Gian Paula L.

Monghit

Songco, et al. vs. National Labor Relations Commission

G.R. Nos. 50999-51000

(March 23, 1990)

FACTS: Zuelig filed an application for clearance to terminate the services of Songco, and others, on the
ground of retrenchment due to financial losses. During the hearing, the parties agreed that the sole
issue to be resolved was the basis of the separation pay due. The salesmen received monthly salaries of
at least P400.00 and commission for every sale they made.

The Collective Bargaining Agreements between Zuelig and the union of which Songco, et al. were
members contained the following provision: "Any employee who is separated from employment due to
old age, sickness, death or permanent lay-off, not due to the fault of said employee, shall receive from
the company a retirement gratuity in an amount equivalent to one (1) month's salary per year of
service."

The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for every year of service with the company.

The National Labor Relations Commission sustained the Arbiter.

ISSUE: Whether or not earned sales commissions and allowances should be included in the monthly
salary of Songco, et al. for the purpose of computing their separation pay.

RULING: In the computation of backwages and separation pay, account must be taken not only of the
basic salary of the employee, but also of the transportation and emergency living allowances.

Even if the commissions were in the form of incentives or encouragement, so that the salesman would
be inspired to put a little more industry on jobs particularly assigned to them, still these commissions
are direct remunerations for services rendered which contributed to the increase of income of the
employee. Commission is the recompense compensation or reward of an agent, salesman, executor,
trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount
of his transactions or on the profit to the principal. The nature of the work of a salesman and the reason
for such type of remuneration for services rendered demonstrate that commissions are part of Songco,
et al's wage or salary.

The Court takes judicial notice of the fact that some salesmen do not receive any basic salary, but
depend on commissions and allowances or commissions alone, although an employer-employee
relationships exists.

If the opposite view is adopted, i.e., that commissions do not form part of the wage or salary, then in
effect, we will be saying that this kind of salesmen do not receive any salary and, therefore, not entitled
to separation pay in the event of discharge from employment. This narrow interpretation is not in
accord with the liberal spirit of the labor laws, and considering the purpose of separation pay which is,
to alleviate the difficulties which confront a dismissed employee thrown to the streets to face the harsh
necessities of life.

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Mayon vs Adana

G.R. No. 157634, May 16, 2005

Facts: Petitioner Mayon Hotel & Restaurant is a single proprietor business employed about sixteen (16)
employees. Due to theexpiration and non-renewal of the lease contract for the rentedspace occupied
by the said hotel and restaurant at, the hoteloperations of the business were suspended. The
operation of the restaurant was continued in its new location only 9 of the16 employees continued. On
various dates, the 16 employeesfiled complaints for underpayment of wages and other moneyclaims
against petitioners. Labor Arbiter rendered a Decisionin favor of the employees but the NLRC reversed
its decision.

Issue: WON the employees are entitled to their moneyclaims

Held: Yes. Entitlement to labor standard benefits is aseparate and distinct concept from payment of
separation payarising from illegal dismissal, and are governed by different provisions of the Labor
Code. Respondents have set out with particularity in their complaint, position paper, affidavits
andother documents the labor standard benefits they are entitledto, and which they alleged that
petitioners have failed to paythem. It was therefore petitioners' burden to prove that theyhave paid
these money claims. One who pleads payment hasthe burden of proving it, and even where the
employees mustallege nonpayment, the general rule is that the burden rests onthe defendant to prove
nonpayment, rather than on the plaintiff to prove non payment. This petitioners failed to do

Planas Commercial vs. NLRC Case Digest

G.R. No. 144619. November 11, 2005

Facts: In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for
underpayment of wages, non payment of overtime pay, holiday pay, service incentive leave pay, and
premium pay for rest day and holiday and night shift differential against petitioners in the Arbitration
Branch of NLRC. It alleged that Cohu is engaged in the business of wholesale of plastic products and
fruits of different kinds with more than 24 employees. Respondents were hired on January 1990, May
1990 and July 19991 as laborers and were paid below the minimum wage for the past 3 years. They
were required to work for more than 8 hours a day and never enjoyed the minimum benefits.
Petitioners filed their comment stating that the respondents were their helpers.

The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an appeal with
the NLRC where it granted the money claims of Ofialda, Morente and Allaguian. Petitioners appealed
with the CA but it was denied. It said that the company having claimed of exemption of the coverage of
the minimum wage shall have the burden of proof to the claim.

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In the present petition, the Petitioners insist that C. Planas Commercial is a retail establishment
principally engaged in the sale of plastic products and fruits to the customers for personal use, thus
exempted from the application of the minimum wage law; that it merely leases and occupies a stall in
the Divisoria Market and the level of its business activity requires and sustains only less than ten
employees at a time. Petitioners contend that private respondents were paid over and above the
minimum wage required for a retail establishment, thus the Labor Arbiter is correct in ruling that
private respondents’ claim for underpayment has no factual and legal basis. Petitioners claim that since
private respondents alleged that petitioners employed 24 workers, it was incumbent upon them to
prove such allegation which private respondents failed to do.

Issue: Whether or not petitioner is exempted from the application of minimum wage law.

Ruling: The contention of the petitioners that they are exempted by the law must be proven. The
petitioners have not successfully shown that they had applied for the exemption.

R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage rate of
all workers and employees in the private sector. Section 4 of the Act provides for exemption from the
coverage, thus: Sec. 4. (c) Exempted from the provisions of this Act are household or domestic helpers
and persons employed in the personal service of another, including family drivers. Also, retail/service
establishments regularly employing not more than ten (10) workers may be exempted from the
applicability of this Act upon application with and as determined by the appropriate Regional Board in
accordance with the applicable rules and regulations issued by the Commission. Whenever an
application for exemption has been duly filed with the appropriate Regional Board, action on any
complaint for alleged non-compliance with this Act shall be deferred pending resolution of the
application for exemption by the appropriate Regional Board.

In the event that applications for exemptions are not granted, employees shall receive the appropriate
compensation due them as provided for by this Act plus interest of one percent (1%) per month
retroactive to the effectivity of this Act.

Clearly, for a retail/service establishment to be exempted from the coverage of the minimum wage law,
it must be shown that the establishment is regularly employing not more than ten (10) workers and had
applied for exemptions with and as determined by the appropriate Regional Board in accordance with
the applicable rules and regulations issued by the Commission.

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Boie-Takeda Chemicals, Inc. vs. Dela Serna

G.R. No. 92174, January 5, 1994

Facts: 2 cases were consolidated involving similar issues. A routine inspection was conducted in the
premises of petitioner Boie-Takeda Chemicals, Inc. Finding that Boie-Takeda had not been including
the commissions earned by its medical representatives in the computation of their 13th month pay, The
officer served a Notice of Inspection Results on Boie-Takeda requiring Boie-Takeda within ten (10)
calendar days from notice to effect restitution or correction of "the underpayment of 13th month pay
for the year(s) 1986, 1987 and 1988 of Med Rep (Revised Guidelines on the Implementation of 13th
month pay # 5) in the total amount of P558,810.89." Boie-Takeda wrote the Labor Department
contesting the Notice of Inspection Results because according to the law, only basic salary is required1 .
Regional Director directed Boie-Takeda to pay the said amount. On appeal before the Acting Labor
Secretary, the commissions shall be excluded in the computation of their 13th month pay. A similar
inspection was also conducted in the premises of Philippine Fuji Xerox Corp. The two companies had
the same counsel who filed a complaint against labor officials Hon. Dionisio dela Serna and
Undersecretary Cresenciano B. Trajano in issuing the questioned Orders and attacked Section 5 Revised
Guidelines of P. D. 8512 .

ISSUE: Are Commissions of Sales Representatives excluded from the computation of 13th month pay?

HELD:

YES. In remunerative schemes consisting of a fixed or guaranteed wage plus commission, the
fixed or guaranteed wage is patently the "basic salary" for this is what the employee receives for a
standard work period. Commissions are given for extra efforts exerted in consummating sales or other
related transactions. They are, as such, additional pay, which this Court has made clear do not form part
of the "basic salary."

Respondents would do well to distinguish this case from Songco vs. National Labor Relations
Commission, supra, upon which they rely so heavily. What was involved therein was the term "salary"
without the restrictive adjective "basic". Thus, in said case, we construed the term in its generic sense to
refer to all types of "direct remunerations for services rendered," including commissions. In the same
case, we also took judicial notice of the fact "that some salesmen do not receive any basic salary but
depend on commissions and allowances or commissions alone, although an employer-employee
relationship exists," which statement is quite significant in that it speaks of a "basic salary" apart and
distinct from "commissions" and "allowances". Instead of supporting respondents' stand, it would
appear that Songco itself recognizes that commissions are not part of "basic salary."

In including commissions in the computation of the 13th month pay, the second paragraph of Section 5
(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law unduly expanded the
concept of "basic salary" as defined in P.D. 851. It is a fundamental rule that implementing rules cannot
add to or detract from the provisions of the law it is designed to implement. Administrative regulations
adopted under legislative authority by a particular department must be in harmony with the provisions
of the law they are intended to carry into effect. They cannot widen its scope. An administrative agency
cannot amend an act of Congress.

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Gian Paula L. Monghit

WHEREFORE, the consolidated petitions are hereby GRANTED. The second paragraph of Section 5 (a)
of the Revised Guidelines on the Implementation of the 13th Month Pay Law issued on November 16,
1987 by then Labor Secretary Franklin M. Drilon is declared null and void as being violative of the law
said Guidelines were issued to implement, hence issued with grave abuse of discretion correctible by
the writ of prohibition and certiorari.

Philippine Lone Distance Telephone Company vs. Henry Estranero

G.R. No. 192518, October 15, 2014

Facts:

IN 1995, respondent Henry Estranero availed of the Manpower Reduction Program (MRP) offered by
petitioner Philippine Long Distance Telephone Company (PLDT). His redundancy pay plus other
benefits amounted to P267,028.37.

However, the respondent had outstanding liabilities arising from various loans he obtained from
different entities. PLDT deducted his loan obligations from the payment he was supposed to receive.
Consequently, not a single centavo was left of his take home pay. Thus, he was prompted to retract his
availment of the separation pay package. Despite his retraction, he was no longer allowed to report for
work. He was constrained to file a complaint for illegal dismissal with reinstatement, moral and
exemplary damages, and attorney’s fees. He argued that the deduction of the outstanding loan from
his redundancy pay was contrary to law.

Does this argument find merit?

Ruling: Yes.
It is clear in Article 113 of the Labor Code that no employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except in cases where the employer is
authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The
Omnibus Rules Implementing the Labor Code, meanwhile, provides that deductions from the wages of
the employees may be made by the employer when such deductions are authorized by law, or when the
deductions are with the written authorization of the employees for payment to a third person. Thus,
any withholding of an employee’s wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code, as well as the Omnibus
Rules implementing it. Further, Article 116 of the Labor Code clearly provides that it is unlawful for any
person, directly or indirectly, to withhold any amount from the wages of a worker without the worker’s
consent.

In this case, the deductions made to the respondent’s redundancy pay do not fall under any of the
circumstances provided under Article 113, nor was it established with certainty that the respondent has
consented to the said deductions or that the petitioners had authority to make such deductions.

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As aptly stated by the CA, the matter would have been different if the deductions refer to the
respondent’s contributions for his being a member of SSS, HDMF, or withholding taxes on income,
because if such was the case, the contributions are deductions already sanctioned by existing laws.
Here, it is evidently emphasized that the subject deductions pertain to the respondent’s outstanding
loans from various entities.

Furthermore, the petitioners may not offset the outstanding loans of the respondent against the
latter’s monetary benefits. The records expressly revealed that the respondent has obtained various
loans from different entities and not with PLDT. Accordingly, set-off or legal compensation cannot take
place between PLDT and the respondent because they are not mutually creditor and debtor of each
other. Thus, there can be no valid set-off because the respondent’s creditor is not PLDT.

The Court further agrees with the labor tribunals that the petitioners cannot offset the outstanding
balance of the respondent’s loan obligation with his redundancy pay because the balance on the loan
does not come within the scope of jurisdiction of the LA. The demand for payment of the said loans is
not a labor, but a civil dispute. It involves debtor-creditor relations, rather than employee-employer
relations. Evidently, the respondent’s unpaid balance on his loans cannot be offset against the
redundancy pay due to him.

In fine, the Court rules that PLDT has no legal right to withhold the respondent’s redundancy pay and
other benefits to recompense for his outstanding loan obligations to different entities. The
respondent’s entitlement to his redundancy pay is mandated by law which the petitioners cannot
unjustly deny. (Reyes, J., SC Third Division; Philippine Long Distance Telephone Company and/or
Ernani Tumimbang vs. Henry Estranero, G.R. No. 192518, October 15, 2014)

Philippine Duplicators vs. NLRC

GR 110068 February 15, 1995

Facts:
Private respondent union, for and on behalf of its member-salesmen, asked petitioner corporation for
payment of 13th month pay computed on the basis of the salesmen’s fixed or guaranteed
wages plus commissions.

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

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

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

2 Resolution (1995)
In Boie-Takeda the so-called commissions “paid to or received by medical representatives of Boie-
Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co.,” were excluded from
the term “basic salary” because these were paid to the medical representatives and rank-and-file
employees as “productivity bonuses.” The Second Division characterized these payments as additional
monetary benefits not properly included in the term “basic salary” in computing their 13th month pay.
As a rule a bonus is an amount granted and paid to an employee for his industry loyalty which contributed
to the success of the employer’s business and made possible the realization of profits. It is an act of
generosityof the employer for which the employee ought to be thankful and grateful. It is also granted
by an enlightened employer to spur the employee to greater efforts for the success of the business and
realization of bigger profits. From the legal point of view a bonus is not and mandatory and enforceable
obligation. It is so when It is made part of the wage or salary or compensation.
2nd MR dismissed.

IASE VS. QUISUMBING [G.R. No. 128845; June 1, 2000]

FACTS:

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Gian Paula L. Monghit

Private respondent International School, Inc. is a domestic educational institution established primarily
for dependents of foreign diplomatic personnel and other temporary residents. To enable the School to
continue carrying out its educational program and improve its standard of instruction, the School hires
both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-
hires and (2) local-hires.

The School grants foreign-hires certain benefits not accorded local-hires. These include housing,
transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a
salary rate twenty-five percent (25%) more than local-hires. Petitioner claims that the point-of-hire
classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries
to foreign-hires constitutes racial discrimination.

ISSUE:

Whether there is indeed a discrimination thus a violation of Equal Protection Clause.

HELD:

Public policy abhors inequality and discrimination. The Constitution directs the State to
promote “equality of employment opportunities for all.” Similarly, the Labor Code provides that the
State shall “ensure equal work opportunities regardless of sex, race or creed.”

Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for
example, prohibits and penalizes the payment of lesser compensation to a female employee as against
a male employee for work of equal value. Article 248 declares it an unfair labor practice for an employer
to discriminate in regard to wages in order to encourage or discourage membership in any labor
organization. The foregoing provisions impregnably institutionalize in this jurisdiction the long honored
legal truism of “equal pay for equal work.” Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries. This rule applies
to the School, its “international character” notwithstanding. In this case, employees should be given
equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a principle
that rests on fundamental notions of justice. That is the principle we uphold today.

JPL Marketing Promotions vs. Court of Appeals

G.R. No. 151966, July 8, 2005

FACTS:

JPL is a domestic corporation engaged in the business of recruitment and placement of workers, while
private respondents Noel Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as
merchandisers on separate dates and assigned at different establishments in Naga City and Daet,
Camarines Norte as attendants to the display of California Marketing Corporation, one of JPL clients.

13 Aug ‘96: JPL notified private respondents that CMC would stop its direct merchandising activity in
the Bicol Region, Isabela, and Cagayan Valley effective 15 August 1996.

They were advised to wait for further notice as they would be transferred to other clients.

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However, on 17 October 1996, private respondents Abesa and Gonzales filed before the NLRC
complaints for illegal dismissal, praying for separation pay, 13th month pay, service incentive leave pay
and payment for moral damages. Aninipot filed a similar case thereafter.

LA Rivera dismissed complaints for lack of merit

The LA said that Gonzales and Abesa applied with another store before the 6-month period given by
law to JPL to provide private respondents a new assignment. Thus, they may be considered to have
unilaterally severed their relation with JPL, and cannot charge JPL with illegal dismissal.

LA said that it was their obligatioin to wait until they were reassigned by JPL, and if after six months
they were not reassigned, they can file an action for separation pay but not for illegal dismissal.

The claims for 13th month pay and service incentive leave pay was also denied since private
respondents were paid way above the applicable minimum wage during their employment.

NLRC affirmed LA but ordered Separation pay, based on their last salary rate and counted from the first
day of their employment with the respondent JPL up to the finality of this judgment; Service Incentive
Leave pay, and 13th month pay, computed as in No.1 hereof

CA affirmed

ISSUE:

WON private respondents are entitled to separation pay, 13th month pay and service incentive leave
pay - YES

What should be the reckoning point for computing said awards. – From the time the employees severed
their ties with JPL

RATIO:

The employee is granted separation pay:

Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of dismissals due
to any of these reasons: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d)
cessation of the employer's business; and (e) when the employee is suffering from a disease and his
continued employment is prohibited by law or is prejudicial to his health and to the health of his
co-employees.

As a measure of social justice in those cases where the employee is validly dismissed for causes other
than serious misconduct or those reflecting on his moral character, but only when he was illegally
dismissed

Under Sec. 4(b), Rule I, Book VI of the Implementing Rules to Implement the Labor Code that provides
for the payment of separation pay to an employee entitled to reinstatement but the establishment
where he is to be reinstated has closed or has ceased operations or his present position no longer exists
at the time of reinstatement for reasons not attributable to the employer.

The common denominator of the instances where payment of separation pay is warranted is that the
employee was dismissed by the employer.

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In the instant case, there was no dismissal to speak of. Private respondents were simply not dismissed
at all, whether legally or illegally. What they received from JPL was not a notice of termination of
employment, but a memo informing them of the termination of CMC’s contract with JPL. More
importantly, they were advised that they were to be reassigned. At that time, there was no severance
of employment to speak of.

(MAIN TOPIC)

Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business
or undertaking for a period not exceeding six 6 months, wherein an employee/employees are placed on
the so­called “floating status.”

When that “floating status” of an employee lasts for more than six months, he may be considered to
have been illegally dismissed from the service. Thus, he is entitled to the corresponding benefits for his
separation, and this would apply to suspension either of the entire business or of a specific component
thereof.

As clearly borne out by the records of this case, private respondents sought employment from other
establishments even before the expiration of the six (6)-month period provided by law. As they
admitted in their comment, all three of them applied for and were employed by another establishment
after they received the notice from JPL.

JPL did not terminate their employment; they themselves severed their relations with JPL. Thus, they
are not entitled to separation pay.

The Court is not inclined in this case to award separation pay even on the ground of compassionate
justice.

The Court of Appeals relied on the cases wherein the Court awarded separation pay to legally dismissed
employees on the grounds of equity and social consideration.

Said cases involved employees who were actually dismissed by their employers, whether for cause or
not. Clearly, the principle applies only when the employee is dismissed by the employer, which is not
the

Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave pay to
private respondents. Said benefits are mandated by law and should be given to employees as a matter
of right.

They were not given their 13th month pay and service incentive leave pay while they were under the
employ of JPL. Instead, JPL provided salaries which were over and above the minimum wage.

The Court rules that the difference between the minimum wage and the actual salary received by
private respondents cannot be deemed as their 13th month pay and service incentive leave pay as such
difference is not equivalent to or of the same import as the said benefits contemplated by law.

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Gian Paula L. Monghit

The computation for both benefits should only be up to 15 August 1996, or the last day that private
respondents worked for JPL.

To extend the period to the date of finality of the NLRC resolution would negate the absence of illegal
dismissal, or to be more precise, the want of dismissal in this case. Besides, it would be unfair to require
JPL to pay private respondents the said benefits beyond 15 August 1996 when they did not render any
service to JPL beyond that date.

Honda Phils., Inc., vs Samahan ng Malayang Manggagawa sa Honda (2005) G.R. 145561

Facts:

The case stems from the collective bargaining agreement between Honda and the respondent union
that it granted the computation of 14th month pay as the same as 13th month pay. Honda continues
the practice of granting financial assistance covered every December each year of not less than 100% of
the basic salary. In the latter part of 1998, the parties started to re-negotiate for the fourth and fifth
years of the CBA. The union filed a notice of strike on the ground of unfair labor practice for deadlock.

DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration. The
striking employees were ordered to return to work and management to accept them back under the
same terms prior to the strike staged. Honda issued a memorandum of the new computation of the
13th month and 14th month pay to be granted to all its employees whereby the 31 long strikes shall be
considered unworked days for purpose of computing the said benefits. The amount equivalent to ½ of
the employees’ basic salary shall be deducted from these bonuses, with a commitment that in the event
that the strike is declared legal, Honda shall pay the amount.

The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to
voluntary arbitration where it ruled that the company’s implementation of the pro-rated computation is
invalid.

Issue: WON the pro-rated computation of the 13th and 14th month pays and other bonuses in question
is valid and lawful.

Held: The pro-rated computation is invalid.

The pro-rated computation of Honda as a company policy has not ripened into a company practice and
it was the first time they implemented such practice.

The payment of the 13th month pay in full month payment by Honda has become an established
practice. The length of time where it should be considered in practice is not being laid down by
jurisprudence. The voluntary act of the employer cannot be unilaterally withdrawn without violating
Article 100 of the Labor Code.

The court also rules that the withdrawal of the benefit of paying a full month salary for 13th month pay
shall constitute a violation of Article 100 of the Labor Code.

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ARIEL L. DAVID vs. JOHN G. MACASIO

G.R. No. 195466 JULY 2, 2014

For: overtime pay, holiday pay, 13th month pay and payment for service incentive leave.

Facts:

In January 2009, Macasio filed before the LA a complaint against petitioner Ariel L. David, doing
business under the name and style “Yiels Hog Dealer,” for non-payment of overtime pay, holiday pay
and 13th month pay. He also claimed payment for moral and exemplary damages and attorney’s fees.
Macasio also claimed payment for service incentive leave (SIL) David claimed that he started his hog
dealer business in 2005 and that he only has ten employees. The LA concluded that as Macasio was
engaged on “pakyaw” or task basis, he is not entitled to overtime, holiday, SIL and 13th month pay. The
NLRC affirmed the LA decision, thus this case reach the CA which says that Macasio is entitled to his
monetary claims following the doctrine laid down in Serrano v. Severino Santos Transit.The CA
explained that as a task basis employee, Macasio is excluded from the coverage of holiday, SIL and 13th
month pay only if he is likewise a “field personnel.”Thus this case reached the SC.

Issue: Whether or not Macasio is entitled of overtime pay, holiday pay, 13th month pay and payment
for service incentive leave.

Ruling: Yes, in so far as the Holiday and SIL pay is concern. To determine whether workers engaged on
“pakyaw” ortask basis” is entitled to holiday and SIL pay, the presence (or absence) of employer
supervision as regards the worker’s time and performance is the key: if the worker is simply engaged on
pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and SIL pay unless
exempted from the exceptions specifically provided under Article 94 (holiday pay) and Article 95 (SIL
pay) of the Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the
meaning of “field personnel” under the law, then he is not entitled to these monetary benefits. CA that
Macasio does not fall under the definition of “field personnel.” The CA’s finding in this regard is
supported by the established facts of this case: first, Macasio regularly performed his duties at David’s
principal place of business; second, his actual hours of work could be determined with reasonable
certainty; and, third, David supervised his time and performance of duties. Since Macasio cannot be
considered a “field personnel,” then he is not exempted from the grant of holiday, SIL pay even as he
was engaged on “pakyaw” or task basis.

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However, the governing law on 13th month pay is PD No. 851. As with holiday and SIL pay, 13th month
pay benefits generally cover all employees; an employee must be one of those expressly enumerated to
be exempted. Section 3 of the Rules and Regulations Implementing P.D. No. 851 enumerates the
exemptions from the coverage of 13th month pay benefits. Under Section 3(e), “employers of those
who are paid on task basis, and those who are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance thereof are exempted. Note that unlike the IRR
of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations Implementing PD
No. 851exempts employees "paid on task basis" without any reference to "field personnel." This could
only mean that insofar as payment of the 13th month pay is concerned, the law did not intend to qualify
the exemption from its coverage with the requirement that the task worker be a "field personnel" at the
same time. Thus Macasio is not entitled to 13th month pay.

Wherefore, the petition was partially granted the petition insofar as the payment of 13th month pay to
respondent is concerned. But all other aspect of the CA’s decision was affirmed.

CASE: OUR HAUS REALTY DEVELOPMENT CORPORATION vs. ALEXANDER PARIAN, JAY C.
ERINCO, ALEXANDER CANLAS, BERNARD TENEDERO and JERRY SABULAO

G.R. No. 204651 August 6, 2014

FACTS:

This is a petition for review on certiorari to challenge the CA rulings and the NLRC resolution
who reversed the LA’s decision to favor the herein respondents.

Respondents Alexander Parian, Jay C. Erinco, Alexander Canlas, Bernard Tenedero and Jerry
Sabulao were all laborers working for petitioner Our Haus Realty Development Corporation, a company
engaged in the construction business.

On May 2010, the petitioner company experienced financial distress and had to suspend some
of its construction projects to alleviate its condition. The respondents were among those who were
affected who were asked to take vacation leaves.

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

The LA ruled in favor of Our Haus who claimed that the respondents’ wages complied with the
law’s minimum requirement because aside from paying the monetary amount of the respondents’
wages, Our Haus also subsidized their meals (3 times a day), and gave them free lodging near the
construction project they were assigned to. In determining the total amount of the respondents’ daily
wages, the value of these benefits should be considered, in line with Article 97(f) of the Labor Code. LA

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did not give merit on the laborers’ contention that that the value of their meals should not be
considered in determining their wages’ total amount since the requirements set under Section 413 of
DOLE Memorandum Circular No. 215 were not complied with. Besides, Our Haus failed to present any
proof that they agreed in writing to the inclusion of their meals’ value in their wages.

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

Our Haus moved for the reconsideration of the NLRC’s decision and submitted new evidence
(the five kasunduans) to show that the respondents authorized Our Haus in writing to charge the values
of their meals and lodging to their wages. However, NLRC denied this motion, thus, Our Haus filed a
Rule 65 petition with the CA propounding a new theory that there is a distinction between deduction
and charging; that a written authorization is only necessary if the facility’s value will be deducted and
will not be needed if it will merely be charged or included in the computation of wages. The CA
dismissed Our Haus’ certiorari petition and affirmed the NLRC rulings in toto finding that there is no
distinction between deduction and charging and that the legal requirements before any deduction or
charging can be made, apply to both. Our Haus filed a motion for reconsideration but the CA denied its
motion, prompting it to file the present petition for review on certiorari under Rule 45.

ISSUE:

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

HELD:

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

PAG-ASA STEEL WORKS, INC vs COURT OF APPEALS, FORMER SIXTH DIVISION

G.R. No. 166647 March 31, 2006

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Gian Paula L. Monghit

FACTS:

Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under Philippine laws
and is engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel Workers Union is the duly
authorized bargaining agent of the rank-and-file employees of petitioner. The CBA between the
company and the union provided for a wage adjustment every July 1st for the years 1999 - 2000. In
October of 1999, Wage Order # NCR-07 was issued providing for a Php25.50 per day increase in the
salary of minimum wage earners. This wage increase was paid accordingly by the petitioner. In July
2000, the rank and file employees were again given an increase in accordance with the provision of the
CBA. In November 2000, Wage Order # NCR-08 was issued providing for a Php26.50 per day increase
in the salary of minimum wage earners, making the minimum wage Php250/day. The Union President
requested for the implementation of the wage order in favor of the rank and file employees. Petitioner
however refused because none of the employees were receiving a daily salary rate lower than Php250,
there was no wage distortion and it is not obliged to grant the wage increase.

ISSUE:

Whether or not management is obliged to grant wage increase in accordance with a wage order as a
matter of practice even if its employees are receiving salaries higher than the minimum wage?

HELD:

No, management is not obliged to grant the wage increase under the wage order, either by virtue of the
CBA, or as a matter of company practice. Wage Order No. NCR-08 clearly states that only those
employees receiving salaries below the prescribed minimum wage are entitled to the wage increase
provided therein, and not all employees across-the-board as respondent Union would want petitioner
to do. Considering that none of the members of respondent Union are receiving salaries below the
P250.00 minimum wage, petitioner is not obliged to grant the wage increase to them. The claim that
the grant of a wage-order-mandated increase to all the employees regardless of their salary rates on an
agreement collateral to the CBA had ripened into company practice is not supported by evidence.
Respondent Union failed to adduce proof on the salaries of the employees prior to the issuance of each
wage order to establish its allegation that, even if the employees were receiving salaries above the
minimum wage and there was no wage distortion, they were still granted salary increase. It is only
when examples offered to establish pattern of conduct or habit are numerous enough to lose an
inference of systematic conduct that

Hacienda Leddy / Ricardo Gamboa, Jr. v. Paquito Villegas

Facts:
 Paquito Villegas is an employee at the Hacienda Leddy.
o He was employed as early as 1960 when it was still named Hacienda Teresa.
o It was owned by Ricardo Gamboa Sr., and was succeeded by his son Ricardo Gamboa,
Jr.
o During his employment up to the time of his dismissal, Villegas performed sugar
farming jobs 8 hours a day, 6 days a week, continuously for not less than 302 days a
year, and was paid P45 per day.

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o He also worked in the hacienda’s coconut lumber business where he was paid P34 a day
for 8 hours work.
 On June 9, 1993, Gamboa went to Villegas' house and told him that his services were no longer
needed without prior notice or valid reason.
 Hence, Villegas filed a complaint for illegal dismissal.
 Gamboa denied having dismissed Villegas but admitted that Villegas worked with the farm
owned by his father, doing casual and odd jobs.
o Villegas was even given the benefit of occupying a small portion of the land where his
house was erected.
o However, he maintained that Villegas ceased working at the farm as early as 1992, and
not dismissed.
 However, Gamboa retracted his statement and said that the only time Villegas rendered service
for the hacienda was only in the year 1993.
o Villegas rendered service specifically on February 9, 1993 and February 11, 1993 when
he was contracted by the farm to cut coconut lumber.
o They informed Villegas that they need the property, hence, they requested that he
vacate it, but he refused.
o Gamboa surmised that Villegas filed the complaint to gain leverage so he would not be
evicted from the land he is occupying.
 LA found that there was illegal dismissal.
 NLRC reversed. MFR denied.
 CA set aside the NLRC.

Issue: WoN there exists an employer-employee relationship

 YES
 Gamboa’s position:
o Villegas was paid on a piece-rate basis without supervision.
o Since his job was not necessary or desirable in the usual business or trade of the
hacienda, he cannot be considered as a regular employee.
o It was Villegas who stopped working, and not dismissed.
 The issue of Villegas' alleged illegal dismissal is anchored on the existence of an employer-
employee relationship between him and Gamboa.

Records / Pleadings
 Records show that Villegas has been employed in the Hacienda while it was still being managed
by Gamboa, Sr. It was even admitted by Gamboa, Jr. in his earlier pleadings.
 While refuting that Villegas was a regular employee, Gamboa failed to categorically deny that
Villegas was employed in their hacienda albeit he insisted that Villegas was merely a casual
employee doing odd jobs.

Length of Service
 Villegas worked for more than 20 years. His length of service is an indication of the regularity of
his employment.
 Even assuming that he was doing odd jobs around the farm, such long period of doing said odd
jobs is indicative that these were either necessary or desirable to petitioner's trade or business.
 Owing to the length of service alone, he became a regular employee, by operation of law, one
year after he was employed.

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 While length of time may not be the controlling test to determine if Villegas is indeed a regular
employee, it is vital in establishing if he was hired to perform tasks which are necessary and
indispensable to the usual business or trade of the employer.
 If it was true that Villegas worked in the hacienda only in the year 1993, specifically February 9,
1993 and February 11, 1993, why would then he be given the benefit to construct his house in
the hacienda?
 Conclusion: Even assuming that Villegas' employment was only for a specific duration, the fact
that he was repeatedly re-hired over a long period of time shows that his job is necessary and
indispensable to the usual business or trade of the employer.

Wage / Piece-rate basis

 Payment on a piece-rate basis does not negate regular employment.

Villegas did not suddenly stop working.

 Considering that Villegas was employed with the Gamboas for more than 20 years and was
even given a place to call his home, it does not make sense why he would suddenly stop
working for no apparent reason.
 Gamboa failed to discharge the burden of proof of abandonment. Other than the self-serving
declarations in the affidavit of his employee, he did not adduce proof of overt acts of Villegas
showing his intention to abandon his work.
 The filing of the illegal dismissal complaint negates any intention on Villegas’ part to sever their
employment relationship.

Conclusion
 As a regular worker, Villegas is entitled to security of tenure under Article 279 of the Labor Code
and can only be removed for cause. The Court found no valid cause attending to his dismissal
and found also that his dismissal was without due process.
 The failure of the Hacienda / Gamboa to comply with procedural guidelines renders its dismissal
of Villegas illegal. (A277b)

CASE DIGEST: UNITED TOURIST PROMOTIONS (UTP) and ARIEL D. JERSEY v. HARLAND B.
KEMPLIN

FACTS: In 1995, Jersey, with the help of two American expatriates, Kemplin and the late Mike Dunne,
formed UTP, a sole proprietorship business entity engaged in the printing and distribution of
promotional brochures and maps for tourists.

In 2002, UTP employed Kemplin to be its President for a period of five years, to commence on March 1,
2002 and to end on March 1, 2007, "renewable for the same period, subject to new terms and
conditions".

Kemplin continued to render his services to UTP even after his fixed term contract of employment
expired. On May 12, 2009, Kemplin, signing as President of UTP, entered into advertisement
agreements with Pizza Hut and M. Lhuillier.

On July 30, 2009, UTPs legal counsel sent Kemplin a letter informing his Employment contract has

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expired and never been renewed. However, because of his past services to companys clients, by coming
to the office, as such he was given monthly commissions with allowances.

But because of his inhuman treatment to the rank and file employees which caused great damage and
prejudices to the company, a case for Grave Oral Threat pending Preliminary Investigation, a Summary
Deportation and for Grave Coercion and Grave Threats was filed. Subsequently, he received a notice
from UTPs counsel ordering him to cease and desist from entering the premises of UTP offices.

Kemplin filed before the NLRC a Complaint against UTP and its officer for: (a) illegal dismissal; (b) non-
payment of salaries, 13th month and separation pay, and retirement benefits; (c) payment of actual,
moral and exemplary damages and monthly commission ofP200,0000.00; and (d) recovery of the
company car, which was forcibly taken from him, personal laptop, office paraphernalia and personal
books.

He claimed that even after the expiration of his employment contract on March 1, 2007, he rendered his
services as President and General Manager of UTP.

UTP, on its part, argued that the termination letter sent to Kemplin on July 30, 2009 was based on (a)
the expiration of the fixed term employment contract they had entered into, and (b) an employers
prerogative to terminate an employee, who commits criminal and illegal acts prejudicial to business.

The LA held in favor of Kemplin adjudging he was illegally dismissed by UTP and Jersey.

LA Joses ratiocinations are:

Kemplin was able to show that he was still officially connected with [UTP] as he signed in his capacity as
President of UTP an advertisement agreements with Pizza Hut and M. Lhuillier Phils. as late as May 12,
2009. This only goes to show that [UTP and Jerseys] theory of toleration has no basis in fact.

It would appear now, per record, that Kemplin was allowed to continue performing and suffered to
work much beyond the expiration of his contract. Such being the case, Kemplins fixed term
employment contract was converted to a regular one under Art. 280 of the Labor Code, as amended.
Viernes vs. NLRC, et al., G.R. No. 108405, April 4, 2003.

Kemplins tenure having now been converted to regular employment, he now enjoys security of tenure
under Art. 279 of the Labor Code, as amended. Simply put, Kemplin may only be dismissed for cause
and after affording him the procedural requirement of notice and hearing. Otherwise, his dismissal will
be illegal.

UTP and Jersey argued that Kemplin was not illegally terminated, for his termination was according to
Art. 282 of the Labor Code, as amended, i.e., loss of trust and confidence allegedly for various and
serious offenses.

However, upon closer scrutiny, in trying to justify Kemplins dismissal on the ground of loss of trust and

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confidence, [UTP and Jersey] failed to observe the procedural requirements of notice and hearing, or
more particularly, the two-notice rule. It would appear that [UTP and Jerseys] cease and desist letter
compressed the two notices in one. Besides, the various and serious offenses alluded thereto were not
legally established before [Kemplins] separation. Ostensibly, Kemplin was not confronted with these
offenses and given the opportunity to explain himself.

Respondents miserably failed to discharge their onus probandi. Hence, illegal dismissal lies.

The NLRC affirmed LA Joses Decision.

When appealed to the CA, it affirmed the disquisitions of the LA and NLRC. Hence, this petition

ISSUE: Did the CA err in invalidating the termination of Kemplin?

HELD: The advertisement agreements with Pizza Hut and M. Lhuillier entered into by Kemplin, who
signed the documents as President of UTP on May 12, 2009, or more than two years after the supposed
expiration of his employment contract. They validate Kemplins claim that he, indeed, continued to
render his services as President of UTP well beyond March 2, 2007.

Moreover, in the letterdated July 30, 2009, Kemplin was ordered to cease and desist from entering the
premises of UTP. The twin requirements of notice and hearing were not complied with by respondents.

The charges against Kemplin were not clearly specified. While the letter stated that Kemplins
employment contract had expired, it likewise made general references to alleged criminal suits filed
against him. One who reads the letter is inevitably bound to ask if Kemplin is being terminated due to
the expiration of his contract, or by reason of the pendency of suits filed against him. Anent the
pendency of criminal suits, the statement is substantially bare.

It also bears stressing that the letter failed to categorically indicate which of the policies of UTP did
Kemplin violate to warrant his dismissal from service. Further, Kemplin was never given the chance to
refute the charges against him as no hearing and investigation were conducted. Corollarily, in the
absence of a hearing and investigation, the existence of just cause to terminate Kemplin could not have
been sufficiently established.

Kemplin should have been promptly apprised of the issue of loss of trust and confidence in him before
and not after he was already dismissed.

***

APO Chemical Manufacturing Corporation v. Bides, G.R. No. 186002, September 19, 2012is instructive
anent the instances when separation pay and not reinstatement shall be ordered. The Court is well
aware that reinstatement is the rule and, for the exception of "strained relations" to apply, it should be
proved that it is likely that, if reinstated, an atmosphere of antipathy and antagonism would be
generated as to adversely affect the efficiency and productivity of the employee concerned.

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Under the doctrine of strained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such
payment liberates the employee from what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its
employ a worker it could no longer trust. Moreover, the doctrine of strained relations has been made
applicable to cases where the employee decides not to be reinstated and demands for separation pay.

***

Being a managerial employee, the petitioner is not entitled to 13th month pay. Pursuant to
Memorandum Order No. 28, as implemented by the Revised Guidelines on the Implementation of the
13th Month Pay Law dated November 16, 1987, managerial employees are exempt from receiving such
benefit without prejudice to the granting of other bonuses, in lieu of the 13th month pay, to managerial
employees upon the employer's discretion. In Torres v. Rural Bank of San Juan, Inc., G.R. No. 184520,
March 13, 2013.

The award to Harland B. Kemplin of a 13th month benefit was deleted. In lieu of his reinstatement, he is
awarded separation pay to be computed at the rate of one (1) month pay for every year of service, with
a fraction of at least six (6) months considered as one whole year to be reckoned from the time of his
employment on March 1, 2002 until the finality of this Decision

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