Paternity Leave (RA8187)

Solo Parent Leave (RA 8972)

Maternity leave (RA 1161 as amended by RA 8282)
Leave for victims of VAWC (RA 9262)
Special Leave for women RA 9710

1) NORKIS TRADING CORPORATION vs JOAQUIN BUENA VISTA, et al. G.R. No. 182018, Oct. 10, 2012

2) POLYFOAM-RGC INTERNATIONAL, CORPORATION and PRECILLA A. GRAMAJE vs EDGARDO

CONCEPCION, G.R. No. 172349, June 13, 2012

3) Superior Packaging Corp. vs. Arnel Balagsay, G.R. No. 178909, Oct. 10, 2012

4) 1) JOEB M. ALIVIADO, et al. vs. PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC.G.R. No.
160506 March 9, 2010

5) Metrobank Employees Union vs. NLRC G.R. No. 102636, September 10, 1993

6) ALU-TUCP vs. NLRC, G.R. No. 109328, august 16, 1994

7) MANILA MANDARIN EMPLOYEES UNION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
Second Division, and the MANILA MANDARIN HOTEL, respondents. [G.R. No. 108556. November 19, 1996]
 G.R. No. 182018 October 10, 2012
NORKIS TRADING CORPORATION, Petitioners vs. JOAQUIN BUENA VISTA, HENRY FABROA,
RICARDO CAPE, BERTULDO TULOD, WILLY DONDOY ANO and GLEN VILLARASA, Respondents.

Facts: The petition stems from an amended complaint for illegal suspension, illegal dismissal, unfair labor practice and
other monetary claims filed with the National Labor Relations Commission (NLRC) by herein respondents Joaquin
Buenavista (Buenavista), Henry Fabroa (Fabroa), Ricardo Cape (Cape), Bertuldo Tulod (Tulod), Willy Dondoyano
(Dondoyano) and Glen Villariasa (Villariasa) against Norkis Trading and Panaghiusa sa Kauswagan Multi-Purpose
Cooperative (PASAKA). The respondents were hired by Norkis Trading. Although they worked for Norkis Trading as
skilled workers assigned in the operation of industrial and welding machines owned and used by Norkis Trading for its
business, they were not treated as regular employees by Norkis Trading. Instead, they were regarded by Norkis Trading
as members of PASAKA, a cooperative organized under the Cooperative Code of the Philippines, and which was
deemed an independent contractor that merely deployed the respondents to render services for Norkis Trading. The
respondents nonetheless believed that they were regular employees of Norkis Trading. Despite having served
respondent Norkis Trading for many years and performing the same functions as regular employees, complainants were
not accorded regular status. It was made to appear that complainants are not employees of said company but that of
respondent PASAKA. The respondents filed on June 9, 1999 with the Department of Labor and Employment (DOLE) a
complaint against Norkis Trading and PASAKA for labor-only contracting and non-payment of minimum wage and
overtime pay. On August 26, 1999, PASAKA informed the respondents of the cooperatives decision to suspend them
for fifteen (15) working days. On October 13, 1999, the respondents were to report back to work but during the hearing
in their NLRC case, they were informed by PASAKA that they would be transferred to Norkis Tradings sister
company, Porta Coeli Industrial Corporation (Porta Coeli), as washers of Multicab vehicles. The respondents opposed
the transfer as it would allegedly result in a change of employers, from Norkis Trading to Porta Coeli. The respondents
also believed that the transfer would result in a demotion since from being skilled workers in Norkis Trading, they
would be reduced to being utility workers. These circumstances made the respondents amend their complaint for illegal
suspension, to include the charges of unfair labor practice, illegal dismissal, damages and attorneys fees. The Ruling of
the Labor Arbiter: Dismissed the complaint via a Decision. The allegation of unfair labor practice and claim for
monetary awards were likewise rejected by the LA. Feeling aggrieved, the respondents appealed from the decision of
the LA to the NLRC. The Ruling of the NLRC: Affirmed with modification the decision of LA. It held that the
respondents were not illegally suspended from work, as it was their membership in the cooperative that was suspended
after they were found to have violated the cooperatives rules and regulations. It also declared that the respondents
dismissal was not established by substantial evidence. The NLRC however declared that the LA had no jurisdiction
over the dispute because the respondents were not employees, but members of PASAKA.

The Ruling of the CA: Reversed and set aside the decision and resolution of the NLRC. In ruling that the respondents
were illegally dismissed, the CA held that Norkis Tradings refusal to accept the respondents back to their former
positions, offering them instead to accept a new assignment as washers of vehicles in its sister company, was a
demotion that amounted to a constructive dismissal. Issue: Whether or not the respondents shall be regarded as
employees (or whether or not PASAKA is a labor-only contractor). Ruling: Norkis Trading is the principal employer of
the respondents, considering that PASAKA is a mere labor-only contractor. Labor-only contracting, a prohibited act, is
an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job,
work, or service for a principal. In labor-only contracting, the following elements are present: (a) the contractor or
subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its
own account and responsibility; and (b) the employees recruited, supplied or placed by such contractor or
subcontractor perform activities which are directly related to the main business of the principal. These differentiate it
from permissible or legitimate job contracting or subcontracting, which refers to an arrangement whereby a principal
agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job,
work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be
performed or completed within or outside the premises of the principal. A person is considered engaged in legitimate
job contracting or subcontracting if the following conditions concur: (a) the contractor carries on a distinct and
independent business and partakes the contract work on his account under his own responsibility according to his own
manner and method, free from the control and direction of his employer or principal in all matters connected with the
performance of his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c)
the agreement between the principal and the contractor or subcontractor assures the contractual employees entitlement
to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of
tenure, and social welfare benefits.49 PASAKA as a mere labor-only contractor, and Norkis Trading as the true
employer of herein respondents. The respondents claim that the machinery, equipment and supplies they used to
perform their duties were owned by Norkis Trading, and not by PASAKA, was undisputed. Herein petitioner failed to
prove that their sub-contracting arrangements fall under any of the conditions set forth in Sec. 6 of D.O. # 10 S. 1997 to
qualify as permissible contracting or subcontracting as provided for as follows: Sec. 6. Permissible contracting or
subcontracting. Subject to conditions set forth in Sec. 4 (d) and (e) and Section 5 hereof, the principal may engage the
services of a contractor or subcontractor for the performance of any of the following: a.) Works or services temporarily
or occasionally needed to meet abnormal increase in the demand of products or services... b) Works or services
temporarily or occasionally needed by the principal for undertakings requiring expert or highly technical personnel to
improve the management or operations of an enterprise; c) Services temporarily needed for the introduction or
promotion of new products...; d) Works or services not directly related or not integral to main business or operation of
the principal including casual work, janitorial, security, landscaping and messengerial services and work not related to
manufacturing processes in manufacturing establishments. e) Services involving the public display of manufacturers
products...; f) Specialized works involving the use of some particular, unusual or peculiar skills... and g) Unless a
reliever system is in place among the regular workforce, substitute services for absent regular employees... It is
therefore evident that herein respondents are engaged in "labor-only" contracting as defined in Art. 106 of the Labor
Code. Furthermore, such contracting/sub-contracting arrangement not only falls under labor-only contracting but also
fails to qualify as legitimate subcontracting as defined under Sec. 4 par. e of D.O. #10 S. 1997, to wit: "Sec. 4. Definition of
terms. Subject to the provisions of Sections 6, 7 and 8 of this Rule, contracting or subcontracting shall be legitimate if the
following circumstances concur: i) The contractor or subcontractor carries on a distinct and independent business and
undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own
manner and method, and free from the control and direction of the principal in all matters connected with the performance of
the work except to the results thereof; ii) The contractor or subcontractor has substantial capital or investment; and iii)
The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to
all labor and occupational and safety and health standards, free exercise of the right to self-organization, security of
tenure and social and welfare benefits."52 (Emphasis supplied) This Court agrees with the finding of the DOLE Regional
Director, as affirmed by the Secretary of Labor in her assailed Order, that petitioners among them, herein petitioner were
engaged in labor-only contracting.
First. PASAKA failed to prove that it has substantial capitalization or investment in the form of tools, equipment,
machineries, work premises, among others, to qualify as an independent contractor. Private respondents were using
machineries and equipment owned by and located at the premises of NORKIS TRADING.
Second. PASAKA likewise did not carry out an independent business from NORKIS TRADING. Based on facts. The
Project Contract dated December 18, 1998 with NORKIS INTERNATIONAL is nothing more than an afterthought by
the petitioners to confuse its workers and defeat their rightful claims
Third. Private respondents performed activities directly related to the principal business of NORKIS TRADING. They
worked as welders and machine operators engaged in the production of steel crates which were sent to Japan for use as
containers of motorcycles that are then sent back to NORKIS TRADING.
Private respondents functions therefore are directly related and vital to NORKIS TRADINGs business of
manufacturing of Yamaha motorcycles. All the foregoing considerations affirm by more than substantial evidence that
NORKIS TRADING and PASAKA engaged in labor-only contracting.53 Termination of an employment for no just
or authorized cause amounts to an illegal dismissal. As to the issue of whether the respondents were illegally dismissed
by Norkis Trading, we answer in the affirmative, although not by constructive dismissal as declared by the CA, but by
actual dismissal. Where an entity is declared to be a labor-only contractor, the employees supplied by said contractor to the
principal employer become regular employees of the latter. Having gained regular status, the employees are entitled to
security of tenure and can only be dismissed for just or authorized causes and after they had been afforded due process.
Termination of employment without just or authorized cause and without observing procedural due process is
illegal.1wphi1 In claiming that they were illegally dismissed from their employment, the respondents alleged having
been informed by PASAKA that they would be transferred, upon the behest of Norkis Trading, as Multicab washers or
utility workers to Porta Coeli, a sister company of Norkis Trading. Norkis Trading does not dispute that such job
transfer was relayed by PASAKA unto the respondents, although the company contends that the transfer was merely an
"offer" that did not constitute a dismissal. It bears mentioning, however, that the respondents were not given any other
option by PASAKA and Norkis Trading but to accede to said transfer. In fact, there is no showing that Norkis Trading
would still willingly accept the respondents to work for the company. Worse, it still vehemently denies that the
respondents had ever worked for it. Respondents transfer to Porta Coeli, although relayed to the respondents by
PASAKA was effectively an act of Norkis Trading. Where labor-only contracting exists, the Labor Code itself
establishes an employer-employee relationship between the employer and the employees of the labor-only contractor.
The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the
labor-only contractor as if such employees had been directly employed by the principal employer.67 LABOR
STANDARDS COCA COLA BOTTLERS INC v. DELA CRUZ G.R. No. 184977 CASE DIGEST Where the
contractors were merely suppliers of labor, the contracted personnel, engaged in component functions in the main
business of the company under the latters supervision and control, cannot but be regular company employees.
FACTS: Respondents Dela Cruz et.al. filed complaints for regularization with money claims against Coca-Cola
Bottlers. The respondents alleged they are route helpers who go from the Coca- Cola sales offices or plants to customer
outlets, and doing such, their jobs are necessary and desirable in its main business. They further alleged that they
worked under the control and supervision of the companys supervisors who prepared their work schedules and
assignments. They argued that the petitioners contracts of services with Peerless and Excellent are in the nature of
labor-only contracts prohibited by law since Peerless and Excellent did not have sufficient capital or investment to
provide services to the petitioner. Coca-cola, the petitioner, contended that it entered into contracts of services with
Peerless and Excellent Partners to provide allied services and that the contractors shall pay the salaries of all personnel
assigned to the petitioner. It claimed that its main business is softdrinks manufacturing and the respondents tasks of
sale and distribution are not part of the manufacturing process. The petitioner posited that there is no employer-
employee relationship between the company and the respondents and the complaints should be dismissed for lack of
jurisdiction. The labor arbiter and the NLRC dismissed the case. CA reversed the decision and denied the motion for
reconsideration. Thus this petition.
ISSUE: W/N Excellent and Peerless were independent labor contractors or labor-only contractors.

HELD: Article 106 which provides: Whenever, an employer enters into a contract with another person for the
performance of the formers work, the employees of the contractor and of the latter s subcontractor shall be paid in
accordance with the provisions of this Code. x x x There is labor-only contracting where the person supplying
workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises, among others, and the workers recruited and placed by such persons are performing activities which
are directly related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent
as if the alter were directly employed by him.
The CA noted that both the contracts for Peerless and the Excellent show that their obligation was solely to provide the
company with the services of contractual employees and nothing more. Peerless and Excellent were mere
suppliers of labor who had no sufficient capitalization and equipment to undertake sales and distribution of softdrinks
as independent activities separate from the manufacture of softdrinks, and who had no control and supervision over the
contracted personnel. They are therefore labor-only contractors. Consequently, the contracted personnel, engaged in
component functions in the main business of the company under the latters supervision and control, cannot but be
regular company employees. 7K CORPORATION VS NLRC FACTS: In February of 1997, 7K Corporation
(petitioner) and Universal Janitorial and Allied Services (Universal) entered into a service contract where Universal
bound itself to provide petitioner with drivers at the rate of P4,637.00 per driver a month. Rene Corona and Alex
Catingan started working for the petitioner on March 7, 1997 and Aril 11, 1997, respectively. Pursuant to the service
contract, petitioner paid Universal the sum of P4,637.00 per driver. As to overtime pay however, petitioner directly
paid the private respondents. A controversy arose when the overtime paid by the accounting department of petitioner
was short of the actual overtime rendered by the private respondents. Private respondents time-cards reflected
overtime of up to 70 hours, however, the accounting personnel reduced them to only 20 hours. After their grievances
were repeatedly ignored, respondents filed separate complaints for illegal dismissal, payment of salary differentials,
unpaid overtime, and reinstatement with backwages, against Universal and/or petitioner before the Labor Arbiter (LA).
Labor Arbiter declared Universal as the employer of the private respondents and that the respondents were illegally
dismissed thus entitled to backwages and separation pay. He gave weight to the service contract between the petitioner
and Universal which provided that the Contractor [universal] shall continue to be the employer of the workers assigned
to the clients [petitioner] premises and shall assume all responsibilities of an employer shall be solely responsible to its
employees shall exercise in full its power of control and supervision over the workers assigned
Universal appealed to NLRC claiming that it is petitioner which is the employer of the private respondents because
(1) it was petitioner which had direct control and supervision over the two
(2) petitioner may select, replace and dismiss the driver whose services are found to be unsatisfactory and
3) petitioner directly paid the private respondents their overtime pay.
Universal also claimed that private respondents were not illegally dismissed, thus they are not entitled to backwages
and reinstatement. NLRC found that Universal is a labor-only contractor since it does not have substantial capital or
investment in the form of tools, equipments, machineries and the like and the workers are performing activities which
are directly related to the principal business of the employer. The NLRC further held that since Universal is a labor-
only contractor, petitioner as the principal employer, is solidarily liable with Universal for all the rightful claims of
private respondents. There was also no illegal dismissal as the LA failed to identify who dismissed the complainants.
PETITIONER AND PRIVATE RESPONDENTS FILED MOTION FOR RECONSIDERATION. NLRC DENIED
THE MOTIONS FOR RECON PETITIONER went to CA for NLRC grave abuse in its discretion. CA dismissed the
petition. SC- petitioner alleged that CA gravely erred when it affirmed NLRCs decision that Universal Janitorial
and Allied Services is a labor-only contractor.
ISSUE: WHETHER LA AND NLRC COMMITTED GRAVE ABUSE IN ITS DISCRETIO WHEN IT DECLARED
THAT UNIVERSAL JANITORIAL & ALLIED SERVICES IS A LABOR-ONLY CONTRACTOR.
RULING: NO SUCH GRAVE ABUSE OF DISCRETION/ The fact that the service contract entered into by petitioner
and Universal stipulated that private respondents shall be the employees of Universal, would not help petitioner, as the
language of a contract is not determinative of the relationship of the parties. Petitioner and Universal cannot dictate, by
the mere expedient of a declaration in a contract, the character of Universals business, i.e., whether as labor-only
contractor, or job contractor, it being crucial that Universals character be measured in terms of and determined by the
criteria set by statute. Art. 106 of the Labor Code provides that there is labor-only contracting where (1) the person
supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and (2) the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. That private respondents are performing
activities which are directly related to the principal business of such employer are not questioned by any of the parties
and Since neither petitioner nor Universal was able to adduce evidence that Universal had any substantial capital,
investment or assets to perform the work contracted for, the presumption that Universal is a labor-only contractor
stands. Thus, petitioner, the principal employer, is solidarily liable with Universal, the labor-only contractor, for the
rightful claims of the employees.[footnoteRef:3][30] Under this set-up, Universal, as the labor-only contractor, is
deemed an agent of the principal, herein petitioner, and the law makes the principal responsible to the employees of the
-only contractor as if the principal itself directly hired or employed the employees.
 G.R. No. 172349 : June 13, 2012
POLYFOAM-RGC INTERNATIONAL, CORPORATION and PRECILLA A. GRAMAJE, Petitioners,
v.EDGARDO CONCEPCION, Respondent.

PERALTA, J.:
FACTS:
In his February 08, 2000 complaint for illegal dismissal against Polyfoam and Natividad Cheng, Edgardo Concepcion
alleged that he was hired by Polyfoam as an "all-around" factory worker and served as such for almost six years. On
January 14, 2000, he allegedly discovered that his time card was not in the rack and was later informed by the security
guard that he could no longer punch his time card. When he protested to his supervisor, the latter allegedly told him
that the management decided to dismiss him due to an infraction of a company rule. Cheng, the company manager, also
refused to face him. Respondent counsel later wrote a letter to Polyfoam manager requesting that respondent be re-
admitted to work, but the request remained unheeded prompting the latter to file the complaint for illegal dismissal.
On April 28, 2000, Gramaje filed a Motion for Intervention claiming to be the real employer of respondent. On the other
hand, Polyfoam and Cheng filed a Motion to Dismiss on the grounds that the NLRC has no jurisdiction over the case,
because of the absence of employer-employee relationship between Polyfoam and respondent and that the money claims had
already prescribed.
On May 24, 2000, Labor Arbiter Adolfo Babiano issued an Order granting Gramaje motion for intervention, it
appearing that she is an indispensable party and denying Polyfoam and Cheng motion to dismiss as the lack of
employer-employee relationship is only a matter of defense.
In their Position Paper, Polyfoam and Cheng insisted that the NLRC has no jurisdiction over the case, because respondent
was not their employee. They likewise contended that respondent money claims had already prescribed. Finally, they fault
respondent for including Cheng as a party-defendant, considering that she is not even a director of the company.
In her Position Paper,Gramaje claimed that P.A. Gramaje Employment Services (PAGES) is a legitimate job contractor
who provided some manpower needs of Polyfoam. It was alleged that respondent was hired as "packer" and assigned to
Polyfoam, charged with packing the latter finished foam products. She argued, however, that respondent was not
dismissed from employment, rather, he simply stopped reporting for work.
On December 14, 2001, Labor Arbiter rendered a Decision finding respondent to have been illegally dismissed from
employment and holding Polyfoam and Gramaje/PAGES solidarily liable for respondent money claims.
On appeal by petitioners, the NLRC modified the LA decision by exonerating Polyfoam from liability for respondent
claim for separation pay and deleting the awards of backwages, 13th month pay, damages, and attorney fees.
Aggrieved, respondent elevated the case to the CA in a special civil action for certiorari under Rule 65 of the Rules of Court. On
December 19, 2005, the appellate court granted the petition. The CA agreed with the LA conclusion that Gramaje is not a
legitimate job contractor but only a "labor-only" contractor. The appellate court affirmed the LA findings of illegal dismissal as
respondent was dismissed from the service without cause and due process. Consequently, separation pay in lieu of reinstatement
was awarded. The CA quoted with approval the LA conclusions on the award of respondent other money claims.
ISSUES:
1. Whether or not Gramaje is an independent job contractor?
2. Whether or not respondent was illegally dismissed from employment?
HELD: The decision of the Court of Appeals is affirmed.
Gramaje is a Labor-Only Contractor - Article 106 of the Labor Code explains the relations which may arise between an
employer, a contractor, and the contractor employees, thus:
ART. 106. Contractor or subcontracting. Whenever an employer enters into a contract with another person for the
performance of the former work, the employees of the contractor and of the latter subcontractor, if any, shall be paid in
accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the
work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting out of
labor to protect the rights of workers established under the Code. In so prohibiting or restricting, he may make
appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these
types of contracting and determine who among the parties involved shall be considered the employer for purposes of
this Code, to prevent any violation or circumvention of any provision of this Code.
There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and
placed by such person are performing activities which are directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible
to the workers in the same manner and extent as if the latter were directly employed by him.
The test of independent contractorship is "whether one claiming to be an independent contractor has contracted to do
the work according to his own methods and without being subject to the control of the employer, except only as to the
results of the work." In San Miguel Corporation v. Semillano, the Court laid down the criteria in determining the
existence of an independent and permissible contractor relationship, to wit:
x x x [W]hether or not the contractor is carrying on an independent business; the nature and extent of the work; the
skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of
work; the control and supervision of the work to another; the employer power with respect to the hiring, firing and
payment of the contractor workers; the control of the premises; the duty to supply the premises, tools, appliances,
materials, and labor; and the mode, manner and terms of payment.
Simply put, the totality of the facts and the surrounding circumstances of the case are to be considered. Each case must
be determined by its own facts and all the features of the relationship are to be considered.
Applying the foregoing tests, we agree with the CA conclusion that Gramaje is not an independent job contractor, but a
"labor-only" contractor.
First, Gramaje has no substantial capital or investment. The presumption is that a contractor is a labor-only contractor unless he
overcomes the burden of proving that it has substantial capital, investment, tools, and the like. The employee should not be
expected to prove the negative fact that the contractor does not have substantial capital, investment and tools to engage in job-
contracting.
Gramaje claimed that it has substantial capital of its own as well as investment in its office, equipment and tools. She pointed
out that she furnished the plastic containers and carton boxes used in carrying out the function of packing the mattresses of
Polyfoam. She added that she had placed in Polyfoam workplace ten (10) sealing machines, twenty (20) hand trucks, and
two (2) forklifts to enable respondent and the other employees of Gramaje assigned at Polyfoam to perform their job. Finally,
she explained that she had her own office with her own staff. However, aside from her own bare statement, neither Gramaje
nor Polyfoampresented evidence showing Gramaje ownership of the equipment and machineries used in the performance of
the alleged contracted job. Considering that these machineries are found in Polyfoam premises, there can be no other logical
conclusion but that the tools and equipment utilized by Gramaje and her "employees" are owned by Polyfoam. Neither did
Polyfoam nor Gramaje show that the latter had clients other than the former. Since petitioners failed to adduce evidence that
Gramaje had any substantial capital, investment or assets to perform the work contracted for, the presumption that Gramaje
is a labor-only contractor stands.
Second, Gramaje did not carry on an independent business or undertake the performance of its service contract according to
its own manner and method, free from the control and supervision of its principal,Polyfoam, its apparent role having been
merely to recruit persons to work for Polyfoam.It is undisputed that respondent had performed his task of packing Polyfoam
foam products in Polyfoam premises. As to the recruitment of respondent, petitioners were able to establish only that
respondent application was referred toGramaje, but that is all. Prior to his termination, respondent had been performing the
same job in Polyfoambusiness for almost six (6) years. He was even furnished a copy of Polyfoam "Mga Alituntunin at
KarampatangParusa,"which embodied Polyfoam rules on attendance, the manner of performing the employee duties, ethical
standards, cleanliness, health, safety, peace and order. These rules carried with them the corresponding penalties in case of
violation.
While it is true that petitioners submitted the Affidavit of Polyfoam supervisor Victor Abadia, claiming that the latter
did not exercise supervision over respondent because the latter was not Polyfoam but Gramajeemployee, said Affidavit
is insufficient to prove such claim. Petitioners should have presented the person who they claim to have exercised
supervision over respondent and their alleged other employees assigned toPolyfoam. It was never established that
Gramaje took entire charge, control and supervision of the work and service agreed upon. And as aptly observed by the
CA, "it is likewise highly unusual and suspect as to the absence of a written contract specifying the performance of a
specified service, the nature and extent of the service or work to be done and the term and duration of the relationship."
A finding that a contractor is a "labor-only" contractor, as opposed to permissible job contracting, is equivalent to declaring
that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the
"labor-only" contractor is considered as a mere agent of the principal, the real employer.In this case, Polyfoam is the
principal employer and Gramaje is the labor-only contractor. Polyfoam and Gramaje are, therefore, solidarily liable for the
rightful claims of respondent.
Respondent was Illegally DismissedFrom Employment - Respondent stated that on January 14, 2000, his time card was
suddenly taken off the rack. His supervisor later informed him that Polyfoam management decided to dismiss him due to
infraction of company rule. In short, respondent insisted that he was dismissed from employment without just or lawful
cause and without due process. Polyfoam did not offer any explanation of such dismissal. It, instead, explained that
respondent real employer is Gramaje. Gramaje, on the other hand, denied the claim of illegal dismissal. She shifted the
blame on respondent claiming that the latter in fact abandoned his work.
The LA gave credence to respondent narration of the circumstances of the case. Said conclusion was affirmed by the
CA. We find no reason to depart from such findings.
Abandonment cannot be inferred from the actuations of respondent. When he discovered that his time card was off the
rack, he immediately inquired from his supervisor. He later sought the assistance of his counsel, who wrote a letter
addressed to Polyfoam requesting that he be re-admitted to work. When said request was not acted upon, he filed the
instant illegal dismissal case. These circumstances clearly negate the intention to abandon his work.
Petitioners failed to show any valid or authorized cause under the Labor Code which allowed it to terminate the services of
respondent. Neither was it shown that respondent was given ample opportunity to contest the legality of his dismissal. No
notice of termination was given to him. Clearly, respondent was not afforded due process. Having failed to establish
compliance with the requirements of termination of employment under the Labor Code, the dismissal of respondent was
tainted with illegality. Consequently, respondent is entitled to reinstatement without loss of seniority rights, and other
privileges and to his full backwages inclusive of allowances and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld up to the time of his actual reinstatement. However, if reinstatement is no
longer feasible as in this case, separation pay equivalent to one-month salary for every year of service shall be awarded as an
alternative. Thus, the CA is correct in affirming the LA award of separation pay with full backwages and other monetary benefits.
DENIED
 G.R. No. 178909 : October 10, 2012
SUPERIOR PACKAGING CORPORATION, Petitioner, v. ARNEL BALAGSA Y, ZALDY ALFORGNE, JAIME
ANGELES, REY APURA, GERALD CABALAN, JONALD CALENTENG, RAMIL CROIJERO, JUNREY
CABALGUINTO, OSCAR DAYTO, RUFO DIONOLA, DIONILO ESMERALDA, BOOTS LADRILLO, ELIEZER
MAGHAMOY, LEO FLORES, RENATOPAGADORA,REYNALDO PLAZA, H.OGER SJBNEAO, EDWIN
TONALBA, .JOHN ACHARON, RODERICK RAMAS, SALVADOR ACURATO, JULUIS BASUL, CARLOS RAYTA,
LITO BELANO, ROGER CASIMIRO, RENE CURADA, NESTRO ESTE, ROMMEL IMPELIOO, ZOILO ISLA,
JHONIE OGARDO, EDWIN POSADAS, ALEXANDER REGPALA, CHRISTOPHER SAMPIANO, RITCHIE
SANCHES, ROLANDO SORIANO, ROWELL ANCHETA, RICKY BORDAS, ANTONIO BEHEN, RONALD
DOMINGO, JERRY MORENO, ROLLY ROSALES, RENATO RESTANO and ISIDRO SARIGNE, Respondents.

RESOLUTION
REYES, J.:
The main issue in this case is whether Superior Packaging Corporation (petitioner) may be held solidarily liable with
Lancer Staffing & Services Network, Inc. (Lancer) for respondents unpaid money claims.

The facts are undisputed.

The petitioner engaged the services of Lancer to provide reliever services to its business, which involves the
manufacture and sale of commercial and industrial corrugated boxes. According to petitioner, the respondents were
engaged for four (4) months from February to June 1998 and their tasks included loading, unloading and segregation of
corrugated boxes.

Pursuant to a complaint filed by the respondents against the petitioner and its President, Cesar Luz (Luz), for
underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-payment of salary, the
Department of Labor and Employment (DOLE) conducted an inspection of the petitioners premises and found several
violations, to wit: (1) non-presentation of payrolls and daily time records; (2) non-submission of annual report of safety
organization; (3) medical and accident/illness reports; (4) non-registration of establishment under Rule 1020 of
Occupational and Health Standards; and (5) no trained first aide 1rll Due to the petitioners failure to appear in the
summary investigations conducted by the DOLE, an Order 2rll was issued on June 18, 2003 finding in favor of the
respondents and adopting the computation of the claims submitted. Petitioner and Luz were ordered, among others, to
pay respondents their total claims in the amount of Eight Hundred Forty Thousand Four Hundred Sixty-Three Pesos
and 38/100 (P 840,463.38).

They filed a motion for reconsideration on the ground that respondents are not its employees but of Lancer and that
they pay Lancer in lump sum for the services rendered. The DOLE, however, denied its motion in its Resolution 4rll
dated February 16, 2004, ruling that the petitioner failed to support its claim that the respondents are not its employees,
and even assuming that they were employed by Lancer, the petitioner still cannot escape liability as Section 13 of the
Department Order No. 10, Series of 1997, makes a principal jointly and severally liable with the contractor to contractual
employees to the extent of the work performed when the contractor fails to pay its employees wages.

Their appeal to the Secretary of DOLE was dismissed per Order 5rll dated July 30, 2004 and the Order dated June
18, 2003 and Resolution dated February 16, 2004 were affirmed. 6rll Their motion for reconsideration likewise
having been dismissed by the Secretary of DOLE in an Order dated January 21, 2005, 7rll petitioner and Luz filed a
petition for certiorari with the Court of Appeals (CA).

On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the modification in that Luz was
absolved of any personal liability under the award. 8rll The petitioner filed a partial motion for reconsideration
insofar as the finding of solidary liability with Lancer is concerned but it was denied by the CA in a Resolution 9rll
dated July 10, 2007.

The petitioner is now before the Court on petition for review under Rule 45 of the Rules of Court, alleging that:
I THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN AFFIRMING
THE RULING OF THE SECRETARY OF LABOR AND EMPLOYMENT THAT THE COMPANY IS SOLIDARILY
LIABLE WITH THE CONTRACTOR NOTWITHSTANDING THE FACT THAT:

A. THE COMPANY CANNOT BE HELD SOLIDARILY LIABLE WITH THE CONTRACTOR FOR THE
PENALTY OR SANCTION IMPOSED BY WAY OF "DOUBLE INDEMNITY" UNDER REPUBLIC ACT NO.
6727.
B. THERE IS NO EVIDENCE TO SHOW THAT PRIVATE RESPONDENTS RENDERED OVERTIME WORK
AND ACTUALLY WORKED ON THEIR RESTDAYS FOR THE COMPANY FOR THE PERIOD IN QUESTION.

II THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION IN AFFIRMING
THE FINDINGS OF THE SECRETARY OF LABOR AND EMPLOYMENT THAT THE CONTRACTOR IS
ENGAGED IN LABOR-ONLY CONTRACTING.

On the first ground, the petitioner argues that the DOLE erred in doubling respondents underpayment of wages and
regular holiday pay under Republic Act No. 6727 (Wage Rationalization Act) inasmuch as the solidary liability of a
principal does not extend to a punitive award against a contractor. 11rll The petitioner also contends that there is no
evidence showing that the respondents rendered overtime work and that they actually worked on their rest days for
them to be entitled to such pay.
On the second ground, the petitioner objects to the finding that it is engaged in labor-only contracting and is
consequently an indirect employer, considering that it is beyond the visitorial and enforcement power of the DOLE to
make such conclusion. According to the petitioner, such conclusion may be made only upon consideration of
evidentiary matters and cannot be determined solely through a labor inspection. 13rll The petitioner also refutes
respondents alleged belated argument that the latter are its employees.

The petition is bereft of merit.

To begin with, the Court will not resolve or dwell on the petitioners argument on the doubling of respondents
underpayment of wages and regular holiday pay by the DOLE for the simple reason that this is the first time that the
petitioner raised such contention. From its pleadings filed in the DOLE and all the way up to the CA, the petitioner
never questioned nor discussed such issue. It is only now before the Court that the petitioner belatedly presented such
argument. It is well-settled that points of law, theories, issues and arguments not brought to the attention of the lower
court, administrative agency or quasi-judicial body need not be considered by a reviewing court, as they cannot be
raised for the first time at that late stage. 15rll To consider the alleged facts and arguments raised belatedly would
amount to trampling on the basic principles of fair play, justice and due process.

With regard to the contention that there is no evidence to support the finding that the respondents rendered overtime
work and that they worked on their rest day, the resolution of this argument requires a review of the factual findings
and the evidence presented, which this Court will not do. This Court is not a trier of facts and this applies with greater
force in labor cases.17rll Hence, where the factual findings of the labor tribunals or agencies conform to, and are
affirmed by, the CA, the same are accorded respect and finality, and are binding upon this Court.

Petitioner also questions the authority of the DOLE to make a finding of an employer-employee relationship
concomitant to its visitorial and enforcement power. The Court notes at this juncture that the petitioner, again, did not
raise this question in the proceedings before the DOLE. At best, what the petitioner raised was the sufficiency of
evidence proving the existence of an employer-employee relationship and it was only in its petition for certiorari with
the CA that the petitioner sought to have this matter addressed. The CA should have refrained from resolving said
matter as the petitioner was deemed to have waived such argument and was estopped from raising the same.

At any rate, such argument lacks merit. The DOLE clearly acted within its authority when it determined the existence
of an employer-employee relationship between the petitioner and respondents as it falls within the purview of its
visitorial and enforcement power under Article 128(b) of the Labor Code, which provides:
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 representative 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.

In Peoples Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and Employment, 20rll
the Court stated that it can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow
has to make a determination of the existence of an employer-employee relationship. Such determination, however, is
merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards provisions.
Such power was further explained recently by the Court in its Resolution 21rll dated March 6, 2012 issued in
Peoples Broadcasting, viz:
The determination of the existence of an employer-employee relationship by the DOLE must be respected. The
expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the
alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the referral of
the matter to the NLRC. The Court issued the declaration that at least a prima facie showing of the absence of an
employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be
faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence
of an employer-employee relationship.
xxxx
x x x The power of the DOLE to determine the existence of an employer-employee relationship need not necessarily
result in an affirmative finding. The DOLE may well make the determination that no employer-employee relationship
exists, thus divesting itself of jurisdiction over the case. It must not be precluded from being able to reach its own
conclusions, not by the parties, and certainly not by this Court.

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination
as to the existence of an employer-employee relationship in the exercise of its visitorial and enforcement power, subject
to judicial review, not review by the NLRC.

Also, the existence of an employer-employee relationship is ultimately a question of fact. 23rll The determination
made in this case by the DOLE, albeit provisional, and as affirmed by the Secretary of DOLE and the CA is beyond the
ambit of a petition for review on certiorari.
The Court now comes to the issue regarding the nature of the relationship between the petitioner and respondents, and
the consequent liability of the petitioner to the respondents under the latters claim.

It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent contractor but was
engaged in "labor-only contracting"; hence, the petitioner was considered an indirect employer of respondents and
liable to the latter for their unpaid money claims.

At the time of the respondents employment in 1998, the applicable regulation was DOLE Department Order No. 10,
Series of 1997.25rll Under said Department Order, labor-only contracting was defined as follows:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be
engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and
other materials; and
(2) The workers recruited and placed by such persons are performing activities which are directly related to the
principal business or operations of the employer in which workers are habitually employed.
Labor-only contracting is prohibited and the person acting as contractor shall be considered merely as an agent or
intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.

According to the CA, the totality of the facts and surrounding circumstances of this case point to such conclusion. The
Court agrees.

The ratio of Lancers authorized capital stock of P 400,000.00 as against its subscribed and paid-up capital stock of P
25,000.00 shows the inadequacy of its capital investment necessary to maintain its day-to-day operations. And while
the Court does not set an absolute figure for what it considers substantial capital for an independent job contractor, it
measures the same against the type of work which the contractor is obligated to perform for the principal. 27rll
Moreover, the nature of respondents work was directly related to the petitioners business. The marked disparity
between the petitioners actual capitalization (P 25,000.00) and the resources needed to maintain its business, i.e., "to
establish, operate and manage a personnel service company which will conduct and undertake services for the use of
offices, stores, commercial and industrial services of all kinds," supports the finding that Lancer was, indeed, a labor-
only contractor. Aside from these is the undisputed fact that the petitioner failed to produce any written service contract
that might serve as proof of its alleged agreement with Lancer.

Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an employer-
employee relationship between the principal and the employees of the supposed contractor, and the "labor only"
contractor is considered as a mere agent of the principal, the real employer. 29rll The former becomes solidarily
liable for all the rightful claims of the employees. 30rll The petitioner therefore, being the principal employer and
Lancer, being the labor-only contractor, are solidarily liable for respondents unpaid money claims.

WHEREFORE, the petition for review is DENIED.

 Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al.
G.R. No. 160506, March 9, 2010
Facts:
Petitioners worked as merchandisers of P&G. They all individually signed employment contracts with either Promm-
Gem or SAPS for periods of more or less five months at a time. They were assigned at different outlets, supermarkets
and stores where they handled all the products of P&G. They received their wages from Promm-Gem or SAPS.
Subsequently, petitioners filed a complaint against P&G for regularization, service incentive leave pay and other
benefits with damages. The complaint was later amended to include the matter of their subsequent dismissal.
The Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no employer-employee
relationship between petitioners and P&G. He found that the selection and engagement of the petitioners, the payment
of their wages, the power of dismissal and control with respect to the means and methods by which their work was
accomplished, were all done and exercised by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were
legitimate independent job contractors. On appeal to the NLRC, the NlRC affirmed the decision of the labor arbiter.
Petitioners then filed a petition for certiorari with the CA, alleging grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the Labor Arbiter and the NLRC. However, said petition was also denied by the CA.
Issues:
1.) Is P&G the employer of petitioners? 2.) Were petitioners illegally dismissed?
Ruling:
Qualify. In order to determine whether P&G is the employer of petitioners, it is necessary to first determine whether
Promm-Gem and SAPS are labor-only contractors or legitimate job contractors. There is "labor-only" contracting
where the person supplying workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and placed by such person are
performing activities which are directly related to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.
The Court held that Promm-Gem cannot be regarded as labor-only contractor but a legitimate independent contractor
because the financial statement of Promm-Gem shows that it has authorized capital stock of P1 million and a paid-in
capital, or capital available for operations, of P500,000.00 as of 1990. It also has long term assets worth P432, 895.28
and current assets of P719, 042.32. Promm-Gem has also proven that it maintained its own warehouse and office space
with a floor area of 870 square meters. It also had under its name three registered vehicles which were used for its
promotional/merchandising business. Promm-Gem also has other clients aside from P&G.
On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only P31, 250.00. There
is no other evidence presented to show how much its working capital and assets are. Furthermore, there is no showing
of substantial investment in tools, equipment or other assets. Considering that SAPS has no substantial capital or
investment and the workers it recruited are performing activities which are directly related to the principal business of
P&G, the court held that SAPS is engaged in "labor-only contracting". The contractor is considered merely an agent of
the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees
had been directly employed by the principal employer.
With regard to the termination letters given by Promm-Gem to its employees uniformly specified the cause of dismissal
as grave misconduct and breach of trust. The court held that there were no valid causes for the dismissal of petitioners-
employees of Promm-Gem.
Misconduct to be valid just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the
performance of the employees duties; and (c) must show that the employee has become unfit to continue working for
the employer. In the case, petitioners-employees of Promm-Gem may have committed an error of judgment in claiming
to be employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing so. As such,
they are guilty of only simple misconduct for assailing the integrity of Promm-Gem as a legitimate and independent
promotion firm. A misconduct which is not serious or grave, as that existing in the instant case, cannot be a valid basis
for dismissing an employee.
Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based on the willful breach of the trust
reposed in the employee by his employer. Ordinary breach will not suffice. Loss of trust and confidence, as a cause for
termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of
trust and confidence. And, in order to constitute a just cause for dismissal, the act complained of must be work-related
and must show that the employee is unfit to continue to work for the employer. In the case at bar, In the instant case,
the petitioners-employees of Promm-Gem have not been shown to be occupying positions of responsibility or of trust
and confidence. Neither is there any evidence to show that they are unfit to continue to work as merchandisers for
Promm-Gem. Hence, no valid cause for dismissal by Promm-Gem against petitioner-employees.
With regard to the petitioners placed with P&G by SAPS, they were given no written notice of dismissal. The records
show that upon receipt by SAPS of P&Gs letter terminating their "Merchandising Services Contact", they in turn
verbally informed the concerned petitioners not to report for work anymore. It must be emphasized that the onus
probandi to prove the lawfulness of the dismissal rests with the employer. In termination cases, the burden of proof
rests upon the employer to show that the dismissal is for just and valid cause. In the instant case, P&G failed to
discharge the burden of proving the legality and validity of the dismissals of those petitioners who are considered its
employees. Hence, the dismissals necessarily were not justified and are therefore illegal.
G.R. No. 102636 September 10, 1993
METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO V. BALINANG,
petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and METROPOLITAN BANK and TRUST
COMPANY, respondents.
Gilbert P. Lorenzo for petitioners.
Marcial G. dela Fuente for private respondents.

VITUG, J.:
In this petition for certiorari, the Metropolitan Bank & Trust Company Employees Union-ALU-TUCP (MBTCEU) and
its president, Antonio V. Balinang, raise the issue of whether or not the implementation by the Metropolitan Bank and
Trust Company of Republic Act No. 6727, mandating an increase in pay of P25 per day for certain employees in the
private sector, created a distortion that would require an adjustment under said law in the wages of the latter's other
various groups of employees.

On 25 May 1989, the bank entered into a collective bargaining agreement with the MBTCEU, granting a monthly P900
wage increase effective 01 January 1989, P600 wage increase 01 January 1990, and P200 wage increase effective 01
January 1991. The MBTCEU had also bargained for the inclusion of probationary employees in the list of employees
who would benefit from the first P900 increase but the bank had adamantly refused to accede thereto. Consequently,
only regular employees as of 01 January 1989 were given the increase to the exclusion of probationary employees.
Barely a month later, or on 01 January 1989, Republic Act 6727, "an act to rationalize wage policy determination be
establishing the mechanism and proper standards thereof, . . . fixing new wage rates, providing wage incentives for
industrial dispersal to the countryside, and for other purposes," took effect. Its provisions, pertinent to this case, state:
Sec. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of all workers and employees in the
private sector, whether agricultural or non-agricultural, shall be increased by twenty-five pesos (P25) per day, . . .:
Provided, That those already receiving above the minimum wage rates up to one hundred pesos(P100.00) shall also
receive an increase of twenty-five pesos (P25.00) per day, . . .
xxx xxx xxx

(d) If expressly provided for and agreed upon in the collective bargaining agreements, all increase in the daily basic
wage rates granted by the employers three (3) months before the effectivity of this Act shall be credited as compliance
with the increases in the wage rates prescribed herein, provided that, where such increases are less than the prescribed
increases in the wage rates under this Act, the employer shall pay the difference. Such increase shall not include
anniversary wage increases, merit wage increase and those resulting from the regularization or promotion of
employees.

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 (NLRC) having
jurisdiction over the workplace.
It shall be mandatory for the NLRC to conduct continous 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.

Pursuant to the above provisions, the bank gave the P25 increase per day, or P750 a month, to its probationary
employees and to those who had been promoted to regular or permanent status before 01 July 1989 but whose daily
rate was P100 and below. The bank refused to give the same increase to its regular employees who were receiving
more than P100 per day and recipients of the P900 CBA increase.

Contending that the bank's implementation of Republic Act 6727 resulted in the categorization of the employees into
(a) the probationary employees as of 30 June 1989 and regular employees receiving P100 or less a day who had been
promoted to permanent or regular status before 01 July 1989, and (b) the regular employees as of 01 July 1989, whose
pay was over P100 a day, and that, between the two groups, there emerged a substantially reduced salary gap, the
MBTCEU sought from the bank the correction of the alleged distortion in pay. In order to avert an impeding strike, the
bank petitioned the Secretary of Labor to assume jurisdiction over the case or to certify the same to the National Labor
Relations Commission (NLRC) under Article 263 (g) of the Labor Code. 1 The parties ultimately agreed to refer the
issue for compulsory arbitration to the NLRC.

The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05 February 1991, the labor arbiter
disregard with the bank's contention that the increase in its implementation of Republic Act 6727 did not constitute a
distortion because "only 143 employees or 6.8% of the bank's population of a total of 2,108 regular employees"
benefited. He stressed that "it is not necessary that a big number of wage earners within a company be benefited by the
mandatory increase before a wage distortion may be considered to have taken place," it being enough, he said, that such
increase "result(s) in the severe contraction of an intentional quantitative difference in wage between employee groups."

The labor arbiter concluded that since the "intentional quantitative difference" in wage or salary rates between and
among groups of employees is not based purely on skills or length of service but also on "other logical bases of
differentiation, a P900.00 wage gap intentionally provided in a collective bargaining agreement as a quantitative
difference in wage between those who WERE regular employees as of January 1, 1989 and those who WERE NOT as
of that date, is definitely a logical basis of differentiation (that) deserves protection from any distorting statutory wage
increase." Otherwise, he added, "a minimum wage statute that seek to uplift the economic condition of labor would
itself destroy the mechanism of collective bargaining which, with perceived stability, has been labor's constitutional
and regular source of wage increase for so long a time now." Thus, since the "subjective quantitative difference"
between wage rates had been reduced from P900.00 to barely P150.00, correction of the wage distortion pursuant to
Section 4(c) of the Rules Implementing Republic Act 6727 should be made.

The labor arbiter disposed of the case, thus:

WHEREFORE, premises considered, the respondent is hereby directed to restore to complainants and their members
the Nine Hundred (P900.00) Pesos CBA wage gap they used to enjoy over non-regular employees as of January 1,
1989 by granting them a Seven Hundred Fifty (P750.00) Pesos monthly increase effective July 1, 1989.
SO ORDERED. 2

The bank appealed to the NLRC. On 31 May 1991, the NLRC Second Division, by a vote of 2 to 1, reversed the
decision of the Labor Arbiter. Speaking, through Commissioners Rustico L. Diokno and Domingo H. Zapanta, the
NLRC said:
. . . a wage distortion can arise only in a situation where the salary structure is characterized by intentional quantitative
differences among employee groups determined or fixed on the basis of skills, length of service, or other logical basis
of differentiation and such differences or distinction are obliterated (In Re: Labor Dispute at the Bank of the Philippine
Islands, NCMB-RB-7-11-096-89, Secretary of Labor and Employment, February 18, 1991).

As applied in this case, We noted that in the new wage salary structure, the wage gaps between Level 6 and 7 levels 5
and 6, and levels 6 and 7 (sic) were maintained. While there is a noticeable decrease in the wage gap between levels 2
and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps between said levels is not significant as to
obliterate or result in severe contraction of the intentional quantitative differences in salary rates between the
employees groups. For this reason, the basis requirement for a wage in this case. Moreover, there is nothing in the law
which would justify an across-the-board adjustment of P750.00 as ordered by the labor Arbiter.

WHEREFORE, premises considered, the appealed decision is hereby set aside and a new judgment is hereby entered,
dismissing the complaint for lack of merit.

SO ORDERED. 3

In her dissent, Presiding Commissioner Edna Bonto-Perez opined:

There may not be an obliteration nor elimination of said quantitative distinction/difference aforecited but clearly there
is a contraction. Would such contraction be severe as to warrant the necessary correction sanctioned by the law in
point, RA 6727? It is may considered view that the quantitative intended distinction in pay between the two groups of
workers in respondent company was contracted by more than fifty (50%) per cent or in particular by more or less
eighty-three (83%) per cent hence, there is no doubt that there is an evident severe contraction resulting in the
complained of wage distortion.

Nonetheless, the award of P750.00 per month to all of herein individual complainants as ordered by the Labor Arbiter
below, to my mind is not the most equitable remedy at bar, for the same would be an across the board increase which is
not the intention of RA 6727. For that matter, herein complainants cannot by right claim for the whole amount of
P750.00 a month or P25.00 per day granted to the workers covered by the said law in the sense that they are not
covered by the said increase mandated by RA 6727. They are only entitled to the relief granted by said law by way of
correction of the pay scale in case of distortion in wages by reason thereof.
Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on 21 May 1991 by the Regional
Tripartite Wages and Productivity Commission for correction of pay scale structures in case of wage distortion as in the
case at bar which is:
Minimum Wage = % x Prescribed = Distortion
Increased Adjustment

Actual Salary would be the most equitable and fair under the circumstances obtaining in this case.
For this very reason, I register my dissent from the majority opinion and opt for the modification of the Labor Arbiter's
decision as afore-discussed. 4

The MBTCEU filed a motion for reconsideration of the decision of the NLRC; having been denied, the MBTCEU and
its president filed the instant petition for certiorari, charging the NLRC with gave abuse of discretion by its refusal (a)
"to acknowledge the existence of a wage distortion in the wage or salary rates between and among the employee
groups of the respondent bank as a result of the bank's partial implementation" of Republic Act 6727 and (b) to give
due course to its claim for an across-the-board P25 increase under Republic Act No. 6727. 5

We agree with the Solicitor General that the petition is impressed with merit. 6

The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined, thus:
(p) Wage Distortion means a situation where an increase in prescribed wage rates results in the elimination or severe
contradiction 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.

The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain
employees, we agree, is, by and large, a question of fact the determination of which is the statutory function of the
NLRC. 7 Judicial review of labor cases, we may add, does not go beyond the evaluation of the sufficiency of the
evidence upon which the labor official's findings rest. 8 As such, factual findings of the NLRC are generally accorded
not only respect but also finality provided that its decision are supported by substantial evidence and devoid of any
taint of unfairness of arbitrariness. 9 When, however, the members of the same labor tribunal are not in accord on those
aspects of a case, as in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency
of the evidence, let alone the conclusions derived therefrom.

In this case, the majority of the members of the NLRC, as well as its dissenting member, agree that there is a wage
distortion arising from the bank's implementation of the P25 wage increase; they do differ, however, on the extent of
the distortion that can warrant the adoption of corrective measures required by law.

The definition of "wage distortion," 10 aforequoted, shows that such distortion can so exist when, as a result of an
increase in the prescribed wage rate, an "elimination or severe contraction of intentional quantitative differences in
wage or salary rates" would occur "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." In mandating an adjustment, the law did not require that there be an elimination or total abrogation of
quantitative wage or salary differences; a severe contraction thereof is enough. As has been aptly observed by Presiding
Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction between personnel groupings comes close
to eighty-three (83%), which cannot, by any stretch of imagination, be considered less than severe.

The "intentional quantitative differences" in wage among employees of the bank has been set by the CBA to about
P900 per month as of 01 January 1989. It is intentional as it has been arrived at through the collective bargaining
process to which the parties are thereby concluded. 11 The Solicitor General, in recommending the grant of due course
to the petition, has correctly emphasized that the intention of the parties, whether the benefits under a collective
bargaining agreement should be equated with those granted by law or not, unless there are compelling reasons
otherwise, must prevail and be given effect. 12

In keeping then with the intendment of the law and the agreement of the parties themselves, along with the often
repeated rule that all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor,
13
we must approximate an acceptable quantitative difference between and among the CBA agreed work levels. We,
however, do not subscribe to the labor arbiter's exacting prescription in correcting the wage distortion. Like the
majority of the members of the NLRC, we are also of the view that giving the employees an across-the-board increase
of P750 may not be conducive to the policy of encouraging "employers to grant wage and allowance increases to their
employees higher than the minimum rates of increases prescribed by statute or administrative regulation," particularly
in this case where both Republic Act 6727 and the CBA allow a credit for voluntary compliance. As the Court, through
Associate Justice Florentino Feliciano, also pointed out in Apex Mining Company, Inc. v. NLRC: 14

. . . . (T)o compel employers simply to add on legislated increases in salaries or allowances without regard to what is
already being paid, would be to penalize employers who grant their workers more than the statutorily prescribed
minimum rates of increases. Clearly, this would be counter-productive so far as securing the interests of labor is
concerned. . . .
We find the formula suggested then by Commissioner Bonto-Perez, which has also been the standard considered by the
regional Tripartite Wages and Productivity Commission for the correction of pay scale structures in cases of wage
distortion, 15 to well be the appropriate measure to balance the respective contentions of the parties in this instance. We
also view it as being just and equitable.

WHEREFORE, finding merit in the instant petition for certiorari, the same is GRANTED DUE PROCESS, the
questioned NLRC decision is hereby SET ASIDE and the decision of the labor arbiter is REINSTATED subject to the
MODIFICATION that the wage distortion in question be corrected in accordance with the formula expressed in the
dissenting opinion of Presiding Commissioner Edna Bonto-Perez. This decision is immediately executory.

SO ORDERED.
 G.R. No. 109902 August 2, 1994
ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE
ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR., LEONIDO
ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, and GERRY I. FETALVERO,
petitioners,vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL CORPORATION (NSC), respondents.
Leonard U. Sawal for petitioners. Saturnino Mejorada for private respondent.
FELICIANO, J.:
In this Petition for Certiorari, petitioners assail the Resolution of the National Labor Relations Commission ("NLRC") dated
8 January 1993 which declared petitioners to be project employees of private respondent National Steel Corporation
("NSC"), and the NLRC's subsequent Resolution of 15 February 1993, denying petitioners' motion for reconsideration.
Petitioners plead that they had been employed by respondent NSC in connection with its Five Year Expansion Program
(FAYEP I & II) 1 for varying lengths of time when they were separated from NSC's service:
Employee Date Nature of Separated/Employed Employment
1. Alan Barinque 5-14-82 Engineer 1 8-31-91 8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91
2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92 9. Russell Gacus 1-30-85 Engineer 1 6-30-92
3. Edgar Bontuyan 11-03-82 Chairman to present 10. Jose Garguena 3-02-81 Warehouseman to present
4. Osias Dandasan 9-21-82 Utilityman 1991 11. Eusebio Mejos 11-17-82 Survey Aide 8-31-91
5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92 12. Bonifacio Mejos 11-17-82 Surv. Party Head 1992
6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91 13. Romeo Sarona 2-26-83 Machine Operator 8-31-91 2
7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized
On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization and monetary benefits
with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.
The complaints were consolidated and after hearing, the Labor Arbiter in a Decision dated 7 June 1991, declared petitioners
"regular project employees who shall continue their employment as such for as long as such [project] activity exists," but entitled
to the salary of a regular employee pursuant to the provisions in the collective bargaining agreement. It also ordered payment of
salary differentials. 3
Both parties appealed to the NLRC from that decision. Petitioners argued that they were regular, not project,
employees. Private respondent, on the other hand, claimed that petitioners are project employees as they were
employed to undertake a specific project NSC's Five Year Expansion Program (FAYEP I & II).
The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It affirmed the Labor Arbiter's holding that
petitioners were project employees since they were hired to perform work in a specific undertaking the Five Years Expansion
Program, the completion of which had been determined at the time of their engagement and which operation was not directly
related to the business of steel manufacturing. The NLRC, however, set aside the award to petitioners of the same benefits enjoyed
by regular employees for lack of legal and factual basis.
Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to show any grave
abuse of discretion or any act without or in excess of jurisdiction on the part of the NLRC in rendering its questioned
resolutions of 8 January 1993 and 15 February 1993.
The law on the matter is Article 280 of the Labor Code which reads in full:
Art. 280. Regular and Casual Employment The provisions of the written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, and employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee
who has rendered at least one year service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall continue while such actually exists.
Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are "necessary, desirable and work-
related to private respondent's main business, steel-making"; and (ii) they have rendered service for six (6) or more
years to private respondent NSC. 4
The basic issue is thus whether or not petitioners are properly characterized as "project employees" rather than "regular employees"
of NSC. This issue relates, of course, to an important consequence: the services of project employees are co-terminous with the
project and may be terminated upon the end or completion of the project for which they were hired. 5 Regular employees, in
contract, are legally entitled to remain in the service of their employer until that service is terminated by one or another of the
recognized modes of termination of service under the Labor Code. 6
It is evidently important to become clear about the meaning and scope of the term "project" in the present context. The
"project" for the carrying out of which "project employees" are hired would ordinarily have some relationship to the usual
business of the employer. Exceptionally, the "project" undertaking might not have an ordinary or normal relationship to the
usual business of the employer. In this latter case, the determination of the scope and parameeters of the "project" becomes
fairly easy. It is unusual (but still conceivable) for a company to undertake a project which has absolutely no relationship to
the usual business of the company; thus, for instance, it would be an unusual steel-making company which would undertake
the breeding and production of fish or the cultivation of vegetables. From the viewpoint, however, of the legal
characterization problem here presented to the Court, there should be no difficulty in designating the employees who are
retained or hired for the purpose of undertaking fish culture or the production of vegetables as "project employees," as
distinguished from ordinary or "regular employees," so long as the duration and scope of the project were determined or
specified at the time of engagement of the "project employees." 7 For, as is evident from the provisions of Article 280 of the
Labor Code, quoted earlier, the principal test for determining whether particular employees are properly characterized as
"project employees" as distinguished from "regular employees," is whether or not the "project employees" were assigned to
carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time the employees
were engaged for that project.
In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2) distinguishable
types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business
of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the
company. Such job or undertaking begins and ends at determined or determinable times. The typical example of this first
type of project is a particular construction job or project of a construction company. A construction company ordinarily
carries out two or more discrete identifiable construction projects: e.g., a twenty-five- storey hotel in Makati; a residential
condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying
out of one of these separate projects, the scope and duration of which has been determined and made known to the
employees at the time of employment, are properly treated as "project employees," and their services may be lawfully
terminated at completion of the project.
The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular business
of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or
regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable
times. The case at bar presents what appears to our mind as a typical example of this kind of "project."
NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in view of expanding the volume
and increasing the kinds of products that it may offer for sale to the public. The Five Year Expansion Program had a number
of component projects: e.g., (a) the setting up of a "Cold Rolling Mill Expansion Project"; (b) the establishment of a "Billet
Steel-Making Plant" (BSP); (c) the acquisition and installation of a "Five Stand TDM"; and (d) the "Cold Mill Peripherals
Project." 8 Instead of contracting out to an outside or independent contractor the tasks of constructing the buildings with
related civil and electrical works that would house the new machinery and equipment, the installation of the newly acquired
mill or plant machinery and equipment and the commissioning of such machinery and equipment, NSC opted to execute and
carry out its Five Yeear Expansion Projects "in house," as it were, by administration. The carrying out of the Five Year
Expansion Program (or more precisely, each of its component projects) constitutes a distinct undertaking identifiable from
the ordinary business and activity of NSC. Each component project, of course, begins and ends at specified times, which had
already been determined by the time petitioners were engaged. We also note that NSC did the work here involved the
construction of buildings and civil and electrical works, installation of machinery and equipment and the commissioning of
such machinery only for itself. Private respondent NSC was not in the business of constructing buildings and installing
plant machinery for the general business community, i.e., for unrelated, third party, corporations. NSC did not hold itself out
to the public as a construction company or as an engineering corporation.
Which ever type of project employment is found in a particular case, a common basic requisite is that the designation of named
employees as "project employees" and their assignment to a specific project, are effected and implemented in good faith, and not
merely as a means of evading otherwise applicable requirements of labor laws.
Thus, the particular component projects embraced in the Five Year Expansion Program, to which petitioners were
assigned, were distinguishable from the regular or ordinary business of NSC which, of course, is the production or
making and marketing of steel products. During the time petitioners rendered services to NSC, their work was limited to one
or another of the specific component projects which made up the FAYEP I and II. There is nothing in the record to show that
petitioners were hired for, or in fact assigned to, other purposes, e.g., for operating or maintaining the old, or previously
installed and commissioned, steel-making machinery and equipment, or for selling the finished steel products.
We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the petitioners were indeed
"project employees:"
It is well established by the facts and evidence on record that herein 13 complainants were hired and engaged for specific activities
or undertaking the period of which has been determined at time of hiring or engagement. It is of public knowledge and which this
Commission can safely take judicial notice that the expansion program (FAYEP) of respondent NSC consist of various phases [of]
project components which are being executed or implemented independently or simultaneously from each other . . .
In other words, the employment of each "project worker" is dependent and co-terminous with the completion or termination
of the specific activity or undertaking [for which] he was hired which has been pre-determined at the time of engagement.
Since, there is no showing that they (13 complainants) were engaged to perform work-related activities to the business of
respondent which is steel-making, there is no logical and legal sense of applying to them the proviso under the second
paragraph of Article 280 of the Labor Code, as amended.
xxx xxx xxx

The present case therefore strictly falls under the definition of "project employees" on paragraph one of Article 280 of the
Labor Code, as amended. Moreover, it has been held that the length of service of a project employee is not the controlling
test of employment tenure but whether or not "the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee".
Petitioners next claim that their service to NSC of more than six (6) years should qualify them as regular employees. We
believe this claim is without legal basis. The simple fact that the employment of petitioners as project employees had gone
beyond one (1) year, does not detract from, or legally dissolve, their status as project employees. 10 The second paragraph of
Article 280 of the Labor Code, quoted above, providing that an employee who has served for at least one (1) year, shall be
considered a regular employee, relates to casual employees, not to project employees.
In the case of Mercado, Sr. vs. National Labor Relations Commission, 11 this Court ruled that the proviso in the second paragraph of
Article 280 relates only to casual employees and is not applicable to those who fall within the definition of said Article's first
paragraph, i.e., project employees. The familiar grammatical rule is that a proviso is to be construed with reference to the
immediately preceding part of the provision to which it is attached, and not to other sections thereof, unless the clear legislative
intent is to restrict or qualify not only the phrase immediately preceding the proviso but also earlier provisions of the statute or
even the statute itself as a whole. No such intent is observable in Article 280 of the Labor Code, which has been quoted earlier.
ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of merit. The Resolutions of the NLRC
dated 8 January 1993 and 15 February 1993 are hereby AFFIRMED. No pronouncement as to costs. SO ORDERED.
 MANILA MANDARIN EMPLOYEES UNION, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, Second Division, and the MANILA MANDARIN HOTEL, respondents.

DECISION
NARVASA, C.J.:
The petitioner in this special civil action of certiorari seeks nullification of the September 11, 1992 Decision of the
Second Division of the National Labor Relations Commission reversing the judgment of the Labor Arbiter in NLRC
NCR Case No. 10-4336-86 and dismissing the case for lack of merit, as well as of the Commissions November 24,
1992 Resolution denying reconsideration of said decision.
On October 30, 1986, the Manila Mandarin Employees Union (hereafter UNION), as exclusive bargaining agent of the
rank-and-file employees of the Manila Mandarin Hotel, Inc. (hereafter MANDARIN), filed with the NLRC Arbitration
Branch a complaint in its members behalf to compel MANDARIN to pay the salary differentials of the individual
employees concerned because of wage distortions in their salary structure allegedly created by the upward revisions of
the minimum wage pursuant to various Presidential Decrees and Wage Orders, and the failure of MANDARIN to
implement the corresponding increases in the basic salary rate of newly-hired employees.
The relevant Presidential Decrees and Wage Orders were specified by the UNION as follows:
a. PD 1389, amending PD 928, mandating an increase in the statutory minimum wage by P3.00 spread out over a period of
three years, as follows: P1.00 starting July 1, 1978; P1.00 starting May 1, 1979; and P1.00 starting May 1, 1980.
b. PD 1614, providing that workers covered by PD 1389, whether agricultural or non-agricultural, should receive an increase
of P2.00 in their statutory minimum wage effective April 1, 1979, the same representing an acceleration of the remaining
increases under PD 1389; and that all non-agricultural workers in Metro Manila shall receive a minimum wage of P12.00;
c. PD 1713, issued on august 18, 1980 providing an increase in the minimum daily wage rates and for additional allowance;
increasing the minimum daily wage rates by P1.00 and providing that all private employers shall pay their employees with
wages or salaries not exceeding P1,500.00 a month, an additional mandatory living allowance of P60.00 a month for non-
agricultural workers, P45.00 for plantation workers and P30.00 a month for agricultural non-plantation workers;
d. PD 1751, issued on December 14, 1980, increasing the statutory daily minimum wages by integrating the P4.00
mandatory allowance under PD 525 and PD 1123 into the basic pay of all covered workers;
e. Wage Order No. 1, issued on March 26, 1981, increasing the mandatory emergency living allowance of all workers
with salaries or wages of P1,500.00 a month by P2.00 a day for non-agricultural workers, P1.50 a day for agricultural
plantation workers, P1.00 a day for agricultural non-plantation workers, effective March 22, 1981;
f. Wage Order No. 2 issued on July 6, 1983 increasing the mandatory basic minimum wage and living allowance for
non-agricultural and agricultural workers in the following manner:
1) For non-agricultural employees, receiving not more than P1,800.00 monthly, P1.00 a day as minimum wage and
P1.50 a day as cost of living allowance;
2) For plantation agricultural employees, P1.00 a day as minimum wage and P0.50 a day as cost of living allowance
subject to the same salary ceiling provided in the immediately preceding section; and
3) For non-plantation agricultural employees, P1.00 a day as minimum wage; and
also, providing that effective October 1, 1983, the living allowances rates as adjusted in the preceding section shall be
further increased subject to the same salary ceiling, for non-agricultural employees, by P1.00.
g. Wage Order No. 3 issued November 7, 1983 increasing the statutory minimum wage rates for workers in the private
sector by P1.00 per day effective November 1, 1983, and also increasing the statutory wage rates by P1.00 per day,
effective December 1, 1983;
h. Wage Order No. 4 issued on May 1, 1984 increasing the statutory daily minimum wages, after integrating the
mandatory living allowance under PDs 1614, 1634, 1678 and 1713 into the basic pay of all covered employees,
effective May 1, 1984; -- after the integration, the minimum daily wage rate was increased by P11.00 for non-
agricultural workers.
i. Wage Order No. 5 issued on June 11, 1984 increasing the statutory daily minimum wage rates and living allowances
of workers in the private sector by P3.00 effective June 16, 1984 -- the minimum daily wage rates became P35.00 for
Metro Manila and P34.00 for outside Metro Manila; and
j. Wage Order No. 6, effective November 1, 1984, increasing the statutory minimum wage rate by P2.00 per day.
On January 15, 1987, the UNION filed its Position Paper amplifying the allegations of its complaint and setting forth
the legal bases of its demands against MANDARIN; and on March 25, 1987, it filed an Amended Complaint presenting
an additional claim for payment of salary differentials to the union members affected, allegedly resulting from
underpayment of wages.
The Labor Arbiter eventually ruled in favor of the UNION, holding that there were in fact wage distortions entitling its
members to salary adjustments totalling P26,173,601.25 -- for 541 employees -- as well as underpayments amounting
to P1,978,296.18 -- 182 employees. The dispositive portion of his decision reads:
WHEREFORE, judgment is hereby rendered ordering the respondent Hotel to pay the individual complainants who are
members of the respondent Union whose names appear on the respective computations embodied in this Decision, the
aggregate amount of P26,173,601.25 representing their salary adjustments by way of correcting the wage distortions in
their respective salary structure, for the period from October 30, 1983 up to October 31, 1990, and continuously
thereafter to pay the corresponding amounts due them as such salary adjustments until the same are properly and
finally restored in their basic monthly rates; to pay the aggregate amount of P1,978,296.18 representing their salary
differentials resulting from underpayment of wages in violation of the minimum wage laws, Presidential Decrees and Wage
Orders for the period from March 25, 1984 up to October 31, 1990, and continuously thereafter to pay the corresponding
amounts due them as such salary differentials until the same are properly and finally restored into their basic monthly rates.
Likewise, the respondent Hotel is ordered to pay an amount equivalent to ten percent (10%) of the total awards granted
to individual complainants, by way of and as attorneys fees.
On appeal, the Second Division of respondent Commission (composed of Commissioner Domingo H. Zapanta,
ponente, and Presiding Commissioner Edna Bonto-Perez) rendered the dispositions already referred to and now
assailed -- setting aside the Labor Arbiters judgment and dismissing the UNIONs complainant, and later denying the
UNIONs motion for reconsideration.
The principal issues raised in this Court are: (1) Whether or not the NLRC had jurisdiction to take cognizance of
MANDARINS appeal from the Labor Arbiters decision; and (2) if so, whether or not it gravely abused its discretion in
setting aside the Labor Arbiters judgment and dismissing the UNIONS complaint.
The issue of jurisdiction is grounded on the posited tardiness of private respondents appeal from the Labor Arbiters
judgment to the NLRC, and fatal defect in their supersedeas bond.
The UNION contends that the records indubitably show that MANDARIN received on January 22, 1991 its copy of
the Labor Arbiters Decision (of January 15, 1991), but filed its appeal and paid the appeal fee only on February 4,
1991, three (3) days beyond the reglementary ten-day period for doing so. It also condemns as anomalous the
certification of Deputy Executive Clerk Gaudencio P. Demaisip, Jr., NLRC, to the effect that MANDARINs lawyer had
approached Hon. Domingo H. Zapanta, a member of the Second Division, NLRC, for assistance to have the appeal
including the appeal fee in said case duly received and acknowledged on February 1, 1991, at 4:40 P.M; and claims
that the anomally was aggravated when it was Commissioner Zapanta who wrote the Decision for the Second Division
--
reversing the Labor Arbiters judgment, as aforesaid -- despite the UNIONS motion for his disqualification and/or
inhibition. The UNION finally argues that MANDARINS appeal was not only tardy but also fatally flawed in that its
supersedeas bond had been issued by a surety company -- Plaridel Surety & Insurance Company -- which had pending
obligations and liabilities at the time, the Insurance Commissioner having in fact issued a Cease-and-Desist Order
against said company for issuing bonds of no little magnitude without authority; and that moreover, the replacement
bond of the Commonwealth Insurance Company -- subsequently filed by order of the NLRC -- was just as defective
because the latter company had an authorized maximum net retention level in the amount of only P686,582.80, way
below the monetary award subject of MANDARINS appeal to the Commission.
The Court rules that respondent Commission acted correctly in accepting and acting on MANDARINs appeal. The
circumstances attendant upon the filing of the appeal and supersedeas bond are clearly set forth in the Certification of
Deputy Executive Clerk Demaisip, Jr. above mentioned, viz.:
This is to certify that when Atty. Godofredo Labay filed the appeal in NLRC NCR Case No. 10-4335-86 entitled
Manila Mandarin Employees Union vs. Manila Mandarin on Friday, February 1, 1991, the Cashier and the Docket
Section, NCR, were not around, that no one would receive the pleadings and the appeal fee. He therefore approached
Commissioner Domingo H. Zapanta for assistance and to have the appeal including the appeal bond in said case duly
received on February 1, 1991 at 4:50 p.m. with respect to the appeal fee, since no one was authorized to act as
substitute for the Cashier of the NCR for purposes of receiving the appeal fee and issuing a temporary receipt and/or
official receipt therefor, Commissioner Zapanta requested Atty. Gaudencio P. Demaisip, Jr. to receive said pleadings
and allowed Atty. Labay to pay the appeal fee on Monday, February 4, 1991.
This certification is issued upon request of Atty. Labay for whatever purpose it may serve him.
(SGD.) GAUDENCIO P. DEMAISIP, JR.
Deputy Executive Clerk
Second Division
MANDARIN cannot be faulted for paying the appeal fee only on February 4, 1991. The fact is that on February 1,
1991, its lawyer was in the NLRC premises, ready to pay said fee, but was unable to do so because the NLRC Cashier
or any other employee authorized to receive payment in his stead, was no longer around. This is why Commissioner
Zapanta allowed payment of the appeal fee to be made on the next business day, as in fact the appeal fee was paid on,
February 4, 1991. This Court has ruled that the failure to pay the appeal docketing fee within the reglementary period
confers a directory, not mandatory, power to dismiss an appeal, to be exercised with circumspection in light of all the
relevant facts. In view of these considerations, and the meritoriousness of MANDARINs appeal -- as later pronounced
by respondent NLRC -- the interest of justice was quite evidently served when MANDARINs appeal was given due
course despite delayed payment of the docketing fee.
The contention concerning MANDARINs ostensibly defective appeal bond, issued by Plaridel Surety and Insurance
Company, deserves short shrift, too. The issuance of the bond antedated this Courts resolution of January 15, 1992 -- to
which the attention of respondent NLRC had been invited by the UNION -- declaring said surety company to be of
doubtful solvency. More important, the issue was mooted when MANDARIN posted a new surety bond, through
Commonwealth Insurance Company, in compliance with the Order of the respondent Commission dated December 10,
1991. The UNIONs contention that this new bond was equally defective because the bonding company had an
authorized maximum net retention level lower than the sum of P30,967,087.17 involved in this dispute, is
inconsequential, the new bonding company being duly accredited by this Court and licensed by the Insurance
Commission.
At any rate, this Court has invariably ruled that Article 223 of the Labor Code, requiring a bond in appeals involving
monetary awards, must be liberally construed, in line with the desired objective of resolving controversies on their merits.
The circumstance under which the bond was filed in this case adequately justify such liberal application of the provision.
As to the alleged partiality of Commissioner Domingo Zapanta, the Court finds that his intervention on February 1,
1991 in the matter of payment of the appeal docketing fee did not, in the circumstances already related, constitute
impropriety or pre-judgment of the case and a ground for his disqualification as a member of the Second Division to
which the case was thereafter raffled. Significantly, in its motion to inhibit, the UNION mentioned that the case was
assigned particularly to the late Commissioner Rustico Diokno ** (but) that upon the latters demise, the case was
reassigned to Commissioner Domingo Zapanta as the new ponente.[if !supportFootnotes][8][endif] As Commissioner Zapanta had
always been a member of the Second Division, the UNIONs motion for his inhibition, filed more than a year after the
occurrence of the incident on which it was based, becomes suspect as a mere afterthought. In any case, Commissioner
Zapanta did inhibit himself from taking part in the resolution of the UNIONS motion for reconsideration of the assailed
decision of September 11, 1992, thus dispelling what doubts might linger about his impartiality.
Coming now to the issue of wage distortion, prior to the effectivity on June 9, 1989 of Republic Act No. 6727 which,
among others, amended Article 124 (Standards/Criteria for Minimum Wage Fixing) of the Labor Code, the concept to
wage distortion was relatively obscure. So it was observed by this Court in National Federation of Labor vs. NLRC, a
case involving the same subject Wage Orders:
We note that neither the Wage Orders noted above, nor the Implementing Rules promulgated by the Department of
Labor and Employment, set forth a clear and specific notion of wage distortion. What the Wage Orders and the
Implementing Rules did was simply to recognize that implementation of the Wage Orders could result in a distortion of
the wage structure of an employer, and to direct the employer and the union to negotiate with each other to correct the
distortion. 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 of
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 arising from wage distortions 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. (Underscoring supplied)
It is therefore opportune to re-state the general principles enunciated in that case, summarized in Metro Transit
Organization, Inc. vs. NLRC, et al. as follows:
(a) 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.
(b) Wage distortions have often been the result of government-decreed increases in minimum wages. There are,
however, other causes of wage distortions, like the merger of two (2) companies (with differing classification of
employees and different wage rates) where the surviving company absorbs all the employees of the dissolved
corporation. (In the present Metro case, as already noted, the wage distortion arose because the effectivity dates of
wage increases given to each of the two (2) classes of employees (rank-in-file and supervisory) had not been
synchronized in their respective CBAs.)
(c) Should a wage distortion exist, there is no legal requirement that, in the rectification of that distortion by re-
adjustment of the wage rates of the differing classes of employees, the gap which had previously or historically existed
be restored in precisely the same amount. In other words, correction of a wage distortion may be done by re-
establishing a substantial or significant gap (as distinguished from the historical gap) between the wage rates of the
differing classes of employees.
(d) The re-establishment of a significant difference in wage rates may be the result of resort to grievance procedures or
collective bargaining negotiations.

It was only on June 9, 1989, upon the enactment of R.A. No. 6727 (Wage Rationalization Act, amending, among
others, Article 124 of the Labor Code), that the term wage distortion came to be 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.

The same provision lays down the procedure to be followed where wage distortion arises from the implementation of a
wage increase prescribed by law or ordered by a Regional Wage Board, viz.:
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. 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 therefrom 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 pusurant to the provisions of law or Wage Order.
The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain
employees, is a question of fact; and as a rule, factual findings in labor cases, where grounded on substantial evidence,
are not reviewed. However, a disharmony such as exists here, between the factual findings of the Labor Arbiter and
those of the NLRC, opens the door to a review thereof by this Court. [if
The Labor Arbiter ruled that a wage distortion existed, and that the only and logical way to correct ** (it) in the salary
structure of the employees of respondent Hotel is to apply the corresponding increase made by way of revising upward
the minimum wage or integration of the ECOLA into the basic wage as embodied in the various Presidential Decrees
and Wage Orders, across-the-board, so that employees whose salaries are above the minimum set by law who have
already been long in the service will not be discriminated against. [if !supportFootnotes][15][endif]
On the other hand, respondent Commission declared in its decision [ that there was no wage distortion arising from the
implementation of said Presidential Decrees and Wage Orders such as warranted across-the-board increases to all employees:
On the issue of wage distortion, we have examined the various presidential decrees and wage orders referred to by the
complainant and in the Labor Arbiters decision and we found nothing therein that would justify the award of across-
the-board increases to all employees. The apparent intention of the law is only to upgrade the salaries or wages of the
employees receiving lower than the minimum daily wage set therein. For example, Section 1 of Wage Order No. 6
provides that effective November 1, 1984, the statutory minimum daily wage rates workers in the private sector shall
be increased by P2.00. Also, Section 1 of Presidential Decree 1389 provides that Presidential Decree 928 is hereby
amended by increasing all existing statutory minimum wages in the country by Three Pesos ( P3.00) spread equally
over a period of three years, as follows: 1)One Peso (P1.00) starting July 1, 1978; 2)One Peso(P1.00) starting May 1,
1979; and One Peso (P1.00) starting May 1, 1980. Thus, it is clear that the presidential decrees and wage orders merely
provide for a floor wage to be observed by the employers in the private sector.
It indeed appears that the clear mandate of those issuances was merely to increase the prevailing minimum wages of
particular employee groups. There were no across-the-board increases to all employees; increases were required only
as regards those specified therein. It was therefore incorrect for the UNION to claim that all its members became
automatically entitled to across-the-board increases upon the effectivity of the Decrees and Wage Orders in question.
And even if there were wage distortions, which is not the case here, the appropriate remedy thereunder prescribed is for the
employer and the union to negotiate to correct them; or, if the dispute be not thereby resolved, to thresh out the controversy
through the grievance procedure in the collective bargaining agreement, or through conciliation or arbitration.
A review of the records convinces this Court that respondent NLRC committed no grave abuse of discretion in holding
that no wage distortion was demonstrated by the UNION. It was, to be sure, incumbent on the UNION to prove by
substantial evidence its assertion of the existence of a wage distortion. This it failed to do. It presented no such evidence
to establish, as required by the law, what, if any, were the designed quantitative differences in wage or salary rates between
employee groups, and if there were any severe contractions or elimination of these quantitative differences.
The UNIONs effort to prove wage distortion consisted only of the presentation of an unverified list of thirteen (13)
employees denominated a Sample Comparison of Salary Rates Affected by Wage Distortion, viz.:
SAMPLE COMPARISON OF SALARY RATES OF COMPLAINANTS AFFECTED BY WAGE DISTORTION
F & B DEPT.
Name Position Date Hired Basic Rate (12/30/85)
1. Pablo Trinidad -- Waiter -- 9/1/78 P1,300 4. Renato Solomon -- Busboy -- 7/19/84 P1,096
2. Eduardo Vito -- Waiter -- 10/16/80 P1,375 5. Buenconsejo Monico -- Busboy -- 4/15/85 P 968
3. Camilo Sanchez -- Busboy -- 8/1/83 P 954
HOUSEKEEPING DEPT.
1. Ruben A. Rillo -- Linen Uniform Att. -- 6/19/76 P 984 5. David Pineda -- Cloakroom Attn. -- 9/14/81 P1,194
2. Hubert Malolot -- Linen Uniform Att. -- 1/16/80 P1,238 6. Nemesio Matro -- Houseman Attn. -- 6/10/76 P1,142
3. Aurella Kilat -- Linen Uniform Att. -- 5/2/79 P1,272 7. Domgo Sabando -- Houseman Attn. -- 3/8/82 P1,194
4. Rogelio Molaco -- Cloakroom Attn. -- 9/1/80 P 946
8. Renato Guina -- Houseman Attn. -- 8/24/81 P1,194
SUBMITTED:
(SGD.) ATTY. R. E. ESPINOSA
9/17/87.

The UNIONs Internal Vice-President, Arnulfo Castro, deposed that the employees named in this list were the more or
less (13) persons found to have suffered wage distortion, [if !supportFootnotes][19][endif] and the UNION pointed out that while
these thirteen employees occupied similar positions, they were receiving different rates of salary.
Respondent Commission however found that as explained by respondents, such disparity was due simply to the fact
that the employees mentioned had been hired on different dates and were thus receiving different salaries; or that an
employee was hired initially at a position level carrying a hiring rate than the others; or that an employee failed to meet
the cut-off date in the grant of yearly CBA increase; or that the union did not get the correct data on salaries. The
Commission accepted as more accurate the data presented by MANDARIN respecting the same employees, to wit: [if
ANNEX2
F & B Dept. NAME Position Date Hired Basic Rate per Hotel Records as of 12/30/85
1. Pablo Trinidad Waiter 09/01/78 P1,302.00* 4. Renato Solomon Busboy 07/19/84 1,096.00
2. Eduardo Vito Waiter 10/16/80 1,375.00* 5. Buenconsejo Monico Busboy 14/15/85 968.00
3. Camilo Sanchez Busboy 08/01/83 1,194.00
Housekeeping Dept.
1. Ruben A. Rillo Linen Uniform Att. 06/19/76 1,417.00 5. David Pineda Cloakroom Attn. 09/14/81 1,213.00
2. Hubert Malolot Linen Uniform Att. 01/16/80 1.238.00 6. Nemesio Matro Houseman Attn. 06/10/77 1,342.00
3. Aurella Kilat Linen Uniform Att. 05/02/79 1,272.00 7. Domingo Sabando Houseman Attn. 03/08/82 1,194.00
4. Rogelio Molaco Cloakroom Attn. 09/01/80 1,272.00 8. Renato Guina Houseman Attn. 08/24/81 1,194.00
* Vito was hired at a higher position with a higher hiring rate than that given to Trinidad, i.e. Vito was hired at
P366/mo. While Trinidad at P301/mo. Prior to hiring, Vito already worked as a waiter at the Metropolitan Club.
The Court agrees that the claimed wage distortion was actually a result of the UNIONS failure to appreciate various
circumstances relating to the employment of the thirteen employees. For instance, while some of these employees
mentioned by UNION Vice-President Arnulfo Castro occupied the same or similar positions, they were hired by the
Hotel on different dates and at different salaries. As explained in part by MANDARIN:
With respect to the case of Pablo Trinidad and Eduardo Vito, while they were both occupying the position of waiter in
1987, with monthly salaries of P2,044.00 and P2,217.00, respectively, a comparative study of the records of these
employees shows one of them was initially hired at a higher position level which naturally carried a higher hiring rate.
Trinidad was originally hired in 1978 as a mere Houseman at the Banquet Department with a basic starting rate of
P301.00 a month. On the other hand, Vito was originally hired in 1980 already a Busboy at the Food and Beverage
Department with a starting salary of P366.00 a month. Before he was hired at the Mandarin Hotel, Vito had already
been working as Waiter at the Metropolitan Club. Rrecords also show that it was only after some time that Trinidad
was promoted to Busboy but still with the smaller Banquet Department. The headway in rate was carried by Vito
although at some point in their careers, these two employees achieved the same position as Waiter. Not long after, Vito
was promoted to Captain Waiter while Trinidad remained Waiter. There is therefore no reason to compare the
remuneration of these two employees as the circumstances attendant to their employment are different.
Respondent Commission correctly concluded that these did not represent cases of wage distortion contemplated by the
law (Article 124, Labor Code, as amended), i.e., 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
employees groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure
based on skills, length of service, or other logical basis of differentation.
Moreover, even assuming arguendo that there was really a wage distortion, it was wrong for the Labor Arbiter, after first
acknowledging that some of the money claims had prescribed under Article 291 of the Labor Code, nevertheless order the
computation of salary differentials retroactive to the effective dates of PDs 1389,1614,1713, 1751 and Wage Orders Nos.
2,3,4,5,and 6: in 1978, 1979, 1980, 1980, July 1983, November 1983, May 1984, June 1981 and November 1984,
respectively. Clearly, five of these Decrees and Wage Orders took effect after the lapse of the three-year prescriptive period
for litigating claims for wage distortion differentials, the original complaint for wage distortion having been filed on October
30, 1986 and the amended complaint for underpayment of wages, on March 25, 1987. Consequently, the applicable cut-off
dates, for purposes of prescription, were October 30, 1983 and March 25, 1984, respectively.
Finally, the records show that the matter of wage distortion, actual or imputed under the various issuances up to Wage
Order No. 6, had been settled by the parties as early as July 30, 1985. On that day they executed a Compromise
Agreement with the assistance of the then Regional Director of the National Capital Region, Severo M. Pucan in which
they affirmed that with the implementation by MANDARIN of Wage Order Nos. 4 and 6 as well as P.D. 1634, the
latter was deemed for all legal and purposes to have fully satisfied all its legal and contractual obligations to its
employees under all presidential issuances on wages,
The Compromise Agreement pertinently states:
1. That the respondent shall implement Wage Order No. 6 effective July 1, 1985, without prejudice to the outcome of
the application for exemption as distressed employer filed by said respodent with the National Wage Council as regards
benefits that might be due between November 1, 1985 and June 30, inclusive;
2. The the respondent shall also implement effective August 1, 1985 the integration of the P90.00 a month cost of
living allowance under P.D. 1634 into the basic wages of its employees as called for under Wage Order No. 4 in
accordance with the Guidelines contained in the Explanatory Bulletin issued by the Bureau of Working Conditions on
August 8, 1985;
3. That as soon as the respondent shall have complied with the above terms of this Compromise Agreement, said
respondent shall be deemed for all legal intents and puposes to have fully satisfied all the legal and contractual
obligations to its employees under all presidential issuances on wages, including Wage Orders No. 4 and 6, and Article
XI of the collective bargaining agreement,
The Labor Code recognizes the conclusiveness of compromises as a means to settle and end labor disputes. Article 227
provides that (a)ny compromise settlement, including those involving labor standard laws, voluntary agreed upon by
the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and
binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over
issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement
was obtained through fraud, misrepresentation or coercion. In Olaybar vs. NLRC,[if !supportFootnotes][24][endif] this Court had
occasion, in a labor dispute, to apply the rule that compromises and settlements have the effect and conclusiveness of
res judicata upon the parties.
Thus, and again assuming arguendo the existence of a wage distortion, this was corrected under the fully implemented Compromise
Agreement; and such correction having been explicitly acknowledge by the UNION, it is now estopped from claiming that a distortion
still subsists. In the same manner, when the UNION entered into a new collective agreement with MANDARIN, providing for wage
increases in 1987, it is deemed to have thereby settled any remaining question of wage distortion, since the subject of wages and wage
distortions were plainly and unavoidably an economic issue and the proper subject of collective bargaining. .
Neither did respondent Commission gravely abuse its discretion in ruling against the UNION on the issue of
underpayment of wages.

The UNIONs theory was that since the employees of MANDARIN are paid on a monthly basis under the Group III
category, the applicable increase in daily wage must be multiplied by 365 and then divided by 12 to determine the
equivalent monthly rate. MANDARINs position, on the other hand, was that it had consistently been using the
multiplier 313, and not 365, for the purpose of deriving salary related benefits of its employees who are paid by the
month, excluding from 365, the 52 unpaid rest days in a year. This appears to have been the consistent practice of
MANDARIN, following the formula for daily paid employees under Group II category as prepared by the Bureau of
Labor Standards:
AR x 313 days = EMR
____________
12
Where: 313 days = 303 actual working days a year plus the paid 10 unworked regular holidays.
Actual working days . 303 10 legal holidays 10
_____
Total No. of Days 313.
MANDARIN presented evidence of its practice regarding the use of the factor 313 in computing the monthly
equivalent of the minimum daily wages and other related benefits of its employees; i.e., Annexes 3 and 4 of its
Supplemental Appeal dated November 12, 1991. This was corroborated by the UNIONs Internal Vice President,
Arnulfo Castro, who admitted during cross-examination that in his research and study, he found that the divisor used in
arriving at the daily rate of the hotel employees was 313 days, which meant that the days-off or rest days are not paid. [if
The admission confirms that the hotel employees pertain to Group II category under the Bureau of Labor Standards
Guidelines for computing the equivalent monthly minimum wage rates. Thus, instead of multiplying the applicable
minimum daily wage by 365 and dividing the result by 12 to derive the applicable minimum monthly salary, the factor
used is 313, composed of 303 actual working days and the 10 unworked but paid regular holidays in a year.

In his explanatory Bulletin on the payment of Holiday Pay -- Ref. No. 85-08 dated 6 November 1985 -- then Secretary
Augusto Sanchez of the Department of Labor and Employment, expatiating on the implications of the Chartered Bank
case, stated:
6. Monthly Paid Employees
Oftentime confusion arises from the different interpretations as to who is a monthly-paid employee. A monthly-paid
employee is one whose monthly salary includes payments for everyday of the month although he does not regularly
work on his rest days or Sundays and on regular and special holidays. Group III in the above illustration covers
monthly paid employees. Employees falling under Group I, II and IV are in reality daily paid employees but whose
daily rate is translated into its monthly equivalent. The fact, therefore, that an employee is regularly paid a fixed
monthly rate does not necessarily mean that he is a monthly-paid employee as defined above. (Italics supplied)

As applied to the UNION, the monthly equivalent of the minimum wage under the various Presidential Decrees and
Wage Orders based on the above formula should be as follows:
PD/WO NO. Effectivity Minimum Daily Equivalent
Wage Rate Monthly Rate
PD 1389 01 July 1978 P 11.00 P 286.96 WO # 2 06 July 1983 19.00 495.58 WO # 5 01 Nov. 1984 35.00 912.92
PD 1614 1 March 1979 13.00 339.00 WO # 3 01 Nov. 1983 20.00 521.67 WO # 6 01 Nov. 1984 37.00 965.08
PD 1813 18 Aug. 1980 14.00 365.17 WO # 4 01 May 1984 32.00 834.67

On the other hand, the monthly pay of the Hotel employees and their hiring rate may be illustrated as follows:
PD/WO NO. Effectivity Equivalent Lowest Salary
Monthly Rate in the Hotel
PD 1389 01 July 1978 P 286.92 P 350.00 WO # 2 06 July 1983 495.58 960.00 WO # 5 16 May 1984 912.92 960.00
PD 1614 01 March 1979 339.08 411.00 WO # 3 01 Nov. 1983 521.67 960.00 WO # 6 01 Nov. 1984 965.08 1,015.00.
PD 1813 18 Aug. 1980 365.17 562.00 WO # 4 01 May 1984 834.67 960.00
A comparative analysis of the wages of the Hotels employees from 1978 to 1984 vis a vis the minimum wages fixed by
law for the same period reveals that at no time during the said period was there any underpayment of wages by the
respondent Hotel. On the contrary, the prevailing monthly salaries of the subject hotel employees appear to be and
above the minimum amounts required under the applicable Presidential Decrees and Wage Orders.

WHEREFORE, the assailed Decision of respondent Commission promulgated on September 11, 1992 --
reversing the judgment of the Labor Arbiter and dismissing the UNIONS complaint - - being based on substantial
evidence and in accord with applicable laws and jurisprudence, as well as said Commissions Resolution dated
November 24, 1992 -- denying reconsideration -- are hereby AFFIRMED in toto.

SO ORDERED.
 MANILA MANDARIN EMPLOYEES UNION VS NLRC
GRN 108556 NOVEMBER 19, 1996

FACTS:
The union filed with the NLRC arbitration branch a complaint on wage distortion. The labor arbiter ruled in favor of
the Union while the NRLC Commissioner Zapanta reversed the same. The Union contends that the Mandarin Hotel
filed its appeal three days beyond the reglamentary period.

ISSUES:
Whether or not NLRC acquired jurisdiction to take cognizance of Mandarins appeal from Labor Arbiter.

RULING:
The Court ruled that the Commission acted correctly in accepting and acting on Mandarins appeal. The employee who
was authorized to receive payment was not around so the respondent was allowed to pay docketing fee on the next
business day which was February 4, 1991. In view of the considerations and in the interest of justice was quite served
when Mandarins appeal was given due course despite delayed payment of fees. . . the reglamentary period confers a
directory, not a mandatory, power to dismiss an appeal