDENTS. THERE IS E-E RELATIONSHIP

When the concession was terminated, they were denied entrance to the premises. Thus, spouses Pablo, thru their counsel, sent a
protest letter to GMPC. In the letter, they admitted that the respondents in this case are their employees because said letter is worded
as follows, “x xx you barred our clients and their employees/helpers from entering said premises x xx”. Moreover, the spouses did not
deny that they paid the salary of the respondents.

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 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

In addition, there is E-E relationship between SIP and the respondents because the former exercised the essential elements of an E-
E relationship such as hiring, payment of wages and the power of control.

THE FURNISHED BOARD AND LODGING CANNOT BE SET-OFF FOR THE UNDERPAYMENT OF THE RESPONDENTS’
WAGES

In Mabeza v NLRC, it was held that that the employer cannot simply deduct from the employee’s wages the value of the board and
lodging without satisfying the following requirements: (1) proof that such facilities are customarily furnished by the trade; (2) voluntary
acceptance in writing by the employees of the deductible facilities; and (3) proof of the fair and reasonable value of the facilities
charged. As the CA aptly noted, it is clear from the records that SIP failed to comply with these requirements.

SC also said that there are only 20 days a month upon which the monetary award should be computed, since respondents explicitly
claim their salaries and benefits for the services rendered from Monday to Friday or 5 days a week.

PETITION HAS NO MERIT

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 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

SLL International Cables Specialist vs. NLRC

Doctrine: FACILITIES – WHEN DEDUCTIBLE; DISTINGUISHED FROM SUPPLEMENTS

Facts: Sometime in 1996 and 1997, respondents Roldan, Edgardo and Danilo were hired by Sonny (Manager of SLL) as trainee
cable/lineman. They were paid full minimum wage, but only reported to work as substitutes to regular workers, or when there is
needed extra workers. After training, the private respondents were engaged as project employees by Sonny in four different projects,
the significant one is that project in Camarin Caloocan City with Furukawa Corp as the general contractor. As the project was
ongoing, Furukawa delayed in the delivery of imported materials which led to the non-completion of the project on time. Faced with
economic problems, Sonny decided to cut down overtime work. When private respondents asked to work overtime, Sonny refused,
and said that if they insist, they would have to go home to Cebu at their own expense. True enough, they went home to Cebu.
Afterwards, they filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month, and service incentive leave.

As an answer, SLL and Sonny claimed that the private respondents were merely project employees. They allege that the food
allowance of P63 per day as well as allowance for lodging, transportation, electricity, water and snacks should be added to their basic
pay. With the allowances, they allegedly received higher wage rate than that prescribed in Rizal and Manila. Complaint should also
be dismissed because it should have been filed in Manila where the work was done.

LABOR ARBITER DECISION:

LA Belarmino decided that it had jurisdiction because “workplace” included the place where the employee was supposed to report
back after a temporary detail, assignment or travel, which in this case was Cebu. As to status of employment, said respondents were
regular employees because they were repeatedly hired by Sonny. Respondents were also underpaid because the allowances given
cannot be deducted from their wages because it was furnished without their consent. Nevertheless, it was ruled that petitioners were
not liable for illegal dismissal because the act of the respondents of going home was an act of indifference when petitioners prohibited
overtime work.

NLRC DECISION:
LA decision was affirmed. Motion for recon was denied. It also found that no project completion was filed with the nearest Public
Employment Office as required by DOLE.

CA DECISION:
It affirmed that the respondents were regular employees because they performed functions which were the regular and usual
business of petitioners. The failure to submit the project completion was also proof that the respondents were not project employees
but regular employees. Also, the allowances cannot be deducted because again, it was without respondents’ consent. Nevertheless,
there was no illegal dismissal because it was petitioners’ prerogative to deny any request for overtime work. Petitioners appeal to SC.

Issue: WON the facilities (the allowances) can be deducted from the wages of the private respondents

Ruling: PETITION HAS NO MERIT. As a general rule on payment of wages, the party who alleges payment as defense has the
burden of proving it. In labor cases, burden of proving monetary claims rests on the employer – rationale of which is that the files,
payrolls records and similar documents are in the possession of the employer. In this case, petitioners, aside from bare allegations,
failed to present any evidence such as payroll or pay slips.

On whether the value of the facilities should be included in the computation of the "wages" received by private respondents, Section 1
of DOLE Memorandum Circular No. 2 provides that an employer may provide subsidized meals and snacks to his employees
provided that the subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In such cases, the employer
may deduct from the wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the latter, provided
that such deduction is with the written authorization of the employees concerned.

As defined, FACILITIES - are items of expense necessary for the laborer's and his family's existence and subsistence so that by
express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer are deductible therefrom.
Moreover, before the value of facilities can be deducted from the employees’ wages, the following requisites must all be attendant: 1)
proof must be shown that such facilities are customarily furnished by the trade; 2) the provision of deductible facilities must be
voluntarily accepted in writing by the employee; and 3) facilities must be charged at reasonable value. Mere availment is not sufficient
to allow deductions from employees’ wages.

E.R.D.DIMAUNAHAN – EH409 3
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

SUPPLEMENTS on the other hand is defined as constitute extra remuneration or special privileges or benefits given to or received by
the laborers over and above their ordinary earnings or wages. It is of the view that the food and lodging, or the electricity and water
allegedly consumed by private respondents in this case were not facilities but supplements.

TAKE NOTE - FOR WHOSE BENEFIT: if for EMPLOYEES – DEDUCTIBLE; if for EMPLOYERS – NON-DEDUCTIBLE. In this case,
the facilities were for the benefit of petitioners - for the purpose of maintaining the efficiency and health of its workers while they were
working at their respective projects.
PETITION DENIED.

E.R.D.DIMAUNAHAN – EH409 4
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc.

Doctrine: PRINCIPLE OF NON-DIMINUTION OF BENEFITS; REGULAR COMPANY PRACTICE

Facts: Ricardo Vergara was an employee of Coca-Cola from May 1968 until Kan. 31, 2002, as a District Sales Supervisor (DSS) for
Las Pinas, Manila. As stipulated in Coca-Cola’s retirement plan, the Annual Performance Incentive Pay of RSMs, DSSs, and SSSs
shall be considered in the computation of retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance
Incentive (which is the total performance incentive earned during the year immediately preceding ÷ 12 months) × No. of Years in
Service.

Ricardo filed a complaint before the NLRC claiming that he is entitled to an additional P474,600 as Salmes Management Incentives
and to the amount of P496,016.67 which Coca-Cola allegedly deducted illegally, representing the unpaid accounts of two dealers
within his jurisdiction.

LABOR ARBITER and NLRC DECISION:

LA directed Coca-Cola to reimburse the amount illegally deducted from petitioner’s retirement package and to integrate therein his
SMI privilege. On appeal to NLRC, the payment of SMI was deleted.

Pursuant to LA decision, Ricardo moved to partially execute the reimbursement of illegal deduction, which was paid and then a
Compromise agreement was afterwards executed affirming such payment, without prejudice to his appeal to the CA of the NLRC
decision which deleted the SMI payment.

DECISION OF CA.

Appeal and subsequent motion for reconsideration was denied. Hence the petition.

Issue: WON the SMI should be included in the computation of petitioner’s retirement benefits on the ground of consistent company
practice. – NO

Ruling: Employees have a vested right over existing benefits voluntarily granted to them by their employees by virtue of the principle
of non-diminution of benefits. There is diminution of benefits when: (1) the grant or benefit is founded on a policy or has ripened into a
practice over a long period of time; (2) the practice is consistent and deliberate; (3) the practice is not due to error in the construction
or application of a doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the employer.

To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the benefit is
done over a long period of time, and that it has been made consistently and deliberately.

In this case, there is no substantial evidence to prove that the grant of SMI to all retired DSS had ripened into company practice.
Ricardo utterly failed to adduce proof to establish his allegation that SMI has been consistently, deliberately and voluntarily granted to
all retired DSS without any qualification or conditions. The only evidence he presented where the testimonies of formers DSSs
Renato Hidalgo and Ramon Velazquez, who claimed that the SMI were included in their retirement package.

These testimonies were sufficiently countered by Coca-Cola by presenting the affidavits of its witnesses, which pointed out the
various stop-gap measures undertaken by it beginning 1999 in order to arrest the deterioration of its accounts receivables balance,
which included the payment of SMI, where certain conditions were to be met in order to qualify. As established, Ricardo failed to meet
the collection qualifiers in order to be eligible to receive SMI as part of the retirement plan. Specifically, he failed to meet the trade
receivable qualifier.

PETITION DENIED.

E.R.D.DIMAUNAHAN – EH409 5
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

Royal Plant Workers Union

vs. Coca-Cola Bottlers Phils Inc.

Facts: Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in the manufacture, sale and
distribution of soft drink products. Under the employ of each bottling plant are bottling operators. In the case of the plant in Cebu City,
there are 20 bottling operators who work for its Bottling Line 1 while there are 12-14 bottling operators who man its Bottling Line.

Prior to September 2008, the rotation is this: after two and a half (2 ½) hours of work, the bottling operators are given a 30-minute
break and this goes on until the shift ends. In September 2008 and up to the present, the rotation has changed and bottling operators
are now given a 30-minute break after one and one half (1 ½) hours of work.

In 1974, Bottling Operators in Bottling Line 2 were provided were chairs upon their request and in 1988 the Bottling Operators in
Bottling Line 1 followed suit and were granted the same. However, Sometime in September 2008, the chairs provided for the
operators were removed pursuant to a national directive of petitioner. This directive is in line with the "I Operate, I Maintain, I Clean"
program of petitioner for bottling operators, wherein every bottling operator is given the responsibility to keep the machinery and
equipment assigned to him clean and safe. With this task of moving constantly to check on the machinery and equipment assigned to
him, a bottling operator does not need a chair anymore, hence, petitioner’s directive to remove them. Further herein respondent
rationalized that it would prevent the bottling operators will now avoid sleeping thus would also prevent injuries.

The bottling operators took issue with the removal of chairs. They were represented by herein petitioners and initiated their grievance
system in accordance to their CBA. However a gridlock still transpired between both parties.
Arbitration then ensued where the Arbitration ruled for the employees. Appeal to the CA was made and the CA reversed the decision.

Issue: WON the removal of the chairs violated the CBA, Labor Laws and the General Principles of Justice and Fair Play. – No. It did
not violate.

Ruling: Procedural Aspect: Rule 43 is the proper remedy to petition a review of a decision or award as granted by a voluntary
arbitrator. Courts justification is Jurisprudence and Sec.2 Rule 42 of the 1997 Rules of Civil Procedure

A Valid Exercise of Management Prerogative

The Court has held that management is free to regulate, according to its own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time, place, and manner of work, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal and recall of
workers.

In the present controversy, it cannot be denied that CCBPI removed the operators’ chairs pursuant to a national directive and in line
with its "I Operate, I Maintain, I Clean" program, launched to enable the Union to perform their duties and responsibilities more
efficiently. The chairs were not removed indiscriminately. They were carefully studied with due regard to the welfare of the members
of the Union.

In short, the removal of the chairs was designed to increase work efficiency. Hence, CCBPI’s exercise of its management prerogative
was made in good faith without doing any harm to the workers’ rights.

No Violation of Labor Laws

The rights of the Union under any labor law were not violated. There is no law that requires employers to provide chairs for bottling
operators. The CA correctly ruled that the Labor Code, only requires employers to provide seats for women. No similar requirement is
mandated for men or male workers.

It must be stressed that all concerned bottling operators in this case are men.

There was no violation either of the Health, Safety and Social Welfare Benefit provisions under Book IV of the Labor Code of the
Philippines. As shown in the foregoing, the removal of the chairs was compensated by the reduction of the working hours and
increase in the rest period. The directive did not expose the bottling operators to safety and health hazards. The Union should not

E.R.D.DIMAUNAHAN – EH409 6
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

complain too much about standing and moving about for one and one-half (1 ½) hours because studies show that sitting in
workplaces for a long time is hazardous to one’s health (there were different studies provided by the court in its decision to support
this claim)

No Violation of the CBA

The CBA15 between the Union and CCBPI contains no provision whatsoever requiring the management to provide chairs for the
operators in the production/manufacturing line while performing their duties and responsibilities.

Further the CBA provided, that benefits and/or privileges, not expressly given therein but which are presently being granted by the
company and enjoyed by the employees, shall be considered as purely voluntary acts by the management and that the continuance
of such benefits and/or privileges, no matter how long or how often, shall not be understood as establishing an obligation on the
company’s part. Since the matter of the chairs is not expressly stated in the CBA, it is understood that it was a purely voluntary act on
the part of CCBPI and the long practice did not convert it into an obligation or a vested right in favor of the Union.

No Violation of the general principles of justice and fair play

The Court completely agrees with the CA ruling that the removal of the chairs did not violate the general principles of justice and fair
play because the bottling operators’ working time was considerably reduced from two and a half (2 ½) hours to just one and a half (1
½) hours and the break period, when they could sit down, was increased to 30 minutes between rotations. The bottling operators’
new work schedule is certainly advantageous to them because it greatly increases their rest period and significantly decreases their
working time. A break time of thirty (30) minutes after working for only one and a half (1 ½) hours is a just and fair work schedule.

No Violation of Article 100 of the Labor Code

The operators’ chairs cannot be considered as one of the employee benefits covered in Article 100 of the Labor Code. In the Court’s
view, the term "benefits" mentioned in the non-diminution rule refers to monetary benefits or privileges given to the employee with
monetary equivalents. Such benefits or privileges form part of the employees’ wage, salary or compensation making them
enforceable obligations. This Court has already decided several cases regarding the non-diminution rule where the benefits or
privileges involved in those cases mainly concern monetary considerations or privileges with monetary equivalents

Petition is Denied

E.R.D.DIMAUNAHAN – EH409 7
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

The National Wages & Productivity Commission et al., vs. The Alliance of Progressive Labor et al.

Facts: On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages throughout the Philippines,
Republic Act No. 6727 created the NWPC and the RTWPBs of the different regions. Section 3 of Republic Act No. 6727, empowered
the NWPC to formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and
national levels; to prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the
regional, provincial or industry levels; and to review regional wage levels set by the RTWPBs to determine whether the levels were in
accordance with the prescribed guidelines and national development plans, among others. Further, Section 3 of Republic Act No.
6727, tasked the RTWPBs to determine and fix minimum wage rates applicable in their region, provinces or industries therein; and to
issue the corresponding wage orders, subject to the guidelines issued by the NWPC. The RTWPBs were also mandated to receive,
process and act on applications for exemption from the prescribed wage rates as may be provided by law or any wage order.

On October 14 1999, RTWPB – NCR issued Wage Order No. NCR – 07 imposing an increase of P25.50/day on the wages of all
private sector workers and employees in the NCR and pegging the minimum wage rate in the NCR at P223.50/day. However, Section
2 and Section 9 of Wage Order No. NCR-07 exempted certain sectors and industries from its coverage (Agricultural Workers,
Workers in Small Establishments employing less than 10 workers, Distressed Establishments, Exporters including indirect exporters
with at least 50% export sales and with forward contracts with their foreign buyers/principals)

Feeling aggrieved by their non-coverage by the wage adjustment, the Alliance of Progressive Labor (APL) and the Tunay na
Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with the NWPC assailing Section 2(A) and Section 9(2) of Wage Order
No. NCR-07. They contended that neither the NWPC nor the RTWPB-NCR had the authority to expand the non-coverage and
exemptible categories under the wage order; hence, the assailed sections of the wage order should be voided. The appeal was
docketed as NWPC Case No. W.O.- 99-001.

NWPC upheld the validity of Sec 2 and Sec 9 of the Wage Order. CA Reversed the decision of NWPC

Issue: WON NWPC AND RTWPB has authority to expand the non-coverage and exemptible categories under the wage order

Ruling: The petition for review on certiorari is meritorious. Indisputably, the NWPC had the authority to prescribe the rules and
guidelines for the determination of the minimum wage and productivity measures, and the RTWPB-NCR had the power to issue wage
orders.

The wage orders issued by the RTWPBs could be reviewed by the NWPC motu proprio or upon appeal. Any party aggrieved by the
wage order issued by the RTWPBs could appeal. Here, APL and TNMR appealed on October 26, 1999, submitting to the NWPC
precisely the issue of the validity of the Section 2(A) and Section 9(2) of Wage Order No. NCR-07. The NWPC, in arriving at its
decision, weighed the arguments of the parties and ruled that the RTWPB-NCR had substantial and justifiable reasons in exempting
the sectors and establishments enumerated in Section 2(A) and Section 9(2) based on the public hearings and consultations,
meetings, social-economic data and informations gathered prior to the issuance of Wage Order No. NCR-07. The very fact that the
validity of the assailed sections of Wage Order No. NCR-07 had been already passed upon and upheld by the NWPC meant that the
NWPC had already given the wage order its necessary legal imprimatur. Accordingly, the requisite approval or review was complied
with.

In creating the RTWPBs, Congress intended to rationalize wages, firstly, by establishing full time boards to police wages round-the-
clock, and secondly, by giving the boards enough powers to achieve this objective. In Employers Confederation of the Phils. v.
National Wages and Productivity Commission, this Court all too clearly pronounced that Congress meant the RTWPBs to be creative
in resolving the annual question of wages without Labor and Management knocking on the doors of Congress at every turn. The
RTWPBs are the thinking group of men and women guided by statutory standards and bound by the rules and guidelines prescribed
by the NWPC. In the nature of their functions, the RTWPBs investigate and study all the pertinent facts to ascertain the conditions in
their respective regions. Hence, they are logically vested with the competence to determine the applicable minimum wages to be
imposed as well as the industries and sectors to exempt from the coverage of their wage orders.

Lastly, Wage Order No. NCR-07 is presumed to be regularly issued in the absence of any strong showing of grave abuse of
discretion on the part of RTWPB-NCR. The presumption of validity is made stronger by the fact that its validity was upheld by the
NWPC upon review

E.R.D.DIMAUNAHAN – EH409 8
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

Petition is granted. CA Decision is set aside.

E.R.D.DIMAUNAHAN – EH409 9
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

David/Yiels Hog Dealer vs. Macasio

Doctrine: The payment of an employee on task or pakyaw basis alone is insufficient to exclude one from the coverage of Service
Incentive Leave (SIL) and holiday pay. In determining whether workers engaged on “pakyaw” or task basis is entitled to holiday and
Service Incentive Leave (SIL) pay, the presence (or absence) of employer supervision as regards the worker’s time and performance
is the key.

Facts: Macasio filed before the Labor Arbiter a complaint against petitioner Ariel L. David, doing business under the name and style
“Yiels Hog Dealer,” for nonpayment of overtime pay, holiday pay, and 13th month pay. He also claimed payment for moral and
exemplary damages and attorney’s fees; and for payment of service incentive leave (SIL).

Macasio alleged before the Labor Arbiter that he had been working as a butcher for David since January 6, 1995. Macasio claimed
that David exercised effective control and supervision over his work, pointing out that David:

set the work day, reporting time and hogs to be chopped, as well as the manner by which he was to perform his work;

daily paid his salary of P700.00, which was increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and
approved and disapproved his leaves.

Macasio added that David owned the hogs delivered for chopping, as well as the work tools and implements; David also rented the
workplace. He further claimed that David employs about twenty-five (25) butchers and delivery drivers.

David claimed that he started his hog dealer business in 2005, and that he only has ten employees. He alleged that he hired Macasio
as a butcher or chopper on “pakyaw” or task basis who is, therefore, not entitled to overtime pay, holiday pay and 13th month pay.
David pointed out that Macasio:

usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or earlier, depending on the volume of the delivered
hogs;

received the fixed amount of P700.00 per engagement, regardless of the actual number of hours that he spent chopping the delivered
hogs; and

was not engaged to report for work and, accordingly, did not receive any fee when no hogs were delivered.

Macasio disputed David’s allegations. He argued that, first, David did not start his business only in 2005. He pointed to the Certificate
of Employment that David issued in his favor which placed the date of his employment, albeit erroneously, in January 2000.

Second, he reported for work every day which the payroll or time record could have easily proved had David submitted them in
evidence.David claimed that he issued the Certificate of Employment, upon Macasio’s request, only for overseas employment
purposes.

Labor Arbiter and NLRC: dismissed Macasio’s complaint for lack of merit. The Labor Arbiter gave credence to David’s claim that he
engaged Macasio on “pakyaw” or task basis.The LA concluded that since Macasio was engaged on “pakyaw” or task basis, he is not
entitled to overtime, holiday, SIL and 13th month pay.

CA: explained that as a task basis employee, Macasio is excluded from the coverage of holiday, SIL and 13th month pay only if he is
likewise a “field personnel.”

Issue:
(1) Whether or not a worker paid in "pakyaw" basis is entitled to holiday pay and Service?

(2) Whether or not A worker engaged in "pakyaw" basis is entitled to 13th month pay?

Ruling:

E.R.D.DIMAUNAHAN – EH409 10
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

YES. David confuses engagement on “pakyaw” or task basis with the lack of employment relationship. Impliedly, David asserts that
their “pakyawan” or task basis arrangement negates the existence of employment relationship. The Supreme Court reject this
assertion of the petitioner.

Engagement on “pakyaw” or task basis does not characterize the relationship that may exist between the parties, i.e., whether one of
employment or independent contractorship.To determine the existence of an employer-employee relationship, four elements
generally need to be considered, namely:

the selection and engagement of the employee;

the payment of wages;

the power of dismissal; and

the power to control the employee’s conduct.

These elements or indicators comprise the so-called “four-fold” test of employment relationship.

Macasio’s relationship with David satisfies this test. A distinguishing characteristic of “pakyaw” or task basis engagement, as opposed
to straight-hour wage payment, is the non-consideration of the time spent in working.The payment of an employee on task or pakyaw
basis alone is insufficient to exclude one from the coverage of Service Incentive Leave (SIL) and holiday pay. In determining whether
workers engaged on “pakyaw” or task basis is entitled to holiday and Service Incentive Leave (SIL) pay, the presence (or absence) of
employer supervision as regards the worker’s time and performance is the key.

The Supreme Court agree with the CA that Macasio does not fall under the definition of “field personnel.” The CA’s finding in this
regard is supported by the established facts of this case:
first, Macasio regularly performed his duties at David’s principal place of business; second, his actual hours of work could be
determined with reasonable certainty; and third, David supervised his time and performance of duties.

Since Macasio cannot be considered a “field personnel,” then he is not exempted from the grant of holiday, SIL pay even as he was
engaged on “pakyaw” or task basis.

NO. With respect to the payment of 13th month pay however, the Supreme Court find that the CA legally erred in finding that the
NLRC gravely abused its discretion in denying this benefit to Macasio.

The governing law on 13th month pay is PD 8 5 1. As with holiday and SIL pay, 13th month pay benefits generally cover all
employees; an employee must be one of those expressly enumerated to be exempted.

Section 3 of the Rules and Regulations Implementing P.D. 851enumerates the exemptions from the coverage of 13th month pay
benefits. Under said law, “employers of those who are paid on task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance thereof” are exempted.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations Implementing PD 851
exempts employees “paid on task basis” without any reference to “field personnel.” This could only mean that insofar as payment of
the 13th month pay is concerned, the law did not intend to qualify the exemption from its coverage with the requirement that the task
worker be a “field personnel” at the same time.

E.R.D.DIMAUNAHAN – EH409 11
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

Our Haus Realty Development Corp., vs. Parian et al.

Doctrine: There is no substantial distinction between deducting and charging a facility’s value from the employee’s wage.

Facts: Respondents Alexander Parian et,al were all laborers working for petitioner Our Haus Realty Development Corporation, a
company engaged in the construction business. On May 2010, the petitioner company experienced financial distress and had to
suspend some of its construction projects to alleviate its condition. The respondents were among those who were affected who were
asked to take vacation leaves.

Eventually, these laborers were asked to report back to work but instead of doing so, they filed with the LA a complaint for
underpayment of their daily wages claiming that except for Tenedero, their wages were below the minimum rates prescribed in the
following wage orders from 2007 to 2010. They also claimed that Our Haus failed to pay them their holiday, Service Incentive Leave
(SIL), 13th month and overtime pays.

LA: ruled in favor of Our Haus who claimed that the respondents’ wages complied with the law’s minimum requirement because aside
from paying the monetary amount of the respondents’ wages, Our Haus also subsidized their meals (3 times a day), and gave them
free lodging near the construction project they were assigned to. In determining the total amount of the respondents’ daily wages, the
value of these benefits should be considered, in line with Article 97(f) of the Labor Code. LA did not give merit on the laborers’
contention that that the value of their meals should not be considered in determining their wages’ total amount since the requirements
set under Section 413 of DOLE Memorandum Circular No. 215 were not complied with. Besides, Our Haus failed to present any proof
that they agreed in writing to the inclusion of their meals’ value in their wages.

NLRC: Reversed the decision of LA. It ruled that that the laborers did not authorize Our Haus in writing to charge the values of their
board and lodging to their wages. Thus, the same cannot be credited and further ruled that they are entitled to their respective
proportionate 13th month payments for the year 2010 and SIL payments for at least three years, immediately preceding May 31,
2010, the date when the respondents left Our Haus. However, it maintains LA’s decision that they are not entitled to overtime pay
since the exact dates and times when they rendered overtime work had not been proven.

CA: affirmed the NLRC rulings finding that there is no distinction between deduction and charging and that the legal requirements
before any deduction or charging can be made, apply to both.

Issue: Whether or not the laborers are entitled to their respective proportionate 13th month payments for the year 2010 and SIL
payments for at least three years?

Ruling: YES. There is no substantial distinction between deducting and charging a facility’s value from the employee’s wage; the legal
requirements for creditability apply to both. Herein petitioner’s argument is a vain attempt to circumvent the minimum wage law by
trying to create a distinction where none exists because in reality, deduction and charging both operate to lessen the actual take-
home pay of an employee. Thus, the Court held that NLRC did not commit grave abuse of discretion in its rulings. It DENY this
petition and AFFIRMED CA’s decision.

E.R.D.DIMAUNAHAN – EH409 12
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

Milan et al., vs. NLRC

Doctrine: Claims arising from employer-employee relationship falling within the jurisdiction of NLRC is not only limited to claims by an
employee against the employer but also claims of an employer against the employee.

Jurisdiction of NLRC covers property rights as long as it is necessary to determine an issue related to rights or claims arising from an
employer-employee relationship and is connected to the labor issue.

A clearance procedure which is a procedure instituted to ensure that the properties, real or personal, belonging to the employer but
are in the possession of the separated employee, are returned to the employer before the employee's departure is standard
procedure among employers and is allowed under our laws as a valid exercise for withholding of wages by virtue of a debt due.

A right to possess a property granted by employer to an employee by virtue of the former’s liberality is not an employment benefit but
is rather considered a debt creating an obligation to return possession of such property back to the employer, that is due, by the
employee in favor of the employer when the employer decides to withdraw such, which can be a ground for the employer to withhold
wages and benefits due to the employees pending its return.

Facts: Petitioners consist of several employees of respondent corporation, Solid Mills. They were represented by their collective
bargaining agent which was the National Federation of Labor Unions. One of the agreements in the employment was that Solid Mills
will grant “by way of goodwill and in the spirit of generosity” financial assistance less accountabilities to members of the union.
Through such agreement, several employees were allowed by Solid Mills to occupy SMI village which was a property owned by Solid
Mills.

The issue arose when respondent Solid Mills declared that they will cease business operations due to serious business losses of
which, petitioners were properly informed. In consequence of this, the employees received notices to vacate SMI Village. Employees
were then made to sign a memorandum of agreement to effect that vacating the SMI Village is a pre-condition for the release of their
termination benefits and leave pay. Petitioners are among those who refused to vacate and who did not sign the agreement and
instead demanded their benefits and pay. Petitioners argued that Solid Mills cannot legally withhold their benefits because its
payment is based on company policy and practice and that their possession of the SMI property should not be considered within the
meaning of “accountabilities” in their agreement.
Labor Arbiter ruled in favor of petitioners ruling that there was illegal withholding of wages.

NLRC and CA ruled in favor of Solid Mills, ruling that Solid Mills’ act of letting employees dwell in SMI Village was merely an act of
liberality on its part which can be revoked at any time at its discretion. Hence, they were justified in withholding the benefits and
separation pay.

Issues:
1. Whether or not NLRC has jurisdiction.
2. Whether or not the withholding of the benefits and separation pay was proper.

Ruling:

Yes, NLRC has jurisdiction. Under Art. 217 (6) of the Labor Code, the NLRC has jurisdiction over claims arising from employer-
employee relationship with an amount exceeding 5,000 regardless of any claim for reinstatement except those claims for employee
compensation, Social Security, Medicare and Maternity benefits. The claims is not only limited to claims by an employee but includes
claims by an employer against its employee. Moreover, such jurisdiction covers rights over a property when it is sufficiently connected
to the labor issue such that it is necessary to determine an issue related to rights or claims arising from an employer-employee
relationship.

Yes, withholding was proper. While under Art. 116 and Art. 100 of the labor code, withholding of wages and diminution of wages is
prohibited, Art. 113 (3) of the labor code allows an employer to deduct when such employer is authorized by law or regulations issued
by the Secretary of Labor and Employment. Here, the act of Solid Mills falls within a clearance procedure which is a procedure
instituted to ensure that the properties, real or personal, belonging to the employer but are in the possession of the separated
employee, are returned to the employer before the employee's departure. Clearance procedure is a standard procedure among
employers and is allowed under our laws.

E.R.D.DIMAUNAHAN – EH409 13
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER
Moreover, Art. 1706 of the new civil code allows withholding of wages for a debt due. Here, the term ‘accountabilities’ was construed
in its ordinary sense which is essentially a debt or obligation. As long as accountabilities are incurred because of employer-employee
relationship, it can be a subject of a clearance procedure.
Since Solid Mills’ act of allowing petitioners to dwell in SMI Village was merely an act of liberality on its part, the property can be
demanded back at its will. Here, the return of the property became an obligation on the part of petitioners when the employer-
employee relationship ceased, as such was included in the term accountabilities, thus the withholding of the wages and benefits was
proper.
Toyota Pasig Inc vs. De Peralta
Doctrine: Commissions are included in the definition of wages.
It is employer who has the burden of proof of payment even in
cases where the employee alleges non-payment rather than the
employee having the burden of proving non-payment.
Facts: Respondent was an employee of petitioner corporation.
She was initially hired as a cashier and attained the position of
Insurance sales executive due to her excellence in the work as
was shown when she was awarded Best Sales Insurance
Executive from 2007 to 2011. Issue came when her husband,
who was also an employee of petitioner, organized a collective
bargaining unit the members of which, including her husband,
were later dismissed from service. She also suffered the same
fate, and according to respondent, she was then accused of
fraud in the processing of several insurance transactions in that
she claimed commissions in those transactions instead of
considering such under the marketing department’s new
business accounts. With this, she was preventively suspended
and was later terminated upon her receipt of the notice of
termination.
Respondent then filed a case claiming payment of her earned
substantial commissions, tax rebates, and other benefits dating
back from July 2011 to January 2012, amounting to
P617,248.08. Petitioner in defense, contended that respondent
was terminated with just cause and that the claims she is asking
are unfounded and unsupported by documents and that such
claims do not partake of unpaid wages/salaries.
Labor Arbiter found respondent liable for the accusations
against her and did not order the payment of the benefits
claimed by respondent, instead it merely required petitioner to
pay the unpaid salary.
NLRC and CA agreed with LA that respondent is guilty of the
accusations but it ordered petitioner to pay the claim of
P617,248.08 of respondent.
Soriano et. al vs. Secretary of Finance
Facts:
On 19 May 2008, the Senate filed its Senate Committee Report No.
53 on Senate Bill No. (S.B.) 2293. On 21 May 2008, former
E.R.D.DIMAUNAHAN – EH409
Issues:
Whether or not the claims of respondent is included in the
definition of “wages” in the labor code.
Whether or not the claims will be discarded for failure of
respondent to substantiate such claims.
Ruling:
Yes, respondent’s claims fall within the definition of “wages”.
Under Art. 97 (f) of the labor code, “wage paid to an employee
shall mean the remuneration of earnings, however designated,
capable of being expressed in terms of money, whether
ascertained on a time, task, piece, or commission basis”. The
claims of commissions, tax rebates for achieved monthly
targets, and success share/profit sharing, are given to
respondent as incentives or forms of encouragement in order
for her to put extra effort in performing her duties as an
insurance sales executive are included in the term “commission”
which falls within the definition of “wages” under Art. 97(f) of the
labor code. This is for the reason that the nature of the work of a
salesman is to stimulate growth in sales which can be achieved
by encouraging such employees to put more effort in their jobs
through commissions. Hence, commissions are indubitably
included in a sales employee’s wages.
No, the claims will not be discarded just because respondent
was not able to produce supporting documents. Under law,
once an employee alleges non-payment of specific claims in
his/her complaint with particularity, the one who pleads payment
has the burden of proving it and even if the employee alleges
non-payment, it is still the employer who has to prove payment
rather than the employee to prove non-payment. Here, the
petitioner did not allege payment of the claims or at least allege
that respondent is not entitled to such claims. Hence, since
petitioner failed to overcome the burden, the claims will not be
discarded.
President Gloria M. Arroyo certified the passage of the bill as
urgent through a letter addressed to then Senate President Manuel
Villar. On the same day, the bill was passed on second reading IN
the Senate and, on 27 May 2008, on third reading. The following
day, 28 May 2008, the Senate sent S.B. 2293 to the House of
Representatives for the latter's concurrence.
14
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER
On 17 June 2008, R.A. 9504 entitled "An Act Amending Sections
22, 24, 34, 35, 51, and 79 of Republic Act No. 8424, as Amended,
Otherwise Known as the National Internal Revenue Code of 1997,"
was approved and signed into law by President Arroyo
The following are the salient features of the new law: It increased
the basic personal exemption from P20,000 for a single individual,
P25,000 for the head of the family, and P32,000 for a married
individual to P50,000 for each individual. It increased the additional
exemption for each dependent not exceeding four from P8,000 to
P25,000.It raised the Optional Standard Deduction (OSD) for
individual taxpayers from 10% of gross income to 40% of the gross
receipts or gross sales. It introduced the OSD to corporate
taxpayers at no more than 40% of their gross income. It granted
MWEs exemption from payment of income tax on their minimum
wage, holiday pay, overtime pay, night shift differential pay and
hazard pay.
Accordingly, R.A. 9504 was published in the Manila Bulletin and
Malaya on 21 June 2008. On 6 July 2008, the end of the 15-day
period, the law took effect.
Petitioners Jaime N. Soriano et al. primarily assail Section 3 of RR
10-2008 providing for the prorated application of the personal and
additional exemptions for taxable year 2008 to begin only effective
6 July 2008 for being contrary to Section 4 of Republic Act No.
9504.[2]Petitioners argue that the prorated application of the
personal and additional exemptions under RR 10-2008 is not "the
legislative intendment in this jurisdiction."[3] They stress that
Congress has always maintained a policy of "full taxable year
treatment"[4] as regards the application of tax exemption laws.
They allege further that R.A. 9504 did not provide for a prorated
application of the new set of personal and additional exemptions.[5]
Then Senator Manuel Roxas, as principal author of R.A. 9504, also
argues for a full taxable year treatment of the income tax benefits of
the new law. He relies on what he says is clear legislative intent In
his "Explanatory Note of Senate Bill No. 103," he stresses "the very
spirit of enacting the subject tax exemption law
Petitioner Trade Union Congress of the Philippine contends that the
provisions of R.A. 9504 provide for the application of the tax
exemption for the full calendar year 2008. It also espouses the
interpretation that R.A. 9504 provides for the unqualified tax
exemption of the income of MWEs regardless of the other benefits
they receive.[14] In conclusion, it says that RR 10-2008, which is
only an implementing rule, amends the original intent of R.A. 9504,
which is the substantive law, and is thus null and void.
Petitioners Senator Francis Joseph Escudero, the Tax
Management Association of the Philippines, Inc., and Ernesto Ebro
allege that R.A. 9504 unconditionally grants MWEs exemption from
income tax on their taxable income, as wel1 as increased personal
and additional exemptions for other individual taxpayers, for the
whole year 2008. They note that the assailed RR 10-2008 restricts
the start of the exemptions to 6 July 2008 and provides that those
MWEs who received "other benefits" in excess of P30,000 are not
E.R.D.DIMAUNAHAN – EH409
exempt from income taxation. Petitioners believe this RR is a
"patent nullity"[15] and therefore voi
The Office of the Solicitor General (OSG) filed a Consolidated
Comment[16] and took the position that the application of R.A.
9504 was intended to be prospective, and not retroactive. This was
supposedly the general rule under the rules of statutory
construction: law will only be applied retroactively if it clearly
provides for retroactivity, which is not provided in this instance
The OSG further argues that the legislative intent of non-
retroactivity was effectively confirmed by the "Conforme" of Senator
Escudero, Chairperson of the Senate Committee on Ways and
Means, on the draft revenue regulation that became RR 10-2008.
Issues:
First, whether the increased personal and additional exemptions
provided by R.A. 9504 should be applied to the entire taxable year
2008 or prorated, considering that R.A. 9504 took effect only on 6
July 2008.Second, whether an MWE is exempt for the entire
taxable year 2008 or from 6 July 2008 only.Third, whether Sections
1 and 3 of RR 10-2008 are consistent with the law in providing that
an MWE who receives other benefits in excess of the statutory limit
of P30,000[19] is no longer entitled to the exemption provided by
R.A. 9504.
Ruling:
This Court ruled in the affirmative, considering that the increased
exemptions were already available on or before 15 April 1992, the
date for the filing of individual income tax returns. Further, the law
itself provided that the new set of personal and additional
exemptions would be immediately available upon its effectivity.
While R.A. 7167 had not yet become effective during calendar year
1991, the Court found that it was a piece of social legislation that
was in part intended to alleviate the economic plight of the lower-
income taxpayers. For that purpose, the new law provided for
adjustments "to the poverty threshold level" prevailing at the time of
the enactment of the law
T]he Court is of the considered view that Rep. Act 7167 should
cover or extend to compensation income earned or received during
calendar year 1991.
In sum, R.A. 9504, like R.A. 7167 in Umali, was a piece of social
legislation clearly intended to afford immediate tax relief to
individual taxpayers, particularly low-income compensation earners.
Indeed, if R.A. 9504 was to take effect beginning taxable year 2009
or half of the year 2008 only, then the intent of Congress to address
the increase in the cost of living in 2008 would have been negated.
The NIRC is clear on these matters. The taxable income of an
individual taxpayer shall be computed on the basis of the calendar
year.[30] The taxpayer is required to fi1e an income tax return on
the 15th of April of each year covering income of the preceding
taxable year. The tax due thereon shall be paid at the time the
return is filed
15
 WAGES AND WAGE RATIONALIZATION ACT;
VIOLATION OF WAGE ORDER

In the present case, the increased exemptions were already

available much earlier than the required time of filing of the return
on 15 April 2009. R.A. 9504 came into law on 6 July 2008, more
than nine months before the deadline for the filing of the income tax
return for taxable year 2008. Hence, individual taxpayers were
entitled to claim the increased amounts for the entire year 2008.
This was true despite the fact that incomes were already earned or
received prior to the law's effectivity on 6 July 2008.
We find the facts of this case to be substantially identical to those of
Umali. First, both cases involve an amendment to the prevailing tax
code. The present petitions call for the interpretation of the effective
date of the increase in personal and additional exemptions.
Otherwise stated, the present case deals with an amendment (R.A.
9504) to the prevailing tax code (R.A. 8424 or the 1997 Tax Code).
Like the present case, Umali involved an amendment to the then
prevailing tax code - it interpreted the effective date of R.A. 7167,
an amendment to the 1977 NIRC, which also increased personal
and additional exemptions. Second, the amending law in both
cases reflects an intent to make the new set of personal and
additional exemptions immediately available after the effectivity of
the law. As already pointed out, in Umali, R.A. 7167 involved social
legislation intended to adjust personal and additional exemptions.
The adjustment was made in keeping with the poverty threshold
level prevailing at the time. Third, both cases involve social
legislation intended to cure a social evil - R.A. 7167 was meant to
adjust personal and additional exemptions in relation to the poverty
threshold level, while R.A. 9504 was geared towards addressing
the impact of the global increase in the price of goods. Fourth, in
both cases, it was clear that the intent of the legislature was to
hasten the enactment of the law to make its beneficial relief
immediately available.

E.R.D.DIMAUNAHAN – EH409 16