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Wages to Withholding of Bonus | Labor Standards


A.
1.

Wages
Definition
JOSE SONGCO vs NLRC and F.E. Zuellig

FACTS: Private respondent F.E. Zuellig filed with the Department of


Labor an application seeking clearance to terminate the services of
petitioners Jose Songco, Romeo Cipres, and Amancio Manuel on the
ground of retrenchment due to financial losses. This application was
seasonably opposed by petitioners alleging that the company is not
suffering from any losses. They alleged further that they are being
dismissed because of their membership in the union. At the last
hearing of the case, however, petitioners manifested that they are no
longer contesting their dismissal. The parties then agreed that the sole
issue to be resolved is the basis of the separation pay due to
petitioners. Petitioners, who were in the sales force of Zuellig received
monthly salaries of at least P40,000. In addition, they received
commissions for every sale they made.
Zuellig and petitioners entered into a Bargaining Agreement, which
states: Any employee who is separated from employment due to
permanent lay-off not due to the fault of said employee shall receive
from the company a retirement gratuity in an amount equivalent to one
(1) month's salary per year of service.
LA Decision: Respondent should be as it is hereby, ordered to pay the
complainants separation pay equivalent to their one month salary for
every year of service that they have worked with the company.
ISSUE: Whether or not earned sales commissions and allowances
should be included in the monthly salary of petitioners for the purpose
of computation of their separation pay. (YES)
RULING:
Art 97 of the LC explicitly includes commission in the definition
of the term wage
Petitioners' position was that in arriving at the correct and legal amount
of separation pay due them, whether under the Labor Code or the
CBA, their basic salary, earned sales commissions and allowances
should be added together. They cited Article 97(f) of the Labor Code
which includes commission as part on one's salary.
Zuellig argues that if it were really the intention of the Labor Code as
well as its implementing rules to include commission in the
computation of separation pay, it could have explicitly said so in clear
and unequivocal terms. Furthermore, in the definition of the term
"wage", "commission" is used only as one of the features or
designations attached to the word remuneration or earnings.
Article 97(f) by itself is explicit that commission is included in the
definition of the term "wage". It has been repeatedly declared by the
courts that where the law speaks in clear and categorical language,
there is no room for interpretation or construction; there is only room
for application
Insofar as the issue of whether or not allowances should be included in
the monthly salary of petitioners for the purpose of computation of their
separation pay is concerned, this has been settled in the case
of Santos v. NLRC where the SC ruled that "in the computation of
backwages and separation pay, account must be taken not only of the
basic salary of petitioner but also of her transportation and emergency
living allowances."
There is no ambiguity between Art 97 (f) and Art 284 of the LC
How ever, it may be argued that if we correlate Article 97(f) with Article
XIV of the Collective Bargaining Agreement, Article 284 of the Labor
Code and Sections 9(b) and 10 of the Implementing Rules, there
appears to be an ambiguity.
The ambiguity between Article 97(f), which defines the term 'wage' and
Article XIV of the Collective Bargaining Agreement, Article 284 of the
Labor Code and Sections 9(b) and 10 of the Implementing Rules,
which mention the terms "pay" and "salary", is more apparent than
real. Broadly, the word "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. Indeed, there is eminent authority

for holding that the words "wages" and "salary" are in essence
synonymous.
The commissions were in the form of incentives or encouragement, so
that the petitioners would be inspired to put a little more industry on the
jobs particularly assigned to them, still these commissions are direct
remuneration services rendered which contributed to the increase of
income of Zuellig
The nature of the work of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly that
commission are part of petitioners' wage or salary. We take judicial
notice of the fact that some salesmen do not receive any basic salary
but depend on commissions and allowances or commissions alone,
are part of petitioners' wage or salary.
Applying this by analogy, since the commissions in the present case
were earned by actual market transactions attributable to petitioners,
these should be included in their separation pay. In the computation
thereof, what should be taken into account is the average commissions
earned during their last year of employment.
The final consideration is, in carrying out and interpreting the Labor
Code's provisions and its implementing regulations, the workingman's
welfare should be the primordial and paramount consideration. This
kind of interpretation gives meaning and substance to the liberal and
compassionate spirit of the law as provided for in Article 4 of the Labor
Code which states that "all doubts in the implementation and
interpretation of the provisions of the Labor Code including its
implementing rules and regulations shall be resolved in favor of labor"
Cebu vs. Ople (1987)
ISSUES: WON allowances & other fringe benefits of faculty members
& other school employees may be charged against the 60% portion of
the tuition fee increases provided in Sec. 3(a), PD 451; WON the same
items may be charged against said portion under BP 232; WON
schools & their employees may enter into a CBA allocating more than
60% of said incremental proceeds for salary increases & other benefits
of employees
This case consolidates six cases involving private schools, their
teachers & non-teaching school personnel, & even parents with
children studying in said schools.
The common problem requires an interpretation of Sec. 3(a) of PD
451: Limitations. The increase in tuition or other school fees or other
charges as well as the new fees or charges authorized under the next
preceding section shall be subject to the following conditions; (a) That
no increase in tuition or other school fees or charges shall be approved
unless sixty (60%)per centum of the proceeds is allocated for increase
in salaries or wages of the members of the faculty and all other
employees of the school concerned, and the balance for institutional
development, student assistance and extension services, and return to
investments: Provided That in no case shall the return to investments
exceed twelve (12%) per centum of the incremental proceeds.
In a nutshell, the present controversy was precipitated by the claims
of some school personnel for allowances and other benefits and the
refusal of the private schools concerned to pay said allowances and
benefits on the ground that said items should be deemed included in
the salary increases they had paid out of the 60% portion of the
proceeds from tuition fee increases provided for in Sec. 3(a) of PD
451.
1) No. If the schools have no resources other than those derived
from tuition fee increases, allowances and benefits should be charged
against the proceeds of tuition fee increases which the law allows for
return on investments under Sec. 3(a) of PD 451. Therefore, it should
not be charged against the 60% portion allocated for increases in
salaries and wages. Sec. 3(a), PD 451 imposes among the conditions
for the approval of tuition fee increases, the allocation of 60% per cent
of the incremental proceeds thereof for increases in salaries or wages
of school personnel and not for any other item such as allowances or
other fringe benefits.
The 60% incremental proceeds from the tuition increase are to be
devoted entirely to wage or salary increases which means increases in
basic salary. The law cannot be construed to include allowances which
are benefits over and above the basic salaries of the employees. To

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Wages to Withholding of Bonus | Labor Standards
charge such benefits to the 60% incremental proceeds would be to
reduce the increase in basic salary provided by law, an increase
intended also to help the teachers and other workers tide themselves
and their families over these difficult economic times. The legislative
intent is to alleviate the sad plight of private schools and that of their
personnel wrought by slump in enrollment and increasing operational
costs on the part of the schools, and the increasing costs of living on
the part of the personnel.
In the light of existing laws which exclude allowances from the basic
salary or wage in the computation of the amount of retirement and
other benefits payable to an employee, this Court will not adopt a
different meaning of the terms "salaries or wages" to mean the
opposite, i.e. to include allowances in the concept of salaries or wages.
Consequently, the IRR of the MECS which provides that allowances
& other benefits may be charged against the 60% portion of the
proceeds of tuition fee increases in PD 451, is issued ultra vires.
2) Yes. PD 451 provides that 60% of the incremental proceeds of
tuition fee increases shall be applied or used to augment the salaries
and wages of members of the faculty and other employees of the
school, while BP 232 provides that the increment shall be applied or
used in accordance with the regulations promulgated by the MECS.
The Court is in favor of repeal.
First, the legislative authority under PD 451 retained the power to
apportion the incremental proceeds of the tuition fee increases.
Second, PD 451 limits the application or use of the increment to salary
or wage increase, institutional development, student assistance and
extension services and return on investment, whereas BP 232 gives
the MECS discretion to determine the application or use of the
increments. Third, the extent of the application or use of the increment
under PD 451 is fixed at the pre-determined percentage allocations;
60% for wage and salary increases, 12% for return in investment and
the balance of 28% to institutional development, student assistance
and extension services, while under BP 232, the extent of the
allocation or use of the increment is likewise left to the discretion of the
MECS.
The guidelines and regulations on tuition and other school fees
issued after the enactment of BP 232 consistently permit the charging
of allowances and other benefits against the 60% incremental
proceeds.
3) Yes. Based on the MECS and DECS rules and regulations which
implement BP 232, the 60% portion of the proceeds of tuition fee
increases may now be allotted for both salaries and allowances and
other benefits. The 60% figure is, however, a minimum which means
that schools and their employees may agree on a larger portion, or in
this case, as much as 90% for salaries and allowances and other
benefits. This is not in anyway to allow diminution or loss of the portion
allotted for institutional development of the school concerned. Thus,
paragraph 7.5 of MECS Order No. 25, series of 1985 specifically
provides that other student fees and charges like registration, library,
laboratory or athletic fees shall be used exclusively for the purposes
indicated.

PLASTIC TOWN CENTER CORPORATION


vs.
NLRC AND NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)KATIPUNAN
G.R. No. 81176 April 19, 1989
ISSUES:
The case provides for the distinction between SALARY and
GRATUITY PAY and the purpose of the latter. It also discuss whether
or not the stipulations of the parties in the CBA governs over the
provisions of the Labor Code and its IRR.
a)
What governs in the computation of gratuity pay.
(COLLECTIVE BARGAINING AGREEMENT)
b)

Whether or not the gratuity pay in the case at bar


must be computed on a 26 days in a month period
instead of 30 days. (30 DAYS).

SUBJECT OF THE CONTROVERSY:

Pertinent provisions of the CBA which provides for the


following:
Section 1: Grants the rank and file employees who rendered at least
one year of continuous service increase of P1 per worked day.
Section 2: Grant of gratuity pay by the COMPANY herein set forth is to
reward employees and laborers, who have rendered satisfactory and
efficient service with the COMPANY. THUS, in case of voluntary
resignation, which is not covered by Section 1 above, the COMPANY
nevertheless agrees to grant a gratuity pay to the resigning employee
or laborer.
Section 3: Aforementioned increase in pay shall be credited against
future allowances or wage orders hereinafter implemented or enforced
by virtue of Letters of Instructions, Decrees and other labor legislation.
FACTS:
On September 7, 1984, the respondent Nagkakaisang Lakas
ng Manggagawa (NLM)-Katipunan filed a complaint dated August 30,
1984 charging the petitioner with:
a. Violation of Wage Order No. 5, by crediting the Pl.00 per
day increase in the CBA as part of the compliance with said Wage
Order No. 5, and y instead of thirty (30) days equivalent to one (1)
month as gratuity pay to resigning employees. (p. 3, Rollo)
b. Unfair labor practice thru violation of the CBA by giving
only twenty-six (26) days pay instead of thirty (30) days equivalent to
one (1) month as gratuity pay to resigning employees. (p. 3, Rollo)
ALLEGATIONS OF THE PETITIONER:
1)

The petitioner incurred a deficiency of P1.00 in the wage


rate after integrating the ECOLA with basic pay pursuant
to Wage Order No. 4. So the petitioner advanced to May
1, 1984 or two months earlier the implementation of the
one-peso wage increase provided for in the CBA starting
July 1, 1984 for the benefit of the workers.

2)

The petitioner argues that it did not credit the Pl.00 per
day across the board increase under the CBA as
compliance with Wage Order No. 5 implemented on June
16,1984 since it gave an additional P3.00 per day to the
basic salary pursuant to said order. It, however, credited
the Pl.00 a day increase to the requirement under Wage
Order No. 4 to which the private respondents allegedly did
not object.

3)

The petitioner alleges that one month salary for daily


paid workers should be computed on the basis of
twenty-six (26) days and not thirty (30) days since
daily wage workers do not work every day of the
month including Sundays and holidays PURSUANT
TO THE PRINCIPLE OF FAIR DAY'S WAGE FOR FAIR
DAY'S LABOR"

RULING OF THE LOWER TRIBUNALS:


Labor Arbiter ruled in favor of Plastic Town while the NLRC
reversed the decision in favor of the Labor Union.
RULING: IN FAVOR OF THE LABOR UNION
The subject for interpretation in this petition for review is not
the Labor Code or its implementing rules and regulations but the
provisions of the collective bargaining agreement entered into by
management and the labor union. As a contract, it constitutes the law
between the parties and in interpreting contracts, the rules on contract
must govern.
Contracts which are not ambiguous are to be interpreted according to
their literal meaning and should not be interpreted beyond their
obvious intendment (INCLUDED IN THE DIGEST INCASE ASKED.
THIS ANSWERS THE FIRST CONTENTION)

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Wages to Withholding of Bonus | Labor Standards
The issue here is not payment for days worked but payment of gratuity
pay equivalent to one month or 30 days salary. Supreme Court
defined gratuity as follows:
a)

Something given freely, or without recompense; a gift;


something voluntarily given in return for a favor or
services; a bounty; a tip.

b)

That paid to the beneficiary for past services rendered


purely out of the generosity of the giver or grantor.-

c)

Salary or compensation. The very term 'gratuity' differs


from the words 'salary' or 'compensation' in leaving
the amount thereof, within the limits of reason, to the
arvitrament of the giver.

From the foregoing, gratuity pay is therefore, not intended to


pay a worker for actual services rendered. It is a money benefit
given to the workers whose purpose is "to reward employees or
laborers, who have rendered satisfactory and efficient service to the
company." (Sec. 2, CBA)
While it may be enforced once it forms part of a
contractual undertaking, the grant of such benefit is NOT
MANDATORY so as to be considered a part of labor standard law
unlike the salary, cost of living allowances, holiday pay, leave
benefits, etc., which are covered by the Labor Code. Nowhere has
it ever been stated that gratuity pay should be based on the actual
number of days worked over the period of years forming its basis. We
see no point in counting the number of days worked over a ten-year
period to determine the meaning of "two and one- half months'
gratuity."
The Civil Code likewise provides that when months are not
designated by name, a month is understood to be thirty (30) days. The
provision applies under the circumstances of this case.
G.R. No. L-31832 October 23, 1982
SOCIAL SECURITY SYSTEM, petitioner,
vs.
SSS SUPERVISORS' UNION-CUGCO and COURT OF INDUSTRIAL
RELATIONS, respondents.
The instant case is an offshoot of Case No. 46-IPA (49) certified to the
CIR by the President of the Philippines for compulsory arbitration of
labor dispute between the SSS and the PAFLU concerning the
interpretation of certain provisions of their Collective Bargaining
Agreement.
The PAFLU (Philippine Association of Free Labor Unions) had staged a
strike in defiance of the CIR Order of August 29, 1968 "enjoining the
parties, for the sake of industrial peace . . . to maintain the status quothe Union not to declare any strike and the Management not to dismiss
nor suspend any of its employees nor to declare any lockout." On 3
September 1968, in that same case, the SSS filed an Urgent Petition
to declare the strike illegal.
On 26 September 1968, respondent Union (the SSS Supervisors'
Union) filed a Motion for Intervention in the said case averring, inter
alia, that
1.it had not participated in the strike:
2.its members wanted to report for work but were prevented by the
picketers from entering the work premises;
3. that under the circumstances, they were entitled to their salaries
corresponding to the duration of the strike, which could be deducted
from the accrued leave credits of their members.
The SSS had no objection to the intervention sought but opposed the
demand for the payment of salaries pertaining to the entire period of
the strike.
W/N petitioner Social Security System (SSS) may be held liable
for the payment of wages of members of respondent Union who

admittedly did not work during the 17-day strike declared in 1968
by the PAFLU
RULING: We find for the petitioner based on the equitable tenet of a
"fair day's wage for a fair day's labor."
The age-old rule governing the relation between labor and capital or
management and employee is that of a 'fair day's wage for a fair day's
labor.' If there is no work performed by the employee there can be no
wage or pay, unless of course the laborer was able, willing and ready
to work but was illegally locked out, dismissed or suspended. It is
hardly fair or just for an employee or laborer to fight or litigate against
his employer on the employer's time.<re||an1w>
In this case, the failure to work on the part of the members of
respondent Union was due to circumstances not attributable to
themselves. But neither should the burden of the economic loss
suffered by them be shifted to their employer, the SSS, which was
equally faultless, considering that the situation was not a direct
consequence of the employer's lockout or unfair labor practice. Under
the circumstances, it is but fair that each party must bear his own loss.
Considering, therefore, that the parties had no hand or participation in
the situation they were in, and that the stoppage of the work was not
the direct consequence of the company's lockout or unfair labor
practice, 'the economic loss should not be shifted to the employer.'
Justice and equity demand that each must have to bear its own loss,
thus placing the parties in equal footing where none should profit from
the other there being no fault of either.
IRAN vs. NLRC
G.R. No. 121927 April 22, 1998
FACTS:
Petitioner Antonio Iran is engaged in softdrinks merchandising and
distribution in Mandaue City, Cebu, employing truck drivers who double
as salesmen, truck helpers, and non-field personnel in pursuit thereof.
Petitioner hired private respondents:

Godofredo Petralba, Moreno Cadalso, Celso


Labiaga and Fernando Colina as drivers/
salesmen

Pepito Tecson, Apolinario Gimena, Jesus


Bandilao, Edwin Martin and Diosdado
Gonzalgo as truck helpers.

Drivers/salesmen drove petitioner's delivery trucks and promoted, sold


and delivered softdrinks to various outlets in Mandaue City. The truck
helpers assisted in the delivery of softdrinks to the different outlets.
As part of their compensation, the driver/salesmen and truck helpers of
petitioner received commissions per case of softdrinks sold at the
following rates:
SALESMEN:
-

10/case of Regular softdrinks


12/case of Family Size softdrinks

TRUCK HELPERS:
8/case of Regular softdrinks
10case of Family Size softdrinks
Sometime in June 1991, petitioner, while conducting an audit of his
operations, discovered cash shortages and irregularities allegedly
committed by private respondents. Pending the investigation of
irregularities and settlement of the cash shortages, petitioner required
private respondents to report for work everyday. A few days thereafter,
despite aforesaid order, private respondents stopped reporting for
work, prompting petitioner to conclude that the former had abandoned
their employment. Consequently, petitioner terminated their services.
He also filed on November 7, 1991, a complaint for estafa against
private respondents.
On the other hand, private respondents, on December 5, 1991, filed
complaints against petitioner for illegal dismissal, illegal deduction,
underpayment of wages, premium pay for holiday and rest day, holiday

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Wages to Withholding of Bonus | Labor Standards
pay, service incentive leave pay, 13th month pay, allowances,
separation pay, recovery of cash bond.
Labor Arbiter - petitioner had validly terminated private respondents.
Nevertheless, he also ruled that petitioner had not complied with
minimum wage requirements in compensating private respondents,
and had failed to pay private respondents their 13th month pay.
Both parties seasonably appealed to the NLRC, with petitioner
contesting the labor arbiter's refusal to include the commissions he
paid to private respondents in determining compliance with the
minimum wage requirement
NLRC - denied petitioner's claim that commissions be included in
determining compliance with the minimum wage ratiocinated thus:
Petitioner insist assiduously that the commission should be
included in the computation of actual wages per agreement. We
will not fall prey to this fallacious argument. An employee should
receive the minimum wage as mandated by law and that the
attainment of the minimum wage should not be dependent on the
commission earned by an employee. A commission is an
incentive for an employee to work harder for a better production
that will benefit both the employer and the employee. To include
the commission in the computation of wage in order to comply
with labor standard laws is to negate the practice that a
commission is granted after an employee has already earned the
minimum wage or even beyond it.
ISSUE: Whether or not commissions are included in determining
compliance with the minimum wage requirement.
HELD: Article 97(f) of the Labor Code defines wage as follows:
Art. 97(f) "Wage" paid to any employee shall mean the
remuneration or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of
calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment
for work done or to be done, or for services rendered or to be
rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the employee.
This definition explicitly includes commissions as part of wages. While
commissions are, indeed, incentives or forms of encouragement to
inspire employees to put a little more industry on the jobs particularly
assigned to them, still these commissions are direct remunerations for
services rendered. In fact, commissions have been defined as the
recompense, compensation or reward of an agent, salesman,
executor, trustee, receiver, factor, broker or bailee, when the same is
calculated as a percentage on the amount of his transactions or on the
profit to the principal. The nature of the work of a salesman and the
reason for such type of remuneration for services rendered
demonstrate clearly that commissions are part of a salesman's wage or
salary.
Thus, the commissions earned by private respondents in selling
softdrinks constitute part of the compensation or remuneration paid to
drivers/salesmen and truck helpers for serving as such, and hence,
must be considered part of the wages paid them.
The NLRC asserts that the inclusion of commissions in the
computation of wages would negate the practice of granting
commissions only after an employee has earned the minimum wage or
over. While such a practice does exist, the universality and prevalence
of such a practice is questionable at best. In truth, this Court has taken
judicial notice of the fact that some salesmen do not receive any basic
salary but depend entirely on commissions and allowances or
commissions alone, although an employer-employee relationship
exists. Undoubtedly, this salary structure is intended for the benefit of
the corporation establishing such, on the apparent assumption that
thereby its salesmen would be moved to greater enterprise and
diligence and closes more sales in the expectation of increasing their
sales commissions. This, however, does not detract from the character
of such commissions as part of the salary or wage paid to each of its
salesmen for rendering services to the corporation.

Likewise, there is no law mandating that commissions be paid only


after the minimum wage has been paid to the employee. Verily, the
establishment of a minimum wage only sets a floor below which an
employee's remuneration cannot fall, not that commissions are
excluded from wages in determining compliance with the minimum
wage law. This conclusion is bolstered by Philippine Agricultural
Commercial and Industrial Workers Union vs. NLRC, where this Court
acknowledged that drivers and conductors who are compensated
purely on a commission basis are automatically entitled to the basic
minimum pay mandated by law should said commissions be less than
their basic minimum for eight hours work. It can, thus, be inferred that
were said commissions equal to or even exceed the minimum wage,
the employer need not pay, in addition, the basic minimum pay
prescribed by law. It follows then that commissions are included in
determining compliance with minimum wage requirements.
Lambo vs NLRC
(GR. 111042, Oct. 26, 1999)
OVERVIEW:

Employer:
JC TAILOR SHOP

Employees: LAMBO & BELOCURA

Job:
Tailors, paid on piece-work basis

Claim:
Illegal dismissal and recovery of overtime pay,
holiday pay, premium pay on holiday and rest day, service
incentive leave pay, separation pay, 13th month pay
FACTS:
1.
LAMBO & BELOCURA (Petitioner employees) were employed
as tailors of JC TAILOR (Respondent employer) on Sep 10,
1985 & Mar 3 1985, respectively.
They worked from 8AM 7PM daily, including Sundays &
holidays.
They were paid on piece-work basis, according to the
style of the suits they made.
Regardless of the number of pieces they finish in a day,
they were each given a daily pay of at least P64.
2.

PROBLEM: PETITIONERS demanded for a straight


payment of their minimum wage.
To settle the disputes, a company meeting was held.
H o w e v e r, m a j o r i t y o f t h e e m p l o y e e s , e x c e p t
PETITIONERS, voted to maintain the company policy of
paying them according to the volume of work finished
at the rate of P18 per dozen of tailored clothing
materials.
Consequently, PETITIONERS walked out of the meeting.
-

3.

On Jan 17, 1989, PETITIONERS filed a complaint for illegal


dismissal and sought recovery of overtime pay, holiday pay,
premium pay on holiday and rest day, service incentive leave
pay, separation pay, 13th month pay, and attorneys fees.

4.

LA ruled for PETITIONERS, declaring JC TAILOR guilty of


illegal dismissal.

5.

NLRC REVERSED, declaring there was abandonment of work


when they walked out of the meeting and NOT dismissal.

ISSUE:
W/N PETITIONERS (who are workers paid by results) are regular
employees; hence, illegally dismissed and entitled to overtime pay,
holiday pay, and 13th month pay.
HELD: YES

PETITIONERS, who are workers paid by results, are


considered regular employees. Thus, they are illegally
dismissed and are entitled to separation pay, overtime pay,
holiday pay, and 13th month pay.

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Wages to Withholding of Bonus | Labor Standards

a.

There are 2 categories of employees paid by results:


SUPERVISED

UNSUPERVISED

With control & supervision


over the manner as to
how the work is to be
performed.

With control over the


results of the work.

e.g. piece-rate worker in


garments factories

e.g. pakyao & takay basis


workers in agricultural
industries such as sugar
plantations where the work
is performed in bulk or
volumes difficult to quantify

b.

PETITIONERS belong to the first category, i.e.


supervised employees.
There is employer-employee relationship since JC
TA I L O R e x e r c i s e d c o n t r o l o v e r t h e w o r k o f
PETITIONERS in the companys premises from 8AM-7PM
daily, including Sundays and holidays.

c.

They are regular employees:


(1)
Their work as tailors was necessary or desirable in
the usual business of tailoring;
(2)

(3)

They worked throughout the year, their employment


NOT being dependent on a specific project or
season; and
They worked for JC TAILOR for more than one year.

The mere fact that they were paid on a piece-rate basis


does NOT negate their status as regular employees. XXX
Payment by piece is just a method of compensation and
does NOT define the essence of the relations.

Other corollary issues:


1.
Whether there is abandonment by the employees or illegal
dismissal.
There is ILLEGAL DISMISSAL.
There is NO abandonment because JC TAILOR failed to
adduce evidence showing unequivocal intent on the part
of the employee to discontinue employment.
2.

What should be awarded to the PETITIONERS?


Since there is illegal dismissal, they are entitled to
REINSTATEMENT WITH BACKWAGES computed within
3YRS from dismissal on Jan 17, 1989.
BUT considering the time lapse, reinstatement would

be impractical.
Hence, SEPARATION PAY shall be awarded, in lieu

of reinstatement, which shall be at the rate of 1MO.


Salary for every year of service, with a fraction of at
least 6MOS of service being considered as 1YR.
b.
Also, they are entitled for overtime pay, holiday pay and
1 3 t h M O . P a y. ( P l e a s e s e e f u l l t e x t f o r t h e
computationssssss.)
a.

2.

Coverage
C. PLANAS COMMERCIAL vs. NLRC

FACTS:
RESPONDENTS COMPLAINT

Dioleto Morente, Rudy Allauigan and Alfredo Ofialda (private


respondents) together with 5 others filed a complaint for underpayment
of wages, nonpayment of overtime pay, holiday pay, service incentive
leave pay and premium pay for holiday and rest day and night shift
differential against petitioners, Cohu, owner of C. Planas Commercial
Private respondents alleged that petitioner Cohu is engaged in
wholesale of plastic products and fruits of different kinds with more
than 24 employees; that private respondents were hired by petitioners
as helpers/laborers; that they were paid below the minimum wage law
for the past 3 years; that they were required to work for more than 8
hours a day without overtime pay; that they never enjoyed holiday pay
and did not have a rest day as they worked for 7 days a week; and
they were not paid service incentive leave pay although they had been
working for more than one year.
PETITIONERS DEFENSE
Petitioners filed their comment admitting that private respondents were
their helpers who used to accompany the delivery trucks and helped in
the loading and unloading of merchandise being distributed to clients;
that they usually started their work from 10 a.m. to 6 p.m.; that private
respondents stopped working with petitioners sometime in September
1993 as they were already working in other establishments/stalls in
Divisoria; that they only worked for 6 days a week; that they were not
entitled to holiday and service incentive leave pays for they were
employed in a retail and service establishment regularly employing
less than ten workers.
LABOR ARBITER DISMISSED RESPONDENTS MONEY CLAIMS
The rule in this jurisdiction is that employers who are regularly
employing not more than ten workers in retail establishments are
exempt from the coverage of the minimum wage law.
In connection therewith and in consonance with Sec. 1, Rule 131 of the
Rules of Court, it is incumbent upon the party to support affirmative
allegation that an employer regularly employs more than ten (10)
workers.
In the case at bar, complainants failed to substantiate their claim that
the respondent establishment regularly employs (24) workers.
Accordingly, we have no factual basis to grant salary differentials to
complainants. In the same context, under Sec. 1 (b), Rule IV and Sec.
1(g), Rule V of the Implementing Rules of the Labor Code,
complainants are not entitled to legal holiday pay and service incentive
leave pay.
We also do not have sufficient factual basis to award overtime pay and
premium pay for holiday and rest day because complainants failed to
substantiate that they rendered overtime and during rest days
NLRC MODIFIED THE DECISION
On claims for underpayment/non-payment of legally mandated wages
and fringe benefits where exemption from coverage of the minimum
wage law is put up as a defense, he who invokes such an exemption
(usually the employer) has the burden of showing the basis for the
exemption like for instance the fact of employing regularly less than ten
workers.
However, apart from their allegation, respondents (Cohu) presented no
evidence to show the number of workers they employed regularly.
CA AFFIRMED THE DECISION OF NLRC
Having claimed exemption from the coverage of the minimum wage
laws or order, it was incumbent upon petitioner to prove such claim.
Apart from simply denying private respondents allegation that it
employs more than 24 workers in its business, petitioner failed to
adduce evidence to prove that it is, indeed, a "retail establishment"
which employs less than ten (10) employees. Its failure to present
records of its workers and their respective wages gives rise to the
presumption that these are adverse to its claims.
ISSUE: WON PLANAS IS EXEMPTED FROM THE COVERAGE OF
THE MINIMUM WAGE LAW
RULING: NO
Sec. 4 of R.A. No. 6727 known as the Wage Rationalization
Act

6
Wages to Withholding of Bonus | Labor Standards
(c) Exempted from the provisions of this Act are household or
domestic helpers and persons employed in the personal
service of another, including family drivers.
Retail/service establishments regularly employing not more
than ten (10) workers may be exempted from the applicability
of this Act upon application with and as determined by the
appropriate Regional Board in accordance with the applicable
rules and regulations issued by the Commission. Whenever
an application for exemption has been duly filed with the
appropriate Regional Board, action on any complaint for
alleged non-compliance with this Act shall be deferred
pending resolution of the application for exemption by the
appropriate Regional Board.

For a retail/service establishment to be exempted from the


coverage of the minimum wage law, it must be shown that the
establishment is regularly employing not more than ten (10)
workers and had applied for exemptions with and as
determined by the appropriate Regional Board in accordance
with the applicable rules and regulations issued by the
Commission. Petitioners main defense in controverting private
respondents claim for underpayment of wages is that they are
exempted from the application of the minimum wage law, thus
the burden of proving such exemption rests on petitioners.
Petitioners had not shown any evidence to show that they had
applied for such exemption and if they had applied, the same
was granted.

Petitioners claim exemption under the aforestated law.


However, the best proof that they could have adduced was
their approved application for exemption in accordance with
applicable guidelines issued by the Commission. Section 4,
subpar. (c) of RA 6727 categorically provides:
Retail/service establishments regularly employing not
more than ten (10) workers may be exempted from the
applicability of this Act upon application with and as
determined by the appropriate Regional Board in
accordance with the applicable rules and regulations
issued by the Commission. Whenever an application for
exemption has been duly filed with the appropriate
Regional Board, action on any complaint for alleged noncompliance with this Act shall be deferred pending
resolution of the application for exemption by the
appropriate Regional Board. In the event that applications
for exemptions are not granted, employees shall receive
the appropriate compensation due them as provided for
by this Act plus interest of one percent (1%) per month
retroactive to the effectivity of this Act.

More importantly, NLRC correctly upheld the Labor Arbiter's


finding that PLANAS employed around thirty (30) workers. We
have every reason to believe that petitioners need at least thirty
(30) persons to conduct their business considering that
Manager Cohu did not submit any employment record to prove
otherwise. As employer, Manager Cohu ought to be the keeper
of the employment records of all his workers. Thus, it was well
within his means to refute any monetary claim alleged to be
unpaid. His inability to produce the payrolls from their files
without any satisfactory explanation can be interpreted no less
as suppression of vital evidence adverse to PLANAS.
3.

Prohibition against diminution/elimination

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner,


vs. RUBEN V. ABARQUEZ
FACTS:

October 16, 1985


A CBA was entered by petitioner and private
o
respondent ATU-TUCP (Union) which provided
for sick leave with payment benefits each year
to its employees who have rendered at least
one (1) year of service with the company
April 15, 1989
The CBA was renewed which reproduced the
o
provisions for sick leave with pay benefits under

Sections and 3, Article VIII of the new CBA, but


the coverage of the said benefits was expanded
to include the "present Regular Extra Labor
Pool as of the signing of this Agreement."
During the effectivity of the CBA for 3 years and 9 months
(October 16, 1985 to 3 months after its renewal on April
15, 1989) all the field workers of petitioner who are
members of the regular labor pool and the present regular
extra labor pool who had rendered at least 750 hours
up to 1,500 hours were extended sick leave with pay
benefits. Any unenjoyed portion thereof at the end of
the current year was converted to cash and paid at
the end of the said one-year period pursuant to
Sections 1 and 3, Article VIII of the CBA.
The number of days of their sick leave per year
o
depends on the number of hours of service per
calendar year in accordance with the schedule
provided in Section 3, Article VIII of the CBA.
But under a new assistant manager, Benjamin Marzo, the
petitioner stopped the conversion of the unenjoyed portion
of the sick leave with pay benefits of the intermittent
workers into cash because they are not entitled to said
benefits under Sections 1 and 3 of the 1989 CBA.
The respondent Union objected contending that it is
different from the intention of the parties who negotiated
the CBA. It would also violate the principle in labor laws
that benefits already extended shall not be taken away
and that it would result in discrimination between the nonintermittent and the intermittent workers of the petitionercompany.
The Union brought the matter for voluntary arbitration
before the National Conciliation and Mediation Board,
Regional Arbitration Branch XI at Davao City by way of
complaint for enforcement of the CBA. The parties
mutually designated public respondent Ruben Abarquez,
Jr. to act as voluntary arbitrator.
September 10, 1991
An Award in favor of the Union ruling that the
o
intermittent workers are entitled to commutation
of their unenjoyed sick leave with pay benefits
under Sections 1 and 3 of the 1989 CBA.

ISSUE: Whether or not intermittent (irregular) workers are entitle to


commutation of their unenjoyed sick leave with pay benefits.

DECSION: Yes. Petition dismissed. The award (decision) of public


respondent dated September 10, 1991 is hereby AFFIRMED.
RATIO:
Definition of Sick Leave in the CBA

Sick leave benefits, like other economic benefits stipulated


in the CBA such as maternity leave and vacation leave
benefits, among others, are by their nature, intended to be
replacements for regular income which otherwise would
not be earned because an employee is not working during
the period of said leaves. They are non-contributory in
nature, in the sense that the employees contribute nothing
to the operation of the benefits. By their nature, upon
agreement of the parties, they are intended to alleviate the
economic condition of the workers.
Interpretation of the CBA provisions

It is not disputed that both classes of workers are entitled


to sick leave with pay benefits provided they comply with
the conditions set forth under Section 1 in relation to the
last paragraph of Section 3, to wit: (1) the employeeapplicant must be regular or must have rendered at least
one year of service with the company; and (2) the
application must be accompanied by a certification from a
company-designated physician.
It was wrong for the petitioner to isolate
o
Section 1 of the CBA from other provisions
regarding sick leave with pay benefitrs in

7
Wages to Withholding of Bonus | Labor Standards

order to justify their action. Their action was


discriminatory in nature.
It must be noted that the 1989 CBA has 2 sections on sick
leave with pay benefits which apply to 2 distinct classes of
workers in petitioner's company, namely:
1.
the regular non-intermittent workers
a.
those workers who render a daily eighthour service to the company and are
governed by Section 1, Article VIII of the
1989 CBA; and
2.
intermittent field workers
a.
who are members of the regular labor pool
and the present regular extra labor pool as
of the signing of the agreement on April 15,
1989 or those workers who have irregular
working days and are governed by Section
3, Article VIII of the 1989 CBA.
It is not disputed that both classes of workers are entitled
to sick leave with pay benefits provided they comply with
the conditions set forth under Section 1 in relation to the
last paragraph of Section 3, to wit: (1) the employeeapplicant must be regular or must have rendered at least
one year of service with the company; and (2) the
application must be accompanied by a certification from a
company-designated physician.
For the phrase "herein sick leave privilege," as used in the
last sentence of Section 1, refers to the privilege of having
a fixed 15-day sick leave with pay which, as mandated by
Section 1, only the non-intermittent workers are entitled to.
This fixed 15-day sick leave with pay benefit should be
distinguished from the variable number of days of sick
leave, not to exceed 15 days, extended to intermittent
workers under Section 3 depending on the number of
hours of service rendered to the company, including
overtime pursuant to the schedule provided therein. It is
only fair and reasonable for petitioner-company not to
stipulate a fixed 15-day sick leave with pay for its regular
intermittent workers since, as the term "intermittent"
implies, there is irregularity in their work-days.

On March 30, 1988, the company was able to


conclude a CBA with the union at the Cebu/
Davao Sales Office, and on August 5, 1988,
with the Cagayan de Oro factory workers.

The union assailed the validity of those


agreements and filed a case of unfair labor
practice against the company.

NLRC resolution: Retirement Plan


The company shall continue implementing its retirement plan
modified as follows:
a) for fifteen years of service or less an amount equal to
100% of the employee's monthly salary for every year of
service;
b) more than 15 but less than 20 years 125% of the
employee's monthly salary for every year of service;
c) 20 years or more 150% of the employee's monthly
salary for every year of service. (pp. 58-59, Rollo.)
While it is not disputed that the plan is non-contributory on
the part of the workers, tills does not automatically remove it from the
ambit of collective bargaining negotiations. On the contrary, the plan is
specifically mentioned in the previous bargaining agreements thereby
integrating or incorporating the provisions thereof to the agreement. By
reason of its incorporation, the plan assumes a consensual character
which cannot be terminated or modified at will by either party.
Consequently, it becomes part and parcel of CBA negotiations.
The company's contention that its retirement plan is nonnegotiable,
Hence, this petition.
ISSUE: WON Nestle has the sole and exclusive prerogative to define
the terms of the plan
RULING: NO

NESTL PHILIPPINES vs NLRC


G.R. No. 91231
February 4, 1991
FACTS: Four (4) collective bargaining agreements separately covering
the petitioner's employees in its: (a) Alabang/Cabuyao factories (b)
Makati Administration Office (these two were represented by the Union
of Filipro Employees [UFE]) (c) Cagayan de Oro Factory represented
by WATU and (d) Cebu/Davao Sales Offices represented by the Trade
Union of the Philippines and Allied Services (TUPAS), all expired on
June 30, 1987.

Thereafter, UFE was certified as the sole and


exclusive bargaining agent for all regular rankand-file ALL the employees.

While the parties were negotiating, the


employees at Cabuyao resorted to a
"slowdown" and walk-outs prompting the
petitioner to shut down the factory.

The UFE declared a bargaining deadlock.

The Secretary of Labor assumed jurisdiction


and issued a return to work order.

In spite of that order, the union struck,


without notice, at the Alabang/Cabuyao,
Makati and Cagayan de Oro offices on
September 11, 1987 up to December 8, 1987.

The company retaliated by dismissing the


union officers and members of the
negotiating panel who participated in the
illegal strike.

The NLRC affirmed the dismissals.

UFE filed a notice of strike on the ground of


CBA deadlock and unfair labor practices.

The fact that the retirement plan is non-contributory, i.e., that


the employees contribute nothing to the operation of the plan, does not
make it a non-issue in the CBA negotiations. As a matter of fact, almost
all of the benefits that the petitioner has granted to its employees under
the CBA salary increases, rice allowances, mid-year bonuses, 13th
and 14th month pay, seniority pay, medical and hospitalization plans,
health and dental services, vacation, sick & other leaves with pay
are non-contributory benefits. Since the retirement plan has been an
integral part of the CBA since 1972, the Union's demand to increase
the benefits due the employees under said plan, is a valid CBA issue.
The deadlock between the company and the union on this issue was
resolvable by the Secretary of Labor, or the NLRC, after the Secretary
had assumed jurisdiction over the labor dispute (Art. 263,
subparagraph [i] of the Labor Code).
The petitioner's contention, that employees have no vested
or demandable right to a non-contributory retirement plan, has no merit
for employees do have a vested and demandable right over existing
benefits voluntarily granted to them by their employer. The latter may
not unilaterally withdraw, eliminate or diminish such benefits (Art. 100,
Labor Code; Tiangco, et al. vs. Hon. Leogardo, et al., 122 SCRA 267).
TIANGCO VS. LEOGARDO
Facts:
The petitioner, Reynaldo Tiangco, is a fishing operator who owns the
Reynaldo Tiangco Fishing Company and a fleet of fishing vessels
engaged in deep-sea fishing which operates from Navotas, Rizal. His
business is capitalized at P2,000,000.00, while his co-petitioner,
Victoria Tiangco, is a fish broker whose business is capitalized at
P100,000.00.
The private respondents are batillos engaged by the petitioners to
unload the fish catch from the vessels and take them to the Fish Stall
of the petitioner Victoria Tiangco.

8
Wages to Withholding of Bonus | Labor Standards

The work of these batillos were limited to days of arrival of the fishing
vessels and their working days in a month are comparatively few. Their
working hours average 4 hours a day.
On April 8, 1980, the private respondents filed a complaint against the
petitioners with the Ministry of Labor and Employment for non-payment
of their legal holiday pay and service incentive leave pay, as well as
underpayment of their emergency cost of living allowances which used
to be paid in full irrespective of their working days, but which were
reduced effective February, 1980, in contravention of Article 100 of the
new Labor Code which prohibits the elimination or diminution of
existing benefits.

MAMERTO B. ASIS, petitioner,


vs.
MINISTER OF LABOR AND EMPLOYMENT, et. al., respondents.
FACTS
Mamerto Asis was appointed Legal Counsel of the Central Azucarera
de Pilar. Later, concurrently with his position as Legal Counsel, he was
named Head of its Manpower and Services Department.

The petitioners denied the laborers contention. They argued that no


law was violated as their refusal to pay allowances for non-working
days is in consonance with the principle of no work, no allowance,
and that they could not pay private respondents fixed monthly
allowance without risking the viability of their business.

In addition to Mamerto Asis basic salaries and other fringe benefits as


legal counselor and later as Head of its Manpower and Services
Department, his employer, CENTRAL AZUCARERA DE PILAR,
granted him, and a few other officials of the company, a monthly ration
of 200 liters of gasoline and a small tank of liquefied petroleum gas
(LPG). This monthly ration was temporarily revoked some five (5)
years later as a cost reduction measure of the Central.
The petitioner commenced an action against the Central with the
Regional Office of the Ministry of Labor and Employment, seeking
restoration of his monthly ration of gasoline and LPG, and complaining
against a signed memorandum ordaining his relief (by being placed on
leave of absence. He theorized that he had in effect been dismissed,
illegally.

Decision of the Director of the National Capital Region of the Ministry


of Labor and Employment:
The daily extra pay given to private respondents was a production
incentive benefit separate and distinct from the service incentive leave
pay and legal holiday pay, payment of which cannot be used to offset a
benefit provided by law, and ordered the petitioners to pay the private
respondents their service incentive leave pay and legal holiday pay.
However, he denied the laborers claim for differentials in the
emergency cost of living allowance for the reason that the emergency
cost of living allowance accrues only when the labourers actually work
following the principle of no work no pay.

The Regional Directors judgment was for petitioners reinstatement


including the restoration of additional benefits (ration of gasoline and
LPG) but upon appeal by Central, the Deputy Minister of Labor
reversed the Regional Directors decision. Hence, this petition.

Decision of the Minister of Labor and Employment:

ISSUE

He directed the petitioners to restore and pay the individual


respondents their fixed monthly allowance from March 1980 and to pay
them the amount of P58,860.00, as underpayment of their living
allowance from May 1977 to February 21, 1980.

WON an employee may demand the restoration of the revoked


additional benefits even if such are not part of the basic salary.

Petitioners contention:
Respondent Deputy Minister of Labor and Employment erred when it
ordered them to pay the private respondents a fixed monthly allowance
from March 1980, despite the no work, no pay, law.
Issue:
W/N the Deputy Minister of Labor and Employment erred when it
ordered the payment of respondents allowances. NO
Ruling:
Indeed, the record shows that the private respondents work for the
petitioners on a part-time basis and their work average only 4 days a
week. It is not also disputed that the private respondents work for more
than one employer so that the private respondents should be paid their
living allowance only for the days they actually worked in a week or
month and all the employers of the employee shall share
proportionately in the payment of the allowance of the employee.
However, the respondent Deputy Minister of Labor and Employment
correctly ruled that since the petitioners had been paying the private
respondents a fixed monthly emergency allowance since November
1976 up to February 1980, as a matter of practice and/or verbal
agreement between the petitioners and the private respondents, the
discontinuance of the practice and/or agreement unilaterally by the
petitioners contravened the provisions of the Labor Code, particularly
Article 100 thereof which prohibits the elimination or diminution of
existing benefits.
Section 15 of the Rules on PD 525 and Section 16 of the Rules on PD
1123 also prohibits the diminution of any benefit granted to the
employees under existing laws, agreements, and voluntary employer
practice.

HELD

No.

The revocation of the ration had been occasioned by force of


circumstances affecting the Centrals business. The monthly ration was
not a part of his basic salary, and is not indeed found in any of the
management payroll vouchers pertinent to the petitioner. Moreover, the
adverse consequences of the suspension of the monthly rations had
been largely if not entirely negated by the Centrals undertaking to
reimburse the petitioner for his actual consumption of fuel during the
period of suspension.

LEXAL LABORATORIES and/or JOSE ANGELES, Manager,


petitioners,
vs.
NATIONAL CHEMICAL INDUSTRIES WORKERS UNION-PAFLU
(Lexal Laboratories Chapter) and THE COURT OF INDUSTRIAL
RELATIONS, respondents.
FACTS:

The controversy came about because of the implementation of the


decision of the Court of Industrial Relations (CIR) of June 29,
19631 directing petitioner Lexal Laboratories (Lexal) to reinstate
Guillermo Ponseca, a dismissed employee, to his former position
"with full back wages from the day of his dismissal up to the time
he is actually reinstated without loss of his seniority rights and of
such other rights and privileges enjoyed by him prior to his lay-off."

CIR
Ponseca was entitled to back wages from November 5, 1958
when he ceased reporting for work, to November 24, 1963 a
day prior to his reinstatement on November 25, 1963;

and that for the number of days that he was supposed to be in


Manila, he was to earn P4.50 a day,

and during the periods when he should have been in the


provinces, P4.50 a day plus a per diem of P4.00 or a total of
P8.50 daily.

9
Wages to Withholding of Bonus | Labor Standards

This order was subsequently modified by CIR's resolution of


May 22, 1965 which directed the deduction of P5,000.00
previously paid Ponseca under the judgment and P610.00
which Ponseca earned from other sources during his lay-off.
Petitioners: objected to the inclusion of the P4.00 per diem in the
computation of Ponseca's back wages because the latter "did not
actually spend for his meals and lodgings for he was all the time in
Manila, his station."

That the officers and men working on board the


petitioners' vessels have not been paid their sick leave,
vacation leave and overtime pay;

that the petitioners threatened or coerced them to accept


a reduction of salaries, observed by other shipowners;

that after the Minimum Wage Law had taken effect, the
petitioners required their employees on board their
vessels, to pay the sum of P.40 for every meal (by
deducting the cost of meals from the wages and salaries),
while the masters and officers were not required to
pay their meals

that the petitioners dismissed Captain Asensi when he


refused to yield to the general reduction salaries.

CIR: per diems should be paid as part of the back wages because
they were "paid to him regularly."

ISSUE: WON per diems are included in backpay


RULING: NO

Per diem is "a daily allowance" given "for each day he (an officer
or employee) was away from his home base".

It is intended to cover the cost of lodging and subsistence of


officers and employees when the latter are on duty outside of their
permanent station.

Lexal concedes that whenever its employee, Guillermo Ponseca,


was out of Manila, he was allowed a per diem of P4.00 broken
down as follows:

P1.00 for breakfast;

P1.00 for lunch;

P1.00 for dinner; and

P1.00 for lodging.

Ponseca during the period involved did not leave Manila.


Therefore, he spent nothing for meals and lodging outside of
Manila. Because he spent nothing, there is nothing to be
reimbursed. Since per diems are in the nature of
reimbursement, Ponseca should not be entitled to per diems.

Besides, back wages are what an employee has lost "in the way
of wages" due to his dismissal. So that, because Ponseca earned
P4.50 a day, "then that is the amount which he lost daily by reason
of his dismissal, nothing more nothing less:"
As to the computation of his Net Backpay: But the CIR order of
February 15, 1965 credits Ponseca with 1,856 days for the period
from November 5, 1958 to November 24, 1963 but there should
only be 1,846 days from November 5, 1958 to November 24,
1963.

1,846 days
x
P4.50=.
P8,307.00
Less: Advance payment
P5,000.00
Earnings from other sources
P610.00
P5,610.008
NET
P2,697.00

B A C K PAY

SC: ordering petitioner Lexal Laboratories to pay Guillermo


Ponseca, by way of net backpay, the sum of P2,697.00.

4.

Withholding of Bonus

States Marine Corporation and Royal Line, Inc vs Cebu Seamens


Association
Facts:
Petitioners States Marine Corporation and Royal Line, Inc. were
engaged in the business of marine coastwise transportation, employing
therein several steamships of Philippine registry.
1952, respondent union filed with the CIR, a petition against the States
Marine Corporation and Royal Line, Inc. alleging the following:

The petitioners averred that there is no law which provides for the
payment of sick leave or vacation leave to employees or workers of
private firms; that the shipowners and operators in Cebu were paying
the salaries of their officers and men, depending upon the margin of
profits they could realize and other factors or circumstances of the
business; that in enacting Rep. Act No. 602 (Minimum Wage Law),
the Congress had in mind that the amount of P.40 per meal,
furnished the employees should be deducted from the daily
wages; that Captain Asensi was not dismissed for alleged union
activities, but with the expiration of the terms of the contract between
said officer and the petitioners, his services were terminated.
Take note: Prior to the effectivity of the Minimum Wage Law on August
4,1951, no deductions of the cost of meals were made against the
wages and salaries of the crew. But after the effectivity, they started
deducting the cost of meals from the wages/salaries of the crew except
the deck officers and engineers.
Petitioners herein contend that the deductions are legal and should not
be reimbursed to the respondent union. The union, however, claims
that the same are illegal and reimbursement should be made.
ISSUE: WON the deduction for costs of meals from the wages or
salaries is illegal and same should be reimbursed to the employee
concerned. Yes.
Ruling:
Such deductions are not authorized. In the coastwise business of
transportation of passengers and freight, the men who compose the
complement of a vessel are provided with free meals by the
shipowners, operators or agents, because they hold on to their work
and duties, regardless of "the stress and strain concomitant of a bad
weather, unmindful of the dangers that lurk ahead in the midst of the
high seas."
It is argued that the food or meals given to the deck officers, marine
engineers and unlicensed crew members in question, were mere
"facilities" which should be deducted from wages, and not
"supplements" which, according to said section 19, should not be
deducted from such wages.
Supplements", therefore, constitute extra remuneration or
special privileges or benefits given to or received by the
laborers over and above their ordinary earnings or wages.
"Facilities", on the other hand, are items of expense
necessary for the laborer's and his family's existence and
subsistence so that by express provision of law, 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.
In short, the benefit or privilege given to the employee which
constitutes an extra remuneration above and over his basic or ordinary
earning or wage, is supplement; and when said benefit or privilege is
part of the laborers' basic wages, it is a facility. The criterion is not so
much with the kind of the benefit or item (food, lodging, bonus or sick
leave) given, but its purpose.
Considering, therefore, as definitely found by the respondent court that
the meals were freely given to crew members prior to August 4, 1951,
while they were on the high seas "not as part of their wages but as a
necessary matter in the maintenance of the health and efficiency of the
crew personnel during the voyage", the deductions therein made for
the meals given after August 4, 1951, should be returned to them, and

10
Wages to Withholding of Bonus | Labor Standards
the operator of the coastwise vessels affected should continue giving
the same benefit.
It having been found and held by the SC that the meals or food in
question are not facilities but supplements.
//
> The shipping companies argue that the furnishing of meals to the
crew before the effectivity of Rep. Act No. 602, is of no moment,
because such circumstance was already taken into consideration by
Congress, when it stated that "wage" includes the fair and reasonable
value of boards customarily furnished by the employer to the
employees.
If We are to follow the theory of the herein petitioners, then
a crew member, who used to receive a monthly wage of
P100.00, before August 4, 1951, with no deduction for
meals, after said date, would receive only P86.00 monthly
(after deducting the cost of his meals at P.40 per meal),
which would be very much less than the P122.00
monthly minimum wage, fixed in accordance with the
Minimum Wage Law. Instead of benefiting him, the law will
adversely affect said crew member. Such interpretation does
not conform with the avowed intention of Congress in
enacting the said law.
One should not overlook a fact fully established, that only
unlicensed crew members were made to pay for their meals
or food, while the deck officers and marine engineers
receiving higher pay and provided with better victuals, were
not. This pictures in no uncertain terms, a great and unjust
discrimination obtaining in the present case.

unworked. Where the company observes a 5-day work week, as


provided in the CBA, it will have to be held that the COLA should
be computed on the basis of 22 days.
Payment in full by petitioner of the COLA before the execution of
the CBA and in compliance with Wage Orders Nos. 1 to
5(previous WOs), should not be construed as constitutive of
voluntary employer practice. To be considered as such, it should
have been practiced over a long period of time, and must be
shown to have been consistent and deliberate.
In Wage Order No.4 (previous Wage Order), there was lack of
administrative guidelines in the implementation of the Wage
Orders and it was later when its Rules Implementing Wage Order
No.4 was issued that a formula for the conversion of the daily
allowance to its monthly equivalent was laid down. Absent clear
administrative guidelines, petitioner cannot be faulted for
erroneous application of the law. Payment may be said to have
been made by reason of a mistake in the construction or
application of a doubtful or difficult question of law. Since it is a
past error that is being corrected, no vested right may be said to
have arisen nor any diminution of benefits under Art. 100 of the
LC may be said to have resulted by virtue of the correction.
ATOK-BIG WEDGE MINING CO., INC., petitioner,
vs.
ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION, respondent.

Petitioner complied with said wage order by paying its


monthly-paid employees the mandated P3.00 per day
COLA.

On September 4, 1950, demand was submitted to petitioner by


respondent union through its officers for various concession, among
which were
(a) an increase of P0.50 in wages,
(b) commutation of sick and vacation leave if not enjoyed during the
year,
(c) various privileges, such as free medical care, medicine, and
hospitalization,
(d) right to a closed shop, check off, etc.,
(e) no dismissal without prior just cause and with a prior investigation,
etc.

However, in computing said COLA, petitioner multiplied


the P3.00 daily COLA by 22 days, which is the number of
working days.

Some of the demands, were granted by the petitioner, and the other
were rejected, and so hearings were held and evidence submitted on
the latter.

Respondent Union disagreed with the computation


claiming that the daily COLA rate of P3.00 should be
multiplied by 30 days.

Respondent also alleged that prior to the effectivity of the


Wage Order, petitioner had been paying the monthly
COLA on the basis of 30 days per month and that this
constituted employer practice.

After the hearing the respondent court rendered a decision, the most
important provisions of which were those
1.
fixing the minimum wage for the laborers at P3.20,
2.
declaring that additional compensation representing
efficiency bonus should not be included as part of the
wage, and
3.
making the award effective from September 4, 1950.

Respondent filed a complaint for illegal deduction,


underpayment, unpaid allowances, and violation of Wage
Order No.6.

LA ruled that the monthly COLA should be computed on


the basis of 22 days because 22 days is the basis used
for computing vacation and sick leave, OT pay and other
benefits and it would be unjust to compel petitioner to use
the 30 days as basis.

NLRC reversed the LAs decision and held petitioner as


guilty of illegal deductions. Workers paid on monthly basis
are entitled to COLA on Saturdays, Sundays and legal
holidays even if unworked.

Globe Mackay Cable and Radio Corp. vs NLRC, FFW-Globe


Mackay employees Union
FACTS:

Wage No.6 took effect on Oct.30, 1984, increased the


COLA of non-agricultural workers in the private sector.

ISSUE:
WON 30 days should be used as a basis.
RULING:
NO. Section 5 of the Rules Implementing Wage
Orders No. 6 provide:
Section 5. Allowance for Unworked Days. All Covered employees
shall be entitled to their daily living allowance during the days that
they are paid their basic wage, even if unworked.
The payment of COLA is mandated only for the days that the
employees are paid their basic wage, even if said days are

It is against these portions of the decision that this appeal is taken.


ISSUE: WON to grant the increase in wage?
CONTENTION OF PETITIONER: It is contended by petitioner that as
the respondent court found that
1.
the laborer and his family at least need the amount of
P2.58 for food, this should be the basis for the
determination of his wage, not what he actually spends;
2.
that it is not justifiable to fix a wage higher than that
provided by Republic Act No. 602; and
3.
that respondent union made the demand in accordance
with a pernicious practice of claiming more after an original
demand is granted.
The respondent court found that P2.58 is the minimum amount actually
needed by the laborer and his family. That does not mean that it is his
actual expense. A person's needs increase as his means increase.
This is true not only as to food but as to everything else education,
clothing, entertainment, etc. The law guarantees the laborer a fair and
just wage. The minimum must be fair and just. The "minimum wage"
can by no means imply only the actual minimum. Some margin or
leeway must be provided, over and above the minimum, to take care of
contingencies such as increase of prices of commodities and desirable
improvement in his mode of living. Certainly, the amount of P0.22 a

11
Wages to Withholding of Bonus | Labor Standards
day (difference between P2.80 fixed and P2.58 actual) is not
excessive for this purpose. That the P3 minimum wage fixed in the
law is still far below what is considered a fair and just minimum is
shown by the fact that this amount is only for the year after the law
takes effect, as thereafter the law fixes it at P4. Neither may it be
correctly contended that the demand for increase is due to an alleged
pernicious practice. Frequent demands for increase are indicative of a
healthy spirit of wakefulness to the demands of a progressing and an
increasingly more expensive world. We, therefore, find no reason or
ground for disturbing the finding contained in the decision fixing the
amount of P3.20 as the minimum wage.
Both parties agreed that any award should be retroactive to the date of
the presentation of the demand, which is September 4, 1950.
ISSUE: Whether or not bonus forms part of wages?
It depends upon the circumstances or condition for its payment
CONTENTION OF PETITIONER: It is next contended that the
efficiency bonus paid the laborer should have been included in his
(minimum) wage, in the same manner as the value of living quarters.
Whether or not bonus forms part of wages depends upon the
circumstances or condition for its payment.
1.
ADDITIONAL COMPENSATION WHICH THE
EMPLOYER PROMISED: part of wage
If it is an additional compensation which the employer promised
and agreed to give without any conditions imposed for its payment,
such as success of business or greater production or output, then it is
part of the wage.
2.
Dependent only to PROFIT realization: Not part of
wage
But if it is paid only if profits are realized or a certain amount of
productivity achieved, it cannot be considered part of the wages. In
the case at bar, it is not payable to all but to laborers only. It is also
paid on the basis of actual production or actual work accomplished. If
the desired goal of production is not obtained or the amount of actual
work accomplished, the bonus does not accrue. It is evidence that
under the circumstances it is paid only when the labor becomes more
efficient or more productive. It is only an inducement for efficiency, a
prize therefor, not a part of the wage.
The terms of the stipulation are clearly against petitioner's contention.
There being no question as to its (agreement) existence, the same
must be given force and effect.
The petition is hereby dismissed, with costs.
TRADERS ROYAL BANK vs.
NLRC & TRADERS ROYAL BANK EMPLOYEES UNION
Facts: On November 18, 1986, the Union, through its president, filed a
letter-complaint against TRB with the Conciliation Division of the
Bureau of Labor Relations. The union claims that:
l) The Management of TRB per memo dated October 10, 1986 paid the
employees their holiday pay but has withheld from the union the basis
of their computation.
2) The computation in question has allegedly decreased the daily
salary rate of the employees. This diminution of existing benefits has
decreased our overtime rate and has affected the employees' take
home pay.
3) The diminution of benefits being enjoyed by the employees since
the immemorial, e.g. mid-year bonus, from 2 months gross pay to 2
months basic and year-end bonus from 3 months gross to only 2
months.
4) The refusal by management to recall active union members from the
branches which were being transferred without prior notice, solely at
the instance of the branch, manager.
TRB pointed out that the NLRC, not the Bureau of Labor Relations,
had jurisdiction over the money claims of the employees.
In the meantime, the parties who had been negotiating for a collective
bargaining agreement. However, the union insisted on pursuing the

case, arguing that the CBA would apply prospectively only to claims
arising after its effectivity.
NLRC rendered a decision in favor of the employees.
Issue: WON the granting of bonuses is a management prerogative.
TRBs Contention: It insisted that it had paid the holiday pay. The
practice of giving them bonuses at year's end, would only depend on
how profitable the operation of the bank had been.
Held: YES. A bonus is "a gratuity or act of liberality of the giver which
the recipient has no right to demand as a matter of right". "It is
something given in addition to what is ordinarily received by or strictly
due the recipient." The granting of a bonus is basically a management
prerogative which cannot be forced upon the employer "who may not
be obliged to assume the onerous burden of granting bonuses or other
benefits aside from the employee's basic salaries or wages
The matter of giving them bonuses over and above their lawful salaries
and allowances is entirely dependent on the profits, if any, realized by
the Bank from its operations during the past year.
From 1979-1985, the bonuses were less because the income of the
Bank had decreased. In 1986, the income of the Bank was only 20.2
million pesos, but the Bank still gave out the usual 2 months basic midyear and 2 months gross year-end bonuses. The bank pointed out,
however, that the Bank weakened considerably after 1986 on account
of political developments in the country. Suspected to be a Marcosowned or controlled bank, it was placed under sequestration by the
present administration and is now managed by the PCGG.
Issue: WON the grant of bonuses has ripened into a company
practice.
Unions contention: The granting of bonuses to the employees had
ripened into a company practice that may not be adjusted to the
prevailing financial condition of the Bank.
Held: NO. It has no legal and moral bases. Its fiscal condition having
declined, the Bank may not be forced to distribute bonuses which it
can no longer afford to pay and, in effect, be penalized for its past
generosity to its employees.
Issue: WON there was a diminution in the employees salaries.
Unions contention: The decrease in the midyear and year-end
bonuses constituted a diminution of the employees' salaries.
Held: NO. bonuses are not part of labor standards in the same class
as salaries, cost of living allowances, holiday pay, and leave benefits,
which are provided by the Labor Code.
Manila Banking Corporation (Manilabank) v. NLRC
FACTS: In 1984, Manilabank was experiencing liquidity problems and
had incurred chronic reserve deficiencies against deposit liabilities. As
a result, it was placed under comptrollership by the Central Bank. A
month before that, the bank was already prohibited by the Monetary
Board from granting new loans, making new investments (except
investments in government securities with Central Bank support), and
from declaring stock dividends.
Feliciano Miranda was designated as receiver by the Monetary
Board to take charge of the banks assets and liabilities. He terminated
343 officers and top managers of the bank. Those terminated are the
respondents in this case. Although the respondents were all paid
separation and/or retirement benefits due to them, they come to court
claiming entitlement to additional benefits:
1.
wage increases
2.
Christmas bonuses
3.
mid-year bonuses
4.
profit-sharing
5.
car and travel plans
6.
gasoline allowances

12
Wages to Withholding of Bonus | Labor Standards
7.

differentials on accrued leaves, retirement, and other


bonuses
longetivity pay and loyalty pay
medical, dental, and optical benefits
uniform allowances

benefits, and mid-year bonuses. The award of medical benefits,


longetivity pay are affirmed.

The respondents claim that the entitlement to the foregoing benefits


was based on Manilabanks alleged practice, policy and tradition of
awarding said benefits. They contended that the policy has ripened
into vested property rights in their favor.

FACTS:
Petitioners Marcos, Andrada, Lopez and Cruz were regular employees
of respondent Insular Life Assurance Co., but were dismissed on
November 1, 1990 when their positions were declared redundant. A
special redundancy benefit was paid to them. Meanwhile, in the same
year that they were dismissed, the Insular Life approved the grant of
an anniversary bonus. Later on March 1991, Insular Life also granted a
performance bonus equivalent to 2 months salary and 2.75 basic
salary.
Lopez sent a letter to Insular Life questioning the redundancy package.
She claimed that they should receive their respective service awards
and other prorated bonuses which they had earned at the time they
were dismissed.
However later, Insular Life required petitioners to execute a Release
and Quitclaim which petitioners complied with a written protest
reiterating their previous demand.
Upon inquiry from the Legal Service of the DOLE, the labor department
issued its opinion saying among others that a gratuity or bonus, by
reason of its long and regular concession indicating company practice,
may become regarded as part of regular compensation and thus
demandable and that the fact that they were asked to sign the
Release and Quitclaim did not affect their right to the material
benefits of the service award.
Despite said opinion, Insular Life still refused to pay petitioners service
awards. This prompted petitioners to file a complaint with the NLRC for
payment of their service awards, including performance and
anniversary bonuses.
Petitioners contended that they are likewise entitled to the performance
and anniversary bonuses because, at the time the performance bonus
was announced to be given, they were only short of two (2) months
service to be entitled to the full amount thereof as they had already
served the company for ten (10) months prior to the declaration of the
grant of said benefit. Also, they lacked only fifteen (15) days to be
entitled to the full amount of the anniversary bonus when it was
announced to be given to employees as of November 15, 1990.
Labor Arbiter: ordered Insular Life to pay petitioners their service
awards, anniversary bonuses and prorated performance bonuses.
NLRC: set aside Labor Arbiters decision upholding the quitclaim
document executed by petitioners.
ISSUE: W/N Petitioners are entitled to the service awards,
performance and anniversary bonus. YES.

8.
9.
10.

Manila bank, on its part, alleged that the additional benefits sought are
without basis since these are conferred by management only when it
deems necessary to do so. The award of the said benefits is in the
nature of a management prerogative which, it contended, can be
withheld by management upon a clear showing that the company is not
in a position to grant them either because of financial difficulties or
circumstances which do not warrant conferment of such benefits. And
since it was experiencing financial distress, it claimed that it was in no
position to give the benefits sought.
Labor arbiter decided in favor of respondents and ordered Manilabank
to pay in full all the claims of private respondents amounting
to P193,338,212.33, plus 12% interest annually and 10% of the total
award as attorneys fees.
Manilabank appealed and posted a bond in the form of a certification
from the Central Bank that the portion of Manilabanks funds in an
amount equal to that of the total award of the labor arbiter, has been
reserved and set aside by the Central Bank to answer for the private
respondents claims should they finally be adjudged to be entitled
thereto.
NLRC affirmed the decision of the Labor Arbiter with modifications.
ISSUE: Are the respondents entitled to such benefits?
HELD: No.
Both the Labor Arbiter and the NLRC opted to award all the additional
benefits claimed by the 343 private respondents who had already been
duly paid separation pay and/or retirement benefits upon termination of
their employment. The NLRC erroneously adopted the findings of the
labor arbiter, misapplying the time-honored rule that factual findings of
quasi-judicial agencies are accorded not only respect but even finality
if supported by substantial evidence. It declared that the additional
benefits sought are in the nature of bonuses which when made part
of the wage or salary or compensation of an employee become
demandable and enforceable.
Both the Labor Arbiters and the NLRCs findings and conclusions are
flawed.
By definition, a bonus is a gratuity or act of liberality of the giver
which the recipient has no right to demand as a matter of right. It is
something given in addition to what is ordinarily received by or strictly
due the recipient. The granting of a bonus is basically a management
prerogative which cannot be forced upon the employer who may not be
obliged to assume the onerous burden of granting bonuses or other
benefits aside from the employees basic salaries or wages, especially
so if it is incapable of doing so.
It is evident, therefore, that petitioner bank was operating on net losses
from the years 1984, 1985 and 1986, thus, resulting to its eventual
closure in 1987 and liquidation in 1988. Clearly, there was no success
in business or realization of profits to speak of that would warrant the
conferment of additional benefits sought by private respondents. No
company should be compelled to act liberally and confer upon its
employees additional benefits over and above those mandated by law
when it is plagued by economic difficulties and financial losses. No act
of enlightened generosity and self-interest can be exacted from near
empty, if not empty, coffers.
SC modified judgment deleting 5% profit sharing, wage increases,
Christmas bonuses, differentials on accrued leaves, retirement

MARCOS vs NLRC
G.R. No. 111744, September 8, 1995

HELD:
The fact that an employee has signed a satisfaction receipt for his
claims does not necessarily result in the waiver thereof.
The law does not consider as valid any agreement whereby a worker
agrees to receive less compensation than what he is entitled to
recover. A deed of release or quitclaim cannot bar an employee from
demanding benefits to which he is legally entitled.
Quitclaims and/or complete releases executed by the employees do
not estop them from pursuing their claims arising from unfair labor
practices of the employer. The basic reason for this is that such
quitclaims and/or complete releases are against public policy and,
therefore, null and void.
On the grant of the service awards, performance and anniversary
bonus.
Since each of the complainants have rendered services to respondent
in multiple(s) of five years prior to their separation from employment,
respondent should be paid their service awards for 1990. Service
awards are governed by respondent's employee's manual and (are)
therefore contractual in nature.
We cannot see any cogent reason why an anniversary bonus which
respondent gives only once in every five years were given to all
employees of respondent as of 15 November 1990 and not to
complainants who have rendered service to respondent for most of the
five year cycle. This is also true in the case of performance bonus
which were given to permanent employees of respondent as of 30
March 1991 and not to employees who have been connected with
respondent for most of 1990 but were separated prior to 30 March
1991.

13
Wages to Withholding of Bonus | Labor Standards
The authorities hold that if one enters into a contract of employment
under an agreement that he shall be paid a certain salary by the week
or some other stated period and, in addition, a bonus, in case he
serves for a specified length of time, there is no reason for refusing to
enforce the promise to pay the bonus, if the employee has served
during the stipulated time, on the ground that it was a promise of a
mere gratuity.
This is true if the contract contemplates a continuance of the
employment for a definite term, and the promise of the bonus is made
at the time the contract is entered into. If no time is fixed for the
duration of the contract of employment, but the employee enters upon
or continues in service under an offer of a bonus if he remains therein
for a certain time, his service, in case he remains for the required time,
constitutes an acceptance of the offer of the employer to pay the bonus
and, after that acceptance, the offer cannot be withdrawn, but can be
enforced by the employee.
The weight of authority in American jurisprudence, with which we are
persuaded to agree, is that after the acceptance of a promise by an
employer to pay the bonus, the same cannot be withdrawn, but may be
enforced by the employee.
However, in the case at bar, equity
demands that the performance and anniversary bonuses should be
prorated to the number of months that petitioners actually served
respondent company in the year 1990. This observation should be
taken into account in the computation of the amounts to be awarded to
petitioners.
5.

Payment by Result

LCP vs. NLRC (1998)


ISSUE: WON the employees are entitled to the benefits they claim
99 persons (petitioners) were rank & file employees of Empire Food
Products. They filed a complaint for payment of money claims and for
violations of labor standards laws.
23 Oct 90: Empire & the employees entered into a MOA, where
Labor Congress of the Philippines and its Local Chapter as the sole &
exclusive bargaining agent and representative for all rank & file
employees of Empire, regarding their wages, hours of work, & other
terms & conditions.
MOA was approved by Mediator Cortez & LCP was certified as the
bargaining agent among the employees of Empire.
23 Jan 91: Petitioners filed a complaint for unfair labor practice,
union busting thru harassments, threats, & interfering with rights
employees to self-organization, violation of MOA, & underpayment of
wages.
LA failed to rule on the other benefits prayed for by petitioners, such
as the holiday pay, premium pay, 13th month pay & service incentive
leave.
Yes. Although the employees are piece-rate workers, they were
regular employees are Empire. First, as to the nature of petitioners'
tasks, their job of repacking snack food was necessary or desirable in
the usual business of Empire, who were engaged in the manufacture
and selling of such food products. Second, petitioners worked for
Empire throughout the year, their employment not having been
dependent on a specific project or season. Third, the length of time
that petitioners worked for Empire. Thus, while petitioners' mode of
compensation was on a "per piece basis," the status and nature of
their employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees
from receiving benefits such as nighttime pay, holiday pay, service
incentive leave and 13th month pay field personnel and other
employees whose time and performance is unsupervised by the
employer, including those who are engaged on task or contract basis,
purely commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the performance
thereof.
Plainly, petitioners as piece-rate workers do not fall within this group.
Not only did petitioners labor under the control of Empire as their
employer, likewise did petitioners toil throughout the year with the
fulfillment of their quota as supposed basis for compensation.
As to overtime pay: the workers who are paid by results including
those who are paid on piece-work, takay, pakiao, or task basis, if their
output rates are in accordance with the standards prescribed under

Sec. 8, Rule VII, Book III are not entitled to receive overtime pay.
However, Empire did not allege adherence to the standards set forth in
Sec. 8 nor with the rates prescribed by the Secretary of Labor. As
such, petitioners are beyond the ambit of exempted persons and are
therefore entitled to overtime pay.
6.

Forms of Payment

BERNARDO JIMENEZ and JOSE JIMENEZ, as Operators of JJ's


TRUCKING
vs.
NLRC, PEDRO JUANATAS and FREDELITO JUANATAS,
G.R. No. 116960 April 2, 1996
ISSUES:
1)

2)

Whether or not private respondents were not paid their


commissions in full, and
Whether or not respondent Fredelito Juanatas was an
employee of JJ's Trucking.

JOB OF THE PLAINTIFF/ RESPONSIBILITIES:


They were hired as driver/mechanic and helper, respectively,
in trucking firm of Bernardo Jiminez, JJ Trucking in December 1987.
They were assigned to a ten-wheeler truck to haul soft drinks of CocaCola Bottling Company and paid on commission basis, initially fixed at
17% but later increased to 20% in 1988.
CAUSES OF ACTION
On June 29, 1990, herein private respondent Pedro and
Fredelito Juanatas, father and son, filed a claim for unpaid wages/
commissions, separation pay and damages against JJ's Trucking and/
or Dr. Bernardo Jimenez. Said respondents, as complainants therein,
alleged that in December, 1987,
ALLEGATIONS OF THE PLAINTIFF:
1)
For the years 1988 and 1989 they received only a partial
commission of P84, 000.00 from petitioners' total gross
income of almost P1, 000,000.00 for the said two years.
Consequently, with their commission for that period being
computed at 20% of said income, there was an unpaid
balance to them of P106,211.86;
2)

That until March, 1990 when their services were illegally


terminated, they were further entitled to P15,050.309
which, excluding the partial payment of P7,000.00, added
up to a grand total of P114,261.86 due and payable to
them;

3)

That petitioners' refusal to pay their aforestated


commission was a ploy to unjustly terminate them.

DEFENSES OF THE DEFENDANT:


1)

Fredelito Juanatas was not an employee of the firm but


was merely a helper of his father Pedro;

2)

THAT All commissions for 1988 and 1989, as well as


those up to March, 1990, were duly paid;

3)

And that the truck driven by respondent Pedro Juanatas


was sold to one Winston Flores in 1991 and, therefore,
private respondents were not illegally dismissed.

RULING:
A)

FIRST ISSUE:

We find no reason to disturb the findings of respondent NLRC that


the entire amount of commissions was not paid, this BY REASON OF

14
Wages to Withholding of Bonus | Labor Standards
THE EVIDENT FAILURE OF HEREIN PETITIONERS TO PRESENT
EVIDENCE THAT FULL PAYMENT THEREOF HAS BEEN MADE.
It is a basic rule in evidence that each party must prove his
affirmative allegation. Since the burden of evidence lies with the party
who asserts an affirmative allegation, the plaintiff or complainant has to
prove his affirmative allegations in the complaint and the defendant or
respondent has to prove the affirmative allegations in his affirmative
defenses and counterclaim. Considering that petitioners herein assert
that the disputed commissions have been paid, they have the bounden
duty to prove that fact.
As a general rule, one who pleads payment has the burden of
proving it. 9 Even where the plaintiff must allege non-payment, the
general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-payment. 10 The
debtor has the burden of showing with legal certainty that the
obligation has been discharged by payment. 11
When the existence of a debt is fully established by the evidence
contained in the record, the burden of proving that it has been
extinguished by payment devolves upon the debtor who offers such a
defense to the claim of the creditor. 12 Where the debtor introduces
some evidence of payment, the burden of going forward with the
evidence as distinct from the general burden of proof shifts
to the creditor, who is then under a duty of producing some
evidence to show non-payment.
In the instant case, the right of respondent Pedro
Juanatas to be paid a commission equivalent to 17%, later
increased to 20%, of the gross income is not disputed by
petitioners. Although private respondents admit receipt of partial
payment, petitioners still have to present proof of full payment.
Where the defendant sued for a debt admits that the debt
was originally owed, and pleads payment in whole or in part, it is
incumbent upon him to prove such payment. That a plaintiff admits that
some payments have been made does not change the burden of proof.
The defendant still has the burden of establishing payments beyond
those admitted by plaintiff.
The testimony of petitioners which merely denied the claim
of private respondents, unsupported by documentary evidence, is not
sufficient to establish payment. Although petitioners submitted a
notebook showing the allegedvales of private respondents for the year
1990, 15 the same is inadmissible and cannot be given probative value
considering that it is not properly accomplished, is undated and
unsigned, and is thus uncertain as to its origin and authenticity.
The positive testimony of a creditor may be sufficient of itself
to show non-payment, even when met by indefinite testimony of the
debtor. Similarly, the testimony of the debtor may also be sufficient to
show payment, but, where his testimony is contradicted by the other
party or by a disinterested witness, the issue may be determined
against the debtor since he has the burden of proof. The testimony of
the debtor creating merely an inference of payment will not be
regarded as conclusive on that issue. 17
Hence, for failure to present evidence to prove payment,
petitioners defaulted in their defense and in effect admitted the
allegations of private respondents.
B)

SECOND ISSUE:

The father is declared to be employee as an employee of


the Trucking Firm while the son is not. The Court applied the fourfold test.
The agreement was between petitioner JJ's Trucking and
respondent Pedro Juanatas. The hiring of a helper was discretionary
on the part of Pedro. Under their contract, should he employ a helper,
he would be responsible for the latter's compensation. With or without
a helper, respondent Pedro Juanatas was entitled to the same
percentage of commission. Respondent Fredelito Juanatas was hired
by his father, Pedro, and the compensation he received was paid by
his father out of the latter's commission. Further, Fredelito was not
subject to the control and supervision of and dismissal by petitioners
but of and by his father.