ESPINA, AK LABOR

LIDUVINO MILLARES, ET. AL. V. NLRC (facilities v. supplements)

Facts: Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur.

In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials.

Issue: Whether the allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their existence and subsistence.

SC Ruling: The allowances are not part of the wages of the employees. Wage is defined in letter (f) as 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. When an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." Customary is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. The court agrees with the observation of the Office of the Solicitor General that the subject allowances were temporarily, not regularly, received by petitioners. Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the benefit of the employer or

necessary to the conduct of the employer's business. In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. Revenue Audit Memo Order No. 1-87 pertinently provides —3.2… transportation, representation or entertainment expenses shall not constitute taxable compensation if: (a) It is for necessary travelling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade or business of the employer, and (b) The employee is required to, and does, make an accounting/liquidation for such expense in accordance with the specific requirements of substantiation for such category or expense.Board and lodging allowances furnished to an employee not in excess of the latter's needs and given free of charge, constitute income to the latter except if such allowances or benefits are furnished to the employee for the convenience of the employer and as necessary incident to proper performance of his duties in which case such benefits or allowances do not constitute taxable income. The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig. The inevitable conclusion is that subject allowances did not form part of petitioners' wages.

SLL INTERNATIONAL CABLES SEPCIALIST V. NLRC

FACTS: Sometime in 1996 and January 1997, Lopez, Canete and Zuniga. were hired by petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but since they were only trainees, they did not report for work regularly but came in as substitutes to the regular workers or in undertakings that needed extra workers to expedite completion of work. After their training, Zuñiga, Cañete and Lopez were engaged as project employees by the petitioners in their Islacom project in Bohol. Private respondents started on March 15, 1997 until December 1997. Upon the completion of their project, their employment was also terminated. Private respondents received the amount of P145.00, the minimum prescribed daily wage for Region VII. In July 1997, the amount of P145 was increased to P150.00 by the Regional Wage Board (RWB) and in October of the same year, the latter was increased to P155.00. Sometime in March 1998, Zuñiga and Cañete were engaged again by Lagon as project employees for its PLDT Antipolo, Rizal project, which ended sometime in (sic) the late September 1998. As a consequence, Zuñiga and Cañete’s employment was terminated. For this project, Zuñiga and Cañete received only the wage

of P145.00 daily. The minimum prescribed wage for Rizal at that time was P160.00.Sometime in late November 1998, private respondents re-applied in the Racitelcom project of Lagon in Bulacan. Zuñiga and Cañete were re-employed. Lopez was also hired for the said specific project. For this, private respondents received the wage of P145.00. Again, after the completion of their project in March 1999, private respondents went home to Cebu City.On May 21, 1999, private respondents for the 4th time worked with Lagon’s project in Camarin, Caloocan City with Furukawa Corporation as the general contractor. Their contract would expire on February 28, 2000, the period of completion of the project. From May 21, 1997-December 1999, private respondents received the wage of P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In January to February 28, the three received the wage of P165.00. The existing rate at that time was P213.00.For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project was not completed on the scheduled date of completion. Face[d] with economic problem[s], Lagon was constrained to cut down the overtime work of its worker[s][,] including private respondents. Thus, when requested by private respondents on February 28, 2000 to work overtime, Lagon refused and told private respondents that if they insist, they would have to go home at their own expense and that they would not be given anymore time nor allowed to stay in the quarters. This prompted private respondents to leave their work and went home to Cebu. On March 3, 2000, private respondents filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well as damages and attorney’s fees.

ISSUE: Whether or not the value of facilities that respondents enjoyed should be included in the computation of wages

RULING: No. Before the value of facilities can be deducted from the employees’ wages, the following requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the employee; and finally, facilities must be charged at reasonable value. Mere availment is not sufficient to allow deductions from employees’ wages.These requirements, however, have not been met in this case. SLL failed to present any company policy or guideline showing that provisions for meals and lodging were part of the employee’s salaries. It also failed to provide proof of the employees’ written authorization, much less show how they arrived at their valuations. At any rate, it is not even clear whether private respondents actually enjoyed said facilities.The Court, at this point, makes a distinction between "facilities" and "supplements." It is of the view that the food and lodging, or the electricity and water allegedly consumed by private respondents in this case were not

facilities but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co.,22 the two terms were distinguished from one another in this wise:"Supplements," therefore, constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. "Facilities," on the other hand, are items of expense necessary for the laborer's and his family's existence and subsistence so that by express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same.

AMERICAN WIRE AND CABLE UNION V. AMERICAN WIRE AND CABLE CO. (art. 100)

FACTS: American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables.  There are two unions in this company, the American Wire and Cable Monthly-Rated Employees Union and the American Wire and Cable Daily-Rated Employees Union. On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and Employment by the two unions for voluntary arbitration.  They alleged that the private respondent, without valid cause, suddenly and unilaterally withdrew and denied certain benefits and entitlements which they have long enjoyed. These are Service Award, 35% premium pay of an employee’s basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29, Christmas Party and Promotional Increase.

Issue: Whether or not the respondent company violated Article 100 of the Labor Code.

SC Ruling: The Court ruled that company is not guilty of violating Art. 100 of the Labor Code. Article 100 of the Labor Code provides: PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. – Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code. The certain benefits and entitlements are considered bonuses. A bonus can only be enforceable and demandable if it has ripened into a company practice. It must also be expressly agreed by the employer and employee or it must be on a fixed amount. The assailed benefits were never subjects of any agreement between the union and the company. It was never incorporated in the CBA. Since all these benefits are in the form of bonuses, it is neither enforceable nor demandable.

TSPI CORP. V. TSPIC UNION (ART. 100)

FACTS:  TSPI Corporation entered into a Collective Bargaining Agreement with the corporation Union for the increase of salary for the latter’s members for the year 2000 to 2002 starting from January 2000. thus, the increased in salary was materialized on January 1, 2000. However, on October 6, 2000, the Regional Tripartite Wage and production Board raised daily minimum wage from P 223.50 to P 250.00 starting November 1, 2000. Conformably, the wages of the 17 probationary employees were increased to P250.00 and became regular employees therefore receiving another 10% increase in salary. In January 2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the nine employees who were senior to the 17 recently regularized employees, received less wages. On January 19, 2001, TSPIC’s HRD notified the 24 employees who are private respondents, that due to an error in the automated payroll system, they were overpaid and the overpayment would be deducted from their salaries starting February 2001. The Union on the other hand, asserted that there was no error and the deduction of the alleged overpayment constituted diminution of pay. 

ISSUE: Whether the alleged overpayment constitutes diminution of pay as alleged by the Union. RULING: Yes, because it is considered that Collective Bargaining Agreement entered into by unions and their employers are binding upon the parties and be acted in strict compliance therewith. Thus, the CBA in this case is the law between the employers and their employees. Therefore, there was no overpayment when there was an increase of salary for the members of the union simultaneous with the increasing of minimum wage for workers in the National Capital Region. The CBA should be followed thus, the senior employees who were first promoted as regular employees shall be entitled for the increase in their salaries and the same with lower rank workers.

LEPANTO CERAMICS V. LEPANTO CERAMICS EE’S ASSOC. (ART. 100)

FACTS: Petitioner Lepanto Ceramics, Inc., a corporation primarily in the business of manufacture, makes, buy and sell, on whole sale basis, tiles, marbles, mosaics and other similar products. Respondent Lepanto Ceramics Employees Association is the sole and exclusive bargaining agent in the establishment of petitioner.

In 1998, petitioner gave P3, 000.00 as bonus to its employees, members of the respondent Association. Subsequently, in September 1999, petitioner and respondent Association entered into a Collective Bargaining Agreement (CBA) which provides for, among others, the grant of a Christmas gift package/bonus to the members of the respondent Association.

In the succeeding years, 1999, 2000, 2001, petitioner gave bonuses in a form of a certificate which is equivalent to P3, 000.00. However, in 2002, petitioner gave only P600.00 as cash benefit. Respondent Association objected to the P600.00 cash benefit and argued that it was in violation of the CBA. Petitioner averred that the giving of extra compensation was based on the company’s available resources for a given year and the workers are not entitled to a bonus if the company does not make profits. Unable to amicably settle the dispute, the case was referred to the Voluntary Arbitrator. The Voluntary Arbitrator rendered a decision, declaring that petitioner is bound to grant each of its workers a Christmas bonus of P3,000.00 for the reason that the bonus was given prior to the effectivity of the CBA between the parties and that the financial losses of the company is not a sufficient reason to exempt it from granting the same. On appeal, the Court of Appeals affirmed the ruling of the Voluntary Arbitrator.

Issue:

Is petitioner obliged to give a Christmas bonus to respondent Association?

Ruling:

Yes. Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the parties. Given that the bonus in this case is integrated in the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas bonus due to respondent Association has become more than just an act of generosity on the part of the petitioner but a contractual obligation it has undertaken.

A reading of the provision of the CBA reveals that the same provides for the giving of a "Christmas gift package/bonus" without qualification. The said provision did not state that the Christmas package shall be made to depend on the petitioner’s financial standing. The records are also bereft of any showing that the petitioner made it clear during CBA negotiations that the bonus was dependent on any condition. Indeed, if the petitioner and respondent Association intended that the P3,000.00 bonus would be dependent on the company earnings, such intention should have been expressed in the CBA.

All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced,

diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection.EASTERN TELECOM PHILS. V. EASTERN TELECOM EE’S UNION

FACTS: RESPONDENT Eastern Telecoms Employees’ Union (ETEU) is the certified exclusive bargaining agent of the rank-and-file employees of petitioner Eastern Telecommunications Phils., Inc. (ETPI). ETPI planned to defer payment of the 2003 14th, 15th and 16th month bonuses sometime in April 2004 due to continuing deterioration of their financial position. Such postponement would also be subject to availability of funds. In opposing ETPI’s plan, ETEU invoked the Side Agreement of their Collective Bargaining Agreement for the period 2001-2004, which reads: “4. Employment Related Bonuses. The Company confirms that the 14th, 15th and 16th month bonuses (other than 13th month pay) are granted.”

ISSUE: Is ETPI liable to pay said month bonuses?

Ruling: Yes. A reading of the above provision reveals that the same provides for the giving of 14th, 15th and 16th month bonuses without qualification.The wording of the provision does not allow any other interpretation. There were no conditions specified in the CBA Side Agreements for the grant of the benefits, contrary to the claim of ETPI that the same is justified only when there are profits earned by the company.Terse and clear, the said provision does not state that the subject bonuses shall be made to depend on the ETPI’s financial standing or that their payment was contingent upon the realization of profits. Neither does it state that if the company derives no profits, no bonuses are to be given to the employees. In fine, the payment of these bonuses was not related to the profitability of business operations.The records are also bereft of any showing that the ETPI made it clear before or during the execution of the Side Agreements that the bonuses shall be subject to any condition.Indeed, if ETPI and ETEU intended that the subject bonuses would be dependent on the company earnings, such intention should have been expressly declared in the Side Agreements or the bonus provision should have been deleted altogether.In the absence of any proof that ETPI’s consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the Side Agreements voluntarily, that it had full knowledge of the contents thereof and that it was aware of its commitment under the contract.Verily, by virtue of its incorporation in the CBA Side Agreements, the grant of 14th, 15th and 16th month bonuses has become more than just an act of generosity on the part of ETPI but a contractual obligation it has undertaken.Moreover, the continuous conferment of bonuses by ETPI to the union members from 1998 to 2002 by virtue

of the Side Agreements evidently negates its argument that the giving of the subject bonuses is a management prerogative.

GSIS V. NLRC 17 Nov 2010

FACTS: RESPONDENTS were employed as security guards by DNL Security Agency, which entered into a contract with petitioner Government Service Insurance System (GSIS), Tacloban City Office, on May 1, 1978.

In February 1993, DNL informed respondents that its service contract with GSIS was terminated. However, respondents continued working with GSIS upon the instruction of DNL until April 30, 1993 but without receiving their wages, after which their employment was terminated.

ISSUE: In a complaint for illegal dismissal, can GSIS be held liable for respondents’ claims for salary differential, 13th month pay and unpaid wages?

Ruling: Yes. The joint and several liability of the employer or principal was enacted to ensure compliance with the provisions of the Labor Code, principally those on statutory minimum wage. The contractor or subcontractor is made liable by virtue of his or her status as a direct employer, and the principal as the indirect employer of the contractor’s employees. This liability facilitates, if not guarantees, payment of the workers’ compensation, thus, giving the workers ample protection as mandated by the 1987 Constitution.

This is not unduly burdensome to the employer. Should the indirect employer be constrained to pay the workers, it can recover whatever amount it had paid in accordance with the terms of the service contract between itself and the contractor.

Petitioner’s liability covers the payment of respondents’ salary differential and 13th month pay during the time they worked for petitioner. In addition, the petitioner is solidarily liable with DNL Security for respondents’ unpaid wages from February 1993 until April 20, 1993.

While it is true that respondents continued working for petitioner after the expiration of their contract, based on the instruction of DNL Security, petitioner did not object to such assignment and allowed respondents to render service. Thus, the petitioner, by implication, approved the extension of respondents’ services.

Accordingly, the petitioner is bound by the provisions of the Labor Code on indirect employment. Petitioner cannot be allowed to deny its obligation to respondents after it had benefited from their services. So long as the work, task, job, or project has been performed for petitioner’s benefit or on its behalf, the liability accrues for such services.

The principal is made liable to its indirect employees because, after all, it can protect itself from irresponsible contractors by withholding payment of such sums that are due the employees and by paying the employees directly, or by requiring a bond from the contractor or subcontractor for this purpose.ALIVIADO V. PROCTER AND GAMBLE (Labor only Contracting-Job contracting)

FACTS: Petitioners worked as merchandisers of P&G from various dates, They all individually signed employment contracts with either Promm-Gem or SAPS for periods of more or less five months at a time.5 They were assigned at different outlets, supermarkets and stores where they handled all the products of P&G. They received their wages from Promm-Gem or SAPS.6SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual absenteeism, dishonesty or changing day-off without prior notice.7P&G is principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to various supermarkets and distributors.8 To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products.9In December 1991, petitioners filed a complaint10 against P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later amended11 to include the matter of their subsequent dismissal.

ISSUE: whether P&G is the employer of petitioners

RULING: In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary to first determine whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors.

The pertinent Labor Code provision on the matter states:ART. 106. Contractor or subcontractor. – Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code.In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. Clearly, the law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the

current labor rules expressly prohibit labor-only contracting.To emphasize, there is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal and any of the following elements are present:

i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or

ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. (Underscoring supplied)

In the instant case, the financial statements of Promm-Gem show that it has authorized capital stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as of 1990. It also has long term assets worth P432,895.28 and current assets of P719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space with a floor area of 870 square meters. It also had under its name three registered vehicles which were used for its promotional/merchandising business. Promm-Gem also has other clients aside from P&G. Under the circumstances, we find that Promm-Gem has substantial investment which relates to the work to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE Department Order No. 18-02.The records also show that Promm-Gem supplied its complainant-workers with the relevant materials, such as markers, tapes, liners and cutters, necessary for them to perform their work. Promm-Gem also issued uniforms to them. It is also relevant to mention that Promm-Gem already considered the complainants working under it as its regular, not merely contractual or project, employees. This circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order No. 18-02, which speaks of contractual employees. This, furthermore, negates – on the part of Promm-Gem – bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the Court to strike down the employment practice or agreement concerned as contrary to public policy, morals, good customs or public order.Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate independent contractor. Furthermore, the petitioners have been charged with the merchandising and promotion of the products of P&G, an activity that has already been considered by the Court as doubtlessly directly related to the manufacturing business, which is the principal business of P&G. Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which are directly related to the principal business of P&G, we find that the former is engaged in "labor-only contracting".

"Where ‘labor-only’ contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the ‘labor-only’ contractor." The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.

MANDAUE GALLEON TRADE V. ANDALES

Vicente Andales is one of the 260 workers laid off due to the termination of their contracts by MGTI. MGTI claims that due to the dwindling demand for rattan products, they retrenched some of their employees and the 260 envied the substantial separation pay of the regular employees. The court held that the 260 “independent contractors” did not have substantial capital and tools and that their work is directly related to MGTI’s business. This proves a labor only contraction and thus, equivalent to declaring that there is an ER-EE relationship between the principal and the employees of the supposed contractor. They are entitled to separation pay of ½ month for every year of service.

EXECPTIONS to the rule- When the findings are grounded entirely on speculation- When the inference made is manifestly mistaken- Where there is grave abuse of discretion- Judgment is made from misapprehension of facts- Findings of fact are conflicting- (in making its findings) CA went beyond issue- Findings are contrary to the trial court- Conclusions without citation- Facts set forth not disputed by respondent - Findings premised on absence of evidence- CA overlooked relevant facts disputed by parties.*The first 2 par. Of article 106 set the general rule that a principal is permitted by law to engage the services of a contractor for the performance of a particular job, but the principal, nevertheless, becomes SOLIDARILY liable with the contractor.

SPIC N’ SPAN SERVICE CORP V. PAJE

FACTS: In February 1998, Gloria Paje and 10 others were dismissed as sales girls (promo girls) of Swift Corporation. Paje et al were provided to Swift by Spic N’ Span Services Corporation. Paje et al, through their non-lawyer representative, Florencio Peralta, filed a labor case for illegal dismissal against Swift and Spic N’ Span. Paje et al won. Swift and Spic N’ Span appealed the case to the NLRC. The NLRC affirmed the Labor Arbiter. The Court of Appeals likewise ruled in favor of Paje et al. Spic N’ Span and Swift further appealed to the SC where they alleged that there are two procedural infirmities on the part of Paje et al. First was the fact that not all of them (Paje et al) signed the pleadings signed before the NLRC, and second, that Paje et al were represented by a non-lawyer (Peralta); that under the law, in labor

cases, there are only two instances where a non-lawyer may appear or represent a litigant before the labor arbiter or the NLRC, to wit: (1) If they represent themselves; or (2) If they represent their organization or members thereof. Neither can be said of Peralta.ISSUE: Whether or not such procedural lapse on the part of Paje et al is sufficient for the dismissal of their complaint against Spic N’ Span and Swift.HELD: No. In the hierarchy observed in the dispensation of justice, rules of procedure can be disregarded in order to serve the ends of justice. Certain labor rights assume preferred positions in our legal hierarchy. Under the Constitution and the Labor Code, the State is bound to protect labor and assure the rights of workers to security of tenure. The State is bound to “protect the rights of workers and promote their welfare,” and the workers are “entitled to security of tenure, humane conditions of work, and a living wage.” Under these fundamental guidelines, Paje et al’s right to security of tenure is a preferred constitutional right that technical infirmities in labor pleadings cannot defeat. The Supreme Court also noted that even if not all of the complainants signed the pleadings, it is sufficient that some of them have signed it. The lack of a verification in a pleading is only a formal defect, not a jurisdictional defect, and is not necessarily fatal to a case. The primary reason for requiring a verification is simply to ensure that the allegations in the pleading are done in good faith, are true and correct, and are not mere speculations.

DEVELOPMENT BANK OF PHILS V. NLRC –ART110

FACTS: Complainants are employee’s of Lirag. LIRAG was a mortgage debtor of DBP. Private respondent Labor Alliance for National Development (LAND, for brevity) was the bargaining representative of the more or less 800 former rank and file employees of LIRAG. Around September 1981, LIRAG started terminating the services of its employees on the ground of retrenchment. By December of the said year there were already 180 regular employees separated from the service. LIRAG has since ceased operations presumably due to financial reverses.In February 1982, Joselito Albay, one of the employees dismissed in September 1981, filed a complaint before the National Labor Relations Commission (NLRC) against LIRAG for illegal dismissal (Case No. 2-2090-82). On 1 March 1982, LAND, on behalf of 180 dismissed members, also filed a Complaint against LIRAG seeking separation pay, 13th month pay, gratuity pay, sick leave and vacation leave pay and emergency allowance (Case No. 3-2581-82). These two cases were consolidated and jointly heard by the NLRC. Said complainants have since been joined by supervisors and managers.

ISSUE: Whether or not the NLRC gravely abused its discretion in affirming the Order of the Labor Arbiter granting the Writ of Garnishment out of the proceeds of LIRAG's properties foreclosed by DBP to satisfy the judgment in these cases.

RULING: YES. Article 110 of the Labor Code provides:Art. 110. Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision to the contrary notwithstanding. Unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer. Because of its impact on the entire system of credit, Article 110 of the Labor Code cannot be viewed in isolation but must be read in relation to the Civil Code scheme on classification and preference of credits. In the event of insolvency, a principal objective should be to effect an equitable distribution of the insolvent's property among his creditors. To accomplish this there must first be some proceeding where notice to all of the insolvents's creditors may be given and where the claims of preferred creditors may be bindingly adjudicated. A distinction should be made between a preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. Even if Article 110 and its Implementing Rule, as amended, should be interpreted to mean "absolute preference," the same should be given only prospective effect in line with the cardinal rule that laws shall have no retroactive effect, unless the contrary is provided (Article 4, Civil Code). Thereby, any infringement on the constitutional guarantee on non-impairment of the obligation of contracts (Section 10, Article III, 1987 Constitution) is also avoided. In point of fact, DBP's mortgage credit antedated by several years the amendatory law, RA No. 6715. To give Article 110 retroactive effect would be to wipe out the mortgage in DBP's favor and expose it to a risk which it sought to protect itself against by requiring a collateral in the form of real property.

SHS PERFORATED MATERIALS V. DIAZ -- Art. 113

FACTS: SHS is a start-up corporation organized and existing under the Philippines and registered with the PEZA. Petitioner Hartmannshenn, a German national, is its president, in which capacity he determines the administration and direction of the day-to-day business affairs of SHS. Petitioner Schumacher, also a German national, is the treasurer and one of the board directors. As such, he is authorized to pay all bills, payrolls, and other just debts of SHS of whatever nature upon maturity. Schumacher is also the EVP of the European Chamber of Commerce of the Philippines (ECCP) which is a separate entity from SHS. Both entities have an arrangement where ECCP handles the payroll

requirements of SHS to simplify business operations and minimize operational expenses. Thus, the wages of SHS employees are paid out by ECCP, through its Accounting Services Department headed by Taguiang. Respondent Diaz was hired by petitioner SHS as Manager for Business Development on probationarystatus from July 18, 2005 to January 18, 2006, with a monthly salary of P100,000.00. He was tasked to perform sales/marketing functions, represent the company in its events, perform all functions, duties and responsibilities to be assigned by the employer in due course, among others. In addition to the above-mentioned responsibilities, respondent was also instructed by Hartmannshenn to report to the SHS office and plant at least two (2) days every work week to observe technical processes involved in the manufacturing of perforated materials, and to learn about the products of the company, which respondent was hired to market and sell. During respondents employment, Hartmannshenn was often abroad and, because of business’ exigencies, his instructions to respondent were either sent by electronic mail or relayed through telephone or mobile phone. When he would be in the Philippines, he and the respondent held meetings. As to respondents work, there was no close supervision by him. However, during meetings’ with the respondent, Hartmannshenn expressed his dissatisfaction over respondents poor performance. Respondent allegedly failed to make any concrete business proposal or implement any specific measure to improve the productivity of the SHS office. In addition, respondent was said not to have returned Hartmannshenn's calls and e-mails, to which Diaz denied. Hartmannshenn instructed Taguiang not to release respondents salary. Later that afternoon, respondent called and inquired about his salary. Taguiang informed him that it was being withheld and that he had to immediately communicate with Hartmannshenn. The next day, respondent served on SHS a demand letter and a resignation letter, citing illegal and unfair labor practices.

ISSUES: WON the temporary withholding of respondents salary/wages by petitioners was a valid exercise of management prerogative

HELD: NO. Management prerogative refers “to the right of an employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work.” Although management prerogative refers to “the right to regulate all aspects of employment,” it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the employee. To sanction such an interpretation would be contrary to Article 116 of the Labor Code.

P.I. MANUFACTURING INC. V. P.I. MANUFACTURING SUPERVISORS AND FOREMAN ASSOC. –ART. 124

FACTS: Petitioner P.I. Manufacturing, Incorporated is a domestic corporation engaged in the manufacture and sale of household appliances. On the other hand, respondent P.I. Manufacturing Supervisors and Foremen Association (PIMASUFA) is an organization of petitioner’s supervisors and foremen, joined in this case by its federation, the National Labor Union (NLU).

On December 10, 1987, the President signed into law Republic Act (R.A.) No. 66402 providing, among others, an increase in the statutory minimum wage and salary rates of employees and workers in the private sector. Thereafter, on December 18, 1987, petitioner and respondent PIMASUFA entered into a new Collective Bargaining Agreement (1987 CBA) whereby the supervisors were granted an increase of P625.00 per month and the foremen, P475.00 per month. The increases were made retroactive to May 12, 1987, or prior to the passage of R.A. No. 6640, and every year thereafter until July 26, 1989. On January 26, 1989, respondents PIMASUFA and NLU filed a complaint with the Arbitration Branch of the National Labor Relations Commission (NLRC), docketed as NLRC-NCR Case No. 00-01-00584, charging petitioner with violation of R.A. No. 6640.3 Respondents attached to their complaint a numerical illustration of wage distortion resulting from the implementation of R.A. No. 6640.

ISSUE: Whether the implementation of R.A. No. 6640 resulted in a wage distortion and whether such distortion was cured or remedied by the 1987 CBA.

RULING: Ruled against employees. Wage distortion means the disappearance or virtual disappearance of pay differentials between lower and higher positions in an enterprise because of compliance with a wage order.In this case, the Court of Appeals correctly ruled that a wage distortion occurred due to the implementation of R.A. No. 6640. Notably, the implementation of R.A. No. 6640 resulted in the increase of P10.00 in the wage rates of Alcantara, supervisor, and Morales and Salvo, both foremen. They are petitioner’s lowest paid supervisor and foremen. As a consequence, the increased wage rates of foremen Morales and Salvo exceeded that of supervisor Buencuchillo. Also, the increased wage rate of supervisor Alcantara exceeded those of supervisors Buencuchillo and Del Prado. Consequently, the P9.79 gap or difference between the wage rate of supervisor Del Prado and that of supervisor Alcantara was eliminated. Instead, the latter gained a P.21 lead over Del Prado. Like a domino effect, these gaps or differences between and among the wage rates of all the above employees have been substantially altered and reduced. It is therefore undeniable that the increase in the wage rates by virtue of R.A. No. 6640 resulted in wage distortion or the elimination of the intentional quantitative differences in the wage rates of the above employees. At this juncture, it must be stressed that a CBA constitutes the law between the parties when freely and voluntarily entered into. Here, it has not been shown that respondent PIMASUFA was

coerced or forced by petitioner to sign the 1987 CBA. All of its thirteen (13) officers signed the CBA with the assistance of respondent NLU. They signed it fully aware of the passage of R.A. No. 6640. The duty to bargain requires that the parties deal with each other with open and fair minds. A sincere endeavor to overcome obstacles and difficulties that may arise, so that employer-employee relations may be stabilized and industrial strife eliminated must be apparent. Respondents cannot invoke the beneficial provisions of the 1987 CBA but disregard the concessions it voluntary extended to petitioner. The goal of collective bargaining is the making of agreements that will stabilize business conditions and fix fair standards of working conditions. Definitely, respondents’ posture contravenes this goal.

BANKARD EMPLOYEES UNION V. NLRC – ART. 124

FACTS: PETITIONER Bankard, Inc. has resorted to job contractualization or outsourcing or contracting out of jobs. Among other programs, it also implemented a Manpower Rationalization Program (MRP), which was an invitation to the employees to tender their voluntary resignation with entitlement to separation pay equivalent to at least two months’ salary for every year of service. Majority of its Phone Center and Service Fulfillment Division employees availed themselves of the MRP.Respondent Bankard Employees Union-AWATU (Union) contended that Bankard committed unfair labor practice (ULP). Is there merit to this contention?

Ruling: No.The general principle is that the one who makes an allegation has the burden of proving it. While there are exceptions to this general rule, in ULP cases, the alleging party has the burden of proving the ULP; and in order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim. Such principle finds justification in the fact that ULP is punishable with both civil and/or criminal sanctions.Aside from the bare allegations of the union, nothing in the records strongly proves that Bankard intended its program, the MRP, as a tool to drastically and deliberately reduce union membership. Contrary to the findings and conclusions of both the National Labor Relations Commission (NLRC) and the Court of Appeals (CA), there was no proof that the program was meant to encourage the employees to disassociate themselves from the union or to restrain them from joining any union or organization.There was no showing that it was intentionally implemented to stunt the growth of the union or that Bankard discriminated against, or in any way singled out the union members who had availed themselves of the retirement package under the MRP.True, the program might have affected the number of union membership because of the employees’ voluntary resignation and availment of the package, but it does not necessarily follow that Bankard indeed purposely sought such a result. It must be recalled that the MRP was implemented as a valid cost-cutting measure, well within

the ambit of the so-called management prerogatives. Bankard contracted an independent agency to meet business exigencies. In the absence of any showing that Bankard was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees’ right to self-organize, it cannot be said to have committed an act of unfair labor practice.

CENTRAL AZUCARERA DE TARLAC V. C.A.D.L.U. –13TH MONTH PAY

Petitioner Central Azucarera de Tarlac had been giving the 13th month pay to its employees on the basis of their basic monthly salary together with their overtime pay, night premium pay and vacation and sick leaves. However, in 2006, after almost thirty (30) years, the petitioner Company changed the basis of the computation to only the basic monthly pay. The labor union questioned the change in the computation. The High Court held that the practice of Central Azucarera de Tarlac in giving 13th-month pay based on the employees’ gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn.

PEOPLE’S BROADCASTING SERVICE V. SEC. OF LABOR –-ART. 128

FACTS: The Public Attorney’s Office (PAO) filed a motion for Clarification of the earlier Decision (with Leave of Court) of the Supreme Court on this case. PAO sought to clarify as to when the visitorial and enforcement power of the DOLE be not considered as co-extensive with the power to determine the existence of an employer-employee relationship. In its Comment, the DOLE sought clarification as well, as to the extent of its visitorial and enforcement power under the Labor Code, as amended. The Supreme Court earlier ruled that there exist no employer-employee relationship between respondent Jandeleon Juezan and petitioner Bombo Radyo Phils., Inc.. It further ruled on the extent of visitorial and enforcement power of the Secretary of Labor vis-à-vis his jurisdiction over the cases involving the determination of the existence of employer-employee relationship. It was held thatwhile the DOLE may make a determination of the existence of an employer-employee relationship, this function could not be co-extensive with the visitorial and enforcement power provided in Art. 128(b) of the Labor Code, as amended by RA 7730. The NationalLabor Relations Commission (NLRC) was held to be the primary agency in determining the existence of an employer-employeerelationship.This was the interpretation of the Court of the clause “in cases where the relationship of employer-employee still exists” in Art. 128(b).

ISSUE:

Whether or not under the expanded visitorial and enforcement powers of the Secretary of Labor granted by RA 7730, theSecretary of Labor has jurisdiction over the cases involving the determination of the existence of employer-employee relationship.

HELD:The Court treated the Motion for Clarification as a second motion for reconsideration, granting said motion and reinstating thepetition. It is apparent that there is a need to delineate the jurisdiction of the DOLE Secretary vis-à-vis that of the NLRC.Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as tothe existence of an employer-employee relationship in the exercise of its visitorial and enforcement power, subject to judicial review, notreview by the NLRC. If a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properlywith the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly withthe Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction isproperly with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court.

YANSON V. SECRETARY OF LABOR –ART 128

FACTS: On March 27, 1998, Mardy Cabigo and 40 other workers (private respondents) filed with the Department of Labor and Employment-Bacolod District Office (DOLE Bacolod) a request for payroll inspection4 of Hacienda Valentin Balabag owned by Alberta Yanson (petitioner). DOLE Bacolod conducted an inspection of petitioner's establishment on May 27, 1998, and issued a Notice of Inspection Report, finding petitioner liable for the following violations of labor standard laws:1. Underpayment of salaries and wages (workers being paid a daily rate of Ninety Pesos [P90.00] since 1997 and Seventy Five Pesos [P75.00] prior to such year);2. Non-payment of 13th month pay for two (2) years;3. Non-payment of Social Amelioration Bonus (SAB) for two (2) years;4. Non-payment of employer's 1/3 carabao share.5and directing her to correct the same, thus:You are required to affect [sic] restitution and/or correction of the foregoing at the company or plant level within ten (10) calendar days from notice hereof.Any question of the above findings should be submitted to this Office within five (5) working days from notice hereof otherwise order of compliance shall be issued.

This notice shall be posted conspicuously in the premises of the workplace, removal of which shall subject the establishment to a fine and/ or contempt proceedings.

When there is a certified union, a copy of the notice shall be furnished said union.

RULING: In Guico, Jr. v. Hon. Quisumbing, we held that the posting of the proper amount of the appeal bond under Article 128 (b) is mandatory for the perfection of an appeal from a monetary award in labor standard cases: The next issue is whether petitioner was able to perfect his appeal to the Secretary of Labor and Employment. Article 128 (b) of the Labor Code clearly provides that the appeal bond must be "in the amount equivalent to the monetary award in the order appealed from." The records show that petitioner failed to post the required amount of the appeal bond. His appeal was therefore not perfected. Just like the petitioner in the present case, the employer in Guico v. Secretary of Labor had also sought a reduction of the appeal bond due to financial losses arising from the shutdown of his business; yet, we did not temper the strict requirement of Article 128 (b) for him. The rationale behind the stringency of such requirement is that the employer-appellant may choose between a cash bond and a surety bond. Hence, limitations in his liquidity should pose no obstacle to his perfecting an appeal by posting a mere surety bond. Moreover, Article 128(b) deliberately employed the word "only" in reference to the requirements for perfection of an appeal in labor standards cases. "Only" commands a restrictive application, giving no room for modification of said requirements. Ruled against company.