Midterm Labor Case Digest

USC LAW EH 306 LABOR MIDTERM CASE DIGESTS
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Basic
Principles

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Applicable
Laws

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1.
SINGER SEWING MACHINE vs. NLRC
January 24, 1991, 193 SCRA 271
Facts: Private respondent Singer Machine Collectors Union-Baguio (SIMACUB) filed a petition for direct
certification as the sole and exclusive bargaining agent of all collectors of the Singer Sewing Machine
Company (Singer). Singer opposed the petition claiming that the collectors are not employees but are
independent contractors as evidenced by the Collection Agency Agreement (Agreement) between them.
The Med-Arbiter granted the petition. Aggrieved, Singer appealed to the Secretary of Labor. The Secretary
of Labor affirmed the Med-Arbiters Decision and denied Singers motion for reconsideration. Hence, this
petition for certiorari to review the order and resolution of the Secretary of Labor and Employment.
Singer alleges that the collectors are not employees but independent contractors. It supported its
allegation by stating the following stipulations in the Agreement: (a) a collector is designated as a collecting
agent who is to be considered at all times as an independent contractor and not employee of Singer, (b)
collection are to be made monthly or oftener, (c) an agent is paid a commission of 6% of all collections plus
a bonus, xxx , (g) his services shall be terminated in case of failure to satisfy the required performance
required.
Private respondent, on the other hand, relies on other features of the same Agreement. Among
which are that an agent shall utilize only receipt forms authorized and issued by Singer; an agent has to
submit and deliver at least once a week or as often as required a report of all collections made using report
forms furnished by Singer; and the monthly collection quota, which quota they deemed as a control measure
over the means by which an agent is to perform his services. They also rely on Art. 280 of the Labor Code
and on Sec. 8 Rule 8, Book No. III of the Omnibus Rules defining job-contracting.
Issue: Whether or not collectors of Singer are employees and therefore are constitutionally granted the right
to join or form labor organization for purposes of collective bargaining.
Ruling: No, collectors of Singer are not employees. Hence, they are not entitled to the constitutional right to
join or form labor organization for purposes of collective bargaining. The Supreme Court mainly applied the
control test where the existence of employer-employee relationship is determined by the following elements:
(a) selection and engagement of the employee, (b) payment of wages, (c) power of dismissal and (d) power
to control the employees conduct although the latter is the most important element. In that regard, it was
ruled that the element on the power to control the employees conduct the most important element was
absent. The forms, schedule of delivery and quota were controls used only for the result of the job, if they
were really controls. There were also other circumstances uncontroverted in the pleadings that made the
Supreme Court rule that they are independent contractors like: (1) collectors are not required to observe
office hours nor report everyday; (2) they do not have to devote their time exclusively for Singer; (3) the
manner and method of effecting collections are left to their discretion xxx (5) they are paid strictly on
commission basis. This circumstances negate that Singer had any control as to the manner by which
collectors perform collections.
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Art. 280 is not instructive because it only deals with casual and regular employees while the provision in the
Omnibus Rules was only relevant in ascertaining whether the employer is solidarily liable with the contractor
or subcontractor.
2.
MANILA GOLF & COUNTRY CLUB, INC. vs. IAC
September 27, 1994, G.R. No. 64948
Facts: Caddies of the Manila Golf & Country Club, Inc. (the Club) filed a petition with the Social Security
Commission for coverage and availment of benefits under the Social Security System. The caddies allege
that they are employees of the Club and thus entitled to SSS coverage, and that the Club has not registered
them in the SSS.
The caddies contend that the following connotes the Clubs control over the means and methods by which a
caddy performs caddying services, and thus supports the existence of employer-employee relationship:
Issue: Are persons performing caddying services for members of golf clubs and their guests in said clubs'
courses or premises the employees of such clubs and therefore within the compulsory coverage of the
SSS?
Ruling: They are NOT employees of the Club as the latter has no control over the means and methods by
which they perform caddying services. Thus they are not entitled to compulsory coverage in the SSS.

On the rules and regulations issued by the Club
As long as it is, the list detailing the various matters of conduct, dress, language, etc. covered by the
petitioner's regulations, does not so circumscribe the actions or judgment of the caddies concerned as to
leave them little or no freedom of choice whatsoever in the manner of carrying out their services.
In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the
privilege of pursuing their occupation within the premises and grounds of whatever club they do their work
in. They work for the club to which they attach themselves on sufference but, on the other hand, also without
having to observe any working hours, free to leave anytime they please, to stay away for as long they like. It
is not pretended that if found remiss in the observance of said rules, any discipline may be meted them
beyond barring them from the premises which, it may be supposed, the Club may do in any case even
absent any breach of the rules, and without violating any right to work on their part. All these considerations
clash frontally with the concept of employment.
On the rotation system enforced by the Club
This is less a measure of employer control than an assurance that the work is fairly distributed, a caddy who
is absent when his turn number is called simply losing his turn to serve and being assigned instead the last
number for the day.
On the Clubs suggestion of rates to be paid
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On the contrary to the stand that this suggests the Clubs control over the caddies, the suggesting shows
that the Club has not the measure of control over the incidents of the caddies' work and compensation that
an employer would possess. It is the Clubs guests who decides how much they will pay to the caddies, and
even whether they will pay them or not.
Other circumstances showing lack of Clubs control over means and methods of caddying
Club has no means of compelling the presence of a caddy. A caddy is not required to
exercise his occupation in the premises of petitioner. He may work with any other golf club
or he may seek employment as a caddy or otherwise with any entity or individual without
restriction by the Club.
The caddies are not required to render a definite number of hours of work on a single day.
Even the group rotation of caddies is not absolute because a player is at liberty to choose
a caddy of his preference regardless of the caddy's order in the rotation.
A caddy who has rendered services to a player on one day may still find sufficient time to work elsewhere.
Under such circumstances, he may then leave the premises of petitioner and go to such other place of work
that he wishes. Or a caddy who is on call for a particular day may deliberately absent himself if he has more
profitable caddying, or another, engagement in some other place. These are things beyond petitioner's
control and for which it imposes no direct sanctions on the caddies.
3.
ENCYCLOPEDIA BRITANNICA (Philippines), INC. vs. NLRC
G.R. No. 87098, November 4, 1996.
Facts: Limjoco was a Sales Division of Encyclopedia Britannica and was in charge of selling the products
through some sales representatives. As compensation, he would receive commissions from the products
sold by his agents. He was also allowed to use the petitioners name, goodwill and logo. It was agreed that
office expenses would be deducted from Limjocos commissions.
In 1974, Limjoco resigned to pursue his private business and filed a complaint against petitioner for
alleged non-payment of separation pay and other benefits and also illegal deduction from sales
commissions. Petitioner alleged that Limjoco was not an employee of the company but an independent
dealer authorized to promote and sell its products and in return, received commissions therein. Petitioner
also claims that it had no control and supervision over the complainant as to the manners and means he
conducted his business operations. Limjoco maintained otherwise. He alleged he was hired by the petitioner
and was assigned in the sales department.
The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC also affirmed the
decision and opined that there was no evidence supporting allegation that Limjoco was an independent
contractor or dealer.
Issue: Whether or not there was an employee-employer relationship between the parties.
Ruling: There was no employee-employer relationship. In determining the relationship, the following
elements must be present: selection and engagement of the employee, payment of wages, power of
dismissal and power to control the employees conduct. The power of control is commonly regarded as the
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most crucial and determinative indicator of the presence or absence of an employee-employer relationship.
Under the control test, an employee-employer relationship exists where the person for whom the services
are performed reserves a right to control not only the end to be achieved, but also the manner and means to
be employed in reaching that end.
The issuance of guidelines by the petitioner was merely guidelines on company policies which
sales managers follow and impose on their respective agents. Limjoco was not an employee of the
company since he had the free rein in the means and methods for conducting the marketing operations. He
was merely an agent or an independent dealer of the petitioner. He was free to conduct his work and he
was free to engage in other means of livelihood.
In ascertaining the employee-employer relationship, the factual circumstances must be considered.
The element of control is absent where a person who works for another does so more or less at his own
pleasure and is not subject to definite hours or conditions of work, and in turn is compensated in according
to the result of his efforts and not the amount thereof. Hence, there was no employee-employer relationship.

4.
CARUNGCONG vs. SUNLIFE
283 SCRA 319
Facts: Susan Carungcong began her career in the insurance industry in 1974 as an agent of Sun Life
Assurance Company of Canada (hereinafter Sun Life).
Now, it appears that sometime in November, 1989. Ms. Eleizer Sibayan, Manager of Sun Life's Internal
Audit Department, commenced an inquiry into the special fund availments of Carungcong and other New
Business Managers; this, allegedly because the Company's Vice President for Far East Asia, respondent
Lance Kemp, had been receiving reports of anomalies in relation thereto from unit managers and
agents.

These special fund availments are governed by the following portion of the Agreement of January 1,
1986 under the sub-head, "New Business Manager's Expenses," viz:
Sun Life agrees to reimburse the New Business Manager for actual reasonable expenses properly
incurred in performing his duties as New Business Manager provided such expenses are within the
guidelines issued by Sun Life from time to time and are incurred for the purposes of gaining or
producing income and that they are accounted for in the manner established by Sun Life and made
known to the New Business Manager.
Such reimbursement by Sun Life of said expenses will be made only upon the submission by the
New Business Manager of a statement in form and content acceptable to Sun Life detailing said
expenses with attached receipts.
It also appears that Ms. Sibayan drew up a report (Summary of Availments)

after having examined and
analyzed the pertinent records, and interviewed the unit managers and agents mentioned in the receipts
presented by Carungcong to support her claims for reimbursement of expenses for 1987, 1988 and 1989.
Thereafter, on January 4, 1990, and again on January 10, 1990, Carungcong was confronted with and
asked to explain the discrepancies set out in Sibayan's report. On January 11, 1990, she was given a letter
signed by "Merton V. Deveza, CLU, Director, Marketing," which advised of the termination of her
relationship with Sun Life, viz.:

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In our meeting with you yesterday we presented the charge of fraudulent reimbursement of the
Branch Special Fund against you. Accordingly, you admitted having committed said act.
For dishonesty, disloyalty and breach of your Agent's Agreement and New Business Manager's
Agreement with Sun Life of Canada dated June 10, 1974 and January 1, 1986, respectively, the
Management has decided to terminate you as Agent and New Business Manager of Sun Life of
Canada effective immediately.
Carungcong instituted proceedings for vindication in the Arbitration Branch of the National Labor Relations
Commission on January 16, 1990. She succeeded in obtaining a favorable judgment.

Labor Arbiter Ernesto
S. Dinopol found that there existed an employer-employee relationship between her and Sun Life; ruled that
she had been illegally dismissed, thus entitled to reinstatement without loss of seniority rights and other
benefits; and ordered Sun Life, and its co-respondents Lance Kemp and Merton Deveza,

jointly and
severally to pay her P12,475,973.25 as "back commissions," P8,000,000.00 as moral damages,
P2,000,000.00 as exemplary damages, and P2,047,597.32 as attorney's fees a total of P22,523,570.57.

On appeal, the National Labor Relations Commission reversed the Arbiter's judgment. It affirmed that no
employment relationship existed between Carungcong and Sun Life. Nevertheless, it awarded to her
P2,696,252.00 as "lost average commission" on the ground that during the appeal, she had neither been
restored to work nor reinstated in payroll.

However, the NLRC later eliminated this monetary award in a
second decision promulgated on October 28, 1994 on the basis of a motion for reconsideration of Sun Life
and its co-respondents. The NLRC declared itself without competence to make such an award absent an
employment relationship between the parties.

Opting not to file a motion for reconsideration of the Commission's judgment,

Carungcong forthwith initiated
the special civil action of certiorari at bar (after obtaining an extension of time to do so), in which she seeks
invalidation of the Commission's decision of October 28, 1994, and consequent restoration of the Labor
Arbiter's awards.
Issue: Whether or not Carungcong should be considered as an employee of Sun Life?
Carungcong arguments:
Although she was not, as "new business manager," required either to account for her time or perform her
duties in a fixed manner, she was nonetheless an employee subject to the control and supervision of Sun
Life like any other managerial employee. She brands as ludicrous the accusation leveled against her, of
having defrauded Sun Life of the sum of P6,000.00, since her annual income at that time was in excess of
P3,000,000.00.

She contends that the accusation was a mere fabrication of her Unit Managers, Jorge Chua
and Corazon de Mesa, who were promoted to Branch Managers after termination of her employment,

and
that she actually had no hand in the preparation of the vouchers involved in the imputed anomaly, this task
being entrusted to the branch office secretary, Lilet Ginete, selected and hired by Sun Life.
She also contends that in dismissing her, Sun Life failed to observe procedural due process. She was not
furnished with copies of the audit report of her supposedly fraudulent use of her special fund availments,
and was never afforded an opportunity to be heard by Sun Life officials prior to termination of her
employment.

She assails the decisions of the NLRC as tainted with bias and grave abuse of discretion,
particularly in ignoring the "deluge of evidence" adduced before the labor arbiter.
Sun Life and its co-respondents arguments:
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That the challenged decisions were in fact precisely based on Carungcong's so-called "deluge of
evidence," and thus cannot in any sense be deemed "capricious, whimsical, arbitrary or despotic."

They
invoke the familiar rule that the findings of fact of administrative agencies are accorded respect, if not indeed
finality, by this Court. The assert that jurisprudence and Carungcong's admissions before the Labor Arbiter
negate the existence of an employment relationship; that in truth Carungcong was duly informed of the
charge of fraud and dishonesty, a charge supported by adequate proof; and that therefore the cancellation
of the business relationship between them and Carungcong was valid and legal, effected with due process
and for just cause.
FINDINGS OF THE SUPREME COURT:
The record reveals the fraudulent character of these claims, that is to say, the unclean hands with
which Carungcong has come to court. Her claims are categorically belied by no less than the eight (8)
insurance managers and agents specifically named by her in her supporting documents, about whose
impartially or credibility the Court has been cited to no persuasive cause for doubt or misgiving. Jorge
Chua

and Corazon de Mesa

deposed that as regards the special fund raised by Carungcong for prizes,
awards, and outings, they had in fact contributed thereto but the latter had made it appear that she had
raised and disbursed the entire fund by herself, and although she later obtained reimbursement therefor in
the sum of more than P30,000.00, she never returned to them what they had contributed.
The record thus appears to establish adequate cause for Sun Life to terminate its relationship with
Susan Carungcong. Her attention was drawn to the perfidious nature of her claims for reimbursement; she
was accorded an opportunity to explain the same; she refused to do so.
Prescinding therefrom, the contracts she had willingly and knowingly signed with Sun
Life

repeatedly and clearly provided that said agreements were terminable by either party by written notice
with or without cause. Her "Career Agent's (or Unit Manager's) Agreement" inter alia provided for
termination of the agreement by death, or by written notice "with or without cause,"

Her "MANAGER'S
Supplementary Agreement." effective July 1, 1979, contained provisions regarding termination of the
agreement inter alia by written notice "without cause."

A subsequent agreement by which she was named
Manager for New Business, dated January 1, 1986, similarly provided for termination of relation, by among
others, notice in writing with or without cause.
Noteworthy is that this last agreement of January 1, 1986 emphasized, like the "Career Agent's (or
Unit Manager's) Agreement" first signed by her,

that in the performance of her duties defined herein.
Carungcong would be considered an independent contractor and not . . an employee of Sun Life," and that
"(u)nder no circumstance shall the New Business Manager and/or his employees be considered employees
of Sun Life."
Ruling: It is germane to advert to the fact, which should by now be apparent, that Carungcong was not your
ordinary run-of-the-mill employee, nor even your average managerial employee or supervisor. Her stated
annual income from her occupation is impressive by any standards: "in excess of P3,000,000.00," exclusive
of overriding commissions. Certainly, she may not be likened to an ordinary person applying for
employment, or an ordinary employee striving to keep his job, under the moral dominance of the hiring entity
or individual. By no means may Carungcong be considered as dealing, or having dealt, with Sun Life from
an inferior position, as a disadvantaged, morally-dominated person. She must be deemed as having
transacted with Sun Life's executives on more or less equal terms.
These considerations impel concurrence with the conclusions of the challenged decision and
resolution of respondent Commission which considered Carungcong as an independent contractor, not an
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employee of Sun Life. It is significant that this issue of the precise status of Carungcong as an independent
contractor, evidently deemed decisive by respondent Commission, was discussed by it at some length not
once, but twice, first in its Decision of July 29, 1994, and then in its second Decision of October 28, 1994
resolving the separate motions for reconsideration of the parties.
In the Decision of July 29, 1994, the Commission said:

A thorough review of the facts and evidence adduced on record compels us to rule in the negative
(on "the question of whether or not complainant Carungcong is a regular employee of
respondents").
Moreover, it is true that complainant Carungcong's duties and functions derived from her then
existing agreements/contracts were made subject to rules and regulations issued by respondent
company, and for that matter, have likewise been made subject of certain limitations imposed by
said respondent company. Nonetheless, these are not sufficient to accord the effect of establishing
employer-employee relationship absent in this case. This is so because the insurance business is
not just any other ordinary business. It is one that is imbued with public interest hence, it must be
governed by the rules and regulations of the state. The controls adverted to by complainant are
latent in the kind of business she is into and are mainly aimed at promoting the results the parties
so desire and do not necessarily create any employer-employee relationships, where the
employers' controls have to interfere in the methods and means by which the employee would like
to employ to arrive at the desired results.
For that matter, complainant Carungcong was never paid a fixed wage or salary but was mainly
paid by commissions, depending on the level and volume of her performance/production, the
number of trained agents, when taken in and assigned to her, being responsible for her added
income as she gets a certain percentage from the said agents' production as part of her
commission.
In the second judgment of October 28, 1994,

respondent Commission stressed the following points:
Complainant's "theory of the case" appears to be limited to pointing out that respondent company
issued rules and regulations to which she should conform. However, no showing has been made
that such rules and regulations effectively and actually controlled or restricted her choice of
methods in performing her duties as New Business Manager. Without such proof, there can be no
plausible reason to believe that her contractual declaration that she was an independent contractor
has been qualified.
Of course, Carungcong disagrees with these dispositions. Quite possibly, others may share her opinion, and
insist that there was error in either the appreciation of the evidence or the choice of law or jurisprudence
applied by the Commission. But such errors of judgment as might be ascribed to the Commission's
reasoned conclusions may not be accorded so egregious a cast as to be fairly considered to constitute
grave abuse of discretion meriting correction by the extraordinary writ of certiorari.
It should be apparent that no whimsicality, capriciousness, or want of logic or foundation may rationally be
imputed to NLRC in its marshaling and analysis of the evidence, its identification of the issues, in its
assessment of the arguments thereon, and its conclusions on the basis thereof. It is simply not possible in
the premises to opine that grave abuse of discretion was attendant on its challenged decisions.
WHEREFORE, the petition is DISMISSED, with costs against petitioner.
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5.
ROGELIO E. RAMOS and ERLINDA RAMOS, in their own behalf and as natural guardians of the
minors, ROMMEL RAMOS, ROY RODERICK RAMOS, and RON RAYMOND RAMOS vs.
COURT OF APPEALS, DE LOS SANTOS MEDICAL CENTER, DR. ORLINO HOSAKA and DR.
PERFECTA GUTIERREZ
Facts: Erlinda Ramos was seeking professional medical help for the removal of stones in her gall
bladder.Dr. Hosaka advised her to undergo surgery.The operation was scheduled for June 17, 1985 at 9:00
in the morning at private respondent De Los Santos Medical Center (DLSMC). Since neither petitioner
Erlinda nor her husband, petitioner Rogelio, knew of any anesthesiologist, Dr. Hosaka recommended to
them the services of Dr. Gutierrez.The operation was scheduled for June 17, 1985 at 9:00 in the morning at
private respondent De Los Santos Medical Center (DLSMC).Dr. Hosaka finally arrived at the hospital at
around 12:10 in the afternoon, or more than three (3) hours after the scheduled operation.Cruz, who was
then still inside the operating room, heard about Dr. Hosakas arrival. While she held the hand of Erlinda,
Cruz saw Dr. Gutierrez trying to intubate the patient. Cruz heard Dr. Gutierrez utter: "ang hirap ma-intubate
nito, mali yata ang pagkakapasok. O lumalaki ang tiyan." Cruz noticed a bluish discoloration of Erlindas
nailbeds on her left hand. She (Cruz) then heard Dr. Hosaka instruct someone to call Dr. Calderon, another
anesthesiologist. When he arrived, Dr. Calderon attempted to intubate the patient. The nailbeds of the
patient remained bluish, thus, she was placed in a trendelenburg position a position where the head of the
patient is placed in a position lower than her feet. At this point, Cruz went out of the operating room to
express her concern to petitioner Rogelio that Erlindas operation was not going well.Cruz quickly rushed
back to the operating room and saw that the patient was still in trendelenburg position. At almost 3:00 in the
afternoon, she saw Erlinda being wheeled to the Intensive Care Unit (ICU). The doctors explained to
petitioner Rogelio that his wife had bronchospasm. Erlinda stayed in the ICU for a month. She was released
from the hospital only four months later or on November 15, 1985. Since the ill-fated operation, Erlinda
remained in comatose condition until she died on August 3, 1999.
Issues:
There were three issues, but since this is a digest, I think it is more important to dwell on what is
related to our topic in class
1. WHETHER OR NOT DR. ORLINO HOSAKA (SURGEON) IS LIABLE FOR NEGLIGENCE;
2. WHETHER OR NOT DR. PERFECTA GUTIERREZ (ANESTHESIOLOGIST) IS LIABLE FOR
NEGLIGENCE; AND
3. WHETHER OR NOT THE HOSPITAL IS LIABLE FOR ANY ACT OF NEGLIGENCE COMMITTED BY
THEIR VISITING CONSULTANT SURGEON AND ANESTHESIOLOGIST.

DSLMC opposes their liability by saying that there was no employer-employee relationship that existed
between them and the doctors (Drs. Hosaka and Guttierez); absent such relationship they cannot be held
liable for the negligence of the doctors.
Remember the four fold test:
Selection and engagement of services;
payment of wages
the power to hire and fire and
the power to control not only the end to be achieved, but the means to be used in reaching such an end

A. As to selection and the power to hire and fire
The hospital merely accredits the doctors and gives them the privilege to maintain a clinic and admit
patients within the hospital. The admission of a physician to membership in DLSMCs medical staff as active
or visiting consultant is first decided upon by the Credentials Committee thereof, which is composed of the
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heads of the various specialty departments such as the Department of Obstetrics and Gynecology,
Pediatrics, Surgery with the department head of the particular specialty applied for as chairman.
The Credentials Committee then recommends to DLSMC's Medical Director or Hospital Administrator the
acceptance or rejection of the applicant physician, and said director or administrator validates the
committee's recommendation.
As to disciplinary action, the hospital director is only an ex-officio chairman of the disciplining committee, the
matter is initiated by the department to whom the doctor belongs and is referred to the Ethics Committee
composed of the departments specialty heads
B.As to payment of wages
It is not the hospital, but the patient, who pays the doctor for his/her consultation fees
The contract entered into by the patient with the doctor (A) is different from the one the patient enters with
the hospital (B).
A is a contract for the service of the doctor, to render to the patient medical services
B is contract by the hospital to provide facilities and make its staff available to the patient (staff means the
lab technicians, nurses, etc. Apparently does not include the doctors).
It was also not shown that the hospital failed to provide such facilities to Ramos
As to power of control
Lastly, DLSMC argues that when a doctor refers a patient for admission in a hospital, it is the
doctor who prescribes the treatment to be given to said patient. The hospitals obligation is limited to
providing the patient with the preferred room accommodation, the nutritional diet and medications
prescribed by the doctor, the equipment and facilities necessary for the treatment of the patient, as well as
the services of the hospital staff who perform the ministerial tasks of ensuring that the doctors orders are
carried out strictly.

RULING:
The Court found that the hospital was not to be held solidarily liable with the doctors for their
negligence. They were absolved from ANY liability.
Other matters:
The damages awarded to Ramos were modified, considering that she had already died, negating
the need for further medical care and expenses.

6.
JOSE Y. SONZ vs. ABS-CBN BROADCASTING CORPORATION

Facts:ABS-CBN Broadcasting Corporation (ABS-CBN) signed an Agreement (Agreement) with the Mel
and Jay Management and Development Corporation (MJMDC). ABS-CBN was represented by its
corporate officers while MJMDC was represented by SONZA
- As AGENT, MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as talent for radio and
television. The services are enumerated as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays
- SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National
Capital Region. He complained that ABS-CBN did not pay his salaries, separation pay, service incentive
leave pay, 13
th
month pay, signing bonus, travel allowance and amounts due under the Employees Stock
Option Plan (ESOP).
- ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed
between the parties
- Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at PCIBank
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- The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction.
Stating:
a talent as above-described cannot be considered as an employee by reason of the peculiar
circumstances surrounding the engagement of his services. Complainant was engaged by respondent by
reason of his peculiar skills and talent as a TV host and a radio broadcaster. Unlike an ordinary employee,
he was free to perform the services he undertook to render in accordance with his own style.
Agreement are certainly very much higher than those generally given to employees. For one,
complainant Sonzas monthly talent fees amount to a staggering P317,000. Moreover, his engagement as a
talent was covered by a specific contract. Likewise, he was not bound to render eight (8) hours of work per
day as he worked only for such number of hours as may be necessary.
The fact that per the May 1994 Agreement complainant was accorded some benefits normally
given to an employee is inconsequential. Whatever benefits complainant enjoyed arose from specific
agreement by the parties and not by reason of employer-employee relationship.
All these benefits are merely talent fees and other contractual benefits and should not be deemed
as salaries, wages and/or other remuneration accorded to an employee, notwithstanding the nomenclature
appended to these benefits.
The fact that complainant was made subject to respondents Rules and Regulations, likewise,
does not detract from the absence of employer-employee relationship
The line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result, create no employer-employee relationship
unlike the second, which address both the result and the means to achieve
- SONZA appealed to the NLRC but it affirmed the labor Arbiters ruling.
- SONZA filed a special civil action for certiorari before the Court of Appeals. Court of Appeals rendered a
Decision dismissing the case
- Hence, this petition
SONZA contends that the Labor Arbiter has jurisdiction over the case because he was an employee of ABS-
CBN. On the other hand, ABS-CBN insists that the Labor Arbiter has no jurisdiction because SONZA was
an independent contractor.
SONZA maintains that all essential elements of an employer-employee relationship are present in this case.
Case law has consistently held that the elements of an employer-employee relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employers power to control the employee on the means and methods by which the work is
accomplished.
[18]
The last element, the so-called control test, is the most important element.

Ruling:
A. Selection and Engagement of Employee
- ABS-CBN engaged SONZAs services to co-host its television and radio programs because of SONZAs
peculiar skills, talent and celebrity status
- Independent contractors often present themselves to possess unique skills, expertise or talent to
distinguish them from ordinary employees. The specific selection and hiring of SONZA,because of his
unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative,
but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique
skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but
would have hired him through its personnel department just like any other employee
B. Payment of Wages
- ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC
- All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If
SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as
13 | P a g e

SSS, Medicare, x x x and 13
th
month pay which the law automatically incorporates into every employer-
employee contract.
- SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of
the ordinary that they indicate more an independent contractual relationship rather than an employer-
employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of
SONZAs unique skills, talent and celebrity status not possessed by ordinary employees. Obviously, SONZA
acting alone possessed enough bargaining power to demand and receive such huge talent fees for his
services. The power to bargain talent fees way above the salary scales of ordinary employees is a
circumstance indicative, but not conclusive, of an independent contractual relationship.
- The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as
an independent contractor. The parties expressly agreed on such mode of payment
C. Power of Dismissal
- For violation of any provision of the Agreement, either party may terminate their relationship. SONZA
failed to show that ABS-CBN could terminate his services on grounds other than breach of contract, such as
retrenchment to prevent losses as provided under labor laws
- ABS-CBN agreed to pay SONZAs talent fees as long as AGENT and Jay Sonza shall faithfully and
completely perform each condition of this Agreement.

Even if it suffered severe business losses, ABS-CBN
could not retrench SONZA because ABS-CBN remained obligated to pay SONZAs talent fees during the
life of the Agreement. This circumstance indicates an independent contractual relationship between SONZA
and ABS-CBN.
- The manner by which SONZA terminated his relationship with ABS-CBN is immaterial. Whether SONZA
rescinded the Agreement or resigned from work does not determine his status as employee or independent
contractor.
D. Power of Control
Since there is no local precedent on whether a radio and television program host is an employee or an
independent contractor, we refer to foreign case law in analyzing the present case.
In Alberty-Vlez v. Corporacin De Puerto Rico Para La Difusin Pblica (WIPR): It ruled that a television
program host is an independent contractor.
First, a television actress is a skilled position requiring talent and training not available on-the-job.
Alberty possesses a masters degree in public communications and journalism; is trained in dance, singing,
and modeling; taught with the drama department at the University of Puerto Rico; and acted in several
theater and television productions .
Second, Alberty provided the tools and instrumentalities necessary for her to perform. Specifically, she
provided, or obtained sponsors to provide, the costumes, jewelry, and other image-related supplies and
services necessary for her appearance.
- In applying the control test to the present case, we find that SONZA is not an employee but an
independent contractor. The control test is the most important test our courts apply in distinguishing an
employee from an independent contractor. This test is based on the extent of control the hirer exercises
over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is
deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely
the worker is considered an independent contractor
First,
ABS-CBN engaged SONZAs services specifically to co-host the Mel & Jay programs. ABS-CBN
did not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent.
How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs
control. SONZA did not have to render eight hours of work per day. The Agreement required SONZA to
attend only.
The rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. ABS-
CBN could not dictate the contents of SONZAs script. However, the Agreement prohibited SONZA from
criticizing in his shows ABS-CBN or its interests.

The clear implication is that SONZA had a free hand on
what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. ABS-CBNs sole
14 | P a g e

concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise
control over the means and methods of performance of SONZAs work.
Although ABS-CBN did have the option not to broadcast SONZAs show, ABS-CBN was still obligated
to pay SONZAs talent fees. Thus, even if ABS-CBN was completely dissatisfied with the means and
methods of SONZAs performance of his work, or even with the quality or product of his work, ABS-CBN
could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZAs show
but ABS-CBN must still pay his talent fees in full.
ABS-CBN could not terminate or discipline SONZA even if the means and methods of performance
of his work - how he delivered his lines and appeared on television - did not meet ABS-CBNs
approval. This proves that ABS-CBNs control was limited only to the result of SONZAs work
In either case, ABS-CBN must still pay SONZAs talent fees in full until the expiry of the Agreement.
No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the Mel & Jay
programs. However, the equipment, crew and airtime are not the tools and instrumentalities SONZA
needed to perform his job. What SONZA principally needed were his talent or skills and the costumes
necessary for his appearance.

A radio broadcast specialist who works under minimal supervision is an independent contractor
Second,
The Agreement stipulates that SONZA shall abide with the rules and standards of performance
covering talents of ABS-CBN. The Agreement does not require SONZA to comply with the rules and
standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA
under the Agreement refers to the Television and Radio Code of the Kapisanan ng mga Broadcaster sa
Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics.
This code applies to broadcasters, not to employees of radio and television stations. Clearly, the
rules and standards of performance referred to in the Agreement are those applicable to talents and not to
employees of ABS-CBN .
In this case, SONZA failed to show that these rules controlled his performance. We find that these
general rules are merely guidelines towards the achievement of the mutually desired result.
Lastly,
Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an
independent contractor can validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control.
The hiring of exclusive talents is not designed to control the means and methods of work of the talent,
but simply to protect the investment of the broadcast station.
- In a labor-only contract, there are three parties involved: (1) the labor-only contractor; (2) the employee
who is ostensibly under the employ of the labor-only contractor; and (3) the principal who is deemed the
real employer
- The labor-only contractor is the agent of the principal. The law makes the principal responsible to the
employees of the labor-only contractor as if the principal itself directly hired or employed the employees.
These circumstances are not present in this case.
- In this case, only two parties involved under the Agreement, namely, SONZA and ABS-CBN. MJMDC
merely acted as SONZAs agent. The Agreement expressly states that MJMDC acted as the AGENT of
SONZA. The records do not show that MJMDC acted as ABS-CBNs agent. MJMDC, which stands for Mel
and Jay Management and Development Corporation, is a corporation organized and owned by SONZA and
TIANGCO.
- It is absurd to hold that MJMDC, which is owned, controlled, headed and managed by SONZA, acted as
agent of ABS-CBN in entering into the Agreement with SONZA, who himself is represented by MJMDC
- MJMDC is a management company devoted exclusively to managing the careers of SONZA, and not
engaged in any other business, not even job contracting.

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7.
ANGELITO LAZARO, PROPRIETOR OF ROYAL STAR MARKETING VS. SOCIAL SECURITY
COMMISSION ROSALINA LAUDATO AND CA.
GR No. 138254, 30 July 2004

Principles of law: for the purposes of coverage under the Social Security Act, the determination of employer-
employee relationship warrants the application of the control test, that is, whether the employer controls or
has reserved the right to control the employee, not only as to the result of the work done, but also as to the
means and methods by which the same is accomplished

Facts: Rosalina Laudato filed a case against 3 of her employers including Royal Star Marketing for
remittance of her unpaid monthly SSC contributions;
Despite her being a supervisor of sales agents for Royal Star Marketing, said company failed to report her to
SSC for compulsory coverage;
As a defense, Royal Star claims that Laudato was merely an agent paid on a commission basis and that she
was not subject to definite hours and conditions of work, hence, she is not even an employee of Royal Star;
Applying the control test, SSC ruled that Laudato was an employee of Royal Star, on the other hand,
Royal Star claims that they had no control over her activities and hence, she was not employee;
Issue: Is Laudato an employee considering that she does not have fixed hours of work?
What is the proper determination of employee-employer relationship for purposes of coverage
under Social Security Act?
Ruling:Yes. Citing Cosmopolitan Funeral Homes v. Maalat, this Court declared that there was an employer-
employee relationship, noting that [the] supervisor, although compensated on commission basis, [is]
exempt from the observance of normal hours of work for his compensation is measured by the number of
sales he makes.
The proper determination is the control test. That is, whether the employer controls or has reserved the
right to control the employee, not only as to the result of the work done, but also as to the means and
methods by which the same is accomplished.

8.

PHIL. GLOBAL COMM. VS DE VERA
G.R. No. 157214; June 7, 2005

Principle of Law: Any agreement may provide that one party shall render services for and in behalf of
another, no matter how necessary for the latters business, even without being hired as an employee. There
was no employee-employer relationship in a case where element of control of the employer over the
employee is absent.
Facts: Philippine Global Communications inc. is a corporation engaged in the business of communication
services and allied activities while Ricardo de Vera is a physician by profession whom petitioner enlisted to
attend to the medical needs of its employees. The controversy rose when petitioner terminated his
engagement.
In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized the
respondents proposal in a document denominated as retainership contract which will be for a period of one
year, subject to renewal and clearly stated that respondent will cover the retainership the company
previously with Dr. Eulau. The agreement went until 1994, in the years 1995-1996, it was renewed verbally.
The turning point of the parties relationship was when petitioner, thru a letter bearing the subject
16 | P a g e

TERMINATION RETAINERSHIP CONTRACT, informed Dr. de Vera of its decision to discontinue the
latters retainer contract because the management has decided that it would be more practical to provide
medical services to its employees through accredited hospitals near the company premises.
On January 1997, de Vera filled a complaint for illegal dismissal before the NLRC, alleging that he
had been actually employed by the company as its company physician since 1991. The commission
rendered decision in favor of Philcom and dismissed the complaint saying that de Vera was an independent
contractor. On appeal to NLRC, it reversed the decision of the Labor Arbiter stating that de Vera is a regular
employee and directed the company to reinstate him. Philcom appealed to the CA where it rendered
decision deleting the award but reinstating de Vera. Philcom filed this petition involving the difference of a
job contracting agreements from employee-employer relationship.
Issue: Whether or not there exists an employee-employer relationship between the parties.
Ruling:SC ruled that there was no such relationship existing between Dr. de Vera and Phil. Com. Upon
reading the contract dated September 6, 1982, signed by the complainant himself , it clearly states that is a
retainership contract. The retainer fee is indicated thereon and the duration of the contract for one year is
also clearly indicated in paragraph 5 of the Retainership Contract.
The complainant cannot claim that he was unaware that the contract was good only for one year, as he
signed the same without any objections. The complainant also accepted its renewal every year thereafter
until 1994. As a literate person and educated person, the complainant cannot claim that he does not know
what contract he signed and that it was renewed on a year to year basis.
The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with
petitioner, he never was included in its payroll; was never deducted any contribution for remittance to the
Social Security System (SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding
tax for his professional fee, in accordance with the National Internal Revenue Code, matters which are
simply inconsistent with an employer-employee relationship.
The elements of an employer-employee relationship are wanting in this case. The record are replete with
evidence showing that respondent had to bill petitioner for his monthly professional fees. It simply runs
against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to
receive his salary.
The power to terminate the parties relationship was mutually vested on both. Either may terminate
the arrangement at will, with or without cause.
Remarkably absent is the element of control whereby the employer has reserved the right to control the
employee not only as to the result of the work done but also as to the means and methods by which the
same is to be accomplished.
Petitioner had no control over the means and methods by which respondent went about performing
his work at the company premises. In fine, the parties themselves practically agreed on every terms and
conditions of the engagement, which thereby negates the element of control in their relationship.
Petition is GRANTED.
9.
ABS-CBN vs Nazareno
G.R. 164156, 2006
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Facts:ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production
assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio
programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued
ABS-CBN employees identification cards and were required to work for a minimum of eight hours a day,
including Sundays and holidays. They were made to: a) Prepare, arrange airing of commercial broadcasting
based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate, arrange personalities
for air interviews; c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or
incoming reports; d) Facilitate, prepare and arrange airtime schedule for public service announcement and
complaints; e) Assist, anchor program interview, etc; and f) Record, log clerical reports, man based control
radio.

Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining
Agreement (CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since
petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the
CBA.

Due to a memorandum assigning PAs to non-drama programs, and that the DYAB studio
operations would be handled by the studio technician. There was a revision of the schedule and
assignments and that respondent Gerzon was assigned as the full-time PA of the TV News Department
reporting directly to Leo Lastimosa.

On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and
13
th
Month Pay with Damages against the petitioner before the NLRC.

Issue: WON the respondents are regular employees?

Held: Respondents are considered regular employees of ABS-CBN and are entitled to the benefits granted
to all regular employees.

Where a person has rendered at least one year of service, regardless of the nature of the activity
performed, or where the work is continuous or intermittent, the employment is considered regular as long as
the activity exists. The reason being that a customary appointment is not indispensable before one may be
formally declared as having attained regular status. Article 280 of the Labor Code provides:
REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an 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.

Any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed
regular with respect to the activity performed and while such activity actually exists. The fact that
respondents received pre-agreed talent fees instead of salaries, that they did not observe the required
office hours, and that they were permitted to join other productions during their free time are not conclusive
of the nature of their employment. They are regular employees who perform several different duties under
the control and direction of ABS-CBN executives and supervisors.

18 | P a g e

There are two kinds of regular employees under the law: (1) those engaged to perform activities which
are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees
who have rendered at least one year of service, whether continuous or broken, with respect to the activities
in which they are employed.

What determines whether a certain employment is regular or otherwise is the character of the activities
performed in relation to the particular trade or business taking into account all the circumstances, and in
some cases the length of time of its performance and its continued existence.

The employer-employee relationship between petitioner and respondents has been proven by the ff:

First. In the selection and engagement of respondents, no peculiar or unique skill, talent or
celebrity status was required from them because they were merely hired through petitioners
personnel department just like any ordinary employee.

Second. The so-called talent fees of respondents correspond to wages given as a result of an
employer-employee relationship. Respondents did not have the power to bargain for huge talent
fees, a circumstance negating independent contractual relationship.

Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and
respondents are highly dependent on the petitioner for continued work.

Fourth. The degree of control and supervision exercised by petitioner over respondents through its
supervisors negates the allegation that respondents are independent contractors.

The presumption is that when the work done is an integral part of the regular business of the employer and
when the worker, relative to the employer, does not furnish an independent business or professional
service, such work is a regular employment of such employee and not an independent contractor.

10.

ANGELINA FRANCISCO vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI,
TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA
G.R. No. 170087 August 31, 2006
Facts: In 1995, petitioner was hired by Kasei Corporation as Accountant and Corporate Secretary, and as
Liaison Officer to the City of Makati. In 1996, petitioner was designated as Acting Manager while her old
position as accountant was accorded to Gerry Nino, and she did so for five years.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager and was allegedly required to sign
a prepared resolution for the replacement but was assured that she will still be connected with Kasei
Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters. Thereafter, Kasei
Corporation reduced her salary. Petitioner made repeated follow-ups with the company cashier but she was
advised that the company was not earning well.
On October 15, 2001, petitioner asked for her salary but she was informed that she is no longer connected
with the company. Since she was no longer paid her salary, petitioner did not report for work and filed an
action for constructive dismissal before the labor arbiter.
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The Labor Arbiter found that petitioner was illegally dismissed.
Issues: The core issues to be resolved in this case are (1) whether there was an employer-employee
relationship between petitioner and private respondent Kasei Corporation; and if in the affirmative, (2)
whether petitioner was illegally dismissed.
Ruling: The answer is both in the affirmative.
The court held that the better approach would therefore be to adopt a two-tiered test involving: (1) the
putative employers power to control the employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic realities of the activity or relationship.
Hence, determination of such a relationship depends upon the circumstances of the whole economic
activity, such as: (1) the extent to which the services performed are an integral part of the employers
business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree of
control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of
initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer; and (7) the degree of
dependency of the worker upon the employer for his continued employment in that line of business. The
proper standard of economic dependence is whether the worker is dependent on the alleged employer for
his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because
she was under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. It
is therefore apparent that petitioner is economically dependent on the respondent corporation for her
continued employment in the latters line of business.
There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was
selected and engaged by the company for compensation, and is economically dependent upon respondent
for her continued employment in that line of business. More importantly, Respondent Corporation had the
power to control petitioner with the means and methods by which the work is to be accomplished.
The court stated where an employee ceases to work due to a demotion of rank or a diminution of pay, an
unreasonable situation arises which creates an adverse working environment rendering it impossible for
such employee to continue working for her employer (Inc. v. Florendo-Flores). Hence, her severance from
the company was not of her own making and therefore amounted to an illegal termination of employment.
11.

NOGALES ET AL. VS CAPITOL MEDICAL CENTER ET AL.
G.R. No. 142625, December 19, 2006

Facts:Pregnant with her fourth child, Corazon Nogales (Corazon), who was then 37 years old, was under
the exclusive prenatal care of Dr. Oscar Estrada (Dr. Estrada) beginning on her fourth month of pregnancy
or as early as December 1975. While Corazon was on her last trimester of pregnancy, Dr. Estrada noted an
increase in her blood pressure and development of leg edema

indicating preeclampsia,

which is a
dangerous complication of pregnancy.

20 | P a g e

Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting Corazon and
Rogelio Nogales (Spouses Nogales) to see Dr. Estrada at his home. After examining Corazon, Dr.
Estrada advised her immediate admission to the Capitol Medical Center (CMC).

On 26 May 1976, Corazon was admitted at 2:30 a.m. at the CMC after the staff nurse noted the written
admission request

of Dr. Estrada. Upon Corazons admission at the CMC, Rogelio Nogales (Rogelio)
executed and signed the Consent on Admission and Agreement and Admission Agreement.

Corazon
was then brought to the labor room of the CMC.

Eventually, Corazon died after giving birth to the child, which prompted the petitioners to file a complaint for
damages against CMC, Dr. Estrada and other physicians and a certain nurse for Corazons death.
Petitioners mainly contended that defendant physicians and CMC personnel were negligent in the treatment
and management of Corazon's condition. Petitioners charged CMC with negligence in the selection and
supervision of defendant physicians and hospital staff.

Issue:WON there exists an employer-employee relationship
WON CMC is vicariously liable for the negligence of Dr. Estrada

Ruling: Dr. Estrada is not an employee of CMC, but an independent contractor. However, CMC is still
vicariously liable

CMC disclaims liability by asserting that Dr. Estrada was a mere visiting physician and that it admitted
Corazon because her physical condition then was classified an emergency obstetrics case.

CMC alleges that Dr. Estrada is an independent contractor for whose actuations CMC would be a total
stranger. CMC maintains that it had no control or supervision over Dr. Estrada in the exercise of his
medical profession.

In Ramos v. Court of Appeals, Court had the occasion to determine the relationship between a hospital and
a consultant or visiting physician and the liability of such hospital for that physician's negligence:

In other words, private hospitals, hire, fire and exercise real control over their attending and visiting
consultant staff. While consultants are not, technically employees, a point which respondent hospital
asserts in denying all responsibility for the patients condition, the control exercised, the hiring, and the right
to terminate consultants, all fulfills the important hallmarks of an employer-employee relationship, with the
exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test
is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating
responsibility in medical negligence cases, an employer-employee relationship in effect exists between
hospitals and their attending and visiting physicians.

The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article
2180 of the Civil Code which considers a person accountable not only for his own acts but also for those of
others based on the formers responsibility under a relationship of patria potestas. x x x

While the Court in Ramos did not expound on the control test, such test essentially determines whether an
employment relationship exists between a physician and a hospital based on the exercise of control over the
physician as to details. Specifically, the employer (or the hospital) must have the right to control both the
means and the details of the process by which the employee (or the physician) is to accomplish his task.

21 | P a g e

After a thorough examination of the voluminous records of this case, the Court finds no single evidence
pointing to CMCs exercise of control over Dr. Estradas treatment and management of Corazons condition.
It is undisputed that throughout Corazons pregnancy, she was under the exclusive prenatal care of Dr.
Estrada. At the time of Corazons admission at CMC and during her delivery, it was Dr. Estrada, assisted by
Dr. Villaflor, who attended to Corazon. There was no showing that CMC had a part in diagnosing Corazons
condition. While Dr. Estrada enjoyed staff privileges at CMC, such fact alone did not make him an
employee of CMC. CMC merely allowed Dr. Estrada to use its facilities when Corazon was about to give
birth, which CMC considered an emergency. Considering these circumstances, Dr. Estrada is not an
employee of CMC, but an independent contractor.

In general, a hospital is not liable for the negligence of an independent contractor-physician. There is,
however, an exception to this principle. The hospital may be liable if the physician is the ostensible agent
of the hospital. This exception is also known as the doctrine of apparent authority. In Gilbert v. Sycamore
Municipal Hospital, the Illinois Supreme Court explained the doctrine of apparent authority in this wise:

Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a
physician providing care at the hospital, regardless of whether the physician is an independent contractor,
unless the patient knows, or should have known, that the physician is an independent contractor. The
elements of the action have been set out as follows:

For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that: (1) the
hospital, or its agent, acted in a manner that would lead a reasonable person to conclude that the individual
who was alleged to be negligent was an employee or agent of the hospital; (2) where the acts of the
agent create the appearance of authority, the plaintiff must also prove that the hospital had knowledge of
and acquiesced in them; and (3) the plaintiff acted in reliance upon the conduct of the hospital or its agent,
consistent with ordinary care and prudence.

The element of holding out on the part of the hospital does not require an express representation by the
hospital that the person alleged to be negligent is an employee. Rather, the element is satisfied if the
hospital holds itself out as a provider of emergency room care without informing the patient that the care is
provided by independent contractors.

The doctrine of apparent authority essentially involves two factors to determine the liability of an
independent-contractor physician.

The first factor focuses on the hospitals manifestations and is sometimes described as an inquiry whether
the hospital acted in a manner which would lead a reasonable person to conclude that the individual who
was alleged to be negligent was an employee or agent of the hospital. In this regard, the hospital need not
make express representations to the patient that the treating physician is an employee of the hospital; rather
a representation may be general and implied.

The doctrine of apparent authority is a species of the doctrine of estoppel. Estoppel rests on this rule:
Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to
believe a particular thing true, and to act upon such belief, he cannot, in any litigation arising out of such
declaration, act or omission, be permitted to falsify it.

In the instant case, CMC impliedly held out Dr. Estrada as a member of its medical staff. Through CMCs
acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales to believe that
Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate such authority.

22 | P a g e

First, CMC granted staff privileges to Dr. Estrada; second, CMC made Rogelio sign consent forms printed
on CMC letterhead; third, Dr. Estradas referral of Corazons profuse vaginal bleeding to Dr. Espinola, Head
of the Obstetrics and Gynecology Department of CMC, gave the impression that Dr. Estrada as a member
of CMCs medical staff was collaborating with other CMC-employed specialists in treating Corazon.

The second factor focuses on the patients reliance. It is sometimes characterized as an inquiry on whether
the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and
prudence.

The records show that the Spouses Nogales relied upon a perceived employment relationship with CMC in
accepting Dr. Estrada's services. Rogelio testified that he and his wife specifically chose Dr. Estrada to
handle Corazon's delivery not only because of their friend's recommendation, but more importantly because
of Dr. Estrada's "connection with a reputable hospital, the [CMC]." In other words, Dr. Estrada's relationship
with CMC played a significant role in the Spouses Nogales' decision in accepting Dr. Estrada's services as
the obstetrician-gynecologist for Corazon's delivery. Moreover, as earlier stated, there is no showing that
before and during Corazon's confinement at CMC, the Spouses Nogales knew or should have known that
Dr. Estrada was not an employee of CMC.

Likewise unconvincing is CMCs argument that petitioners are estopped from claiming damages based on
the Consent on Admission and Consent to Operation. The documents do not expressly release CMC from
liability for injury to Corazon due to negligence during her treatment or operation. Neither do the consent
forms expressly exempt CMC from liability for Corazons death due to negligence during such treatment or
operation. Such release forms, being in the nature of contracts of adhesion, are construed strictly against
hospitals. Besides, a blanket release in favor of hospitals from any and all claims, which includes claims
due to bad faith or gross negligence, would be contrary to public policy and thus void.

Even simple negligence is not subject to blanket release in favor of establishments like hospitals but may
only mitigate liability depending on the circumstances. When a person needing urgent medical attention
rushes to a hospital, he cannot bargain on equal footing with the hospital on the terms of admission and
operation. Such a person is literally at the mercy of the hospital. There can be no clearer example of a
contract of adhesion than one arising from such a dire situation. Thus, the release forms of CMC cannot
relieve CMC from liability for the negligent medical treatment of Corazon.

12.

COCA COLA BOTTLES VS. DR. CLIMACO
GR No. 146881 February 5, 2007

Facts: Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-cola Bottlers Phil.(petitioner) by
virtue of a Retainer Agreement. Among the terms and conditions under their retainer agreement are:
That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31, 1988. Either party may
terminate the contract upon giving a 30-day written notice to the other;
That petitioner shall compensate respondent a retainer fee of P3,800/month. The DOCTOR may
charge professional fee for hospital services rendered in line with his specialization;
That in consideration of the retainers fee, the DOCTOR agrees to perform the duties and
obligations in the COMPREHENSIVE MEDICAL PLAN, made an integral part of this retainer agreement;
That the DOCTOR shall observe clinic hours at the companys premises from Monday to Saturday
of a minimum of two (2) hours each day or a maximum of TWO (2) hours each day or treatment from 7:30
a.m. to 8:30 a.m and 3:00pm to 4:00pm. It is further understood that the DOCTOR shall be on call at all
23 | P a g e

times during the other workshifts to attend to emergency case(s);
That no employee-employer relationship shall exist between the company and the DOCTOR.
The retainer agreement expired after 1 year. However, despite the non-renewal of the agreement,
respondent continued to perform his functions as company doctor to petitioner until he received a letter
dated march 9, 1995 from the company ending their retainership agreement.
Respondent thereafter filed a complaint before the NLRC seeking recognition as a regular
employee of petitioner and thus prayed from payment of all the benefits of a regular employee including
13th month pay, COLA, holiday pay, service incentive leave, and Christmas bonus.
Also, respondent filed another complaint for illegal dismissal against petitioner.
In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant complaint was dismissed by
the Labor Arbiters and subsequently affirmed by the NLRC on the ground that no employer-employee
relationship existed between petitioner company and respondent.
However when it was elevated to CA for review, the latter ruled that employer-employee
relationship existed between the parties after applying the four-fold test: (1) power to hire employee (2)
payment of wages (3) power to dismissal (4) and power to control over the employee with respect to the
means and methods by which the work is to be accomplished. The CA held it in this wise:
1. First, the agreement provide the company desires to engage on a retainer basis the services of a
physician and the said DOCTOR is accepting such engagement. This clearly shows that coca-cola
company exercised its power to hire.
2. Secondly, the agreement showed that petitioner would compensate the doctor for P3,800/month.
This would represent the element of payment of wages.
3. Thirdly, it was provided in the agreement that the same shall be valid only for 1 year. the said term
notwithstanding, either party may terminated the contract upon giving 30-day written notice. This
would show that petitioner had the power to dismissal.
4. Lastly, the agreement reveal that Coca-cola control over the conduct of respondent in the latters
performance of his duties sas a doctor for the company.

Hence, this petition filed by Coca-cola company
Issue:W/N there exist an employer-employee relationship between the parties.
Ruling: The Court agrees with the finding of the Labor Arbiter and the NLRC.
The Court held that the Labor Arbiter and the NLRC correctly found that petitioner company lacked the
power of control over the performance by respondent of his duties.
The Court citing the case of Neri vs. NLRC said, petitioner company, through the Comprehensive Medical
Plan, provided guidelines merely to ensure that the end result was achieved. In other words, what was
sought to be controlled by the petitioner company was actually the end result of the task. The guidelines or
the Comprehensive Medical Plan were laid down merely to ensure that the desired end result was achieved
but did not control the means and methods by which respondent performed his assigned tasks.
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The Supreme Court further held that, an employee is required to stay in the employers workplace or
proximately close thereto that he cannot utilize his time effectively and gainfully for his own purpose. Such is
not the prevailing situation here. The respondent does not dispute that fact that outside of the two (2) hours
that he is required to be at petitioner companys premises, he is not at all further required to just sit around
in the premises and wait for an emergency to occur so as to enable him from using such hours for his own
benefit and advantage. In fact, respondent maintains his own private clinic attending his private practice in
the city, where he services his patients and bills them accordingly.
The Court finds that the requirement to be on call for emergency cases do not amount to such control, but
are necessary incidents to the Retainership Agreement.
The Supreme Court also notes that the Agreement granted to both parties the power to terminate their
relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of
dismissal or termination.
Therefore, the petition was GRANTED.
13.

CALAMBA MEDICAL CENTER VS. NLRC
G.R. 176484 (2008)
Facts:Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr.
Merceditha Lanzanas as part of its team of resident physicians. Reporting at the hospital twice-a-week on
twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each. Resident physicians
were also given a percentage share out of fees charged for out-patient treatments, operating room
assistance and discharge billings, in addition to their fixed monthly retainer.
The work schedules of the members of the team of resident physicians were fixed by petitioner's medical
director Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax from them.
After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and a fellow
employee Diosdado Miscala, the former was given a preventive suspension and his wife Dr. Merceditha was
not given any schedule after sending the Memorandum. On March 1998, Dr. Ronaldo filed a complaint for
illegal suspension and Dr. Merceditha for illegal dismissal.
Issue: Whether or not there exists an employer-employee relationship between petitioner and the spouses-
respondents?
Ruling: Drs. Lanzanas were declared employees of the petitioner hospital.
Under the control test, an employment relationship exists between a physician and a hospital if the hospital
controls both the means and the details of the process by which the physician is to accomplish his task.
That petitioner exercised control over respondents gains light from the undisputed fact that in the
emergency room, the operating room, or any department or ward for that matter, respondents' work is
monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consent of
petitioner or its medical director, no operations can be undertaken in those areas. For control test to apply, it
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is not essential for the employer to actually supervise the performance of duties of the employee, it being
enough that it has the right to wield the power.
With respect to respondents' sharing in some hospital fees, this scheme does not sever the employment tie
between them and petitioner as this merely mirrors additional form or another form of compensation or
incentive similar to what commission-based employees receive as contemplated in Article 97 (f) of the Labor
Code.
Moreover, respondents were made subject to petitioner-hospital's Code of Ethics,the provisions of which
cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior,
and offenses against persons, property and the hospital's interest.
More importantly, petitioner itself provided incontrovertible proof of the employment status of respondents,
namely, the identification cards it issued them, the payslips and BIR W-2 (now 2316) Forms which reflect
their status as employees, and the classification as "salary" of their remuneration. Moreover, it enrolled
respondents in the SSS and Medicare (Philhealth) program. It bears noting at this juncture that mandatory
coverage under the SSS Law is premised on the existence of an employer-employee relationship, except in
cases of compulsory coverage of the self-employed.
14.
ESCASINAS ET AL VS. SHANGRILA- LAS MACTAN ISLAND RESORT ET AL.
G.R. No. 178827, March 4, 2009

Facts: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999
and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at
respondent Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician.
In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for
regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month
pay differential against respondents, claiming that they are regular employees of Shangri-la. Shangri-
la claimed, however, that petitioners were not its employees but of respondent doctor, that Article 157 of the
Labor Code, as amended, does not make it mandatory for a covered establishment to employ health
personnel, that the services of nurses is not germane nor indispensable to its operations, and that
respondent doctor is a legitimate individual contractor who has the power to hire, fire and supervise the work
of nurses under her.
Issue: Whether or not there exists an employer-employee relationship between Shangri-la and petitioners.
Ruling: The Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la
provides the clinic premises and medical supplies for use of its employees and guests do not necessarily
prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic
and provision of medical services to its employees is required under Art. 157, which are not directly related
to Shangri-las principal business operation of hotels and restaurants. As to payment of wages,
respondent doctor is the one who underwrites the following: salaries, SSS contributions and other benefits
of the staff; group life, group personal accident insurance and life/death insurance for the staff with minimum
benefit payable at 12 times the employees last drawn salary, as well as value added taxes and withholding
taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from
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Shangri-las guests who avail of the clinic services. It is unlikely that respondent doctor would report
petitioners as workers, pay their SSS premium as well as their wages if they were not indeed her
employees. With respect to
the supervision and control of the nurses and clinic staff, it is not disputed that a document, Clinic Policies
and Employee Manual claimed to have been prepared by respondent doctor exists, to which petitioners
gave their conformity and in which they acknowledged their co-terminus employment status. It is thus
presumed that said document, and not the employee manual being followed by Shangri-las regular
workers, governs how they perform their respective tasks and responsibilities. In fine, as Shangri-la does
not control how the work should be performed by petitioners, it is not petitioners employer.
15.
TONGCO VS. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A.VERGEL
DE DIOS
G.R. No. 167622 (2011)

Facts:This is a resolution of the petition to set aside the June 29, 2010 decision of the Supreme Court that
the petitioner was an insurance agent, not the employee, of the respondent The Manufacturers Life
Insurance Co. (Phils.), Inc. (Manulife).
In his motion for reconsideration, petitioner argues that for 19 years, he performed administrative
functions and exercised supervisory authority over employees and agents of Manulife, in addition to his
insurance agent functions. In these 19 years, he was designated as a Unit Manager, a Branch Manager
and a Regional Sales Manager, and now posits that he was not only an insurance agent for Manulife but
was its employee as well.

Issue:Whether or not petitioner Tongco can be considered an employee of Manulife

Ruling:The Supreme Court found no basis or any error to merit the reconsideration of the June 29, 2010
Resolution since petitioner failed to establish the presence of an employer-employee relationship.
Based on the control test, petitioner failed to show that the control Manulife exercised over him was
the control required to exist in an employer-employee relationship. It carried only the characteristic of the
relationship between an insurance company and its agents, as defined by the Insurance Code and by the
law of agency under the Civil Code. His assertions that labor law control was exercised by Manulife over
him (1) when it set the objectives and sales targets regarding production, recruitment and training
programs; and (2) when it prescribed the Code of Conduct for Agents and the Manulife Financial Code of
Conduct to govern his activities do not hold water. These are built-in elements of control specific to an
insurance agency which provides in the Insurance Code definite parameters in the way an agent negotiates
for the sale of the companys insurance products, his collection activities and his delivery of the insurance
contract or policy. The Civil Code also defines an agent as a person who binds himself to do something in
behalf of another, with the consent or authority of the latter. Article 1887 of the Civil Code also provides that
in the execution of the agency, the agent shall act in accordance with the instructions of the principal. Thus,
it can be gleaned that the activities carried out by Manulife as pointed out above cannot be considered
control of the means and manner of doing an assigned task as defined in the Labor Code. These controls
are only aimed at specific results in undertaking an insurance agency, and are, in fact, parameters set by
law in defining an insurance agency and the attendant duties and responsibilities an insurance agent must
observe and undertake.

Manulifes codes of conduct, likewise, do not necessarily intrude into the insurance agents means
and manner of conducting their sales. Codes of conduct are norms or standards of behavior rather than
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employer directives into how specific tasks are to be done. These codes, as well as insurance industry
rules and regulations, are not per se indicative of labor law control under our jurisprudence.

With regards to the various titles petitioner held in Manulife, these do not support his claim that he
is Manulifes employee. The petitioners occupation was to sell Manulifes insurance policies and products
from 1977 until the termination of the Career Agents Agreement (Agreement). Due to the nature of this job,
Manulife permitted him to exercise guiding authority over other agents who operate under their own agency
agreements with Manulife and whose commissions he shared. His designation also changed from unit
manager to branch manager and then to regional sales manager, to reflect the increase in the number of
agents he recruited and guided, as well as the increase in the area where these agents operated.

Supreme Court ruled that the titles and positions the petitioner held did not change his status from
the insurance agent that he had always been (as evidenced by the Agreement that governed his
relationship with Manulife from the start to its disagreeable end). Tongco simply progressed from his
individual agency to being a lead agent who could use other agents in selling insurance and share in the
earnings of these other agents.

WHEREFORE, there is absolutely no evidence of labor law control.

16.
CAONG, JR. VS. BEGUALOS
GR No. 179428, Jan. 26, 2011

Facts:Petitioners filed a complaint against the respondent on the grounds of illegal dismissal. Their
allegations are they were not availed of the due process of law when they were dismissed, there was no just
cause and the respondent disregarded that there are days that boundary could not be met due to the
scarcity of passengers. The respondent countered that they were not employees hence they are not
covered by the labor code, and that there is no such illegal dismissal since he only suspended them
because they have arrears to be paid which was resulted from the lack of payment of boundary.
The labor arbiter favored the respondents contention, that there was no illegal dismissal, the respondent
was just imposing sanction on the petitioners for not paying the full amount of boundary, thus resulted to
suspension.
The petitioner appealed the case, however it was denied thus the case went up to the Supreme Court.
Issue:WON there was employee and employer relationship between the parties and there was an illegal
dismissal in case.
Ruling: Yes, there is employee and employer relationship.
The Supreme Court held that in boundary system, it shall not be treated as lessee and lessor relationship,
the existence of boundary does not negate the employee and employer relationship.

However on the issue of illegal dismissal, the court ruled that there is no illegal dismissal. Since the
respondent was just exercising his prerogative as an employer, thus he has the right to suspend them due
to not paying the full amount of boundary.

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Atok Big Wedge Company vs. Gison
G.R. No. 169510 August 8, 2011

FACTS:
Sometime in February 1992, respondent Jesus P. Gison was engaged as part-time consultant on
retainer basis by petitioner Atok Big Wedge Company, Inc. through its then Asst. Vice-President and Acting
Resident Manager, Rutillo A. Torres. As a consultant on retainer basis, respondent assisted petitioner's
retained legal counsel with matters pertaining to the prosecution of cases against illegal surface occupants
within the area covered by the company's mineral claims. Respondent was likewise tasked to perform
liaison work with several government agencies, which he said was his expertise.
Sometime thereafter, since respondent was getting old, he requested that petitioner cause his
registration with the Social Security System (SSS), but petitioner did not accede to his request. He later
reiterated his request but it was ignored by respondent considering that he was only a retainer/consultant.
On February 4, 2003, respondent filed a Complaint with the SSS against petitioner for the latter's refusal to
cause his registration with the SSS.
On the same date, Mario D. Cera, in his capacity as resident manager of petitioner, issued a
Memorandum advising respondent that within 30 days from receipt thereof, petitioner is terminating his
retainer contract with the company since his services are no longer necessary.
On September 26, 2003, after the parties have submitted their respective pleadings, Labor Arbiter
Rolando D. Gambito rendered a Decision ruling in favor of the petitioner. Finding no employer-employee
relationship between petitioner and respondent, the Labor Arbiter dismissed the complaint for lack of merit.
On July 30, 2004, the NLRC, Second Division, issued a Resolution affirming the decision of the
Labor Arbiter. Respondent filed a Motion for Reconsideration, but it was denied in the Resolution dated
September 30, 2004.

ISSUE:
Whether or not there was an employer-employee relationship.

RULING:
To ascertain the existence of an employer-employee relationship jurisprudence has invariably
adhered to the four-fold test, to wit: (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 employee's conduct, or the so-called
"control test." Of these four, the last one is the most important. The so-called "control test" is commonly
regarded as the most crucial and determinative indicator of the presence or absence of an employer-
employee relationship. Under the control test, an employer-employee relationship exists where the person
for whom the services are performed reserves the right to control not only the end achieved, but also the
manner and means to be used in reaching that end.
Applying the aforementioned test, an employer-employee relationship is apparently absent in the
case at bar. Among other things, respondent was not required to report everyday during regular office hours
of petitioner. Respondent's monthly retainer fees were paid to him either at his residence or a local
restaurant. More importantly, petitioner did not prescribe the manner in which respondent would accomplish
any of the tasks in which his expertise as a liaison officer was needed; respondent was left alone and given
the freedom to accomplish the tasks using his own means and method. Respondent was assigned tasks to
perform, but petitioner did not control the manner and methods by which respondent performed these tasks.
Verily, the absence of the element of control on the part of the petitioner engenders a conclusion that he is
not an employee of the petitioner.
Contrary to the conclusion of the CA, respondent is not an employee, much more a regular
employee of petitioner. The appellate court's premise that regular employees are those who perform
activities which are desirable and necessary for the business of the employer is not determinative in this
case. In fact, any agreement may provide that one party shall render services for and in behalf of another,
no matter how necessary for the latter's business, even without being hired as an employee. Hence,
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respondent's length of service and petitioner's repeated act of assigning respondent some tasks to be
performed did not result to respondent's entitlement to the rights and privileges of a regular employee.
Furthermore, despite the fact that petitioner made use of the services of respondent for eleven
years, he still cannot be considered as a regular employee of petitioner. Article 280 of the Labor Code, in
which the lower court used to buttress its findings that respondent became a regular employee of the
petitioner, is not applicable in the case at bar. Indeed, the Court has ruled that said provision is not the
yardstick for determining the existence of an employment relationship because it merely distinguishes
between two kinds of employees, i.e., regular employees and casual employees, for purposes of
determining the right of an employee to certain benefits, to join or form a union, or to security of tenure; it
does not apply where the existence of an employment relationship is in dispute. It is, therefore, erroneous
on the part of the Court of Appeals to rely on Article 280 in determining whether an employer-employee
relationship exists between respondent and the petitioner.
Considering that there is no employer-employee relationship between the parties, the termination
of respondent's services by the petitioner after due notice did not constitute illegal dismissal warranting his
reinstatement and the payment of full backwages, allowances and other benefits.

18
SEMBLANTE ET AL,. VS COURT OF APPEALS, ET. AL
G.R. No. 196426, August 15, 2011

Facts:Petitioners Marticio Semblante and Dubrick Pilar assert that they were hired by respondents-spouses
Vicente and Maria Luisa Loot, the owners of Gallera de Mandaue (the cockpit), as the official masiador and
sentenciador, respectively, of the cockpit sometime in 1993.
As the masiador, Semblante calls and takes the bets from the gamecock owners and other
bettors and orders the start of the cockfight. He also distributes the winnings after deducting the arriba, or
the commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing of fighting
cocks, determines the fighting cocks physical condition and capabilities to continue the cockfight, and
eventually declares the result of the cockfight.
For their services as masiador and sentenciador, Semblante receives PhP 2,000 per week or a
total of PhP 8,000 per month, while Pilar gets PhP 3,500 a week or PhP 14,000 per month. They work every
Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly derbies and cockfights held on
special holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours
of the morning depending on the needs of the cockpit. Petitioners had both been issued employees
identification cards that they wear every time they report for duty. They alleged never having incurred any
infraction and/or violation of the cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry into the cockpit upon the
instructions of respondents, and were informed of the termination of their services effective that date. This
prompted petitioners to file a complaint for illegal dismissal against respondents.
Respondents denied that petitioners were their employees and alleged that they were associates
of respondents independent contractor, Tomas Vega. Respondents claimed that petitioners have no regular
working time or day and they are free to decide for themselves whether to report for work or not on any
cockfighting day. In times when there are few cockfights in Gallera de Mandaue, petitioners go to other
cockpits in the vicinity. Lastly, petitioners, so respondents assert, were only issued identification cards to
indicate that they were free from the normal entrance fee and to differentiate them from the general public.
In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners to be
regular employees of respondents as they performed work that was necessary and indispensable to the
usual trade or business of respondents for a number of years. The Labor Arbiter also ruled that petitioners
were illegally dismissed, and so ordered respondents to pay petitioners their backwages and separation
pay.
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Respondents counsel received the Labor Arbiters Decision on September 14, 2004. And within the
10-day appeal period, he filed the respondents appeal with the NLRC on September 24, 2004, but without
posting a cash or surety bond equivalent to the monetary award granted by the Labor Arbiter.
It was only on October 11, 2004 that respondents filed an appeal bond dated October 6, 2004. The
NLRC denied the appeal for its non-perfection but reversed its decision upon Motion for Reconsideration
postulating that their appeal was meritorious and the filing of an appeal bond, albeit belated, is a substantial
compliance with the rules. The NLRC held in its Resolution of October 18, 2006 that there was no
employer-employee relationship between petitioners and respondents, respondents having no part in the
selection and engagement of petitioners, and that no separate individual contract with respondents was ever
executed by petitioners.
The CA upheld the NLRC decision.

Issues:
1. W/N the CA committed a reversible error in entertaining an appeal, which was not
perfected in the first place.
2. W/N there exists an employer/employee relationship between Semblante, et al. and
the spouses LOOT.
Ruling:Indeed, the posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the Decision of the Labor Arbiter. Article 223 of the Labor Code provides:

Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final
and executory unless appealed to the Commission by any or both parties within ten
(10) calendar days from receipt of such decisions, awards, or orders. Such appeal
may be entertained only on any of the following grounds:

x x x x

In case of a judgment involving a monetary award, an appeal by the employer may
be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from. (Emphasis supplied.)

Time and again, however, this Court, considering the substantial merits of the case, has relaxed
this rule on, and excused the late posting of, the appeal bond when there are strong and compelling reasons
for the liberality, such as the prevention of miscarriage of justice extant in the case or the special
circumstances in the case combined with its legal merits or the amount and the issue involved. After all,
technical rules cannot prevent courts from exercising their duties to determine and settle, equitably and
completely, the rights and obligations of the parties. This is one case where the exception to the general
rule lies.
2. The petitioners are NOT employees of respondents, since their relationship fails to pass muster
the four-fold test of employment We have repeatedly mentioned in countless decisions: (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, which is the most important element.
As found by both the NLRC and the CA, respondents had no part in petitioners selection and
management; petitioners compensation was paid out of the arriba (which is a percentage deducted from the
total bets), not by petitioners; and petitioners performed their functions as masiador and sentenciador free
from the direction and control of respondents. In the conduct of their work, petitioners relied mainly on their
expertise that is characteristic of the cockfight gambling, and were never given by respondents any tool
needed for the performance of their work.
Respondents, not being petitioners employers, could never have dismissed, legally or illegally,
petitioners, since respondents were without power or prerogative to do so in the first place.
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19.
BERNARTE VS. PHIL. BASKETBALL ASSOCIATION ET AL.
G.R. No. 192084, September 14, 2011

Facts:Petition for review of the 17 December 2009 Decision and 5 April 2010 Resolution of the Court of
Appeals in CA-G.R. SP No. 105406.
The Court of Appeals set aside the decision of the National Labor Relations Commission (NLRC),
which affirmed the decision of the Labor Arbiter, and held that petitioner Jose Mel Bernarte is an
independent contractor, and not an employee of respondents Philippine Basketball Association (PBA), Jose
Emmanuel M. Eala, and Perry Martinez. The Court of Appeals denied the motion for reconsideration.

Complainants:
Jose Mel Bernarte and Renato Guevarra
aver that they were invited to join the PBA as referees. During the leadership of
Commissioner Emilio Bernardino, they were made to sign contracts on a year-to-year
basis. During the term of Commissioner Eala, however, changes were made on the terms
of their employment.
Bernarte, was not made to sign a contract during the first conference of the All-Filipino
Cup which was from February 23, 2003 to June 2003. It was only during the second
conference when he was made to sign a one and a half month contract for the period
July 1 to August 5, 2003.
January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory performance
on and off the court. It was a total shock for Bernarte who was awarded Referee of the
year in 2003. He felt that the dismissal was caused by his refusal to fix a game upon
order of Ernie De Leon.
Guevarra alleges that he was invited to join the PBA pool of referees in February 2001.
On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a yearly
contract as Regular Class C referee. On May 6, 2003, respondent Martinez issued a
memorandum to Guevarra expressing dissatisfaction over his questioning on the
assignment of referees officiating out-of-town games. Beginning February 2004, he was
no longer made to sign a contract.
Respondents:
Philippine Basketball Association (PBA), Jose Emmanuel M. Eala, and Perry Martinez. The Court
of Appeals denied the motion for reconsideration.

Complainants entered into two contracts of retainer with the PBA in the year 2003. The first
contract was for the period January 1, 2003 to July 15, 2003; and the second was for September 1
to December 2003. After the lapse of the latter period, PBA decided not to renew their contracts.

Complainants were not illegally dismissed because they were not employees of the PBA. Their
respective contracts of retainer were simply not renewed. PBA had the prerogative of whether or
not to renew their contracts, which they knew were fixed.

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Labor Arbiter:
31 March 2005 Decision, declared petitioner an employee whose dismissal by respondents was
illegal. Accordingly, the Labor Arbiter ordered the reinstatement of petitioner and the payment
of backwages, moral and exemplary damages and attorneys fees.
NLRC:
In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiters judgment. The dispositive
portion of the NLRCs decision reads:

WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor
Arbiter Teresita D. Castillon-Lora dated March 31, 2005 is AFFIRMED.

Court of Appeals Ruling
The Court of Appeals found petitioner an independent contractor since respondents did not
exercise any form of control over the means and methods by which petitioner performed his work
as a basketball referee. The Court of Appeals held:

While the NLRC agreed that the PBA has no control over the referees acts of blowing the
whistle and making calls during basketball games, it, nevertheless, theorized that the said acts
refer to the means and methods employed by the referees in officiating basketball games for the
illogical reason that said acts refer only to the referees skills. How could a skilled referee perform
his job without blowing a whistle and making calls? Worse, how can the PBA control the
performance of work of a referee without controlling his acts of blowing the whistle and making
calls?
Issues:
a) Whether the Labor Arbiters decision has become final and executory for failure of
respondents to appeal with the NLRC within the reglementary period
b) Whether petitioner is an employee of respondents, which in turn determines whether petitioner
was illegally dismissed
Ruling
a) Petitioner failed to present any concrete proof as to how, when and to whom the delivery and
receipt of the three notices issued by the post office was made. There is no conclusive
evidence showing that the post office notices were actually received by respondents, negating
petitioners claim of constructive service of the Labor Arbiters decision on respondents. The
Postmasters Certification does not sufficiently prove that the three notices were delivered to
and received by respondents; it only indicates that the post office issued the three notices.
Simply put, the issuance of the notices by the post office is not equivalent to delivery to and
receipt by the addressee of the registered mail. Thus, there is no proof of completed
constructive service of the Labor Arbiters decision on respondents.
At any rate, the NLRC declared the issue on the finality of the Labor Arbiters decision
moot as respondents appeal was considered in the interest of substantial justice. We agree
with the NLRC. The ends of justice will be better served if we resolve the instant case on the
33 | P a g e

merits rather than allowing the substantial issue of whether petitioner is an independent
contractor or an employee linger and remain unsettled due to procedural technicalities.
b) The existence of an employer-employee relationship is ultimately a question of fact. As a
general rule, factual issues are beyond the province of this Court. However, this rule admits of
exceptions, one of which is where there are conflicting findings of fact between the Court of
Appeals, on one hand, and the NLRC and Labor Arbiter, on the other, such as in the present
case.

To determine the existence of an employer-employee relationship, case law has consistently
applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employee on the means and methods by which the work is accomplished. The so-called
control test is the most important indicator of the presence or absence of an employer-
employee relationship.

We agree with respondents that once in the playing court, the referees exercise their own independent
judgment, based on the rules of the game, as to when and how a call or decision is to be made. The
referees decide whether an infraction was committed, and the PBA cannot overrule them once the decision
is made on the playing court. The referees are the only, absolute, and final authority on the playing court.
Respondents or any of the PBA officers cannot and do not determine which calls to make or not to make
and cannot control the referee when he blows the whistle because such authority exclusively belongs to the
referees. The very nature of petitioners job of officiating a professional basketball game undoubtedly calls
for freedom of control by respondents.
Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the referees
are required to report for work only when PBA games are scheduled, which is three times a week spread
over an average of only 105 playing days a year, and they officiate games at an average of two hours per
game; and (2) the only deductions from the fees received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight hours per day for five days a
week, petitioner is required to report for work only when PBA games are scheduled or three times a week at
two hours per game. In addition, there are no deductions for contributions to the Social Security
System, Philhealth or Pag-Ibig, which are the usual deductions from employees salaries. These undisputed
circumstances buttress the fact that petitioner is an independent contractor, and not an employee of
respondents.
20.
LIRIO VS GENOVIA
G.R. NO. 169757, NOVEMBER 23, 2011

:
Facts: On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio
and/or Celkor Ad Sonicmix Recording Studio for illegal dismissal, non-payment of commission and award of
moral and exemplary damages.

In his Position Paper,respondent Genovia alleged, among others, that on August 15, 2001, he was
hired as studio manager by petitioner Lirio, owner of Celkor Ad Sonicmix Recording Studio (Celkor). He
34 | P a g e

was employed to manage and operate Celkor and to promote and sell the recording studio's services to
music enthusiasts and other prospective clients. He received a monthly salary of P7,000.00. They also
agreed that he was entitled to an additional commission of P100.00 per hour as recording technician
whenever a client uses the studio for recording, editing or any related work. He was made to report for work
from Monday to Friday from 9:00 a.m. to 6 p.m. On Saturdays, he was required to work half-day only, but
most of the time, he still rendered eight hours of work or more. All the employees of petitioner, including
respondent, rendered overtime work almost everyday, but petitioner never kept a daily time record to avoid
paying the employees overtime pay.

Respondent stated that a few days after he started working as a studio manager, petitioner
approached him and told him about his project to produce an album for his 15-year-old daughter, Celine
Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked respondent to compose and arrange
songs for Celine and promised that he (Lirio) would draft a contract to assure respondent of his
compensation for such services. As agreed upon, the additional services that respondent would render
included composing and arranging musical scores only, while the technical aspect in producing the album,
such as digital editing, mixing and sound engineering would be performed by respondent in his capacity as
studio manager for which he was paid on a monthly basis. Petitioner instructed respondent that his work
on the album as composer and arranger would only be done during his spare time, since his other work as
studio manager was the priority. Respondent then started working on the album.

Respondent alleged that before the end of September 2001, he reminded petitioner about his
compensation as composer and arranger of the album. Petitioner verbally assured him that he would be
duly compensated. By mid-November 2001, respondent finally finished the compositions and musical
arrangements of the songs to be included in the album. Before the month ended, the lead and back-up
vocals in the ten (10) songs were finally recorded and completed. From December 2001 to January 2002,
respondent, in his capacity as studio manager, worked on digital editing, mixing and sound engineering of
the vocal and instrumental audio files.

Thereafter, respondent was tasked by petitioner to prepare official correspondence, establish
contacts and negotiate with various radio stations, malls, publishers, record companies and manufacturers,
record bars and other outlets in preparation for the promotion of the said album. By early February 2002,
the album was in its manufacturing stage. ELECTROMAT, manufacturer of CDs and cassette tapes, was
tapped to do the job. The carrier single of the album, which respondent composed and arranged, was finally
aired over the radio on February 22, 2002.

On February 26, 2002, respondent again reminded petitioner about the contract on his
compensation as composer and arranger of the album. Petitioner told respondent that since he was
practically a nobody and had proven nothing yet in the music industry, respondent did not deserve a high
compensation, and he should be thankful that he was given a job to feed his family. Petitioner informed
respondent that he was entitled only to 20% of the net profit, and not of the gross sales of the album, and
that the salaries he received and would continue to receive as studio manager of Celkor would be deducted
from the said 20% net profit share. Respondent objected and insisted that he be properly compensated. On
March 14, 2002, petitioner verbally terminated respondents services, and he was instructed not to report
for work.

Respondent asserts that he was illegally dismissed as he was terminated without any valid
grounds, and no hearing was conducted before he was terminated, in violation of his constitutional right to
due process. Having worked for more than six months, he was already a regular employee. Although he
was a so called studio manager, he had no managerial powers, but was merely an ordinary employee.

35 | P a g e

Respondent prayed for his reinstatement without loss of seniority rights, or, in the alternative, that
he be paid separation pay, backwages and overtime pay; and that he be awarded unpaid commission in the
amount of P2,000.00 for services rendered as a studio technician as well as moral and exemplary
damages.

Respondents evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which was
certified correct by petitioner,
[2]
and Petty Cash Vouchers
[3]
evidencing receipt of payroll payments by
respondent from Celkor.

In defense, petitioner stated in his Position Paper
[4]
that respondent was not hired as studio
manager, composer, technician or as an employee in any other capacity of Celkor. Respondent could not
have been hired as a studio manager, since the recording studio has no personnel except petitioner.
Petitioner further claimed that his daughter Celine Mei Lirio, a former contract artist of ABS-CBN Star
Records, failed to come up with an album as the latter aborted its project to produce one. Thus, he decided
to produce an album for his daughter and established a recording studio, which he named Celkor Ad
Sonicmix Recording Studio. He looked for a composer/arranger who would compose the songs for the said
album. In July 2001, Bob Santiago, his son-in-law, introduced him to respondent, who claimed to be an
amateur composer, an arranger with limited experience and musician without any formal musical training.
According to petitioner, respondent had no track record as a composer, and he was not known in the field of
music. Nevertheless, after some discussion, respondent verbally agreed with petitioner to co-produce the
album based on the following terms and conditions: (1) petitioner shall provide all the financing, equipment
and recording studio; (2) Celine Mei Lirio shall sing all the songs; (3) respondent shall act as composer
and arranger of all the lyrics and the music of the five songs he already composed and the revival songs;
(4) petitioner shall have exclusive right to market the album; (5) petitioner was entitled to 60% of the net
profit, while respondent and Celine Mei Lirio were each entitled to 20% of the net profit; and (6)
respondent shall be entitled to draw advances of P7,000.00 a month, which shall be deductible from his
share of the net profits and only until such time that the album has been produced.
According to petitioner, they arrived at the foregoing sharing of profits based on the mutual
understanding that respondent was just an amateur composer with no track record whatsoever in the music
industry, had no definite source of income, had limited experience as an arranger, had no knowledge of the
use of sound mixers or digital arranger and that petitioner would help and teach him how to use the studio
equipment; that petitioner would shoulder all the expenses of production and provide the studio and
equipment as well as his knowledge in the use thereof; and Celine Mei Lirio would sing the songs. They
embarked on the production of the album on or about the third week of August 2002.

Petitioner asserted that from the aforesaid terms and conditions, his relationship with respondent is
one of an informal partnership under Article 1767of the New Civil Code, since they agreed to contribute
money, property or industry to a common fund with the intention of dividing the profits among themselves.
Petitioner had no control over the time and manner by which respondent composed or arranged the songs,
except on the result thereof. Respondent reported to the recording studio between 10:00 a.m. and 12:00
noon. Hence, petitioner contended that no employer-employee relationship existed between him and the
respondent, and there was no illegal dismissal to speak of.

Issue: W/N employer-employee relationship exist

Ruling:The elements to determine the existence of an employment relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employees conduct. The most important element is the employers control of the
employees conduct, not only as to the result of the work to be done, but also as to the means and methods
to accomplish it.

36 | P a g e

It is settled that no particular form of evidence is required to prove the existence of an employer-
employee relationship. Any competent and relevant evidence to prove the relationship may be admitted.

In this case, the documentary evidence presented by respondent to prove that he was an
employee of petitioner are as follows: (a) a document denominated as "payroll" (dated July 31, 2001 to
March 15, 2002) certified correct by petitioner,
[31]
which showed that respondent received a monthly salary
of P7,000.00 (P3,500.00 every 15
th
of the month and another P3,500.00 every 30
th
of the month) with the
corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash
vouchers,
[32]
showing the amounts he received and signed for in the payrolls.

The said documents showed that petitioner hired respondent as an employee and he was paid
monthly wages of P7, 000.00. Petitioner wielded the power to dismiss as respondent stated that he was
verbally dismissed by petitioner, and respondent, thereafter, filed an action for illegal dismissal against
petitioner. The power of control refers merely to the existence of the power. It is not essential for the
employer to actually supervise the performance of duties of the employee, as it is sufficient that the former
has a right to wield the power. Nevertheless, petitioner stated in his Position Paper that it was agreed that
he would help and teach respondent how to use the studio equipment. In such case, petitioner certainly had
the power to check on the progress and work of respondent.

21.

CHARLIE JAO V. BCC PRODUCTS SALES, INC.
GR No. 163700 April 18, 2012

Facts Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President,
respondent Terrance Ty (Ty), employed him as comptroller starting from September 1995 with a monthly
salary of P20,000.00 to handle the financial aspect of BCC's business; that on October 19, 1995, the
security guards of BCC, acting upon the instruction of Ty, barred him from entering the premises of BCC
where he then worked; that his attempts to report to work in November and December 12, 1995 were
frustrated because he continued to be barred from entering the premises of BCC; and that he filed a
complaint dated December 28, 1995 for illegal dismissal, reinstatement with full backwages, non-payment of
wages, damages and attorney's fees.
Respondents countered that petitioner was not their employee but the employee of Sobien Food
Corporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him as its comptroller
in BCC to oversee BCC's finances and business operations and to look after SFC's interests or investments
in BCC.; that their issuance of the ID to petitioner was only for the purpose of facilitating his entry into the
BCC premises in relation to his work of overseeing the financial operations of BCC for SFC; that the ID
should not be considered as evidence of petitioner's employment in BCC; that petitioner executed an
affidavit in March 1996, 20 stating, among others, as follows:
1.I am a CPA (Certified Public Accountant) by profession but presently associated with, or
employed by, Sobien Food Corporation with the same business address as abovestated;
2.In the course of my association with, or employment by, Sobien Food Corporation (SFC, for
short), I have been entrusted by my employer to oversee and supervise collections on account of
receivables due SFC from its customers or clients; for instance, certain checks due and turned over by one
of SFC's customers is BCC Product Sales, Inc., operated or run by one Terrance L. Ty, (President and
General manager).
37 | P a g e

Petitioner counters, however, that the affidavit did not establish the absence of an employer-
employee relationship between him and respondents because it had been executed in March 1996, or after
his employment with respondents had been terminated on December 12, 1995; and that the affidavit
referred to his subsequent employment by SFC following the termination of his employment by BCC.

Issue: The sole issue is whether or not an employer-employee relationship existed between petitioner and
BCC. A finding on the existence of an employer-employee relationship will automatically warrant a finding of
illegal dismissal, considering that respondents did not state any valid grounds to dismiss petitioner.

Ruling: In determining the presence or absence of an employer-employee relationship, the Court has
consistently looked for the following incidents, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the
employee on the means and methods by which the work is accomplished. The last element, the so-called
control test, is the most important element.

Petitioner presented no document setting forth the terms of his employment by BCC. The failure to
present such agreement on terms of employment may be understandable and expected if he was a
common or ordinary laborer who would not jeopardize his employment by demanding such document from
the employer, but may not square well with his actual status as a highly educated professional.

Petitioner's admission that he did not receive his salary for the three months of his employment by
BCC, as his complaint for illegal dismissal and non-payment of wages and the criminal case for estafa he
later filed against the respondents for non-payment of wages indicated, further raised grave doubts about
his assertion of employment by BCC. If the assertion was true, we are puzzled how he could have remained
in BCC's employ in that period of time despite not being paid the first salary of P20,000.00/month. Moreover,
his name did not appear in the payroll of BCC despite him having approved the payroll as comptroller.

Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of the
insincerity of petitioner's assertion of employment by BCC. In the petition for review on certiorari, he averred
that he had been barred from entering the premises of BCC on October 19, 1995, 27 and thus was illegally
dismissed. Yet, his complaint for illegal dismissal stated that he had been illegally dismissed on December
12, 1995 when respondents' security guards barred him from entering the premises of BCC, 28 causing him
to bring his complaint only on December 29, 1995, and after BCC had already filed the criminal complaint
against him. The wide gap between October 19, 1995 and December 12, 1995 cannot be dismissed as a
trivial inconsistency considering that the several incidents affecting the veracity of his assertion of
employment by BCC earlier noted herein transpired in that interval.

With all the grave doubts thus raised against petitioner's claim, we need not dwell at length on the
other proofs he presented, like the affidavits of some of the employees of BCC, the ID, and the signed
checks, bills and receipts. Suffice it to be stated that such other proofs were easily explainable by
respondents and by the aforestated circumstances showing him to be the employee of SFC, not of BCC.

38 | P a g e

22.

LEGEND HOTEL VS. REALUYO
GR 153511, July 18, 2012

Facts:This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a
hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for alleged
unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his premium pay
for holidays, separation pay, service incentive leave pay, and 13111 month pay.
Respondent averred that he had worked as a pianist at the Legend Hotels Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night that was given to him after each nights performance;
that his rate had increased to P750.00/night; and that during his employment, he could not choose the time
of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that
the Legend Hotels restaurant manager had required him to conform with the venues motif; that he had
been subjected to the rules on employees representation checks and chits, a privilege granted to other
employees; that on July 9, 1999, the management had notified him that as a cost-cutting measure his
services as a pianist would no longer be required effective July 30, 1999; that he disputed the excuse,
insisting that Legend Hotel had been lucratively operating as of the filing of his complaint; and that the loss
of his employment made him bring his complaint.
2

Issue: Whether there exists an employer-employee relationship
Ruling:Employer-employee relationship existed between the parties.The issue of whether or not an
employer-employee relationship existed between petitioner and respondent is essentially a question of
fact. The factors that determine the issue include who has the power to select the employee, who pays the
employees wages, who has the power to dismiss the employee, and who exercises control of the methods
and results by which the work of the employee is accomplished.10 Although no particular form of evidence
is required to prove the existence of the relationship, and any competent and relevant evidence to prove the
relationship may be admitted, a finding that the relationship exists must nonetheless rest on substantial
evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to
justify a conclusion
A review of the circumstances reveals that respondent was, indeed, petitioners employee. He was
undeniably employed as a pianist in petitioners Madison Coffee Shop/Tanglaw Restaurant from September
1992 until his services were terminated on July 9, 1999.
First of all, petitioner actually wielded the power of selection at the time it entered into the service contract
dated September 1, 1992 with respondent. This is true, notwithstanding petitioners insistence that
respondent had only offered his services to provide live music at petitioners Tanglaw Restaurant, and
despite petitioners position that what had really transpired was a negotiation of his rate and time of
availability. The power of selection was firmly evidenced by, among others, the express written
recommendation dated January 12, 1998 by Christine Velazco, petitioners restaurant manager, for the
increase of his remuneration.
Secondly, petitioner argues that whatever remuneration was given to respondent were only his
talent fees that were not included in the definition of wage under the Labor Code. Respondent was paid
P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six nights a week. Such rate of
remuneration was later increased to P750.00 upon restaurant manager Velazcos recommendation. There is
no denying that the remuneration denominated as talent fees was fixed on the basis of his talent and skill
and the quality of the music he played during the hours of performance each night, taking into account the
prevailing rate for similar talents in the entertainment industry.
39 | P a g e

Respondents remuneration, albeit denominated as talent fees, was still considered as included in
the term wage in the sense and context of the Labor Code, regardless of how petitioner chose to designate
the remuneration.
Thirdly, the power of the employer to control the work of the employee is considered the most
significant determinant of the existence of an employer-employee relationship. This is the so-called control
test, and is premised on whether the person for whom the services are performed reserves the right to
control both the end achieved and the manner and means used to achieve that end.
A review of the records shows, however, shows that respondent performed his work as a pianist
under petitioners supervision and control. Specifically, petitioners control of both the end achieved and the
manner and means used to achieve that end was demonstrated by the following, to wit:
a. He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm,
three to six times a week;
b. He could not choose the place of his performance;
c. The restaurants manager required him at certain times to perform only Tagalog songs or music, or to
wear barong Tagalog to conform to the Filipiniana motif; and
d. He was subjected to the rules on employees representation check and chits, a privilege granted to other
employees.

23.

THE NEW PHILIPPINE SKYLANDERS, INC. VS DAKILA
G.r. No. 199547, Sept. 24, 2012

Facts: November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union
affiliated with the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the
certification election conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its
rival union, Philippine Skylanders Employees Association-WATU (PSEA-WATU) immediately protested the
result of the election before the Secretary of Labor.

In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLUs
supposed deliberate and habitual dereliction of duty toward its members. Attached to the notice was a copy
of the resolution adopted and signed by the officers and members of PSEA authorizing their local union to
disaffiliate from its mother federation.

PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to
Philippine Skylanders Employees Association -National Congress of Workers (PSEA-NCW), and to maintain
continuity within the organization, allowed the former officers of PSEA-PAFLU to continue occupying their
positions as elected officers in the newly-forged PSEA-NCW.

On 17 March, 1994, PSEA-NCW entered into a collective bargaining agreement with PSI which was
immediately registered with the Department of Labor and Employment.

PAFLU requested for the accounting. PSI through its personnel manager Francisco Dakila denied the
request.

PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president Mariles
Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from PSIs refusal to bargain
40 | P a g e

collectively with its workers, the company through its president and personnel manager, was also liable for
interfering with its employees union activities

Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco Dakila.
Through Ayroso PAFLU claimed that Dakila was present in PSEAs organizational meeting thereby
confirming his illicit participation in union activities. Ayroso added that the members of the local union had
unwittingly fallen into the manipulative machinations of PSI and were lured into endorsing a collective
bargaining agreement which was detrimental to their interests.

PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional party
respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito
Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba,
Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa,
were equally guilty of unfair labor practice since they brazenly allowed themselves to be manipulated and
influenced by petitioner Francisco Dakila.

Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an inter-
union conflict which lay beyond the jurisdiction of the Labor Arbiter. PSEA was no longer affiliated with
PAFLU, Ayroso or PAFLU for that matter had no personality to file the instant complaint.

Labor Arbiter declared PSEAs disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their
respective officers guilty of unfair labor practice.

As PSEA-NCWs personality was not accorded recognition, its collective bargaining agreement with PSI
was struck down for being invalid.

PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC). But
the NLRC upheld the Decision ofthe Labor Arbiter.

Ruling: Local unions have a right to separate from their mother federation on the ground that as separate
and voluntary associations, local unions do not owe their creation and existence to the national federation to
which they are affiliated but, instead, to the will of their members. The sole essence of affiliation is to
increase, by collective action, the common bargaining power of local unions for the effective enhancement
and protection of their interests. Admittedly, there are times when without succor and support local unions
may find it hard, unaided by other support groups, to secure justice for themselves. Yet the local unions
remain the basic units of association, free to serve their own interests subject to the restraints imposed by
the constitution and by-laws of the national federation, and free also to renounce the affiliation upon the
terms laid down in the agreement which brought such affiliation into existence.

There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly
forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway. As
such, the pendency of an election protest involving both the mother federation and the local union did not
constitute a bar to a valid disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the 120
members of the local union, or an equivalent of 92.5% of the total union membership supported the claim of
disaffiliation and had in fact disauthorized PAFLU from instituting any complaint in their behalf.

It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As
PSEA had validly severed itself from PAFLU, there would be no restrictions which could validly hinder it
from subsequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its
members.

41 | P a g e

The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the
license to act independently of the local union.

24.
Tesoro et al., vs. Metro Manila Retreaders Inc., et al.,
GR No. 171482, March 12, 2014

This case concerns the effect on the status of employment of employees who entered into a Service
Franchise Agreement with their employer.

Facts: On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro, Pedro Ang, and
Gregorio Sharp used to work as salesmen for respondents Metro Manila Retreaders, Inc., Northern Luzon
Retreaders, Inc., or Power Tire and Rubber Corporation. These are sister companies collectively called
Bandag. Bandag offered repair and retread services for used tires. In 1998, however, Bandag developed a
franchising scheme that would enable others to operate tire and retreading businesses using its trade name
and service system. Petitioners quit their jobs as salesmen and entered into separate Service Franchise
Agreements (SFAs) with Bandag for the operation of their respective franchises. Under this SFA, Bandag
would provide funding with the petitioners subject to regular liquidation of revolving funds. The expenses of
these funds will be deducted from their sale in order to determine their income. After some time, petitioners
began to default on their obligations to submit periodic liquidations of their operational expenses in relation
to the revolving funds Bandag provided them. Bandag terminated their SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, nonpayment of wages,
incentive pay, 13th month pay and damages against Bandag with the National Labor Relations Commission
(NLRC). Petitioners contend that despite the SFA, they remained employees of Bandag. For its part,
Bandag pointed out that petitioners freely resigned from their employment and decided to avail themselves
of the opportunity to be independent entrepreneurs under the franchise scheme that Bandag had. Thus, no
employeremployee relationship existed between petitioners and Bandag.

Issue: Whether or not petitioners remained to be Bandags salesmen under the franchise scheme it
entered into with them.

Ruling: No, petitioners were no longer employees of Bandag the moment they entered into the
SFA.
Franchising is a business method of expansion that allows an individual or group of individuals to market a
product or a service and to use of the patent, trademark, trade name and the systems prescribed by the
owner.
The tests for determining employeremployee relationship are: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to
control the employee with respect to the means and methods by which the work is to be accomplished. The
last is called the control test, the most important element.
When petitioners agreed to operate Bandags franchise branches in different parts of the country,
they knew that this substantially changed their former relationships. They were to cease working as
Bandags salesmen, the positions they occupied before they ventured into running separate Bandag
42 | P a g e

branches. They were to cease receiving salaries or commissions. Their incomes were to depend on the
profits they made. Yet, petitioners did not then complain of constructive dismissal. They took their chances,
ran their branches, Gregorio Sharp in La Union for several months and Ashmor Tesoro in Baguio and Pedro
Ang in Pangasinan for over a year. Clearly, their belated claim of constructive dismissal is quite hollow.

It is pointed out that Bandag continued, like an employer, to exercise control over petitioners work.
It points out that Bandag: (a) retained the right to adjust the price rates of products and services; (b)
imposed minimum processed tire requirement (MPR); (c) reviewed and regulated credit applications; and (d)
retained the power to suspend petitioners services for failure to meet service standards. But uniformity in
prices, quality of services, and good business practices are the essence of all franchises. A franchisee will
damage the franchisors business if he sells at different prices, renders different or inferior services, or
engages in bad business practices. These business constraints are needed to maintain collective
responsibility for faultless and reliable service to the same class of customers for the same prices.
This is not the control contemplated in employeremployee relationships. Control in such
relationships addresses the details of day to day work like assigning the particular task that has to be done,
monitoring the way tasks are done and their results, and determining the time during which the employee
must report for work or accomplish his assigned task.
Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employer
employee relationship with Bandag. These funds do not represent wages. They are more in the nature of
capital advances for operations that Bandag conceptualized to attract prospective franchisees. Petitioners
incomes depended on the profits they make, controlled by their individual abilities to increase sales and
reduce operating costs.

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Hiring
Of
Employees

44 | P a g e

25.
WILLIAM OLLENDORFF VS. IRA ABRAHAMSON
38 Phil 585
Facts:A contract of employment with certain condition imposed upon by the employer (Ollendorff, plaintiff)
to its employee (Abrahamson, defendant) was created by the parties upon employment. The contract
stipulates that the employee;
further binds and obligates himself, his heirs, successors and
assigns, that he will not enter into or engage himself directly or
indirectly, nor permit any other person under his control to enter
in or engage in a similar or competitive business to that of the
said party of the first part anywhere within the Philippine Islands
for a period of five years from this date.
The defendant left the plaintiffs employ at his own request before the expiration of the stipulated terms of
two years in the contract on account for his ill health. Then the defendant went to United States to seek
medications and while in the States he took the opportunities of his knowledge on plaintiffs connections and
methods of the business since he was a manager back then. Some months after his departure for the
United States, defendant returned to Manila as the manager of the Philippine Underwear Company, a
corporation. The business of the corporation is the same of the plaintiffs business and in fact the defendant
employs the same workers employed by the plaintiff.
Issue:Whether or not the contract is void as constituting an unreasonable restraint of trade?
Ruling:The modern rule that the validity of restraints upon trade or employment is to be determined by the
intrinsinc reasonableness of restriction in each case, rather than by any fixed rule, and that such restrictions
may be upheld when not contrary to afford a fair and reasonable protection to the party in whose favor it is
imposed.
ANSWER OR EXPLAINATION of the COURT:
The restriction of time and place impose by the employer in the contract is limited and reasonable,
therefore valid and not against public order and policy. The 5 year restriction to engage in similar business
within the Philippine is a reasonable means in safeguarding the plaintiffs business. A business enterprise
may and often does depend for its success upon the owner's relations with other dealers, his skill in
establishing favorable connections, his methods of buying and selling -- a multitude of details, none vital if
considered alone, but which in the aggregate constitute the sum total of the advantages which the result of
the experience or individual aptitude and ability of the man or men by whom the business has been built up.
Failure or success may depend upon the possession of these intangible but all important assets, and it is
natural that their possessor should seek to keep them from falling into the hands of his competitors. Such
that restrictions on trade are imposed against the employee whose duties are such as of necessity to give
him an insight into the general scope and details of his employers business.
Failure to prove pecuniary damages by reason of the breach will not justify us in permitting
defendant to continue to break his contract over plaintiff's objection. The injury is a continuous one. With
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respect to the contention that an injunction may only be granted to prevent irreparable injury, the answer is
that any continuing breach of a valid negative covenant is irreparable by the ordinary process of courts of
law
CONTETION OF THE DEFENDANT
Defendant contended that the contract is void for it constitutes restraint of trade. It is also
contended that plaintiff has not proved that he has suffered any estimable pecuniary damage by reason of
defendants breach of the contract, and that for that reason his action must fail. It is further contended that in
no event is it proper to enforce such a contract as this by injunction, because it has not been alleged and
proved that the continuance of the acts complained of will cause plaintiff irreparable damage.
26.

DEL CASTILLO VS. RICHMOND
G.R. No. L-21127; February 9, 1924

Facts: The case was instituted to declare the contract of services entered into by Alfonso del Castillo as
null and void. Del Castillo alleges that the provisions and conditions contained in the third paragraph of said
contract constitute an illegal and unreasonable restriction upon his liberty to contract, are contrary to public
policy, and are unnecessary in order to constitute a just and reasonable protection to the defendant; and
asked that the same be declared null and void and of no effect.
The said contract constituted an illegal and unreasonable restriction upon the right of the plaintiff to contract
and was contrary to public policy. It will be noted that the restrictions placed upon the plaintiff are strictly
limited (a) to a limited district or districts, and (b) during the time while the defendant or his heirs may own or
have open a drugstore, or have an interest in any other one within said limited district.
Issue: Whether or not the said restraint is reasonable.
Ruling: SC ruled that the restriction is reasonable and not contrary to public policy.
The law concerning contracts which tend to restrain business or trade has gone through a long
series of changes from time to time with the changing conditions of trade and commerce. With trifling
exceptions, said changes have been a continuous development of a general rule.
The early cases show plainly a disposition to avoid and annul all contracts which prohibited or
restrained any one from using lawful trade " at any time or at any place," as being against the benefit of the
state. Later, however, the rule became well established that if the restraint was limited to "a certain time"
and within "a certain place", such contracts were valid and not "against the benefit of the state." Later cases,
and we think the rule is now well established, have held that a contract in restraint of trade is valid provided
there is a limitation upon either time or place. A contract, however, which restrains a man entering into a
business or trade without either a limitation as to time or place, will be held invalid.
As stated in the case of Ollendorf vs. Abrahamson, The public welfare of course must always be
considered, and if it be not involved and the restraint upon one party is not greater than protection to the
other requires, contracts like the one we are discussing will be sustained. The general tendency, we believe,
of modern authority, is to make the test whether the restraint is reasonably necessary for the protection of
the contracting parties. If the contract is reasonably necessary to protect the interest of the parties, it will be
upheld.
In that case we held that a contract by which an employee agrees to refrain at a given length of
time, after the expiration of the term of his employment, from engaging in business, competitive with that of
his employer, is not void as being in restraint of trade if the restraint imposed is not greater than that which
is necessary to afford a reasonable protection.

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27.

PT & T vs. NLRC
G.R. No. 118978; May 23, 1997

Facts: Grace de Guzman was initially hired by petitioner as a reliever for a fixed period from November
21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under the Reliever
Agreement which she signed with Petitioner Company, her employment was to be immediately terminated
upon expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19,
1991 to August 8, 1991, private respondents services as reliever were again engaged by petitioner, this
time in replacement of one Erlinda F. Dizon who went on leave during both periods. After August 8, 1991,
and pursuant to their Reliever Agreement, her services were terminated.
It now appears that private respondent had made the a representation that she was single even
though she contracted marriage months before, in the two successive reliever agreements which she signed
on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch
supervisor sent to private respondent a memorandum requiring her to explain the discrepancy. In that
memorandum, she was reminded about the companys policy of not accepting married women for
employment.
Private respondent was dismissed from the company effective January 29, 1992, which she
readily contested by initiating a complaint for illegal dismissal. Labor Arbiter handed down a decision
declaring that private respondent, who had already gained the status of a regular employee, was illegally
dismissed by petitioner. On appeal to the National Labor Relations Commission (NLRC), said public
respondent upheld the labor arbiter and it ruled that private respondent had indeed been the subject of an
unjust and unlawful discrimination by her employer, PT&T.

Issue: Whether or not discrimination merely by reason of the marriage of a female employee is expressly
prohibited by Article 136.

Ruling: SC ruled that the stipulation is violative of Art. 136 of the Labor Code.
An employer is free to regulate, according to his discretion and best business judgment, all aspects of
employment, from hiring to firing, except in cases of unlawful discrimination or those which may be
provided by law. Petitioners policy of not accepting or considering as disqualified from work any woman
worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all
women workers by our labor laws and by no less than the Constitution.
Respondents act of concealing the true nature of her status from PT&T could not be properly
characterized as willful or in bad faith as she was moved to act the way she did mainly because she wanted
to retain a permanent job in a stable company. In other words, she was practically forced by that very same
illegal company policy into misrepresenting her civil status for fear of being disqualified from work.
The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T.
The Labor Code states, in no uncertain terms, as follows:
ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman shall not get married, or to stipulate expressly or
tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage.
Under American jurisprudence, job requirements which establish employer preference or conditions relating
to the marital status of an employee are categorized as a sex-plus discrimination where it is imposed on
one sex and not on the other. Further, the same should be evenly applied and must not inflict adverse
effects on a racial or sexual group which is protected by federal job discrimination laws.
Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on the
right of a woman to be free from any kind of stipulation against marriage in connection with her employment,
but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom
47 | P a g e

to choose her status, a privilege that by all accounts inheres in the individual as an intangible and
inalienable right.
Hence, while it is true that the parties to a contract may establish any agreements, terms, and
conditions that they may deem convenient, the same should not be contrary to law, morals, good customs,
public order, or public policy. Carried to its logical consequences, it may even be said that petitioners policy
against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament
of marriage.

28.

DUNCAN ASSO. OF DETAILMAN- PTGWO VS. GLAXO WELLCOME PHILS.
G.R. No. 162994, Sept. 17, 2004

Facts :Petitioner Pedro Tecson was hired by respondent Glaxo Wellcome Philppines(glaxo) as medical
representative on Oct.24,1994 thereafter signed a contract of employment which stipulates among others
that he agrees to study and abide existing company rules; to disclose to management any existing of future
relationship by consanguinity or affinity with co-employees or employees of competing drug companies and
if ever that such management find such conflict of interest,he must resign. The Employee Code of Conduct
of Glaxo similarly provides that an employee is expected to inform management of any existing or future
relationship by consanguinity or affinity with co-employees or employees of competing drug companies. If
management perceives a conflict of interest or a potential conflict between such relationship and the
employees employment with the company, the management and the employee will explore the possibility of
a transfer to another department in a non-counterchecking position or preparation for employment outside
the company after six months.
Reminders from Tecsons district manager did not stop him from marrying.Tecson married Bettsy,
an Astras Branch Coordinatior in Albay. She supervised the district managers and medical representatives
of her company and prepared marketing strategies for Astra in that area.

Tecson was reassigned to another place and was not given products that the Astra company has
and he was not included in products seminars and training.
Tecson requested for time in complying said policy by asking for a transfer in the Glaxos milk division in
which the other company had no counterpart. Thereafter, he bought the matter to Grievance Committee but
the parties failed to resolve such issue, Glaxo offered Tecson a separation pay of one-half () month pay
for every year of service, or a total of P50,000.00 but he declined the offer. On November 15, 2000, the
National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxos policy
on relationships between its employees and persons employed with competitor companies, and affirming
Glaxos right to transfer Tecson to another sales territory.
Tecson filed for a petition for review on the CA and the CA promulgated that the NCMB did not err
in rendering its decision. A recon was filed in appellate court but it was denied.
So hence this petition for certiorari. Petitioners contention it was violative of constitutional law
which is the equal protection clause and he was constructively dismissed while the respondents contention
that it is a valid exercise of it s management prerogatives.

Issue :Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying
employees of another pharmaceutical company is valid?

Ruling: This petition was denied.

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Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and
other confidential programs and information from competitors, especially so that it and Astra are rival
companies in the highly competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of competitor companies
upon Glaxos employees is reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to
protect its interests against the possibility that a competitor company will gain access to its secrets and
procedures.

That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the
Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to
reasonable returns on investments and to expansion and growth.

The challenged company policy does not violate the equal protection clause of the Constitution as
petitioners erroneously suggest. It is a settled principle that the commands of the equal protection clause
are addressed only to the state or those acting under color of its authority.

From the wordings of the contractual provision and the policy in its employee handbook, it is clear
that Glaxo does not impose an absolute prohibition against relationships between its employees and those
of competitor companies. Its employees are free to cultivate relationships with and marry persons of their
own choosing. What the company merely seeks to avoid is a conflict of interest between the employee and
the company that may arise out of such relationships.

There was no merit in Tecsons contention that he was constructively dismissed when he was
transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del
Sur sales area, and when he was excluded from attending the companys seminar on new products which
were directly competing with similar products manufactured by Astra. Constructive dismissal is defined as a
quitting, an involuntary resignation resorted to when continued employment becomes impossible,
unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to the employee. The record
does not show that Tecson was demoted or unduly discriminated upon by reason of such transfer.

29.

CITY OF MANILA VS. LAGUIO
G.R. No. 118127, April 12, 2005

Facts Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in
the business of operating hotels, motels, hostels and lodging houses.
[5]
It built and opened Victoria Court in
Malate which was licensed as a motel although duly accredited with the Department of Tourism as a
hotel.
[6]
On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of Preliminary
Injunction and/or Temporary Restraining Order
[7]
(RTC Petition) with the lower court impleading as
defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the
members of the City Council of Manila (City Council). MTDC prayed that the Ordinance, insofar as it
includes motels and inns as among its prohibited establishments, be declared invalid and unconstitutional.
[8]

Enacted by the City Council
[9]
on 9 March 1993 and approved by petitioner City Mayor on 30 March 1993,
the said Ordinance is entitled

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AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING
CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-
MALATE AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER
PURPOSES.

The Ordinance is reproduced in full, hereunder:
SECTION 1. Any provision of existing laws and ordinances to the contrary notwithstanding, no person,
partnership, corporation or entity shall, in the Ermita-Malate area bounded by Teodoro M. Kalaw Sr. Street
in the North, Taft Avenue in the East, Vito Cruz Street in the South and Roxas Boulevard in the West,
pursuant to P.D. 499 be allowed or authorized to contract and engage in, any business providing certain
forms of amusement, entertainment, services and facilities where women are used as tools in entertainment
and which tend to disturb the community, annoy the inhabitants, and adversely affect the social and moral
welfare of the community, such as but not limited to:
1. Sauna Parlors
2. Massage Parlors
3. Karaoke Bars
4. Beerhouses
5. Night Clubs
6. Day Clubs
7. Super Clubs
8. Discotheques
9. Cabarets
10. Dance Halls
11. Motels
12. Inns
In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its
enumeration of prohibited establishments, motels and inns such as MTDCs Victoria Court considering that
these were not establishments for amusement or entertainment and they were not services or facilities
for entertainment, nor did they use women as tools for entertainment, and neither did they disturb the
community, annoy the inhabitants or adversely affect the social and moral welfare of the community.

Issue: Whether or not Ordinance No. 7783 of City of Manila is a valid exercise of police power.

Ruling :It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable
regulations looking to the promotion of the moral and social values of the community. However, the worthy
aim of fostering public morals and the eradication of the communitys social ills can be achieved through
means less restrictive of private rights; it can be attained by reasonable restrictions rather than by an
absolute prohibition. The closing down and transfer of businesses or their conversion into businesses
allowed under the Ordinance have no reasonable relation to the accomplishment of its purposes.
Otherwise stated, the prohibition of the enumerated establishments will not per se protect and promote the
social and moral welfare of the community; it will not in itself eradicate the alluded social ills of prostitution,
adultery, fornication nor will it arrest the spread of sexual disease in Manila.
It is readily apparent that the means employed by the Ordinance for the achievement of its purposes, the
governmental interference itself, infringes on the constitutional guarantees of a persons fundamental right to
liberty and property.
Persons desirous to own, operate and patronize the enumerated establishments under Section 1 of
the Ordinance may seek autonomy for these purposes.
Motel patrons who are single and unmarried may invoke this right to autonomy to consummate their bonds
in intimate sexual conduct within the motels premisesbe it stressed that their consensual sexual behavior
does not contravene any fundamental state policy as contained in the Constitution.
[72]
Adults have a right to
choose to forge such relationships with others in the confines of their own private lives and still retain their
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dignity as free persons. The liberty protected by the Constitution allows persons the right to make this
choice.
[73]
Their right to liberty under the due process clause gives them the full right to engage in their
conduct without intervention of the government, as long as they do not run afoul of the law. Liberty should
be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful government restraint; it must
include privacy as well, if it is to be a repository of freedom. The right to be let alone is the beginning of all
freedomit is the most comprehensive of rights and the right most valued by civilized men
All considered, the Ordinance invades fundamental personal and property rights and impairs personal
privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is discriminatory and
unreasonable in its operation; it is not sufficiently detailed and explicit that abuses may attend the
enforcement of its sanctions. And not to be forgotten, the City Council under the Code had no power to
enact the Ordinance and is therefore ultra vires, null and void.

30.

Star Paper Corp., vs. Simbol
G.R. No. 164774, April 12, 2006

Facts:Petitioner Star Paper Corporation is a corporation engaged in trading principally of paper products.
Josephine Ongsitco is its Manager of the Personnel and Administration Department while Sebastian Chua is
its Managing Director. Respondents Simbol, Comia and Estrella are regular employees of the company.
Simbol met Alma, Comia met Howard and Estrella got pregnant by Zunga. All of their partners are employed
on the same company. Prior to the marriage of each respective couple, Ongsitco advised each of them that
should they decide to get married, one of either partner should resign pursuant to a company policy
promulgated in 1995. Thus, Simbol, Comia and Estrella resigned. Respondents signed a Release and
Confirmation Agreement which states that they have no money and property accountabilities in the
company and that they release the latter of any claim or demand of whatever nature.

However, the respondents, thereafter, filed a complaint for unfair labor practice, constructive dismissal,
separation pay and attornerys fees. They averred that the aforementioned company policy is illegal and
contravenes Art. 136 of the Labor Code.

Petitioner, on the other hand, claims it does not violate Art 136 as it is not the marital status of the
employee, per se, that is being discriminated. It is only intended to carry out its no-employment-for relatives-
within-the-third-degree policy which is within the ambit of the prerogatives of management.
The Labor Arbiter dismissed the complaint claiming that such company policy was a management
prerogative. On appeal to the NLRC, the commission affirmed the decision of the Labor Arbiter. In its appeal
via petition for Certiorari, CA reversed the NLRC decision stating that the dismissal of respondents were
illegal.

Issue: Whether the 1995 policy of the employer banning spouses from working in the same company
violates the rights of the employees under the Constitution and the Labor Code or is it a valid exercise of
management prerogative?

Ruling: The finding of a bona fide occupational qualification justifies an employer's no-spouse rule, the
exception is interpreted strictly and narrowly by these state courts. There must be a compelling business
necessity for which no alternative exists other than the discriminatory practice. To justify a bona fide
occupational qualification, the employer must prove two factors: (1) that the employment qualification is
reasonably related to the essential operation of the job involved; and, (2) that there is a factual basis for
believing that all or substantially all persons meeting the qualification would be unable to properly perform
the duties of the job.
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Though it is noted that the questioned policy may not facially violate Art. 136 of the Labor Code but it create
a disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny is
a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect.
Thus, in the case at bar, there is no reasonable business necessity due to petitioners failure to present
undisputed marital discrimination. Thus, the questioned policy is an invalid exercise of management
prerogative

AFFIRMED.

Other Related Provisions:
Two types of employment policies involve spouses: policies banning only spouses from working in the same
company (no-spouse employment policies), and those banning all immediate family members, including
spouses, from working in the same company (anti-nepotism employment policies).
In challenging the anti-nepotism employment policies in the United States, complainants utilize two theories
of employment discrimination: the disparate treatment and the disparate impact. Under the disparate
treatment analysis, the plaintiff must prove that an employment policy is discriminatory on its face. No-
spouse employment policies requiring an employee of a particular sex to either quit, transfer, or be fired are
facially discriminatory. On the other hand, to establish disparate impact, the complainants must prove that a
facially neutral policy has a disproportionate effect on a particular class

31.

Del Monte Phils vs. Velasco
G.R. No. 153477, March 6, 2007

Facts: Lolita Velasco was hired by Del Monte as seasonal employee and was subsequently regularized
by Del Monte. On June 1987, petitioner warned Velasco of its absences and was repeatedly reminded that
her absence without permission may result to forfeiture of her vacation leave.
Another warning was sent due to her absences without permission which eventually led to the forfeiture of
her vacation entitlement. On September 1994, a notice of hearing was sent to Velasco informing her of the
charges filed against her for violating the Absence without leave rule. On January 1995, after the hearing,
Del Monte terminated the services of Velasco due to excessive absence without leave. Feeling aggrieved,
Velasco filed a case for illegal dismissal. She asserted that she was absent since she was suffering urinary
tract infection and she was pregnant.
She sent an application for leave to the supervisor. Upon check up of the company doctor, Velasco was
advised to rest. On the following check-ups, she was again advised to rest where this time, she was not able
to get secure a leave.
The Labor Arbiter rendered decision that she was an incorrigible absentee. Respondent appealed to the
NLRC. NLRC vacated the decision of the Labor Arbiter. It decided that respondent was illegally dismissed
and was entitled to reinstatement. Petitioner appealed to CA where it dismissed its claim and affirmed
NLRC. Thus, this petition.
Issue: Whether or not the dismissal was illegal?
Ruling: Yes. In this case, by the measure of substantial evidence, what is controlling is the finding of the
NLRC and the CA that respondent was pregnant and suffered from related ailments. It would be
unreasonable to isolate such condition strictly to the dates stated in the Medical Certificate or the Discharge
Summary. It can be safely assumed that the absences that are not covered by, but which nonetheless
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approximate, the dates stated in the Discharge Summary and Medical Certificate, are due to the continuing
condition of pregnancy and related illnesses, and, hence, are justified absences.
The termination was illegal since it comes within the purview of the prohibited acts provided in Article 137 of
the Labor Code. Based on Art. 137, it shall be unlawful for any employer (1) to deny any woman employee
the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of
preventing her from enjoying any of the benefits provided under this Code; (2) to discharge such woman on
account of her pregnancy, or while on leave or in confinement due to her pregnancy; and (3) to discharge or
refuse the admission of such woman upon returning to her work for fear that she may again be pregnant.
The respondent was illegally dismissed by the petitioner on account of her pregnancy. The act of the
employer is unlawful, it being contrary to law.

32.

Yrasuegui vs. Phil Air Lines
G.R. No. 168081, October 17, 2008

Petitioner Yrasuegui, an international flight steward of Philippine Airlines Inc. (PAL), was dismissed because
of his failure to adhere to the weight standards of the airline company.
In consequence thereof, petitioner filed a complaint for illegal dismissal against PAL before the
Labor Arbiter(LA) contending that his dismissal does not fall under 282(e) of the Labor Code; that the
continuing adherence to the weight standards of the company is not a bona fide occupational qualification;
and that he was discriminated against because other overweight employees were promoted instead of being
disciplined.
The Labor Arbiter ruled that the petitioner was illegally dismissed. It also issued a writ of execution directing
the reinstatement of the petitioner without loss of seniority and other benefits, and also the payment of
backwages.
Respondent PAL appealed to the NLRC which affirmed the LAs decision. Respondent PAL appealed to the
Court of Appeals. CA reversed the NLRC case. Facts:

Issue: Whether the dismissal of the petitioner valid.

Ruling: The Court upheld the legality of the petitioners dismissal. Separation pay, however, should be
awarded in favor of the employee as an act of social justice or based on equity. This is so because his
dismissal is not serious misconduct. Neither is it reflective of his moral character.

I. The obesity of petitioner is a ground for dismissal under Article 282(e) of the Labor Code.

A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a
continuing qualification of an employee in order to keep the job. Tersely put, an employee may be dismissed
the moment he is unable to comply with his ideal weight as prescribed by the weight standards. The
dismissal of the employee would thus fall under Article 282(e) of the Labor Code. As explained by the CA:

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x x x [T]he standards violated in this case were not mere orders of the employer;
they were the prescribed weights that a cabin crew must maintain in order to qualify for
and keep his or her position in the company. In other words, they were standards that
establish continuing qualifications for an employees position. In this sense, the failure to
maintain these standards does not fall under Article 282(a) whose express terms require
the element of willfulness in order to be a ground for dismissal. The failure to meet the
employers qualifying standards is in fact a ground that does not squarely fall under
grounds (a) to (d) and is therefore one that falls under Article 282(e) the other causes
analogous to the foregoing.

By its nature, these qualifying standards are norms that apply prior to and
after an employee is hired. They apply prior to employment because these are the
standards a job applicant must initially meet in order to be hired. They apply after
hiring because an employee must continue to meet these standards while on the job in
order to keep his job. Under this perspective, a violation is not one of the faults for which
an employee can be dismissed pursuant to pars. (a) to (d) of Article 282; the employee
can be dismissed simply because he no longer qualifies for his job irrespective of
whether or not the failure to qualify was willful or intentional.

In the case at bar, the evidence on record militates against petitioners claims that obesity is a
disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that it is possible for him to
lose weight given the proper attitude, determination, and self-discipline. Indeed, during
the clarificatory hearing on December 8, 1992, petitioner himself claimed that [t]he issue is could I bring my
weight down to ideal weight which is 172, then the answer is yes. I can do it now.

True, petitioner claims that reducing weight is costing him a lot of expenses. However, petitioner has only
himself to blame. He could have easily availed the assistance of the company physician, per the advice
of PAL. He chose to ignore the suggestion. In fact, he repeatedly failed to report when required to undergo
weight checks, without offering a valid explanation. Thus, his fluctuating weight indicates absence of
willpower rather than an illness.

The obesity of petitioner, when placed in the context of his work as flight attendant, becomes an analogous
cause under Article 282 (e) of the Labor Code. His obesity may not be unintended, but is nonetheless
voluntary.

Art 82. Termination by employer. An employer may terminate an employment for any of the following
causes.
a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
b) Gross and habitual neglect by the employee of his duties;
c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;
d) Commission of a crime or offense by the employee against the person of his employer or
any immediate member of his family or his duly authorized representatives; and
e) Other causes analogous to the foregoing.

Voluntariness basically means that the just cause is solely attributable to the employee without any external
force influencing or controlling his actions. This element runs through all just causes under Art. 282, whether
they be in nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is
considered voluntary although it lacks the element of intent found in Art. 282 (a), (c), and (d).
54 | P a g e

II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense.

Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin
unless the employer can show that sex, religion, or national origin is an actual qualification for performing
the job. The qualification is called a bona fide occupational qualification (BFOQ).

In the United States, there are a few federal and many state job discrimination laws that contain an
exception allowing an employer to engage in an otherwise unlawful form of prohibited discrimination when
the action is based on a BFOQ necessary to the normal operation of a business or enterprise.

A common carrier, from the nature of its business and for reasons of public policy, is bound to observe
extraordinary diligence for the safety of the passengers it transports. It is bound to carry its passengers
safely as far as human care and foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances.

The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only logical to
hold that the weight standards of PAL show its effort to comply with the exacting obligations imposed upon it
by law by virtue of being a common carrier.

The business of PAL is air transportation. As such, it has committed itself to safely transport its
passengers. In order to achieve this, it must necessarily rely on its employees, most particularly the cabin
flight deck crew who are on board the aircraft. The weight standards of PAL should be viewed as imposing
strict norms of discipline upon its employees.

Passenger safety goes to the core of the job of a cabin attendant. Truly, airlines need cabin attendants who
have the necessary strength to open emergency doors, the agility to attend to passengers in cramped
working conditions, and the stamina to withstand grueling flight schedules.

On board an aircraft, the body weight and size of a cabin attendant are important factors to consider in case
of emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Thus, the
arguments of respondent that [w]hether the airlines flight attendants are overweight or not has no direct
relation to its mission of transporting passengers to their destination; and that the weight standards has
nothing to do with airworthiness of respondents airlines, must fail.

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Wage and
Wage
Rationalization
Act

56 | P a g e

33.

Ilaw at Buklod ng Manggagawa (IBM) vs. National Labor Relations Commission (First Division), Hon.
Carmen Talusan and San Miguel Corporation (SMC)
G.R. No. 91980 June 27, 1991

CASE OVERVIEW
The San Miguel Corporation (SMC) filed with the Arbitration Branch of the National Labor Relations
Commission a complaint against the Union (IBM) and its members to declare the strike or slowdown illegal
and to terminate the employment of the union officers. The slowdown (i.e. not rendering the regularly
scheduled overtime work) was effected by the Union purportedly in protest of SMCs refusal to comply with
their demand to correct the wage distortion brought about by the implementation of the Wage
Rationalization Act (Republic Act 6727). The Union refuses to acknowledge the jurisdiction of the NLRC and
commenced a special civil action of certiorari and prohibition with the Supreme Court.

Facts: Upon the implementation of RA 6727, wage distortions allegedly affected the employees of San
Miguel Corporation (SMC) which prompted the 4,500-strong Union (Ilaw at Buklod ng Manggagawa or IBM)
to present their demand for correction of the distortion.
SMC was claimed to have ignored the demand when it offered an across-the-board wage increase of PhP
7.00 compared to IBMs proposal of PhP 25.00 which it later reduced to PhP 15.00.
In view of the non-agreement, the Union workers refused to work beyond eight hours every day beginning
October 16, 1989 so as to compel SMC to correct the distortion.
The eight-hour work shift was observed by some 800 employees of SMCs Polo plant production line all of
whom are members of the IBM. This work shift was a turnabout from the work schedule that they have been
implementing for the past five years (i.e. ten (10) hours for the first shift and ten (10) to fourteen (14) hours
for the second shift, from Mondays to Fridays ; (and on) Saturdays, eight (8) hours for both shifts) and
according to SMC has caused work disruption and lower efficiency resulting to lessened production and
reduction of revenues.
On October 18, 1989, two days after the concerted refusal to render overtime, SMC filed with the Arbitration
Branch of the National Labor Relations Commission (NLRC) a complaint against the Union and its members
"to declare the strike or slowdown illegal" and to terminate the employment of the union officers and shop
stewards.
On December 8, 1989, SMC filed another complaint against the Union because the case with the Arbitration
branch yielded no relief. This time, SMC went directly to the NLRC to enjoin and restrain illegal slowdown
and for damages, with prayer for the issuance of a cease-and-desist and temporary restraining order.
On December 19, 1989, the NLRC First Division authorized the issuance of a Temporary Restraining Order
directing IBM to cease and desist from the work disruption and to comply with the work schedule as
established by the company. Injunction case was to be heard by Labor Arbiter Carmen Talusan but IBM
refuses to acknowledge the NLRCs Jurisdiction.
The Hearing Officer extended the TRO of December 19, 1989.
On February 14, 1990, the Union filed a petition which commenced the special civil action of certiorari and
prohibition, contending, among others that the central issue is the application of the Eight-Hour Labor Law
and SMCs inaction on the wage distortion. They also assailed the NLRCs indecent haste of issuing a
TRO bases on ex-parte evidence presented by SMC and pointed out that members of the NLRC lacked
authority to act as Commissioners because they had not been confirmed by the Commission on
Appointments.
On the other hand, SMC argues that the coordinated reduction of the work time by the IBM members was
an illegal and protected activity meant to cause losses on the part of SMC to compel it to yield to IBMs
demands and is therefore within the jurisdiction of the NLRC to validly issue injunctive relief in the first
instance.
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Issue: Whether or not the NLRC has jurisdiction over the complained of by SMC which were committed
by IBM members to compel SMC to address the wage distortion issue based on the unions proposal.
Corrolarily, whether or not the union members actuations fall within the purview of protected union activities
based on Article 264 of the Labor Code.

Ruling: The Supreme Court ruled in favor of SMC and declared the IBMs acts as violative of law and
affirmed the NLRCs jurisdiction bases on the provisions in the Labor Code.
Although Article 263 of the Labor Code recognizes the right of legitimate labor organizations to strike and
picket and of employer to lockout, consistent with the national interest, the legality of these activities is
usually dependent on the legality of the purposes sought to be attained and the means employed. These
joint or coordinated activities may be forbidden or restricted by law or contract.
In the case of the wage distortion complained of by IBM, the issue is governed by Section 3 of Republic Act
6727 which prescribes a specific, detailed and comprehensive procedure for the correction of the distortion
and implicitly excludes strikes or lockouts or other concerted activities as modes of settlement of the issue.
Also the Court said that the issue on the Eight-Hour Law was IBMs futile attempt to justify its illegal acts
which were also violative of its Collective Bargaining Agreement with SMC.
As to the NLRCs jurisdiction, the Court declared that the Commission was acting within its authority as
stipulated in Article 254 of the Labor Code which says No temporary or permanent injunction or restraining
order in any case involving or growing out of labor disputes shall be issued by any court or other entity,
except as otherwise provided in Articles 218 and 264 Article 264, meanwhile, lists down the prohibited
activities which may be stopped by a restraining order or injunction and Article 218 confers on the NLRC
the power to "enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts
or to require the performance of a particular act in any labor dispute which, if not restrained or performed
forthwith, may cause grave or irreparable damage to any party or render ineffectual any decision in favor of
such party..."

34.

Employers Confederation of the Phils., vs. NWPC
201 SCRA 759 [1991]

Facts:The present controversy involves the questioned validity of Wage Order No. NCR-01-A dated
October 23, 1990. The Employers Confederation of the Philippines (ECOP) is questioning the validity of
such order issued Regional Tripartite Wages and Productivity Board which was promulgated pursuant to
promulgated pursuant to the authority vested by virtue of Republic Act No. 6727. The Wage Rationalization
Act provides new wage rates, the creation of Regional Tripartite Wages and Productivity Boards in charge
of prescribing minimum wage rates for all workers in the various regions and for a National Wages
and Productivity Commission to review such wage levels as determined by the RTWPB.
In the exercise of such authority, the Regional Board of the National Capital Regio issued the
assailed wage order, which increased the minimum wage by P17.00 daily in the National Capital Region.
The Trade Union Congress and the Personnel Management Association of the Philippines moved for
reconsideration, ECOP opposed.
Thus on On October 23, 1990, the Board issued Wage Order No. NCR-01-A amending Wage
Order No. NCR-01, as follows:
Section 1. Upon the effectivity of this Wage Order, all workers and employees in
the PRIVATE SECTOR in the National Capital Region already receiving wages above the
58 | P a g e

statutory minimum wage rates up to one hundred and twenty-five pesos (P125.00) per
day shall also receive an increase of seventeen pesos (P17.00) per day.
From this, ECOP appealed to the NWPC but such was dismissed for lack of merit. Hence the
present petition.
Issue: Whether or not the wage order is void by exceeding its jurisdiction in decreeing a grant of an
across-the-board wage increase to workers already being paid more than existing minimum wage rates?
Whether or not RA No. 6727 limit the board to prescribe only minimum wages and not determine
salary ceiling?
Ruling:
The determination of wages generally may involve 2 methods, the "floor-wage" method and the "salary-
ceiling" method.
Floor wage method involves the fixing of determinate amount that would be added to the prevailing
statutory minimum wage. On the other hand, the salary-ceiling method applies to employees receiving
a certain denominated salary ceiling.
Previously the use of the floor wage method resulted to labor disputes arising from wage distortions. To
address the issue, the practice of salary-cap method was utilized to minimize wage distortions.
Supposedly, these distortions were resolved through collective bargaining, but such may at times be
ineffective mechanism. Thus, Republic Act No. 6727 was enacted by law to rationalize wage by
providing for full-time boards to police wages round-the-clock, and second, by giving the boards enough
powers to achieve this objective.
While it is true that wage fixing constitute an act of Congress, this power may necessarily be delegated.
Hence, the power to fix rates may fall upon these entities provided that Congress has left sufficient
standards. The standards therefore in Article 124, being sufficient the Supreme Court ruled that the
Commission correctly upheld the Regional Board of the National Capital Region.
ECOP presumes Republic Act No. 6727 is meant to "get the Government out of the industry" and leave
labor and management alone in deciding wages. But the Act itself is meant to rationalize wages by
instituting permanent boards to decide wages rather than leaving wages to Congress from year to year.
It takes into consideration the proliferation of specialized activities and the necessity to entrust such
resolution to administrative agencies.
It should be noted that wage and minimum wage are two different concepts. "Wage" paid to any
employee shall mean the remuneration or earnings, however designated, capable of being expressed in
terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for services rendered or to be rendered
and includes the fair and reasonably value, as determined by the Secretary of Labor, of board, lodging,
or other facilities customarily furnished by the employer to the employee.
On the other hand "minimum wage" means more than setting a floor wage to upgrade existing wages. It
emphasizes the effort of the State to breathe life into he States declared policies and at the same time
that social justice be served.
WHEREFORE, premises considered, the petition is DENIED. No pronouncement as to costs.
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35.
Mabeza vs NlRC
NLRC, 271 SCRA 670

Facts: Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her co-
employees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an
instrument attesting to the latter's compliance with minimum wage and other labor standard provisions of
law.||| The instrument provides among others
4. That we have no complaints against the management of the Hotel Supreme as we
are paid accordingly and that we are treated well.
5. That we are executing this affidavit voluntarily without any force or intimidation and
for the purpose of informing the authorities concerned and to dispute the alleged report
of the Labor Inspector of the Department of Labor and Employment conducted on the
said establishment on February 2, 1991.
As gleaned from the affidavit, the same was drawn by management for the sole purpose of refuting findings
of the Labor Inspector of DOLE (in an inspection of respondent's establishment on February 2, 1991)
apparently adverse to the private respondent. 3
After she refused to proceed to the City Prosecutor's Office on the same day the affidavit was submitted
to the Cordillera Regional Office of DOLE petitioner avers that she was ordered by the hotel management
to turn over the keys to her living quarters and to remove her belongings from the hotel premises.
Issue
whether or not the dismissal by the private respondent of petitioner constitutes an unfair labor
practice.|||
Held
The pivotal question in any case where unfair labor practice on the part of the employer is alleged is
whether or not the employer has exerted pressure, in the form of restraint, interference or coercion, against
his employee's right to institute concerted action for better terms and conditions of employment. Without
doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor
standards provisions of law when he might have not, together with the act of terminating or coercing those
who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act clearly
preempts the right of the hotel's workers to seek better terms and conditions of employment through
concerted action.|||
For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an
example to all of the hotel's employees, that they could only cause trouble to management at great personal
inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of charges against her
was the warning that they would not only be deprived of their means of livelihood, but also possibly, their
personal liberty.||| (Mabeza v. NLRC, G.R. No. 118506, April 18, 1997)
36.
JOY BROTHERS, INC., vs. NATIONAL WAGES AND PRODUCTIVITY COMMISSION
273 SCRA 622 [1997]

FACTS: Wage Order No. NCR-03, providing for a twenty-seven peso wage increase for all private sector
workers and employees in the National Capital Region receiving one hundred fifty-four pesos (P154.00) and
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below daily, was approved November 29, 1993. 1 On February 14, 1994, petitioner applied for exemption
from said wage order on the ground that it was a distressed establishment.
On June 7, 1994, the Regional Tripartite Wages and Productivity Board (hereinafter referred to as the
Board) denied petitioner's application for exemption after holding that the corporation accumulated profits
amounting to P38,381.80 for the period under review. Petitioner's motion for reconsideration was likewise
denied by the Wages and Productivity Board.
On appeal to the National Wages and Productivity Commission, (the NWPC or respondent Commission)
petitioner was again denied relief. Hence, this petition for certiorari where an exemption as a distressed
establishment is insisted upon.
More specifically, petitioner contends that the interim period to be reckoned with is from January 1, 1993 to
December 15, 1993 and not merely up to September 30, 1993 as held by respondent Commission.
Significantly, the period up to December 31, 1993 will reflect losses in petitioner corporation's books, but not
if the covered interim period is only up to September 30, 1993.

ISSUE:
WON the interim period to be reckoned with is from January 1, 1993 to December 15, 1993 and not merely
up to September 30, 1993.

RULING:
NO.
Under Section 5 of Wage Order No. NCR-03, distressed firms, as defined in the NWPC Revised Guidelines
on Exemption may be exempted from the provisions of the Order upon application with and due
determination of the Board. NWPC Guidelines No. 01, Series of 1992, providing for the Revised Guidelines
on Exemption indicate the criteria to qualify for exemption.
Section 8, paragraph a, of the Rules Implementing Wage Order No. NCR-03 provides that exemption from
compliance with the wage increase may be granted to distressed establishments whose paid-up capital has
been impaired by at least twenty-five percent (25%) or which registers capital deficiency or negative net
worth.
The last two full accounting periods here are 1991 and 1992, for which years petitioner incurred net profits
of P53,607.00 and P60,188.00, respectively. If, as petitioner maintains, the unaudited financial figures for
the entire 1993 (up to December 31, 1993) are taken into consideration, all of a sudden petitioner incurs a
net loss of P5,260,273.00. Said loss impairs its paid-up capital for the year 1993 (P15,142,531.00) by 34%
or more than the 25% required by the exemption provisions aforequoted. However, respondent Commission
and the Board held that using September 30, 1993 as the cut-off date for the interim period, petitioner even
realizes a profit amounting to P38,381.80.
Since Wage Order No. NCR-03 was published on December 1, 1993 and thus became effective on
December 16, 1993. The Revised Guidelines on Exemption expressly require interim quarterly financial
statements for the period immediately preceding December 16, 1993. It is clear that the financial statements
worthy of consideration are those of the three quarters prior to December 16, 1993, the third quarter ending
on September 30, 1993. Thus, petitioner manifestly errs in claiming that said interim period is up to
December 15, 1993 or December 31, 1993.

37.

PRUBANKERS ASSOCIATION VS PRUDENTIAL BANK
(1999) 302 SCRA 74

Facts: The RTWPB Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living
Allowance (COLA) to workers in the private sector who had rendered service for at least three (3) months
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before its effectivity, and for the same period thereafter, in the following categories: P17.50 in the cities of
Naga and Legaspi; P15.50 in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and P10.00
for all other areas in the Bicol Region.
On November 1993, RTWPB Region VII issued Wage Order No. RB VII-03, which directed the
integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the basic pay of all
workers. It also established an increase in the minimum wage rates for all workers and employees in the
private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos
(P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and
the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran. The bank granted a COLA of
P17.50 to its employees at its Naga Branch, the only branch covered by Wage Order No. RB 5-03, and
integrated the P150.00 per month COLA into the basic pay of its rank-and-file employees at its Cebu,
Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB VII-03.
On June 7, 1994, Prubankers Association wrote the petitioner requesting that the Labor
Management Committee be immediately convened to discuss and resolve the alleged wage distortion
created in the salary structure upon the implementation of the said wage orders. It demanded in the Labor
Management Committee meetings that the petitioner extend the application of the wage orders to its
employees outside Regions V and VII, claiming that the regional implementation of the said orders created a
wage distortion in the wage rates of petitioner's employees nationwide. As the grievance could not be
settled in the said meetings, the parties agreed to submit the matter to voluntary arbitration.

Issue: WON a wage distortion resulted from respondent's implementation of the Wage Orders.

Held: The court ruled that there is no wage distortion since the wage order implementation covers all the
branches of the bank.
The hierarchy of positions was still preserved. The levels of different pay classes was not eliminated. The
statutory definition of wage distortion is found in Article 124 of the Labor Code, as amended by Republic Act
No. 6727, which reads: Standards/Criteria for Minimum Wage Fixing . . ."As used herein, a wage
distortion shall mean a situation where an increase in prescribed wage 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."
Wage distortion involves four elements: (1) An existing hierarchy of positions with corresponding salary
rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the
salary rate of a higher one; (3)The elimination of the distinction between the two levels and (4) The
existence of the distortion in the same region of the country.
A disparity in wages between employees holding similar positions but in different regions does not constitute
wage distortion as contemplated by law. As stated, it is the hierarchy of positions and the disparity of their
corresponding wages and other emoluments that are sought to be preserved by the concept of wage
distortion.

38.

LIDUVINO M. MILLARES et.al. , petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, (FIFTH
DIVISION), and PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (PICOP),
[G.R. No. 122827. March 29, 1999]

FACTS: Petitioners numbering one hundred sixteen (116) occupied the positions of Technical Staff, Unit
Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of
respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur.
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- In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of
restrictive government regulations on logging and the economic crisis. To avert further losses, it
undertook a retrenchment program and terminated the services of petitioners.
- Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay
for every year of service. Believing however that the allowances they allegedly regularly received
on a monthly basis during their employment should have been included in the computation thereof
they lodged a complaint for separation pay differentials.
- PICOP grants the following allowances:
o Staff allowance/managers allowance to those who live in rented houses near the mill site
which ceases whenever a vacancy occurs in the companys free housing facilities.
o Transportation allowance in the form of advances for actual transportation expenses
subject to liquidation is given to key officers and managers who use their own vehicles in
the performance of their duties. This privilege is discontinued when the conditions no
longer obtain.
o Bislig allowance is given to managers and officers on account of the hostile environment
prevailing therein. Once the recipient is transferred elsewhere, the allowance ceases.

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

- On appeal, the National Labor Relations Commission (NLRC) did not view in favor of the Executive
Labor Arbiter. On 7 October 1994 it set aside the assailed decision by decreeing that the
allowances did not form part of the salary base used in computing separation pay.
ISSUE:
- Whether or not the allowances in question are considered facilities customarily furnished.
RULING:
- The Staff/Manager's allowance may fall under "lodging" but the transportation and Bislig
allowances are not embraced in "facilities" on the main consideration that they are granted as well
as the Staff/Manager's allowance for respondent PICOP's benefit and convenience, i.e., to insure
that petitioners render quality performance. In determining whether a privilege is a facility, the
criterion is not so much its kind but its purpose. That the assailed allowances were for the benefit
and convenience of respondent company was supported by the circumstance that they were not
subjected to withholding tax.
- In addition, the Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor
Code may from time to time fix in appropriate issuances the "fair and reasonable value of board,
lodging and other facilities customarily furnished by an employer to his employees." Petitioners'
allowances do not represent such fair and reasonable value as determined by the proper authority
simply because the Staff/Manager's allowance and transportation allowance were amounts given
by respondent company in lieu of actual provisions for housing and transportation needs whereas
the Bislig allowance was given in consideration of being assigned to the hostile environment then
prevailing in Bislig.
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39.

International School Alliance of Educators vs Quisumbing (2000)
333 SCRA 13

Facts: International School, Inc., pursuant to PD 732, is a domestic educational institution established
primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable the
School to continue carrying out its educational program and improve its standard of instruction, Section 2(c)
of the same decree authorizes the School to employ its own teaching and management personnel selected
by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from
otherwise applicable laws and regulations attending their employment, except laws that have been or will be
enacted for the protection of employees.
The School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1)
foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member
should be classified as a foreign-hire or a local hire: (a) What is one's domicile? (b) Where is one's home
economy? (c) To which country does one owe economic allegiance? (d) Was the individual hired abroad
specifically to work in the School and was the School responsible for bringing that individual to the
Philippines? Should the answer to any of these queries point to the Philippines, the faculty member is
classified as a local hire; otherwise, he or she is deemed a foreign-hire.
The School grants foreign-hires certain benefits not accorded local- hires. These include housing,
transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary
rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two "significant
economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited
tenure. The compensation scheme is simply the School's adaptive measure to remain competitive on an
international level in terms of attracting competent professionals in the field of international education.
Issue: WON local hire teachers shall enjoy same salary as foreign hire teachers where they perform the
same work.
Held: Employees are entitled to same salary for performance of equal work.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof,
provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of
just and favorable conditions of work, which ensure, in particular: ( a) Remuneration which provides all
workers, as a minimum, with: (i) Fair wages and equal remuneration for work of equal value without
distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed
by men, with equal pay for equal work; The foregoing provisions impregnably institutionalize in this
jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially
equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries.
This rule applies to the School.
The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of
foreign-hires. The Court finds this argument a little inconsiderate. If an employer accords employees the
same position and rank, the presumption is that these employees perform equal work. If the employer pays
one employee less than the rest, it is not for that employee to explain why he receives less or why the
64 | P a g e

others receive more. The employer has discriminated against that employee; it is for the employer to explain
why the employee is treated unfairly.
In this case, the employer has failed to discharge this burden. There is no evidence here that foreign-hires
perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and
responsibilities, which they perform under similar working conditions.
40.
BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS vs.
NATIONAL LABOR RELATIONS COMMISSION and BANKARD, INC.,
[G.R NO. 140689, February 17, 2004.]
Facts: Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III, Level IV, and Level V. On
May 1993, its Board of Directors approved a New Salary Scale, made retroactive to April 1, 1993, for the
purpose of making its hiring rate competitive in the industrys labor market. The New Salary Scale increased
the hiring rates of new employees: Levels I and V by one thousand pesos (P1,000.00), and Levels II, III and
IV by nine hundred pesos (P900.00). Accordingly, the salaries of employees who fell below the new
minimum rates were also adjusted to reach such rates under their levels.
This made Bankard Employees Union-WATU (petitioner), the duly certified exclusive bargaining agent of the
regular rank and file employees of Bankard, to request for the increase in the salary of its old, regular
employees. Bankard insisted that there was no obligation on the part of the management to grant to all its
employees the same increase in an across-the-board manner.
Petioner filed two notices of strike. The first was treated by the National Conciliation and Mediation Board a
Preventive Mediation Case, and the second notice was certified by the Secretary of Labor and
Employment for compulsory arbitration. The NLRC no wage distortion dismissed the case for lack of merit.
Petitioners motion for reconsideration of the dismissal of the case was denied. The Court of Appeals
likewise denied the Bankard employees petition.
Issue: Whether the unilateral adoption by an employer of an upgraded salary resulted in wage distortion
within the contemplation of Article 124 of the Labor Code.
Held: There exists a wage distortion but the Court will not interfere in the management prerogative of the
petitioner.
Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among others, Article
124 of the Labor Code), the term "wage distortion" was 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.
In the case of Prubankers Association v. Prudential Bank and Trust Company, it laid down the four elements
of wage distortion, to wit: (1.) An existing hierarchy of positions with corresponding salary rates; (2) A
significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of
a higher one; (3) The elimination of the distinction between the two levels; and (4) The existence of the
distortion in the same region of the country.
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Normally, a company has a wage structure or method of determining the wages of its employees. In a
problem dealing with "wage distortion," the basic assumption is that there exists a grouping or classification
of employees that establishes distinctions among them on some relevant or legitimate bases. Involved in the
classification of employees are various factors such as the degrees of responsibility, the skills and
knowledge required, the complexity of the job, or other logical basis of differentiation. The differing wage
rate for each of the existing classes of employees reflects this classification.
The Bankard Employees believe that the classification in the company is not one based on "levels" or
"ranks" but on two groups of employees, the newly hired and the old, in each and every level, and not
between and among the different levels or ranks in the salary structure.
However as found by the NLRC, the entry of new employees to the company ipso facto places them under
any of the levels mentioned in the new salary scale which Bankard adopted retroactive to April 1, 1993.
Bankard has a recognized management prerogative of formulating a wage structure, based on levels (I to
V). There is no hierarchy of positions between the newly hired and regular employees of Bankard, The
NLRC also found the other requisites for wage distortion lacking.
Petitioner cannot legally obligate Bankard to correct the alleged "wage distortion" as the increase in the
wages and salaries of the newly-hired was not due to a prescribed law or wage order.
The wordings of Article 124 are clear. If it was the intention of the legislators to cover all kinds of wage
adjustments, then the language of the law should have been broad, not restrictive as it is currently phrased:
Article 124. Standards/Criteria for Minimum Wage Fixing. 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.
Article 124 is entitled "Standards/Criteria for Minimum Wage Fixing." It is found in CHAPTER V on "WAGE
STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION" which principally deals with the fixing of
minimum wage. Article 124 should thus be construed and correlated in relation to minimum wage fixing, the
intention of the law being that in the event of an increase in minimum wage, the distinctions embodied in the
wage structure based on skills, length of service, or other logical bases of differentiation will be preserved.
If the compulsory mandate under Article 124 to correct "wage distortion" is applied to voluntary and
unilateral increases by the employer in fixing hiring rates which is inherently a business judgment
prerogative, then the hands of the employer would be completely tied even in cases where an increase in
wages of a particular group is justified due to a re-evaluation of the high productivity of a particular group, or
as in the present case, the need to increase the competitiveness of Bankards hiring rate. An employer
would be discouraged from adjusting the salary rates of a particular group of employees for fear that it would
result to a demand by all employees for a similar increase, especially if the financial conditions of the
business cannot address an across-the-board increase.
Bankards right to increase its hiring rate, to establish minimum salaries for specific jobs, and to adjust the
rates of employees affected thereby is even embodied under Section 2, Article V (Salary and Cost of Living
Allowance) of the parties Collective Bargaining Agreement (CBA).
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Wage distortion is a factual and economic condition that may be brought about by different causes. The
mere factual existence of wage distortion does not, however, ipso facto result to an obligation to rectify it,
absent a law or other source of obligation which requires its rectification.
41.
ODANGO VS NLRC
G.R. No. 147420, June 10, 2004
Facts: 33 monthly-paid employees of Antique Electric Cooperative, Inc. (ANTECO) are asking for wage
differentials. Their work is from Monday to Friday and half day on Saturdays. The controversy started with
the routine inspection made by the Regional Branch of DOLE finding ANTECO liable for underpayment of
monthly salaries of its employees and directed it to pay. Because of the failure of ANTECO to do so, the
employees file complaints with the NLRC Sub-regional Branch VI in Iloilo City. The Labor Arbiter granted all
employees, except one, wage differentials amounting to P1,017,507.73 and 10% attorneys fees. ANTECO
appealed to the NLRC. The NLRC reversed the Labor Arbiters Decision. Petitioners elevated it to the
Supreme Court through a petition for certiorari which referred the case to the Court of Appeals. The Court of
Appeals dismissed the case. Aggrieved, petitioners made the present petition.
Petitioners allege that ANTECO was underpaying them because ANTECO used only 304 as a divisor for
their leave credits. And since Section 2 Rule IV of the Implementing Rules and Regulations of the Labor
Code (Section 2) states that monthly-paid employees are considered paid for all the days in a month, there
are 61 days, the difference between 365 and 304, that they were not paid. The Labor Arbiter sided with
petitioners. The NLRC reversed the decision arguing that applying the formula in Section 2 that Daily Wage
= (Wage x 12) /365 and substituting wage with the current monthly salary of the petitioners, their daily wage
is still above the minimum wage. Hence, ANTECO is not liable for any amount since it is still paying its
employees above the minimum wage. The Court of Appeals dismissed the case based on a procedural
lapse since the petition was not able to allege the specific instances where the actions of the NLRC
amounted to grave abuse of discretion. The petition only averred to sweeping generalizations. The Supreme
Court sided with the Court of Appeals dismissing the case because of the procedural lapse. Not
disregarding the procedural lapse, the Supreme Court went on to discuss the issues raised just to illustrate
the extent by which petitioners have haphazardly pursued their claim.
Issue: WON petitioners are entitled to claim wage differentials?
Ruling: No, they are not entitled to claim differentials. The Supreme Court discussed that petitioners basis
for their claim Section 2 has long been declared void in the 1984 case of Insular Bank Asia vs Inciong
because it amended the Labor Codes provisions on holiday pay by including monthly-paid employees to
those who are excluded from the benefits of the holiday pay. But even though Section 2 was valid, their
claim would still fail because of the rule of no work, no pay prevalent in the Philippines. An exception to
this rule is the 10 legal holidays in a year. It is a mistaken notion that Section 2 gives monthly employees the
right to be paid for un-worked non-legal-holiday days. It also creates unjust classification. It is clearly in
violation of the no work, no pay rule and of the equal protection clause because sustaining the claim would
make monthly-paid employees a privileged class who are paid even if they do not work.
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Regarding the 304 days, the Supreme Court says the minimum allowable divisor is 287 (365 days less 52
Sundays less 26 Saturdays). Since they are using 304, they are not even underpaying the employees for
their leave credits.
42
C. PLANAS COMMERCIAL/ MARCIAL COHU VS NLRC
G.R. No. 144619

Facts: C. Planas Commercial, owned by Cohu, (the petitioner) is engaged in the wholesale of plastic
products and fruits of different kinds in Divisoria. Morente, Allauigan, Ofialda and several others (the
employees) are its laborers who accompany the delivery trucks and helped in the loading and unloading of
merchandise being distributed to clients.

The employees filed a complaint with the Arbitration Branch of the NLRC against the petitioner for
underpayment of wages, nonpayment of overtime pay, holiday pay, service incentive leave pay and
premium pay for holiday and rest day. The employees alleged that petitioner was obliged to pay these to
them as petitioner is employing more than 24 employees, and thus covered by the minimum wage law.

Petitioner, on the other hand, alleged that the employees were not entitled to their claims for they were
employed in a retail and service establishment regularly employing less than ten workers.

Two of the employees eventually executed quitclaims after receiving P3,000.00 and P6,000.00 respectively,
from petitioner.

Issues:
1) Are the employees entitled to the salary differentials (difference between minimum and actual
wages), holiday pay and service incentive leave?
2) Are the employees entitled to overtime pay and premium pay for holidays and rest days?
3) Are the quitclaims executed by the two employees in favor of the petitioner valid?

Ruling and rationale:

1) Yes, the employees are entitled to salary differentials, holiday pay and service incentive leave. The
petitioner is covered under RA 6727 which provides for these benefits.

Sec. 4 of RA 6726 (Wage Rationalization Act) provides:

xxx
(c) Exempted from the provisions of this Act are household or domestic helpers
and persons employed in the personal service of another, including family
drivers.

Retail/service establishments regularly employing not more than ten (10) workers
may be exempted from the applicability of this Act upon application with and as
determined by the appropriate Regional Board in accordance with the applicable
rules and regulations issued by the Commission. xxx

Clearly, for a retail/service establishment to be exempted from the coverage of the minimum wage
law, it must be shown that the establishment is regularly employing not more than ten workers and
had applied for exemptions with and as determined by the appropriate Regional Board in
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accordance with the applicable rules and regulations issued by the Commission. Petitioners main
defense in controverting the employees claim for underpayment of wages is that they are
exempted from the application of the minimum wage law, thus the burden of proving such
exemption rests on petitioners. Petitioners had not shown any evidence to show that they had
applied for such exemption and if they had applied, the same was granted

2) No, the employees are not entitled to overtime pay and premium pay for holidays and rest days.

There is no sufficient factual basis to award the claims because the employees failed to
substantiate that they rendered overtime and worked during holidays and rest days.
These claims, unlike claims for underpayment and non-payment of fringe benefits
mandated by law, need to be proven by the employees.

3) Yes, the quitclaims executed by the two employees in favor of the petitioner are valid.

It has been held that not all quitclaims are per se invalid or against public policy, except (1) where
there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or (2)
where the terms of settlement are unconscionable on their face. In these cases, the law will step in
to annul the questionable transactions.

These two instances are not present in the case of the two employees who executed the
quitclaims. They failed to refute petitioners allegation that the settlement was voluntarily made as
they had not filed any pleadings before the CA. These employees were required by SC to file their
comment on the instant petition, however, they failed to do so. They were then required to show
cause why they should not be disciplinarily dealt with or held in contempt. However, they still failed
to file their comment, thus, they were imposed fines. The SC then ordered the National Bureau of
Investigation to arrest and detain these two employees and for the latter to file their comment.
However, they could not be located at their given address and they are not known in their locality,
so the order of arrest and commitment was returned unserved. Such inaction on the part of these
two employees are an indication that they already relented in their claims and gives credence to
petitioners claim that they had voluntarily executed the release and quitclaim.

43.
EJR CRAFTS CORP vs. CA
G.R. No. 154101, March 10, 2006
Facts :In 1997, private respondents filed a complaint for underpayment of wages, regular holiday pay,
overtime pay, non-payment of 13th month pay and service incentive leave pay against petitioner before the
Regional Office, NCR of the Department of Labor and Employment (DOLE). Acting on the complaint,
Regional Director issued an inspection authority to Senior Labor Enforcement Officer.
On August 1997, an inspection was conducted on the premises of petitioners offices wherein the following
violations of labor standards law were discovered, to wit: non-presentation of employment records (payrolls
and daily time records); underpayment of wages, regular holiday pay, and overtime pay; and non-payment
of 13th month pay and service incentive leave pay. On the same day, the Notice of Inspection Result was
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received by and explained to the manager of petitioner corporation Mr. Jae Kwan Lee, with the
corresponding directive that necessary restitution be effected within five days from said receipt.
As no restitution was made, the Regional Office thereafter conducted summary investigations. However,
despite due notice, petitioner failed to appear for two consecutive scheduled hearings. Petitioner failed to
question the findings of the Labor Inspector received by and explained to the corporations manager.
Petitioner then filed a Motion for Reconsideration of said Order arguing that the Regional Director has no
jurisdiction over the case as private respondents were allegedly no longer connected with petitioner
corporation at the time of the filing of the complaint and when the inspection was conducted, and that private
respondents claims are within the exclusive and original jurisdiction of the Labor Arbiters.
Issue: WON the Regional Director has jurisdiction over the claims of the private respondents.
Held: Regional Director has jurisdiction to hear and decide the instant case.
The Court favors the respondents in the money claims against the petitioner company. It is admitted that for
the Regional Director to exercise the power to order compliance, or the so-called "enforcement power"
under Article 128(b) of P.D. No. 442 as amended, it is necessary that the employer-employee relationship
still exists.
In support of its contention that it is the Labor Arbiter and not the Regional Director who has jurisdiction over
the claims of herein private respondents, petitioner contends that at the time the complaint was filed, the
private respondents were no longer its employees. Considering thus that there still exists an employer-
employee relationship between petitioner and private respondents and that the case involves violations of
labor standard provisions of the Labor Code, we agree with the Undersecretary of Labor and the appellate
court that the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article
128(b) of the Labor Code which states:
Art. 128. Visitorial and Enforcement Power. (b) 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
representatives 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.
44.
PAG-ASA STEEL WORKS, INC. vs. COURT OF APPEALS
G.R. No. 166647, March 31, 2006
Facts: This is a Petition for Review on Certiorari of the Decision of the Court of Appeals (CA) in CA-G.R. SP
No. 65171 ordering Pag-Asa Steel Works, Inc. to pay the members of Pag-Asa Steel Workers Union (Union)
the wage increase prescribed under Wage Order No. NCR-08. Also assailed in this petition is the CA
Resolution denying the corporations motion for reconsideration.
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Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under Philippine laws and
is engaged in the manufacture of steel bars and wire rods.
Pag-Asa Steel Workers Union is the duly authorized bargaining agent of the rank-and-file employees of
petitioner.
On January 8, 1998, the Regional Tripartite Wages and Productivity Board (Wage Board) of the National
Capital Region (NCR) issued Wage Order No. NCR-06. It provided for an increase of P13.00 per day in the
salaries of employees receiving the minimum wage, and a consequent increase in the minimum wage rate
to P198.00 per day.
Petitioner and the Union negotiated on how to go about the wage adjustments. Petitioner forwarded a
letterdated March 10, 1998 to the Union with the list of the salary adjustments of the rank-and-file
employees after the implementation of Wage Order No. NCR-06, and the notation that said "adjustments
[were] in accordance with the formula [they] have discussed and [were] designed so as no distortion shall
result from the implementation of Wage Order No. NCR-06."
On September 23, 1999, petitioner and the Union entered into a Collective Bargaining Agreement (CBA),
effective July 1, 1999 until July 1, 2004. Section 1, Article VI (Salaries and Wage) of said CBA provides:
Section 1. WAGE ADJUSTMENT - The COMPANY agrees to grant all the workers, who are already regular
and covered by this AGREEMENT at the affectivity of this AGREEMENT, a general wage increase as
follows:
July 1, 1999 . . . . . . . . . . . P15.00 per day per employee
The aforesaid wage increase shall be implemented across the board. Any Wage Order to be implemented
by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted to
above. However, if no wage increase is given by the Wage Board within six (6) months from the signing of
this AGREEMENT, the Management is willing to give the following increases, to wit:
The difference of the first year adjustment to retroact to July 1, 1999.
The across-the-board wage increase for the 4th and 5th year of this AGREEMENT shall be subject for a re-
opening or renegotiation as provided for by Republic Act No. 6715.
For the first year of the CBAs effectivity, the salaries of Union members were increased
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On October 14, 1999, Wage Order No. NCR-07 was issued, and on October 26, 1999, its Implementing
Rules and Regulations. It provided for a P25.50 per day increase in the salary of employees receiving the
minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the P25.50 per day
increase to all of its rank-and-file employees.
On July 1, 2000, the rank-and-file employees were granted the second year increase provided in the CBA in
the amount of P25.00 per day.
On November 1, 2000, Wage Order No. NCR-08 took effect. Section 1 thereof provides:
Section 1. Upon the effectivity of this Wage Order, private sector workers and employees in the National
Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of
TWENTY SIX PESOS and FIFTY CENTAVOS (P26.50) per day, thereby setting the new minimum wage
rate in the National Capital Region at TWO HUNDRED FIFTY PESOS (P250.00) per day.
Then Union president Lucenio Brin requested petitioner to implement the increase under Wage Order No.
NCR-08 in favor of the companys rank-and-file employees.
Petitioner rejected the request, claiming that since none of the employees were receiving a daily salary rate
lower than P250.00 and there was no wage distortion, it was not obliged to grant the wage increase.
The Union elevated the matter to the National Conciliation and Mediation Board. When the parties failed to
settle, they agreed to refer the case to voluntary arbitration. In the Submission Agreement, the parties
agreed that the sole issue is "[w]hether or not the management is obliged to grant wage increase under
Wage Order No. NCR #8 as a matter of practice," and that the award of the Voluntary Arbitrator (VA) shall
be final and binding.
In its Position Paper, the Union alleged that it has been the companys practice to grant a wage increase
under a government-issued wage order, aside from the yearly wage increases in the CBA. It averred that
petitioner paid the salary increases provided under the previous wage orders in full (aside from the yearly
CBA increases), regardless of whether there was a resulting wage distortion, or whether Union members
salaries were above the minimum wage rate. Wage Order No. NCR-06, where rank-and-file employees
were given different wage increases ranging from P10.00 to P13.00, was an exception since the
adjustments were the result of the formula agreed upon by the Union and the employer after negotiations.
The Union averred that all of their CBAs with petitioner had a "collateral agreement" where petitioner was
mandated to pay the equivalent of the wage orders across-the-board, or at least to negotiate how much will
be paid. It pointed out that an established practice cannot be discontinued without running afoul of Article
100 of the Labor Code on non-diminution of benefits.
For its part, petitioner alleged that there is no such company practice and that it complied with the previous
wage orders (Wage Order Nos. NCR-01-05) because some of its employees were receiving wages below
the minimum prescribed under said orders. As for Wage Order No. NCR-07, petitioner alleged that its
compliance was in accordance with its verbal commitment to the Union during the CBA negotiations that it
would implement any wage order issued in 1999. Petitioner further averred that it applied the wage
distortion formula prescribed under Wage Order Nos. NCR-06 and NCR-07 because an actual distortion
occurred as a result of their implementation. It asserted that at present, all its employees enjoy regular
status and that none receives a daily wage lower than theP250.00 minimum wage rate prescribed under
Wage Order No. NCR-08.
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In reply to the Unions position paper, petitioner contended that the full implementation of the previous wage
orders did not give rise to a company practice as it was not given to the workers within the bargaining unit
on a silver platter, but only per request of the Union and after a series of negotiations. In fact, during CBA
negotiations, it steadfastly rejected the following proposal of the Unions counsel, Atty. Florente Yambot, to
include an across-the-board implementation of the wage orders:
x x x To supplement the above wage increases, the parties agree that additional wage increases equal to
the wage orders shall be paid across-the-board whenever the Regional Tripartite Wage and Productivity
Board issues wage orders. It is understood that these additional wage increases will be paid not as wage
orders but as agreed additional salary increases using the wage orders merely as a device to fix or
determine how much the additional wage increases shall be paid.
The Union, however, insisted that there was such a company practice. It pointed out that despite the fact
that all the employees were already receiving salaries above the minimum wage, the CBA still provided for
the payment of a wage increase using wage orders as the yardstick. It claimed that the parties intended that
petitioner-employer would pay the additional increases apart from those in the CBA. The Union further
asserted that the CBA did not include all the agreements of the parties; hence, to determine the true
intention of the parties, parol evidence should be resorted to. Thus, Atty. Yambots version of the wage
adjustment provision should be considered.
Issue:
I. WHETHER THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR IN
NOT FINDING THAT THE INCREASES PROVIDED FOR UNDER WAGE ORDER NO. 8 CANNOT BE
DEMANDED AS A MATTER OF RIGHT BY THE RESPONDENT UNDER THE 1999 CBA, in that:
a) Issue not averred in the complaint nor raised during the trial cannot be raised for the
first time on appeal; and
b) The Rules of Statutory Construction, in relation to Article 1370 and 1374 of the New
Civil Code, as well as Section 11 of the Rules of Court, requires that contract must be
read in its entirety and the various stipulations in a contract must be read together to give
effect to all.
II. WHETHER THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE REVERSIBLE ERROR
IN NOT FINDING THAT THE INCREASES PROVIDED FOR UNDER WAGE ORDER NO. 8 CANNOT BE
DEMANDED BY THE RESPONDENT UNION AS A MATTER OF PRACTICE.
Ruling:
The petition is meritorious. We rule that petitioner is not obliged to grant the wage increase under Wage
Order No. NCR-08 either by virtue of the CBA, or as a matter of company practice.
On the procedural issue, well-settled is the rule, also applicable in labor cases, that issues not raised below
cannot be raised for the first time on appeal. Points of law, theories, issues and arguments not brought to
the attention of the lower court need not be, and ordinarily will not be, considered by the reviewing court, as
they cannot be raised for the first time at that late stage. Basic considerations of due process impel this rule.
We now come to the core of this case. Is [petitioner] under an obligation to grant wage increase to its
workers under W.O. No. NCR-08 as a matter of practice? It is submitted that employers (unless exempt) in
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Metro Manila (including the [petitioner]) are mandated to implement the said wage order but limited to those
entitled thereto. There is no legal basis to implement the same across-the-board. A perusal of the record
shows that the lowest paid employee before the implementation of Wage Order #8 is P250.00/day and none
was receiving belowP223.50 minimum. This could only mean that the union can no longer demand for any
wage distortion adjustment. Neither could they insist for an adjustment of P26.50 increase under Wage
Order #8. The provision of wage order #8 and its implementing rules are very clear as to who are entitled to
the P26.50/day increase, i.e., "private sector workers and employees in the National Capital Region
receiving the prescribed daily minimum wage rate ofP223.50 shall receive an increase of Twenty-Six Pesos
and Fifty Centavos (P26.50) per day," and since the lowest paid is P250.00/day the company is not obliged
to adjust the wages of the workers.
With the above narration of facts and with the union not having effectively controverted the same, we find no
merit to the complainants assertion of such a company practice in the grant of wage order increase applied
across-the-board. The fact that it was shown the increases granted under the Wage Orders were obtained
thru request and negotiations because of the existence of wage distortion and not as company practice as
what the union would want.
Neither do we find merit in the argument that under the CBA, such increase should be implemented across-
the-board. The provision in the CBA that "Any Wage Order to be implemented by the Regional Tripartite
Wage and Productivity Board shall be in addition to the wage increase adverted above" cannot be
interpreted in support of an across-the-board increase. If such were the intentions of this provision, then the
company could have simply accepted the original demand of the union for such across-the-board
implementation, as set forth in their original proposal (Annex "2" union[]s counsel proposal). The fact that
the company rejected this proposal can only mean that it was never its intention to agree, to such across-
the-board implementation. Thus, the union will have to be contented with the increase of P30.00 under the
CBA which is due on July 31, 2001 barely a month from now.
We agree with petitioners contention that the rule excluding parol evidence to vary or contradict a written
agreement, does not extend so far as to preclude the admission of extrinsic evidence, to show prior or
contemporaneous collateral parol agreements between the parties. Such evidence may be received
regardless of whether or not the written agreement contains reference to such collateral agreement. As the
Court ruled in United Kimberly-Clark Employees Union, et al. v. Kimberly-Clark Philippines, Inc.:
A CBA is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen
cannot wholly anticipate. It covers the whole employment relationship and prescribes the rights and duties of
the parties. It is a system of industrial self-government with the grievance machinery at the very heart of the
system. The parties solve their problems by molding a system of private law for all the problems which may
arise and to provide for their solution in a way which will generally accord with the variant needs and desires
of the parties.
If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties, the literal
meaning of its stipulation shall prevail. However, if, in a CBA, the parties stipulate that the hirees must be
presumed of employment qualification standards but fail to state such qualification standards in said CBA,
the VA may resort to evidence extrinsic of the CBA to determine the full agreement intended by the parties.
When a CBA may be expected to speak on a matter, but does not, its sentence imports ambiguity on that
subject. The VA is not merely to rely on the cold and cryptic words on the face of the CBA but is mandated
to discover the intention of the parties. Recognizing the inability of the parties to anticipate or address all
future problems, gaps may be left to be filled in by reference to the practices of the industry, and the step
which is equally a part of the CBA although not expressed in it. In order to ascertain the intention of the
contracting parties, their contemporaneous and subsequent acts shall be principally considered. The VA
74 | P a g e

may also consider and rely upon negotiating and contractual history of the parties, evidence of past
practices interpreting ambiguous provisions. The VA has to examine such practices to determine the scope
of their agreement, as where the provision of the CBA has been loosely formulated. Moreover, the CBA
must be construed liberally rather than narrowly and technically and the Court must place a practical and
realistic construction upon it.
However, just like any other fact, habits, customs, usage or patterns of conduct must be proved..
In determining whether the examples are numerous enough, and sufficiently regular, the key criteria are
adequacy of sampling and uniformity of response. After all, habit means a course of behavior of a person
regularly represented in like circumstances. It is only when examples offered to establish pattern of conduct
or habit are numerous enough to lose an inference of systematic conduct that examples are admissible. The
key criteria are adequacy of sampling and uniformity of response or ratio of reaction to situations.
As petitioner explains, a wage distortion occurred as a result of granting the increase to those employees
who were receiving salaries below the prescribed minimum wage. The wage distortion necessitated the
upward adjustment of the salaries of the other employees and not because it was a matter of company
practice or usage. The situation of the employees before Wage Order No. NCR-08, however, was different.
Not one of the members of respondent Union was then receiving less than P250.00 per day, the minimum
wage requirement in said wage order.
Moreover, to ripen into a company practice that is demandable as a matter of right, the giving of the
increase should not be by reason of a strict legal or contractual obligation, but by reason of an act of
liberality on the part of the employer. Hence, even if the company continuously grants a wage increase as
mandated by a wage order or pursuant to a CBA, the same would not automatically ripen into a company
practice. In this case, petitioner granted the increase under Wage Order No. NCR-07 on its belief that it was
obliged to do so under the CBA.
WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court of Appeals in CA-
G.R. SP No. 65171 and Resolution dated January 11, 2005 are REVERSED and SET ASIDE. The Decision
of the Voluntary Arbitrator is REINSTATED. No costs.
SO ORDERED.
45.
Metropolitan Bank vs. NWPC
G.R. No. 144322; February 6, 2007

FACTS: On October 17, 1995, the Regional Tripartite Wages and Productivity Board, Region II,
Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwise known as
the Wage Rationalization Act, issued Wage Order No. R02-03 (Wage Order), as follows: Section 1. Upon
effectivity of this Wage Order, all employees/workers in the private sector throughout Region II, regardless
of the status of employment are granted an across-the-board increase of P15.00 daily.
The Wage Order was published in a newspaper of general circulation on December 2, 1995 and
took effect on January 1, 1996. Its Implementing Rules were approved on February 14, 1996. Per Section
13 of the Wage Order, any party aggrieved by the Wage Order may file an appeal with the National Wages
75 | P a g e

and Productivity Commission (NWPC) through the RTWPB within 10 calendar days from the publication of
the Wage Order.
Bankers Council in a letter inquiry to NWPC requested for ruling to seek exemption from coverage
of the wage order since the members bank are paying more than the regular wage. NWPC replied that the
member banks are covered by the wage order and does not fall with the exemptible categories.
In another letter inquiry, Metrobank asked for the interpretation of the applicability of the wage
order. NWPC referred it to RTWPB. RTWPB in return clarified that establishments in Region 2 are covered
by the wage order. Petitioner filed a petition with the CA and denied the petition.

ISSUE:
Whether or not the wage order is void thus it has no legal effect and the RTWPB acted in excess of
its jurisdiction.
RULING:
The Court finds that Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase
to employees earning more than the minimum wage rate; and pursuant to the separability clause of the
Wage Order, Section 1 is declared valid with respect to employees earning the prevailing minimum wage
rate.
The powers of NWPC are enumerated in ART. 121. Powers and Functions of the Commission. -
The Commission shall have the following powers and functions: (d) To review regional wage levels set by
the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with
prescribed guidelines and national development plans; (f) To review plans and programs of the Regional
Tripartite Wages and Productivity Boards to determine whether these are consistent with national
development plans; (g) To exercise technical and administrative supervision over the Regional Tripartite
Wages and Productivity Boards.
R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wages and to
promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the
workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to
enhance employment generation in the countryside through industrial dispersal; and to allow business and
industry reasonable returns on investment, expansion and growth.
In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power to
prescribe rules and guidelines for the determination of appropriate minimum wage and productivity
measures at the regional, provincial or industry levels; and authorized the RTWPB to determine and fix the
minimum wage rates applicable in their respective regions, provinces, or industries therein and issue the
corresponding wage orders, subject to the guidelines issued by the NWPC. Pursuant to its wage fixing
authority, the RTWPB may issue wage orders which set the daily minimum wage rates, based on the
standards or criteria set by Article 124 of the Labor Code.
The Court declared that there are two ways of fixing the minimum wage: the "floor-wage" method
and the "salary-ceiling" method. The "floor-wage" method involves the fixing of a determinate amount to be
added to the prevailing statutory minimum wage rates. On the other hand, in the "salary-ceiling" method, the
wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other
words, workers already being paid more than the existing minimum wage (up to a certain amount stated in
the Wage Order) are also to be given a wage increase.
76 | P a g e

In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-wage
method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage level nor
a range to which a wage adjustment or increase shall be added. Instead, it granted an across-the-board
wage increase of P15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its
authority by extending the coverage of the Wage Order to wage earners receiving more than the prevailing
minimum wage rate, without a denominated salary ceiling. As correctly pointed out by the OSG, the Wage
Order granted additional benefits not contemplated by R.A. No. 6727.
46.
Equitable Bank vs. Sadac
G.R. No. 164772; June 8, 2006

FACTS: Ricardo Sadac was appointed Vice President of the Legal Department of petitioner Bank effective 1
August 1981, and subsequently General Counsel thereof on 8 December 1981. On June 1989, nine lawyers
of petitioner Banks Legal Department, in a letter-petition to the Chairman of the Board of Directors, accused
respondent Sadac of abusive conduct and ultimately, petitioned for a change in leadership of the
department. On the ground of lack of confidence in Sadac, under the rules of client and lawyer relationship,
petitioner Bank instructed respondent Sadac to deliver all materials in his custody in all cases in which the
latter was appearing as its counsel of record. In reaction thereto, Sadac requested for a full hearing and
formal investigation but the same remained unheeded. On 9 November 1989, respondent Sadac filed a
complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of
Directors thereof. After learning of the filing of the complaint, petitioner Bank terminated the services of
respondent Sadac. Finally, on 10 August 1989, Sadac was removed from his office
Labor Arbiter rendered decision that Sadacs termination was illegal and entitled to reinstatement
and payment of full back wages. NLRC affirmed the decision upon appeal by the Bank. Sadac filed for
execution of judgment where it gave its computation which amounted to P 6.03 M representing his back
wages and the increases he should have received during the time he was illegally dismissed. The Bank
opposed to Sadacs computation. The Labor Arbiter favor Sadacs computation. NLRC, upon appeal by the
bank, reversed the decision. CA reversed the decision of NLRC. Hence, this petition.
ISSUE:
Whether or not the computation of back wages shall include the general increases.
RULING:
To resolve the issue, the court revisits its pronouncements on the interpretation of the term
backwages. Backwages in general are granted on grounds of equity for earnings which a worker or
employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in
furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right
but rather in the nature of a command to the employer to make public reparation for dismissing an
employee either due to the formers unlawful act or bad faith.
In the case of Bustamante v. National Labor Relations Commission, It said that the Court deems
it appropriate to reconsider such earlier ruling on the computation of back wages by now holding that
conformably with the evident legislative intent as expressed in Rep. Act No. 6715, back wages to be
77 | P a g e

awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the
earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this
ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to
support himself and family, while full backwages have to be paid by the employer as part of the price or
penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in
Rep. Act No. 6715 is to give more benefits to workers than was previously given them. Thus, a closer
adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly
that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee
during the period of his illegal dismissal.
There is no vested right to salary increases. Sadac may have received salary increases in the
past only proves fact of receipt but does not establish a degree of assuredness that is inherent in
backwages. The conclusion is that Sadacs computation of his full backwages which includes his
prospective salary increases cannot be permitted.
47.
S.I.P FOOD HOUSE ET. AL VS. BATOLINA
GR NO. 192473 OCT. 11, 2010
FACTS: The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the
Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to operate a
canteen in the new GSIS Building, but had no capability and expertise in this area. Thus, it engaged the
services of the petitioner S.I.P. Food House (SIP), owned by the spouses Alejandro and Esther Pablo, as
concessionaire. The respondents Restituto Batolina and nine (9) others (the respondents) worked as
waiters and waitresses in the canteen
In February 2004, GMPC terminated SIPs contract as GMPC concessionaire, because of GMPCs
decision to take direct investment in and management of the GMPC canteen; SIPs continued refusal to
heed GMPCs directives for service improvement; and the alleged interference of the Pablos two sons with
the operation of the canteen. The termination of the concession contract caused the termination of the
respondents employment, prompting them to file a complaint for illegal dismissal, with money claims,
against SIP and the spouses Pablo.
The employer of the respondents claimed that it was merely a labor-only contractor of GMPC. Hence, it
could not be liable.
ISSUE:
WON there exist an employer-employee relationship
RULING:
We affirm the CA ruling that SIP was the respondents employer. The NLRC decision, which the CA affirmed,
states:

Respondents have been the concessionaire of GMPC canteen for nine (9) years. During this
period, complainants were employed at the said canteen. On February 29, 2004, respondents
concession with GMPC was terminated. When respondents were prevented from entering the
78 | P a g e

premises as a result of the termination of their concession, they sent a protest letter dated April 14,
2004 to GMPC thru their counsel. Pertinent portion of the letter:

We write this letter in behalf of our client Mr. & Mrs. Alejandro C. Pablo, the
concessionaires who used to occupy and/or rent the area for a cafeteria/canteen at the
2
nd
Floor of the GSIS Building for the past several years.

Last March 12, 2004, without any court writ or order, and with the aid of your
armed agents, you physically barred our clients & their employees/helpers from entering
the said premises and from performing their usual duties of serving the food requirements
of GSIS personnel and others.

Clearly, no less than respondents, thru their counsel, admitted that complainants herein
were their employees.

That complainants were employees of respondents is further bolstered by the fact that
respondents do not deny that they were the ones who paid complainants salary. When
complainants charged them of underpayment, respondents even interposed the defense of file (sic)
board and lodging given to complainants.

The CA ruled out SIPs claim that it was a labor-only contractor or a mere agent of GMPC. We
agree with the CA; SIP and its proprietors could not be considered as mere agents of GMPC because they
exercised the essential elements of an employment relationship with the respondents such as hiring,
payment of wages and the power of control, not to mention that SIP operated the canteen on its own
account as it paid a fee for the use of the building and for the privilege of running the canteen. The fact that
the respondents applied with GMPC in February 2004 when it terminated its contract with SIP, is another
clear indication that the two entities were separate and distinct from each other. We thus see no reason to
disturb the CAs findings.

48.
SLL INTERNATIONAL CABLES SPECIALITS VS NLRC
GR No. 172161, March 2, 2011

Principle of Law: Before the value of facilities can be deducted from the employees' wages, the
following requisites must all be attendant: first, proof must be shown that such facilities are customarily
furnished by the trade; second, the provision of deductible facilities must be voluntarily accepted in
writing by the employee; and finally, facilities must be charged at reasonable value

Facts: Sometime in 1996, and January 1997, private respondents were hired by petitioner Lagon as
apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but
since they were only trainees, they did not report for work regularly but came in as substitutes to the
regular workers or in undertakings that needed extra workers to expedite completion of work. Soon
after they were engaged as private employees for their Islacom project in Bohol. Private respondents
started on March 15, 1997 until December 1997. Upon the completion of their project, their employment
79 | P a g e

was also terminated. Private respondents received the amount of P145.00, the minimum prescribed
daily wage for Region VII. In July 1997, the amount of P145 was increased to P150.00 and in October
of the same year, the latter was increased to P155.00.
On May 21, 1999, private respondents for the 4
th
time worked with Lagon's project in Camarin,
Caloocan City with Furukawa Corporation as the general contractor. Their contract would expire on
February 28, 2000, the period of completion of the project. From May 21, 1997-December 1999, private
respondents received the wage of P145.00. At this time, the minimum prescribed rate for Manila was
P198.00. In January to February 28, the three received the wage of P165.00. The existing rate at that
time was P213.00.
For reasons of delay on the delivery of imported materials from Furukawa Corporation, the
Camarin project was not completed on the scheduled date of completion. Face[d] with economic
problem[s], Lagon was constrained to cut down the overtime work of its worker[s][,] including private
respondents. Thus, when requested by private respondents on February 28, 2000 to work overtime,
Lagon refused and told private respondents that if they insist, they would have to go home at their own
expense and that they would not be given anymore time nor allowed to stay in the quarters. This
prompted private respondents to leave their work and went home to Cebu. On March 3, 2000, private
respondents filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13
th
month pay
for 1997 and 1998 and service incentive leave pay as well as damages and attorney's fees

Issue:
Whether or not the respondent should be allowed to recover the differential due to the failure
of the petitioner to pay the minimum wage.
Whether or not value of the facilities that the private respondents enjoyed should be included
in the computation of the "wages" received by them

Held:
As a general rule, on payment of wages, a party who alleges payment as a defense has the burden
of proving it. Specifically with respect to labor cases, the burden of proving payment of monetary claims
rests on the employer, the rationale being that the pertinent personnel files, payrolls, records,
remittances and other similar documents -- which will show that overtime, differentials, service incentive
leave and other claims of workers have been paid -- are not in the possession of the worker but in the
custody and absolute control of the employer.
In this case, petitioners, aside from bare allegations that private respondents received wages
higher than the prescribed minimum, failed to present any evidence, such as payroll or payslips, to
support their defense of payment. Thus, petitioners utterly failed to discharge the onus probandi.
On whether the value of the facilities should be included in the computation of the "wages"
received by private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an
employer may provide subsidized meals and snacks to his employees provided that the subsidy shall
not be less that 30% of the fair and reasonable value of such facilities. In such cases, the employer may
deduct from the wages of the employees not more than 70% of the value of the meals and snacks
enjoyed by the latter, provided that such deduction is with the written authorization of the employees
concerned.
Moreover, before the value of facilities can be deducted from the employees' wages, the following
requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished
80 | P a g e

by the trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the
employee; and finally, facilities must be charged at reasonable value.
[]
Mere availment is not sufficient
to allow deductions from employees' wages.
[]

These requirements, however, have not been met in this case. SLL failed to present any company
policy or guideline showing that provisions for meals and lodging were part of the employee's salaries. It
also failed to provide proof of the employees' written authorization, much less show how they arrived at
their valuations. At any rate, it is not even clear whether private respondents actually enjoyed said
facilities.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration
above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege
is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the kind of benefit
or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given. In the case at
bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency and
health of its workers while they were working at their respective projects.
For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these
were cases of dismissal with just and authorized causes. The present case involves the matter of the
failure of the petitioners to comply with the payment of the prescribed minimum wage.
The Court sustains the deletion of the award of differentials with respect to respondent Roldan
Lopez. As correctly pointed out by the CA, he did not work for the project in Antipolo.

49.

VERGARA JR. VS. COCA-COLA BOTTLES PHILS. INC.
G.R. No. 176985, April 1, 2013

Facts: Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines,
Inc. from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Pias
City, Metro Manila.
As stipulated in respondent's existing Retirement Plan Rules and Regulations at the time, the
Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of
retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance Incentive (which is the
total performance incentive earned during the year immediately preceding 12 months) No. of Years in
Service.
Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives
(SMI) and to the amount of PhP496,016.67 which respondent allegedly deducted illegally, representing the
unpaid accounts of two dealers within his jurisdiction, petitioner filed a complaint before the NLRC on June
11, 2002 for the payment of his "Full Retirement Benefits, Merit Increase, Commission/Incentives, Length of
Service, Actual, Moral and Exemplary Damages, and Attorney's Fees."
(Apparently, Petitioner argued that the granting of SMI to all retired DSSs regardless of whether or
not they qualify to the same had ripened into company practice. The only two pieces of evidence that he
stubbornly presented throughout the entirety of this case are the sworn statements of Renato C. Hidalgo
(Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and 1998,
respectively. They claimed that the SMI was included in their retirement package even if they did not meet
81 | P a g e

the sales and collection qualifiers. Therefore, the failure of employer to grant him his SMI is a violation on
the principle of non-diminution of benefits.)
Issue: WON the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same
had ripened into company practice
Ruling: Generally, employees have a vested right over existing benefits voluntarily granted to them by their
employer. Thus, any benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is
actually founded on the Constitutional mandate to protect the rights of workers, to promote their welfare, and
to afford them full protection. In turn, said mandate is the basis of Article 4 of the Labor Code which states
that "all doubts in the implementation and interpretation of this Code, including its implementing rules and
regulations, shall be rendered in favor of labor." chanroblesvirtualawlibrary
There is diminution of benefits when the following requisites are present:
(1) the grant or benefit is founded on a policy or has ripened into a practice over a long period of
time;
(2) the practice is consistent and deliberate;
(3) the practice is not due to error in the construction or application of a doubtful or difficult question
of law; and
(4) the diminution or discontinuance is done unilaterally by the employer.tualawlibrary
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. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company
practice should have been exercised in order to constitute voluntary employer practice. The common
denominator in previously decided cases appears to be the regularity and deliberateness of the grant of
benefits over a significant period of time. It requires an indubitable showing that the employer agreed to
continue giving the benefit knowing fully well that the employees are not covered by any provision of the law
or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary
and deliberate intent of the employer to grant the benefit over a considerable period of
time.blesvirtualawlibrary
Upon review of the entire case records, We find no substantial evidence to prove that the grant of
SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company
practice.
The granting of the SMI in the retirement package of Velazquez was an isolated incident and could
hardly be classified as a company practice that may be considered an enforceable obligation. To repeat, the
principle against diminution of benefits is applicable only if the grant or benefit is founded on an express
policy or has ripened into a practice over a long period of time which is consistent and deliberate; it
presupposes that a company practice, policy and tradition favorable to the employees has been clearly
established; and that the payments made by the company pursuant to it have ripened into benefits enjoyed
by them. Certainly, a practice or custom is, as a general rule, not a source of a legally demandable or
enforceable right. Company practice, just like any other fact, habits, customs, usage or patterns of conduct,
82 | P a g e

must be proven by the offering party who must allege and establish specific, repetitive conduct that might
constitute evidence of habit or company practice.
50.
Royal Plant Workers Union vs. Coca-Cola Bottlers Philippines Inc.
[G.R. No. 198783, April 15, 2013.]
FACTS: Under the employ of each bottling plant of Coca-Cola are bottling operators. In the case of the plant
in Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there are 12-14 bottling
operators who man its Bottling Line 2. All of them are male and they are members of herein respondent
Royal Plant Workers Union (ROPWU).
In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their request. In 1988,
the bottling operators of then Bottling Line 1 followed suit and asked to be provided also with chairs. Their
request was likewise granted. Sometime in September 2008, the chairs provided for the operators were
removed pursuant to a national directive of petitioner. This directive is in line with the "I Operate, I Maintain, I
Clean" program of petitioner for bottling operators, wherein every bottling operator is given the responsibility
to keep the machinery and equipment assigned to him clean and safe. The program reinforces the task of
bottling operators to constantly move about in the performance of their duties and responsibilities.

With this task of moving constantly to check on the machinery and equipment assigned to him, a bottling
operator does not need a chair anymore, hence, petitioners directive to remove them. Furthermore, CCBPI
rationalized that the removal of the chairs is implemented so that the bottling operators will avoid sleeping,
thus, prevent injuries to their persons. As bottling operators are working with machines which consist of
moving parts, it is imperative that they should not fall asleep as to do so would expose them to hazards and
injuries. In addition, sleeping will hamper the efficient flow of operations as the bottling operators would be
unable to perform their duties competently.
ISSUE: Whether or not the removal of the bottling operators chairs was a valid exercise of management
prerogative. ---YES
HELD: According to the Union, such removal constitutes a violation of the 1) Occupational Health and
Safety Standards which provide that every worker is entitled to be provided by the employer with
appropriate seats, among others; 2) policy of the State to assure the right of workers to a just and humane
condition of work as provided for in Article 3 of the Labor Code;8 3) Global Workplace Rights Policy of
CCBPI which provides for a safe and healthy workplace by maintaining a productive workplace and by
minimizing the risk of accident, injury and exposure to health risks; and 4) diminution of benefits provided in
Article 100 of the Labor Code.
The Court has held that management is free to regulate, according to its own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, time, place, and manner of
work, processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers, and discipline, dismissal and recall of workers. The exercise of management
prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights
of labor.10
83 | P a g e

In the present controversy, it cannot be denied that CCBPI removed the operators chairs pursuant to a
national directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the Union
to perform their duties and responsibilities more efficiently. The chairs were not removed indiscriminately.
They were carefully studied with due regard to the welfare of the members of the Union. The removal of the
chairs was compensated by: a) a reduction of the operating hours of the bottling operators from a two-and-
one-half (2 )-hour rotation period to a one-and-a-half (1 ) hour rotation period; and b) an increase of the
break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid
instances of operators sleeping on the job while in the performance of their duties and responsibilities and
because of the fact that the chairs were not necessary considering that the operators constantly move about
while working. In short, the removal of the chairs was designed to increase work efficiency. Hence, CCBPIs
exercise of its management prerogative was made in good faith without doing any harm to the workers
rights.
The rights of the Union under any labor law were not violated. There is no law that requires employers to
provide chairs for bottling operators. There was no violation either of the Health, Safety and Social Welfare
Benefit provisions under Book IV of the Labor Code of the Philippines. As shown in the foregoing, the
removal of the chairs was compensated by the reduction of the working hours and increase in the rest
period. The directive did not expose the bottling operators to safety and health hazards.
The Union should not complain too much about standing and moving about for one and one-half (1 ) hours
because studies show that sitting in workplaces for a long time is hazardous to ones health. The CBA
between the Union and CCBPI contains no provision whatsoever requiring the management to provide
chairs for the operators in the production/manufacturing line while performing their duties and
responsibilities.
The Court completely agrees with the CA ruling that the removal of the chairs did not violate the general
principles of justice and fair play because the bottling operators working time was considerably reduced
from two and a half (2 ) hours to just one and a half (1 ) hours and the break period, when they could sit
down, was increased to 30 minutes between rotations. The bottling operators new work schedule is
certainly advantageous to them because it greatly increases their rest period and significantly decreases
their working time. A break time of thirty (30) minutes after working for only one and a half (1 ) hours is a
just and fair work schedule.
The operators chairs cannot be considered as one of the employee benefits covered in Article 10016 of the
Labor Code. In the Courts view, the term "benefits" mentioned in the non-diminution rule refers to monetary
benefits or privileges given to the employee with monetary equivalents.
Such benefits or privileges form part of the employees wage, salary or compensation making them
enforceable obligations.
This Court has already decided several cases regarding the non-diminution rule where the benefits or
privileges involved in those cases mainly concern monetary considerations or privileges with monetary
equivalents. Without a doubt, equating the provision of chairs to the bottling operators is something within
the ambit of "benefits'' in the context of Article 100 of the Labor Code is unduly stretching the coverage of
the law. The interpretations of Article 100 of the Labor Code do not show even with the slightest hint that
such provision of chairs for the bottling operators may be sheltered under its mantle.

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51.

THE NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC) AND THE REGIONAL
TRIPARTITE WAGES AND PRODUCTIVITY BOARD (RTWPB) NCR, v. THE ALLIANCE OF
PROGRESSIVE LABOR (APL) AND THE TUNAY NA NAGKAKAISANG MANGGAGAWA SA ROYAL
(TNMRAPL)
G.R. No. 150326, March 12, 2014

Facts: On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages
throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the different
regions.

Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered the NWPC
to formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise,
industry and national levels; to prescribe rules and guidelines for the determination of appropriate minimum
wage and productivity measures at the regional, provincial or industry levels; and to review regional wage
levels set by the RTWPBs to determine whether the levels were in accordance with the prescribed
guidelines and national development plans, among others.

On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of Republic Act No. 6727,
tasked the RTWPBs to determine and fix minimum wage rates applicable in their region, provinces or
industries therein; and to issue the corresponding wage orders, subject to the guidelines issued by the
NWPC.

Consequently, the RTWPBNCR issued Wage Order No. NCR07 on October 14, 1999 imposing an
increase of P25.50/day on the wages of all private sector workers and employees in the NCR and pegging
the minimum wage rate in the NCR at P223.50/day.
6
However, Section 2 and Section 9 of Wage Order No.
NCR07 exempted certain sectors and industries from its coverage

Section 2. The adjustment in this Order does not cover the following:

A. [W]orkers in the following sectors which were granted corresponding wage increases
on January 1, 1999 as prescribed by Wage Order No. NCR06:
a.1. Agriculture workers
Plantation P12.00

Nonplantation P18.50

a.2. Cottage/handicraft industry P16.00

a.3. Private hospitals with bed capacity
of 100 or less
P12.00

a.4. Retail/Service establishments

Employing 1115
workers
P12.00

Employing not more
than 10 workers
P19.00

B. Workers in small establishments employing less that ten (10) workers.

85 | P a g e

x x x x

Section 9. Upon application with and as determined by the Board, based on
documentation and other requirements in accordance with applicable rules and
regulations issued by the Commission, the following may be exempt from the applicability
of this Order:

1. Distressed establishments as defined in the NPWC Guidelines No. 01, series of 1996;

2. Exporters including indirect exporters with at least 50% export sales and with forward
contracts with their foreign buyers/principals entered into on or twelve (12) months before
the date of publication of this Order may be exempt during the lifetime of said contract but
not to exceed twelve (12) months from the effectivity of this Order.

Feeling aggrieved by their noncoverage by the wage adjustment, the Alliance of Progressive Labor (APL)
and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with the NWPC assailing
Section 2(A) and Section 9(2) of Wage Order No. NCR07. They contended that neither the NWPC nor the
RTWPBNCR had the authority to expand the noncoverage and exemptible categories under the wage
order; hence, the assailed sections of the wage order should be voided.

The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No. NCR07. It observed
that the RTWPBs power to determine exemptible categories was adjunct to its wage fixing function
conferred by Article 122(e) of the Labor Code, as amended by Republic Act No. 6727; that such authority of
the RTWPB was also recognized in NWPC Guidelines No. 01, Series of 1996.

The APL and TNMR assailed the decisions of the NWPC on certiorari in the CA, contending that the power
of the RTWPBNCR to determine exemptible categories was not an adjunct to its wage fixing function. CA
favored the respondents and granted the petition for certiorari.
Hence, this appeal by petition for review on certiorari by the NWPC and RTWPBNCR.
Issue: Whether or not the RTWPBNCR had
Ruling: the RTWPBNCR had the authority to provide additional exemptions from the minimum wage
adjustments embodied in Wage Order No. NCR07
The NWPC promulgated NWPC Guidelines No. 00195 (Revised Rules of Procedure on Minimum Wage
Fixing) to govern the proceedings in the NWPC and the RTWPBs in the fixing of minimum wage rates by
region, province and industry. Section 1 of Rule VIII of NWPC Guidelines No. 00195 recognized the power
of the RTWPBs to issue exemptions from the application of the wage orders subject to the guidelines issued
by the NWPC
(this is the rationale behind exemption)

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS
Exemption of establishments from compliance with the wage increases and cost of living allowances
prescribed by the Boards may be granted in order to (1) assist establishments experiencing temporary
difficulties due to losses maintain the financial viability of their businesses and continued employment of
their workers; (2) encourage the establishment of new businesses and the creation of more jobs, particularly
in areas outside the National Capital Region and Export Processing Zones, in line with the policy on industry
dispersal; and (3) ease the burden of micro establishments, particularly in the retail and service sector, that
86 | P a g e

have a limited capacity to pay.

The following categories of establishments may be exempted upon application with and as determined by
the Board:

1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10) workers
4. Establishments adversely affected by natural calamities

Under the guidelines, the RTWPBs could issue exemptions from the application of the wage orders as long
as the exemptions complied with the rules of the NWPC. In its rules, the NWPC enumerated four exemptible
establishments, but the list was not exclusive. The RTWPBs had the authority to include in the wage orders
establishments that belonged to, or to exclude from the four enumerated exemptible categories.

If the exemption was outside of the four exemptible categories, like here, the exemptible category should be:
(1) in accord with the rationale for exemption; (2) reviewed/approved by the NWPC; and (3) upon review,
the RTWPB issuing the wage order must submit a strong and justifiable reason or reasons for the inclusion
of such category. It is the compliance with the second requisite that is at issue here.

The NWPC, in arriving at its decision, weighed the arguments of the parties and ruled that the RTWPB
NCR had substantial and justifiable reasons in exempting the sectors and establishments enumerated in
Section 2(A) and Section 9(2) based on the public hearings and consultations, meetings, socialeconomic
data and informations gathered prior to the issuance of Wage Order No. NCR07. The very fact that the
validity of the assailed sections of Wage Order No. NCR07 had been already passed upon and upheld by
the NWPC meant that the NWPC had already given the wage order its necessary legal imprimatur.
Accordingly, the requisite approval or review was complied with.

The RTWPBs are the thinking group of men and women guided by statutory standards and bound by the
rules and guidelines prescribed by the NWPC. In the nature of their functions, the RTWPBs investigate and
study all the pertinent facts to ascertain the conditions in their respective regions. Hence, they are logically
vested with the competence to determine the applicable minimum wages to be imposed as well as the
industries and sectors to exempt from the coverage of their wage orders.

Lastly, Wage Order No. NCR07 is presumed to be regularly issued in the absence of any strong showing
of grave abuse of discretion on the part of RTWPBNCR. The presumption of validity is made stronger by
the fact that its validity was upheld by the NWPC upon review.

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Wage
Enforcement
And
Recovery

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52.

Rajah Humabon Hotel vs. Trajano
226 SCRA 332

Facts: The respondent-employees filed a complaint before the regional director of the DOLE against the
petitioner-employer due to underpaid wages and non-payment of benefits. However, the jurisdiction of the
regional director was challenged by the petitioner-employee on the ground that it was the Labor Arbiter who
has the exclusive jurisdiction.
As a consequence of the complaint, the DOLE-region 7 instructed the petitioner employer to allow its
authorized representative to visit their premises and to conduct inspection of the employment records of
their employees. But during the scheduled visit, a picket was staged by the other workers outside the
premises of the petitioner-employer which prevented the inspectors entry in the premises.
On april 16, 1989, the business of the petitioner-employer was closed. The petitioner filed a motion to
dismiss of the complaint on the ground that the regional director has no longer jurisdiction over the case as
the employer-employee relationship between the parties has been terminated due to the closure of the
business and also on the ground that the aggregate claims of each of the employee exceeded P5,000
therefore it argued that the Labor Arbiter has the power to hear and determine the case.
The regional director deny the petitioners motion to dismiss, the regional director ruled that at the time the
complaint was filed, the employer-employee relationship between the parties still exist. The subsequent
closure of the business or the subsequent termination of their relationship did not divest the regional director
of its authority to hear and decided the case.
The DOLE affirmed the decision of the Regional director in denying the motion to dismiss filed by the
petiotioner-employer. The DOLE affirmed that the latter has jurisdiction over the case since the employer-
employee relationship was still in exist when the complaint was instituted by the respondents-employees.
Also the DOLE found no merit on the petitioners contention that the Labor Arbiter has the exclusive
jurisdiction since the amount claim by the employees exceeded P5,000.00, because the provision of par. 6,
Art. 217, refers only to simple money claims of domestic workers. In this case the DOLE held that
respondents employers are not domestic workers. Thus, the foregoing provision should not be made to
apply to them.

(note: that the money claims of each employees of this case exceeded P5,000)
Hence, this petition
Issue:
Who between the regional director and the labor arbiter has jurisdiction?
Ruling:
The regional directors under Articles 129 and 217 of the Labor Code as amended by Republic Act No.
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6715, can try money claims only if the following requisites concur:
1. The claim is presented by an employee or person employed in domestic or household service, or
househelper under the code;
2. The claimant, no longer being employed, does not seek reinstatement; and
3. The aggregate money claim of the employee or housekeeper does not exceed five thousand pesos
(P5,000.00).
The aggregate claims of each of the employees of petitioner-employer are above the amount of P5,000.00
fixed by Republic Act No. 6715. Therefore, the regional director had no jurisdiction over the case. The
exclusive jurisdiction to hear and decide employees claims arising from employer-employee relations,
exceeding the aggregate amount of P5,000.00 for each employee, is vested in the Labor Arbiter (Article 217
(a) (6). This exclusive jurisdiction of the Labor Arbiter is confirmed by the provisions of Article 129 which
excludes from the jurisdiction of the Regional Director or any hearing officer of the Department of Labor the
power to hear and decide claims of employees arising from employer-employee relations exceeding the
amount of P5,000.00 for each employee.
The provisions of Article 217 (a) (6) and Article 129 of the Labor Code which, as above-pointed out, confer
exclusive jurisdiction on the Labor Arbiter to hear and decide such employees claims (exceeding P5,000.00
for each employee). To sustain the respondents-employees position that Article 217 of the Labor Code
which conferred to the labor arbiter the original and exclusive jurisdiction over claims in excess of P5,000
does not operate to oust the regional director of visitorial and enforcement powers vis-a-vis labor standard
infractions under Article 128 (b) involving amounts exceeding such sum, would in effect, sanction a situation
where all employees claims, regardless of amount, can be heard and determined by the Secretary of Labor
under his visitorial power. This does not, however, appear to be the legislative intent.
The power to hear and decide employees claims exceeding P5,000.00 for each employee should be left to
the Labor Arbiter as the exclusive repository of the power to hear and decide such claims. In other words,
the inspection conducted by the Secretary of Labor, through labor regulation officers or industrial safety
engineers, may yield findings of violations of labor standard under labor laws; the Secretary of Labor may
order compliance with said labor standards, if necessary, through appropriate writs of execution but when
the findings disclose an employee claim of over P5,000.00, the matter should be referred to the Labor
Arbiter in recognition of his exclusive jurisdiction over such claims.
WHEREFORE, the petition is hereby GRANTEd.
53.

Guico vs. Sec of Labor
[, G.R. No. 131750, November 16, 1998]

FACTS: The case started when the Office of the Regional Director, Department of Labor and Employment
(DOLE), Region I, San Fernando, La Union, received a letter-complaint dated April 25, 1995, requesting for
an investigation of petitioner's establishment, Copylandia Services & Trading, for violation of labor standards
laws. Pursuant to the visitorial and enforcement powers of the Secretary of Labor and Employment or his
duly authorized representative under Article 128 of the Labor Code, as amended, inspections were
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conducted at Copylandia's outlets on April 27 and May 2, 1995. The inspections yielded the following
violations involving twenty-one (21) employees who are copier operators: (1) underpayment of wages; (2)
underpayment of 13th month pay; and (3) no service incentive leave with pay.

On October 30, 1995, Regional Director Guerrero N. Cirilo issued an Orderfavorable to the 21 employees.
First, he ruled that the purported Receipt, Waiver and Quitclaim dated December 21 and 22, 1994, could not
cause the dismissal of the labor standards case against the petitioner since the same were executed before
the filing of the said case. Moreover, the employees repudiated said waiver and quitclaim. Second, he held
that despite the salary increase granted by the petitioner, the daily salary of the employees was still below
the minimum daily wage rate of P119.00 under Wage Order No. RB-I-03. Thirdly, he held that the removal
of the commission and incentive schemes during the pendency of the case violated the prohibition against
elimination or diminution of benefits under Article 100 of the Labor Code, as amended. The Regional
Director awarded the claimants ONE MILLION EIGHTY ONE THOUSAND SEVEN HUNDRED FIFTY SIX
PESOS AND SEVENTY CENTAVOS (P1,081,756.70) representing their backwages, well over P5,000.

On October 24, 1997, the respondent Secretary denied the Motion for Reconsideration. He ruled that the
Regional Director has jurisdiction over the case citing Article 128 (b) of the Labor Code, as amended. He
pointed out that Republic Act No. 7730 repealed the jurisdictional limitations imposed by Article 129 on the
visitorial and enforcement powers of the Secretary of Labor and Employment or his duly authorized
representatives. In addition, he held that petitioner is now estopped from questioning the computation made
by the Regional Director as a result of the compromise agreement he entered into with the employees.
Lastly, he reiterated his ruling that the Receipt, Waiver and Quitclaim signed by the employees was not
valid.

ISSUE:
Whether or not the Regional Director of the Department of Labor and employment can award claims even
more than P5,000.

HELD:
Yes, the Regional Director can award claims of over P5,000. The visitorial power of the Secretary of Labor
to order and enforce compliance with labor standard laws cannot be exercised where the individual claim
exceeds P5,000.00, can no longer be applied in view of the enactment of R.A. No. 7730 amending Article
128(b) of the Labor Code, viz:
Art. 128 (b) 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 the Code and other labor legislation based on the findings of the labor
employment and enforcement officers or industrial safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives 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.

54.
Ex-Bataan Vetrerans Security Agency vs. Sec. Of Labor, et al.
G.R. No. 152396

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Facts: On 20 February 1996, private respondents led by Alexander Pocding (Pocding) instituted a
complaint

for underpayment of wages against EBVSAI before the Regional Office of the Department of
Labor and Employment (DOLE).
On 7 March 1996, the Regional Office conducted a complaint inspection at the Ambuklao Plant
where the following violations were noted:
1) non-presentation of records;
2) non-payment of holiday pay;
3) non-payment of rest day premium;
4) underpayment of night shift differential pay;
5) non-payment of service incentive leave;
6) underpayment of 13
th
month pay;
7) no registration;
8) no annual medical report;
9) no annual work accidental report;
10) no safety committee; and
11) no trained first aider.
On 19 August 1996, the Director of the Regional Office (Regional Director) issued an Order.
(Compliance Order)
EBVSAI filed a motion for reconsideration

and alleged that the Regional Director does not have
jurisdiction over the subject matter of the case because the money claim of each private
respondent exceeded P5,000. EBVSAI pointed out that the Regional Director should have
endorsed the case to the Labor Arbiter.
Issues:
Whether the Secretary of Labor or his duly authorized representatives have jurisdiction over the
money claims of private respondents which exceed P5,000.
Ruling:
On the Regional Directors Jurisdiction over the Money Claims
In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that: While it is true that under Articles
129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where
the aggregate money claims of each employee exceedsP5,000.00, said provisions of law do not
contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly
authorized representatives.
o Art. 128 Visitorial and enforcement power. --- x x x
(b) Notwithstanding the provisions of Article[s] 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 representatives 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.
x x x x
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The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of
the Labor Code by the phrase (N)otwithstanding the provisions of Articles 129 and 217of
this Code to the contrary x x x thereby retaining and further strengthening the power of
the Secretary of Labor or his duly authorized representatives to issue compliance orders
to give effect to the labor standards provisions of said Code and other labor legislation
based on the findings of labor employment and enforcement officer or industrial safety
engineer made in the course of inspection.
However, if the labor standards case is covered by the exception clause in Article 128(b) of the
Labor Code, then the Regional Director will have to endorse the case to the appropriate Arbitration
Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction,
the following elements must be present:
1) that the employer contests the findings of the labor regulations officer and raises issues
thereon;
2) that in order to resolve such issues, there is a need to examine evidentiary matters; and
3) that such matters are not verifiable in the normal course of inspection.

The rules also provide that the employer shall raise such objections during the hearing of the case
or at any time after receipt of the notice of inspection results.
In this case, the Regional Director validly assumed jurisdiction over the money claims of private
respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in
accordance with Article 128(b) of the Labor Code and the case does not fall under the exception
clause.
Petition denied.

55.

Sapio vs. Undaloc
G.R. No. 155034, May 22, 2008

FACTS: The controversy started with a complaint filed by petitioner against Undaloc Construction and/or
Engineer Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory
benefits. Respondent Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in
road construction business in Cebu City.

Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when he was
terminated on the ground that the project he was assigned to was already finished, he being allegedly a
project employee. He asserted that he is a regular employee having been engaged to perform works which
are usually necessary and desirable to respondents business. He also contended that he received a daily
wage lower than that mandated by the wage order. He further alleged that he was made to sign two payroll
sheets, the first bearing the actual amount he received wherein his signature was affixed to the last column
opposite his name, and the second containing only his name and signature. He also averred that his salary
from 18 to 30 May 1998 was withheld by respondents. Respondent on the other hand argued that petitioner
was hired as a project employee and that there was no underpayment of wages as evidenced by the
payrolls presented.

The Labor Arbiter in resolving this controversy ruled that the complainant was indeed a project
employee. However, it ordered the respondent to pay the Sapio his unpaid wage and salary differential.

ISSUE:
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Whether or not Petitioner is entitled to the Salary Differential

RULING:

Yes. He is entitled to the salary differential. Petitioners claim of salary differential represents the
difference between the daily wage he actually received and the statutory minimum. To counter petitioners
assertions, respondents submitted typewritten and signed payroll sheets from 2 September to 8 December
1996, from 26 May to 15 June 1997, and from 12 January to 31 May 1998. These payroll sheets clearly
indicate that petitioner did receive a daily salary of P141.00.

In turn, petitioner presented the December 1995 payroll sheet written in pencil in tandem with the
assertion that he, together with his co-employees, was required to sign two sets of payroll sheets in different
colors: white, which bears the actual amount he received with his signature affixed in the last column
opposite his name, and yellow, where only his name appears thereon with his signature also affixed in the
last column opposite his name. In the December 1995 payroll sheet, petitioner appears to have
received P90.00 only as his daily salary but he did not sign the same.

Banking on the fact that the December 1995 payroll sheet was written in pencil, the Labor Arbiter
concluded that the entries were susceptible to change or erasure and that that susceptibility in turn rendered
the other payroll sheets though typewritten less credible. The appellate court however, ruled on the contrary.
It contended that the allegations of fraud in the preparation of payroll sheets must be substantiated by
evidence and not by mere suspicions or conjectures, which the petitioner failed to do. There being no
evidence that there was an alteration in his payroll sheet dated December 1995.

The Supreme Court subscribed to the findings of the appellate court but it nonetheless found that
the petitioner is still entitled to a salary differential. The Court found that from 1 January to 30 August
1996 and 1 July 1997 to 31 May 1998, petitioner had received a wage less than the minimum mandated by
law. The total salary differential that petitioner is lawfully entitled to amounts to P6,578.00 However,
pursuant to Section 12 of Republic Act (R.A.) No. 6727, as amended by R.A. No. 8188. Respondents are
required to pay double the amount owed to petitioner, bringing their total liability to P13,156.00.

56.

Hon. Secretary of Labor vs. Panay Veterans Security and Investigation Agency
G.R. No. 167708, August 22, 2008

Facts: Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent Panay
Veterans Security and Investigation Agency, Inc. as security guards sometime in 1988. They were stationed
at the plant site of Food Industries, Inc. (FII) in Sta. Rosa, Laguna until FII terminated its contract with
respondent security agency on July 6, 2000. They were not given new assignments and their benefits
(including 13th month pay, overtime pay and holiday pay as well as wage differentials due to underpayment
of wages) were withheld by respondent security agency. This prompted them to file a complaint for violation
of labor standards in the regional office of the Department of Labor and Employment in the National Capital
Region (DOLE-NCR).
A labor inspector acted on the complaint, Manuel M. Cayabyab. He conducted an inspection on October 3,
2000. His assessment is that the respondents should comply with the labor standards through payment or
question in it to the DOLE-NCR within 5 days.
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Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned the labor
employment officers findings. Thus, in his May 10, 2001 order, the Regional Director of the DOLE-NCR
adopted the findings and computation of Cayabyab as to the unpaid benefits due to petitioners Agapay and
Alonso, Jr.
Respondents moved for reconsideration but the DOLE-NCR Regional Director denied it. Undeterred,
respondents filed an appeal (with motion to reduce cash or surety bond) to the Secretary of Labor and
Employment. In his July 9, 2002 order, the Secretary of Labor and Employment found that respondents
failed to perfect their appeal since they did not post a cash or surety bond equivalent to the monetary award.
Thus, the appeal was dismissed and the DOLE-NCR Regional Directors May 10, 2001 order was declared
final and executory. The Secretary of Labor and Employment denied reconsideration.
Respondents elevated the case to the CA, at first the CA dismissed their appeal and upheld the DOLEs
decision. But the CA granted their reconsideration and modified DOLEs decision, Invoking the case of Star
Angel Handicraft v. National Labor Relations Commission.
Thus, the case was appealed by the petitioner in supreme court.
Issue: whether or not the CA was right in granting the appeal.
Held:
No, the employers motion to reduce the appeal the bond was no in accordance with the art. 128 of Labor
code, the last paragraph of the said provision provides:an order issued by the duly authorized
representative of the Secretary of Labor and Employment under this Article may be appealed to the latter. In
case said order involves a monetary award, an appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of
Labor and Employment in the amount equivalent to the monetary award in the order appealed from
Clearly the respondents did not post bail, when they appealed the case at the DOLE-NCR.
The CAs amended decision also contradicted the spirit that animates all labor laws, the promotion of social
justice and the protection of workers. The posting of a cash or surety bond to perfect an appeal of an order
involving a monetary award has a two-fold purpose: (1) to assure the employee that, if he finally prevails in
the case, the monetary award will be given to him upon dismissal of the employers appeal and (2) to
discourage the employer from using the appeal to delay or evade payment of his obligations to the
employee.[17] The CA disregarded these pro-labor objectives when it treated respondents failure to post
the required bond with undue leniency. The CA should have resolved any doubt in the implementation and
interpretation of the Labor Code and its implementing rules in favor of labor.
Moreover, Star Angel Handicraft permitted the filing of a motion for reduction of the appeal bond because
the Court recognized the NLRCs existing practice at that time to allow the reduction of the appeal bond
upon motion of appellant and on meritorious grounds. In fact, the practice was subsequently
institutionalized in the rules of procedure of the NLRC which now allow the reduction of the amount of the
bond in justifiable cases and upon motion of the appellant.
57.

National Mines and Allied Workers Union vs. Marcopper Mining Corp.,
G.R. No. 174641, Nov. 11, 2008

FACTS: DENR ordered the indefinite suspension of MARCOPPER's operations for causing damage to the
environment of the Province of Marinduque by spilling the company's mine waste or tailings from an old
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underground impounding area into the Boac River, in violation of its ECC. NAMAWU was the exclusive
bargaining representative of the rank-and-file workers of MARCOPPER. It filed a complaint with the NLRC
against MARCOPPER for nonpayment of wages, separation pay, damages, and attorney's fees.

NAMAWU claimed that due to the indefinite suspension of MARCOPPER's operations, its members were
not paid the wages due them for six months. It further claimed that its members are also entitled to be paid
their separation pay pursuant to their collective bargaining agreement with MARCOPPER and under
existing implementing rules of the Labor Code. There had been an illegal strike which occurred.

ISSUE:
Whether or not it is necessary that MARCOPPER file an appeal bond

RULING:
In the context of the NLRC appeal bond that is directly at issue, MARCOPPER had every reason to claim
in its April 10, 2000 appeal to the NLRC that it should be excused from filing an appeal bond with respect to
the NAMAWU members who were no longer company employees. The CA decision decreeing the
termination of employment of those involved in the illegal strike case had already been issued at that time.
We subsequently ruled on the same issue during the time the environmental incident case was pending
before the NLRC. Thus, when the NLRC dismissed MARCOPPER's appeal for failure to file the requisite
appeal bond corresponding to the 615 NAMAWU members, the termination of employment of these
NAMAWU members was already a settled matter that the NLRC was in no position to disregard. In this light,
the CA was correct in reversing the dismissal of MARCOPPER's appeal for failure to file an appeal bond.
Pursued to its logical end, the CA conclusions should lead to the dismissal of NAMAWU's complaint with
respect to its 615 previously dismissed members.

58.

Jethro Intelligence & Security Corp., vs. SOLE, et al.
GR No. 172537, Aug. 14, 2009

FACTS: Jethro Intelligence and Security Corporation is a security service contractor with a security service
contract agreement with co-petitioner Yakult Phils., Inc. On the basis of a complaint filed by Frederick
Garcia, one of the security guards deployed by Jethro, for underpayment of wages, legal/special holiday
pay, premium pay for rest day, 13
th
month pay, and night shift differential, the DOLE-Regional Office No. IV
conducted an inspection at Yakults premises in Calamba, Laguna in the course of which several labor
standards violations were noted, including keeping of payrolls and daily time records in the main office,
underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE as required
under Department Order No. 18-02.
Hearings on Garcias complaint and on the subsequent complaints of his co-respondents Gil
Cordero et al. were conducted during which Jethro submitted copies of payrolls covering June 16 to 30,
2003, February to May 16-31, 2004, June 16-30, 2003, and February 1-15, 2004. Jethro failed to submit
daily time records of the claimants from 2002 to June 2004, however, despite the order for it to do so.
By Order of September 9, 2004, the DOLE Regional Director, noting petitioners failure to rectify
the violations noted during the above-stated inspection within the period given for the purpose, found them
jointly and severally liable to herein respondents for the aggregate amount of EIGHT HUNDRED NINE
THOUSAND TWO HUNDRED TEN AND 16/100 PESOS (P809,210.16) representing their wage
differentials, regular holiday pay, special day premium pay, 13
th
month pay, overtime pay, service incentive
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leave pay, night shift differential premium and rest day premium. Petitioners were also ordered to submit
proof of payment to the claimants within ten calendar days, failing which the entire award would be doubled,
pursuant to Republic Act No. 8188, and the corresponding writs of execution and garnishment would be
issued.
Jethro appealed to the Secretary of Labor and Employment (SOLE), faulting the Regional
Director for, among other things, basing the computation of the judgment award on Garcias affidavit instead
of on the data reflected in the payrolls for 2001 to 2004.
By Decision dated May 27, 2005, then SOLE Patricia A. Sto. Tomas partially granted petitioner
Jethros appeal by affirming with modification the Regional Directors Order dated September 9, 2004 by
deleting the penalty of double indemnity and setting aside the writs of execution and garnishment, without
prejudice to the subsequent issuance by the Regional Director of the writs necessary to implement the said
Decision.
Petitioners Motion for Reconsideration of the SOLE Decision having been denied, they filed a
petition for certiorari before the Court of Appeals, insisting that the affidavit of Garcia should not have been
given evidentiary weight in computing the judgment award.

ISSUES:
W/N the SOLE has jurisdiction over the case since, following Article 129 of the Labor Code, the
aggregate money claim of each employee exceeded P5,000.00.

RULING:
While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction
to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said
provisions do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or
his duly authorized representatives. Said powers are defined and set forth in Article 128 of the Labor Code
(as amended by R.A. No. 7730) thus:

Art. 128. Visitorial and enforcement power.

x x x x

(b) Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of employer-
employee 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 representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the finding of the labor
employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of inspection.
[Emphasis, underscoring and italics supplied]

Art explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase
(N)otwithstanding the provisions of Articles 129 and 217 of this Code to the contrary xxx thereby retaining
and further strengthening the power of the Secretary of Labor or his duly authorized representative to issue
compliance orders to give effect to the labor standards provisions of said Code and other labor legislation
based on the findings of labor employment and enforcement officers or industrial safety engineers made in
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the course of inspection.

x x x if the labor standards case is covered by the exception clause in Article
128(b) of the Labor Code, then the Regional Director will have to endorse the
case to the appropriate Arbitration Branch of the NLRC. In order to divest the
Regional Director or his representatives of jurisdiction, the following elements
must be present: (a) that the employer contests the findings of the labor
regulations officer and raises issues therein; (b) that in order to resolve such
issues, there is a need to examine evidentiary matters; and (c) that such
matters are not verifiable in the normal course of inspection. The rules also
provide that the employer shall raise such objections during the hearing of the
case or at any time after receipt of the notice of inspection results.

In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does
not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed the
inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the
payrolls presented by it were considered in the ordinary course of inspection. While the employment
records of the employees could not be expected to be found in Yakults premises in Calamba, as Jethros
offices are in Quezon City, the records show that Jethro was given ample opportunity to present its payrolls
and other pertinent documents during the hearings and to rectify the violations noted during the ocular
inspection. It, however, failed to do so, more particularly to submit competent proof that it was giving its
security guards the wages and benefits mandated by law.

(Note on execution and garnishment of funds) It bears emphasis that the SOLE, under Article
106 of the Labor Code, as amended, exercises quasi-judicial power, at least to the extent necessary to
determine violations of labor standards provisions of the Code and other labor legislation. He/she or the
Regional Directors can issue compliance orders and writs of execution for the enforcement thereof. The
significance of and binding effect of the compliance orders of the DOLE Secretary is enunciated in Article
128 of the Labor Code, as amended, viz:

ART. 128. Visitorial and enforcement power.

x x x x
(d) It shall be unlawful for any person or entity to obstruct, impede,
delay or otherwise render ineffective the orders of the Secretary of Labor or his duly
authorized representatives issued pursuant to the authority granted under this
article, and no inferior court or entity shall issue temporary or permanent injunction
or restraining order or otherwise assume jurisdiction over any case involving the
enforcement orders issued in accordance with this article.

And Sec. 5, Rule V (Execution) of the Rules on Disposition of Labor Standards Cases in Regional Offices
provides that the filing of a petition for certiorari shall not stay the execution of the appealed order or
decision, unless the aggrieved party secures a temporary restraining order (TRO) from the Court. In the
case at bar, no TRO or injunction was issued, hence, the issuance of the questioned writs of execution and
garnishment by the DOLE-Regional Director was in order.

59.

PHIL. Hoteliers Inc. vs. National Union of Workers in Hotel, Restaurant and Allied Industries- Dusit
Hotel Nikko Chapter
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GR NO. 181972, AUGUST 25, 2009

FACTS: RTWPB issued Wage Order No. 9 that took effect on November 5, 2001. It grants P30.00 ECOLA
to particular employees and workers of all private sectors, identified as follows in Section 1 thereof:

Section 1. Upon the effectivity of this Wage Order, all private sector workers and employees in the National
Capital Region receiving daily wage rates of TWO HUNDRED FIFTY PESOS (P250.00) up to TWO
HUNDRED NINETY PESOS (P290.00) shall receive an emergency cost of living allowance in the amount of
THIRTY PESOS (P30.00) per day payable in two tranches as follows:

Amount of ECOLA Effectivity
P15.00 5 November 2001
P15.00 1 February 2002

Respondent National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit Hotel Nikko Chapter
(Union), through its President, Reynaldo C. Rasing (Rasing), sent a letter to Director Alex Maraan (Dir.
Maraan) of the Department of Labor and Employment-National Capital Region (DOLE-NCR), reporting the
non-compliance of Dusit Hotel with WO No. 9, while there was an on-going compulsory arbitration before
the National Labor Relations Commission (NLRC) due to a bargaining deadlock between the Union and
Dusit Hotel; and requesting immediate assistance on this matter. Rasing sent Dir. Maraan another letter
following-up his previous request for assistance.

Acting on Rasings letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO Natividad)
to conduct an inspection of Dusit Hotel premises on 24 April 2002. LSO Natividads Inspection Results
Report dated 2 May 2002 stated:

Based on interviews/affidavits of employees, they are receiving more than P290.00 average daily rate which
is exempted in the compliance of Wage Order NCR-09;

Remarks: There is an ongoing negotiation under Case # NCMB-NCR-NS-12-369-01 & NCMB-NCR-NS-01-
019-02 now forwarded to the NLRC office for the compulsory arbitration.

NOTE: Payrolls to follow later upon request including position paper of [Dusit Hotel].

By virtue of Rasings request for another inspection, LSO Natividad conducted a second inspection of Dusit
Hotel premises on 29 May 2002. In her Inspection Results Report dated 29 May 2002, LSO Natividad noted:

*Non-presentation of records/payrolls

*Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO Chapter, there
are one hundred forty-four (144) affected in the implementation of Wage Order No. NCR-09-> ECOLA
covering the periods from Nov.5/01 to present.

Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect restitution
and/or correction of the noted violations within five days from receipt of the Notice, and to submit any
question on the findings of the labor inspector within the same period, otherwise, an order of compliance
would be issued. The Notice of Inspection Result was duly received by Dusit Hotel Assistant Personnel
Manager Rogelio Santos.

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In the meantime, the NLRC rendered a Decision dated 9 October 2002 in NLRC-NCR-CC No. 000215-02
the compulsory arbitration involving the Collective Bargaining Agreement (CBA) deadlock between Dusit
Hotel and the Union granting the hotel employees the following wage increases, in accord with the CBA:

Effective January 1, 2001- P500.00/month



On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises, DOLE-NCR,
through Dir. Maraan, issued the Order directing Dusit Hotel to pay 144 of its employees the total amount of
P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus, the penalty of double
indemnity, pursuant to Section 12 of Republic Act No. 6727,11 as amended by Republic Act No. 8188.

The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing
to the employees: Provided, that payment of indemnity shall not absolve the employer from the criminal
liability under this Act.

If the violation is committed by a corporation, trust or firm, partnership, association or any other entity, the
penalty of imprisonment shall be imposed upon the entitys responsible officers including but not limited to
the president, vice president, chief executive officer, general manager, managing director or partner.

Dusit Hotel filed a Motion for Reconsideration of the DOLE-NCR Order dated 22 October 2002, arguing that
the NLRC Decision dated 9 October 2002, resolving the bargaining deadlock between Dusit Hotel and the
Union, and awarding salary increases under the CBA to hotel employees retroactive to 1 January 2001,
already rendered the DOLE-NCR Order moot and academic. With the increase in the salaries of the hotel
employees ordered by the NLRC Decision of 9 October 2002, along with the hotel employees share in the
service charges, the 144 hotel employees, covered by the DOLE-NCR Order of 22 October 2002, would
already be receiving salaries beyond the coverage of WO No. 9.

Acting on the Motion, DOLE-NCR issued a Resolution setting aside its earlier Order for being moot and
academic, in consideration of the NLRC decision and dismissing the complaint of the Union against Dusit
Hotel, for non-compliance with WO No. 9, for lack of merit.

The Union appealed before the DOLE Secretary maintaining that the wage increases granted by the NLRC
Decision of 9 October 2002 should not be deemed as compliance by Dusit Hotel with WO No. 9. The DOLE,
through Acting Secretary Manuel G. Imson, issued an Order granting the appeal of the Union. The DOLE
Secretary reasoned that the NLRC Decision dated 9 October 2002 categorically declared that the wage
increase under the CBA finalized between Dusit Hotel and the Union shall not be credited as compliance
with WOs No. 8 and No. 9. Furthermore, Section 1 of Rule IV of the Rules Implementing WO No. 9, which
provides that wage increases granted by an employer in an organized establishment within three months
prior to the effectivity of said Wage Order shall be credited as compliance with the ECOLA prescribed
therein, applies only when an agreement to this effect has been forged between the parties or a provision in
the CBA allowing such crediting exists.

Expectedly, Dusit Hotel sought reconsideration of the Order of the DOLE Secretary. In an Order, the DOLE
Secretary granted the Motion for Reconsideration of Dusit Hotel and reversed his Order dated 22 July 2004.
The DOLE Secretary, in reversing his earlier Order, admitted that he had disregarded therein that the wage
increase granted by the NLRC in the latters Decision dated 9 October 2002 retroacted to 1 January 2001.
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The said wage increase, taken together with the hotel employees share in the service charges of Dusit
Hotel, already constituted compliance with the WO No. 9.

It was then the turn of the Union to file a Motion for Reconsideration, but it was denied by the DOLE
Secretary. The DOLE Secretary found that it would be unjust on the part of Dusit Hotel if the hotel
employees were to enjoy salary increases retroactive to 1 January 2001, pursuant to the NLRC Decision
dated 9 October 2002, and yet said salary increases would be disregarded in determining compliance by the
hotel with WO No. 9.

The Union appealed the Orders dated 16 December 2004 and 13 October 2005 of the DOLE Secretary with
the Court of Appeals, the Court of Appeals promulgated its Decision ruling in favor of the Union. Referring to
Section 13 of WO No. 9, the Court of Appeals declared that wage increases/allowances granted by the
employer shall not be credited as compliance with the prescribed increase in the same Wage Order, unless
so provided in the law or the CBA itself; and there was no such provision in the case at bar. The appellate
court also found that Dusit Hotel failed to substantiate its position that receipt by its employees of shares in
the service charges collected by the hotel was to be deemed substantial compliance by said hotel with the
payment of ECOLA required by WO No. 9. The Court of Appeals adjudged that Dusit Hotel should be liable
for double indemnity for its failure to comply with WO No. 9 within five days from receipt of notice. The
appellate court stressed that ECOLA is among the laborers financial gratifications under the law, and is
distinct and separate from benefits derived from negotiation or agreement with their employer.

The Motion for Reconsideration of Dusit Hotel was denied for lack of merit by the Court of Appeals.

ISSUE:

Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite the increases in
their salaries, retroactive to 1 January 2001, ordered by NLRC in the latters Decision dated 9 October 2002.

RULING:

The reliance of the Union on Section 13 of WO No. 9 in this case is misplaced. Dusit Hotel is not contending
creditability of the hotel employees salary increases as compliance with the ECOLA mandated by WO No.
9. Creditability means that Dusit Hotel would have been allowed to pay its employees the salary increases in
place of the ECOLA required by WO No. 9. This, however, is not what Dusit Hotel is after. The position of
Dusit Hotel is merely that the salary increases should be taken into account in determining the employees
entitlement to ECOLA. The retroactive increases could raise the hotel employees daily salary rates above
P290.00, consequently, placing said employees beyond the coverage of WO No. 9. Evidently, Section 13 of
WO No. 9 on creditability is irrelevant and inapplicable herein.

The Court agrees with Dusit Hotel that the increased salaries of the employees should be used as bases for
determining whether they were entitled to ECOLA under WO No. 9. The very fact that the NLRC decreed
that the salary increases of the Dusit Hotel employees shall be retroactive to 1 January 2001 and 1 January
2002, means that said employees were already supposed to receive the said salary increases beginning on
these dates. The increased salaries were the rightful salaries of the hotel employees by 1 January 2001,
then again by 1 January 2002. Although belatedly paid, the hotel employees still received their salary
increases.

It is only fair and just, therefore, that in determining entitlement of the hotel employees to ECOLA, their
increased salaries by 1 January 2001 and 1 January 2002 shall be made the bases. There is no logic in
recognizing the salary increases for one purpose (i.e., to recover the unpaid amounts thereof) but not for the
other (i.e., to determine entitlement to ECOLA). For the Court to rule otherwise would be to sanction unjust
101 | P a g e

enrichment on the part of the hotel employees, who would be receiving increases in their salaries, which
would place them beyond the coverage of Section 1 of WO No. 9, yet still be paid ECOLA under the very
same provision.

The NLRC, in its Decision dated 9 October 2002, directed Dusit Hotel to increase the salaries of its
employees by P500.00 per month, retroactive to 1 January 2001. After applying the said salary increase,
only 82 hotel employees would have had daily salary rates falling within the range of P250.00 to P290.00.
Thus, upon the effectivity of WO No. 9 on 5 November 2001, only the said 82 employees were entitled to
receive the first tranch of ECOLA, equivalent to P15.00 per day.

The NLRC Decision also ordered Dusit Hotel to effect a second round of increase in its employees salaries,
equivalent to P550.00 per month, retroactive to 1 January 2002. As a result of this increase, the daily salary
rates of all hotel employees were already above P290.00. Consequently, by 1 January 2002, no more hotel
employee was qualified to receive ECOLA.

The assertion of Dusit Hotel that the receipt by said hotel employees of their shares in the service charges
already constituted substantial compliance with the prescribed payment of ECOLA under WO No. 9.

It must be noted that the hotel employees have a right to their share in the service charges collected by
Dusit Hotel, pursuant to Article 96 of the Labor Code of 1991, to wit:

Article 96. Service charges. All service charges collected by hotels, restaurants and similar
establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and
fifteen percent (15%) for management. The share of employees shall be equally distributed among them. In
case the service charge is abolished, the share of the covered employees shall be considered integrated in
their wages.

Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and
management their respective shares in the service charges collected, the hotel cannot claim that payment
thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9.
Undoubtedly, the hotel employees right to their shares in the service charges collected by Dusit Hotel is
distinct and separate from their right to ECOLA; gratification by the hotel of one does not result in the
satisfaction of the other.

SC finds no basis to hold Dusit Hotel liable for double indemnity
Under Section 2(m) of DOLE Department Order No. 10, Series of 1998, the Notice of Inspection Result
"shall specify the violations discovered, if any, together with the officers recommendation and computation
of the unpaid benefits due each worker with an advice that the employer shall be liable for double indemnity
in case of refusal or failure to correct the violation within five calendar days from receipt of notice." A careful
review of the Notice of Inspection Result dated 29 May 2002, issued herein by the DOLE-NCR to Dusit
Hotel, reveals that the said Notice did not contain such an advice. Although the Notice directed Dusit Hotel
to correct its noted violations within five days from receipt thereof, it was not sufficiently apprised that failure
to do so within the given period would already result in its liability for double indemnity. The lack of advice
deprived Dusit Hotel of the opportunity to decide and act accordingly within the five-day period, as to avoid
the penalty of double indemnity. By 22 October 2002, the DOLE-NCR, through Dir. Maraan, already issued
its Order directing Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding
to their unpaid ECOLA under WO No. 9; plus the penalty of double indemnity, pursuant to Section 12 of
Republic Act No. 6727, as amended by Republic Act No. 8188.

SC AFFIRMED WITH THE FOLLOWING MODIFICATIONS: (1) Dusit Hotel Nikko is ORDERED to pay its
82 employees who, after applying the salary increases for 1 January 2001, had daily salaries of P250.00
102 | P a g e

to P290.00 the first tranch of Emergency Cost of Living Allowance, equivalent to P15.00 per day, from 5
November 2001 to 31 December 2001, within ten (10) days from finality of this Decision; and (2) the penalty
for double indemnity is DELETED. No costs.

Although the Court is mindful of the fact that labor embraces individuals with a weaker and unlettered
position as against capital, it is equally mindful of the protection that the law accords to capital. While the
Constitution is committed to the policy of social justice and the protection of the working class, it should not
be supposed that every labor dispute will be automatically decided in favor of labor. Management also has
its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play.
60.

TIGER CONSTRUCTION AND DEVELOPMENT CORPORATION.VS SOLE
GR No. 164141, Feb. 26, 2010

FACTS: On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before the
Regional Office of the Department of Labor and Employment (DOLE), an inspection was conducted by DOLE officials
at the premises of petitioner TCDC. Several labor standard violations were noted, such as deficiencies in record
keeping, non-compliance with various wage orders, non-payment of holiday pay, and underpayment of 13
th
month
pay. The case was then set for summary hearing.

However, before the hearing could take place, the Director of Regional Office No. V, Ma. Glenda A. Manalo
(Director Manalo), issued an Order on July 25, 2002, referring the instant case back to the NLRC ,pursuant with Article
129 of LC in relation to Article 217, on the ground that the aggregate money claim of each worker execeeds the
jurisdictional amoun of her office which is Five Thousand Pesos.

Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas (Secretary Sto. Tomas), in
an apparent reversal of Director Manalos endorsement, issued another inspection authority on August 2, 2002 in the
same case. Pursuant to such authority, DOLE officials conducted another investigation of petitioners premises and the
same violations were discovered.

The DOLE officials issued a Notice of Inspection Results to petitioner directing it to rectify the violations within five
days from notice. For failure to comply with the directive, the case was set for summary hearing on August 19,
2002. On even date, petitioner allegedly questioned the inspectors findings and argued that the proceedings before the
regional office had been rendered moot by the issuance of the July 25, 2002 Order endorsing the case to the
NLRC. According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground of lack of
jurisdiction, which dismissal had attained finality; hence, all proceedings before the DOLE regional office after July 25,
2002 were null and void for want of jurisdiction.

On September 30, 2002, Director Manalo issued an Order directing TCDC to pay P2,123,235.90 to its
employees representing underpayment of salaries, 13
th
month pay, and underpayment of service incentive leave pay
and regular holiday pay. TCDC filed a Motion for Reconsideration on October 17, 2002 and a Supplemental Pleading
to the Motion for Reconsideration on November 21, 2002, reiterating the argument that Director Manalo had lost
jurisdiction over the matter. Apparently convinced by petitioners arguments, Director Manalo again endorsed the case
to the NLRC Regional Arbitration Branch V (Legaspi City). On January 27, 2003, the NLRC returned the entire records
of the case to Director Manalo on the ground that the NLRC does not have jurisdiction over the complaint.

Having the case in her office once more, Director Manalo finally issued an Order dated January 29,
2003 denying petitioners motion for reconsideration for lack of merit.

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Since TCDC did not interpose an appeal within the prescribed period, Director Manalo issued forthwith a Writ of
Execution on February 12, 2003.

On May 14, 2003, while the sheriff was in the process of enforcing the Writ of Execution, and more than three
months after the denial of its motion for reconsideration, TCDC filed an admittedly belated appeal with the DOLE
Secretary. There it reiterated its argument that, subsequent to the July 25, 2002 Order, all of Director Manalos actions
concerning the case are null and void for having been issued without jurisdiction.

Acting on the ill-timed appeal, Secretary Sto. Tomas issued an Order dated January 19, 2004 dismissing
petitioners appeal for lack of merit.

Citing Guico v. Quisumbing Secretary Sto. Tomas held that jurisdiction over the case properly belongs with the regional
director; hence, Director Manalos endorsement to the NLRC was a clear error. Such mistakes of its agents cannot bind
the State, thus Director Manalo was not prevented from continuing to exercise jurisdiction over the case.

Undaunted, TCDC filed a Motion for Reconsideration insisting that the CA erred in dismissing its petition for certiorari on
a mere technicality. Petitioner argues that the strict application of the rule on verification and certification of non-forum
shopping will result in a patent denial of substantial justice.

Since respondents did not file a comment on the motion for reconsideration, we resolved to grant the same and
to reinstate the petition.

Issue:

WON petitioner can still assail the January 29, 2003 Order of Director Manalo allegedly on the ground of lack of
jurisdiction, after said Order has attained finality and is already in the execution stage. (affirmative)

Ruling:
While it is true that orders issued without jurisdiction are considered null and void and, as a general rule, may
be assailed at any time, the fact of the matter is that in this case, Director Manalo acted within her jurisdiction. Under
Article

128 (b) of the Labor Code, as amended by Republic Act (RA) No. 7730, the DOLE Secretary and her representatives,
the regional directors, have jurisdiction over labor standards violations based on findings made in the course of
inspection of an employers premises. The said jurisdiction is not affected by the amount of claim involved, as RA 7730
had effectively removed the jurisdictional limitations found in Articles 129 and 217 of the Labor Code insofar as
inspection cases, pursuant to the visitorial and enforcement powers of the DOLE Secretary, are concerned. The last
sentence of Article 128(b) of the Labor Code recognizes an exception to the jurisdiction of the DOLE Secretary and her
representatives, but such exception is neither an issue nor applicable here.

Director Manalos initial endorsement of the case to the NLRC, on the mistaken opinion that the claim was within
the latters jurisdiction, did not oust or deprive her of jurisdiction over the case. She therefore retained the jurisdiction to
decide the case when it was eventually returned to her office by the DOLE Secretary. Jurisdiction or authority to try a
certain case is conferred by law and not by the interested parties, much less by one of them, and should be exercised
precisely by the person in authority or body in whose hands it has been placed by the law.

We also cannot accept petitioners theory that Director Manalos initial endorsement of the case to the NLRC
served as a dismissal of the case, which prevented her from subsequently assuming jurisdiction over the same. The
said endorsement was evidently not meant as a final disposition of the case; it was a mere referral to another agency,
the NLRC, on the mistaken belief that jurisdiction was lodged with the latter. It cannot preclude the regional director from
subsequently deciding the case after the mistake was rectified and the case was returned to her by the DOLE
104 | P a g e

Secretary, particularly since it was a labor case where procedural lapses may be disregarded in the interest of
substantial justice.

61.

PEOPLES BROADCASTING( BOMBO RADYO PHIIL.) VS SEC. OF DOLE ET AL
GR No. 179652, March 6, 2012

Facts: Jandeleon Juezan (Juezan) filed a complaint before the DOLE against Bombo Radyo Phils.
(Bombo Radyo) for illegal deduction, non-payment of service incentive leave, 13th month pay, premium
pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage
of SSS, PAG-IBIG and Philhealth. On the basis of the complaint, the DOLE conducted a plant level
inspection. The Labor Inspector in his report wrote,
Management representative informed that (Juezan) complainant is a drama talent hired on a per
drama participation basis hence no employer-employer relationship existed between them. As proof of this,
management presented photocopies of cash vouchers, billing statement, employments of specific
undertaking, etc. The management has no control of the talent if he ventures into another contract with other
broadcasting industries.

Issue: Whether or not the Secretary of Labor has the power to determine the existence of an employer-

Ruling:Yes.

No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-
employee relationship. No procedure was laid down where the DOLE would only make a preliminary
finding, that the power was primarily held by the NLRC. The law did not say that the DOLE would first seek
the NLRCs determination of the existence of an employer-employee relationship, or that should the
existence of the employer-employee relationship be disputed, the DOLE would refer the matter to the
NLRC. The DOLE must have the power to determine whether or not an employer-employee relationship
exists, and from there to decide whether or not to issue compliance orders in accordance with Art. 128(b) of
the Labor Code, as amended by RA 7730.

The DOLE, in determining the existence of an employer-employee relationship, has a ready set of
guidelines to follow, the same guide the courts themselves use. The elements to determine the existence of
an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; (4) the employers power to control the employees conduct. The use of
this test is not solely limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize the
same test, even in the course of inspection, making use of the same evidence that would have been
presented before the NLRC.

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.
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If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of
the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employer-
employee relationship has already been terminated, or it appears, upon review, that no employer-employee
relationship existed in the first place.

It must also be remembered that 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.

To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions of
the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing
employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE
finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a
complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is
properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter
has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and
other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is
filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction is properly
with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari
under Rule 65 of the Rules of Court

62.

SUPERIOR PACKAGING CORP VS BALAGSAY ET AL
G.R. No. 178909, October 10, 2012

Facts: 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.
Thereafter, respondents filed complaint against the petitioner and President, Cesar Luz (Luz), for
underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-payment of
salary. Upon receipt 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.ll.
Due to the petitioners failure to appear in the summary investigations conducted by the DOLE, an Order

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).
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Petitioner 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 because 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 thus, l 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.
Hence, this petition for review under Rule 45 of the Rules of Court.
Issue:
Whether or not DOLE has authority to determine the existence of an employer-employee relationship?
Whether Superior Packaging Corporation may be held solidarily liable with Lancer Staffing & Services
Network, Inc. (Lancer) for respondents unpaid money claims?

Ruling:
The petition is bereft of 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. The determination of the existence of an
employer-employee relationship by the DOLE must be respected.
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, Court said that it is not a trier of facts and it applies with
greater force in labor cases. 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 to Supreme Court.
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. 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 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. The former
becomes solidarily liable for all the rightful claims of the employees.
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Petitioner therefore, being the principal employer and Lancer, being the labor-only contractor, are solidarily
liable for respondents unpaid money claims.

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Wage
Protection
Provisions and
Prohibitions
Regarding
Wages

109 | P a g e

63.
Gaa vs. CA
G.R. No. L-44169; December 3, 1985

FACTS: Rosario Gaa is occupying a managerial/ supervisory position in El Grande Hotel. A Notice of
Garnishment upon El Grande Hotel, where petitioner was then employed, garnishing her "salary,
commission and/or remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to
lift said garnishment on the ground that her "salaries, commission and, or remuneration are exempted from
execution under Article 1708 of the New Civil Code.

ISSUE:
Whether or not the renumeration of Gaa are exempted from execution or attachment pursuant to
Art. 1708 of the Civil Code.

RULING:
SC held that, We do not think that the legislature intended the exemption in Article 1708 of the
New Civil Code to operate in favor of any but those who are laboring men or women in the sense that their
work is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or
present support, and such persons are more in need of the exemption than any others. Petitioner Rosario A.
Gaa is definitely not within that class.
64.
Nestle Phils. vs. NLRC
G.R. No. 85197 March 18, 1991
FACTS: The private respondents were employed by the petitioner either as sales representatives or
medical representatives. By reason of the nature of their work they were each allowed to avail of the
company's car loan policy. Under that policy, the company advances the purchase price of a car to be paid
back by the employee through monthly deductions from his salary, the company retaining the ownership of
the motor vehicle until it shall have been fully paid for. All of the private respondents availed of the
petitioner's car loan policy.
Respondents were dismissed from service because of their participation in the strike/ certain
irregularities. As such, they filed a case of illegal dismissal before the NLRC. In the Notices of Dismissal,
they were asked by the Company to settle the accounts payable of their car loans or return the car for
proper disposition. The Company filed a civil suit to recover possession of the cars. Private respondents
sought a temporary restraining order in the NLRC to stop the company from cancelling their car loans and
collecting their monthly amortizations pending the final resolution of their appeals in the illegal dismissal
case. NLRC granted the TRO.
ISSUE:
Whether or not NLRC is correct in granting the TRO in favor of the respondents pending the case
of illegal dismissal.
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RULING:
Nestl's demand for payment of the private respondents' amortizations on their car loans, or, in the
alternative, the return of the cars to the company, is not a labor, but a civil, dispute. It involves debtor-
creditor relations, rather than employee-employer relations. The NLRC gravely abused its discretion and
exceeded its jurisdiction by issuing the writ of injunction to stop the company from enforcing the civil
obligation of the private respondents under the car loan agreements and from protecting its interest in the
cars which, by the terms of those agreements, belong to it (the company) until their purchase price shall
have been fully paid by the employee. The terms of the car loan agreements are not in issue in the labor
case. The rights and obligations of the parties under those contracts may be enforced by a separate civil
action in the regular courts, not in the NLRC.
65.
Five J Taxi vs. NLRC
G.R. No. 111474 August 22, 1994

FACTS: Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi
drivers. Aside from the daily "boundary", they were also required to pay P20.00 for car washing, and to
further make a P15.00 deposit to answer for any deficiency in their "boundary," for every actual working day.

ISSUE:
Whether or not the car wash payment is an illegal deduction as contemplated in the Labor Code.

RULING:
SC held that the amount doled out was paid directly to the person who washed the unit, thus we
find nothing illegal in this practice, much more to consider the amount paid by the driver as illegal deduction
in the context of the law. Consequently, private respondents are not entitled to the refund of the P20.00 car
wash payments they made. It will be noted that there was nothing to prevent private respondents from
cleaning the taxi units themselves, if they wanted to save their P20.00.Car washing after a tour of duty is a
practice in the taxi industry, and is, in fact, dictated by fair play.
66.
Phil. Veterans Bank vs. NLRC
G.R. No. 130439 October 26, 1999

FACTS: Due to financial losses, the Philippine Veterans Bank was placed in receivership pursuant to the
order of the Central Bank of the Philippines. Consequently, its employees, including private respondent Dr.
Jose Teodorico V. Molina, were terminated from work and given their respective separation pay and other
benefits. Dr. Molina filed a complaint before NLRC. He demanded the implementation of the Wage Orders
No. 1 and 2. Both the Labor Arbiter and NLRC granted the petition of Molina.
ISSUE:
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Whether or not Molina is entitled to the increase of his salary pursuant to Wage Orders No. 1 and
2.
RULING:
SC held that Molinas salary is within the coverage of the said wage orders. W.O. 1 expressly
states that employees having a monthly salary of not more than P3,802.08 are entitled to receive the
mandated wage increase. Undeniably, MOLINA was receiving a monthly salary of P3,754.60. This fact
alone leaves no doubt that he should benefit from said wage order. On the other hand, W.O. 2 raised the
ceiling for entitlement to the wage increase. If MOLINA was covered by the earlier wage order, with more
reason should the later wage order apply to him.
67.
Philippine Appliances Corp. vs. CA
G.R. No. 149434; June 3, 2004

FACTS: Petitioner is a domestic corporation engaged in the business of manufacturing refrigerators,
freezers and washing machines. Respondent United Philacor Workers Union-NAFLU is the duly elected
collective bargaining representative of the rank-and-file employees of petitioner. During the collective
bargaining negotiations between petitioner and respondent union in 1997 (for the last two years of the
collective bargaining agreement covering the period of July 1, 1997 to August 31, 1999), petitioner offered
the amount of four thousand pesos (P4,000.00) to each employee as an "early conclusion bonus". Upon
conclusion of the CBA negotiations, petitioner accordingly gave this early signing bonus. After the expiration
of the CBA, both parties negotiated for a new CBA. However, it resulted to a deadlock. The respondent
union filed before the NCMB a notice of strike due to bargaining deadlock. The Department of Labor and
Employment took cognizance of the case and ordered, among other things, herein petitioner to award
signing bonus. Petitioner argued that the award of the signing bonus was patently erroneous since it was
not part of the employees salaries or benefits or of the collective bargaining agreement. It is not
demandable or enforceable since it is in the nature of an incentive.
ISSUE:
Whether or not the award of a signing bonus by the Secretary of Labor is correct.
RULING:
SC held that the signing bonus must not be awarded.
The CBA negotiation between petitioner and respondent union failed notwithstanding the
intervention of the NCMB. Respondent union went on strike for eleven days and blocked the ingress to and
egress from petitioners two work plants. The labor dispute had to be referred to the Secretary of Labor and
Employment because neither of the parties was willing to compromise their respective positions regarding
the four remaining items which stood unresolved. While we do not fault any one party for the failure of the
negotiations, it is apparent that there was no more goodwill between the parties and that the CBA was
clearly not signed through their mutual efforts alone. Hence, the payment of the signing bonus is no longer
justified and to order such payment would be unfair and unreasonable for petitioner.
Furthermore, we have consistently ruled that a bonus is not a demandable and enforceable
obligation.

68.
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AGABON VS NLRC
G.R. 158693

Facts: Private Respondent Riviera Home improvements Inc. is engaged in the business of selling and
installing ornamental and construction materials. It employed petitioner Virgilio Agabon and Jenny Agabon
as gypsum board and cornice installers on Jan. 2.1992 until February 23,1999 when they were dismissed
for abandonment of work.

Petitioners filed a complaint for illegal dismissal and payments of money claims and the LA rendered in
favor of the petitioners ordering the private respondents to pay the monetary claims.

On appeal, NLRC reversed the decision because it found that petitioners abandoned their work and not
entitled to backwages so the petitioners filed for a petition for certiorari in CA.

CA ruled that the dismissal was not illegal because they had abandoned their employment but ordered the
payment of money claims including their holiday pay and incentives.

Petitioners assert that they were dismissed because private respondent refused to give them assignments
unless they agreed to work on pakyawbasis and that private respondent did not comply with the twin
requirements of notice and hearing.

Private respondent said that it sent two letters to petitioners advising them to report for work and talked over
the phone about the cornice installation at Pacific Plaza Towers.However, petitioners did not report for work
because they had subcontracted another installation from another company.

Issue: WON the petitioners illegally dismissed and WON they are entitled to benefits?

Ruling: Dismissal was legal and they are entitled to benefits.

In February 1999, petitioners were frequently absent having subcontracted for an installation work for
another company. Subcontracting for another company clearly showed the intention to sever the employer-
employee relationship with private respondent. This was not the first time they did this. In January 1996,
they did not report for work because they were working for another company. Private respondent at that
time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the
warning and exhibited a clear intention to sever their employer-employee relationship. The record of an
employee is a relevant consideration in determining the penalty that should be meted out to him.

Dismissals based on just causes contemplate acts or omissions attributable to the employee while
dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to
terminate employees. A termination for an authorized cause requires payment of separation pay. When the
termination of employment is declared illegal, reinstatement and full backwages are mandated under Article
279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the
employee two written notices and a hearing or opportunity to be heard if requested by the employee before
terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and
(2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his
separation.
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From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under
Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article
284, and due process was observed; (2) the dismissal is without just or authorized cause but due process
was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4)
the dismissal is for just or authorized cause but due process was not observed.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the employer should be held liable for non-compliance with
the procedural requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be upheld because it was
established that the petitioners abandoned their jobs to work for another company. Private respondent,
however, did not follow the notice requirements and instead argued that sending notices to the last known
addresses would have been useless because they did not reside there anymore. Unfortunately for the
private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the
employees last known address. Thus, it should be held liable for non-compliance with the procedural
requirements of due process.

As a general rule, one who pleads payment has the burden of proving it. Even where the employee must
allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than
on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files,
payrolls, records, remittances and other similar documents which will show that overtime, differentials,
service incentive leave and other claims of workers have been paid are not in the possession of the
worker but in the custody and absolute control of the employer.

In the case at bar, if private respondent indeed paid petitioners holiday pay and service incentive leave
pay, it could have easily presented documentary proofs of such monetary benefits to disprove the claims of
the petitioners. But it did not, except with respect to the 13
th
month pay wherein it presented cash vouchers
showing payments of the benefit in the years disputed. Allegations by private respondent that it does not
operate during holidays and that it allows its employees 10 days leave with pay, other than being self-
serving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby
making it liable for such claims to the petitioners.

Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabons 13
th
month
pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant
an additional income in the form of the 13
th
month pay to employees not already receiving the same so as
to further protect the level of real wages from the ravages of world-wide inflation. Clearly, as additional
income, the 13
th
month pay is included in the definition of wage under Article 97(f) of the Labor Code

The Court ruled that respondent is liable for petitioners holiday pay, service incentive leave pay and 13
th

month pay without deductions. The evident intention of Presidential Decree No. 851 is to grant an additional
income in the form of the 13
th
month pay to employees not already receiving the same so as to further
protect the level of real wages from the ravages of world-wide inflation. Clearly, as additional income, the
13
th
month pay is included in the definition of wage under Article 97(f) of the Labor Code.

69.

AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES VS AMERICAN WIRE
G.R. 155059

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Facts: American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables.
There are two unions in this company, the American Wire and Cable Monthly-Rated Employees Union and
the American Wire and Cable Daily-Rated Employees Union.
On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and
Employment by the two unions for voluntary arbitration. They alleged that the private respondent, without
valid cause, suddenly and unilaterally withdrew and denied certain benefits and entitlements which they
have long enjoyed. These are Service Award, 35% premium pay of an employees basic pay for the work
rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29,
Christmas Party and Promotional Increase.

Issue: WON the respondent company violated Article 100 of the Labor Code.

Ruling: The company is not guilty of violating Art. 100 of the Labor Code.
Article 100 of the Labor Code provides:
PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. Nothing in this Book shall be
construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the
time of promulgation of this Code.
The certain benefits and entitlements are considered bonuses. A bonus can only be enforceable and
demandable if it has ripened into a company practice. It must also be expressly agreed by the employer and
employee or it must be on a fixed amount.
The assailed benefits were never subjects of any agreement between the union and the company. It was
never incorporated in the CBA. Since all these benefits are in the form of bonuses, it is neither enforceable
nor demandable.

70.

HONDA PHILIPPINES vs. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA
G.R. No. 145561, June 15, 2005

Facts: Petitioner Honda and Respondent union forged a Collective Bargaining Agreement which averred
that Honda shall maintain the present practice in the implementation of the 13
th
and 14
th
month pay. Such
CBA is effective until 2000. In the later part of 1998, the parties started re-negotiations.
However, when the talk between the parties did not go well, respondent union filed a Notice to Strike on the
ground of bargaining deadlock. Honda then filed a notice of Lockout in which the DOLE ordered the party to
cease and desist from committing acts.
The union filed a second Notice of Strike on ground of unfair labor, in which they went into pocketing of the
premises of Honda. DOLE then assumed jurisdiction and subjected the issue to the NLRC for compulsory
arbitration for which the employees were ordered to return to work.
The management of Honda, on 22 Nov. 1999, then issued a memorandum announcing its new computation
of the 13
th
and 14
th
month pay to be granted to employees whereby the 31-day strike shall be considered
unworked days for purposes of computing said benefits.
Thus, the union opposed the pro-rated computation of the bonuses and the matter was brought before the
Grievance Machinery. The Labor Arbiter ordered Honda to compute each provision in full month basic pay.
Ca affirmed the decision of the labor arbiter.

Issue: WON the pro-rated computation of the 13
th
month pay and the other bonuses in question is valid
and lawful

Ruling: Such pro-rated computation is invalid.
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It is well noted that the CBA refers to the negotiated contract between a legitimate labor organization and
the employer. It is the law between the parties and compliance therewith is mandated by express policy of
the law.
Honda did not adduce evidence to show that the 13
th
month, 14
th
month and financial assistance benefits
were previously subject to pro-rating. Thus, such was an implicit acceptance that prior to the strike, a full
month basic pay computation was the present practice intended to be maintained in the CBA.
Lastly, to allow pro-ration of the 13
th
month pay is to undermine the wisdom behind the law and the mandate
that the workingmans welfare should be the primordial and paramount consideration.

DENIED.

71.

Producers Bank vs. NLRC
355 SCRA 506

FACTS: Private respondent filed a complaint on 11 February 1988 with the Arbitration Branch, National
Capital Region, National Labor Relations Commission (NLRC), charging petitioner with diminution of
benefits and non-payment of holiday pay. In addition, private respondent prayed for damages.
On 31 March 1989, Labor Arbiter found private respondent's claims to be unmeritorious and dismissed its
complaint. In a complete reversal, however, the NLRC granted all of private respondent's claims, except for
damages.
ARGUMENTS
Petitioner:
1) It cannot be compelled to pay the alleged bonus differentials due to its depressed financial condition, as
evidenced by the fact that in 1984 it was placed under conservatorship by the Monetary Board. According to
petitioner, it sustained losses in the millions of pesos from 1984 to 1988, an assertion which was affirmed by
the labor arbiter. Moreover, the collective bargaining agreement of the parties does not provide for the
payment of any mid-year or Christmas bonus.
2) It is not covered by PD 851 since the mid-year and Christmas bonuses it has been giving its employees
from 1984 to 1988 exceeds the basic salary for one month (except for 1985 where a total of one month
basic salary was given). Hence, this amount should be applied towards the satisfaction of the 13th month
pay, pursuant to Section 2 of PD 851.
Respondent:
1) The mid-year and Christmas bonuses, by reason of their having been given for thirteen consecutive
years, have ripened into a vested right and, as such, can no longer be unilaterally withdrawn by petitioner
without violating Article 100 of Presidential Decree No. 4429 which prohibits the diminution or elimination of
benefits already being enjoyed by the employees. Although private respondent concedes that the grant of a
bonus is discretionary on the part of the employer, it argues that, by reason of its long and regular
concession, it may become part of the employee's regular compensation.
116 | P a g e

2) The conservator was not justified in diminishing or not paying the 13th month pay and that petitioner
should have instead applied for an exemption, in accordance with section 7 of Presidential Decree No. 851,
as amended by Presidential Decree No. 1364, but that it did not do so. The actions of the conservator ran
counter to the provisions of PD 851.
ISSUE
Whether or not petitioner is entitled to pay the bonuses and 13th month pay.
DECISION
NO, THEY ARE NOT.
A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the
success of the employer's business and made possible the realization of profits. It is an act of generosity
granted by an enlightened employer to spur the employee to greater efforts for the success of the business
and realization of bigger profits. The granting of a bonus is a management prerogative, something given in
addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is not a demandable and
enforceable obligation, except when it is made part of the wage, salary or compensation of the
employee.However, an employer cannot be forced to distribute bonuses which it can no longer afford to
pay. To hold otherwise would be to penalize the employer for his past generosity.
Private respondent's contention, that the decrease in the mid-year and year-end bonuses constituted a
diminution of the employees' salaries, is not correct, for bonuses are not part of labor standards in the same
class as salaries, cost of living allowances, holiday pay, and leave benefits, which are provided by the Labor
Code.
Petitioner was placed under conservatorship by the Monetary Board, pursuant to its authority under Section
28-A of Republic Act No. 265,21 as amended by Presidential Decree No. 72. Under Section 28-A, the
Monetary Board may place a bank under the control of a conservator when it finds that the bank is
continuously unable or unwilling to maintain a condition of solvency or liquidity.
Petitioner was not only experiencing a decline in its profits, but was reeling from tremendous losses
triggered by a bank-run which began in 1983. In such a depressed financial condition, petitioner cannot be
legally compelled to continue paying the same amount of bonuses to its employees. Thus, the conservator
was justified in reducing the mid-year and Christmas bonuses of petitioner's employees. To hold otherwise
would be to defeat the reason for the conservatorship which is to preserve the assets and restore the
viability of the financially precarious bank. Ultimately, it is to the employees' advantage that the
conservatorship achieve its purposes for the alternative would be petitioner's closure whereby employees
would lose not only their benefits, but their jobs as well.
With regard to 13th month pay, PD 851, which was issued by President Marcos on 16 December 1975,
requires all employers to pay their employees receiving a basic salary of not more than P 1,000 a month,
regardless of the nature of the employment, a 13th month pay, not later than December 24 of every year.
However, employers already paying their employees a 13th month pay or its equivalent are not covered by
the law. Under the Revised Guidelines on the Implementation of the 13th-Month Pay Law, the term
"equivalent" shall be construed to include Christmas bonus, mid-year bonus, cash bonuses and other
117 | P a g e

payments amounting to not less than 1/12 of the basic salary. The intention of the law was to grant some
relief - not to all workers - but only to those not actually paid a 13th month salary or what amounts to it, by
whatever name called. It was not envisioned that a double burden would be imposed on the employer
already paying his employees a 13th month pay or its equivalent whether out of pure generosity or on the
basis of a binding agreement. To impose upon an employer already giving his employees the equivalent of
a 13th month pay would be to penalize him for his liberality and in all probability, the employer would react
by withdrawing the bonuses or resist further voluntary grants for fear that if and when a law is passed giving
the same benefits, his prior concessions might not be given due credit.
In the case at bar, even assuming the truth of private respondent's claims as contained in its position paper
or Memorandum regarding the payments received by its members in the form of 13th month pay, mid-year
bonus and Christmas bonus, it is noted that, for each and every year involved, the total amount given by
petitioner would still exceed, or at least be equal to, one month basic salary and thus, may be considered as
an "equivalent" of the 13th month pay mandated by PD 851.Thus, petitioner is justified in crediting the mid-
year bonus and Christmas bonus as part of the 13th month pay.
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72.

Jardin vs. NLRC
G.R. No. 119268, February 23,2000

FACTS: Petitioners were drivers of respondent, a domestic corporation engaged in the operation of
"Goodman Taxi". Petitioners used to drive respondent's taxicabs every other day on a 24 hour work
schedule under the boundary system. Under this arrangement, petitioners earned an average of P400 daily.
Nevertheless, respondent admittedly regularly deducts from petitioners, daily earnings the amount of P30
supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to
form a labor union to protect their rights and interests.
Upon learning about the plan of petitioners, respondent refused to let petitioners drive their taxicabs when
they reported for work. Petitioners suspected that they were singled out because they were the leaders and
active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against
respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. In a decision, the
labor arbiter dismissed the complaint for lack of merit.
On appeal, the NLRC, in a decision, reversed and set aside the judgment of the labor arbiter. The labor
tribunal declared that petitioners are employees of respondent and, as such, their dismissal must be for just
cause and after due process.
Respondent's first motion for reconsideration was denied. Respondent filed another motion for
reconsideration. The NLRC, in its decision, granted the second motion for reconsideration. It ruled that it
lacks jurisdiction over the case as petitioners and respondent have no employer employee relationship. It
held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor
Code.
ISSUE:
Whether or not there is an employer employee relationship so as to entitle them to payment of
backwages.
RULING:
The court ruled that the relationship between jeepney owners/ operators on one hand and jeepney drivers
on the other under the boundary system is that of employer employee and not of lessor lessee. The
court has explained that in the lease of chattels, the lessor loses complete control over the chattel leased
although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the
damages to the lessor. In the case of jeepney owners/ operators and jeepney drivers, the former exercise
supervision and control over the latter. The management of the business is in the owner's hands. The owner
as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by
the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers
do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the owner/
operator is not sufficient to withdraw the relationship between them from that of employer and employee.
The court has applied by analogy the doctrine to the relationships between bus owner/ operator and bus
119 | P a g e

conductor, auto-calesa owner/ operator and driver and between taxi owners/ operators and taxi drivers.
Hence, petitioners are undoubtedly employees of respondent because as taxi drivers they perform activities
which are usually necessary or desirable in the usual business or trade of their employer.
As consistently held by the court, termination of employment must be effected in accordance with law. The
just and authorized causes for termination of employment are enumerated under Articles 282, 283 and 284
of the Labor Code. The requirement of notice and hearing is set-out in Article 277 of the said Code. Hence,
petitioners, being employees of respondent, can be dismissed only for just and authorized cause and after
affording them notice and hearing prior to termination. In the instant case, respondent had no valid cause to
terminate the employment of petitioners. Neither were there two written notices sent by respondent
informing each of the petitioners that they had been dismissed from work. These lack of valid cause and
failure on the part of respondent to comply with the twin-notice requirement underscored the illegality
surrounding petitioners' dismissal.
Under the law, an employee who is unjustly dismissed from work shall be 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 from him
up to the time of his actual reinstatement. It must be emphasized though that recent judicial
pronouncements distinguish between employees illegally dismissed prior to the effectivity of Republic Act
No. 6715 on March 21, 1989 and those whose illegal dismissals were effected after such date. Thus,
employees illegally dismissed prior to March 21, 1989, are entitled to backwages up to three years without
deduction or qualification, while those illegally dismissed after that date are granted full backwages inclusive
of allowances and other benefits or their monetary equivalent from the time their actual compensation was
withheld from them up to the time of their actual reinstatement. The legislative policy behind Republic Act
No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the
earnings derived elsewhere by the concerned employee during the period of his illegal dismissal.
Considering that petitioners were terminated from work on August 1, 1991, they are entitled to full
backwages on the basis of their last daily earnings.
With regard to the amount deducted daily by respondent from petitioners for washing of the taxi units, the
court is of the view that the same is not illegal in the context of the law. The court notes that after a tour of
duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he
took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by
fair play. Hence, the drivers are not entitled to reimbursement of washing charges.
73.

Manila Jockeys Club Employees Labor Union vs. Manila Jockey Club
G.R. No. 167601, March 7, 2007

FACTS: Manila Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate and maintain
horse races, entered into a Collective Bargaining Agreement (CBA) with Manila Jockey Club Employees
Labor Union-PTGWO. Under Section 1 Article IV of their CBA, the parties agreed to a 7-hour work schedule
from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday. All
work performed in excess of seven (7) hours work schedule and on days not included within the work week
shall be considered overtime and paid as such with exception to those monthly compensation which
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includes work performed during Saturday, Sunday, and Holiday when races are held at the Club. The CBA
likewise reserved in management prerogatives including the determination of the work schedule. An inter-
office memorandum was later issued declaring that the hours of work of regular monthly-paid employees
shall be from 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and Thursday. The
memorandum, however, sustained the 9:00 a.m. to 5:00 p.m. schedule for non-race days.
Before the voluntary arbitrators of the National Conciliation and Mediation Board, petitioners questioned the
memorandum as violative of the prohibition against non-diminution of wages and benefits guaranteed the
CBA which specified the work schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. They
claimed that as a result of the memorandum, the employees are precluded from rendering their usual
overtime work from 5:00 p.m. to 9:00 p.m.

ISSUE:
Whether or not the change in the work schedule violated Article 100 of the Labor Code on the non-
diminution of wages and benefits guaranteed under the parties CBA.

RULING:
No. It was evident that the change in work schedule was justified, it being a management prerogative.
Respondent, as employer, cited the change in the program of horse races as reason for the adjustment of
the employees work schedule. It rationalized that when the CBA was signed, the horse races started at
10:00 a.m. When the races were moved to 2:00 p.m., there was no other choice for management but to
change the employees' work schedule as there was no work to be done in the morning. It is true that
Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from
1:00 p.m. to 5:00 p.m. from Mondays to Saturdays. However, Section 2, Article XI expressly reserves on
respondent the prerogative to change existing methods or facilities to change the schedules of work.
Moreover, Manila Jockey Club was not obliged to allow all its employees to render overtime work everyday
for the whole year, but only those employees whose services were needed after their regular working hours
and only upon the instructions of management. The overtime pay was not given to each employee
consistently, deliberately and unconditionally, but as a compensation for additional services rendered. Thus,
overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code on prohibition
against elimination or diminution of benefits.

74.

San Miguel Corp et al., vs. Layoc, Jr., et al.,
G.R. No. 149640, October 19, 2007

FACTS: Respondents were among the Supervisory Security Guards of the Beer Division of the San Miguel
Corporation. From the commencement of their employment, the private respondents were required to punch
their time cards for purposes of determining the time they would come in and out of the companys work
place. As such, the private respondents were availing the benefits for overtime, holiday and night premium
duty through time card punching. However, in the early 1990s, the San Miguel Corporation embarked on a
Decentralization Program.
The Beer Division of the San Miguel Corporation implemented no time card policy whereby the supervising
security guards of the Beer Division were no longer required to punch their time cards. However, in lieu of
the overtime pay and the premium pay, the personnel of the Beer Division of the petitioner San Miguel
Corporation affected by the No Time Card Policy were given a 10% across-the-board increase on their
basic pay while the supervisors who were assigned in the night shift (6:00 p.m. to 6:00 a.m.) were given
night shift allowance ranging from P2,000.00 to P2,500.00 a month.
Aggrieved, respondents filed a complaint for unfair labor practice, violation of Article 100 of the Labor Code
of the Philippines, and violation of the equal protection clause and due process of law in relation to
paragraphs 6 and 8 of Article 32 of the New Civil Code of the Philippines.
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ISSUE:
Whether or not the No Time Card Policy constitutes a violation of Article 100 of the Labor Code.

RULING:
SC ruled in favor of the petitioners. Petitioners exercised management prerogative in the implementation of
the No Time Card Policy.
As a general rule, managerial employees are not entitled to overtime pay for services rendered in excess of
eight hours a day. Respondents failed to show that the circumstances of the present case constitute an
exception to this general rule.
Respondents assert that Article 100 of the Labor Code prohibits the elimination or diminution of benefits.
However, contrary to the nature of benefits, petitioners did not freely give the payment for overtime work to
respondents. Petitioners paid respondents overtime pay as compensation for services rendered in addition
to the regular work hours. Respondents rendered overtime work only when their services were needed after
their regular working hours and only upon the instructions of their superiors. Respondents even differ as to
the amount of overtime pay received on account of the difference in the additional hours of services
rendered.
Aside from their allegations, respondents were not able to present anything to prove that petitioners were
obliged to permit respondents to render overtime work and give them the corresponding overtime pay.
Even if petitioners did not institute a no time card policy, respondents could not demand overtime pay from
petitioners if respondents did not render overtime work. The requirement of rendering additional service
differentiates overtime pay from benefits such as thirteenth month pay or yearly merit increase. These
benefits do not require any additional service from their beneficiaries. Thus, overtime pay does not fall within
the definition of benefits under Article 100 of the Labor Code.

75.

San Miguel Corp., vs. Pontillas
G.R. No. 155178, May 7, 2008

FACTS: On October 24, 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas(respondent)
as a daily-wage company guard and on 1984 respondent became a monthly-paid employee which entitled
him to yearly increase in the salary.
On October 19, 1993, respondent filed an action for recovery of damages due to discrimination under Article
100 of the labor Code of the Philippines against the company security commander, Capt. Segundino D.
Fortich (Capt. Fortich), and Francisco Manzon, VP Brewery Director. He alleged that the increases in his
salary were only percentage of what the other security guard received.
On December 6, 1993, a memorandum ordering the transfer of responsibility of the Oro Verde warehouse to
the newly- organized VisMin Logistics Operation, in effect, transferring the security guards of the Oro Verde
warehouse to Vismin Logistics Operations.
However, respondent continued to report at Oro Verde Warehouse, alleging that he was not notified by the
transfer by his direct superior (Capt. Fortich).
Petitioner alleged that respondent was properly notified of the transfer but he refused to receive 14
memoranda issued by Major Enriquez from 14-27 February 1994. Petitioner also alleged that respondent
was given notices of Guard Detail dated 9 February 1994 and 15 February 1994 but he still refused to report
for duty at the VisMin Logistics Operations.
After the administrative investigation, respondent was terminated for violating company rules and
regulations, particularly for insubordination of willful disobedience in carrying out reasonable instructions of
his superior. Respondent filed an amended complaint against petitioner for illegal dismissal.
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The Labor Arbiter found nothing prejudicial, unjust, or unreasonable to petitioner's decision on petitioners
transfer of materials and security guard assignments. Respondent appealed.
The NLRC ruled that respondent was not informed of his transfer from Oro Verde Warehouse to VisMin
Logistics Operations. The notices allegedly sent to respondent did not indicate any receipt from respondent.
The NLRC further ruled that respondent was a victim of discrimination. The NLRC declared that petitioner
failed to justify why respondent was not entitled to the full rate of salary increases enjoyed by other security
guards. The CA affirmed the decision of the NLRC.

ISSUE:
Whether there was an illegal dismissal of Pontillas by San Miguel Corporation

RULING:
Petition was granted. The issue about the alleged violation of Article 100 of the LCP was not discussed by
SC.
An employer may terminate an employment for serious misconduct or willful disobedience by the employee
of the lawful orders of his employer or representative in connection with his work. Willful disobedience
requires the concurrence of two elements: (1) the employee's assailed conduct must have been willful, that
is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee, and must pertain to the duties which he had been engaged to
discharge.
As early as 9 February 1994, Major Enriquez, the head of the VisMin Logistics Operations issued several
notice and successive memoranda to respondent officially informing him of his transfer to the VisMin
Logistics Operations but respondent refused to sign all the notices.
The employer exercises the prerogative to transfer an employee for valid reasons and according to the
requirements of its business, provided the transfer does not result in demotion in rank or diminution of the
employee's salary, benefits, and other privileges.
In this case, SC found that the order of transfer was reasonable and lawful considering the integration of
Oro Verde Warehouse with VisMin Logistics Operations. Respondent was properly informed of the transfer
but he refused to receive the notices on the pretext that he was wary because of his pending case against
petitioner. Respondent failed to prove that petitioner was acting in bad faith in effecting the transfer. There
was no demotion involved, or even a diminution of his salary, benefits, and other privileges. Respondent's
persistent refusal to obey petitioner's lawful order amounts to willful disobedience under Article 282 of the
Labor Code.

76.

Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU, G.R.
No. 170734, May 14, 2008, citing Davao Fruits vs. Asso. Labor Union, 225 SCRA 562 and Sevilla
Trading vs. AVA Tomas Services
G.R. No. 152456, April 28, 2004

FACTS:
Petitioner is a company engaged in the manufacture of metal products, whereas respondent is
the labor union of petitioner's rank and file employees. Sometime in December 2003, petitioner
paid the 13th month pay, bonus, and leave encashment of three union members in amounts
proportional to the service they actually rendered in a year, which is less than a full twelve (12)
months. Respondent protested the prorated scheme, claiming that on several occasions
petitioner did not prorate the payment of the same benefits to seven (7) employees who had
not served for the full 12 months. According to respondent, the prorated payment violates the
rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a
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complaint before the National Conciliation and Mediation Board (NCMB). The parties submitted
the case for voluntary arbitration.
The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that the
giving of the contested benefits in full, irrespective of the actual service rendered within one
year has not ripened into a practice. He also interpreted the phrase "for each year of service"
found in the pertinent CBA provisions to mean that an employee must have rendered one year
of service in order to be entitled to the full benefits provided in the CBA.
Respondent filed a Petition for Review before the Court of Appeals. The appellate court found
that petitioner had an existing voluntary practice of paying the aforesaid benefits in full to its
employees; thereby rejecting the claim that petitioner erred in paying full benefits to its seven
employees. The appellate court noted that aside from the affidavit of petitioner's officer, it has
not presented any evidence in support of its position that it has no voluntary practice of
granting the contested benefits in full and without regard to the service actually rendered within
the year.

ISSUES:
1. Whether or not the petitioners should grant 13th month pay, bonus and leave encashment in
full regardless of actual service rendered.
2. Whether or not the prorated payment of the said benefits constitutes diminution of benefits
under Article 100 of the Labor Code.

RULING:
On the first issue, according to petitioner, there is a one-year cutoff in the entitlement to the
benefits provided in the CBA, which is evident from the wording of its pertinent provisions as
well as of the existing law. There is no doubt that in order to be entitled to the full monetization
of sixteen (16) days of vacation and sick leave, one must have rendered at least one year of
service. The clear wording of the provisions does not allow any other interpretation. Anent the
13th month pay and bonus, the CBA provisions did not give any meaning different from that
given by the law, thus it should be computed at 1/12 of the total compensation, which an
employee receives for the whole calendar year. The bonus is also equivalent to the amount of
the 13th month pay given, or in proportion to the actual service rendered by an employee
within the year.
On the second issue, it is a settled rule that any benefit and supplement being enjoyed by
employees cannot be reduced, diminished, discontinued or eliminated by the employer. The
principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the
rights of workers and promote their welfare," and "to afford labor full protection." Said
mandate in turn is the basis of Article 4 of the Labor Code which states that "all doubts in the
implementation and interpretation of this Code, including its implementing rules and
regulations shall be rendered in favor of labor."
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely,
voluntarily and consistently granting full benefits to its employees regardless of the length of
service rendered.
Petitioner claims that its full payment of benefits regardless of the length of service to the
company does not constitute voluntary employer practice. It points out that the payments had
been erroneously made and they occurred in isolated cases in the years 1992, 1993, 1994, 1999,
2002 and 2003. According to petitioner, it was only in 2003 that the accounting department
discovered the error. Petitioner further argues that for a grant of a benefit to be considered a
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practice, it should have been practiced over a long period of time and must be shown to be
consistent, deliberate and intentional, which is not what happened in this case.
True, there were only a total of seven employees who benefited from such a practice, but it was
an established practice nonetheless. Jurisprudence has not laid down any rule specifying a
minimum number of years within which a company practice must be exercised in order to
constitute voluntary company practice. Petitioner cannot shirk away from its responsibility by
merely claiming that it was a mistake or an error, supported only by an affidavit of its
manufacturing group.
Petition denied.

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77.

AGUANZA VS. ASIAN TERMINAL INC. ET AL
GR No. 163505, Aug. 14, 2009

Facts: Petitioner Gualberto Aguanza was employed with respondent company Asian Terminal, Inc. from
April 15, 1989 to October 1997. He was initially employed as Derickman or Crane Operator and was
assigned as such aboard Bismark IV, a floating crane barge owned by Asian Terminals, Inc. based at the
port of Manila.
As of October 1997, he was receiving the following salaries and benefits from [ATI]:
a. Basic salary - P8,303.30;
b. Meal allowance - P1,800 a month;
c. Fixed overtime pay of 16 hours when the barge is assigned outside Metro Manila;
d. P260.00 per day as out of port allowance when the barge is assigned outside Manila.
Sometime in September 1997, the Bismark IV, together with its crew, was temporarily assigned at the
Mariveles Grains Terminal in Mariveles, Bataan. On October 20, 1997, respondent James Keith issued a
memo to the crew of Bismark IV stating that the barge had been permanently transferred to the Mariveles
Grains terminal beginning October 1, 1997 and because of that, its crew would no longer be entitled to out
of port benefits of 16 hours overtime and P200 a day allowance. [Aguanza], with four other members of the
crew, stated that they did not object to the transfer of Bismark IV to Mariveles, Bataan, but they objected to
the reduction of their benefits. When they objected to the reduction of their benefits, they were told by
James Keith to report to the Manila office only to be told to report back to Bataan. On both occasions,
[Aguanza] was not given any work assignment. After being shuttled between Manila and Bataan, [Aguanza]
was constrained to write respondent Atty. Corvite for clarification of his status, at the same time informing
the latter of his willingness to work either in Manila or Bataan. While he did not agree with private
respondents' terms and conditions, he was nonetheless willing to continue working without prejudice to
taking appropriate action to protect his rights. Because of private respondents' refusal to give him any work
assignment and pay his salary, [Aguanza] filed a complaint for illegal dismissal against respondents.

Issue: WON ATI's transfer of Bismark IV's base from Manila to Bataan was a valid exercise of
management prerogative.

Ruling: ATI's transfer of Bismark IV's base from Manila to Bataan was, contrary to Aguanza's assertions, a
valid exercise of management prerogative. The transfer of employees has been traditionally among the acts
identified as a management prerogative subject only to limitations found in law, collective bargaining
agreement, and general principles of fair play and justice. Even as the law is solicitous of the welfare of
employees, it must also protect the right of an employer to exercise what are clearly management
prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot
be denied.

On the other hand, the transfer of an employee may constitute constructive dismissal "when
continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank
and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to the employee."

Aguanza's continued employment was not impossible, unreasonable or
unlikely; neither was there a clear discrimination against him. Among the employees assigned to Bismark
IV, it was only Aguanza who did not report for work in Bataan. Aguanza's assertion that he was not allowed
to "time in" in Manila should be taken on its face: Aguanza reported for work in Manila, where he wanted to
work, and not in Bataan, where he was supposed to work. There was no demotion in rank, as Aguanza
would continue his work as Crane Operator. Furthermore, despite Aguanza's assertions, there was no
diminution in pay.


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78.
Genesis Transport Service Inc et al., vs. Unyon ng Malayang Manggagawa ng Genesis Transport et
al
GR No. 182114, April 5, 2010

FACTS: Respondent Juan Taroy was hired by petitioner Genesis Transport as driver on commission basis
at 9% of the gross revenue per trip. He, after due notice and hearing, terminated from employment after an
accident on April 20, 2002 where he was deemed to have been driving recklessly. He then filed a complaint
for illegal dismissal and payment of service incentive leave pay, claiming that he was singled out for
termination because of his union activities, other drivers who had met accidents not having been dismissed
from employment. He later amended his complaint to implead his co-respondent union and add as grounds
unfair labor practice and reimbursement of illegal deductions on tollgate fees, and payment of service
incentive leave pay.
Upon appeal, with respect to Taroys claim for refund, the Labor Arbiter ruled in his favor for if, as
contended by Genesis Transport, tollgate fees form part of overhead expense, why were not expenses for
fuel and maintenance also charged to overhead expense. The Labor Arbiter thus concluded that it would
appear that the tollgate fees are deducted from the gross revenues and not from the salaries of drivers and
conductors, but certainly the deduction thereof diminishes the take home pay of the employees.
ISSUE:
Whether the tollgate fee deductions which resulted to an underpayment given to Taroy is illegal?
HELD:
The deduction is considered illegal.
The amounts representing tollgate fees were deducted from gross revenues and not directly from Taroys
commissions, the labor tribunal and the appellate court correctly held that the withholding of those amounts
reduced the amount from which Taroys 9% commission would be computed. Such a computation not only
marks a change in the method of payment of wages, resulting in a diminution of Taroys wages in violation
of Article 113 vis--vis Article 100 of the Labor Code, as amended. It need not be underlined that without
Taroys written consent or authorization, the deduction is considered illegal.
Besides, the invocation of the rule on company practice is generally used with respect to the grant of
additional benefits to employees, not on issues involving diminution of benefits.
79.
Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU
GR No. 188949, July 26, 2010

FACTS: In compliance with Presidential Decree (P.D.) No. 851, petitioner-employer granted its employees
the mandatory (13th) - month pay since 1975. The formula used by petitioner in computing the

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13th-month pay was: Total Basic Annual Salary divided by twelve (12). Included in petitioners
computation of the Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours
overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and sick leaves for
each year. Throughout the years, petitioner used this computation until 2006.
On November 6, 2004, respondent-union staged a strike. During the pendency of the strike, petitioner
declared a temporary cessation of operations but it was only on December 2005, all the striking union
members were allowed to return to work. Subsequently, petitioner declared another temporary cessation of
operations for the months of April and May 2006. Which was later on lifted on June 2006, but the rank-and-
file employees were allowed to report for work on a fifteen (15) day-per-month rotation basis that lasted until
September 2006. In December 2006, petitioner gave the employees their 13th-month pay based on the
employees total earnings during the year divided by 12.
However, the respondent union objected to this computation. It averred that petitioner did not adhere to the
usual computation of the 13th-month pay. It claimed that the divisor should have been eight (8) instead of
12, because the employees worked for only 8 months in 2006. It likewise asserted that petitioner did not
observe the company practice of giving its employees the guaranteed amount equivalent to their one month
pay, in instances where the computed 13th-month pay was less than their basic monthly pay.
Petitioner explained that the change in the computation of the 13th-month pay was intended to rectify an
error in the computation, particularly the concept of basic pay which should have included only the basic
monthly pay of the employees.
ISSUE:
Whether petitioner's interpretation of the term basic pay, essential in the computation of the 13th-month
pay, is correct
RULING:
No. It is not correct.
The Rules and Regulations Implementing P.D. No. 851, promulgated on December 22, 1975, defines
13th-month pay and basic salary as follows:
Sec. 2. Definition of certain terms. - As used in this issuance:
(a) "Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a
calendar year;
(b) "Basic salary" shall include all remunerations or earnings paid by an employer to an employee for
services rendered but may not include cost-of-living allowances granted pursuant to Presidential Decree No.
525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits
which are not considered or integrated as part of the regular or basic salary of the employee at the time of
the promulgation of the Decree on December 16, 1975.

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On January 16, 1976, the Supplementary Rules and Regulations Implementing P.D. No. 851 was issued.
The Supplementary Rules clarifies that overtime pay, earnings, and other remuneration that are not part of
the basic salary shall not be included in the computation of the 13th-month pay.
On November 16, 1987, the Revised Guidelines on the Implementation of the 13th-Month Pay Law was
issued. Significantly, under this Revised Guidelines, it was specifically stated that the minimum 13th-month
pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee
within a calendar year.
Furthermore, the term basic salary of an employee for the purpose of computing the 13th month pay was
interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not
include allowances and monetary benefits which are not integrated as part of the regular or basic salary,
such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential
and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included
as part of the basic salary in the computation of the 13th- month pay if, by individual or collective agreement,
company practice or policy, the same are treated as part of the basic salary of the employees.
The guidelines set by the law are not difficult to decipher. The voluntariness of the grant of the benefit was
manifested by the number of years the employer had paid the benefit to its employees. Petitioner only
changed the formula in the computation of the 13th-month pay after almost 30 years and only after the
dispute between the management and employees erupted. This act of petitioner in changing the formula at
this time cannot be sanctioned, as it indicates a badge of bad faith.

80.

SHS Perforated Materials, Inc. et al., vs. Diaz,
GR No. 185814, Oct. 13, 2010

FACTS: Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing
under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone
Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a German national, is its president. Thus,
the wages of SHS employees are paid out by ECCP, through its Accounting Services Department headed
by Juliet Taguiang (Taguiang). Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for
Business Development on probationary status
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. During meetings with the respondent, Hartmannshenn expressed his dissatisfaction over
respondents poor performance. respondent acknowledged his poor performance and offered to resign from
the company.
On November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on November 22
and 24, 2005, notified respondent of his arrival through electronic mail messages and advised him to get in
touch with him. Respondent claimed that he never received the messages. Hartmannshenn instructed
Taguiang not to release respondents salary.

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Respondent served on SHS a demand letter and a resignation letter. It is precisely because of illegal and
unfair labor practices such as these that I offer my resignation with neither regret nor remorse.
Appealing for the release of his salary respondent filed a Complaint against the petitioners for illegal
dismissal; non-payment of salaries/wages and 13th month pay with prayer for reinstatement and full
backwages; exemplary damages, and attorneys fees, costs of suit, and legal interest.
ISSUES
Whether or not the temporary withholding of respondents salary/wages by petitioners was a valid exercise
of management prerogative.
RULING
Withholding respondents salary was not a valid exercise of management prerogative.
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. 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.
Any withholding of an employees 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:
(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.
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it would foreclose any choice by him except to
forego his continued employment. 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 this case, the withholding of respondents 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
respondents salary amounts to constructive dismissal.


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81.
Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo
G.R. No. 188169, November 28, 2011

FACTS: Respondents were employed as goldsmiths by the petitioner Nia Jewelry Manufacturing of Metal
Arts, Inc.
There were incidents of theft involving goldsmiths in Nia Jewelry's employ:
The petitioner imposed a policy for goldsmiths, which were intended to answer for any loss or damage
which Nia 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 backwages, attorney's fees and 13th month pay.

ISSUES:
1) Whether or not Nia Jewelry Manufacturing of Metal Arts, Inc. may impose the policy for their goldsmiths
requiring them to post cash bonds or deposits; and
2) Whether or not there is constructive dismissal.

HELD:
1) NO, the Nia 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.
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 Nia Jewelry's employ falls under the exceptions specified in Articles
113 and 114 of the Labor Code.

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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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Payment of
Wages


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82.
Locsin II vs. Mekeni Food Corp
GR No. 192105, December 9, 2013

FACTS: Petitioner Antonio Locsin II was the Regional Sales Manager of respondent Mekeni Food
Corporation. He was hired on February 2004 to oversee the NCR and Luzon operation. In addition to his
compensation and benefit package, a car was offered to him under which one-half of the cost of the vehicle
is to be paid by the company and the other half to be deducted from petitioner's salary. The car valued at
280,000 which Locsin paid through salary deductions of 5,000 per month.
On February 2006, Locsin resigned. A total of 112,500.00 had already been deducted from his monthly
salary and applied as part of his share in the car plan. Upon resignation, petitioner made personal and
written follow-ups regarding his unpaid salaries, commissions, benefits, and offer to purchase his service
vehicle. Mekeni replied that the company car plan benefit applied only to employees who have been with the
company for five years; for this reason, the balance that petitioner should pay on his service vehicle stood at
P116,380.00 if he opts to purchase the same.
On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S. Garcia, a Complaint for
the recovery of monetary claims consisting of unpaid salaries, commissions, sick/vacation leave benefits,
and recovery of monthly salary deductions which were earmarked for his cost-sharing in the car plan.
ISSUE
Whether or not petitioner is entitled to a refund of all the amounts applied to the cost of the service vehicle
under the car plan.
RULING
Any benefit or privilege enjoyed by petitioner from using the service vehicle was merely incidental and
insignificant, because for the most part the vehicle was under Mekeni's control and supervision. Free and
complete disposal is given to the petitioner only after the vehicle's cost is covered or paid in full. Until then,
the vehicle remains at the beck and call of Mekeni. Given the vast territory petitioner had to cover to be able
to perform his work effectively and generate business for his employer, the service vehicle was an absolute
necessity, or else Mekeni's business would suffer adversely. Thus, it is clear that while petitioner was paying
for half of the vehicle's value, Mekeni was reaping the full benefits from 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. Consequently, Mekeni may not enrich itself by charging
petitioner for the use of its vehicle which is otherwise absolutely necessary to the full and effective
promotion of its business. It may not, under the claim that petitioner's payments constitute rents for the use

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of the company vehicle, refuse to refund what petitioner had paid, for the reasons that the car plan did not
carry such a condition; the subject vehicle is an old car that is substantially, if not fully, depreciated; the car
plan arrangement benefited Mekeni for the most part; and any personal benefit obtained by petitioner from
using the vehicle was merely incidental.
Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart contribution to the cost
of the vehicle; that is not property or money that belongs to him, nor was it intended to be given to him in
lieu of the car plan. Mekeni's share of the vehicle's cost was not part of petitioner's compensation package.
The vehicle is an asset that belonged to Mekeni. Just as Mekeni is unjustly enriched by failing to refund
petitioner's payments, so should petitioner not be awarded the value of Mekeni's counterpart contribution to
the car plan, as this would unjustly enrich him at Mekeni's expense.
Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's payments under the car plan
agreement amounting only to the extent of the contribution Locsin made, totalling to the amount of
P112,500.00.
83.

TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp. Union
GR No. 191714, Feb 26, 2014

FACTS: On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation workers union
(THS-GQ Union) filed their Complaint for Unfair Labor Practice (ULP) by way of union busting, and Illegal
Lockout, with moral and exemplary damages and attorneys fees, against T&H Shopfitters Corporation (T&H
Shopfitters) and Gin Queen Corporation before the Labor Arbiter (LA).
1st CAUSE:
In their desire to improve their working conditions, respondents and other employees of held their first
formal meeting on November 23, 2003 to discuss the formation of a union. The following day, seventeen
(17) employees were barred from entering petitioners factory premises located in Castillejos, Zambales,
and ordered to transfer to T&H Shopfitters warehouse at Subic Bay Freeport Zone (SBFZ) purportedly
because of its expansion. Afterwards, the said seventeen (17) employees were repeatedly ordered to go on
forced leave due to the unavailability of work.
Respondents contended that the affected employees were not given regular work assignments, while
subcontractors were continuously hired to perform their functions. Respondents sought the assistance of the
National Conciliation and Mediation Board. Subsequently, an agreement between petitioners and THS-GQ
Union was reached. Petitioners agreed to give priority to regular employees in the distribution of work
assignments. Respondents averred, however, that petitioners never complied with its commitment but
instead hired contractual workers. Instead, Respondents claimed that the work weeks of those employees in
the SBFZ plant were drastically reduced to only three (3) days in a month.
2nd CAUSE:
On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was issued to hold
the certification election in both T&H Shopfitters and Gin Queen.

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On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The officers
and members of the THS-GQ Union were purportedly excluded from the field trip. On the evening of the
field trip, a certain Angel Madriaga, a sales officer of petitioners, campaigned against the union in the
forthcoming certification election.
When the certification election was scheduled on October 11, 2004, the employees were escorted from the
field trip to the polling center in Zambales to cast their votes. The remaining employees situated at the SBFZ
plant cast their votes as well. Due to the heavy pressure exerted by petitioners, the votes for "no union"
prevailed.
3rD CAUSE:
A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin Queen, informed its
employees of the expiration of the lease contract between Gin Queen and its lessor in Castillejos, Zambales
and announced the relocation of its office and workers to Cabangan, Zambales.
When the respondents, visited the site in Cabangan, discovered that it was a "talahiban" or grassland. The
said union officers and members were made to work as grass cutters in Cabangan, under the supervision of
a certain Barangay Captain Greg Pangan. Due to these circumstances, the employees assigned in
Cabangan did not report for work. The other employees who likewise failed to report in Cabangan were
meted out with suspension.
PETITIONERS DEFENSE:
In its defense, Petitioners also stress that they cannot be held liable for ULP for the reason that there is no
employer-employee relationship between the former and respondents. Further, Gin Queen avers that its
decision to implement an enforced rotation of work assignments for respondents was a management
prerogative permitted by law, justified due to the decrease in orders from its customers, they had to resort to
cost cutting measures to avoid anticipated financial losses. Thus, it assigned work on a rotational basis. It
explains that its failure to present concrete proof of its decreasing orders was due to the impossibility of
proving a negative assertion. It also asserts that the transfer from Castillejos to Cabangan was made in
good faith and solely because of the expiration of its lease contract in Castillejos. It was of the impression
that the employees, who opposed its economic measures, were merely motivated by spite in filing the
complaint for ULP against it.
ISSUES:
Whether ULP acts were committed by petitioners against respondents.
RULING:
ULP were committed by petitioners against respondents.
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:

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(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
x x x x
(c) 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;
x x x x
(e) 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 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 center; 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.
The Court is of the considered view that petitioners undisputed actions prior and immediately before the
scheduled certification election, while seemingly innocuous, unduly meddled in the affairs of its employees
in selecting their exclusive bargaining representative.
84.

Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso.,
GR No. 181806, March 12, 2014

FACTS: Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly
organized and existing under the laws of the Philippines. Respondent Wesleyan University-Philippines
Faculty and Staff Association, on the other hand, 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.
In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May 31, 2008.
On August 16, 2005, petitioner, through its President, Atty. Maglaya , issued a Memorandum providing
guidelines on the implementation of vacation and sick leave credits as well as vacation leave commutation
which states that vacation and sick leave credits are not automatic as leave credits would be earned on a
month-to-month and only vacation leave is commuted or monetized to cash which is effected after the
second year of continuous service of an employee.
Respondents questioned the guidelines for being violative of existing practices and the CBA which provide
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.

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Respondent file a grievance complaint on the implementation of the vacation and sick leave policy.
Petitioner also announced its plan of implementing a one-retirement policy which was unacceptable to
respondent.
Respondent submitted affidavits to prove 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.
The Voluntary Arbitrator rendered a Decision declaring the one-retirement policy and the Memorandum
dated August 16, 2005 contrary to law. CA also affirmed the ruling of the Voluntary Arbitrator.
Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan
are one and the same. It maintains that there is no established company practice or policy of giving two
retirement benefits to its employees. Respondent belies the claims of petitioner and asserts that there are
two retirement plans as the PERAA Retirement Plan, which has been implemented for more than 30 years,
is different from the CBA Retirement Plan. Respondent further avers that it has always been a practice of
petitioner to give two retirement benefits and that this practice was established by substantial evidence as
found by both the Voluntary Arbitrator and the CA.
ISSUE:
Whether or not the respondents are entitled to two retirement plans.
RULING:
The Non-Diminution Rule found in 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.
Respondent was able to present substantial evidence in the form of affidavits to support its claim that there
are two retirement plans. Based on the affidavits, petitioner has been giving two retirement benefits as early
as 1997. Petitioner, on the other hand, failed to present any evidence to refute the veracity of these
affidavits. Petitioner's assertion that there is only one retirement plan as the CBA Retirement Plan and the
PERAA Plan are one and the same is not supported by any evidence.
The Memorandum dated August 16, 2005 is contrary to the existing CBA. It limits the available leave credits
of an employee at the start of the school year. The Memorandum dated imposes a limitation not agreed
upon by the parties nor stated in the CBA, so it must be struck down.
85.
Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014, citing2011 Nina
Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo

FACTS: The respondent was employed as a sales clerk and assigned at the petitioners boutique. Her
primary tasks were attending to all customer needs, ensuring efficient inventory, coordinating orders from
clients, cashiering and reporting to the accounting department. The petitioner learned that some of their

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employees had access to their POS system with the use of a universal password given to them by a certain
Elmer Flores, who in turn learned of the password from the respondent. The petitioner then conducted an
investigation and asked the petitioner to explain why she should not be disciplinarily dealt with. During the
investigation the respondent was placed under preventive suspension. After investigation the petitioner
terminated the respondent on the grounds of loss of trust or confidence. This respondent was given her final
wage and benefits less the inventory variance incurred by the store. This urged the respondent to file a
complaint for illegal dismissal, illegal suspension, holiday pay, rest day and separation pay. The labor arbiter
ruled in her favour awarding her backwages. The petitioner appealed the decision in the NLRC and the
decision was reversed. However, upon the respondents petition for certiorari in the court of appeals the
decision was reinstated. Hence, this petition.
ISSUE:
Whether the negative sales variance could be validly deducted from the respondents wage?
HELD:
No, it cannot be deducted in this case.
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:
(a) That the employee concerned is clearly shown to be responsible for the loss or damage;
(b) That the employee is given reasonable opportunity to show cause why deduction should not be
made;
(c) That the amount of such deduction is fair and reasonable and shall not exceed the actual loss
or damage; and
(d) That the deduction from the wages of the employee does not exceed 20 percent of the
employee's wages in a week.
In this case, the petitioner failed to sufficiently establish that Esteban was responsible for the negative
variance it had in its sales for the year 2005 to 2006 and that Esteban was given the opportunity to show
cause the deduction from her last salary should not be made.
Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v. Montecillo, that:

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[T]he petitioners should first establish that the making of deductions from the salaries is authorized
by law, or regulations issued by the Secretary of Labor. Further, the posting of cash bonds should
be proven as a recognized practice in the jewelry manufacturing business, or alternatively, the
petitioners should seek for the determination by the Secretary of Labor through the issuance of
appropriate rules and regulations that the policy the former seeks to implement is necessary or
desirable in the conduct of business. The petitioners failed in this respect. It bears stressing that
without proofs that requiring deposits and effecting deductions are recognized practices, or without
securing the Secretary of Labor's determination of the necessity or desirability of the same, the
imposition of new policies relative to deductions and deposits can be made subject to abuse by the
employers. This is not what the law intends.
86.
Congson vs. NLRC
G.R. No. 114250; April 5, 1995

FACTS: Dominico C. Congson is the registered owner of Southern Fishing Industry. Respondents were
hired as piece-rate employees uniformly paid at a rate of P1.00 per tuna weighing thirty (30) to eighty (80)
kilos per movement. They work for 7 days a week. Due to alleged scarcity of tuna, Congson notified his
proposal to reduce the rate-per-tuna movement. When they reported the following day, they found out that
they were already replaced with new set of workers. They wanted to have a dialogue with the management,
but they waited in vain. Thus, they filed a case before NLRC for underpayment of wages (violation of the
minimum wage law) and non-payment of overtime pay, 13th month pay, holiday pay, rest day pay, and five
(5)-day service incentive leave pay; and for constructive dismissal.
Petitioner conceded that his payment of wages falls below the minimum wage law. He averred that
NLRC should have considered as forming a substantial part of private respondents' total wages the cash
value of the tuna liver and intestines private respondents were entitled to retrieve. He argued that the
combined value of the cash wage and monetary value of the tuna liver and intestines clearly exceeded the
minimum wage fixed by law.
Both the Labor Arbiter and the NLRC ruled in favor of the respondents.

ISSUE: Whether or not the form of payment by Congson is valid pursuant to Article 102 of the Labor Code.

RULING:Petitioner's practice of paying the private respondents the minimum wage by means of legal tender
combined with tuna liver and intestines runs counter to the above cited provision of the Labor Code. The
fact that said method of paying the minimum wage was not only agreed upon by both parties in the
employment agreement but even expressly requested by private respondents, does not shield petitioner.
Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance
when an employer is permitted to pay wages informs other than legal tender, that is, by checks or money
order, is when the circumstances prescribed in the second paragraph of Article 102 are present.

87.

North Davao Mining vs. NLRC
G.R. No. 112546; March 13, 1996

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FACTS: Due to financial losses, North Davao Mining Corporation laid off workers. Respondent Wilfredo
Guillema is one among several employees of North Davao who were separated by reason of the companys
closure on May 31, 1992. It appears that, during the life of the petitioner corporation, from the beginning of
its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty (30)
days pay for every year of service. Moreover, inasmuch as the region where North Davao operated was
plagued by insurgency and other peace and order problems, the employees had to collect their salaries at a
bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 hours travel time
by public transportation; this arrangement lasted from 1981 up to 1990.

ISSUE:
Whether or not time spent in collecting wages in a place other than the place of employment is
compensable notwithstanding that the same is done during official time.

RULING:
SC, affirming the decision of the Labor Arbiter, finds that the hours spent by complainants in
collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours
worked. Considering further the distance between Amacan, Maco to Tagum which is 2 hours by travel
and the risks in commuting all the time in collecting complainants salaries, would justify the granting of
backwages equivalent to two (2) days in a month as prayed for. Corollary, we likewise hold respondents
liable for the transportation expenses incurred by complainants at P40.00 round trip fare during pay days.

88.

National Federation of Labor vs. CA,
G.R. No. 149464, Oct. 19, 2004

FACTS: American Rubber Company, Inc. (ARCI) entered into a Farm Management Agreement (FMA) with
Sime Darby Pilipinas, Inc. (SDPI) to manage, administer, develop, cultivate and improve the rubber
plantation in Latuan, Isabela, Basilan. However, SDPI decided to terminate the FMA with ARCI and cease
operation of the rubber plantation in Latuan, Isabela, Basilan effective January 17, 1998. Thus on December
17, 1997, SDPI served formal notices of termination to all employees of the plantation effective January 17,
1997. In complaince with the collective bargaining agreement of the National Federation of Labor (NFL),
which was the duly registered bargaining agent of SDPI, and SDPI, the separation pay of the employees
was computed in accordance with the provisions of the Labor Code. On January 17, 1998, each of the
herein petitioners received their separation pay which was equivalent to one-half pay for every year of
service, and other benefits which were all lumped in one check. However, the petitioners filed a complaint
for deficiency in separation pay raising the issue of non-payment of the exact computation of separation
pay. They contended that the private respondents is bound by its policy of granting separation pay
equivalent to one-month pay for every year of service to its retrenched employees.
ISSUE:
Whether or not the petitioners are entitled to separation pay equivalent to one month pay for every year of
employment with private respondents.

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RULING:
According to the Supreme Court, Article 283 of the Labor Code provides that employees who are dismissed
due to closures that are not due to business insolvency should be paid separation pay equivalent to one-
month pay or at least one-half month pay for every year of service, whichever is higher. In the case at bar,
the petitioners had served the respondent SDPI for a period longer than six months. Hence, their separation
pay computed at one-half month pay per year of service is more than the minimum one month pay. Also, the
court emphasized that the collective bargaining agreement should prevail as a contract governing the
employer and the employees respecting the terms of employment, which in this case, they agreed on the
terms of termination pay should be in accordance with the provisions of the Labor Code. Consequently,
Artcle 283 of the Labor Code, which grants separation pay equivalent to one-month pay or one-half month
pay for every year of service, whichever is higher, to the employees retrenched due to business closures,
should apply.
89.
Heirs of Sara Lee vs. Rey
G.R. No. 149013, Aug. 31, 2006

FACTS: The Heir of Sara Lee is engaged in the direct selling of a variety of product lines for men and
women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items,
through its various outlets nationwide. In the pursuit of its business, the petitioner engages and contracts
with dealers to sell the aforementioned merchandise. These dealers, known either as Independent
Business Managers (IBMs) or Independent Group Supervisors (IGSs), depending on whether they sell
individually or through their own group, would obtain at discounted rates the merchandise from the petitioner
on credit or then sell the same products to their own customers at fixed prices also determined by the
petitioner.
In turn, the dealers are paid Services Fees, or sales commissions, the amount of which depends on the
volume and value of their sales. Under existing company policy, the dealers must remit to the petitioner the
proceeds of their sales within a designated credit period, which would either be 38 days for IGSs or 52 days
for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner. To
discourage late remittances, the petitioner imposes a Credit Administration Charge, or simply, a penalty
charge, on the value of the unremitted payment.
The dealers under this system earn income through a profit margin between the discounted purchase price
they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On top of this
margin, the dealer is given the Service Fee, a sales commission, based on the volume of sales generated
by him or her. Due to the sheer volume of sales generated by all of its outlets, the petitioner has found the
need to strictly monitor the 38- or 52-day rolling due date of each of its IBMs and IGSs through the
employment of Credit Administration Supervisors (CAS) for each branch. The primary duty of the CAS is
to strictly monitor each of these deadlines, to supervise the credit and collection of payments and
outstanding accounts due to the petitioner from its independent dealers and various customers, and to
screen prospective IBMs. To discharge these responsibilities, the CAS is provided with a computer

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equipped with control systems through which data is readily generated. Under this organizational setup, the
CAS is under the direct and immediate supervision of the Branch Operations Manager (BOM).
Cynthia Rey at the time of her dismissal from employment, held the position of Credit Administration
Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first employed by the
petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent
was transferred to the Cagayan de Oro City branch retaining the same position. In January 1994,
respondent was elevated to the position of CAS. At that time, the Branch Operations Manager or BOM of
the Cagayan de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent was
temporarily assigned to the Butuan City branch.
Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed the
Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one of the IBMs of the
petitioner who happens to be respondents sister-in-law, from the 52-day limit to an unauthorized term of
60 days. The respondent made the instruction just before the computer data for the computation of the
Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this
allegedly unauthorized act of respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the
report, as the petitioner alleges, BOM Villagracia discreetly verified the records and discovered that it was
not only the 52-day credit term of IBM Rey-Petilla that had been extended by the respondent, but there were
several other IBMs whose credit terms had been similarly extended beyond the periods allowed by company
policy. BOM Villagracia then summoned the respondent and required her to explain the unauthorized credit
extensions.
ISSUE:
WON the respondent is entitled to 13th month pay.
HELD:
The award of 13th month pay must be deleted. Respondent is not a rank-and-file employee and is,
therefore, not entitled to thirteenth-month pay. However, the NLRC and the CA are correct in refusing to
award 14th and 15th month pay as well as the monthly salary increase of 10 percent per year for two years
based on her latest salary rate. The respondent must show that these benefits are due to her as a matter
of right. Mere allegations by the respondent do not suffice in the absence of proof supporting the same.
With respect to salary increases in particular, the respondent must likewise show that she has a vested right
to the same, such that her salary increases can be made a component in the computation of backwages.
What is evident is that salary increases are a mere expectancy. They are by nature volatile and dependent
on numerous variables, including the companys fiscal situation, the employees future performance on the
job, or the employees continued stay in a position. In short, absent any proof, there is no vested right to
salary increases.


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Conditions
Of
Employment


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90.

San Juan De Dios Hospital vs. NLRC
282 SCRA 316 [1997]

FACTS: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital
Employees Association, sent a letter requesting for the expeditious implementation and payment by
respondent, San Juan De Dios Hospital, of the '40-hours/5-day workweek' with compensable weekly two (2)
days off provided for by Policy Instruction No. 54 issued by the Secretary of Labor. Said policy instruction
purports to implement R.A. No. 5901, otherwise known as An Act Prescribing Forty Hours A Week of Labor
For Government and Private Hospitals Or Clinic Personnel. Respondent hospital failed to give a favorable
response; thus, petitioners filed a complaint regarding their claims for statutory benefits under the above-
cited law and policy issuance. However, the Labor Arbiter and, subsequently, NLRC dismissed the
complaint. Hence, this petition ascribing grave abuse of discretion on the part of NLRC in concluding that
Policy Instructions No. 54 proceeds from a wrong interpretation of R.A. 5901 and Article 83 of the Labor
Code.
ISSUE:
Whether or not Policy Instruction No. 54, entitling a full weekly wage of 7 days upon completion of 40-
hour/5-day workweek, is valid based on existing labor laws.
RULING:
Policy Instruction No. 54 is void, it being inconsistent with and repugnant to the provision of Article 83 of the
Labor Code, as well as to R.A. No. 5901.
A perusal of R. A. No. 5901 reveals nothing therein that gives two days off with pay for health personnel
who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of House Bill No. 16630
(later passed into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten the
working hours of health personnel and not to dole out a two days off with pay. Petitioners' position is also
negated by the very rules and regulations promulgated by the Bureau of Labor Standards which implement
Republic Act No. 5901. Section 15 of aforementioned implementing rules grants specific rate of additional
compensation for work performed on Sunday or for work performed in excess of forty hours a week. Policy
Instruction No. 54 unduly extended the statute.
Article 83 merely provides: (1) the regular office hour of eight hours a day, five days per week for health
personnel, and (2) where the exigencies of service require that health personnel work for six days or forty-
eight hours then such health personnel shall be entitled to an additional compensation of at least thirty
percent of their regular wage for work on the sixth day. There is nothing in the law that supports then
Secretary of Labor and petitioners assertion. The Secretary of Labor exceeded his authority by including a
two days off with pay in contravention of the clear mandate of the statute. Administrative interpretation of the
law is at best merely advisory, and the Court will not hesitate to strike down an administrative interpretation
that deviates from the provision of the statute.


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91.
Simedarby vs. NLRC
289 SCRA 86 [1998]

FACTS: Prior to the present controversy, the factory employees of Sime Darby Pilipinas, Inc. enjoyed a 30-
minute paid on call lunch break in their daily work schedule of 7:45 am to 3:45 pm. The petitioner company
passed a memorandum dated Aug 12 1992 advising all factory-based workers, except those in the
Warehouse and Quality Assurance Department, of a change in work schedule that discontinued the 30-
minute paid on call lunch break and set an uninterrupted 1 hour lunch break in lieu thereof.
Private respondents then filed a complaint for unfair labor practice, discrimination, and evasion of liability
with the Labor Arbiter who dismissed the complaint, ruling that the elimination of the 30-minute lunch break
was a valid exercise of management prerogative. Appeal was made to respondent NLRC who reversed the
decision of the Labor Arbiter, declaring that the new work schedule deprived the employees of the benefits
of a time-honored company practice and that such change also resulted in an unjust diminution of employee
benefits.
The OSG recommended the present petition to be granted, alleging that the new memorandum containing
the work schedule was not discriminatory not did it constitute unfair labor practice.
ISSUE:
Whether or not the memorandum dated Aug 14 1992 discontinuing the 30-minute paid on call lunch break
constituted unfair labor practice and diminution of benefits
HELD:
The Supreme Court sustained petitioner, holding that it is clearly a management prerogative to fix the work
schedules of company employees. Under the old schedule, the employees are compensated during their
30-minute lunch break, but in essence it is still working time since the workers could be called upon to work.
Whereas in the new schedule, the employees are given a longer break of 1 hour, though uncompensated, it
is uninterrupted as workers on their break are no longer on call. The change in schedule would improve
company productivity as well as enhance the comfort of workers who could enjoy an uninterrupted break.
The Supreme Court also reiterated the policy that while social justice and the protection of the working class
is ensured by the Constitution, the same fundamental law also protects the right of the management to
regulate all aspects of employment as well as to retain the prerogative of changing work schedules
according to the exigencies of the enterprise. So long as this prerogative is exercised in good faith, the
Court upholds such exercise.
92.

Phil. Airlines vs. NLRC
302 SCRA 582 [1999]


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FACTS: Private respondent (Dr. Herminio A. Fabros) was employed as flight surgeon at petitioner company
( PAL). He was assigned at (PAL Medical Clinic at Nichols) and was on duty from 4:00 in the afternoon
until 12:00 midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at
his residence, which was about five-minute drive away. A few minutes later, the clinic received an
emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a
heart attack. Upon receiving the call the nurse on duty, Mr. Merlino Eusebio, called private respondent at
home to inform him of the emergency. The patient arrived at the clinic at 7:50 in the evening and was
rushed by Mr. Eusebio to the hospital. When private respondent reached the clinic at around 7:51 in the
evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight
Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required private respondent to
explain why no disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he
immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at
the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without
waiting for him.
Finding private respondents explanation unacceptable, the management charged private respondent with
abandonment of post while on duty.
*Petitioner argues that being a full-time employee, private respondent is obliged to stay in the company
premises for not less than eight (8) hours. Hence, he may not leave the company premises during such
time, even to take his meals.
ISSUE:
WON being a full-time employee, private respondent is obliged to stay in the company premises for not less
than eight (8) hours.
RULING
NO. Employees are not prohibited from going out of the premises as long as they return to their post on
time.
Articles 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work.The normal hours of work of any employee shall not exceed eight
(8) hours a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or
in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office
hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where
the exigencies of the service require that such personnel work for six (6) days or forty-eight (48)
hours, in which case they shall be entitled to an additional compensation of at least thirty per cent
(30%) of their regular wage for work on the sixth day. For purposes of this Article, health

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personnel shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social
workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and
all other hospital or clinic personnel. (emphasis supplied)
Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may prescribe, it
shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off
for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of sex, not
less than one (1) hour time-off for regular meals, except in the following cases when a meal period
of not less than twenty (20) minutes may be given by the employer provided that such shorter meal
period is credited as compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be performed on
machineries, equipment or installations to avoid serious loss which the employer would otherwise
suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as
compensable working time.
Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred
that employees must take their meals within the company premises. Employees are not prohibited from
going out of the premises as long as they return to their posts on time. Private respondents act, therefore,
of going home to take his dinner does not constitute abandonment.
93.
Linton Commercial Co., Inc., vs. Hellera et al.,
G.R. No. 163147, October 10, 2007

FACTS: On 17 December 1997, Linton issued a memorandum addressed to its employees informing them
of the company's decision to suspend its operations from December 18, 1997 to January 5, 1998 due to the
currency crisis that affected its business operations. Linton submitted an establishment termination report to
the Department of Labor and Employment (DOLE) regarding the temporary closure of the establishment
covering the said period. The company's operation was to resume on January 6, 1998. On January 7,
1997, Linton issued another memorandum informing them that effective January 12, 1998, it would
implement a new compressed workweek of three (3) days on a rotation basis. In other words, each worker
would be working on a rotation basis for three working days only instead for six days a week. On the same
day, Linton submitted an establishment termination report concerning the rotation of its workers. Linton
proceeded with the implementation of the new policy without waiting for its approval by DOLE. Aggrieved,
sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of workdays.

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ISSUE:
WON there was an illegal reduction of work when Linton implemented a compressed workweek by reducing
from six to three the number of working days with the employees working on a rotation basis.
HELD:
The compressed workweek arrangement was unjustified and illegal.
The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in determining
when an employer can validly reduce the regular number of working days. The said bulletin states that a
reduction of the number of regular working days is valid where the arrangement is resorted to by the
employer to prevent serious losses due to causes beyond his control, such as when there is a substantial
slump in the demand for his goods or services or when there is lack of raw materials. Although the bulletin
stands more as a set of directory guidelines than a binding set of implementing rules, it has one main
consideration, consistent with the ruling in Philippine Graphic Arts Inc., in determining the validity of
reduction of working hours that the company was suffering from losses.

Certainly, management has the prerogative to come up with measures to ensure profitability or loss
minimization. However, such privilege is not absolute. Management prerogative must be exercised in good
faith and with due regard to the rights of labor. As previously stated, financial losses must be shown before
a company can validly opt to reduce the work hours of its employees. However, to date, no definite
guidelines have yet been set to determine whether the alleged losses are sufficient to justify the reduction of
work hours. If the standards set in determining the justifiability of financial losses under Article 283 (i.e.,
retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered, petitioners
would end up failing to meet the standards. On the one hand, Article 286 applies only when there is a bona
fide suspension of the employer's operation of a business or undertaking for a period not exceeding six (6)
months.
Records show that Linton continued its business operations during the effectivity of the compressed
workweek, which spanned more than the maximum period. On the other hand, for retrenchment to be
justified, any claim of actual or potential business losses must satisfy the following standards: (1) the losses
incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the
retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (4)
the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven
by sufficient and convincing evidence. Linton failed to comply with these standards.

94.
Bisig Manggagawa sa Tryco vs. NLRC
G.R. No. 151309, Oct. 15, 2008

FACTS: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office
is located in Caloocan City. Petitioners are its regular employees, occupying the positions of helper,

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shipment helper and factory workers, assigned to the Production Department. They are members of Bisig
Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees.
Tryco and the petitioners signed a Memorandum of Agreement (MOA), providing for a compressed
workweek schedule to be implemented in the company effective May 20, 1996. As provided, 8:00 a.m. to
6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay
shall be due and payable to the employee for work rendered during those hours. The MOA specifically
stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12
p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the
regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or
required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay.
On a letter dated March 26, 1997, the Bureau of Animal Industry of the Department of Agriculture reminded
Tryco that its production should be conducted in San Rafael, Bulacan, not in Caloocan City.
Accordingly, Tryco issued a Memorandum dated April 7, 1997 which directed petitioner Aya-ay to report to
the companys plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated the order on
April 18, 1997. Subsequently, through a Memorandum dated May 9, 1997, Tryco also directed the other
petitioners Egera, Lario and Barte to report to the companys plant site in Bulacan.
BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor
practice. In protest, BMT declared a strike on May 26, 1997.
In August 1997, petitioners filed their separate complaints for illegal dismissal, underpayment of wages,
nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its
President, Wilfredo C. Rivera. Petitioners alleged that the company acted in bad faith during the CBA
negotiations because it sent representatives without authority to bind the company, and this was the reason
why the negotiations failed. Also, the management transferred petitioners from Caloocan to San Rafael,
Bulacan to paralyze the union. They prayed for the company to pay them their salaries from May 26 to 31,
1997, service incentive leave, and overtime pay, and to implement Wage Order No. 4.
ISSUE:
Whether or not the company committed Unfair Labor Practices
HELD:
NO.
Petitioners mainly contend that the transfer orders amount to a constructive dismissal. They maintain that
the letter of the Bureau of Animal Industry is not credible because it is not authenticated; it is only a ploy,
solicited by respondents to give them an excuse to effect a massive transfer of employees. There is not
proof to support this claim. Absent any evidence, the allegation is not only highly irresponsible but is grossly
unfair to the government agency concerned.
Also, Trycos decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it
was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right
to control and manage its enterprise effectively.

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When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not
involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not
complain that it amounts to a constructive dismissal. In this case, the transfer orders do not entail a
demotion in rank or diminution of salaries, benefits and other privileges of the petitioners. Petitioners,
therefore, anchor their objection solely on the ground that it would cause them great inconvenience since
they are all residents of Metro Manila and they would incur additional expenses to travel daily from Manila to
Bulacan. Such contention is untenable because the Court has previously declared that mere incidental
inconvenience is not sufficient to warrant a claim of constructive dismissal. The distance from Caloocan to
San Rafael, Bulacan is not considerably great so as to compel petitioners to seek living accommodations in
the area and prevent them from commuting to Metro Manila daily to be with their families.
Finally, MOA is enforceable and binding against the petitioners. Where it is shown that the person making
the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.
In addition, D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the
employees will derive from the adoption of a compressed workweek scheme. Moreover, the adoption of a
compressed workweek scheme in the company will help temper any inconvenience that will be caused the
petitioners by their transfer to a farther workplace. Notably, the MOA complied with the following conditions
set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a
compressed workweek scheme
Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange
of a five-day workweek, there is no room for interpretation and its terms should be implemented as they are
written.


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Minimum
Labor
Standards
Benefit


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95.
Union of Filipro Employees vs. Vicar
205 SCRA 203 [1992]

FACTS: On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the NLRC a
petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly
paid employees for holiday pay.
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration
with respondent Vivar as the voluntary arbitrator. Vivar rendered a decision directing Filipro to pay its
monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and
limitations specified in Article 82 and such other legal restrictions as are provided for in the Code.
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion
of salesmen, sales representatives, truck drivers, merchandisers and medical representatives (hereinafter
referred to as sales personnel) from the award of the holiday pay, and (3) deduction from the holiday pay
award of overpayment for overtime, night differential, vacation and sick leave benefits due to the use of 251
divisor.
Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor
Code, that their sales personnel are not field personnel and are therefore entitled to holiday pay, and that
the use of 251 as divisor is an established employee benefit which cannot be diminished.
Respondent Vivar issued an order declaring that:
1. the effectivity of the holiday pay award shall retroact to November 1, 1974, the date of
effectivity of the Labor Code
2. the company's sales personnel are field personnel and, as such, are not entitled to holiday
pay
3. with the grant of 10 days' holiday pay, the divisor should be changed from 251 to 261 and
ordered the reimbursement of overpayment for overtime, night differential, vacation and sick leave
pay due to the use of 251 days as divisor
Both parties filed motions for partial reconsideration but Vivar forwarded the case to the NLRC which issued
a resolution remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to
review decisions in voluntary arbitration. However, Vivar refused to take cognizance of the case reasoning
that he had resigned from service.
ISSUE:
Whether or not Nestle's sales personnel are entitled to holiday pay
RULING:
The Court ruled that the company's sales personnel are not entitled to holiday pay.

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Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-
agritultural employees who regularly perform their duties away from the principal place of business or
branch office of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty."
The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot
be determined with reasonable certainty."
The law requires that the actual hours of work in the field be reasonably ascertained. The company has no
way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m.
prior to field work and come back at 4:30 p.m, really spend the hours in between in actual field work.
As disposed by the respondent arbitrator, the period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises
their hours of work in the field, the extent or scope and result of which are subject to their individual capacity
and industry and which "cannot be determined with reasonable certainty." This is the reason why effective
supervision over field work of salesmen and medical representatives, truck drivers and merchandisers is
practically a physical impossibility. Consequently, they are excluded from the ten holidays with pay award.
Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable
certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides:
Rule IV Holidays with Pay
Sec. 1. Coverage This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the
employer . . .
Contrary to the contention of the petitioner that the rule added another element not found in the law, the
Court finds that the aforementioned rule did not add another element to the Labor Code definition of field
personnel. The clause "whose time and performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined
with reasonable certainty." Hence, in deciding whether or not an employee's actual working hours in the field
can be determined with reasonable certainty, query must be made as to whether or not such employee's
time and performance is constantly supervised by the employer.
96.
National Sugar Refinery Corp., vs. NLRC
220 SCRA 452 [1993]

FACTS: Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully
owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and
Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50.

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Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery,
namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor,
Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior
Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor,
General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment
and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse,
Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day
Maintenance Supervisor and Motorpool Supervisor.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-
and-file to department heads which was designed to rationalized the duties and functions of all positions,
reestablish levels of responsibility, and recognize both wage and operational structures. Jobs were ranked
according to effort, responsibility, training and working conditions and relative worth of the job. As a result,
all positions were re-evaluated, and all employees including the members of respondent union were granted
salary adjustments and increases in benefits commensurate to their actual duties and functions.
The Courts glean from the records that for about ten years prior to the JE Program, the members of
respondent union were treated in the same manner as rank-and file employees. As such, they used to be
paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor
Code as amended. On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which
was organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions,
as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar
Refinery. Two years after the implementation of the JE Program, specifically on June 20, 1990, the
members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of
overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.
ISSUE:
Whether or not the members of respondent union are entitled to overtime, rest day and holiday pay.
RULING:
The members of the union are not entitled to overtime, rest and holiday pay since they fall within the
classification of managerial employees which makes them a part of the exempted employees.
It must of necessity be ascertained first whether or not the union members, as supervisory employees, are
to be considered as officers or members of the managerial staff who are exempt from the coverage of
Article 82 of the Labor Code.
It is not disputed that the members of respondent union are supervisory employees, as defined employees,
as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads: 'Managerial
employee' is one who is vested with powers or prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory
employees are those who, in the interest of the employer effectively recommend such managerial actions if
the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent
judgment. All employees not falling within any of those above definitions are considered rank-and-file
employees of this Book."

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Article 82 of the Labor Code states: The provisions of this title shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him for support,
domestic helpers, persons in the personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in Appropriate regulations.
As used herein, 'managerial employees' refer to those whose primary duty consists of the management of
the establishment in which they are employed or of a department or subdivision thereof, and to other officers
or members of the managerial staff.
'Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they
qualify for exemption under the condition set forth herein:
(b) Managerial employees, if they meet all of the following conditions, namely:
(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof:
(2) They customarily and regularly direct the work of two or more employees therein:
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions
and recommendations as to the hiring and firing and as to the promotion or any other change of
status of other employees are given particular weight.
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to management
policies of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision thereof; or
(ii) execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or
(iii) execute under general supervision special assignments and tasks;
(4) Who do not devote more 20 percent of their hours worked in a work-week to activities
which are not directly and closely related to the performance of the work described in paragraphs
(1), (2), and above."
They are clearly officers or members of the managerial staff because they meet all the conditions prescribed
by law and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212
(m) should be made to apply only to the provisions on Labor Relations, while the right of said employees to
the questioned benefits should be considered in the light of the meaning of a managerial employee and of

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the officers or members of the managerial staff, as contemplated under Article 82 of the Code and Section
2, Rule I Book III of the implementing rules.
In other words, for purposes of forming and joining unions, certification elections, collective bargaining, and
so forth, the union members are supervisory employees. In terms of working conditions and rest periods and
entitlement to the questioned benefits, however, they are officers or members of the managerial staff, hence
they are not entitled thereto.
The union members will readily show that these supervisory employees are under the direct supervision of
their respective department superintendents and that generally they assist the latter in planning, organizing,
staffing, directing, controlling communicating and in making decisions in attaining the company's set goals
and objectives. These supervisory employees are likewise responsible for the effective and efficient
operation of their respective departments.
More specifically, their duties and functions include, among others, the following operations whereby the
employee:
1) assists the department superintendent in the following:
a) planning of systems and procedures relative to department activities;
b) organizing and scheduling of work activities of the department, which
includes employee shifting scheduled and manning complement;
c) decision making by providing relevant information data and other inputs;
d) attaining the company's set goals and objectives by giving his full support;
e) selecting the appropriate man to handle the job in the department; and
f) preparing annual departmental budget;
2) observes, follows and implements company policies at all times and recommends disciplinary
action on erring subordinates;
3) trains and guides subordinates on how to assume responsibilities and become more productive;
4) conducts semi-annual performance evaluation of his subordinates and recommends necessary
action for their development/advancement;
5) represents the superintendent or the department when appointed and authorized by the former;
6) coordinates and communicates with other inter and intra department supervisors when
necessary;
7) recommends disciplinary actions/promotions;
8) recommends measures to improve work methods, equipment performance, quality of service
and working conditions;

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9) sees to it that safety rules and regulations and procedure and are implemented and followed by
all NASUREFCO employees, recommends revisions or modifications to said rules when deemed
necessary, and initiates and prepares reports for any observed abnormality within the refinery;
10) supervises the activities of all personnel under him and goes to it that instructions to
subordinates are properly implemented; and
11) performs other related tasks as may be assigned by his immediate superior.
From the foregoing, it is apparent that the members of respondent union discharge duties and
responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined in
Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.:
(1) their primary duty consists of the performance of work directly related to management policies
of their employer;
(2) they customarily and regularly exercise discretion and independent judgment;
(3) they regularly and directly assist the managerial employee whose primary duty consist of the
management of a department of the establishment in which they are employed
(4) they execute, under general supervision, work along specialized or technical lines requiring
special training, experience, or knowledge;
(5) they execute, under general supervision, special assignments and tasks; and
(6) they do not devote more than 20% of their hours worked in a work-week to activities which are
not directly and clearly related to the performance of their work hereinbefore described.
Under the facts obtaining in this case, The Court is constrained to agree with petitioner that the union
members should be considered as officers and members of the managerial staff and are, therefore, exempt
from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday.

97.
Salazar vs. NLRC,
256 SCRA 273 [1996]

FACTS: 17 April 1990. HL Carlos Construction Inc (HLCC), private respondent, employed the petitioner,
Engr. Leoncio V. Salazar (Engr. S), as construction/project engineer for the construction of a building in QC
at a monthly salary of P4,500.
16 April 1991. Engr. S received a memorandum informing him of the termination of his services effective on
30 April 1991.

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13 September 1991. Engr. S filed a complaint against HLCC for illegal dismissal, unfair labor practice, illegal
deduction, non-payment of wages, overtime rendered, service incentive leave pay, commission, allowances,
profit-sharing and separation pay with the NLRC.
The Labor Arbiter ruled that Engr. S was a managerial employee and therefore exempt from payment of
benefits such as overtime pay, service incentive leave pay and premium pay for holidays and rest days.
Engr. S was also not entitled to separation pay. He was hired as a project employee and his services were
terminated due to the completion of the project.
ISSUES:
1) Whether or not petitioner is entitled to overtime pay, premium pay for services rendered on rest days and
holidays and service incentive leave pay, pursuant to Articles 87, 93, 94 and 95 of the Labor Code;
2) Whether or not petitioner is a field personnel since he performs his duties in the project site or away from
the principal place of business of his employer.
3) Whether or not petitioner is entitled to separation pay.
RULING:
(1) On the first issue, the NLRC concurred with the Labor Arbiters ruling that petitioner was a managerial
employee and, therefore, exempt from payment of overtime pay, premium pay for holidays and rest days
and service incentive leave pay under the law. The NLRC declared that:
Book III on conditions of employment exempts managerial employees from its coverage on the grant of
certain economic benefits, which are the ones the complainant-appellant was demanding from respondent.
It is an undisputed fact that appellant was a managerial employee and such, he was not entitled to the
economic benefits he sought to recover.
(2) Petitioner claims that since he performs his duties in the project site or away from the principal place of
business of his employer (herein private respondent), he falls under the category of field personnel.
However, petitioner accentuates that his case constitutes the exception to the exception because his actual
working hours can be determined as evidenced by thedisbursement vouchers containing payments of
petitioners salaries and overtime services. Strangely, petitioner is of the view that field personnel may
include managerial employees.
We are constrained to disagree with petitioner.
In his original complaint, petitioner stated that the nature of his work is supervisory-engineering. Similarly,
in his own petition and in other pleadings submitted to this Court, petitioner confirmed that his job was to
supervise the laborers in the construction project. Hence, although petitioner cannot strictly be classified as
a managerial employee under Art. 82 of the Labor Code, and Sec. 2(b), Rule 1, Book III of the Omnibus
Rules Implementing the Labor Code, nonetheless he is still not entitled to payment of the aforestated
benefits because he falls squarely under another exempt category - officers or members of a managerial
staff as defined under Sec. 2(c) of the abovementioned implementing rules:

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Sec. 2. Exemption. - The provisions of this Rule shall not apply to the following persons if the
qualify for exemption under the condition set forth herein:
xxx xxx xxx
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies of
their employer;
(3) [i] Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision
thereof; or
[ii] execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or [iii] execute under general supervision special assignments
and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a work-week to activities
which are not directly and closely related to the performance of the work described in paragraphs
(1), (2), and (3) above.
(3) On the last issue, we rule that petitioner is a project employee and, therefore, not entitled to separation
pay.
The applicable provision is Article 280 of the Labor Code which defines the term project employee, thus:
ART. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an 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. (Italics ours.)
In the case at bench, it was duly established that private respondent hired petitioner as project or
construction engineer specifically for its Monte de Piedad building project. In his own words, petitioner
declared:
2. That complainant-petitioner herein, by virtue of an oral agreement entered into with private
respondent herein through its proprietor, president and general manager, Engr. Honorio L. Carlos,
on April 17, 1990, began to work as a duly licensed Civil Engineer as construction or project
engineer of its contracted project, the Monte de Piedad Bank Building, at Cubao, Quezon City, on
the following terms and conditions, to wit:

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Accordingly, as project employee, petitioners services are deemed co-terminous with the project, that is,
petitioners services may be terminated as soon as the project for which he was hired is completed.
There can be no dispute that petitioners dismissal was due to the completion of the construction of the
Monte de Piedad building. Petitioner himself stated that it took him and his assisting laborers until 15 May
1991 to complete the finishing touches on the said building.28
Petitioner, thus, has no legal right to demand separation pay. Policy Instruction No. 20 entitled Stabilizing
Employer-Employee Relations in the Construction Industry explicitly mandates that:
Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the
number of projects in which they have been employed by a particular construction company.
Moreover, the company is not required to obtain a clearance from the Secretary of Labor in
connection with such termination. What is required of the company is a report to the nearest Public
Employment Office for statistical purposes.
98.
Labor Congress of the Phils., vs. NLRC
G.R. No. 1239381, May 21, 1998

FACTS: The 99 petitioners in this proceeding were rank-and-file employees of respondent Empire Food
Products, which hired them on various dates. Petitioners filed against private respondents a complaint for
payment of money claims and for violation of labor standards laws
ISSUE:
Whether or not petitioners are entitled back wages.
RULING:
Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor
Code, as amended by R.A. No. 6715. Nevertheless, the records disclose that taking into account the
number of employees involved, the length of time that has lapsed since their dismissal, and the perceptible
resentment and enmity between petitioners and private respondents which necessarily strained their
relationship, reinstatement would be impractical and hardly promotive of the best interests of the parties. In
lieu of reinstatement then, separation pay at the rate of one month for every year of service, with a fraction
of at least six (6) months of service considered as one (1) year, is in order.
That being said, the amount of backwages to which each petitioner is entitled, however, cannot be fully
settled at this time. Petitioners, as piece-rate workers, have been paid by the piece. There is need to
determine the varying degrees of production and days worked by each worker.


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99.
Mercidar Fishing Corp., vs. NLRC
G.R. No. 112574, October 8, 1998

FACTS: This case originated from a complaint filed on September 20, 1990 by private respondent Fermin
Agao, Jr. against petitioner for illegal dismissal, violatiion of P.D. No. 851, and non-payment of five days
service incentive leave for 1990. Private respondent had been employed as a "bodegero" or ship's
quartermaster on February 12, 1998. He complained that he had been constructively dismissed by the
petitioner when the latter refused him assignments aboard its after he had reported to work on May 28,
1990.
Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month
from April 28, 1990 but that when he reported to work at the enf of such period with a health clearance, he
was told to come back another time as he could not be reinstated immediately. Thereafter, petitioner
refused to give him work. For this reason, private respondent asked for a certificate of employment from
petitioner on September 6, 1990. However, when he came back for the certificateon September 10,
petitioner refused to issue the certificate unless he submitted his resignation. Since private respondent
refused to submit such letter unless he was given separation pay, petitioner prevented him from entering the
premises.
Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work.
ISSUE:
Whether or not the fishing crew members are considered field personnel as classified in Art. 82 of the Labor
Code.
RULING:
Art. 82 of the Labor Code provides:
"The provisions of this title[Working Conditions and Rest Periods] shall apply to all eployees in all
establishments and undertakings whether to profit or not, but not to govenrment employees, field
personnel, members of the family of the employer who are dependent on him for support, domestic
helpers, persons in personal service of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate regulations."
"Field personnel" Shall refer to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch ofiice of the employer and whose actual hours of workin the field
cannot be determined with reasonable certatinty.
In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by
petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work
away from petitioners businessoffices, the fact remains that throughout the duration of their work they are
under the effective control and supervision of petitioner through the vessel's patron or master.

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100.
San Miguel Corp., vs. CA
G.R. No. 146775, Jan. 30, 2002

Facts: Upon visitation and conduction routine inspection by the DOLE, it was discovered that there was
underpayment by SMC of regular Muslin holiday pay. SMC, however, contested the findings. DOLE then
conducted summary hearings. However, SMC failed to submit proof that it was paying regular Muslim
holiday.
However, Alan M. Macaraya, Director of DOLE, issued a compliance order directing SM to consider Muslim
holidays as regular holidays and to pay both its Muslim and Non-muslim employees holiday within 30 days
from receipt thereof, as provided for in PD 1083. Upon motion by SMC, it was still dismissed. SMC, thus
went to this court,

Issue:WON court erred in ordering SMC to grant Muslim holiday pay to its employees. Further, WON the
Regional Director has the power to issue such compliance order.

Ruling:The court did not err. It is to be noted that the 1999 Handbook on Workers Statutory Benefits,
categorically states:Considering that all private corporations, offices, agencies, and entities or
establishments operating within the designated Muslim provinces and cities are required to observe Muslim
holidays, both Muslim and Christians working within the Muslim areas may not report for work on the days
designated by law as Muslim holidays
RD Macaraya acted as the duly authorized representative of SOLE and it was within his power to issue
compliance order.
DISMISSED.

101.
.
TAN VS. LAGRAMA
G.R. No. 151228; August 15, 2002

Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of
Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter, making ad
billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for
more than 10 years, from September 1, 1988 to October 17, 1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na
naman ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When Lagrama
asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa.
Guikan karon, wala nay drawing. Gawas." ("Don't say anything further. I don't want you to draw anymore.
From now on, no more drawing. Get out.")
Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing
area and that, even if the charge was true, it was a minor infraction to warrant his dismissal. However,
everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but to leave the
premises. Lagrama filed a complaint with the National Labor Relations Commission (NLRC) in Butuan City.
He alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay,
service incentive leave pay, salary differential, and damages.

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As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to file
their position papers. It declared that the dismissal illegal and order the payment of monetary benefits. Tan
appealed to the NLRC and reversing the decision of the Labor Arbiter.

Issue: Whether or not the respondent was illegally dismissed and thus entitled to payment of benefits
provided by law.

Ruling: The respondent was illegally dismissed and entitled to benefits. The Implementing Rules of the
Labor Code provide that no worker shall be dismissed except for a just or authorized cause provided by law
and after due process. This provision has two aspects: (1) the legality of the act of dismissal, that is,
dismissal under the grounds provided for under Article 282 of the Labor Code and (2) the legality in the
manner of dismissal. The illegality of the act of dismissal constitutes discharge without just cause, while
illegality in the manner of dismissal is dismissal without due process.
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as the
latter tried to explain his side, petitioner made it plain that Lagrama was dismissed. Urinating in a work place
other than the one designated for the purpose by the employer constitutes violation of reasonable
regulations intended to promote a healthy environment under Art. 282(1) of the Labor Code for purposes of
terminating employment, but the same must be shown by evidence. Here there is no evidence that Lagrama
did urinate in a place other than a rest room in the premises of his work.
Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter found that
the relationship between the employer and employee has been so strained that the latter's reinstatement
would no longer serve any purpose. The parties do not dispute this finding. Hence, the grant of separation
pay in lieu of reinstatement is appropriate.
This is of course in addition to the payment of backwages which, in accordance with the ruling in
Bustamante v. NLRC should be computed from the time of Lagrama's dismissal up to the time of the finality
of this decision, without any deduction or qualification.
The Bureau of Working Conditions 32 classifies workers paid by results into two groups, namely; (1) those
whose time and performance is supervised by the employer, and (2) those whose time and performance is
unsupervised by the employer. The first involves an element of control and supervision over the manner the
work is to be performed, while the second does not. If a piece worker is supervised, there is an employer-
employee relationship, as in this case. However, such an employee is not entitled to service incentive leave
pay since, as pointed out in Makati Haberdashery v. NLRC 33 and Mark Roche International v. NLRC, 34 he
is paid a fixed amount for work done, regardless of the time he spent in accomplishing such work.

102.

LAMBO VS. NLRC
317 SCRA 420

Facts: Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents
J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked
from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100
employees of private respondents, petitioners were paid on a piece-work basis, according to the style of
suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily
pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and
sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave
pay, separation pay, 13th month pay, and attorneys fees. After hearing, Labor Arbiter found private
respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners claims. On appeal,

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the NLRC reversed the decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of
work and accordingly dismissed their claims except that for 13th month pay.

Petitioners alleged 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 the petitioners are entitled to the minimum benefits provided by law.

Ruling: The petitioners are entitled to the minimum benefits provided by law. There is no dispute that
petitioners were employees of private respondents although they were paid not on the basis of time spent
on the job but according to the quantity and the quality of work produced by them. There are two categories
of employees paid by results: (1) those whose time and performance are supervised by the employer.
(Here, there is an element of control and supervision over the manner as to how the work is to be
performed. A piece-rate worker belongs to this category especially if he performs his work in the company
premises.); and (2) those whose time and performance are unsupervised. (Here, the 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. Petitioners
belong to the first category, i.e., supervised employees.

In the case at bar, 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. Nor does the fact that petitioners are not covered by the SSS affect the employer-

As petitioners were illegally dismissed, they are entitled to reinstatement with back wages. The Arbiter
applied the rule in the Mercury Drug case, according to which the recovery of back wages should be limited
to three years without qualifications or deductions. Any award in excess of three years is null and void as to
the excess. The Labor Arbiter correctly ordered private respondents to give separation pay.

Considerable time had lapsed since petitioners dismissal, so that reinstatement would now be impractical
and hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be awarded to
petitioners at the rate of one month salary for every year of service, with a fraction of at least six (6) months
of service being considered as one (1) year. The awards for overtime pay, holiday pay and 13th month pay
are in accordance with the finding that petitioners are regular employees, although paid on a piece-rate
basis.

103.

R&E Transport vs. Latag,
G.R. No. 155214, Feb. 13, 2004


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FACTS: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. However, he was
transferred to the petitioner R & E Transport, Inc. upon cessation of La Mallorcas business operations. In
January 1995, he got sick and was forced to apply for partial disability with the SSS, which was then
granted. Upon recovery, he reported back to work in September 1998 but was no longer allowed on account
of his old age. Latag asked the petitioner, through its administrative officer for his retirement pay pursuant to
Republic Act 7641 but he was ignored. Latag filed a case for payment of his retirement pay before the
NLRC.
Upon Pedro Latags death on April 30, 1999, he was substituted by his wife, the respondent Avelina Latag.
Labor Arbiter rendered a decision in favour of Latag. Petitioner filed the quitclaim and motion to dismiss
where the Labor Arbiter issued an order for Writ of Execution. Petitioners interposed an appeal before
NLRC. Appeal was dismissed for failure to post a cash or surety bond, as mandated by law.
ISSUE:
Whether or not Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.
RULING:
The Supreme Court ruled that the respondent is entitled to retirement benefits despite of the waiver of
quitclaims.
As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that
the document was invalid and could not bar her from demanding the benefits legally due her husband. This
is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers'
rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of
the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. In the absence of a
retirement plan or agreement providing for retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is
hereby declared the compulsory retirement age, who has served at least five (5) years in said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15)
days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of
service incentive leaves.
The rules implementing the New Retirement Law similarly provide the above-mentioned formula for
computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not
entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed
on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the
"boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their
benefits should be the average daily income. In this case, the CA found that Pedro was earning an average
of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14

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years of service equals P105,000. Hence, it is clear that the late Pedro M. Latag is entitled to retirement
benefits.
104.
Asian Transmission vs. CA
425 SCRA 478 [2004]

FACTS: The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B.
Trajano, issued an Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia, that employees
are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which[,] apart from being Good
Friday [and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal holiday].
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and
Araw ng Kagitingan.
Despite the explanatory bulletin, petitioner, Asian Transmission Corporation, opted to pay its daily paid
employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor
Union (BATLU) protested.
The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor Union (BATLU), and held that
Article 94 of the Labor Code provides for holiday pay for every regular holiday, the computation of which is
determined by a legal formula which is not changed by the fact that there are two holidays falling on one
day, like on April 9, 1998 when it was Araw ng Kagitingan and at the same time was Maundy Thursday.
In the assailed decision, the Court of Appeals upheld the findings of the Voluntary Arbitrator.
ISSUE:
Whether or not daily-paid employees are entitled to be paid for two regular holidays which fall on the same
day.
RULING:
The Court dismissed the petition and ruled that petitioners should pay its employees 200% and not just
100% of their regular daily wages for the unworked April 9, 1998 which covers two regular holidays, namely,
Araw ng Kagitingan and Maundy Thursday.
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford
protection to labor. Its purpose is not merely "to prevent diminution of the monthly income of the workers on
account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he
should earn, that is, his holiday pay."
The provision is mandatory, regardless of whether an employee is paid on a monthly or daily basis. Unlike a
bonus, which is a management prerogative, holiday pay is a statutory benefit demandable under the law.


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105.
Autobus Transport System vs. Bautista
G.R. No. 156364, May 16, 2005

FACTS: Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc.,
since May 1995, as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-Tuguegarao
via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of
the total gross income per travel, on a twice a month basis.
On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he
was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped
at a sharp curve without giving any warning. Respondent averred that the accident happened because he
was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost
twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50,
representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent's
pleas for reconsideration, the same was ignored by management. After a month, management sent him a
letter of termination. Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with
Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus.
On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor
Arbiter decided that the complaint be dismissed where the respondent must pay to the complainant
ISSUE:
Whether or not respondent is entitled to service incentive leave.
RULING:
The respondent is entitled to service incentive leave.
The disposition of the issue revolves around the proper interpretation of Article 95 of the Labor Code vis--
vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which
provides: RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has rendered at least one
year of service shall be entitled to a yearly service incentive leave of five days with pay.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall apply to all
employees except: (d) Field personnel and other employees whose performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission basis, or those
who are paid in a fixed amount for performing work irrespective of the time consumed in the performance
thereof;
A careful examination of said provisions of law will result in the conclusion that the grant of service incentive
leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to

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those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees classified as "field personnel."
The phrase "other employees whose performance is unsupervised by the employer" must not be
understood as a separate classification of employees to which service incentive leave shall not be granted.
Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor
Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract basis, purely
commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that they follow.
Hence, employees engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave, unless, they fall under the classification of
field personnel.
What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to
respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is
further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-
Clerical Commercial Employees Association 10 which states that:
As a general rule, field personnel are those whose performance of their job/service is not supervised by the
employer or his representative, the workplace being away from the principal office and whose hours and
days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for
rendering specific service or performing specific work. If required to be at specific places at specific times,
employees including drivers cannot be said to be field personnel despite the fact that they are performing
work away from the principal office of the employee.
At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with
the location where the employee regularly performs his duties but also with the fact that the employee's
performance is unsupervised by the employer. As discussed above, field personnel are those who regularly
perform their duties away from the principal place of business of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an
employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether
or not the employee's time and performance are constantly supervised by the employer. Respondent is not
a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual
trade of petitioner's business. Accordingly, respondent is entitled to the grant of service incentive leave.
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments,
subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides
that "every employee who has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay."

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Service incentive leave is a right which accrues to every employee who has served "within 12 months,
whether continuous or broken reckoned from the date the employee started working, including authorized
absences and paid regular holidays unless the working days in the establishment as a matter of practice or
policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall
be considered as one year." It is also "commutable to its money equivalent if not used or exhausted at the
end of the year." In other words, an employee who has served for one year is entitled to it. He may use it as
leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general
recommends, is to unduly restrict such right.
106.
San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005

FACTS: On April 17, 2000, respondent was employed by petitioner as key account specialist. On March 9,
2001, petitioner informed respondent that her probationary employment will be severed at the close of the
business hours of March 12, 2001. On March 13, 2001, respondent was refused entry to petitioners
premises. On June 24, 2002, respondent filed a complaint against petitioner for illegal dismissal and
underpayment/non-payment of monetary benefits.

ISSUE:
Whether or not respondent is a regular employee of petitioner.

HELD:
Affirmative:
In termination cases, like the present controversy, the burden of proving the circumstances that would justify
the employees dismissal rests with the employer. The best proof that petitioner should have presented to
prove the probationary status of respondent is her employment contract. None, having been presented, the
continuous employment of respondent as an account specialist for almost 11 months, from April 17, 2000 to
March 12, 2001, means that she was a regular employee and not a temporary reliever or a probationary
employee.
And while it is true that by way of exception, the period of probationary employment may exceed six months
when the parties so agree, such as when the same is established by company policy, or when it is required
by the nature of the work, none of these exceptional circumstance were proven in the present case. Hence,
respondent whose employment exceeded six months is undoubtedly a regular employee of petitioner.
Moreover, even assuming that the employment of respondent from April 7, 2000 to September 3, 2000, is
only temporary, and that the reckoning period of her probationary employment is September 4, 2000, she
should still be declared a regular employee because by the time she was dismissed on March 12, 2001, her
alleged probationary employment already exceeded six months, i.e., six months and eight days to be
precise. A worker was found to be a regular employee notwithstanding the presentation by the employer
of a Payroll Authority indicating that said employee was hired on probation, since it was shown that he was
terminated four days after the 6th month of his purported probationary employment.
Neither will petitioners belated claim that respondent became a probationary employee starting October 1,
2000 work against respondent. As earlier stated, the payroll authorities indicating that respondents
probationary status became effective as of such date are of scant evidentiary value since it does not show
the conformity of respondent. At any rate, in the interpretation of employment contracts, whether oral or
written, all doubts must be resolved in favor of labor.
Hence, the contract of employment in the instant case, which appears to be an oral agreement since no
written form was presented by petitioner, should be construed as one vesting respondent with a regular
status and security of tenure.

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Regarding the argument of redundancy, Redundancy, for purposes of the Labor Code, exists where the
services of an employee are in excess of what is reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of
business, or dropping of a particular product line or service activity previously manufactured or undertaken
by the enterprise.
The determination that the employees services are no longer necessary or sustainable and, therefore,
properly terminable is an exercise of business judgment of the employer. The wisdom or soundness of this
judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is no
violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words, it is
not enough for a company to merely declare that it has become overmanned. It must produce adequate
proof of such redundancy to justify the dismissal of the affected employees.
The following evidence may be proffered to substantiate redundancy: the new staffing pattern, feasibility
studies/proposal, on the viability of the newly created positions, job description and the approval by the
management of the restructuring.
In the case at bar, petitioner presented an affidavit of its Sales Manager and a memorandum of the
company both to the effect that there is a need to redeploy its regular employees and terminate the
employment of temporary employees, in view of an excess in manpower. These documents, however, do
not satisfy the requirement of substantial evidence that a reasonable mind might accept as adequate to
support a conclusion.
Moreover, the lingering doubt as to the existence of redundancy or of petitioners so called restructuring,
realignment or reorganization which resulted in the dismissal of not only probationary employees but also of
regular employees, is highlighted by the non-presentation by petitioner of the required notice to the DOLE
and to the separated employees. If there was indeed a valid redundancy effected by petitioner, these
notices and the proof of payment of separation pay to the dismissed regular employees should have been
offered to establish that there was excess manpower in petitioners GMA-KAG caused by a decline in the
sales volume.
In balancing the interest between labor and capital, the prudent recourse in termination cases is to
safeguard the prized security of tenure of employees and to require employers to present the best evidence
obtainable, especially so because in most cases, the documents or proof needed to resolve the validity of
the termination, are in the possession of employers. A contrary ruling would encourage employers to
prevent the regularization of an employee by simply invoking a feigned or unsubstantiated redundancy
program.
Granting that petitioner was able to substantiate the validity of its reorganization or restructuring, it
nevertheless, failed to effect a fair and reasonable criterion in dismissing respondent. The criteria in
implementing a redundancy are: (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c)
seniority.
It is evident from the foregoing that the criterion allegedly used by petitioner in reorganizing its sales unit
was the employment status of the employee. However, in the implementation thereof, petitioner
erroneously classified respondent as a probationary employee, resulting in the dismissal of the latter. Verily,
the absence of criteria and the erroneous implementation of the criterion selected, both render invalid the
redundancy because both have the ultimate effect of illegally dismissing an employee.
.Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also to
payment of full backwages, computed from the time her compensation was actually withheld from her on
March 13, 2001, up to her actual reinstatement. As a regular employee of petitioner from the date of her
employment on April 17, 2000, she is likewise entitled to other benefits, i.e., service incentive leave pay and
13th month pay computed from such date also up to her actual reinstatement.
Respondent is not, however, entitled to holiday pay because the records reveal that she is a monthly paid
regular employee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor Code,
employees who are uniformly paid by the month, irrespective of the number of working days therein, shall
be presumed to be paid for all the days in the month whether worked or not.

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Anent attorneys fees, in actions for recovery of wages or where an employee was forced to litigate and thus
incurred expenses to protect his rights and interests, a maximum of 10% of the total monetary award by way
of attorneys fees is justifiable under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its
Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. The award of attorneys fees is proper
and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the
wages. There need only be a showing that the lawful wages were not paid accordingly, as in the instant
controversy.

107.

Penaranda vs. Baganga Plywood Corp.
G.R. No. 159577, May 3, 2006

FACTS: Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of Baganga
Plywood Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler. In
May 2001, Pearanda filed a Complaint for illegal dismissal with money claims against BPC and its general
manager, Hudson Chua, before the NLRC.
After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers
and submit supporting documents.
Pearanda alleges that he was employed by respondent Banganga on March 15, 1999 with a monthly
salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December
19, 2000. he alleges that his services were terminated without the benefit of due process and valid grounds
in accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working during
holidays/rest days, night shift differentials and finally claimed for payment of damages and attorney's fees
having been forced to litigate the present complaint.
Respondent BPC is a domestic corporation duly organized and existing under Philippine laws and is
represented herein by its General Manager HUDSON CHUA, the individual respondent. Respondents allege
that complainant's separation from service was done pursuant to Art. 283 of the Labor Code. The
respondent BPC was on temporary closure due to repair and general maintenance and it applied for
clearance with the Department of Labor and Employment, Regional Office No. XI, to shut down and to
dismiss employees. And due to the insistence of herein complainant he was paid his separation benefits.
Consequently, when respondent BPC partially reopened in January 2001, Pearanda failed to reapply.
The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was premature
because he was still employed by BPC. Petitioners money claims for illegal dismissal was also weakened
by his quitclaim and admission during the clarificatory conference that he accepted separation benefits, sick
and vacation leave conversions and thirteenth month pay.

ISSUE:
Whether or not Pearanda is a regular, common employee entitled to monetary benefits under Art. 82 of the
Labor Code and is entitled to the payment of overtime pay and other monetary benefits.

RULING:
The petitioner is not entitled to overtime pay and other monetary benefits.
The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However,
petitioner was a member of the managerial staff, which also takes him out of the coverage of labor
standards. Like managerial employees, officers and member of the managerial staff are not entitled to the
provisions of law on labor standards.
The Implementing Rules of the Labor Code define members of a managerial staff as those with the following
duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies of
the employer;

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(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists
of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute
under general supervision work along specialized or technical lines requiring special training, experience, or
knowledge; or (iii) execute under general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which
are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3)
above."
The petitioners work involves:
1. To supply the required and continuous steam to all consuming units at minimum cost.
2. To supervise, check and monitor manpower workmanship as well as operation of boiler and
accessories.
3. To evaluate performance of machinery and manpower.
4. To follow-up supply of waste and other materials for fuel.
5. To train new employees for effective and safety white working.
6. Recommend parts and suppliers purchases. acEHSI
7. To recommend personnel actions such as: promotion, or disciplinary action.
8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness
limit.
9. Implement Chemical Dosing.
10. Perform other task as required by the superior from time to time." 34
The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the
managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff
under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the
operation of the machines and the performance of the workers in the engineering section. This work
necessarily required the use of discretion and independent judgment to ensure the proper functioning of the
steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff.
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was
the foreman responsible for the operation of the boiler. The term foreman implies that he was the
representative of management over the workers and the operation of the department. Petitioner's evidence
also showed that he was the supervisor of the steam plant. His classification as supervisors is further
evident from the manner his salary was paid. He belonged to the 10% of respondent's 354 employees who
were paid on a monthly basis; the others were paid only on a daily basis.

108.

Leyte IV Electric Cooperative Inc., vs LEYECO IV Employees Union ALU (2007)
G.R. 157775

Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and LeyecoIV Employees Union-ALU
(respondent) entered into a Collective Bargaining Agreement (CBA), covering petitioner rank-and-file
employees, for a period of five (5) years effective January 1, 1998. And on June 7, 2000, respondent,
through its Regional Vice-President, Vicente P.Casilan, sent a letter to petitioner demanding holiday pay for
all employees, as provided for in the CBA.
After exhausting the procedures of the grievance machinery, the parties agreed to submit the
issues of the interpretation and implementation of Section 2, Article VIII of the CBA on the payment of
holiday pay, for arbitration of the National Conciliation and Mediation Board (NCMB), Regional Office
No. VIII in TaclobanCity.
Petitioners Position Paper, insisted payment of the holiday pay in compliance with the CBA
provisions, stating that payment was presumed since the formula used in determining the daily rate of pay of

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the covered employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12
divided by 360 days, thus with said formula, the employees are already paid their regular and special days,
the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.
The LA rendered decision against the petitioner holding it liable for payment of holidays from 1998
to 2000 of P1,054,393.07 that it failed to show the compliance paying holiday being reflected in the payroll
in accordance to the CBA.
In 2001, petitioner filed for a recon but was denied by the VA in a resolution and received a
resolution. So the petitioner filed for a petition for Certiorari for ignoring the said computation for computing
the applicable daily rate of the rank and file employee which includes the 13 unwork regular holiday and
holding it liable for unpaid holiday just because it was not reflected in the payroll.
On CA it dismissed it due to the adoption of a wrong mode of appeal.

Issue: Is the Petitioner Leyte IV Electric Cooperative Inc. liable for the underpayment of holiday pay?

Ruling: No , the petitioner is not liable.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the
CBA provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the
admission of respondent in its Position Paper that the employees were paid all the days of the month even if
not worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of
employees salaries gains significance.
In Union of Filipro Employees v. Vivar, Jr. the Court held that [t]he divisor assumes an important
role in determining whether or not holiday pay is already included in the monthly paid employees salary and
in the computation of his daily rate. This ruling was applied in Wellington Investment and Manufacturing
Corporation v. Trajano, Producers Bank of the Philippines v. National Labor Relations Commission
and Odango v. National Labor Relations Commission,

among others
.

In Odango v. National Labor Relations Commission, the Court ruled that the use of a divisor that
was less than 365 days cannot make the employer automatically liable for underpayment of holiday pay. In
said case, the employees were required to work only from Monday to Friday and half of Saturday. Thus, the
minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays
(or 52 half Saturdays). Any divisor below 287 days meant that the employees were deprived of their holiday
pay for some or all of the ten legal holidays. The 304-day divisor used by the employer was clearly above
the minimum of 287 days.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum
allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked
Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above the
minimum, indubitably, petitioner's employees are being given their holiday pay.
Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting
respondent's claim of non-payment of holiday pay, a double burden was imposed upon petitioner because
it was being made to pay twice for its employees' holiday pay when payment thereof had already been
included in the computation of their monthly salaries.

109.

BAHIA SHIPPINE SERVICES INC., VS CHUA
G.R. 162195

Facts: Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping
Services, Inc., as a restaurant waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a
Philippine Overseas Employment Administration (POEA) approved employment contract dated October 9,
1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997. On October 18, 1996, the
private respondent left Manila for Heathrow, England to board the said sea vessel where he will be assigned

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to work. On February 15, 1997, the private respondent reported for his working station one and one-half
hours late. On February 17, 1997, the master of the vessel served to the private respondent an official
warning-termination form pertaining to the said incident. On March 8, 1997, the vessel's master, ship captain
Thor Fleten conducted an inquisitorial hearing to investigate the said incident. Thereafter, on March 9, 1997,
private respondent was dismissed from the service on the strength of an unsigned and undated notice of
dismissal. An alleged record or minutes of the said investigation was attached to the said dismissal notice.
On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other
monetary claims. The private respondent alleged that he was paid only US$300.00 per month as monthly
salary for five (5) months instead of US$410.00 as stipulated in his employment contract. Thus, he claimed
that he was underpaid in the amount of US$110.00 per month for that same period of five (5) months. He
further asserted that his salaries were also deducted US$20.00 per month by the petitioner for alleged union
dues.

Issue: WON respondent is entitled to overtime pay which was incorporated in his award for the unexpired
portion of the contract despite the fact that he did not render overtime work.

Ruling: The inclusion of his "guaranteed overtime" pay into his monthly salary as basis in the computation
of his salaries for the entire unexpired period of his contract has no factual or legal basis and the same
should have been disallowed.
Petitioner contends that there is no factual or legal basis for the inclusion of said amount because, after
respondent's repatriation, he could not have rendered any overtime work. This time, petitioner's contention
is well-taken.
The Court had occasion to rule on a similar issue inStolt-Nielsen Marine Services (Phils.), Inc. v. National
Labor Relations Commission,where the NLRC was questioned for awarding to an illegally dismissed
overseas worker fixed overtime pay equivalent to the unexpired portion of the latter's contract. In resolving
the question, the Court, citingCagampan v. National Labor Relations Commission,held that although an
overseas employment contract may guarantee the right to overtime pay, entitlement to such benefit must
first be established, otherwise the same cannot be allowed.

110.

PNCC Skyway Traffic Management and Security Division Workers Organization
GR No. 171231, Feb. 17, 2010

FACTS: Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment
(DOLE). Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and
by virtue of the laws of the Philippines. On November 15, 2002, petitioner and respondent entered into a
Collective Bargaining Agreement (CBA) incorporating the terms and conditions of their agreement which
included vacation leave and expenses for security license provisions.
A memorandum was passed by the respondents scheduling the leaves of the laborers. Petitioner objected
to the implementation of this memorandum and contended that their union members have the preference in
scheduling their vacation leave. On the other hand, respondent argued that Article VIII, Section 1 (b) gives
the management the final say regarding the vacation leave schedule of its employees. Respondent may
take into consideration the employees' preferred schedule, but the same is not controlling.
ISSUE:
Whether or not it is the prerogative of PNCC to schedule leaves of its employees.
RULING:

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Yes. The rule is that where the language of a contract is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or aids. The intention of the parties must be gathered from
that language, and from that language alone. Stated differently, where the language of a written contract is
clear and unambiguous, the contract must be taken to mean that which, on its face, it purports to mean,
unless some good reason can be assigned to show that the words used should be understood in a different
sense.
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of
the CBA categorically provides that the scheduling of vacation leave shall be under the option of the
employer. The preference requested by the employees is not controlling because respondent retains its
power and prerogative to consider or to ignore said request. Thus, if the terms of a CBA are clear and leave
no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. In
fine, the CBA must be strictly adhered to and respected if its ends have to be achieved, being the law
between the parties.

111.
RADIO MINDANAO NETWORK, INC. vs. YBAROLA

FACTS: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and
June 1, 1983, respectively, by RMN. They eventually became account managers, soliciting advertisements
and servicing various clients of RMN.

The respondents services were terminated as a result of RMNs reorganization/restructuring; they were
given their separation pay P 631,250.00 for Ybarola, and P 481,250.00 for Rivera. Sometime in December
2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were later
consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims,
including attorneys fees. They indicated that their monthly salary rates were P 60,000.00 for Ybarola and P
40,000.00 for Rivera.

The respondents argued that the release/quitclaim they executed should not be a bar to the recovery of the
full benefits due them; while they admitted that they signed release documents, they did so due to dire
necessity.

The petitioners denied liability, contending that the amounts the respondents received represented a fair
and reasonable settlement of their claims, as attested to by the release/quitclaim affidavits which they
executed freely and voluntarily. They belied the respondents claimed salary rates, alleging that they each
received a monthly salary of P 9,177.00, as shown by the payrolls.

The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the payment of
additional separation pay to the respondents P 490,066.00 for Ybarola and P 429,517.55 for Rivera.

On appeal by the petitioners to the National Labor Relations Commission (NLRC), the NLRC set aside the
labor arbiters decision and dismissed the complaint for lack of merit. It ruled that the withholding tax
certificate cannot be the basis of the computation of the respondents separation pay as the tax document
included the respondents cost-of-living allowance and commissions; as a general rule, commissions cannot
be included in the base figure for the computation of the separation pay because they have to be earned by
actual market transactions attributable to the respondents From the NLRC, the respondents sought relief
from the CA through a petition for certiorari under Rule 65 of the Rules of Court.

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The CA granted the petition and set aside the assailed NLRC dispositions. It reinstated the labor arbiters
separation pay award, rejecting the NLRCs ruling that the respondents commissions are not included in the
computation of their separation pay. It pointed out that in the present case, the respondents earned their
commissions through actual market transactions attributable to them; these commissions, therefore, were
part of their salary.

The appellate court declared the release/quitclaim affidavits executed by the respondents invalid for being
against public policy, citing two reasons: (1) the terms of the settlement are unconscionable; the separation
pay the respondents received was deficient by at least P 400,000.00 for each of them; and (2) the absence
of voluntariness when the respondents signed the document, it was their dire circumstances and inability to
support their families that finally drove them to accept the amount the petitioners offered. Significantly, they
dallied and it took them three months to sign the release/quitclaim affidavits.

ISSUE:
Whether or not the release/quitclaim affidavits are invalid for being against public policy.

HELD:
Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being against public
policy for two reasons: (1) the terms of the settlement are unconscionable; the separation pay for
termination due to reorganization/restructuring was deficient by Php400,000.00 for each employee; they
were given only half of the amount they were legally entitled to; and (2) the absence of voluntariness when
the employees signed the document, it was their dire circumstances and inability to support their families
that finally drove them to accept the amount offered. Without jobs and with families to support, they dallied
in executing the quitclaim instrument, but were eventually forced to sign given their circumstances. To be
sure, a settlement under these terms is not and cannot be a reasonable one, given especially the
respondents length of service 25 years for Ybarola and 19 years for Rivera. Radio Mindanao Network,
Inc. and Eric S. Canoy vs. Domingo Z. Ybarola, et al. G.R. No. 198662. September 12, 2012.


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Other
Benefits


178 | P a g e

112.

Villuga vs. NLRC
[225 SCRA 537 [1993]

Facts: Petitioner Elias Villuga was employed as cutter in the Broad Street Tailoring owned by
privaterespondent Rodolfo Zapanta. He was paid a fixed monthly salary of P840.00 and a monthly
transportation allowance of P40.00. In addition, Villuga was assigned the chore of distributing work to the
shop's tailors or sewers when both the shop's manager and assistant manager would be absent. The other
petitioners were either ironers, repairmen and sewers. They were paid a fixed amount for every item ironed,
repaired or sewn, regardless of the time consumed in accomplishing the task. Petitioners did not fill up any
time record since they did not observe regular or fixed hours of work.
From February 17 to 22, 1978, Villuga failed to report for work allegedly due to illness.
For not properly notifying his employer, he was considered to have abandoned his work. Villuga claimed
that he was refused admittance when he reported for work after his absence, allegedly due to his active
participation in the union organized by private respondent's tailors. He further claimed that he was not paid
overtime pay, holiday pay, premium pay for work done on rest days and holidays, service incentive leave
pay and 13th month pay. Petitioners Abistado, Mendoza, Brizuela and Oro also claimed that they were
dismissed from their employment because they joined the Philippine Social
Security Labor Union (PSSLU). The other petitioners claimed that they stopped working because private
respondents gave them few pieces of work to do after learning of their membership with PSSLU.

The Labor Arbiter rendered a decision ordering the dismissal of the complaint for unfair labor practices,
illegal dismissal and other money claims except petitioner Villuga's claim for 13th month pay for the years
1976, 1977 and 1980. The NLRC affirmed the questioned decision.

Issue:
Whether an employer-employee relationship exists and whether such employment is managerial in
character or that of a rank and file employee are primordial considerations before extending labor benefits.

Held:
Under Rule I, Section 2(c), Book III of the Implementing Rules of the Labor Code, to be a
member of a managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary
duty consists of the performance of work directly related to management policies; (2) that he customarily
and regularly exercises discretion and independent judgment in the performance of
his functions; (3) that he regularly and directly assists in the management of the establishment; and (4) that
he does not devote twenty per cent of his time to work other than those described above.

113.

CJC Trading vs. NLRC
G.R. No. 115884; July 20, 1995

FACTS: Private respondents Ricardo Ausan, Jr. and Ernesto Alanan were employed by petitioner since
1983 and 1978 as truck drivers and were paid on a "per trip or task basis." They filed separate complaints
on against petitioner CJC Trading, Incorporated and/or Ms. Celia J. Carlos for illegal dismissal and non-
payment of premium pay for holiday and rest day, service incentive leave pay and thirteenth month pay.
These cases were consolidated.
On 22 July 1993, a decision was rendered by the Labor Arbiter dismissing the complaints and were not
entitled to the labor standards benefits claimed by them because they were paid on a "per trip or per task
basis.

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On appeal, NLRC affirmed in toto the decision of the Labor Arbiter.
ISSUE:
Whether or not the respondents are entitled to the benefits provided by law.

RULING:
The employees are granted to retirement benefits. An employee who voluntarily resigns is not entitled to
separation pay unless otherwise stipulated in an employment contract or collective bargaining agreement, or
sanctioned by established employer practice or policy. The Labor Code is devoid of any provision which
grants separation pay to employees who voluntarily resign. Neither was there anything in the record that
shows that, in the instant case, there is a collective bargaining agreement or any other agreement or
established company policy concerning the payment of separation pay to employees who resign.
Considering that private respondents were close to the age of sixty (60) at the time they stopped working for
petitioner and that they had been in the employ of petitioner for several years, the Court, considers that this
could be deemed to be in effect a prayer for the grant of retirement benefits.
The pertinent law is Article 287 of the Labor Code, as amended by R.A. No. 7641, which reads: Retirement.
Any employee may be retired upon reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
earned under existing laws and any collective bargaining agreement and other agreements: Provided,
however, That an employee's retirement benefits under any collective bargaining and other agreements
shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6) months being considered as one whole
year.
R.A. No. 7641 may be given effect where (1) the claimant for retirement benefits was still the employee of
the employer at the time the statute took effect; and (2) the claimant was in compliance with the
requirements for eligibility under the statute for such retirement benefits. It appears that private respondents
did not qualify for the benefits of R.A. No. 7641 under the terms of this law itself. Since the record does not
show any retirement plan or collective bargaining agreement providing for retirement benefits to petitioner's
employees, the applicable retirement benefits to petitioner's employees, the applicable retirement age is the
optional retirement age of sixty (60) years according to Article 287, which would qualify the retiree to
retirement benefits equivalent to one-half (1/2) month's salary for every year of service. Unfortunately, at the
time private respondent stopped working for petitioner, they had not yet reached the age of sixty (60) years.
The Court stresses that there is nothing to prevent petitioners from voluntarily giving private respondents
some financial assistance on an ex gratia basis.

114.

PANTRANCO NORTH EXPRESS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION
and URBANO SUIGA, respondents.

Facts: Urbano Suiga was hired by Pantranco North Express Inc. in 1964 as a bus conductor. He
eventually joined the Pantranco Employees Association-PTGWO. He continued in petitioner's employ until
August 12, 1989, when he was retired at the age of fifty-two (52) after having rendered twenty five years'
service. The basis of his retirement was the compulsory retirement provision of the collective bargaining
agreement between the petitioner and the aforenamed union. Private respondent received P49,300.00 as
retirement pay.

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On February 15, 1990, private respondent filed a complaint for illegal dismissal against petitioner with the
Sub-Regional Arbitration Branch of the respondent Commission in Dagupan City. The complaint was
consolidated with two other cases of illegal dismissal having similar facts and issues, filed by other
employees, non-union members.
Collective Bargaining Agreement between petitioner company and the union states:
"Upon reaching the age of sixty (60) years or upon completing twenty-five (25) years of service to the
COMPANY, whichever comes first, and the employee shall be compulsory retired and paid the retirement
benefits herein provided.
After hearings were held and position papers submitted, on March 26, 1990, Labor Arbiter Olairez rendered
his decision that the three complainants illegally and unjustly dismissed and ordered the respondent to
reinstate them to their former or substantially equivalent positions without loss of seniority rights with full
backwages and other benefits with a total of P31,618.12 plus additional backwages and other benefits but
not to exceed 3 years and the corresponding attorney's fees. The amounts already received by
complainants shall be considered as advanced payment of their retirement pay which shall be deducted
when they shall actually retire or (be) separated from the service. The order of reinstatement is immediately
executory even pending appeal. Petitioner appealed to public respondent, which issued the questioned
Resolution affirming the labor arbiter's decision in toto. Hence, this petition.

Issues
1. The National Labor Relations Commission gravely abused its discretion in holding that the Labor
Arbiter has jurisdiction over the case.
2. The National Labor Relations Commission gravely abused its discretion in affirming the Labor
Arbiter's decision that private respondent Urbano Zuiga (sic) was illegally dismissed."

Ruling:
The petition is meritorious thus warranting reversal of the questioned Resolution.
Jurisdiction of Labor Arbiter
Article 261 of the Labor Code provides that violations of a Collective Bargaining Agreement, except those
which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For purposes of the Article, gross violations of a
Collective Bargaining agreement shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes, grievances or matters under the
exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the
Collective Bargaining Agreement."
The complaint of illegal dismissal of which original and exclusive jurisdiction under Article 217 has been
conferred to the Labor Arbiters. The interpretation of the CBA or enforcement of the company policy is only
corollary to the complaint of illegal dismissal. Otherwise, an employee who was on AWOL, or who
committed offenses contrary to the personnel polices can no longer file a case of illegal dismissal because
the discharge is premised on the interpretation or enforcement of the company polices.
Respondent voluntarily submitted the case to the jurisdiction of this labor tribunal. It adduced arguments to
the legality of its act, whether such act may be retirement and/or dismissal, and prayed for reliefs on the
merits of the case. A litigant cannot pray for reliefs on the merits and at the same time attacks the
jurisdiction of the tribunal.
The Court agrees with the public respondent's affirmance of the arbiter's decision in respect of the question
of jurisdiction.
In Sanyo Philippines Workers Union PSSLU vs. Caizares, the petitioner, the court ruled:
Only disputes involving the union and the company shall be referred to the grievance machinery or voluntary
arbitrators.In the instant case, both the union and the company are united or have come to an agreement
regarding the dismissal of private respondents. No grievance between them exists which could be brought

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to a grievance machinery. The dispute has to be settled before an impartial body. The grievance
machinery with members designated by the union and the company cannot be expected to be impartial
against the dismissed employees. Due process demands that the dismissed workers grievances be
ventilated before an impartial body. Since there has already been an actual termination, the matter falls
within the jurisdiction of the Labor Arbiter."
Applying the same rationale to the case at bar, it cannot be said that the "dispute" is between the union and
petitioner company because both have previously agreed upon the provision on "compulsory retirement" as
embodied in the CBA. Also, it was only private respondent on his own who questioned the compulsory
retirement. Thus, the case is properly denominated as a "termination dispute" which comes under the
jurisdiction of labor arbiters.
Therefore, public respondent did not commit a grave abuse of discretion in upholding the jurisdiction of the
labor arbiter over this case.
Private Respondent's Compulsory Retirement Is Not Illegal Dismissal
"Retirement. -- In the absence of any collective bargaining agreement or other applicable agreement
concerning terms and condition of employment which provides for retirement at an older age, an employee
may be retired upon reaching the age of sixty (60) years."
Art. 287 of the Labor Code as worded permits employers and employees to fix the applicable retirement age
at below 60 years. Moreover, providing for early retirement does not constitute diminution of benefits. In
almost all countries today, early retirement, i.e., before age 60, is considered a reward for services rendered
since it enables an employee to reap the fruits of his labor particularly retirement benefits, whether lump-
sum or otherwise at an earlier age, when said employee, in presumably better physical and mental
condition, can enjoy them better and longer. As a matter of fact, one of the advantages of early retirement
is that the corresponding retirement benefits, usually consisting of a substantial cash windfall, can early on
be put to productive and profitable uses by way of income-generating investments, thereby affording a more
significant measure of financial security and independence for the retiree who, up till then, had to contend
with life's vicissitudes within the parameters of his fortnightly or weekly wages. Thus we are now seeing
many CBAs with such early retirement provisions. And the same cannot be considered a diminution of
employment benefits.
A CBA incorporates the agreement reached after negotiations between employer and bargaining agent with
respect to terms and conditions of employment. A CBA is not an ordinary contract. It is a labor contract
within the contemplation of Article 1700 of the Civil Code of the Philippines which governs the relations
between labor and capital, it is not merely contractual in nature but impressed with public interest, thus it
must yield to the common good. As such, it must be construed liberally rather than narrowly and technically,
and the courts must place a practical and realistic construction upon it, giving due consideration to the
context in which it is negotiated and purpose which it is intended to serve.
Being a product of negotiation, the CBA between the petitioner and the union intended the provision on
compulsory retirement to be beneficial to the employees-union members, including herein private
respondent. When private respondent ratified the CBA with the union, he not only agreed to the CBA but
also agreed to conform to and abide by its provisions. Thus, it cannot be said that he was illegally
dismissed when the CBA provision on compulsory retirement was applied to his case.
Incidentally, The Retirement Pay Law," said statute sheds light on the present discussion when it amended
Art. 287 of the Labor Code worded that "Any employee may be retired upon reaching the retirement age
establish in the collective bargaining agreement or other applicable employment contract."
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in
the said establishment may retire."
The provision makes clear the intention and spirit of the law to give employers and employees a free hand
to determine and agree upon the terms and conditions of retirement. Providing in a CBA for compulsory
retirement of employees after twenty-five (25) years of service is legal and enforceable so long as the
parties agree to be governed by such CBA. Public respondent committed a grave abuse of discretion in

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affirming the decision of the labor arbiter. The compulsory retirement of private respondent effected in
accordance with the CBA is legal and binding.

115.

R&E Transport , Inc., And Honorio Enriquez, vs. Avelina Latag (February 13, 2004)
G.R. 155214

Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca
ceased from business operations, Latag transferred to R & E Transport, Inc. He was receiving an average
daily salary of five hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995 and was forced
to apply for partial disability with the SSS, which was granted. When he recovered, he reported for work in
September 1998 but was no longer allowed to continue working on account of his old age. Latag thus asked
Felix Fabros, the administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641
but he was ignored.

On December 21, 1998, Latag filed a case for payment of his retirement pay before the NLRC.
Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January
10, 2000, the Labor Arbiter rendered a decision in favor of Latag.

Issue:
WON Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.

Held:
YES, the respondent is entitled to retirement benefits despite of the waiver of quitclaims.

The Supreme Court upheld that the CA committed no error when it ruled that the Quitclaim and
Waiver was invalid and could not bar respondent Latag from demanding the benefits legally due her
husband despite the former having signed the document. This is not to say that all quitclaims are invalid per
se. Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look with disfavor
upon quitclaims and waivers that bargain these away.

Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc.
Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides:

Art. 287. Retirement. xxx xxx xxx In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age,
who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement
pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year. Unless the parties provide for broader inclusions, the term one
half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive leaves. xxx xxx xxx

The rules implementing the New Retirement Law similarly provide the above-mentioned formula for
computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not
entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed
on the sole basis of his salary.


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It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of
the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing
their benefits should be the average daily income.

116.

Rufina Patis Factory v. Alusitain

Facts: In March 1948, respondent Alusitain was hired as a laborer at the Rufina Patis Factory owned and
operated by petitioner Lucas. On February 19, 1991, respondent, then 63 years of age, tendered his letter of
resignation, and also executed a duly notarized affidavit of separation from employment and submitted the
same to the Pensions Department of the SSS. Meanwhile, R.A. 7641 took effect in January 1993 providing,
among others, that In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not
beyond sixty five (65) years which is hereby declared the compulsory retirement age, who has served at
least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to
at least one half (1/2) month salary for every year of service, a fraction of at least six (6) months being
considered as one whole year.
In 1995, respondent, claiming that he retired from the company on January 31, 1995, having reached the
age of 65 and due to poor health, demanded from petitioner the payment of his retirement benefits in the
amount of P86,710.00, which petitioner refused to pay. Respondent filed a complaint before the NLRC
against petitioners for non-payment of retirement benefits. Petitioners maintained that respondent resigned
from the company in 1991. On the other hand, respondent maintained that he continued working for
petitioners until January 1995, the date of actual retirement, due to illness and old age, and that he merely
accomplished the documents in compliance with the requirements of the SSS in order to avail of his
retirement benefits. The Labor Arbiter upheld respondents position. The Court of Appeals upheld the NLRC
decision. Petitioners assert that the appellate court erred in applying retroactively R.A. 7641 as said law
does not expressly provide for such retroactive application and to do so would defeat the clear intent of
Congress. Hence, this petition.

Issue:
Whether or not respondent is entitled to his claim for retirement benefits.

Held:
No. R.A. 7641 is a social legislation and may be given retroactive effect where (1) the claimant for
retirement benefits was still the employee of the employer at the time the statute took effect; and (2) the
claimant had complied with the requirements for eligibility under the statute for such retirement benefits. It is
thus clear that in order for respondent to claim retirement benefits from petitioner, he has to prove that he
was its employee at the time R.A. 7641 took effect. In the case at bar, it was incumbent on respondent to
prove that he retired on January 31, 1995 and not on February 20, 1991 as indicated on his letter of
resignation. Respondent failed to prove that he was an employee of petitioner at the time R.A. 7641 took
effect. Thus, his claim for retirement benefits must be disallowed.

117.

STA CATALINA COLLEGE V. NLRC (LABOR)

FACTS: Hilaria was hired as an elementary teacher in petitioner school in 1955 until 1970. In 1970, she
applied for and was granted 1 year leave of absence without pay on account of her mother's illness. In the
meantime, she was employed as a teacher in another school. In 1982, she applied anew at petitioner

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school. When she reached the compulsory retirement age of 65, petitioner school pegged her retirement
benefits only from her service from 1982 to 1997. Hilaria then files a complaint for non-payment of
retirement benefits.

HELD: HILARIA ABANDONED HER WORK, for which reason, she could not be credited for her services
from 1955 to 1970 in determining her retirements benefits for after 1 year of leave of absence in 1971
without her requesting for extension thereof as in fact she had not been heard from until she resurfaces in
1982 when she reapplied, she abandoned her teaching position as in fact she was employed elsewhere and
effectively relinquished the retirement benefits that accumulated during said period.

ABANDONMENT OF WORK being a just cause for terminating the services of Hilaria, petitioner school was
under no obligation to serve a written notice to her.

118.

Honda Philippines vs. Samahan ng Malayang Manggagawa sa Honda
G.R. No. 145561, June 15, 2005

Facts: Honda Phils, Inc (company) and Samahan ng Malayang Manggagawa sa Honda (union) started
renegotiations of their CBA. When there was a bargaining deadlock, the union filed a notice of strike. The
company likewise filed a notice of lockout. SOLE assumed jurisdiction and ordered both parties to desist
from their strike and lockout.

However, the union subsequently filed a second notice of strike onthe ground of unfair labor practice,
alleging that the company illegally contracted out work to the detriment of the workers. The union went on
strike. SOLE assumed jurisdiction and certified the case to NLRC for compulsory arbitration. The striking
employees were ordered to return to work and management accepted them back.

Honda then issued a memorandum announcing its new computationof the 13th and 14th month pay
whereby the 31-day strike shall be considered unworked days for the purpose of computing said benefits.
The amount equivalent to 1/12 of the employees basic salary shall be deducted from the bonuses (because
they did not work for 1 month). Furthermore, Honda wanted a pro-rata payment of the 13th month pay.

The union opposed said computation because it was contrary to the Sections 3 and 6 in their current CBA
which mandates that the company shall maintain the present practice in the implementation of the 13th
month pay and that the 14th month pay shall be computed in the same way as the former.

The Bureau of Working Conditions (BWC) sided with the company. But the issue was unresolved by the
grievance machinery, so it wassubmitted for voluntary arbitration. The Voluntary Arbiter invalidated
Hondas computation and ordered the computation of the benefits based on the full month basic pay.

CA affirmed, hence this petition.

Issues:
(1) Whether or not there is ambiguity in the CBA provisions concerning the 13th and 14th month pay

(2) Whether or not the proposed computation of Honda deducting 1/12 of the employees basic salary from
the 13th and 14th month pay and its pro-rata payment are valid

Held:

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(1) YES. A collective bargaining agreement refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. The parties in a CBA may establish such stipulations, clauses, terms and
conditions as they may deem convenient as long as they are not contrary to law, morals, good customs,
public order or public policy. Where the CBA is clear and unambiguous, it becomes the law between the
parties.

However, there are times when the CBA provisions may become contentious. In this case, Honda wanted to
implement a pro-ratedcomputation based on the no work, no pay rule. Honda argues that the phrase
present practice in the CBA refers to the manner of payment of the bonuses (50% in May and 50% in
December). The union, on the other hand, insists that the CBA provisions necessarily relate to
the computation of the benefits.

As the voluntary arbitrator has correctly observed, there is ambiguity in the assailed CBA provisions
because they did not categorically state whether the computation of the 13th and 14th month pay would be
based on a one full months basic salary of the employees, or pro-rated based on the compensation actually
received.

(2) NO. The ambiguity in the CBA provisions was correctly resolved by the arbitrator by relying on Article
1702 of the Civil Code, which provides that in case of doubt, all labor legislation and all labor contracts shall
be construed in favor of the safety and decent living of the laborer. CA is also correct in ruling that
the computation of the 13th month pay should be based on the length of service and not on the actual wage
earned by the worker.

PD 851 or the 13th Month Pay Law was issued to protect the level of wages of workers from worldwide
inflation. Under the IRR of said law, the minimum 13th month pay shall not be less than 1/12 of the total
basic salary earned by an employee within a calendar year.The Court has interpreted basic salary to
mean, NOT the amount actually received by an employee, but 1/12 of their standard monthly wage
multiplied by their length of service within a given calendar year.

The IRR also provide for a pro-ration of this benefit ONLY in cases of resignation or separation from work. In
the present case, there being no resignation/separation, the computation of the 13th month pay should not
be pro-rated but should be given in full.

Moreover, it has not been proven that Honda has been implementing pro-rating of the 13th month
pay before the present case. It is not a company practice. In fact, there was an implicit acceptance that prior
to the strike, a full month basic pay computation was the present practice intended in the CBA. It was the
second strike that prompted the company to adopt the pro-rata computation.

119.

Jaculbe vs. Silliman University
G.R. No. 156934; March 16, 2007

FACTS: Sometime in 1958, petitioner began working for respondents university medical center as a nurse.
In a letter in December 1992, respondent, through its Human Resources Development Office, informed
petitioner that she was approaching her 35th year of service with the university and was due for automatic
retirement on November 18, 1993, at which time she would be 57 years old. This was pursuant to
respondents retirement plan for its employees which provided that its members could be automatically
retired upon reaching the age of 65 or after 35 years of uninterrupted service to the university.
Respondent required certain documents in connection with petitioners impending retirement.

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A brief exchange of letters between petitioner and respondent followed. Petitioner emphatically insisted that
the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be
allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS
pension. But respondent stood pat on its decision to retire her, citing company policy.
On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for
termination of service with preliminary injunction and/or restraining order. On November 18, 1993,
respondent compulsorily retired petitioner. The labor arbiter rendered a decision finding respondent guilty of
illegal dismissal and ordered that petitioner be reinstated and paid full back wages. On appeal, the NLRC
reversed the labor arbiters decision and dismissed the complaint. the CA affirmed the NLRC.

ISSUE:
Whether or not the respondents retirement plan imposing automatic retirement after 35 years of service
contravenes the security of tenure clause in the 1987 Constitution and the Labor Code.

RULING:
Retirement plans allowing employers to retire employees who are less than the compulsory retirement age
of 65 are not per se repugnant to the constitutional guaranty of security of tenure. Article 287 of the Labor
Code provides: Retirement - Any employee may be retired upon reaching the retirement age established in
the collective bargaining agreement or other applicable employment contract. By its express language, the
Labor Code permits employers and employees to fix the applicable retirement age at below 60 years.
The rules and regulations of the plan show that participation therein was not voluntary at all. Rule III of the
plan, on membership, stated:
SECTION 1 MEMBERSHIP, All full-time Filipino employees of the University will automatically become
members of the Plan, provided, however, that those who have retired from the University, even if rehired,
are no longer eligible for membership in the Plan. A member who continues to serve the University cannot
withdraw from the Plan.
SECTION 2 EFFECTIVITY OF MEMBERSHIP, Membership in the Plan starts on the day a person is hired
on a full-time basis by the University.
SECTION 3 TERMINATION OF MEMBERSHIP, Termination of membership in the Plan shall be upon the
death of the member, resignation or termination of employees contract by the University, or retirement from
the University.
Meanwhile, Rule IV, on contributions, stated:
The Plan is contributory. The University shall set aside an amount equivalent to 3% of the basic salaries of
the faculty and staff. To this shall be added a 5% deduction from the basic salaries of the faculty and staff.
A member on leave with the University approval shall continue paying, based on his pay while on leave, his
leave without pay should pay his contributions to the Plan. However, a member, who has been on leave
without pay should pay his contributions based on his salary plus the Universitys contributions while on
leave or the full amount within one month immediately after the date of his reinstatement. Provided, further
that if a member has no sufficient source of income while on leave may pay within six months after his
reinstatement.
It was through no voluntary act of her own that petitioner became a member of the plan. In fact, the only way
she could have ceased to be a member thereof was if she stopped working for respondent altogether.
Furthermore, in the rule on contributions, the repeated use of the word shall ineluctably pointed to the
conclusion that employees had no choice but to contribute to the plan (even when they were on leave).
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and
the employee whereby the latter, after reaching a certain age agrees to sever his or her employment with
the former. The truth was that petitioner had no choice but to participate in the plan, given that the only way
she could refrain from doing so was to resign or lose her job. It is axiomatic that employer and employee do
not stand on equal footing, a situation which often causes an employee to act out of need instead of any
genuine acquiescence to the employer. This was clearly just such an instance.

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An employer is free to impose a retirement age less than 65 for as long as it has the employees consent.
Stated conversely, employees are free to accept the employers offer to lower the retirement age if they feel
they can get a better deal with the retirement plan presented by the employer. Thus, having terminated
petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her,
respondent was guilty of illegal dismissal.

120.

Intercontinental Broadcasting Corp., vs. Amarilla
G.R. No. 162775; October 27, 2006

FACTS: Petitioner employed persons as Studio Technician, Collector, Traffic Clerk in its Cebu branch.
The government sequestered the station, including its properties, funds and other assets, and took over its
management and operations from its owner, Roberto Benedicto. However,
The government and Benedicto entered into a temporary agreement under which the latter would retain its
management and operation.
Presidential Commission on Good Government (PCGG) and Benedicto executed a Compromise
Agreement, where Benedicto transferred and assigned all his rights, shares and interests in petitioner
station to the government.
In the meantime, the four employees retired from the company and received on staggered basis their
retirement benefits under the 1993 Collective Bargaining Agreement between petitioner and the bargaining
unit of its employees.
P1,500.00 salary increase was given to all employees of the company (current and retired) effective July
1994.
However, when the four retirees demanded theirs, petitioner refused and instead informed them via a letter
that their differentials would be used to offset the tax due on their retirement benefits in accordance with the
National Internal Revenue Code (NIRC).
The four retirees filed separate complaints against IBC TV-13 Cebu and Station Manager Louella F.
Cabaero for unfair labor practice and non-payment of backwages before the NLRC.

ISSUE:

Whether or not the retirement benefits of respondents are taxable?

RULING:

The Court agrees with petitioner that under the CBA, it is not obliged to pay for the taxes on the
respondents' retirement benefits. CBA did not provide a provision where petitioner obliged itself to pay the
taxes on the retirement benefits of its employees. The Court also agrees with petitioner that, under the
NIRC, the retirement benefits of respondents are part of their gross income subject to taxes.

For the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the
concurrence of the following elements:
(1) a reasonable private benefit plan is maintained by the employer
(2) the retiring official or employee has been in the service of the same employer for at least 10 years
(3) the retiring official or employee is not less than 50 years of age at the time of his retirement
(4) the benefit had been availed of only once.

Article VIII of the 1993 COLLECTIVE BARGAINING AGREEMENT provides for two kinds of retirement
plans - compulsory and optional.

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Section 1: Compulsory Retirement Any employee who has reached the age of Fifty Five (55) years shall
be retired from the COMPANY and shall be paid a retirement.

Section 2: Optional Retirement Any covered employee, regardless of age, who has rendered at least five
(5) years of service to the COMPANY may voluntarily retire and the COMPANY agrees to pay Long Service
Pay to said covered employee.

Section 3: Fraction of a Year In computing the retirement under Section 1 and 2 of this Article, a fraction
of at least six (6) months shall be considered as one whole year.

Respondents were qualified to retire optionally from their employment with petitioner. There is no record that
the 1993 CBA had been approved or was ever presented to the BIR. Hence, the retirement benefits of
respondents are taxable.

Under Section 80 of the National Internal Revenue Code (NIRC) Employer was obliged to withhold the taxes
on said benefits and remit the same to the BIR.
Section 80.
The employer shall be liable for the withholding and remittance of the correct amount of tax required to be
deducted and withheld under this Chapter. If the employer fails to withhold and remit the correct amount of
tax as required to be withheld under the provision of this Chapter, such tax shall be collected from the
employer together with the penalties or additions to the tax otherwise applicable in respect to such failure to
withhold and remit.
121.
Letran Calamba Faculty & Employees Association vs NLRC (2008) G.R. 156225
Facts: Three cases were consolidated involving petitioner Letran Calamba Faculty and Employees
Association and Colegio de San Juan de Letran, Calamba, for money claims and a petition to declare the
subject strike illegal filed by respondent.
On July 28, 1999, the NLRC promulgated its Decision dismissing both appeals. Petitioner filed a Motion for
Reconsideration but the same was denied by the NLRC in its Resolution dated June 21, 2000.Petitioner
then filed a special civil action for certiorari with the CA assailing the above-mentioned NLRC Decision and
Resolution.
On May 14, 2002, the CA rendered the presently assailed judgment dismissing the petition. Petitioner filed a
Motion for Reconsideration but the CA denied it in its Resolution promulgated on November 28, 2002. Citing
Agustilo v. Court of Appeals, petitioner contends that in a special civil action for certiorari brought before the
CA, the appellate court can review the factual findings and the legal conclusions of the NLRC.
Petitioner avers that the CA, in concluding that the NLRC Decision was supported by substantial evidence,
failed to specify what constituted said evidence. Thus, petitioner asserts that the CA acted arbitrarily in
affirming the Decision of the NLRC.
Issue: WON the Court of Appeals erred in holding that the factual findings of the NLRC cannot be reviewed
in certiorari proceedings.
Held: Court finds no error in the ruling of the CA that since nowhere in the petition is there any acceptable
demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess of
its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence
which supports the labor tribunals' findings of fact.
Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the
Supreme Court, unless patently erroneous. It is not the function of the Supreme Court to analyze or weigh
all over again the evidence already considered in the proceedings below. In a petition for review on
certiorari, this Courts jurisdiction is limited to reviewing errors of law in the absence of any showing that the
factual findings complained of are devoid of support in the records or are glaringly erroneous. Firm is the
doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases. Findings of

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fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only great respect but even finality.
They are binding upon this Court unless there is a showing of grave abuse of discretion or where it is clearly
shown that they were arrived at arbitrarily or in utter disregard of the evidence on record. We find none of
these exceptions in the present case.
In petitions for review on certiorari like the instant case, the Court invariably sustains the unanimous factual
findings of the LA, the NLRC and the CA, specially when such findings are supported by substantial
evidence and there is no cogent basis to reverse the same, as in this case.

122.

Reyes vs. NLRC et al.
G.R. No. 160233; August 8, 2007

FACTS: Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City on
August 12, 1977. He was eventually appointed as unit manager of Sales Department-South Mindanao
District, a position he held until his retirement on November 30, 1997. Thereafter, he received a letter
regarding the computation of his separation pay. Insisting that his retirement benefits and 13th month pay
must be based on the average monthly salary of P42,766.19, which consists of P10,919.22 basic salary and
P31,846.97 average monthly commission, petitioner refused to accept the check issued by private
respondent in the amount of P200,322.21. Instead, he filed a complaint before the arbitration branch of the
NLRC for retirement benefits, 13th month pay, tax refund, earned sick and vacation leaves, financial
assistance, service incentive leave pay, damages and attorney's fees.
Petitioner contends that the commissions form part of the basic salary, citing the case of Philippine
Duplicators, Inc. v. National Labor Relations Commission, wherein the Court held that commissions earned
by salesmen form part of their basic salary. Private respondent counters that petitioner knew that the
overriding commission is not included in the basic salary because it had not been considered as such for a
long time in the computation of the 13th month pay, leave commissions, absences and tardiness.

ISSUE:
Whether or not the average monthly sales commission of thirty one thousand eight hundred forty six and
97/100 (Php31,846.97) should be included in the computation of his retirement benefits and 13
th
month pay.

RULING:
This Court has held, in Philippine Duplicators that, the salesmen's commissions, comprising a pre-
determined percentage of the selling price of the goods sold by each salesman, were properly included in
the term basic salary for purposes of computing the 13th month pay. The salesmen's commission are not
overtime payments, nor profit-sharing payments nor any other fringe benefit but a portion of the salary
structure which represents an automatic increment to the monetary value initially assigned to each unit of
work rendered by a salesman.
Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical representatives of
Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co., were excluded from
the term basic salary because these were paid to the medical representatives and rank-and-file employees
as productivity bonuses, which are generally tied to the productivity, or capacity for revenue production, of a
corporation and such bonuses closely resemble profit-sharing payments and have no clear direct or
necessary relation to the amount of work actually done by each individual employee. Further, commissions
paid by the Boie-Takeda Company to its medical representatives could not have been sales commissions in
the same sense that Philippine Duplicators paid the salesmen their sales commissions. Medical
representatives are not salesmen; they do not effect any sale of any article at all.

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In fine, whether or not a commission forms part of the basic salary depends upon the circumstances or
conditions for its payment, which indubitably are factual in nature for they will require a re-examination and
calibration of the evidence on record.
As to the main issue whether petitioner's commissions be considered in the computation of his retirement
benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code, as amended by
Republic Act No. 7641, otherwise known as The New Retirement Law, 22 provides: Retirement. Any
employee may be retired upon reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year. Unless the parties provide for
broader inclusions, the term one half (1/2) month salary shall mean fifteen (15) days plus one twelfth (1/12)
of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his
retirement benefits is his latest salary rate of P10,919.22 as the commissions he received are in the form of
profit-sharing payments specifically excluded by the foregoing rules. Case law has it that when these
earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing statements,
they are properly excluded in computing retirement pay. However, sales commissions which are effectively
an integral portion of the basic salary structure of an employee, shall be included in determining the
retirement pay.
At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary corresponding to
his position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the "overriding
commissions" paid to him by Universal Robina Corp. could not have been 'sales commissions' in the same
sense that Philippine Duplicators paid its salesmen sales commissions. Unit Managers are not salesmen;
they do not effect any sale of article at all. Therefore, any commission which they receive is certainly not the
basic salary which measures the standard or amount of work of complainant as Unit Manager. Accordingly,
the additional payments made to petitioner were not in fact sales commissions but rather partook of the
nature of profit-sharing business. Certainly, from the foregoing, the doctrine in Boie-Takeda Chemicals and
Philippine Fuji Xerox Corporation, which pronounced that commissions are additional pay that does not form
part of the basic salary, applies to the present case. Aside from the fact that as unit manager petitioner did
not enter into actual sale transactions, but merely supervised the salesmen under his control, the disputed
commissions were not regularly received by him. Only when the salesmen were able to collect from the sale
transactions can petitioner receive the commissions. Conversely, if no collections were made by the
salesmen, then petitioner would receive no commissions at all. In fine, the commissions which petitioner
received were not part of his salary structure but were profit-sharing payments and had no clear, direct or
necessary relation to the amount of work he actually performed. The collection made by the salesmen from
the sale transactions was the profit of private respondent from which petitioner had a share in the form of a
commission. Hence, petition is denied.

123.

Arco Metal Products vs. Samahan ng Manggagawa sa Arco-Metal-NAFLU
G.R. No. 170734; May 14, 2008

FACTS: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the
labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the 13
th

month pay, bonus, and leave encashment of three union members in amounts proportional to the service
they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the
prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same

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benefits to seven (7) employees who had not served for the full 12 months. According to respondent, the
prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus,
they filed a complaint before the National Conciliation and Mediation Board (NCMB). The parties submitted
the case for voluntary arbitration.

ISSUE:
Whether or not the prorated payment of the benefits constitute a violation under Art. 100 of the Labor Code.

:
SC ruled in favor of the respondents. The voluntary grant of the benefits has been an established company
practice. It has been a company practice which grants full benefits to its employees regardless of the
length of service rendered.
There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and sick
leave, one must have rendered at least one year of service. The clear wording of the provisions does not
allow any other interpretation. Anent the 13
th
month pay and bonus, we agree with the findings of Labor
Arbiter Mangabat that the CBA provisions did not give any meaning different from that given by the law,
thus it should be computed at 1/12 of the total compensation which an employee receives for the whole
calendar year. The bonus is also equivalent to the amount of the 13
th
month pay given, or in proportion to
the actual service rendered by an employee within the year.
Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional
mandate to "protect the rights of workers and promote their welfare, and to afford labor full protection.
Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts in the
implementation and interpretation of this Code, including its implementing rules and regulations shall be
rendered in favor of labor. Jurisprudence is replete with cases which recognize the right of employees to
benefits which were voluntarily given by the employer and which ripened into company practice. Thus in
Davao Fruits Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously
included in the computation of the 13
th
month pay those items that were expressly excluded by the law, we
held that the act which was favorable to the employees though not conforming to law had thus ripened into
a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading
Company v. Semana, we ruled that the employers act of including non-basic benefits in the computation of
the 13
th
month pay was a voluntary act and had ripened into a company practice which cannot be
peremptorily withdrawn. Meanwhile in Davao Integrated Port Stevedoring Services v. Abarquez, the Court
ordered the payment of the cash equivalent of the unenjoyed sick leave benefits to its intermittent workers
after finding that said workers had received these benefits for almost four years until the grant was stopped
due to a different interpretation of the CBA provisions. We held that the employer cannot
unilaterally withdraw the existing privilege of commutation or conversion to cash given to said workers,
and as also noted that the employer had in fact granted and paid said cash equivalent of the unenjoyed
portion of the sick leave benefits to some intermittent workers.

124.

Universal Robina Sugar Milling Corp., vs Caballeda
[G.R. 156644. July 28, 2008]

Facts: Agripino Caballeda worked as welder for URSUMCO from March 1989 until June 23, 1997 while
Alejandro Cadalin worked for URSUMCO as crane operation from 1976 up to June 15, 1997.
John Gokongwei, Jr. President of URSUMCO issued a memorandum establishing the company policy on
Compulsory Retirement. All employees corporate-wide who attain 60 years of age on or before April 30,
1991 shall be considered retired on May 31, 1991. Subsequently, on December 9, 1992, Republic Act No.
7641 was enacted into law and it took effect on January 7, 1993, amending Article 287 of the Labor Code.

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Agripino and Alejandro having reached the age of 60, were allegedly forced to retire by URSUMCO. They
both accepted their retirement benefits. Later on, Agripino filed a complaint for illegal dismissal because his
compulsory retirement was in violation of the provisions of RA 7641 and, was in effect, a form of illegal
dismissal.
Issues:
Whether RA 7641 can be given retroactive effect?
Whether or not Agripino Caballeda and Alejandro Cadalin voluntarily retired from the service?

Held:
The issue of retroactivity has long been settled in the case of Enriquez Security Services, Inc. vs. Cabotaje.
RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and
as a curative statute that absent a retirement plan devised by, an agreement with, or a voluntary grant from,
an employer can respond, in part at least, to the financial wellbeing of workers during their twilight years
soon following their life of labor. There should be little doubt about the fact that the law can apply to labor
contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only
from the date of the law's enactment but retroactively to the time said employment contracts have started.
This doctrine has been repeatedly upheld and clarified in several cases. Pursuant thereto, this Court
imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant
for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the
claimant had complied with the requirements for eligibility for such retirement benefits under the statute.
When respondents were compulsorily retired from the service, RA 7641 was already in full force and effect.
The petitioners failed to prove that the respondents did not comply with the requirements for eligibility under
the law for such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus,
warranting the retroactive application of R.A. 7641 in this case.
the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with
the former. The age of retirement is primarily determined by the existing agreement between the employer
and the employees. However, in the absence of such agreement, the retirement age shall be fixed by law.
Under Art. 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65
years, while the set minimum age for optional retirement is 60 years.
In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory
retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement
benefits accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the
Labor Code which provides for two types of retirement: (a) compulsory and (b) optional. The first takes place
at age 65, while the second is primarily determined by the collective bargaining agreement or other
employment contract or employer's retirement plan. In the absence of any provision on optional retirement in
a collective bargaining agreement, other employment contract, or employer's retirement plan, an employee
may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has
served at least five years in the establishment concerned. That prerogative is exclusively lodged in the
employee.
Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy.
Generally, the law looks with disfavor on quitclaims and releases by employees who have been inveigled or
pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and
frustrate just claims of employees. They are frowned upon as contrary to public policy. A quitclaim is
ineffective in barring recovery of the full measure of a worker's rights, and the acceptance of benefits
therefrom does not amount to estoppel.
In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the
employer is able to prove the following requisites: (1) the employee executes a deed of quitclaim voluntarily;
(2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is
credible and reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or

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good customs or prejudicial to a third person with a right recognized by law. In this case, petitioners failed to
establish all the foregoing requisites.
To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is clear
from the decisions of the LA, NLRC and CA that petitioners are still liable to pay Alejandro the differential on
his retirement benefits. On the other hand, Agripino was actually and totally deprived of his retirement
benefit. In Becton Dickinson Phils., Inc. v. National Labor Relations Commission, we held:
There is no nexus between intelligence, or even the position which the employee held in the company when
it concerns the pressure which the employer may exert upon the free will of the employee who is asked to
sign a release and quitclaim. The employee is confronted with the same dilemma of whether signing a
release and quitclaim and accept what the company offers them, or refusing to sign and walk out without
receiving anything, may do succumb to the same pressure, being very well aware that it is going to take
quite a while before he can recover whatever he is entitled to, because it is only after a protracted legal
battle starting from the labor arbiter level, all the way to this Court, can he receive anything at all. The Court
understands that such a risk of not receiving anything whatsoever, coupled with the probability of not
immediately getting any gainful employment or means of livelihood in the meantime, constitutes enough
pressure upon anyone who is asked to sign a release and quitclaim in exchange of some amount of money
which may be way below what he may be entitled to based on company practice and policy or by law.
Absent any convincing proof of voluntariness in the submission of the documentary requirements and the
execution of the quitclaim, we cannot simply assume that respondents were not subjected to the very same
pressure. Respondents vigorously pursued this case all the way up to the Supreme Court. Without doubt,
this is a manifestation that respondents had no intention of relinquishing their employment, wholly
incompatible to petitioners' assertion that respondents voluntarily retired. Respondents did not voluntarily
retire but were forced to retire, tantamount to illegal dismissal.

125.

LOURDES CERCADO vs UNIPROM INC.
G.R. NO. 188154 October 13, 2010

Facts: Petitioner Lourdes cerdaco was an employee of UNIPROM Inc. for 22 years since December 15,
1978. When respondent came up with a retirement plan, sometime in 1980 and then amended in 2001,
which provides that any employee with a minimum of 20 years of service, regardless of age, may be retired
at the option of the employer. In December 2000, UNIPROM implemented a company-wide retirement
program, including herein petitioner. She was offered an early retirement package amounting to P171,
982.90 but Cercado rejected the offer. UNIPROM exercised its option under the retirement plan and decided
to retire petitioner effective February 15, 2001 so she was no longer given any work assignment after the
said date. This prompted the petitioner to file a complaint for illegal dismissal before the Labor Arbiter,
alleging that UNIPROM did not have abona fide retirement plan, and even if there was, she didnt consent
thereto. Respondent averred that Cercado was automatically covered by the retirement plan when she
agreed to the companys rules and regulations, and that her retirement was an exercise of management
prerogative.

ISSUES:
Whether or not UNIPROM has a bona fide retirement plan
Whether or not petitioner was validly retired pursuant thereto

HELD:
Petition is meritorious.
the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with
the former.

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Yes, UNIPROM had a bona fide retirement plan. Article 287 of the Labor Code, as amended by R.A 7641,
pegs the age for compulsory retirement at 65 years old, while the minimum age for optional retirement is set
at 60 years. However, an employer is free to impose a retirement age earlier than the foregoing mandates.
This has been upheld in numerous cases as a valid exercise of management prerogative.
In this case, petitioner was retired by UNIPROM at the age of 47, after having served the company for 22
years, pursuant to the companys retirement plan, which provides that employees who have rendered at
least 20 years of service can be retired at the option of the copany. Respondents retirement plan can be
expediently stamped with validity and justified under the all encompassing phrase management
prerogative.
No, petitioner was not validly retired. Jurisprudence has upheld that it is axiomatic that a retirement plan
giving the employer the option to retire its employees below below the ages provided by law must be
assented to and accepted by the latter, otherwise its adhesive imposition will amount to a deprivation of
property without due process. In decided cases, the retirement plans were either embodied in the CBA, or
established after consultations and negotiations with the emplyees bargaining representative. The cnsent of
the employees to be retired even before the statutory retirement age of 65 years was thus clear and
unequivocal. Acceptance by the employees of an early retirement age must be explicit, voluntary, free and
uncompelled.
WhHEREFORE, petition is granted.

126.

RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY, petitioners, vs. DOMINGO Z. YBAROLA,
JR. and ALFONSO E. RIVERA, JR., respondents.
[G.R. No. 198662. September 12, 2012.]

FACTS: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and
June 1, 1983, respectively, by Radio Mindanao Network (RMN). They eventually became account
managers, soliciting advertisements and servicing various clients of RMN.
On September 15, 2002, the respondents' services were terminated as a result of RMN's
reorganization/restructuring; they were given their separation pay P631,250.00 for Ybarola, and
P481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents filed separate complaints (which were later
consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims,
including attorney's fees. They indicated that their monthly salary rates were P60,000.00 for Ybarola and
P40,000.00 for Rivera.

ISSUE:

Whether the amounts the respondents received represented a fair and reasonable settlement of their claims

RULING:
The petitioners insist that the respondents' commissions were not part of their salaries, because they failed
to present proof that they earned the commission due to actual market transactions attributable to them.
They submit that the commissions are profit-sharing payments which do not form part of their salaries. We
are not convinced. If these commissions had been really profit-sharing bonuses to the respondents, they
should have received the same amounts, yet, as the NLRC itself noted, Ybarola and Rivera received
P372,173.11 and P586,998.50 commissions, respectively, in 2002. The variance in amounts the
respondents received as commissions supports the CA's finding that the salary structure of the respondents
was such that they only received a minimal amount as guaranteed wage; a greater part of their income was
derived from the commissions they get from soliciting advertisements; these advertisements are the

195 | P a g e

"products" they sell. As the CA aptly noted, this kind of salary structure does not detract from the character
of the commissions being part of the salary or wage paid to the employees for services rendered to the
company, as the Court held in Philippine Duplicators, Inc. v. NLRC.
The petitioners' reliance on our ruling in Talam v. National Labor Relations Commission, regarding the
"proper appreciation of quitclaims," as they put it, is misplaced. While Talam, in the cited case, and Ybarola
and Rivera, in this case, are not unlettered employees, their situations differ in all other respects.
In Talam, the employee received a valuable consideration for his less than two years of service with the
company; he was not shortchanged and no essential unfairness took place. In this case, as the CA noted,
the separation pay the respondents each received was deficient by at least P400,000.00; thus, they were
given only half of the amount they were legally entitled to. To be sure, a settlement under these terms is not
and cannot be a reasonable one, given especially the respondents' length of service 25 years for Ybarola
and 19 years for Rivera. The CA was correct when it opined that the respondents were in dire straits when
they executed the release/quitclaim affidavits. Without jobs and with families to support, they dallied in
executing the quitclaim instrument, but were eventually forced to sign given their circumstances.


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Other
Benefits


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127.

ELEAZAR S. PADILLO, petitioner, vs. RURAL BANK OF NABUNTURAN, INC. and MARK S.
OROPEZA,respondents
G.R.No.199338.January22013

Facts: On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed by respondent Rural
Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity problems which arose sometime in
2003, the Bank took out retirement/insurance plans with Philippine American Life and General Insurance
Company (Philam Life) for all its employees in anticipation of its possible closure and the concomitant
severance of its personnel. In this regard, the Bank procured Philam Plan Certificate of Full Payment No.
88204, Plan Type 02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in favor of Padillo for a
benefit amount of P100,000.00 and which was set to mature on July 11, 2009. .During the latter part of
2007, Padillo suffered a mild stroke due to hypertension which consequently impaired his ability to
effectively pursue his work.On September 10, 2007, he wrote a letter addressed to respondent Oropeza, the
president of the bank, expressing his intention to avail of an early retirement package. Despite several
follow-ups, his request remained unheeded. On October 3, 2007, Padillo was separated from employment
due to his poor and failing health as reflected in a Certification dated December 4, 2007 issued by the Bank.
Not having received his claimed retirement benefits, Padillo filed with the NLRC a complaint for the recovery
of unpaid retirement benefits.

Held:
The Labor Code provision on termination on the ground of disease under Article 297 does not apply in this
case, considering that it was the petitioner and not the Bank who severed the employment relations. It was
Padillo who voluntarily retired and that he was not terminated by the Bank.

Under article 300 of the labor code, in the absence of any applicable agreement, an employee must (1)
retire when he is at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle
him/her to a retirement benefit of at least one-half (1/2) month salary for every year of service, with a fraction
of at least six (6) months being considered as one whole year. Notably, these age and tenure requirements
are cumulative and non-compliance with one negates the employee's entitlement to the retirement benefits
under Article 300 of the Labor Code.

In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any
other equivalent contract between the parties which set out the terms and condition for the retirement of
employees, with the sole exception of the Philam Life Plan which premiums had already been paid by the
Bank. In the absence of any applicable contract or any evolved company policy, Padillo should have met the
age and tenure requirements set forth under Article 300 of the Labor Code to be entitled to the retirement
benefits provided therein. Unfortunately, while Padillo was able to comply with the five (5) year tenure
requirement as he served for twenty-nine (29) years he, however, fell short with respect to the sixty
(60) year age requirement given that he was only fifty-five (55) years old when he retired. Therefore, without
prejudice to the proceeds due under the Philam Life Plan, petitioners' claim for retirement benefits must be
denied.

128.
T/SGP Larkins vs. NLRC
G.R. No. 92432; February 23, 1995

FACTS: Petitioner was a member of the United States Air Force (USAF) assigned to oversee the
dormitories of the Third Aircraft Generation Squadron (3 AGS) at Clark Air Base, Pampanga.

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On August 10, 1988, 3 AGS terminated the contract for the maintenance and upkeep of the dormitories with
the De Guzman Custodial Services. The employees thereof, including private respondents, were allowed to
continue working for 3 AGS. It was left to the new contractor, the JAC Maintenance Services owned by
Joselito Cunanan, to decide whether it would retain their services. Joselito Cunanan, however, chose to
bring in his own workers. As a result, the workers of the De Guzman Custodial Services were requested to
surrender their base passes to Lt. Col. Frankhauser or to petitioner.
It is petitioners contention that the questioned resolutions are null and void because respondent Labor
Arbiter did not acquire jurisdiction to entertain and decide the case. Petitioner alleges that she never
received nor was served, any summons or copies of the original and amended complaints, and therefore the
Labor Arbiter had no jurisdiction over her person under Article XIV of the R.P. ? U.S. Military Bases
Agreement.

ISSUE
WON the Labor Arbiter acquires jurisdiction over the respondent.

RULING
The Agreement Between the Republic of the Philippines and the United States of America Concerning
Military Bases, otherwise known as the R.P. ? U.S. Military Bases Agreement, governed the rights, duties,
authority, and the exercise thereof by Philippine and American nationals inside the U.S. military bases in the
country.
Article XIV thereof, governing the procedure for service of summons on persons inside U.S. military bases,
provides that:
. . . [N]o process, civil or criminal, shall be served within any base except with the permission of the
commanding officer of such base; but should the commanding officer refuse to grant such permission he
shall forthwith take the necessary steps . . . . to serve such process, as the case may be, and to provide the
attendance of the server of such process before the appropriate court in the Philippines or procure such
server to make the necessary affidavit or declaration to prove such service as the case may require.
Summonses and other processes issued by Philippine courts and administrative agencies for United States
Armed Forces personnel within any U.S. base in the Philippines could be served therein only with the
permission of the Base Commander. If he withholds giving his permission, he should instead designate
another person to serve the process, and obtain the servers affidavit for filing with the appropriate court.
Respondent Labor Arbiter did not follow said procedure. He instead, addressed the summons to Lt. Col.
Frankhauser and not the Base Commander (Rollo, p. 11).
Respondents do not dispute petitioners claim that no summons was ever issued and served on her. They
contend, however, that they sent notices of the hearings to her (Rollo, pp. 12-13).
Notices of hearing are not summonses. The provisions and prevailing jurisprudence in Civil Procedure may
be applied by analogy to NLRC proceedings (Revised Rules of the NLRC, Rule I, Sec. 3). It is basic that the
Labor Arbiter cannot acquire jurisdiction over the person of the respondent without the latter being served
with summons (cf. Vda. de Macoy v. Court of Appeals, 206 SCRA 244 [1992]; Filmerco Commercial Co.,
Inc. v. Intermediate Appellate Court, 149 SCRA 193 [1987]). In the absence of service of summons or a
valid waiver thereof, the hearings and judgment rendered by the Labor Arbiter are null and void (cf. Vda. de
Macoy v. Court of Appeals, supra.)
Petitioner, in the case at bench, appealed to the NLRC and participated in the oral argument before the said
body. This, however, does not constitute a waiver of the lack of summons and a voluntary submission of her
person to the jurisdiction of the Labor Arbiter. (De los Santos v. Montera, 221 SCRA 15 [1993]).
Be that as it may, on the assumption that petitioner validly waived service of summons on her, still the case
could not prosper. There is no allegation from the pleadings filed that Lt. Col. Frankhauser and petitioner
were being sued in their personal capacities for tortious acts (United States of America v. Guinto, 182 SCRA
644 [1990]). However, private respondents named 3 AGS as one of the respondents in their complaint
(Rollo, p. 10).

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Under the Agreement Between the Government of the Republic of the Philippines and the Government of
the United States of America Relating to the Employment of Philippine Nationals in the United States
Military Bases in the Philippines otherwise known as the Base Labor Agreement of May 27, 1968, any
dispute or disagreement between the United States Armed Forces and Filipino employees should be settled
under grievance or labor relations procedures established therein (Art. II) or by the arbitration process
provided in the Romualdez-Bosworth Memorandum of Agreement dated September 5, 1985. If no
agreement was reached or if the grievance procedure failed, the dispute was appealable by either party to a
Joint Labor Committee established in Article III of the Base Labor Agreement.
Unquestionably therefore, no jurisdiction was ever acquired by the Labor Arbiter over the case and the
person of petitioner and the judgment rendered is null and void (Filmerco Commercial Co. v. Intermediate
Appellate Court, supra.; Sy v. Navarro, 81 SCRA 458 [1978]).
The petition for certiorari is GRANTED.

129.
UERM Memorial Medical Center vs NLRC
(G.R. No. 110419, March 3, 1997)

Facts: On December 14, 1987, RA 6640 took effect mandating a 10-peso increase on the prevailing daily
minimum wage (DMW) resulting to a 95-peso difference in the salaries of rank-and-file employees (union
members) and faculty members (non-union). On July 1, 1989, RA 6727 took effect again increasing the
DMW by 25 pesos resulting in a difference of P237.42 between the salaries of the 2 employee groups. In
September 1987, petitioners increased the hiring rate to P188.00 per month. On 12 April 1988, Policy
Instruction No. 54 was issued by the then Secretary of Labor Franklin Drilon providing that the personnel in
subject hospitals and clinics are entitled to a full weekly wage of seven days if they have completed the 40-
hour/5-day workweek in any given workweek.
Consequently, a complaint was filed by the private respondents, represented by the Federation of Free
Workers (FFW), claiming salary differentials under Republic Act Nos. 6640 and 6727, correction of the wage
distortion and the payment of salaries for Saturdays and Sundays under Policy Instruction No. 54.
Labor Arbiter Nieves de Castro sustained the private respondents except for their claim of wage distortion
and directed petitioner to pay P17,082,448.56 as salary differentials and P2,000.00 each as exemplary
damages. Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of
Appeal with a Real Estate Bond consisting of land and various improvements therein worth P102,345,650.
The private respondents moved to dismiss the appeal on the ground that Article 223 of the Labor Code, as
amended, requires the posting of a cash or surety bond. The NLRC directed petitioners to post a cash or
surety bond of P17,082,448.56 with a warning that failure to do so would cause the dismissal of the appeal.
The petitioners filed a Motion for Reconsideration alleging it is not in a viable financial condition to post a
cash bond nor to pay the annual premium of P700,000.00 for a surety bond. On 6 October 1992, the NLRC
dismissed petitioners' appeal. Petitioners' MR was also denied by the NLRC in a resolution dated 7 June
1993.

Issue: WON in perfecting an appeal to the National Labor Relations Commission (NLRC) a property bond is
excluded by the two forms of appeal bond cash or surety as enumerated in Article 223 of the Labor
Code.

Held: The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which
provides:
"In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the judgment appealed from."
We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC we ruled:

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"x x x that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring a cash or
surety bond in the amount equivalent to the monetary award in the judgment appealed from for the appeal
to be perfected, may be considered a jurisdictional requirement, nevertheless, adhering to the principle that
substantial justice is better served by allowing the appeal on the merits threshed out by the NLRC, the Court
finds and so holds that the foregoing requirement of the law should be given a liberal interpretation."
Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission we held:
"The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal
by the employer is underscored by the provision that an appeal by the employer may be perfected "only
upon the posting of a cash or surety bond." The word "only" makes it perfectly clear, that the lawmakers
intended the posting of a cash or surety bond by the employer to be the exclusive means by which an
employer's appeal may be perfected. The requirement is intended to discourage employers from using an
appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims.
Considering, however, that the current policy is not to strictly follow technical rules but rather to take into
account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of the
case, especially since petitioner disputes the allegation that private respondent was illegally dismissed."
We reiterate this policy which stresses the importance of deciding cases on the basis of their substantive
merit and not on strict technical rules. In the case at bar, the judgment involved is more than P17 million and
its precipitate execution can adversely affect the existence of petitioner medical center. Likewise, the issues
involved are not insignificant and they deserve a full discourse by our quasi-judicial and judicial authorities.
We are also confident that the real property bond posted by the petitioners sufficiently protects the interests
of private respondents should they finally prevail. It is not disputed that the real property offered by
petitioners is worth P102,345,650. The judgment in favor of private respondents is only a little more than
P17 million.
Case remanded to NLRC for continuation of proceedings.

130.

PHIL TRANCO SERVICES v. NLRC
G.R. No. 124100, April 1, 1998

FACTS: Nieva was employed as a driver by petitioner assigned to the Legaspi City-Pasay City route. Nieva
sideswiped an owner-type jeep and a criminal complaint was filed against him. Philtranco posted a bail bond
for Nieva. After having been suspended for thirty days, he tried to report to work but was told to wait until his
case was settled. The case was finally settled, he again reported to work but was requested to file a new
application as he was no longer considered an employee of Philtranco, allegedly for being absent without
leave from October 19 to November 20, 1989.
Nieva filed a complaint for illegal dismissal and demanded for Thirteenth-Month Pay with the NLRCs
National Capital Region Arbitration Branch in Manila. Philtranco filed a motion to dismiss on the ground of
improper venue, stating that the complaint should have been lodged with the NLRCs Regional Arbitration
Branch in Legaspi City, not only because Nieva was a resident thereof, but also because the latter was
hired, assigned, and based in Legaspi City.

ISSUE:
Whether or not NLRCs NCR Arbitration Branch in Manila was the proper venue for the filing of Nievas
complaint for illegal dismissal?

HELD:
Yes, the NLRCs NCR Arbitration Branch was the proper venue for the filing of the complaint. The question
of venue essentially pertains to the trial and relates more to the convenience of the parties rather than upon
the substance and merits of the case. Provisions on venue are intended to assure convenience for the
plaintiff and his witnesses and to promote the ends of justice. In fact, Section 1 (a), Rule IV of the New

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Rules of Procedure of the NLRC, cited by Philtranco in support of its contention that venue of the illegal
dismissal case filed by Nieva is improperly laid, speaks of the complainant/petitioner's workplace, evidently
showing that the rule is intended for the exclusive benefit of the worker. This being the case, the worker may
waive said benefit. Furthermore, the aforesaid Section has been declared by this Court to be merely
permissive. Moreover, Nieva, as a driver of Philtranco, was assigned to the Legazpi City-Pasay City route.
Sulpicio Lines, Inc. vs. NLRC is exactly in point. In said case, we held that: "Section 1, Rule IV of the 1990
NLRC Rules additionally provides that, for purposes of venue, workplace shall be understood as the place
or locality where the employer is regularly assigned when the cause of action arose." From the foregoing, it
is obvious that the filing of the complaint with the National Capital Region Arbitration Branch was proper,
Manila being considered as part of Nieva's workplace by reason of his plying the Legazpi City-Pasay City
route.

131.

St. Martin Funeral Homes vs. NLRC
G.R. No. 130866, September 16, 1998

FACTS:
Private respondent alleges that he started working as Operations Manager of petitioner St. Martin
Funeral Home on February 6, 1995. Petitioner on the other hand claims that private respondent was not its
employee but only the uncle of Amelita Malabed, the owner of petitioner St. Martins Funeral Home. When
the mother of Amelita passed away, the latter then took over the management of the business and made
some changes in the business operation and private respondent and his wife were no longer allowed to
participate in the management thereof. As a consequence, the latter filed a complaint charging that
petitioner had illegally terminated his employment.
The labor arbiter rendered a decision in favor of petitioner declaring that no employer-employee
relationship existed between the parties and, therefore, his office had no jurisdiction over the case.
On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and
remanding the case to the labor arbiter for immediate appropriate proceedings. Petitioner then filed a motion
for reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for lack of merit.

ISSUE:
Whether or not the Court has the power to review decisions of the NLRC.

RULING:
When the issue was raised in an early case on the argument that this Court has no jurisdiction to
review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal provision
for appellate review thereof, the Court nevertheless rejected that thesis. It held that there is an underlying
power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though
no right of review is given by statute; that the purpose of judicial review is to keep the administrative agency
within its jurisdiction and protect the substantial rights of the parties; and that it is that part of the checks and
balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications.
Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of
the aggrieved party is to timely file a motion for reconsideration as a precondition for any further or
subsequent remedy, and then seasonably avail of the special civil action of certiorari under Rule 65, for
which said Rule has now fixed the reglementary period of sixty days from notice of the decision. Curiously,
although the 10-day period for finality of the decision of the NLRC may already have lapsed as
contemplated in Section 223 of the Labor Code, it has been held that this Court may still take cognizance of
the petition for certiorari on jurisdictional and due process considerations if filed within the reglementary
period under Rule 65.

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Sec. 9. Jurisdiction. The Court of Appeals shall exercise: (3) Exclusive appellate jurisdiction over
all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the
Social Security Commission, the Employees Compensation Commission and the Civil Service Commission,
except those falling within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948

132.

Ludo & Luym Corp. vs. Soarnido
G.R. No. 140960, January 20, 2003

FACTS: LUDO engaged the arrastre services of Cresencio Lu Arrastre Services (CLAS) for the loading
and unloading of its finished products at the wharf. Accordingly, several arrastre workers were deployed by
CLAS to perform the services needed by LUDO. These arrastre workers were subsequently hired, on
different dates, as regular rank-and-file employees of LUDO every time the latter needed additional
manpower services. Said employees thereafter joined respondent union, the LUDO Employees Union
(LEU), which acted as the exclusive bargaining agent of the rank-and-file employees. Respondent union
entered into a collective bargaining agreement with LUDO which provides certain benefits to the employees,
the amount of which vary according to the length of service rendered by the availing employee. Thereafter,
the union requested LUDO to include in its members period of service the time during which they rendered
arrastre services to LUDO through the CLAS so that they could get higher benefits. LUDO failed to act on
the request. Thus, the matter was submitted for voluntary arbitration. Voluntary Arbitrator ruled that: (1) the
respondent employees were engaged in activities necessary and desirable to the business of petitioner, and
(2) CLAS is a labor-only contractor of petitioner. The Court of Appeals affirmed in toto the decision of the
Voluntary Arbitrator. Petitioner contends that the appellate court erred when it upheld the award of benefits
which were beyond the terms of submission agreement and that the arbitrator must confine its adjudication
to those issues submitted by the parties for arbitration, which in this case is the sole issue of the date of
regularization of the workers. Hence, the award of benefits by the arbitrator was done in excess of
jurisdiction.

ISSUE:
WON the appellate court gravely erred when it upheld the award of benefits which were beyond the terms of
submission agreement.

RULING:
Generally, the arbitrator is expected to decide only those questions expressly delineated by the submission
agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make a final
settlement since arbitration is the final resort for the adjudication of disputes.13 The succinct reasoning
enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a labor controversy has
jurisdiction to render the questioned arbitral awards, deserves our concurrence, thus: In general, the
arbitrator is expected to decide those questions expressly stated and limited in the submission agreement.
However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that
he has the power to make a final settlement. Thus, assuming that the submission empowers the arbitrator to
decide whether an employee was discharged for just cause, the arbitrator in this instance can reasonable
assume that his powers extended beyond giving a yes-or-no answer and included the power to reinstate
him with or without back pay.


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133.

HANJIN ENGINEERING & CONSTRUCTION v. CA
GR No. 165910

FACTS: On October 18, 1991 and August 21, 1992, Hanjin and the Philippine Government, through the
National Irrigation Administration (NIA), executed contracts for the construction of the Malinao Dam at Pilar,
Bohol, with a projected completion period of 1,050 calendar days, including main canal and lateral projects
for 750 days.

From August 1995 to August 1996, Hanjin contracted the services of 712 carpenters, masons,
truck drivers, helpers, laborers, heavy equipment operators, leadmen, engineers, steelmen, mechanics,
electricians and others.
In April 1998, 712 employees filed complaints for illegal dismissal and for payment of benefits against
Hanjin and Nam Hyun Kim, the officer-in-charge of the project (herein petitioners), before the National Labor
Relations Commission (NLRC). The complainants averred that they were regular employees of Hanjin and
that they were separated from employment without any lawful or just cause. Only 521 of the complainants
affixed their signatures in the complaints.
Petitioners alleged that the complainants were mere project employees in its Bohol Irrigation Project.
On May 12, 1998, the Labor Arbiter rendered judgment in favor of the 428 complainants, granting
separation pay and attorneys fees to each of them. According to the Labor Arbiter, the complainants were
regular employees of petitioner Hanjin, and their claims for underpayment, holiday pay, premium pay for
holiday and rest day, 13
th
month pay, and service incentive leave would be computed after sufficient data
were made available.
Petitioners appealed the decision to the NLRC, which affirmed with modification the Labor Arbiters ruling
on January 28, 2000.
Petitioners filed a Motion for the Reconsideration of the decision (with a motion to conduct clarificatory
hearings).
On July 20, 2001, the NLRC issued a Resolution partially granting petitioners motion.
Unsatisfied, petitioners filed a Petition for Certiorari under Rule 65 of the Revised Rules of Court in the CA.
On March 18, 2004, the CA dismissed the petition and affirmed the NLRCs ruling that the dismissed
employees (respondents) were regular employees. The CA stressed that petitioners failed to refute the
claim of the respondents that they were regular employees. Petitioners moved to reconsider the decision,
which the CA denied.

ISSUE:
WON respondents regular employees entitled to their moneys.

RULING:
The CA, for its part, affirmed the findings of the Labor Arbiter and the NLRC, and held that respondents
were regular employees of petitioner Hanjin:
In the instant case, petitioners belatedly submitted copies of Appointment(s) as Contract Worker(s)
allegedly signed by private respondents at the time they commenced work, and which provided for an
employment of six (6) months only, a period applicable for probationary employment. While it may be
allowed that in the instant case the workers were initially hired for specific projects or undertakings for a
period of six (6) months or less, the repeated re-hiring and the continuing need for their services over a long
span of time (from 1991 to 1995) have undeniably made them regular employees. Thus, we held that where
the employment of project employees is extended long after the supposed appointments has been
finished, the employees are removed from the scope of project employees and considered regular
employees. How can one properly explain private respondents continuous employment from 1991 to 1996
when their appointment was for a measly period of six months? It is clear, therefore, that as aptly
established by the NLRC, these piecemeal appointments have been imposed to preclude the acquisition of
tenurial security. While length of time may not be a controlling test for project employment, it can be a strong

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factor in determining whether the employee was hired for a specific undertaking or in fact tasked to perform
functions which are vital, necessary and indispensable to the usual business or trade of the employer.
Furthermore, it is noteworthy to emphasize that these appointments were submitted only as attachments
to petitioners motion for reconsideration. As borne out by the records and even mentioned in the decision of
the Labor Arbiter, petitioners were already required during the initial hearings before the Labor Arbiter to
submit additional documents in their possession necessary to support their case. Instead of complying,
petitioners still had to wait for the adverse decision of the NLRC before they submitted the same. Likewise,
in the NLRCs assailed decision, petitioners failure to present these appointments were adverted to, thus,
the NLRC ruled that nowhere in the records can the said contracts be found. Despite sufficient time, from
the time they were required by the Labor Arbiter to present additional evidence up to the time the appeal
was resolved by the NLRC, petitioners were not able to present said employment contracts. Petitioners
hesitation to submit the same is well-founded. It is a well-settled rule that when the evidence tends to prove
a material fact which imposes a liability on a party, and he has it in his power to produce evidence which
from its very nature must overthrow the case made against him if it is not founded on fact, and he refuses to
produce such evidence, the presumption arises that the evidence, if produced, would operate to his
prejudice, and support the case of his adversary.

Moreover, it is required under Policy Instruction No. 20, Series of 1993, that in case of project employees,
the termination of their employment in the particular project or undertaking must be reported to the
Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within
thirty (30) days following the date of his separation from work. In Ochoco v. National Labor Relations
Commission, the failure of the employer to report to the nearest employment office the termination of
employment of workers everytime it completed a project was considered by this Court as proof that the
dismissed employees were not project employees but regular employees. On this requirement, petitioners
were silent, until the Decision of the NLRC reminded them. To prove that petitioners allegedly complied with
said requirement, they again belatedly submitted machine copies of reports allegedly made to the DOLE of
Bohol. To explain away their failure to produce certified true copies of the same, petitioners allege that the
NLRC should have given evidentiary weight to the machine copies which are for all legal intents and
purposes already public records in the custody of the DOLE duly recorded in a public office. The same
argument can be taken against herein petitioners in that, for all the time it took them to produce said
machine copies, it would have been more prudent for them to have it certified by the DOLE in Bohol. Under
the Rules of Evidence, and as stated by petitioners, the original document need not be produced when the
same is a public record in the custody of a public office or is recorded in a public office. Thus, proof of such
documents may be made by a duly authenticated copy of the original document or record. It is essential,
furthermore, that the copies be made in the manner provided by the rules and that all requirements in
connection therewith be complied with before such copy be properly admissible in evidence. Considering
that the documents submitted by petitioners are mere machine copies, the NLRC cannot be compelled to
give them evidentiary weight.
The appellate court, the NLRC and the Labor Arbiter are thus one in finding that respondents were not
project employees, and in sustaining respondents claim of illegal dismissal due to petitioners failure to
adduce contrary evidence. Well-settled is the rule that findings of fact of quasi-judicial agencies, like the
NLRC, are accorded not only respect but at times even finality if such findings are supported by substantial
evidence. Such findings of facts can only be set aside upon showing of grave abuse of discretion, fraud or
error of law,none of which have been shown in this case.

134.

Phil. Journalistic Inc., vs NLRC
G.R. 166421 September 5, 2006


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Facts: In NLRCs Resolution dated May 31, 2001, petitioner Philippine Journalists, Inc. (PJI) was adjudged
liable in the total amount of P6,447,008.57 for illegally dismissing 31 complainants-employees and that there
was no basis for the implementation of petitioner's retrenchment program. Thereafter, the parties executed a
Compromise Agreement dated July 9, 2001, where PJI undertook to reinstate the 31 complainant-
employees effective July 1, 2001 without loss of seniority rights and benefits; 17 of them who were
previously retrenched were agreed to be given full and complete payment of their respective monetary
claims, while 14 others would be paid their monetary claims minus what they received by way of separation
pay.
The compromise agreement was submitted to the NLRC for approval. All the employees mentioned in the
agreement and in the NLRC Resolution affixed their signatures thereon. They likewise signed the Joint
Manifesto and Declaration of Mutual Support and Cooperation which had also been submitted for the
consideration of the labor tribunal. The NLRC forthwith issued another Resolution on July 25, 2002, which
among others declared that the compromise agreement was approved and NCMB-NCR-NS-03-087-00 was
deemed closed and terminated.
In the meantime, however, the Union filed another Notice of Strike on July 1, 2002. In an Order dated
September 16, 2002, the DOLE Secretary certified the case to the Commission for compulsory arbitration.
The case was docketed as NCMB-NCR- NS-07-251-02. In its Resolution dated July 31, 2003, the NLRC
ruled that the complainants were not illegally dismissed. The May 31, 2001 Resolution declaring the
retrenchment program illegal did not attain finality as "it had been academically mooted by the compromise
agreement entered into between both parties on July 9, 2001." The Union assailed the ruling of the NLRC
before the CA via petition for certiorari under Rule 65. In its Decision dated August 17, 2004, the appellate
court held that the NLRC gravely abused its discretion in ruling for PJI. The compromise agreement referred
only to the award given by the NLRC to the complainants in the said case, that is, the obligation of the
employer to the complainants.

Issue:
WON the petitioners petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure is a proper
remedy in this case.

Held:
At the outset, we note that this case was brought before us via petition for certiorari under Rule 65 of the
Revised Rules of Civil Procedure. The proper remedy, however, was to file a petition under Rule 45. It must
be stressed that certiorari under Rule 65 is "a remedy narrow in scope and inflexible in character. It is not a
general utility tool in the legal workshop." Moreover, the special civil action for certiorari will lie only when a
court has acted without or in excess of jurisdiction or with grave abuse of discretion.
Be that as it may, a petition for certiorari may be treated as a petition for review under Rule 45. Such move
is in accordance with the liberal spirit pervading the Rules of Court and in the interest of substantial justice.
As the instant petition was filed within the prescribed fifteen-day period, and in view of the substantial issues
raised, the Court resolves to give due course to the petition and treat the same as a petition for review on
certiorari.

135.

Balagtas Multi-purpose Coop. v. CA

FACTS: Balagtas Multi-Purpose Cooperative, Inc. is a duly organized and existing cooperative under the
laws of the Philippines. Sometime in April 1991, Balagtas hired Josefina G. Hipolito-Herrero, as part time
manager in its office. Subsequently, Josefina made known of her intention to take a leave of absence. Her
proposal was immediately approved. However, after the lapse of her leave of absence, Josefina did not
report for work anymore. Later on, she filed her resignation.

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Consequently Josefina filed a complaint with the Provincial Office of the Department of Labor in Malolos,
Bulacan for illegal dismissal, and non-payment of 13th month pay or Christmas Bonus. She also prayed for
reinstatement and paid backwages as well as moral damages.
The Labor Arbiter rendered judgment in favor of complainant and against respondents and ordered the latter
to pay the former 13th month pay, backwages and separation pay. Aggrieved, herein petitioners appealed
the decision to NLRC but failed to post either a cash or surety bond as required by Article 223 of the Labor
Code. They filed a manifestation and motion instead, stating, that under Republic Act No. 6938, Article 62(7)
of the Cooperative Code of the Philippines, petitioners are exempt from putting up a bond in an appeal from
the decision of the inferior court. NLRC ordered respondents to post a cash or surety bond in the amount of
P218,000.00, within 10 inextendible days from receipt of the Order, failure of which shall constitute a waiver
and non-perfection of the appeal. Balagtas appealed to CA, which dismissed the petition holding that the
exemption from putting up a bond by a cooperative applies to cases decided by inferior courts only.

ISSUES:
1. WON cooperatives are exempted from filing a cash or surety bond required to perfect an
employers appeal under Section 223 of Presidential Decree No. 442 (the Labor Code);
2. WON a certification issued by the Cooperative Development Authority constitutes substantial
compliance with the requirement for the posting of a bond.

RULING:
1. No. Petitioners argue that there are certain benefits and privileges expressly granted to
cooperative under the Cooperative Code. It invoked the provision on Article 62 regarding the exemption
from payment of an appeal bond, to wit: (7)All cooperatives shall be exempt from putting up a bond for
bringing an appeal against the decision of an inferior court or for seeking to set aside any third party claim:
Provided, That a certification of the Authority showing that the net assets of the cooperative are in excess of
the amount of the bond required by the court in similar cases shall be accepted by the court as a sufficient
bond.
However, it is only one among a number of such privileges which appear under the article entitled Tax and
Other Exemptions of the code. The provision cited by petitioners cannot be taken in isolation and must be
interpreted in relation to the Cooperative Code in its entirety. Exceptions are to be strictly but reasonably
construed; they extend only so far as their language warrants, and all doubts should be resolved in favor of
the general provision rather than the exceptions.
2. No. Article 119 of the Cooperative Code itself expressly embodies the legislative intention to
extend the coverage of labor statutes to cooperatives. For this reason, petitioners must comply with the
requirement set forth in Article 223 of the Labor Code in order to perfect their appeal to the NLRC. It must
be pointed out that the right to appeal is not a constitutional, natural or inherent right. It is a privilege of
statutory origin and, therefore, available only if granted or provided by statute. The law may validly provide
limitations or qualifications thereto or relief to the prevailing party in the event an appeal is interposed by the
losing party.
In this case, the obvious and logical purpose of an appeal bond is to insure, during the period of appeal,
against any occurrence that would defeat or diminish recovery by the employee under the judgment if the
latter is subsequently affirmed.
Therefore, no error can be ascribed to the CA for holding that the phrase inferior courts appearing in
Article 62 paragraph (7) of the Cooperative Code does not extend to quasi-judicial agencies and that,
petitioners are not exempt from posting the appeal bond required under Article 223 of the Labor Code.

136.

St. Martin Funeral Homes vs NLRC
(2006) G.R. 142351


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Facts: On September 16, 1998, the Supreme Court rendered the landmark decision in G.R. No. 130866,
holding for the first time that all petitions for certiorari under Rule 65 assailing the decisions of the NLRC
should henceforth be filed with the CA, thus all references in the amended section 9 of B.P. No. 129 to
supposed appeals from the NLRC to the Supreme Court are interpreted and refer to petitions for certiorari
under Rule 65. Consequently, all such petitions should henceforth be initially filed in the Court of Appeals in
strict observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief desired.
Thus, the petition was remanded to the CA and redocketed as CA-G.R. SP No. 49183. Subsequently, the
CA rendered the assailed September 30, 1999 Decision, dismissing petitioner's appeal for lack of merit with
the finding that respondent NLRC did not commit grave abuse of discretion, in its pronouncement that the
Labor Arbiter did not make any finding on the alleged employer-employee relationship between the parties,
reasoning this way:
Actually the Labor Arbiter did not determine whether there is an employer-employee relation between the
parties because according to him, such issue should be resolved by the regular court pursuant to the ruling
of the Supreme Court in De la Salle University vs. NLRC (135 SCRA 674, 677 (1988)).
For its part, respondent NLRC, is remanding the case to the Labor Arbiter, reminded the latter that he is
authorized by the NLRC Rules to determine, in an appropriate proceeding the existence of an employer-

Issue: WON the Labor Arbiter made a determination of the presence of an employer-employee relationship.

Held: At the outset, it is clear that the issue submitted for resolution is a question of fact which is proscribed
by the rule disallowing factual issues in appeal by certiorari to the Supreme Court under Rule 45. This is
explicit in Rule 45, Section 1 that petitions of this nature "shall raise only questions of law which must be
distinctly set forth." Petitioner St. Martin would like the Court to examine the pleadings and documentary
evidence extant on the records of the Labor Arbiter to determine if said official indeed made a finding on the
existence of the alleged employer-employee nexus between the parties based on the facts contained in said
pleadings and evidence. Evidently this issue is embraced by the circumscription.
Even if we would like to relax the rule and allow the examination of the documentary evidence as an
exception to the general rule, we are precluded by the abject failure of petitioner to attach to the petition
important and material portions of the records as would support the petition prescribed by Rule 45, Section
4. St. Martin asks us to find out if the Labor Arbiter was correct in concluding that respondent Aricayos was
not in its employ; but committed the blunder of not attaching to the petition even the Decision of the Labor
Arbiter sought to be reviewed, the NLRC Decision, the position papers and memoranda of the parties filed
with the Labor Arbiter, the affidavits of petitioner's employees, and other pieces of evidence that we can
consider in resolving the factual issue on employment. Without these vital documents, petitioner cannot be
given the relief prayed for.

137.
DOLE Phils. vs. Esteva
G.R. No. 161115, November 30, 2006

FACTS: Petitioner is a corporation duly recognized and existing in accordance with Philippine laws,
engaged principally in the production and processing of pineapple for the export market. Its plantation is
located in Polomolok, South Cotabato .

Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was
organized in accordance with R.A. No. 6938, otherwise known as the Cooperative Code of the Philippines ,
and duly registered with the Cooperative Development Authority (CDA) on 6 January 1993. Members of
CAMPCO live in communities surrounding petitioners plantation and are relatives of petitioners employees.


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On 17 August 1993, petitioner and CAMPCO entered into a Service Contract. The Service Contract referred
to petitioner as the Company, while CAMPCO was the Contractor. The said contract was good for six
months.

Pursuant to the contract, CAMPCO members rendered services to petitioner. The parties apparently
extended or renewed the same for the succeeding years without executing another written contract.

However, due to investigations and reliable information, the Regional Director of DOLE exercised his
visitorial and enforcement power and found out that CAMPCO is engaged in labor-only contracting together
with two other cooperatives.

The Law cited was Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code.
(pertaining to Labor-only contracting 1. no substantial capital; 2. work is directly related to the principal
business of the principal b. in such case, the one who alleges as contractor is deemed an agent of the
principal while the latter will latter is considered the indirect employer for purposes of enforcement of the
labor rights.)

Before the NLRC, respondents contended that they have been working more than one year too petitioner.
While some of the respondents were still working for petitioner, others were put on stay home status on
varying dates in the years 1994, 1995, and 1996 and were no longer furnished with work thereafter. They,
then, filed a case before the NLRC for illegal dismissal, regularization, wage differentials, damages and
attorneys fees.

Respondents argued that they should be considered regular employees of petitioner given that: 1. they were
performing jobs that were usually necessary and desirable in the usual business of petitioner; 2. petitioner
exercised control over respondents, not only as to the results, but also as to the manner by which they
performed their assigned tasks; and 3. CAMPCO, a labor-only contractor, was merely a conduit of
petitioner. As regular employees of petitioner, respondents asserted that they were entitled to security of
tenure and those placed on stay home status for more than six months had been constructively and
illegally dismissed. Respondents further claimed entitlement to wage differential, moral damages, and
attorneys fees.

NLRC affirmed the Labor Arbiters decision. CA also affirmed.

ISSUES:
Whether the lower courts were correct in ruling that Petitioner is the employer of respondents and
that CAMPCO be considered merely as agent of the company

HELD:

In summary, this Court finds that CAMPCO was a labor-only contractor and, thus, petitioner is the real
employer of the respondents, with CAMPCO acting only as the agent or intermediary of petitioner. Due to
the nature of their work and length of their service, respondents should be considered as regular employees
of petitioner. Petitioner constructively dismissed a number of the respondents by placing them on "stay
home status" for over six months, and was therefore guilty of illegal dismissal. Petitioner must accord
respondents the status of regular employees, and reinstate the respondents who it constructively and
illegally dismissed, to their previous positions, without loss of seniority rights and other benefits, and pay
these respondents backwages from the date of filing of the Complaint with the NLRC on 19 December 1996
up to actual reinstatement.


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CRITERIA TO ESTABLISH THE EXISTENCE OF AN INDEPENDENT AND PERMISSIBLE CONTRACTOR
RELATIONSHIP

generally established by the following criteria: whether 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's power with respect to the hiring, firing and payment of the contractor's 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

SEVERAL FACTORS ARE PRESENT IN THE CASE TO ESTABLISH A LABOR- ONLY CONTRACTING
ARRANGEMENT BY BETWEEN THE MANAGEMENT AND CAMPCO

While there is present in the relationship of petitioner and CAMPCO some factors suggestive of an
independent contractor relationship (i.e., CAMPCO chose who among its members should be sent to work
for petitioner; petitioner paid CAMPCO the wages of the members, plus a percentage thereof as
administrative charge; CAMPCO paid the wages of the members who rendered service to petitioner), many
other factors are present which would indicate a labor-only contracting arrangement between petitioner and
CAMPCO.

First, although petitioner touts the multi-million pesos assets of CAMPCO, it does well to remember that
such were amassed in the years following its establishment. In 1993, when CAMPCO was established and
the Service Contract between petitioner and CAMPCO was entered into, CAMPCO only had P6,600.00
paid-up capital, which could hardly be considered substantial. It only managed to increase its capitalization
and assets in the succeeding years by continually and defiantly engaging in what had been declared by
authorized DOLE officials as labor-only contracting.

Second, CAMPCO did not carry out an independent business from petitioner. It was precisely established to
render services to petitioner to augment its workforce during peak seasons. Petitioner was its only client.
Even as CAMPCO had its own office and office equipment, these were mainly used for administrative
purposes; the tools, machineries, and equipment actually used by CAMPCO members when rendering
services to the petitioner belonged to the latter.

Third, petitioner exercised control over the CAMPCO members, including respondents. Petitioner attempts
to refute control by alleging the presence of a CAMPCO supervisor in the work premises. Yet, the mere
presence within the premises of a supervisor from the cooperative did not necessarily mean that CAMPCO
had control over its members. Section 8(1), Rule VIII, Book III of the implementing rules of the Labor Code,
as amended, required for permissible job contracting that the contractor undertakes 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 the work except as to
the results thereof. As alleged by the respondents, and unrebutted by petitioner, CAMPCO members, before
working for the petitioner, had to undergo instructions and pass the training provided by petitioners
personnel. It was petitioner who determined and prepared the work assignments of the CAMPCO members.
CAMPCO members worked within petitioners plantation and processing plants alongside regular
employees performing identical jobs, a circumstance recognized as an indicium of a labor-only
contractorship.

Fourth, CAMPCO was not engaged to perform a specific and special job or service. In the Service Contract
of 1993, CAMPCO agreed to assist petitioner in its daily operations, and perform odd jobs as may be
assigned. CAMPCO complied with this venture by assigning members to petitioner. Apart from that, no
other particular job, work or service was required from CAMPCO, and it is apparent, with such an

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arrangement, that CAMPCO merely acted as a recruitment agency for petitioner. Since the undertaking of
CAMPCO did not involve the performance of a specific job, but rather the supply of manpower only,
CAMPCO clearly conducted itself as a labor-only contractor.

Lastly, CAMPCO members, including respondents, performed activities directly related to the principal
business of petitioner. They worked as can processing attendant, feeder of canned pineapple and pineapple
processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions which
were, not only directly related, but were very vital to petitioners business of production and processing of
pineapple products for export.

The findings enumerated in the preceding paragraphs only support what DOLE Regional Director Parel and
DOLE Undersecretary Trajano had long before conclusively established, that CAMPCO was a mere labor-
only contractor

EMPLOYER- EMPLOYEE RELATIONSHIP EXIST BETWEEN THE PETITIONER AND THE
RESPONDENT WITH THE DECLARATION THAT CAMPCO WAS ENGAGED IN THE PROHIBITED ACTS
OF LABOR-ONLY CONTRACTING

The declaration that CAMPCO is indeed engaged in the prohibited activities of labor-only contracting, then
consequently, an employer-employee relationship is deemed to exist between petitioner and respondents,
since CAMPCO shall be considered as a mere agent or intermediary of petitioner

RESPONDENTS ARE CONSIDERED REGULAR EMPLOYEES FOR THEY PERFORMED ACTIVITIES
THAT ARE NECESSARY OR DESIRABLE TO THE USUAL BUSINESS OF THE PETITIONER

Since respondents are now recognized as employees of petitioner, this Court is tasked to determine the
nature of their employment. In consideration of all the attendant circumstances in this case, this Court
concludes that respondents are regular employees of petitioner.

In the instant Petition, petitioner is engaged in the manufacture and production of pineapple products for
export. Respondents rendered services as processing attendant, feeder of canned pineapple and pineapple
processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions they
performed alongside regular employees of the petitioner. There is no doubt that the activities performed by
respondents are necessary or desirable to the usual business of petitioner.

Petitioner likewise want this Court to believe that respondents employment was dependent on the peaks in
operation, work backlogs, absenteeism, and excessive leaves. However, bearing in mind that respondents
all claimed to have worked for petitioner for over a year, a claim which petitioner failed to rebut, then
respondents continued employment clearly demonstrates the continuing necessity and indispensability of
respondents employment to the business of petitioner.

THE COMPANYS ACT OF PLACING SOME OF THE RESPONDENTS ON "STAY HOME STATUS" AND
NOT GIVING THEM WORK ASSIGNMENTS FOR MORE THAN SIX MONTHS WERE ALREADY
TANTAMOUNT TO CONSTRUCTIVE AND ILLEGAL DISMISSAL

Respondents, as regular employees of petitioner, are entitled to security of tenure. They could only be
removed based on just and authorized causes as provided for in the Labor Code, as amended, and after
they are accorded procedural due process. Therefore, petitioners acts of placing some of the respondents
on "stay home status" and not giving them work assignments for more than six months were already
tantamount to constructive and illegal dismissal


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138.

Intercontinental Broadcasting Corp., vs Panganiban
G.R. No. [151407, February 6, 2007

FACTS:

Petitioner employed persons as Studio Technician, Collector, Traffic Clerk in its Cebu branch.
The government sequestered the station, including its properties, funds and other assets, and took over its
management and operations from its owner, Roberto Benedicto. However,
The government and Benedicto entered into a temporary agreement under which the latter would retain its
management and operation.
Presidential Commission on Good Government (PCGG) and Benedicto executed a Compromise
Agreement, where Benedicto transferred and assigned all his rights, shares and interests in petitioner
station to the government.
In the meantime, the four employees retired from the company and received on staggered basis their
retirement benefits under the 1993 Collective Bargaining Agreement between petitioner and the bargaining
unit of its employees.
P1,500.00 salary increase was given to all employees of the company (current and retired) effective July
1994.
However, when the four retirees demanded theirs, petitioner refused and instead informed them via a letter
that their differentials would be used to offset the tax due on their retirement benefits in accordance with the
National Internal Revenue Code (NIRC).
The four retirees filed separate complaints against IBC TV-13 Cebu and Station Manager Louella F.
Cabaero for unfair labor practice and non-payment of backwages before the NLRC.

ISSUE:

Whether or not the retirement benefits of respondents are taxable?

RULING:

The Court agrees with petitioner that under the CBA, it is not obliged to pay for the taxes on the
respondents' retirement benefits. CBA did not provide a provision where petitioner obliged itself to pay the
taxes on the retirement benefits of its employees. The Court also agrees with petitioner that, under the
NIRC, the retirement benefits of respondents are part of their gross income subject to taxes.

For the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the
concurrence of the following elements:
(1) a reasonable private benefit plan is maintained by the employer
(2) the retiring official or employee has been in the service of the same employer for at least 10 years
(3) the retiring official or employee is not less than 50 years of age at the time of his retirement
(4) the benefit had been availed of only once.

Article VIII of the 1993 COLLECTIVE BARGAINING AGREEMENT provides for two kinds of retirement
plans - compulsory and optional.

Section 1: Compulsory Retirement Any employee who has reached the age of Fifty Five (55) years shall
be retired from the COMPANY and shall be paid a retirement.


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Section 2: Optional Retirement Any covered employee, regardless of age, who has rendered at least five
(5) years of service to the COMPANY may voluntarily retire and the COMPANY agrees to pay Long Service
Pay to said covered employee.

Section 3: Fraction of a Year In computing the retirement under Section 1 and 2 of this Article, a fraction
of at least six (6) months shall be considered as one whole year.

Respondents were qualified to retire optionally from their employment with petitioner. There is no record that
the 1993 CBA had been approved or was ever presented to the BIR. Hence, the retirement benefits of
respondents are taxable.

Under Section 80 of the National Internal Revenue Code (NIRC) Employer was obliged to withhold the taxes
on said benefits and remit the same to the BIR.
Section 80.
The employer shall be liable for the withholding and remittance of the correct amount of tax required to be
deducted and withheld under this Chapter. If the employer fails to withhold and remit the correct amount of
tax as required to be withheld under the provision of this Chapter, such tax shall be collected from the
employer together with the penalties or additions to the tax otherwise applicable in respect to such failure to
withhold and remit.

139

FAR EAST AGRICULTURAL SUPPLY, INC. vs.
JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS
G.R. No. 162813 February 12, 2007

FACTS

On March 4, 1996, Far East hired Jimmy Lebatique as truck driver to animal feeds to the companys clients.
He had a daily wage of P223.50. On January 24, 2000, Lebatique complained of nonpayment of overtime
work particularly on January 22, 2000, when he was required to make a second delivery in Novaliches,
Quezon City. That same day Lebatique was suspended apparently for illegal use of company vehicle. Even
so, Lebatique reported for work the next day but he was prohibited from entering the company premises.

On January 26, 2000, Lebatique sought the assistance of DOLE Public Assistance and Complaints Unit
concerning the nonpayment of his overtime pay. Lebatique explained that he had never been paid for
overtime work since he started working for the company. He also told Alexander (general manager) that
Manuel (Alexanders brother) had fired him. After talking to Manuel, Alexander terminated Lebatique and
told him to look for another job.

On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The
Labor Arbiter found that Lebatique was illegally dismissed, and ordered his reinstatement and the payment
of his full back wages, 13th month pay, service incentive leave pay, and overtime pay.

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit. The NLRC
held that there was no dismissal to speak of since Lebatique was merely suspended. Further, it found that
Lebatique was a field personnel, hence, not entitled to overtime pay and service incentive leave pay.
Lebatique sought reconsideration but was denied.


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The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was suspended on January
24, 2000 but was illegally dismissed on January 29, 2000 when Alexander told him to look for another job. It
also found that Lebatique was not a field personnel and therefore entitled to payment of overtime pay,
service incentive leave pay, and 13th month pay.

ISSUES

WON Lebatique was illegally dismissed
WON Lebatique was a field personnel, not entitled to overtime pay

HELD

YES. It is well settled that in cases of illegal dismissal, the burden is on the employer to prove that the
termination was for a valid cause. In this case, petitioners failed to discharge such burden. Petitioners aver
that Lebatique was merely suspended for one day but he abandoned his work thereafter. To constitute
abandonment as a just cause for dismissal, there must be: (a) absence without justifiable reason; and (b) a
clear intention, as manifested by some overt act, to sever the employer-employee relationship.

When Lebatique was verbally told by Alexander Uy, the companys General Manager, to look for another
job, Lebatique was in effect dismissed. Even assuming earlier he was merely suspended for illegal use of
company vehicle, the records do not show that he was afforded the opportunity to explain his side. It is clear
also from the sequence of the events leading to Lebatiques dismissal that it was Lebatiques complaint for
nonpayment of his overtime pay that provoked the management to dismiss him, on the erroneous premise
that a truck driver is a field personnel not entitled to overtime pay.

NO. Lebatique is not a field personnel. Article 82 of the Labor Code is decisive on the question of who are
referred to by the term "field personnel

"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.

The definition of a "field personnel" is not merely concerned with the location where the employee regularly
performs his duties but also with the fact that the employees performance is unsupervised by the employer.

Lebatique is not a field personnel as defined above for the following reasons: (1) company drivers, including
Lebatique, are directed to deliver the goods at a specified time and place; (2) they are not given the
discretion to solicit, select and contact prospective clients; and (3) Far East issued a directive that company
drivers should stay at the clients premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00
to 9:00 p.m. Lebatique, therefore, is a regular employee whose tasks are usually necessary and desirable to
the usual trade and business of the company. Thus, he is entitled to the benefits accorded to regular
employees of Far East, including overtime pay and service incentive leave pay.

Note that all money claims arising from an employer-employee relationship shall be filed within three years
from the time the cause of action accrued; otherwise, they shall be forever barred. Further, if it is established
that the benefits being claimed have been withheld from the employee for a period longer than three years,
the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by
prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the
amount of the benefits withheld within three years before the filing of the complaint.


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Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the
prescriptive period commences at the time he was terminated. On the other hand, his claim regarding
nonpayment of overtime pay since he was hired in March 1996 is a different matter. In the case of overtime
pay, he can only demand for the overtime pay withheld for the period within three years preceding the filing
of the complaint on March 20, 2000. However, we find insufficient the selected time records presented by
petitioners to compute properly his overtime pay. The Labor Arbiter should have required petitioners to
present the daily time records, payroll, or other documents in managements control to determine the correct
overtime pay due Lebatique.

140.
Letran Calamba Faculty and Employees Association vs. NLRC (1997
G.R. 156225

Facts: The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint

against
Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its
members. One of the allegations that petitioner alleged in its Position Paper is that: In the computation of
the thirteenth month pay of its academic personnel, respondent does not include as basis therefor their
compensation for overloads. It only takes into account the pay the faculty members receive for their
teaching loads not exceeding eighteen (18) units. The teaching overloads are rendered within eight (8)
hours a day. The Labor Arbiter (LA) handling the consolidated cases, denied and dismissed the respective
complaints.

Issue: WON the pay of the faculty members for teaching overloads should be included as basis in the
computation of their 13
th
month pay?

Held: Teaching overload may not be considered part of basic salary.
Under the Rules and Regulations Implementing PD 851, the following compensations are deemed not part
of the basic salary: a) cost-of-living allowances granted pursuant to PD 525 and Letter of Instruction No.
174; b) profit sharing payments; c) all allowances and monetary benefits which are not considered or
integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree
on Dec 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued by the then Labor
Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic
salary and in the computation of the 13
th
-month pay.
The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic salary
includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed
on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed
not part of the basic salary and shall not be considered in the computation of the 13
th
-month pay.
As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional compensation other
than and added to the regular wage or basic salary, for reason of which such is categorically excluded from
the definition of basic salary under the Supplementary Rules and Regulations Implementing PD 851.
In the same manner that payment for overtime work and work performed during special holidays is
considered as additional compensation apart and distinct from an employee's regular wage or basic salary,
an overload pay, owing to its very nature and definition, may not be considered as part of a teacher's regular
or basic salary, because it is being paid for additional work performed in excess of the regular teaching load.


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141.
Metro Transit Organization vs Piglas NFWU-KMU et al., (2008
G.R. 175460

Facts:
Petitioner MTO is a government owned and controlled corporation which entered into a Management and
Operations Agreement (MOA) with the Light Rail Transit Authority (LRTA) for the operation of the Light Rail
Transit (LRT) Baclaran-Monumento Line. Petitioner Jose L. Cortez, Jr. was sued in his official capacity as
then Undersecretary of the Department of Transportation and Communications and Chairman of the Board
of Directors of petitioner MTO.
Respondents filed with the Labor Arbiter Complaints against petitioners and the LRTA for the following: (1)
illegal dismissal; (2) unfair labor practice for union busting; (3) moral and exemplary damages; and (4)
attorney's fees.
On 13 September 2004, the Labor Arbiter rendered judgment in favor of respondents. Petitioners appealed
to the National Labor Relations Commission (NLRC). In a Resolution dated 19 May 2006, the NLRC
dismissed petitioners' appeal for non-perfection since it failed to post the required bond. Without filing a
Motion for Reconsideration of the afore-quoted NLRC Resolution, petitioners filed a Petition for Certiorari
with the Court of Appeals assailing the same. On 24 August 2006, the Court of Appeals issued a Resolution
dismissing the Petition.

Issue: WON petitioner can directly file the extraordinary remedy of certiorari without filing first a motion for
reconsideration with the NLRC.

Held: Petitioners' failure to file a motion for reconsideration against the assailed Resolution of the NLRC
rendered its petition for certiorari before the appellate court as fatally defective.
It must be primarily established that petitioners contravened the procedural rule for the extraordinary remedy
of certiorari. The rule is, for the writ to issue, it must be shown that there is no appeal, nor any plain, speedy
and adequate remedy in the ordinary course of law.
The settled rule is that a motion for reconsideration is a condition sine qua non for the filing of a petition for
certiorari. Its purpose is to grant an opportunity for the court to correct any actual or perceived error
attributed to it by the re-examination of the legal and factual circumstances of the case. The rationale of the
rule rests upon the presumption that the court or administrative body which issued the assailed order or
resolution may amend the same, if given the chance to correct its mistake or error.
We have held that the "plain," "speedy," and "adequate remedy" referred to in Section 1, Rule 65 of the
Rules of Court is a motion for reconsideration of the questioned Order or Resolution. As we consistently
held in numerous cases, a motion for reconsideration is indispensable for it affords the NLRC an opportunity
to rectify errors or mistakes it might have committed before resort to the courts can be had.
In the case at bar, petitioners directly went to the Court of Appeals on certiorari without filing a motion for
reconsideration with the NLRC. The motion for reconsideration would have aptly furnished a plain, speedy,
and adequate remedy. As a rule, the Court of Appeals, in the exercise of its original jurisdiction, will not take
cognizance of a petition for certiorari under Rule 65, unless the lower court has been given the opportunity
to correct the error imputed to it. The Court of Appeals correctly ruled that petitioners' failure to file a motion
for reconsideration against the assailed Resolution of the NLRC rendered its petition for certiorari before the
appellate court as fatally defective.
We agree in the Court of Appeals' finding that petitioners' case does not fall under any of the recognized
exceptions to the filing of a motion for reconsideration, to wit: (1) when the issue raised is purely of law; (2)
when public interest is involved; (3) in case of urgency; or when the questions raised are the same as those
that have already been squarely argued and exhaustively passed upon by the lower court. As the Court of
Appeals reasoned, the issue before the NLRC is both factual and legal at the same time, involving as it does
the requirements of the property bond for the perfection of the appeal, as well as the finding that petitioners

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failed to perfect the same. Evidently, the burden is on petitioners seeking exception to the rule to show
sufficient justification for dispensing with the requirement.
Certiorari cannot be resorted to as a shield from the adverse consequences of petitioners' own omission of
the filing of the required motion for reconsideration.
Nonetheless, even if we are to disregard the petitioners' procedural faux pas with the Court of Appeals, and
proceed to review the propriety of the 19 May 2006 NLRC Resolution, we still arrive at the conclusion that
the NLRC did not err in denying petitioners' appeal for its failure to file a bond in accordance with the Rules
of Procedure of the NLRC.

142.

J.K. Mercado & Sons Agricultural Enterprises, Inc., vs. Sto. Tomas,
G.R. No. 158084, August 29, 2008

Facts of the Case: On December 3, 1993, the RTWPB of Region IX issued Wage Order No. 3 granting a
Cost of Living Allowance to covered workers. J.K. Mercado & Sons Agricultural Enterprises, Inc., petitioner,
filed for an exemption from the coverage of such order. Said application was denied by the regional wage
board for lack of merit.

Despite denial of such application, private respondents were still not given benefits due them from
said wage order. Private respondents filed a Writ of Execution and Writ of Garnishment seeking for its
enforcement. Petitioner filed a motion to Quash the Writ of Execution arguing that the rights of the
respondents already prescribed as per stated in Article 291 of the Labor Code regarding any issue
concerning a wage order.

Ruling of the Regional Director:

The Motion to Quash was denied and held that unpaid benefits have not prescribed and that the
private respondents need not file a claim to be entitled thereto.

Petitioner filed a Notice of Appeal alleging that the Regional Director abused his discretion
in issuing the writ of execution in the absence of any motion filed by private respondents. Appeal was then
denied which prompted the petiotioner to file a Motion for Reconsideration.

Ruling of the Court of Appeals:

The Motion for Reconsideration was also denied due to lack of merit.

Hence, present petition.

Issues:

Whether or not the Honorable Court of Appeals committed an error in holding that Article 291 of the Labor
Code is not applicable to recovery of benefits under the subject Wage Order No. RTWPB-XI-03, which
entitled respondents to a cost of living allowance (COLA).

Whether or not the Court of Appeals committed an error in holding that the cost of living allowance (COLA)
granted by Wage Order No. RTWPB-XI-03 can be enforced without the appropriate case having been filed
by herein private respondents within the three (3) year prescriptive period.

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Whether or not the claim of the private respondents for cost of living allowance (COLA) pursuant to Wage
Order No. RTWPB-XI-03 has already prescribed because of the failure of the respondents to make the
appropriate claim within the three (3) year prescriptive period provided by Article 291 of the Labor Code, as
amended.

Ruling of the Supreme Court:

The Court sees no error on the part of the Court of Appeals.

Art. 291 of the Labor Code applies to money claims in general and provides for a 3-year prescriptive period
to file them.

On the other hand, respondent employees money claims in this case had been reduced to a judgment, in
the form of a Wage Order, which has become final and executory. The prescription applicable, therefore, is
not the general one that applies to money claims, but the specific one applying to judgments. Thus, the
right to enforce the judgment, having been exercised within five years, has not yet prescribed.

Stated otherwise, a claimant has three years to press a money claim. Once judgment is rendered in her
favor, she has five years to ask for execution of the judgment, counted from its finality. This is consistent
with the rule on statutory construction that a general provision should yield to a specific one and with the
mandate of social justice that doubts should be resolved in favor of labor.

WHEREFORE, the petition is DENIED.

143.

J. Phil. Marine Inc. vs. NLRC
G.R. No. 168339, October 10, 2008

FACTS:
The herein respondent, was a cook aboard vessels plying overseas, filed before the National Labor
Relations Commission
(NLRC) a pro-forma complaint against petitioners for unpaid money claims, moral and exemplary damages,
and attorneys fees and thereafter filed two amended pro forma complaints praying for the award of overtime
pay, vacation leave pay, sick leave pay, and disability/medical benefits, he having, by his claim, contracted
enlargement of the heart and severe thyroid enlargement in the discharge of his duties as cook which
rendered him disabled.
Labor Arbiter Fe Superiaso-Cellan dismissed respondents complaint for lack of merit but the NLRC
reversed the Labor Arbiters decision and awarded US$50,000.00 disability benefit to respondent. The Court
of Appeals dismissed petitioners petition for, inter alia, failure to attach to the petition all material
documents, and for defective verification and certification. Petitioners
Motion for Reconsideration of the appellate courts Resolution was denied; hence, they filed the present
Petition for Review on Certiorari.
During the pendency of the case, against the advice of his counsel, entered into a compromise agreement
with petitioners, he thereupon signed a Quitclaim and Release subscribed and sworn to before the Labor
Arbiter. Petitioners filed before this Court
a Manifestation dated May 7, 2007 informing that, inter alia, they and respondent had forged an amicable
settlement.

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Respondents counsel also filed before this Court, purportedly on behalf of respondent, a Comment on the
present petition. The parties having forged a compromise agreement as respondent in fact has executed a
Quitclaim and Release, the Court dismisses the petition.

ISSUE:
WON the compromise agreement/deed of quit claim entered by the parties is valid?

RULING:

Article 227 of the Labor Code provides:
Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the
parties with the assistance 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 v. NLRC , the Court, recognizing the conclusiveness of compromise settlements as a means to
end labor disputes, held that Article 2037 of the Civil Code, which provides that [a] compromise has upon
the parties the effect and authority of res judicata, applies suppletorily to labor cases even if the
compromise is not judicially approved.

That respondent was not assisted by his counsel when he entered into the compromise does not render it
null and void. Eurotech Hair Systems, Inc. v. Go so enlightens:
A compromise agreement is valid as long as the consideration is reasonable and the employee signed the
waiver voluntarily, with a full understanding of what he was entering into. All that is required for the
compromise to be deemed voluntarily entered into is personal and specific individual consent. Thus,
contrary to respondents contention, the employees counsel need not be present at the time of the signing
of the compromise agreement.
It bears noting that, as reflected earlier, the Quitclaim and Waiver was subscribed and sworn to before the
Labor Arbiter.
Petition DISMISSED

144.

Sy vs. ALC Industries
G.R. No. 168339, October 10, 2008

Facts: Ma. Gregorietta Leila C. Sy (Sy) was hired by ALC Industries, Inc.(ALCII) as a supervisor in its
purchasing office. She was thereafter assigned to ALCII's construction project in Davao City as business
manager and supervisor of the Administrative Division from May 1997 to April 15, 1999. Sy filed a complaint
before the labor arbiter alleging that ALCII refused to pay her salary beginning August 1998 and allowances
beginning June 1998. Despite several notices and warnings, ALCII did not file a position paper to controvert
Sy's claims.

The labor arbiter ordered ALCII and/or Dexter Ceriales to pay petitioner P282,560 representing her unpaid
salary and allowance. ALCII filed an appeal with the NLRC without posting any cash or surety bond. NLRC
dismissed respondents' appeal. Thereafter ALCII filed a motion for reconsideration which was also denied
by NLRC. ALCII questioned the NLRC's denial of their motion for clarification and reconsideration in the CA
via a petition for certiorari. The CA set aside the resolutions of the NLRC and the decision of the labor
arbiter. Sy filed a Rule 45 petition in the Supreme Court questioning the CA decision and resolution on the
ground that the decision of the labor arbiter had become final and executory.

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Issues: (1) Can the employer file an appeal with the NLRC without posting a cash bond? (2) Did the CA
acquire jurisdiction over the labor case?

Rulings: (1) Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten calendar days from receipt
of such decisions, awards, or orders In case of a judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary award in the
judgment appealed from.
As the right to appeal is merely a statutory privilege, it must be exercised only in the manner and in
accordance with the provisions of the law. Otherwise, the right to appeal is lost.

Liberal construction of the NLRC rules is allowed only in meritorious cases, where there is substantial
compliance with the NLRC Rules of Procedure or where the party involved demonstrates a willingness to
abide by the rules by posting a partial bond. Failure to post an appeal bond during the reglementary period
was directly violative of Article 223 of the Labor Code.

The payment of the appeal bond is a jurisdictional requisite for the perfection of an appeal to the NLRC. The
lawmakers intended to make the posting of a cash or surety bond by the employer the exclusive means by
which an employer's appeal may be perfected. It is intended to assure the workers that if they prevail in the
case, they will receive the money judgment in their favor upon the dismissal of the employers' appeal. It was
intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy
their employee's just and lawful claims.

(2) The filing of a joint undertaking/declaration, filed way beyond the ten-day reglementary period for
perfecting an appeal and as a substitute for the cash or surety bond, did not operate to validate the lost
appeal. The decision of the labor arbiter therefore became final and executory for failure of respondents to
perfect their appeal within the reglementary period. Clearly, the CA no longer had jurisdiction to entertain
respondents' appeal from the labor arbiter's decision.

145.

PCI Travel Corp vs NLRC
GR no. 154379

Facts: Sometime in 1994, respondent PCI Travel Employees Union filed a Complaint for unfair labor
practice against petitioner PCI Travel Corporation. It claimed that petitioner had been filling up positions left
by regular rank-and-file with contractual employees, but were performing work which were usually
necessary and desirable in the usual business or trade of the petitioner. Respondent prayed that the Labor
Arbiter order the petitioner to pay the contractual employees the differentials between the wages/benefits
of regular employees and the actual wages/benefits paid to them from the first day of their employment, plus
moral and exemplary damages, and attorneys fees of not less than P300,000.00 per employee.

Petitioner manifested that while it was ready and willing to prove that said employees were provided by
independent legitimate contractors and that it was not engaged in labor-only contracting in a position paper
yet to be submitted, petitioner prayed that the Labor Arbiter first resolve the issues raised in their motion to
dismiss.

Labor Arbiter rendered a decision on the merits dated October 16, 1998, in favor of the respondent.

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Appeal, the NLRC affirmed with modification the decision of the Labor Arbiter deleting the awards of
damages for lack of sufficient basis.

Appeal, the CA issued the assailed Resolution dismissing the petition outright for petitioners failure to
attach copies of pleadings and documents relevant and pertinent to the petition. More importantly, the
verification and certification of non-forum shopping was signed by Elizabeth Legarda, President of the
petitioner-corporation, without submitting any proof that she was duly authorized to sign for, and bind the
petitioner-corporation in these proceedings.

Issue:
Whether or not the president of the PCI Travel was not an authorized representative of the petitioner to sign
the verification and certification against forum shopping, without need of a board resolution.

Ruling:
It must be borne in mind that Sec. 23, in relation to Sec. 25, of the Corporation Code, clearly enunciates that
all corporate powers are exercised, all business conducted, and all properties controlled by the board of
directors. A corporation has a separate and distinct personality from its directors and officers and can only
exercise its corporate powers through the board of directors. Thus, it is clear that an individual corporate
officer cannot solely exercise any corporate power pertaining to the corporation without authority from the
board of directors. This has been our constant holding in cases instituted by a corporation.

In a slew of cases, however, we have recognized the authority of some corporate officers to sign the
verification and certification against forum shopping. The SC has held that the following officials or
employees of the company can sign the verification and certification without need of a board resolution: (1)
the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or
Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.

With this issue settled, that the President of the corporation can sign the verification and certification without
need of a board resolution, there thus exists a compelling reason for the reinstatement of the petition
before the Court of Appeals.

147.

Lockheed Detective and Watchman Agency, Inc. vs. University Of The Philippines
G.R. No. 185918, April 18, 2012

Facts: The petition is for review on certiorari under Rule 45. Petitioner Lockheed entered into a contract of
security with the University of the Philippines. On 1998, several of the guards assigned to UP filed a
complaint for unpaid wages, 25% overtime pay, premium pay for rest days and special holidays, holiday
pay, service incentive leave pay, night shift differentials, 13th month pay, refund of cash bond, refund of
deductions for the Mutual Benefits Aids System (MBAS), unpaid wages from December 16-31, 1998, and
attorney's fees.
The Labor Arbiter declared UP solidarily liable. The decision was appealed but sustained by the NLCR,
albeit a few modifications. The parties motion to reconsider were likewise denied. On July 25, 2005, a
Notice of Garnishment 10 was issued to Philippine National Bank (PNB) UP Diliman Branch for the
satisfaction of the award of P12,142,522.69 (inclusive of execution fee).
On August 16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds being
subjected to garnishment at PNB are government/public funds. However, the execution of the garnishment
was carried out. UP elevated their case to the court of appeals. On reconsideration, however, the CA issued
the assailed Amended Decision. It held that without departing from its findings that the funds covered in the

221 | P a g e

savings account sought to be garnished do not fall within the classification of public funds, it reconsiders the
dismissal of the petition in light of the ruling in the case of National Electrification Administration v. Morales
which mandates that all money claims against the government must first be filed with the Commission on
Audit (COA).
Lockheed appealed this decision to the Supreme Court. Arguing mainly that the NEA case should not apply
and that UP could be both sued and held liable. And that the quashal of garnishment sought was moot
because it had already become fait accompli.

ISSUES:
Whether or not the NEA Case applies and the funds be garnished directly bypassing the COA.
Whether or not the previous garnishment and withdrawal of funds was fait accompli.

HELD:
YES. This Court finds that the CA correctly applied the NEA case. Like NEA, UP is a juridical personality
separate and distinct from the government and has the capacity to sue and be sued. Thus, also like NEA, it
cannot evade execution, and its funds may be subject to garnishment or levy. However, before execution
may be had, a claim for payment of the judgment award must first be filed with the COA. (suability does not
immediately mean liability).
NO. As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can be
done since the funds of UP had already been garnished, since the garnishment was erroneously carried out
and did not go through the proper procedure (the filing of a claim with the COA), UP is entitled to
reimbursement of the garnished funds plus interest of 6% per annum, to be computed from the time of
judicial demand to be reckoned from the time UP filed a petition for certiorari before the CA which occurred
right after the withdrawal of the garnished funds from PNB.

148.

Portillo v. Rudolf Lietz

Facts: Potillo was hired by Rudolf in Lietz Co. under the condition that Potillo will not engage in any other
gainful employment by himself or with any other company either directly or indirectly without written consent
of Lietz Inc., otherwise Potillo will be liable for liquidated damages.
Upon his promotion, Potillo signed another letter agreement containing a Goodwill Clause stating that:

on the termination of his employment and for a period of three (3) years thereafter, he shall not engage
directly or indirectly as employee, manager, proprietor, or solicitor for himself or others in a similar or
competitive business or the same character of work which he was employed by Lietz Inc. to do and perform.
Should he breach this good will clause of this Contract, he shall pay Lietz Inc. as liquidated damages the
amount of 100% of his gross compensation over the last 12 months.

Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit interview, Portillo
declared that she intended to engage in businessa rice dealership, selling rice in wholesale.
On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her of the "Goodwill Clause" in the
last letter agreement she had signed.
Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines, Limited to head its
Pharma Raw Material Department. Ed Keller Limited is purportedly a direct competitor of Lietz Inc.
Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and commissions
went unheeded. Lietz Inc. gave Portillo the run around, on the pretext that her salaries and commissions
were still being computed.

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Subsequently, Portillo filed a complaint with the National Labor Relations Commission (NLRC) for non-
payment of 1 months salary, two (2) months commission, 13th month pay, plus moral, exemplary and actual
damages and attorneys fees.
In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount of
P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillos money claims should
be offset against her liability to Lietz Inc. for liquidated damages for Portillos alleged breach of the "Goodwill
Clause" in the employment contract when she became employed with Ed Keller Philippines, Limited.

Issue:

Who has jurisdiction over the present controversy?
Whether Portillos money claims for unpaid salaries may be offset against respondents claim for liquidated
damages.

Held:

Jurisdiction belongs to the Civil Courts.

Petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary
relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded are
not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as payment
of wages, overtime compensation or separation pay. The items claimed are the natural consequences
flowing from breach of an obligation, intrinsically a civil dispute.

Furthermore, non-compete clause, as in the "Goodwill Clause" refers to post-employment relations of the
parties. The "Goodwill Clause" or the "Non-Compete Clause" is a contractual undertaking effective after the
cessation of the employment relationship between the parties. In accordance with jurisprudence, breach of
the undertaking is a civil law dispute, not a labor law case.

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover damages
based on the parties contract of employment as redress for respondents breach thereof. Such cause of
action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts.
More so must this be in the present case, what with the reality that the stipulation refers to the
postemployment relations of the parties.

No, it may not be.

Indeed, the application of compensation in this case is effectively barred by Article 113 of the Labor Code
which prohibits wage deductions except in three circumstances:

ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any
deduction from 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.


223 | P a g e

150.

Building Care Corp. / Leopard Security and Investigation Agency v. Macaraeg

Facts: Petitioners are in the business of providing security services to their clients.

They hired respondent as a security guard beginning August 25, 1996, assigning her at Genato Building in
Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She was re-assigned to
Bayview Park Hotel from March 9-13, 2008, but after said period, she was allegedly no longer given any
assignment.

Thus, on September 9, 2008, respondent filed a complaint against petitioners for illegal dismissal,
underpayment of salaries, non-payment of separation pay and refund of cash bond. Respondent claimed
that petitioners failed to give her an assignment for more than nine months, amounting to constructive
dismissal, and this compelled her to file the complaint for illegal dismissal.

On the other hand, petitioners alleged in their position paper that respondent was relieved from her post as
requested by the client because of her habitual tardiness, persistent borrowing of money from employees
and tenants of the client, and sleeping on the job.

On May 13, 2009, the Labor Arbiter rendered a Decision dismissing the charge of illegal dismissal as
wanting in merit but ordering the Respondents Leopard Security and Investigation Agency and Rupert
Protacio to pay complainant a financial assistance in the amount of P5,000.00.

Respondent then filed a Notice of Appeal with the National Labor Relations Commission (NLRC), but in a
Decision dated October 23, 2009, the NLRC dismissed the appeal for having been filed out of time, thereby
declaring that the Labor Arbiter's Decision had become final and executory on June 16, 2009.

Upon elevating to the CA via a petition for certiorari, the court reversed and set aside the Decision of the
NLRC and in lieu thereof, a new judgment is entered declaring petitioner to have been illegally dismissed.

Issue:

Whether the CA erred in liberally applying the rules of procedure and ruling that respondent's appeal should
be allowed and resolved on the merits despite having been filed out of time.

Held:

Yes, it erred.

It should be emphasized that the resort to a liberal application, or suspension of the application of
procedural rules, must remain as the exception to the well-settled principle that rules must be complied with
for the orderly administration of justice.

The relaxation of procedural rules in the interest of justice was never intended to be a license for erring
litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can be
invoked only in proper cases and under justifiable causes and circumstances.

The desired leniency cannot be accorded absent valid and compelling reasons for such a procedural lapse.


224 | P a g e

Although the CA justified such a reversal of the NLRCs decision on the ground that the belated filing of
respondent's appeal before the NLRC was the fault of respondent's former counsel, note, however, that
neither respondent nor her former counsel gave any explanation or reason citing extraordinary
circumstances for her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted
that she had not been remiss in following up her case with said lawyer. It is a basic rule that the negligence
and mistakes of counsel bind the client.

It should also be borne in mind that the right of the winning party to enjoy the finality of the resolution of the
case is also an essential part of public policy and the orderly administration of justice. Hence, such right is
just as weighty or equally important as the right of the losing party to appeal or seek reconsideration within
the prescribed period.25
When the Labor Arbiter's Decision became final, petitioners attained a vested right to said judgment. They
had the right to fully rely on the immutability of said Decision.

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