COMPILED LABOR 6th Meeting Updated as of 10.7.14
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Transcript of COMPILED LABOR 6th Meeting Updated as of 10.7.14
7/17/2019 COMPILED LABOR 6th Meeting Updated as of 10.7.14
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
G.R. No. L-55703 November 27, 198
!"ILI!!INE O#ERSEAS DRILLING AND OIL DE#ELO!$ENTCOR!ORATION, petitioner,
vs.
T"E "ON. $INISTR% O& LABOR, "ON. &RANCISCO L.ESTRELLA, Re'(o)*+ D(reor, Re'(o) I#, $()(r/ o L*bor*) Em+o/me), $ARIANO $. $ELENDRES, R., *)S4er( ABE ESTRADA *) !ERCI#AL GRANADO, respondents.
&ACTS6
Petitioner is a domestic corporation engaged in petroleum
exploration and exploitation. Private Respondent is the Chief
Geologist of the Petitioner for almost ten years before he nally
decided to resign.
!n "ovember #$, %&'&, private respondent (rote petitioner in
in)uiring (hether any action had been ta*en on his resignation and
+*(m()' e*r*(o) */ *) o4er be)e 4(4 e((o)eree)e o o4er em+o/ee 4o 4* e*r+(er re(')e.
!n +ecember ', %&'&, petitioner, (ithout replying to the letter of
private respondent, led (ith the oce of the +irector of -ureau of
abor Relations, "ational Capital Region, a veried application for
clearance to terminate the employment of private respondent
e/ective September #&, %&'& due to the latter0s resignation. A
copy thereof (as received by private respondent on +ecember %#,
%&'&.
!n +ecember %1, %&'&, private respondent led (ith the
aforementioned oce a veried complaint2opposition to clearance
application charging petitioner (ith unfair labor practice and undue
discrimination in refusing to grant him separation pay.
Respondent +irector of abor issued an order in favor of Private
Respondent (hich reads3
xxx
Careful examination of the record disclosed that complainant is
legally entitled to separation benets of pay pursuant to company
policy. 4he documented evidence xxx re5ect payment of benets
to employees (ho (ere similarly situated. "on6grant of the same
benet to complainant (ould inferentially be interpreted as unfair
discrimination or 7P. ogically, the a(ard of this benet as percompany policy is (arranted.
ISS:E6
8hether or not Private Respondent is legally entitled to separation
benet.
R:LING6
%ES.
98ell6established is the principle that ndings of administrativeagencies (hich have ac)uired expertise because their :urisdiction
is conned to specic matters are generally accorded not only
respect but even nality. Judicial revie( by this Court on labor
cases do not go so far as to evaluate the suciency of the
evidence upon (hich the +eputy ;inister and the Regional +irector
based their determinations but are limited to issues of :urisdiction
or grave abuse of discretion.9
-e that as it may, the nding of respondent +irector, that there
(as a company policy to grant separation benet or pay e)uivalent
to one <%= month pay for every year of service to employees (ho
(ere similarly situated as private respondent, is supported by
substantial evidence (hich means 9such relevant evidence as a
reasonable mind might accept as ade)uate to support a
conclusion.9 <Ang4ibay vs. C>R, ?& Phil. ?@B Caete vs. 8or*men0s
Compensation Commission, ;ay 1, %&1, %@? SCRA @$#, @$1=.
+ocuments to this e/ect (ere presented by private respondent at
the hearing on January #D, %&1$ as Annexes 9+9 thru 9+6' 9 of his
position paper.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
Eaving found that there (as a company policy to that e/ect,
respondent +irector correctly held that private respondent (as
legally entitled to a separation benet or pay e)uivalent to one <%=
month pay for every year of service, not(ithstanding the fact that
he had voluntarily resigned. Ee applied a basic principle
permeating the abor Code and its >mplementing Rules andRegulations. <4iangco vs. eogardo, Jr., ;ay %?, %&1@, %## SCRA
#?', #'#6#'@B ;arcopper ;ining Corporation vs. !ple, June %%,
%&1%, %$ SCRA ', 1@B !ceanic Pharmacal Fmployees 7nion
HH8I vs. >nciong, "ovember ', %&'&, &D SCRA #'$, #'=. After
having served petitioner for ten years, private respondent
deserved his separation benet or pay.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
G.R. "o. '#1& August @%, %&1&
;A$A%A !OINT "OTEL, e((o)er, v. NATIONAL LABORRELATIONS CO$$ISSION, &EDERATION O& &REE <OR;ERS*) $E$IA =:IA$BAO, reo)e).
&ACTS3 ;emia uiambao (ith thirty others, members of Hederation of Hree 8or*ers <HH8=, (ere employed by petitioner ashotel cre(. !n the basis of the protability of the company0sbusiness operations, management granted a %Dth month pay to itsemployees starting in %&'&. >n January %&1#, operations ceased togive (ay to the hotel0s conversion into a training center for ibyanscholars. Eo(ever, due to technical and nancing problems, theibyans pre6terminated the program on July ', %&1#, leavingpetitioner (ithout any business, aside from the fact that it (as notpaid for the use of the hotel premises and in addition had tounderta*e repairs of the premises damaged by the ibyanstudents. >t allegedly su/ered losses amounting to P# million.
Although it reopened the hotel premises to the public, it (as notable to pic*6up its lost patronage. >n a couple of months it e/ecteda retrenchment program until nally on it totally closed itsbusiness.
HH8 led a complaint against petitioner for illegal suspension,violation of the C-A and non6payment of the %Dth month pay.
ISS:E3 Records sho( that the case (as submitted for decision onthe sole issue of alleged non6payment of the %Dth month pay forthe year %&1# .
R:LING3 "!, 4EFK ARF "!4 F"4>4F+. 8e nd it dicult to
comprehend (hy the "RC and the abor Arbiter, despite theiradmission that the %Dth month pay has no contractual or legalbasis, still chose to rule in favor of private respondents. >t ispatently obvious that Article %$$ is clearly (ithout applicability. 4he date of e/ectivity of the abor Code is ;ay %, %&'D. >n thecase at bar, petitioner extended its %Dth month pay beginning%&'& until %&1%. 8hat is demanded is payment of the %Dth monthpay for %&1#. I)>b(*b+/ rom 4ee * *+o)e, Ar(+e 100o 4e L*bor Coe *))o *+/.
;oreover, there is )o +* 4* m*)*e 4e */me) o 4e1?4 mo)4 */. O)+/ 4e 134 mo)4 */ ( m*)*e.
"*v()' e)@o/e 4e *((o)*+ ()ome () 4e orm o 4e134 mo)4 */, r(v*e reo)e) ()(e)e o) 4e1?4 mo)4 */ or 1982 ( *+re*/ *) >)*rr*)ee*)(o) o 4e +(ber*+(/ o 4e +*.
Also contractually, as gleaned from the collective bargaining
agreement bet(een management and the union, there is nostipulation as to such extra remuneration. Ev(e)+/, 4(om((o) ( *) *)o+e'me) 4* >4 be)e (e)(re+/ o)(+*'e) or ee)e) o) 4e ro*b(+(/ o 4eom*)/ oer*(o).
A %Dth month pay is a misnomer because it is basically a bonusand, therefore, gratuitous in nature. 4he granting of the %Dthmonth pay is a management prerogative (hich cannot be forcedupon the employer. >t is something given in addition to (hat isordinarily received by or strictly due the recipient. >t is a gratuity to(hich the recipient has no right to ma*e a demand.
4his Court is not prepared to compel petitioner to grant the %Dthmonth pay solely because it has allegedly ripened into a companypractice9 as the labor arbiter has put it. Eaving lost its cateringbusiness derived from ibyan students, Lamaya Eotel should notbe penaliMed for its previous liberality.
An employer may not be obliged to assume a 9double burden9 of paying the %@th month pay in addition to bonuses or other benetsaside from the employee0s basic salaries or (ages.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
S:!RE$E STEEL COR!ORATION vNAG;A;AISANG$ANGGAGA<A NG S:!RE$E INDE!ENDENT :NION N$S-IND-A!L
Petitioner Supreme Steel Pipe Corporation is a domesticcorporation engaged in the business of manufacturing steel pipesfor domestic and foreign mar*ets. Respondent"ag*a*aisang;anggaga(a ng Supreme >ndependent 7nion is thecertied bargaining agent of petitionerNs ran*6and6le employees.
HAC4S3 !n July #', #$$, respondent led a notice of stri*e (ith the"ational Conciliation and ;ediation -oard <"C;-= on the groundthat petitioner violated certain provisions of the C-A. 4he partiesfailed to settle their dispute. Conse)uently, the Secretary of aborcertied the case to the "RC for compulsory arbitration pursuantto Article #?@<g= of the abor Code.
Respondent alleged eleven C-A violations, delineated as follo(s3De)(*+ o o>r em+o/ee o 4e CBA- rov(e *'e()re*e, Contracting6out labor, Hailure to provide shuttle service,Refusal to ans(er for the medical expenses incurred by threeemployees, Hailure to comply (ith the time6o/ (ith pay provision,OisitorsN free access to company premises Respondent chargedpetitioner (ith violation of Article >>, Section ' of the C-A, Hailure tocomply (ith reporting time6o/ provision, +ismissal of +iosdado;adayag, +enial of paternity leave benet to t(oemployees, +iscrimination and harassment, and No)-(m+eme)*(o) o COLA () <*'e Orer No. RBIII-10 *)11Ar(+e 100 L*bor Coe.
Regarding the C-A6provided (age increase<%=, Article >>, Section %of the C-A provides3
Section %. 4he C!;PA"K shall grant a general (age increase, overand above to all employees, according to the follo(ing schedule3
A. F/ective June %, #$$@ P%D.$$ per (or*ing dayB
-. F/ective June %, #$$D P%#.$$ per (or*ing dayB and
C. F/ective June %, #$$ P%#.$$ per (or*ing day. @
Respondent alleged that petitioner has repeatedly denied theannual C-A increases to at least four individuals3 Juan "io,
Reynaldo Acosta, Rommel 4alavera, and Fddie +alagon. Accordingto respondent, petitioner gives an anniversary increase to itsemployees upon reaching their rst year of employment. 4he fouremployees received their respective anniversary increases andpetitioner used such anniversary increase to :ustify the denial of their C-A increase for the year. Petitioner explained that it hasbeen the companyNs long standing practice that upon reaching oneyear of service, a (age ad:ustment is granted, and, once (agesare ad:usted, the increase provided for in the C-A for that year isno longer implemented. Petitioner claimed that this practice (asnot ob:ected to by respondent as evidenced by the employeesN payslips. Respondent countered that petitioner failed to prove that, asa matter of company practice, the anniversary increase too* theplace of the C-A increase. >t contended that all employees shouldreceive the C-A stipulated increase for the years #$$@ to #$$.
8ith regards to the "on6implementation of C!A in 8age !rder"os. R->>>6%$ and %%<#=. Respondent posited that any form of (ageincrease granted through the C-A should not be treated ascompliance (ith the (age increase given through the (age boards.Respondent claimed that, for a number of years, petitioner hascomplied (ith Article >>, Section # of the C-A (hich provides3
Section #. All salary increase granted by the C!;PA"K shall not becredited to any future contractual or legislated (age increases.-oth increases shall be implemented separate and distinct from
the increases stated in this Agreement. >t should be understood byboth parties that contractual salary increase are separate anddistinct from legislated (age increases, thus the increase broughtby the latter shall be en:oyed also by all covered employees.
Respondent maintained that for every (age order that (as issuedin Region @, petitioner never hesitated to comply and grant asimilar increase. Specically, respondent cited petitionerNscompliance (ith 8age !rder "o. R->>>6%$ and grant of themandated P%.$$ cost of living allo(ance <C!A= to all itsemployees. Petitioner, ho(ever, stopped implementing it to non6
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
minimum (age earners on July #D, #$$. >t contended that thisviolates Article %$$ of the abor Code (hich prohibits thediminution of benets already en:oyed by the (or*ers and thatsuch grant of benets had already ripened into a companypractice.D%
!e((o)er e+*()e 4* 4e COLA rov(e >)er <*'eOrer No. RBIII-10 *+(e o m()(m>m *'e e*r)er o)+/*) 4*, b/ m(*e, ( (m+eme)e 4e *me *ro 4ebo*r or o *++ ( em+o/ee. Aer re*+(()' ( m(*e, (oe ()e'r*()' 4e COLA o 4e b*( */ o 4eorer 4o ere e*r)()' *bove 4e m()(m>m *'e.
4he "RCNs Ruling
!ut of the eleven issues raised by respondent, eight (ere decided
in its favorB t(o <denial of paternity leave benet anddiscrimination of union members= (ere decided in favor of petitionerB (hile the issue on visitorNs free access to companypremises (as deemed settled during the mandatory conference.
<%= 4he "RC correctly held that every employee is entitled to the(age increase under the C-A despite receipt of an anniversaryincrease. 4he CA concluded that, based on the (ording of the C-A,(hich uses the (ords 9general increase9 and 9over and above,9 itcannot be said that the parties have intended the anniversaryincrease to be given in lieu of the C-A (age increase.
2 T4e CA e+*re 4* 4e (4r**+ o 4e COLA >)er<*'e Orer No. RBIII-10 rom 4e em+o/ee 4o ere )om()(m>m *'e e*r)er *mo>)e o * (m()>(o) o be)e be*>e >4 'r*) 4* *+re*/ r(e)e ()o *om*)/ r*(e. I o()e o> 4* 4ere * )o*mb('>(/ or o>b * o 4o ere overe b/ 4e *'eorer. !e((o)er, 4ereore, m*/ )o ()voe error orm(*e () ee)()' 4e COLA o *++ em+o/ee *) >4* *) o)+/ be o)r>e * F* * vo+>)*r/ * o) 4e *ro 4e em+o/er.9D? 4he CA opined that, considering theforegoing, the ruling in Globe ;ac*ay Cable and Radio Corp. v.
"RCD' clearly did not apply as there (as no doubtful or dicult)uestion involved in the present case.D1
Petitioner moved for a reconsideration of the CANs decision but CAdenied the motion for lac* of merit. Eence, the case.
>SS7FS3
%. 8!" the employees are entitled to the general (age increasedespite the given anniversary increase.
#. <ON 4ere * (m()>(o) o be)e 4e) !e((o)eroe (m+eme)()' 4e COLA rov(e >)er *'eorer )o RBIII-10 o )o)-m()(m>m *'e e*r)er.
EF+3 7pon these (ell6established precepts, (e sustain the CANsndings and conclusions on all the issues, except the issuepertaining to the denial of the C!A under 8age !rder "o. R->>>6%$and %% to the employees (ho are not minimum (age earners.
<%= KFS. 4he (ording of the C-A on general (age increase cannotbe interpreted any other (ay3 4he C-A increase should be given toall employees 9over and above9 the amount they are receiving,even if that amount already includes an anniversary increase.Stipulations in a contract must be read together, not in isolationfrom one another.' Consideration of Article >>>, Section # <non6crediting provision=, bolsters such interpretation. Section # statesthat 9aIll salary increase granted by the company shall not becredited to any future contractual or legislated (age increases.9Clearly then, even if petitioner had already a(arded an anniversary
increase to its employees, such increase cannot be credited to the9contractual9 increase as provided in the C-A, (hich is considered9separate and distinct.9
!e((o)er +*(m 4* ( 4* bee) 4e om*)/ r*(e ooe 4e *))(ver*r/ ()re*e (4 4e CBA ()re*e. I4oever *(+e o rove >4 m*er(*+ *. Com*)/r*(e, @> +(e *)/ o4er *, 4*b(, >om, >*'e or*er) o o)> m> be rove). T4e oer()' *r/m> *++e'e *) rove e(, ree((ve o)> 4*m('4 o)(>e ev(e)e o 4*b(, or om*)/ r*(e.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
Ev(e)+/, 4e */ +( o 4e o>r em+o/ee o )o erve* >(e) roo.
<#="!. "o diminution of benets (ould result if the (age orders arenot implemented across the board, as no such company practicehas been established.
+iminution of benets is the unilateral (ithdra(al by the employerof benets already en:oyed by the employees. T4ere ((m()>(o) o be)e 4e) ( ( 4o) 4*6 1 4e 'r*)or be)e ( o>)e o) * o+(/ or 4* r(e)e ()o *r*(e over * +o)' er(o o (meH 2 4e r*(e (o)(e) *) e+(ber*eH 3 4e r*(e ( )o >e oerror () 4e o)r>(o) or *+(*(o) o * o>b>+ or(>+ >e(o) o +*H *) ? 4e (m()>(o) or(o)()>*)e ( o)e >)(+*er*++/ b/ 4e em+o/er.
4o recall, the CA arrived at its ruling by relying on the fact that
there (as no ambiguity in the (ording of the (age order as to theemployees covered by it. Hrom this, the CA concluded thatpetitioner actually made no error or mista*e, but acted voluntarily,in granting the C!A to all its employees. >t therefore too*exception to the Globe ;ac*ay case (hich, according to it, appliesonly (hen there is a doubtful or dicult )uestion involved.
4he CA failed to note that Globe ;ac*ay primarily emphasiMedthat, for the grant of the benet to be considered voluntary, 9itshould have been practiced over a long period of time, and mustbe sho(n to have been consistent and deliberate.9 4he fact thatthe practice must not have been due to error in the construction orapplication of a doubtful or dicult )uestion of la( is a distinct
re)uirement.
4he implementation of the C!A under 8age !rder "o. R->>>6%$across the board2all employees, (hich only lasted for less than ayear, cannot be considered as having been practiced 9over a longperiod of time.9 8hile it is true that :urisprudence has not laiddo(n any rule re)uiring a specic minimum number of years inorder for a practice to be considered as a voluntary act of theemployer, under existing :urisprudence on this matter, an actcarried out (ithin less than a year (ould certainly not )ualify assuch. Eence, the (ithdra(al of the C!A 8age !rder "o. R->>>6%$
from the salaries of non6minimum (age earners did not amount toa 9diminution of benets9 under the la(.
4here is also no basis in en:oining petitioner to implement 8age!rder "o. R->>>6%% across the board. Similarly, no proof (aspresented sho(ing that the implementation of (age orders acrossthe board has ripened into a company practice. >n the same (aythat (e re)uired petitioner to prove the existence of a companypractice (hen it alleged the same as defense, at this instance, (ealso re)uire respondent to sho( proof of the company practice asit is no( the party claiming its existence. Abe) *)/ roo o e(, ree((ve o)> 4* m('4 o)(>e ev(e)eo 4e r*(e, e *))o '(ve ree)e o reo)e)J+*(m. T4e (o+*e * o (m+eme)()' * *'e orer*ro 4e bo*r *) 4*r+/ be o)(ere * om*)/r*(e, more o 4e) >4 (m+eme)*(o) *erro)eo>+/ m*e.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
RE!:BLIC !LANTERS BAN; )o )o) * !NB 6 RE!:BLICBAN; petitioner, vs. NLRC *) ANTONIO G. SANTOS,respondents.
&ACTS6
A"4!">! G. SA"4!S (as employed by Republic Planters
-an*, no( *no(n as P"-6Republic -an* <P"-6R-=, for thirty6one
<@%= years and fteen <%= days occupying various positions.
At the time of his retirement on @% ;ay %&&$ he (as a
+epartment ;anager (ith a monthly salary of P1,&?.$$ and
accumulated leave credits of t(o hundred and seventy6t(o <#'#=
days.
Ee received a gratuity pay of PD@D,D?1.# out of (hich
P#$,?%.?# (as deducted for taxes due.
Santos fled the instant suit or underpayment o
gratuity pay, non-payment o accumulated sick and
vacation leaves, mid-year and year-end bonuses, fnancial
assistance, at the same time claiming damages and
attorney's ees.
4he abor Arbiter found for complainant Santos
!n Appeal, "RC armed. Eence the petition.
ISS:E6
8hether or not Antonio G. Santos is entitled to the a(ard of P ??%,#%$.?@ and, that the a(ard to Santos of mid6year and year6
end bonuses, moral and exemplary damages and attorney0s fees
has no legal basis. Petitioner argues that Santos is not entitled to
the a(ard as he signed a Release, Waiver and Quitclaim therefor
(hen he received his gratuity pay of PD@D,D?1.#.
R:LING6
%e
Antonio G. Santos in entitled to the amount of PD#@,??%.$$,
less the applicable taxes.
A )uitclaim by an employee in favor of his employer
amounts to a valid and binding compromise agreement bet(een
them. An agreement voluntarily entered into (hich represents areasonable settlement is binding on the parties and may not later
be diso(ned simply because of a change of mind.
!n the other hand, uitclaims are ine/ective to bar recovery
for the full measure of the (or*er0s rights and that acceptance
thereof does not amount to estoppel. Generally, )uitclaims by
laborers are fro(ned upon as contrary to public policy. And the fact
that the consideration given in exchange thereof (as very much
less than the amount claimed renders the )uitclaim null and void.
>n the instant case, the total amount claimed by Santos is
!908,022.5 o 4(4 o)+/ !?3?,?8.52 * ree(ve b/4(m. Considering that the Release,Waiver and Quitclaim was
signed by Santos under protest as found by the Labor Arbiter and
the NLRC, and the dierence between the amount claimed and
that paid cannot in any way be considered negligible, it is proper to
recompute and determine the exact amount of the retirement
benets due private respondent.
>n the case before us, (e nd the di/erence involved is
considerably big and substantial. 4he total of the claim is
P&$1,$##.?. +educting therefrom the amount of PD@D,D?1.#
already received by respondent Santos leaves a di/erence of
PD'@,D.%@ (hich is even more than (hat he had been given.
P"--R- avers that the "RC gravely abused its discretion
(hen it computed the gratuity pay of Santos at P??%,#%$.?@ based
on the salary rate of the next higher ran* on the theory that he
ac)uired a vested right over it pursuant to the %&'%6%&'@
Collective -argaining Agreement <C-A=. Petitioner posits that as
the C-A had long expired it could no longer be used as basis in
computing the gratuity pay of its retiring ocersB instead, the
computation should be based on the practice and policy of the
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
ban* e/ective at the time of the employee0s retirement.
>n Republic !lanters "an# v$ National Labor Relations
Commission(hich, coincidentally, emanated from a similar set of
facts. >n that case, ;acario de GuMman resigned from P"-6R- on @
June %&1. 4he follo(ing day he led a complaint (ith the
+epartment of abor and Fmployment for underpayment of
gratuity pay, underpayment of unused leaves and non6payment of
accrued leave credits. +e GuMman be(ailed the erroneous
computation of his gratuity pay and the cash value of his
accumulated leave credits, and maintained that it should have
been based on the provisions of the %&'%6%&'@ C-A instead of the
%&1#6%&1 C-A entered into bet(een P"-6R- and its ran*6and6le
employees. >n nding for de GuMman (e ruled
Prior to private respondent0s resignation, there (ere other
managerial employees (ho resigned and2or retired from
petitioner0s employ (ho received their corresponding gratuitybenets and the cash value of their accumulated leave credits
pursuant to the provisions of the old C-A of %&'%6'@ despite its
expiration in %&'?. Among them (ere Simplicio ;analo and ;iguel
Calimbas (ho resigned on % ;arch %&'' and % July %&'1,
respectively. 8ith such a practice and policy, petitioner cannot
refuse to pay private respondent his gratuity benets under the old
C-A. 7nder Section %D<a=, Rule % of the Rules and Regulations
>mplementing -oo* O> of the abor Code, it is provided3
Sec$ %&$ Retirement "ene'ts$( )a* An employee who is retired
pursuant to a bona'de retirement plan or in accordance with theapplicable individual or collective agreement or established
employer policy shall be entitled to all the retirement bene'ts
provided therein + ++$( )-talics supplied*
4he foregoing provision explicitly states that a company practice or
policy is a labor standard in determining the retirement benets of
its employees.
4he petitioner0s theory that the computation of the benets of
private respondent should be based on the %&1#61 C-A (hich (as
the one enforced at the time of his resignation is untenable. Said
C-A (as entered into by petitioner (ith its ran*6and6le
employees. !r(v*e reo)e) ( * m*)*'er(*+ em+o/ee(ho, by express provision of la(, is excepted from the coverage of
the aforesaid contract
Since no ne( C-A had been entered into bet(een the managerial
employees and petitioner upon the expiration of the said %&'%6'@
C-A, private respondent has ac)uired a vested right to the said
established policy of petitioner in applying the %&'%6'@ C-A to
retiring or resigning executives of managerial employees. Such
right cannot be curtailed or diminished.
8e maintain the same dictum in the case before us. P"-6R-
insists on diso(ning any practice or policy of granting gratuity pay
to its retiring ocers based on the salary rate of the next higherran*. >t admitted ho(ever that it granted gratuity pay on the basis
of the salary rate of the next higher ran* but only in the case of
Simplicio ;analo. As to other instances (hen it granted gratuity
pay based on the salary rate of the next higher ran*, P"-6R-
explains that those (ere not voluntarily done but (ere in la(ful
compliance (ith court orders.
A punctilious perusal of the records leads us to the same
conclusion, i.e., that P"-6R- has adopted the policy of granting
gratuity benets to its retiring ocers based on the salary
rate o the next higher rank . It continued to adopt this
practice even ater the expiration o the 1!1-1!" #$%. 4he grant (as consistent and deliberate although petitioner *ne(
fully (ell that it (as not re)uired to give the benets after the
expiration of the %&'%6%&'@ C-A. 7nder these circumstances, the
granting of the gratuity pay on the basis of the salary rate of the
ran* next higher may be deemed to have ripened into company
practice or policy (hich can no longer be peremptorily (ithdra(n.
Any benet and supplement being en:oyed by the employees
cannot be reduced, diminished, discontinued or eliminated by the
employer by virtue of Sec. %$ of the Rules and Regulations
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
>mplementing P.+. "o. 1% and Art. %$$ of the abor Code (hich
prohibit the diminution or elimination by the employer of the
employees0 existing benets. eave credits should li*e(ise be
computed based on the upgraded salary rate, i.e., the salary rate
of the next higher ran* in conformity (ith the provisions of the
%&'%6%&'@ C-A (hich in part read 6
Section %D. 4he -an* agrees to grant to each regular supervisor
employee upon his retirement, resignation or separation (ithout
cause after July %, %&?&, the follo(ing benets3
a= Gratuity pay e)uivalent to one <%= month salary plus the
corresponding living allo(ance of the ran* next higher than the
ran* of such supervisor at the time of his retirement, resignation or
separation (ithout cause, for every year of service in the -an*,
provided that the said supervisor has at least ve <= years of
continuous service (ith the -an*.
b= 4he cash e)uivalent of the accumulated sic* and vacation
leaves since the time of his initial employment (ith the -an*.
7nder this section, only the gratuity pay is expressly entitled
to be computed based on the salary rate of the ran* next higher.
>n this instance, it may be (orth to loo* into the reasons (hich
motivated the parties to enter into the above agreement. 4he
conversion of leave credits into their cash e)uivalent is aimed
primarily to encourage (or*ers to (or* continuously and (ith
dedication for the company. Companies o/er incentives, such as
the conversion of the accumulated leave credits into their cash
e)uivalent, to lure employees to stay (ith the company. eave
credits are normally converted into their cash e)uivalent based on
the last prevailing salary received by the employee. Considering
all these, the accumulated leave credits should be converted based
on the upgraded salary of the retiree, (hich is the salary rate of
the ran* next higher.
P"-6R- avers that it has suciently established that the
salary of an ocer is pegged to a minimum or maximum
depending on his performance appraisal in accordance (ith the
Fxecutive Compensation Salary Structure <FCSS= e/ective % ;ay
%&1'. Since Santos0 latest performance rating (as only
satisfactory, his gratuity pay should be based on the minimum and
not on the maximum amount of the rate of the salary of the ran*
next higher. >n this regard, (e )uote (ith approval the Commentof the Solicitor General that 6
"othing in the provisions of the %&'% C-A from (hich emanated
the one ran* higher policy indicates a minimum or maximum range
of the next higher ran*. >nstead, (hat is provided is an un)ualied
one ran* higher concept. Petitioner is, therefore, precluded from
dra(ing a distinction (here none has been stated in the contract.
-esides, assuming that an ambiguity does exist, the same must be
resolved in the light of Article %'$# of the Civil Code that3 >n case
of doubt, the labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.
Such should be liberally construed in favor of the persons intendedto be beneted thereby.
;oreover, petitioner, by invo*ing the salary structure and criteria
for promotion as basis for determining the amount of gratuity has
confused the t(o distinct concepts of gratuity and salary.
Gr*>(/ */, >)+(e *+*r/, ( *( o 4e be)e(*r/ or 4e* erv(e or *vor re)ere >re+/ o> o 4e'e)ero(/ o 4e '(ver or 'r*)or. Gr*>(/, 4ereore, ()o ()e)e o */ * orer or *>*+ erv(e re)ereor or *>*+ erorm*)e. I ( * mo)e/ be)e or bo>)/
'(ve) o 4e orer, 4e >roe o 4(4 ( o re*rem+o/ee 4o 4*ve re)ere *(*or/ erv(e o 4eom*)/. S*+*r/, o) 4e o4er 4*), ( * *r o +*bor*)*r +* b*e o) 4e *>*+ *mo>) o or re)ereor 4e )>mber o */ ore over 4e er(o o /e*r. Eence, petitioner0s attempt to apply the salary structure to
determine gratuity (ould eradicate the very essence of a gratuity
a(ard, and ma*e it parta*e of the character of a (age or salary
given on the basis of actual (or* or performance. Such (as never
the intendment of the la( and (ould run counter to essential social
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
:ustice.
Additionally, computing the gratuity pay based on the
performance rating of the retiring ocer is a practice that is very
li*ely susceptible to abuse as he (ill be placed at the mercy of the
members of the performance appraisal committee.
As to the Claim of Santos for bonuses corresponding to the
years %&1, %&1? and mid6year of %&1' has already prescribed.
4his is correct$ Article ./% of the Labor Code,
All money claims arising from employer(employee relations
accruing during the eectivity of this Code shall be 'led within
three )0* years from the time the cause of action accrued1
otherwise they shall be forever barred$
Since Santos led his complaint only on %# July %&&$, his
claim for %&1 <mid6year and year6end=, %&1? <mid6year and year6
end=, and %&1' <mid6year= bonuses already prescribed. As regards
bonuses for %&1' <year6end=, %&11 <mid6year and year6end=, %&1&
<mid6year and year6end=, and %&&$ <mid6year=, (e agree (ith
petitioner that these should be based on the existing salary rate at
the time of their accrual. 4he record sho(s ho(ever that in %&11
Santos (as found guilty of an administrative charge. Eence, in
consonance (ith existing company policy, the %&11 <mid6year and
year6end= bonus should be forfeited in favor of the -an*.
!n the matter of moral and exemplary damages, the same is a
must considering that petitioner is guilty of bad faith by itscontinued refusal to pay his claims despite the nal rulings of the
Supreme Court in similar other cases earlier cited, petitioner has
sho(n to be anti6labor. Conse)uently, private respondent had
su/ered mental anguish and sleepless nights and therefore, should
be entitled to moral damages.
-asic gratuity pay3
Applicable monthly rate <P%,1D$.$$= x length of service <@% years
and % days= Q
P%,1D$.$$ x @% years .......... PD&%,$D$.$$
P%,1D$ x %2#% days ........... P &D?.$$
PD&%,&1?.$$
eave Credits3
P%,1D$ x #'# x %#2#%
#$,&1@.$$
Accrued -onuses3
%&1' 6 year6end only.................. %,@$$.$$
%&11 6 forfeited <due adm. case=. 6
%&1& 6 mid6year2year6end........... %%,@1$.$$
%&&$ 6 mid6year only.................. 1,&?.$$
#%,?D.$$
P'%&,?%D.$$
ess 3 Gratuity already received ......
PD@D,D?1.$$
-alance3 ...................... ......... #1,%D?.$$
Add 3 ;oral damages .....................
$,$$$.$$
Fxemplary damages .. ..... .... ...
$,$$$.$$
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
Attorney0s Hees .....................
@1,%.$$
4otal ............................ .................. PD#@,??%.$$
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
I)er)*(o)*+ S4oo+ o A++(*)e E>*or v. =>((mb()'333 SCRA 13
>)e 1, 2000;*>)*), .
&*6 Private respondent, >nternational School, >nc., is a domestic
educational institution that is established primarily for dependentsof foreign diplomatic school personnel. >t is created pursuant toPresidential +ecree "o. '@# (hereby under Section #<c= thereof, itgives the school the po(er to hire employees either locally orabroad.
Conse)uently, the respondent hires t(o types of personnel. 4heseare the foreign hires and the local hires. +espite the fact that theforeign hires and the local hires are of the same position andperform similar tas*s, duties and responsibilities, the Schoolcompensates these employees di/erently. 4he foreign hires receivebetter benets than the local hires. 4hey are paid salaries that is# more than the salaries received by the local hires. >n addition,
they are also granted housing, transportation, shipping costs, taxesand home leave travel allo(ance.
-ecause of these, the petitioner contested the di/erences of thebenets and salaries received bet(een the foreign and local hirescontending that such constitutes racial discrimination invo*ing thee)ual protection clause under the %&1' Constitution. >t alsocontends that such di/erence violates the e)ual pay for e)ual (or*principle under the abor Code.
!n the other hand, the private respondent contends that bettersalaries and benets are o/ered to foreign hires because of t(ofactors3 %. the dislocation factor and #. limited tenure. >t furthercontends that there being a valid :ustication for the better salaryand benets given to foreign hires, it cannot therefore constitutediscrimination. ;oreover, they contend that there are foreignnationals (ho are given the benets of a local hire (hich furtherdiscredits the contention that there is racial discrimination.
4he Acting Secretary of +!F gave credence to the contention of the private respondent and stated that the di/erences in salaryrates does not constitute discrimination because there is asubstantial di/erence or a valid classication bet(een local andforeign heirs. ;oreover, such di/erences are :ustied becauseforeign heirs are under di/erent (or*ing conditions in contrast (ith
the local hires as they are under limited tenure and they su/erinconveniences because they are separated from their home andfamily.
Eence, the current petition.
I>e6 8hether or not the salary di/erences received by the localand foreign hires violates the e)ual protection clause and theprinciple of e)ual pay for e)ual (or* principle.
R>+()'6 4he Supreme Court reversed the decision of the +!F anddeclared that the grant of better benets in favor of the foreignhired employees constitutes discrimination and a violation not onlyof the e)ual protection clause but also of the rule on e)ual pay fore)ual (or*.
4he general principles of la( abhor discrimination and upholdfairness and e)uality in favor of the abor. 4his is embodied notonly in the statutes promulgated by this country but it is also
established in the Constitution itself and even in internationalconventions. 4he constitution provides that the labor shall beentitled to humane conditions of (or*. 4his right of the labor doesnot only pertain to the physical (or*ing conditions in the (or*place but it also includes the manner in (hich the employees aretreated. >n addition, the Constitution and the abor Code alsoprovides that the State shall ensure e)uality of employmentopportunities for all employees regardless of their age, sex andreligion.
4his pronouncements and principles (ould necessarily lead to theconclusion that discrimination, in (hatever manner, of theemployees especially in the payment of the (ages is fro(ned uponby the la( including the abor Code. >n line (ith this, in cases of payment of (ages the principle of e)ual pay for e)ual (or* mustbe follo(ed. 4his means that persons (ho (or* (ith substantiallye)ual )ualications, s*ill, e/ort and responsibility, under similarconditions should be paid similar salaries.
>n the case at bar, it is apparent that the foreign and local hires areof e)ual footing in terms of their s*ills, duties, responsibilities andthat they are under similar circumstances. 4hey therefore shouldbe paid e)ually. 4he fact that there is a dislocation factor andlimited tenure in foreign hires does not :ustify that they should begiven higher salary rates. 4hese inconvenience, as declared by the
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
Supreme Court, is already compensated by the additional benetsgiven to them by the School. As it is found that no substantialdistinctions lie bet(een foreign and local hires, it is but :ust togrant them similar salary rates and to do other(ise (ould violatethe e)ual protection clause and the e)ual pay for e)ual (or*principle.
4he Supreme Court ruled that salaries should not be used asenticement to the pre:udice of the other (or*ers. Salaries are givenas a compensation for the (or* performed by the employees and itshould be given to them (ithout any form of discrimination.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
Norm* $*be* v. NLRC *) !eer N'K"oe+ S>reme
&ACTS6
Petitioner "orma ;abeMa (as an employee hired by Eotel Supreme
in -aguio City. >n %&&%, an inspection (as made by the +epartment
of abor and Fmployment <+!F= at Eotel Supreme and the +!F
inspectors discovered several violations committed by the hotelNs
management.
Petitioner and her co6employees (ere then as*ed by the hotelNs
management to sign an instrument attesting to the latterNs
compliance (ith minimum (age and other labor standard
provisions of la(. 4he instrument provides that, 2+ ++ 3hey have no
complaints against the management of the 4otel Supreme as they
are paid accordingly and that they are treated well1 + ++5
As gleaned from the adavit, the same (as dra(n by
management for the sole purpose of refuting the ndings of +!F
inspectors apparently adverse to private respondent.
4he petitioner signed the adavit but refused to go to the City
ProsecutorNs !ce to s(ear to the veracity and contents of the
adavit as instructed by management. 4he adavit (as
nevertheless submitted on the same day to the Regional !ce of
+!F in -aguio City.
4hat same day, as she refused to go to the City ProsecutorNs !ce,
she (as ordered by the hotel management to turn over the *eys to
her living )uarters and to remove her belongings from the hotelNspremises. According to her, respondent strongly chided her for
refusing to proceed to the City Prosecutor0s !ce to attest to the
adavit. She thereafter reluctantly led a leave of absence from
her :ob (hich (as denied by management. She attempted to
return to (or* but the hotelNs cashier told her that she should not
report to (or* and instead continue (ith her unocial leave of
absence.
4hree days after her attempt to return to (or*, petitioner led a
complaint against the management for illegal dismissal before the
Arbitration -ranch of the "RC in -aguio City. >n addition to that,
she alleged underpayment of (ages because her (age (as less
than the minimum (age.
Private respondent Peter "g <o(ner of Eotel Supreme=, in his
defense, argued that petitionerNs unauthoriMed leave of absence
from (or* is the ground for her dismissal. Ee even maintained that
there (as no basis for the money claims for underpayment and
other benets as these (ere paid in the form of facilities to
petitioner and the hotelNs other employees. Ee argued that the
reason for such lo( payment of (ages (as because she (as being
given free lodging, food, and electricity and (ater consumption by
the hotel.
Ee then raised a ne( ground, loss of condence, (hich (as
supported by his ling of criminal complaint for ualied 4heft of
the petitioner.
abor Arbiter3 rendered a decision dismissing petitioner0s complaint
on the ground of loss of condence.
"RC3 armed the abor ArbiterNs decision.
Eence, this petition.
ISS:E6
8!" the amenities <food, lodging, electricity and (ater
consumption= provided by the hotel be considered as facilities
(hich are deductible from petitioner ;abeMaNs (age
R:LING6 "!.
Going into the issue of petitioner0s money claims, (e nd one more
salient reason in this case to set things right3 the labor arbiter0s
evaluation of the money claims in this case incredibly ignores
existing la( and :urisprudence on the matter.
4he labor arbiter accepted hoo*, line and sin*er the private
respondent0s bare claim that the reason the monetary benets
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
received by petitioner bet(een %&1% to %&1' (ere less than
minimum (age (as because petitioner did not factor in the meals,
lodging, electric consumption and (ater she received during the
period in her computations.
Granting that meals and lodging (ere provided and indeed
constituted facilities, >4 *(+((e o>+ )o be e>e(4o> 4e em+o/er om+/()' r (4 er*() +e'*+re>(reme). 8ithout satisfying these re)uirements, the
employer simply cannot deduct the value from the employee0s
(ages3
1 !roo m> be 4o) 4* >4 *(+((e *re>om*r(+/ >r)(4e b/ 4e r*e
2 T4e rov((o) o e>(b+e *(+((e m> bevo+>)*r(+/ *ee () r(()' b/ 4e em+o/ee
3 &*(+((e m> be 4*r'e * *(r *) re*o)*b+ev*+>e
4hese re)uirements (ere not met in the instant case. Private
respondent 9failed to present any company policy or guideline
to sho( that the meal and lodging . . . <are= part of the salaryB9
he failed to provide proof of the employee0s (ritten
authoriMationB and, he failed to sho( ho( he arrived at the
valuations.
;ore signicantly, the food and lodging, or the electricity and
(ater consumed by the petitioner (ere not facilities but
supplements. A be)e or r(v(+e'e 'r*)e o *)em+o/ee or 4e o)ve)(e)e o 4e em+o/er ( )o **(+(/. 4he criterion in ma*ing a distinction bet(een the t(o
not so much lies in the *ind <food, lodging= but the >roe.
Considering, therefore, that hotel (or*ers are re)uired to (or*
di/erent 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 respondent0s
hotel.
>t is therefore evident that petitioner is entitled to the payment
of the deciency in her (ages e)uivalent to the full (age
applicable from ;ay %@, %&11 up to the date of her illegal
dismissal.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
T(*)'o v. Leo'*ro
G.R. No. L-573 $*/ 1, 1983
Hacts3
Reynaldo 4iangco, petitioner, is a shing operator (ho o(ns theReynaldo 4iangco Hishing Company and a 5eet of shing vessels
engaged in deep sea shing (hich operates from "avotas, RiMal.
Eis business is capitaliMed at P#,$$$,$$$.$$, (hile petitioner
Oictoria 4iangco is a sh bro*er (hose business is capitaliMed at
P%$$,$$$.$$.
Some of the private respondents (ere engaged by Reynaldo
4iangco as batillos, (ho (ere tas*ed to unload the sh catch from
the vessels and ta*e them to the Hish Stall of the petitioner Oictoria
4iangco. 4he other private respondents (ere batillos engaged by
Oictoria 4iangco.
4he private respondents (ere all (or*ing as part6time since their
(or* (ere limited to days of arrival of the shing vessels and their
(or*ing days in a month are comparatively fe(. 4heir (or*ing
hours average four <D= hours a day.
4he private respondents led a complaint against the petitioners
(ith the ;inistry of abor and Fmployment for non6 payment of
their legal holiday pay and service incentive leave pay, * e++ *>)er*/me) o 4e(r emer'e)/ o o +(v()' *++o*)e4(4 >e o be *( () >++ (rree(ve o 4e(r or()'*/, b> 4(4 ere re>e ee(ve &ebr>*r/ 1980, ()o)r*ve)(o) o Ar(+e 100 o 4e )e L*bor Coe 4(4ro4(b( 4e e+(m()*(o) or (m()>(o) o e(()' be)e.
4he petitioners denied the laborersN contention, claiming that the
laborers (ere all given, in addition to their regular daily (age, a
daily extra pay in amounts ranging from @$ centavos to %$ pesos
(hich are sucient to o/set the laborersN claim for service
incentive leave and legal holiday pay.
As regards the claim for emergency allo(ance di/erentials, the
petitioners admitted that they discontinued their practice of paying
their employees a xed monthly allo(ance, and e/ective Hebruary
%&1$, they no longer paid allo(ances for non6 (or*ing days. 4hey
argued, ho(ever, that no la( (as violated as their refusal to pay
allo(ances for non6(or*ing days is in consonance (ith theprinciple of no (or*, no allo(anceTB and that they could not pay
private respondents a xed monthly allo(ance (ithout ris*ing the
viability of their business.
4he +irector of the "ational Capitol Region of the ;inistry of abor
and Fmployment ruled that the daily extra pay given to private
respondents (as a production incentive benetT, separate and
distinct from the service incentive leave pay and legal holiday pay,
payment of (hich cannot be used to o/set a benet provided by
la(, and ordered the petitioners to pay the private respondents
their service incentive leave pay and legal holiday pay.
Eo(ever, he denied the laborersN claim for di/erentials in the
emergency cost of living allo(ance for the reason that the
emergency cost of living allo(ance accrues only (hen the laborers
actually (or* follo(ing the principle of no (or*, no pay,T and
private respondents are not entitled to a xed monthly allo(ance
since they (or* on a part time basis (hich average only four <D=
days a (ee*. 4he private respondents should not be paid their
allo(ances during non6(or*ing days.
!n appeal, the +eputy ;inister of abor and Fmployment modied
the order and directed the petitioners to restore and pay the
individual respondents their xed monthly allo(ance from ;arch,%&1$ and to pay them the amount of P1,1?$.$$, as
underpayment of their living allo(ance from ;ay, %&'' to Hebruary
#%, %&1$.
8hen their motion for the reconsideration (as denied, the
petitioners interposed the present recourse.
>ssue3
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
8hether the +eputy ;inister of abor and Fmployment acted in
excess of :urisdiction in deciding that there is diminution of
benets in the discontinuance of giving of allo(ance
Ruling3
"o.
>ndeed, the record sho(s that the private respondents (or* for the
petitioners is on a part6time basis and their (or* average is only
four <D= days a (ee*. >t is not also disputed that the private
respondents (or* for more than one employer so that the private
respondents should be paid their living allo(ance only for the days
they actually (or*ed in a (ee* or month and all the employers of
the employee shall share proportionately in the payment of the
allo(ance of the employee.
T4e reo)e) De>/ $()(er o L*bor *) Em+o/me)orre+/ r>+e 4* ()e 4e e((o)er 4* bee) */()'4e r(v*e reo)e) * e mo)4+/ emer'e)/*++o*)e ()e November 197 > o &ebr>*r/ 1980, * *m*er o r*(e *)Kor verb*+ *'reeme) beee) 4ee((o)er *) 4e r(v*e reo)e), 4e(o)()>*)e o 4e r*(e *)Kor *'reeme)>)(+*er*++/ b/ 4e e((o)er o)r*ve)e 4e rov((o)o 4e L*bor Coe, *r(>+*r+/ Ar(+e 100 4ereo 4(4ro4(b( 4e e+(m()*(o) or (m()>(o) o e(()' be)e.
Article %$$ of the abor Code provides3
&%rticle 1. (rohibition against elimination or diminution
o benefts. )othing in this $ook shall be construed to
eliminate or in any *ay diminish supplements or other
employee benefts being en+oyed at the time o the
promulgation o this #ode.
Section % of the Rules on P.+. # and Section %? of the Rules on
P.+. %%#@ also prohibits the diminution of any benet granted to
the employees under existing la(s, agreements, and voluntary
employer practice.
Section % of the Rules on P.+. # provides, as follo(s3
2Section %6$ Relation to Agreement$ 7 Nothing herein shall
prevent the employer and his employees from entering into any
agreement with terms more favorable to the employees than those
provided therein, or be construed to sanction the diminution of any
bene't granted to the employees under e+isting laws, agreements,
and voluntary employer practice$5
Section %? of the Rules on P.+. %%#@ similarly prohibits diminution
of benets. >t provides3
2Section %8$ Relation to other agreements$ 7 Nothing herein shall
prevent employers from granting allowances to their employees in
e+cess of those provided under the 9ecree and the Rules nor shall
it be construed to countenance any reduction of bene'ts already
being en:oyed$5
4he petitioners further claim that the respondent +eputy ;inister
of abor and Fmployment erred in ordering them to pay the
amount of P1,1?$.$$ to the private respondents as underpayment
of respondentsN allo(ances from ;ay %&'' to Hebruary #$, %&1$.
4he petitioners contend that the emergency cost of living
allo(ances of the private respondents had been paid in full.
4he court nds no merit in the contention. Eo(ever, a revision of
the amount due the private respondents is in order for the reason
that the respondent +eputy ;inister of abor and Fmployment
failed to ta*e into consideration, in computing the amount due
each (or*er, the fact that the private respondents are employedby t(o di/erent individuals (hose businesses are divergent and
capitaliMed at various amounts, contrary to the provisions of P.+.
# and subse)uent amendatory decrees, (herein the amount of
the emergency cost of living allo(ance to be paid to a (or*er is
made to depend upon the capitaliMation of the business of his
employer or its total assets, (hichever is higher.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
Em+o/er Co)eer*(o) o 4e !4(+(()e v. N*(o)*+<*'e *) !ro>(v(/ Comm((o)
&*6 RA ?'#' also *no(n as the 8age RationaliMation Act (as
approved by the President on June &, %&1&. 4he said act provides
not only ne( (age rates but also various Regional 4ripartite 8ages
and Productivity -oards in charge of prescribing minimum (age
rates for all (or*ers in various regions, and also a "ational 8ages
and Productivity Commission (hich revie(s the (age levels
determined by the boards.
Pursuant to RA ?'#', the Regional -oard of the "ational capital
Region issued (age order no. "CR6$% (hich increases the
minimum (age by p %'.$$ per day in the "CR. -oth the 4rade
7nion Congress of the Philippines and the Personnel ;anagement
Association of the Philippines moved for reconsideration. Petitioner
FC!P opposed the said order.
Subse)uently, the -oard, again issued 8age !rder no. "CR $%6A,
amending (age order no. "CR6$%, (hich provides that all (or*ers
and employees in the private sector in "CR already receiving
(ages above the statutory minimum (age rates, up to P %#.$$,
shall also receive an increase of P %'.$$ per day.
Petitioner FC!P appealed to the "ational 8ages and Productivity
Commission. 4he Commission ho(ever dismissed the appeal for
lac* of merit. 4he Commission li*e(ise denied petitionerNs motion
for reconsideration. Eence this petition.
FC!P assails that the board0s grant of an 9across6the6board9 (ageincrease to (or*ers already being paid more than existing
minimum (age rates <up to P%#. $$ a day= as an alleged excess
of authority, and alleges that under the RA ?'#', the boards may
only prescribe 9minimum (ages,9 not determine 9salary ceilings.9
FC!P li*e(ise claims that RA ?'#' is meant to promote collective
bargaining as the primary mode of settling (ages, and that the
boards cannot preempt collective bargaining agreements by
establishing ceilings.
FC!P prays for the nullication of 8age !rder "o. "CR $%6A and
for the 9reinstatement9 of 8age !rder "o. "CR6$%.
FC!P further insisted that (age6xing is a legislative function, and
RA ?'#' delegated to the regional boards no more 9than the po(er
to grant minimum (age ad:ustments9 and 9in the absence of clear
statutory authority,9 the boards may no more than ad:ust 95oor
(ages.9
4he Solicitor General ho(ever opined that the board, in prescribing
an across6the6board hi*e did not, in reality, 9grant additional or
other benets to (or*ers and employees, such as the extension of
(age increases to employees and (or*ers already receiving more
than minimum (ages ...9 but rather, xed minimum (ages
according to the 9salary6ceiling method.9 Ee further argued that RA
?'#' is intended to correct (age distortionsT and that the salary
ceiling method of determining (ages, is meant to rectify (age
distortions.
I>e6%.8!" the board has exceeded its authority in issuing (age order
no. "CR6$% and (age order no. "CR6$%6A
#. 8!" 4he Regional -oard of the "ational Capital Region, in
decreeing an across6the6board hi*e, performed an unla(ful act of
legislation.
"e+6%. "o. 4he determination of (ages has generally involved t(o
methods. Hirst is the 5oor (age method (hich involves the xing of
a determinate amount that (ould be added to the prevailingstatutory minimum (age. And the second is the salary6ceiling
method (hereby the (age ad:ustment is applied to employees
receiving a certain denominated salary ceiling.
4he shift from the rst method to the second method (as brought
about by labor disputes arising from (age distortions. 4he
previous (age orders provides that (age distortions shall be
resolved through grievance procedure, ho(ever, the legislature
found such process ine/ective (hich resulted to the
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
implementations of ne( (age orders. 8ith the establishment of
the second method as a practice in minimum (age xing, (age
distortion disputes (ere minimiMed.
!f course, disputes are appropriate sub:ects of collective
bargaining and grievance procedures, but as the Commission
observed, bargaining has helped very little in correcting (agedistortions. Precisely, RA ?'#' (as intended to rationaliMe (ages,
rst, by providing for full6time boards to monitor (ages round6the6
cloc*, and second, by giving the boards enough po(ers to achieve
this ob:ective.
4he SC is of the opinion that Congress meant the boards to be
creative in resolving the annual )uestion of (ages (ithout labor
and management *noc*ing on the legislature0s door at every turn.
4he SC further held that if RA ?'#' intended that the boards (ill
only set 5oor (ages, the Act (ould have no need for a board but
an accountant to *eep trac* of the latest consumer price index.
#. "o. >t is true that (age6xing, li*e rate6xing constitutes an act
of CongressB it is also true, ho(ever, that Congress may delegate
the po(er to x rates provided that, as in all delegations cases,
Congress leaves sucient standards. As this Court has indicated, it
is impressed that the standards provided for under Art. %#D of RA
?'#' are sucient, and in the light of the 5oor6(age method0s
failure, the Court believes that the Commission correctly upheld
the Regional -oard of the "ational Capital Region.
4he SC further held that the Act is meant to rationaliMe (ages, that
is, by having permanent boards to decide (ages rather than
leaving (age determination to Congress year after year and la(after la(. 4he Court is not of course saying that the Act is an e/ort
of Congress to pass the buc*, or (orse, to abdicate its duty, but
simply, to leave the )uestion of (ages to the expertise of experts.
4he concept of 9minimum (age9 is, ho(ever, a di/erent thing, and
certainly, it means more than setting a 5oor (age to upgrade
existing (ages. 4he statute (ould have no need for a board if the
)uestion (ere simply 9ho( much9. 4he State is concerned, in
addition, that (ages are not distributed unevenly, and more
important, that social :ustice is subserved.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
ATO;-BIG <EDGE $INING CO., INC., petitioner,
vs.
ATO;-BIG <EDGE $:T:AL BENE&IT ASSOCIATION,respondent.
&ACTS6
!n September D, %&$, demand (as submitted to
petitioner by respondent union through its ocers for various
concession, among (hich (ere
<a= an increase of P$.$ in (ages,
<b= commutation of sic* and vacation leave if not en:oyed
during the year,
<c= various privileges, such as free medical care, medicine,and hospitaliMation,
<d= right to a closed shop, chec* o/, etc.,
<e= no dismissal (ithout prior :ust cause and (ith a prior
investigation, etc.
Some of the demands, (ere granted by the petitioner, and
the other (ere re:ected, and so hearings (ere held and evidence
submitted on the latter.
After the hearing the respondent court <Court of >ndustrial
Relations= rendered a decision, the most important provisions of
(hich (ere those xing the minimum (age for the laborers at
P@.#$, declaring that *((o)*+ ome)*(o) reree)()'e(e)/ bo)> 4o>+ )o be ()+>e * *r o 4e*'e, *) m*()' 4e **r ee(ve rom Seember ?,1950. >t is against these portions of the decision that this appeal is
ta*en.
&IRST ISS:E6
O) 4e (>e o 4e *'e, it is contended by petitionerthat as the respondent court<Court of >ndustrial Relations= foundthat the laborer and his family at least need the amount of P#.1for food, this should be the basis for the determination of his (age,
not (hat he actually spends.
R:LING6
4he respondent court found that P#.1 is the minimum
amount actually needed by the laborer and his family. 4hat does
not mean that it is his actual expense. A person0s needs increase
as his means increase. 4his is true not only as to food but as to
everything else U education, clothing, entertainment, etc. 4he la(
guarantees the laborer a fair and :ust wage. 4he minimum must be
fair and :ust. 4he 9minimum (age9 can by no means imply only the
actual minimum.
Some margin or lee(ay must be provided, over and above
the minimum, to ta*e care of contingencies such as increase of
prices of commodities and desirable improvement in his mode of
living. Certainly, the amount of P$.## a day <di/erence bet(een
P#.1$ xed and P#.1 actual= is not excessive for this purpose.
4hat the P@ minimum (age xed in the la( is still far belo(
(hat is considered a fair and :ust minimum is sho(n by the fact
that this amount is only for the year after the la( ta*es e/ect, as
thereafter the la( xes it at PD.
"either may it be correctly contended that the demand for
increase is due to an alleged pernicious practice. Hre)uent
demands for increase are indicative of a healthy spirit of
(a*efulness to the demands of a progressing and an increasingly
more expensive (orld.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
8e, therefore, nd no reason or ground for disturbing the
nding contained in the decision xing the amount of P@.#$ as the
minimum (age.
SECOND ISS:E6
>t is next contended that the e(e)/ bo)> *( 4e+*borer 4o>+ 4*ve bee) ()+>e () 4( m()(m>m *'e,
in the same manner as the value of living )uarters.
R:LING6
8hether or not bonus forms part of (ages depends upon the
circumstances or condition for its payment.
>f it is an additional compensation (hich the employer
promised and agreed to give (ithout any conditions imposed for itspayment, such as success of business or greater production or
output, then it is part of the (age. -ut if it is paid only if prots are
realiMed or a certain amount of productivity achieved, it cannot be
considered part of the (ages.
>n the case at bar, it is not payable to all but to laborers
only. >t is also paid on the basis of actual production or actual (or*
accomplished. >f the desired goal of production is not obtained or
the amount of actual (or* accomplished, the bonus does not
accrue.
>t is evidence that under the circumstances it is paid only
(hen the labor becomes more ecient or more productive. >t is
only an inducement for eciency, a priMe therefor, not a part of the
(age.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
G.R. No. 18180, $*r4 12, 201?
<ESLE%AN :NI#ERSIT% !"ILI!!INES, !etitioner , v$ <ESLE%AN:NI#ERSIT%- !"ILI!!INES &AC:LT% AND STA&&
ASSOCIATION, Respondent$
%#/
Petitioner 8esleyan 7niversity6Philippines is a non6stoc*, non6prot
educational institution duly organiMed and existing under the la(s
of the Philippines. Respondent 8esleyan 7niversity6Philippines
Haculty and Sta/ Association, on the other hand, is a duly
registered labor organiMation acting as the sole and exclusive
bargaining agent of all ran*6and6le faculty and sta/ employees of petitioner
Petitioner issued a ;emorandum providing guidelines on theimplementation of vacation and sic* leave credits as (ell asvacation leave commutation
RespondentNs President, Cynthia . +e ara <+e ara= (rote aletter to Atty. ;aglaya informing him that respondent is notamenable to the unilateral changes made by petitioner. +e ara
)uestioned the guidelines for being violative of existing practicesand the C-A,
abor ;anagement Committee <;C= ;eeting (as held during(hich petitioner advised respondent to le a grievance complainton the implementation of the vacation and sic* leave policy. I) 4e*me mee()', e((o)er *))o>)e ( +*) o (m+eme)()' * o)e-re(reme) o+(/,4(4 *>)*e*b+e o reo)e).
abor ;anagement Committee <;C= ;eeting (as held during(hich petitioner advised respondent to le a grievance complaint
on the implementation of the vacation and sic* leave policy. >n thesame meeting, petitioner announced its plan of implementing aone6retirement policy,(hich (as unacceptable to respondent.
!etitioner;s Argument
Petitioner argues that there is only one retirement plan as the C-ARetirement Plan and the PFRAA Plan are one and the same. >tmaintains that there is no established company practice or policyof giving t(o retirement benets to its employees. Assuming,(ithout admitting, that t(o retirement benets (erereleased, petitioner insists that these (ere done by mere oversightor mista*e as there is no -oard Resolution authoriMing theirrelease. And since these benets are unauthoriMed and irregular,these cannot ripen into a company practice or policy. As to theadavits submitted by respondent, petitioner claims that these areself6serving declarations, and thus, should not be given (eight andcredence.
Respondent;s Argument
Respondent belies the claims of petitioner and asserts that thereare t(o retirement plans as the PFRAA Retirement Plan, (hich hasbeen implemented for more than @$ years, is di/erent from theC-A Retirement Plan. Respondent further avers that it has al(aysbeen a practice of petitioner to give t(o retirement benets andthat this practice (as established by substantial evidence as foundby both the Ooluntary Arbitrator and the CA.cra
ISS:E8hether or not the reduction of the of the retirement benets
(hich has been implemented for more than @$ years is in violationof the labor codeV
R:LINGT4e No)-D(m()>(o) R>+e o>) () Ar(+e 100 o 4e L*borCoe e+((+/ ro4(b( em+o/er rom e+(m()*()' orre>()' 4e be)e ree(ve b/ 4e(r em+o/ee. T4(r>+e, 4oever, *+(e o)+/ ( 4e be)e ( b*e o) *)ere o+(/, * r(e) o)r*, or 4* r(e)e ()o *r*(e. To be o)(ere * r*(e, ( m> beo)(e)+/ *) e+(ber*e+/ m*e b/ 4e em+o/er over *+o)' er(o o (me.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
A) ee(o) o 4e r>+e ( 4e) 4e r*(e ( >e oerror () 4e o)r>(o) or *+(*(o) o * o>b>+ or(>+ >e(o) o +*.M T4e error, 4oever, m> beorree (mme(*e+/ *er ( (over/H o4er(e, 4er>+e o) No)-D(m()>(o) o Be)e o>+ (++ *+/.
>n this case, respondent (as able to present substantial evidencein the form of adavits to support its claim that there are t(oretirement plans. -ased on the adavits, petitioner has beengiving t(o retirement benets as early as %&&'. Petitioner, on theother hand, failed to present any evidence to refute the veracity of these adavits. PetitionerNs contention that these adavits areself6serving holds no (ater. 4he retired employees of petitionerhave nothing to lose or gain in this case as they have alreadyreceived their retirement benets. 4hus, they have no reason toper:ure themselves. !bviously, the only reason they executedthose adavits is to bring out the truth. As (e see it then, theiradavits, corroborated by the adavits of incumbent employees,are more than sucient to sho( that the granting of t(oretirement benets to retiring employees had already ripened intoa consistent and deliberate practice.
;oreover, petitionerNs assertion that there is only one retirementplan as the C-A Retirement Plan and the PFRAA Plan are one andthe same is not supported by any evidence. 4here is nothing inArticle O> of the C-A to indicate or even suggest that the PlanTreferred to in the C-A is the PFRAA Plan. -esides, any doubt in theinterpretation of the provisions of the C-A should be resolved infavor of respondent. >n fact, petitionerNs assertion is negated bythe announcement it made during the ;C ;eeting on Hebruary 1,#$$? regarding its plan of implementing a one6retirement plan.THor if it (ere true that petitioner (as already implementing a one6
retirement policy, there (ould have been no need for suchannouncement. F)ually damaging is the letter6memorandum dated ;ay %%, #$$?, entitled Suggestions on thedefenses (e can introduce to :ustify the abolition of doubleretirement policy,T prepared by the petitionerNs legal counsel. 4hese circumstances, ta*en together, bolster the nding that thet(o6retirement policy is a practice. 4hus, petitioner cannot,(ithout the consent of respondent, eliminate the t(o6retirementpolicy and implement a one6retirement policy as this (ould violatethe rule on non6diminution of benets.
As a last ditch e/ort to abolish the t(o6retirement policy, petitionercontends that such practice is illegal or unauthoriMed and that thebenets (ere erroneously given by the previous administration."o evidence, ho(ever, (as presented by petitioner to substantiateits allegations.
Considering the foregoing dis)uisition, (e agree (ith the ndingsof the Ooluntary Arbitrator, as armed by the CA, that there issubstantial evidence to prove that there is an existing practice of giving t(o retirement benets, one under the PFRAA Plan andanother under the C-A Retirement Plan.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
NESTL !"ILI!!INES, INC., petitioner,
vs.T"E NATIONAL LABOR RELATIONS CO$$ISSION *) :NIONO& &ILI!RO E$!LO%EES, respondents.
HAC4S3
"estle Philippines as four collective bargaining agreement
separately covering the petitioner0s employees in its3 %.
Alabang2Cabuyao factoriesB #. ;a*ati Administration !ce. <-oth
Alabang2Cabuyao factories and ;a*ati oce (ere represented by
the respondent, :)(o) o &(+(ro Em+o/ee :&EP=B @. Cagayan
de !ro Hactory represented by 8A47B and D. Cebu2+avao Sales
!ces represented by the 4rade 7nion of the Philippines and Allied
Services <47PAS=, all expired on June @$, %&1'.
4hereafter, 7HF (as certied as the sole and exclusive bargainingagent for all regular ran*6and6le employees at the petitioner0s
Cagayan de !ro factory, as (ell as its Cebu2+avao Sales !ce.
8hile the parties, (ere negotiating, the employees at Cabuyao
resorted to a 9slo(do(n9 and (al*6outs prompting the petitioner to
shut do(n the factory. ;arathon collective bargaining negotiations
bet(een the parties ensued. 4he 7HF declared a bargaining
deadloc*. 4he Secretary of abor assumed :urisdiction and issued a
return to (or* order. >n spite of that order, the union struc*,
(ithout notice. 4he company retaliated by dismissing the union
ocers and members of the negotiating panel (ho participated in
the illegal stri*e. 4he "RC armed the dismissals. 7HF led a
notice of stri*e on the same ground of C-A deadloc* and unfairlabor practices.
Eo(ever, the company (as able to conclude a C-A (ith the union
at the Cebu2+avao Sales !ce, and (ith the Cagayan de !ro
factory (or*ers. 4he union assailed the validity of those
agreements and led a case of unfair labor practice against the
company. After conciliation e/orts of the "ational Conciliation and
;ediation -oard <"C;-= yielded negative results, the dispute (as
certied to the "RC by the Secretary of abor.
After the parties had led their pleadings, the "RC issued aresolution regarding the union0s demand for liberaliMation of the
company0s retirement plan for its (or*ers modifying such.
-oth parties move to reconsider ho(ever it has been denied. 4he
petitioner contended that since its retirement plan is non6
contributory, it <"estlW= has the sole and exclusive prerogative to
dene the terms of the plan 9because the (or*ers have no vested
and demandable rights thereunder, the grant thereof being not a
contractual obligation but merely gratuitous. At most the company
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
can only be directed to maintain the same but not to change its
terms. >t should be left to the discretion of the company on ho( to
improve or modify the same
>ssue3 8hether or not Retirement plan that is included in the C-A is
valid
Ruling3
Kes. Retirement Plan (as 9a collective bargaining issue
right from the start9 for the improvement of the existing
Retirement Plan (as one of the original C-A proposals submitted
by the 7HF on ;ay 1, %&1' to Arthur Gilmour, president of "estlW
Philippines. 4he union0s original proposal (as to modify the existing
plan by including a provision for early retirement. 4he company did
not )uestion the validity of that proposal as a collective bargaining
issue but merely o/ered to maintain the existing non6contributory
retirement plan (hich it believed to be still ade)uate for the needs
of its employees, and competitive (ith those existing in the
industry. 4he union thereafter modied its proposal, but the
company (as adamant. Conse)uently, the impassW on the
retirement plan become one of the issues certied to the "RC for
compulsory arbitration.
4he company0s contention that its retirement plan is non6
negotiable, is not (ell6ta*en. 4he "RC correctly observed that the
inclusion of the retirement plan in the collective bargaining
agreement as part of the pac*age of economic benets extended
by the company to its employees to provide them a measure of nancial security after they shall have ceased to be employed in
the company, re(ard their loyalty, boost their morale and
eciency and promote industrial peace, gives 9a consensual
character9 to the plan so that it may not be terminated or modied
at (ill by either party
4he fact that the retirement plan is non6contributory, i.e., that the
employees contribute nothing to the operation of the plan, does
not ma*e it a non6issue in the C-A negotiations. As a matter of
fact, almost all of the benets that the petitioner has granted to its
employees under the C-A U salary increases, rice allo(ances, mid6
year bonuses, %@th and %Dth month pay, seniority pay, medical
and hospitaliMation plans, health and dental services, vacation, sic*
X other leaves (ith pay U are non6contributory benets. Since the
retirement plan has been an integral part of the C-A since %&'#,
the 7nion0s demand to increase the benets due the employees
under said plan, is a valid C-A issue.
Sev(++* Tr*()' Com*)/ v. Sem*)*
G.R. "o. %#D? April #1, #$$D
&*6 in %&&? to %&&', petitioner Sevilla 4rading added to the
base gure the amount of other benets received by the
employees (hich are beyond the basic pay such as "ight Premium,
7nion eave Pay, ;aternity eave Pay, egal Eoliday Pay and etc.
in its computation of the %@th month pay of its employees. 8hen
the company changed the person6in6charged of the payroll in the
process of computeriMing its payroll and after audit (as conducted,
it allegedly discovered the error of including non6basic pay or other
benets used in the computation of the %@th month pay. 4he
company excluded then these non Ybasic pay or other benets and
used a ne( formula, as follo(s3
%@th month pay Q net basic pay 2 %# months
(here3net basic pay Q gross pay Y <non6basic pay or other
benets=
Conse)uently, the Sevilla 4rading 8or*ers 7nion contested the ne(
computation and the reduction of their %@th month pay. 4hey both
agreed to settle the issue through public respondent Accredited
Ooluntary Arbiter Semana. 4he 7nion alleged that petitioner
violated the rule prohibiting the elimination or diminution of
employeesN benets as provided for in Article %$$ of the abor
Code and therefore, should be included in the computation of %@th
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
month pay. 4he petitioner, on the other hand, argues that the
computation of the %@th month pay is based on basic salary, so it
merely corrected the mista*e it committed.
Semana ruled in favor of the 7nion. Eence, this case.
I>e6 8!" the computation of the %@th month pay includes non6
basic pay or other benets in the case at barV
R>+()'6 KFS <"!4F3 the period or time lapsed before the company
corrected or rectied its computation=
San ;iguel Corporation vs. >nciong held that, 7nder Presidential
+ecree 1% and its implementing rules, the basic salary of an
employee is used as the basis in the determination of his %@th
month pay. Any compensation or remunerations (hich are deemed
not part of the basic pay is excluded as basis in the computation of the mandatory bonus.T
E!8FOFR, (hen petitioner Sevilla 4rading still included over the
years non6basic benets of its employees, such as maternity leave
pay, cash e)uivalent of unused vacation and sic* leave, among
others in the computation of the %@th month pay, this may only be
construed as a voluntary act on its part. Putting the blame on the
petitionerNs payroll personnel is inexcusable.
8ith regard to the length of time to constitute voluntary employer
practice (hich cannot be unilaterally (ithdra(n by the employer,
(e hold that :urisprudence has not laid do(n any rule re)uiring a
specic minimum number of years. >n the case at bar, petitioner
Sevilla *ept the practice of including non6basic benets such as
paid leaves for unused sic* leave and vacation leave in the
computation of their %@th month pay for at least t(o<#= years. 4his,
(e rule li*e(ise constitutes voluntary employer practice (hich
cannot be unilaterally (ithdra(n by the employer (ithout violating
Art. %$$ of the abor Code.
GLOBE $AC;A% CABLE AND RADIO COR!ORATION v.NATIONAL LABOR RELATIONS CO$$ISSION
&ACTS6
!n !ctober @$, %&1D, 8age !rder "o. ? too* e/ect and
increased the cost6of6living allo(ance of non6agricultural (or*ers in
the private sector. Petitioner Corporation complied (ith the said
8age !rder by paying its monthly6paid employees the mandated P
@ per day C!A. Eo(ever, in computing said C!A, petitioner
Corporation multiplied the P@ daily C!A by ## days, (hich is the
number of (or*ing days in the company. Respondent 7nion
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
disagreed (ith the computation of the monthly C!A claiming that
the daily C!A rate of P@ should be multiplied by @$ days to arrive
at the monthly C!A rate.
Respondent 7nion led a complaint for illegal deduction,
underpayment, unpaid allo(ances, and violation of 8age !rder "o.
?. abor Arbiter sustained the position of Petitioner Corporation
that the monthly C!A should be computed on the basis of t(enty
t(o <##= days. "RC reversed the abor Arbiter and held that
Petitioner Corporation (as guilty of illegal deductions and that
C!A should be paid and computed on the basis of thirty <@$= days
instead of t(enty t(o <##= days.
ISS:E6
8hether or not the computation should be multiplied by @$ days to
arrive at a monthly C!A rate
R:LING6
)0. he primordial consideration or the entitlement to
#0% is that basic *age is being paid. >n other (ords, the
payment of C!A is mandated only for the days that the
employees are paid their basic (age, even if said days are
un(or*ed. So that on the days that employees are not paid their
basic (age, the payment of C!A is not mandated. Eence, (e
have the principle of Z"o Pay, "o FC!AN
;oreover, pursuant to the C-A, monthly basic pay is computed on
the basis of ve days a (ee* or t(enty t(o days a month. As such,
specimen payrolls of employees consistently used t(enty6t(o
days.
8here the company observes a 6day (or* (ee*, it (ill have to be
held that the C!A should be computed on the basis of t(enty6t(o
days.
DE#ELO!$ENT BAN; O& T"E !"ILI!!INES v. NATIONALLABOR RELATIONS CO$$ISSION
&ACTS6
irag 4extile ;ills, >nc. <>RAG= ceased operations by early
%&1#. Pursuant to a nal and executory :udgment of the "RC,
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
>RAG (as ad:udged liable to its (or*ers for unpaid (ages and
salaries (hich amounted to P ?,#&#,@1$
>RAGNs only remaining asset (as mortgaged to +-P (hich
on April %, %&1@ foreclosed the mortgage and ac)uired said
property at public auction for P@%,@D?,D?#.&$, in partial
satisfaction of >RAGNs indebtedness to +-P. >RAGNs (or*ers
through their union <A"+= thereupon sought to garnish on +-P
the proceeds of the foreclosure sale, to the extent of their
ad:udged unpaid (ages.
ISS:E6
8hether or not the claim of >RAGNs (or*ers for unpaid (ages
should be given rst preference in the li)uidation proceedings.
R:LING6
)0. A"+ <representing >RAGNs (or*ers= may not enforce its rstpreference in the satisfaction of unpaid monetary claims of its
members, over that of +-P, in the absence o a ormal
declaration o bankruptcy or +udicial li2uidation o I3%45s
business.
7nder Article %%$ of the abor Code3
>n the event of ban*ruptcy or li)uidation of an employerNs
business, his (or*ers shall en:oy rst preference as regards their
unpaid (ages and other monetary claims, any provision of la( to
the contrary not(ithstanding. Such unpaid (ages and monetary
claims, shall be paid in full before the claims of the Governmentand other creditors may be paidT
>n the event of insolvency, a principal ob:ective should be to e/ect
an e)uitable distribution of the insolventNs property among his
creditors. 4o accomplish this there must rst be some proceeding
(here notice to all of the insolventNs creditors may be given and
(here the claims of preferred creditors may be bindingly
ad:udicated.
Preferential right of credit attains signicance only after the
properties of the debtor have been inventoried and li)uidated, and
the claims held by his various creditors have been established.T
+-P anchors its claim on a mortgage credit. A recorded mortgage
credit is a special preferred credit. 4he preference given by Article
%%$, is an ordinary preferred credit.
Hor and orderly settlement of a debtorNs assets, all creditors must
be convened, their claims ascertained and inventoried, and
thereafter the preferences determined in the course of :udicial
proceedings. Such ad:udication made (ill be binding on all parties6
in6interest, since the proceedings are proceedings in rem.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
I)>+*r "oe+ Em+o/ee :)(o)QN&L v <*erro) I)>+*r"oe+ D*v*o
&*6
!n "ovember ?, #$$$, respondent 8aterfront >nsular Eotel +avao
<respondent= sent the +epartment of abor and Fmployment
<+!F=, Region >, +avao City, a "otice of Suspension of
!perations notifying the same that it (ill suspend its operations for
a period of six months due to severe and serious business losses.>n said notice, respondent assured the +!F that if the company
could not resume its operations (ithin the six6month period, the
company (ould pay the a/ected employees all the benets legally
due to them.
+uring the period of the suspension, +omy R. Ro:as <Ro:as=, the
President of +avao >nsular Eotel Hree Fmployees 7nion <+>EHF76
"H=, the recogniMed labor organiMation in 8aterfront +avao, sent
respondent a number of letters as*ing management to reconsider
its decision.
>n a letter dated "ovember 1, #$$$, Ro:as intimated that the
members of the 7nion (ere determined to *eep their :obs and that
they believed they too had to help respondent.
>n another letter dated "ovember %$, #$$$, Ro:as reiterated the
7nion0s desire to help respondent, to (it3
2We would li#e to than# you for giving us the opportunity
to meet <with= your representatives in order for us to air our sentiments and e+tend our helping hands for a possible
reconsideration of the company>s decision$
3he tal#s have enabled us to initially come up with a suggestion of
solving the high cost on payroll$
We propose that .6 years and above be paid their due
retirement bene'ts and put their length of service to ?ero without
loss of status of employment with a minimum hiring rate$
3hru this scheme, the company would be able to save asubstantial amount and reduce greatly the payroll costs without
aecting the 'nance of the families of the employees because
they will still have a :ob from where they could get their income$
@oreover, we are also open to a possible reduction of some
economic bene'ts as our gesture of sincere desire to help$
We are loo#ing forward to a more fruitful round of tal#s in order to
save the hotel.T
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
>n another letter dated "ovember #$, #$$$, Ro:as sent respondent
more proposals as a form of the 7nion0s gesture of their intention
to help the company, thus3
%* Suspension of <the= C"A for ten years, No stri#e no loc#(
out shall be enforced$
.* !ay all the employees their bene'ts due, and put the
length of service to ?ero with a minimum hiring rate$
!ayment of bene'ts may be on a staggered basis or as
available$
0* Night premium and holiday pays shall be according to
law$ vertime hours rendered shall be osetted as
practiced$
&* Reduce the sic# leaves and vacation leaves to %6
daysB%6days$
6* mergency leave and birthday o are hereby waived$
8* 9uty meal allowance is '+ed at !0D$DD only$ No more
midnight snac#s and double meal allowance$ 3he coo#
drin#s be stopped as practiced$
E* We will shoulder 6DF of the group health insurance andfamily medical allowance be reduced to %,6DD$DD instead
of 0,DDD$DD$
G* 3he practice of bringing home our uniforms for laundry
be continued$
/* Hi+ed manning shall be implemented, the rest of
manpower reIuirements maybe sourced thru WA! and
casual hiring$ @anpower for '+ed manning shall be %&6
ran#(and('le union members$
%D* Jnion will cooperate fully on strict implementation of
house rules in order to attain desired productivity and
discipline$ 3he union will not tolerate problem members$
%%* 3he union in its desire to be of utmost service would
adopt multi(tas#ing for the hotel to be more competitive$
-t is understood that with the suspension of the C"A
renegotiations, the same e+isting C"A shall be adopted and that all
provisions therein shall remain enforced e+cept for those
mentioned in this proposal$ 3hese proposals shall automatically
supersede the aected provisions of the C"A$
>n a hand(ritten letter dated "ovember #, #$$$, Ro:as once again
appealed to respondent for it to consider their proposals and to re6
open the hotel. >n said letter, Ro:as stated that manpo(er for xed
manning shall be one hundred <%$$= ran*6and6le 7nion members
instead of the one hundred forty6ve <%D= originally proposed.
Hinally, sometime in January #$$%, +>EHF76"H, through Ro:as,
submitted to respondent a ;anifesto concretiMing their earlier
proposals.
After series of negotiations, respondent and +>EHF76"H,
represented by its President, Ro:as, and Oice6Presidents, Fxe)uiel J.
Oarela Jr. and Avelino C. -ation, Jr., signed a ;emorandum of
Agreement <;!A= (herein respondent agreed to re6open the hotel
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
sub:ect to certain concessions o/ered by +>EHF76"H in its
;anifesto.
Aor()'+/, reo)e) o)(e ( m*)oer r>>reo 100 r*)-*)-+e em+o/ee * e or4 () 4e erm o 4e $OA. $oreover, * *'ree >o) () 4e $OA, * )e */*+e * *+o re*re b/ reo)e).
4he retained employees individually signed a 9Reconrmation of
Fmployment9 (hich embodied the ne( terms and conditions of
their continued employment. Fach employee (as assisted by Ro:as
(ho also signed the document. !n June %, #$$%, respondent
resumed its business operations
!n August ##, #$$#, +arius Joves <Joves= and +ebbie Planas,
claiming to be local ocers of the "ational Hederation of abor
<"H=, led a "otice of ;ediation before the "ational Conciliation
and ;ediation -oard <"C;-=, Region >, +avao City. >n said "otice,
it (as stated that the 7nion involved (as 9+AR>7S J!OFS2+F-->F
PA"AS F4. A, "ational Hederation of abor.9 4he issue raised in
said "otice (as the 9+iminution of (ages and other benets
through unla(ful ;emorandum of Agreement.9
!n August #&, #$$#, the "C;- called Joves and respondent to aconference to explore the possibility of settling the con5ict. >n the
said conference, respondent and petitioner >nsular Eotel
Fmployees 7nion6"H <>EF76"H=, represented by Joves, signed a
Submission Agreement (herein they chose AOA Alfredo C. !lvida
<AOA !lvida= to act as voluntary arbitrator. S>bm(e or 4ereo+>(o) o A#A O+v(* * 4e eerm()*(o) o 4e4eror )o 4ere * * (m()>(o) o *'e *) o4er be)e4ro>'4 *) >)+*>+ $OA. I) >or o 4( *>4or(/ o +e4e om+*(), ove, *(e b/ A/. D*)(+o C>++o,
ree)e ever*+ Se(*+ !oer o Aor)e/ S!A 4(4ere, 4oever, >)*e *) >))o*r(e. S>be>e)+/A#A O+v(* * re+*e b/ )e *rb(r*or A#A $o)e@o.
A#A $o)e@oJ )()'6 >n favor of Cullo. +eclared the ;!A in
)uestion invalid as contrary to la( and public policy and declared
that there is dimunition of the (ages and the other benets of the
7nion members and ocers under said invalid ;!A.
CA R>+()'6 +eclared the ;!A Oalid and enforceable.
I>e6 <4e4er or )o Ar(+e 100 o 4e L*bor Coe *+(eo)+/ o be)e e)@o/e r(or o 4e *o(o) o L*borCoe, () ee *++o 4e (m>)((o) o 4e be)ee)@o/e b/ 4e em+o/ee rom ( *o(o) 4e)eor4
S(e (>e6 #*+((/ o $OA I ( )o > (>e re'*r()'me(*(o), L*bRe+ )* /** />)
R>+()'6 %ES.Cullo argues that the CA must have erred in concluding that Article
%$$ of the abor Code applies only to benets already en:oyed at
the time of the promulgation of the abor Code.
Article %$$ of the abor Code provides3
!RO"IBITION AGAINST ELI$INATION OR DI$IN:TION O&BENE&ITS- No4()' () 4( Boo 4*++ be o)r>e oe+(m()*e or () *)/ */ (m()(4 >+eme), or o4erem+o/ee be)e be()' e)@o/e * 4e (me o 4erom>+'*(o) o 4( Coe.
!n this note, Apex ;ining Company, >nc. v. "RC? is instructive,
to (it3
C+e*r+/, 4e ro4(b((o) *'*() e+(m()*(o) or (m()>(o) o be)e e o> () Ar(+e 100 o 4e L*bor Coe (e(*++/ o)er)e (4 be)e *+re*/ e)@o/e * 4e(me o 4e rom>+'*(o) o 4e L*bor Coe. Ar(+e 100oe )o, () o4er or, >ror o *+/ o (>*(o)*r(()' *er 4e rom>+'*(o) *e o 4e L*bor Coe.
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
Fven assuming arguendo that Article %$$ applies to the case at
bar, this Court agrees (ith respondent that 4e *me oe )oro4(b( * >)(o) rom oer()' *) *'ree()' o re>e*'e *) be)e o 4e em+o/ee. >n Rivera v. Fspiritu, this
Court ruled 4* 4e r('4 o ree o++e(ve b*r'*()()', *er*++, ()+>e 4e r('4 o >e) ( , thus3
A C"A is a contract e+ecuted upon reIuest of either the employer
or the e+clusive bargaining representative incorporating the
agreement reached after negotiations with respect to wages,
hours of wor# and all other terms and conditions of employment,
including proposals for ad:usting any grievances or Iuestions
arising under such agreement$ 3he primary purpose of a C"A is
the stabili?ation of labor(management relations in order to create a
climate of a sound and stable industrial peace$ -n construing a
C"A, the courts must be practical and realistic and give due
consideration to the conte+t in which it is negotiated and the purpose which it is intended to serve$ 3he assailed !AL(!ALA
agreement was the result o voluntary collective bargaining
negotiations undertaken in the light o the severe fnancial
situation aced by the employer, *ith the peculiar and
uni2ue intention o not merely promoting industrial peace
at (%, but preventing the latter5s closure $ We 'nd no conKict
between said agreement and Article .60(A of the Labor Code$
Article .60(A has a two(fold purpose$ ne is to promote industrial
stability and predictability$ -nasmuch as the agreement sought to
promote industrial peace at !AL during its rehabilitation, said
agreement satis'es the 'rst purpose of Article .60(A$ 3he other is
to assign speci'c timetables wherein negotiations become a
matter of right and reIuirement$ Nothing in Article .60(A, prohibits
the parties from waiving or suspending the mandatory timetables
and agreeing on the remedies to enforce the same$ -n the instant
case, it was !ALA, as the e+clusive bargaining agent of !AL;s
ground employees, that voluntarily entered into the #$% *ith
(%. It *as also (%6% that voluntarily opted or the 1-
year suspension o the #$%. 6ither case *as the union5s
exercise o its right to collective bargaining. he right to
ree collective bargaining, ater all, includes the right to
suspend it .
S(e (>e6 astly, this Court is not unmindful of the fact that
+>EHF76"H0s Constitution and -y6a(s specically provides that
9the results of the collective bargaining negotiations shall be
sub:ect to ratication and approval by ma:ority vote of the 7nion
members at a meeting convened, or by plebiscite held for such
special purpose.9 Aor()'+/, ( ( >)(>e 4* 4e $OA* )o >b@e o r*(*(o) b/ 4e 'e)er*+ member4(o 4e :)(o). T4e >e(o) o be reo+ve 4e) (, oe 4e)o)-r*(*(o) o 4e $OA () *or*)e (4 4e :)(o)o)(>(o) rove **+ o 4e v*+((/ 4ereo NO
>t must be remembered that after the ;!A (as signed, 4emember o 4e :)(o) ()(v(>*++/ (')e o)r*e)om()*e * FReo)rm*(o) o Em+o/me).F Cullo did
not dispute the fact that of the 1' members of the 7nion, (hosigned and accepted the 9Reconrmation of Fmployment,9 '% are
the respondent employees in the case at bar. ;oreover, it bears to
stress 4* *++ 4e em+o/ee ere *(e b/ Ro@*,DI"&E:-N&L re(e), 4o eve) o-(')e e*4 o)r*.
S(>+*e () e*4 Reo)rm*(o) o Em+o/me) ere 4e)e *+*r/ *) be)e 4eme. I) *((o), ( be*r ore 4* e( rov((o) o 4e )e o)r* *+om*e reere)e o 4e $OA. T4>, 4e ()(v(>*+ membero 4e >)(o) *))o e(') )o+e'e o 4e ee>(o) o 4e$OA. E*4 o)r* * ree+/ e)ere ()o *) 4ere ( )o()(*(o) 4* 4e *me * *e)e b/ r*>,m(reree)*(o) or >re. 4o this Court0s mind, 4e (')()'o 4e ()(v(>*+ FReo)rm*(o) o Em+o/me)F 4o>+,4ereore, be eeme *) (m+(e r*(*(o) b/ 4e :)(o)member o 4e $OA.
>n Planters Products, >nc. v. "RC,'% this Court refrained from
declaring a C-A invalid not(ithstanding that the same (as not
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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.
ratied in vie( of the fact that the employees had en:oyed benets
under it, thus3
Jnder Article .0% of the Labor Code and Sec$ %, Rule -, "oo# M of
the -mplementing Rules, the parties to a collective <bargaining=
agreement are reIuired to furnish copies of the appropriate
Regional ce with accompanying proof of rati'cation by the
ma:ority of all the wor#ers in a bargaining unit$ 3his was not done
in the case at bar$ $ut *e do not declare the 178-17! #$%
invalid or void considering that the employees have
en+oyed benefts rom it. hey cannot receive benefts
under provisions avorable to them and later insist that the
#$% is void simply because other provisions turn out not to
the liking o certain employees $ + + +$ @oreover, the two C"As
prior to the %/G&(%/GE C"A were not also formally rati'ed, yet the
employees are basing their present claims on these C"As$ -t is
iniIuitous to receive bene'ts from a C"A and later on disclaim its
validity$
A+(e o 4e *e * b*r, 4(+e 4e erm o 4e $OA>)o>be+/ re>e 4e *+*r(e *) er*() be)e
rev(o>+/ e)@o/e b/ 4e member o 4e :)(o), ( *))oe*e 4( Co>r *e)(o) 4* ( * 4e ee>(o) o 4e $OA 4(4 *ve 4e */ or 4e re-oe)()' o 4e4oe+, )o(4*)()' ( )*)(*+ (re. $ore(mor*)+/, 4e ee>(o) o 4e $OA *++oe reo)e)o ee 4e(r @ob. I o>+ er*()+/ be ()(>(o> or 4emember o 4e :)(o) o (') )e o)r* rom()' 4ere-oe)()' o 4e 4oe+ o)+/ o +*er o) re)e'e o) 4e(r*'reeme) o) 4e * o 4e )o)-r*(*(o) o 4e $OA.
I) *((o), ( be*r o o() o> 4* Ro@* ( )o *>)(+*er*++/ 4e) 4e )e'o(*e (4 reo)e)m*)*'eme). T4e Co)(>(o) *) B/-L* o DI"&E:-N&L+e*r+/ rov(e 4* 4e re(e) ( *>4or(e oreree) 4e >)(o) o) *++ o*(o) *) () *++ m*er ()4(4 reree)*(o) o 4e >)(o) m*/ be *'ree orre>(re. &>r4ermore, Ro@* * roer+/ *>4or(e
>)er * Bo*r o D(reor Reo+>(o) o )e'o(*e (4reo)e).