NATIONAL FEDERATION OF SUGAR WORKERS (NFSW), petitioner,

vs.
ETHELWOLDO R. OVEJERA et. al., respondents

FACTS:
NFSW struck against private respondent Central Azucarera de la Carlota (CAC) to compel the latter for
the payment of the 13th month pay under PD 851 (13th Month Pay Law) in addition to the Christmas,
milling and amelioration bonuses being enjoyed by CAC workers which amount to 1-½ months’ salary.

Labor Arbiter Ovejera declared the strike as illegal and no pronouncement was made as to the demand on
the 13th month pay. This caused petitioner to file an instant petition with SC.

ISSUE:
WON under PD 851, an employer is obliged to give its workers a 13th month salary in addition to
Christmas, milling and amelioration bonuses, the aggregate of which exceeds the 13th month pay.

HELD:
No.
The intention was to grant some relief — not to all workers — but only to the unfortunate ones not
actually paid a 13th month salary or what amounts to it, by whatever name called; but it was not
envisioned that a double burden would be imposed on the employer already paying his employees a 13th
month pay or its equivalent — whether out of pure generosity or on the basis of a binding agreement and,
in the latter ease, regardless of the conditional character of the grant, so long as there is actual payment.
Otherwise, what was conceived to be a 13th month salary would in effect become a 14th or possibly 15th
month pay.

Dole Philippines, Inc. vs Leogardo, Jr., G. R. No. 60018, October 23, 1982

Facts: STANFILCO, a company merged with petitioner Dole Philippines, inc entered into a collective
bargaining agreement with the Associated Labor Union. The CBA provided among others, the grant of a
year-end productivity bonus to all workers within the collective bargaining unit. The company agrees to
grant each worker within the bargaining unit a year-end productivity bonus equivalent to ten days of his
basic daily wage if eighty percent or more of the average total production for the two preceding calendar
years together with the current year’s estimate is attained. Thereafter, PD 851 took effect. Section 1
thereof required all employers to pay their employees receiving a basic salary of not more than P1,000 a
month, regardless of the nature of their employment, a 13th month pay not later than December 24 of
every year. Section 2, however exempted from its coverage those employers already paying their
employees a 13th month pay or its equivalent.

Sec. 3 of The Rules and regulations Implementing PD 851 provides that the term “its equivalent” shall
include Christmas bonus, mid-year bonus, profit sharing payments and other cash bonuses amounting to
not less than 1/12th of the basic salary but shall not include cash and stock dividends, cost of living
allowances and other allowances regularly enjoyed by the employees as well as non-monetary benefits.
The rules further added that where an employer pays less than 1/12th of the employee’s basic salary, the
employer shall pay the difference.

Complying with the provision of PD 851 and relying on the interpretation of section 2 by the MOLE’s
implementing rules, STANFILCO paid its workers the difference between 1/12th of their yearly basic
salary and their year-end productivity bonus. Respondent ALU, joined by petitioner’s employees filed a
complaint for the non-implementation of the CBA provision on the year-end productivity bonus

Issue: WON productivity bonus agreed in the CBA is demandable aside from the 13th month pay
provided for in the PD 851.

Held: No. Year-end productivity bonus granted by petitioner to private respondents pursuant to their CBA
is, in legal contemplation, an integral part of their 13th month pay, notwithstanding its conditional nature.
In complying with PD 851, petitioner credited the year-end productivity bonus as part of the 13th month
pay and adopted the procedure of paying only the difference between said bonus and 1/12th of the
worker’s yearly basic salary, it acted well within the letter and spirit of the law and its implementing
rules. For in the event that an employer pays less than 1/12th of the employees’ basic salary, all that the
said employer is required to do under the law is to pay the difference.

Universal Corn Products v NLRC

Sometime in May, 1972, the petitioner and the Universal Corn Products Workers Union entered into a
collective bargaining agreement in which it was provided, among other things, that:

The COMPANY agrees to grant all regular workers within the bargaining unit with at least one (1) year
of continuous service, a Christmas bonus equivalent to the regular wages for seven (7) working days,
effective December, 1972. The bonus shall be given to the workers on the second week of December.

In the event that the service of a worker is not continuous due to factory shutdown, machine breakdown
or prolonged absences or leaves, the Christmas bonus shall be prorated in accordance with the length of
services that worker concerned has served during the year . 

 the collective bargaining agreement in question expired without being renewed.

For failure of the petitioner to pay the seven-day Christmas bonus for 1975 to 1978 inclusive, in
accordance with the 1972 CBA, the union went to the labor arbiter for relief. In his decision,  6 the labor
arbiter ruled that the payment of the 13th month pay precluded the payment of further Christmas bonus.
The union appealed to the National Labor Relations Commission (NLRC). The NLRC set aside the
decision of the labor arbiter appealed from and entered another one, "directing respondent company [now
the petitioner] to pay the members concerned of complainants [sic] union their 7-day wage bonus 

Issue: WON the union workers are entitled to the 7 day bonus.

Ruling: Yes. we consider the seven-day bonus here demanded "to be in addition to the legal requirement."
The classification of the company's workers in the CBA according to their years of service supports the
allegation that the reason for the payment of bonus was to give bigger award to the senior employees-a
purpose which is not found by P.D. 851. A bonus under the CBA is an obligation created by the contract
between the management and workers while the 13th month pay is mandated by the law  . The fact,
therefore, that the new agreements are silent on the seven-day bonus demanded should not preclude the
private respondents' claims thereon.

SAN MIGUEL CORPORATION v. AMADO G. INCIONG, GR No. L-49774, 1981-02-24

Facts:

On January 3, 1977, Cagayan Coca-Cola Free Workers Union, private respondent herein, filed a
complaint against San Miguel Corporation (Cagayan Coca-Cola Plant), petitioner herein, alleging failure
or refusal of the latter to include in the computation of 13th- month pay such items as sick, vacation or
maternity leaves, premium for work done on rest days and special holidays, including pay for regular
holidays and night differentials.

An Order 3 dated February 15, 1977 was issued by Regional Office No. X where the complaint was filed
requiring herein petitioner San Miguel Corporation (Cagayan Coca-Cola Plant) "to pay the difference of
whatever earnings and the amount actually received as 13th month pay excluding overtime premium and
emergency cost of living allowance. "

Herein petitioner appealed from that Order to the Minister of Labor in whose behalf the Deputy Minister
of Labor Amado G. Inciong issued an Order 4 dated June 7, 1978 affirming the Order of Regional Office
No. X and dismissing the appeal for lack of merit. Petitioner's motion for reconsideration having been
denied, it filed the instant petition.

On February 14, 1979, this Court issued a Temporary Restraining Order 5 enjoining respondents from
enforcing the Order

Issues:
NO... whether or not in the computation of the 13th-month pay under Presidential Decree 851, payments
for sick, vacation or maternity leaves, premium for work done on rest days and special holidays, including
pay for regular holidays and night... differentials should be considered.
Ruling:
No. The Court finds petitioner's contention meritorious. Petitioner assails as erroneous the aforesaid
order, ruling and opinions, vigorously contends that Presidential Decree 851 speaks only of  basic
salary as basis for the determination of the 13th-month pay; submits that payments for sick, vacation, or
maternity leaves, night differential pay, as well as premium paid for work performed on rest days, special
and regular holidays do not form part of the basic salary; and concludes that the inclusion of those
payments in the computation of the 13th-month pay is clearly not sanctioned by Presidential Decree 851.

The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instructions No.
174, and profit sharing payments indicate the intention to strip basic salary of other payments which are
properly considered as "fringe" benefits. Likewise, the catch-all exclusionary phrase "all allowances and
monetary benefits which are not considered or integrated as part of the basic salary" shows also the
intention to strip basic salary of any and all additions which may be in the form of allowances or "fringe"
benefits.

It is clear that overtime pay is an additional compensation other than and added to the regular wage or
basic salary, for reason of which such is categorically excluded from the definition of basic salary under
the Supplementary Rules and Regulations Implementing Presidential Decree 851

Philippine Duplicators vs. NLRC DIGEST

Facts:

Private respondent union, for and on behalf of its member-salesmen, asked petitioner corporation for
payment of 13th month pay computed on the basis of the salesmen’s fixed or guaranteed
wages plus commissions.
Petitioner corporation refused the union’s request, but stated it would respect an opinion from the MOLE.
On 17 November 1987, acting upon a request for opinion submitted by respondent union, Director
Augusto G. Sanchez of the Bureau of Working Conditions, MOLE, rendered an opinion to respondent
union declaring applicable the provisions of Explanatory Bulletin No. 86-12, Item No. 5 (a):
. . . . Since the salesmen of Philippine Duplicators are receiving a fixed basic wage plus commission on
sales and not purely on commission basis, they are entitled to receive 13th month pay provided they
worked at least one (1) month during the calendar year. May we add at this point that  in computing such
13th month pay, the total commissions of said salesmen for the calendar year shall be divided by twelve
(12). (Emphasis supplied)
Notwithstanding Director Sanchez’ opinion or ruling, petitioner refused to pay the claims of its salesmen
for 13th month pay computed on the basis of both fixed wage plus sales commissions.

Issue: WON sales commission is included in the coverage of basic salary for purposes of computing 13th
month pay.
Held:

1. Decision (1993)
In the first place, Article 97 (f) of the Labor Code defines the term “wage” (which is equivalent to
“salary,” as used in P.D. No. 851 and Memorandum Order No. 28) in the following terms:
(f) “Wage“ paid to any employee shall mean the remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission
basis, or other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to
be rendered, and includes the fair and reasonable value, as determined by the Secretary of Labor, of
board, lodging, or other facilities customarily furnished by the employer to the employee. “Fair and
reasonable value” shall not include any profit to the employer or to any person affiliated with the
employer. (Emphasis supplied)
In the instant case, there is no question that the sales commissions earned by salesmen who make or close
a sale of duplicating machines distributed by petitioner corporation constitute part of the compensation or
remuneration paid to salesmen for serving as salesmen, and hence as part of the “wage” or “salary” of
petitioner’s salesmen. Indeed, it appears that petitioner pays its salesmen a small fixed or guaranteed
wage; the greater part of the salesmen’s wages or salaries being composed of the sales or incentive
commissions earned on actual sales closed by them. No doubt this particular salary structure was intended
for the benefit of petitioner corporation, on the apparent assumption that thereby its salesmen would be
moved to greater enterprise and diligence and close more sales in the expectation of increasing their sales
commissions. This, however, does not detract from the character of such commissions as part of the
salary or wage paid to each of its salesmen for rendering services to petitioner corporation.
Petition and MR dismissed

Boie-Takeda Chemicals, Inc. vs. de la Serna

Facts: P.D. No. 851 provides for the Thirteen-Month Pay Law. Under Sec. 1 of said law, “allemployers
are required to pay all their employees receiving basic salary of not more than P1,000.00 a month,
regardless of the nature of the employment, and such should be paid onDecember 24 of every year.” The
Rules and Regulations Implementing P.D. 851 containedprovisions defining “13-month pay” and “basic
salary” and the employers exempted fromgiving it and to whom it is made applicable. Supplementary
Rules and RegulationsImplementing P.D. 851 were subsequently issued by Minister Ople which inter alia
set items of compensation not included in the computation of 13-month pay. (overtime pay, earnings
andother remunerations which are not part of basic salary shall not be included in thecomputation of 13-
month pay). Pres. Corazon Aquino promulgated on August 13, 1985 M.O.No. 28, containing a single
provision that modifies P.D. 851 by removing the salary ceiling of P1,000.00 a month. More than a year
later, Revised Guidelines on the Implementation of the13-month pay law was promulgated by the then
Labor Secretary Franklin Drilon, among otherthings, defined particularly what remunerative items were
and were not included in theconcept of 13-month pay, and specifically dealt with employees who are paid
a fixed orguaranteed wage plus commission or commissions were included in the computation of
13thmonth pay)A routine inspection was conducted in the premises of petitioner. Finding thatpetitioner
had not been including the commissions earned by its medical representatives inthe computation of their
1-month pay, a Notice of Inspection Result was served on petitionerto effect restitution or correction of
“the underpayment of 13-month pay for the years, 1986 to1988 of Medical representatives. Petitioner
wrote the Labor Department contesting the Noticeof Inspection Results, and expressing the view that the
commission paid to its medicalrepresentatives are not to be included in the computation of the 13-moth
pay since the lawand its implementing rules speak of REGULAR or BASIC salary and therefore exclude
allremunerations which are not part of the REGULAR salary. Regional Dir. Luna Piezas issued anorder
for the payment of underpaid 13-month pay for the years 1986, 1987 and 1988. Amotion for
reconsideration was filed and the then Acting labor Secretary Dionisio de la Sernaaffirmed the order with
modification that the sales commission earned of medicalrepresentatives before August 13, 1989
(effectivity date of MO 28 and its implementingguidelines) shall be excluded in the computation of the
13-month pay.Similar routine inspection was conducted in the premises of Phil. Fuji Xerox where itwas
found there was underpayment of 13th month pay since commissions were not included.In their almost
identically-worded petitioner, petitioners, through common counsel, attributegrave abuse of discretion to
respondent labor officialsHon. Dionisio dela Serna and Undersecretary Cresenciano B. Trajano.

ISSUE: Whether or not commissions are included in the computation of 13-month pay

HELD: NO. Contrary to respondent’s contention, M.O No. 28 did not repeal, supersede orabrogate P.D.
851. As may be gleaned from the language of MO No. 28, it merely “modified”Section 1 of the decree by
removing the P 1,000.00 salary ceiling. The concept of 13th Monthpay as envisioned, defined and
implemented under P.D. 851 remained unaltered, and whileentitlement to said benefit was no longer
limited to employees receiving a monthly basicsalary of not more than P 1,000.00 said benefit was, and
still is, to be computed on the basicsalary of the employee-recipient as provided under P.D. 851. Thus, the
interpretation given tothe term “basic salary” was defined in PD 851 applies equally to “basic salary”
under M.O. No.28. The term “basic salary” is to be understood in its common, generally accepted
meaning,i.e., as a rate of pay for a standard work period exclusive of such additional payments asbonuses
and overtime. In remunerative schemes consists of a fixed or guaranteed wage pluscommission, the fixed
or guaranteed wage is patently the “basic salary” for this is what theemployee receives for a standard
work period. Commissions are given for extra effortsexerted in consummating sales of other related
transactions. They are, as such, additionalpay, which the SC has made clear do not from part of the “basic
salary.”

Philippine Agricultural Commercial and Industrial Workers Union v. NLRC

Facts: Philippine Agricultural Commercial and Agricultural Workers Union — TUCP instituted a
complaint for payment of 13th month pay in behalf of drivers and conductors of Vallacar Transit on the
ground that although paid “purely commission” they are entitled to basic minimum pay mandated by law.
Vallacar Transit contend that they are not entitled due to an exempting provision in the IRR of the 13th
Month Pay Law and pursuant to its CBA.

Petitioner Philippine Agricultural Commercial and Agricultural Workers Union — TUCP (the union) is
the exclusive bargaining agent of the rank and file employees of respondent Vallacar Transit, Inc. The
union instituted a complaint with NLRC for payment of 13th month pay in behalf of the drivers and
conductors of respondent Vallacar Transit on the ground that although said drivers and conductors are
compensated on a "purely commission" basis as described in their Collective Bargaining Agreement
(CBA), they are automatically entitled to the basic minimum pay mandated by law should said
commission be less than their basic minimum for eight (8) hours work. Respondent Vallacar Transit, Inc.
contended that since said drivers and conductors are compensated on a purely commission basis, they are
not entitled to 13th month pay pursuant to the exempting provisions enumerated in para. 2 of the Revised
Guidelines on the Implementation of the Thirteenth Month Pay Law. It further contended that Sec.2 of
Art. XIV of the CBA expressly provided that "drivers and conductors paid on a purely commission are
not legally entitled to 13th month pay." Said CBA, being the law between the parties, must be respected.
Labor Arbiter: dismissed the complaint. NLRC: likewise dismissed so was the MR. Hence, the present
petition.

ISSUES: WON the bus drivers and conductors of Vallacar Transit, Inc. are entitled to 13th month pay.
(YES)

RATIO: The bus drivers and conductors are entitled to 13th month pay P.D. 851 ("13th Month Pay" Law)
prescribes payment of 13th month pay in the following terms: Sec. 1. All employers are hereby required
to pay all their employees receiving a basic salary of not more than P1,000.00 a month, regardless of the
nature of the employment, a 13th month pay not later than December 24 of every year.

Sec. 2. Employers already paying their employees a 13th month pay or its equivalent are not covered by
this Decree. The IRR of said law defined the following terms: (a) 13th month pay shall mean one-twelfth
(1/12) of the basic salary of an employee within a calendar year; (b) basic salary shall include all
remunerations or earnings paid by an employer to an employer for services rendered, but may not include
cost of living allowances XXXX profitsharing payments, and all allowances and monetary benefits which
are not considered or integrated as part of the regular or basic salary of the employee

ariel david vs john macasio

Tan vs. Lagrama
G.R. No. 151228, August 15, 2002
Facts
 Lagrama works for Tan as painter of billboards and murals for the motion pictures shown at the
theaters managed by Tan for more than 10years
 Lagrama was dismissed for having urinated in his working area
 Lagrama filed a complaint for illegal dismissal and non payment of benefits
 Tan asserted that Lagrama was an independent contractor as he was paid in piece-work basis

Issue
W/N Lagrama is an independent contractor or an employee of Tan?

Ruling
Lagrama is an employee not an independent contractor
Applying Four Fold Test
A. Power of Control - Evidence shows that the Lagrama performed his work as painter and under
the supervision and control of Tan.
1. Lagrama worked in a designated work area inside the theater of Tan for the use
of which petitioner prescribed rules, which rules included the observance of
cleanliness and hygeine and prohibition against urinating in the work area and
any other place other than rest rooms and
2. Tan's control over Lagrama's work extended not only the use of work area but
also the result of Lagrama;s work and the manner and means by which the work
was to be accomplished
3. Lagrama is not an independent contractor because he did not enjoy independence
and freedom from the control and supervision of Tan and he was subjected to
Tan's control over the means and methods by which his work is to be performed
and accomplished
         B. Payment of Wages
1. Lagrama worked for Tan on a fixed piece work basis is of no moment. Payment by result is a
method of compensation and does not define the essence of the relation.
2. Tat Lagrama was not reported as an employee to the SSS is not conclusive, on the question
whether he was an employee, otherwise Tan would be rewarded for his failure or even neglect to
perform his obligation.
    C. Power of Dismissal – by Tan stating that he had the right to fire Lagrama, Tan in effect
acknowledged Lagrama to be his employee
    D. Power of Selection and Engagement of Employees – Tan engaged the services of Lagrama without
the intervention of third party

Philippine spring water resources inc v mahilum

Philippine Spring Water Resources, Inc. (PSWRI) is engaged in the business of manufacturing, selling,
and distributing bottled mineral waterm hired respondent Mahilum as Vice-President for Sales and
Marketing for the Bulacan-South Luzon area, for a monthly salary of 15,000php plus 0.25% commission
on every cash delivery, and another 0.25% on new accounts from July to August 2004. In Nov. 2004, the
inauguration of PSWRI’s Bulacan plant would be celebrated at the same time with the company’s
Christmas party. Mahilum was designated as the over-all chairman of the event. Mahilum had a prior
appointment with major clients in Makati City. He requested Vicky Evangelista, VP for Admin and
Finance, to take charge of the meetings re. inauguration. On the inaugural day, Mahilum was not seen
around to supervise the program proper as he entertained some visitors of the company. Lua, the CEO of
PWSRI was furious over Mahilum b/c he was not recognized during the program. He was not mentioned
in the opening remarks or called to deliver his inaugural speech. The following day, Mahilum was
required to explain why Lua was not recognized and made to deliver his speech. As a consequence of his
actions, he was placed under preventive suspension for 30 days. When his suspension ended, Mahilum
reported for work but was prevented from entering the workplace. He subsequently received a copy of the
memorandum, terminating his services. He received the amount of 43,998.56 and was made to execute
the Release, Waiver and Quitclaim in favor of the company and Lua. Mahilum filed a complaint for
illegal dismissal, with prayer for reinstatement, and payment of backwages and damages. LA: Dismissed
Mahilum’s complaint on the ground that the quitclaim he executed barred his right to question his
dismissal under thr principle of estoppel. NLRC: Reversed LA and declared Mahilum illegally dismissed.
It ruled that although Mahilum voluntarily signed the quitclaim, it was highly possible that he might have
been constrained to assent to its execution considering that he had not received any salary for more than 1
month due to his preventive suspension. CA: Initially reversed NLRC but reconsidered its decision. It
held that indeed, Mahilum was illegally dismissed from employment, he was entitled to full backwages
and separation pay in lieu of reinstatement. The CA declared that the quitclaim was void. As part of its
backwages, it awarded 0.25% commission on the cash sales of the company from 1 Feb 2005 up to the
finality of the decision.

ISSUES: 1. W/N Mahilum is illegally dismissed? – YES 2. W/N the CA awarded the wages correctly? –
NO

RULING: 1. Yes. Mahilum was a regular employee who was entitled to security of tenure. It follows that
he could only be dismissed from service for causes provided under the Labor Code. Mahilum’s
designation as the chairman of the whole affair did not form part of his duty as a supervisor. Mahilum
was engaged to supervise the sales and marketing aspects of PSWRI’s Bulacan Plant. Clearly, the charge
of loss of trust and confidence had no leg to stand on, as the act complained of was not work related.
Furthermore, quitclaim executed by Mahilum did not operate to a bar a cause of action for illegal
dismissal. The Court observed that the amounts received by Mahilum were only those owing to him under
the law sustained the fact that the quitclaim was executed without consideration. Hence, the quitclaim is
not binding. Because he was illegally dismissed, Art. 279 of the Labor Code provides that “an employee
who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges, to full backwages, inclusive of allowances, and to other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his actial
reinstatement.” Thus, an illegally dismissed employee is entitled to: C.
Reinstatement, if viable or separation pay, if reinstatement is no longer viable; Payment of separation pay
is an acceptable alternative when reinstatement is no longer viable or desirable due to the strained
relationship of the parties. In a sense, such payment liberates the employee from what could be
considered a highly oppressive work environment. In another sense, the payment releases the employer
from the grossly unpalpable obligation of maintaining an employee it no longer trusts.

Mabeza vs. NLRC

FACTS:

Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-employees at
the Hotel Supreme in Baguio City were asked by the hotel’s management to sign an instrument attesting
to the latter’s compliance with minimum wage and other labor standard provisions of law.
 
Mabeza signed the affidavit but refused to go to the City Prosecutor’s Office to swear to the veracity and
contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the
same day to the Regional Office of the Department of Labor and Employment in Baguio City.
 
 
She thereafter reluctantly filed a leave of absence from her job which was denied by
management. When she attempted to return to work on May 10, 1991, the hotel’s cashier,
Margarita Choy, informed her that she should not report to work and, instead, continue with her unofficial
leave of absence. Consequently, on May 13, 1991, three days after her attempt to return to work,
petitioner filed a complaint for illegal dismissal before the Arbitration Branch of
the National Labor Relations Commission —
CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of wages,
non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other
benefits.
 
Private respondent Peter Ng alleged before Labor Arbiter Pati that petitioner “surreptitiously left (her job)
without notice to the management” and that she actually abandoned her work.

He maintained that there was no basis for the money claims for underpayment and other benefits as these
were paid in the form of facilities to petitioner and the hotel’s other employee.

In a supplemental answer submitted eleven (11) months after the original complaint for illegal dismissal
was filed, private respondent raised a new ground, loss of confidence, which was supported by a criminal
complaint for Qualified Theft.
 
LA dismissed Mabeza’s complaint on the ground of loss of condifence. NLRC affirmed LA’s decision.
 
Mabeza alleged that the NLRC committed a patent and palpable error amounting to grave abuse of
discretion in adopting the ruling of the labor arbiter that there was no underpayment of wages and
benefits.

ISSUE:
Whether or not Mabeza was underpaid of her wages

RULING:

Yes. Labor Arbiter Pati accepted hook, line and sinker the private respondent’s bare claim that the reason
the monetary benefits received by petitioner between 1981 to 1987 were less than minimum wage was
because petitioner did not factor in the meals, lodging, electric consumption and water she received
during the period in her computations.

Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not
be deducted without the employer complying first with certain legal requirements.

Without satisfying these requirements, the employer simply cannot deduct the value from the employee’s
ages. Requirements:
1. Proof must be shown that such facilities are customarily furnished by the trade.
2. The provision of deductible facilities must be voluntarily accepted in writing by the
employee.
3. Facilities must be charged at fair and reasonable value.

These requirements were not met in the instant case. Private respondent “failed to present any company
policy or guideline to show that the meal and lodging . . . (are) part of the salary;” he failed to provide
proof of the employee’s written authorization; and, he failed to show how he arrived at the valuations.

Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision were
figures furnished by the private respondent’s own accountant, without corroborative evidence. On the
pretext that records prior to the July 16, 1990 earthquake were lost or destroyed, respondent failed to
produce payroll records, receipts and other relevant documents, where he could have, as has been pointed
out in the Solicitor General’s manifestation, “secured certified copies thereof from the nearest regional
office of the Department of Labor, the SSS or the BIR.”

More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not
facilities but supplements. A benefit or privilege granted to an employee for the convenience of the
employer is not a facility. The criterion in making a distinction between the two not so much lies in the
kind (food, lodging) but the purpose.

Considering, therefore, that hotel workers are required to work different shifts and are expected to be
available at various odd hours, their ready availability is a necessary matter in the operations of a small
hotel, such as the private respondent’s hotel.

It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent to
the full wage applicable from May 13, 1988 up to the date of her illegal dismissal.

OUR HAUS REALTY DEVELOPMENT CORPORATION vs. ALEXANDER PARIAN

FACTS: This is a petition for review on certiorari to challenge the CA rulings and the NLRC resolution
who reversed the LA’s decision to favor the herein respondents. Respondents Alexander Parian, Jay C.
Erinco, Alexander Canlas, Bernard Tenedero and Jerry Sabulao 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. The 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. The laborers
appealed LA’s decision to NLRC who reversed it in favor of them. 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. Our Haus moved for the reconsideration of the NLRC’s decision and submitted new
evidence (the five kasunduans) to show that the respondents authorized Our Haus in writing to charge the
values of their meals and lodging to their wages. However, NLRC denied this motion, thus, Our Haus
filed a Rule 65 petition with the CA propounding a new theory that there is a distinction between
deduction and charging; that a written authorization is only necessary if the facility’s value will be
deducted and will not be needed if it will merely be charged or included in the computation of wages. The
CA dismissed Our Haus’ certiorari petition and affirmed the NLRC rulings in toto 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. Our Haus filed a motion for reconsideration but the CA denied its
motion, prompting it to file the present petition for review on certiorari under Rule 45.

ISSUE: Whether or not the NLRC committed grave abuse of discretion in its decision favoring the herein
respondents.

HELD: The Court ruled that 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.
ariel david vs john macasio
NASIPIT LUMBER CO. vs. NWPC G.R. No. 146225 November 25, 2004

Facts: The General Membership of WAWU-ALU-TUCP, approved and issued a Resolution which states
that except for the rank-and-file workers assigned to the St. Christopher Hospital, the thirty (30) members
of NOWM would not report for work effective February 19, 1996. Nasipit and Wallboard were informed
of the said resolution. Meanwhile, the Office of the DOLE conducted an inspection of the offices of
Nasipit and found that the corporation committed the violations of labor standard law, to wit: a)
underpayment of 13th month pay from December for (sic) 1995; b) non-payment of vacation leave 1995;
c) non-payment of holiday 1995; d) non-payment of overtime pay; e) non-payment of benefits under
CBA; f) unpaid wages from December 16-31, 1994 and January-December, 1995. In an Order, the
Regional Director directed Nasipit to pay to its employees P7,629,490.00 as unpaid wages. Nasipit filed a
motion for reconsideration which was denied. It appealed the Order to the DOLE.

The Secretary of Labor and Employment issued an Order directing the Regional Director to elevate the
entire records of the case to the DOLE for computation of the total sum rightly due to the workers. In the
meantime, NOWM and its thirty (30) members filed a complaint against Nasipit and Wallboard for illegal
cessation of business operations, non-payment of separation pay, underpayment of salary and salary
arrears for one (1) year before the NLRC. LA dismissed the complaint for lack of merit on his finding that
the petitioners had to suspend their operations because of the respondent employees' refusal to report for
work. NLRC set aside the decision of the LA and awarding separation pay to the thirty members of the
respondent union. It ruled that, contrary to the findings of the LA, the 30 members were dismissed
because of their failure to report for work after Nasipit and Wallbaord refused to accede to their just

demands for monetary benefits.

Issue: Whether the 30 union members are entitled to separation pay; and if in the affirmative, the amount
of entitlement of each individual respondent by way of separation pay and other monetary benefits. (YES,
1/2 month pay for every year of service)

Ruling: The SC’s decision adopting the ruling of the CA: The services of the members were terminated
in January 1996, a month before the other rankand-file employees did not report to work. It seems that
Nasipit and Wallboard made use of such event in order to avoid the fulfillment of their obligation to the
30 union members. Moreover, Nasipit and Wallboard's insistence that the cessation of the operation was
due to the union holds no water. As correctly observed by the union, such is a mere offshoot of the
petitioners' refusal to make good their obligation to the workers concerned.

They were dismissed when they refused to report for work. SC agree with the NLRC and the CA that
Nasipit and Wallboard's claim of suspending operations in 1994 and 1995 was merely an afterthought to
justify their dismissal of the 30 union members. It must be stressed that Nasipit and Wallboard obstinately
refused to heed and agree to the union members' just demands to pay their monetary benefits and backlog
wages amounting to P1.8M which ultimately led to the latter's dismissal from employment.

Ecop vs. NWPC

Metropolitan Bank Vs NWPC 
NWPC and RTWP v. APL

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 noncoverage and exemptible categories
under the wage order; hence, the assailed sections of the wage order should be voided.  NWPC upheld
the validity of Section 2 (A) and Section 9 (2) of Wage Order No. NCR-07. It observed that the RTWPB's
power to determine exemptible categories was adjunct to its wage fixing function conferred by Article
122 (e) of the Labor Code, as amended by Republic Act No. 6727.  With regard to the excluded sectors
provided for in Section 2 (A) of Wage Order No. NCR-07, the NWPC took cognizance of the precarious
situation in the Philippines in 1997 because of the Asian economic turmoil that had prompted the
RTWPB-NCR to issue Wage Order No. NCR-06 to prescribe a staggered amount of wage increases for
the agricultural workers, cottage/handicraft industry, private hospitals with bed capacity of 100 or less,
and retail/service establishments employing 15 or less workers. It noted that the effects of that economic
turmoil were still felt in the NCR when Wage Order No. NCR-07 was issued considering that the
unemployment rate was 15.4% in July 1999; that the RTWPB- NCR thought it wise to defer the
implementation of the new wage increase until a future date; and that the non-inclusion of some sectors
from the coverage of the Wage Order No. NCR-07 was only temporary in character.  CA granted the
petition for certiorari, holding that: 1. the powers and functions of the NWPC and RTWPB-NCR as set
forth in Republic Act No. 6727 did not include the power to grant additional exemptions from the
adjusted minimum wage; 2. that an administrative rule or regulation must be in harmony with the
enabling law; and 3. that the statutory grant of power could not be extended by implication beyond what
was necessary for their just and reasonable execution.

ISSUES: 1. Whether the RTWPB-NCR had the authority to provide additional exemptions from the
minimum wage adjustments embodied in Wage Order No. NCR-07. (YES)

RULING: 1. 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.

Pursuant to its statutorily defined functions, the NWPC promulgated NWPC Guidelines No. 001-95
(Revised Rules of Procedure on Minimum Wage Fixing) to govern the proceedings in the NWPC and the
RTWPBs in the fixing of minimum wage rates by region, province and industry. Section 1 of Rule VIII of
NWPC Guidelines No. 001-95 recognized the power of the RTWPBs to issue exemptions from the
application of the wage orders subject to the guidelines issued by the NWPC. SECTION 1.
APPLICATION FOR EXEMPTION. — Whenever a wage order provides for exemption, applications for
exemption shall be led with the appropriate Board which shall process these applications, subject to the
guidelines issued by the Commission.

Philippine Geothermal vs. Chevron Geothermal 

FACTS:
Petitioner is a legitimate labor organization and the certified bargaining agent of the rank employees of
Chevron Geothermal Phils. Holdings, Inc. (respondent).and file On July 31, 2008, the petitioner and
respondent formally executed a Collective Bargaining Agreement (CBA) which was made effective for
the period from November 1, 2007 until October 31, 2012. Under Article VII, Section 1 thereof, there is a
stipulation governing salary increases of the respondent’s rank file employees. On October 6, 2009, a
letter dated September 20, 2009 was sent by the petitioner’s President to respondent expressing, on behalf
of its members, the concern that the aforesaid CBA provision and implementing rules were not being
implemented properly pursuant to the guidelines and that, if not addressed, might result to a salary
distortion among union members.

As a consequence of their accelerated increases, wages of said probationary workers equated the wage
rates of the regular employees, thereby obliterating the wage rates distinction based on merit, skills and
length of service. Therefore, the petitioner insisted that its members’ salaries must necessarily be
increased so as to maintain the higher strata of their salaries from those of the probationary employees
who were given the said premature salary increases. On the other hand, respondent maintained that it did
not commit any violation of that CBA provision and its implementing guidelines; in fact, it complied
therewith. It reasoned that the questioned increases given to Lanao and Cordovales’ salaries were granted,
not during their probationary employment, but after they were already regularized. It further asseverated
that there was actually no salary distortion in this case since the disparity or difference of salaries between
Lanao and Cordovales with that of the other company employees were merely a result of their being hired
on different dates, regularization at different occasions, and differences in their hiring rates at the time of
their employment. After due proceedings, the Voluntary Arbitrator rendered a Decision dated August 16,
2010 in favor of respondent, ruling that petitioner failed to duly substantiate its allegations that the former
prematurely gave salary increases to its probationary employees and that there was a resultant distortion
in the salary scale of its regular employees.

ISSUE:
Whether or not the grant of wage increase to Lanao and Cordovales is a valid exercise of management
prerogative by respondent.

RULING:
There is no wage distortion in this case. Upon the enactment of Republic Act (R.A.) No. 6727 (Wage
Rationalization Act, amending among others, Article 124 of the Labor Code) on June 9, 1989, the term
“Wage Distortion” was explicitly defined as “a situation where an increase in prescribed wage rates
results in the elimination or severe contraction of intentional quantitative differences in wage or salary
rate between and among employee groups an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of service or other logical bases of
differentiation.” Contrary to petitioner’s claim of alleged “wage distortion”, Article 124 of the Labor
Code of the Philippines only cover wage adjustments and increases due to a prescribed law or wage order,
viz.:

Metrobank vs. NLRC

Facts:
The bank entered into a collective bargaining agreement with the MBTCEU, granting a monthly
P900 wage increase effective 01 January 1989, P600 wage increase 01 January 1990, and P200 wage
increase effective 01 January 1991. The MBTCEU had also bargained for the inclusion of probationary
employees in the list of employees who would benefit from the first P900 increase but the bank had
adamantly refused to accede thereto. Consequently, only regular employees as of 01 January 1989 were
given the increase to the exclusion of probationary employees.
Pursuant to the provision of R.A. 6727, Sec.4 (a) & (D), the bank gave the P25 increase per day, or
P750 a month, to its probationary employees and to those who had been promoted to regular or
permanent status before 01 July 1989 but whose daily rate was P100 and below. The bank refused to give
the same increase to its regular employees who were receiving more than P100 per day and recipients of
the P900 CBA increase.  Contending that the bank's implementation of Republic Act 6727 resulted in the
categorization of the employees into (a) the probationary employees as of 30 June 1989 and regular
employees receiving P100 or less a day who had been promoted to permanent or regular status before 01
July 1989, and (b) the regular employees as of 01 July 1989, whose pay was over P100 a day, and that,
between the two groups, there emerged a substantially reduced salary gap, the MBTCEU sought from the
bank the correction of the alleged distortion in pay. In order to avert an impeding strike, the bank
petitioned the Secretary of Labor to assume jurisdiction over the case.
The labor arbiter disregard with the bank's contention that the increase in its implementation of
Republic Act 6727 did not constitute a distortion because "only 143 employees or 6.8% of the bank's
population of a total of 2,108 regular employees" benefited.  NLRC reversed the decision of the Labor
Arbiter.
 
Issue:
Whether or not NLRC acted with grave abuse of discretion by its refusal "to acknowledge the
existence of a wage distortion in the wage or salary rates between and among the employee groups of the
respondent bank as a result of the bank's partial implementation" of Republic Act 6727.”
 
Held:
Yes.
 
Ratio:
The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined, thus:
(p) Wage Distortion means a situation where an increase in prescribed wage rates results in the
elimination or severe contradiction of intentional quantitative differences in wage or salary rates between
and among employee groups in an establishment as to effectively obliterate the distinctions embodied in
such wage structure based on skills, length of service, or other logical bases of differentiation.
The definition of "wage distortion," 10 aforequoted, shows that such distortion can so exist when, as
a result of an increase in the prescribed wage rate, an "elimination or severe contraction of intentional
quantitative differences in wage or salary rates" would occur "between and among employee groups in an
establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation." In mandating an adjustment, the law did not
require that there be an elimination or total abrogation of quantitative wage or salary differences; a severe
contraction thereof is enough. As has been aptly observed by Presiding Commissioner Edna Bonto-Perez
in her dissenting opinion, the contraction between personnel groupings comes close to eighty-three
(83%), which cannot, by any stretch of imagination, be considered less than severe.

PRUBANKERS ASSOC vs. PRUDENTIAL BANK DIGEST

Facts:

The Regional Tripartite Wages and Productivity Board of Region V issued Wage Order No. RB 05-
03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector who ha[d]
rendered service for at least three (3) months before its effectivity, and for the same period [t]hereafter, in
the following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the cities of Naga
and Legaspi; FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco,
Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00) for all other areas in the Bicol Region.
The Regional Tripartite Wages and Productivity Board of Region VII issued Wage Order No. RB
VII-03, which directed the integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A
into the basic pay of all workers. It also established an increase in the minimum wage rates for all workers
and employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and
Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova,
Talisay, Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran.
The petitioner then granted a COLA of P17.50 to its employees at its Naga Branch, the only branch
covered by Wage Order No. RB 5-03. Respondent Prubankers Association wrote the petitioner requesting
that the Labor Management Committee be immediately convened to discuss and resolve the alleged wage
distortion created in the salary structure upon the implementation of the said wage orders. Respondent
Association then demanded in the Labor Management Committee meetings that the petitioner extend the
application of the wage orders to its employees outside Regions V and VII, claiming that the regional
implementation of the said orders created a wage distortion in the wage rates of petitioners employees
nationwide.
Court of Appeals held that the variance in the salary rates of employees in different regions of the
country was justified by RA 6727. It noted that the underlying considerations in issuing the wage orders
are diverse, based on the distinctive situations and needs existing in each region. Hence, there is no basis
to apply the salary increases imposed by Wage Order No. VII-03 to employees outside of Region VII.
 
Issue:
Whether or not the banks separate and regional implementation of Wage Order No. 5-03 at its Naga
Branch and Wage Order No. VII-03 at its Cebu, Mabolo and P. del Rosario branches, created a wage
distortion in the bank nationwide
 
Held:
No.
 
Ratio:
The statutory definition of wage distortion is found in Article 124 of the Labor Code, as amended by
Republic Act No. 6727, which reads:
Article 124. Standards/Criteria for Minimum Wage Fixing - xxx
As used herein, a wage distortion shall mean a situation where an increase in prescribed wage results
in the elimination or severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of service, or other logical bases of
differentiation.
Elaborating on this statutory definition, this Court ruled: Wage distortion presupposes a classification
of positions and ranking of these positions at various levels. One visualizes a hierarchy of positions with
corresponding ranks basically in terms of wages and other emoluments. Where a significant change
occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other
level in the hierarchy of positions, negating as a result thereof the distinction between one level of
position from the next higher level, and resulting in a parity between the lowest level and the next higher
level or rank, between new entrants and old hires, there exists a wage distortion. xxx. The concept of
wage distortion assumes an existing grouping or classification of employees which establishes
distinctions among such employees on some relevant or legitimate basis. This classification is reflected in
a differing wage rate for each of the existing classes of employees.
 
 Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary rates
2. A significant change in the salary rate of a lower pay class without a concomitant increase in the
salary rate of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country.

Bankard Union Vs NLRC 

Facts:
Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level I, Level II, Level III, Level
IV, and Level V. On May 28, 1993, its Board of Directors approved a New Salary Scale, made retroactive
to April 1, 1993, for the purpose of making its hiring rate competitive in the industrys labor market. The
New Salary Scale increased the hiring rates of new employees, to wit: Levels I and V by one thousand
pesos (P1,000.00), and Levels II, III and IV by nine hundred pesos (P900.00). Accordingly, the salaries of
employees who fell below the new minimum rates were also adjusted to reach such rates under their
levels.
Bankards move drew the Bankard Employees Union-WATU (petitioner), the duly certified exclusive
bargaining agent of the regular rank and file employees of Bankard, to press for the increase in the salary
of its old, regular employees.
Bankard took the position, however, that there was no obligation on the part of the management to
grant to all its employees the same increase in an across-the-board manner.
As the continued request of petitioner for increase in the wages and salaries of Bankards regular
employees remained unheeded, it filed a Notice of Strike on August 26, 1993 on the ground of
discrimination and other acts of Unfair Labor Practice (ULP).
Petitioner filed another Notice of Strike on the grounds of refusal to bargain, discrimination, and
other acts of ULP - union busting. The strike was averted, however, when the dispute was certified by the
Secretary of Labor and Employment for compulsory arbitration.
NLRC held that there is not wage distortion and dismissed the case for lack of merit. CA also denied
the petition for certiorari filed by Petitioner.
 
Issue:
Whether the unilateral adoption by an employer of an upgraded salary scale that increased the hiring
rates of new employees without increasing the salary rates of old employees resulted in wage distortion
within the contemplation of Article 124 of the Labor Code.
 
Held:
No.
 
Ratio:
Normally, a company has a wage structure or method of determining the wages of its employees. In a
problem dealing with wage distortion, the basic assumption is that there exists a grouping or classification
of employees that establishes distinctions among them on some relevant or legitimate bases.
 Involved in the classification of employees are various factors such as the degrees of responsibility,
the skills and knowledge required, the complexity of the job, or other logical basis of differentiation. The
differing wage rate for each of the existing classes of employees reflects this classification.
To determine the existence of wage distortion, the historical classification of the employees prior to
the wage increase must be established. Likewise, it must be shown that as between the different
classification of employees, there exists a historical gap or difference.
Thus the employees of private respondent have been historically classified into levels, i.e. I to V, and
not on the basis of their length of service. Put differently, the entry of new employees to the company ipso
facto place[s] them under any of the levels mentioned in the new salary scale which private respondent
adopted retroactive [to] April 1, 1993. Petitioner cannot make a contrary classification of private
respondents employees without encroaching upon recognized management prerogative of formulating a
wage structure, in this case, one based on level .
[W]hether or not a new additional scheme of classification of employees for compensation purposes
should be established by the Company (and the legitimacy or viability of the bases of distinction there
embodied) is properly a matter of management judgment and discretion, and ultimately, perhaps, a
subject matter for bargaining negotiations between employer and employees. It is assuredly something
that falls outside the concept of wage distortion.

SHS vs. Diaz 

GR 185814 October 13 2010

Facts:

Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing under the
laws of the Republic of the Philippines and registered with the Philippine Economic Zone Authority.
Petitioner Winfried Hartmannshenn (Hartmannshenn), a German national, is its president, in which
capacity he determines the administration and direction of the day-to-day business affairs of SHS. Manuel
F. Diaz (respondent) was hired by petitioner SHS as Manager for Business Development on probationary
status.
On November 29, 2005, Hartmannshenn instructed Taguiang not to release respondent’s salary. Later that
afternoon, respondent called and inquired about his salary. Taguiang informed him that it was being
withheld and that he had to immediately communicate with Hartmannshenn. Respondent denied having
received such directive.
The next day, on November 30, 2005, respondent served on SHS a demand letter and a resignation letter.
In the evening of the same day, November 30, 2005, respondent met with Hartmannshenn in Alabang.
The latter told him that he was extremely disappointed for the following reasons: his poor work
performance; his unauthorized leave and malingering from November 16 to November 30, 2005; and
failure to immediately meet Hartmannshenn upon his arrival from Germany.
Issue: WON the temporary withholding of respondent’s salary/wages by petitioners was a valid exercise
of management prerogative.
Held:

Although management prerogative refers to “the right to regulate all aspects of employment,” it cannot be
understood to include the right to temporarily withhold salary/wages without the consent of the employee.
To sanction such an interpretation would be contrary to Article 116 of the Labor Code, which provides:
 ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful for any person, directly
or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his
wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker’s
consent.
 Any withholding of an employee’s wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below:
 ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:
 (a)  In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
 (b)  For union dues, in cases where the right of the worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual worker concerned; and
 (c)   In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.
Absent a showing that the withholding of complainant’s wages falls under the exceptions provided in
Article 113, the withholding thereof is thus unlawful.
Petitioners argue that Article 116 of the Labor Code only applies if it is established that an employee is
entitled to his salary/wages and, hence, does not apply in cases where there is an issue or uncertainty as to
whether an employee has worked and is entitled to his salary/wages, in consonance with the principle of
“a fair day’s wage for a fair day’s work.” Petitioners contend that in this case there was precisely an issue
as to whether respondent was entitled to his salary because he failed to report to work and to account for
his whereabouts and work accomplishments during the period in question.
Commando Security Agency v. NLRC
Petitioner's contention that Decierdo is estopped from complaining about the 25% deduction from his
salary representing petitioner's share in procuring job placement for him, is not well taken. That provision
of the employment contract was illegal and inequitous, hence, null and void.

Mabeza vs. NLRC

FACTS:

Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-employees at
the Hotel Supreme in Baguio City were asked by the hotel’s management to sign an instrument attesting
to the latter’s compliance with minimum wage and other labor standard provisions of law.
 
Mabeza signed the affidavit but refused to go to the City Prosecutor’s Office to swear to the veracity and
contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the
same day to the Regional Office of the Department of Labor and Employment in Baguio City.
 
As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting
findings of the Labor Inspector of DOLE (in an inspection of respondent’s establishment on February 2,
1991) apparently adverse to the private respondent.

After she refused to proceed to the City Prosecutor’s Office — on the same day the affidavit was
submitted to the Cordillera Regional Office of DOLE — petitioner avers that she was ordered by the hotel
management to turn over the keys to her living quarters and to remove her belongings from the hotel
premises.
 
She thereafter reluctantly filed a leave of absence from her job which was denied by
management. When she attempted to return to work on May 10, 1991, the hotel’s cashier,
Margarita Choy, informed her that she should not report to work and, instead, continue with her unofficial
leave of absence. Consequently, on May 13, 1991, three days after her attempt to return to work,
petitioner filed a complaint for illegal dismissal before the Arbitration Branch of
the National Labor Relations Commission —
CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of wages,
non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other
benefits.
 
Private respondent Peter Ng alleged before Labor Arbiter Pati that petitioner “surreptitiously left (her job)
without notice to the management” and that she actually abandoned her work.

He maintained that there was no basis for the money claims for underpayment and other benefits as these
were paid in the form of facilities to petitioner and the hotel’s other employee.

In a supplemental answer submitted eleven (11) months after the original complaint for illegal dismissal
was filed, private respondent raised a new ground, loss of confidence, which was supported by a criminal
complaint for Qualified Theft.
 
LA dismissed Mabeza’s complaint on the ground of loss of condifence. NLRC affirmed LA’s decision.
 
Mabeza alleged that the NLRC committed a patent and palpable error amounting to grave abuse of
discretion in adopting the ruling of the labor arbiter that there was no underpayment of wages and
benefits.

ISSUE:

Whether or not Mabeza was underpaid of her wages

RULING:

Yes. Labor Arbiter Pati accepted hook, line and sinker the private respondent’s bare claim that the reason
the monetary benefits received by petitioner between 1981 to 1987 were less than minimum wage was
because petitioner did not factor in the meals, lodging, electric consumption and water she received
during the period in her computations.

Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not
be deducted without the employer complying first with certain legal requirements.

Without satisfying these requirements, the employer simply cannot deduct the value from the employee’s
ages. Requirements:
1. Proof must be shown that such facilities are customarily furnished by the trade.
2. The provision of deductible facilities must be voluntarily accepted in writing by the
employee.
3. Facilities must be charged at fair and reasonable value.

These requirements were not met in the instant case. Private respondent “failed to present any company
policy or guideline to show that the meal and lodging . . . (are) part of the salary;” he failed to provide
proof of the employee’s written authorization; and, he failed to show how he arrived at the valuations.

Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision were
figures furnished by the private respondent’s own accountant, without corroborative evidence. On the
pretext that records prior to the July 16, 1990 earthquake were lost or destroyed, respondent failed to
produce payroll records, receipts and other relevant documents, where he could have, as has been pointed
out in the Solicitor General’s manifestation, “secured certified copies thereof from the nearest regional
office of the Department of Labor, the SSS or the BIR.”

More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not
facilities but supplements. A benefit or privilege granted to an employee for the convenience of the
employer is not a facility. The criterion in making a distinction between the two not so much lies in the
kind (food, lodging) but the purpose.
Considering, therefore, that hotel workers are required to work different shifts and are expected to be
available at various odd hours, their ready availability is a necessary matter in the operations of a small
hotel, such as the private respondent’s hotel.

Milan vs. NLRC

FACTS:
As Solid Mills’ employees, petitioners Milan, et al. and their families were allowed to occupy SMI
Village, a property owned by respondent Solid Mills. According to Solid Mills, this was “out of liberality
and for the convenience of its employees . . . and on the condition that the employees . . . would vacate
the premises anytime the Company deems fit.”

Subsequently, petitioners were informed that Solid Mills would cease its operations due to serious
business losses. NAFLU (petitioner’s labor union) recognized Solid Mills’ closure due to serious business
losses in the memorandum of agreement. The memorandum of agreement provided for Solid Mills’ grant
of separation pay less accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th
month pay to the employees. Later on, Solid Mills, through Alfredo Jingco, sent to petitioners individual
notices to vacate SMI Village. As a consequence, petitioners were no longer allowed to report for work.
They were required to sign a memorandum of agreement with release and quitclaim before their vacation
and sick leave benefits, 13th month pay, and separation pay would be released. Employees who signed
the memorandum of agreement were considered to have agreed to vacate SMI Village, and to the
demolition of the constructed houses inside as condition for the release of their termination benefits and
separation pay. Petitioners refused to sign the documents and demanded to be paid their benefits and
separation pay.

Hence, petitioners filed complaints before the Labor Arbiter for alleged non- payment of separation pay,
accrued sick and vacation leaves, and 13th month pay. They argued that their accrued benefits and
separation pay should not be withheld because their payment is based on company policy and practice.
Moreover, the 13th month pay is based on law, specifically, Presidential Decree No. 851.

Their possession of Solid Mills property is not an accountability that is subject to clearance procedures.
They had already turned over to Solid Mills their uniforms and equipment when Solid Mills ceased
operations.

ISSUE:

Whether Solid Mills is allowed to withhold terminal pay and benefits pending the petitioners’ return of its
properties.

RULING:

Yes. Requiring clearance before the release of last payments to the employee is a standard procedure
among employers, whether public or private. Clearance procedures are 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.
The Civil Code also provides that the employer is authorized to withhold wages for debts due: Article
1706. Withholding of the wages, except for a debt due, shall not be made by the employer.

“Debt” in this case refers to any obligation due from the employee to the employer. It includes any
accountability that the employee may have to the employer. There is no reason to limit its scope to
uniforms and equipment, as petitioners would argue.

More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that the
release of petitioners’ benefits shall be “less accountabilities.”

“Accountability,” in its ordinary sense, means obligation or debt. The ordinary meaning of the term
“accountability” does not limit the definition of accountability to those incurred in the worksite. As long
as the debt or obligation was incurred by virtue of the employer-employee relationship, generally, it shall
be included in the employee’s accountabilities that are subject to clearance procedures.

It may be true that not all employees enjoyed the privilege of staying in respondent Solid Mills’ property.
However, this alone does not imply that this privilege when enjoyed was not a result of the employer-
employee relationship. Those who did avail of the privilege were employees of respondent Solid Mills.
Petitioners’ possession should, therefore, be included in the term “accountability.” The return of the
property owned by their employer Solid Mills became an obligation or liability on the part of the
employees when the employer-employee relationship ceased. Thus, respondent Solid Mills has the right
to withhold petitioners’ wages and benefits because of this existing debt or liability.