PLASTIC TOWN CENTER CORPORATION vs
NLRC
Work: Not stated
Employer: PLASTIC TOWN CENTER
CORPORATION
Complainant: Nagkakaisang Lakas ng
Manggagawa (NLM)-Katipunan
An issue in this petition is the interpretation of
certain provisions of the Collective Bargaining
Agreement (CBA) between Plastic Town Center
Corporation and the respondent union.
Facts:
On September 7,1984, the respondent
Nagkakaisang Lakas ng Manggagawa (NLM)-
Katipunan filed a complaint dated August 30,
1984 charging the petitioner with:
a. Violation of Wage Order No. 5, by crediting the
Pl.00 per day increase in the CBA as part of the
compliance with said Wage Order No. 5, and y
instead of thirty (30) days equivalent to one (1)
month as gratuity pay to resigning employees. (p.
3, Rollo)
b. Unfair labor practice thru violation of the CBA
by giving only twenty-six (26) days pay instead of
thirty (30) days equivalent to one (1) month as
gratuity pay to resigning employees.
Petitioner’ contention:
The petitioner maintains that under the principle
of "fair day's wage for fair day's labor", gratuity
pay should be computed on the basis of 26 days
for one month salary considering that the
employees are daily paid.
ISSUE: WON gratuity pay should be computed
on the basis of 26 days for one month salary
considering that the employees are daily paid.
RULING: (based on book of Azucena) Salary
Distinguised from gratuity.
NO.
We find no abuse of discretion on the part of the
NLRC in granting gratuity pay equivalent to one
month or 30 days salary .
We quote with favor the NLRC decision which
states:
xxx xxx xxx
... To say that awarding the daily
wage earner salary for more than
26 days is paying him for days he
does not work misses the point
entirely. The issue here is not
payment for days worked but
payment of gratuity pay
equivalent to one month or 30
days salary.
Looking into the definition of gratuity, we find the
following in Moreno's Philippine Law Dictionary,
to wit:
Something given freely, or without
recompense; a gift; something voluntarily
given in return for a favor or services; a
bounty; a tip.
That paid to the beneficiary for past
services rendered purely out of the
generosity of the giver or grantor.
Salary or compensation. The very term
'gratuity' differs from the words 'salary' or
'compensation' in leaving the amount
thereof, within the limits of reason, to the
arvitrament of the giver
From the foregoing, gratuity pay is therefore, not
intended to pay a worker for actual services
rendered. It is a money benefit given to the
workers whose purpose is "to reward employees
or laborers, who have rendered satisfactory and
efficient service to the company." (Sec. 2, CBA)
While it may be enforced once it forms part of a
contractual undertaking, the grant of such benefit
is not mandatory so as to be considered a part of
labor standard law unlike the salary, cost of living
allowances, holiday pay, leave benefits, etc.,
which are covered by the Labor Code. Nowhere
has it ever been stated that gratuity pay should
be based on the actual number of days worked
over the period of years forming its basis. We see
no point in counting the number of days worked
over a ten-year period to determine the meaning
of "two and one- half months' gratuity." Moreover
any doubts or ambiguity in the contract between
management and the union members should be
resolved in the light of Article 1702 of the Civil
Code that:

In case of doubt, all labor legislation and

all labor contracts shall be construed in
favor of the safety and decent living for
the laborer.

In view of the foregoing, the public respondent did

not act with grave abuse of discretion when it
rendered the assailed decision which is in
accordance with law and jurisprudence.

Lambo vs NLRC
Work: Tailor
Employer: J.C. TAILOR SHOP and/or JOHNNY
CO
Facts:
Petitioners Avelino Lambo and Vicente
Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co
on September 10, 1985 and March 3, 1985,
respectively. They worked from 8:00 a.m. to 7:00
p.m. daily, including Sundays and holidays. As in
the case of the other 100 employees of private
respondents, petitioners were paid on a piece-
work basis, according to the style of suits they
made. Regardless of the number of pieces they
finished in a day, they were each given a daily
pay of at least P64.00.
On January 17, 1989, petitioners filed a
complaint against private respondents for illegal
dismissal and sought recovery of overtime pay,
holiday pay, premium pay on holiday and rest
day, service incentive leave pay, separation pay,
13th month pay, and attorneys fees.
On appeal by private respondents, the NLRC
reversed the decision of the Labor Arbiter. It
found that petitioners had not been dismissed
from employment but merely threatened with a
closure of the business if they insisted on their
demand for a straight payment of their minimum
wage, after petitioners, on January 17, 1989,
walked out of a meeting with private respondents
and other employees. According to the NLRC,
during that meeting, the employees voted to
maintain the company policy of paying them
according to the volume of work finished at the
rate of P18.00 per dozen of tailored clothing
materials. Only petitioners allegedly insisted that
they be paid the minimum wage and other
benefits. The NLRC held petitioners guilty of
abandonment of work and accordingly dismissed
their claims except that for 13th month pay.
Petitioners allege that they were dismissed by
private respondents as they were about to file a
petition with the Department of Labor and
Employment (DOLE) for the payment of benefits
such as Social Security System (SSS) coverage,
sick leave and vacation leave. They deny that
they abandoned their work.
ISSUE: Whether or not petitioners should be
awarded for overtime pay, holiday pay and 13th
month although paid on a piece-rate basis.
RULING: YES
There is no dispute that petitioners were
employees of private respondents although they
were paid not on the basis of time spent on the
job but according to the quantity and the quality
of work produced by them. There are two
categories of employees paid by results: (1)
those whose time and performance
are supervised by the employer. (Here, there is
an element of control and supervision over the
manner as to how the work is to be performed. A
piece-rate worker belongs to this category
especially if he performs his work in the company
premises.); and (2) those whose time and
performance are unsupervised. (Here, the
employers control is over the result of the
work. Workers on pakyao and takay basis
belong to this group.) Both classes of workers are
paid per unit accomplished. Piece-rate payment
is generally practiced in garment factories where
work is done in the company premises, while
payment on pakyao and takay basis is commonly
observed in the agricultural industry, such as in
sugar plantations where the work is performed in
bulk or in volumes difficult to
quantify.[4] Petitioners belong to the first
category, i.e., supervised employees.
In determining the existence of an employer-
employee relationship, the following elements
must be considered: (1) the selection and
engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the
power to control the employees conduct.[5] Of
these elements, the most important criterion is
whether the employer controls or has reserved
the right to control the employee not only as to the
result of the work but also as to the means and
methods by which the result is to be
accomplished.[6]
In this case, private respondents exercised
control over the work of petitioners. As tailors,
petitioners worked in the companys premises
from 8:00 a.m. to 7:00 p.m. daily, including
Sundays and holidays. The mere fact that they
were paid on a piece-rate basis does not negate
their status as regular employees of private
respondents. The term wage is broadly defined in
Art. 97 of the Labor Code as remuneration or
earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time,
task, piece or commission basis. Payment by the
piece is just a method of compensation and does
not define the essence of the relations.[7] Nor
does the fact that petitioners are not covered by
the SSS affect the employer-employee
relationship.
Indeed, the following factors show that
petitioners, although piece-rate workers, were
regular employees of private respondents: (1)
within the contemplation of Art. 280 of the Labor
Code, their work as tailors was necessary or
desirable in the usual business of private
respondents, which is engaged in the tailoring
business; (2) petitioners worked for private
respondents throughout the year, their
employment not being dependent on a specific
project or season; and, (3) petitioners worked for
private respondents for more than one year.
Lexal Laboratories vs National Chemical
Industries Workers Union and The CIR
Facts:
The Court of Industrial Relations(CIR)
ordered petitioner (Lexal Laboratories) to
reinstate Guillermo Ponseca, a dismissed
employee to his former position “with full back
wages from the day of his dismissal up to the time
he is actually reinstated without loss of his rights
and of such other rights and privileges enjoyed by
him prior to his lay-off”.
The CIR ruled that Ponesca was entitled
to back wages from Nov. 5, 1958 when he ceased
reporting for work, to Nov. 24, 1963 a day prior to
his reinstatement on Nov. 25, 1963.
officers and employees when the latter are on
duty outside of their permanent station. Ponesca
during the period involved did not leave Manila.
Therefore, he spent nothing for meals and
lodging outside of Manila. Because he spent
nothing, there is nothing to be reimbursed. Since
per diems are in the nature of reimbursement,
Ponesca should not be entitled to per diems.
Besides back wages are what an
employee has lost “in the way of wages” due to
his dismissal. So that, because Ponesca earned
P4.50 a day, “then that is the amount which he
lost daily by reason of his dismissal, nothing more
nothing less”

If Ponesca is in Manila, he was to earn P

4.50 a day, and during the periods when he
should have been in the provinces, P4.50 a day
plus per diem of P4.00 or a total of P8.50 daily.

Petitioner objected to the inclusion of the

P4.00 per diem in the computation of Ponesca’s
back wages because the latter did not actully
spend for his meals and lodgings for he was all
the time in Manila, his station. The CIR brushed
the contention. Hence, the petition.

Issue:

Whether or not the per diem is included

in the computation of the back wages.

Ruling:

The Supreme Court ruled in the negative.

It ruled that it had not been drawn its attention to
a rule of law or jurisprudence which holds that per
diems are integral parts of regular wages or
salaries. Neither is it suggested in the record that
per diems formed part of the terms of
employment between petitioner and respondent
union.

The Supreme Court defines per diem as

a daily allowance given for each day he (an officer
or employee) was away from his home base. It
would seem to us that per diem is intended to
cover the cost of lodging and subsistence of
Meralco v. Quisumbing
Facts:
Meralco Workers Association (MEWA) is the duly
recognized labor organization of the rank-and-file
employees of MERALCO.
MEWA informed MERALCO of its intention to re-
negotiate the terms and conditions of their
existing 1992-1997 Collective Bargaining
Agreement (CBA) covering the remaining period
of two years starting from December 1, 1995 to
November 30, 1997. MERALCO signified its
willingness to re-negotiate however, despite the
series of meetings between the negotiating
panels of MERALCO and MEWA, the parties
failed to arrive at terms and c`onditions
acceptable to both of them.
MEWA filed a Notice of Strike with the National
Capital Region Branch of the National
Conciliation and Mediation Board (NCMB) of the
Department of Labor and Employment (DOLE) on
the grounds of bargaining deadlock and unfair
labor practices.
Faced with the imminence of a strike, MERALCO
filed an Urgent Petition with the DOLE praying
that the Secretary assume jurisdiction over the
labor dispute and to enjoin the striking employees
to go back to work.
The Labor Secretary granted the petition and the
parties were directed to submit their respective
Position Papers. Thereafter, the parties
submitted their respective memoranda the
Secretary resolved the labor dispute through an
Order containing the following awards:
ECONOMIC DEMANDS (bonuses only)
 Longevity Increase- the present longevity
bonus is maintained but the bonus shall
be incorporated into the new CBA.
 Longevity Bonus- is increased from
P140.00 to P200.00 for every year of
service to be received by the employee
after serving the Company for 5 years.
 Christmas Bonus and Special Christmas
Grant- MEWAs demand of one month
salary as Christmas Bonus and two
months’ salary as Special Christmas
Grant is granted and to be incorporated
in the new CBA.
 Midyear Bonus- one month’s pay to be
included in the CBA.
 Anniversary Bonus - unions demand is
denied.
 Christmas Gift Certificate - company has
the discretion as to whether it will give it
to its employees.
POLITICAL DEMANDS (bonuses only)
 Signing Bonus- P4, 000.00 per member
of the bargaining unit for the conclusion
of the CBA.
MERALCO filed a motion for
reconsideration. Secretary issued an Order
which changed, among others, the longevity
bonus from 200 to 170.
MERALCO questions the Secretary’s award of
Christmas bonuses on the ground that what it had
given its employees were special bonuses to
mark or celebrate special occasions, such as
when the Asia Money Magazine recognized
MERALCO as the best managed company in
Asia. These grants were given on or about
Christmas time, and the timing of the grant
apparently led the Secretary to the conclusion
that what were given were Christmas bonuses
given by way of a company practice on top of the
legally required 13th month pay.
Issue:
Whether the bonuses should be granted.
Held: as to bonuses only
As a rule, a bonus is not a demandable and
enforceable obligation; it may nevertheless be
granted on equitable consideration as when the
giving of such bonus has been the company’s
long and regular practice. To be considered a
regular practice, the giving of the bonus should
have been done over a long period of time, and
must be shown to have been consistent and
deliberate. Thus we have ruled in National Sugar
Refineries Corporation vs. NLRC:
The test or rationale of this rule on long
practice requires an indubitable showing
 that the employer agreed to continue and signed between the employer and the union.
giving the benefits knowing fully well that In the present case, this goodwill does not exist.
said employees are not covered by the
law requiring payment thereof. In contractual terms, a signing bonus is justified
by and is the consideration paid for the goodwill
AS to Christmas Bonus that existed in the negotiations that culminated in
the signing of a CBA. Without the goodwill, the
In the case at bar, the record shows the payment of a signing bonus cannot be justified
MERALCO, aside from complying with the and any order for such payment, to our mind,
regular 13th month bonus, has further been constitutes grave abuse of discretion. This is
giving its employees an additional Christmas more so where the signing bonus is in the not
bonus at the tail-end of the year since 1988. insignificant total amount of P16 Million.
While the special bonuses differed in amount and
bore different titles (In 1988, it was P1, 500. In
1989, it was month salary. The use of Christmas
bonus title stopped after 1989. In 1990, what was
given was a cash gift of months’ salary), it cannot
be denied that these were given voluntarily and
continuously on or about Christmas time. The
considerable length of time MERALCO has been
giving the special grants to its employees
indicates a unilateral and voluntary act on its part,
to continue giving said benefits knowing that such
act was not required by law.

Indeed, a company practice favorable to the

employees has been established and the
payments made by MERALCO pursuant thereto
ripened into benefits enjoyed by the employees.
Consequently, the giving of the special bonus can
no longer be withdrawn by the company as this
would amount to a diminution of the employees
existing benefits.

As to Two-month special Christmas grant

We cannot, however, affirm the Secretary’s

award of a two-month special Christmas bonus to
the employees since there was no recognized
company practice of giving a two-month special
grant. The two-month special bonus was given
only in 1995 in recognition of the employees’
prompt and efficient response during the
calamities. Instead, a one-month special bonus,
we believe, is sufficient, this being merely a
generous act on the part of MERALCO.

As to Signing bonus

On the signing bonus issue, we agree with the

positions commonly taken by MERALCO and by
the Office of the Solicitor General that the signing
bonus is a grant motivated by the goodwill
generated when a CBA is successfully negotiated
Jimenez v. NLRC
Facts:
Pedro and Fredelito Juanatas, father and son
were hired by herein petitioner Bernardo Jimenez
as driver, mechanic and helper, respectively, in
his trucking firm, JJ Trucking. They were
assigned to a ten-wheeler truck to haul soft drinks
of Coca-Cola Bottling Company and paid on
commission basis, initially fixed at 17% but later
increased to 20% in 1988.
Pedro and Fredelito Juanatas alleged that for the
years 1988 and 1989 they received only a partial
commission of P84, 000.00 from petitioner’s total
gross income of almost P1, 000,000.00 for the
said two years. Consequently, with their
commission for that period being computed at
20% of said income, there was an unpaid balance
to them of P106, 211.86; that until March, 1990
when their services were illegally terminated, they
were further entitled to P15, 050.309 which,
excluding the partial payment of P7, 000.00,
added up to a grand total of P114, 261.86 due
and payable to them; and that petitioners refusal
to pay their aforestated commission was a ploy to
unjustly terminate them.
Jimenez contends that Fredelito Juanatas was
not an employee of the firm but was merely a
helper of his father Pedro; that all commissions
for 1988 and 1989, as well as those up to March,
1990, were duly paid; and that the truck driven by
respondent Pedro Juanatas was sold to one
Winston Flores in 1991 and, therefore, private
respondents were not illegally dismissed.
NLRC Decision:
1. Complainant Fredelito Juanatas is hereby
declared respondents employee and shares in
(the) commission and separation pay awarded to
complainant Pedro Juanatas, his father.
2. Respondent JJs Trucking and Dr. Bernardo
Jimenez are jointly and severally liable to pay
complainants their unpaid commissions in the
total amount P84,387.05.
1st Issue:
Whether the private respondents were not paid
their commissions in full.
Held: Yes
On the first issue, we find no reason to disturb the
findings of respondent NLRC that the entire
amount of commissions was not paid, this by
reason of the evident failure of herein petitioners
to present evidence that full payment thereof has
been made. It is a basic rule in evidence that each
party must prove his affirmative allegations. Since
the burden of evidence lies with the party who
asserts an affirmative allegation, the plaintiff or
complainant has to prove his affirmative
allegation, in the complaint and the defendant or
respondent has to prove the affirmative
allegations in his affirmative defenses and
counterclaim. Considering that petitioners herein
assert that the disputed commissions have been
paid, they have the bounden duty to prove that
fact.
In the instant case, the right of respondent Pedro
Juanatas to be paid a commission equivalent to
17%, later increased to 20%, of the gross income
is not disputed by petitioners. Although private
respondents admit receipt of partial payment,
petitioners still have to present proof of full
payment. Where the defendant sued for a debt
admits that the debt was originally owed, and
pleads payment in whole or in part, it is incumbent
upon him to prove such payment. That a plaintiff
admits that some payments have been made
does not change the burden of proof. The
defendant still has the burden of establishing
payments beyond those admitted by plaintiff.
The testimony of petitioners which merely denied
the claim of private respondents, unsupported by
documentary evidence, is not sufficient to
establish payment. Although petitioners
submitted a notebook showing the alleged vales
of private respondents for the year 1990, the
same is inadmissible and cannot be given
probative value considering that it is not properly
accomplished, is undated and unsigned, and is
thus uncertain as to its origin and authenticity.
Hence, for failure to present evidence to prove
payment, petitioners defaulted in their defense
and in effect admitted the allegations of private
respondents.
2nd Issue (side issue)
Whether respondent Fredelito Juanatas was an
employee of JJs Trucking.

Held: No

With respect to the second issue, however, we

agree with petitioners that the NLRC erred in
holding that the son, Fredelito, was an employee
of petitioners.

We have consistently ruled that in determining

the existence of an employer-employee
relationship, the elements that are generally
considered are the following: (1) the selection and
engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the
power to control the employees conduct,18 with
the control test assuming primacy in the overall
consideration.

In the case at bar, the aforementioned elements

are not present. The agreement was between
petitioner JJs Trucking and respondent Pedro
Juanatas. The hiring of a helper was discretionary
on the part of Pedro. Under their contract, should
he employ a helper, he would be responsible for
the latters compensation. With or without a
helper, respondent Pedro Juanatas was entitled
to the same percentage of commission.
Respondent Fredelito Juanatas was hired by his
father, Pedro, and the compensation he received
was paid by his father out of the latter’s
commission. Further, Fredelito was not subject to
the control and supervision of and dismissal by
petitioners but of and by his father.