LABOR LAW 1 (CASES)
TOPIC 4: WAGES AND WAGE FIXING
28. Gaa vs CA et. al
Facts:
 respondent Europhil Industries Corporation
was formerly one of the tenants in Trinity
Building at T.M. Kalaw Street, Manila, while
petitioner Rosario A. Gaa was then the building
administrator.
 The latter (Europhil) filed in the Court of First
Instance in Manila action for damages against
petitioner "for having perpetrated certain acts
that Europhil Industries considered a trespass
upon its rights, namely, cutting of its electricity,
and removing its name from the building
directory and gate passes of its officials and
employees"
 The Court rendered judgment in favor of
respondent Europhil Industries.
 The said decision having become final and
executory, a writ of garnishment was issued
pursuant to which Deputy Sheriff Cesar A.
Roxas, served a Notice of Garnishment upon
El Grande Hotel, where petitioner was then
employed, garnishing her "salary, commission
and/or remuneration.
 Petitioner then filed with the Court of First
Instance (CFI) of Manila a motion to lift said
garnishment on the ground that her "salaries,
commission and, or remuneration are
exempted from execution under Article 1708 of
the New Civil Code.
 Said motion was denied, hence petitioner filed
with the Court of Appeals a petition for
certiorari against said order. The CA dismissed
said petition.
 the Court of Appeals held that petitioner is not
a mere laborer as contemplated under Article
1708 as the term laborer does not apply to one
who holds a managerial or supervisory position
like that of petitioner, but only to those
"laborers occupying the lower strata."
 It also held that the term "wages" means the
pay given" as hire or reward to artisans,
Case Digest – Valentine Morales
mechanics, domestics or menial servants, and
laborers employed in manufactories,
agriculture, mines, and other manual
occupation and usually employed to distinguish
the sums paid to persons hired to perform
manual labor, skilled or unskilled, paid at stated
times, and measured by the day, week, month,
or season," which is the ordinary acceptation of
the said term, and that "wages" in Spanish is
"jornal" and one who receives a wage is a
"jornalero."
 Hence, this petition for certiorari
Issue:
Was the CA was correct in their interpretation of Article
1708 of the New Civil Code?
Held:
Yes, the CA was correct in their interpretation of Article
1708 of the New Civil Code, which reads:
ART. 1708. The laborer's wage shall not be subject to
execution or attachment, except for debts incurred for
food, shelter, clothing and medical attendance.
In the case at bar, the Supreme Court held that:
1) The word "laborer" includes everyone who
performs any kind of mental or physical labor,
but as commonly and customarily used and
understood, it only applies to one engaged in
some form of manual or physical labor. That is
the sense in which the courts generally apply
the term as applied in exemption acts, since
persons of that class usually look to the reward
of a day's labor for immediate or present
support and so are more in need of the
exemption than are other.
It is beyond dispute that petitioner is not an
ordinary or rank and file laborer but "a
responsibly place employee," of El Grande
Hotel, "responsible for planning, directing,
controlling, and coordinating the activities of all
housekeeping personnel" so as to ensure the
cleanliness, maintenance and orderliness of all
guest rooms, function rooms, public areas, and
the surroundings of the hotel. Considering the
importance of petitioner's function in El Grande
Hotel, it is undeniable that petitioner is
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occupying a position equivalent to that of a
managerial or supervisory position.
2) Article 1708 used the word "wages" and not
"salary" in relation to "laborer" when it
declared what are to be exempted from
attachment and execution. The term "wages"
as distinguished from "salary", applies to the
compensation for manual labor, skilled or
unskilled, paid at stated times, and measured
by the day, week, month, or season, while
"salary" denotes a higher degree of
employment, or a superior grade of services,
and implies a position of office: by contrast, the
term wages " indicates considerable pay for a
lower and less responsible character of
employment, while "salary" is suggestive of a
larger and more important service.
"'Wages' are the compensation given to a hired
person for service, and the same is true of
'salary'. The words seem to be synonymous,
convertible terms, though we believe that use
and general acceptation have given to the word
'salary' a significance somewhat different from
the word 'wages' in this: that the former is
understood to relate to position of office, to be
the compensation given for official or other
service, as distinguished from 'wages', the
compensation for labor."
29. Philippine Airlines, June 22, 1989
Petitioner: PAL
Respondents: NLRC and Armando Dolina
Facts:
 Private respondent Dolina was admitted to the
Philippine Airlines (PAL) Aviation School for
training as a pilot, The training agreement
bound PAL to provide regular and permanent
employment to Dolina upon completion of the
training course.
 As a requirement for his appointment, Dolina
took a psychological examination wherein his
"Adaptability Rating" was found to be
"unacceptable".
 Complainant was again subjected to an
examination and interview by the Pilot
Acceptance Qualifications Board as part of the
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regularization process, which examination
revealed the following:
Xxx
b. Armando Dolina - After thorough evaluation
of the candidate's past records, his
performance and the result of his medical
examination as submitted by the Medical Sub-
Department, the Board finds Mr. A. Dolina not
qualified for regular employment in the
Company.
 The Board recommended the termination of the
complainant pursuant to which PAL filed a
clearance application for Dolina's termination.
 Dolina countered with a complaint for illegal
dismissal, the Officer-in-Charge of the
Department of Labor Regional Office No. IV
lifted the preventive suspension, and ordered
petitioner to reinstate Dolina to his former
position with full backwages. The issue of
termination and damages was referred to the
Executive Labor Arbiter for compulsory
arbitration.
 Petitioner appealed the order lifting Dolina's
suspension to the Secretary of Labor.
 pending the resolution of petitioner's appeal,
the parties signed an agreement before the
Undersecretary of Labor, the terms of which
are as follows:
AGREEMENT
The undersigned parties hereby agree to the
following:
1 While pending final resolution of the
complaint of Mr. Armando Dolina against the
Philippine Airlines, he shall be considered in
the payroll effective 1 October 1976.
2 The order of Regional Director Vicente
Leogardo for the reinstatement with backwages
of Mr. Dolina is hereby rendered moot and
academic.
3 The parties shall consider this arrangement
pending final resolution of the case by
arbitration.
xxx xxx xxx
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 The Acting Secretary of Labor issued an order
finding that the propriety of the suspension had
been rendered moot and academic by the
above agreement and referred the case for
compulsory arbitration to the Executive Labor
Arbiter.
 the Labor Arbiter rendered its decision:
IN VIEW OF ALL THE FOREGOING, it is our
considered opinion that there is merit on the
application for clearance, and therefore, the
same should be as it is hereby GRANTED.
Consequently, the oppositor's TERMINATION
IS IN ORDER.
Since the termination is upheld, perforce the
claim for moral damages is denied. Besides
pursuant to P.D. No. 1367 dated May 1, 1978,
this office is devoid of jurisdiction to entertain
said claim.
 Dolina then appealed the Labor Arbiter's
decision to the public respondent NLRC, and
there filed a motion praying that PAL be
ordered to return him to PAL's payroll,
contending that the Labor Arbiter's decision
was not yet final because of his timely appeal.
 PAL opposed the motion claiming that it was no
longer obliged to return Dolina to its payroll
since the decision of the Labor Arbiter in its
favor was a final resolution of the case by
arbitration.
 public respondent NLRC rendered its decision:
xxx xxx xxx
In fine it is our considered view that the
respondent's application for clearance to
dismiss the complainant has sufficiently
surmounted the test of validity.
Be that as it may, we are not in accord with the
discontinuation of the payment of complainant's
salaries. The agreement of the parties
stipulated in no uncertain terms that the
complainant [Dolina] is to be carried in
respondent's payroll until this case is finally
resolved. As things stand, the main issue is still
being litigated. The complainant, therefore,
Case Digest – Valentine Morales
must be restored to the payroll and paid for his
salaries from 1 April 1979, the date he was
dropped from the respondent's payroll.
 the Decision appealed from should be as it is
hereby affirmed in toto. However the
respondent is ordered to restore the
complainant to its payroll and to pay his
salaries from 1 April 1979 until this case is
finally resolved.
 Hence, this petition, with a prayer for a
temporary restraining order.
Issue:
Did the NLRC committed grave abuse of discretion in
holding that private respondent Dolina was entitled to
his salaries from 1 April 1979 "until this case is finally
resolved."?
Held:
Yes, the NLRC committed grave abuse of discretion in
holding that private respondent Dolina was entitled to
his salaries from 1 April 1979 "until this case is finally
resolved."
In the case at bar, the Supreme Court held that:
1) Arbitration is the reference of a dispute to an
impartial third person, chosen by the parties or
appointed by statutory authority to hear and
decide the case in controversy. When the
consent of one of the parties is enforced by
statutory provisions, the proceeding is referred
to as compulsory arbitration. In labor cases,
compulsory arbitration is the process of
settlement of labor disputes by a government
agency which has the authority to investigate
and to make an award which is binding on all
the parties.
Under the Labor Code, it is the Labor Arbiter
who is clothed with the authority to conduct
compulsory arbitration on cases involving
termination disputes.
When the Labor Arbiter renders his decision,
compulsory arbitration is deemed terminated
because by then the hearing and determination
of the controversy has ended. Any appeal
raised by an aggrieved party from the Labor
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Arbiter's decision is already beyond the scope
of arbitration since in the appeal stage, the
NLRC en banc merely reviews the Labor
Arbiter's decision for errors of fact or law and
no longer duplicates the proceedings before
the Labor Arbiter. Thus, the clause "pending
final resolution of the case by arbitration"
should be understood to be limited only to the
proceedings before the Labor Arbiter, such that
when the latter rendered his decision, the case
was finally resolved by arbitration.
2) The fact that the NLRC's order for the
continued payment of Dolina's salaries is
inconsistent with its affirmance of the Labor
Arbiter's decision upholding the validity of
Dolina's dismissal.
In finding of valid dismissal, the NLRC had no
authority to order the continued payment of
Dolina's salaries from 1 April 1979 until the
case is finally resolved. The NLRC's order
would result in compensating Dolina for
services no longer rendered and when he is no
longer in PAL's employ. This is contrary to the
age-old rule of "a fair day's wage for a fair day's
labor" which continues to govern the relation
between labor and capital and remains a basic
factor in determining employees' wages. So
that, if there is no work performed by the
employee there can be no wage or pay unless
the laborer was able, willing and ready to work
but was prevented by management or was
illegally locked out, suspended or dismissed.
Where the employee's dismissal was for a just
cause, it would neither be fair nor just to allow
the employee to recover something he has not
earned and could not have earned.
In ordering the continued payment of Dolina's
salaries from 1 April 1979 until the case is
finally resolved, the NLRC in effect ordered the
payment of backwages to Dolina
notwithstanding its finding of a valid dismissal.
The Court found this decision clearly
untenable, because backwages in general are
granted on grounds of equity for earnings
which a worker or employee has lost due to his
illegal dismissal. Where, as in this case, the
dismissal was for a just cause, there is no
factual or legal basis for ordering the payment
Case Digest – Valentine Morales
of backwages. The order of the NLRC for the
continued payment of Dolina's salaries would
allow the latter to unjustly enrich himself at the
expense of the petitioner. This Court has
reiterated time and again that the law, in
protecting the rights of the laborer, authorizes
neither oppression nor self-destruction of the
employer
The Court holds that respondent NLRC's order
for the continued payment of Dolina's salaries
from "l April 1979 until the case is finally
resolved" is contrary to law and established
jurisprudence and the NLRC acted in excess of
its jurisdiction in issuing the assailed order.
Therefore, that part of the dispositive portion of
the decision of the National Labor Relations,
requiring petitioner to restore private
respondent to its payroll and ordering the
payment of his salaries from 1 April 1979 until
the case is finally resolved is hereby declared
NULL and VOID and SET ASIDE.
30. International School Alliance of Educators vs.
Hon. Leonardo Quisumbing, et.al.
Facts:
Petitioners work under private respondent International
School. The school hires both local and foreign hires.
Foreign hires are granted with more benefits and higher
salary. Respondent says this is because of dislocation
factor and limited tenure. Petitioners contested the
difference in salary rates between foreign and local
hires. They claim that it is discriminatory to Filipinos
and it constitutes racial discrimination.
Issue:
Is the point-of-hire classification employed by the
School is discriminatory to Filipinos and that the grant
of higher salaries to foreign-hires constitutes racial
discrimination?
Held:
Yes, the point-of-hire classification employed by the
School is discriminatory to Filipinos and that the grant
of higher salaries to foreign-hires constitutes racial
discrimination.
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The Supreme Court held that there is violation of equal
protection. General principles of law include principles
of equity. Equal pay for equal work, persons who work
with substantially equal qualifications, skills, effort, and
responsibility under similar conditions should be paid
similar salaries. If an employer accords the same rank
and position, the presumption is that they perform equal
work. Here, both groups have similar functions which
they perform under similar conditions. There is no
evidence that foreign hires perform 25% more efficient
than local hires. The dislocation factor and tenure are
properly accorded by the benefits they received.
The International Covenant on Economic, Social, and
Cultural Rights, supra, in Article 7 thereof, provides:
The States Parties to the present Covenant recognize
the right of everyone to the enjoyment of just and
favourable conditions of work, which ensure, in
particular:
a.....Remuneration which provides all workers, as a
minimum, with:
i.....Fair wages and equal remuneration for work of
equal value without distinction of any kind, in particular
women being guaranteed conditions of work not inferior
to those enjoyed by men, with equal pay for equal work;
x x x.
The School cannot invoke the need to entice foreign-
hires to leave their domicile to rationalize the distinction
in salary rates without violating the principle of equal
work for equal pay.
"Salary" is defined in Black's Law Dictionary (5th ed.)
as "a reward or recompense for services performed."
"salary" means a recompense or consideration made to
a person for his pains or industry in another man's
business. Whether it be derived from "salarium," or
more fancifully from "sal," the pay of the Roman soldier,
it carries with it the fundamental idea of compensation
for services rendered.
The Court recognize the need of the School to attract
foreign-hires, salaries should not be used as an
enticement to the prejudice of local-hires. The local-
hires perform the same services as foreign-hires and
they ought to be paid the same salaries as the latter.
For the same reason, the "dislocation factor" and the
foreign-hires' limited tenure also cannot serve as valid
bases for the distinction in salary rates. The dislocation
Case Digest – Valentine Morales
factor and limited tenure affecting foreign-hires are
adequately compensated by certain benefits accorded
them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and
home leave travel allowances.
The Constitution enjoins the State to "protect the rights
of workers and promote their welfare," "to afford labor
full protection." The State, therefore, has the right and
duty to regulate the relations between labor and capital.
These relations are not merely contractual but are so
impressed with public interest that labor contracts,
collective bargaining agreements included, must yield
to the common good. Should such contracts contain
stipulations that are contrary to public policy, courts will
not hesitate to strike down these stipulations.
Therefore, the Court find the point-of-hire classification
employed by respondent School to justify the distinction
in the salary rates of foreign-hires and local hires to be
an invalid classification. There is no reasonable
distinction between the services rendered by foreign-
hires and local-hires. The practice of the School of
according higher salaries to foreign-hires contravenes
public policy.
31. Atok-Big Wedge Mutual Benefit Association vs.
Atok-Big Wedge Mining Company, Incorporated
Facts:
 The petitioner labor union, the Atok-Big Wedge
Mutual Benefit Association, submitted to the
Atok-Big Wedge Mining Co., Inc. (respondent
herein) several demands, among which was an
increase of P0.50 in daily wage.
 The matter was referred by the mining
company to the Court of Industrial Relations for
arbitration and settlement (Case No. 523-V). In
the course of conciliatory measures taken by
the Court, some of the demands were granted,
and others (including the demand for increased
wages) rejected, and so, hearings proceeded
and evidence submitted on the latter.
 The Court rendered a decision fixing the
minimum wage at P2.65 a day with the rice
ration, or P3.20 without rice ration; denying the
deduction from such minimum wage, of the
value of housing facilities furnished by the
company to the laborers, as well as the
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efficiency bonus given to them by the company;
and ordered that the award be made effective
retroactively from the date of the demand,
From this decision, the mining company
appealed to this Court.
 Subsequently, an urgent petition was
presented in Court by the Atok-Big Wedge
Mining Company for authority to stop
operations and lay off employees and laborers,
for the reason that due to the heavy losses,
increased taxes, high cost of materials,
negligible quantity of ore deposits, and the
enforcement of the Minimum Wage Law, the
continued operation of the company would lead
to its immediate bankruptcy and collapse.
 To avert the closure of the company and the
consequent lay-off of hundreds of laborers and
employees, the Court, instead of hearing the
petition on the merits, convened the parties for
voluntary conciliation and mediation.
 The parties reached an agreement effective
from August 4, 1952 to December 31, 1954
The Agreement in part provides:
I without rice ration, and the payment of
That the petitioner, Atok-Big Wedge Mining
Company, Incorporated, agrees to abide by
whatever decision that the Supreme Court may
render with respect to Case No. 523-V (G.R.
5276) and Case No. 523-1 (10) (G.R. 5594).
xxx xxx xxx
III
xxx xxx xxx
That the petitioner, Atok-Big Wedge Mining
Company, Incorporated, and the respondent,
Atok-Big Wedge Mutual Benefit Association,
agree that the following facilities heretofore
given or actually being given by the petitioner
to its workers and laborers, and which
constitute as part of their wages, be valued as
follows:
Rice ration P.55 per day
Housing facility P40 per day
All other facilities such as recreation facilities,
medical treatment to dependents of laborers,
school facilities, rice ration during off-days,
Case Digest – Valentine Morales
water, light, fuel, etc., equivalent to at least P85
per day.
 It is understood that the said amount of
facilities valued at the abovementioned prices,
may be charged in full or partially by the Atok-
Big Wedge Mining Company, Inc., against
laborer or employee, as it may see fit pursuant
to the exigencies of its operation.
 Later, Case No. G.R. No. L-5276 was decided
by this Court (promulgated March 3, 1953),
affirming the decision of the Court of Industrial
Relations fixing the minimum cash wage of the
laborers and employees of the Atok-Big Wedge
Mining Co. at P3.20 cash, without rice ration, or
P2.65, with rice ration.
 The labor union presented to the Court a
petition for the enforcement of the terms of the
agreement of October 29, 1952, as allegedly
modified by the decision of this Court in G.R.
No. L-5276 and the provisions of the Minimum
Wage Law, which has since taken effect,
praying for the payment of the minimum cash
wage of P3.45 a day with rice ration, or P4.00
differential pay from August 4, 1952, when the
award became effective.
 The mining company opposed the petition
claiming that the Agreement of October 29,
1952 was entered into by the parties with the
end in view that the company's cost of
production be not increased in any way, so that
it was intended to supersede whatever decision
the Supreme Court would render in G.R. No. L-
5276 and the provisions of the Minimum Wage
Law with respect to the minimum cash wage
payable to the laborers and employees.
 the Court of Industrial Relations, denied the
petition, upon the ground that when the
Agreement of the parties of October 29, 1952
was entered into by them, they already knew
the decision of said Court (although subject to
appeal to the Supreme Court) fixing the
minimum cash wage at P3.20 without rice
ration, or P2.65 with rice ration, as well as the
provisions of the Minimum Wage Law requiring
the payment of P4 minimum daily wage in the
provinces effective August 4, 1952; so that the
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parties had intended to be regulated by their
Agreement of October 29, 1952.
 the Court issued another order, denying the
claim of the labor union for payment of an
additional 50 per cent based on the basic wage
of P4 for work on Sundays and holidays,
holding that the payments being made by the
company were within the requirements of the
law.
 Its motion for the reconsideration of both orders
having been denied, the labor union filed this
petition for review by certiorari.
Issue:
1) Is the agreement to deduct certain facilities
received by the laborers from their employer a
waiver of the minimum wage fixed by the law?
2) Is the Petitioner’s contention that to allow the
deductions of the facilities appearing in the
Agreement would be contrary to the mandate
of section 19 of the Minimum Wage Law, that
"nothing in this Act . . . justify an employer . . .
in reducing supplements furnished on the date
of enactment?
Held:
1) No, the agreement to deduct certain facilities
received by the laborers from their employer is
not a waiver of the minimum wage fixed by the
law.
In the case at bar, the Supreme Court held that
Wage, as defined by section 2 of Republic Act No.
602, "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." Thus, the law
permits the deduction of such facilities from the
laborer's minimum wage of P4, as long as their
value is "fair and reasonable".
The Supreme Court further held that the agreement
was prompted by an urgent petition filed by the
respondent mining company to close operations
and lay-off laborers because of heavy losses and
the full enforcement of the Minimum Wage Law in
the provinces, requiring it to pay its laborers the
minimum wage of P4; to avoid such eventuality,
through the mediation of the Court of Industrial
Case Digest – Valentine Morales
Relations, a compromise was reached whereby it
was agreed that the company would pay the
minimum wage fixed by the law, but the facilities
then being received by the laborers would be
evaluated and charged as part of the wage, but
without in any way reducing the P2.00 cash portion
of their wages which they were receiving prior to
the agreement.
In other words, while it was the objective of the
parties to comply with the requirements of the
Minimum Wage Law, it was also deemed important
that the mining company should not have to
increase the cash wages it was then paying its
laborers, so that its cost of production would not
also be increased, in order to prevent its closure
and the lay-off of employees and laborers.
"it is this eventuality that the parties did not like to
happen, when they have executed the said
agreement". Accordingly, after said agreement was
entered into, the Company started paying its
laborers a basic cash or "take-home" wage of
P2.20, representing the difference between P4
(minimum wage) and P1.80 (value of all facilities).
2) No, the Petitioner’s contention that to allow the
deductions of the facilities appearing in the
Agreement would not be contrary to the
mandate of section 19 of the Minimum Wage
Law, that "nothing in this Act . . . justify an
employer . . . in reducing supplements
furnished on the date of enactment.
The Supreme Court held that, the facilities
mentioned in the agreement of October 29, 1952
do not come within the term "supplements" as used
in Art. 19 of the Minimum Wage Law.
"Supplements", therefore, constitute extra
renumeration 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 the 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.
Therefore, the petition is hereby dismissed, with
costs against the petitioner Atok-Big Wedge Mutual
Benefit Association.
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32. Mabeza vs NLRC
Petitioner: Norma Mabeza
Respondent: NLRC, PETER NG/HOTEL
SUPREME
Facts:
 Petitioner Norma Mabeza contends that
she and her co-employees at the Hotel
Supreme in Baguio City were asked by the
hotel's management to sign an instrument
attesting to the latter's compliance with
minimum wage and other labor standard
provisions of law.
 Petitioner signed the affidavit but refused to
go to the City Prosecutor's Office to swear
to the veracity and contents of the affidavit
as instructed by management.
 After she refused to proceed to the City
Prosecutor's Office - on the same day the
affidavit was submitted to the Cordillera
Regional Office of DOLE - petitioner avers
that she was ordered by the hotel
management to turn over the keys to her
living quarters and to remove her
belongings from the hotel premises.
 She thereafter reluctantly filed a leave of
absence from her job which was denied by
management. When she attempted to
return to work, the hotel's cashier,
Margarita Choy, informed her that she
should not report to work.
 Petitioner filed a complaint for illegal
dismissal before the Arbitration Branch of
the National Labor Relations Commission -
CAR Baguio City. In addition to her
complaint for illegal dismissal, she alleged
underpayment of wages, non-payment of
holiday pay, service incentive leave pay,
13th month pay, night differential and other
benefits.
 Responding to the allegations made in
support of petitioner's complaint for illegal
dismissal, private respondent Peter Ng
alleged before Labor Arbiter Pati that
petitioner "surreptitiously left (her job)
without notice to the management" and that
Case Digest – Valentine Morales
she actually abandoned her work. He
maintained that there was no basis for the
money claims for underpayment and other
benefits as these were paid in the form of
facilities to petitioner and the hotel's other
employees.
 In a supplemental answer submitted eleven
(11) months after the original complaint for
illegal dismissal was filed, private
respondent raised a new ground, loss of
confidence, which was supported by a
criminal complaint for Qualified Theft he
filed before the prosecutor's office of the
City of Baguio against petitioner.
 Labor Arbiter Pati rendered a decision
dismissing petitioner's complaint on the
ground of loss of confidence.
His findings:
It appears from the evidence of respondent
that complainant carted away or stole one
(1) blanket, 1 piece bedsheet, 1 piece
thermos, 2 pieces towel;
In fact, this was the reason why respondent
Peter Ng lodged a criminal complaint
against complainant for qualified theft and
perjury. The fiscal's office finding a prima
facie evidence that complainant committed
the crime of qualified theft issued a
resolution for its filing in court but
dismissing the charge of perjury; As a
consequence, complainant was charged in
court for the said crime;
With these pieces of evidence, complainant
committed serious misconduct against her
employer which is one of the just and valid
grounds for an employer to terminate an
employee (Article 282 of the Labor Code
as amended).
 Respondent NLRC promulgated its
assailed Resolution[10] affirming the Labor
Arbiter's decision. The resolution
substantially incorporated the findings of
the Labor Arbiter.
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 Unsatisfied, petitioner instituted the instant
special civil action for certiorari under Rule
65 of the Rules of Court.
 The Solicitor General, in a Manifestation in
lieu of Comment dated August 8, 1995
rejects private respondent's principal
claims and defenses and urges this Court
to set aside the public respondent's
assailed resolution.
Issue:
1) Is the dismissal by the private respondent of
petitioner constitutes an unfair labor practice?
2) Did the NLRC committed a patent and palpable
error amounting to grave abuse of discretion in
adopting the ruling of the labor arbiter that
there was no underpayment of wages and
benefits?
Held:
1) Yes, dismissal by the private respondent of
petitioner constitutes an unfair labor practice.
The Supreme Court held that, the pivotal question in
any case where unfair labor practice on the part of the
employer is alleged is whether or not the employer has
exerted pressure, in the form of restraint, interference
or coercion, against his employee's right to institute
concerted action for better terms and conditions of
employment. Without doubt, the act of compelling
employees to sign an instrument indicating that the
employer observed labor standards provisions of law
when he might have not, together with the act of
terminating or coercing those who refuse to cooperate
with the employer's scheme constitutes unfair labor
practice. The first act clearly preempts the right of the
hotel's workers to seek better terms and conditions of
employment through concerted action.
The Court agrees with the Solicitor General's
observation in his manifestation that "[t]his actuation...
is analogous to the situation envisaged in paragraph (f)
of Article 248 of the Labor Code" which distinctly makes
it an unfair labor practice "to dismiss, discharge or
otherwise prejudice or discriminate against an
employee for having given or being about to give
testimony" under the Labor Code. For in not giving
positive testimony in favor of her employer, petitioner
had reserved not only her right to dispute the claim and
Case Digest – Valentine Morales
proffer evidence in support thereof but also to work for
better terms and conditions of employment.
2) Yes, the NLRC committed a patent and
palpable error amounting to grave abuse of
discretion in adopting the ruling of the labor
arbiter that there was no underpayment of
wages and benefits.
The Supreme Court held that, the labor arbiter's
evaluation of the money claims in this case incredibly
ignores existing law and jurisprudence on the matter.
Its blatant one-sidedness simply raises the suspicion
that something more than the facts, the law and
jurisprudence may have influenced the decision at the
level of the Arbiter.
Labor Arbiter Pati accepted hook, line and sinker the
private respondent's bare claim that the reason the
monetary benefits received by petitioner between 1981
to 1987 were less than minimum wage was because
petitioner did not factor in the meals, lodging, electric
consumption and water she received during the period
in her computations.
Granting that meals and lodging were provided and
indeed constituted facilities, such facilities could not be
deducted without the employer complying first with
certain legal requirements. Without satisfying these
requirements, the employer simply cannot deduct the
value from the employee's wages:
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. Finally,
facilities must be charged at fair and reasonable value.
These requirements were not met in the instant case.
Private respondent "failed to present any company
policy or guideline to show that the meal and lodging . .
. (are) part of the salary;" he failed to provide proof of
the employee's written authorization; and, he failed to
show how he arrived at the valuations.
More significantly, the food and lodging, or the
electricity and water consumed by the petitioner were
not facilities but supplements. A benefit or privilege
granted to an employee for the convenience of the
employer is not a facility. The criterion in making a
distinction between the two not so much lies in the kind
(food, lodging) but the purpose. Considering, therefore,
that hotel workers are required to work different shifts
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 LABOR LAW 1 (CASES)
and are expected to be available at various odd hours,
their ready availability is a necessary matter in the
operations of a small hotel, such as the private
respondent's hotel.
Therefore, the RESOLUTION of the National Labor
Relations Commission is REVERSED and SET ASIDE.
For clarity, the economic benefits due the petitioner are
hereby summarized as follows:
1) Deficiency wages and the applicable ECOLA from
May 13, 1988 up to the date of petitioner's illegal
dismissal;
2) Service incentive leave pay; night differential pay
and 13th month pay for the same period;
3) Separation pay equal to one month's salary for every
year of petitioner's continuous service with the private
respondent starting with her job at the Belfront Hotel;
4) Full backwages, without qualification or deduction,
from the date of petitioner's illegal dismissal up to the
date of promulgation of this decision pursuant to our
ruling in Bustamante vs. NLRC.[34]
5) P1.000.00.
33. Prubankers Association vs Prudential
Bank and Trust Company
FACTS:
The Regional Tripartite Wages and Productivity Board
(RTWPB) Region V issued Wage Order No. RB 05-03
which provided for a Cost of Living Allowance (COLA)
to workers in the private sector who had rendered
service for at least three (3) months before its
effectivity, and for the same period thereafter. RTWPB
Region VII however followed suit but the COLA
amounts in other cities nationwide were different from
that issued by RTWPN region V. This caused
Prubankers Association to write the petitioner
requesting that the Labor Management Committee be
immediately convened to discuss and resolve the
alleged wage distortion created in the salary structure
upon the implementation of the said wage orders. As
the grievance could not be settled in the meetings, the
parties agreed to submit the matter to voluntary
arbitration.
Case Digest – Valentine Morales
Respondent brought the case to appeal and was
favored by CA, petitioner then sought the review by SC.
It argued that a wage distortion exists, because the
implementation of the two Wage Orders has resulted in
the discrepancy in the compensation of employees of
similar pay classification in different regions.
ISSUE:
WON two wage orders resulting in the discrepancy of
employees’ compensation in different regions also
results to a wage distortion.
HELD:
No.
There is no wage distortion since the wage order
implementation covers all the branches of the bank.
The hierarchy of positions was still preserved.
Also, petitioner’s claim of wage distortion must also be
denied for one other reason. The difference in wages
between employees in the same pay scale in different
regions is not the mischief sought to be banished by the
law. Republic Act No. 6727 (the Wage Rationalization
Act), recognizes “existing regional disparities in the cost
of living” as provided in Section 2 of said law.
***Notes: The levels of different pay classes was not
eliminated. The statutory definition of wage distortion is
found in Article 124 of the Labor Code, as amended by
Republic Act No. 6727, which reads: Standards/Criteria
for Minimum Wage Fixing. ―As used herein, a wage
distortion shall mean a situation where an increase in
prescribed wage results in the elimination or severe
contraction of intentional quantitative differences in
wage or salary rates between and among employee
groups in an establishment as to effectively obliterate
the distinctions embodied in such wage structure based
on skills, length of service, or other logical bases of
differentiation. Wage distortion involves four elements:
(1) An existing hierarchy of positions with
corresponding salary rates; (2) A significant change in
the salary rate of a lower pay class without a
concomitant increase in the salary rate of a higher one;
(3)The elimination of the distinction between the two
levels and (4) The existence of the distortion in the
same region of the country.
A disparity in wages between employees holding
similar positions but in different regions does not
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 LABOR LAW 1 (CASES)
constitute wage distortion as contemplated by law. As
stated, it is the hierarch of positions and the disparity of
their corresponding wages and other emoluments that
are sought to be preserved by the concept of wage
distortion.
34. Bankard Employees Union-Workers
Alliance Trade Union vs NLRC and
Bankard, Inc.
Facts:
On May 28, 1993, Bankard's Board of Directors
approved a "New Salary Scale", made retroactive to
April 1, 1993, for the purpose of making its hiring rate
competitive in the industry’s labor market. The "New
Salary Scale" increased the hiring rates of new
employees, to wit: Levels I and V by one thousand
pesos (P1,000.00), and Levels II, III and IV by nine
hundred pesos (P900.00). Accordingly, the salaries of
employees who fell below the new minimum rates were
also adjusted to reach such rates under their
levels.Bankard’s move drew the Bankard Employees
Union-WATU (petitioner), the duly certified exclusive
bargaining agent of the regular rank and file employees
of Bankard, to press for the increase in the salary of its
old, regular employees.
Bankard took the position, however, that there was no
obligation on the part of the management to grant to all
its employees the same increase in an across-the-
board manner.The Second Division of the NLRC, by
Order of May 31, 1995, finding no wage distortion,
dismissed the case for lack of merit.
Petitioner’s motion for reconsideration of the dismissal
of the case was, by Resolution of July 28, 1995,
denied.
Issue:
WHETHER OR NOT THE NEW SALARY SCALE OF
BANKARD RESULTED IN WAGE DISTORTION
Held:
No. Normally, a company has a wage structure or
method of determining the wages of its employees. In a
problem dealing with "wage distortion," the basic
assumption is that there exists a grouping or
classification of employees that establishes distinctions
among them on some relevant or legitimate bases.6
Case Digest – Valentine Morales
Involved in the classification of employees are various
factors such as the degrees of responsibility, the skills
and knowledge required, the complexity of the job, or
other logical basis of differentiation. The differing wage
rate for each of the existing classes of employees
reflects this classification.the employees of private
respondent have been "historically" classified into
levels, i.e. I to V, and not on the basis of their length of
service. Put differently, the entry of new employees to
the company ipso facto place[s] them under any of the
levels mentioned in the new salary scale which private
respondent adopted retroactive [to] April 1, 1993.
Petitioner cannot make a contrary classification of
private respondent’s employees without encroaching
upon recognized management prerogative of
formulating a wage structure, in this case, one based
on level.7 (Emphasis and underscoring supplied)
It is thus clear that there is no hierarchy of positions
between the newly hired and regular employees of
Bankard, hence, the first element of wage distortion
provided in Prubankers is wanting.
35. Metrobak vs NLRC
Facts:
On 25 May 1989, the Metropolitan Bank & Trust
Company entered into a collective bargaining
agreement with the Metropolitan Bank & Trust
Company Employees Union MBTCEU, granting a
monthly P900 wage increase effective 01 January
1989. With the exclusion of the probationary
employees.
Republic Act 6727 was enacted "an act to rationalize
wage policy determination be establishing the
mechanism and proper standards thereof, . . . fixing
new wage rates, providing wage incentives for
industrial dispersal to the countryside, and for other
purposes," took effect which provides for the
agricultural or non-agricultural employees salary, be
increased by twenty-five pesos (P25) per day, . . .:
Provided, That those already receiving above the
minimum wage rates up to one hundred
pesos(P100.00) shall shall also receive an increase of
twenty-five pesos (P25.00) per day, . . .
Pursuant to the above provisions, the bank gave the
P25 increase per day, or P750 a month, to its
probationary employees and to those who had been
promoted to regular or permanent status before 01 July
Page 11
 LABOR LAW 1 (CASES)
1989 but whose daily rate was P100 and below. The
bank refused to give the same increase to its regular
employees who were receiving more than P100 per day
and recipients of the P900 CBA increase.
Contending that the bank's implementation of Republic
Act 6727 resulted in the categorization of the
employees into (a) the probationary employees as of 30
June 1989 and regular employees receiving P100 or
less a day who had been promoted to permanent or
regular status before 01 July 1989, and (b) the regular
employees as of 01 July 1989, whose pay was over
P100 a day, and that, between the two groups, there
emerged a substantially reduced salary gap.
The Union sought from the bank the correction of the
alleged distortion in pay by granting 750 increase in
regular employees with above 100 pay and reciepient
of 900 CBA increase. To avoid strike the bank
petitioned the secretary of Labor to assume jurisdiction,
then assigned to Labor Arbiter for arbitration.
The Labor arbiter sided with the Union, that such
salary increase resulted in the severe contraction of an
intentional quantitative difference in wage between
employee groups. The bank appealed to the NLRC,
and the NLRC reversed the decision of the Labor
Arbiter in favour of Metrobank and Trust Company.
Issue:
Whether there has been a wage distortion, and a need
to grant the increase 750 to regular employees
receiving above 100 peso per day.
Held:
There has been a wage distortion. However it is not
conductive to grant the increase of P750 to regular
employees receiving above 100 peso per day.
The term "wage distortion", under the Rules
Implementing Republic Act 6727, is defined, thus:
(p) Wage Distortion means a situation where an
increase in prescribed wage rates results in the
elimination or severe contradiction of intentional
quantitative differences in wage or salary rates between
and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such
wage structure based on skills, length of service, or
other logical bases of differentiation.
The definition of "wage distortion," 10 aforequoted,
shows that such distortion can so exist when, as a
Case Digest – Valentine Morales
result of an increase in the prescribed wage rate, an
"elimination or severe contraction of intentional
quantitative differences in wage or salary rates" would
occur "between and among employee groups in an
establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills,
length of service, or other logical bases of
differentiation." In mandating an adjustment, the law did
not require that there be an elimination or total
abrogation of quantitative wage or salary differences; a
severe contraction thereof is enough.
We find the formula suggested then by Commissioner
Bonto-Perez, which has also been the standard
considered by the regional Tripartite Wages and
Productivity Commission for the correction of pay scale
structures in cases of wage distortion, 15 to well be the
appropriate measure to balance the respective
contentions of the parties in this instance. We also view
it as being just and equitable.
Minimum Wage = % x Prescribed = Distortion
—————— Increased Adjustment
Actual Salary
36. Ikaw at Buklod ng Manggagawa (IBM)
vs NLRC, et. al
FACTS:
IBM representing 4500 employees of SMC working at
various plants, offices and warehouses in NCR
presented to the company a demand for correction of
the significant distortion in the workers’ wages pursuant
to the Wage Rationalization Act. Demand unheeded by
company hence the union members refused to render
overtime services until the distortion has been
corrected by SMC. It appears that the employees
working hours/schedule has been freely observed by
the employees for the past 5 years and due to the
abandonment of the longstanding schedule of work and
reversion to the eight-hour shift substantial losses were
incurred by SMC. SMC filed a complaint with arbitration
branch of NLRC then before the NLRC for the latter to
declare the strike illegal. Union’s contention: workers’
refusal to work beyond 8 hours was a legitimate means
of compelling SMC to correct distortion. SMC: The
coordinated reduction by the Union’s members of the
work time in order to compel SMC to yield to the
demand was an illegal and unprotected activity.
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 LABOR LAW 1 (CASES)
ISSUE:
W/N the strike was legal
HELD:
ILLEGAL. The strike invoking the issue of wage
distortion is illegal. The legality of these activities
depends on the legality of the purposes sought to be
attained. These joint or coordinated activities may be
forbidden or restricted by law or contract. The
legislative intent that solution of the problem of wage
distortions shall be sought by voluntary negotiation or
arbitration, and not by strikes, lockouts, or other
concerted activities of the employees or management,
is made clear in the rules implementing RA 6727 issued
by the Secretary of Labor and Employment pursuant to
the authority granted by Section 13 of the Act. Section
16, Chapter I of these implementing rules, after
reiterating the policy that wage distortions be first
settled voluntarily by the parties and eventually by
compulsory arbitration, declares that, “Any issue
involving wage distortion shall not be a ground for a
strike/lockout.”
TOPIC 6 : WAGE ENFORCEMENT AND RECOVERY
37. Rajah Humabon Hotel v. Trajano
FACTS:
Subsequent to the initial pleading filed by respondent-
employees before the regional director of DOLE for
redress in regard to underpaid wages and non-payment
of benefits, petitioners were instructed to allow the
inspection of the employment records of respondents
on April 4, 1989.
However, no inspection could be done on that date on
account of the picket staged by other workers. At the
re-scheduled examination after closure of petitioners'
business on April 16, 1989, instead of presenting the
payrolls and daily time records of private respondents,
petitioner Peter Po submitted a motion to dismiss on
the supposition that the regional director has no
jurisdiction over the case because the employer-
employee relationship had been served as a result of
the closure of petitioners' business, apart from the fact
that each of the claims of private respondents
exceeded the jurisdictional limit of P5,000.00 pegged
by Republic Act No. 6715 or the New Labor Relations
Law.
Case Digest – Valentine Morales
ISSUE:
Who between the Regional Director of DOLE and the
Labor Arbiter has jurisdictional competence over the
complaint of private respondents?
HELD:
Regional Director had no jurisdiction over the case.
Section 2 of EO No. 111, promulgated on December
24, 1986, which amended Article 128(b) of the Labor
Code gives concurrent jurisdiction to both the Secretary
of Labor (or the various regional directors) and the
labor arbiters over money claims among the other
cases mentioned by Article 217 of the Labor Code. This
provision merely confirms/reiterates the
enforcement/adjudication authority of the Regional
Director over uncontested money claims in cases
where an employer-employee relationship still exists.
However, with the enactment of Republic Act No. 6715,
which took effect on March 21, 1989 or seven days
after the complaint at bar was filed on March 14, 1989,
Articles 129 and 217 of the Labor Code were amended,
there is no doubt that the regional directors can try
money claims only if the following requisites concur: (1)
the claim is presented by an employee or person
employed in domestic or household service, or house
helper under the code; (2) the claimant, no longer being
employed, does not seek reinstatement; and (3) the
aggregate money claim of the employee or
housekeeper does not exceed five thousand pesos
(P5,000.00). Thus, the power to hear and decide
employees' claims arising from employer-employee
relations, exceeding P5,000.00 for each employee
should be left to the Labor Arbiter as the exclusive
repository of the power to hear and decide such claims.
In the instant case, a simple examination of the labor
arbiter's impugned order dated September 25, 1989
readily shows that the aggregate claims of each of the
twenty-five employees of petitioner are above the
amount of P5,000.00 fixed by Republic Act No. 6715.
Therefore, the regional director had no jurisdiction over
the case. Hence, the petition is granted and the public
respondent is directed to refer the workers' money
claims to the appropriate Labor Arbiter for proper
disposition.
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 LABOR LAW 1 (CASES)
TOPIC 7: PROTECTION PROVISIONS & The voluntary arbitrator, Apron M. Mangabat, ruled in
PROHIBITIONS REGARDING WAGES
38. Five J Taxi v. NLRC
Facts:
Private respondents Domingo Maldigan and Gilberto
Sabsalon were hired by the petitioners as taxi drivers.
Aside from the daily "boundary", they were also
required to pay P20.00 for car washing, and to further
make a P15.00 deposit to answer for any deficiency in
their "boundary," for every actual working day.
Issue:
Whether or not the car wash payment is an illegal
deduction as contemplated in the Labor Code.
Held:
SC held that the amount doled out was paid directly to
the person who washed the unit, thus we find nothing
illegal in this practice, much more to consider the
amount paid by the driver as illegal deduction in the
context of the law. Consequently, private respondents
are not entitled to the refund of the P20.00 car wash
payments they made. It will be noted that there was
nothing to prevent private respondents from cleaning
the taxi units themselves, if they wanted to save their
P20.00.Car washing after a tour of duty is a practice in
the taxi industry, and is, in fact, dictated by fair play.
39. Arco Metal Products vs Salvador Uy
Facts:
Petitioner is a company engaged in the manufacture of
metal products, whereas respondent is the labor union
of petitioner's rank and file employees. Sometime in
December 2003, petitioner paid the 13th month pay,
bonus, and leave encashment of three union members
in amounts proportional to the service they actually
rendered in a year, which is less than a full twelve (12)
months. Respondent protested the prorated scheme,
claiming that on several occasions petitioner did not
prorate the payment of the same benefits to seven (7)
employees who had not served for the full 12 months.
According to respondent, the prorated payment violates
the rule against diminution of benefits under Article 100
of the Labor Code. Thus, they filed a complaint before
the National Conciliation and Mediation Board (NCMB).
The parties submitted the case for voluntary arbitration.
Case Digest – Valentine Morales
favor of petitioner and found that the giving of the
contested benefits in full, irrespective of the actual
service rendered within one year has not ripened into a
practice. He also interpreted the phrase "for each year
of service" found in the pertinent CBA provisions to
mean that an employee must have rendered one year
of service in order to be entitled to the full benefits
provided in the CBA. Respondent filed a Petition for
Review before the Court of Appeals. The appellate
court found that petitioner had an existing voluntary
practice of paying the aforesaid benefits in full to its
employees; thereby rejecting the claim that petitioner
erred in paying full benefits to its seven employees. The
appellate court noted that aside from the affidavit of
petitioner's officer, it has not presented any evidence in
support of its position that it has no voluntary practice of
granting the contested benefits in full and without
regard to the service actually rendered within the year.
Issues:
1. Whether or not the petitioners should grant 13th
month pay, bonus and leave encashment in full
regardless of actual service rendered.
2. Whether or not the prorated payment of the said
benefits constitutes diminution of benefits under Article
100 of the Labor Code.
Held:
On the first issue, according to petitioner, there is a
one-year cutoff in the entitlement to the benefits
provided in the CBA, which is evident from the wording
of its pertinent provisions as well as of the existing law.
There is no doubt that in order to be entitled to the full
monetization of sixteen (16) days of vacation and sick
leave, one must have rendered at least one year of
service. The clear wording of the provisions does not
allow any other interpretation. Anent the 13th month
pay and bonus, the CBA provisions did not give any
meaning different from that given by the law, thus it
should be computed at 1/12 of the total compensation,
which an employee receives for the whole calendar
year. The bonus is also equivalent to the amount of the
13th month pay given, or in proportion to the actual
service rendered by an employee within the year.
On the second issue, it is a settled rule that any benefit
and supplement being enjoyed by 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
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 LABOR LAW 1 (CASES)

"protect the rights of workers and promote their

welfare," and "to afford labor full protection." Said
mandate in turn is the basis of Article 4 of the Labor
Code which states that "all doubts in the
implementation and interpretation of this Code,
including its implementing rules and regulations shall
be rendered in favor of labor."

In the years 1992, 1993, 1994, 1999, 2002 and 2003,

petitioner had adopted a policy of freely, voluntarily and
consistently granting full benefits to its employees
regardless of the length of service rendered.

Petitioner claims that its full payment of benefits

regardless of the length of service to the company does
not constitute voluntary employer practice. It points out
that the payments had been erroneously made and
they occurred in isolated cases in the years 1992,
1993, 1994, 1999, 2002 and 2003.

According to petitioner, it was only in 2003 that the

accounting department discovered the error. Petitioner
further argues that for a grant of a benefit to be
considered a practice, it should have been practiced
over a long period of time and must be shown to be
consistent, deliberate and intentional, which is not what
happened in this case. True, there were only a total of
seven employees who benefited from such a practice,
but it was an established practice nonetheless.
Jurisprudence has not laid down any rule specifying a
minimum number of years within which a company
practice must be exercised in order to constitute
voluntary company practice. Petitioner cannot shirk
away from its responsibility by merely claiming that it
was a mistake or an error, supported only by an
affidavit of its manufacturing group.

Hence, Petition denied.

Case Digest – Valentine Morales Page 15