BROTHERHOOD LABOR UNITY MOVEMENT OF THE PHILIPPINES vs.
(d) the employer's power to control the employee with respect to the means
ZAMORA
G.R. No. L-48645 January 7, 1987
Ponente: J. Guiterrez
FACTS:
BLUM filed a complaint with the now defunct Court of Industrial Relations,
charging San Miguel Corporation, and the following officers: Enrique
Camahort, Federico Ofiate Feliciano Arceo, Melencio Eugenia Jr., Ernesto
Villanueva, Antonio Bocaling and Godofredo Cueto of unfair labor practice as
set forth in Section 4 (a), sub-sections (1) and (4) of Republic Act No. 875
and of Legal dismissal. It was alleged that respondents ordered the individual
complainants to disaffiliate from the complainant union; and that
management dismissed the individual complainants when they insisted on
their union membership.
On their part, respondents moved for the dismissal of the complaint on the
grounds that the complainants are not and have never been employees of
respondent company but employees of the independent contractor; that
respondent company has never had control over the means and methods
followed by the independent contractor who enjoyed full authority to hire and
control said employees; and that the individual complainants are barred by
estoppel from asserting that they are employees of respondent company.
ISSUE:
The question of whether an employer-employee relationship exists
HELD:
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
and methods by which the work is to be accomplished. It. is the called
"control test" that is the most important element.
The existence of an independent contractor relationship is generally
established by the following criteria: "whether or not the contractor is carrying
on an independent business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to assign the
performance of a specified piece of work; the control and supervision of the
work to another; the employer's power with respect to the hiring, firing and
payment of the contractor's workers; the control of the premises; the duty to
supply the premises tools, appliances, materials and labor; and the mode,
manner and terms of payment"
The records fail to show that a large commercial outfit, such as the San
Miguel Corporation, entered into mere oral agreements of employment or
labor contracting where the same would involve considerable expenses and
dealings with a large number of workers over a long period of time. Despite
respondent company's allegations not an iota of evidence was offered to
prove the same or its particulars. Such failure makes respondent SMC's
stand subject to serious doubts.
SAN MIGUEL BREWERY UNION vs. OPLE
FACTS:
For 3 years, a collective bargaining agreement was being implemented by
San Miguel Corporation Sales Force Union (PTGWO), and San Miguel
Corporation. Section 1, of Article IV of which provided Employees within the
appropriate bargaining unit shall be entitled to a basic monthly compensation
plus commission based on their respective sales. Then, the company
introduced a marketing scheme known as Complementary Distribution
System(CDS) whereby its beer products were offered for sale directly to
wholesalers through San Miguels Sales Offices. The union alleged that the
new marketing scheme violates Sec 1, Art IV f the CBA because the
introduction of the CDS would reduce the take home pay of the salesmen.
ISSUE:
Whether or not the new marketing scheme should be upheld considering that
the act was unilaterally made by the employer.
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RULING:
Yes, because it is a valid exercise of managerial prerogative. So long as a
companys management prerogatives are exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating
or circumventing the rights of the employees under special laws or under
valid agreements, this Court will uphold them. San Miguel Corporations offer
to compensate the members of its sales force who will be adversely affected
by the implementation of the CDS by paying them a so-called back
adjustment commission to make up for the commissions they might lose as
a result of the CDS proves the companys good faith and lack of intention to
bust their union.
SAN MIGUEL BREWERY, INC., vs. DEMOCRATIC LABOR
ORGANIZATION, ET AL.,
Prologue (Principle): The Eight-Hour Labor Law only applies to employees
who are paid on a monthly or daily basis.Employees who are paid on a
piece-work basis are EXCLUDED.
FACTS:
On January 27, 1955, 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
asked for the dismissal of the complaint
At the hearing held sometime in September, 1955, the union manifested its
desire to confine its claim to its demands for overtime, night-shift differential
pay, and attorney's fees. Presiding Judge Jose S. Bautista, who was
commissioned to receive the evidence, rendered decision expressing his
disposition with regard to the points embodied in the complaint. After the
morning roll call, the employees leave the plant of the company to go on their
respective sales routes either at 7:00 a.m. for soft drinks trucks, or 8:00 a.m.
for beer trucks. They do not have a daily time record. The company never
require them to start their work as outside sales personnel earlier than the
above schedule. The sales routes are so planned that they can be completed
within 8 hours at most, or that the employees could make their sales on their
routes within such number of hours variable in the sense that sometimes
they can be completed in less than 8 hours, sometimes 6 to 7 hours, or
more. The moment these outside or field employees leave the plant and
while in their sales routes they are on their own, and often times when the
sales are completed, or when making short trip deliveries only, they go back
to the plant, load again, and make another round of sales.
These employees receive monthly salaries and sales commissions in
variable amounts. The amount of compensation they receive is uncertain
depending upon their individual efforts or industry. Besides the monthly
salary, they are paid sales commission that range from P30, P40, sometimes
P60, P70, to sometimes P90, P100 and P109 a month, at the rate of P0.01 to
P0.01- per case.
1. To overtime compensation that the provisions of the Eight-Hour Labor
Law apply to the employees concerned for those working in the field or
engaged in the sale of the company's products outside its premises and
consequently they should be paid the extra compensation accorded them by
said law in addition to the monthly salary and commission earned by them,
regardless of the meal allowance given to employees who work up to late at
night.
2. To employees who work at night that they be paid their corresponding
salary differentials for work done at night prior to January 1, 1949 with the
present qualification: 25% on the basis of their salary to those who work from
6:00 to 12:00 p.m., and 75% to those who work from 12:01 to 6:00 in the
morning.
3. To work done during Sundays and holidays that the employees
concerned be paid an additional compensation of 25% as provided for in
Commonwealth Act No. 444 even if they had been paid a compensation on
monthly salary basis. Zenaida Resuma Razon Hours of Work Labor Law.
ISSUE:
Whether or not outside or field sales personnel are entitled to the benefits of
the Eight-Hour Labor Law.
HELD:
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.
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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 reasons for excluding an outside salesman are fairly apparent. Such
salesman, to a greater extent, works individually. There are no restrictions
respecting the time he shall work and he can earn as much or as little, within
the range of his ability, as his ambition dictates. In lieu of overtime he
ordinarily receives commissions as extra compensation. He works away from
his employer's place of business, is not subject to the personal supervision of
his employer, and his employer has no way of knowing the number of hours
he works per day.
The employees concerned are paid a fixed salary for their month of service,
such as Benjamin Sevilla, a salesman, P215; Mariano Ruedas, a truck driver,
P155; Alberto Alpaza and Alejandro Empleo, truck helpers, P125 each, and
sometimes they work in excess of the required 8-hour period of work, but for
their extra work they are paid a commission which is in lieu of the extra
compensation to which they are entitled.
The record shows that these employees during the period of their
employment were paid sales commission ranging from P30, P40, sometimes
P60, P70, to sometimes P90, P100 and P109 a month depending on the
volume of their sales and their rate of commission per case. And so, insofar
is the extra work they perform, they can be considered as employees paid on
piece work, "pakiao", or commission basis. We are, therefore, of the opinion
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.
INTERPHIL LABORATORIES EMPLOYEES UNION FFW ET AL VS.
INTERPHIL LABORATORIES, INC AT AL
Facts:
Interphil Laboratories Employees Union-FFW is the sole and
exclusive bargaining agent of the rank- and- file employees of
Interphil Laboratories, Inc- a company engaged in the business of
manufacturing and packaging pharmaceutical products.
They had a Collective Bargaining Agreement (CBA) effective from
August 01, 1990 to July 31, 1993.
Prior to the expiration of the CBA, Allesandro G. Salazar, the Vice
President of the Human Resources Department of the respondent
company was approached by Nestor Ocampo, the union president
and Hernando Clemente. Salazar told the union officers that the
matter could be discussed during formal negotiations.
March 1993- The union officers again approached Salazar. They
required once more about the CBA status and received the same
reply from Salazar.
April 1993- Ocampo requested for a meeting to discuss the duration
and effectivity of CBA. Salazar however, declared that it would still
be premature to discuss the matter and that the company could not
make a decision at a moment.
The following day all the rank- and file employees refused to follow
their regular shift work schedule:
o From 6:00 am to 6:00 pm /6:00 pm to 6:00 am
o 2:00 pm to 2:00 am
The employees stopped working and left their workplace without
sealing the containers and securing the raw materials they were
working on
To minimize the damage the overtime boycott was causing the
company, Salazar immediately asked for the meeting with the union
officers.
Gonzales told Salazar that the employees will return to their normal
work schedule if the company would agree to their demands as to
the effectivity and duration of the new CBA (agreement must be
effective for 2 years).
Again, Salazar told the union officers that the matter could be
discussed during formal negotiations unsatisfied with the answer the
employees started to engage in a work slowdown campaign to delay
the production of the company.
September 1993- respondent company filed with NLRC a petition to
declare illegal petitioner unions overtime boycott and work
slowdown . It amounted to illegal strike.
October 1993, respondent company filed with National Conciliation
and Mediation Board (NCMB) an urgent request for preventive
mediation aimed to help the parties in their CBA negotiations.
January 1994- petitioner union filed with the NCMB a Notice of
Strike citing unfair labor allegedly committed by the respondent
company.
February 1994- Secretary of Labor Nieves Confessor issued an
order directing respondent company to
o Immediately accept all striking workers, including the 53
terminated union officers
o Shop stewards and union members back to work under the
same terms and conditions
Page 3 of 26
 o To pay all the unpaid accrued year end benefits of its
employees.
On the other hand, petitioner union was directed to strictly and
immediately comply with the return-to work order.
September 1995- Secretary Quisumbing approved and adopted the
decision of the Labor Arbiter Caday declaring the overtime boycott
and work slowdown as illegal strike and found out that the
respondent company is guilty of unfair labor practice.
Petitioner unions reconsideration and petition for certiorari were
denied.
Issue:
1. Whether or not the Secretary of Labor and Employment has a
jurisdiction over labor and labor related dispute. YES.
2. Whether or not the 12 working hours violate the right of the
employees to just work for not more than 8 hours a day. NO
3. Whether or not the overtime boycott or work slowdown by the
employees constitutes a violation of the CBA which prohibits the
union to stage a strike or engage in slowdown or interruption of work.
YES
Ratio:
1. In the present case, the Secretary was explicitly granted by Article
263 of the labor Code the authority to assume jurisdiction over a
labor dispute causing or likely to cause or lockout in an industry.
Necessarily, this authority to assume jurisdiction over the said
labor dispute must include and extend to all questions and
controversies including cases over which the labor arbiter has
exclusive jurisdiction.
2. The regular working hours shall consist of not more than eight (8)
hours. It shall be 7:30 am to 4:30 pm. The schedule of shift work
shall be maintained; however, the company may change the
prevailing work time at its discretion, should such change be
necessary in the operations of the company. All employees
shall observe such rules as have been laid down by the
company for the purpose of effecting control over working
hours. The Labor Arbiter found out that the respondent company
had to adopt a continuous 24-hour work daily schedule by reason of
the nature of its business and the demands of its clients.
3. Because there is a contractual commitment that there shall be no
strikes, walkouts, stoppage or slowdown of work, boycotts or
secondary boycotts x x x or any interference with any of the
operations of the company during CBA. The workers refusal to
adhere to the work schedule in force is a slowdown and it is
inherently illegal activity essentially illegal even in the absence of a
no-strike clause in a CBA. The court also agrees that such slowdown
is generally condemned as inherently illicit and unjustifiable because
while the employees continue to work and remain at their positions
and accept the wages paid to them. They select what part of their
allotted tasks they care to perform. In other words, they work on
their own terms.
Wherefore, the petition is DENIED DUE COURSE.
PAN AMERICAN WORLD AIRWAYS SYSTEM VS. PAN AMERICAN
EMPLOYEES ASSOCIATION
FACTS:
Petitioner herein claims that the one hour meal period should not be
considered as overtime work, because the evidence showed that
complainants could rest completely, and were not in any manner under the
control of the company during that period. The court below found, on the
contrary, that during the so-called meal period, the mechanics were required
to stand by for emergency work; that if they happened not to be available
when called, they were reprimanded by the lead man; that as in fact it
happened on many occasions, the mechanics had been called from their
meals or told to hurry up eating to perform work during this period.
ISSUE:
Whether or not the 1 hour meal period of the mechanics is considered
working time.
HELD:
Yes. The Industrial Courts order for permanent adoption of a straight 8-hour
shift including the meal period was but a consequence of its finding that the
meal hour was not one of complete rest but was actually a work hour, since
for its duration, the laborers had to be on ready call.
MERCURY DRUG COMPANY INCORPORATED VS. NARDO
DAYAO, ET AL.
FACTS:
Petition for review on certiorari of the decision of the Court of
Industrial Relations. Herein respondent, filed a petition against
Page 4 of 26
Mercury Drug Company, Incorporated contenting: 1)payment of their
unpaid back wages for work done on Sundays and legal holidays plus 25%
additional compensation from date of their employment up to June30, 1962;
2) payment of the extra compensation on work done at night; 3)
reinstatement of Januario Referente and Oscar Echalar to their former
positions with back salaries; and as against the respondent union, for
its disestablishment and the refund of allmonies it had collected from
petitioners. Mercury Drug is hereby ordered to pay the 69 petitioners another
additional sum or premium equivalent to 25% of their respective basic or
regular salaries for night time services rendered from March20, 1961 up
toJune 30, 1962. Hence, this petition.
ISSUE:
Whether or not private respondents are entitled for night time work premiums
although there is a waiver of said claims and the total absence of evidence
there on?
HELD:
Yes. Work done at night should be paid more than work done at daytime,
and that if that work is done beyond the workers regular hours of
duty, he should also be paid additional compensation for overtime
work; Ruling of C.I.R awarding additional pay for night time work is supported
by evidence. No additional evidence was necessary to prove that the private
respondents were entitled to additional compensation for whether or not they
were entitled to the same is a question of law which the respondent court
answered correctly. The waiver rule does not apply in the case at
bar. Additional compensation for night time work is founded on public policy;
hence the same cannot be waived. Petition is dismissed.
NHA VS MACEDA SECURITY AGENCY
FACTS:
On September 17, 1996, respondent MASADA Security Agency entered into
a 1-year contract to provide security services to the various offices and
installations of NFA. Upon expiration of said contract, the parties extended
the effectivity thereof on a monthly basis under same terms. Subsequently,
the RTWPB issued several wage orders increasing the daily wage rate.
Accordingly, respondent requested NFA for a corresponding upward
adjustment in the monthly contract rate consisting of the increases in the
daily minimum wage of the security guards as well as increases in their
overtime pay, holiday pay and rest day pay. It also claimed SSS and Pag-
ibig Premiums. NFA however granted only with respect to the increase in the
daily wage by multiplying the amount of the mandated increase by 30 days
and denied the others. Respondent now filed a case with the RTC for
recovery of sum of money against NFA, seeking reimbursement for the other
wage- related benefits. NFA however denied that respondent paid the
security guards their wage related benefits and that respondent cannot
demand an adjustment on said- related benefits because it is bound by their
contract expressly limiting NFAs obligation to pay only the increment in their
daily wage.
ISSUE:
1. Whether or not respondent is entitled to recover from NFA the wage
related benefits of the security guards;
2. Whether or not respondent the liability of the principals in service
contracts under Section 6 of RA 6727 and the wage orders issued by
the RTWPB is limited only to the increment in the minimum wage;
HELD:
Payment of the increases in the wage rate of workers is ordinarily shouldered
by the employer. RA 6727Section 6 however expressly lodged said
obligation to the principals or indirect employers in construction projects and
establishments providing security, janitorial and similar services , the
prescribed increases in the wage rates of the workers shall be borne by the
principals or clients of the service contractors and the contract shall be
deemed amended accordingly.
The term wage in RA 6727 pertained to no other than the statutory minimum
which is defined as the lowest wage rate fixed by law other than an employer
can pay his worker. The presumption is that lawmakers are aware that wage
means the statutory minimum wage. If their intention was to extend the
obligation of the principals in service contracts to the payment of the
increment in the other benefits and remuneration of workers, it would be
expressly specified.
At any rate, however, the interest of the employees will not be adversely
affected if the obligation of the principals under the subject provision will be
limited to the increase in the statutory minimum wage. This is so because all
remuneration and benefits other than the increased statutory minimum wage
Page 5 of 26
should be shouldered and paid by the employer or service contractor to the
workers concerned. Having discharged its obligation to the respondent, NFA
no longer has the cause of action. The latters complaint for collection of
remuneration and benefits other than the increased minimum wage rate
should therefore be dismissed.
NICANOR BALTAZAR V. SAN MIGUEL BREWERY
FACTS:
The petitioner is the salesman-in-charge of San Miguel Brewery, Inc. in
Dagupan warehouse with a monthly pay of P240.00, P5.00 per diem and a
commission of P0.75 per case sold. On October 9, 1956, 8 days after
Baltazar was appointed as the salesman-in-charge, the regular employees in
Dagupan warehousewent on strike because of unjust treatment. Baltazar
was recalled to appellants Manila Office on the 13th of October, 1956 upon
theorder of his superior and conduct an investigation. The investigationfound
that the employees grievances were well founded. The next day, the strikers
returned to their work voluntarily. On October 15, the petitioner was informed
that he was not to return to Dagupan anymore but he still reported to work at
the main office from October 16 to November 2, 1956 waiting for assignment.
From November 3 to December 19 on the same year, he absented himself
from work without consent from his superiors and without advising them or
anybody else of the reason for his prolonged absence. He was dismissed
from work because of petitioners unauthorized absence and if the company
would consider its health, welfare and retirement plan requiring sick leave,
still the petitioner did inexcusable actions since sick leave, to be considered
authorized and excusable, must be certified to by the company physician and
the appellant-company informed that Baltazar was dismissed effective
November 30, 1956. Baltazar initiated a complaint which the trial court ruled
that Baltazars dismissal was justified but, however, ordering San Miguel
Brewery Inc. to pay Baltazar one month separation pay, plus the cash value
of 6 months accumulated sick leave.
Issue:
Whether or not the petitioner is entitled to one month separation pay and the
cash value of 6 months accumulated sick leave.
Held:
No, the petitioner is not entitled to one month separation pay and the cash
value of 6 months accumulated sick leave. Under the Marcaida vs. Philippine
Education Company 53 O.G. No. 23, RA 1052 makes reference to
termination of employment, instead of dismissal, to exclude employees
separated from the service for causes attributable to their own fault. It is
limited in its operation, to cases of employment without definite period. When
the employment is for a fixed duration, the employer may terminate it even
before the expiration of a stipulated period, should there be a substantial
breach of obligations by the employee; in which event the latter is not entitles
to advance notice or separation pay. it would patently, be absurd to grant a
right thereto to an employee guilty of the same breach of obligation, when the
employment is without a definite period, as if he were entitled to greater
protection than employees engaged for a fixed duration. In connection with
the question of whether or not petitioner is entitled to the cash value of 6
months accumulated sick leave, it appears that while under the last
paragraph of Article 5 of appellants Rules and Regulations of Health,
Welfare and Retirement Plan, unused sick leave may be accumulated up to a
maximum of 6 months, the same is not commutable or payable in cash upon
the employees option.
ATOK BIG WEDGE MUTUAL BENEFIT ASSOCIATION V ATOK BIG
WEDGE MINING CO. INC
FACTS:
On September 4, 1950, a demand was submitted to petitioner by respondent
union through its officers for various concessions, 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 petitioner and the others were
rejected. Hearings were held in the Court of Industrial Relations. After the
hearing, the respondent court rendered a decision fixing the minimum wage
for the laborers at P3.20 without rice ration and 2.65 a day with rice ration,
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 (the date of the presentation of the original demand,
Page 6 of 26
instead of from April 5, 1951, the date of the amended demand).
Atok Company asked the Court for authority to stop operations & lay off
employees and laborers, for the reason that due to the heavy losses,
increased taxes, high cost of materials, negligible quantity of ore deports,
and the enforcement of the Minimum Wage Law, the continued operation of
the company and the consequent lay-off of hundreds of laborers and
employees.
The parties reached an agreement on October 29, 1952 after the SC
decision which states agreement that the following facilities heretofore given
or actually being given by petitioner to its workers and laborers, and which
constitute as part of their wages, be valued as follows:
Rice ration P.55 per day
Housing facility 40 per day
All other facilities at least 85 per day
It is understood that the said amount of facilities valued at the above
mentioned prices, may be charged in full or partially by the Company against
laborer or employee, as they may see fit pursuant to the exigencies of its
operation.
This was approved by the Court on December 26, 1952.
Later, another case was decided involving the 2 parties giving the employees
minimum cash wage of 3.45 a day with rice ration or 4.00 without rice ration.
ISSUES:
(1) Which of the two decisions would prevail? The agreement or the
subsequent decision giving the employees minimum case wage?, and;
WON the Agreement of October 29, 1952 from the minimum daily wage of
P4 would be a waiver of the minimum wage fixed by the law and hence null
and void, since RA 602 sec. 20 provides that no agreement or contract, oral
or written, to accept a lower wage or less than any other under this Act, shall
be valid.
(2) WON additional compensation should be paid by the Company to its
workers for work rendered on Sundays and holidays which should be based
on the minimum wage of 4.00 and not on the cash portion which is 2.20.
[Currently the company pays additional compensation of 50% based on the
2.20 wage]
HELD:
(1) The Agreement subsists.
An agreement to deduct certain facilities received by the laborers from their
employer is not a waiver of the minimum wage fixed by the law. Wage
includes 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 (Sec 2 of RA 602).
Thus, the law permits the deduction of such facilities from the laborers
minimum wage of P4, as long as their value is fair and reasonable
(2) NO. The Company is correct.
Section 4 of the Commonwealth Act No. 444 (Eight Hour Labor Law)
provides:
No person, firm, or corporations... shall compel an employee or laborer to
work during Sundays and holidays, unless he is paid an additional sum of at
least 25% of his regular remuneration.
Thus, the Company even pays the laborers higher wage than the minimum.
Thus, no law is violated.
OTHER NOTES:
DIFFERENCE BETWEEN A SUPPLEMENT and FACILITY
(1) Supplements, defined extra remuneration or special privileges or
benefits given to or received by the laborers over and above their ordinary
earnings or wages [vacation and holidays not worked; paid sick leave or
maternity leave; overtime rate in excess of what is required by law; sick,
pension, retirement and death benefits; profit sharing; family allowances;
Christmas, war risk and cost of living bonuses or other bonuses other than
those paid as a reward for extra output or time spent on the job].
(2) Facilities, defined items of expense necessary for laborers and his
familys existence and subsistence, so that by express provision of the law,
Page 7 of 26
they form part of the wage and when furnished by the employer are
deductible therefrom since if they are not so furnished, the laborer would
spend and pay for them just the same.
PHILIPPINE BANK OF COMMUNICATION VS NLRC
FACTS:
Petitioner and CESI entered into a letter agreement wherein CESI will
provide Temporary Services to petitioner. Attached to the letter was a list of
messengers, assigned to work with the petitioner, including respondent
Orpiada. Orpiada rendered services within the premises of the bank. On
October 1976, petitioner requested CESI to withdraw Orpiadas assignment
because Orpiadas services were no longer needed. Thus, Orpiada filed a
complaint against petitioner for illegal dismissal and failure to pay the 13th
month pay.
ISSUE:
WON an employer-employee relationship existed between the
petitioner Phil. Bank of Communications and private respondent Ricardo
Orpiada.
HELD:
In the case at bar, Orpiada is not previously selected by the bank but was
assigned to work by CESI. The selection of Orpiada by CESI, was however
subject to the acceptance of the bank.
With respect to the payment of Orpiadas wages, the bank remitted to CESI
the daily rate or Orpiada and CESI pays the latter his wages. He was also
listed in the payroll of CESI with SSS deduction.
In respect of the power of dismissal, the bank requested CESI to withdraw
Orpiadas assignment, which resulted to the latters termination.
With regard to power of control, Orpiada performed his functions within the
banks premises and not in CESI.
Payment of wages and power of dismissal exist between CESI and Orpiada.
However, selection and control exist between Orpiada and the bank. Thus, it
is necessary to determine the relationship between the bank and CESI,
whether the latter is a job (independent) contactor or a labor-only contracting.
In the present case, the undertaking of CESI in favor of the bank was not the
performance of a specific job, but to produce its client the bank with a
certain number of persons to work as messengers. Thus, Orpiada utilized the
premises and office equipment of the bank and not of CESI.
Orpiada worked in the bank for a period of 16 months. Under the Labor
Code, any employee who has rendered at least 1 year, whether continuous
or not, shall be considered as a regular employee.
Therefore, CESI was only engaged in a labor-only contracting with petitioner
and Orpiada. As a result, petitioner is liable to Opiada as if Opiada had been
directly employed by the bank. Wherefore, petition of certiorari is denied.
SAN MIGUEL CORPORATION VS PROSPERO A. ABALLA
The language of a contract disavowing the existence of an employer-
employee relationship is not determinative of the parties relationship. It is the
totality of the facts and surrounding circumstances of the case.
Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose
Cooperative (Sunflower) entered into a one-year Contract of Service and
such contract is renewed on a monthly basis until terminated. Pursuant to
this, respondent Prospero Aballa et al. rendered services to SMC.
After one year of rendering service, Aballa et al., filed a complaint before
National Labor Relations Commission (NLRC) praying that they be declared
as regular employees of SMC. On the other hand, SMC filed before the
Department of Labor and Employment (DOLE) a Notice of Closure due to
serious business losses. Hence, the labor arbiterdismissed the complaint and
ruled in favor of SMC. Aballa et al. then appealed before the NLRC. The
NLRC dismissed the appeal finding that Sunflower is an independent
contractor.
On appeal, the Court of Appeals reversed NLRCs decision on the ground
that the agreement between SMC and Sunflower showed a clear intent to
abstain from establishing an employer-employee relationship.
ISSUE:
Whether or not Aballa et al. are employees of SMC
HELD:
The test to determine the existence of independent contractorship is whether
one claiming to be an independent contractor has contracted to do the work
Page 8 of 26
according to his own methods and without being subject to the control of the
employer, except only as to the results of the work.
In legitimate labor contracting, the law creates an employer-employee
relationship for a limited purpose, i.e., to ensure that the employees are paid
their wages. The principal employer becomes jointly and severally liable with
the job contractor, only for the payment of the employees wages whenever
the contractor fails to pay the same. Other than that, the principal employer is
not responsible for any claim made by the employees.
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.
The Contract of Services between SMC and Sunflower shows that the
parties clearly disavowed the existence of an employer-employee
relationship between SMC and private respondents. The language of a
contract is not, however, determinative of the parties relationship; rather it is
the totality of the facts and surrounding circumstancesof the case. A party
cannot dictate, by the mere expedient of a unilateral declaration in a contract,
the character of its business, i.e., whether as labor-only contractor or job
contractor, it being crucial that its character be measured in terms of and
determined by the criteria set by statute.
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 Aballa et al. in carrying out their tasks were owned and provided
by SMC.
And from the job description provided by SMC itself, the work assigned to
Aballa et al. was directly related to the aquaculture operations of SMC. As for
janitorial and messengerial services, that they are considered directly related
to the principal business of the employer has been jurisprudentially
recognized.
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.
All the foregoing considerations affirm by more than substantial evidence the
existence of an employer-employee relationship between SMC and Aballa et
al. Since Aballa et al. who were engaged in shrimp processing performed
tasks usually necessary or desirable in the aquaculture business of SMC,
they should be deemed regular employees of the latter and as such are
entitled to all the benefits and rights appurtenant to regular employment.
They should thus be awarded differential pay corresponding to the difference
between the wages and benefits given them and those accorded SMCs
other regular employees.
PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION, INC. VS. NLRC
FACTS:
The respondent used to be a security guard under the employ of the
petitioner company. He works for 12 hours a day and is receiving a monthly
salary. He was then dismissed by the petitioner company. Because of this,
the respondent filed a complaint with the Labor Arbiter for the payment of his
overtime pay. The Labor Arbiter ruled that the respondent is entitled to an
overtime pay. The NLRC affirmed the decision of the Labor Arbiter. Hence,
the current petition.
The petitioner contends that the fact that the monthly salary of the petitioner
is higher than the minimum wage provided by law is already compensatory of
the excess of 4 hours of work rendered by the said employee. It argues that
the salary of the petitioner already includes the payment for the excess of 4
hours of work rendered by the respondent. It also contends that since there
is a meeting of the minds between the respondent and the petitioner, there is
already a perfected contract which means that the parties are bound by their
agreements.
ISSUE:
Whether or not the respondent is entitled to an overtime pay.
HELD:
The Supreme Court ruled that the respondent is entitled to an overtime pay.
The contention of the petitioner that since the respondents monthly salary is
higher than the minimum wage, it is already commensurate of the 4 hours
excess of work rendered by the respondent. The Supreme Court held that
the fact that ones salary is higher than the minimum wage does not in any
way offset the other benefits that are due to the employees, in the absence of
Page 9 of 26
an agreement to the contrary. To consider the overtime pay of the
respondent included in his monthly salary would be in contravention of the
rule against non-diminution of benefits and a violation of the Labor Code
since it prescribes a certain manner on how overtime pay is included.
Moreover, the Supreme Court found that contrary to what the petitioner
avers, as shown in the computation of the petitioner itself, the monthly salary
of the respondent is only a basic salary which is exclusive of all the other
benefits that the respondent is to receive.
With regard to the petitioners second contention that
there is already a perfected contract, hence the terms and conditions
imposed therein binds the parties to the contract, the Supreme Court held
that while such contention has the weight and force of law, it is still subject to
certain exception. The general right to contract is subject to a limitation that
such terms and conditions must not be contrary to law, public order, public
policy, morals and good customs. Employment contracts are imbued with
public interest and are therefore subject to the police power of the state. The
subject contract in the case at bar is contrary to labor laws. Therefore, not
binding to the parties of the case.
EPARWA VS. LICEO
FACTS:
Eparwa and LDCU, through their representatives, entered into a contract for
Security Services. Eparwa allocated the contracted amount of 5,000 pesos
per security guard per month. Eleven security guards whom Eparwa
assigned to LDCU from December 1, 1997 to November 30, 1998 filed a
complaint before the National Labor Relations Commission's (NLRC). The
complaint was filed against both Eparwa and LDCU for underpayment of
salary, legal holiday pay, 13th month pay, rest day, service incentive leave,
night shift differential and overtime pay. LDCU made a cross-claim and
prayed that Eparwa should reimburse LDCU for any payment to the security
guards.
The Labor Arbiter found that the security guards are entitled to wage
differentials and premium for holiday work and rest day. The Labor Arbiter
held Eparwa and LDCU solidarily liable pursuant to Art. 109 of the Labor
Code. LDCU filed an appeal before the NLRC. LDCU agreed with the Labor
Arbiters decision on the security guards entitlement to salary differential but
challenged the propriety of the amount of the award. LDCU alleged that
security guards not similarly situated were granted uniform monetary awards
and that the decision did not include the basis of the computation of the
amount of the award. Eparwa filed an appeal before the NLRC. For its part,
Eparwa questioned it liability for the security guards claims and the awarded
cross-claims amounts.
The NLRC resolved Eparwa and LDCUs separate appeals in it Resolution.
The NLRC found that the security guards are entitled to wage differentials
and premium for holiday and rest day work. Although the NLRC held Epawa
and LDCU solidarily liable for wage differentials and premium for holiday and
rest day work, the NLRC did not require Eparwa to reimburse LDCU for its
payment to the security guards. Eparwa and LDCU filed separate motions for
partial reconsideration of the Resolution. LDCU questioned the NLRCs
deletion of LDCUs entitlement to reimbursement by Eparwa. Eparwa prayed
that LDCU be made to reimburse Eparwa for whatever amount it may pay to
the security guards. The NLRC declared that although Eparwa and LDCU
are solidarily liable to the security guards for the monetary award, LDCU
alone is ultimately liable. LDCU filed a petition for certiorari before the
appellate court assailing the NLRCs decision. LDCU took issue with the
NLRCs order that LDU should reimburse Eparwa. LDCU started that this
would free Eparwa from any liability for payment of the security guards
money claims.
The Appellate Court granted LDCUs petition and reinstated the Labor
Arbiters decision. The Appellate Court also allowed LDCU to claim
reimbursement from Eparwa. Eparwa filed a motion reconsideration of the
appellate courts decision. Eparwa stressed that jurisprudence is consistent in
ruling that the ultimate liability for the payment of the monetary award rests
with LDCU alone. The appellate court denied Eparwa motion for
reconsideration for lack of merit.
Issue:
Is LDCU alone ultimately liable to the security guards for the wage
differentials and premium for holiday and rest day pay.
Held:
Yes. For the security guards, the actual source of the payment of their wage
differentials and premiums for holiday and rest day work does not matter as
long as they are paid. This is the import of Eparwa and LDCUs solitary
liability. Creditors, such as the security guards, may collect from anyone for
Page 10 of 26
the solitary debtors. Soldiarly liability does not mean that, as between
themselves, two solidary debtors are liable for only half of the payment.
LDCUs ultimately liability comes into play because of the expiration of the
contracts for security services. There is no privity of contract between the
security guards and LDCU, but LDCU's liability to the security guards
remains because Art. 106, 107 and 109 of the Labor Code. Eparwa is
already precluded from asking LDCU for an adjustment in the contract price
because of the expiration of the contract, but Eparwa's liability to the security
guards remains because of their employer-employee relationship. In lieu, of
an adjustment in the contract Eparwa may claim reimbursement from LDCU
for any payment it may make to the security guards. However, LDCU cannot
claim any reimbursement from Eparwa for any payment it may make to the
security guards.
PEOPLES BROADCASTING (BOMBO RADYO PHILS.) VS. SECRETARY
OF LABOR
FACTS:
Jandeleon Juezan (Juezan) filed a complaint before the DOLE against
Bombo Radyo Phils. (Bombo Radyo) for illegal deduction, non-payment of
service incentive leave, 13th month pay, premium pay for holiday and rest
day and illegal diminution of benefits, delayed payment of wages and non-
coverage of SSS, PAG-IBIG and Philhealth. On the basis of the complaint,
the DOLE conducted a plant level inspection. The Labor Inspector in his
report wrote,
Management representative informed that (Juezan) complainant is
a drama talent hired on a per drama participation basis hence no
employer-employer relationship existed between them. As proof of
this, management presented photocopies of cash vouchers, billing
statement, employments of specific undertaking, etc. The
management has no control of the talent if he ventures into another
contract with other broadcasting industries.
The DOLE Regional Director issued an order ruling that Juezan is an
employee of Bombo Radyo, and that Juezan is entitled to his money claims.
Bombo Radyo sought reconsideration claiming that the Regional Director
gave credence to the documents offered by Juezan without examining the
originals, but at the same time the Regional Director missed or failed to
consider Bombo Radyos evidence. The motion for reconsideration was
denied. On appeal, the Acting DOLE Secretary dismissed the appeal on the
ground that Bombo Radyo did not post a cash or surety bond and instead
submitted a Deed of Assignment of Bank Deposit.
Bombo Radyo elevated the case to the Court of Appeals, claiming that it was
denied due process when the DOLE Secretary disregarded the evidence it
presented and failed to give it the opportunity to refute the claims of Juezan.
It maintained that no employer-employee relationship had ever existed
between it and Juezan because it was the drama directors and producers
who paid, supervised and disciplined him. It also added that the case was
beyond the DOLEs jurisdiction because Juezans claim exceeded P5,000.
The Court of Appeals held that the DOLE Secretary had the power to order
and enforce compliance with labor standard laws irrespective of the amount
of individual claims because the limitation imposed by Art. 29 of the Labor
Code had been repealed by R.A. 7730.
Bombo Radyo argues that the NLRC (not the DOLE Secretary) has
jurisdiction over Juezans claim, in view of Arts. 217 and 128 of the Labor
Code. It adds that the Court of Appeals committed grave abuse of discretion
when it dismissed their appeal without delving on the issue of employer-
employee relationship.
ISSUE: Whether or not the Secretary of Labor has the power to determine
the existence of an employer-employee relationship.
HELD:
NO. Art. 128 (b) of the Labor Code, as amended by R.A. 7730 reads:
Notwithstanding the provisions of Articles 129 and 217 of this Code
to the contrary, and in cases where the relationship of employer-
employee still exists, the Secretary of Labor and Employment or his
duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions
of this Code and other labor legislation based on the findings of
labor employment and enforcement officers or industrial safety
engineers made in the course of inspection.
The provision is explicit that the visitorial and enforcement power of the
DOLE comes into play only in cases when the relationship of employer-
employee still exists. This clause signifies that the employer-employee
relationship must have existed even before the emergence of the
controversy. Necessarily, the DOLEs power does not apply in two instances,
namely: (i) where the employer-employee relationship has ceased; and (ii)
where no such relationship has ever existed.
The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on
the Disposition of Labor Standards Cases issued by the DOLE Secretary. It
reads:
Page 11 of 26

Where employer-employee relationship no longer exists by reason
of the fact that it has already been severed, claims for payment of
monetary benefits fall within the exclusive and original jurisdiction
of the labor arbiters. Accordingly, if on the face of the complaint, it
can be ascertained that employer-employee relationship no longer
exists, the case, whether accompanied by an allegation of illegal
dismissal, shall immediately be endorsed by the Regional Director
to the appropriate branch of the National Labor Relations
Commission (NLRC).
The law accords a prerogative to the NLRC over the claim when the
employer-employee relationship has terminated or such relationship has not
arisen at all. The existence of an employer-employee relationship is a matter
which is not easily determinable from an ordinary inspection because the
elements of such a relationship are not verifiable from a mere ocular
examination. The intricacies and implications of an employer-employee
relationship demand that the level of scrutiny should be far above the
superficial. While documents, particularly documents found in the employers
office are the primary source materials, what may prove decisive are factors
related to the history of the employers business operations, its current state
as well as accepted contemporary practices in the industry. More often than
not, the question of employer-employee relationship becomes a battle of
evidence, the determination of which should be comprehensive and intensive
and therefore best left to the specialized quasi-judicial body of the NLRC.
It can be assumed that the DOLE in the exercise of its visitorial and
enforcement power somehow has to make a determination of the existence
of an employer-employee relationship. However, such determination cannot
be coextensive with the visitorial and enforcement power itself. Such is
merely preliminary, incidental and collateral to the DOLEs primary function of
enforcing labor standards provisions. The determination of the existence of
employer-employee relationship is still primarily lodged with the NLRC. This
is the meaning of the clause in cases where the relationship of employer-
employee still exists in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Art. 128, two
important questions must be resolved: (i) Does the employer-employee
relationship still exist, or alternatively, was there ever an employer-employee
relationship to speak of; and (ii) Are there violations of the Labor Code or of
any labor law?
The existence of an employer-employee relationship is a statutory
prerequisite to and a limitation on the power of the Secretary of Labor, one
which the legislative branch is entitled to impose. The rationale underlying
this limitation is to eliminate the prospect of competing conclusions of the
Secretary of Labor and the NLRC. If the Secretary of Labor proceeds to
exercise his visitorial and enforcement powers absent the first requisite, his
office confers jurisdiction on itself which it cannot otherwise acquire.
Nevertheless, a mere assertion of absence of employer-employee
relationship does not deprive the DOLE of jurisdiction over the claim. At least
a prima facie showing of such absence of relationship, as in this case, is
needed to preclude the DOLE from the exercise of its power. Without a
doubt, Bombo Radyo, since the inception of this case had been consistent in
maintaining that Juezan is not its employee. A preliminary determination,
based on the evidence offered and noted by the Labor Inspector during the
inspection as well as submitted during the proceedings before the Regional
Director puts in genuine doubt the existence of employer-employee
relationship. From that point on, the prudent recourse on the part of the
DOLE should have been to refer Juezan to the NLRC for the proper
dispensation of his claims. Furthermore, even the evidence relied on by the
Regional Director in his order are mere self-serving declarations of Juezan,
and hence cannot be relied upon as proof of employer-employee
relationship.
DAVAO INTEGRATED PORT STEVEDORING SERVICES V. ABARQUEZ
FACTS:
Petitioner Davao Integrated Port Stevedoring Services (petitioner-company)
and private respondent ATU-TUCP, entered into a collective bargaining
agreement (CBA) on October 16, 1985. Under sections 1 and 3, Article VIII
thereof, sick leave with pay benefits shall be provided for employees who
have rendered at least one (1) year of service with the company. During the
effectivity of the CBA until three (3) months after its renewal on April 15,
1989, or until July 1989 (a total of three (3) years and nine (9) months), all
the field workers of petitioner who are members of the regular labor pool and
the present regular extra labor pool who had rendered at least 750 hours up
to 1,500 hours were extended sick leave with pay benefits. Any unused
portion thereof at the end of the current year was converted to cash and paid
at the end of the said one-year period pursuant to Sections 1 and 3, Article
VIII of the CBA. The commutation of the unused portion of the sick leave with
pay benefits of the intermittent workers or its conversion to cash was,
however, discontinued or withdrawn when the petitioner hired a new
assistant manager, Mr. Benjamin Marzo who stopped the payment of its cash
equivalent on the ground that they are not entitled to the said benefits under
Sections 1 and 3 of the 1989 CBA. The union alleges that the discontinuation
of the benefits being granted would violate the principle in labor laws that
benefits already extended shall not be taken away and that it would result in
Page 12 of 26
discrimination between the non-intermittent and the intermittent workers of
the petitioner-company.
ISSUE:
Whether or not the benefits given by the petitioner have not yet ripened into
an established company practice and can therefore be withdrawn.
HELD:
No, the benefits given by the petitioner to its employees have already ripened
into an established company practice and therefore cannot be withdrawn.
The employer cannot unilaterally withdraw the existing privilege of
commutation or conversion to cash, given to the said workers and as also
noted that the employer had in fact granted and paid said cash equivalent of
the unused portion of the sick leave benefits to some intermittent workers.
Well-settled is it that the said privilege of commutation or conversion to cash,
being an existing benefit, the petitioner may not diminish such benefits.
Under the circumstances, these may be deemed to have ripened into
company practice or policy which cannot be peremptorily withdrawn.
DAVAO INTEGRATED PORT STEVEDORING SERVICES VS. RUBEN V.
ABARQUEZ, ET AL.,
FACTS:
Petitioner and private respondent, THE ASSOCIATION OF TRADE UNIONS
(ATU-TUCP), entered into a CBA providing for 2 sections on sick leave with
pay benefits which apply to both the regular non-intermittent workers or those
workers who render a daily eight-hour service to the company as governed
by Section 1, Article VIII of the 1989 CBA, and the intermittent field workers
who are members of the regular labor pool and the present regular extra
labor pool, as governed by Sec. 3 thereof.
Sec. 1, however, of said CBA had a proviso that only those regular workers
of the company whose work are not intermittent, are entitled to the
commutation of sick leave privilege.A proviso not found in Sec. 3. This
caused the new assistant manager to discontinue the commutation of the
unenjoyed portion of the sick leave with pay benefits of the intermittent
workers or its conversion to cash.
The Union objected and brought the matter for voluntary arbitration before
the National Conciliation and Mediation Board with respondent Abarquez
acting as voluntary arbitrator who later issued an award in favor of the Union.
Hence, the instant petition.
ISSUE:
WON intermittent (irregular) workers are entitled to commutation of their
unenjoyed sick leave with pay benefits.
HELD:
Yes.
The CBA has two (2) sections on sick leave with pay benefits which apply to
two (2) distinct classes of workers in petitioners company, namely: (1) the
regular non-intermittent workers or those workers who render a daily eight-
hour service to the company and (2) intermittent field workers who are
members of the regular labor pool and the present regular extra labor pool.
Sick leave benefits, like other economic benefits stipulated in the CBA such
as maternity leave and vacation leave benefits, among others, are by their
nature, intended to be replacements for regular income which otherwise
would not be earned because an employee is not working during the period
of said leaves. They are non-contributory in nature, in the sense that the
employees contribute nothing to the operation of the benefits. By their nature,
upon agreement of the parties, they are intended to alleviate the economic
condition of the workers.
***Notes: Petitioner-company is of the mistaken notion that since the
privilege of commutation or conversion to cash of the unenjoyed portion of
the sick leave with pay benefits is found in Section 1, Article VIII, only the
regular non-intermittent workers and no other can avail of the said privilege
because of the proviso found in the last sentence thereof.
ASSOCIATED LABOR UNIONS(ALU) and DIVINE WORD UNIVERSITY
EMPLOYEES UNION-ALU (DWUEUALU) v. CA, THE ROMAN CATHOLIC
ARCHBISHOP OF PALO, LEYTE (RCAP) and DIVINE WORD
UNIVERSITY OF TACLOBAN (DWUT)
Art. 110 of the Labor Code applies only to cases of bankruptcy and
liquidation. Likewise, the concurrence and preference of credits properly
come into play only in cases of insolvency.
Page 13 of 26
FACTS:
RCAP is a corporation sole which sold to Societas Verbum Dei (SVD) the
subject 13 parcels of land, the last 4 of which were untitled when the sale
was concluded. While the conveying document was not notarized, the SVD
was able to secure the corresponding TCTs over the subject lots, but the
deed conditions, restrictions, and reversionary right of the RCAP were not
annotated. Due to labor unrest, DWUT, run by the SVD, and the Union
engaged in a protracted legal battle. RCAP filed a petition for annotation.
DWUT issued notices to unions members of the closing of the university and
consider themselves dismissed. Prompted by the closure of DWUT and the
resulting termination of its members services, the Union filed a complaint.
The Union alleged in its complaint that the sale of the subject properties over
which the DWUT is located was incomplete. What is more, the RCAP did not,
despite the sale, sever its employment relations with DWUT which, thus,
rendered the RCAP solidarily liable with DWUT for the payment of the
benefits of the Union members. RTC dismissed the petition. The parties
entered in a Memorandum of Agreement (MOA). CA reversed and granted
the petition to annotate.
ISSUE:
Whether Article 110 of the Labor Code in relation to the Civil Code provisions
on concurrence and preference of credits apply in the instant case
HELD:
No. The judgment lien over the subject properties is really non-existent as it
has not been shown that a levy on execution has been imposed over the
subject properties. We agree with the RCAP that a judgment lien over the
subject properties has not legally attached and that Art. 110 of the LC, in
relation to Arts. 2242, 2243, and 2244 of the Civil Code on concurrence and
preference of credits, does not cover the subject properties. Art. 110 of the
LC applies only to cases of bankruptcy and liquidation. Likewise, the
abovementioned articles of the Civil Code on concurrence and preference of
credits properly come into play only in cases of insolvency. Since there is no
bankruptcy or insolvency proceeding to speak of, much less a liquidation of
the assets of DWUT, the Union cannot look to said statutory provisions for
support.
Moreover, we note the utter lack of showing that DWUT has no other assets
to answer its obligations. DWUT may have liquidity problems hampering its
ability to meet its judicially-imposed obligations. The school, however,
appears to have other properties it can and in fact did use to settle its
obligations as shown in the MOA. A scrutiny of the MOA readily shows that
the subject properties were not included in the assets or properties
earmarked to settle DWUTs obligations.
NASIPIT INTEGRATED ARRASTRE AND STEVEDORING SERVICES,
INC. (NIASSI) v. NASIPIT EMPLOYEES LABOR UNION (NELU)-ALU-
TUCP
Expressio unius est exclusio alterius. The express mention of one person,
thing, act, or consequence excludes all others. The beneficent, operative
provision of WO RXIII-02 is specific enough to cover only minimum wage
earners. Necessarily excluded are those receiving rates above the
prescribed minimum wage.
FACTS:
Wage Board of Caraga Region in Northeastern Mindanao issued Wage
Order No. (WO) RXIII-02 which granted an additional PhP12 per day cost of
living allowance to the minimum wage earners in that region. Owing allegedly
to NIASSIs failure to implement the wage order, the Union filed a complaint
before the DOLE for inspection and the enforcement of WO RXIII-02. But the
inspection team stated that WO RXIII- 02 was not applicable to NIASSIs
employees since they were already receiving a wage rate higher than the
prescribed minimum wage.
Voluntary Arbitrator Jesus G. Chavez rendered a decision granting the
Unions prayer for the implementation of WO RXIII-02 on the rationale that
WO RXIII-02 did not specifically prohibit the grant of wage increase to
employees earning above the minimum wage. On the contrary, Chavez said,
the wage order specifically enumerated those who are outside its coverage,
but did not include in the enumeration those earning above the minimum
wage. On appeal, CA affirmed.
ISSUE:
Whether the WO RXIII-02 may be made to apply and cover Nasipits
employees who, at the time of the issuance and effectivity of the wage order,
were receiving a wage higher than the prevailing minimum wage.
Page 14 of 26
HELD:
No. WO RXIII-02 and its IRR provide that only minimum wage earners are
entitled to the wage increase. The only situation when employees receiving a
wage rate higher than that prescribed by the WO RXIII-02 may still benefit
from the order is, as indicated in Sec. 1 (c) of the IRRs, through the
correction of wage distortions. In any case, it would be highly irregular for the
Wage Board to issue an across-the-board wage increase, its mandate being
limited to determining and fixing the minimum wage rates within its area of
concern, in this case the Caraga Region, and to issue the corresponding
wage orders and implementing rules.
In the same case, the Court held that a RTWPB commits an ultra vires act
when, instead of setting a minimum wage rate, it prescribes a wage increase
cutting across all levels of employment and wage brackets:
The RTWPB did not determine or fix the minimum wage rate by the floor-
wage method or the salary ceiling method in issuing the Wage Order. The
RTWPB did not set a wage level nor a range to which a wage adjustment or
increase shall be added. Instead, it granted an across-the-board wage
increase of P15.00 to all employees and workers of Region 2. In doing so,
the RTWPB exceeded its authority by extending the coverage of the Wage
Orders to wage earners receiving more than the prevailing minimum wage
rate, without a denominated salary ceiling.
Only employees receiving salaries below the prescribed minimum wage are
entitled to the wage increase set forth under WO RXIII-02, without prejudice,
to the grant of increase to correct wage distortions consequent to the
implementation of such wage order. Considering that NIASSIs employees
are undisputedly already receiving a wage rate higher than that prescribed by
the wage order, NIASSI is not legally obliged to grant them wage increase.
Decision of the arbitrator is reversed.
TSPIC CORPORATION v. TSPIC EMPLOYEES UNION (FFW)
An erroneously granted benefit may be withdrawn without violating the
prohibition against non-diminution of benefits.
FACTS:
TSPI Corporation entered into a Collective Bargaining Agreement with the
corporation Union for the increase of salary for the latters members for the
year 2000 to 2002. Thus, the increase in salary was materialized on January
1, 2000. However, on October 6, 2000, the Regional Tripartite Wage and
production Board raised daily minimum wage from P223.50 to P250.00
starting November 1, 2000. Conformably, the wages of the 17 probationary
employees were increased to P250.00. They therefore became regular
employees and received another 10% increase in salary. In January 2001,
TSPIC implemented the new wage rates as mandated by the CBA. As a
result, the nine employees who were senior to the 17 recently regularized
employees, received less wages. On January 19, 2001, TSPICs Human
Resource Development notified the 24 employees who are private
respondents, that due to an error in the automated payroll system, they were
overpaid and the overpayment would be deducted from their salaries starting
February 2001. The Union asserted that there was no error and the
deduction of the alleged overpayment constituted diminution of pay.
They brought the issue to the grievance machinery but the TSPIC and the
Union failed to reach an agreement. They went to a voluntary arbitration
where the arbitrator held that the unilateral deduction made by TSPIC
violated Art. 100 of the Labor Code. The decision was affirmed by the CA.
ISSUE:
Whether the deduction of the overpayment constitutes diminution of benefits
HELD:
No. Diminution of benefits is the unilateral withdrawal by the employer of
benefits already enjoyed by the employees. There is diminution of benefits
when it is shown that: (1) the grant or benefit is founded on a policy or has
ripened into a practice over a long period; (2) the practice is consistent and
deliberate; (3) the practice is not due to error in the construction or
application of a doubtful or difficult question of law; and (4) the diminution or
discontinuance is done unilaterally by the employer.
The overpayment of its employees was a result of an error. This error was
immediately rectified by TSPIC upon its discovery. No vested right accrued to
individual respondents when TSPIC corrected its error by crediting the salary
increase for the year 2001 against the salary increase granted under WO No.
8, all in accordance with the CBA. Hence, any amount given to the
employees in excess of what they were entitled to may be legally deducted
by TSPIC from the employees salaries. It was also fair that TSPIC deducted
the overpayment in installments over a period of 12 months starting from the
Page 15 of 26
date of the initial deduction to lessen the burden on the overpaid employees.
TSPIC must refund to respondents any amount deducted from their salaries
which was in excess of what TSPIC is legally allowed to deduct from the
salaries.
RAUL G. LOCSIN & EDDIE B. TOMAQUIN v. PLDT CO.
The power of control is the right to control not only the end to be achieved
but also the means to be used in reaching such end.
FACTS:
Philippine Long Distance Telephone Company (PLDT) and the Security and
Safety Corporation of the Philippines (SSCP) entered into a Security
Services Agreement (Agreement) whereby SSCP would provide armed
security guards to PLDT to be assigned to its various offices. Pursuant to
such agreement, Raul Locsin and Eddie Tomaquin, among other security
guards, were posted at a PLDT office. PLDT issued a Letter terminating the
Agreement effective October 1, 2001. Despite the termination of the
Agreement, however, petitioners continued to secure the premises of their
assigned office. They were allegedly directed to remain at their post by
representatives of respondent. In support of their contention, petitioners
provided the Labor Arbiter with copies of petitioner Locsins pay slips for the
period of January to September 2002.
On September 30, 2002, petitioners services were terminated. They filed a
complaint before the Labor Arbiter for illegal dismissal and recovery of
money claims.
ISSUE:
Whether petitioners became employees of PLDT after the Agreement
between SSCP and PLDT was terminated
HELD:
Yes. Respondent must be considered as petitioners employer from the
termination of the Agreement onwards as this was the only time that any
evidence of control was exhibited by respondent over petitioners.
Respondent, by directing petitioners to remain at their posts and continue
with their duties, exercised control over them. This is sufficient to establish
the existence of an employer-employee relationship. While respondent and
SSCP no longer had any legal relationship with the termination of the
Agreement, petitioners remained at their post securing the premises of
respondent while receiving their salaries, allegedly from SSCP. With the
behest and, presumably, directive of respondent, petitioners continued with
their services. Evidently, such are indicia of control that respondent exercised
over petitioners.
UNIVERSAL CORN PRODUCTS vs. NLRC
FACTS:
In 1972, the petitioner and the Universal Corn Products Workers Union
entered into a collective bargaining agreement. The COMPANYagrees to
grant all regular workers within the bargaining unit with at least one (1) year
of continuous service, a Christmas bonusequivalent to the regular wages for
seven (7) working days. The agreement had a duration of three years. On
account however of differences between the parties with respect to certain
economic issues, the collective bargaining agreement in question expired
withoutbeing renewed. In 1979, the parties entered into an "addendum"
stipulating certain wage increases covering the years from 1974
to1977.Simultaneously, they entered into a collective bargaining agreement
for the years from 1979 to 1981. Like the "addendum," the newcollective
bargaining agreement did not refer to the "Christmas bonus" theretofore paid
but dealt only with salary adjustments.According to the petitioner, the new
agreements deliberately excluded the grant of Christmas bonus with the
enactment of PresidentialDecree No. 851.It further claims that since 1975, it
had been paying its employees 13th-month pay pursuant to the Decree. For
failure of the petitioner topay the seven-day Christmas bonus for 1975 to
1978 inclusive, in accordance with the 1972 CBA, the union went to the labor
arbiter forrelief. In his decision, the labor arbiter ruled that the payment of the
13th month pay precluded the payment of further Christmas bonus.The union
appealed to NLRC. The NLRC set aside the decision of the labor arbiter
appealed from and entered another one, "directingrespondent company now
the petitioner to pay the members concerned of complainants union their 7-
day wage bonus in accordancewith the 1972 CBA from 1975 to 1978.
ISSUE:
Whether or not the Christmas bonus can be considered as 13th month pay
HELD:
The collective bargaining agreement accords a reward, in this case, for
loyalty, to certain employees. This is evident from the stipulationgranting the
bonus in question to workers "with at least one (1) year of continuous service
Page 16 of 26
is a purpose not found in P.D. 851. It isclaimed, however, that as a
consequence of the impasse between the parties beginning 1974 through
1979, no collective bargainingagreement was in force during those
intervening years. Hence, there is allegedly no basis for the money award
granted by therespondent labor body.The fact, therefore, that the new
agreements are silent on the seven-day bonus demanded should not
preclude the private respondents'claims thereon. The 1972 agreement is
basis enough for such claims for the whole writing is instinct with an
obligation, imperfectlyexpress.WHEREFORE, premises considered, the
petition is hereby DISMISSED. The Decision of the public respondent NLRC
promulgated onFebruary 11, 1982, and its Resolution dated March 23, 1982,
are hereby AFFIRMED. The temporary restraining order issued on May
19,1982 is LIFTED
NESTLE PHILIPPINES VS NLRC
FACTS:
Four (4) collective bargaining agreements separately covering the petitioner's
employees in its Alabang/Cabuyao factories; Makati Administration Office.
(Both Alabang/Cabuyao factories and Makati office were represented by the
respondent, Union of Filipro Employees [UFE]);Cagayan de Oro Factory
represented by WATU; and Cebu/Davao Sales Offices represented by the
Trade Union of the Philippines and Allied Services (TUPAS), all expired on
June 30, 1987. UFE was certified as the sole and exclusive bargaining agent
for all regular rank-and-file employees at the petitioner's Cagayan de Oro
factory, as well as its Cebu/Davao Sales Office.
In August 1987, while the parties, were negotiating, the employees at
Cabuyao resorted to a "slowdown" and walk-outs prompting the petitioner to
shut down the factory. Marathon collective bargaining negotiations between
the parties ensued. On September 1987, the UFE declared a bargaining
deadlock. On September 8, 1987, the Secretary of Labor assumed
jurisdiction and issued a return to work order. In spite of that order, the union
struck, without notice, at the Alabang/Cabuyao factory, the Makati office and
Cagayan de Oro factory on September 11, 1987 up to December 8, 1987.
The company retaliated by dismissing the union officers and members of the
negotiating panel who participated in the illegal strike. The NLRC affirmed
the dismissals on November 2, 1988. On January 26, 1988, UFE filed a
notice of strike on the same ground of CBA deadlock and unfair labor
practices.
However, on March 30, 1988, the company was able to conclude a CBA with
the union at the Cebu/Davao Sales Office, and on August 5, 1988, with the
Cagayan de Oro factory workers. The union assailed the validity of those
agreements and filed a case of unfair labor practice against the company on
November 16, 1988. After conciliation efforts of the NCMB yielded negative
results, the dispute was certified to the NLRC. The NLRC issued a resolution
on June 5, 1989, whose pertinent disposition regarding the union's demand
for liberalization of the company's retirement plan for its workers. the NLRC
issued a resolution denying the motions for reconsideration. With regard to
the Retirement Plan, the NLRC held that Anent management's objection to
the modification of its Retirement Plan, the plan is specifically mentioned in
the previous bargaining agreements thereby integrating or incorporating the
provisions thereof to the agreement. By reason of its incorporation, the plan
assumes a consensual character which cannot be terminated or modified at
will by either party. Consequently, it becomes part and parcel of CBA
negotiations.
Petitioner alleged that since its retirement plan is non-contributory, Nestle
has the sole and exclusive prerogative to define the terms of the plan
because the workers have no vested and demandable rights, the grant
thereof being not a contractual obligation but merely gratuitous. At most the
company can only be directed to maintain the same but not to change its
terms. It should be left to the discretion of the company on how to improve or
modify the same.
Issue: Whether or not the workers have vested and demandable rights over
the retirement plan.
Ruling:
The Court ruled that employees have a vested and demandable right over
the retirement plan. The inclusion of the retirement plan in the collective
bargaining agreement as part of the package of economic benefits 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 "a consensual character" to the plan so that it may not be terminated or
modified at will by either party.
The fact that the retirement plan is non-contributory, i.e., that the employees
contribute nothing to the operation of the plan, does not make it a non-issue
in the CBA negotiations. As a matter of fact, almost all of the benefits that the
petitioner has granted to its employees under the CBA salary increases,
rice allowances, midyear bonuses, 13th and 14th month pay, seniority pay,
medical and hospitalization plans, health and dental services, vacation, sick
& other leaves with pay are non-contributory benefits. Since the retirement
plan has been an integral part of the CBA since 1972, the Union's demand to
increase the benefits due the employees under said plan, is a valid CBA
issue.
Page 17 of 26
The petitioner's contention, that employees have no vested or demandable
right to a non-contributory retirement plan, has no merit for employees do
have a vested and demandable right over existing benefits voluntarily
granted to them by their employer. The latter may not unilaterally withdraw,
eliminate or diminish such benefits.
MARIAN B. NAVARETTE v. MANILA INTERNATIONAL FREIGHT
FORWARDERS, INC./MIFFI LOGISTICS COMPANY, INC., MR. HARADA,
AND MBI MILLENNIUM EXPERTS, INC.,
The power of control is determinative of the existence of employer-employee
relationship
FACTS:
MIFFI entered into a contract with MBI for the provision of production workers
and technical personnel for MIFFI's projects or temporary needs. MBI hired
Navarette and assigned her as a temporary project employee to MIFFI's
Packaging Department. For a fixed period of three (3) months, she worked
amongst MIFFI's regular employees who performed the same tasks as hers.
She used MIFFI's equipment and was supervised by employees of MIFFI.
Navarette, joined by other employees, filed a complaint for inspection against
respondents MIFFI, MLCI, MBI and a certain PAMS with the DOLE Regional
Arbitration Branch IV. Following an inspection of respondents' premises,
certain violations of labor laws were uncovered, including labor-only
contracting by MBI. Several hearings were had and eventually, the parties
decided to submit an agreement to be signed by all concerned and to be
approved by DOLE officials.
Pursuant to said covenant, MBI called a meeting where Navarette and her
co-workers were asked to sign a document. However, Navarette found the
contents of the document to be erroneous since it stated that the parties had
already come to an agreement on the issues and conditions when, in fact, no
such agreement was made. This angered Navarette, causing her to throw
the document and to say, "Hindi ito ang pinagusapan natin sa DOLE!
Niloloko niyo lang kami." Her actuations, to MBI, constituted serious
misconduct, for which a show-cause memorandum was issued directing her
to explain herself. After issuing several memoranda setting conferences on
the matter to which Navarette could not attend because of her work
schedule, MBI terminated Navarette's employment. Navarette filed a
complaint for illegal dismissal before the NLRC against MBI, MIFFI and
MCLI. The respondents claimed that since MBI is a legitimate labor
contractor, MBI is liable to the petitioner.
ISSUE:
Whether Navarette is MBI's employee
HELD:
Yes. A fundamental principle in Philippine labor law is the application of the
four-fold test in determining the existence of an employer-employee
relationship, thus: (1) selection and engagement; (2) payment of wages; (3)
power to dismiss; and (4) power of control over the means and methods by
which the work is to be accomplished. There are, however, instances when
these elements are not exercised by a single person or entity. There are
cases where one or more of the said factors are assumed by another entity,
for which reason, the Court made it clear that of the four tests mentioned, it is
the power of control that is determinative. One such instance is whenever an
employer supplies workers to another pursuant to a contracting agreement,
i.e., job contracting.
Per DOLE Order No. 3, Series of 2001, there is contracting or subcontracting
whenever an employer, referred to as the principal, farms out the
performance of a part of its business to another, referred to as the contractor
or subcontractor, and for the purpose of undertaking the principal's business
that is farmed out, the contractor or subcontractor then employs its own
employees. In such an arrangement, the four-fold test must be satisfied by
the contractor or subcontractor. Otherwise, it is the principal that shall be
considered as the employer.
NATIONAL SUGAR REFINERIES CORPORATION vs. NLRC
FACTS:
Petitioner National Sugar Refineries Corporation (NASUREFCO), a
corporation which is fully owned and controlled by the Government, operates
three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. Private
respondent union represents the former supervisors of the NASUREFCO
Batangas Sugar Refinery.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program
affecting all employees, from rank-and-file to department heads. As a result,
all positions were re-evaluated, and all employees including the members of
respondent union were granted salary adjustments and increases in benefits
commensurate to their actual duties and functions.
For about ten years prior to the JE Program, the members of respondent
union were treated in the same manner as rank-and file employees. As such,
they used to be paid overtime, rest day and holiday pay. With the
implementation of the JE Program, the following adjustments among others
were made: (1) the members of respondent union were re-classified under
levels S-5 to S-8 which are considered managerial staff for purposes of
Page 18 of 26
compensation and benefits; (2) there was an increase in basic pay of the
average of 50% of their basic pay prior to the JE Program, with the union
members now enjoying a wide gap (P1,269.00 per month) in basic pay
compared to the highest paid rank-and-file employee.
On May 11, 1990, petitioner NASUREFCO recognized herein respondent
union as the bargaining representative of all the supervisory employees at
the NASUREFCO Batangas Sugar Refinery.
Two years after the implementation of the JE Program the members of
herein respondent union filed a complaint for non-payment of overtime, rest
day and holiday pay allegedly in violation of Article 100 of the Labor Code.
ISSUE: W/N supervisory employees should be considered as officers or
members of the managerial staff under Article 82, Book III of the same Code,
and hence are not entitled to overtime rest day and holiday pay.
HELD:
YES. Article 212(m), Book V of the Labor Code on Labor Relations reads:
(m) Managerial employee is one who is vested with powers or prerogatives
to lay down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharged, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer
effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
independent judgment. All employees not falling within any of those above
definitions are considered rank-and-file employees of this Book.
Respondent NLRC, in holding that the union members are entitled to
overtime, rest day and holiday pay, and in ruling that the latter are not
managerial employees, adopted the definition stated in the aforequoted
statutory provision.
A cursory perusal of the Job Value Contribution Statements of the union
members will readily show that these supervisory employees are under the
direct supervision of their respective department superintendents and that
generally they assist the latter in planning, organizing, staffing, directing,
controlling communicating and in making decisions in attaining the
companys set goals and objectives.
These supervisory employees are likewise responsible for the effective and
efficient operation of their respective departments. The members of
respondent union discharge duties and responsibilities which ineluctably
qualify them as officers or members of the managerial staff, as defined in
Section 2, Rule I Book III of the aforestated Rules to Implement the Labor
Code, viz.: (1) their primary duty consists of the performance of work directly
related to management policies of their employer; (2) they customarily and
regularly exercise discretion and independent judgment; (3) they regularly
and directly assist the managerial employee whose primary duty consist of
the management of a department of the establishment in which they are
employed (4) they execute, under general supervision, work along
specialized or technical lines requiring special training, experience, or
knowledge; (5) they execute, under general supervision, special assignments
and tasks; and (6) they do not devote more than 20% of their hours worked
in a work-week to activities which are not directly and clearly related to the
performance of their work hereinbefore described.
Under the facts obtaining in this case, the union members should be
considered as officers and members of the managerial staff and are,
therefore, exempt from the coverage of Article 82 hence they are not entitled
to overtime, rest day and holiday.
JIMENEZ, AT AL. VS. NLRC AND JUANATAS
FACTS:
Petition for certiorari assailing the decision of NLRC which denied the
petitioners motion for reconsideration.
The private respondents Juantas (father and son) filed a claim for
unpaid wages/commissions, separation pay and damages against
JJ s Trucking and/or Dr. Bernardo Jimenez.
The Juantas allege 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 ten-wheeler
truck to haul soft drinks of Coca-Cola Bottling Company and paid on
commission basis, initially fixed at 17% but later increased to 20%.
They further allege that they only receive partial commissions and
that there was an unpaid balance when they were unjustly
terminated.
Petitioners contend that that respondent Fredelito Juanatas was not
an employee of the firm but was merely a helper of his father Pedro
and that all commissions were dully 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.
LABOR ARBITER
o ordering respondents JJs Trucking and/or Dr. Bernardo
Jimenez to pay jointly and severally complainant Pedro
Juanatas (father) a separation pay of FIFTEEN THOUSAND
Page 19 of 26
 FIFTY (P15,050.00) PESOS, plus attorneys fee equivalent
to ten percent (10%) of the award.
o The complaint of Fredelito Juanatas (son) is hereby
dismissed for lack of merit.
NLRC modified the decision of the Labor Arbiter
o Fredelito Juanatas is hereby declared respondents
employee and shares in (the) commission and separation
pay awarded to complainant Pedro Juanatas, his father.
o Respondent JJs Trucking and Dr. Bernardo Jimenez are
jointly and severally liable to pay complainants their unpaid
commissions in the total amount of Eighty Four Thousand
Three Hundred Eighty Seven Pesos and 05/100
(P84,387.05).
o The award of attorneys fees is reduced accordingly to eight
thousand four hundred thirty eight pesos and 70/100
(P8,438.70).
ISSUES:
1. Whether or not Fredelito Juantas is an employee of JJs Trucking
2. Whether or not there was a grave abuse of discretion on the part of
NLRC
3. Whether or not the private respondents were not paid their
commissions in full (IMPORTANT ISSUE)
HELD/RATIO:
1. No, Fredelito is not an employee because his case does not fall
under the four fold test
2. NLRC erred in holding that the son, Fredelito, was an employee of
petitioners.
3. YES, right of respondent Pedro Juanatas to be paid a commission
equivalent to 17%, later increased to 20%, of the gross income is not
disputed by petitioners.
a. private respondents admit receipt of partial payment but the
petitioners still have to present proof of full payment, in the
case the petitioners have the burden of proving such full
payment but the petitioners failed to do so.
b. The petitioners merely submitted a notebook showing the
alleged vales of private respondents for the year 1990,15 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
JUDGMENT:
Decision of NLRC affirmed with a modification that Fredelito Juantas is NOT
an employee of the petitioners.
EDI-STAFFBUILDERS INTERNATIONAL, INC. V. NATIONAL LABOR
RELATIONS COMMISSION AND ELEAZAR S. GRAN
In termination disputes or illegal dismissal cases, the employer has the
burden of proving that the dismissal is for just and valid causes. The
employer is bound to adduce clear, accurate, consistent, and convincing
evidence to prove that the dismissal is legal.
FACTS:
EDI is engaged in recruitment and placement of OFWs. Eleazar Gran was an
OFW recruited by EDI to work Omar Ali Bin Bechr Est. at Riyadh, Saudi
Arabia. EDI and OAB entered into an employment contract with Gran
whereby the latter will work as a computer specialist for OAB while EDI
would process the papers of Gran necessary for his employment at Saudi
Arabia. Gran started working for OAB. However, Gran was terminated by
OAB on the ground of insubordination against the management of OAB.
Gran was given his final pay and was sent back to the Philippines. Gran filed
a complaint for underpayment and illegal dismissal against EDI before the
LA.
The LA dismissed the complaint. On appeal with the NLRC, the NLRC
reversed the decision of the LA and held that there was underpayment and
illegal dismissal thus warranting the award of backwages in favor of Gran.
The CA affirmed the decision of the NLRC. Hence this petition.
ISSUE:
Whether EDI is guilty of underpayment of wages and illegal dismissal
HELD:
Yes. EDI claims that Gran was validly dismissed for just cause, due to
incompetence and insubordination or disobedience. To prove its allegations,
EDI submitted two letters as evidence. The first is the July 9, 1994
termination letter, addressed to Gran, from Andrea E. Nicolaou, Managing
Director of OAB. The second is an unsigned April 11, 1995 letter from OAB
Page 20 of 26
addressed to EDI and ESI, which outlined the reasons why OAB had
terminated Grans employment.
Petitioner claims that Gran was incompetent for the Computer Specialist
position because he had insufficient knowledge in programming and zero
knowledge of the ACAD system. Petitioner also claims that Gran was
justifiably dismissed due to insubordination or disobedience because he
continually failed to submit the required Daily Activity Reports. However,
other than the abovementioned letters, no other evidence was presented to
show how and why Gran was considered incompetent, insubordinate, or
disobedient.
EDI failed to overcome the burden of proving that Gran was validly
dismissed. An allegation of incompetence should have a factual foundation.
Incompetence may be shown by weighing it against a standard, benchmark,
or criterion. EDI failed to establish any such bases to show how petitioner
found Gran incompetent.
ASIA PACIFIC CHARTERING (PHILS.) INC.vs. MARIA LINDA R.
FAROLAN
FACTS:
Respondent Maria Linda R. Farolan was hired as Sales Manager of
petitioner for its passenger and cargo GSA operations for Scandinavian
Airline System (SAS).
Soon after respondent assumed her post, she participated in a number of
meetings/seminars (technical aspects all geared towards improving her
marketing and sales skills)
Respondent, upon instruction of Bondoc (VP/Comptroller), submitted a
report. As reflected in respondents report, there was a drop in SAS sales
revenues which to her was attributable to market forces beyond her control.
Petitioner directed its high ranking officer Roberto Zozobrado to conduct an
investigation on the matter and identify the problem/s and implement
possible solutions. Zozobrado thus informally took over some of respondents
marketing and sales responsibilities, albeit respondent retained her title as
Sales Manager and continued to receive her salary as such.
Soren Jespersen, General Manager of SAS, came to the Philippines to
assess the statistics on SAS sales revenues and SAS was convinced that
respondent was not fit for the job of Sales Manager; and in view of the
changes introduced by Zozobrado, SAS-GSA sales operations drew positive
results.
Respondent Farolan nevertheless, received letter from Jespersen
congratulating him for exceeding sale results in April and a number of
recommendations for improvement.
However, on even date, Petitioner terminated the employment of respondent
on ground of loss of trust and confidence. Thus, respondent filed a complaint
for illegal dismissal with prayer for damages and attorneys fees.
Respondents version: alleged that Bondoc and Zozobrado had asked her to
tender her resignation as she was not the person whom SAS was looking for
to handle the position of Sales Manager 9 but that she refused, hence, she
was terminated
LA: ruled in favor of respondent; NLRC: reversed the ruling of the LA
CA: Set aside the decision of NLRC
ISSUE:
WON, APC, AS EMPLOYER, HAS THE MANAGEMENT PREROGATIVE
TO REPLACE A SALES MANAGER WHOM IT HAS REASONABLE
GROUNDS TO BELIEVE CANNOT EFFECTIVELY DISCHARGE THE
DUTIES DEMANDED BY SUCH POSITION.
HELD:
NO. Recent decisions of this Court distinguish the treatment of managerial
employees from that of rank and file personnel insofar as the application of
the doctrine of loss of trust and confidence is concerned
MANAGERIAL EMPLOYEES; CONDITIONS THAT MUST BE MET BEFORE
ONE MAY BE CONSIDERED A MANAGERIAL EMPLOYEE. As
enunciated in Samson v. NLRC, 330 SCRA 460, Before one may be
properly considered a managerial employee, all the following conditions must
be met: (1) Their primary duty consists of the management of the
establishment in which they are employed or of a department or subdivision
thereof; (2) They customarily and regularly direct the work of two or more
employees therein; (3) They have the authority to hire or fire other
employees of lower rank; or their suggestions and recommendations as to
the hiring and firing and as to the promotion or any other change of status of
other employees are given particular weight. (Section 2(b), Rule I, Book III of
the Omnibus Rules Implementing the Labor Code, italics supplied).
It is not disputed that her job description, and the terms and conditions of her
employment, with the exception of her salary and allowances, were never
reduced to writing.
Page 21 of 26
By respondents claim, her function, as verbally explained to her by Murray,
dealt mainly with servicing of existing clientele. Bondoc, however, described
respondents functions and duties as critical
DISMISSAL; LOSS OF TRUST AND CONFIDENCE; MUST BE BASED ON
A WILLFUL BREACH AND FOUNDED ON CLEARLY ESTABLISHED
FACTS; BREACH OF DUTIES; WHEN CONSIDERED WILLFUL; CASE AT
BAR. Even assuming, however, that respondent was a managerial
employee, the stated ground (in the letter of termination) for her dismissal,
loss of confidence, should have a basis and determination thereof cannot
be left entirely to the employer. Loss of trust and confidence to be a valid
ground for an employees dismissal must be based on a willful breach and
founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. Respondents detailed REPORT dated September 8, 1993,
relative to SAS profit and loss for 1993, which was closely examined and
analyzed by the LA contains an explanation of what brought about the
decline in sales revenues. And it contains too a number of recommended
measures on improvement of sales for the remainder of 1993 and for 1994.
As did the Labor Arbiter and the Court of Appeals, this Court finds
respondents explanation in her Report behind the decline in sales revenues
as due to market forces beyond respondents control plausible. In any event,
there is no showing that the decline is reflective of any willful breach of duties
by respondent.
TRADERS ROYAL BANK V. NLRC
FACTS:
Respondent fled a letter-complaint against petitioner or the diminution of
benefits being enjoyed by the employees since time immemorial such as
mid-year bonus computed from two months gross pay to two months basic
pay and year-end bonus rom 3 months gross to only 2 months.
Petitioner insisted that the practice o giving them bonuses at years end
would depend on how profitable the operation of the bank during the year.
ISSUE: Whether or not bonuses are part o labor standards and therefore
demandable as a matter of right.
HELD:
No. 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. It is something given in addition
to what is ordinarily received by or strictly due the recipient. The granting of a
bonus is basically a management prerogative which cannot be forced upon
the employer & who may not be obliged to assume the onerous burden of
granting bonuses or other benefits aside rom the employees basic salaries
or wages'.
DYNAMIC SIGNMAKER OUTDOOR ADVERTISING SERVICES, INC., VS
FRANCISCO POTONGAN
FACTS:
If exercised in good faith for the purpose of advancing business interests, not
of defeating or circumventing the rights of employees, the managerial
prerogative to transfer personnel from one area of operation to another is
justified.
Respondent Francisco Potongan (Potongan) worked for Dynamic Signmaker
Outdoor Advertising Services (Corporation) as a Production Supervisor. The
union of rank-and-file employees of corporation declared a strike on the
ground that the corporation replaced all its supervisors. Subsequently
Potongan did not receive his salary and he was advised to take an indefinite
leave of absence. Then Potongan was being charge by the company for the
alleged burning of corporations main building and for the disruption of work.
However, Potangan denied all allegations. Potongan then filed a complaint
for illegal dismissal with NLRC against corporation.
The Labor Arbiter dismissed the case on the ground that the action was
barred by prior judgment regarding the strike of union. Potongan then
appealed, contending that the Labor Arbiter did not acquire jurisdiction over
him because he was not even a member of the union. The NLRC set aside
the Labor Arbiters decision and directed respondent Potongan to go back to
work.
The Labor Arbiter eventually dismissed Potongans complaint for lack of
merit, holding that, inter alia, Potongan should have reported back to work
and/or inquired into the results of the investigation of the charges against
him; and that the belated filing of his complaint partakes of a fishing
expedition.
On appeal, the NLRC affirmed the decision of the Labor Arbiter. The Court of
Appeals (CA) however, reversed the decision of NLRC holding that Potongan
was denied due process and was dismissed without cause.
ISSUE:
Whether or not the dismissal of Potongan was a valid exercise of
management prerogatives
Page 22 of 26
HELD:
The Supreme Court recognizes that management has wide latitude to
regulate, according to its own discretion and judgment, all aspects of
employment, including the freedom to transfer and reassign employees
according to the requirements of its business. The scope and limits of the
exercise of management prerogatives, must, however, be balanced against
the security of tenure given to labor.
If exercised in good faith for the purpose of advancing business interests, not
of defeating or circumventing the rights of employees, the managerial
prerogative to transfer personnel from one area of operation to another is
justified.
The Supreme Court finds it difficult, however, to attribute good faith on the
part of Dynamic. Potongan was instructed to go on indefinite leave. He was
asked to return to work only after more than three years from the time he was
instructed to go on indefinite leave during which period his salaries were
withheld, and only after the NLRC promulgated its decision of May 21, 1998
reversing the labor arbiters dismissal of his complaint.
MAFINCO TRADING CORP. VS. OPLE
FACTS:
Cosmos Aerated Water Factory, a firm based at Malabon, Rizal, appointed
petitioner Mafinco as its sole distributor of Cosmos soft drinks in Manila.
Rodrigo Repomanta and Mafinco executed a peddling contract whereby
Repomanta agreed to buy and sell Cosmos soft drinks. Rey Moralde entered
into a similar contract. Months later, Mafinco terminated the peddling contract
with Repomanta and Moralde. Consequently, Repomanta and Moralde,
through their union, filed a complaint with the NLRC, charging the general
manager of Mafinco for illegally dismissing them.4.Mafinco filed a motion to
dismiss the complaint on the ground that the NLRC had no jurisdiction
because Repomanta and Moralde were not its employees but were
independent contractors. It stressed that there was termination of the
contract not a dismissal of an employee.
ISSUE:
Whether or not there exist an employer-employee relationship between
petitioner Mafinco and private respondents Repomanta and Moralde.
HELD:
The Supreme Court held that under the peddling contracts, Repomanta and
Moralde were not employees of Mafinco but were independent contractors as
found by the NLC and its fact finder and by the committee appointed by the
Secretary of Labor to look into the status of Cosmos and Mafinco peddlers. A
contract whereby one engages to purchase and sell soft drinks on trucks
supplied by the manufacturer but providing that the other party (peddler) shall
have the right to employ his own workers, shall post a bond to protect the
manufacturer against losses, shall be responsible for damages caused to
third persons, shall obtain the necessary licenses and permits and bear the
expenses incurred in the sale of the soft drinks is not a contract of
employment.
BERNARDINO S. MANIOSO VS GOVERNMENT SERVICE INSURANCE
SYSTEM
FACTS:
Benefits due an employee due to work-related sickness shall be provided
until he becomes gainfully employed, or until his recovery or death.
Bernardino Manioso is an Accounting Clerk I who started working at the
Budget Commission on July 13, 1959. He was transferred to the Bureau of
Forestry with the same position on August 10, 1959. He was promoted to the
position of Senior Bookkepeer of the Department of Environment and Natural
Resources, Region IV, Manila. It was in 1978 when Manioso was found to be
suffering from Hypertensive Vascular Disease. Since then, Manioso was
already in and out the hospital for the purpose of having tests conducted on
him and to be hospitalized on several instances. From January 11, 1995 up
to May 15,1995 when Manioso compulsory retired from the government
service on reaching 65 years of age and after serving almost 36 years, he no
longer reported for work. His sick leave covering the said period was duly
approved.
Manioso filed with the GSIS for additional benefits claiming that the ailments
for which he was hospitalized several times in 1997 developed from his work
related illnesses.The GSIS disapproved petitioners request upon the ground
that he was already paid the maximum monthly income benefit for eight (8)
months covering the period from May 15, 1995 to January 14, 1996
commensuarate to the degree of his disability at the time of his retirement.
On appeal, the GSISs ruling was also affirmed. Hence, this petition.
ISSUE:
Whether or not the Manioso is entitled to Permanent Total Disability Benefits
HELD:
Under Article 192 (a) of the Labor Code, any employee who contacts
sickness or sustains an injury resulting in PTD shall, for each month until his
death, be paid by the [GSIS] during such disability, an amount equivalent to
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the monthly income benefit, plus ten percent thereof for each dependent
child, but not exceeding five. And under Article 192 (b) of the same Code, the
only time the income benefits, which are guaranteed for five years, shall be
suspended is if the employee becomes gainfully employed, or recovers from
his PTD or fails to be present for examination at least once a year upon
notice by the GSIS.
As Maniosos medical records show that the ailments that he suffered in
1997 are complications that resulted from his work-related ailments, the right
to compensation extends to disability due to disease supervening upon and
proximately and naturally resulting from compensable injury.
Maniosos retirement from the service does not prevent him from availing of
the PTD benefits to which he is entitled. For as stated earlier, benefits due an
employee due to work-related sickness shall be provided until he becomes
gainfully employed, or until his recovery or death. None of these is present in
Maniosos case.
It would be an affront to justice if Manioso, a government employee who had
served for thirty six (36) years, is deprived of the benefits due him for work-
related ailments that resulted in his Permanent Total Disability.
CAGAYAN SUGAR MILLING COMPANY vs. SECRETARY OF LABOR
AND EMPLOYMENT
Facts: On November 16, 1993, Regional Wage Order No. RO2-02 was
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: Sec. 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 as follows: P 14.00 per day . . .
Cagayan. On September 12 and 13, 1994, labor inspectors from the DOLE
Regional Office examined the books of petitioner to determine its compliance
with the wage order. They found that petitioner violated the wage order as it
did not implement an across the board increase in the salary of its
employees.
Issue: Whether or not the petitioner violates the Wage Oder that mandates
the increase of minimum wage, and Regional Wage Order No. RO2-02 is
valid, and violates Article 123 of the Labor Code?
Held:
No, Article 123 of the Labor Code provides: Wage Order. - Whenever
conditions in the region so warrant, the Regional Board shall investigate and
study all pertinent facts, and, based on the standards and criteria herein
prescribed, shall proceed to determine whether a Wage Order should be
issued. Any such Wage Order shall take effect after (15) days from its
complete publication in at least one (1) newspaper of general circulation in
the region. In the performance of its wage-determining functions, the
Regional Board shall conduct public hearings/consultations giving notices to
employees' and employers' groups and other interested parties. In sum, we
hold 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. Decision of the Secretary of Labor, dated October 8,
1996, is set aside for lack of merit.
EMPLOYEES CONFEDERATION OF THE PHILIPPINES (ECOP) VS.
NWPC
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. NCR01-A,
amending Wage Order No. NCR-01. It provides that 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
contending that the board's grant of an "across-the-board" wage increase to
workers already being paid more than existing minimum wage rates (up to
P125.00 a day) as an alleged excess of authority. ECOP further alleges that
under the Republic Act No. 6727, the boards may only prescribe "minimum
wages," not determine "salary ceilings." ECOP likewise claims that Republic
Act No. 6727 is meant to promote collective bargaining as the primary mode
of settling wages, and in its opinion, the boards can not preempt collective
bargaining agreements by establishing ceilings.
On November 6, 1990, the Commission promulgated an Order, dismissing
the appeal for lack of merit. On November 14, 1990, the Commission denied
reconsideration. ECOP then, elevated the case via petition for review on
certiorari to the Supreme Court.
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Issue:
The main issue in this case is whether Wage Order No. NCR-01-A providing
for new wage rates, as well as authorizing various Regional Tripartite Wages
and Productivity Boards to prescribe minimum wage rates for all workers in
the various regions, and for a National Wages and Productivity Commission
to review, among other functions, wage levels determined by the boards is
valid.
Ruling:
The Supreme Court ruled in favor of the National Wages and Productivity
Commission and Regional Tripartite Wages and Productivity Board-NCR,
Trade Union Congress of the Philippines and denied the petition of ECOP.
The Supreme Court held that 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.
.
The Court's opinion is that if Republic No. 6727 intended the boards alone to
set floor wages, the Act would have no need for a board but an accountant to
keep track of the latest consumer price index, or better, would have
Congress done it as the need arises, as the legislature, prior to the Act, has
done so for years. The fact of the matter is that the Act sought a "thinking"
group of men and women bound by statutory standards. The Court is not
convinced that the Regional Board of the National Capital Region, in
decreeing an across-the-board hike, performed an unlawful act of legislation.
It is true that wage-firing, like rate-fixing, constitutes an act Congress; it is
also true, however, that Congress may delegate the power to fix rates
provided that, as in all delegations cases, Congress leaves sufficient
standards. As this Court has indicated, it is impressed that the above-quoted
standards are sufficient, and in the light of the floor-wage method's failure,
the Court believes that the Commission correctly upheld the Regional Board
of the National Capital Region.
*****The Court agrees with the Solicitor General. It noted that there are two
ways in the determination of wage, these are floor wage method and salary
ceiling method. The floor wage method involves the fixing of determinate
amount that would be added to the prevailing statutory minimum wage while
the salary ceiling method involves where the wage adjustment is applied to
employees receiving a certain denominated salary ceiling.
RA 6727 gave statutory standards for fixing the minimum wage.
ART. 124. Standards/Criteria for Minimum Wage Fixing The regional
minimum wages to be established by the Regional Board shall be as nearly
adequate as is economically feasible to maintain the minimum standards of
living necessary for the health, efficiency and general well-being of the
employees within the framework of the national economic and social
development program. In the determination of such regional minimum
wages, the Regional Board shall, among other relevant factors, consider the
following:
(a) The demand for living wages;
(b) Wage adjustment vis-a-vis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay of employers;
(i) Effects of employment generation and family income; and
(j) The equitable distribution of income and wealth along the imperatives of
economic and social development."
The wage order was not acted in excess of boards authority. The law gave
reasonable limitations to the delegated power of the board.
COCOFED ET. AL., VS. HON. CRESENCIANO B. TRAJANO
FACTS:
Philippine Coconut Producers Federation operates petitioner COCOFED
(Kalamansig), a coconut plantation utilized as a demonstration farm for
replanting and/or training area for coconut farmers, located in Kalamansig,
Sultan Kudarat.
On November 15, 1988, a complaint inspection was conducted by the
Department of Labor and Employment, Region XII, Cotabato City in
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response to complaints filed by two of petitioner's employees, Alex Edicto
and Delia Pahuwayan. The inspection revealed that petitioner was guilty of
underpayment of wages, emergency cost of living allowance (ECOLA) and
13th month pay. Accordingly, notice of inspection results was issued:
requiring petitioner to effect restitution or correction within five (5) days from
notice.
Summary Petitioner submitted its position paper claiming that it should be
classified as an establishment with less than 30 employees and with a paid-
up capital of P500,000.00 or less as evidenced by the assessment of the
municipal treasurer. Moreover, complainants worked for less than eight
hours, a minimum of four and maximum of six.
. . . A three (3) year actual payrolls from March 1985 to February 1989
showing the daily actual payment made by the respondent to involved
workers are substantial evidence against the mere memorandum issued by
the respondents on the matter. Further, such payrolls submitted by
respondents are not mere summaries of daily efforts of workers but these are
daily records showing workers actual daily rate.
ISSUE: Whether or not the petitioner was justified in paying an amount less
than the statutory minimum wage.
HELD:
Petitioner would have us overturn the factual finding of public respondents
that its employees are daily paid workers. This we are unable to do for the
payrolls submitted by it support the latters' position. 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. WHEREFORE, the petition is DISMISSED.
questioned her termination on account of her marriage, invoking Article 136
of the same law.
Issue:
W/N Zialcita was validly terminated on account of her marriage.
Ruling
NO. When Presidential Decree No. 148, otherwise known as theWomen and
Child Labor Law, was promulgated in 13 March 1973, PALs policy hadmet
its doom. However, since no one challenged its validity, the said policy
wasable to obtain a momentary reprieve. Section 8 of PD148 is exactly the
same provision reproduced verbatim in Article 136 of the Labor Code, which
waspromulgated on 1 May 1974 and took effect six months later.Although
Article 132 enjoins the Secretary of Labor to establish standardsthat will
ensure the safety and health of women employees and in appropriatecases
shall by regulation require employers to determine appropriate
minimumstandards for termination in special occupations, such as those of
flight attendants,it is logical to presume that, in the absence of said standards
or regulations whichare yet to be established, the policy of PAL against
marriage is patently illegal.
Article 136 is not intended to apply only to women employed in
ordinaryoccupations, or it should have categorically expressed so. The
sweepingintendment of the law, be it on special or ordinary occupations, is
reflected inthe whole text and supported by Article 135 that speaks of non-
discriminationon the employment of women.

ZIALCITA, ET AL. V. PAL

Facts:

Complainant Zialcita, an international flight stewardess of PAL,

wasdischarged from the service on account of her marriage. In separating
Zialcita, PALinvoked its policy which stated that flight attendants must be
single, and shall beautomatically separated from employment in the event
they subsequently getmarried. They claimed that this policy was in
accordance with Article 132 of theLabor Code. On the other hand, Zialcita

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