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103. Paguio vs NLRC, G.R. No.

147816, May 9, 2013


Facts:
On June 22, 1992, respondent Metromedia Times Corporation entered
into a contract with petitioner Efren P. Paguio, appointing the latter to be an
account executive and to solicit advertisements for The Manila Times.
Petitioner was to receive compensation consisting of a 15% commission on
direct advertisements less withholding tax and a 10% commission on agency
advertisements based on gross revenues less agency commission and the
corresponding withholding tax. The commissions, released every fifteen days
of each month, were to be given to petitioner only after the clients would
have paid for the advertisements. Apart from commissions, petitioner was
also entitled to a monthly allowance of P2,000.00 as long as he met the
P30,000.00-monthly quota.
It was stipulated in the contract that the petitioner is not an employee
of the company nor does the company have any obligations anyone the
petitioner may employ, nor any responsibility for the operating expenses or
liabilities he may incur. Also, it was stipulated that either party may
terminate the contract at any time by giving written notice to the other.
On August 15, 1992, petitioner received notice from the firm that he
has been terminated from service.
Issue:
Whether or not petitioners dismissal is legal.
Held:
YES. A regular employment, whether it is one or not, is aptly gauged
from the concurrence, or the non-concurrence, of the following factors - a)
the manner of selection and engagement of the putative employee, b) the
mode of payment of wages, c) the presence or absence of the power of
dismissal; and d) the presence or absence of the power to control the
conduct of the putative employee or the power to control the employee with
respect to the means or methods by which his work is to be accomplished.
The "control test" assumes primacy in the overall consideration. Under this
test, an employment relation obtains where work is performed or services
are rendered under the control and supervision of the party contracting for
the service, not only as to the result of the work but also as to the manner
and details of the performance desired.

The law, in defining their contractual relationship, does so, not necessarily or
exclusively upon the terms of their written or oral contract, but also on the
basis of the nature of the work petitioner has been called upon to perform.
The law affords protection to an employee, and it will not countenance any
attempt to subvert its spirit and intent. A stipulation in an agreement can be
ignored as and when it is utilized to deprive the employee of his security of
tenure.
A lawful dismissal must meet both substantive and procedural requirements;
in fine, the dismissal must be for a just or authorized cause and must comply
with the rudimentary due process of notice and hearing. It is not shown that
respondent company has fully bothered itself with either of these
requirements in terminating the services of petitioner. The notice of
termination recites no valid or just cause for the dismissal of petitioner nor
does it appear that he has been given an opportunity to be heard in his
defense.

104. Great Pacific Life Assurance Corp. (Grepalife) vs. Judico


Facts:
Honorato Judico filed a complaint for illegal dismissal against Grepalife, a
duly organized insurance firm. Grepalife admits that Judico entered into an
agreement with them to become a debit agent. According to Grepalife, a
debit agent is an insurance agent who has definite work assignments
including but not limited to collection of premiums from policyholders and
selling insurance to prospective agent.
Judico was promoted to the position of Zone Supervisor and was given an
additional supervisors allowance fixed at Php 110.00 per week. However, on
November 1981, he was reverted to his former position as debit agent but,
for unknown reasons, not paid so-called weekly sales reserve of at Php
200.00. On June 1982, Judico was dismissed by way of termination of his
agency contract.
Petitioner argued that respondent was not an employee and that the
compensation was not based on any fixed number of hours he was required
to devote to the service of the company by rather it was the production or
result of his efforts or his work that was being compensated.
Respondent Judicos argued that he received a definite amount as his wage
known as sales reserve the failure to maintain the same would bring him
back to a beginners employment with a fixed weekly wage of Php 200.00
regardless of production.
Issue:
Whether or not employee-employer relationship existed between the parties.
Held:
Yes. Aan insurance company may have two classes of agents who sell its
insurance policies: (1) salaried employees who keep definite hours and work
under the control and supervision of the company; and (2) registered
representatives who work on commission basis. The agents who belong to

the second category are not required to report for work at anytime, they do
not have to devote their time exclusively to or work solely for the company
since the time and the effort they spend in their work depend entirely upon
their own will and initiative; they are not required to account for their time
nor submit a report of their activities; they shoulder their own selling
expenses as well as transportation; and they are paid their commission
based on a certain percentage of their sales. One salient point in the
determination of employer-employee relationship which cannot be easily
ignored is the fact that the compensation that these agents on commission
received is not paid by the insurance company but by the investor (or the
person insured). After determining the commission earned by an agent on his
sales the agent directly deducts it from the amount he received from the
investor or the person insured and turns over to the insurance company the
amount invested after such deduction is made. The test therefore is whether
the "employer" controls or has reserved the right to control the "employee"
not only as to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished.
Applying the aforementioned test to the case at bar, we can readily see that
the element of control by the petitioner on Judico was very much present.
The record shows that petitioner Judico received a definite minimum amount
per week as his wage known as "sales reserve" wherein the failure to
maintain the same would bring him back to a beginner's employment with a
fixed weekly wage of P 200.00 for thirteen weeks regardless of production.
He was assigned a definite place in the office to work on when he is not in
the field; and in addition to his canvassing work he was burdened with the
job of collection. In both cases he was required to make regular report to the
company regarding these duties, and for which an anemic performance
would mean a dismissal. Conversely faithful and productive service earned
him a promotion to Zone Supervisor with additional supervisor's allowance, a
definite amount of P110.00 aside from the regular P 200.00 weekly
"allowance". Furthermore, his contract of services with petitioner is not for a
piece of work nor for a definite period.
On the other hand, an ordinary commission insurance agent works at his own
volition or at his own leisure without fear of dismissal from the company and
short of committing acts detrimental to the business interest of the company
or against the latter, whether he produces or not is of no moment as his
salary is based on his production, his anemic performance or even dead
result does not become a ground for dismissal. Whereas, in private
respondent's case, the undisputed facts show that he was controlled by

petitioner insurance company not only as to the kind of work; the amount of
results, the kind of performance but also the power of dismissal.
Undoubtedly, private respondent, by nature of his position and work, had
been a regular employee of petitioner and is therefore entitled to the
protection of the law and could not just be terminated without valid and
justifiable cause.

109. Makati Haberdashery, Inc. vs. National Labor Relations


Commission, G.R. Nos. 83380-81, November 15,1989-

Facts:
Individual complainants have been working for Makati Haberdashery,
Inc. as tailors, seamsters, sewers, basters and plantsadoras. They were
paid on a piece-rate basis except the two who were paid on a monthly basis.
In addition to their piece-rate, they were given a daily allowance of three
(P3.00) pesos provided they report for work before 9:30 a.m. everyday. They
were required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from
Monday to Saturday and during peak periods even on Sundays and holidays.

The Sandigan ng Manggagawang Pilipino filed a complaint for


underpayment of the basic wage, underpayment of living allowance, nonpayment of overtime work, non-payment of holiday pay, and other money
claims.

The labor arbiter rendered judgement in favor of complainants which


the NLRC affirmed.

Petitioner [employer] urged that the NLRC erred in concluding that an


employer-employee relationship existed between petitioner and the workers.

Issue:

Whether or not piece-rate workers are employees

Ruling:
The facts at bar indubitably reveal that the most important requisite of
control is present. When a customer enters into a contract with the
haberdashery or its proprietor, the latter directs an employee who may be a
tailor, pattern maker, sewer or plantsadora to take the customers
measurement and to sew the pants, coat or shirt as specified by the
customer. Supervision is actively manifested in all these acts the manner
and quality of cutting, sewing and ironing.

Petitioner has reserved the right to control its employees not only as to
the result but also the means and methods by which the same are to be
accomplished. Unlike independent contractors who generally rely on their
own resources, the equipment, tools, accessories and paraphernalia used by
the workers are supplied and owned by the Haberdashery. The workers are
totally dependent on the employer in all theses aspects.

110. Caurdanetaan Piece Workers Union vs. Undersecretary


Bienvenido E. Laguesma and Corfarm Grains, Inc., G.R. No. 113542,
February 24, 1998

Facts:
The complainants worked as cargador at the warehouse and ricemills
of private respondent Corfarm at Umingan, Pangasinan since 1982. As
cargadores, they loaded, unloaded and piled sacks of palay from the
warehouse to the cargo trucks and those brought by cargo trucks for delivery
to different places. They were paid by Corfarm on a piece-rate basis. When
Corfarm denied them some benefits, they formed their union. Corfarm
replaced them with non-members of the union.

Respondent Corfamr denies that ut had the power to control over the
complainants, rationalizing that they were street-hired workers engaged
from time to time to do loading and unloading work; there was no
superintendent-in-charge to give orders; and there were no gate passes
issued, nor tools, equipment and paraphernalia issued by Corfarm for
loading/unloading. It attributes error to the solicitors generals reliance on

Article 280 [now 294] of the Labor Code. Citing Brent School, Inc. vs. Zamora
(181 SCRA 702, February 5, 1990), it asserts that a literal application of such
article will result in absurdity, where petitioners members will be regular
employees not only of respondents but also of several other rice mills, where
they allegedly also render service. Finally, Corfarm submits that the OSGs
position is negated by the fact petitioners members contracted for loading
and unloading services with respondent company when such work was
available when they felt lik it x x x.

Issue:
Whether street-hired cargadores be considered as regular
employees

Ruling:
The Court considers cargadores as regular employee. It is undeniable
that petitioners members worked as cargadores for private respondent.
They loaded, unloaded and pile sacks of palay from the warehouses to the
cargo trucks and from the cargo trucks to the buyers. This work is directly
related, necessary and vital to the operations of Corfarm. Moreover, Corfarm
did not even allege, much less prove, that petitioners members have
substantial capital or investment in the form of tools, equipment,
machineries, and work premises among others. Furthermore, said
respondent did no contradict petitioners allegation that it paid wages
directly to these workers without the intervention of any third-party
independent contractor. It also wielded the power of dismissal over
petitioners; in fact, its exercise of this power. Clearly, the workers are not
independent contractors.

111. Ruga et. al vs. NLRC ,GR No. 72654-61, January 22, 1990
Facts:
Petitioners were the fishermen-crew members of 7/B Sandyman II, one of
several fishing vessels owned and operated by private respondent De
Guzman Fishing Enterprises which is primarily engaged in the fishing
business with port and office at Camaligan, Camarines Sur. Petitioners
rendered service aboard said fishing vessel in various capacities, as follows:
Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief engineer;
Laurente Bautu, second engineer; Jaime Barbin, master fisherman; Nicanor
Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin,
fishermen.

For services rendered in the conduct of private respondent's regular business


of "trawl" fishing, petitioners were paid on percentage commission basis in
cash by one Mrs. Pilar de Guzman, cashier of private respondent. As agreed
upon, they received thirteen percent (13%) of the proceeds of the sale of the
fish-catch if the total proceeds exceeded the cost of crude oil consumed
during the fishing trip, otherwise, they received ten percent (10%) of the
total proceeds of the sale. The patron/pilot, chief engineer and master
fisherman received a minimum income of P350.00 per week while the
assistant engineer, second fisherman, and fisherman-winchman received a
minimum income of P260.00 per week.
On September 11, 1983 upon arrival at the fishing port, petitioners were told
by Jorge de Guzman, president of private respondent, to proceed to the
police station at Camaligan, Camarines Sur, for investigation on the report
that they sold some of their fish-catch at midsea to the prejudice of private
respondent. Petitioners denied the charge claiming that the same was a
countermove to their having formed a labor union and becoming members of
Defender of Industrial Agricultural Labor Organizations and General Workers
Union (DIALOGWU) on September 3, 1983.
During the investigation, no witnesses were presented to prove the charge
against petitioners, and no criminal charges were formally filed against
them.

Notwithstanding, private respondent refused to allow petitioners to return to


the fishing vessel to resume their work on the same day, September 11,
1983.
On September 22, 1983, petitioners individually filed their complaints for
illegal dismissal and non-payment of 13th month pay, emergency cost of
living allowance and service incentive pay, with the then Ministry (now
Department) of Labor and Employment, Regional Arbitration Branch No. V,
Legaspi City, Albay. They uniformly contended that they were arbitrarily
dismissed without being given ample time to look for a new job.
Issue:
Whether or not the fishermen-crew members of the trawl fishing vessel 7/B
Sandyman II are employees of its owner-operator, De Guzman Fishing
Enterprises.
Ruling:

Disputing the finding of public respondent that a "joint fishing venture" exists
between private respondent and petitioners, petitioners claim that public
respondent exceeded its jurisdiction and/or abused its discretion when it
added facts not contained in the records when it stated that the pilot-crew
members do not receive compensation from the boat-owners except their
share in the catch produced by their own efforts; that public respondent
ignored the evidence of petitioners that private respondent controlled the
fishing operations; that public respondent did not take into account
established jurisprudence that the relationship between the fishing boat
operators and their crew is one of direct employer and employee.
We have consistently ruled that in determining the existence of an employeremployee relationship, the elements that are generally considered are the
following (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 with respect to the means and methods by which
the work is to be accomplished. 8 The employment relation arises from
contract of hire, express or implied. 9 In the absence of hiring, no actual
employer-employee relation could exist.
From the four (4) elements mentioned, we have generally relied on the socalled right-of-control test where the person for whom the services are
performed reserves a right to control not only the end to be achieved but
also the means to be used in reaching such end. The test calls merely for the
existence of the right to control the manner of doing the work, not the actual
exercise of the right.
The petition is GRANTED. The questioned resolution of the National Labor
Relations Commission dated May 30,1985 is hereby REVERSED and SET
ASIDE. Private respondent is ordered to reinstate petitioners to their former
positions or any equivalent positions with 3-year backwages and other
monetary benefits under the law. No pronouncement as to costs.

112.

113.
114.
115.
116. Autobus transport system vs bautista (GR 156367, May 16 2005)
117. Union of Filipino Employees vs Vivar (GR 79255)
118. SAN MIGUEL BREWERY, INC V. DOMESTIC LABOR ORGANIZATION
FACTS:
The Democratic Labor Association filed complaint against the San Miguel
Brewery, Inc. embodying 12 demands for the betterment of the conditions of
employment of its members. The company filed its answer to the complaint
specifically denying its material averments and answering the demands point
by point. The company asked for the dismissal of the complaint.
At the hearing, the union manifested its desire to confine its claim to its
demands for overtime, night-shift differential pay, and attorney's fees,
although it was allowed to present evidence on service rendered during
Sundays and holidays, or on its claim for additional separation pay and sick
and vacation leave compensation.
After the case had been submitted for decision, the Presiding Judge held that
the employees are entitled to the additional compensation provided in the
Eight Hour Labor Law, night-shift differential pay and additional
compensation on work done during Sunday or holiday. The motion for
reconsideration of the petitioner was denied by the industrial court en banc,
which affirmed the decision of the court a quo with few exceptions, the San
Miguel Brewery, Inc. interposed the present petition for review.
ISSUE:
Whether or not the employees are entitled to the benefits of Eight Hour
Labor Law.
RULING:
The Eight-Hour Labor Law only has application where an employee or laborer
is paid on a monthly or daily basis, or is paid a monthly or daily
compensation, in which case, if he is made to work beyond the requisite
period of 8 hours, he should be paid the additional compensation prescribed

by law. This law has no application when the employee or laborer is paid on a
piece-work, "pakiao", or commission basis, regardless of the time employed.
The philosophy behind this exemption is that his earnings in the form of
commission based on the gross receipts of the day. His participation depends
upon his industry so that the more hours he employs in the work the greater
are his gross returns and the higher his commission.
The Department of Labor, called upon to implement, the Eight-Hour Labor
Law, is of this opinion when on December 9, 1957 it made the ruling on a
query submitted to it, thru the Director of the Bureau of Labor Standards, to
the effect that field sales personnel receiving regular monthly salaries, plus
commission, are not subject to the Eight-Hour Labor Law. Thus, on this point,
said official stated:
. . . Moreover, when a fieldman receives a regular monthly salary plus
commission on percentage basis of his sales, it is also the established policy
of the Office to consider his commission as payment for the extra time he
renders in excess of eight hours, thereby classifying him as if he were on
piecework basis, and therefore, technically speaking, he is not subject to the
Eight-Hour Labor Law.
The Supreme Court held that the industrial court erred in holding that the
Eight-Hour Labor Law applies to the employees composing the outside
service force and in ordering that they be paid the corresponding additional
compensation. The rest of the decision insofar as work performed on
Sundays and holidays as well as the award for night salary differentials, is
affirmed.

119. Abundio Cadiz vs Philippine Sinter Corporation


120. Rosales vs Tan Que
121. Adriano Quintos vs D.D. transport Co., Inc.
122. Lara vs Del Rosario (L-6339)
123. Manila terminal Co. vs CIR (L-4148)
124. Interphil laboratories employees union FFW vs Interphil Laboratories
(142824)
125.Pan American world airways system vs. Pan American Employees
Association (L-16275)
126. Jose gayona vs Good earth emporium and supermarket
127. University of Pangasinan Faculty Union vs. University of
Pangasinan, No. L-63122, February 20, 1984

DOCTRINE:
Regular full-time monthly paid teachers in private school are entitled to
salary and emergency cost-of-living allowance during semestral breaks.
FACTS:
The petitioner is a labor union composed of full-time faculty members of the
respondent University of Pangasinan paid on a regular monthly basis. The
petitioner filed a claim with the NLRC for respondents non-payment of the
ECOLA (emergency cost-of-living allowance) during the semestral break. The
private respondent claims that the teachers are not entitled thereto because
the semestral break is not an integral part of the school year and there being
no actual services rendered by the teachers during said period, the principle
of "No work, no pay" applies.

ISSUE:
Whether or not the petitioners are entitled to ECOLA during the semestral
break?
RULING:
Yes, the petitioners are entitled to receive ECOLA during the semestral break.
It is beyond dispute that the petitioners members are full-time employees
receiving their monthly salaries irrespective of the number of working days
or teaching hours in a month. However, they find themselves in a most
peculiar situation whereby they are forced to go on leave during semestral
breaks. These semestral breaks are in the nature of work interruptions
beyond the employees control. The duration of the semestral break varies
from year to year dependent on a variety of circumstances affecting at times
only the private respondent but at other times all educational institutions in
the country. As such, these breaks cannot be considered as absences within
the meaning of the law for which deductions may be made from monthly
allowances. The "No work, no pay" principle does not apply in the instant
case. The petitioners members received their regular salaries during this
period. Petitioners, in the case at bar, certainly do not, ad voluntatem,
absent themselves during semestral breaks. Rather, they are constrained to
take mandatory leave from work. For this they cannot be faulted nor can
they be begrudged that which is due them under the law. To a certain extent,
the private respondent can specify dates when no classes would be held.
Surely, it was not the intention of the framers of the law to allow employers
to withhold employee benefits by the simple expedient of unilaterally
imposing "no work" days and consequently avoiding compliance with the
mandate of the law for those days.
The semestral break scheduled is an interruption beyond petitioners control
and it cannot be used "effectively nor gainfully in the employees interest.
Thus, the semestral break may also be considered as "hours worked." For
this, the teachers are paid regular salaries and, for this, they should be
entitled to ECOLA. Not only do the teachers continue to work during this
short recess but much less do they cease to live for which the cost of living
allowance is intended. The legal principles of "No work, no pay; No pay, no
ECOLA" must necessarily give way to the purpose of the law to augment the
income of employees to enable them to cope with the harsh living conditions
brought about by inflation; and to protect employees and their wages against
the ravages brought by these conditions. Significantly, it is the commitment

of the State to protect labor and to provide means by which the difficulties
faced by the working force may best be alleviated. To submit to the
respondents interpretation of the no work, no pay policy is to defeat this
noble purpose. The Constitution and the law mandate otherwise.

128. Luzon Stevedoring Co., Inc. vs. Luzon Marine Department Union, G.R. No. L-9265,
April 29, 1957
DOCTRINE:
A laborer need not leave the premises of the factory, shop or boat in order that his period of rest
shall not be counted, it being enough that he ceases to work, may rest completely and leave or
may leave at his will the spot where he actually stays while working to go somewhere else,
whether within or outside the premises of said factory, shop or boat. The period of such reach
shall not be counted as hours worked.
FACTS:
Petitioner is a corporation engaged in the operation of motor tugboats and employment of
officers, engineers and crewmembers to work thereat. The seamen union declared a strike against
the corporation for several issues including the nonpayment of overtime pay despite the fact that
they are being required to report for 12 hours from 6:00 am to 6:00pm.
ISSUE:
Whether or not the hours that a seaman stayed onboard a vessel without actually working could
be considered as hours worked?
RULING:
No, the hours that a seaman stayed onboard a vessel without performing actual working could
not be considered as hours worked. Hence, the seamen in this case are not entitled to overtime
pay even though they stayed in the motorboat beyond eight hours.For the purposes of this case,
the Supreme Court said that it do not need to set for seamen a criterion different from that
applied to laborers on land. The only thing to be done is to determine the meaning and scope of
the term "working place" used in the law. A laborer need not leave the premises of the factory,

shop or boat in order that his period of rest shall not be counted, it being enough that he "cease to
work", may rest completely and leave or may leave at his will the spot where he actually stays
while working, to go somewhere else, whether within or outside the premises of said factory,
shop or boat. If these requisites are complied with, the period of such rest shall not be counted.

129. Cagampan, et al. vs. NLRC, G.R. Nos. 85122-24, March 12, 1991
DOCTRINE:
A laborer need not leave the premises of the factory, shop or boat in order that his period of rest
shall not be counter, it being enough that he ceases to work, may rest completely and leave or
may leave at his will the spot where he actually stays while working to go somewhere else,
whether within or outside the premises of said factory, shop or boat. The period of such reach
shall not be counted as hours worked.
FACTS:
Petitioners are seafarers who entered into separate contracts of employment with Golden Light
Ocean Transport, Ltd. and were deployed thereafter. After they were discharged, petitioners filed
complaints against the company for non-payment of overtime pay, vacation pay and terminal
pay. The POEA found for the petitioners and the agency ordered the company to pay the
petitioners their leave pay and overtime pay. On appeal, the NLRC found that the petitioners in
this case is not entitled to overtime pay.
ISSUE:
Whether or not seafarers onboard the vessel without performing actual work is entitled to
overtime pay?
RULING:
No, the hours that a seaman stayed onboard a vessel without performing actual working could
not be considered as hours worked. Hence, the seamen in this case are not entitled to overtime
pay even though they stayed in the motorboat beyond eight hours.

As regards the question of overtime pay, the NLRC cannot be faulted for disallowing the
payment of said pay because it merely straightened out the distorted interpretation asserted by
petitioners and defined the correct interpretation of the provision on overtime pay embodied in
the contract conformably with settled doctrines on the matter. Notably, the NLRC ruling on the
disallowance of overtime pay is ably supported by the fact that petitioners never produced any
proof of actual performance of overtime work.
The Supreme Court also said that it can not agree with the Court below that peitioners should be
paid overtime compensation for every hour in excess of the regular working hours that he was on
board his vessel or barge each day, irrespective of whether or not he actually put in work during
those hours. Seamen are required to stay on board their vessels by the very nature of their duties,
and it is for this reason that, in addition to their regular compensation, they are given free living
quarters and subsistence allowances when required to be on board. It could not have been the
purpose of our law to require their employers to pay them overtime even when they are not
actually working; otherwise, every sailor on board a vessel would be entitled to overtime for
sixteen hours each day, even if he spent all those hours resting or sleeping in his bunk, after his
regular tour of duty. The correct criterion in determining whether or not sailors are entitled to
overtime pay is not, therefore, whether they were on board and can not leave ship beyond the
regular eight working hours a day, but whether they actually rendered service in excess of said
number of hours.
130. National development company vs CIR (L-15422)
131. Sime darby pilipinas, inc., vs. NLRC (119205)
132.Mercury drug co., inc. vs nardo dayao (L-30452)
133. NATIONAL SHIPYARDS AND STEEL CORPORATION vs. CIR
DOCTRINE:
The correct criterion in determining whether or not sailors are entitled to overtime pay is
not, therefore, whether they were on board and can not leave ship beyond the regular
eight working hours a day, but whether they actually rendered service in excess of said
number of hours.
FACTS:
The petitioner NASSCO, a government-owned and controlled corporation, is
the owner of several barges and tugboats used in the transportation of
cargoes and personnel in connection with its business of shipbuilding and
repair. In order that its bargeman could immediately be called to duty

whenever their services are needed, they are required to stay in their
respective barges, for which reason they are given living quarters therein as
well as subsistence allowance of P1.50 per day during the time they are on
board. However, upon prior authority of their superior officers, they may
leave their barges when said barges are idle.
The 39 crew members of petitioner's tugboat service, including therein
respondent Dominador Malondras, filed a complaint for the payment of
overtime compensation .In the course of the proceeding, the parties entered
into a stipulation of facts wherein the NASSCO recognized and admitted 4. That to meet the exigencies of the service in the performance of the
above work, petitioners have to work when so required in excess of eight (8)
hours a day and/or during Sundays and legal holidays (actual overtime
service is subject to determination on the basis of the logbook of the vessels,
time sheets and other pertinent records of the respondent).
6. The petitioners are paid by the respondent their regular salaries and
subsistence allowance, without additional compensation for overtime work;
On February 20, 1960, the Court ordered the examiner to make a reexamination of the records with a view to determining Malondras' overtime
service from January 1, 1954 to December 31, 1956, and from January 1,
1957 to April 30, 1957, but without deducting from the compensation to be
paid to him his subsistence allowance. The examiner, on April 23, 1960,
submitted a report giving Malondras an average of sixteen (16) overtime
hours a day, on the basis of his time sheets, and recommending the payment
to him of the total amount of P15,242.15 as overtime compensation during
the periods covered by the report.
ISSUE:
Whether or not Malondras is entitled to the 16 hours overtime as a worker in
a barge.
RULING:
The only matter to be determined here is, the number of hours of overtime
for which Malondras should be paid for the periods January 1, 1954 to
December 31, 1956, and from January to April 30, 1957. Respondents urge
that this is a question of fact and not subject to review by this Court, there

being sufficient evidence to support the Industrial Court's ruling on this point.
It appears, however, that in crediting Malondras with 16 hours of overtime
service daily for the periods in question, the court examiner relied only on his
daily time sheets which, although approved by petitioner's officers in charge
and its auditors, do not show the actual number of hours of work rendered by
him each day.
We can not agree with the Court below that respondent Malondras should be
paid overtime compensation for every hour in excess of the regular working
hours that he was on board his vessel or barge each day, irrespective of
whether or not he actually put in work during those hours. Seamen are
required to stay on board their vessels by the very nature of their duties, and
it is for this reason that, in addition to their regular compensation, they are
given free living quarters and subsistence allowances when required to be on
board. It could not have been the purpose of our law to require their
employers to pay them overtime even when they are not actually working;
otherwise, every sailor on board a vessel would be entitled to overtime for
sixteen hours each day, even if he had spent all those hours resting or
sleeping in his bunk, after his regular tour of duty.
While Malondras' daily time sheets do not show his actual working hours,
nevertheless, petitioner has already admitted in the Stipulation of Facts in
this case that Malondras and his co-claimants did render service beyond
eight (8) hours a day when so required by the exigencies of the service; and
in fact, Malondras was credited and already paid for five (5) hours daily
overtime work during the period from May 1 to December 31, 1957, under
the examiner's first report. Since Malondras has been at the same job since
1954, it can be reasonably inferred that the overtime service he put in
whenever he was required to be aboard his barge all day from 1954 to 1957
would be more or less consistent.
WHEREFORE, the order appealed from is modified in the sense that
respondent Malondras should be credited five (5) overtime hours instead of
sixteen (16) hours a day for the periods covered by the examiner's report.

134. PNB vs. PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION


Facts:
The case involves a 25 year dispute. PNB assails the decision of the Court of
Industrial Relations pursuant to a jurisprudence (NAWASA vs NAWASA
Consolidated Unions) that in the computation of overtime pay the cost of
living pay and longevity pay be taken into account. PNB questions the ruling
doctrine as well as asks the court for the correct interpretation of CA 444 or
the eight hour law in the determination of the overtime pay.
Issue:

Whether or not the cost of living allowance and longevity pay be included in
the computation of overtime pay
Held:
The cost-of-living allowance began to be granted in 1958 and the longevity pay in
1981. In other words, they were granted by PNB upon realizing the difficult plight of
its labor force in the face of the unusual inflationary situation in the economy of the
country, which, however acute, was nevertheless expected to improve. There was
thus evident an inherently contingent character in said allowances. They were not
intended to be regular, much less permanent additional part of the compensation of
the employees and workers. Also with the longevity pay; manifestly, this was not
based on the daily or monthly amount of work done or service rendered it was more
of a gratuity for their loyalty, or their having been in the bank's employment for
consideration periods of time. What are decisive in determining the basis for the
computation of overtime pay are two very germane considerations, namely, (1)
whether or not the additional pay is for extra work done or service rendered and (2)
whether or not the same is intended to be permanent and regular, not contingent
nor temporary and given only to remedy a situation which can change any time.
Overtime pay is for extra effort beyond that contemplated in the employment
contract, hence when additional pay is given for any other purpose, it is illogical to
include the same in the basis for the computation of overtime pay. This holding
supersedes NAWASA.

135. BISIG NG MANGGAGAWA NG PHILIPPINE REFINING CO., INC vs.


PHILIPPINE REFINING CO., INC.,
DOCTRINE:
The ruling concerning the meaning of the phrase "regular pay" of the EightHour Labor Law could be applied to employees of private corporations like
the Philippine Refining Company, the same was, nevertheless, inapplicable to
the case at bar which involved the interpretation of the phrase "regular base

pay which was different from "regular pay". It declared that "regular base
pay" referred only to the basic or monthly pay exclusive of Christmas bonus
and other fringe benefits. Furthermore, the validity of the provision of the
1965 collective bargaining agreement concerning the computation of the
employees' overtime pay on the basis of their "regular base pay" was upheld
by the court for the reason that the same was even higher than the overtime
pay prescribed by law. The court emphasized that contracts are binding on
the parties insofar as they are not contrary to law, morals and public order

FACTS:
On April 15,1966, the Bisig ng Manggagawa ng Philippine Refining Company,
Inc., as the representative union of the rank and file employees of the
Philippine Refining Co., Inc., filed with the Court of First Instance of Manila a
petition for declaratory relief praying, among others
That a
declaratory judgment be rendered declaring and adjudicating the e rights
and duties of petitioner and respondent under the above quoted provision of
their Collective 13 - agreements and further declaring that the Christmas
bonus of one month or thirty days pay and other de determinable benefits
should be included for the purpose of computation of the overtime pay
spread throughout the twelve months period of each year from August, 1963
up to the present and subsequently hereafter; and that respondent be
therefore directed to pay such differential in the overtime pay of all the
employees of the herein respondent ;
Petitioner union contended that the respondent company was under
obligation to include the employees' Christmas bonus and other fringe
benefits in the computation of their overtime pay by virtue of the ruling of
this Court in the case of NAWASA vs. NAWASA Consolidated Unions
On May 3, 1966, the Philippine Refining Co.. Inc. filed its answer to the
petition alleging, among others, that never did the parties intend, in the
1965 collective bargaining agreement and in prior agreements, to include
the employees' Christmas bonus and other fringe benefits in the
computation of the overtime pay and that the company precisely agreed to a
rate of 50%, which is much higher than the 25% required by the Eight-Hour
Labor Law (Commonwealth Act No. 444, as amended), on the condition that
in computing the overtime pay only the "regular base pay" would be
considered. Furthermore, respondent company contended that the ruling of
this Court in the NAWASA case relative to the computation of overtime

compensation could not be applied to its employees since it was a private


corporation and not a government-owned or controlled corporation like the
NAWASA.
Court of First Instance of Manila rendered a decision declaring that the term
"regular base pay" in Section 6, Article VI of Exhibit A refers only to "regular
base pay" and does not include Christmas bonus and other fringe benefits.
Held that while the NAWASA ruling concerning the meaning of the phrase
"regular pay" of the Eight-Hour Labor Law could be applied to employees of
private corporations like the Philippine Refining Company, the same was,
nevertheless, inapplicable to the case at bar which involved the
interpretation of the phrase "regular base pay which was different from
"regular pay". It declared that "regular base pay" referred only to the basic or
monthly pay exclusive of Christmas bonus and other fringe benefits.
Furthermore, the validity of the provision of the 1965 collective bargaining
agreement concerning the computation of the employees' overtime pay on
the basis of their "regular base pay" was upheld by the court for the reason
that the same was even higher than the overtime pay prescribed by law. The
court emphasized that contracts are binding on the parties insofar as they
are not contrary to law, morals and public order.

This is an appeal from the decision of the Court of First Instance of Manila
dated December 8, 1966, in Civil Case No. 65082, holding that Christmas
bonus and other fringe benefits are excluded in the computation of the
overtime pay of the members of the appellant union under Section 6, Article
VI of the 1965 collective bargaining agreement which reads as follows:
Overtime pay at the rate of regular base pay plus 50% thereof shag be
paid for all work performed in excess of eight hours on ordinary days within
the work week (that is to say, Monday to Friday).
ISSUE:
Whether or not the phrase "regular base pay" as used in the above-quoted
provision of the 1965 CBA includes Christmas bonus and other fringe
benefits?
HELD:
NO, the phrase "regular base pay" is clear, unequivocal and requires no
interpretation. It means regular basic pay and necessarily excludes money
received in different concepts such as Christmas bonus and other fringe

benefits. In this connection it is necessary to remember that in the


enforcement of previous collective bargaining agreements containing the
same provision of overtime pay at the rate of regular base pay plus 50@'c
thereof", the overtime compensation was invariably based only on the
regular basic pay, exclusive of Christmas bonus and other tinge benefits.
Appellant union knew all the while of such interpretation and precisely
attempted to negotiate for a provision in the subject collective bargaining
agreement that would include the Christmas bonus and other fringe benefits
in the computation of the overtime pay. Significantly, the appellee company
did not agree to change the phrase "regular base pay" as it could not
consent to the inclusion of the fringe benefits in the computation of the
overtime pay. Hence, the appellant union could not question the intended
definition of the phrase but could only claim that the same violated the
Nawasa doctrine and insist that the phrase should be redefined to conform to
said doctrine.
In the case at bar, it is admitted that the contractual formula of "regular base
pay plus 50% thereof" yields an overtime compensation which is higher than
the result in applying the statutory formula as elaborated in the Nawasa
case. Consequently, its validity is upheld and the parties are enjoined to
accord due respect to it.
Decision appealed from is hereby affirmed in all respects.

136. Pampanga sugar development co. vs CIR (L-139987)

137. NWSA vs NWSA consolidated unions


138. Rodrigo Sto. Domingo vs phil rock Products
139. FELIPE DE LEON et. al v. PAMPANGA SUGAR DEVELOPMENT CO., INC.
20 SCRA 628 (art. 91-93)
SYLLABUS:
LABOR LAW; WEEKLY REST DAY; Every employer shall give his employees a
rest period of not less than twenty-four (24) consecutive hours after every six
consecutive normal work days. The rest day or day off shall be determined
by the employer subject to CBA and to such rules and regulations as the
Secretary of labor may provide. The preference of the employee shall be
respected by the employer if the same is based on religious grounds.
same; COMPENSATION FOR REST DAY, SUNDAY OR HOLIDAY; Where an
employee is permitted to work on his scheduled rest day, he shall be paid an
additional compensation of at least 30% (then 25% based on C.A. 444) of his
regular wage. An employee shall be entitled to such additional compensation
for work performed on Sunday only when it is his established rest day.
FACTS:
Petitioners were the companys 21 security guards who were required to
work 8 hours a day, seven days a week. They filed with the CIR a complaint
seeking payment to them an additional 25% compensation for work
performed on Sundays and holidays as provided by law.
ISSUE:
WON the petitioners were entitled to premium or differential based on their
claim.
HELD:
For employees paid on a monthly basis, the first 100% (of the 125%)
corresponding to the regular remuneration may or may not be included in
the monthly salary. If it is, then the employee is entitled to collect only the
premium of 30%. If it is not, then the employee has the right to receive the
entire 130%.
The regular remuneration of 100% is already included in the computation of
monthly salaries. And that there is a factual findings of the trial court, that

the petitioners were paid their monthly salaries plus 25% additional
compensation for work performed on Sundays and holidays. The findings of
fact of the CIR are conclusive to the Court
140. JOSE RIZAL COLLEGE v. NLRC and NATOW G.R. 65482 dated 1 Dec.
1987(art. 94)
SYLLABUS:
LABOR LAW; HOLIDAY and HOLIDAY PAYS; ARTICLE 8
FACTS:
Petitioner is a non-stock, non-profit educational institution duly organized
and existing under the laws of the Philippines. It has three groups of
employees categorized as follows: (a) personnel on monthly basis, who
receive their monthly salary uniformly throughout the year, irrespective of
the actual number of working days in a month without deduction for
holidays; (b) personnel on daily basis who are paid on actual days worked
and they receive unworked holiday pay and (c) collegiate faculty who are
paid on the basis of student contract hour. Before the start of the semester
they sign contracts with the college undertaking to meet their classes as per
schedule. Unable to receive their corresponding holiday pay, as claimed,
from 1975 to 1977.
ISSUE:
The sole issue in this case is whether or not the school faculty who according
to their contracts are paid per lecture hour are entitled to unworked holiday
pay.
HELD:
Petitioner maintains the position among others, that it is not covered by Book
V of the Labor Code on Labor Relations considering that it is a non- profit
institution and that its hourly paid faculty members are paid on a "contract"
basis because they are required to hold classes for a particular number of
hours.
if a regular week day is declared a holiday, the school calendar is extended
to compensate for that day. Thus petitioner argues that the advent of any of
the legal holidays within the semester will not affect the faculty's salary

because this day is not included in their schedule while the calendar is
extended to compensate for special holidays.
Regular holidays specified as such by law are known to both school and
faculty members as no class days;" certainly the latter do not expect
payment for said unworked days, and this was clearly in their minds when
they entered into the teaching contracts.
On the other hand, both the law and the Implementing Rules governing
holiday pay are silent as to payment on Special Public Holidays.
Declared purpose of the holiday pay which is the prevention of diminution of
the monthly income of the employees on account of work interruptions is
defeated when a regular class day is cancelled on account of a special public
holiday and class hours are held on another working day to make up for time
lost in the school calendar.
PREMISES CONSIDERED, the decision of respondent National Labor Relations
Commission is hereby set aside, and a new one is hereby RENDERED:
(a) exempting petitioner from paying hourly paid faculty members their pay
for regular holidays, whether the same be during the regular semesters of
the school year or during semestral, Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly
rate on days declared as special holidays or for some reason classes are
called off or shortened for the hours they are supposed to have taught,
whether extensions of class days be ordered or not; in case of extensions
said faculty members shall likewise be paid their hourly rates should they
teach during said extensions.

141. SAN MIGUEL CORP. V. CA G.R. 146775 dated 30 January 2002


FACTS:
The Department of Labor and Employment conducted a routine inspection in
San Miguel Corporation, Iligan City and it was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees. DOLE
sent a copy of inspection result to SMC which the latter contested the
findings. SMC failed to submit proof and hence the Director of DOLE of Iligan
District Office issued a compliance order to pay both its Muslim and nonMuslim employees the Muslim Holidays. SMC appealed to DOLE main office
but dismissed for having been filed late but later on reconsidered because it
is within reglementary period but still dismissed for lack of merit. Hence, this
present petition for certiorari.
ISSUE:
Whether or not non-Muslim employees working in Muslim areas is entitled to
Muslim Holiday Pay.
HELD:
The Supreme Court dismissed the petition and ordered the petitioner to pay
its non-Muslim employees. The basis for this decision were Articles 169 and
170 of P.D. No. 1083 Code of Muslim Personal Laws which listed all official
Muslim holidays and provincies and cities where officially observed. In this
case, SMC is located in Iligan which is covered in the those provisions. Also

Article 169 and 170 of PD No. 1083 should be read in conjunction with Article
94 of Labor Code which provides for the right of every worker to be paid of
holiday pay.
Petitioner asserts Art.3(3) of PD No. 1083 provides that it shall be applicable
only to Muslims. However, the Court said that said article declares that
nothing herein shall be construed to operate to the prejudice of a nonMuslim. There should be no distinction between Muslims and non-Muslims as
regards payment of benefits for Muslim holidays.
It was said also that the The Court of Appeals did not err in sustaining
Undersecretary Espaol who stated: Assuming arguendo that the
respondents position is correct, then by the same token, Muslims throughout
the Philippines are also not entitled to holiday pays on Christian holidays
declared by law as regular holidays. We must remind the respondentappellant that wages and other emoluments granted by law to the working
man are determined on the basis of the criteria laid down by laws and
certainly not on the basis of the workers faith or religion.
142. Insular bank of asia and American employees union vs Inciong (L52415)
143. the chartered bank employees association vs. Hon Blas OPLE (L44717)
144. Obango vs NLRC (L-147420)
145 Union of Filipro Employees vs Benigno vivar (79255)
146 Wellington Investment and Manufacturing Corporation
147 Jose rizal College vs NLRC (65482)
148 Baltazar vs San Miguel brewery (L- 23076)
149 Davao integrated port stevedoring services vs abarquez
150 Kwok vs Philippine Carpet Manufacturing Corp.

102132

151. SONGCO ET. AL VS NLRC

DOCTRINE
Applying this by analogy, since the commissions in the present case were earned by actual
market transactions attributable to petitioners, these should be included in their separation pay

FACTS
F.E. Zuellig Inc. filed with the Department of Labor an application seeking clearance to
terminate the services of Jose Songco, Romeo Cipres and Amancio Manuel on the ground of
retrenchment due to financial losses. It was opposed by the petitioners because they claim that
the company is not suffering any loss. The further claim that they were terminated because of
their membership in the union. However, on the last hearing of the case, the petitioners
manifested that they are no longer contesting their dismissal. The petitioners were part of the
sales force of Zuellig and were receiving P40,000 plus their commission for every sale that they
were able to make.
ISSUE
Whether or not earned sales commissions and allowances should be included in the
monthly salary of petitioners for the purpose of computation of their separation pay?
RULING
Yes, insofar as whether the allowances should be included in the monthly salary of petitioners for
the purpose of computation of their separation pay is concerned, this has been settled in the case of Santos
vs. NLRC, 76721, in the computation of backwages and separation pay, account must be taken not only of
the basic salary of petitioner but also of her transportation and emergency living allowances. In the issue
of whether commission should be included in the computation of their separation pay, it is proper to
define first commission. Blacks Law Dictionary defined commission as the recompensed, compensation
or reward of an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when the same is
calculated as a percentage on the amount of his transactions or on the profit to the principal. The nature of
the work of a salesman and the reason for such type of remuneration for services rendered demonstrate
clearly that the commission are part of petitioners wage and salary. Some salesmen do not receive any
basic salary but depend on commission and allowances or commissions alone, are part of petitioners
wage and salary. Some salesman do not received any basic salary but depend on commission and
allowances or commissions alone, although an employer-employee relationship exist. In Soriano v.
NLRC, it is ruled then that, the commissions also claimed by petitioner (override commission plus net
deposit incentive) are not properly includible in such base figure since such commissions must be earned
by actual market transactions attributable to petitioner. Applying this by analogy, since the commissions
in the present case were earned by actual market transactions attributable to petitioners, these should be
included in their separation pay. In the computation thereof, what should be taken into account is the
average commissions earned during their last year of employment.

152. RUGA ET. AL VS NLRC

DOCTRINE
Percentage commission based on the gross sale of the fish-catch i.e. 13% of the proceeds of the
sale if the total proceeds exceeded the cost of the crude oil consumed during the fishing trip,
otherwise only 10% of the proceeds of the sale. Such compensation falls within the scope and
meaning of the term "wage" as defined under Article 97(f) of the Labor Code

FACTS
Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing
vessels owned and operated by private respondent De Guzman Fishing Enterprises which is
primarily engaged in the fishing business with port and office at Camaligan, Camarines Sur.
Petitioners rendered service aboard said fishing vessel in various capacities, as follows: Alipio
Ruga and Jose Parma patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second
engineer; Jaime Barbin, master fisherman; Nicanor Francisco, second fisherman; Philip
Cervantes and Eleuterio Barbin, fishermen.

For services rendered in the conduct of private respondent's regular business of "trawl" fishing,
petitioners were paid on percentage commission basis in cash by one Mrs. Pilar de Guzman,
cashier of private respondent. As agreed upon, they received thirteen percent (13%) of the
proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil
consumed during the fishing trip, otherwise, they received ten percent (10%) of the total
proceeds of the sale. The patron/pilot, chief engineer and master fisherman received a minimum
income of P350.00 per week while the assistant engineer, second fisherman, and fishermanwinchman received a minimum income of P260.00 per week.
On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de
Guzman, president of private respondent, to proceed to the police station at Camaligan,
Camarines Sur, for investigation on the report that they sold some of their fish-catch at midsea to
the prejudice of private respondent. Petitioners denied the charge claiming that the same was a
countermove to their having formed a labor union and becoming members of Defender of
Industrial Agricultural Labor Organizations and General Workers Union (DIALOGWU) on
September 3, 1983.
During the investigation, no witnesses were presented to prove the charge against petitioners, and
no criminal charges were formally filed against them. Notwithstanding, private respondent
refused to allow petitioners to return to the fishing vessel to resume their work on the same day,
September 11, 1983.
On September 22, 1983, petitioners individually filed their complaints for illegal dismissal and
non-payment of 13th month pay, emergency cost of living allowance and service incentive pay,
with the then Ministry (now Department) of Labor and Employment, Regional Arbitration
Branch No. V, Legaspi City, Albay. They uniformly contended that they were arbitrarily
dismissed without being given ample time to look for a new job.

ISSUES
Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II
are employees of its owner-operator, De Guzman Fishing Enterprises.
Whether or not the commission received by the fishermen can be considered as wage

RULING
1. Yes, the Court ruled that in determining the existence of an employer-employee
relationship, the elements that are generally considered are the following (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 with respect to the means and methods by which the

work is to be accomplished. 8 The employment relation arises from contract of hire, express or
implied. 9 In the absence of hiring, no actual employer-employee relation could exist.

From the four (4) elements mentioned, we have generally relied on the so-called right-of-control
test where the person for whom the services are performed reserves a right to control not only the
end to be achieved but also the means to be used in reaching such end. The test calls merely for
the existence of the right to control the manner of doing the work, not the actual exercise of the
right. We have examined the jurisprudence on the matter and find the same to be supportive of
petitioners' stand. In Negre vs. WCC 135 SCRA 653 (1985), we held that fishermen crew
members who were recruited by one master fisherman locally known as "maestro" in charge of
recruiting others to complete the crew members are considered employees, not industrial
partners, of the boat-owners.
2. Yes, it must be noted that petitioners received compensation on a percentage commission
based on the gross sale of the fish-catch i.e. 13% of the proceeds of the sale if the total proceeds
exceeded the cost of the crude oil consumed during the fishing trip, otherwise only 10% of the
proceeds of the sale. Such compensation falls within the scope and meaning of the term "wage"
as defined under Article 97(f) of the Labor Code, thus:
(f) "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 included the fair and reasonable value, as
determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished
by the employer to the employee. . . .

The petition is GRANTED. The questioned resolution of the National Labor Relations
Commission dated May 30,1985 is hereby REVERSED and SET ASIDE. Private respondent is
ordered to reinstate petitioners to their former positions or any equivalent positions with 3-year
backwages and other monetary benefits under the law. No pronouncement as to costs.

153. STATE MARINE CORPORATION AND ROYAL LINE VS CEBU

SEAMENS ASSOCIATION, INC.


DOCTRINE
"Wage" includes the fair and reasonable value of boards customarily furnished by the employer
to the employees

FACTS
States Marine Corporation and Royal Line, Inc. were engaged in the business of marine
coastwise transportation, employing therein several steamships of Philippine registry. They had a
collective bargaining contract with the respondent Cebu Seamen's Association, Inc. On
September 12, 1952, the respondent union filed a complaint against the petitioners alleging that
the officers and men working on board the petitioners vessels have not been paid their sick
leave, vacation leave and overtime pay; that the petitioners threatened then to accept the
reduction of salaries, observed by other ship owners.
After the Minimum Wage Law had taken effect, the petitioners required their employees on
board their vessels, to pay the sum of P0.40 for every meal, while the masters and officers were

required to pay their meals and that because the captain had refused to yield to the general
reduction of salaries, the petitioners dismissed the captain. The petitioner, on their defense, stated
that they have suffered a financial losses in the operation of their vessels and there is no law
which provides for the payment of sick leave or vacation leave to employees of private firms;
that with regards to their overtime pay, they have always observed the Eight-hour labor Law and
that overtime does not apply to those who provide means of transportation.
ISSUE
Whether or not the employees should be required to pay for their meals
RULING
No, 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 criterion is not so
much with the kind of the benefit or item (food, lodging, bonus or sick leave) given, but its
purpose. Considering, therefore, as definitely found by the respondent court that the meals were
freely given to crew members prior to August 4, 1951, while they were on the high seas "not as
part of their wages but as a necessary matter in the maintenance of the health and efficiency of
the crew personnel during the voyage", the deductions therein made for the meals given after
August 4, 1951, should be returned to them, and the operator of the coastwise vessels affected
should continue giving the same benefit..
The shipping companies argue that the furnishing of meals to the crew before the
effectivity of Rep. Act No. 602, is of no moment, because such circumstance was already taken
into consideration by Congress, when it stated that "wage" includes the fair and reasonable value
of boards customarily furnished by the employer to the employees. If We are to follow the theory
of the herein petitioners, then a crew member, who used to receive a monthly wage of P100.00,
before August 4, 1951, with no deduction for meals, after said date, would receive only P86.00
monthly (after deducting the cost of his meals at P.40 per meal), which would be very much less
than the P122.00 monthly minimum wage, fixed in accordance with the Minimum Wage Law.
Instead of benefiting him, the law will adversely affect said crew member. Such interpretation
does not conform with the avowed intention of Congress in enacting the said law.

154. PHILIPPINE AIRLINES, INC., vs. NATIONAL LABOR RELATIONS


COMMISSION

DOCTRINE:
rule of "a fair day's wage for a fair day's labor"

FACTS:
Private respondent Dolina was admitted to the Philippine Airlines (PAL) Aviation School
for training as a pilot beginning 16 January 1973. The training agreement bound PAL to provide
regular and permanent employment to Dolina upon completion of the training course. On 25
January 1974, Dolina completed the course, and undertook an equipment qualification course up
to 4 October 1974. On 9 October 1974, the Civil Aeronautics Administration issued him a license
as Commercial Pilot and PAL then extended him a temporary appointment for six (6) months as
Limited First Officer. When his appointment was due to expire on 30 April 1975, Dolina had
only logged eighty four (84) hours and fifty five (55) minutes flying time, short of the minimum

500 flying hours required for regularization as First Officer. To enable him to complete the
requirement, his employment was extended for another six months which appointment was
described as "permanent." On 31 October 1975, when his appointment was again due to expire,
he was still short of the minimum flying time requirement such that his appointment was again
extended up to 30 April 1976. During this third extension of his appointment, Dolina completed
the 500 flying hours requirement, and thus on 31 March 1976 he applied for regularization as
First Officer. Pending his physical examination by the chief Flight Surgeon, his appointment was
again extended to 31 October 1976. On 17 August 1976, Dolina took a psychological
examination wherein his "Adaptability Rating" was found to be "unacceptable" .On 23
September 1976, complainant was again subjected to an examination and interview by the Pilot
Acceptance Qualifications Board as part of the regularization process wherein Dolina was
declared unfit to work. After the recommendation of the Board of his termination and while
under preventive suspension, the parties signed an agreement with the Secretary of Labor, but
subsequently PAL removed Dolina from its payroll effective 1 April 1979. Dolina then appealed
the Labor Arbiter's decision to the public respondent NLRC on 29 April 1979 and there filed a
motion praying that PAL be ordered to return him to PAL's payroll, contending that the Labor
Arbiter's decision was not yet final because of his timely appeal. PAL opposed the motion
claiming that it was no longer obliged to return Dolina to its payroll since the decision of the
Labor Arbiter dated 23 March 1979 in its favor was a final resolution of the case by arbitration.
Public respondent NLRC rendered its decision affirming the appealed ruling, hence this petition
for temporary restraining order.

ISSUE:
Whether private respondent was entitled to his salaries from April 1, 1979 until the case
is finally resolved.

RULING:
In view of the above finding of valid dismissal, the NLRC had no authority to order the
continued payment of Dolina's salaries from 1 April 1979 until the case is finally resolved. The
NLRC's order would result in compensating Dolina for services no longer rendered and when he
is no longer in PAL's employ. This is contrary to the age-old rule of "a fair day's wage for a fair
day's labor" which continues to govern the relation between labor and capital and remains a basic
factor in determining employees' wages [Durabilt Recapping Plant & Co. v. National Labor
Relations Commission, G.R. No. 76746, July 27, 1987, 152 SCRA 328]. So that, if there is no
work performed by the employee there can be no wage or pay unless the laborer was able,
willing and ready to work but was prevented by management or was illegally locked out,
suspended or dismissed. Where the employee's dismissal was for a just cause, it would neither be

fair nor just to allow the employee to recover something he has not earned and could not have
earned [Santos v. National Labor Relations Commission, G.R. No. 76721, September 21, 1987,
154 SCRA 166].

Moreover, in ordering the continued payment of Dolina's salaries from 1 April 1979 until
the case is finally resolved, the NLRC in effect ordered the payment of backwages to Dolina
notwithstanding its finding of a valid dismissal

155. INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS vs. Quisumbing

DOCTRINE:
"Equal pay for equal work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries.

FACTS:
Private respondent International School, Inc is a domestic educational institution
established primarily for dependents of foreign diplomatic personnel and other temporary
residents. Accordingly, 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?

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. When negotiations for a new collective bargaining
agreement were held on June 1995, petitioner International School Alliance of Educators, "a
legitimate labor union and the collective bargaining representative of all faculty members" of the
School, contested the difference in salary rates between foreign and local-hires.

On September 7, 1995, petitioner filed a notice of strike. The failure of the National
Conciliation and Mediation Board to bring the parties to a compromise prompted the Department
of Labor and Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996,
the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and
representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing
subsequently denied petitioner's motion for reconsideration in an Order dated March 19, 1997.
Petitioner claims that the point-of-hire classification employed by the School is
discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial
discrimination. The School disputes these claims and gives a breakdown of its faculty members,
numbering in all, with nationalities other than Filipino, who have been hired locally and
classified as local hires. The Acting Secretary of Labor found that these non-Filipino local-hires
received the same benefits as the Filipino local-hires.

ISSUE:
Whether or not there was an equal pay for an equal work.

RULING:
We cannot agree. 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, its "international character"
notwithstanding.

If an employer accords employees the same position and rank, the presumption is that
these employees perform equal work. This presumption is borne by logic and human experience.
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 others receive more. That would be adding insult to injury. The
employer has discriminated against that employee; it is for the employer to explain why the
employee is treated unfairly.
The local-hires perform the same services as foreign-hires and they ought to be paid the
same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires'
limited tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation
factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits
accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping
costs, taxes and home leave travel allowances.
In this case, we find the point-of-hire classification employed by respondent School to
justify the distinction in the salary rates of foreign-hires and local hires to be an invalid
classification. There is no reasonable distinction between the services rendered by foreign-hires
and local-hires. The practice of the School of according higher salaries to foreign-hires
contravenes public policy and, certainly, does not deserve the sympathy of this Court.

156. ATOK-BIG WEDGE MINING CO., INC., vs. ATOK-BIG WEDGE MUTUAL

BENEFIT ASSOCIATION,
DOCTRINE:
The "minimum wage" can by no means imply only the actual minimum. Some margin or
leeway must be provided, over and above the minimum, to take care of contingencies such as
increase of prices of commodities and desirable improvement in his mode of living.
FACTS:
Demand was submitted to petitioner by respondent union through its officers for various
concession, among which were (a) an increase of P0.50 in wages, (b) commutation of sick and
vacation leave if not enjoyed during the year, (c) various privileges, such as free medical care,
medicine, and hospitalization, (d) right to a closed shop, check off, etc., (e) no dismissal without
prior just cause and with a prior investigation, etc. Some of the demands, were granted by the
petitioner, and the other were rejected, and so hearings were held and evidence submitted on the
latter. After the hearing the respondent court rendered a decision, the most important provisions
of which were those fixing the minimum wage for the laborers at P3.20, declaring that additional
compensation representing efficiency bonus should not be included as part of the wage, and

making the award effective from September 4, 1950. It is against these portion of thedecision
that this appeal is taken.
On the issue of the wage, it is contended by petitioner that as the respondent court found that the
laborer and his family at least need the amount of P2.58 for food, this should be the basis for the
determination of his wage, not what he actually spends; that it is not justifiable to fix a wage
higher than that provided by Republic Act No. 602; and that respondent union made the demand
in accordance with a pernicious practice of claiming more after an original demand is granted.
The respondent court found that P2.58 is the minimum amount actually needed by the laborer
and his family
ISSUE:
What will be the basis to determine the minimum wage.
RULING:
A person's needs increase as his means increase. This is true not only as to food but as to
everything else education, clothing, entertainment, etc. The law guarantees the laborer a fair
and just wage. The minimum must be fair and just. The "minimum wage" can by no means
imply only the actual minimum. Some margin or leeway must be provided, over and above the
minimum, to take care of contingencies such as increase of prices of commodities and desirable
improvement in his mode of living.
157. De racho vs municipality of iligan

L-23442

158. C. Planas Commercial vs NLRC

144619

159. Davao Integrated Ports Stevedoring Services vs. Abarquez


160. Nestle Philippines vs. NLRC

Doctrine:
While it is not disputed that the retirement plan is non-contributory on the part of the workers,
tills does not automatically remove it from the ambit of collective bargaining negotiations.
The fact that the retirement plan is non-contributory, that the employees contribute
nothing to the operation of the plan.

Facts:
UFE was certified as the sole and exclusive bargaining agent for all regular rank-and file
employees of Nestle Phils. Cagayan de oro factory as well as its Cebu/Davao Sales office. While
the parties negotiating their CBA, the employees of Cabuyao resorted to a slow down and

walk-outs prompting the petitioner to shut down the factory, subsequently, the Sec. of Labor
assumed jurisdiction and issued a return to work order, in spite of the order, the union struck
without notice. The company retaliated by dismissing the union officers and members of
negotiating panel who participated in the illegal strike. UFE declared a bargaining deadlock.
Thereafter, the union filed a notice of strike and filed a case of unfair labor practice against the
company. After conciliation efforts the NCMB yielded negative results, the dispute was certified
to the NLRC by the Sec. of Labor. The NLRC issued a resolution that the company shall
continue implementing its retirement Plan modified as follows;
1.) For 15 years of service or less- an amount equal to 100% of the employees monthly salary
for every year of service;
2.) For more that 15 but not less than 20 years in service 125% of the employees monthly
salary for every year of service
3.) For 29 years or more 150% of the employees monthly salary for every year of service.
Issues:
Whether or not the employees have not vested demandable right to a contributory
retirement plan?
Ruling:
The Supreme Court held that the employees have vested and demandable right over existing
benefits Voluntary granted to them by their employer. The employer may not unilaterally
withdraw, eliminate or diminish such benefits. The NLRC correctly observed that the inclusion
of the retirement plan in the CBA as part of the package of economic benefit extended by the
company to its employees to provide them a measure of financial security after they shall have
ceased to be employed in the company, reward their loyalty, boost their morale and efficiency
and promote industrial peace, gives consensual character to the plan so that it may not be
terminated or modified at the will by either party. The fact that the retirement plan is noncontributory, the employees contribute nothing to the operation of the plan, does not make it a
non-issue in the CBA. Salary increases, rice allowances, mid-year bonuses, 13th and 14th
month pay, seniority pay, medical and hospitalization plans, health and dental services, vacation,
sick and other Leaves with pay are non-contributory benefits. Since the retirement plan has
been an integral part of the CBA. The decision of the NLRC is not vitiated by abuse of
discretion. The benefits and concessions given to the employees were based on the NLRCs
evaluation of the unions demand, the evidence adduced by the parties, the financial capacity of
the company to grant such demands, its long-term viability, the economic conditions prevailing
in the country as they affect the purchasing power of the employees as well as it concomitant
effect on the other factors of production, the recent trends in the industry to which it belongs.

161. REYNALDO TIANGCO vs HON. VICENTE LEOGARDO, JR


Doctrine:
Under Section 15 of the Rules on P.D. 525 and Section 16 of the Rules on P. D. 1123 also
prohibits the diminution of any benefit granted to the employees under existing laws,
agreements, and voluntary employer practice.
Facts:
Reynaldo Tiangco, is a fishing operator who owns the Reynaldo Tiangco Fishing Company and a
fleet of fishing vessels engaged in deep-sea fishing which operates from Navotas, Rizal. His
business is capitalized at P2,000,000.00, while the petitioner, Victoria Tiangco, is a fish broker
whose business is capitalized at P100,000.00. The private respondents, Aurelio Ilustrisimo,
Pepito Gilbuena, Rogelio Carabio, Abraham Gilbuena, Rustom Ofqueria, Ernesto Diong, Jesus
Gilbuena, Clemente (Emerenciano) Villaruel, Dominador Lacerna, and Graciano Durana, are
batillos engaged by the petitioner Reynaldo Tiangco to unload the fish catch from the vessels and
take them to the Fish Stall of the petitioner Victoria Tiangco. The private respondents, Eddie

Batobalanos, Aguedo Marabe, Gregorio Laylay, Fruto Gihapon, Solomon Clarin, Pepito Batoy,
Jose Ofqueria, Daniel Cabrera, Juan Castro, Alcafone Esgana, Tomas Capalar, Antonio Gilbuena,
Ernesto Batoy, Serafio Yadawon, Juan Gihapon, Elias Escaran and Roberto Bayon-on, were
batillos engaged by Victoria Tiangco. 3 The work of these batillos were limited to days of arrival
of the fishing vessels and their working days in a month are comparatively few. Their working
hours average four (4) hours a day. On April 8, 1980, the private respondents filed a complaint
against the petitioners with the Ministry of Labor and Employment for non-payment of their
legal holiday pay and service incentive leave pay, as well as underpayment of their emergency
cost of living allowances which used to be paid in full irrespective of their working days, but
which were reduced effective February, 1980, in contravention of Article 100 of the new Labor
Code which prohibits the elimination or diminution of existing benefits. The petitioners denied
the laborers' contention, claiming that the laborers were all given, in addition to their regular
daily wage, a daily extra pay in amounts ranging from 30 centavos to 10 pesos which are
sufficient to offset the laborers' claim for service incentive leave and legal holiday pay. As
regards the claim for emergency allowance differentials, the petitioners admitted that they
discontinued their practice of paying their employees a fixed monthly allowance, and effective
February, 1980, they no longer paid allowances for non-working days. They argued, however,
that no law was violated as their refusal to pay allowances for non-working days is in
consonance with the principle of "no work, no allowance"; and that they could not pay private
respondents a fixed monthly allowance without risking the viability of their business. Resolving
the case, the Director of the National Capitol Region of the Ministry of Labor and Employment
ruled that the daily extra pay given to private respondents was a ,'production incentive benefit",
separate and distinct from the service incentive leave pay and legal holiday pay, payment of
which cannot be used to offset a benefit provided by law, and ordered the petitioners to pay the
private respondents their service incentive leave pay and legal holiday pay. However, he denied
the laborers' claim for differentials in the emergency cost of living allowance for the reason that
the emergency cost of living allowance accrues only when the laborers actually work following
the principle of "no work, no pay," and private respondents are not entitled to a fixed monthly
allowance since they work on a part time basis which average only four (4) days a week. The
private respondents should not be paid their allowances during non-working days. From this
order, both parties appealed. On May 22, 1981, the respondent Deputy Minister of Labor and
Employment modified the order and directed the petitioners to restore and pay the individual
respondents their fixed monthly 19 allowance from March, 1980 and to pay them the amount of
P58,860.00, as underpayment of their living allowance from May, 1977 to February 21, 1980.
Issues:
Whether or not the Deputy Minister of Labor and Employment acted in excess of his
jurisdiction?
Ruling:

We find no merit in the contention. However, a revision of the amount due the private
respondents is in order for the reason that the respondent Deputy Minister of Labor and
Employment failed to take into consideration, in computing the amount due each worker, the fact
that the private respondents are employed by two different individuals whose businesses are
divergent and capitalized at various amounts, contrary to the provisions of P.D. 525 and
subsequent amendatory decrees, wherein the amount of the emergency cost of living allowance
to be paid to a worker is made to depend upon the capitalization of the business of his employer
or its total assets, whichever is higher. Hence, for the period from November, 1976 to April 30,
1977, the petitioner Victoria Tiangco should pay her workers a fixed monthly allowance of P
30.00, while the workers of the petitioner Reynaldo Tiangco were entitled to a fixed monthly
allowance of P50.00, each. The record shows that during this period, the petitioner Victoria
Tiangco was paying her workers a monthly allowance of P30.00 each. Accordingly, there was no
underpayment for this period insofar as her batillos are concerned. The petitioner Reynaldo
Tiangco, however, paid his employees P30.00, instead of P50.00, as mandated by law. Therefore,
there was an underpayment of P20.00 a month for each batillo under his employ. For the 6month period, he should pay his workers differentials in the amount of P120.00 each. For the
period from May, 1977 to March 1979, the workers of the petitioner Victoria Tiangco were
entitled to a fixed monthly allowance of P90.00 in view of the promulgation of P.D. 1123 which
granted an across-the-board increase of P60.00 a month in their allowances. For this period,
however, the said petitioner paid her workers only P60.00 a month, or a difference of P30.00 a
month. There was, therefore, an underpayment of P690.00 for every batillo under her employ for
the 23-month period. With the addition of P60.00 across-the-board increase in their allowances,
the workers of the petitioner Reynaldo Tiangco were entitled to receive a fixed monthly
allowance of P110.00. However, the record shows that his workers were only paid P60.00 a
month, or a difference of P50.00 a month. Consequently, each batillo hired by him should be
paid a differential of P1,150.00 for the 23-month period. For the period from April, 1979 to
August, 1979, the employees of the petitioner Victoria Tiangco were entitled to a fixed monthly
allowance of P150.00 while the workers employed by the petitioner Reynaldo Tiangco were
entitled to an allowance of P170.00, pursuant to P.D. 1614. The record shows, however, that both
petitioners paid their workers only P120.00 a month. There was a difference of P30.00 a month
in the case of the petitioner Victoria Tiangco, and P50.00, a month, in the case of the petitioner
Reynaldo Tiangco. Hence, for this period, the petitioner Victoria Tiangco should pay the amount
of P150.00 to each batillo in her employ, while the petitioner Reynaldo Tiangco should pay the
amount of P250.00, as differentials in the cost of living allowances of the workers under his
employ. With this modification, the judgment appealed from is AFFIRMED in all other respects.
With costs against the petitioners.

162. CEBU AUTOBUS CO vs UNITED CEBU AUTOBUS EMPLOYEES ASSN


Doctrine:
Rule on deductibility of facilities or supplements from wages
Facts:
The company used to pay to its drivers and conductors, who were assigned outside of the City
limits, aside from their regular salary, a certain percentage of their daily wage, as allowance for
food. Upon the effectivity of the Minimum Wage Law, however, that privilege was stopped by

the company. The order of CIR to the company to continue granting this privilege, was upheld by
this Court.
The shipping company argue that the furnishing of meals to the crew before the effectivity of
Rep. Act No. 602, is of no moment, because such circumstance was already taken into
consideration by Congress, when it stated that wage includes the fair and reasonable value of
boards customarily furnished by the employer to the employees.
Issues:
Whether or Not wage includes the fair and reasonable value of boards customarily
furnished by the employer to the employees.
Ruling:
No, if We are to follow the theory of the herein petitioners, then a crew member, who used to
receive a monthly wage of P100.00, before August 4, 1951, with no deduction for meals, after
said date, would receive only P86.00 monthly (after deducting the cost of his meals at P.40 per
meal), which would be very much less than the P122.00 monthly minimum wage, fixed in
accordance with the Minimum Wage Law. Instead of benefiting him, the law will adversely
affect said crew member. Such interpretation does not conform with the avowed intention of
Congress in enacting the said law.

163. Pag-asa steel works vs. CA

166647

164. Lexal Laboratories vs CIR L-24632


165. National Sugar Refineries Corp. vs. NLRC

101761

166. Case Title No.: American Wire and Cable Daily Rated Employees
Union vs. American Wire and Cable Co., and the Court of Appeals
(GR No. 155059, April 29, 2005)
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. An original action was filed before
the NCMB of the Department of Labor and Employment (DOLE) by the two
unions for voluntary arbitration. The petitioner submits that the withdrawal
of the private respondent of the 35%premium pay for selected days during
the Holy Week and Christmas season, the holding of the Christmas Party and
its incidental benefits, and the giving of service awards, which they have
long enjoyed, violated Article 100 of the Labor Code. A decision was rendered
by the Voluntary Arbitrator in favor of the private respondent. On appeal, CA
affirmed and upheld the Arbitrators decision.
ISSUE: Whether or not private respondent is guilty of violating Article 100 of
the Labor Code, as amended, when the benefits/entitlements given to the
members of petitioner union were withdrawn.
HELD: The Court ruled that respondent is not guilty of violating Art. 100 of
the Labor Code.
ART. 100. 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 benefits and entitlements mentioned in the instant case are all
considered bonuses which were given by the private respondent out of its
generosity and munificence. A bonus is an amount granted and paid to an
employee for his industry and loyalty which contributed to the success of the
employers business and made possible the realization of 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.

For a bonus to be enforceable, it must have been promised by the employer


and expressly agreed upon by the parties or it must have had a fixed amount
and had been a long and regular practice on the part of the employer. The
assailed benefits were never subjects of any agreement between the union
and the company. It was never incorporated in the CBA. To be considered a
regular practice, the giving of the bonus should have been done over a
long period of time, and must be shown to have been consistent and
deliberate. The downtrend in the grant of these two bonuses over the years
demonstrates that there is nothing consistent about it. To hold that an
employer should be forced to distribute bonuses which it granted out of
kindness is to penalize him for his past generosity.
167. Case Title/No: LG Marcos et.al Vs. NLRC and Insular Life
Assurance Co., Ltd (GR No. 111744, September 8, 1995)
Facts:
Petitioners were regular employees of private respondent Insular Life
Assurance Co:, Ltd., but they were dismissed when their positions were
declared redundant. A special redundancy benefit was paid to them, which
included payment of accrued vacation leave and fifty percent(50%) of
unused current sick leave, special redundancy benefit, equivalent to three
(3) month salary for every year of service; and additional cash benefits, in
lieu of other benefits provided by the company or required by law.
Before the termination of their services, petitioner Marcos had been in the
employ of private respondent for more than twenty (20) years; petitioner
Andrada, more than twenty-five (25)years; petitioner Lopez, exactly thirty
(30) years; and petitioner Cruz, more than twenty (20)years.
Petitioners, particularly Baltazara J. Lopez, sent a letter dated October 23,
1990 to respondent company questioning the redundancy package, She
claimed that they should receive their respective service awards and other
prorated bonuses which they had earned at the time they were dismissed. In
addition, Lopez argued that "the cash service awards have already been
budgeted in a fund distinct and apart from redundancy fund.
Thereafter, private respondent required petitioners to execute a "Release
and Quitclaim,"
And petitioners complied but with a written protest reiterating their previous
demand that they were nonetheless entitled to receive their service awards.

Meanwhile, in the same year, private respondent celebrated its 80th


anniversary wherein the management approved the grant of an anniversary
bonus equivalent to one (1) month salary only to permanent and
probationary employees as of November 15, 1990.
On March 26, 1991, respondent company announced the grant of
performance bonus to both rank and file employees and supervisory
specialist grade and managerial staff equivalent to two(2) months salary and
2.75 basic salary, respectively, as of December 30, 1990. The performance
bonus, however, would be given only to permanent employees as of March
30,1991.
In a decision dated October 8, 1992, the labor arbiter ordered respondent
company to pay petitioners their service awards, anniversary bonuses
and prorated performance bonuses, including ten percent (10%) thereof as
attorney's fees.
Issue:
WON respondent NLRC committed reversible error or grave abuse of
discretion in affirming the validity of the "Release and Quitclaim" and,
consequently, that petitioners are not entitled to payment of service awards
and other bonuses.
Held:
Under prevailing jurisprudence, the fact that an employee has signed a
satisfaction receipt for his claims does not necessarily result in the waiver
thereof. The law does not consider as valid ny agreement whereby a worker
agrees to receive less compensation than what he is entitled to recover. A
deed of release or quitclaim cannot bar an employee from demanding
benefits to which he is legally entitled. Furthermore, in the instant case, it is
an undisputed fact that when petitioners signed the instrument of release
and quitclaim, they made a written manifestation reserving their right to
demand the payment of their service awards. The element of total
voluntariness in executing that instrument is negated by the fact that they
expressly stated therein their claim for the service awards, a manifestation
equivalent to a protest and a disavowal of any waiver thereof. The grant of
service awards in favor of petitioners is more importantly underscored in the
precedent case of Insular Life Assurance Co., Ltd., et al. vs. NLRC, et al.,
where this Court ruled that "as to the service award differentials claimed by
some respondent union members, the company policy shall likewise prevail,

the same being based on the employment contracts or collective bargaining


agreements between the parties. As the petitioners had explained, pursuant
to their policies on the matter, the service award differential is given at the
end of the year to an employee who has completed years of service divisible
by 5.A bonus is not a gift or gratuity, but is paid for some services or
consideration and is in addition to what would ordinarily be given.
The term "bonus" as used in employment contracts, also conveys an idea of
something which is gratuitous, or which may be claimed to be gratuitous,
over and above the prescribed wage which the employer agrees to pay.
While there is a conflict of opinion as to the validity of an agreement to pay
additional sums for the performance of that which the promise is already
under obligation to perform, so as to give the latter the right to enforce such
promise after performance, the authorities hold that if one enters into a
contract of employment under an agreement that he shall be paid a certain
salary by the week or some other stated period and, in addition, a bonus, in
case he serves for as specified length of time, there is no reason for refusing
to enforce the promise to pay the bonus, if the employee has served during
the stipulated time, on the ground that it was a promise of a mere gratuity.
This is true if the contract contemplates a continuance of the employment
for a definite term, and the promise of the bonus is made at the time the
contract is entered into. If no time is fixed for the duration of the contract of
employment, but the employee enters upon or continues in service under an
offer of a bonus if he remains therein for a certain time, his service, in case
he remains for the required time, constitutes an acceptance of the offer of
the employer to pay the bonus and, after that acceptance, the offer cannot
be withdrawn, but can be enforced by the employee. The weight of authority
in American jurisprudence, with which we are persuaded to agree, is that
after the acceptance of a promise by an employer to pay the bonus, the
same cannot be withdrawn, but may be enforced by the employee. However,
in the case at bar, equity demands that the performance and anniversary
bonuses should be prorated to the number of months that petitioners
actually served respondent company in the year 1990. This observation
should betaken into account in the computation of the amounts to be
awarded to petitioners. WHEREFORE the decision of Labor Arbiter Alex
Arcadio Lopez is upheld.

168. Case Title/No.: Traders Royal Bank Vs. NLRC (GR No. 88168,
August 30,1990)
Facts:
`Respondent Traders Royal Bank Employees Union filed a complaint to the
NLRC on the account of diminution of their benefits by the petitioner.
Said diminution was effected through ;mid-year bonus, from two (2) months
gross pay to two (2) months basic and year-end bonus from three (3) months
gross to only two (2) months. NLRC rendered a decision in favor of
the Employees union and ordered Traders Royal Bank to pay to employees
the mid-year bonus differential representing the difference between wo (2)
months gross pay and two (2) months basic pay and end-year bonus
differential of one(1) month gross pay for 1986.The motion for
reconsideration of Traders Royal Bank was then denied. Thus the petition for
certiorari.
Issue:
Whether or not the reduction in bonuses is tantamount to diminution of
benefits?

Held:
The petition for Certiorari was granted. A bonus is a gratuity or act of
liberality of the giver which the recipient has no right to demand as a matter
of right. The discretion of giving bonuses rests upon the management and
the income of the operations of the past year. It has been claimed that the
income of the petitioner has indeed decreased yet the bank still gave out the
usual bonuses. Any claim that the receipt of the employees of bonuses has
been a company tradition and cannot be adjusted to its fiscal position is
without merit. The company cannot be forced to give bonuses which it can
no longer afford and in effect, be penalized for its past generosity. Bonuses
are not part of labor standards like salaries, cost of living allowances, and
leave benefits, which are provided by the Labor Code.

169. NATIONAL FEDERATION OF SUGAR WORKERS vs. OVEJERA


G.R. No. L-59743 May 31 1982
Facts:
National Federation of Sugar Workers (NFSW) has been the bargaining agent
of CENTRAL AZUCARERA DE LA CARLOTA (CAC) rank and file employees and
has concluded with CAC a collective bargaining agreement stipulating a
provision regarding the grant of bonuses.
On November 28, 1981, NFSW struck allegedly to compel the payment of the
13th month pay under PD 851, in addition to the Christmas, milling and
amelioration bonuses being enjoyed by CAC workers.

To settle the strike, a compromise agreement was concluded between CAC


and NFSW on November stipulating that the parties agree to abide by the
final decision of the Supreme Court in any case involving the 13th Month Pay
Law if it is clearly held that the employer is liable to pay a 13th month pay
separate and distinct from the bonuses already given.
Meanwhile, a motion for reconsideration on the case of Marcopper Mining
Corp. vs. Blas Ople et. al. (G.R. No. 51254) for the payment of 13th month
pay under PD 851 was denied and an entry of judgment was made in favor of
the Union. After the Marcopper decision had become final, NFSW renewed its
demand that CAC give the 13th month pay. CAC refused. A notice of strike
was filed with the Ministry of Labor and Employment and was subsequently
commenced based on the non-payment of the 13th month pay.
Issue:
Whether under PD 851, CAC is obliged to give its workers a 13th month
salary in addition to Christmas, milling and amelioration bonuses stipulated
in a collective bargaining agreement amounting to more than a month's pay.
Ruling:
The evident intention of the law, as revealed by the law itself, was to grant
an additional income in the form of a 13th month pay to employees not
already receiving the same. Otherwise put, the intention was to grant some
relief not to all workers but only to the unfortunate ones not actually
paid a 13th month salary or what amounts to it, by whatever name called;
but 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
and, in the latter ease, regardless of the conditional character of the grant
(such as making the payment dependent on profit), so long as there is actual
payment. Otherwise, what was conceived to be a 13th month salary would in
effect become a 14th or possibly 15th month pay. This view is justified by the
law itself which makes no distinction in the grant of exemption: "Employers
already paying their employees a 13th month pay or its equivalent are not
covered by this Decree." (P.D. 851.)
To require employers (already giving their employees a 13th month salary or
its equivalent) to give a second 13th month pay would be unfair and
productive of undesirable results. To the employer who had acceded and is
already bound to give bonuses to his employees, the additional burden of a

13th month pay would amount to a penalty for his munificence or liberality.
The probable reaction of one so circumstance would be to withdraw 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; and this negative attitude would have an adverse impact on the
employees.
At any rate, in view of the rulings made herein, NFSW cannot insist on its
claim that its members are entitled to a 13th month pay in addition to the
bonuses already paid by CAC.
WHEREFORE, the petition is dismissed for lack of merit. No costs. SO
ORDERED.

170. UNIVERSAL CORN PRODUCTS vs.


THE NATIONAL LABOR RELATIONS COMMISSION et. al
G.R. No. L-60337 August 21, 1987
Facts:

In May 1972, Universal Corn Products, petitioner, and the Universal Corn
Products Workers Union entered into a collective bargaining agreement
wherein the petitioner agrees to grant all regular workers within the
bargaining unit with at least one (1) year of continuous service, a Christmas
bonus equivalent to the regular wages for seven (7) working days. The
agreement had a duration of three years, effective June 1, 1971, or until June
1, 1974.
The collective bargaining agreement in question expired without being
renewed. On June 1, 1979, they entered into a collective bargaining
agreement for the years from 1979 to 1981. The new collective bargaining
agreement did not refer to the "Christmas bonus" but dealt only with salary
adjustments. According to the petitioner, the new agreements deliberately
excluded the grant of Christmas bonus with the enactment of Presidential
Decree No. 8514 on December 16, 1975. It further claims that since 1975, it
had been paying its employees 13th-month pay pursuant to the Decree.
For failure of the petitioner to pay the seven-day Christmas bonus for 1975 to
1978 inclusive, in accordance with the 1972 CBA, the union went to the labor
arbiter who ruled that the payment of the 13th month pay precluded the
payment of further Christmas bonus. The union appealed to the National
Labor Relations Commission (NLRC) which set aside the decision of the labor
arbiter on the opinion that the crediting of said benefit to the 13th month
pay cannot be sanctioned on the ground that it is contrary to Section 10 of
the Rules and Regulations Implementing Presidential Decree No. 851, which
prohibits the reduction or elimination of benefits or favorable practice being
enjoyed by the employees. Moreover, that same parties entered into another
3-year CBA, which no longer provides for a 7-day wage Christmas bonus. In
effect, therefore, the parties agreed to discontinue the privilege, which
agreement should also be respected.
Issue:
Whether the seven-day Christmas bonus constitute 13th month pay.
Ruling:

We hold that in the case at bar, Ovejera (La Carlota) case does not apply. We
apply instead, United CMC Textile Workers Union v. Valenzuela, a recent
decision. In that case this Court, speaking through Mr. Justice Edgardo Paras,
held: x x x If the Christmas bonus was included in the 13th month pay, then

there would be no need for having a specific provision on Christmas bonus in


the CBA. But it did not provide for a bonus in graduated amounts depending
on the length of service of the employee. The intention is clear therefore that
the bonus provided in the CBA was meant to be in addition to the legal
requirement. Moreover, why exclude the payment of the 1978 Christmas
bonus and pay only the 1979-1980 bonus. The classification of the
company's workers in the CBA according to their years of service supports
the allegation that the reason for the payment of bonus was to give bigger
award to the senior employeesa purpose which is not found by P.D. 851. A
bonus under the CBA is an obligation created by the contract between the
management and workers while the 13th month pay is mandated by the law
(P.D. 851).
ln the same vein, we consider the seven-day bonus here demanded "to be in
addition to the legal requirement." Although unlike the Valenzuela CBA,
which took effect after the promulgation of Presidential Decree No. 851 in
1975, the subject agreement was entered into as early as 1972, that is no
bar to our application of Valenzuela. What is significant for us is the fact that,
like the Valenzuela agreement, the Christmas bonus provided in the
collective bargaining agreement accords a reward, in this case, for loyalty, to
certain employees. This is evident from the stipulation granting the bonus in
question to workers "with at least one (1) year of continuous service." As we
said in Valenzuela, this is "a purpose not found in P.D. 851."
WHEREFORE, premises considered, the petition is hereby DISMISSED. The
Decision of the public respondent NLRC promulgated on February 11, 1982,
and its Resolution dated March 23, 1982, are hereby AFFIRMED. The
temporary restraining order issued on May 19,1982 is LIFTED.

171. PHILIPPINE AIRLINES, INC. (PAL) vs. NATIONAL LABOR RELATIONS


COMMISSION and AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES (ALPAP)
G.R. No. 114280 July 26, 1996
Facts:
ALPAP filed its complaint on September, 1991, charging PAL of violating
Presidential Decree No. 851, its Implementing Rules and Regulations and
Memorandum Order No. 28 issued by then President Corazon C. Aquino, for
unlawfully refusing and failing to pay the pilots their thirteenth month pay
from 1988 to 1990. Aside from their accumulated thirteenth month pay with
claim for damages and attorneys fees.
In answer to the complaint, PAL denied any liability to ALPAP and maintained
that it was not obliged to give its pilots a thirteenth month pay under P.D.
851 as it was already paying said employees the equivalent of a thirteenth
month pay in the form of a year-end bonus. PAL invokes that under Section 2
of PD 851 and its Implementing Rules and Regulations, "employers already
paying their employees a 13th month pay or more in a calendar year or its
equivalent at the time of this issuance," are not covered by PD 851.
Additionally, PAL contends that there is no demandable obligation in the
absence of any contractual stipulation or a legal provision requiring it to give
its pilots a thirteenth month pay as aside from a year-end bonus that the
latter are already receiving.
ALPAP argued that the payment of the year-end bonus cannot be equated
with the thirteenth month pay since the payment of the former is conditional
in character and not fixed in its amount, while that of the thirteenth month
pay is mandatory in character and definite in its amount.
Judgment was rendered by the Labor Arbiter in ALPAPs favour. PAL's
argument that it is exempted from the coverage of P.D. 851 was ruled out
because it was shown that except for the pilots, all other employees of PAL
were receiving both the thirteenth month pay and the year-end bonus.
However, the coverage of the award for thirteenth month pay was confined
to 1988 until 1990, excluding those from 1986 and 1987, due to ALPAPs
failure to amend its complaint.
Both parties appealed to the NLRC which affirmed with modifications the
decision of the labor arbiter.

Still dissatisfied, the parties sought reconsideration which was denied by the
NLRC.

Issue:
1.
Whether payment of the thirteenth month pay under P.D. 851 and
Memorandum Order No. 28 covers only rank and file employees.
2.
Whether the payment of a year-end bonus is already equivalent to a
thirteenth month pay.
Decision:
The absence of an express provision in the CBA between PAL and ALPAP
obligating the former to pay the members of the latter a thirteenth month
pay is immaterial. It cannot be disputed that the tenor of P.D. 851 as
amended by Memorandum Order No. 28 is mandatory in so providing that
all employers are hereby required to pay all their rank and file employees a
thirteenth month pay not later than December 24 of every year. Noncompliance with this mandate cannot be excused by the simple expedient of
pointing to the absence of a similar provision in the CBA for this would
contravene the basic rule that an existing law enters into and forms part of a
valid contract without the need for the parties to expressly make reference
to it. Notwithstanding therefore the absence of any contractual agreement,
the payment of a thirteenth month pay being a statutory grant, compliance
with the same is mandatory and is deemed incorporated in the CBA.
Although P.D. 851 as amended by Memorandum Order No. 28 requires all
employers to pay all their rank and file employees a thirteenth month pay,
the rule is subject to certain exceptions. Excluded from the coverage are
employers already paying their employees a thirteenth month pay or more
in a calendar year or its equivalent at the time of the issuance of the law.
Construing the term its equivalent, the same was defined as inclusive of
Christmas bonus, midyear bonus, profit-sharing payments and other cash
bonuses amounting to not less than 1/12th of the basic salary but shall not
include cash and stock dividend, cost of living allowances and all other
allowances regularly enjoyed by the employee, as well as nonmonetary
benefits. When an employer pays less than 1/12th of the employees basic
salary, the employer shall pay the difference.

Bonus is an amount granted and paid to an employee for his industry and
loyalty which contributed to the success of the employers business and
made possible the realization of profits.The term bonus was in turn
interpreted to mean: [A] bonus is an amount granted and paid to an
employee for his industry and loyalty which contributed to the success of the
employers business and made possible the realization of profits. It is an act
of generosity of the employer . . . It is also granted by an enlightened
employer to spur the employee to greater efforts for the success of the
business and realization of bigger profits.
Applying the aforecited definitions, it would seem that the year-end bonus
being granted by PAL to the employees may be considered as an equivalent
of the thirteenth month pay considering the similarity in the purpose for
granting the same. As advanced by ALPAP, the rationale for PALs grant of a
year-end bonus was to give regard for the loyalty, dedication and hard work
of the employee. Confirming this purpose is the declaration made by then
PAL President, Feliciano Belmonte, Jr. in his letter addressed to the
employees of the PAL dated October 30, 1991, announcing the granting of a
Christmas bonus equivalent to 125% of the employees monthly pay for a
job well done to wit: x x x x x x x x x In simple terms, we made a profit
from our efforts to increase revenues and cut costs. I believe it is only proper
that appreciation for a job well done should be expressed in a tangible
manner. I am therefore pleased to announce that for this year, management
has decided to award a Christmas bonus equivalent to 125% of your monthly
basic pay. x x x x x x. From the foregoing, it appears that the rationale for
the grant of the year-end bonus by PAL coincides with the nature of the
bonus which can be equated with the payment of a thirteenth month pay.
WHEREFORE, finding no merit in the petitions, the same are hereby DENIED
and the Resolutions of public respondent NLRC promulgated on November
23, 1993 and February 28, 1994 are hereby AFFIRMED.

172. Framanlis Farms Inc vs Minister of Labor

72616-17

173. San Miguel corp vs Inciong103 scra 139


174. Philippine duplicators Inc vs NLRC
175. Isalama Machine works vs NLRC
176.Alliance of Government workers et al vs Minister of labor and
employment
177. Tan vs. Lagrama
178. Lambo vs NLRC
179. Makati Haberdashery vs NLRC
180. Labor Congress of the Philippines
181. Jimenez et al. vs. NLRC and Juanata
[G.R. No. 116960. April 2, 1996]
DOCTRINE:
As a general rule, one who pleads payment has the burden of proving it.
Even where the plaintiff must allege non-payment, the general rule is that
the burden rests on the defendant to prove payment, rather than on the
plaintiff to prove non-payment
FACTS:
Pedro and Fredelito Juanatas, herein respondents, filed a claim for unpaid
wages/commissions, separation pay and damages against JJ s Trucking

and/or Dr. Bernardo Jimenez. Complainants alleged that they were hired by
herein petitioner Bernardo Jimenez as driver, mechanic and helper,
respectively, in his trucking firm, JJ Trucking. They were assigned to a tenwheeler truck to haul soft drinks of Coca-Cola Bottling Company and paid on
commission basis, initially fixed at 17% but later increased to 20% in 1988.
They further alleged that for the years 1988 and 1989 they received only a
partial commission of P84,000.00 from petitioners total gross income of
almost P1,000,000.00 for the said two years. Hence, the Jimenez still owes
them 106,211.86. On March 1990 services of the complainant were illegally
terminated.
Petitioners, on the other hand, contend that respondent Fredelito Juanatas
was not an employee of the firm but was merely a helper of his father Pedro;
that all commissions for 1988 and 1989, as well as those up to March, 1990,
were duly paid; and that the truck driven by respondent Pedro Juanatas was
sold to one Winston Flores in 1991 and, therefore, private respondents were
not illegally dismissed.
The Labor Arbiter rendered a decision in favor of respondent Pedro Juanatas
ordering Jimenez to pay the former a separation pay of P15,050.00, but
dismissing the claim as regard to Fredelito Juanatas. On appeal filed by
private respondents, the NLRC modified the decision of the labor arbiter
declaring Pedro and Fredelito Juanatas as employees and ordering petitioners
to pay the unpaid commission amounting to P84,387.05. Petitioners motion
for reconsideration was denied, hence this petition.
ISSUE:
Whether or not the NLRC committed a grave abuse of discretion in ruling that
private respondents were not paid their commissions in full.
HELD:
No. There is no reason to disturb the findings of respondent NLRC that the
entire amount of commissions was not paid, this by reason of the evident
failure of herein petitioners to present evidence that full payment thereof has
been made. It is a basic rule in evidence that each party must prove his
affirmative allegations. Since the burden of evidence lies with the party who
asserts an affirmative allegation, the plaintiff or complainant has to prove his
affirmative allegation, in the complaint and the defendant or respondent has

to prove the affirmative allegations in his affirmative defenses and


counterclaim. Considering that petitioners herein assert that the disputed
commissions have been paid, they have the bounden duty to prove that fact.
As a general rule, one who pleads payment has the burden of proving it.
Even where the plaintiff must allege non-payment, the general rule is that
the burden rests on the defendant to prove payment, rather than on the
plaintiff to prove non-payment. The debtor has the burden of showing with
legal certainty that the obligation has been discharged by payment.
The testimony of petitioners which merely denied the claim of private
respondents, unsupported by documentary evidence, is not sufficient to
establish payment. Although petitioners submitted a notebook showing the
alleged vales of private respondents for the year 1990, the same is
inadmissible and cannot be given probative value considering that it is not
properly accomplished, is undated and unsigned, and is thus uncertain as to
its origin and authenticity.
The positive testimony of a creditor may be sufficient of itself to show nonpayment, even when met by indefinite testimony of the debtor. Similarly, the
testimony of the debtor may also be sufficient to show payment, but, where
his testimony is contradicted by the other party or by a disinterested
witness, the issue may be determined against the debtor since he has the
burden of proof. The testimony of the debtor creating merely an inference of
payment will not be regarded as conclusive on that issue.
Hence, for failure to present evidence to prove payment, petitioners
defaulted in their defense and in effect admitted the allegations of private
respondents.

182. Neri vs. NLRC, Far East Bank and Trust Co.
[G.R. Nos. 97008-09. July 23, 1993]
DOCTRINE:
There is "labor-only" contracting where: (a) the person supplying workers to
an employer does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others; and, (b) the
workers recruited and placed by such person are performing activities which
are directly related to the principal business of the employer.
FACTS:
Far Bast Bank and Trust Company (FBTC) was sued by two employees of
Building Care Corporation (BCC) to compel the former to recognize them as
its regular employees and be paid the same wages which its employees
receive. In the proceeding, it was established that BCC had substantial
capitalization of P1 Million or a stockholders equity of P1.5 Million. Thus the
Labor Arbiter ruled that BCC was only job contracting and that consequently
its employees were not employees of FEBTC. On appeal, such factual finding
was affirmed by the NLRC. Nevertheless, petitioners insist that BCC is
engaged in "labor-only" contracting because it failed to adduce evidence
purporting to show that it invested in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the
conduct of its business. Moreover, petitioners argue that they perform duties
which are directly related to the principal business or operation of FEBTC.
Consequently, they must be deemed employees of respondent bank by
operation of law since BCC is merely an agent of FEBTC.
ISSUE:
Whether or not BCC is engaged in labor-only contracting, making FBTC the
employer of the petitioners.

HELD:
No. BCC cannot be considered a "labor-only" contractor because it has
substantial capital. While there may be no evidence that it has investment in
the form of tools, equipment, machineries, work premises, among others, it
is enough that it has substantial capital, as was established before the Labor
Arbiter as well as the NLRC. In other words, the law does not require both
substantial capital and investment in the form of tools, equipment,
machineries, etc. This is clear from the use of the conjunction "or". If the
intention was to require the contractor to prove that he has both capital and
the requisite investment, then the conjunction "and" should have been used.
But, having established that it has substantial capital, it was no longer

necessary for BCC to further adduce evidence to prove that it does not fall
within the purview of "labor-only" contracting. There is even no need for it to
refute petitioners' contention that the activities they perform are directly
related to the principal business of respondent bank.
183. Manila Water Co. vs. Pena, et al.
[G.R. No. 158255. July 8, 2004]
DOCTRINE:
Job contracting is permissible only if the following conditions are met: 1) the
contractor carries on an independent business and undertakes the contract
work on his own 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; and 2) the contractor has substantial capital or
investment in the form of tools, equipment, machineries, work premises, and
other materials which are necessary in the conduct of the business.
FACTS:
Under a Concession Agreement with Manila Water Sewerage System (MWSS),
Manila Water Co. undertook to absorb former employees of the MWSS whose
names and positions were in the list furnished by the latter, while the
employment of those not in the list was terminated on the day petitioner
took over the operation. Private respondents, being contractual collectors of
the MWSS, were among the 121 employees not included in the list;
nevertheless, petitioner engaged their services without written contract from
August 1, 1997 to August 31, 1997. Thereafter, on September 1, 1997, they
signed a three-month contract to perform collection services for eight
branches of petitioner in the East Zone. Before the end of the three-month
contract, the 121 collectors incorporated the Association Collectors Group,
Inc. (ACGI), which was contracted by petitioner to collect charges for the
Balara Branch. Subsequently, most of the 121 collectors were asked by the
petitioner to transfer to the First Classic Courier Services, a newly registered
corporation. Only private respondents herein remained with ACGI. Petitioner
continued to transact with ACGI to do its collection needs until February 8,
1999, when petitioner terminated its contract with ACGI.

Private respondents filed a complaint for illegal dismissal and money claims
against petitioner, contending that they were petitioners employees as all
the methods and procedures of their collections were controlled by the latter.

Petitioner, however, asserted that private respondents were employees of


ACGI, an independent contractor. It maintained that it had no control and
supervision over private respondents manner of performing their work
except as to the results. Thus, petitioner did not have an employer-employee
relationship with the private respondents, but only a service contractor-client
relationship with ACGI.
ISSUE:
Whether or not the employment of the respondents with ACGI was labor-only
contracting.
HELD:
Yes. Under the following factual milieu, there is no doubt that ACGI was
engaged in labor-only contracting, and as such, is considered merely an
agent of the petitioner.

ACGI does not have substantial capitalization or investment in the form


of tools, equipment, machineries, work premises, and other materials,
to qualify as an independent contractor. Having only P62,500 as paid-in
capital.
The work of the private respondents was directly related to the
principal business or operation of the petitioner. Being in the business
of providing water to the consumers in the East Zone, the collection of
the charges therefor by private respondents for the petitioner can only
be categorized as clearly related to, and in the pursuit of the latters
business.
ACGI did not carry on an independent business or undertake the
performance of its service contract according to its own manner and
method, free from the control and supervision of its principal,
petitioner. Prior to private respondents alleged employment withACGI,
they were already working for petitioner, subject to its rules and
regulations in regard to the manner and method of performing their

tasks. This form of control and supervision never changed although


they were already under the seeming employ of ACGI.
In labor-only contracting, the statute creates an employer-employee
relationship for a comprehensive purpose: to prevent a circumvention of
labor laws. The contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the principal
employer.[20] Since ACGI is only a labor-only contractor, the workers it
supplied should be considered as employees of the petitioner.

184. San Miguel Corp. Vs. Aballa, et al., G.R. No. 149011, June 28,
2005

Facts:
San Miguel Corp. Entered into a Contract of Services with Sunflower
Multi-Purpose Cooperative, to be effective for one year, starting January 1,
1993, subject to renewal. The services, to be redered to SMCs Shrimp
Processing Plant at Bacolod, would consist of (1) messengerial-janitorial
work, (2) shrimp harvesting and receiving, and (3) sanitation, washing, and
cold storage. The contract stipulated that: (1) the cooperative shall employ
the necessary personnel and provide adequate equipment, materials, and
tools, over which the coop shall have the entire control and supervision; (2)
no employer-employee relationship shall exist between SMC, and the coop
and any of its members; the cooperative is an association of self-employed
members, an independent contractor; subject to the control and the direction
of San Miguel Corp. only as to the result of the work or service; (3) the coop
shall have the exclusive direction in the selection, engagement and
discharge of its member-workers; and (4) the coop undertakes to pay the
wages, premium pay and benefits of its member-workers as well as the
taxes.
In July 1995, 97 worker-members filed their complaint before the NLRC
demanding their regularization as SMC employees with appertaining benefits
and privileges. On September 15, 1995, SMC closed its Bacolod Shrimp
Processing Plant and reported the closure to the DOLE. The workers charged
SMC with illegal dismissal.

Denying employer-employee relationship, SMC pointed to Sunflower as


the employer.
The labor arbiter and subsequently the NLRC dismissed the complaint.
They held that the charge that the coop was a mere labor-only contractor
had not been substantiated.
But the Court of Appeals reversed the ruling, a reversal that the
Supreme Court substantially sustained. Citing the definitions of legitimate
contracting and labor-only contracting in D.O. No. 18-02, the court concluded
that the cooperative in this case did not qualify as an independent
contractor. It was a labor-only contractor; hence, it was a mere agent of SMC,
who therefore, was the employer of the complaining workers.
Issue:

When is a Cooperative a Labor-only Contractor?

Ruling:
The Contract of Service between SMC and Sunflower shows that the
parties clearly disavowed the existence of employer-employee relationship
between SMC and the workers. The language of the contract is not. However,
determinative of the parties relationship, rather it is the totality of the facts
and surrounding circumstances of the case.
While indeed Sunflower was issued Certificate of Registration No. ILO875 on February 10, 1992 by the Cooperative Development Authority, this
merely shows that it had at least P2,000.00 in paid-up share capital, which
amount cannot be considered substantial capitalization.
What appears is that Sunflower does not have substantial
capitalization or investment in the form of tools, equipment, machineries,
work premises and other materials to qualify it as an independent contractor.
On the other hand, it is gathered that the lot, building, machineries and
all other working tools utilized by private respondents (the complaint
workers) in carrying out their tasks were owned and provided by SMC.
The alleged office of Sunflower is found within the confines of a small
carinderia or refreshment (sic) owned by the mother of the Cooperative
Chairman Roy Asong.
xxxIn said . . . . . office, the only equipment used and owned by Sunflower
was a typewriter.

Furthermore, Sunflower did not carry on an independent business or


undertake the performance of its service contract according to its own
manner and method, free from the control and supervision of its principal,
SMC, its apparent role having been merely to recruit persons to work for
SMC.
Thus, it is gathered from the evidence adduced by the complaining
workers before the labor arbiter that their daily time records were signed by
SMC supervisors... which fact shows that SMC exercised the power of control
and supervision over its employees. And control of the premises in which the
workers worked was by SMC. These tend to disprove the independence of the
contractor.

185. Philippine Bank of Communications vs. National Labor


Relations Commission, Honorable Arbiter T.L. Dogelio, and R.
Orpiada, G.R. No. L-66598, December 19, 1986

Facts:
Philippine Bank of Communications and the Corporate Executive
Search, Inc. (CESI) entered into and agreement under which CESI would
provide Temporary Services to PBCom consisting of eleven (11)
messengers, one of whom was Orpiada who had been assigned to the bank
since June 1975.
He rendered messengerial services to the bank, within its premises,
together with others doing similar job. In or about October 1976, the bank
requested CESI to withdraw Orpiadas assignment because Orpiadas
services were no longer needed. Orpiada filed a complaint against the
bank for illegal dismissal and failure to pay the 13th-month pay.

During the compulsory arbitration proceedings, the Bank impleaded


CESI as an additional respondent. Both the bank and CESI maintained that
CESI (and not the bank) was Orpiadas employer.
Issue:
Whether or not an employer-employee relationship existed
between the bank and Orpiada.
Ruling:
The bank maintained that Orpiada was an employee of CESI. The bank
documents its position by pointing to the following provisions of its letter
agreement with CESI: xxx
2. Such individuals will nevertheless remain your (CESIs) employees and you
will, therefore, retain all liabilities arising from the new Labor Code as
amended, Social Security act and other applicable governmental decrees,
rules and regulations, xxx
There is of course, nothing illegal about hiring persons to carry out a
specific project or undertaking the completion or termination of which was
determined at the time of engagement of the employee, or where the work
or service to be performed is seasonal in nature and the employment is for
the duration of the season. The letter f agreement itself, however, merely
required CESI to furnish the bank with eleven (11) messengers for a
contract period from January 19, 1976-. The eleven (11) messengers were
thus supposed to render temporary services for an indefinite or unstated
period of time. Ricardo Orpiada himself was assigned to the banks offices
from June 25, 1975 and rendered services to the bank until sometime in
October 1976, or a period of about sixteen months. Under the Labor Code,
however, any employee who has rendered at least one year of service,
whether such service is continuous or not, shall be considered a regular
employee (Article 281, second paragraph). Assuming, therefore, that Orpiada
could properly be regarded as casual (as distinguished from a regular)
employee of the bank, he becomes entitled to be regarded as a regular
employee of the bank as soon as he had completed one year of service to
the bank. Employers may not terminate the service of a regular employee
except for a just cause or when authorized under the Labor Code (Article 280
[now 279], Labor Code). It is not difficult to see that to uphold the
contractual agreement between the bank and CESI would in effect be to
permit employers to avoid the necessity of hiring regular employees or
permanent employees and to enable them to keep their employees
indefinitely on a temporary or casual status, thus to deny them security of

tenure on their jobs. Article 106 of the Labor Code is precisely designed to
prevent such a result.
We hold that, in the circumstances of this case, CESI was engaged in
labor-only contracting vis-a-vis the petitioner bank and in respect of
Ricardo Orpiada, and that consequently, the petitioner bank is liable to
Orpiada as if Orpiada had been directly employed not only by CESI but also
by the bank. It may well be that the bank may in turn proceed against CESI
to obtain reimbursement of, or some contribution to, the amounts which the
bank will have to pay to Orpiada; but this is not necessary to determine here.

186. Tabas, et al. vs. California Manufacturing Company, Inc., et. al.,
G.R. No. 80680, January 26, 1989Facts:
The petitioner employees were employees of Livi Manpower Services,
Inc. (Livi), which assigned them to work as promotional merchandisers of
California Manufacturing under a manpower supply agreement. The
agreement provided that California has no control or supervision whatsoever
over Livis workers with respect ti how they accomplish their work, that Livi is
an independent contractor and that it is hereby agreed that it is the sole

responsibility o Livi to comply with all existing as well as future laws, rules
and regulations pertinent to employment of labor.
It was further expressly stipulated that the assignment of workers to
California shall be on a seasonal and contractual basis.
The petitioner employees were made to sign employment contracts
with duration of six months, upon the expiration of which they signed new
agreements with the same period, and so on. Unlike regular California
employees, who received not less than P2,823.00 a month in addition to a
host of fringe benefits and binuses, they received P38.56 plus P15.00 in
allowance daily.
The petitioners now allege that they had become regular California
employees and demand, as a consequence whereof, similar benefits. They
likewise claim that they were notified by California that they would not be
rehired, hence, they filed an amended complaint charging California with
illegal dismissal.
Issue:
The labor arbiters decision, affirmed by NLRC on appeal that no
employer-employee relation exists between the petitioners and California.
Ruling:
We reverse.
The existence of an employer-employee relation is a question of law
and being such, it cannot be made subject of agreement. Hence, the fact
that the manpower supply agreement between Livi and California had
specifically designated the former as the petitioners employer and had
absolved the latter from any liability as an employer, will not erase either
partys obligations as an employer, if an employer-employee relation
otherwise exist between the workers and either firm. At any rate, since the
agreement between Livi and California, they alone are bound by it, and the
petitioners cannot be made to suffer from its adverse consequences.
This Court has consistently ruled that the determination of whether or
not there is an employer-employee relation depends upon four (4) standards:
(10) the manner of selection and engagement of the putative employee; (2)
the mode of payment of wages; 3) the presence or absence of a power of
dismissal; and (4) the presence or absence of a power to control the putative
employees conduct. Of the four, the right-of-control test has been held to be
the decisive factor.

On the other hand, we have likewise held, based on Article 106 of


Labor Code, xxx that notwithstanding the absence of a direct employeremployee relationship between the employer in whose favor work had been
contracted out by a labor-only contractor, and the employees, the former
has the responsibility, together with the labor-only contractor for any valid
labor claims, by operation of law. The reason, so we held, is that the laboronly contractor is considered merely an agent of the employer, and
liability must be shouldered by either one or shared by both.
It would have been different, we believe, had Livi been discretely a
promotions firm, and that California had hired it to perform the latters
merchandising activities. For then, Livi would have been truly the employer
of its employees, and California, its client. The client, in that instant case,
would have been a mere patron, and not an employer. The employees would
not in that event be unlike waiters, who, although at the service of
customers, are no the latters employees, but of the restaurant.
xxx

WHEREFORE, the petition is GRANTED. Judgement is hereby


RENDERED: 2) ORDERING the respondent, California Manufacturing Company
to REINSTATE the petitioners with full status and rights of regular employees;
xxx all such other and further benefits as may be provided by exisiting
collective bargaining agreement(s) or other relations, or by law xxx.

187. Mafinco trading corporation vs Ople


188. Insular Life Insurance Co vs NLRC
189. Rhone-Poulene Agrochemicals Philippines vs NLRC

190. Roland Escario and et.al vs. NLRC


Facts: Petitioners were employed by California Marketing Co., Inc. as merchandisers,
whose main task is to withdraw stocks from warehouse, fix the prices, price tagging,
displaying the products and inventory. Respondent, CMC is a domestic corporation
principally engaged in the manufacturing of food products and distribution to
retailers and wholesalers, while Donna Louise Advertising and Marketing Associates,
Inc. is a duly registered promotional firm.
The petitioners alleged that their wages are only paid through CMCs agent D.L
Admark to avoid liability. But, the hiring, control, supervision and determination of
wages are covered by CMC, even the equipment used in their job are all provided by
CMC and not its agent. Petitioners filed a case before the Labor Arbiter for the
regularization of their employment status. While the case is pending, D.L Admark
sent a notice of termination, hence the information was amended which includes
illegal dismissal.
The private respondent contends the CMC is not liable, since theres no employeremployee relationship between them and the petitioners. It alleged that employees
were hired by D.L Admark an independent job contractors who provide the
necessary promotional activities for its product lines.
The Labor Arbiter held that petitioners are the employees of CMC as they were
engaged in activities that are necessary and desirable in the usual business or trade
of CMC. But, on appeal, the NLRC set aside the decision of the Labor Arbiter. It ruled
that no employer-employee relationship existed between the petitioners and CMC.
It, likewise, held that D.L. Admark is a legitimate independent contractor, hence, the
employer of the petitioners.
Hence a petition for certiorari was filed.

Issue:
whether or not D.L. Admark is a labor-only contractor or an independent contractor?

Decision:
Affirmed assailed decision of NLRC in toto.

Ruling: D.L Admark is an independent contractor, as shown by below circumstances


the respondent is a legitimate job contractor, to wit:(a) The SEC registration
certificate of D.L. Admark states that it is a firm engaged in promotional,

advertising, marketing and merchandising activities.(b) The service contract


between CMC and D.L. Admark clearly provides that the agreement is for the supply
of sales promoting merchandising services rather than one of manpower placement.
(c) D.L. Admark was actually engaged in several activities, such as advertising,
publication, promotions, marketing and merchandising. It had several
merchandising contracts with companies like Purefoods, Corona Supply, Nabisco
Biscuits, and Licron. It was likewise engaged in the publication business as
evidenced by it magazine the "Phenomenon. (d) It had its own capital assets to
carry out its promotion business. It then had current assets amounting to P6 million
and is therefore a highly capitalized venture.
Moreover, by applying the four-fold test used in determining employer-employee
relationship, the status of D.L. Admark as the true employer of petitioners is further
established. The elements of this test are (1) the selection and engagement of
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power
to control the employees conduct.
There is labor-only contracting when the contractor or sub-contractor merely
recruits, supplies or places workers to perform a job, work or service for a principal.
In labor-only contracting, the following elements are present: (a) The person
supplying workers to an employer does not have substantial capital or investment in
the form of tools, equipment, machineries, work premises, among others; and (b)
The workers recruited and placed by such person are performing activities which are
directly related to the principal business of the employer.
In Vinoya vs. NLRC, to be considered an independent contractor it is not enough to
show substantial capitalization or investment in the form of tools, equipment, and
machinery and work premises. In addition, the following factors need be considered:
(a) whether the contractor is carrying on an independent business; (b) the nature
and extent of the work; (c) the skill required; (d) the term and duration of the
relationship; (e) the right to assign the performance of specified pieces of work; (f)
the control and supervision of the workers; (g) the power of the employer with
respect to the hiring, firing and payment of workers of the contractor; (h) the control
of the premises; (i) the duty to supply premises, tools, appliances, materials, and
labor; and (j) the mode, manner and terms of payment.

191. Radio Communication of the Philippines, Inc. vs. NLRC


Facts: On May 04, 1981, petitioner file with National Wages and Council an
application for exemption from the coverage of Wage Order No. 1, but it was
opposed by URCPICLA-FUR, a labor organization affiliated with the Federation of
Unions of Rizal (FUR). The application was disapproved by NWC and ordered the
petitioner to pay its covered employees the mandatory living allowance of P2.00
daily.
In March 1985, respondent filed a writ of execution asserting their claim of 15% of
the total backpay due to all its members as "union service fee" for having
successfully prosecuted the latter's claim for payment of wages and for
reimbursement of expenses incurred by FUR and prayed for the segregation and
remittance of said amount to FUR thru its National President. September of same
year the union now claim 20% of total backpay.
The petitioner, entered into a compromise agreement with BMRCPI-NFL as the new
bargaining agent of oppositors RCPI employee, without the knowledge of the union.
The union filed a joint motion with NWC, alleging that compromise agreement
between petitioner and BMRCPI-NFL is unjust and invalid being not a party in the
case-at-bar.
Director of NWC, awarded the union 15% of total backpay and ordered petitioner to
deposit the amount to the Regional Office. However, Secretary of Labor and
Employment issued an order on August 18, 1986 modifying the order appealed from
by holding petitioner solely liable to respondent union for 10% of
the awarded amounts as attorneys fees.
Issue:
Whether or not the deduction of 10% to RCPI employee is valid?
Decision:
Petition is dismissed at bar
Ruling:
In Cristobal vs. ECC, Attorney's fee due the oppositor is chargeable against RCPI.
The defaulting employer or government agency remains liable for attorney's fees
because it compelled the complainant to employ the services of counsel by unjustly
refusing to recognize the validity of the claim.

It is undisputed that oppositor (private respondent herein) was the counsel on


record of the RCPI employees in their claim for ECOLA under Wage Order No. 1 since
the inception of the proceedings at the National Wages Council up to the Supreme
Court. It had therefore a valid claim for attorney's fee which it called union service
fee.
Article 222 of the Labor Code requiring an individual written authorization as a
prerequisite to wage deductions seeks to protect the employee against unwarranted
practices that would diminish his compensation without his knowledge and
consent. However, for all intents and purposes, the deductions required of the
petitioner and the employees do not run counter to the express mandate of the law
since the same are not unwarranted or without their knowledge and consent. Also,
the deductions for the union service fee in question are authorized by law and do
not require individual check-off authorizations

192. Apodaca vs. NLRC


Facts: Petitioner, Ernesto Apodaca was employed by Intrans, Phils, Inc. On August
1985 he was persuaded by respondent Mirasol to subscribe to Php1,500 shares or
for a total of Php150,000.00. He paid Php37,500.00. On September 1, 1975,
petitioner was appointed President and General Manager of. However, on January 2,
1986, he resigned. Petitioner instituted with the NLRC a complaint against private
respondents for the payment of his unpaid wages, his cost of living, and allowance,
the balance of his gasoline and representation expenses and his bonus
compensation for 1986. Private respondents admitted that there is due to petitioner
the amount of Php17,060.07 but this was applied to the unpaid balance of his
subscription in the amount of Php95,439.93. Petitioner questioned the set-off
alleging that there was no call or notice for the payment of the unpaid
subscription.
Issue:
Whether or not the unpaid subscription shall be deducted from his wage/salary?
Decision:
Petition is granted
Ruling:
For payment of the unpaid subscription, the NLRC cannot validly set it off against
the wages and other benefits due petitioner. Article 113 of the Labor Code allows
such a deduction from the wages of the employees by the employer, only in three
instances, to wit:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:
In cases where the worker is insured with his consent by the employer, and
the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;

For union dues, in cases where the right of the worker or his union to checkoff
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.

193. Metropolitan Bank and trust company employees

102636

194. national federation of labor vs NLRC


195. manila mandarin in employees union vs NLRC
196. CAGAYAN SUGAR MILLING COMPANY, petitioner, vs. SECRETARY
OF LABOR AND EMPLOYMENT, DIRECTOR RICARDO S. MARTINEZ, SR.,
and CARSUMCO EMPLOYEES UNION, respondents.
FACTS:
In this petition for certiorari, petitioner CAGAYAN SUGAR MILLING COMPANY
(CARSUMCO) impugns the October 8, 1996 Decision of the Secretary of
Labor, dismissing its appeal and upholding the Order of Regional Director
Ricardo S. Martinez, Sr. Finding petitioner guilty of violating Regional Wage
Order No. RO2-02.
On November 16, 1993, Regional Wage Order No. RO2-02was issued by the
Regional Tripartite Wage and Productivity Board, Regional Office No. II of the
Department of Labor and Employment (DOLE). It provided, inter alia, that:
"Section 1. Upon effectivity of this Wage Order, the statutory minimum wage
rates applicable to workers and employees in the private sector in Region II
shall be increased
labor inspectors from the DOLE Regional Office examined the books of
petitioner to determine its compliance with the wage order and found

violated the wage order as it did not implement an across the board increase
in the salary of its employees
At the hearing at the DOLE Regional Office for the alleged violation,
petitioner maintained that it complied with Wage Order No. RO2-02 as it paid
the mandated increase in the minimum wage.
public respondent Regional Director Ricardo S. Martinez, Sr. ruled that
petitioner violated Wage Order RO2-02 by failing to implement an across the
board increase in the salary of its employees. He ordered petitioner to pay
the deficiency in the salary of its employees in the total amount of
P555,133.41
petitioner appealed to public respondent Labor Secretary Leonardo A.
Quisumbing On the same date Regional Wage Board issued Wage Order No.
RO2-02-Aamending the earlier wage order
Secretary of Labor dismissed petitioner's appeal and affirmed the Order of
Regional Director Martinez, Sr. Petitioner's motion for reconsideration was
likewise denied
private respondent CARSUMCO EMPLOYEES UNION moved for execution of
the December 16, 1994 Order. Regional Director Martinez, Sr. granted the
motion and issued the writ of execution
petitioner moved for reconsideration to set aside the writ of execution. On
March 5, the DOLE regional sheriff served on petitioner a notice of
garnishment of its account with the Far East Bank and Trust Company. On
March 10, the sheriff seized petitioner's dump truck and scheduled its public
sale on March 20, 1997
Hence, this petition, with a prayer for the issuance of a temporary restraining
order (TRO)
Court issued a TRO enjoining respondents from enforcing the writ of
execution. upon petitioner's motion, Court amended the TRO by also
enjoining respondents from enforcing the Decision of the Secretary of Labor
and conducting further proceedings until further orders from this Court.
ISSUE:
WON THE WAGE ORDER RO2-02 IS NULL AND VOID FOR HAVING BEEN
ISSUED IN VIOLATION OF THE PROCEDURE PROVIDED BY LAW AND IN
VIOLATION OF PETITIONER'S RIGHT TO DUE PROCESS OF LAW. And THE

DECISION OF THE SECRETARY OF LABOR AND EMPLOYMENT IS NULL AND


VOID FOR LACK OF ANY LEGAL BASIS.
HELD:
The petition has merit. Wage Order No. RO2-02, passed on November 16,
1993, provided for an increase in the statutory minimum wage rates for
Region II. More than a year later, or on January 6, 1995, the Regional Board
passed Wage Order RO2-02-A amending the earlier wage order and providing
instead for an across the board increase in wages of employees in Region II,
retroactive to the date of effectivity of Wage Order RO2-02.
We agree with Petitioner in holding public respondent Labor Secretary
Quisumbing abused his discretion in upholding the validity of said wage
order. The record shows that there was no prior public consultation or
hearings and newspaper publication insofar as Wage Order No. RO2-02-A is
concerned. In fact, these allegations were not denied by public respondents
in their Comment. The public respondents' position is that there was no need
to comply with the legal requirements of consultation and newspaper
publication as Wage Order No. RO2-02-A merely clarified the ambiguous
provision of the original wage order.
In passing RO2-02-A without going through the process of public consultation
and hearings, the Regional Board deprived petitioner and other employers of
due process as they were not given the opportunity to ventilate their
positions regarding the proposed wage increase. In wage-fixing, factors such
as fair return of capital invested, the need to induce industries to invest in
the countryside and the capacity of employers to pay are, among others,
taken into consideration. Our legislators provide Regional Tripartite Boards
composed of representatives from the government, the workers and the
employers to determine the appropriate wage rates per region to ensure that
all sides are heard. The Wage Order shall take effect only after publication in
a newspaper of general circulation in the region. It is a fundamental rule,
borne out of a sense of fairness, that the public is first notified of a law or
wage order before it can be held liable for violation thereof. It is indisputable
that there was no public consultation or hearing conducted prior to the
passage of RO2-02-A. Neither was it published in a newspaper of general
circulation as attested in the February 3, 1995 minutes of the meeting of the
Regional Wage Board that the non-publication was by consensus of all the
board members. Hence, RO2-02-A must be struck down for violation of
Article 123 of the Labor Code

The court held that RO2-02-A is invalid for lack of public consultations and
hearings and non-publication in a newspaper of general circulation, in
violation of Article 123 of the Labor Code. We likewise find that public
respondent Secretary of Labor committed grave abuse of discretion in
upholding the findings of Regional Director Ricardo S. Martinez, Sr. that
petitioner violated Wage Order RO2-02

197. ECOP vs. NWPC


(G.R. No. 96169 September 24, 1991)
Facts:
On October 15, 1990, the Regional Board of the National Capital Region
issued Wage Order No. NCR-01, increasing the minimum wage by P17.00
daily in the National Capital Region. The Trade Union Congress of the
Philippines (TUCP) moved for reconsideration; so did the Personnel
Management Association of the Philippines (PMAP). ECOP opposed.

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 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.
ECOP appealed to the National Wages and Productivity Commission. On
November 6, 1990, the Commission promulgated an Order, dismissing the
appeal for lack of merit. On November 14, 1990, the Commission denied
reconsideration.
Issue:
The Employers Confederation of the Philippines (ECOP) is questioning the
validity of Wage Order No. NCR-01-A dated October 23, 1990 of the Regional
Tripartite Wages and Productivity Board, National Capital Region,
promulgated pursuant to the authority of Republic Act No. 6727.
Held:
The Commission noted that the increasing trend is toward the salary-cap
method, which has reduced disputes arising from wage distortions (brought
about, apparently, by the floor-wage method). Precisely, Republic Act No.
6727 was intended to rationalize wages, first, by providing for full-time
boards to police wages round-the-clock, and second, by giving the boards
enough powers to achieve this objective. The Court is of the opinion that
Congress meant the boards to be creative in resolving the annual question of
wages without labor and management knocking on the legislature's door at
every turn.
WHEREFORE, premises considered, the petition is DENIED. No
pronouncement as to costs.

198. MEYCAUAYAN COLLEGE, vs Drilon


FACTS:

Petitioner is a private educational institution duly organized and existing under Philippine laws,
and operating in Meycauayan, Bulacan. On January 16, 1987, its board of trustees recognized
the Meycauayan College Faculty and Personnel Association as the employees union in the
Meycauayan College.
Prior to said recognition or on July 17, 1983, petitioner and the union, then headed by Mrs.
Teresita V. Lim, entered into a collective bargaining agreement for 1983-1986. Article IV thereof
provides:
SALARY SCALE
IV. 4.0 ANG ANTAS NG PAGPAPASUWELDO SA MGA GURO SA MATAAS NG
PAARALAN AY UMAALINSUNOD SA PARAAN NG PAGRARANGGONG
KALAKIP NITO BILANG "TAKDA" AT AYON PA RIN SA SUMUSUNOD NA
HALAGA NG PAGPAPASUWELDO (IPATUTUPAD SA AO-ESCOLAR 19831986):
PAGSUBOK A (1-3 TAON) P51.50
KLASE 1 (4-5 TAON) P52.00
(6-8 TAON) P53.00
KLASE II (9-12 TAON) P54.00
KLASE III (13-14 TAON) P57.00
KLASE IV (15-17 TAON) P60.00
KLASE V (18-21 TAON) P63.00
(22 PATAAS) P70.00
When the collective bargaining agreement was entered into, the following presidential decrees
were in effect:
(a) P.D No. 1389 dated May 29, 1978 adjusting the existing statutory minimum wages;
(b) P.D. No. 1713 dated August 18, 1980 providing for an increase in the minimum daily wage
rates and for additional mandatory living allowances, and ;
(c) P.D. No. 1751 dated May 14, 1980 increasing the statutory daily minimum wage at all levels
by P4.00 after integrating the mandatory emergency living allowance under P.D. Nos. 525 and
1123 into the basic pay of all covered workers. Wage Order No. 2 increasing the mandatory

basic minimum wage and living allowance was also issued on July 6, 1983 just before the
collective bargaining agreement herein involved was entered into.
During the lifetime of the collective bargaining agreement, the following were issued:
(a) Wage Order No. 3 dated November 7, 1983 increasing the minimum daily living allowance in
the private sector;
(b) Wage Order No. 4 dated May 1, 1984 integrating as of said date the emergency cost of living
allowances under P.D. Nos. 1614, 1634 and 1713 into the basic pay of covered workers in the
private sector;
(c) Wage Order No. 5 dated June 11, 1984 increasing the cost of living allowance of workers in
the private sector whose basic salary or wage is not more than P1,800 a month; and
(d) Wage Order No. 6 dated October 26, 1984 increasing the daily living allowances.
The union admits herein that its members were paid all these increases in pay mandated by
law. It appears, however, that in 1987, shortly after union president Mrs. Teresita V. Lim, who
held the managerial position of registrar of the college, had turned over the presidency of the
union to Mrs. Fe Villarico, the latter unintentionally got a copy of the collective bargaining
agreement and discovered that Article IV thereof had not been implemented by the petitioner.
Consequently, on March 27, 1987, the union filed with the Department of Labor and
Employment, Regional Office No. III in San Fernando, Pampanga, a notice of strike on the
ground of unfair labor practice alleging therein violation of the collective bargaining agreement
particularly the provisions of Article IV thereof on salary scale.
ISSUE:
1. Whether increases in employees' salaries resulting from the implementation of presidential
decrees and wage orders, which are over and above the agreed salary scale contracted for
between the employer and the employees in a collective bargaining agreement, preclude the
employees from claiming the difference between their old salaries and those provided for under
said salary scale.
RULING:
"Non-compliance with the mandate of a standards law or decree may give rise to an ordinary
action for recovery while violation of a collective bargaining agreement may even give rise to a
criminal action for unfair labor practice. And while the relief sought for violation of a standards
law or decree is primarily for restitution of (an) unpaid benefits, the relief sought for violating a
CBA is ordinarily for compliance and desistance. Moreover, there is no provision in the
aforecited Presidential Decrees providing that compliance thereto is sufficient compliance with a

provision of a collective bargaining agreement and vice-versa." The dispositive portion of the
Secretary's order of September 9, 1987 states:
WHEREFORE, the Management of Meycauayan College is hereby ordered to:
1) Strictly effect the payment of salaries of the union members in accordance
with the provisions of the collective bargaining agreement;
2) Pay the covered union members salary differential computed by subtracting
the salary actually paid and received by them per period provided in the
collective bargaining agreement for school years 1983-1984; 1984-1985 and
1985-1986 including the differential for the 13th month pay for the same period. 5
The petition has no merit.
As correctly ruled by public respondent, a collective bargaining agreement is a contractual
obligation. It is distinct from an obligation imposed by law. The terms and conditions of a
collective bargaining contract constitute the law between the parties. Beneficiaries thereof are
therefore, by right, entitled to the fulfillment of the obligation prescribed therein. Consequently,
to deny binding force to the collective bargaining agreement would place a premium on a refusal
by a party thereto to comply with the terms of the agreement. Such refusal would constitute an
unfair labor practice.
Nevertheless, as the key to the interpretation of contracts, including collective bargaining
agreements, is the intention of the parties, we examined the record and found the undisputed
allegation of private respondent that the collective bargaining agreement herein involved was
entered into by the parties to improve the plight of the teachers by increasing their salary. The
parties increased the teachers' salary or rate per period, by drafting a salary scale "based on the
length of service" of the teachers and eventually came up with Article IV aforequoted. From this
unrebutted allegation, it is clear that the parties wanted to attain one goal increase the
salaries of the teachers on the basis of their length of service. Hence, it is immaterial that the
means by which said goal is achieved is through the alteration of the salary scale.
On the issue of prescription, Article 291 (now Art. 290) of the Labor Code herein invoked by
petitioner, provides:
Offenses. Offenses penalized under this Code and the rules and regulations
issued pursuant thereto shall prescribe in three (3) years.
All unfair labor practices arising from Book V shall be filed with the appropriate
agency within one (1) year from accrual of such unfair labor practice; otherwise,
they shall be forever barred.
The one-year prescriptive period is inapplicable in this case because of peculiar factual
circumstances which petitioner has not denied. Although the collective bargaining agreement

covers school years 1983 to 1986, a copy of the agreement was only made available to the
union in 1987. Immediately thereafter, the union sought its implementation. The union members
might have been aware of the existence of the collective bargaining agreement but that fact that
their president was actually a management employee being petitioner's registrar, they must
have been deterred from demanding its implementation earlier. Hence, to apply the provisions
of Article 290 (Art. 291) would be unfair and prejudicial to the union members particularly those
who have served petitioner for a number of years who stand to benefit most from the salary
scale.
Article 264(g), now Article 263(g) of the Labor Code is broad enough to give the Secretary of
Labor the power to take jurisdiction over what appears at first blush to be an ordinary money
claim. Claims for pay differentials may have that character but, as earlier stated, if they arise out
of a violation of a collective bargaining agreement, they assume the character of an unfair labor
practice and are, therefore, well within the ambit of the jurisdiction of the Secretary of Labor to
decide.the decision of the Secretary of Labor is hereby AFFIRMED and the temporary
restraining order of February 15,1989 is LIFTED.
This decision is immediately executory. Costs against the petitioner.

199. St. Joseph College vs. St. Joseph College Workers Association

Facts: Petitioner is a non-stock, non-profit Catholic educational institution while respondent is a


legitimate labor organization which is currently the official bargaining representative of all
employees of petitioner except the faculty and consultants of the Graduate School, managerial
employees and those who occupy confidential positions. Respondent has an existing CBA with
petitioner for the period from June 1, 1999 to May 31, 2004. For the SY 2000-2001, petitioner
increased its tuition fees for all its departments. Based on petitioners computation, the
incremental proceeds from the tuition fees increase for SY 2000-2001 is P1,560,942.74, 85% of
which is equivalent to P1,326,801.33. Consequently, respondent averred that 85% of
P4,906,307.58, which is P4,170,360.59 should have been released to its members as provided for
in their CBA effective June 1, 2000.
Issue: Whether the 70% - 30% tuition fee increase or the Incremental Proceeds from Tuition Fee
Increase is allocated properly.
Held: Petitioner argues that incremental proceeds should be determined on the basis of the
schools income, not merely on the categorical increase in tuition fee as determined by the
CA. Petitioner explains that if the present years income is less than that of the previous year due
to a lesser number of current enrollees, then there may be no gain or incremental proceeds, but a
loss or decreased proceeds.
The law allows an increase in school tuition fees on the condition that 70 percent of the
increase shall go to the payment of personnel benefits. Plainly unsupported by the law or
jurisprudence is petitioners contention that the payment of such benefits should be based not
only on the rate of tuition fee increases, but also on other factors like the decrease in the number
of enrollees; the number of those exempt from paying the fees, like scholars; the number of
dropouts who, as such, do not pay the whole fees; and the bad debts incurred by the school.

The financial dilemma of petitioner may deserve sympathy and support, but its remedy lies not in
the judiciary but in the lawmaking body.

The law plainly states that 70 percent of the tuition fee increase shall be allotted for the teaching
and the nonteaching personnel; and that the payment of other costs of operation, together with
the improvement of the schools infrastructure, shall be taken only from the remaining 30
percent. The law does not speak, directly or indirectly, of the contention of petitioner that in the
event that its total tuition income is lesser than that in the previous year, then the whole amount
of the increase in tuition fee, and not merely up to 30 percent as provided by law, may be used
for the improvement and modernization of infrastructure and for the payment of other costs of
operation.

200. COCOFED ET AL. vs. HON. CRESENCIANO B. TRAJANO, ET AL.

DOCTRINE
Under RA No. 6727, otherwise known as the Wage Rationalization Act and its
implementing rules, the Department of Labor and Employment shall conduct inspection as often
as possible or necessary, within its manpower constraint, of the payroll and other financial
records kept by the company or business, to determine whether the workers are paid the
prescribed minimum wage rates and other benefits granted by law or any wage order.
FACTS
An inspection conducted by the Department in response to the complaints filed by two
employees, revealed that COCOFED was guilty of underpayment of wages, emergency cost of
living allowance (ECOLA) and 130-month pay. A notice of inspection results was issued
requiring COCOFED to effect restitution or correction within five (5) days from notice.
Thereafter, summary investigations were conducted. COCOFED alleged that complainants
worked for less than eight hours minimum of four and a maximum of six, and that, therefore,
COCOFED was justified in paying an amount less than the statutory minimum wage. The
Regional Director issued a Compliance Order, ruling that the documents confirmed the
manifestation by the counsel of complainants that the workers paid on a daily and monthly basis
are receiving wages below the statutory minimum.
COCOFED appealed to the Secretary of Labor and Employment who denied the appeal
and ruled that:

On the basis of the payrolls submitted by the respondents, we find that the Regional
Director was correct in ruling that the complainants are daily-paid workers. While respondents
claims that in 1985 these workers were paid on a piece-rate-basis, still the payrolls show that
from March 1985 to February 1989, the complainants were paid on a daily basis. Granting that
these workers were indeed converted to piece-rate-workers, said conversion is an outright
violation of the Labor Code. An employer cannot unilaterally decrease the salary being given to
the employees pursuant to Article 100 of the Labor Code. What it has voluntarily given cannot be
unilaterally withdrawn. Besides, the implementing rules are explicit to the effect that nothing
therein shall justify an employer from withdrawing or reducing benefits or supplements provided
in existing individual or collective agreement or employer practice or policy.
ISSUES
Whether the Regional Director and the Secretary of Labor committed grave abuse of
discretion in not categorizing COCOFED as an establishment with less than 30 employees and
with a paid-up capital of P500,000.00 or less,?
Whether the Regional Director and the Secretary of Labor committed grave abuse of
discretion in not finding that complainants are piece-rate workers or paid by results?
RULING
The Court found no grave abuse of discretion on the part of the public respondent.
The petitioner

would

have

the Court overturn

the

factual

finding

of

public

respondents, in that its contention is that the employees are daily paid workers. The Court
however ruled to the contrary, since the payroll submitted does not support the petitioners
contention. Findings of administrative agencies which have acquired expertise because their
jurisdiction is confined to specific matters are generally accorded not only respect but finality.
Moreover, there is absolutely nothing in the records which show that petitioner's employees
worked for less than eight hours. Finally, there would have been no need for petitioner to
make an offer increasing the wage to P45.00 per day if complainants were indeed piece rate
workers, as it claimed and if their wages were not underpaid, as found by public respondents.

201. CEBU OXYGEN & ACETEYLENE CO., INC V. DRILON

DOCTRINE
The provisions of Republic Act No. 6640, do not prohibit the crediting of CBA
anniversary wage increases for purposes of compliance with Republic Act No. 6640. The
implementing rules cannot provide for such a prohibition not contemplated by the law.
Administrative regulations adopted under legislative authority by a particular department must
be in harmony with the provisions of the law, and should be for the sole purpose of carrying into
effect its general provisions. The law itself cannot be expanded by such regulations. An
administrative agency cannot amend an act of Congress.

FACTS
RA No. 6640, passed on December 14, 1987, increased by ten pesos the statutory
minimum daily wage rate of workers and employees in the private sector, whether agricultural or
non-agricultural. The Secretary of Labor issued the pertinent rules implementing RA No. 6640,
Sec. 8 of which provides: No wage increase shall be credited as compliance with the increase
prescribed herein unless expressly provided under valid individual written/ collective
agreements; and, provided further, that such wage increase was granted in anticipation of the
legislated wage increase under the Act. Such increases shall not include anniversary wage
increase provided in collective bargaining agreements.

Cebu Oxygen Co. and the union of its rank-and-file employees entered into a collective
bargaining agreement covering the years 1986 to 1988. Under the CBA, the management gave
salary increases. The Regional Director ordered Cebu Oxygen Co. to pay the deficiency of P200
in the monthly salary and P231 in the 13 th-month pay of its employees for the period stated. Cebu
Oxygen protested the directors order, saying that the anniversary wage increase under the CBA
could be credited against the wage increase mandated by RA No. 6640. It argued that the
payment of the differentials constituted full compliance with RA No. 6640.
ISSUE
Whether the wage increase under the CBA can be credited as compliance with the
statutory wage increase?
HELD
Cebu Oxygen correctly contended that the salary increases granted by it pursuant to the
existing CBA including anniversary wage increase should be considered in determining
compliance with the wage increase mandated by RA No. 6640. It therefore correctly credited its
employees P62 for the differential of two (2) months increase and P31.00 each for the
differential in the 13th-month pay after deducting the P200 anniversary wage increase for 1987
under the Collective Bargaining Agreement.
Section 8 of the Rules Implementing RA No. 6640 is declared null and void insofar as it
excluded the anniversary wage increases negotiated under collective bargaining agreements from
being credited to the wage increases provided for under RA No. 6640.

202. ODIN SECURITY AGENCY VS. HON. DIONISIO DE LA SERNA ET AL.

DOCTRINE
The requirement of due process is satisfied when the parties are given an opportunity to
submit position papers; what the fundamental law abhors is not absence of previous notice but
the absolute lack of opportunity to be heard.
FACTS
The private respondents (employee) filed with the Department of Labor and
Employment, a complaint charging the petitioner employer with underpayment of wages, illegal
deductions, non-payment of night shift differential, overtime pay, etc. When conciliation efforts
failed, the parties were required to submit their position papers. Based on the position papers, the
Regional Director issued an order directing the employer to pay the employees the benefits
prayed for.
Claiming that he was denied due process, the petitioner filed a motion for reconsideration
which was treated as an appeal. The Undersecretary affirmed with modification then order of the
Regional Director.
Hence, the petitioner filed a petition for certiorari and prohibition.
ISSUE
Whether the requirement of due process had been satisfied?

RULING
Requirement of the process is satisfied when the parties are given an opportunity to
submit position papers; what the fundamental law abhors is not absence of previous notice but
the absolute lack of opportunity to be heard. The petitioner was not denied due process, for
several hearings were in fact conducted by the hearing officer of the Regional Office of the
DOLE and the parties submitted position papers upon which in the Regional Director based his
decision in the case. The requirements of due process are satisfied when the parties are given an
opportunity to submit position papers.
The principle of jurisdiction by estoppel. The petitioner is stopped from questioning the
alleged lack of jurisdiction of the Regional Director over the private respondents claims.
Petitioner submitted to the jurisdiction of the Regional Director by taking part in the hearings
before him and by submitting a position paper. This act of participation amounts to estoppels,
that is, action speaks louder than words; the law does not allow a person to speak against his own
act or deed.
203. Urbanes Etc. vs Hon. Security of Labor
204. Zialeita vs PAL
205. Olympia Gualberto vs Marinduque Mining Industrial Corporation
206. Apex Mining Co., Inc. vs NLRC
207. Philippine Global Communications Inc.

157214

208. Jose B. Sarmiento vs Employees Compensation commission 65680


209. raro vs employees 58445
210. belarmino vs employees 90104
211. Hinoguin 8430
212. GSIS vs CA 128524
213. Valeriano

136200

214. Iloilo dock

L-26341

215. Alano vs ECG L-48594


216. Lazo vs Employees 78617
217. Menez

48488

218. Mabuhay shipping vs NLRC 94167


219 IME vs PINEDA 115497
220 NAESS vs NLRC 73441
221 Ysmael vs Avelino
222 Vicente vs ECC

43674
85024

223 Abaya vs Employees

64255

224 Orlino vs Employees

85015

225 Vicente vs ECC 85024


226 GSIS vs Court of Appeals 117572
227 Canonizado vs Almeda L-13005
228 Manzuno vs ECC

88573

229 ECC vs E. Sanico

13428

230 Suanes vs. Workmens Compensation Commission

42808

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