TOPIC: WAGE & THE WAGE RATIONALIZATION ACT CASE TITLE: Ilaw at Buklod ng Manggagawa (IBM) vs.

National Labor Relations Commission, Hon Carmen Talusan and San Miguel Corporation (1991) FACTS: The controversy at bar had its origin in the "wage distortions" affecting the employees of respondent San Miguel Corporation allegedly caused by Republic Act No. 6727, otherwise known as the Wage Rationalization Act.

The union known as Ilaw at Buklod Ng Manggagawa (IBM) said to represent 4,500 employees of San Miguel Corporation, more or less, working at the various plants, offices, and warehouses located at the National Capital Region presented to the company a "demand" for correction of the significant distortion in the workers' wages. In that demand, the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows: Where the application of the increases in the wage rates under this Section results in distortions as defined under existing laws in the wage structure within an establishment and gives rise to a dispute therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock, the same shall be finally resolved through compulsory arbitration by the regional branches of the National Labor Relations Commission having jurisdiction over the workplace. It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under this Section within twenty (20) calendar days from the time said dispute is formally submitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of the increase in the wage rates prescribed under this Section. The union claimed that their demand was ignored and offered an across the board wage increase of P7.00 per employee against the proposal of the union of P 25.00 increase which was later reduced to P 15.00. Thereafter, SMC filed a complaint with the Arbitration Branch of the NLRC to declare the strike illegal and to terminate the employment of the members of the union. Union filed an action for prohibition of the temporary restraining order made by the Arbiter. The issue involved is whether or not the strike is legal in the resolution of wage distortion. HELD: The strike involving the issue of wage distortion is illegal as a means of resolving it. The legality of these activities is usually dependent on the legality of the purposes sought to be attained and the means employed therefore. It goes without saying that these joint or coordinated activities may be forbidden or restricted by law or contract. In the instance of "distortions of the wage structure within an establishment" resulting from "the application of any prescribed wage increase by virtue of a law or wage order," Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the correction thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as modes of settlement of the issue. The provision states that the employer and the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains

unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration. In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising there from shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of any increase in prescribed wage rates pursuant to the provisions of law or Wage Order. The legislative intent that solution of the problem of wage distortions shall be sought by voluntary negotiation or arbitration, and not by strikes, lockouts, or other concerted activities of the employees or management, is made clear in the rules implementing RA 6727 issued by the Secretary of Labor and Employment pursuant to the authority granted by Section 13 of the Act. Section 16, Chapter I of these implementing rules, after reiterating the policy that wage distortions be first settled voluntarily by the parties and eventually by compulsory arbitration, declares that, "Any issue involving wage distortion shall not be a ground for a strike/lockout."

CASE TITLE: Employees Confederation of the Philippines (ECOP) vs. National Wages and Productivity Commission and Regional Tripartite Wages and Productivity Board NCR, Trade Union Congress of the Philippines (1991) FACTS: Petitioners ECOP questioned the validity of the wage order issued by the RTWPB dated October 23, 1990 pursuant to the authority granted by RA 6727. The wage order increased the minimum wage by P17.00 daily in the National Capital Region. The wage order is applied to all workers and employees in the private sector of an increase of P 17.00 including those who are paid above the statutory wage rate. ECOP appealed with the NWPC but dismissed the petition. The Solicitor General in its comment posits that the Board upon the issuance of the wage order fixed minimum wages according to the salary method. Petitioners insist that the power of RTWPB was delegated, through RA 6727, to grant minimum wage adjustments and in the absence of authority, it can only adjust floor wages. HELD: The Court agrees with the Solicitor General. It noted that there are two ways in the determination of wage, these are floor wage method and salary ceiling method. The floor wage method involves the fixing of determinate amount that would be added to the prevailing statutory minimum wage while the salary ceiling method involves where the wage adjustment is applied to employees receiving a certain denominated salary ceiling. RA 6727 gave statutory standards for fixing the minimum wage. ART. 124. Standards/Criteria for Minimum Wage Fixing The regional minimum wages to be established by the Regional Board shall be as nearly adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-being of the employees within the framework of the national economic and social development program. In the determination of such regional minimum wages, the Regional Board shall, among other relevant factors, consider the following: (a) (b) (c) (d) (e) (f) (g) (h) (i) The demand for living wages; Wage adjustment vis-a-vis the consumer price index; The cost of living and changes or increases therein; The needs of workers and their families; The need to induce industries to invest in the countryside; Improvements in standards of living; The prevailing wage levels; Fair return of the capital invested and capacity to pay of employers; Effects of employment generation and family income; and

(j) The equitable distribution of income and wealth along the imperatives of economic and social development." The wage order was not acted in excess of boards authority. The law gave reasonable limitations to the delegated power of the board.

CASE TITLE: Norma Mabeza vs. National Labor Relations Commission, Peter Ng/Hotel Supreme (1997) FACTS: Petitioner Norma Mabeza contends that on the first week of May 1991, she and her co-employees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance with minimum wage and other labor standard provisions of law. Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the same day to the Regional Office of the Department of Labor and Employment in Baguio City. The affidavit was drawn by management for the sole purpose of refuting findings of the Labor Inspector of DOLE apparently adverse to the private respondent. After she refused to proceed to the City Prosecutor's Office, petitioner states that she was ordered by the hotel management to turn over the keys to her living quarters and to remove her belongings from the hotel premises. According to her, respondent strongly chided her for refusing to proceed to the City Prosecutor's Office to attest to the affidavit. She thereafter reluctantly filed a leave of absence from her job which was denied by management. When she attempted to return to work on May 1991, the hotel's cashier informed her that she should not report to work and, instead, continue with her unofficial leave of absence. Consequently, three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the National Labor Relations Commission CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits. Responding to the allegations for illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter that petitioner surreptitiously left her job without notice to the management and that she actually abandoned her work. He maintained that there was no basis for the money claims for underpayment and other benefits as these were paid in the form of facilities to petitioner and the hotel's other employees. Labor Arbiter dismissed the complaint. On April 1994, respondent NLRC promulgated its assailed Resolution affirming the Labor Arbiter's decision. The issue of the case is whether the employer has exerted pressure, in the form of restraint, interference or coercion, against his employee's right to institute concerted action for better terms and conditions of employment constitutes unfair labor practice. HELD: The Court ruled that there was unfair labor practice. Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not, together with the act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through concerted action. For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to all of the hotel's employees, that they could only cause trouble to management at great personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of charges against her was the warning that they would not only be deprived of their means of livelihood, but

also possibly, their personal liberty. Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer complying first with certain legal requirements. Without satisfying these requirements, the employer simply cannot deduct the value from the employee's wages. First, proof must be shown that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities must be voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair and reasonable value. These requirements were not met in the instant case. More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. The criterion in making a distinction between the two not so much lies in the kind (food, lodging) but the purpose. Considering that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as the private respondent's hotel.

CASE TITLE: National Federation of Labor vs. National Labor Relations Commission and Franklin Baker Company of the Philippines (Davao Plant) (1994) FACTS: Between 1 November 1983 and 1 November 1984, Wage Orders Nos. 3,4, 5 and 6 were promulgated by the then President Ferdinand E. Marcos. All these Wage Orders increased the statutory minimum wages of workers with differing increases being specified for agricultural plantation and non-agricultural workers. Before the effectivity of Wage Order No. 3, the wage rates of regular employees and of casual (or non-regular employees of private respondent Franklin Baker Company of the Philippines (Davao Plant) were such that there was a positive differential between the two (2) in the amount of P4.56. Upon the effectivity of Wage Order No. 5, grievance meetings were held by petitioner National Federation of Labor and private respondent Company sometime in June 1984, addressing the impact which implementation of the various Wage Orders had on the wage structure of the Company. On June 1984, all the casual or non-regular employees of private respondent Company (at least in its Davao Plant) were "regularized," or converted into regular employees, pursuant to the request of petitioner NFL. On July 1984, the effectivity date of the 1984 Collective Bargaining Agreement between NFL and the Company, all regular employees of the Company received an increase of P1.84 in their daily wage; the regular daily wage of the regular employees thus became P35.84 as against P34.00 per day for non-regular employees. As a result of the implementation of Wage Order No. 6, casual employees received an increase of their daily wage from P34.00 to 36.00. At the same time, the Company unilaterally granted an across-the-board increase of P2.00 in the daily rate of all regular employees, thus increasing their daily wage from P35.84 to P37.84. Meantime, while the above wage developments were unfolding, the Company experienced a work output slow down. The Company directed some 205 workers to explain the reduction in their work output. The workers failed to comply and they were accordingly issued notices of dismissal by the Company. As a response to its decreasing productivity levels, the Company suspended operations on 16 August 1984. Operations were resumed on 14 September 1984; the Company, however, refused to take back the 205 dismissed employees. Petitioner Union then went on strike alleging a lock-out on the part of the Company and demanding rectification of the wage distortion. The case was certified by the Secretary of Labor to the National Labor Relations Commission for compulsory conciliation. On November 1987, the NLRC rendered a decision which in effect found the existence of wage distortion and required the Company to pay a P1.00 wage increase. The bottom line issue presented to the Court is thus whether or not, the facts as summarized above, the NLRC committed a grave abuse of discretion amounting to lack or excess of jurisdiction, when it concluded that the wage distortion had ceased to exist. HELD: The Court ruled that NLRC did not commit grave abuse of discretion in concluding that the wage distortion ceased to exist.

Thus, Section 6 of Wage Order No. 3, dated 7 November 1983, provided as follows: "SECTION 6. Where the application of the minimum wage rate prescribed herein results in distortions of the wage structure of an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement or through conciliation. In case where there is no collective bargaining agreement or recognized labor organization, the employer shall endeavor to correct such distortions in consultation with their workers. Any dispute shall be resolved through conciliation by the appropriate Regional Office of the Ministry of Labor and Employment or through arbitration by the NLRC Arbitration Branch having jurisdiction over the work-place. A statutory definition of "wage distortion" is now found in Article 124 of the Labor Code as amended by Republic Act No. 6727 (dated 9 June 1989) which reads as follows: ARTICLE 124.Standards/Criteria for Minimum Wage Fixing. As used herein, a wage distortion shall mean a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation." From the above quoted material, it will be seen that the concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees. The wage distortion anticipated in Wage Orders Nos. 3, 4, 5 and 6 was a "distortion" which ensued from the impact of those Wage Orders upon the different wage rates of the several classes of employees. Thus distortion ensued where the result of implementation of one or another of the several Wage Orders was the total elimination or the severe reduction of the differential or gap existing between the wage rates of the differing classes of employees. It is important to note that the remedy contemplated in the Wage Orders, and now in Article 124 of the Labor Code, for a wage distortion consisted of negotiations between employer and employees for the rectification of the distortion by readjusting the wage rates of the differing classes of employees. As a practical matter, this ordinarily meant a wage increase for one or more of the affected classes of employees so that some gap or differential would be reestablished.

CASE TITLE: Joy Brothers Inc., vs. National Wages and Productivity Commission (1997) FACTS: Wage Order No. NCR-03, providing for a twenty-seven peso wage increase for all private sector workers and employees in the National Capital Region receiving one hundred fifty-four pesos (P154.00) and below daily, was approved November 29, 1993. On February 1994, petitioner applied for exemption from said wage order on the ground that it was a distressed establishment. The RTWPB denied petitioner's application for exemption after holding that the corporation accumulated profits amounting to P38,381.80 for the period under review. Petitioner's motion for reconsideration was likewise denied by the Wages and Productivity Board on January 5, 1995. On appeal to the National Wages and Productivity Commission, petitioner was again denied relief. More specifically, petitioner contends that the interim period to be reckoned with is from January 1, 1993 to December 15, 1993 and not merely up to September 30, 1993 as held by respondent Commission. Significantly, the period up to December 31, 1993 will reflect losses in petitioner corporation's books, but not if the covered interim period is only up to September 30, 1993. The instant petition requires an interpretation of the exemption provisions pertinent to Wage Order No. NCR 03 and a determination of whether or not Petitioner Corporation falls within the exemption for distressed establishments. HELD: The petitioner company is not entitled to exemption of the wage order since it is not a distressed establishment. Under Section 5 of Wage Order No. NCR-03, distressed firms may be exempted from the provisions of the Order upon application with and due determination of the Board. NWPC Guidelines No. 01, Series of 1992, providing for the Revised Guidelines on Exemption indicate the criteria to qualify for exemption as follows: "3. For Distressed Establishments: a. In the case of a stock corporation, partnership, single proprietorship, nonstock, non-profit organization or cooperative engaged in a business activity or charging fees for its services a.1 When accumulated losses for the last 2 full accounting periods and interim period, if any, immediately preceding the effectivity of the Order have impaired by at least 25 percent the: Paid-up capital at the end of the last full accounting period preceding the effectivity of the Order, in the case of corporations: Total invested capital at the beginning of the last full accounting period preceding the effectivity of the Order in the case of partnerships and single proprietorships. a.1.1 Establishments operating for less than two (2) years may be granted exemption when accumulated losses for said period have impaired by at least 25% the paid-up capital or total invested capital, as the case may be." Section 8, paragraph a, of the Rules Implementing Wage Order No. NCR-03 provides that exemption from compliance with the wage increase may be granted to distressed establishments whose paid-up capital has been impaired by at least

twenty-five percent (25%) or which registers capital deficiency or negative net worth. The Revised Guidelines on Exemption further provides that the following documents shall be submitted in support of the corporation's application: "For Distressed Establishments: b. Available audited financial statements (together with the notes thereto) for the last 2 full accounting periods preceding the effectivity of the Order filed with and stamped "received" by the BIR and SEC. Interim quarterly financial statements for the period immediately preceding the effectivity of the Order. Income tax returns for the last 2 taxable periods filed with and stamped "received" by the BIR." 11 The Guidelines expressly require interim quarterly financial statements for the period immediately preceding December 16, 1993. The last two full accounting periods here are 1991 and 1992, for which years petitioner incurred net profits of P53,607.00 and P60,188.00, respectively.

CASE TITLE: Antonio Iran vs. National Labor Relations Commission (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 while private respondents Pepito Tecson, Apolinario Gimena, Jesus Bandilao, Edwin Martin and Diosdado Gonzalgo were hired 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 covered by the driver/salesmen. 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. They were not allowed to go on their respective routes. 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 December 1991, private respondents filed complaints against petitioner for illegal dismissal, illegal deduction, underpayment of wages, premium pay for holiday and rest day, holiday pay, service incentive leave pay, 13th month pay, allowances, separation pay, recovery of cash bond, damages and attorney's fees. The labor arbiter found that petitioner had validly terminated private respondents, there being just cause for the latter's dismissal. 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. The NLRC affirmed the validity of private respondent's dismissal, but found that said dismissal did not comply with the procedural requirements for dismissing employees. The principal issue is whether or not commissions are included in determining compliance with the minimum wage requirement. HELD: The Court rules that commissions are included as part of wage. Article 97(f) of the Labor Code defines wage as 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 soft drinks 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 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.

CASE TITLE: Prubankers Association vs. Prudential Bank and Trust Company (1999) FACTS: On November, the RTWPB Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector who had rendered service for at least three (3) months before its effectivity, and for the same period thereafter, in the following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the cities of Naga and Legaspi; FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00) for all other areas in the Bicol Region. On November 1993, RTWPB Region VII issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage Order No. RO VII02-A into the basic pay of all workers. It also established an increase in the minimum wage rates for all workers and employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran. The bank granted a COLA of P17.50 to its employees at its Naga Branch, the only branch covered by Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into the basic pay of its rank-and-file employees at its Cebu, Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB VII-03. On June 7, 1994, Prubankers Association wrote the petitioner requesting that the Labor Management Committee be immediately convened to discuss and resolve the alleged wage distortion created in the salary structure upon the implementation of the said wage orders. It demanded in the Labor Management Committee meetings that the petitioner extend the application of the wage orders to its employees outside Regions V and VII, claiming that the regional implementation of the said orders created a wage distortion in the wage rates of petitioner's employees nationwide. As the grievance could not be settled in the said meetings, the parties agreed to submit the matter to voluntary arbitration. The committee ruled that there was no wage distortion since the increase was granted to all employees. The main issue is whether or not a wage distortion resulted from respondent's implementation of the Wage Orders. HELD: The court ruled that there is no wage distortion since the wage order implementation covers all the branches of the bank. The hierarchy of positions was still preserved. The levels of different pay classes was not eliminated. The statutory definition of wage distortion is found in Article 124 of the Labor Code, as amended by Republic Act No. 6727, which reads: "ARTICLE 124. Standards/Criteria for Minimum Wage Fixing . . .

"As used herein, a wage distortion shall mean a situation where an increase in prescribed wage results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee

groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation." Wage distortion involves four elements: 1. An existing hierarchy of positions with corresponding salary rates 2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one 3. The elimination of the distinction between the two levels 4. The existence of the distortion in the same region of the country A disparity in wages between employees holding similar positions but in different regions does not constitute wage distortion as contemplated by law. As stated, it is the hierarchy of positions and the disparity of their corresponding wages and other emoluments that are sought to be preserved by the concept of wage distortion.

CASE TITLE: Liduvino Millares, et al. vs. National Labor Relations Commission and Paper Industries Corporation of the Philippines (1999) FACTS: Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur. In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials. The issue is whether the allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their existence and subsistence. HELD: The allowances are not part of the wages of the employees. wage is defined in letter (f) as the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. When an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." Customary is founded on longestablished and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. The court agrees with the observation of the Office of the Solicitor General that the subject allowances were temporarily, not regularly, received by petitioners. Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer's business. In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. Revenue Audit Memo Order No. 1-87 pertinently provides 3.2 . . . transportation, representation or entertainment expenses shall not constitute taxable compensation if: (a) It is for necessary travelling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade or business of the employer, and

(b) The employee is required to, and does, make an accounting/liquidation for such expense in accordance with the specific requirements of substantiation for such category or expense. Board and lodging allowances furnished to an employee not in excess of the latter's needs and given free of charge, constitute income to the latter except if such allowances or benefits are furnished to the employee for the convenience of the employer and as necessary incident to proper performance of his duties in which case such benefits or allowances do not constitute taxable income. 18 The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig. The inevitable conclusion is that subject allowances did not form part of petitioners' wages.

CASE TITLE: International Quisumbing (2000)

School

Alliance of Educators vs. Hon. Leonardo

FACTS: International School, Inc., pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted for the protection of employees. The School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: a. What is one's domicile? b. Where is one's home economy? c. To which country does one owe economic allegiance? d. Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines? Should the answer to any of these queries point to the Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire. The School grants foreign-hires certain benefits not accorded local- hires. These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education. When negotiations for a new collective bargaining agreement were held on June 1995, International School Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty members" of the School, contested the difference in salary rates between foreign and local-hires. The issue involves whether or not local hire teachers shall enjoy same salary as foreign hire teachers where they perform the same work. This calls for the applicability of the principle of equal pay for equal work. HELD: Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favorable conditions of work, which ensure, in particular: a. Remuneration which provides all workers, as a minimum, with: i. Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work;

The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. This rule applies to the School. The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires. The Court finds this argument a little inconsiderate. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others receive more. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly. In this case, the employer has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the localhires. Both groups have similar functions and responsibilities, which they perform under similar working conditions. Thus the employees are entitled to same salary for performance of equal work.

CASE TITLE: Bankard Employees Union Workers Alliance Trade Unions vs. National Labor Relations Commissions (2004) FACTS: The petition hinges on the issue whether the unilateral adoption by an employer of an upgraded salary scale that increased the hiring rates of new employees without increasing the salary rates of old employees resulted in wage distortion within the contemplation of Article 124 of the Labor Code. Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III, Level IV, and Level V. On May 1993, its Board of Directors approved a New Salary Scale, made retroactive to April 1, 1993, for the purpose of making its hiring rate competitive in the industrys labor market. The New Salary Scale increased the hiring rates of new employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and Levels II, III and IV by nine hundred pesos (P900.00). Accordingly, the salaries of employees who fell below the new minimum rates were also adjusted to reach such rates under their levels. This made Bankard Employees Union-WATU (petitioner), the duly certified exclusive bargaining agent of the regular rank and file employees of Bankard, to request for the increase in the salary of its old, regular employees. Bankard insisted that there was no obligation on the part of the management to grant to all its employees the same increase in an across-the-board manner. Petioner filed a notice of strike. The strike was averted when the dispute was certified by the Secretary of Labor and Employment for compulsory arbitration. NLRC finding no wage distortion dismissed the case for lack of merit. Petitioners motion for reconsideration of the dismissal of the case was denied. HELD: The Court will not interfere in the management prerogative of the petitioner. The employees are not precluded to negotiate through the provisions of the CBA. Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among others, Article 124 of the Labor Code), the term "wage distortion" was explicitly defined as: ... a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. 4 In the case of Prubankers Association v. Prudential Bank and Trust Company, it laid down the four elements of wage distortion, to wit: (1.) An existing hierarchy of positions with corresponding salary rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3) The elimination of the distinction between the two levels; and

(4) The existence of the distortion in the same region of the country. Normally, a company has a wage structure or method of determining the wages of its employees. In a problem dealing with "wage distortion," the basic assumption is that there exists a grouping or classification of employees that establishes distinctions among them on some relevant or legitimate bases. Involved in the classification of employees are various factors such as the degrees of responsibility, the skills and knowledge required, the complexity of the job, or other logical basis of differentiation. The differing wage rate for each of the existing classes of employees reflects this classification. Put differently, the entry of new employees to the company ipso facto places them under any of the levels mentioned in the new salary scale which private respondent adopted retroactive to April 1, 1993. While seniority may be a factor in determining the wages of employees, it cannot be made the sole basis in cases where the nature of their work differs. Moreover, for purposes of determining the existence of wage distortion, employees cannot create their own independent classification and use it as a basis to demand an across-the-board increase in salary. The wordings of Article 124 are clear. If it was the intention of the legislators to cover all kinds of wage adjustments, then the language of the law should have been broad, not restrictive as it is currently phrased: Article 124. Standards/Criteria for Minimum Wage Fixing. Where the application of any prescribed wage increase by virtue of a law or Wage Order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from the wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Article 124 is entitled "Standards/Criteria for Minimum Wage Fixing." It is found in CHAPTER V on "WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION" which principally deals with the fixing of minimum wage. Article 124 should thus be construed and correlated in relation to minimum wage fixing, the intention of the law being that in the event of an increase in minimum wage, the distinctions embodied in the wage structure based on skills, length of service, or other logical bases of differentiation will be preserved. If the compulsory mandate under Article 124 to correct "wage distortion" is applied to voluntary and unilateral increases by the employer in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the employer would be completely tied even in cases where an increase in wages of a particular group is justified due to a re-evaluation of the high productivity of a particular group, or as in the present case, the need to increase the competitiveness of Bankards hiring rate. An employer would be discouraged from adjusting the salary rates of a particular group of employees for fear that it would result to a demand by all employees for a similar increase, especially if the financial conditions of the business cannot address an across-the-board increase.

Wage distortion is a factual and economic condition that may be brought about by different causes. The mere factual existence of wage distortion does not, however, ipso facto result to an obligation to rectify it, absent a law or other source of obligation which requires its rectification.

CASE TITLE: Cesar Odango, in his behalf and behalf of 32 complainants vs. National Labor Relations Commission and Antique Electric Cooperative, Inc. (2004) FACTS: Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday and half of Saturday. After a routine inspection, the Regional Branch of the Department of Labor and Employment found ANTECO liable for underpayment of the monthly salaries of its employees. On September 1989, the DOLE directed ANTECO to pay its employees wage differentials amounting to P1,427,412.75. ANTECO failed to pay. On various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with the NLRC praying for payment of wage differentials, damages and attorneys fees. On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting them wage differentials amounting to P1,017,507.73 and attorneys fees of 10%. ANTECO appealed the Decision to the NLRC where it reversed the Labor Arbiters Decision. The NLRC denied petitioners motion for reconsideration. Petitioners then elevated the case to CA where it dismissed the petition for failure to comply with Section 3, Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners failed to allege the specific instances where the NLRC abused its discretion. The appellate court denied petitioners motion for reconsideration. Hence, this petition. The issue involves the petitioners are entitled to money claims. HELD: The Court ruled that the petitioners are not entitled to money claims or wage differentials. The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by the Secretary of Labor which was declared null and void since in the guise of clarifying the Labor Codes provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion. Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The basic rule in this jurisdiction is "no work, no pay." The right to be paid for unworked days is generally limited to the ten legal holidays in a year. Petitioners claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten legal holidays. Petitioners line of reasoning is not only a violation of the "no work, no pay" principle, it also gives rise to an invidious classification, a violation of the equal protection clause.

CASE TITLE: C. Planas Commercial and/or Marcial Cohu vs. National Labor Relations Commission, Alfredo Ofialda, Dioleto Morente, Rudy Allauigan (2005) FACTS: In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for underpayment of wages, non payment of overtime pay, holiday pay, service incentive leave pay, and premium pay for rest day and holiday and night shift differential against petitioners in the Arbitration Branch of NLRC. It alleged that Cohu is engaged in the business of wholesale of plastic products and fruits of different kinds with more than 24 employees. Respondents were hired on January 1990, May 1990 and July 19991 as laborers and were paid below the minimum wage for the past 3 years. They were required to work for more than 8 hours a day and never enjoyed the minimum benefits. Petitioners filed their comment stating that the respondents were their helpers. The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an appeal with the NLRC where it granted the money claims of Ofialda, Morente and Allaguian. Petitioners appealed with the CA but it was denied. It said that the company having claimed of exemption of the coverage of the minimum wage shall have the burden of proof to the claim. In the present petition, the Petitioners insist that C. Planas Commercial is a retail establishment principally engaged in the sale of plastic products and fruits to the customers for personal use, thus exempted from the application of the minimum wage law; that it merely leases and occupies a stall in the Divisoria Market and the level of its business activity requires and sustains only less than ten employees at a time. Petitioners contend that private respondents were paid over and above the minimum wage required for a retail establishment, thus the Labor Arbiter is correct in ruling that private respondents claim for underpayment has no factual and legal basis. Petitioners claim that since private respondents alleged that petitioners employed 24 workers, it was incumbent upon them to prove such allegation which private respondents failed to do. HELD: The contention of the petitioners that they are exempted by the law must be proven. The petitioners have not successfully shown that they had applied for the exemption. R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage rate of all workers and employees in the private sector. Section 4 of the Act provides for exemption from the coverage, thus: Sec. 4. (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. 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. Clearly, 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.

CASE TITLE: EJR Crafts Corporation vs. Court of Appeals (2006)

FACTS: In 1997, private respondents filed a complaint for underpayment of wages, regular holiday pay, overtime pay, nonpayment of 13th month pay and service incentive leave pay against petitioner before the Regional Office, NCR of the Department of Labor and Employment (DOLE). Acting on the complaint, Regional Director issued an inspection authority to Senior Labor Enforcement Officer. On 22 August 1997, an inspection was conducted on the premises of petitioners offices wherein the following violations of labor standards law were discovered, to wit: non-presentation of employment records (payrolls and daily time records); underpayment of wages, regular holiday pay, and overtime pay; and nonpayment of 13th month pay and service incentive leave pay. On the same day, the Notice of Inspection Result was received by and explained to the manager of petitioner corporation Mr. Jae Kwan Lee, with the corresponding directive that necessary restitution be effected within five days from said receipt. As no restitution was made, the Regional Office thereafter conducted summary investigations. However, despite due notice, petitioner failed to appear for two consecutive scheduled hearings. Petitioner failed to question the findings of the Labor Inspector received by and explained to the corporations manager. Petitioner then filed a Motion for Reconsideration of said Order arguing that the Regional Director has no jurisdiction over the case as private respondents were allegedly no longer connected with petitioner corporation at the time of the filing of the complaint and when the inspection was conducted, and that private respondents claims are within the exclusive and original jurisdiction of the Labor Arbiters. The pivotal issue in this case is whether the Regional Director has jurisdiction over the claims of herein private respondents. HELD: The Court favors the respondents in the money claims against the petitioner company. It is admitted that for the Regional Director to exercise the power to order compliance, or the so-called "enforcement power" under Article 128(b) of P.D. No. 442 as amended, it is necessary that the employer-employee relationship still exists. In support of its contention that it is the Labor Arbiter and not the Regional Director who has jurisdiction over the claims of herein private respondents, petitioner contends that at the time the complaint was filed, the private respondents were no longer its employees. Considering thus that there still exists an employer-employee relationship between petitioner and private respondents and that the case involves violations of labor standard provisions of the Labor Code, we agree with the Undersecretary of Labor and the appellate court that the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of the Labor Code which states: Art. 128. Visitorial and Enforcement Power. (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions

of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

CASE TITLE: Pag-asa Steel Works, Inc. vs. Court of Appeals, Former Sixth Division

and Pag-asa Steel Workers Union (2006) FACTS: Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under Philippine laws and is engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel Workers Union is the duly authorized bargaining agent of the rank-and-file employees of petitioner. RTWPB of NCR issued a wage order which provided for a P 13.00 increase of the salaries receiving minimum wages. The Petitioner and the union negotiated on the increase. Petitioner forwarded a letter to the union with the list of adjustments involving rank and file employees. In September 1999, the petitioner and union entered into an collective bargaining agreement where it provided wage adjustments namely P15, P25, P30 for three succeeding year. On the first year, the increase provided were followed until RTWPB issued another wage order where it provided for a P25.50 per day increase in the salary of employees receiving the minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the P25.50 per day increase to all of its rank-and-file employees. On November 2000, Wage Order No. NCR-08 was issued where it provided the increase of P26.50 per day. The union president asked that the wage order be implemented where petitioner rejected the request claiming that there was no wage distortion and it was not obliged to grant the wage increase. The union submitted the matter for voluntary arbitration where it favored the position of the company and dismissed the complaint. The matter was elevated to CA where it favored the respondents. Hence, this petition. The issue involves whether or not the company was obliged to grant the wage increase under Wage Order No. NCR-08 as a matter of practice. HELD: The Court favors the petitioner that wage increase shall not be granted by virtue of CBA or matter of practice by the company. It is submitted that employers unless exempt are mandated to implement the said wage order but limited to those entitled thereto. There is no legal basis to implement the same across-the-board. A perusal of the record shows that the lowest paid employee before the implementation of Wage Order #8 is P250.00/day and none was receiving below P223.50 minimum. This could only mean that the union can no longer demand for any wage distortion adjustment. The provision of wage order #8 and its implementing rules are very clear as to who are entitled to the P26.50/day increase, i.e., "private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of Twenty-Six Pesos and Fifty Centavos (P26.50) per day," and since the lowest paid is P250.00/day the company is not obliged to adjust the wages of the workers. The fact that it was shown the increases granted under the Wage Orders were obtained thru request and negotiations because of the existence of wage distortion and not as company practice as what the union would want. The provision in the CBA that "Any Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted above" cannot be interpreted in support of an across-the-board increase. If such were the intentions of this provision, then the company could have simply

accepted the original demand of the union for such across-the-board implementation, as set forth in their original proposal. The fact that the company rejected this proposal can only mean that it was never its intention to agree, to such across-the-board implementation. Wage Order No. NCR-08 clearly states that only those employees receiving salaries below the prescribed minimum wage are entitled to the wage increase provided therein, and not all employees across-the-board as respondent Union would want petitioner to do. Considering therefore that none of the members of respondent Union are receiving salaries below the P250.00 minimum wage, petitioner is not obliged to grant the wage increase to them. Moreover, to ripen into a company practice that is demandable as a matter of right, the giving of the increase should not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the employer. Hence, even if the company continuously grants a wage increase as mandated by a wage order or pursuant to a CBA, the same would not automatically ripen into a company practice.

CASE TITLE: Metropolitan Bank and Trust Company vs. National Wages and Productivity Commission and Regional Tripartite Wage and Productivity Board Region II (2007) FACTS: On October 17, 1995, the Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwise known as the Wage Rationalization Act, issued Wage Order No. R02-03 (Wage Order), as follows: Section 1. Upon effectivity of this Wage Order, all employees/workers in the private sector throughout Region II, regardless of the status of employment are granted an across-the-board increase of P15.00 daily. The Wage Order was published in a newspaper of general circulation on December 2, 1995 and took effect on January 1, 1996. Its Implementing Rules were approved on February 14, 1996. Per Section 13 of the Wage Order, any party aggrieved by the Wage Order may file an appeal with the National Wages and Productivity Commission (NWPC) through the RTWPB within 10 calendar days from the publication of the Wage Order. Bankers Council in a letter inquiry to NWPC requested for ruling to seek exemption from coverage of the wage order since the members bank are paying more than the regular wage. NWPC replied that the member banks are covered by the wage order and does not fall with the exemptible categories. In another letter inquiry, Metrobank asked for the interpretation of the applicability of the wage order. NWPC referred it to RTWPB. RTWPB in return clarified that establishments in Region 2 are covered by the wage order. Petitioner filed a petition with the CA and denied the petition. The core issue of this case is whether or not the wage order is void thus it has no legal effect and the RTWPB acted in excess of its jurisdiction. HELD: The Court finds that Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase to employees earning more than the minimum wage rate; and pursuant to the separability clause of the Wage Order, Section 1 is declared valid with respect to employees earning the prevailing minimum wage rate. The powers of NWPC are enumerated in ART. 121. Powers and Functions of the Commission. - The Commission shall have the following powers and functions:

(d) To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans; (f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans;

(g) To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards;

R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment generation in the countryside through industrial dispersal; and to allow business and industry reasonable returns on investment, expansion and growth. In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power to prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial or industry levels; and authorized the RTWPB to determine and fix the minimum wage rates applicable in their respective regions, provinces, or industries therein and issue the corresponding wage orders, subject to the guidelines issued by the NWPC. Pursuant to its wage fixing authority, the RTWPB may issue wage orders which set the daily minimum wage rates, based on the standards or criteria set by Article 124 of the Labor Code. The Court declared that there are two ways of fixing the minimum wage: the "floorwage" method and the "salary-ceiling" method. The "floor-wage" method involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On the other hand, in the "salary-ceiling" method, the wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage increase. In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-wage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-the-board wage increase of P15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage Order to wage earners receiving more than the prevailing minimum wage rate, without a denominated salary ceiling. As correctly pointed out by the OSG, the Wage Order granted additional benefits not contemplated by R.A. No. 6727.

CASE TITLE: Equitable Banking Corporation ( known as Equitable-PCI Bank) vs. Ricardo Sadac (2006) FACTS: Ricardo Sadac was appointed Vice President of the Legal Department of petitioner Bank effective 1 August 1981, and subsequently General Counsel thereof on 8 December 1981. On June 1989, nine lawyers of petitioner Banks Legal Department, in a letterpetition to the Chairman of the Board of Directors, accused respondent Sadac of abusive conduct and ultimately, petitioned for a change in leadership of the department. On the ground of lack of confidence in Sadac, under the rules of client and lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record. In reaction thereto, Sadac requested for a full hearing and formal investigation but the same remained unheeded. On 9 November 1989, respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. After learning of the filing of the complaint, petitioner Bank terminated the services of respondent Sadac. Finally, on 10 August 1989, Sadac was removed from his office and ordered disentitled to any compensation and other benefits. Labor Arbiter rendered decision that Sadacs termination was illegal and entitled to reinstatement and payment of full back wages. NLRC affirmed the decision upon appeal by the Bank. Sadac filed for execution of judgment where it gave its computation which amounted to P 6.03 M representing his back wages and the increases he should have received during the time he was illegally dismissed. The Bank opposed to Sadacs computation. The Labor Arbiter favor Sadacs computation. NLRC, upon appeal by the bank, reversed the decision. CA reversed the decision of NLRC. Hence, this petition. The issue is whether or not the computation of back wages shall include the general increases. HELD: To resolve the issue, the court revisits its pronouncements on the interpretation of the term backwages. Back wages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right but rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the formers unlawful act or bad faith. in the case of Bustamante v. National Labor Relations Commission, It said that the Court deems it appropriate to reconsider such earlier ruling on the computation of back wages by now holding that conformably with the evident legislative intent as expressed in Rep. Act No. 6715, back wages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of

his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. In other words, the provision calling for "full backwages" to illegally dismissed employees is clear, plain and free from ambiguity and, therefore, must be applied without attempted or strained interpretation. There is no vested right to salary increases. Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages. The conclusion is that Sadacs computation of his full backwages which includes his prospective salary increases cannot be permitted.