compiled labor 6th meeting updated as of 10.7.14

7/17/2019 COMPILED LABOR 6th Meeting Updated as of 10.7.14

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LABOR STANDARDS CASE DIGEST Atty. Cesar Santamaria, Jr.

G.R. No. L-55703 November 27, 198

!"ILI!!INE O#ERSEAS DRILLING AND OIL DE#ELO!$ENTCOR!ORATION, petitioner,

vs.

T"E "ON. $INISTR% O& LABOR, "ON. &RANCISCO L.ESTRELLA, Re'(o)*+ D(reor, Re'(o) I#, $()(r/ o L*bor*) Em+o/me), $ARIANO $. $ELENDRES, R., *)S4er( ABE ESTRADA *) !ERCI#AL GRANADO, respondents.

&ACTS6

Petitioner is a domestic corporation engaged in petroleum

exploration and exploitation. Private Respondent is the Chief

Geologist of the Petitioner for almost ten years before he nally

decided to resign.

!n "ovember #$, %&'&, private respondent (rote petitioner in

in)uiring (hether any action had been ta*en on his resignation and

+*(m()' e*r*(o) */ *) o4er be)e 4(4 e((o)eree)e o o4er em+o/ee 4o 4* e*r+(er re(')e.

!n +ecember ', %&'&, petitioner, (ithout replying to the letter of

private respondent, led (ith the oce of the +irector of -ureau of

abor Relations, "ational Capital Region, a veried application for

clearance to terminate the employment of private respondent

e/ective September #&, %&'& due to the latter0s resignation. A

copy thereof (as received by private respondent on +ecember %#,

%&'&.

!n +ecember %1, %&'&, private respondent led (ith the

aforementioned oce a veried complaint2opposition to clearance

application charging petitioner (ith unfair labor practice and undue

discrimination in refusing to grant him separation pay.

Respondent +irector of abor issued an order in favor of Private

Respondent (hich reads3

xxx

Careful examination of the record disclosed that complainant is

legally entitled to separation benets of pay pursuant to company

policy. 4he documented evidence xxx re5ect payment of benets

to employees (ho (ere similarly situated. "on6grant of the same

benet to complainant (ould inferentially be interpreted as unfair

discrimination or 7P. ogically, the a(ard of this benet as percompany policy is (arranted.

ISS:E6

8hether or not Private Respondent is legally entitled to separation

benet.

R:LING6

%ES.

98ell6established is the principle that ndings of administrativeagencies (hich have ac)uired expertise because their :urisdiction

is conned to specic matters are generally accorded not only

respect but even nality. Judicial revie( by this Court on labor

cases do not go so far as to evaluate the suciency of the

evidence upon (hich the +eputy ;inister and the Regional +irector

based their determinations but are limited to issues of :urisdiction

or grave abuse of discretion.9

-e that as it may, the nding of respondent +irector, that there

(as a company policy to grant separation benet or pay e)uivalent

to one <%= month pay for every year of service to employees (ho

(ere similarly situated as private respondent, is supported by

substantial evidence (hich means 9such relevant evidence as a

reasonable mind might accept as ade)uate to support a

conclusion.9 <Ang4ibay vs. C>R, ?& Phil. ?@B Caete vs. 8or*men0s

Compensation Commission, ;ay 1, %&1, %@? SCRA @$#, @$1=.

+ocuments to this e/ect (ere presented by private respondent at

the hearing on January #D, %&1$ as Annexes 9+9 thru 9+6' 9 of his

position paper.




Eaving found that there (as a company policy to that e/ect,

respondent +irector correctly held that private respondent (as

legally entitled to a separation benet or pay e)uivalent to one <%=

month pay for every year of service, not(ithstanding the fact that

he had voluntarily resigned. Ee applied a basic principle

permeating the abor Code and its >mplementing Rules andRegulations. <4iangco vs. eogardo, Jr., ;ay %?, %&1@, %## SCRA

#?', #'#6#'@B ;arcopper ;ining Corporation vs. !ple, June %%,

%&1%, %$ SCRA ', 1@B !ceanic Pharmacal Fmployees 7nion

HH8I vs. >nciong, "ovember ', %&'&, &D SCRA #'$, #'=. After

having served petitioner for ten years, private respondent

deserved his separation benet or pay.




G.R. "o. '#1& August @%, %&1&

;A$A%A !OINT "OTEL, e((o)er, v. NATIONAL LABORRELATIONS CO$$ISSION, &EDERATION O& &REE <OR;ERS*) $E$IA =:IA$BAO, reo)e).

&ACTS3 ;emia uiambao (ith thirty others, members of Hederation of Hree 8or*ers <HH8=, (ere employed by petitioner ashotel cre(. !n the basis of the protability of the company0sbusiness operations, management granted a %Dth month pay to itsemployees starting in %&'&. >n January %&1#, operations ceased togive (ay to the hotel0s conversion into a training center for ibyanscholars. Eo(ever, due to technical and nancing problems, theibyans pre6terminated the program on July ', %&1#, leavingpetitioner (ithout any business, aside from the fact that it (as notpaid for the use of the hotel premises and in addition had tounderta*e repairs of the premises damaged by the ibyanstudents. >t allegedly su/ered losses amounting to P# million.

Although it reopened the hotel premises to the public, it (as notable to pic*6up its lost patronage. >n a couple of months it e/ecteda retrenchment program until nally on it totally closed itsbusiness.

HH8 led a complaint against petitioner for illegal suspension,violation of the C-A and non6payment of the %Dth month pay.

ISS:E3 Records sho( that the case (as submitted for decision onthe sole issue of alleged non6payment of the %Dth month pay forthe year %&1# .

R:LING3 "!, 4EFK ARF "!4 F"4>4F+. 8e nd it dicult to

comprehend (hy the "RC and the abor Arbiter, despite theiradmission that the %Dth month pay has no contractual or legalbasis, still chose to rule in favor of private respondents. >t ispatently obvious that Article %$$ is clearly (ithout applicability. 4he date of e/ectivity of the abor Code is ;ay %, %&'D. >n thecase at bar, petitioner extended its %Dth month pay beginning%&'& until %&1%. 8hat is demanded is payment of the %Dth monthpay for %&1#. I)>b(*b+/ rom 4ee * *+o)e, Ar(+e 100o 4e L*bor Coe *))o *+/.

;oreover, there is )o +* 4* m*)*e 4e */me) o 4e1?4 mo)4 */. O)+/ 4e 134 mo)4 */ ( m*)*e.

"*v()' e)@o/e 4e *((o)*+ ()ome () 4e orm o 4e134 mo)4 */, r(v*e reo)e) ()(e)e o) 4e1?4 mo)4 */ or 1982 ( *+re*/ *) >)*rr*)ee*)(o) o 4e +(ber*+(/ o 4e +*.

Also contractually, as gleaned from the collective bargaining

agreement bet(een management and the union, there is nostipulation as to such extra remuneration. Ev(e)+/, 4(om((o) ( *) *)o+e'me) 4* >4 be)e (e)(re+/ o)(+*'e) or ee)e) o) 4e ro*b(+(/ o 4eom*)/ oer*(o).

A %Dth month pay is a misnomer because it is basically a bonusand, therefore, gratuitous in nature. 4he granting of the %Dthmonth pay is a management prerogative (hich cannot be forcedupon the employer. >t is something given in addition to (hat isordinarily received by or strictly due the recipient. >t is a gratuity to(hich the recipient has no right to ma*e a demand.

4his Court is not prepared to compel petitioner to grant the %Dthmonth pay solely because it has allegedly ripened into a companypractice9 as the labor arbiter has put it. Eaving lost its cateringbusiness derived from ibyan students, Lamaya Eotel should notbe penaliMed for its previous liberality.

An employer may not be obliged to assume a 9double burden9 of paying the %@th month pay in addition to bonuses or other benetsaside from the employee0s basic salaries or (ages.




S:!RE$E STEEL COR!ORATION vNAG;A;AISANG$ANGGAGA<A NG S:!RE$E INDE!ENDENT :NION N$S-IND-A!L

Petitioner Supreme Steel Pipe Corporation is a domesticcorporation engaged in the business of manufacturing steel pipesfor domestic and foreign mar*ets. Respondent"ag*a*aisang;anggaga(a ng Supreme >ndependent 7nion is thecertied bargaining agent of petitionerNs ran*6and6le employees.

HAC4S3 !n July #', #$$, respondent led a notice of stri*e (ith the"ational Conciliation and ;ediation -oard <"C;-= on the groundthat petitioner violated certain provisions of the C-A. 4he partiesfailed to settle their dispute. Conse)uently, the Secretary of aborcertied the case to the "RC for compulsory arbitration pursuantto Article #?@<g= of the abor Code.

Respondent alleged eleven C-A violations, delineated as follo(s3De)(*+ o o>r em+o/ee o 4e CBA- rov(e *'e()re*e, Contracting6out labor, Hailure to provide shuttle service,Refusal to ans(er for the medical expenses incurred by threeemployees, Hailure to comply (ith the time6o/ (ith pay provision,OisitorsN free access to company premises Respondent chargedpetitioner (ith violation of Article >>, Section ' of the C-A, Hailure tocomply (ith reporting time6o/ provision, +ismissal of +iosdado;adayag, +enial of paternity leave benet to t(oemployees, +iscrimination and harassment, and No)-(m+eme)*(o) o COLA () <*'e Orer No. RBIII-10 *)11Ar(+e 100 L*bor Coe.

Regarding the C-A6provided (age increase<%=, Article >>, Section %of the C-A provides3

Section %. 4he C!;PA"K shall grant a general (age increase, overand above to all employees, according to the follo(ing schedule3

A. F/ective June %, #$$@ P%D.$$ per (or*ing dayB

-. F/ective June %, #$$D P%#.$$ per (or*ing dayB and

C. F/ective June %, #$$ P%#.$$ per (or*ing day. @

Respondent alleged that petitioner has repeatedly denied theannual C-A increases to at least four individuals3 Juan "io,

Reynaldo Acosta, Rommel 4alavera, and Fddie +alagon. Accordingto respondent, petitioner gives an anniversary increase to itsemployees upon reaching their rst year of employment. 4he fouremployees received their respective anniversary increases andpetitioner used such anniversary increase to :ustify the denial of their C-A increase for the year. Petitioner explained that it hasbeen the companyNs long standing practice that upon reaching oneyear of service, a (age ad:ustment is granted, and, once (agesare ad:usted, the increase provided for in the C-A for that year isno longer implemented. Petitioner claimed that this practice (asnot ob:ected to by respondent as evidenced by the employeesN payslips. Respondent countered that petitioner failed to prove that, asa matter of company practice, the anniversary increase too* theplace of the C-A increase. >t contended that all employees shouldreceive the C-A stipulated increase for the years #$$@ to #$$.

8ith regards to the "on6implementation of C!A in 8age !rder"os. R->>>6%$ and %%<#=. Respondent posited that any form of (ageincrease granted through the C-A should not be treated ascompliance (ith the (age increase given through the (age boards.Respondent claimed that, for a number of years, petitioner hascomplied (ith Article >>, Section # of the C-A (hich provides3

Section #. All salary increase granted by the C!;PA"K shall not becredited to any future contractual or legislated (age increases.-oth increases shall be implemented separate and distinct from

the increases stated in this Agreement. >t should be understood byboth parties that contractual salary increase are separate anddistinct from legislated (age increases, thus the increase broughtby the latter shall be en:oyed also by all covered employees.

Respondent maintained that for every (age order that (as issuedin Region @, petitioner never hesitated to comply and grant asimilar increase. Specically, respondent cited petitionerNscompliance (ith 8age !rder "o. R->>>6%$ and grant of themandated P%.$$ cost of living allo(ance <C!A= to all itsemployees. Petitioner, ho(ever, stopped implementing it to non6

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minimum (age earners on July #D, #$$. >t contended that thisviolates Article %$$ of the abor Code (hich prohibits thediminution of benets already en:oyed by the (or*ers and thatsuch grant of benets had already ripened into a companypractice.D%

!e((o)er e+*()e 4* 4e COLA rov(e >)er <*'eOrer No. RBIII-10 *+(e o m()(m>m *'e e*r)er o)+/*) 4*, b/ m(*e, ( (m+eme)e 4e *me *ro 4ebo*r or o *++ ( em+o/ee. Aer re*+(()' ( m(*e, (oe ()e'r*()' 4e COLA o 4e b*( */ o 4eorer 4o ere e*r)()' *bove 4e m()(m>m *'e.

4he "RCNs Ruling

!ut of the eleven issues raised by respondent, eight (ere decided

in its favorB t(o <denial of paternity leave benet anddiscrimination of union members= (ere decided in favor of petitionerB (hile the issue on visitorNs free access to companypremises (as deemed settled during the mandatory conference.

<%= 4he "RC correctly held that every employee is entitled to the(age increase under the C-A despite receipt of an anniversaryincrease. 4he CA concluded that, based on the (ording of the C-A,(hich uses the (ords 9general increase9 and 9over and above,9 itcannot be said that the parties have intended the anniversaryincrease to be given in lieu of the C-A (age increase.

2 T4e CA e+*re 4* 4e (4r**+ o 4e COLA >)er<*'e Orer No. RBIII-10 rom 4e em+o/ee 4o ere )om()(m>m *'e e*r)er *mo>)e o * (m()>(o) o be)e be*>e >4 'r*) 4* *+re*/ r(e)e ()o *om*)/ r*(e. I o()e o> 4* 4ere * )o*mb('>(/ or o>b * o 4o ere overe b/ 4e *'eorer. !e((o)er, 4ereore, m*/ )o ()voe error orm(*e () ee)()' 4e COLA o *++ em+o/ee *) >4* *) o)+/ be o)r>e * F* * vo+>)*r/ * o) 4e *ro 4e em+o/er.9D? 4he CA opined that, considering theforegoing, the ruling in Globe ;ac*ay Cable and Radio Corp. v.

"RCD' clearly did not apply as there (as no doubtful or dicult)uestion involved in the present case.D1

Petitioner moved for a reconsideration of the CANs decision but CAdenied the motion for lac* of merit. Eence, the case.

>SS7FS3

%. 8!" the employees are entitled to the general (age increasedespite the given anniversary increase.

#. <ON 4ere * (m()>(o) o be)e 4e) !e((o)eroe (m+eme)()' 4e COLA rov(e >)er *'eorer )o RBIII-10 o )o)-m()(m>m *'e e*r)er.

EF+3 7pon these (ell6established precepts, (e sustain the CANsndings and conclusions on all the issues, except the issuepertaining to the denial of the C!A under 8age !rder "o. R->>>6%$and %% to the employees (ho are not minimum (age earners.

<%= KFS. 4he (ording of the C-A on general (age increase cannotbe interpreted any other (ay3 4he C-A increase should be given toall employees 9over and above9 the amount they are receiving,even if that amount already includes an anniversary increase.Stipulations in a contract must be read together, not in isolationfrom one another.' Consideration of Article >>>, Section # <non6crediting provision=, bolsters such interpretation. Section # statesthat 9aIll salary increase granted by the company shall not becredited to any future contractual or legislated (age increases.9Clearly then, even if petitioner had already a(arded an anniversary

increase to its employees, such increase cannot be credited to the9contractual9 increase as provided in the C-A, (hich is considered9separate and distinct.9

!e((o)er +*(m 4* ( 4* bee) 4e om*)/ r*(e ooe 4e *))(ver*r/ ()re*e (4 4e CBA ()re*e. I4oever *(+e o rove >4 m*er(*+ *. Com*)/r*(e, @> +(e *)/ o4er *, 4*b(, >om, >*'e or*er) o o)> m> be rove). T4e oer()' *r/m> *++e'e *) rove e(, ree((ve o)> 4*m('4 o)(>e ev(e)e o 4*b(, or om*)/ r*(e.














Ev(e)+/, 4e */ +( o 4e o>r em+o/ee o )o erve* >(e) roo.

<#="!. "o diminution of benets (ould result if the (age orders arenot implemented across the board, as no such company practicehas been established.

+iminution of benets is the unilateral (ithdra(al by the employerof benets already en:oyed by the employees. T4ere ((m()>(o) o be)e 4e) ( ( 4o) 4*6 1 4e 'r*)or be)e ( o>)e o) * o+(/ or 4* r(e)e ()o *r*(e over * +o)' er(o o (meH 2 4e r*(e (o)(e) *) e+(ber*eH 3 4e r*(e ( )o >e oerror () 4e o)r>(o) or *+(*(o) o * o>b>+ or(>+ >e(o) o +*H *) ? 4e (m()>(o) or(o)()>*)e ( o)e >)(+*er*++/ b/ 4e em+o/er.

4o recall, the CA arrived at its ruling by relying on the fact that

there (as no ambiguity in the (ording of the (age order as to theemployees covered by it. Hrom this, the CA concluded thatpetitioner actually made no error or mista*e, but acted voluntarily,in granting the C!A to all its employees. >t therefore too*exception to the Globe ;ac*ay case (hich, according to it, appliesonly (hen there is a doubtful or dicult )uestion involved.

4he CA failed to note that Globe ;ac*ay primarily emphasiMedthat, for the grant of the benet to be considered voluntary, 9itshould have been practiced over a long period of time, and mustbe sho(n to have been consistent and deliberate.9 4he fact thatthe practice must not have been due to error in the construction orapplication of a doubtful or dicult )uestion of la( is a distinct

re)uirement.

4he implementation of the C!A under 8age !rder "o. R->>>6%$across the board2all employees, (hich only lasted for less than ayear, cannot be considered as having been practiced 9over a longperiod of time.9 8hile it is true that :urisprudence has not laiddo(n any rule re)uiring a specic minimum number of years inorder for a practice to be considered as a voluntary act of theemployer, under existing :urisprudence on this matter, an actcarried out (ithin less than a year (ould certainly not )ualify assuch. Eence, the (ithdra(al of the C!A 8age !rder "o. R->>>6%$

from the salaries of non6minimum (age earners did not amount toa 9diminution of benets9 under the la(.

4here is also no basis in en:oining petitioner to implement 8age!rder "o. R->>>6%% across the board. Similarly, no proof (aspresented sho(ing that the implementation of (age orders acrossthe board has ripened into a company practice. >n the same (aythat (e re)uired petitioner to prove the existence of a companypractice (hen it alleged the same as defense, at this instance, (ealso re)uire respondent to sho( proof of the company practice asit is no( the party claiming its existence. Abe) *)/ roo o e(, ree((ve o)> 4* m('4 o)(>e ev(e)eo 4e r*(e, e *))o '(ve ree)e o reo)e)J+*(m. T4e (o+*e * o (m+eme)()' * *'e orer*ro 4e bo*r *) 4*r+/ be o)(ere * om*)/r*(e, more o 4e) >4 (m+eme)*(o) *erro)eo>+/ m*e.




RE!:BLIC !LANTERS BAN; )o )o) * !NB 6 RE!:BLICBAN; petitioner, vs. NLRC *) ANTONIO G. SANTOS,respondents.

&ACTS6

A"4!">! G. SA"4!S (as employed by Republic Planters

-an*, no( *no(n as P"-6Republic -an* <P"-6R-=, for thirty6one

<@%= years and fteen <%= days occupying various positions.

At the time of his retirement on @% ;ay %&&$ he (as a

+epartment ;anager (ith a monthly salary of P1,&?.$$ and

accumulated leave credits of t(o hundred and seventy6t(o <#'#=

days.

Ee received a gratuity pay of PD@D,D?1.# out of (hich

P#$,?%.?# (as deducted for taxes due.

Santos fled the instant suit or underpayment o

gratuity pay, non-payment o accumulated sick and

vacation leaves, mid-year and year-end bonuses, fnancial

assistance, at the same time claiming damages and

attorney's ees.

4he abor Arbiter found for complainant Santos

!n Appeal, "RC armed. Eence the petition.

ISS:E6

8hether or not Antonio G. Santos is entitled to the a(ard of P ??%,#%$.?@ and, that the a(ard to Santos of mid6year and year6

end bonuses, moral and exemplary damages and attorney0s fees

has no legal basis. Petitioner argues that Santos is not entitled to

the a(ard as he signed a Release, Waiver and Quitclaim therefor

(hen he received his gratuity pay of PD@D,D?1.#.

R:LING6

%e

Antonio G. Santos in entitled to the amount of PD#@,??%.$$,

less the applicable taxes.

A )uitclaim by an employee in favor of his employer

amounts to a valid and binding compromise agreement bet(een

them. An agreement voluntarily entered into (hich represents areasonable settlement is binding on the parties and may not later

be diso(ned simply because of a change of mind.

!n the other hand, uitclaims are ine/ective to bar recovery

for the full measure of the (or*er0s rights and that acceptance

thereof does not amount to estoppel. Generally, )uitclaims by

laborers are fro(ned upon as contrary to public policy. And the fact

that the consideration given in exchange thereof (as very much

less than the amount claimed renders the )uitclaim null and void.

>n the instant case, the total amount claimed by Santos is

!908,022.5 o 4(4 o)+/ !?3?,?8.52 * ree(ve b/4(m. Considering that the Release,Waiver and Quitclaim was

signed by Santos under protest as found by the Labor Arbiter and

the NLRC, and the dierence between the amount claimed and

that paid cannot in any way be considered negligible, it is proper to

recompute and determine the exact amount of the retirement

benets due private respondent.

>n the case before us, (e nd the di/erence involved is

considerably big and substantial. 4he total of the claim is

P&$1,$##.?. +educting therefrom the amount of PD@D,D?1.#

already received by respondent Santos leaves a di/erence of

PD'@,D.%@ (hich is even more than (hat he had been given.

P"--R- avers that the "RC gravely abused its discretion

(hen it computed the gratuity pay of Santos at P??%,#%$.?@ based

on the salary rate of the next higher ran* on the theory that he

ac)uired a vested right over it pursuant to the %&'%6%&'@

Collective -argaining Agreement <C-A=. Petitioner posits that as

the C-A had long expired it could no longer be used as basis in

computing the gratuity pay of its retiring ocersB instead, the

computation should be based on the practice and policy of the




ban* e/ective at the time of the employee0s retirement.

>n Republic !lanters "an# v$ National Labor Relations

Commission(hich, coincidentally, emanated from a similar set of

facts. >n that case, ;acario de GuMman resigned from P"-6R- on @

June %&1. 4he follo(ing day he led a complaint (ith the

+epartment of abor and Fmployment for underpayment of

gratuity pay, underpayment of unused leaves and non6payment of

accrued leave credits. +e GuMman be(ailed the erroneous

computation of his gratuity pay and the cash value of his

accumulated leave credits, and maintained that it should have

been based on the provisions of the %&'%6%&'@ C-A instead of the

%&1#6%&1 C-A entered into bet(een P"-6R- and its ran*6and6le

employees. >n nding for de GuMman (e ruled

Prior to private respondent0s resignation, there (ere other

managerial employees (ho resigned and2or retired from

petitioner0s employ (ho received their corresponding gratuitybenets and the cash value of their accumulated leave credits

pursuant to the provisions of the old C-A of %&'%6'@ despite its

expiration in %&'?. Among them (ere Simplicio ;analo and ;iguel

Calimbas (ho resigned on % ;arch %&'' and % July %&'1,

respectively. 8ith such a practice and policy, petitioner cannot

refuse to pay private respondent his gratuity benets under the old

C-A. 7nder Section %D<a=, Rule % of the Rules and Regulations

>mplementing -oo* O> of the abor Code, it is provided3

Sec$ %&$ Retirement "ene'ts$( )a* An employee who is retired

pursuant to a bona'de retirement plan or in accordance with theapplicable individual or collective agreement or established

employer policy shall be entitled to all the retirement bene'ts

provided therein + ++$( )-talics supplied*

4he foregoing provision explicitly states that a company practice or

policy is a labor standard in determining the retirement benets of

its employees.

4he petitioner0s theory that the computation of the benets of

private respondent should be based on the %&1#61 C-A (hich (as

the one enforced at the time of his resignation is untenable. Said

C-A (as entered into by petitioner (ith its ran*6and6le

employees. !r(v*e reo)e) ( * m*)*'er(*+ em+o/ee(ho, by express provision of la(, is excepted from the coverage of

the aforesaid contract

Since no ne( C-A had been entered into bet(een the managerial

employees and petitioner upon the expiration of the said %&'%6'@

C-A, private respondent has ac)uired a vested right to the said

established policy of petitioner in applying the %&'%6'@ C-A to

retiring or resigning executives of managerial employees. Such

right cannot be curtailed or diminished.

8e maintain the same dictum in the case before us. P"-6R-

insists on diso(ning any practice or policy of granting gratuity pay

to its retiring ocers based on the salary rate of the next higherran*. >t admitted ho(ever that it granted gratuity pay on the basis

of the salary rate of the next higher ran* but only in the case of

Simplicio ;analo. As to other instances (hen it granted gratuity

pay based on the salary rate of the next higher ran*, P"-6R-

explains that those (ere not voluntarily done but (ere in la(ful

compliance (ith court orders.

A punctilious perusal of the records leads us to the same

conclusion, i.e., that P"-6R- has adopted the policy of granting

gratuity benets to its retiring ocers based on the salary

rate o the next higher rank . It continued to adopt this

practice even ater the expiration o the 1!1-1!" #$%. 4he grant (as consistent and deliberate although petitioner *ne(

fully (ell that it (as not re)uired to give the benets after the

expiration of the %&'%6%&'@ C-A. 7nder these circumstances, the

granting of the gratuity pay on the basis of the salary rate of the

ran* next higher may be deemed to have ripened into company

practice or policy (hich can no longer be peremptorily (ithdra(n.

Any benet and supplement being en:oyed by the employees

cannot be reduced, diminished, discontinued or eliminated by the

employer by virtue of Sec. %$ of the Rules and Regulations




>mplementing P.+. "o. 1% and Art. %$$ of the abor Code (hich

prohibit the diminution or elimination by the employer of the

employees0 existing benets. eave credits should li*e(ise be

computed based on the upgraded salary rate, i.e., the salary rate

of the next higher ran* in conformity (ith the provisions of the

%&'%6%&'@ C-A (hich in part read 6

Section %D. 4he -an* agrees to grant to each regular supervisor

employee upon his retirement, resignation or separation (ithout

cause after July %, %&?&, the follo(ing benets3

a= Gratuity pay e)uivalent to one <%= month salary plus the

corresponding living allo(ance of the ran* next higher than the

ran* of such supervisor at the time of his retirement, resignation or

separation (ithout cause, for every year of service in the -an*,

provided that the said supervisor has at least ve <= years of

continuous service (ith the -an*.

b= 4he cash e)uivalent of the accumulated sic* and vacation

leaves since the time of his initial employment (ith the -an*.

7nder this section, only the gratuity pay is expressly entitled

to be computed based on the salary rate of the ran* next higher.

>n this instance, it may be (orth to loo* into the reasons (hich

motivated the parties to enter into the above agreement. 4he

conversion of leave credits into their cash e)uivalent is aimed

primarily to encourage (or*ers to (or* continuously and (ith

dedication for the company. Companies o/er incentives, such as

the conversion of the accumulated leave credits into their cash

e)uivalent, to lure employees to stay (ith the company. eave

credits are normally converted into their cash e)uivalent based on

the last prevailing salary received by the employee. Considering

all these, the accumulated leave credits should be converted based

on the upgraded salary of the retiree, (hich is the salary rate of

the ran* next higher.

P"-6R- avers that it has suciently established that the

salary of an ocer is pegged to a minimum or maximum

depending on his performance appraisal in accordance (ith the

Fxecutive Compensation Salary Structure <FCSS= e/ective % ;ay

%&1'. Since Santos0 latest performance rating (as only

satisfactory, his gratuity pay should be based on the minimum and

not on the maximum amount of the rate of the salary of the ran*

next higher. >n this regard, (e )uote (ith approval the Commentof the Solicitor General that 6

"othing in the provisions of the %&'% C-A from (hich emanated

the one ran* higher policy indicates a minimum or maximum range

of the next higher ran*. >nstead, (hat is provided is an un)ualied

one ran* higher concept. Petitioner is, therefore, precluded from

dra(ing a distinction (here none has been stated in the contract.

-esides, assuming that an ambiguity does exist, the same must be

resolved in the light of Article %'$# of the Civil Code that3 >n case

of doubt, the labor legislation and all labor contracts shall be

construed in favor of the safety and decent living for the laborer.

Such should be liberally construed in favor of the persons intendedto be beneted thereby.

;oreover, petitioner, by invo*ing the salary structure and criteria

for promotion as basis for determining the amount of gratuity has

confused the t(o distinct concepts of gratuity and salary.

Gr*>(/ */, >)+(e *+*r/, ( *( o 4e be)e(*r/ or 4e* erv(e or *vor re)ere >re+/ o> o 4e'e)ero(/ o 4e '(ver or 'r*)or. Gr*>(/, 4ereore, ()o ()e)e o */ * orer or *>*+ erv(e re)ereor or *>*+ erorm*)e. I ( * mo)e/ be)e or bo>)/

'(ve) o 4e orer, 4e >roe o 4(4 ( o re*rem+o/ee 4o 4*ve re)ere *(*or/ erv(e o 4eom*)/. S*+*r/, o) 4e o4er 4*), ( * *r o +*bor*)*r +* b*e o) 4e *>*+ *mo>) o or re)ereor 4e )>mber o */ ore over 4e er(o o /e*r. Eence, petitioner0s attempt to apply the salary structure to

determine gratuity (ould eradicate the very essence of a gratuity

a(ard, and ma*e it parta*e of the character of a (age or salary

given on the basis of actual (or* or performance. Such (as never

the intendment of the la( and (ould run counter to essential social




:ustice.

Additionally, computing the gratuity pay based on the

performance rating of the retiring ocer is a practice that is very

li*ely susceptible to abuse as he (ill be placed at the mercy of the

members of the performance appraisal committee.

As to the Claim of Santos for bonuses corresponding to the

years %&1, %&1? and mid6year of %&1' has already prescribed.

4his is correct$ Article ./% of the Labor Code,

All money claims arising from employer(employee relations

accruing during the eectivity of this Code shall be 'led within

three )0* years from the time the cause of action accrued1

otherwise they shall be forever barred$

Since Santos led his complaint only on %# July %&&$, his

claim for %&1 <mid6year and year6end=, %&1? <mid6year and year6

end=, and %&1' <mid6year= bonuses already prescribed. As regards

bonuses for %&1' <year6end=, %&11 <mid6year and year6end=, %&1&

<mid6year and year6end=, and %&&$ <mid6year=, (e agree (ith

petitioner that these should be based on the existing salary rate at

the time of their accrual. 4he record sho(s ho(ever that in %&11

Santos (as found guilty of an administrative charge. Eence, in

consonance (ith existing company policy, the %&11 <mid6year and

year6end= bonus should be forfeited in favor of the -an*.

!n the matter of moral and exemplary damages, the same is a

must considering that petitioner is guilty of bad faith by itscontinued refusal to pay his claims despite the nal rulings of the

Supreme Court in similar other cases earlier cited, petitioner has

sho(n to be anti6labor. Conse)uently, private respondent had

su/ered mental anguish and sleepless nights and therefore, should

be entitled to moral damages.

-asic gratuity pay3

Applicable monthly rate <P%,1D$.$$= x length of service <@% years

and % days= Q

P%,1D$.$$ x @% years .......... PD&%,$D$.$$

P%,1D$ x %2#% days ........... P &D?.$$

PD&%,&1?.$$

eave Credits3

P%,1D$ x #'# x %#2#%

#$,&1@.$$

Accrued -onuses3

%&1' 6 year6end only.................. %,@$$.$$

%&11 6 forfeited <due adm. case=. 6

%&1& 6 mid6year2year6end........... %%,@1$.$$

%&&$ 6 mid6year only.................. 1,&?.$$

#%,?D.$$

P'%&,?%D.$$

ess 3 Gratuity already received ......

PD@D,D?1.$$

-alance3 ...................... ......... #1,%D?.$$

Add 3 ;oral damages .....................

$,$$$.$$

Fxemplary damages .. ..... .... ...

$,$$$.$$




Attorney0s Hees .....................

@1,%.$$

4otal ............................ .................. PD#@,??%.$$




I)er)*(o)*+ S4oo+ o A++(*)e E>*or v. =>((mb()'333 SCRA 13

>)e 1, 2000;*>)*), .

&*6 Private respondent, >nternational School, >nc., is a domestic

educational institution that is established primarily for dependentsof foreign diplomatic school personnel. >t is created pursuant toPresidential +ecree "o. '@# (hereby under Section #<c= thereof, itgives the school the po(er to hire employees either locally orabroad.

Conse)uently, the respondent hires t(o types of personnel. 4heseare the foreign hires and the local hires. +espite the fact that theforeign hires and the local hires are of the same position andperform similar tas*s, duties and responsibilities, the Schoolcompensates these employees di/erently. 4he foreign hires receivebetter benets than the local hires. 4hey are paid salaries that is# more than the salaries received by the local hires. >n addition,

they are also granted housing, transportation, shipping costs, taxesand home leave travel allo(ance.

-ecause of these, the petitioner contested the di/erences of thebenets and salaries received bet(een the foreign and local hirescontending that such constitutes racial discrimination invo*ing thee)ual protection clause under the %&1' Constitution. >t alsocontends that such di/erence violates the e)ual pay for e)ual (or*principle under the abor Code.

!n the other hand, the private respondent contends that bettersalaries and benets are o/ered to foreign hires because of t(ofactors3 %. the dislocation factor and #. limited tenure. >t furthercontends that there being a valid :ustication for the better salaryand benets given to foreign hires, it cannot therefore constitutediscrimination. ;oreover, they contend that there are foreignnationals (ho are given the benets of a local hire (hich furtherdiscredits the contention that there is racial discrimination.

4he Acting Secretary of +!F gave credence to the contention of the private respondent and stated that the di/erences in salaryrates does not constitute discrimination because there is asubstantial di/erence or a valid classication bet(een local andforeign heirs. ;oreover, such di/erences are :ustied becauseforeign heirs are under di/erent (or*ing conditions in contrast (ith

the local hires as they are under limited tenure and they su/erinconveniences because they are separated from their home andfamily.

Eence, the current petition.

I>e6 8hether or not the salary di/erences received by the localand foreign hires violates the e)ual protection clause and theprinciple of e)ual pay for e)ual (or* principle.

R>+()'6 4he Supreme Court reversed the decision of the +!F anddeclared that the grant of better benets in favor of the foreignhired employees constitutes discrimination and a violation not onlyof the e)ual protection clause but also of the rule on e)ual pay fore)ual (or*.

4he general principles of la( abhor discrimination and upholdfairness and e)uality in favor of the abor. 4his is embodied notonly in the statutes promulgated by this country but it is also

established in the Constitution itself and even in internationalconventions. 4he constitution provides that the labor shall beentitled to humane conditions of (or*. 4his right of the labor doesnot only pertain to the physical (or*ing conditions in the (or*place but it also includes the manner in (hich the employees aretreated. >n addition, the Constitution and the abor Code alsoprovides that the State shall ensure e)uality of employmentopportunities for all employees regardless of their age, sex andreligion.

4his pronouncements and principles (ould necessarily lead to theconclusion that discrimination, in (hatever manner, of theemployees especially in the payment of the (ages is fro(ned uponby the la( including the abor Code. >n line (ith this, in cases of payment of (ages the principle of e)ual pay for e)ual (or* mustbe follo(ed. 4his means that persons (ho (or* (ith substantiallye)ual )ualications, s*ill, e/ort and responsibility, under similarconditions should be paid similar salaries.

>n the case at bar, it is apparent that the foreign and local hires areof e)ual footing in terms of their s*ills, duties, responsibilities andthat they are under similar circumstances. 4hey therefore shouldbe paid e)ually. 4he fact that there is a dislocation factor andlimited tenure in foreign hires does not :ustify that they should begiven higher salary rates. 4hese inconvenience, as declared by the




Supreme Court, is already compensated by the additional benetsgiven to them by the School. As it is found that no substantialdistinctions lie bet(een foreign and local hires, it is but :ust togrant them similar salary rates and to do other(ise (ould violatethe e)ual protection clause and the e)ual pay for e)ual (or*principle.

4he Supreme Court ruled that salaries should not be used asenticement to the pre:udice of the other (or*ers. Salaries are givenas a compensation for the (or* performed by the employees and itshould be given to them (ithout any form of discrimination.




Norm* $*be* v. NLRC *) !eer N'K"oe+ S>reme

&ACTS6

Petitioner "orma ;abeMa (as an employee hired by Eotel Supreme

in -aguio City. >n %&&%, an inspection (as made by the +epartment

of abor and Fmployment <+!F= at Eotel Supreme and the +!F

inspectors discovered several violations committed by the hotelNs

management.

Petitioner and her co6employees (ere then as*ed by the hotelNs

management to sign an instrument attesting to the latterNs

compliance (ith minimum (age and other labor standard

provisions of la(. 4he instrument provides that, 2+ ++ 3hey have no

complaints against the management of the 4otel Supreme as they

are paid accordingly and that they are treated well1 + ++5

As gleaned from the adavit, the same (as dra(n by

management for the sole purpose of refuting the ndings of +!F

inspectors apparently adverse to private respondent.

4he petitioner signed the adavit but refused to go to the City

ProsecutorNs !ce to s(ear to the veracity and contents of the

adavit as instructed by management. 4he adavit (as

nevertheless submitted on the same day to the Regional !ce of

+!F in -aguio City.

4hat same day, as she refused to go to the City ProsecutorNs !ce,

she (as ordered by the hotel management to turn over the *eys to

her living )uarters and to remove her belongings from the hotelNspremises. According to her, respondent strongly chided her for

refusing to proceed to the City Prosecutor0s !ce to attest to the

adavit. She thereafter reluctantly led a leave of absence from

her :ob (hich (as denied by management. She attempted to

return to (or* but the hotelNs cashier told her that she should not

report to (or* and instead continue (ith her unocial leave of

absence.

4hree days after her attempt to return to (or*, petitioner led a

complaint against the management for illegal dismissal before the

Arbitration -ranch of the "RC in -aguio City. >n addition to that,

she alleged underpayment of (ages because her (age (as less

than the minimum (age.

Private respondent Peter "g <o(ner of Eotel Supreme=, in his

defense, argued that petitionerNs unauthoriMed leave of absence

from (or* is the ground for her dismissal. Ee even maintained that

there (as no basis for the money claims for underpayment and

other benets as these (ere paid in the form of facilities to

petitioner and the hotelNs other employees. Ee argued that the

reason for such lo( payment of (ages (as because she (as being

given free lodging, food, and electricity and (ater consumption by

the hotel.

Ee then raised a ne( ground, loss of condence, (hich (as

supported by his ling of criminal complaint for ualied 4heft of

the petitioner.

abor Arbiter3 rendered a decision dismissing petitioner0s complaint

on the ground of loss of condence.

"RC3 armed the abor ArbiterNs decision.

Eence, this petition.

ISS:E6

8!" the amenities <food, lodging, electricity and (ater

consumption= provided by the hotel be considered as facilities

(hich are deductible from petitioner ;abeMaNs (age

R:LING6 "!.

Going into the issue of petitioner0s money claims, (e nd one more

salient reason in this case to set things right3 the labor arbiter0s

evaluation of the money claims in this case incredibly ignores

existing la( and :urisprudence on the matter.

4he labor arbiter accepted hoo*, line and sin*er the private

respondent0s bare claim that the reason the monetary benets




received by petitioner bet(een %&1% to %&1' (ere less than

minimum (age (as because petitioner did not factor in the meals,

lodging, electric consumption and (ater she received during the

period in her computations.

Granting that meals and lodging (ere provided and indeed

constituted facilities, >4 *(+((e o>+ )o be e>e(4o> 4e em+o/er om+/()' r (4 er*() +e'*+re>(reme). 8ithout satisfying these re)uirements, the

employer simply cannot deduct the value from the employee0s

(ages3

1 !roo m> be 4o) 4* >4 *(+((e *re>om*r(+/ >r)(4e b/ 4e r*e

2 T4e rov((o) o e>(b+e *(+((e m> bevo+>)*r(+/ *ee () r(()' b/ 4e em+o/ee

3 &*(+((e m> be 4*r'e * *(r *) re*o)*b+ev*+>e

4hese re)uirements (ere not met in the instant case. Private

respondent 9failed to present any company policy or guideline

to sho( that the meal and lodging . . . <are= part of the salaryB9

he failed to provide proof of the employee0s (ritten

authoriMationB and, he failed to sho( ho( he arrived at the

valuations.

;ore signicantly, the food and lodging, or the electricity and

(ater consumed by the petitioner (ere not facilities but

supplements. A be)e or r(v(+e'e 'r*)e o *)em+o/ee or 4e o)ve)(e)e o 4e em+o/er ( )o **(+(/. 4he criterion in ma*ing a distinction bet(een the t(o

not so much lies in the *ind <food, lodging= but the >roe.

Considering, therefore, that hotel (or*ers are re)uired to (or*

di/erent shifts and are expected to be available at various odd

hours, their ready availability is a necessary matter in the

operations of a small hotel, such as the private respondent0s

hotel.

>t is therefore evident that petitioner is entitled to the payment

of the deciency in her (ages e)uivalent to the full (age

applicable from ;ay %@, %&11 up to the date of her illegal

dismissal.




T(*)'o v. Leo'*ro

G.R. No. L-573 $*/ 1, 1983

Hacts3

Reynaldo 4iangco, petitioner, is a shing operator (ho o(ns theReynaldo 4iangco Hishing Company and a 5eet of shing vessels

engaged in deep sea shing (hich operates from "avotas, RiMal.

Eis business is capitaliMed at P#,$$$,$$$.$$, (hile petitioner

Oictoria 4iangco is a sh bro*er (hose business is capitaliMed at

P%$$,$$$.$$.

Some of the private respondents (ere engaged by Reynaldo

4iangco as batillos, (ho (ere tas*ed to unload the sh catch from

the vessels and ta*e them to the Hish Stall of the petitioner Oictoria

4iangco. 4he other private respondents (ere batillos engaged by

Oictoria 4iangco.

4he private respondents (ere all (or*ing as part6time since their

(or* (ere limited to days of arrival of the shing vessels and their

(or*ing days in a month are comparatively fe(. 4heir (or*ing

hours average four <D= hours a day.

4he private respondents led a complaint against the petitioners

(ith the ;inistry of abor and Fmployment for non6 payment of

their legal holiday pay and service incentive leave pay, * e++ *>)er*/me) o 4e(r emer'e)/ o o +(v()' *++o*)e4(4 >e o be *( () >++ (rree(ve o 4e(r or()'*/, b> 4(4 ere re>e ee(ve &ebr>*r/ 1980, ()o)r*ve)(o) o Ar(+e 100 o 4e )e L*bor Coe 4(4ro4(b( 4e e+(m()*(o) or (m()>(o) o e(()' be)e.

4he petitioners denied the laborersN contention, claiming that the

laborers (ere all given, in addition to their regular daily (age, a

daily extra pay in amounts ranging from @$ centavos to %$ pesos

(hich are sucient to o/set the laborersN claim for service

incentive leave and legal holiday pay.

As regards the claim for emergency allo(ance di/erentials, the

petitioners admitted that they discontinued their practice of paying

their employees a xed monthly allo(ance, and e/ective Hebruary

%&1$, they no longer paid allo(ances for non6 (or*ing days. 4hey

argued, ho(ever, that no la( (as violated as their refusal to pay

allo(ances for non6(or*ing days is in consonance (ith theprinciple of no (or*, no allo(anceTB and that they could not pay

private respondents a xed monthly allo(ance (ithout ris*ing the

viability of their business.

4he +irector of the "ational Capitol Region of the ;inistry of abor

and Fmployment ruled that the daily extra pay given to private

respondents (as a production incentive benetT, separate and

distinct from the service incentive leave pay and legal holiday pay,

payment of (hich cannot be used to o/set a benet provided by

la(, and ordered the petitioners to pay the private respondents

their service incentive leave pay and legal holiday pay.

Eo(ever, he denied the laborersN claim for di/erentials in the

emergency cost of living allo(ance for the reason that the

emergency cost of living allo(ance accrues only (hen the laborers

actually (or* follo(ing the principle of no (or*, no pay,T and

private respondents are not entitled to a xed monthly allo(ance

since they (or* on a part time basis (hich average only four <D=

days a (ee*. 4he private respondents should not be paid their

allo(ances during non6(or*ing days.

!n appeal, the +eputy ;inister of abor and Fmployment modied

the order and directed the petitioners to restore and pay the

individual respondents their xed monthly allo(ance from ;arch,%&1$ and to pay them the amount of P1,1?$.$$, as

underpayment of their living allo(ance from ;ay, %&'' to Hebruary

#%, %&1$.

8hen their motion for the reconsideration (as denied, the

petitioners interposed the present recourse.

>ssue3




8hether the +eputy ;inister of abor and Fmployment acted in

excess of :urisdiction in deciding that there is diminution of

benets in the discontinuance of giving of allo(ance

Ruling3

"o.

>ndeed, the record sho(s that the private respondents (or* for the

petitioners is on a part6time basis and their (or* average is only

four <D= days a (ee*. >t is not also disputed that the private

respondents (or* for more than one employer so that the private

respondents should be paid their living allo(ance only for the days

they actually (or*ed in a (ee* or month and all the employers of

the employee shall share proportionately in the payment of the

allo(ance of the employee.

T4e reo)e) De>/ $()(er o L*bor *) Em+o/me)orre+/ r>+e 4* ()e 4e e((o)er 4* bee) */()'4e r(v*e reo)e) * e mo)4+/ emer'e)/*++o*)e ()e November 197 > o &ebr>*r/ 1980, * *m*er o r*(e *)Kor verb*+ *'reeme) beee) 4ee((o)er *) 4e r(v*e reo)e), 4e(o)()>*)e o 4e r*(e *)Kor *'reeme)>)(+*er*++/ b/ 4e e((o)er o)r*ve)e 4e rov((o)o 4e L*bor Coe, *r(>+*r+/ Ar(+e 100 4ereo 4(4ro4(b( 4e e+(m()*(o) or (m()>(o) o e(()' be)e.

Article %$$ of the abor Code provides3

&%rticle 1. (rohibition against elimination or diminution

o benefts. )othing in this $ook shall be construed to

eliminate or in any *ay diminish supplements or other

employee benefts being en+oyed at the time o the

promulgation o this #ode.

Section % of the Rules on P.+. # and Section %? of the Rules on

P.+. %%#@ also prohibits the diminution of any benet granted to

the employees under existing la(s, agreements, and voluntary

employer practice.

Section % of the Rules on P.+. # provides, as follo(s3

2Section %6$ Relation to Agreement$ 7 Nothing herein shall

prevent the employer and his employees from entering into any

agreement with terms more favorable to the employees than those

provided therein, or be construed to sanction the diminution of any

bene't granted to the employees under e+isting laws, agreements,

and voluntary employer practice$5

Section %? of the Rules on P.+. %%#@ similarly prohibits diminution

of benets. >t provides3

2Section %8$ Relation to other agreements$ 7 Nothing herein shall

prevent employers from granting allowances to their employees in

e+cess of those provided under the 9ecree and the Rules nor shall

it be construed to countenance any reduction of bene'ts already

being en:oyed$5

4he petitioners further claim that the respondent +eputy ;inister

of abor and Fmployment erred in ordering them to pay the

amount of P1,1?$.$$ to the private respondents as underpayment

of respondentsN allo(ances from ;ay %&'' to Hebruary #$, %&1$.

4he petitioners contend that the emergency cost of living

allo(ances of the private respondents had been paid in full.

4he court nds no merit in the contention. Eo(ever, a revision of

the amount due the private respondents is in order for the reason

that the respondent +eputy ;inister of abor and Fmployment

failed to ta*e into consideration, in computing the amount due

each (or*er, the fact that the private respondents are employedby t(o di/erent individuals (hose businesses are divergent and

capitaliMed at various amounts, contrary to the provisions of P.+.

# and subse)uent amendatory decrees, (herein the amount of

the emergency cost of living allo(ance to be paid to a (or*er is

made to depend upon the capitaliMation of the business of his

employer or its total assets, (hichever is higher.




Em+o/er Co)eer*(o) o 4e !4(+(()e v. N*(o)*+<*'e *) !ro>(v(/ Comm((o)

&*6 RA ?'#' also *no(n as the 8age RationaliMation Act (as

approved by the President on June &, %&1&. 4he said act provides

not only ne( (age rates but also various Regional 4ripartite 8ages

and Productivity -oards in charge of prescribing minimum (age

rates for all (or*ers in various regions, and also a "ational 8ages

and Productivity Commission (hich revie(s the (age levels

determined by the boards.

Pursuant to RA ?'#', the Regional -oard of the "ational capital

Region issued (age order no. "CR6$% (hich increases the

minimum (age by p %'.$$ per day in the "CR. -oth the 4rade

7nion Congress of the Philippines and the Personnel ;anagement

Association of the Philippines moved for reconsideration. Petitioner

FC!P opposed the said order.

Subse)uently, the -oard, again issued 8age !rder no. "CR $%6A,

amending (age order no. "CR6$%, (hich provides that all (or*ers

and employees in the private sector in "CR already receiving

(ages above the statutory minimum (age rates, up to P %#.$$,

shall also receive an increase of P %'.$$ per day.

Petitioner FC!P appealed to the "ational 8ages and Productivity

Commission. 4he Commission ho(ever dismissed the appeal for

lac* of merit. 4he Commission li*e(ise denied petitionerNs motion

for reconsideration. Eence this petition.

FC!P assails that the board0s grant of an 9across6the6board9 (ageincrease to (or*ers already being paid more than existing

minimum (age rates <up to P%#. $$ a day= as an alleged excess

of authority, and alleges that under the RA ?'#', the boards may

only prescribe 9minimum (ages,9 not determine 9salary ceilings.9

FC!P li*e(ise claims that RA ?'#' is meant to promote collective

bargaining as the primary mode of settling (ages, and that the

boards cannot preempt collective bargaining agreements by

establishing ceilings.

FC!P prays for the nullication of 8age !rder "o. "CR $%6A and

for the 9reinstatement9 of 8age !rder "o. "CR6$%.

FC!P further insisted that (age6xing is a legislative function, and

RA ?'#' delegated to the regional boards no more 9than the po(er

to grant minimum (age ad:ustments9 and 9in the absence of clear

statutory authority,9 the boards may no more than ad:ust 95oor

(ages.9

4he Solicitor General ho(ever opined that the board, in prescribing

an across6the6board hi*e did not, in reality, 9grant additional or

other benets to (or*ers and employees, such as the extension of

(age increases to employees and (or*ers already receiving more

than minimum (ages ...9 but rather, xed minimum (ages

according to the 9salary6ceiling method.9 Ee further argued that RA

?'#' is intended to correct (age distortionsT and that the salary

ceiling method of determining (ages, is meant to rectify (age

distortions.

I>e6%.8!" the board has exceeded its authority in issuing (age order

no. "CR6$% and (age order no. "CR6$%6A

#. 8!" 4he Regional -oard of the "ational Capital Region, in

decreeing an across6the6board hi*e, performed an unla(ful act of

legislation.

"e+6%. "o. 4he determination of (ages has generally involved t(o

methods. Hirst is the 5oor (age method (hich involves the xing of

a determinate amount that (ould be added to the prevailingstatutory minimum (age. And the second is the salary6ceiling

method (hereby the (age ad:ustment is applied to employees

receiving a certain denominated salary ceiling.

4he shift from the rst method to the second method (as brought

about by labor disputes arising from (age distortions. 4he

previous (age orders provides that (age distortions shall be

resolved through grievance procedure, ho(ever, the legislature

found such process ine/ective (hich resulted to the




implementations of ne( (age orders. 8ith the establishment of

the second method as a practice in minimum (age xing, (age

distortion disputes (ere minimiMed.

!f course, disputes are appropriate sub:ects of collective

bargaining and grievance procedures, but as the Commission

observed, bargaining has helped very little in correcting (agedistortions. Precisely, RA ?'#' (as intended to rationaliMe (ages,

rst, by providing for full6time boards to monitor (ages round6the6

cloc*, and second, by giving the boards enough po(ers to achieve

this ob:ective.

4he SC is of the opinion that Congress meant the boards to be

creative in resolving the annual )uestion of (ages (ithout labor

and management *noc*ing on the legislature0s door at every turn.

4he SC further held that if RA ?'#' intended that the boards (ill

only set 5oor (ages, the Act (ould have no need for a board but

an accountant to *eep trac* of the latest consumer price index.

#. "o. >t is true that (age6xing, li*e rate6xing constitutes an act

of CongressB it is also true, ho(ever, that Congress may delegate

the po(er to x rates provided that, as in all delegations cases,

Congress leaves sucient standards. As this Court has indicated, it

is impressed that the standards provided for under Art. %#D of RA

?'#' are sucient, and in the light of the 5oor6(age method0s

failure, the Court believes that the Commission correctly upheld

the Regional -oard of the "ational Capital Region.

4he SC further held that the Act is meant to rationaliMe (ages, that

is, by having permanent boards to decide (ages rather than

leaving (age determination to Congress year after year and la(after la(. 4he Court is not of course saying that the Act is an e/ort

of Congress to pass the buc*, or (orse, to abdicate its duty, but

simply, to leave the )uestion of (ages to the expertise of experts.

4he concept of 9minimum (age9 is, ho(ever, a di/erent thing, and

certainly, it means more than setting a 5oor (age to upgrade

existing (ages. 4he statute (ould have no need for a board if the

)uestion (ere simply 9ho( much9. 4he State is concerned, in

addition, that (ages are not distributed unevenly, and more

important, that social :ustice is subserved.




ATO;-BIG <EDGE $INING CO., INC., petitioner,

vs.

ATO;-BIG <EDGE $:T:AL BENE&IT ASSOCIATION,respondent.

&ACTS6

!n September D, %&$, demand (as submitted to

petitioner by respondent union through its ocers for various

concession, among (hich (ere

<a= an increase of P$.$ in (ages,

<b= commutation of sic* and vacation leave if not en:oyed

during the year,

<c= various privileges, such as free medical care, medicine,and hospitaliMation,

<d= right to a closed shop, chec* o/, etc.,

<e= no dismissal (ithout prior :ust cause and (ith a prior

investigation, etc.

Some of the demands, (ere granted by the petitioner, and

the other (ere re:ected, and so hearings (ere held and evidence

submitted on the latter.

After the hearing the respondent court <Court of >ndustrial

Relations= rendered a decision, the most important provisions of

(hich (ere those xing the minimum (age for the laborers at

P@.#$, declaring that *((o)*+ ome)*(o) reree)()'e(e)/ bo)> 4o>+ )o be ()+>e * *r o 4e*'e, *) m*()' 4e **r ee(ve rom Seember ?,1950. >t is against these portions of the decision that this appeal is

ta*en.

&IRST ISS:E6

O) 4e (>e o 4e *'e, it is contended by petitionerthat as the respondent court<Court of >ndustrial Relations= foundthat the laborer and his family at least need the amount of P#.1for food, this should be the basis for the determination of his (age,

not (hat he actually spends.

R:LING6

4he respondent court found that P#.1 is the minimum

amount actually needed by the laborer and his family. 4hat does

not mean that it is his actual expense. A person0s needs increase

as his means increase. 4his is true not only as to food but as to

everything else U education, clothing, entertainment, etc. 4he la(

guarantees the laborer a fair and :ust wage. 4he minimum must be

fair and :ust. 4he 9minimum (age9 can by no means imply only the

actual minimum.

Some margin or lee(ay must be provided, over and above

the minimum, to ta*e care of contingencies such as increase of

prices of commodities and desirable improvement in his mode of

living. Certainly, the amount of P$.## a day <di/erence bet(een

P#.1$ xed and P#.1 actual= is not excessive for this purpose.

4hat the P@ minimum (age xed in the la( is still far belo(

(hat is considered a fair and :ust minimum is sho(n by the fact

that this amount is only for the year after the la( ta*es e/ect, as

thereafter the la( xes it at PD.

"either may it be correctly contended that the demand for

increase is due to an alleged pernicious practice. Hre)uent

demands for increase are indicative of a healthy spirit of

(a*efulness to the demands of a progressing and an increasingly

more expensive (orld.




8e, therefore, nd no reason or ground for disturbing the

nding contained in the decision xing the amount of P@.#$ as the

minimum (age.

SECOND ISS:E6

>t is next contended that the e(e)/ bo)> *( 4e+*borer 4o>+ 4*ve bee) ()+>e () 4( m()(m>m *'e,

in the same manner as the value of living )uarters.

R:LING6

8hether or not bonus forms part of (ages depends upon the

circumstances or condition for its payment.

>f it is an additional compensation (hich the employer

promised and agreed to give (ithout any conditions imposed for itspayment, such as success of business or greater production or

output, then it is part of the (age. -ut if it is paid only if prots are

realiMed or a certain amount of productivity achieved, it cannot be

considered part of the (ages.

>n the case at bar, it is not payable to all but to laborers

only. >t is also paid on the basis of actual production or actual (or*

accomplished. >f the desired goal of production is not obtained or

the amount of actual (or* accomplished, the bonus does not

accrue.

>t is evidence that under the circumstances it is paid only

(hen the labor becomes more ecient or more productive. >t is

only an inducement for eciency, a priMe therefor, not a part of the

(age.




G.R. No. 18180, $*r4 12, 201?

<ESLE%AN :NI#ERSIT% !"ILI!!INES, !etitioner , v$ <ESLE%AN:NI#ERSIT%- !"ILI!!INES &AC:LT% AND STA&&

ASSOCIATION, Respondent$

%#/

Petitioner 8esleyan 7niversity6Philippines is a non6stoc*, non6prot

educational institution duly organiMed and existing under the la(s

of the Philippines. Respondent 8esleyan 7niversity6Philippines

Haculty and Sta/ Association, on the other hand, is a duly

registered labor organiMation acting as the sole and exclusive

bargaining agent of all ran*6and6le faculty and sta/ employees of petitioner

Petitioner issued a ;emorandum providing guidelines on theimplementation of vacation and sic* leave credits as (ell asvacation leave commutation

RespondentNs President, Cynthia . +e ara <+e ara= (rote aletter to Atty. ;aglaya informing him that respondent is notamenable to the unilateral changes made by petitioner. +e ara

)uestioned the guidelines for being violative of existing practicesand the C-A,

abor ;anagement Committee <;C= ;eeting (as held during(hich petitioner advised respondent to le a grievance complainton the implementation of the vacation and sic* leave policy. I) 4e*me mee()', e((o)er *))o>)e ( +*) o (m+eme)()' * o)e-re(reme) o+(/,4(4 *>)*e*b+e o reo)e).

abor ;anagement Committee <;C= ;eeting (as held during(hich petitioner advised respondent to le a grievance complaint

on the implementation of the vacation and sic* leave policy. >n thesame meeting, petitioner announced its plan of implementing aone6retirement policy,(hich (as unacceptable to respondent.

!etitioner;s Argument

Petitioner argues that there is only one retirement plan as the C-ARetirement Plan and the PFRAA Plan are one and the same. >tmaintains that there is no established company practice or policyof giving t(o retirement benets to its employees. Assuming,(ithout admitting, that t(o retirement benets (erereleased, petitioner insists that these (ere done by mere oversightor mista*e as there is no -oard Resolution authoriMing theirrelease. And since these benets are unauthoriMed and irregular,these cannot ripen into a company practice or policy. As to theadavits submitted by respondent, petitioner claims that these areself6serving declarations, and thus, should not be given (eight andcredence.

Respondent;s Argument

Respondent belies the claims of petitioner and asserts that thereare t(o retirement plans as the PFRAA Retirement Plan, (hich hasbeen implemented for more than @$ years, is di/erent from theC-A Retirement Plan. Respondent further avers that it has al(aysbeen a practice of petitioner to give t(o retirement benets andthat this practice (as established by substantial evidence as foundby both the Ooluntary Arbitrator and the CA.cra

ISS:E8hether or not the reduction of the of the retirement benets

(hich has been implemented for more than @$ years is in violationof the labor codeV

R:LINGT4e No)-D(m()>(o) R>+e o>) () Ar(+e 100 o 4e L*borCoe e+((+/ ro4(b( em+o/er rom e+(m()*()' orre>()' 4e be)e ree(ve b/ 4e(r em+o/ee. T4(r>+e, 4oever, *+(e o)+/ ( 4e be)e ( b*e o) *)ere o+(/, * r(e) o)r*, or 4* r(e)e ()o *r*(e. To be o)(ere * r*(e, ( m> beo)(e)+/ *) e+(ber*e+/ m*e b/ 4e em+o/er over *+o)' er(o o (me.




A) ee(o) o 4e r>+e ( 4e) 4e r*(e ( >e oerror () 4e o)r>(o) or *+(*(o) o * o>b>+ or(>+ >e(o) o +*.M T4e error, 4oever, m> beorree (mme(*e+/ *er ( (over/H o4er(e, 4er>+e o) No)-D(m()>(o) o Be)e o>+ (++ *+/.

>n this case, respondent (as able to present substantial evidencein the form of adavits to support its claim that there are t(oretirement plans. -ased on the adavits, petitioner has beengiving t(o retirement benets as early as %&&'. Petitioner, on theother hand, failed to present any evidence to refute the veracity of these adavits. PetitionerNs contention that these adavits areself6serving holds no (ater. 4he retired employees of petitionerhave nothing to lose or gain in this case as they have alreadyreceived their retirement benets. 4hus, they have no reason toper:ure themselves. !bviously, the only reason they executedthose adavits is to bring out the truth. As (e see it then, theiradavits, corroborated by the adavits of incumbent employees,are more than sucient to sho( that the granting of t(oretirement benets to retiring employees had already ripened intoa consistent and deliberate practice.

;oreover, petitionerNs assertion that there is only one retirementplan as the C-A Retirement Plan and the PFRAA Plan are one andthe same is not supported by any evidence. 4here is nothing inArticle O> of the C-A to indicate or even suggest that the PlanTreferred to in the C-A is the PFRAA Plan. -esides, any doubt in theinterpretation of the provisions of the C-A should be resolved infavor of respondent. >n fact, petitionerNs assertion is negated bythe announcement it made during the ;C ;eeting on Hebruary 1,#$$? regarding its plan of implementing a one6retirement plan.THor if it (ere true that petitioner (as already implementing a one6

retirement policy, there (ould have been no need for suchannouncement. F)ually damaging is the letter6memorandum dated ;ay %%, #$$?, entitled Suggestions on thedefenses (e can introduce to :ustify the abolition of doubleretirement policy,T prepared by the petitionerNs legal counsel. 4hese circumstances, ta*en together, bolster the nding that thet(o6retirement policy is a practice. 4hus, petitioner cannot,(ithout the consent of respondent, eliminate the t(o6retirementpolicy and implement a one6retirement policy as this (ould violatethe rule on non6diminution of benets.

As a last ditch e/ort to abolish the t(o6retirement policy, petitionercontends that such practice is illegal or unauthoriMed and that thebenets (ere erroneously given by the previous administration."o evidence, ho(ever, (as presented by petitioner to substantiateits allegations.

Considering the foregoing dis)uisition, (e agree (ith the ndingsof the Ooluntary Arbitrator, as armed by the CA, that there issubstantial evidence to prove that there is an existing practice of giving t(o retirement benets, one under the PFRAA Plan andanother under the C-A Retirement Plan.




NESTL !"ILI!!INES, INC., petitioner,

vs.T"E NATIONAL LABOR RELATIONS CO$$ISSION *) :NIONO& &ILI!RO E$!LO%EES, respondents.

HAC4S3

"estle Philippines as four collective bargaining agreement

separately covering the petitioner0s employees in its3 %.

Alabang2Cabuyao factoriesB #. ;a*ati Administration !ce. <-oth

Alabang2Cabuyao factories and ;a*ati oce (ere represented by

the respondent, :)(o) o &(+(ro Em+o/ee :&EP=B @. Cagayan

de !ro Hactory represented by 8A47B and D. Cebu2+avao Sales

!ces represented by the 4rade 7nion of the Philippines and Allied

Services <47PAS=, all expired on June @$, %&1'.

4hereafter, 7HF (as certied as the sole and exclusive bargainingagent for all regular ran*6and6le employees at the petitioner0s

Cagayan de !ro factory, as (ell as its Cebu2+avao Sales !ce.

8hile the parties, (ere negotiating, the employees at Cabuyao

resorted to a 9slo(do(n9 and (al*6outs prompting the petitioner to

shut do(n the factory. ;arathon collective bargaining negotiations

bet(een the parties ensued. 4he 7HF declared a bargaining

deadloc*. 4he Secretary of abor assumed :urisdiction and issued a

return to (or* order. >n spite of that order, the union struc*,

(ithout notice. 4he company retaliated by dismissing the union

ocers and members of the negotiating panel (ho participated in

the illegal stri*e. 4he "RC armed the dismissals. 7HF led a

notice of stri*e on the same ground of C-A deadloc* and unfairlabor practices.

Eo(ever, the company (as able to conclude a C-A (ith the union

at the Cebu2+avao Sales !ce, and (ith the Cagayan de !ro

factory (or*ers. 4he union assailed the validity of those

agreements and led a case of unfair labor practice against the

company. After conciliation e/orts of the "ational Conciliation and

;ediation -oard <"C;-= yielded negative results, the dispute (as

certied to the "RC by the Secretary of abor.

After the parties had led their pleadings, the "RC issued aresolution regarding the union0s demand for liberaliMation of the

company0s retirement plan for its (or*ers modifying such.

-oth parties move to reconsider ho(ever it has been denied. 4he

petitioner contended that since its retirement plan is non6

contributory, it <"estlW= has the sole and exclusive prerogative to

dene the terms of the plan 9because the (or*ers have no vested

and demandable rights thereunder, the grant thereof being not a

contractual obligation but merely gratuitous. At most the company




can only be directed to maintain the same but not to change its

terms. >t should be left to the discretion of the company on ho( to

improve or modify the same

>ssue3 8hether or not Retirement plan that is included in the C-A is

valid

Ruling3

Kes. Retirement Plan (as 9a collective bargaining issue

right from the start9 for the improvement of the existing

Retirement Plan (as one of the original C-A proposals submitted

by the 7HF on ;ay 1, %&1' to Arthur Gilmour, president of "estlW

Philippines. 4he union0s original proposal (as to modify the existing

plan by including a provision for early retirement. 4he company did

not )uestion the validity of that proposal as a collective bargaining

issue but merely o/ered to maintain the existing non6contributory

retirement plan (hich it believed to be still ade)uate for the needs

of its employees, and competitive (ith those existing in the

industry. 4he union thereafter modied its proposal, but the

company (as adamant. Conse)uently, the impassW on the

retirement plan become one of the issues certied to the "RC for

compulsory arbitration.

4he company0s contention that its retirement plan is non6

negotiable, is not (ell6ta*en. 4he "RC correctly observed that the

inclusion of the retirement plan in the collective bargaining

agreement as part of the pac*age of economic benets extended

by the company to its employees to provide them a measure of nancial security after they shall have ceased to be employed in

the company, re(ard their loyalty, boost their morale and

eciency and promote industrial peace, gives 9a consensual

character9 to the plan so that it may not be terminated or modied

at (ill by either party

4he fact that the retirement plan is non6contributory, i.e., that the

employees contribute nothing to the operation of the plan, does

not ma*e it a non6issue in the C-A negotiations. As a matter of

fact, almost all of the benets that the petitioner has granted to its

employees under the C-A U salary increases, rice allo(ances, mid6

year bonuses, %@th and %Dth month pay, seniority pay, medical

and hospitaliMation plans, health and dental services, vacation, sic*

X other leaves (ith pay U are non6contributory benets. Since the

retirement plan has been an integral part of the C-A since %&'#,

the 7nion0s demand to increase the benets due the employees

under said plan, is a valid C-A issue.

Sev(++* Tr*()' Com*)/ v. Sem*)*

G.R. "o. %#D? April #1, #$$D

&*6 in %&&? to %&&', petitioner Sevilla 4rading added to the

base gure the amount of other benets received by the

employees (hich are beyond the basic pay such as "ight Premium,

7nion eave Pay, ;aternity eave Pay, egal Eoliday Pay and etc.

in its computation of the %@th month pay of its employees. 8hen

the company changed the person6in6charged of the payroll in the

process of computeriMing its payroll and after audit (as conducted,

it allegedly discovered the error of including non6basic pay or other

benets used in the computation of the %@th month pay. 4he

company excluded then these non Ybasic pay or other benets and

used a ne( formula, as follo(s3

%@th month pay Q net basic pay 2 %# months

(here3net basic pay Q gross pay Y <non6basic pay or other

benets=

Conse)uently, the Sevilla 4rading 8or*ers 7nion contested the ne(

computation and the reduction of their %@th month pay. 4hey both

agreed to settle the issue through public respondent Accredited

Ooluntary Arbiter Semana. 4he 7nion alleged that petitioner

violated the rule prohibiting the elimination or diminution of

employeesN benets as provided for in Article %$$ of the abor

Code and therefore, should be included in the computation of %@th




month pay. 4he petitioner, on the other hand, argues that the

computation of the %@th month pay is based on basic salary, so it

merely corrected the mista*e it committed.

Semana ruled in favor of the 7nion. Eence, this case.

I>e6 8!" the computation of the %@th month pay includes non6

basic pay or other benets in the case at barV

R>+()'6 KFS <"!4F3 the period or time lapsed before the company

corrected or rectied its computation=

San ;iguel Corporation vs. >nciong held that, 7nder Presidential

+ecree 1% and its implementing rules, the basic salary of an

employee is used as the basis in the determination of his %@th

month pay. Any compensation or remunerations (hich are deemed

not part of the basic pay is excluded as basis in the computation of the mandatory bonus.T

E!8FOFR, (hen petitioner Sevilla 4rading still included over the

years non6basic benets of its employees, such as maternity leave

pay, cash e)uivalent of unused vacation and sic* leave, among

others in the computation of the %@th month pay, this may only be

construed as a voluntary act on its part. Putting the blame on the

petitionerNs payroll personnel is inexcusable.

8ith regard to the length of time to constitute voluntary employer

practice (hich cannot be unilaterally (ithdra(n by the employer,

(e hold that :urisprudence has not laid do(n any rule re)uiring a

specic minimum number of years. >n the case at bar, petitioner

Sevilla *ept the practice of including non6basic benets such as

paid leaves for unused sic* leave and vacation leave in the

computation of their %@th month pay for at least t(o<#= years. 4his,

(e rule li*e(ise constitutes voluntary employer practice (hich

cannot be unilaterally (ithdra(n by the employer (ithout violating

Art. %$$ of the abor Code.

GLOBE $AC;A% CABLE AND RADIO COR!ORATION v.NATIONAL LABOR RELATIONS CO$$ISSION

&ACTS6

!n !ctober @$, %&1D, 8age !rder "o. ? too* e/ect and

increased the cost6of6living allo(ance of non6agricultural (or*ers in

the private sector. Petitioner Corporation complied (ith the said

8age !rder by paying its monthly6paid employees the mandated P

@ per day C!A. Eo(ever, in computing said C!A, petitioner

Corporation multiplied the P@ daily C!A by ## days, (hich is the

number of (or*ing days in the company. Respondent 7nion




disagreed (ith the computation of the monthly C!A claiming that

the daily C!A rate of P@ should be multiplied by @$ days to arrive

at the monthly C!A rate.

Respondent 7nion led a complaint for illegal deduction,

underpayment, unpaid allo(ances, and violation of 8age !rder "o.

?. abor Arbiter sustained the position of Petitioner Corporation

that the monthly C!A should be computed on the basis of t(enty

t(o <##= days. "RC reversed the abor Arbiter and held that

Petitioner Corporation (as guilty of illegal deductions and that

C!A should be paid and computed on the basis of thirty <@$= days

instead of t(enty t(o <##= days.

ISS:E6

8hether or not the computation should be multiplied by @$ days to

arrive at a monthly C!A rate

R:LING6

)0. he primordial consideration or the entitlement to

#0% is that basic *age is being paid. >n other (ords, the

payment of C!A is mandated only for the days that the

employees are paid their basic (age, even if said days are

un(or*ed. So that on the days that employees are not paid their

basic (age, the payment of C!A is not mandated. Eence, (e

have the principle of Z"o Pay, "o FC!AN

;oreover, pursuant to the C-A, monthly basic pay is computed on

the basis of ve days a (ee* or t(enty t(o days a month. As such,

specimen payrolls of employees consistently used t(enty6t(o

days.

8here the company observes a 6day (or* (ee*, it (ill have to be

held that the C!A should be computed on the basis of t(enty6t(o

days.

DE#ELO!$ENT BAN; O& T"E !"ILI!!INES v. NATIONALLABOR RELATIONS CO$$ISSION

&ACTS6

irag 4extile ;ills, >nc. <>RAG= ceased operations by early

%&1#. Pursuant to a nal and executory :udgment of the "RC,




>RAG (as ad:udged liable to its (or*ers for unpaid (ages and

salaries (hich amounted to P ?,#&#,@1$

>RAGNs only remaining asset (as mortgaged to +-P (hich

on April %, %&1@ foreclosed the mortgage and ac)uired said

property at public auction for P@%,@D?,D?#.&$, in partial

satisfaction of >RAGNs indebtedness to +-P. >RAGNs (or*ers

through their union <A"+= thereupon sought to garnish on +-P

the proceeds of the foreclosure sale, to the extent of their

ad:udged unpaid (ages.

ISS:E6

8hether or not the claim of >RAGNs (or*ers for unpaid (ages

should be given rst preference in the li)uidation proceedings.

R:LING6

)0. A"+ <representing >RAGNs (or*ers= may not enforce its rstpreference in the satisfaction of unpaid monetary claims of its

members, over that of +-P, in the absence o a ormal

declaration o bankruptcy or +udicial li2uidation o I3%45s

business.

7nder Article %%$ of the abor Code3

>n the event of ban*ruptcy or li)uidation of an employerNs

business, his (or*ers shall en:oy rst preference as regards their

unpaid (ages and other monetary claims, any provision of la( to

the contrary not(ithstanding. Such unpaid (ages and monetary

claims, shall be paid in full before the claims of the Governmentand other creditors may be paidT

>n the event of insolvency, a principal ob:ective should be to e/ect

an e)uitable distribution of the insolventNs property among his

creditors. 4o accomplish this there must rst be some proceeding

(here notice to all of the insolventNs creditors may be given and

(here the claims of preferred creditors may be bindingly

ad:udicated.

Preferential right of credit attains signicance only after the

properties of the debtor have been inventoried and li)uidated, and

the claims held by his various creditors have been established.T

+-P anchors its claim on a mortgage credit. A recorded mortgage

credit is a special preferred credit. 4he preference given by Article

%%$, is an ordinary preferred credit.

Hor and orderly settlement of a debtorNs assets, all creditors must

be convened, their claims ascertained and inventoried, and

thereafter the preferences determined in the course of :udicial

proceedings. Such ad:udication made (ill be binding on all parties6

in6interest, since the proceedings are proceedings in rem.




I)>+*r "oe+ Em+o/ee :)(o)QN&L v <*erro) I)>+*r"oe+ D*v*o

&*6

!n "ovember ?, #$$$, respondent 8aterfront >nsular Eotel +avao

<respondent= sent the +epartment of abor and Fmployment

<+!F=, Region >, +avao City, a "otice of Suspension of

!perations notifying the same that it (ill suspend its operations for

a period of six months due to severe and serious business losses.>n said notice, respondent assured the +!F that if the company

could not resume its operations (ithin the six6month period, the

company (ould pay the a/ected employees all the benets legally

due to them.

+uring the period of the suspension, +omy R. Ro:as <Ro:as=, the

President of +avao >nsular Eotel Hree Fmployees 7nion <+>EHF76

"H=, the recogniMed labor organiMation in 8aterfront +avao, sent

respondent a number of letters as*ing management to reconsider

its decision.

>n a letter dated "ovember 1, #$$$, Ro:as intimated that the

members of the 7nion (ere determined to *eep their :obs and that

they believed they too had to help respondent.

>n another letter dated "ovember %$, #$$$, Ro:as reiterated the

7nion0s desire to help respondent, to (it3

2We would li#e to than# you for giving us the opportunity

to meet <with= your representatives in order for us to air our sentiments and e+tend our helping hands for a possible

reconsideration of the company>s decision$

3he tal#s have enabled us to initially come up with a suggestion of

solving the high cost on payroll$

We propose that .6 years and above be paid their due

retirement bene'ts and put their length of service to ?ero without

loss of status of employment with a minimum hiring rate$

3hru this scheme, the company would be able to save asubstantial amount and reduce greatly the payroll costs without

aecting the 'nance of the families of the employees because

they will still have a :ob from where they could get their income$

@oreover, we are also open to a possible reduction of some

economic bene'ts as our gesture of sincere desire to help$

We are loo#ing forward to a more fruitful round of tal#s in order to

save the hotel.T




>n another letter dated "ovember #$, #$$$, Ro:as sent respondent

more proposals as a form of the 7nion0s gesture of their intention

to help the company, thus3

%* Suspension of <the= C"A for ten years, No stri#e no loc#(

out shall be enforced$

.* !ay all the employees their bene'ts due, and put the

length of service to ?ero with a minimum hiring rate$

!ayment of bene'ts may be on a staggered basis or as

available$

0* Night premium and holiday pays shall be according to

law$ vertime hours rendered shall be osetted as

practiced$

&* Reduce the sic# leaves and vacation leaves to %6

daysB%6days$

6* mergency leave and birthday o are hereby waived$

8* 9uty meal allowance is '+ed at !0D$DD only$ No more

midnight snac#s and double meal allowance$ 3he coo#

drin#s be stopped as practiced$

E* We will shoulder 6DF of the group health insurance andfamily medical allowance be reduced to %,6DD$DD instead

of 0,DDD$DD$

G* 3he practice of bringing home our uniforms for laundry

be continued$

/* Hi+ed manning shall be implemented, the rest of

manpower reIuirements maybe sourced thru WA! and

casual hiring$ @anpower for '+ed manning shall be %&6

ran#(and('le union members$

%D* Jnion will cooperate fully on strict implementation of

house rules in order to attain desired productivity and

discipline$ 3he union will not tolerate problem members$

%%* 3he union in its desire to be of utmost service would

adopt multi(tas#ing for the hotel to be more competitive$

-t is understood that with the suspension of the C"A

renegotiations, the same e+isting C"A shall be adopted and that all

provisions therein shall remain enforced e+cept for those

mentioned in this proposal$ 3hese proposals shall automatically

supersede the aected provisions of the C"A$

>n a hand(ritten letter dated "ovember #, #$$$, Ro:as once again

appealed to respondent for it to consider their proposals and to re6

open the hotel. >n said letter, Ro:as stated that manpo(er for xed

manning shall be one hundred <%$$= ran*6and6le 7nion members

instead of the one hundred forty6ve <%D= originally proposed.

Hinally, sometime in January #$$%, +>EHF76"H, through Ro:as,

submitted to respondent a ;anifesto concretiMing their earlier

proposals.

After series of negotiations, respondent and +>EHF76"H,

represented by its President, Ro:as, and Oice6Presidents, Fxe)uiel J.

Oarela Jr. and Avelino C. -ation, Jr., signed a ;emorandum of

Agreement <;!A= (herein respondent agreed to re6open the hotel




sub:ect to certain concessions o/ered by +>EHF76"H in its

;anifesto.

Aor()'+/, reo)e) o)(e ( m*)oer r>>reo 100 r*)-*)-+e em+o/ee * e or4 () 4e erm o 4e $OA. $oreover, * *'ree >o) () 4e $OA, * )e */*+e * *+o re*re b/ reo)e).

4he retained employees individually signed a 9Reconrmation of

Fmployment9 (hich embodied the ne( terms and conditions of

their continued employment. Fach employee (as assisted by Ro:as

(ho also signed the document. !n June %, #$$%, respondent

resumed its business operations

!n August ##, #$$#, +arius Joves <Joves= and +ebbie Planas,

claiming to be local ocers of the "ational Hederation of abor

<"H=, led a "otice of ;ediation before the "ational Conciliation

and ;ediation -oard <"C;-=, Region >, +avao City. >n said "otice,

it (as stated that the 7nion involved (as 9+AR>7S J!OFS2+F-->F

PA"AS F4. A, "ational Hederation of abor.9 4he issue raised in

said "otice (as the 9+iminution of (ages and other benets

through unla(ful ;emorandum of Agreement.9

!n August #&, #$$#, the "C;- called Joves and respondent to aconference to explore the possibility of settling the con5ict. >n the

said conference, respondent and petitioner >nsular Eotel

Fmployees 7nion6"H <>EF76"H=, represented by Joves, signed a

Submission Agreement (herein they chose AOA Alfredo C. !lvida

<AOA !lvida= to act as voluntary arbitrator. S>bm(e or 4ereo+>(o) o A#A O+v(* * 4e eerm()*(o) o 4e4eror )o 4ere * * (m()>(o) o *'e *) o4er be)e4ro>'4 *) >)+*>+ $OA. I) >or o 4( *>4or(/ o +e4e om+*(), ove, *(e b/ A/. D*)(+o C>++o,

ree)e ever*+ Se(*+ !oer o Aor)e/ S!A 4(4ere, 4oever, >)*e *) >))o*r(e. S>be>e)+/A#A O+v(* * re+*e b/ )e *rb(r*or A#A $o)e@o.

A#A $o)e@oJ )()'6 >n favor of Cullo. +eclared the ;!A in

)uestion invalid as contrary to la( and public policy and declared

that there is dimunition of the (ages and the other benets of the

7nion members and ocers under said invalid ;!A.

CA R>+()'6 +eclared the ;!A Oalid and enforceable.

I>e6 <4e4er or )o Ar(+e 100 o 4e L*bor Coe *+(eo)+/ o be)e e)@o/e r(or o 4e *o(o) o L*borCoe, () ee *++o 4e (m>)((o) o 4e be)ee)@o/e b/ 4e em+o/ee rom ( *o(o) 4e)eor4

S(e (>e6 #*+((/ o $OA I ( )o > (>e re'*r()'me(*(o), L*bRe+ )* /** />)

R>+()'6 %ES.Cullo argues that the CA must have erred in concluding that Article

%$$ of the abor Code applies only to benets already en:oyed at

the time of the promulgation of the abor Code.

Article %$$ of the abor Code provides3

!RO"IBITION AGAINST ELI$INATION OR DI$IN:TION O&BENE&ITS- No4()' () 4( Boo 4*++ be o)r>e oe+(m()*e or () *)/ */ (m()(4 >+eme), or o4erem+o/ee be)e be()' e)@o/e * 4e (me o 4erom>+'*(o) o 4( Coe.

!n this note, Apex ;ining Company, >nc. v. "RC? is instructive,

to (it3

C+e*r+/, 4e ro4(b((o) *'*() e+(m()*(o) or (m()>(o) o be)e e o> () Ar(+e 100 o 4e L*bor Coe (e(*++/ o)er)e (4 be)e *+re*/ e)@o/e * 4e(me o 4e rom>+'*(o) o 4e L*bor Coe. Ar(+e 100oe )o, () o4er or, >ror o *+/ o (>*(o)*r(()' *er 4e rom>+'*(o) *e o 4e L*bor Coe.




Fven assuming arguendo that Article %$$ applies to the case at

bar, this Court agrees (ith respondent that 4e *me oe )oro4(b( * >)(o) rom oer()' *) *'ree()' o re>e*'e *) be)e o 4e em+o/ee. >n Rivera v. Fspiritu, this

Court ruled 4* 4e r('4 o ree o++e(ve b*r'*()()', *er*++, ()+>e 4e r('4 o >e) ( , thus3

A C"A is a contract e+ecuted upon reIuest of either the employer

or the e+clusive bargaining representative incorporating the

agreement reached after negotiations with respect to wages,

hours of wor# and all other terms and conditions of employment,

including proposals for ad:usting any grievances or Iuestions

arising under such agreement$ 3he primary purpose of a C"A is

the stabili?ation of labor(management relations in order to create a

climate of a sound and stable industrial peace$ -n construing a

C"A, the courts must be practical and realistic and give due

consideration to the conte+t in which it is negotiated and the purpose which it is intended to serve$ 3he assailed !AL(!ALA

agreement was the result o voluntary collective bargaining

negotiations undertaken in the light o the severe fnancial

situation aced by the employer, *ith the peculiar and

uni2ue intention o not merely promoting industrial peace

at (%, but preventing the latter5s closure $ We 'nd no conKict

between said agreement and Article .60(A of the Labor Code$

Article .60(A has a two(fold purpose$ ne is to promote industrial

stability and predictability$ -nasmuch as the agreement sought to

promote industrial peace at !AL during its rehabilitation, said

agreement satis'es the 'rst purpose of Article .60(A$ 3he other is

to assign speci'c timetables wherein negotiations become a

matter of right and reIuirement$ Nothing in Article .60(A, prohibits

the parties from waiving or suspending the mandatory timetables

and agreeing on the remedies to enforce the same$ -n the instant

case, it was !ALA, as the e+clusive bargaining agent of !AL;s

ground employees, that voluntarily entered into the #$% *ith

(%. It *as also (%6% that voluntarily opted or the 1-

year suspension o the #$%. 6ither case *as the union5s

exercise o its right to collective bargaining. he right to

ree collective bargaining, ater all, includes the right to

suspend it .

S(e (>e6 astly, this Court is not unmindful of the fact that

+>EHF76"H0s Constitution and -y6a(s specically provides that

9the results of the collective bargaining negotiations shall be

sub:ect to ratication and approval by ma:ority vote of the 7nion

members at a meeting convened, or by plebiscite held for such

special purpose.9 Aor()'+/, ( ( >)(>e 4* 4e $OA* )o >b@e o r*(*(o) b/ 4e 'e)er*+ member4(o 4e :)(o). T4e >e(o) o be reo+ve 4e) (, oe 4e)o)-r*(*(o) o 4e $OA () *or*)e (4 4e :)(o)o)(>(o) rove **+ o 4e v*+((/ 4ereo NO

>t must be remembered that after the ;!A (as signed, 4emember o 4e :)(o) ()(v(>*++/ (')e o)r*e)om()*e * FReo)rm*(o) o Em+o/me).F Cullo did

not dispute the fact that of the 1' members of the 7nion, (hosigned and accepted the 9Reconrmation of Fmployment,9 '% are

the respondent employees in the case at bar. ;oreover, it bears to

stress 4* *++ 4e em+o/ee ere *(e b/ Ro@*,DI"&E:-N&L re(e), 4o eve) o-(')e e*4 o)r*.

S(>+*e () e*4 Reo)rm*(o) o Em+o/me) ere 4e)e *+*r/ *) be)e 4eme. I) *((o), ( be*r ore 4* e( rov((o) o 4e )e o)r* *+om*e reere)e o 4e $OA. T4>, 4e ()(v(>*+ membero 4e >)(o) *))o e(') )o+e'e o 4e ee>(o) o 4e$OA. E*4 o)r* * ree+/ e)ere ()o *) 4ere ( )o()(*(o) 4* 4e *me * *e)e b/ r*>,m(reree)*(o) or >re. 4o this Court0s mind, 4e (')()'o 4e ()(v(>*+ FReo)rm*(o) o Em+o/me)F 4o>+,4ereore, be eeme *) (m+(e r*(*(o) b/ 4e :)(o)member o 4e $OA.

>n Planters Products, >nc. v. "RC,'% this Court refrained from

declaring a C-A invalid not(ithstanding that the same (as not




ratied in vie( of the fact that the employees had en:oyed benets

under it, thus3

Jnder Article .0% of the Labor Code and Sec$ %, Rule -, "oo# M of

the -mplementing Rules, the parties to a collective <bargaining=

agreement are reIuired to furnish copies of the appropriate

Regional ce with accompanying proof of rati'cation by the

ma:ority of all the wor#ers in a bargaining unit$ 3his was not done

in the case at bar$ $ut *e do not declare the 178-17! #$%

invalid or void considering that the employees have

en+oyed benefts rom it. hey cannot receive benefts

under provisions avorable to them and later insist that the

#$% is void simply because other provisions turn out not to

the liking o certain employees $ + + +$ @oreover, the two C"As

prior to the %/G&(%/GE C"A were not also formally rati'ed, yet the

employees are basing their present claims on these C"As$ -t is

iniIuitous to receive bene'ts from a C"A and later on disclaim its

validity$

A+(e o 4e *e * b*r, 4(+e 4e erm o 4e $OA>)o>be+/ re>e 4e *+*r(e *) er*() be)e

rev(o>+/ e)@o/e b/ 4e member o 4e :)(o), ( *))oe*e 4( Co>r *e)(o) 4* ( * 4e ee>(o) o 4e $OA 4(4 *ve 4e */ or 4e re-oe)()' o 4e4oe+, )o(4*)()' ( )*)(*+ (re. $ore(mor*)+/, 4e ee>(o) o 4e $OA *++oe reo)e)o ee 4e(r @ob. I o>+ er*()+/ be ()(>(o> or 4emember o 4e :)(o) o (') )e o)r* rom()' 4ere-oe)()' o 4e 4oe+ o)+/ o +*er o) re)e'e o) 4e(r*'reeme) o) 4e * o 4e )o)-r*(*(o) o 4e $OA.

I) *((o), ( be*r o o() o> 4* Ro@* ( )o *>)(+*er*++/ 4e) 4e )e'o(*e (4 reo)e)m*)*'eme). T4e Co)(>(o) *) B/-L* o DI"&E:-N&L+e*r+/ rov(e 4* 4e re(e) ( *>4or(e oreree) 4e >)(o) o) *++ o*(o) *) () *++ m*er ()4(4 reree)*(o) o 4e >)(o) m*/ be *'ree orre>(re. &>r4ermore, Ro@* * roer+/ *>4or(e

>)er * Bo*r o D(reor Reo+>(o) o )e'o(*e (4reo)e).

compiled labor 6th meeting updated as of 10.7.14

Documents

respondent director

favor of private respondent

letter of private respondent

finding of respondent

ministry of labor

labor relations

labor cases

separation benefits