Aklan Electric Cooperative (AKELCO) v.

NLRC, Rodolfo
Retiso and 165 others (2000)
FACTS:
1. Respondents (numbering around 165) were
employees of AKELCO. They were working at their
main office in Lezo, Aklan and receiving regularly
their salaries.
2. Jan 1992: AKELCO released a Resolution allowing
the temporary transfer of their office to Kalibo,
Aklan since their head office at Lezo was closed
and that the area was dangerous at the time.
Nevertheless, a majority of the employees
still went ahead to Lezo to report for work.
They continued to receive their salaries.
3. Feb 1992: An unnumbered Resolution by the Board
of Director of AKELCO withdrew the earlier
resolution designating the temporary transfer from
Lezo to Kalibo; work was to resume once again in
Lezo. Some returned to Lezo but some of the
employees stayed at Kalibo.
4. Those who were at Lezo received their salaries
from Jan 1992 May 1992. However, in a new
Resolution, they were not paid their salaries from
the period of Jun 1992 Mar 1993
It was only after Mar 1993 that the
employees at Lezo were allowed to draw
their salaries again.
5. Respondents filed suit, trying to claim payment of
salaries, 13th month pay, ECOLA and other fringe
benefits for the said period of Jun 1992 Mar
1993.
6. LA: Complaint dismissed.
7. NLRC: LA reversed; complaint given due course in
favor of respondents.
The NLRC held that the records show that
the respondents had rendered service from
the period of Jun 1992 Mar 1993.
The NLRC took note of the fact that the
management responded to the office
managers request for payment in the
following manner: Rest assured that we
shall recommend your aforesaid request
This payment, however, shall be subject to,
among others, the availability of funds and
the approval of AKELCOs Board of
Directors.
The NLRC treated the reply above as an
admission on the part of AKELCO that the
respondents were indeed entitled to the
compensation they were claiming in this
complaint since the request came from the
office manager, who is most competent to
know whether the employees under him
rendered service and, hence, deserve
compensation.
AKELCOs basis for the non-payment of the
salaries during the interregnum (Jun 1992
Mar 1993) was the principle of no work, no
pay; they allege that the respondents did
not work during the interregnum and hence
deserve no payment. However, the NLRC
notes that AKELCO failed to substantiate
such allegation and hence, the complaint
must be granted in favor of the
respondents.
AKELCO was now ordered to pay the
salaries and other monies pertaining to the
interregnum.

8.

AKELCOs motion for reconsideration having been

denied, they filed this petition for certiorari under
Rule 65, alleging grave abuse of discretion on the
part of NLRC in their reversal of the LAs decision.

ISSUE:
WON NLRC committed a grave abuse of discretion
when it reversed the LA decision (YES)
RATIO:
The NLRC committed a grave abuse of its
discretion; its decision is reversed and set aside.
AKELCO alleges/argues that:
o Respondents considered the transfer to Kalibo
illegal, even when it did not have the power
to do so, and hence not only objected to the
order of transfer but completely defied the
same by staying in Lezo.
o Respondents defiance of the order of transfer
resulted in the disruption of AKELCOs
business operations.
o Respondents do not have a choice on where
to work and hence, must be considered as
dismissed by the reason of their defiance to
report to Kalibo.
o Respondents illegally collected fees and
charges from AKELCOs customers and
arrogated the same unto themselves
o It was an error for the NLRC to consider that
the computation of claims for wages and
benefits merely submitted by the respondents
as it basis for overruling the Labor Arbiter
when it should have done so only on the basis
of substantial evidence.
The Solicitor-General supported the contentions of
AKELCO because the respondents could not have
possibly worked during the interregnum since all
the records and equipment of AKELCO were
brought to Kalibo from the old office in Lezo and
that the computations submitted by respondents
is not proof of rendition of work.
The Court found merit in the position of AKELCO
and the Solicitor General.
o Respondents have not proven that they had
indeed rendered services during the
interregnum of Jun 1992 Mar 1993 so as to
entitle them to the compensation they claim.
o Respondents base their claim on three points:
(a) the letter-request of the office manager
addressed to AKELCO, (b) AKELCOs reply to
the letter-request, which they consider as
assurance of the payment of their claims, and
(c), the computation of their unpaid wages,
which they submitted themselves to the
NLRC.
o The Court, however, does not consider them
as substantial evidence that can support the
NLRC decision. They do not really establish
the fact that the respondents actually
rendered services during the interregnum.
Moreover:

(a) The office manager who submitted

the letter-request was actually one of the
respondents own and is a claimant
himself. His actions, therefore, in this
regard must be considered as selfserving and biased.

(b) AKELCOs reply to the letter request

cannot be taken as an assurance of
payment, and even less so, as an
approval of respondents claim. At best,
it is only an undertaking to recommend
the payment of the claims. It is also
noteworthy that the payment was to be
subject to the availability of funds and
the approval of the Board.

(c) NLRC did err in merely relying on the

submission of computations from the
respondents as its basis for overturning
the LA decision
AKELCO, on its part, was able to show that
respondents did not render service during the
interregnum.

AKELCOs resolution to effect the

temporary transfer from Lezo to Kalibo
was approved by the NEA administrator
(which had control over all electric
cooperatives). This establishes that there
was indeed a necessity to make such
transfer. The issuance of the resolution
must be considered as a valid exercise of
management prerogative.

AKELCOs records and equipment were

also transferred from Lezo to Kalibo.
Respondents claim that they continued
to report for work in Lezo should be then
considered as having no basis.

Respondents excuse for their defiance is

that they considered the transfer to be
illegal. However, they did not have the
color nor the authority from the law to
make that declaration unilaterally. What
they should have done was to follow the
order as it had the presumption of
legality.

The unnumbered resolution (which

declared the return of operations to Lezo)
was also validly proven by AKELCO to be
an invalid act of its Board. This is in
consideration of the following
subsequent actions of AKELCO: (a) it
issued a resolution dismissing from
employment those employees who
refused to work, (b) the issuance of
another resolution accepting back the
dismissed respondents out of
compassion, subject to the principle of
no work, no pay, (c) a resolution
rejecting the claims of respondents for
the wages during the interregnum. There
would have been no need for these
resolutions if the unnumbered resolution
was indeed valid and binding.

DISP: NLRC decision reversed and set aside. LA

affirmed.
Millares v. NLRC and PICOP (1999)
FACTS:
1. Petitioners (numbering 116) were employed by the
Paper Industries Corp. of the Phils (PICOP),
occupying various positions in Bislig, Surigao del
Sur.
2. 1992: PICOP suffered a financial setback because
of the govt regulations on logging as well as the

economic crisis. In view thereof, PICOP undertook

a retrenchment program and terminated the
services of petitioners.
3. In accord with the Labor Code provisions, the
petitioners received separation pay computed at
the rate of 1 month of basic pay for every year of
service.
Petitioners, however, were of the view that
the allowances they allegedly received
regularly should also be included in the
computation. The following were the
allowances referred to:
o Staff/Managers Allowance while
PICOP had free housing facilities for the
employees, there were limited slots.
While fully occupied, PICOP would then
give this allowance for those who live
outside the facilities but near the mill
site. However, when there is a
vancancy, the employee would stop
receiving the allowance and would take
up the vacancy.
o Transportation Allowance granted to
those who use their own vehicles in the
performance of their duties. Should
conditions no longer obtain, the
payment of this allowance is
discontinued.
o Bislig Allowance given to division
managers and corporate officers
assigned in Bislig due to the hostile
environment obtaining. When they are
assigned out of Bislig, however, they
will cease to receive this.
4. There being no resolution on the matter, the
parties submitted it for the decision of the
Executive Labor Arbiter.
5. ELA: Decision in favor of petitioners.
Applying Art. 97 (f) of the Labor Code which
defines wage, the allowances in question,
being customarily furnished by PICOP and
regularly received by petitioners, forms
part of the wages and hence should be
included in the computation for the
separation pay in retrenchment.
Another point is that in the cases of Santos
v. NLRC and Soriano v. NLRC, it was ruled
that not only basic salary but also regular
allowances which the employee had been
receiving should be included in the
computation of the separation pay.
6. NLRC: ELA reversed.
The allowances do not form part of the
basic pay because they are contingencybased.
The Santos and Soriano cases are also
inapplicable since they involved cases of
illegal dismissal where the separation pay
was granted in lieu of their reinstatement.
It is the case of Estate of Eugene Kneebone
v. NLRC, which finds control in this case
where it was held there that representation
and transportation allowances were
deemed not part of the salary and, hence,
should not be included in the separation
pay computations.
7. Hence this petition.

ISSUES:
WON the NLRC committed a grave abuse of discretion
on the part of the NLRC for reversing the findings of the
ELA (NO)
RATIO:
There was no grave abuse of discretion on the
part of the NLRC.
In cases of retrenchment, the employer is
obligated by Art. 283 of the Labor Code to provide
separation pay computed to be equivalent to 1
month pay or at least month pay for every
year of service. The question now is what does
the term pay in the provision connote?
Relating Art. 283 to Art. 97, pay and wage
mean/refer to the same thing.
o The Court gave focus to the last part of Art 97
(f): that wage 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.
o As to the aspect of being customary, the
fact that the allowance is furnished monthly
does not automatically grant it the character
of being customary. The allowances in
question are temporary only because there
are certain conditions that, when met, will
cause these allowances to cease from being
given.
o As to the aspect of facility, Sec. 5, Rule VII,
Book III of the Implementing Rules defines it
as including articles or services for the
benefit of the employee or his family, and
excluding tools of the trade or articles or
service primarily for the benefit of the
employer or necessary to the conduct of the
employers business. In determining what
privilege constitutes facility, the criterion is its
purpose. Since the assailed allowances were
for the benefit and convenience of the
company, it is not considered as facility. This
is supported by the fact that the assailed
allowances were not subject to withholding
tax.
o As for the value being determined by the
Secretary of Labor, it is actually PICOP that
determined the value of these assailed
allowances and were given in lieu of the
actual provisions for housing and
transportation needs whereas the Bislig
allowance was in consideration of the hostile
environment at the time.
o The conclusion is that, as reached by the
NLRC, these allowances do not form part of
the petitioners wages since they are not
regularly received.
The cited cases by the ELA is inapplicable since it
has been determined that these allowances were
not regularly received.
DISP: NLRC affirmed. Petition dismissed.
Phil. Duplicators v. NLRC and Phil. Duplicators UnionTUPAS (1993)
FACTS:
1. PD is a domestic corporation engaged in the sale
of copying machines and other related products. In

2.

3.
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5.

6.

7.
8.

9.

their employ are salesmen who are compensated

with a fixed/guaranteed salary plus commissions
based on the price of the machines sold.
PD 851 was promulgated, prescribing the payment
of 13th month pay to all employees receiving a
basic salary of not more than P1000/month.
This was amended by Memorandum Order
No. 28 which removed the limit of
P1000/month and instead entitled all rankand-file employees to receive the 13th
month pay.
The Ministry of Labor then issued MOLE
Explanatory Bulletin No. 86-12, clarifying
that employees who are plaid a fixed or
guaranteed wage plus commission are
also entitled to the 13th month pay.
In view of these issuances, the Union asked for the
payment of the 13th month pay computed on the
basis of their fixed salary plus their commissions.
PD refused the request but stated that it would
respect the opinion coming from the Ministry of
Labor.
Hence, Dir. Sanchez of the Bureau of Working
Conditions rendered an opinion in favor of the
Union, declaring the issuances to be applicable to
the employees of PD.
It provided that the 13th month pay is to be
computed on the basis of their fixed salary
plus their total commissions for the
calendar year divided by twelve
Despite the opinion, PD refused payment of the
13th month pay based on both fixed salary and
commissions; it only paid based on the fixed
salary. Union then instituted a complaint against
PD for the non-payment of the differentials.
LA: Complaint adjudged in favor of the Union. PD
directed to pay the differentials.
NLRC: LA affirmed.
On PDs argument that the issuances
regarding the application of the 13th month
pay to those receiving fixed wages and
commissions, the NLRC held that it had no
authority to pass on the validity of the
Explanatory Bulletin 86-12 and it shall,
therefore, remain as a source of rights until
declared invalid by a proper body (i.e., the
Supreme Court).
Hence, this petition.

ISSUE:
WON the 13th month pay computations should include
the commissions (YES)
RATIO:
The 13th month pay granted to PDs employees
should include their commissions received.
Art. 97 (f) defines wage as remuneration or
earnings, however designated for work done or
to be done, or for services rendered or to be
rendered
In the instant case, the sales commissions
received by PDs salesmen is without question a
part of the compensation paid to them for services
rendered and hence is part of the wage or salary,
as defined by Art. 97 (f).
The fact that this compensation is in the nature of
a commission, it does not detract from its

character that it is a part of the wage paid to the

salesmen.
The term basic salary as used in PD 851 was
only used to distinguish wage from fringe
benefits (e.g., vacation leave, maternity leave,
etc.). Sales commissions are still part of these
wages and are not mere fringe benefits.
A look at the IRR of PD 851 will tell that what were
excluded from the term basic salary were
profit-sharing payments and all allowances and
monetary benefits which are not considered or
integrated as part of their regular salary. The

sales commissions received by the salesmen were

not of this nature and hence, not excluded.
The opinion issued by Dir. Sanchez is controlling
and should be accorded great respect as it
constitutes contemporaneous administrative
construction, to which the Court traditionally
accords respect
Finally, it should be noted that the opinion by Dir.
Sanchez was adopted and reiterated by Sec.
Drilon in the Revised Guidelines on the
Implementation of the 13th Month Pay Law.
DISP: Petition dismissed.