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, Zuiga, Caete
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, Zuiga and Caete 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,
Zuiga and Caetes employment was terminated. For
this project, Zuiga and Caete 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.
Zuiga and Caete 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 Lagons 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 attorneys 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 employees 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 employees 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 latters 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, TSPICs 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 EES
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 companys 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 petitioners 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
EES 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 ETPIs 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
ETPIs 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 ETPIs 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 contractors 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.

Petitioners 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
petitioners 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.6
SAPS and Promm-Gem imposed disciplinary measures
on erring merchandisers for reasons such as habitual
absenteeism, dishonesty or changing day-off without
prior notice.7
P&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.9
In 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 formers work, the employees of
the contractor and of the latters 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 MGTIs 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
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 als 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 employees 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
petitioners 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 petitioners 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.
13
TH
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.


PEOPLES BROADCASTING SERVICE V. SEC. OF
LABOR -ART. 128

FACTS: The Public Attorneys 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--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-employ
ee 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--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.5
and 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.