Millares vs. National Labor Relations Commission, 305 SCRA 500 (1999)

Posted by Pius Morados on November 15, 2011

(Labor Standards – wages, customary facilities)

Facts: Article 97, par. (f), of the Labor Code defined “wage” 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.

116 employees of Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur were terminated under a retrenchment program as a solution to a major financial setback. Aside from their one month basic pay, petitioners believe that the allowances they allegedly regularly received on a monthly basis should have also been included in the computation of their separation.

PICOP grants the following allowances:

Staff allowance/managers allowance to those who live in rented houses near the mill site which ceases whenever a vacancy occurs in the company’s free housing facilities.

Transportation allowance in the form of advances for actual transportation expenses subject to liquidation is given to key officers and managers who use their own vehicles in the performance of their duties. This privilege is discontinued when the conditions no longer obtain.

Bislig allowance is given to managers and officers on account of the hostile environment prevailing therein. Once the recipient is transferred elsewhere, the allowance ceases.

Applying Art. 97, par (f) of the Labor Code which defines “wage”, the Executive Labor Arbiter opined that the subject allowances, being customarily furnished by respondent PICOP and regularly received by petitioners, formed part of the latter’s wage.

However, the NLRC decreed that the allowances did not form part of the salary base used in computing separation pay since the same were contingency-based.

Issue: Whether or not the allowances in question are considered facilities customarily furnished.

Held: No. “Customary” is founded on long established and constant practice connoting regularity. The receipt of 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 subject allowances were temporarily, not regularly received by petitioners because once the conditions for the availment ceased to exist, the allowance reached the cutoff point. The petitioners’ continuous enjoyment of the disputed allowances was based on contingencies the occurrence of which wrote finis to such enjoyment.

P.I. Manufacturing Incorporated v. P.I Manufacturing Union G.R. No. 167217, 4 February 2008, FIRST DIVISION (Sandoval-Gutierrez, J .)

FACTS

In 1987, the President signed into law Republic Act (RA) No. 6640 providing, among others, anincrease in the statutory minimum wage and salary rates of employees and workers in the private sector. Thereafter, P.I. Manufacturing Incorporated (P.I), petitioner, and P.I. Manufacturing Supervisors andForemen Association (PIMASUFA), respondents, entered into a new Collective Bargaining Agreement(1987 CBA) whereby the supervisors were granted an increase of Php 625 per month and the foremen,Php 475 per month. In 1989, PIMASUFA and the National Labor Union filed a complaint with theNational Labor Relations Commission (NLRC) charging P.I. with violation of RA No. 6640 ,contending that the implementation of the said statute had resulted in a wage distortion.

The Labor Arbiter rendered a Decision in favor of PIMASUFA, ordering P.I. to pay all the members of PIMASUFA (across the board) wage increases equivalent to 13.5%of their basic pay. On appeal, the NLRC rendered a Resolution affirming the Labor Arbiter's judgment. Thereafter, P.I. filed a petition for Certiorari with this Court, which the Court referred to the CA. The CA rendered a Decision affirming that of the NLRC's with modification by raising the 13.5% wage increase to 18.5%. A motion for reconsideration was filed by P.I. but it was denied.

ISSUE:

Whether the implementation of RA No. 6640 resulted in a wage distortion and whether suchdistortion was cured or remedied by the 1987 CBA

HELD: Petition Granted.

Wage distortion means the disappearance or virtual disappearance of pay differentials between lower and higher positions in an enterprise because of compliance with a wage order. In this case, the Court of Appeals correctly ruled that a wage distortion occurred due to the implementation of R.A. No. 6640. Notably, the implementation of R.A. No. 6640 resulted in the increase of P10.00 in the wage rates of Alcantara ,supervisor, and Morales and Salvo , both foremen.

They are petitioner’s lowest paid supervisor and foremen. As a consequence, the increased wage rates of foremen Morales and Salvo exceeded that of supervisor Buencuchillo.

Also, the increased wage rate of supervisor Alcantara exceeded those of supervisors Buencuchillo and Del Prado. Consequently, the P9.79 gap or difference between the wage rate of supervisor Del Prado and that of supervisor Alcantara was eliminated. Instead, the latter gained a P.21 lead over Del Prado. Like a domino effect, these gaps or differences between and among the wage rates of all the above employees have been substantially altered and reduced.

It is therefore undeniable that the increase in the wage rates by virtue of R.A. No. 6640 resulted in wage distortion or the elimination of theintentional quantitative differences in the wage rates of the above employees.However, while we find the presence of wage distortions, we are convinced that the same were cured or remedied when respondent PIMASUFA entered into the 1987 CBA with petitioner after the effectivity of R.A. No. 6640. The 1987 CBA increased the monthly salaries of the supervisors by P625.00 and the foremen, by P475.00, effective May 12, 1987. These increases re-established and broadened the gap, not only between the supervisors and the foremen, but also between themand the rank-and-file employees. Significantly, the 1987 CBA wage increases almost doubled that of the P10.00 increase under R.A. No. 6640. The P625.00/month means P24.03 increase per day for the supervisors, while the P475.00/month means P18.26 increase per day for the foremen.

At this juncture, it must be stressed that a CBA constitutes the law between the parties when freely and voluntarily entered into.13 Here, it has not been shown that respondent PIMASUFA was coerced or forced by petitioner to sign the 1987 CBA. All of its thirteen (13) officers signed the CBA with the assistance of respondent NLU. They signed it fully aware of the passage of R.A. No. 6640. The duty to bargain requires that the parties deal with each other with open and fair minds. A sincere endeavor to overcome obstacles and difficulties that may arise, so that employer-employee relations may be stabilized and industrial strife eliminated, must be apparent.14Respondents cannot invoke the beneficial provisions of the 1987 CBA but disregard the concessions it voluntary extended to petitioner. The goal of collective bargaining is the making of agreements that will stabilize business conditions and fix fair standards of working conditions.15 Definitely, respondents’ posture contravenes this goal.

In fine, it must be emphasized that in the resolution of labor cases, this Court has always been guided by the State policy enshrined in the Constitution that the rights of workers and the promotion of their welfare shall be protected. However, consistent with such policy, the Court cannot favor one party, be it labor or management, in arriving at a just solution to a controversy if the party concerned has no valid support to its claim, like respondents here.

Labor Standards – Case Digests

Lambo vs NLRC (1999) 317 SCRA 420

Facts:

Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3,1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made.

Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00. On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, andattorney’s fees. After hearing, Labor Arbiter found private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners’ claims.

On appeal, the NLRCreversed the decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13thmonth pay.

Issue:

WON the petitioners are entitled to the minimum benefits provided by law.

Held:

The petitioners are entitled to the minimum benefits provided by law. There is no dispute that petitioners were employees of private respondents although they were paid not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of employees paid by results:

(1) those whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and

(2) those whose time and performance are unsupervised. (Here, the employer’s control is over the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished.

Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonlyobserved in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. 4 Petitioners belong to the first category, i.e., supervised employees. In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of private respondents. The term "wage" is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the essence of the relations. Nor does the fact that petitioners are not covered by the SSS affect the employer-employee relationship. As petitioners were illegally dismissed, they are entitled to reinstatement with back wages. The Arbiter applied the rule in the Mercury Drug case, according to which the recovery of back wages should be limited to three years without qualifications or deductions. Any awarding excess of three years is null and void as to the excess. The Labor Arbiter correctly ordered private respondents to give separation pay