LABOR LAW – COMPILED CASE DIGEST (PART 6)

PART 6 CASES
MANILA TERMINAL CO INC. V CIR, 91 PHIL 625, 1952

FACTS:
Petitioner Antonio Iran is engaged in softdrinks merchandising and distribution in Mandaue City, Cebu,
employing truck drivers who double as salesmen, truck helpers, and non-field personnel in pursuit thereof.
Petitioner hired private respondents Godofredo Petralba, Moreno Cadalso, Celso Labiaga and Fernando Colina
as drivers/salesmen while private respondents Pepito Tecson, Apolinario Gimena, Jesus Bandilao, Edwin Martin
and Diosdado Gonzalgo were hired as truck helpers.
Drivers/salesmen drove petitioner’s delivery trucks and promoted, sold and delivered softdrinks to various
outlets in Mandaue City. The truck helpers assisted in the delivery of softdrinks to the different outlets covered
by the driver/salesmen. As part of their compensation, the driver/salesmen and truck helpers of petitioner received
commissions per case of softdrinks sold at the following rates:
SALESMEN:
Ten Centavos (P0.10) per case of Regular softdrinks.
Twelve Centavos (P0.12) per case of Family Size softdrinks.
TRUCK HELPERS:
Eight Centavos (P0.08) per case of Regular softdrinks.
Ten Centavos (P0.10) per case of Family Size softdrinks.
Sometime in June 1991, petitioner, while conducting an audit of his operations, discovered cash shortages
and irregularities allegedly committed by private respondents. Pending the investigation of irregularities and
settlement of the cash shortages, petitioner required private respondents to report for work everyday. They were
not allowed, however, to go on their respective routes. A few days thereafter, despite aforesaid order, private
respondents stopped reporting for work, prompting petitioner to conclude that the former had abandoned their
employment. Consequently, petitioner terminated their services. He also filed on November 7, 1991, a complaint
for estafa against private respondents. On the other hand, private respondents filed complaints against petitioner
for illegal dismissal, illegal deduction, underpayment of wages, premium pay for holiday and rest day, holiday
pay, service incentive leave pay, 13th month pay, allowances, separation pay, recovery of cash bond, damages
and attorney’s fees.
The labor arbiter found that petitioner had validly terminated private respondents, there being just cause
for the latter’s dismissal. Nevertheless, he also ruled that petitioner had not complied with minimum wage
requirements in compensating private respondents, and had failed to pay private respondents their 13th month
pay. The NLRC, in its decision of December 21, 1994, affirmed the validity of private respondents dismissal, but
found that said dismissal did not comply with the procedural requirements for dismissing employees.
Furthermore, it corrected the labor arbiters award of wage differentials to Jesus Bandilao.

ISSUE: Whether or not commissions are included in determining compliance with the minimum wage
requirement.

RULING:
Yes. The petition is impressed with merit. Article 97(f) of the Labor Code defines wage as follows:
Art. 97(f) Wage paid to any employee shall mean the remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or
other method of calculating the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and
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.

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 LABOR LAW – COMPILED CASE DIGEST (PART 6)

While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a little
more industry on the jobs particularly assigned to them, still these commissions are direct remunerations for
services rendered. In fact, commissions have been defined as the recompense, compensation or reward of an
agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage
on the amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the
reason for such type of remuneration for services rendered demonstrate clearly that commissions are part of a
salesmans wage or salary. Thus, the commissions earned by private respondents in selling softdrinks constitute
part of the compensation or remuneration paid to drivers/salesmen and truck helpers for serving as such, and
hence, must be considered part of the wages paid them.

Likewise, there is no law mandating that commissions be paid only after the minimum wage has been paid
to the employee. Verily, the establishment of a minimum wage only sets a floor below which an employees
remuneration cannot fall, not that commissions are excluded from wages in determining compliance with the
minimum wage law. Wherefore, in view of the foregoing, the decision of the NLRC dated July 31, 1995, insofar
as it excludes the commissions received by private respondents in the determination of petitioners compliance
with the minimum wage law, as well as its exclusion of the particular amounts received by private respondents
as part of their 13th month pay is reversed and set aside. This case is remanded to the Labor Arbiter for a
recomputation of the alleged deficiencies. For non-observance of procedural due process in effecting the dismissal
of private respondents, said decision is modified by increasing the award of nominal damages to private
respondents from P1,000.00 to P5,000.00 each. No costs.
_________________________________________________________________________________________

DAVAO FRUITS CORP V ASSOCIATED LABOR UNION, 225 SCRA 562, 1993

FACTS:
Respondent ALU for and in behalf of all the rank-and-file workers and employees of petitioner sought to
recover from the latter the 13th month pay differential for 1982 of said employees, equivalent to their sick,
vacation and maternity leaves, premium for work done on rest days and special holidays, and pay for regular
holidays which petitioner, allegedly in disregard of company practice since 1975, excluded from the computation
of the 13th month pay for 1982.

Issue: WON in the computation of the 13th month pay under PD No. 851, payments for sick, vacation and
maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays may be
excluded in the computation and payment thereof.

Held:
Yes. Basic salary does not merely exclude the benefits expressly mentioned but all payments which may
be in the form of fringe benefits or allowances.

Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851 provides that “overtime
pay, earnings and other remunerations which are not part of the basic salary shall not be included in the
computation of the 13th month pay.

Whatever compensation an employee receives for an 8 hour work daily or the daily wage rate is the basic
salary. Any compensation or remuneration other than the daily wage rate is excluded. It follows therefore, that
payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, as
well as pay for regular holidays, are likewise excluded in computing the basic salary for the purpose of
determining the 13th month pay.

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 LABOR LAW – COMPILED CASE DIGEST (PART 6)

SLL INTERNATIONAL CABLES SPECIALIST V NLRC, GR NO 172161, MARCH 2, 2011

FACTS:
Private Respondents were hired by Lagon as apprentice or trainee cable/lineman and were paid the full
minimum wage and other benefits; they did not report to work regularly, since they are trainees, but came in
substitutes for other regular workers. After their training, they were engaged as Project Employees in different
parts of the Country (Bohol, Anitpolo, Bulacan and Caloocan) upon which they have to re-apply after every
completion. Faced with economic problems, Lagon was constrained to cut down the overtime work of its workers.
Thus, when private respondents requested to work overtime, Lagon refused. Private respondents went home to
Cebu and filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay and service
incentive leave pay as well as damages and attorney’s fees.

Petitioners admitted private respondents’ employment but claimed that the latter were only project
employees for their services were merely engaged for a specific project or undertaking and the same were covered
by contracts duly signed by private respondents. And since the workplaces of private respondents were all in
Manila, the complaint should be filed there. Thus, petitioners prayed for the dismissal of the complaint for lack
of jurisdiction and utter lack of merit.

The LA claimed that his office had jurisdiction under Rule 4, Sec 1 of the NLRC RULES because the
"workplace," as defined in the said rule, included the place where the employee was supposed to report back after
a temporary detail, assignment or travel, which in this case was Cebu. As to the status of their employment, the
LA opined that private respondents were regular employees because they were repeatedly hired by petitioners
and they performed activities which were usual, necessary and desirable in the business or trade of the employer.
LA found that private respondents were underpaid. It ruled that the free board and lodging, electricity, water, and
food enjoyed by them could not be included in the computation of their wages because these were given without
their written consent. However, petitioners were not liable for illegal dismissal. The LA viewed private
respondents’ act of going home as an act of indifference when petitioners decided to prohibit overtime work.

NLRC affirmed the LA’s decision. It noted that no single report of project completion was filed with the
public employment office as required by DOLE. The CA affirmed both the LA’s and NLRC’s decisions and
considered that petitioners failure to comply with the simple but compulsory requirement to submit a report of
termination to the nearest Public Employment Office every time private respondents’ employment was terminated
was proof that the latter were not project employees but regular employees.

ISSUE: WON private respondents are entitled to be paid the minimum wage.

HELD:
YES. As a general rule, on payment of wages, a party who alleges payment as a defense has the burden
of proving it. Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on
the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar
documents are not in the possession of the worker but in the custody and absolute control of the employer.

In this case, petitioners, aside from bare allegations that private respondents received wages higher than
the prescribed minimum, failed to present any evidence, such as payroll or payslips, to support their defense of
payment. Thus, petitioners utterly failed to discharge the onus probandi. Private respondents, on the other hand,
are entitled to be paid the minimum wage, whether they are regular or non-regular employees.

On whether the value of the facilities should be included in the computation of the "wages" received by
private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may provide
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 LABOR LAW – COMPILED CASE DIGEST (PART 6)

subsidized meals and snacks to his employees provided that the subsidy shall not be less that 30% of the fair and
reasonable value of such facilities. In such cases, the employer may deduct from the wages of the employees not
more than 70% of the value of the meals and snacks enjoyed by the latter, provided that such deduction is with
the written authorization of the employees concerned.

Moreover, before the value of facilities can be deducted from the employees’ wages, the following
requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished by the
trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the employee; and
finally, facilities must be charged at reasonable value. Mere availment is not sufficient to allow deductions from
employees’ wages.

These requirements, however, have not been met in this case. SLL failed to present any company policy
or guideline showing that provisions for meals and lodging were part of the employee’s salaries. It also failed to
provide proof of the employees’ written authorization, much less show how they arrived at their valuations. At
any rate, it is not even clear whether private respondents actually enjoyed said facilities.

Facilities VS Supplements
"Supplements," therefore, constitute extra remuneration or special privileges or benefits given to or received by
the laborers over and above their ordinary earnings or wages. "Facilities," on the other hand, are items of expense
necessary for the laborers and his family's existence and subsistence so that by express provision of law, 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.

In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and
over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers'
basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus
or sick leave) given, but in the purpose for which it is given. In the case at bench, the items provided were given
freely by SLL for the purpose of maintaining the efficiency and health of its workers while they were working at
their respective projects.
__________________________________________________________________________________________

ECOP V NWPC, GR NO 96169, SEPTEMBER 24, 1991

FACTS:
Petitioners ECOP questioned the validity of the wage order issued by the RTWPB dated October 23, 1990
pursuant to the authority granted by RA 6727. The wage order increased the minimum wage by P17.00 daily in
the National Capital Region. The wage order is applied to all workers and employees in the private sector of an
increase of P 17.00 including those who are paid above the statutory wage rate. ECOP appealed with the NWPC
but dismissed the petition.

The Solicitor General in its comment posits that the Board upon the issuance of the wage order fixed
minimum wages according to the salary method. Petitioners insist that the power of RTWPB was delegated,
through RA 6727, to grant minimum wage adjustments and in the absence of authority, it can only adjust floor
wages.

Issue: Whether or not the wage order issues by RTWPB dated October 23, 1990 is valid.

Ruling:

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 LABOR LAW – COMPILED CASE DIGEST (PART 6)

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 board’s authority. The law gave reasonable limitations to the
delegated power of the board.
__________________________________________________________________________________________

NASIPIT LUMBER COMPANY V NWPC, 289 SCRA 667, 1998

FACTS:
On November 19, 1993, the Regional Tripartite Wages and Productivity Board (RTWPB) of Region X,
Northern Mindanao, Cagayan de Oro City, issued Wage Order No. RX-03. This Wage Order mandated a P7.00
increase in the minimum daily wage of all workers and employees in the private sector in Region X receiving a
daily wage of not more than P130.00 per day and an additional P10.00 allowance per day.

Subsequently or on March 17, 1994, Nasipit Lumber Company, Philippine Wallboard Corporation and
Anakan Lumber Company (herein petitioners) filed their separate application for exemption from compliance
with Wage Order No. RX-03, claiming they are distressed establishments whose paid-up capital has been
impaired by at least twenty-five percent (25%).

After finding that the petitioners indeed sustained financial losses which impaired their respective paid-
up capital, the RTWPB, in a consolidated Order dated December 3, 1994, granted petitioners a full exemption
from compliance with the said Wage Order for a period of one (1) year or from December 8, 1993 to December
7, 1994. On December 8, 1994, petitioners, citing the continuous business decline in the wood processing industry,
filed a consolidated petition for extension of their full exemption from compliance with Wage Order No. RX-03
for another year or from December 8, 1994 to December 8, 1995.

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 LABOR LAW – COMPILED CASE DIGEST (PART 6)

However, in a Resolution No. 95-01 dated February 24, 1995, the RTWPB denied petitioners consolidated
application for extension of exemption. In justifying its denial, the RTWPB relied on Section 7 of the NWPC
Revised Guidelines No. 1, Series of 1992, thus:

Establishments shall be granted full exemption of one (1) year from effectivity of the Order for all
categories of exemption.

From the said Resolution, petitioners interposed an appeal to the NWPC. On July 3, 1996, the NWPC rendered a
Decision denying the appeal for lack of merit. The NWPC ratiocinated as follows:

Thus, the principal issue to be resolved in this case is whether or not the period of exemption under Wage
Order RX-03 can be extended for more than one (1) year.

We rule in the negative. Section 7 of the NWPC Revised Guidelines on Exemption, which is the applicable rule
on this matter, provides for the duration and extent of exemption that can be granted to a qualified applicant
establishment, to wit:

Establishments shall be granted full exemption of one (1) year from effectivity of the Order for all
categories of exemption.

As set forth by the aforecited rule, the maximum period of exemption that can be accorded to a qualified
applicant is only for one (1) year from the effectivity of the Wage Order. This non-extendable one year period of
exemption, which had been consistently applied to all analogous cases in the past involving companies seeking
extension of the period of their exemption, remains and continues to be the existing policy on the matter. Precisely,
the rationale behind this policy is to afford protection to workers who may be unfairly affected by the deleterious
effect of a prolonged exemption which is not in accord with the very purpose of the issuance of a Wage Order.

Wherefore, premises considered, the instant appeal is hereby denied for lack of merit. Board Resolution
No. 95-01, Series of 1995 dated 24 February 1995 is affirmed. Unswayed, petitioners filed on August 14, 1996,
a consolidated motion for reconsideration. However, the NWPC remained steadfast with its earlier Decision and
denied petitioners motion in its Resolution dated November 27, 1996.

Hence, this petition for certiorari. Petitioners contend they are entitled to an extension for another year of
their full exemption as distressed establishments on the basis of paragraph 4, Section 3 of Wage Order No. RX-
03 which expressly provides: Distressed establishments, as defined by the Board upon due and proper application
with the Board, may also be exempted either partly or fully for a period of one year renewable for another year
provided the conditions still persist and warrant the exemption, provided further that they qualify under the
implementing guidelines issued by the Board.

More specifically, petitioners claim that the NWPC exceeded its jurisdiction (1) in deleting the phrase
renewable for another year provided the conditions still persist and warrant the exemption from paragraph 4,
Section 3 of Wage Order No. RX-03 issued by the RTWPB; (2) in overriding the clear intention of the RTWPB
to extend the exemption of distressed establishments; and (3) in applying Section 7 of the NWPC Guideline No.
01, Series of 1992, limiting the duration of exemption to one (1) year, contrary to Republic Act No. 6727.[4]
Article 121 of the Labor Code, as amended by Republic Act No. 6727, partly provides:
ART. 121. Powers and Functions of the Commission. The Commission shall have the following powers and
functions:

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 LABOR LAW – COMPILED CASE DIGEST (PART 6)

Interpreting the above provision, this Court through Justice Artemio V. Panganiban, in Nasipit Lumber
Company, Inc. vs. National Wages and Productivity Commission, held:

The foregoing clearly grants the NWPC, x x x, the power to prescribe the rules and guidelines for the
determination of minimum wage and productivity measures. x x x, the NWPC has the power not only to prescribe
guidelines to govern wage orders, but also to issue exemptions therefrom. In short, the NWPC lays down the
guidelines which the RTWPB implements.

In affirming the RTWPBs Resolution denying petitioners application for extension for another year of
their full exemption from compliance with Wage Order No. RX-03, the NWPC did not act with grave abuse of
discretion. On the contrary, it merely applied its own Guideline No. 01, Series of 1992 limiting the duration of
exemption to only one (1) year. It is noteworthy that the RTWPB, for its part, implemented to the letter the said
Guideline.

Wherefore, the petition is hereby dismissed. The assailed Decision dated July 3, 1996 and Resolution
dated November 27, 1996 of the National Wages and Productivity Commission (NWPC) are hereby affirmed. So
ordered.
__________________________________________________________________________________________

PRUBANKERS ASSOCIATION V PRUDENTIAL BANK & TRUST COMPANY, 302 SCRA 74, 1999

FACTS:

On Nov 18 1993 the Regional Tripartite Wages and Productivity Board of Region V issued Wage
Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector
who had rendered service for at least 3 months before its effectivity, and for the same period thereafter,
in the following categories:

On Nov 23 1993 the Regional Tripartite Wages and Productivity Board of Region VII issued Wage
Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage Order No. RO
VII-02-A into the basic pay of all workers. The wage order also called for an increase in the minimum
wage rates for all workers and and employees in the private sector as follows:

solacion, Cordova, Talisay, Minglanilla,

Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon and Tagbilaran.

Pursuant to the said wage orders, RESP granted a COLA of P17.50 to its employees at its Naga branch
and integrated the P150.00 per month COLA into the basic pay of its rank-and-file employees at its Cebu,
Mabolo and P. del Rosario branches. On June 7 1994, PET wrote to RESP requesting that a Labor Management
Committee be convened to discuss and resolve the wage distortions that resulted from the implementation of the
wage orders. PET also demanded that PET extend the application of the wage orders to its employees outside
Region V & Region VII, claiming that the regional implementation of the said orders resulted in a wage distortion.
As the matter could not be settled by both parties, both agreed to submit the matter to voluntary arbitration.

VA: Ruled that the regional implementation of the wage orders by PET resulted in a wage distortion
nationwide which should be resolved in accordance with Art. 124 of Labor Code.
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 LABOR LAW – COMPILED CASE DIGEST (PART 6)

CA: Ruled that there was no wage distortion on the following grounds:

n are maintained, as all employees were

granted an increase in minimum wage rate.

PET’s contentions: RESP’s regional implementation:

1.A wage distortion exists, because the implementation of the two Wage Orders has resulted in the
discrepancy in the compensation of employees of similar pay classification in different regions.
2.Implementation violated the principle of equal work, equal pay;
3.RESP-Bank when it adopted a uniform wage policy has sufficiently established a management practice
thus, it is estopped from implementing a wage order for a specific region only.

Issues:
1.WON PET is guilty of forum shopping?
2.WON a wage distortion resulted from RESP’s implementation of the aforecited Wage Orders?

Held:

1.YES. PET failed to comply with Section 2 of Rule 42 of the Rules of Court, which requires that
parties must certify under oath that they have not commenced any other action involving the same issues
in the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or
agency... as PET failed to inform the SC that an action involving the same parties and issues allegedly similar to
those raised in the present controversy, NCMB-NCR-RVA-O4-012-97 (In Re: Voluntary Arbitration between
Prudential Bank and Prubankers Association) is pending.

2.NO. There was no wage distortion as there is no wage parity between employees in different rungs,
instead there is a wage disparity between employees in the same rung but located in different regions of the
country. Art. 124 of LC gives the statutory definition of wage distortion: “a wage distortion shall mean a situation
where an increase in prescribed wage results in the elimination of severe contraction of intentional quantitative
differences in wage or salary rates between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills, length of service, or other
logical bases of differentiation.”

Wage distortion involves 4 elements:

1.An existing hierarchy of positions with corresponding salary rates;
2.A significant change in the salary rate of a lower pay class without a concomitant increase in the
salary rate of a higher one;
3.The elimination of the distinction between the two levels; and
4.The existence of the distortion in the same region of the country.

In the case at bar, there is no wage distortion because elements 2 and 3 are missing. First, the
implementation of the wage orders in the covered branches resulted in an increase in the salary rates of all pay
classes. Also, the quantitative difference in compensation between the pay classes remained the same in all
branches in the affected region hence the hierarchy of positions based on skills, length of service and other logical
bases of differentiation was preserved.
Answer to PET’s contentions:
1.A disparity in wages between employees holding similar positions but in different regions does
not constitute wage distortion as contemplated by law. – Different regional wages are mandated by the law
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 LABOR LAW – COMPILED CASE DIGEST (PART 6)

(specifically RA 6727) as there is recognition that there exist regional disparities in the cost of living. RA 6727
recognizes that there are different needs for the different situations in different regions of the country.

2.Equal pay, equal work contention: RA 6727 mandates that wages in every region must be set by the
particular wage board of that region, based on the prevailing situation therein. Necessarily, the wages in different
regions will not be uniform. Thus, under RA 6727, the minimum wage in Region 1 may be different from that
in Region 13, because the socioeconomic conditions in the two regions are different.

3.Management practice contention: Said nationwide uniform wage policy of the Bank had been adopted prior to
the enactment of RA 6727. After the passage of said law, the Bank was mandated to regionalize its wage structure.
Dispositive: Petition is DENIED and CA’s decision is AFFIRMED.
__________________________________________________________________________________________

GAA V CA, 140 SCRA 304, 1985

FACTS:
It appears that respondent Europhil Industries Corporation was formerly one of the tenants in Trinity
Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the building administrator.

On December 12, 1973, Europhil Industries commenced an action (in the Court of First Instance of Manila
for damages against petitioner for having perpetrated certain acts that Europhil Industries considered a trespass
upon its rights, namely, cutting of its electricity, and removing its name from the building directory and gate
passes of its officials and employees", On June 28, 1974, said court rendered judgment in favor of respondent
Europhil Industries, ordering petitioner to pay the former the sum of P10,000.00 as actual damages, P5,000.00 as
moral damages, P5,000.00 as exemplary damages and to pay the costs.

The said decision having become final and executory, a writ of garnishment was issued pursuant to which
Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon El Grande Hotel, where
petitioner was then employed, garnishing her "salary, commission and/or remuneration." Petitioner then filed with
the Court of First Instance of Manila a motion to lift said garnishment on the ground that her "salaries, commission
and or remuneration" are exempted from execution under Article 1708 of the New Civil Code. Said motion was
denied by the lower Court.

Court of Appeals dismissed the petition. In dismissing the petition, the Court of Appeals held that
petitioner is not a mere laborer as contemplated under Article 1708 as the term laborer does not apply to one who
holds a managerial or supervisory position like that of petitioner, but only to those laborers occupying the lower
strata.

Issue: Whether or not the Petitioner is covered by Article 1708 of the New Civil Code.

Ruling:
The Court ruled that petitioner is not covered by Article 1708 since she does not fall with in the criteria
of laborer. Article 1708 of the Civil Code provides: “The laborer's wage shall not be subject to execution or
attachment, except for debts incurred for food, shelter, clothing and medical attendance."

It is beyond dispute that petitioner is not an ordinary or rank and file laborer but a responsibly place
employee, of El Grande Hotel, responsible for planning, directing, controlling, and coordinating the activities of
all housekeeping personnel so as to ensure the cleanliness, maintenance and orderliness of all guest rooms,
function rooms, public areas, and the surroundings of the hotel. Considering the importance of petitioner's

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function in El Grande Hotel, it is undeniable that petitioner is occupying a position equivalent to that of a
managerial or supervisory position.

We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code to
operate in favor of any but those who are laboring men or women in the sense that their work is manual. Persons
belonging to this class usually look to the reward of a day's labor for immediate or present support, and such
persons are more in need of the exemption than any others. Petitioner is definitely not within that class.
__________________________________________________________________________________________

FIVE J TAXI V NLRC, 235 SCRA 556, 1994

FACTS:
Maldigan and Sabsalon were hired by the Five J Taxi as taxi driver. Nov. 1987 and June 1979,
respectively.
a.They worked for 4 days weekly on a 24 hour shifting schedule.
b.Aside from the daily “boundary” of P700.00 for air-conditioned taxi or P450.00 for non-air-conditioned
taxi, they were also required to pay P20.00 for car washing, and to further make a P15.00 deposit to answer
for any deficiency in their “boundary,” for every actual working day.

Subsequently, in less than 4 months after he was hired, Maldigan failed to report to work for unknown
reasons. Sabsalon was held up by his armed passenger who took all his money and stabbed him. He was
hospitalized and after his discharge, he went to his home province to recuperate. While Sabsalon was re-admitted
to work by Five J Taxi, he was only required to work every other day. However, on several instances, he also
failed to report for work during his schedule. Despite repeated requests for him to report to work, he refused. In
1989, Maldigan requested Five J Taxi for the reimbursement of his daily cash deposits for 2 years, but they told
him that nothing was left of his deposits as these were not even enough to cover the amount spent for the repairs
of the taxi he was driving. This was allegedly the practice adopted by Five J Taxi to recoup the expenses incurred
in the repair of their taxicab units. When Maldigan insisted on the refund of his deposit, petitioners terminated his
services.

Sabsalon, on his part, claimed that his termination from employment was effected when he refused to pay
for the washing of his taxi seat covers.Maldigan and Sabsalon then filed a complaint with the NLRC for illegal
dismissal and illegal deductions. Complaint was dismissed.
a.The filing of the case was a mere after-thought since it took them two years to file
the same. Such delay is unreasonable.
b.It was also discovered that Maldigan was working for another taxi company
called “Mine of Gold” and that Sabsalon was driving a taxi for “Bulaklak
Company.” Both of them failed to controvert the evidence showing this and that
they voluntarily left their jobs.
c.However, ordered Five J Taxi and Armamento to pay Maldigan and Sabsalon
their accumulated deposits and car wash payments.

Issue: WON Maldigan and Sabsalon’s deposits and car wash payments should be refunded. YES.

Held
Deposits should be refunded to them. Car wash payments should not be refunded. NLRC held that the
P15.00 daily deposits made by respondents to defray any shortage in their “boundary” is covered by the general
prohibition in LC 114 against requiring employees to make deposits, and that there is no showing that the

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Secretary of Labor has recognized the same as a “practice” in the taxi industry. Therefore, the deposits made were
illegal and the respondents must be refunded.
It can be deduced that the LC114 provides the rule on deposits for loss or damage to tools, materials or
equipment supplied by the employer. Clearly the same does not apply to or permit deposits not to defray any
deficiency which the taxi driver may incur in the remittance of his “boundary.
Furthermore, when Maldigan and Sabsalon stopped working for Five J Taxi, the alleged purpose for which
the deposits were required no longer existed. As such, any balance due to private respondents after proper
accounting must be returned to them with legal interest.
However, Maldigan and Sabsalon are not entitled to the reimbursement of the car wash payments. Car
washing after a tour of duty is a practice in the taxi industry, and is, in fact, dictated by fair play. It is incumbent
upon the driver to restore the unit he has driven to the same clean condition when he took it out.
There was nothing to prevent Maldigan and Sabsalon from cleaning the taxi units themselves if they
wanted to save P20.
__________________________________________________________________________________________

GENESIS TRANSPORT SERVICE INC V UMMGT GR NO 182114, APRIL 5, 2010

FACTS:
Juan Taroy was hired on February 2, 1992 by Genesis Transport as a driver. By 2002, Taroy was, after due notice
and hearing, terminated from employment after an accident having been driving recklessly.

Taroy thus filed for illegal dismissal claiming that he was singled out for termination because of his union
activities, other drivers who had met accidents not having been dismissed. He further alleged that in 1997,
petitioner had been deducing from his weekly earnings an amount ranging from P1690-900 (representing toll
fees) without his consent, thereby violating LC 113. Deductions were also taken from the bus conductor’s earnings
to thus result to double deduction (Labor Union filed a case too claiming that there was no due process in
dismissal).

On petitioners part, Genesis counter claimed that despite repeated warnings and disciplining, Taroy had
committed several violations which included poor driving skills, tardiness, gambling inside the premises, use of
shabu, smoking while driving, insubordination and reckless driving.

In support of its claim that Taroy was afforded due process, Genesis Transport cited his preventive suspension,
and the investigation held which resulted in the finding that the accident was not due to faulty breaks (as Taroy
claimed) but due to his reckless driving.

LA: Genesis has discharged the burden of proof in proving that Taroy was indeed reckless and that former was
offered due process. UMMGT case was dismissed as well finding that there was due process. On the claim for
service incentive leave pay LA ruled that Taroy was not entitled thereto since he was a field personnel paid on
commission basis.

With respect to Taroy’s claim for refund, however, LA ruled in his favor finding that though tollgate fees are
claimed to form part of overhead expense, why were not expenses for fuel and maintenance also charged to
overhead expenses? LA thus concluded that tollgate fees are deducted from the gross revenues and not from the
salaries of drivers and conductors, but certainly the deduction thereof diminishes the take home pay of the
employees.

Both parties appealed, petitioner as to the finding that Taroy was underpaid. Taroy as for the failure to go over
the issue of his preventive suspension.
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NLRC: Affirmed (underpayment) with Modification, brushing aside the illegal suspension issue having been
brought up for the first time on appeal but found that he had not been afforded due process.

SC: Petitioners aver that cases of similar import involving also the respondent union have been decided with
finality in their favor by the NLRC, thereby invoking res judicata to be applied. SC finds however that absent any
ruling that the decisions had become final, said doctrine cannot be applied.
Neither may the Court take judicial notice of petitioners’ claim that the deduction of tollgate fees from the gross
earnings of drivers is an accepted and long- standing practice.

Judicial Notices would be applied under the following requisites:

(1) the matter must be one of common and general knowledge;
(2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within
the limits of the jurisdiction of the court.

But a court cannot take judicial notice of any fact which, in part, is dependent on the existence or non- existence
of a fact of which the court has no constructive knowledge.

LABOR ISSUES: Lower Courts correctly held that the withholding of those amounts reduced the amount from
which Taroy’s 9% commission would be computed. Not to mention the fact that without Taroy’s written consent
or authorization, the deduction is considered illegal.

DP: Rules require is that the employer act on the suspended worker’s status of employment within the 30­day
period by concluding the investigation. It is only when the suspension exceeds 30 days that the employer must
reinstate the employee.

In the present case, petitioner company had until May 20, 2002. It did by terminating him through a notice dated
May 10, 2002, hence, the 30-day requirement was not violated.

NINA JEWELRY MANUFACTURING OF MEDAL ARTS INC. V MONTECILLO, GR NO 188169

FACTS:
Madeline Montecillo and Liza Trinidad were employed as goldsmiths in Nina Jewelry
•Madeline's weekly rate = P1,500
•Liza's weekly rate = P2,500
Incidents of theft involving the goldsmiths caused Nina Jewelry to require them to post cash bonds or
deposits to answer for any loss or damage by reason of the goldsmiths' fault or negligence in handling the gold
•Deposits vary in amounts but in no case exceed 15% of their weekly salary
•Deposits shall be returned upon completion of work and after accounting of the gold
Nina Jewelry claims goldsmiths were also given the option to sign authorizations in place of the deposits.
Nina Jewelry could deduct from their salaries an amount not exceeding 15% of their take-home pay, should it be
found that they lost gold. However, Madeline and Liza claim that Nia Jewelry left the them with no option but to
post the deposits. They were allegedly constructively dismissed because their employments were made dependent
on their readiness to post the required deposits. They claim they were made to sign blank trust receipts

Nia Jewelry claim the respondents stopped reporting for work and signified their defiance against the new
policy which at that point had not even been implemented yet

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Madeline and Liza filed a complaint for illegal dismissal.

LA: Dismissed complaint, but ordered Nina Jewelry to pay Madeline and Liza their 13th month pay for 2014
•They were not made to sign blank trust receipts, but filled up trust receipts
•They were not dismissed, they were only informed to put up the cash bond before they could be allowed to return
back to work which they previously refused to perform

NLRC: Affirmed LA, but deleted 13th month pay

•Madeline and Liza had unpaid loans with Nina Jewelry

CA: Reversed. NLRC was wrong in holding that there was abandonment of work
•If the employee fails to make the required deposit, he will not be given gold to work on.
•In accordance with Art 113 (Wage Deduction) and Art 114 (Deposits for Loss or Damage), Nina Jewelry failed
to prove that there is an existing law or regulation authorizing it to impose such burden on its employees. And, in
case of deposit, that it is engaged in a trade, occupation or business where such requirement is a recognized
practice.

ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction
from the wages of his employees, except:
a.In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
b.For union dues, in cases where the right of the worker or his union to check-off has been recognized by
the employer or authorized in writing by the individual worker concerned; and
c.In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

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

Issues
1.W/N there was constructive dismissal - NO
2.W/N the policy of posting cash bonds/making deductions from the salaries is proper - NO

Held/Ratio
1.There was no constructive dismissal. Nina Jewelry did not whimsically or arbitrarily impose the policy
to post cash bonds or make deductions from the workers' salaries. As attested to by the respondents' fellow
goldsmiths in their Joint Affidavit, the workers were convened and informed of the reason behind the
implementation of the new policy. Instead of airing their concerns, the respondents just promptly stopped
reporting for work.
•Constructive dismissal: occurs when there is cessation of work because continued employment is
rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or
when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee
•Madeline and Liza merely stopped reporting for work
•The new policy was an additional burden on them, but it was not intended to result in demotion
•Diminution in pay is not intended because as long as the workers observe due diligence in the
performance of their tasks, no loss or damage shall result from their handling of the gold entrusted to them, hence,
all the amounts due to the goldsmiths shall still be paid in full

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•The new policy was intended to merely curb the incidences of gold theft in the work place. The new
policy can hardly be said to be disdainful or insensible to the workers as to render their continued employment
unreasonable, unlikely or impossible.

1. Nina Jewelry failed to prove that their imposition of the new policy upon their goldsmiths falls under the
exceptions specified in Articles 113 and 114 of the Labor Code
•Art 113 and 114 are clear as to the exceptions. There is no need for statutory construction.
•The posting of cash bonds and the making of deductions from the wages would inarguably impose an
additional burden upon the employees.
•While the petitioners are not absolutely precluded from imposing the new policy, they can only do so
upon compliance with the requirements of the law. Nina Jewelry failed in this respect.

Nina Jewelry should first establish that the making of deductions from the salaries is authorized by law,
or regulations issued by the Secretary of Labor. The posting of cash bonds should be proven as a recognized
practice in the jewelry manufacturing business, or alternatively, the petitioners should seek for the determination
by the Secretary of Labor through the issuance of appropriate rules and regulations that the policy the former
seeks to implement is necessary or desirable in the conduct of business.

Without proofs that requiring deposits and effecting deductions are recognized practices, or without
securing the Secretary of Labor's determination of the necessity or desirability of the same, the imposition of new
policies relative to deductions and deposits can be made subject to abuse by the employers. This is not what the
law intends.

Wherefore, the instant petition is partially granted. The assailed Decision and Resolution of the CA dated January
9, 2009 and May 26, 2009, respectively, are reversed only in so far as they declared that the respondents were
constructively dismissed and entitled to reinstatement and payment of backwages, allowances and benefits.
However, the CA's ruling that the petitioners' imposition of its new policy upon the respondents lacks legal basis,
stands.
__________________________________________________________________________________________

SHS PERFORATED MATERIALS V DIAZ, GR NO 185814, OCTOBER 13, 2010

FACTS:
SHS Perforated Materials, Inc. (“SHS”) hired Manuel Diaz (“Manuel”) as the company’s Business
Development Manger on probationary status from July 18, 2005 to January 18, 2006 with a monthly salary of
P100,000.00.

Manuel’s Probationary Employment Contract contained his job description and his tasks. Aside from the
Contract, Hartmannshenn also instructed Manuel to report to the SHS office and plant at least two (2) days every
work week to observe technical processes involved in the manufacturing of perforated materials, and to learn
about the products of the company, which respondent was hired to market and sell.

Hartmannshenn was often abroad so communication with Manuel was usually through e-mail or phone. There
was no close supervision over Manuel.

In the Statement of Facts of the case, SHS and Manuel give conflicting accounts of the days leading up to
Manuel’s resignation. On the one hand, SHS wanted Manuel to explain his absences and return company property
before they would give him his salary for the period November 16-30, 2005. And on the other hand, when

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Manuel’s salary was withheld, he resigned on November 30, 2005 citing the withholding of his salary as an
“illegal and unfair labor practice.” In his letter he demanded that SHS give him his salary and 13th month pay.

On December 9, 2005, Manuel filed a Complaint against SHS for illegal dismissal, non-payment of
salaries/wages and 13th month pay with prayer for reinstatement and full backwages, exemplary damages and
attorney’s fees, costs of suit and legal interest.

Ruling of the Labor Arbiter

The LA found that respondent was constructively dismissed because the withholding of his salary was
contrary to Article 116 of the Labor Code as it was not one of the exceptions for allowable wage deduction by
the employer under Article 113 of the Labor Code. He had no other alternative but to resign because he could
not be expected to continue working for an employer who withheld wages without valid cause.
He ruled that petitioners are jointly and severally liable to respondent for backwages including 13th month
pay as there was no showing in the salary vouchers presented that such was integrated in the salary. The LA
ordered Manuel’s immediate reinstatement without loss of seniority rights and benefits. It is also ordered that
complainant be deemed as a regular employee.

Ruling of the NLRC

The NLRC reversed the LA’s decision. The withholding of respondent’s salary was said to be a valid
exercise of management prerogative. The act was deemed justified as it was reasonable to demand an explanation
for failure to report to work and to account for his work accomplishments. The NLRC held that the respondent
voluntarily resigned as evidenced by the language used in his resignation letter and demand letters. Given his
professional and educational background, the letters showed respondent’s resolve to sever the employer-employee
relationship, and his understanding of the import of his words and their consequences. Consequently, respondent
could not have been regularized having voluntarily resigned prior to the completion of the probationary period.
The NLRC further noted that respondent’s 13th month pay was already integrated in his salary in accordance with
his Probationary Contract of Employment and, therefore, no additional amount should be due him.
The NLRC ordered SHS to pay the complainant’s unpaid salary for the period covering November 16-30, 2005
in the amount of FIFTY THOUSAND PESOS (Php 50,000.00).

Ruling of the Court of Appeals

The CA reversed the NLRC resolutions, the CA held that withholding respondent’s salary was not a valid
exercise of management prerogative as there is no such thing as a management prerogative to withhold wages
temporarily.

The malicious withholding of respondent’s salary made it impossible or unacceptable for respondent to
continue working, thus, compelling him to resign. The respondent’s immediate filing of a complaint for illegal
dismissal could only mean that his resignation was not voluntary. As a probationary employee entitled to security
of tenure, respondent was illegally dismissed. The CA ruled out actual reinstatement, because antagonism had
caused a severe strain in their relationship and instead, separation pay equivalent to at least one month pay, plus
full backwages and other privileges and benefits, or their monetary equivalent would be a more equitable
disposition.

ISSUE:
Whether or not the employer can exercise management prerogative in withholding Manuel’s wages?
Ruling of the Supreme Court

The Supreme Court said that management prerogative refers to “the right to regulate all aspects of
employment,” it cannot be understood to include the right to temporarily withhold salary/wages without the
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consent of the employee. To allow this would be contrary to Article 116 of the Labor Code which prohibits
withholding of wages and kickbacks.
The only allowable deductions are in Art. 113 of the Labor Code:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

Further, Manuel’s duties as manager for business development entailed cultivating business ties,
connections, and clients in order to make sales. Thus because of the nature of his job, he was frequently outside
of the office and did not report to the office on a regular schedule. The Supreme Court said just because he failed
to answer e-mails and take Hartmannshenn’s calls mean that he wasn’t working on November 16-30, 2005.
However, the consistent rule is that if doubt exists between the evidence presented by the employer and that by
the employee, the scales of justice must be tilted in favor of the latter in line with the policy mandated by Articles
2 and 3 of the Labor Code to afford protection to labor and construe doubts in favor of labor. SHS failed to satisfy
their burden of proof, so Manuel is presumed to have worked during the period in question and is, accordingly,
entitled to his salary. Therefore, the withholding of respondent’s salary by petitioners is contrary to Article 116
of the Labor Code and, thus, unlawful.

The Court agrees with the LA and the CA t the unlawful withholding of respondent’s salary amounts to
constructive dismissal, which is an act of clear discrimination, insensibility, or disdain by an employer becomes
so unbearable on the part of the employee that it would foreclose any choice by him except to forego his continued
employment. It exists where there is cessation of work because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.

The Supreme Court affirmed the CA’s decision with some modifications. Separation Pay of P50,000.00
and no 13th month pay because it was already included in the monthly wages.

BALLADARES V PEAK VENTURES CORP, GR NO. 161794, JUNE 16, 2009

FACTS:
Balladares and co-petitioners were hired as security guards by Peak Ventures and were assigned at the
premises of Yangco Market. They filed a complaint for underpayment of wages against Peak Ventureswith the
DOLE. The Regional Director of DOLE rendered judgment in favor of petitioners and ruled thatPeak Ventures
and Yangco Market are solidarily liable to petitioners, said decision was upheld bySecretary of Labor. On
certiorari, the Court of Appeals, ruled that Regional Director has no jurisdictionover the case because the claims
of each petitioners exceeded PHP5,000, therefore power to adjudicatesuch claims belong to the Labor Arbiter.

ISSUE:
Did the Regional Director correctly assume jurisdiction over the case?

RULING:
Art. 128 of the Labor Code on Visitorial and Enforcement Powers. Yes, the Regional Director correctly assume
jurisdiction over the case. The complaint involved underpayment of wages. In order to verify the allegations in
the complaint, DOLE conducted an inspection which yielded proof of violations of labor standards. By nature of
the complaint and from the result of the inspection the authority of the DOLE under Art. 128 of Labor Code came
into play regardless of monetary value of claims involved. The Secretary of Labor or his duly authorized
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representatives is now empowered to hear and decide in summary proceeding, any matter involving the recovery
of amount of wages and other monetary claims arising out of employer-employee relationship at the time of
inspections, even if the amount of money claims exceed PHP5000.
OPINION:
The Regional Director correctly assumed jurisdiction over the money claims of petitioners even if the claims
exceeded PHP5,000. Said jurisdiction was in accordance with Art. 128(b) of the Labor Code and the case does
not fall under the exception clause. We must take note that the doctrine in the Servando case is no longer
controlling upon the amendment of Art. 128 by RA 7730, Secretary of Labor or his duly authorized representative
is now empowered to hear and decide money claims arising out of employer-employee relationship at the time of
inspection. In this case, Peak Ventures did not contest the findings of Regional Director, it even admitted before
the Court of Appeals that petitioners were not paid correct wages and as a defense tried to pass the buck to Yangco
Market, therefore the case does not fall under the exceptions provided in Art. 128 (b) of the Labor Code which
would have divested Regional Director of jurisdiction over the case.
__________________________________________________________________________________________

METEORO V CREATIVE CREATIRES INC, GR NO. 171275, JULY 13, 2009

FACTS:
Creative Creatures, Inc. is a business that primarily caters to the production design requirements of ABS-
CBN. Creative hired the 33 petitioners as artists, carpenters, and welders to design, create, assemble, set-up and
dismantle the props of production sets.

[Feb./Mar. 1999] Petitioners filed complaints for non-payment and illegal deductions with DOLE-NCR. The
benefits allegedly unpaid were the night-shift differential, overtime, holiday, 12th month, premium (Sunday
and/or rest day), SIL, and paternity leave pay, and other benefits.
a.During investigation, the labor inspector noted that records were not made available, and that CREATIVE
claimed the Petitioners were independent talent workers.
b.In their position paper, creative argued that DOLE had no jurisdiction since there is an absence of an employer-
employee relationship, as petitioners were “free-lance” Apr. 1999 PETITIONERS filed complaints for illegal
dismissal with payment with the NLRC. [Oct. 1999] The DOLE Regional Director issued an Order in the DOLE-
NCR case, directing CREATIVE to pay the money claims (totaling P2.7 Million).

a. The Reg. Director sustained PETITIONER’s claim (1) of an employer-employee relationship, and (2)
that they were regular employees, and that (3) DOLE had jurisdiction
b. On appeal, the DOLE Secretary affirmed the Regional Director. She anchored DOLE’s jurisdiction on
the agency’s visitorial and enforcement powers.

May 2005 The CA declared the DOLE decisions as null and void.
a. It noted that under art. 128, the Regional Director may be divested of jurisdiction when the respondent
disputes the existence of an employer-employee relationship, as in this case.
b. It no longer referred the case to the NLRC as there was one pending already.

Issue: WON the DOLE was divested of jurisdiction, i.e. the case falls within the exception clause in art. 128(b)
of the Labor Code. – YES

Held: Petition dismissed; CA decision, affirmed. The case falls within the exclusive jurisdiction of the NLRC.
The DOLE Secretary or her authorized representative has jurisdiction to enforce compliance with labor standards
under their broad visitorial and enforcement powers in art. 128. Legislative history: Art. 128 has gone through
several amendments. In Servando’s v. SOLE, the Court held that the DOLE did not have visitorial and
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enforcement powers when the amounts claimed exceed P5,000. This would later be reversed in Guico v.
Quisumbing, Allied Investigation v. SOLE, and Cireneo v. Bowling. In any event, the issue was settled by R.A.
No. 7730, which freed art. 128(b) from the jurisdiction restrictions in art. 129 and 217.

Nevertheless, the power of the Regional Director to hear and decide monetary claims is not absolute.
Under art. 128(b), there is an exception clause, which divests the DOLE of jurisdiction when the following
elements all concur: (1) the employer contests and raises issues with the findings of the inspector; (2) in order to
resolve the issues, there is a need to examine evidentiary matters; and (3) the matters are not verifiable in the
normal course of inspection.

The CA correctly applied the exception clause: (1) Creative registered its objection during inspection and
in its position paper, and it continues to contest the DOLE jurisdiction; (2) there is a need to examine evidentiary
matters, since the four-fold test involves questions of fact; (3) the key requirement, that the evidentiary matters
are not verifiable in the normal course of inspection, is also present, since while the check vouchers could be
readily verified, the claims of Creative that the petitioners were not working exclusively for them could not.

“To contest” does not mean to simply raise “lack of jurisdiction,” but to question the findings of the
inspection. In sum, because the three requisites have been met, the DOLE Reg. Director should have endorsed
the case to the NLRC.

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