Antonio W.
delivery of softdrinks to the different outlets covered by
Iran v. NLRC
(G.R. No. 121927 April 22, 1998)
III. Labor Standards
A. Wages
4. Commissions
PRINCIPLE:
Commissions are included in determining compliance with the
minimum wage requirement.
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
the driver/salesmen.
 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:
Ten Centavos (P0.10) per case of
Regular softdrinks.
Twelve Centavos (P0.12) per case of
Family Size softdrinks.
TRUCK HELPERS:
Eight Centavos (P0.08) per case of Regular
softdrinks.
Ten Centavos (P0.10) per case 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. They
were not allowed, however, 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 the other hand, 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, in its decision of December 21, 1994,
affirmed the validity of private respondents dismissal,
but found that said dismissal did not comply with the
procedural requirements for dismissing
employees. Furthermore, it corrected the labor arbiters
award of wage differentials to Jesus Bandilao.
ISSUE:
Whether or not commissions are included in
determining compliance with the minimum wage requirement.
RULING:
Yes. The petition is impressed with merit.
 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.
 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 salesmans 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.
 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 employees
remuneration cannot fall, not that commissions are
excluded from wages in determining compliance with
the minimum wage law.
 WHEREFORE, in view of the foregoing, the decision
of the NLRC dated July 31, 1995, insofar as it excludes
the commissions received by private respondents in the
determination of petitioners compliance with the
minimum wage law, as well as its exclusion of the
particular amounts received by private respondents as
part of their 13th month pay is REVERSED and SET
ASIDE. This case is REMANDED to the Labor Arbiter
for a recomputation of the alleged deficiencies. For non-
observance of procedural due process in effecting the
dismissal of private respondents, said decision
is MODIFIED by increasing the award of nominal
damages to private respondents from P1,000.00 to
P5,000.00 each. No costs.
G.R. No. 123938 May 21, 1998
Labor Congress of the Philippines vs.
NLRC
Ponente: J. Davide, Jr.
Doctrine:
Application of LC Article 286(n) in determination of status of
piece workers as regular workers versus LC Article 86 definition
Facts:
The 99 persons (Ana Marie Ocampo, Mary Intal, et al) as private
petitioners in the proceeding (represented by the Labor Congress
of the Phils.) were rank-and-file employees of private
respondent Empire Food Products (a food and fruit processing
company), hired on various dates.
Ocampo et al filed against Empire an NLRC complaint for
payment of money claims and for violation of labor standards
laws. Alongside this they also filed a petition for direct
certification for the Labor Congress to be their bargaining
representative. On Oct. 23, 1990, petitioners represented by
LCP, and private respondents Gonzalo and Evelyn Kehyeng
(Kehyeng spouses) entered into a Memorandum of Agreement,
recognizing the following:
 Status of LCP as sole and exclusive Bargaining Agent
and Representative for all rank and file employees of the
Empire Food Products regarding "wages, hours of work,
and other terms and conditions of employment";
  With regard to the NLRC complaint, all parties agree to
resolve the issues during the Collective Bargaining
Agreement;
 Proper adjustment of wages, withdrawal of case from
the Calendar of NLRC, non-interference or any ULP act,
etc.
On Oct. 24, 1990, the Mediator Arbiter approved the
memorandum and certified LCP as the sole and exclusive
bargaining agent for the rank-and-file employees of Empire.
On November 1990, LCP President Navarro submitted to
Empire a proposal for collective bargaining. However, on
January 1991, the private petitioners Ana Marie et al filed a
complaint for:
 Unfair Labor Practices via Illegal Lockout and
Dismissal;
 Union-Busting through harassment, threats and
interference to the right for self-organization;
 Violation of the Oct. 23, 1990 memorandum
 Underpayment of wages
 Actual, moral and exemplary damages
Labor Arbiter (Part 1):
 Absolved Empire for ULP, union busting, violation of
the memorandum of agreement, underpayment of wages
and denied petitioners' prayer for actual, moral and
exemplary damages.
 Denied prayer for actual, moral and exemplary damages
 Directed reinstatement of complainants, due to the fact
that Empire did not keep its payroll records as per
requirement of the DOLE. Admonition to Empire given
as well re: further harassment and intimidation.
NLRC (Part 1):
 Remanded case to Labor Arbiter for further proceedings
due to overlooking “…the testimonies of some of the
individual complainants which are now on record”.
Labor Arbiter (Part 2):
 Complainants failed to present with definiteness and
clarity the particular act or acts constitutive of unfair
labor practice.
 Declaration of ULP connotes a finding of prima facie
evidence of probability that a criminal offense may have
been committed so as to warrant the filing of a criminal
information before the regular court.
 As regards the issue of harassment, threats and
interference with the rights of employees to self-
organization which is actually an ingredient of unfair
labor practice, complainants failed to specify what type
of threats or intimidation was committed and who
committed the same.
NLRC (Part 2):
 Affirmed LA decision Part 2.
Petitioners:
 The fact that they are piece workers does not imply that
they are not regular employees entitled for reinstatement.
 LA and NLRC decisions were not supported by
substantial evidence;
 Abandonment of work was not proved by substantial
evidence;
 Much credit given to the Kehyeng spouses’ self-serving
arguments.

Respondents:
 Ana Marie, et al were piece workers hence they are
exempt from labor standards benefits
Issues:
1. [RELEVANT] WON the petitioners are entitled to labor
standard benefits, considering their status as piece rate
workers.
2. WON the actions of Ana Marie, et al constituted
abandonment of work.
Held:
1. YES, petitioners are entitled to labor standards benefits,
namely, holiday pay, premium pay, 13th month pay and
service incentive leave.
2. NO, failure to appear to work did not constitute
abandonment,
Ratio:
Supreme Court decision cites that Ana Marie, et al, despite being
“pakyao” or piece workers does not imply that they are not
regular employees entitled to reinstatement. Applying the two-
fold test from LC Article 286(n) [Art. 280 (old)], the SC found
that the supposedly piece workers had three factors in their
favor:
a) The nature of the tasks of Ana Marie, et al of repacking
snack food items was NECESSARY and DESIRABLE
in the usual business of Empire Foods, which is a food
and fruit processing company. According to Tabas vs
California Manufacturing, merchandisers of processed
food who coordinates for sales of processed food was a
necessity and was desirable for the day-to-day operations
of a food processing company. With more reason would
the job of food packers be necessary for the day-to-day
operations of a food processing plant.
b) Ana Marie et al worked throughout the year, with their
employment being independent from a specific project
or season.
c) The length of time that petitioners fulfilled the
requirement of Article 286(n).
Therefore, the SC considered the employees as regular
employees despite their status as piece workers, according them
benefits such as holiday pay, premium pay, 13th month pay and
service incentive leave.
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, inter
alia, "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."
However, petitioners as piece-rate workers do not fall within this
group. Not only did the employees labor under the control of
Empire, the employees also worked throughout the year to fulfil
their quota as “basis for compensation”.
Further, in Section 8 (b), Rule IV, Book III, piece workers are
specifically mentioned as being entitled to holiday pay.
Sec. 8. Holiday pay of certain employees.
(b) Where a covered employee is paid by results or
output, such as payment on piece work, his holiday pay
 shall not be less than his average daily earnings for the
last seven (7) actual working days preceding the regular
holiday: Provided, however, that in no case shall the
holiday pay be less than the applicable statutory
minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the
13th Month Pay Law, in view of the modifications to P.D. No.
851 19 by Memorandum Order No. 28, clearly exclude the
employer of piece rate workers from those exempted from
paying 13th month pay, to wit:
2. EXEMPTED EMPLOYERS - The following
employers are still not covered by P.D. No. 851:
d. Employers of those who are paid on
purely commission, boundary or task basis, and
those who are paid a fixed amount for performing
specific work, irrespective of the time consumed
in the performance thereof, except where the
workers are paid on piece-rate basis in which
case the employer shall grant the required 13th
month pay to such workers.
However, the Revised Guidelines as well as the Rules and
Regulations identify those workers who fall under the piece-rate
category as those who are paid a standard amount for every piece
or unit of work produced that is more or less regularly replicated,
without regard to the time spent in producing the same.
They should also be paid for overtime pay, even though Sec.
2(e), Rule I, Book III of the Implementing Rules states that:
“…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, of these
regulations, or where such rates have been fixed by the
Secretary of Labor in accordance with the aforesaid
section, are not entitled to receive overtime pay.”
In this case, Empire Foods did not allege that they
adhered
to
the
standards
set forth
in
 Sec. 8, Rule
VII, Book III,
nor
with
the
rates
prescribed
by
the
Secretary
of

Labor. Therefore, even though they are piece workers, they
are entitled to overtime pay
With regard to the issue of abandonment of work, the SC cited
the Office of Solicitor General’s observations:
In finding that petitioner employees abandoned their
work, the Labor Arbiter and the NLRC relied on the
testimony of Security Guard Rolando Cairo that on
January 21, 1991, petitioners refused to work. As a result
of their failure to work, the cheese curls ready for
repacking on said date were spoiled…
… The failure to work for one day, which resulted in the
spoilage of cheese curls does not amount to
abandonment of work. In fact two (2) days after the
reported abandonment of work or on January 23, 1991,
petitioners filed a complaint for, among others, unfair
labor practice, illegal lockout and/or illegal dismissal.
Furthermore, the SC stressed that the burden of proving the
existence of just cause for dismissing an employee, such as
abandonment, rests on the employer. According to the SC,
Empire Foods failed to discharge this burden as basis for
dismissing the employees.
Also, the SC considered that, in terminating the employees for
abandonment of work, Empire failed to serve to the employees
a written notice of termination (as required by the Two-Notice
rule and Section 2, Rule XIV, Book V of the Omnibus Rules),
violating the employees’ right to security of tenure and the
constitutional right to due process.
Made by:
John Michael Vida
AUTHOR: TIGLAO
Archilles Q: Why are the respondents
Manufacturing entitled to 13th month pay?
A: Even if you worked even just for
Corporation v. a month during one calendar year,
NLRC you are entitled to 13th month pay.
[G.R. No. 107225 | 02
June 1995]
TOPIC: 13th Month Pay
| PONENTE: J.
Bellosillo
CASE LAW/ DOCTRINE:
Although the reinstatement aspect of the decision is
immediately executory, it does not follow that it is self
executory. There must be a writ of execution issued in order
to allow the employer to exercise his option to merely
reinstate the employee in the payroll under Article 223 of the
Labor Code.
FACTS:
 Private respondents were employed by Archilles to work
in its steel factory. They receive a daily wage of Php 96.00.
 Within the steel factory, there is a bunkhouse where
employees, such as responents, may rest.
 In 1988, a mauling incident occurred involving a relative of
an employee. This resulted to Archilles ordering its
employees to desist from bringing their relatives into the
bunkhouse. Respondents ignored this directive.
 In May 1990, Archilles ordered the respondents to remove
their families from the bunkhouse. They complied;
however, respondents failed to report this to the
management, as required.
 Instead, they chose to absent themselves from work.
Hence, on 18 May 1990, they were terminated in violation
of the bunkhouse order.
 Respondents filed for illegal dismissal against Archilles.
 LA: In favor of respondents. Ordered their reinstatement
and payment of backwages and 13th month pay for 1990.
 NLRC: Respondents filed a motion for execution pending
appeal. Petitioners opposed.
 NLRC ruled in favor of Archilles, stating that the dismissal
was valid because of the violation of the bunkhouse order.
 IMPORTANT: While the NLRC ruled in favor of Archilles,
the latter filed a motion for partial reconsideration insofar
as this part of the decision is concerned
“NLRC ordered ARCHILLES to pay private
respondents their "withheld" salaries from 19
September 1991 when it filed its opposition to
the motion for issuance of a writ of execution
until the promulgation of the NLRC Decision
(11 August 1992) on the ground that the order
of reinstatement of the Labor Arbiter was
immediately executory, even pending appeal.
And since ARCHILLES in its opposition alleged
that actual reinstatement was no longer
possible as it would affect the peace and order
situation in the steel factory, clearly,
ARCHILLES had opted for payroll
reinstatement of private respondents. NLRC
also ordered ARCHILLES to pay their
proportionate 13th month pay for 1990 and
P12,351.30 representing 10% of the total
judgment award of P123,513.00 as attorney's
fees”
 Archilles now prays for the Court to partially annul the
decision insofar as the above quoted portion is concerned.
ISSUE(S):
1. W/N a writ of execution is necessary despite pending
appeal.
2. W/N the award of 13th month pay was proper.
HELD: In both cases, the ruling is on the affirmative.
RATIO:
Although the reinstatement aspect of the decision is
immediately executory, it does not follow that it is self-
executory. There must be a writ of execution which may be
issued motu proprio or on motion of an interested party.
(Maranaw Hotel Resort Corporation v. NLRC)
It is important to note that the motions of private
respondents for the issuance of a writ of execution were not
acted upon by NLRC. It was not shown that respondent
exerted efforts to have their motions resolved. They are
deemed to have abandoned their motions for execution
pending appeal. They cannot now ask that the writ of
execution be issued since their dismissal was found to be for
cause.
On the second issue, which refers to the propriety of the
award of a 13th month pay, paragraph 6 of the Revised
Guidelines on the Implementation of the 13th Month Pay
Law (P. D. 851) provides that "(a)n employee who has
resigned or whose services were terminated at any time
before the payment of the 13th month pay is entitled to this
monetary benefit in proportion to the length of time he at the option of the employer, merely reinstated in the
worked during the year, reckoned from the time he started payroll. The posting of the bond by the employer shall not
working during the calendar year up to the time of his stay the execution for reinstatement provided herein.
resignation or termination from the
service . . . The payment of the 13th month pay may be
demanded by the employee upon the cessation of
employer-employee relationship. This is consistent with the
principle of equity that as the employer can require the
employee to clear himself of all liabilities and property
accountability, so can the employee demand the payment
of all benefits due him upon the termination of the
relationship."

Furthermore, Sec. 4 of the original Implementing Rules of

P.D. 851 mandates employers to pay their employees a 13th
month pay not later than the 24th of December every year
provided that they have worked for at least one (1) month
during a calendar year. In effect, this statutory benefit is
automatically vested in the employee who has at least
worked for one month during the calendar year. As correctly
stated by the Solicitor General, such benefit may not be lost
or forfeited even in the event of the employee's subsequent
dismissal for cause without violating his property rights.
RELEVANT PROVISION:
Article 223(3), Labor Code:
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall be immediately
executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or,
 Framanlis Farms, Inc., et. al. v. employer to pay all non-pakyaw workers their claim for holiday
and incentive leave pay for the years 1977, 1978, all 'pakyaw'
Hon. Minister of Labor, et. al. workers their pay differentials for the same period on days they
G.R. No. 72616-17 March 8, 1989 worked for at least eight (8) hours and earned below P8.06 daily,
and all complainants their 13th month pay for the years 1978 and
1979. The Deputy Minister clarified that pakyaw workers were
Case Doctrine: Productivity Standards
excluded from holiday and service incentive leave pay.
Minister did not err in requiring the petitioners to pay wage
differentials to their pakyaw workers who worked for at least
Issue: Whether awarding pay differentials, holiday and service
eight hours daily and earned less than P8.00 per day.
incentive leave for pakyaw workers who are not regular
employees but are merely paid on piece-rate, contrary to Art. 82
Under Section 3 of PD No. 851, such benefits in the form of food
of the Labor Code;
or free electricity, assuming they were given, were not a proper
substitute for the 13th month pay required by law. Neither may
Whether or not Framanlis Farm is required to pay 13th month
year-end rewards for loyalty and service be considered in lieu of
pay despite the fact that they had substantially complied with the
13th month pay.
requirement by extending yearly bonuses and other benefits in
kind and in cash to the complainants, pursuant to Section 3(c) of
Facts: Eighteen (18) employees of Framanlis Farms, Inc. filed
PD 851 which exempts the employer from paying 13th month
against their employer two labor standard cases alleging that in
pay when its equivalent has already been given;
1977 to 1979 they were not paid emergency cost of living
allowance (ECOLA) minimum wage, 13th month pay, holiday
Ruling:
pay, and service incentive leave pay.
In their answer, Framanlis Farms alleged that the employees
were not regular workers on their hacienda but were migratory
In 1976, PD No. 928 fixed a minimum wage of P7.00 for
(sacadas) or pakyaw workers who worked on-and-off and were
agricultural workers in any plantation or agricultural enterprise
hired seasonally, or only during the milling season, to do piece-
irrespective of whether or not the worker was paid on a piece-
work on the farms, hence, they were not entitled to the benefits
rate basis. However, effective July 1, 1978, the minimum wage
claimed by them.
was increased to P8.00 (Sec. 1, PD 1389). Subsequently, PD
1614 provided for a P2.00 increase in the daily wage of all
The Minister of Labor directed Framanlis Farms to pay the
workers effective April 1, 1979. The petitioners admit that those
deficiency payment of emergency living allowance and service
were the minimum rates prevailing then. Therefore, the
incentive leave pay, holiday pay and social amelioration bonus
respondent Minister did not err in requiring the petitioners to pay
for 3 years for 1977 to 1979. Upon the petitioners' appeal of that
wage differentials to their pakyaw workers who worked for at
Order, the Deputy Minister of Labor modified it by ordering the
least eight hours daily and earned less than P8.00 per day in 1978 provides for the prohibition against reduction or elimination of
to 1979. benefits or favorable practice being enjoyed by the employee.

With regard to the 13th month pay, petitioners admitted that they
failed to pay their workers 13th month pay in 1978 and 1979.
However, they argued that they substantially complied with the
law by giving their workers a yearly bonus and other non-
monetary benefits amounting to not less than 1/12th of their
basic salary, in the form of food and free electricity.

Unfortunately, under Section 3 of PD No. 851, such benefits in

the form of food or free electricity, assuming they were given,
were not a proper substitute for the 13th month pay required by
law. PD 851 provides:

Section 3. Employees covered — The Decree

shall apply to all employees except to:

xxx

The term 'its equivalent' as used in paragraph (c)

hereof shall include Christmas bonus, mid-year
bonus, profit-sharing payments and other cash
bonuses amounting to not less than 1/12 of the
basic salary but shall not include cash and stock
dividends, cost of living allowances and all other
allowances regularly enjoyed by the employee,
as well as non-monetary benefits.xxx

Neither may year-end rewards for loyalty and service be

considered in lieu of 13th month pay. Section 10 of the Rules
and Regulations Implementing Presidential Decree No. 851
JPL MARKETING v. NLRC ET
AL DIGEST
DECEMBER 20, 2016 ~ VBDIAZ
JPL MARKETING PROMOTIONS v.
NATIONAL LABOR RELATIONS
COMMISSION, NOEL GONZALES,
RAMON ABESA III and FAUSTINO
ANINIPOT,
G.R. No. 151966/July 8, 2005/Tinga, J.:
FACTS: JPL Marketing and Promotions (hereinafter referred
to as “JPL”) is a domestic corporation engaged in the business
of recruitment and placement of workers. On the other hand,
private respondents Noel Gonzales, Ramon Abesa III and
Faustino Aninipot were employed by JPL as merchandisers on
separate dates and assigned at different establishments in Naga
City and Daet, Camarines Norte as attendants to the display of
California Marketing Corporation (CMC), one of petitioner’s
clients.
On 13 August 1996, JPL notified private respondents that
CMC would stop its direct merchandising activity in the Bicol
Region, Isabela, and Cagayan Valley effective 15 August
1996. They were advised to wait for further notice as they
would be transferred to other clients. However, on 17 October
1996, private respondents Abesa and Gonzales filed before the
NLRC complaints for illegal dismissal, praying for separation
pay, 13th month pay, service incentive leave pay and payment
for moral damages. Aninipot filed a similar case thereafter.
It must be noted that private respondents were not given their
13th month pay and service incentive leave pay while they
were under the employ of JPL. Instead, JPL provided salaries
which were over and above the minimum wage.
ISSUE: Whether or not the 13th month pay and service
incentive leave pay should be computed from the start of
employment up to the finality of the NLRC resolution.
RULING: Service incentive leave, as provided in Art. 95 of
the Labor Code, is a yearly leave benefit of five (5) days with
pay, enjoyed by an employee who has rendered at least one
year of service. Unless specifically excepted, all
establishments are required to grant service incentive leave to
their employees. The term “at least one year of service” shall
mean service within twelve (12) months, whether continuous or
broken reckoned from the date the employee started
working. The Court has held in several instances that “service
incentive leave is clearly demandable after one year of
service.”
dismissal in this case. Besides, it would be unfair to require
JPL to pay private respondents the said benefits beyond 15
August 1996 when they did not render any service to JPL
beyond that date. These benefits are given by law on the basis
of the service actually rendered by the employee, and in the
particular case of the service incentive leave, is granted as a
motivation for the employee to stay longer with the
employer. There is no cause for granting said incentive to one
who has already terminated his relationship with the employer.

While computation for the 13th month pay should properly

begin from the first day of employment, the service incentive
leave pay should start a year after commencement of
service, for it is only then that the employee is entitled to
said benefit. On the other hand, the computation for both
benefits should only be up to 15 August 1996, or the last day
that private respondents worked for JPL. To extend the period
to the date of finality of the NLRC resolution would negate the
absence of illegal dismissal, or to be more precise, the want of
EN BANC
[ GR No. 51254, Jun 11, 1981 ]
MARCOPPER MINING CORPORATION v. BLAS
OPLE +
DECISION
192 Phil. 368
FERNANDO, C.J.:
It is in pursuance of the constitutional principle of the
enjoyment by the people of a decent standard of living[1] that a
Presidential Decree[2] was issued by way of response to the
ravages of world-wide inflation, causing extreme difficulty to
laborers and wage-earners. It reads thus: "Section 1. All
employers are hereby required to pay all their employees
receiving a basic salary of not more than P1,000 a month,
regardless of the nature of their employment, a 13th-month pay
not later than December 24 of every year. Sec. 2. Employers
already paying their employees a 13th-month pay or its
equivalent are not covered by this Decree Sec. 3. This Decree
shall take effect immediately."[3] Relying on the above Decree,
private respondent Marcopper Employees Labor Union filed a
complaint before the National Labor Relations Commission for
the payment of the 13th-month salary. Petitioner Marcopper
Mining Corporation opposed on the ground that in view of its
then existing collective bargaining agreement adopted on
October 8, 1977 which granted the employees belonging to
private respondent midyear and year-end bonuses, it was
exempt from the operation of such Decree. Its opposition
prevailed with a regional director, who, on March 29, 1979,
dismissed the complaint. On appeal, then Deputy Minister of
Labor, respondent Amado G. Inciong, on July 25, 1979,
reversed such order. He explicitly stated that the bonuses
under the collective bargaining agreement are "by their very
nature of a different character from the 13th month pay
ordained by the Decree." He went on to say: "Foremost to
consider and in point is, Section 10 of the Rules and
Regulations Implementing PD No. 851 which deals on
prohibition against reduction or elimination of the benefits
provided by the Decree. Said section provides as
follows: 'Nothing herein shall be construed to authorize any
employer to eliminate, or diminish in any way, supplements, or
other employee benefits or favorable practice being enjoyed by
the employee at the time of the promulgation of this issuance.'
Both the mid-year and year-end bonuses are benefits being
enjoyed by complainants at the time of the promulgation of PD
851, hence, covered by the foregoing prohibition. In fact, said
benefits were negotiated and re-incorporated in subsequent
collective bargaining agreement which gives them a character
separate and distinct from the 13th month pay. By reason of
the collective bargaining agreement, complainants acquired a
vested right over such benefits on a mutual and contractual
understanding. Any subsequent grant of benefit, extended by
law, will not operate to disturb the existing agreement and to
construe otherwise will result to the prejudice of the
workers. If we must consider deeper the grant of the bonuses,
we will find that it is a voluntary gesture on the part of the
respondent irrespective of the amount of salary of the
employees and does not form part of their pay. It is likewise
conditional in that the same could be availed of only when
profit in business has been realized. Once profit is declared,
then bonuses must be automatically granted in the amount to be
determined by the company. On the other hand, the grant of
13th month pay to employees is mandatory, irrespective of loss
or profit by the company."[4]
Hence this petition. It was alleged that there was a grave abuse
of discretion as under the term of the Decree, in relation to a
section cited,[5] petitioner is excluded from its coverage and
that there was lack of jurisdiction of respondent Inciong. In the
answer of public respondents submitted by Solicitor General
Estelito Mendoza,[6] the above contentions were characterized
as devoid of merit. Reference was made to the inability of
petitioner to demonstrate that it clearly falls under the
exempting clause of the above Decree, citing not only the
section of the implementing rules and regulations relied upon
by petitioner, but a later section which reads thus: "Nothing
herein shall be construed to authorize any employer to
eliminate or diminish in any way, supplements, or other
employee benefits or favorable practice being enjoyed by the
employee at the time of promulgation of this issuance."[7] The
answer discussed the matter further thus: "In the case at bar,
the payment of the mid-year and Christmas bonuses in those
years when petitioner's operation is profitable is a matter of
contractual obligation on the part of the petitioner. It should be
noted that the CBA clearly states that petitioner 'shall grant
mid-year and end-year bonuses to employees following years
in which it had profitable operations.' The only thing that is left
to the discretion of petitioner is the amount of such mid-year
and end-year bonuses; but there is no question that petitioner
has to grant such bonuses. Since said bonuses
granted in fulfillment of petitioner's contractual obligations
under the CBA are employee benefits enjoyed by petitioner's
employees at the time PD 851 took effect and since the
payment of such bonuses is obligatory on the part of petitioner,
the petitioner does not come under the exempting clause of PD
851 and it has to pay its employees the 13th month pay
required under said Decree. In other words, all employee
monetary benefits provided in the CBA are in addition to, and
may not be taken as substitute for, the employee benefits
granted by law, otherwise there would be no reason for the
execution of the CBA."[8]
The petition must be dismissed. Such a conclusion is
unavoidable in the light of the mandatory language of the
Presidential Decree, the conditional character of the contractual
obligation under the collective bargaining agreement, and on
the construction that should be fastened on statutes or decrees
intended to promote social and economic rights.
1. The Decree is specific and mandatory. Employers,
without exception, are required to pay their employees
receiving a basic salary of not more than P1,000 a month
irrespective of the nature of employment, a 13th-month pay not
later than December 24 of every year. That is the plain and
specific command. That is an obligation imposed by law and
must be obeyed. Where the employers, however, actually grant
such for the 13th-month pay, they could be exempted from the
operation of the Decree. To fall within the exempting clause, it
must be shown that there is such actual payment. There is no
such showing here. Instead, reliance of petitioner corporation
is on a clause in the existing bargaining contract which in its
opinion amounts to the fulfillment of its duty under the
Decree. The memorandum of Solicitor General Mendoza
makes clear why such a submission is unwarranted. Thus: "In
the case at bar, the payment of mid-year and Christmas bonuses
in the years when petitioner's operation is profitable is a matter
of contractual obligation on the part of the petitioner. The only
thing that is left to the discretion of petitioner is the amount of
such mid-year and end-year bonuses; but there is no question
that petitioner has to grant such bonuses. Since said bonuses
granted in fulfillment of petitioner's contractual obligations
under the CBA are employee benefits enjoyed by petitioner's
employees at the time PD No. 851 took effect and since the
payment of such bonuses is obligatory on the part of the
petitioner, then the petitioner does not come under the
exempting clause of PD No. 851 and it has to pay its
employees the 13th month pay required under said Decree. On
the other hand, if the company earns no profit in a particular
year, then it is not obligated, under the CBA, to grant bonuses
to its employees. If it grants bonuses notwithstanding the fact
that it is not in profitable operation, the grant thereof is a purely
voluntary gesture on the part of the company, and the company
is then entitled to credit the same as the 13th month salary
under the Decree. In other words, all employee monetary
benefits provided in the CBA are in addition to, and may not be
taken as substitute for, the employee benefits granted by law,
otherwise there would be no reason for the execution of the
CBA."[9] The Solicitor General then went on to state that a
bonus under the collective bargaining agreement and the 13th-
month pay are of different category. For while the former is an
obligation created by contract, the other is created by law;
while the former is contractual in character, only if there are
profits, the latter is absolute and mandatory on the part of the
employer; while the former benefits only those earning P1,000
or less a month, the latter applies to all rank and file
workers. It is clear, therefore, that a 13th-month pay is in the
nature of wages while the bonuses provided for are mere
supplements or fringe benefits. Further the memorandum
continues: "The 13th month pay is, by its nature and purpose,
part of wages, considering the express recitals in PD No. 851
that 'it is necessary to protect the level of real wages from the
ravage of world-wide inflation' and 'there has been no increase
in the legal minimum wage rates since 1970' * * * CBA
bonuses and benefits are not part of wages but merely
supplements or fringe benefits."[10] On the authority of Atok-
Big Wedge Association v. Atok-Big Wedge Co.[11] it is
contended, and correctly, by the Solicitor General that clearly
"the bonuses and other benefits granted to the employees by the
petitioner under the current CBA are 'supplements' and do not
form part of wages."[12]
2. There is no vagueness in the Decree. At the most, there
could be ambiguity by the use of the word "equivalent" in
Section 2 thereof. If it were a 13th-month pay, then obviously
petitioner is entitled to be exempted. Thus it is understandable
why it made much of Section 3 of the implementing rules and
regulations, referring, as already noted, to a Christmas bonus as
well as a mid-year bonus. That would be, though, as was
pointed out by the Solicitor General, to ignore an even clearer
provision in the implementing rules, namely Section 10
thereof. Thus: "Nothing herein shall be construed to authorize
any employer to eliminate or diminish in any way,
supplements, or other employee benefits or favorable practice
being enjoyed by the employee at the time of promulgation of
this issuance."[13] The purpose that animated the Decree is thus
rendered even clearer. It was issued in the expectation that
"whatever employee benefits or favorable practice being
enjoyed by the employee" when it was promulgated should not
be eliminated or diminished. If it were otherwise, it would lose
its character as a measure intended to cope with the problems
that the low salaried employees face in view of the inflationary
state of the economy. The situation, instead of improving, has
grown worse the past six years, the Decree being issued in
1975. It would be, therefore, to defeat the purpose of the
Decree if the contention urged by petitioner would be
sustained.
3. The conclusion reached by the Court receives an even more
compelling justification from the Constitution. The 1935
Constitution enshrined the concepts of social justice[14] and
protection to labor.[15] Even then, there was a realization of
their importance in vitalizing a regime of liberty not just as
immunity from governmental restraint but as the assumption by
the State of an obligation to assure a life of dignity for all,
especially the poor and the needy. The expanded social
justice[16] and protection to labor provisions[17] of the present
Constitution lend added emphasis to the concern for social and
economic rights. The memorandum of the Solicitor General
quoted this excerpt from La Mallorca v. Workmen's
Compensation Commission:[18] "A decisive consideration,
much more compelling in character,precludes acceptance of the
view now pressed by petitioner. Time and time again, we have
stressed that statutes intended to benefit labor should be
accorded the most hospitable scope to attain their dominant
purpose. Thereby fidelity is manifested to the constitutional
policy embodied in the principle of social justice and the
mandate of protection to labor. They cannot be made to yield a
meaning that would emasculate their terms or allow
evasion. To do so could even give rise to serious constitutional
questions, for the legislative body would then be deemed to
have enacted measures which, rather than translate into reality
such worthy constitutional objective, would frustrate it. Such
an approach certainly cannot find any favor with courts, if the
oft-repeated doctrine that no interpretation is allowable that
would bring doubts as to the validity of any statutory provision
for repugnancy to the fundamental law were to be, as it should
be, respected."[19]That was so under the 1935
Constitution. Such an approach is even more valid now. As a
matter of fact, in the first case after the applicability of the
1973 Constitution where social and economic rights were
involved, this Court in Alfanta v. Noe,[20] through Justice
Antonio, stated: "In the environment of a new social order We
can do no less. Thus, under the new Constitution, property
ownership has been impressed with a social function. This
implies that the owner has the obligation to use his property not
only to benefit himself but society as well. Hence, it provides
under Section 6 of Article II thereof, that in the promotion of
social justice, the State 'shall regulate the acquisition,
ownership, use, enjoyment, and disposition of private property,
and equitably diffuse property ownership and profits.' The
Constitution also ensures that the worker shall have a just and
living wage which should assure for himself and his
family an existence worthy of human dignity and give him
opportunities for a better life."[21] Such a sentiment finds
expression in subsequent opinions.[22]
4. The second point raised in the petition is the allegation that
respondent Deputy Minister was without jurisdiction. This
contention on its face clearly lacks support in law. As far back
as Philippine American Management & Financing Co., Inc. v.
Management & Supervisors Association of the Philippine-
American Management & Financing Co., Inc.,[23] decided in
1972, this Court left no doubt as to the labor tribunal, then the
Court of Industrial Relations, being vested with competence to
pass upon a declaratory relief petition for the interpretation of a
collective bargaining agreement, not a Court of First
Instance. There is no justification for a departure from the
principle which was announced in the light of a careful study of
previous decisions and precisely enunciated to settle all doubts
on the matter.[24] The allegation that this is a money claim
falsifies reality. What is involved here and what persuaded this
Court to give due course to this petition is that a serious
question of the applicability of Presidential Decree No. 851
was raised in the light of the stipulation in the collective
bargaining contract between petitioner and respondent union as PHIMCO INDUSTRIES,
to the mid-year and Christmas bonus.
INC., vs.HONORABLE ACTING
WHEREFORE, the petition is dismissed for lack of merit. No
costs. SECRETARY OF LABOR JOSE
BRILLANTES and PHIMCO
INDUSTRIES LABOR
ASSOCIATION
G.R. No. 120751 March 17, 1999

FACTS: On March 9, 1995, the private respondent, Phimco

Industries Labor Association (PILA), duly certified collective
bargaining representative of the daily paid workers of the
petitioner PHIMCO filed a notice of strike with the NCMB
against PHIMCO, a corporation engaged in the production of
matches, after a deadlock in the collective bargaining and
negotiation. Parties failed to resolve their differences PILA
(during the conciliation conferences), composed of
352 members, staged a strike.

PHIMCO sent notice of termination to some 47 workers

including several union officers.

Secretary Brillantes assumed jurisdiction over the labor

dispute; issued a return-to-work order.

Hence, petitioner files this petition.

ISSUE: whether or not the public respondent acted with grave
abuse of discretion amounting to lack or excess of jurisdiction
in assuming jurisdiction over subject labor dispute.
HELD: YES, the petition is impressed with merit.
Art. 263, paragraph (g) of the Labor Code, provides:
(g) When, in his opinion, there exist a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable
to the national interest, the Secretary of Labor and Employment
may assume jurisdiction over the dispute and decide it or
certify the same to the Commission for compulsory arbitration .
..
The Labor Code vests in the Secretary of Labor the discretion
to determine what industries are indispensable to the national
interest. Accordingly, upon the determination by the Secretary
of Labor that such industry is indispensable to the national
interest, he will assume jurisdiction over the labor dispute in
the said industry. 8 This power, however, is not without any
limitation.
It stressed in the case of Free telephone Workers Union
vs. Honorable Minister of Labor and Employment, et al., 10 the
limitation set by the legislature on the power of the Secretary of
Labor to assume jurisdiction over a labor dispute, thus:
xxx cannot be any clearer, the coverage being limited to
“strikes or lockouts adversely affecting the national interest. 11
In this case at bar, however, the very admission by the public
respondent draws the labor dispute in question out of the ambit
of the Secretary’s prerogative, to wit.
While the case at bar appears on its face not to fall within the
strict categorization of cases imbued with “national interest”,
this office believes that the obtaining circumstances warrant the
exercise of the powers under Article 263 (g) of the Labor Code,
as amended. 12
The private respondent did not even make any effort to
touch on the indispensability of the match factory to the
national interest. It must have been aware that a match
factory, though of value, can scarcely be considered as an
industry “indispensable to the national interest” as it cannot
be in the same category as “generation and distribution of
energy, or those undertaken by banks, hospitals, and export-
oriented industries.” 13 Yet, the public respondent assumed
jurisdiction thereover.
To uphold the action of the public respondent under the
premises would be stretching too far the power of the Secretary
of Labor as every case of a strike or lockout where there are
inconveniences in the community, or work disruptions in an
industry though not indispensable to the national interest,
would then come within the Secretary’s power. It would be
practically allowing the Secretary of Labor to intervene in
any Labor dispute at his pleasure.
This is precisely why the law sets and defines the standard:
even in the exercise of his power of compulsory arbitration
under Article 263 (g) of the Labor Code, the Secretary must
follow the law.
PETITION GRANTED.
From Atty. Bayani^^