WAGE PROTECTION PROVISIONS

SHS Perforated Materials, Inc. et al., vs. Diaz

Doctrine: In this case, the withholding of respondent’s salary does not fall under any of the circumstances provided under Article 113.
Neither was it established with certainty that respondent did not work from November 16 to November 30, 2005. Hence, the Court
agrees with the LA and the CA that the unlawful withholding of respondent’s salary amounts to constructive dismissal.

Facts: SHS is a start-up corporation organized and existing under the Philippines and registered with the PEZA. Petitioner
Hartmannshenn, a German national, is its president, in which capacity he determines the administration and direction of the day-to-
day business affairs of SHS. Petitioner Schumacher, also a German national, is the treasurer and one of the board directors. As such,
he is authorized to pay all bills, payrolls, and other just debts of SHS of whatever nature upon maturity. Schumacher is also the EVP
of the European Chamber of Commerce of the Philippines (ECCP)which is a separate entity from SHS. Both entities have an
arrangement where ECCP handles the payroll requirements of SHS to simplify business operations and minimize operational
expenses. Thus, the wages of SHS employees are paid out by ECCP, through its Accounting Services Department headed by
Taguiang.

Respondent Diaz was hired by petitioner SHS as Manager for Business Development on probationary status from July 18, 2005 to
January 18, 2006, with a monthly salary of P100,000.00. He was tasked to perform sales/marketing functions, represent the company
in its events, perform all functions, duties and responsibilities to be assigned by the employer in due course, among others. In
addition to the above-mentioned responsibilities, respondent was also instructed by Hartmannshenn to report to the SHS office and
plant at least two (2) days every work week to observe technical processes involved in the manufacturing of perforated materials, and
to learn about the products of the company, which respondent was hired to market and sell.

During respondents employment, Hartmannshenn was often abroad and, because of business exigencies, his instructions to
respondent were either sent by electronic mail or relayed through telephone or mobile phone. When he would be in the Philippines,
he and the respondent held meetings. As to respondents work, there was no close supervision by him. However, during meetingswith
the respondent, Hartmannshenn expressed his dissatisfaction over respondents poor performance. Respondent allegedly failed to
make any concrete business proposal or implement any specific measure to improve the productivity of the SHS office. In addition,
respondent was said not to have returned Hartmannshenn's calls and e-mails, to which Diaz denied.Hartmannshenn instructed
Taguiang not to release respondents salary. Later that afternoon, respondent called and inquired about his salary. Taguiang informed
him that it was being withheld and that he had to immediately communicate with Hartmannshenn. The next day, respondent served
on SHS a demand letter and a resignation letter, citing illegal and unfair labor practices.

Issue: WON the temporary withholding of respondents salary/wages by petitioners was a valid exercise of management prerogative.

WON respondent voluntarily resigned.

Ruling: THE RULING OF THE LABOR ARBITER - judgment is hereby rendered declaring complainant as having been illegally
dismissed and further ordering his immediate reinstatement without loss of seniority rights and benefits. It is also ordered that
complainant be deemed as a regular employee.

THE RULING OF THE NLRC - On appeal, the NLRC reversed the decision of the LA. THE RULING OF THE COURT OF APPEALS -
The CA reversed the NLRC

THE RULING OF THE SUPREME COURT – AFFIRMED CA WITH MODIFICATION. T h e additional amount for 13th month pay is
deleted

We disagree with petitioners. Management prerogative refers "to the right of an employer to regulate all aspects of employment, such
as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of
employees, supervision of their work, lay-off and discipline, and dismissal and recall of work." 12 Although management prerogative
refers to "the right to regulate all aspects of employment," it cannot be understood to include the right to temporarily withhold
salary/wages without the consent of the employee. To sanction such an interpretation would be contrary to Article 116 of the Labor
Code, which provides:

ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful for any person, directly or indirectly, to withhold any
amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any

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other means whatsoever without the worker’s consent. Any withholding of an employee’s wages by an employer may only be allowed
in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below:

ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of
his employees, except:

In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the
amount paid by him as premium on the insurance;
For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in
writing by the individual worker concerned; and

In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

As correctly pointed out by the LA, "absent a showing that the withholding of complainant’s wages falls under the exceptions provided
in Article 113, the withholding thereof is thus unlawful.” The Court, however, agrees with the LA and the CA that respondent was
forced to resign and was, thus, constructively dismissed

This Court has held that probationary employees who are unjustly dismissed during the probationary period are entitled to
reinstatement and payment of full backwages and other benefits and privileges from the time they were dismissed up to their actual
reinstatement. Respondent is, thus, entitled to reinstatement without loss of seniority rights and other privileges as well as to full
backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time his compensation was
withheld up to the time of actual reinstatement. Respondent, however, is not entitled to the additional amount for 13th month pay, as it
is clearly provided in respondent’s Probationary Contract of Employment that such is deemed included in his salary.

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Nina Jewelry Manufacturing of Metal Arts Inc.

vs. Montecillo

Doctrine: Articles 113 and 114 of the Labor Code are clear as to what are the exceptions to the general prohibition against requiring
deposits and effecting deductions from the employees' salaries. Hence, a statutory construction of the aforecited provisions is not
called for. Even if we were however called upon to interpret the provisions, our inclination would still be to strictly construe the same
against the employer because evidently, the posting of cash bonds and the making of deductions from the wages would inarguably
impose an additional burden upon the employees

Facts: Respondents were employed as goldsmiths by the petitioner Niña Jewelry Manufacturing of Metal Arts, Inc. There were
incidents of theft involving goldsmiths in Niña Jewelry's employ. The petitioner imposed a policy for goldsmiths, which were intended
to answer for any loss or damage which Niña Jewelry may sustain by reason of the goldsmiths' fault or negligence in handling the
gold entrusted to them, requiring them to post cash bonds or deposits in varying amounts but in no case exceeding 15% of the latter’s
salaries per week.

The petitioner alleged that the goldsmiths were given the option not to post deposits, but to sign authorizations allowing the former to
deduct from the latter's salaries amounts not exceeding 15% of their take home pay should it be found that they lost the gold
entrusted to them. The deposits shall be returned upon completion of the goldsmiths' work and after an accounting of the gold
received. The respondents claimed otherwise insisting that petitioner left the goldsmiths with no option but to post the deposits. The
next day after the policy was imposed, the respondents no longer reported for work and signified their defiance against the new policy
which at that point had not even been implemented yet.

The respondents alleged that they were constructively dismissed by the petitioner as their continued employments were made
dependent on their readiness to post the required deposits. The respondents then filed a complaint for illegal dismissal and for the
award of separation pay against the petitioner, and later filed their amended complaint which excluded their earlier prayer for
separation pay but sought reinstatement and payment of back wages, attorney's fees and 13th month pay.

Issues:

WON Niña Jewelry Manufacturing of Metal Arts, Inc. may impose the policy for their goldsmiths requiring them to post cash bonds or
deposits; and
WON there is constructive dismissal.

Ruling:

NO, the Niña Jewelry may not impose the policy. Articles 113 and 114 of the Labor Code are clear as to what are the exceptions to
the general prohibition against requiring deposits and effecting deductions from the employees' salaries.

ART. 113. Wage Deduction — No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of
his employees, except:

(a)In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the
amount paid by him as premium on the insurance;

(b)For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized
in writing by the individual worker concerned; and

(c)In cases where the employer is authorized by law or regulations issued by the Secretary of

Labor.

Article 114.Deposits for loss or damage — No employer shall require his worker to make deposits from which deductions shall be
made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the
employer is engaged in such trades, occupations or business where the practice of making deposits is a recognized one, or is
necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations.

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The petitioners should first establish that the making of deductions from the salaries is authorized by law, or regulations issued by the
Secretary of Labor. The petitioners failed to prove that their imposition of the new policy upon the goldsmiths under Niña Jewelry's
employ falls under the exceptions specified in Articles 113 and 114 of the Labor Code.

2) There is NO constructive dismissal. Constructive dismissal occurs when there is cessation of work because continued employment
is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.

The petitioners did not whimsically or arbitrarily impose the policy to post cash bonds or make deductions from the workers' salaries.
As attested to by the respondents' fellow goldsmiths in their Joint Affidavit, the workers were convened and informed of the reason
behind the implementation of the new policy. Instead of airing their concerns, the respondents just promptly stopped reporting for
work

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Locsin II vs. Mekeni Food Corp.

Facts: March 2004, Respondent Mekeni food corporation hired Petitioner Antonio Locsin II as the Regional Sales Manager in
Makeni’s National Capital Region Supermarket and South Luzon operations. Mekeni furnished a Honda civic worth Two-hundred
eighty thousand pesos, this was in addition to the benefits and compensation. The 50% of the said car plan was to be paid by Mekeni
and the other 50% is to be paid by Locsin through salary deduction of Five thousand pesos each month.

On February 2004 Locsin resigned and by that time a total of one hundred twelve thousand and five hundred pesos has already been
deducted from his monthly salary and was applied as the employees share for the car plan. Upon said resignation Locsin offered that
he be allowed to purchase the said service vehicle by paying the outstanding balance thereon, but upon negotiation the parties have
not reached any compromise which led to the return of the car by Locsin to the company on May of 2006.

Subsequently Locsin made personal and written follow-ups for the unpaid salaries and commissions, benefits and offer to purchase
the service vehicle. However, the company replied that said car benefit only applies to those employees who rendered service for a
total of 5 yrs. This prompted the petitioner to file a case against Mekeni and/or it’s President Prudencio S. Garcia.

LABOR ARBITER:

Decision was rendered in favor of the complainant Locsin, ordering respondent Mekeni to turnover the disputed vehicle upon the
payment of one hundred thousand pesos and four hundred thirty-five pesos and eighty four centavos. This was appealed to the
NLRC.

NLRC:

NLRC reversed the decision and ordered Mekeni to pay the unpaid compensation and benefits, as well as the amortization payments
on the service vehicle, if not unjust enrichment would occur since the vehicle was still in the possession of Mekeni. Mekeni is also
ordered to pay the employee’s part in the car plan since it would form part of the benefits of the said employee.

Court of Appeals

The Court of Appeals modified the NLRC decision and deleted the portion wherein Mekeni is ordered to reimburse Locsin’s payment
under the car plan and all other else are affirmed. CA justified the said decision stating that said payments by Locsin are to be treated
as rentals since there was no stipulation stating otherwise applying the Elisco Tool Manufacturing Corporation v. Court of Appeals.
Recovery by Locsin of the purchase price of the vehicle would lead to unjust enrichment.

Issue: WON the petitioner is entitled for the reimbursement of the amounts paid to purchase the said service vehicle under the car
plan.

Ruling: The reliance of the Court of Appeals in the Elisco tools ruling is of no avail. The ruling involves an agreement wherein it was
stipulated that said payments would constitute as rentals but in the present, one cannot find any other stipulation stating that if
petitioner failed to completely cover one-half of the cost of the vehicle then all the deductions will be treated as rentals.

Second point, the vehicle did not fully benefited the employee but it was more beneficial on the part of the employer. The said vehicle
was material for the petitioner to cover the vast sales territory assigned to him and sales or marketing of Mekeni’s products could not
have been booked or made fast enought to move Mekeni’s inventory.

Any benefit or privilege enjoyed by the petitioner while using the said car was merely incidental since it was under Mekeni’s control
and supervision. Free disposal of such vehicle is only given after the full payment, clearly it was Mekeni who was reaping the full
benefits in the use thereof.

Under Article 22 of the Civil Code, “every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.” Article
2142 of the same Code likewise clarifies that there are certain lawful, voluntary and unilateral acts which give rise to the juridical
relation of quasi-contract, to the end that no one shall be unjustly enriched or benefited at the expense of another. In the absence of
specific terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a quasi-contractual relation
was created between them. To point out the said car was used and has clearly depreciated, Mekeni may not enrich itself by charging

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petitioner for the use of the vehicle which was absolutely necessary to the full and effective promotion of its business. Petitioner
cannot also recover the other half paid by Mekeni as it will also lead to unjust enrichment since it was not part of his compensation
package.

Thus, petition is GRANTED IN PART.

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TH Shopfitters Corp., et al.,

vs. T&H Shopfitters Corp., Union

Doctrine: A certification election is the sole concern of the workers, save when the employer itself has to file the petition, but even
after such filing, its role in the certification process ceases and becomes merely a bystander.

Facts: On September 7, 2004 herein respondents T&H Shopfitters Union filed a complaint for Unfail Labor Practice by way of Union
Busting and Illegal Lockout against herein petitioner T&H Shopfitters Corp before the Labor Arbiter.

In their desire to improve the working conditions, respondents and other employees of the petitioner held their first formal meeting.
The next day seventeen employees were barred to enter the petitioner’s factory premises and was ordered to transfer to another T&H
warehouse because of its expansion. Afterwards the said seventeen employees were repeatedly ordered to go on forced leave due to
inavailability of work.

In their contention respondents stated that the affected employees were not given regular work assignments, while subcontractors
were continuously hired to perform their functions. Which prompted herein respondents to seek the assistance of the National
Conciliation and Mediation Board wherein they were able to arrive into a certain compromise, but respondents alleged that petitioners
never complied with their agreement.

Subsequently, the union filed a petition for certification election. An order was issued to hold the certification elections in both T&H
Shopfitters and Gin Queen. A day before the scheduled election, petitioners sponsored a field trip for its employees. The officers and
members of the T&H Union were purportedly excluded from the said trip. On the evening of the field trip a sales officer of petitioners
campaigned against the union in the forthcoming certification election.

The following day, the employees were escorted from the field trip to the polling center in Zambales to cast their votes. Due to the
heavy pressure exerted by petitioners, the votes for “no union” prevailed. This prompted herein respondent union to file its protest
with respect to the certification election proceedings.

Labor Arbiter:

Dismissed respondent Union’s complaint and all their money claims due to lack of merit.

NLRC:

Reversed and ruled in favor of respondents. Stating that said respondents (herein petitioner) committed Unfair Labor Practices acts
consisting in interfering with the exercise of the employees’ right to self- organization (specifically, through the sponsored field trip on
the day preceding the certification election, warning of employees of dire consequences should the union prevail and escorting them
to the polling center) and discriminating in regard to conditions of employment in order to discourage union membership (assigning
union officers and active union members as grass cutters on rotation basis).

Court of Appeals:

Dismissed the appeal and affirmed the decision of NLRC.

Issue: WON Unfair Labor Practice was committed by petitioners against respondents.

Ruling: Supreme Court decided in the affirmative that said company committed ULP against the respondents. The petitioners are
being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly Article 248) of the Labor Code,13 to wit:

Article 257. Unfair labor practices of employers.—It shall be unlawful for an employer to commit any of the following unfair labor
practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;

xxxx

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To contract out services or functions being performed by union members when such will interfere with, restrain, or coerce employees
in the exercise of their right to self-organization;

xxxx

To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage or discourage
membership in any labor organization. x x x

The test of whether an employer has interfered with and coerced employees in the exercise of their right to self organization was laid
down in the case of Insular Life Assurance Co., ltd Employees Association – NATU vs. Insular Life Co. Ltd. ,that is, whether the
employer has engaged in conduct which, it may reasonably be said, tends to interfere with the free exercise of the employees’ rights;
and that it is not necessary that there be direct evidence that any employee was in fact intimidated or coerced by statements of
threats of the employer if there is reasonable inference that anti-union conduct of the employer does have an adverse effect on self
organization and collective bargaining.

The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to the exclusion of union
members, before the scheduled certification election; 2) the active campaign by the sales officer of petitioners against the union
prevailing as a bargaining agent during the field trip; 3) escorting its employees after the field trip to the polling centre; 4) the
continuous hiring of subcontractors performing respondents’ functions; 5) assigning union members to the Cabangan site to work as
grass cutters; and 6) the enforcement of work on a rotational basis for union members, taken together, reasonably support an
inference that, indeed, such were all orchestrated to restrict respondents’ free exercise of their right to self-organization.

Petitioners have no business persuading and/or assisting its employees in their legally protected independent process of selecting
their exclusive bargaining representative. Wherefore the decision of the Court of Appeals is AFFIRMED.

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Wesleyan University-Philippines vs. Wesleyan University-Philippines faculty and Staff Association

Doctrine: A Collective Bargaining Agreement is a contract entered into by an employer and a legitimate labor organization concerning
the terms and conditions of employment. Unilateral changes or suspensions in the implementation of the provisions of the CBA
cannot be allowed without the consent of both parties.

Facts: Petitioner Wesleyan University-Philippines (WUP) is a non-stock, non-profit educational institution duly organized and existing
under the laws of the Philippines while respondent WUP Faculty and Staff Association is a duly registered labor organization acting
as the sole and exclusive bargaining agent of all rank-and-file faculty and staff employees of petitioner. The parties signed a 5-year
CBA effective June 1, 2003 until May 31, 2008.

Petitioner issued a Memorandum providing guidelines on the implementation of vacation and sick leave credits as well as vacation
leave commutation. But respondent is not amenable to the unilateral changes made by petitioner because the guidelines are violative
of existing practices and the CBA. The CBA provides that all covered employees are entitled to 15 days sick leave and 15 days
vacation leave with pay every year and that after the second year of service, all unused vacation leave shall be converted to cash and
paid to the employee at the end of each school year, not later than August 30 of each year. The Memorandum, however, states that
vacation and sick leave credits are not automatic as leave credits would be earned on a month-to-month basis. Petitioner also
announced its plan of implementing a one-retirement policy, which was unacceptable to respondent. Respondent argued that there is
an established practice of giving two retirement benefits, one from the Private Education Retirement Annuity Association (PERAA)
Plan and another from the CBA Retirement Plan.

Voluntary Arbitrator- The one-retirement policy and the Memorandum are contrary to law.

Court of Appeals- Affirmed the nullification of the one-retirement policy and the Memorandum.

Issue: WON the petitioner's unilateral acts violated the rule on non-diminution of benefits.

Ruling: Yes. Article 100 of the Labor Code explicitly prohibits employers from eliminating or reducing the benefits received by their
employees. This rule, however, applies only if the benefit is based on an express policy, a written contract, or has ripened into a
practice. To be considered a practice, it must be consistently and deliberately made by the employer over a long period of time. An
exception to the rule is when the practice is due to error in the construction or application of a doubtful or difficult question of law. The
error, however, must be corrected immediately after its discovery; otherwise, the rule on Non-Diminution of Benefits would still apply.

In the case, the practice of giving two retirement benefits to petitioner’s employees is supported by substantial evidence. The two-
retirement policy is a practice. The CBA Retirement Plan and the PERAA Plan are not the same. There is nothing in the CBA to
indicate or even suggest that the "Plan" referred to in the CBA is the PERAA Plan. Besides, any doubt in the interpretation of the
provisions of the CBA should be resolved in favor of respondent.

While petitioner contends that such practice is illegal or unauthorized and that the benefits were erroneously given by the previous
administration, no evidence was presented by petitioner to substantiate its allegations. Petitioner cannot, without the consent of
respondent, eliminate the two-retirement policy and implement a one-retirement policy as this would violate the rule on non-diminution
of benefits. Moreover, the Memorandum issued imposes a limitation not agreed upon by the parties nor stated in the CBA. When the
provision of the CBA is clear, leaving no doubt on the intention of the parties, the literal meaning of the stipulation shall govern.
However, if there is doubt in its interpretation, it should be resolved in favor of labor, as this is mandated by no less than the
Constitution.

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Bluer Than Blue Joint Ventures Company/Mary Ann Dela Vega vs. Glyza Esteban

Doctrine: No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees,
except in cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment.

Facts: Respondent was employed as Sales Clerk. The petitioner received a report that several employees have access to its point-of-
sale (POS) system through a universal password given by Flores. Upon investigation, it was discovered that it was respondent who
gave Flores the password. The petitioner sent a letter memorandum to respondent asking her to explain in writing why she should not
be disciplinary dealt with for tampering with the company’s POS system through the use of an unauthorized password. Respondent
was also placed under preventive suspension for ten days. In her explanation, respondent admitted that she used the universal
password three times on the same day in 2005, after she learned of it from two other employees.

Respondent’s preventive suspension was lifted, but a notice of termination was sent to her, finding her explanation unsatisfactory and
terminating her employment immediately on the ground of loss of trust and confidence. Respondent was given her final pay, including
benefits and bonuses, less inventory variances incurred by the store amounting to ₱8,304.93. The petitioner justified the deduction
on the basis of alleged trade practice and that it is allowed by the Labor Code. Respondent signed a quitclaim and release in favor of
the petitioner. Subsequently, respondent filed a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and
separation pay.

Labor Arbiter- Respondent was illegally dismissed and awarded her separation pay, backwages, unpaid salary during her preventive
suspension and attorney’s fees.

NLRC- Reversed the decision of the LA and dismissed the case for illegal dismissal. Petitioners are ordered to refund to respondent
the amount of P 8,304.93 which was illegally deducted from her salary.

Court of Appeals- Set aside the decision of NLRC. Decision of the Labor Arbiter is REINSTATED with MODIFICATION, that the
award of separation pay is computed from January 2, 2004, and not from November 25, 2003.

Issues:

(1)Whether respondent’s act constitutes just cause to terminate her employment with the company on the ground of loss of trust and
confidence.

(2)Whether the petitioner illegally deducted the store’s negative variance for the year 2005 to 2006 from the respondent's salary.

Ruling: (1) No. The acts committed by the respondent do not amount to a willful breach of trust. She did so, however, out of curiosity
and without any obvious intention of defrauding the petitioner. There must be a showing that her acts were done with "moral
perverseness" that would justify the claimed loss of trust and confidence attendant to her job. While respondent's position was
denominated as sales clerk, the nature of her work included inventory and cashiering, a function that clearly falls within the sphere of
rank-and-file positions imbued with trust and confidence. Her duties were more than that a sales clerk. Aside from attending to
customers and tending to the shop, respondent also assumed cashiering duties. As consistently ruled by the Court, it is not the job
title but the actual work that the employee performs that determines whether he or she occupies a position of trust and confidence.
Given that respondent had in her care and custody the store’s property and funds, she is considered as a rank-and-file employee
occupying a position of trust and confidence.

Yes. Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any person, shall make any deduction
from the wages of his employees, except in cases where the employer is authorized by law or regulations issued by the Secretary of
Labor and Employment, among others. The Omnibus Rules Implementing the Labor Code, meanwhile, provides:

SECTION 14. Deduction for loss or damage. – Where the employer is engaged in a trade, occupation or business where the practice
of making deductions or requiring deposits is recognized to answer for the reimbursement of loss or damage to tools, materials, or
equipment supplied by the employer to the employee, the employer may make wage deductions or require the employees to make
deposits from which deductions shall be made, subject to the following conditions:

That the employee concerned is clearly shown to be responsible for the loss or damage;

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That the employee is given reasonable opportunity to show cause why deduction should not be made;
That the amount of such deduction is fair and reasonable and shall not exceed the actual loss or damage; and
That the deduction from the wages of the employee does not exceed 20 percent of the employee’s wages in a week.

Petitioner failed to sufficiently establish that respondent was responsible for the negative variance it had in its sales for the year 2005
to 2006 and that respondent was given the opportunity to show cause why deduction from her last salary should not be made.

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Netlink Computer Inc. vs. Delmo

Doctrine: In the absence of a written agreement between the employer and the employee that sales commissions shall be paid in a
foreign currency, the latter has the right to be paid in such foreign currency once the same has become an established practice of the
former. The rate of exchange at the time of payment, not the rate of exchange at the time of the sales, controls. Otherwise would
result to diminution of benefits.

Facts: On November 3, 1991, Netlink Computer, Inc. Products and Services (Netlink) hired Eric S. Delmo (Delmo) as account
manager tasked to canvass and source clients and convince them to purchase the products and services of Netlink. Delmo worked in
the field most of the time. He was not required to accomplish time cards to record his personal presence.

He was able to generate sales worth P35,000,000.00, more or less, from which he earned commissions amounting to P993,558.89
and US$7,588.30. He then requested payment of his commissions, but Netlink refused and only gave him partial cash advances
chargeable to his commissions. Later on, Netlink began to nitpick and fault find, like stressing his supposed absences and tardiness.
In order to force him to resign, the company issued a memoranda detailing his supposed infractions of the company’s attendance
policy. In1996, Delmo was refused entry to the company premises by the security guard pursuant to memorandum.

Delmo filed a complaint for illegal dismissal. NETLINK countered that that there were guidelines regarding company working time and
its utilization and how the employees' time would be recorded. Allegedly, all personnel were required to use the bundy clock to punch
in and out in the morning, and in and out in the afternoon. Excepted from the rules were the company officers, and the authorized
personnel in the field project assignments. Netlink claimed that it would be losing on the business transactions closed by Delmo due
to the high costs of equipment, and in fact his biggest client (ALCATEL) had not yet paid Netlink asserted that warning, reprimand,
and suspension memoranda were given to employees who violated company rules and regulations, but such actions were considered
as a necessary management tool to instill discipline.

1998, LA decision: favoring Delmo declared that the latter was illegally dismissed and ordered Netlink to reinstate, and pay
Delmobackwages and 13th month pay from 1996-1998 and the unpaid commissions (as above stated)

NLRC: modified the LA decision because of the existence of valid and just causes for Delmo’s termination and ordered netlink to pay
Delmo the amount awarded by LA except for the backwages.

MR denied

CA affirmed subject to modification: since the payment of the commission is made to depend on the future and uncertain event —
which is the payment of the accounts by the persons who have transacted business with the petitioner. The evidence on record
shows that the ALCATEL, private respondent's biggest client has not paid fully the amount it owes to the petitioner as of March 10,
1998. The obligation therefore to pay commission has not yet arisen. However, petitioner failed to refute by evidence that respondent
is not entitled to the said commission, petitioner has paid the respondent in the amount of P216,799.45 in the form of advance
payment. Said amount should therefore be deductedDelmo is not entitled to 13th month pay since the termination was valid although
deprived of his right to due process.

“Sebuguero vs. National Labor Relations Commission where it was ruled that "where the dismissal of an employee is in fact for a just
and valid cause and is so proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin
requirements of notice and the opportunity to be heard, the dismissal shall be upheld but the employer must be sanctioned for
noncompliance with the requirements of or for failure to observe due process.”

Petitioner also failed to refute by evidence that Delmo is not entitle to commissions payable in US dollar, also the petitioner’s
contention that the computation of these commissions should be based on the value of peso in relation to a dollar at the time of sale
is untenable. the devaluation of the peso cannot be used as a shield against the complainant because that should have been the
lookout of the respondent company in providing for such a clause that in case of devaluation, the price agreed upon should be at the
exchange rate when the contract of sale had been consummated the complainant should not be made to suffer.

Issue: WON payment of commissions should be made in US dollars.

Ruling: YES. As a general rule, all obligations shall be paid in Philippine currency unless there is stipulation to the contrary. There
was no written contract between Netlink and Delmo stipulating that the latter's commissions would be paid in US dollars. The absence

E.R.D.DIMAUNAHAN – EH409 12
 WAGE PROTECTION PROVISIONS

of the contractual stipulation notwithstanding, Netlink was still liable to pay Delmo in US dollars because the practice of paying its
sales agents in US dollars for their US dollar denominated sales had become a company policy. This was impliedly admitted by
Netlink when it did not refute the allegation that the commissions earned by Delmo and its other sales agents had been paid in US
dollars. Instead of denying the allegation, Netlink only sought a declaration that the US dollar commissions be paid using the
exchange rate at the time of sale.

The principle of non-diminution of benefits, which has been incorporated in Article 100 of the Labor Code, forbade Netlink from
unilaterally reducing, diminishing, discontinuing or eliminating the practice. Verily, the phrase "supplements, or other employee
benefits" in Article 100 is construed to mean the compensation and privileges received by an employee aside from regular salaries or
wages.

With the payment of US dollar commissions having ripened into a company practice, there is no way that the commissions due to
Delmo were to be paid in US dollars or their equivalent in Philippine currency determined at the time of the sales. To rule otherwise
would be to cause an unjust diminution of the commissions due and owing to Delmo.

E.R.D.DIMAUNAHAN – EH409 13
 WAGE PROTECTION PROVISIONS

PLDT vs. HENRY ESTRAÑERO

Doctrine: Set-off of employee’s loan against the latter’s separation pay by the employer cannot be validly made unless there is
consent obtained from the employee in writing.

Facts: On July 1, 1995, PLDT employed the respondent as an Auto-Mechanic/Electrician Helper, Job Grade 3 with a monthly salary
of P15,000.00 at the time of his separation from the service in 2003. In the year 1995, PLDT adopted a company-wide Manpower
Reduction Program (MRP), aimed at reducing its work force. PLDT offered the affected employees an attractive redundancy pay
consisting of 100% of their basic monthly salary for every year of service, in addition to their retirement benefits, if entitled. For those
who were not qualified to the retirement benefits, they were offered separation Or redundancy package of 200% of their basic
monthly salary for every year of service. Consequently, the respondent's position was included in those declared as redundant.
Attracted by the separation pay offered by the company, the respondent expressed his conformity to his inclusion in the MRP. In the
inter-office Memorandum dated April 21, 2003, the respondent declared that he has no objection to being included in the redundancy
program of PLDT. Notice of Separation Due to Redundancy was submitted to the Department of Labor and Employment on April 25,
2003. He was then made to sign a deed denominated as a Receipt, Release and Quitclaim for his severance from employment, thus
availed of the offered personnel reduction program.

Respondent’s length of service was 8 years therefor he was not qualified for a retirement pay which requires that the employee have
worked for at least 15 years. The respondent was nonetheless entitled to 200% of his basic monthly salary for every year of service
by way of redundancy pay or equivalent to P240,000.00. He was also entitled to other benefits (13th, SIL, Bonus,etc) amounted to
27k+. However, the respondent had outstanding liabilities arising from various loans he obtained from different entities which summed
to P267,028.37 (the same total amount of his redundancy pay). Thus, PLDT deducted the said amount from the payment that the
respondent was supposed to receive as his redundancy pay. This prompted the respondent to retract his availment of the separation
pay. However, the respondent was no longer allowed to report to work. Resp. filed a complaint for illegal dismissal with claim for
reinstatement before the NLRC.

LA DECISION: favored resp. ordered PLDT to pay the redundancy pay in full and declared that the set-off made to resp.’ outstanding
loan againsts pay invoked by PLDT was dismissed for lack of jurisdiction. PLDT’s contention as to the set-off made by them, which
LA claimed that they had no jurisdiction because the same did not arise from E-E relationship may only be brought through a special
civil action in regular courts.
NLRC affirmed. Agreed with LA that it is not a labor dispute but one arising from debtor-creditor relation where PLDT stands as
collecting agent. MR denied.

CA affirmed and ruled there must be proof that there is a personal written authorization from respondent authorizing petitioners to
deduct from his terminal pay his outstanding loans from said entities. Petitioners failed to present convincing evidence that, indeed
respondent, has knowledge and consented to these deductions. On the contrary respondent maintains that petitioners unilaterally
made the application of deductions without his knowledge, much less consent. Thus, it is the burden of petitioners to present proof of
the validity of the deductions. Proof insufficient. MR denied.

Issue: WON the petitioners can validly deduct the respondent's outstanding loan obligation from his redundancy pay.

Ruling: NO. PLDT CANNOT VALIDLY DEDUCT THE LOANS FROM RESP.’ REDUNDANCY PAY.

The instant case is not about jurisdiction to determine the validity of the set-off but more of the petitioner's authority to deduct from the
redundancy pay of the respondent his outstanding loans obtained from different entities. It is clear in Article 113 15 of the Labor Code
that no employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except in
cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The
IRR of LC meanwhile, provides that deductions from the wages of the employees may be made by the employer when such
deductions are authorized by law, or when the deductions are with the written authorization of the employees for payment to a third
person. Article 116 17 of the Labor Code clearly provides that it is unlawful for any person, directly or indirectly, to withhold any
amount from the wages of a worker without the worker's consent. The deductions made to the respondent's redundancy pay do not
fall under any of the circumstances provided under Article 113, nor was it established with certainty that the respondent has
consented to the said deductions or that the petitioners had authority to make such deductions. PLDT has no legal right to withhold
the respondent's redundancy pay and other benefits to recompense for his outstanding loan obligations to different entities. The
respondent's entitlement to his redundancy pay is mandated by law which the petitioners cannot unjustly deny. CA’s decision
affirmed.

E.R.D.DIMAUNAHAN – EH409 14
 WAGE PROTECTION PROVISIONS

Milan et al vs. NLRC

Doctrine: An employer is allowed to withhold terminal pay and benefits pending the employee’s return of the employer’s properties.

Facts: As Solid Mills’ employees, petitioners and their families were allowed to occupy SMI Village, a property owned by Respondent
Solid Mills. According to Solid Mills, this was out of liberality and for the convenience of its employees, and on the condition that the
employees, would vacate the premises anytime the Company deems fit. Due to serious business losses, petitioners were informed
that Solid Mills will cease its operations. Solid Mills filed its Department of Labor and Employment termination report and later, Solid
Millssent to petitioners’ individual notices to vacate SMI Village.

After, petitioners were no longer allowed to report for work. They were required to sign a memorandum of agreement with release and
quitclaim before their vacation and sick leave benefits, 13th month pay, and separation pay would be released. Employees who
signed the memorandum of agreement were considered to have agreed to vacate SMI Village, and to the demolition of the
constructed houses inside as condition for the release of their termination benefits and separation pay. Petitioners refused to sign the
documents and demanded to be paid their benefits and separation pay.

Hence, petitioners filed complaints before the Labor Arbiter for alleged non-payment of separation pay, accrued sick and vacation
leaves, and 13th month pay. They argued that their accrued benefits and separation pay should not be withheld because their
payment is based on company policy and practice. Also, Petitioners argue that respondent Solid Mills and NAFLU (employees’ labor
union) memorandum of agreement has no provision stating that benefits shall be paid only upon return of the possession of
respondent Solid Mills’ property; that said agreement only provides that the benefits shall be “less accountabilities,” which should not
be interpreted to include such possession.

On the other hand, Solid Mills argued that petitioners’ complaint was premature because they had not vacated its property.
Respondents Solid Mills argue that petitioners’ failure to turn over respondent Solid Mills’ property “constituted an unsatisfied
accountability” for which reason “petitioners’ benefits could rightfully be withheld.

Labor Arbiter, NLRC, and CA: The Labor Arbiter ruled in favor of petitioners. According to the Labor Arbiter, Solid Mills illegally
withheld petitioners’ benefits and separation pay. NLRC reversed the Labor Arbiters ruling and NLRC’s ruling was affirmed by the CA.

Issue: Can respondent solid mills withhold the employee’s terminal pay and other benefits of the employees if the employees have
not returned the property belonging to solid mills?

Ruling: YES. Requiring clearance before the release of last payments to the employee is a standard procedure among employers,
whether public or private. Clearance procedures are instituted to ensure that the properties, real or personal, belonging to the
employer but are in the possession of the separated employee, are returned to the employer before the employee’s departure.

As a general rule, employers are prohibited from withholding wages from employees as provided in the art. 100 and 116 of the Labor
Code.

HOWEVER, OUR LAW SUPPORTS THE EMPLOYERS’ INSTITUTION OF CLEARANCE PROCEDURES BEFORE THE RELEASE
OF WAGES. As an exception to the general rule that wages may not be withheld and benefits may not be diminished, under Article
113 Labor Code.

THE CIVIL CODE PROVIDES THAT THE EMPLOYER IS AUTHORIZED TO WITHHOLD WAGES FOR DEBTS DUE:

Article 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.

“Debt” in this case refers to any obligation due from the employee to the employer. It includes any accountability that the employee
may have to the employer. There is no reason to limit its scope to uniforms and equipment, as petitioners would argue.

The return of the property’s possession became an obligation or liability on the part of the employees when the employer-employee
relationship ceased. Thus, respondent Solid Mills has the right to withhold petitioners’ wages and benefits because of this existing
debt or liability.

E.R.D.DIMAUNAHAN – EH409 15
 WAGE PROTECTION PROVISIONS
Withholding of payment by the employer does not mean that the employer may renege on its obligation to pay employees their
wages, termination payments, and due benefits. The employees’ benefits are also not being reduced. It is only subjected to the
condition that the employees return properties properly belonging to the employer. This is only consistent with the equitable principle
that “no one shall be unjustly enriched or benefited at the expense of another.”
Galang et al., vs. Boie Takeda Chemicals Inc. et al.
Doctrine: To be considered as a regular company practice the
employee must prove by substantial evidence that the giving of
the benefit is done over a long period of time, and that it has
been made consistently and deliberately.
Facts: Respondent Boie Takeda Chemicals, Inc. (BTCI) hired
petitioners Ernesto Galang and Ma. Olga Jasmin Chan.
Petitioners rose from the ranks and were promoted to Regional
Sales Managers. As Regional Sales Managers, they belong to
the sales department of BTCI. When the National Sales
Director position became vacant, the General Manager,
Kazuhiko Nomura (Nomura), asked petitioners to apply for the
position of National Sales Director. Later, however, petitioners
were informed that BTCI, instead of the petitioners, promoted
Edwin Villanueva as National Sales Director. Petitioners
believed that Villanueva did not apply for the position, and has
only three years of experience in sales.
Aggrieved of not being the one promoted, petitioners inquired if
they could avail of early retirement package due to health
reasons. Specifically, they requested Nomura if they could avail
of the early retirement package of 150% plus 120% of monthly
salary for every year of service tax free, and full ownership of
service vehicle tax free. They claimed that this is the same
retirement package given to previous retirees namely, former
Regional Sales Director Jose Sarmiento, Jr. (Sarmiento), and
former National Sales Director Melchor Barretto.
Nomura, however, insisted that such retirement package does
not exist and Sarmiento's case was exceptional since he was
just a few years shy from the normal retirement age. Then,
petitioners intimated their intention to retire. Thereafter,
petitioners received their retirement package and other
monetary pay from BTCI. Upon petitioners' retirement, the
positions of Regional Sales Manager were abolished, and a
new position of Operations Manager was created.
The Arguments
Petitioners argue that they were constructively dismissed
because of the acts of BTCI 's General Manager Nomura. They
claim that they were forced into resigning because instead of
promoting them to the position of National Sales Directors,
BTCI hired Villanueva who only had three years of service in
the company, who has no background or experience in sales to
speak of.70
Petitioners also argue that the retirement package given to
them is lower compared to others who were holding the similar
position at the time of their retirement. Petitioners cite the case
E.R.D.DIMAUNAHAN – EH409
of one Sarmiento, who was promoted with them to the same
position, and who opted for early retirement in 2001. Sarmiento
allegedly received a more generous package compared to what
petitioners received.
For its part, BCTI claims that the complaint is only an attempt to
extort additional benefits from the company. BTCI argues that
no constructive dismissal can occur because there was no
movement or transfer of position or diminution of salaries or
benefits. Neither was there any circumstance that would make
petitioners' continued employment unreasonable or impossible,
and that the appointment of Villanueva was within the
management prerogative.
As to the payment of retirement benefits, BTCI insists that
petitioners have been paid according to the Collective
Bargaining Agreement (CBA) between BTCI and BTCI
Supervisory Union. Although petitioners are managers (and are
not covered by the CBA), BTCI by practice grants the same
retirement benefits to managers. BTCI admits that it gave
Sarmiento additional financial assistance because of serious
health problems, and because he was merely three years away
from normal retirement. Other employees cited by petitioners all
received retirement benefits computed on the CBA provisions.
Labor Arbiter, NLRC, and CA: The labor arbiter ruled that the
petitioner was constructively dismissed, but it was reversed by
the NLRC for failure to prove that they were indeed
constructively dismissed. CA affirmed NLRC’s decision.
Issues:
I. Whether petitioners were constructively dismissed
from service; and
II. Whether petitioners are entitled to a higher
retirement package.
Ruling:
I. No. Petitioners were not constructively dismissed from
service
Constructive dismissal has often been defined as a "dismissal
in disguise" or "an act amounting to dismissal but made to
appear as if it were not." It exists where there is cessation of
work because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in
rank and a diminution in pay. In some cases, while no demotion
in rank or diminution in pay may be attendant, constructive
dismissal may still exist when continued employment has
become so unbearable because of acts of clear discrimination,
insensibility or disdain by the employer, that the employee has
no choice but to resign. Under these two definitions, what is
16
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essentially lacking is the voluntariness in the employee's

separation from employment.

In this case, petitioners were neither demoted nor did they

receive a diminution in pay and benefits. Petitioners also failed
to show that employment is rendered impossible, unreasonable
or unlikely. Petitioners admitted that they have previously
intended to retire and were actually the ones who requested to
avail of an early retirement. Our labor laws respect the
employer's inherent right to control and manage effectively its
enterprise and do not normally allow interference with the
employer's judgment in the conduct of his business. The
promotion of employees to managerial or executive positions
rests upon the discretion of management.

II. No. Petitioners were not discriminated against in terms of

their retirement package.

The entitlement of employees to retirement benefits must

specifically be granted under existing laws, a collective
bargaining agreement or employment contract, or an
established employer policy. Based on both parties' evidence,
petitioners arc not covered by any agreement. There is also no
dispute that petitioners received more than what is mandated
by Article 287of the Labor Code. Petitioners, however, claim
that they should have received a larger pay because BTCI has
given more than what they received to previous retirees, and
that it has already become a company practice.

The burden of proof that the benefit has ripened into company
practice rests with the employee: To be considered as a regular
company practice the employee must prove by substantial
evidence that the giving of the benefit is done over a long
period of time, and that it has been made consistently and
deliberately.

Petitioners presented evidence showing that Anita Ducay,

Rolando Arada, Marcielo Rafael, and Sarmiento, received
significantly larger retirement benefits. However, the cases of
Ducay, Arada, and Rafael cannot be used as precedents to
prove this specific company practice because these employees
were not shown to be similarly situated in terms of rank, nor are
the applicable retirement packages corresponding to their ranks
alike. Also, these employees, including Sarmiento, all retired in
the same year. A year cannot be considered long enough to
constitute the grant of retirement benefits to these employees
as company practice.

E.R.D.DIMAUNAHAN – EH409 17