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Singer Sewing Machine vs. NLRC (193 SCRA 271) Facts: On February 15, 1989, Singer Machine Collectors Union-Baguio filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of the Singer Sewing Machine Company. The company opposed the petition mainly because the union members are not employees but independent contractors as evidenced by the collection agency agreement which they signed. The respondent Med-Arbiter ruled that there exists an employee-employer relationship and granted the certification election which was affirmed by Secretary of Labor Franklin Drilon. The Singer Sewing Machine Company filed the petition on the determination of the employeremployee relationship. The union members insisted that the provisions of the Collection Agreement belie the company’s position that the union members are independent contractors. The present case mainly calls for the application of the control test, which if not satisfied, would conclude that no employer-employee relationship exists. Issue: Whether or not there exists an employer-employee relationship between the parties. Ruling: Respondents are not employees of the company. In the determination of the employer-employee relationship, the following elements are generally considered: (1) the selection and engagement of the employee; (2) payment of wages, (3) power of dismissal; and (4) the power to control the employee’s conduct which is the most important element. The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular relationship. Not all collecting agents are employees and neither are all collecting agents independent contractors. The agreement confirms the status of the collecting agents as independent contractor. The requirement that collection agents utilize only receipt forms and report forms issued by the company and that reports shall be submitted at least once a week is not necessarily an indication of control over the means by which the job collection is to be performed. Even if report requirements are to be called control measures, any control is only with respect to the end result of the collection since the requirements regulate the things to be done after the performance of the collection job or the rendition of service. The plain language of the agreement reveals that the designation as collection agent does not create an employment relationship and that the applicant is to be considered at all times as an independent contractor. The court finds that since private respondents are not employees of the company, they are not entitled to the constitutional right to form or join a labor organization for the purposes of collective bargaining. There is no constitutional and legal basis for their union to be granted their petition for direct certification. The petition for certification election is ordered dismissed.

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Manila Golf & Country Club, Inc., vs. IAC and Fermin Llamar (237 SCRA 207) Facts: The respondents were caddies and employees of Manila Golf & Country Club who originally filed a petition with the Social Security Commission (SSC) for coverage and availment of benefits under the Social Security Act. They alleged that Manila Golf and Country Club, a domestic corporation, did not register them with the SSS even if they were employees of the said corporation. In the case before the SSC, the respondent Manila Golf and Country Club alleged that the petitioners, caddies by occupation, were allowed into the Club premises to render services to the individual members and guests playing the Club's golf course and who themselves paid for such services. Moreover, as caddies, the petitioners were not subject to the direction and control of the Club as regards the manner in which they performed their work. Hence, they were not the Club's employees. Issue: Whether or not there exist an employer-employee relationship between the cadies and the Golf Club Ruling: There is no existence of employer-employee relationship. Caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufferance. On the other hand, the caddies don’t observe to any working hours and they are free to leave anytime they please. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond barring them from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any right to work on their part. All these considerations clash frontally with the concept of employment. The fact that the Club suggests the rate of fees payable by the players to the caddies does not show the measure of control of the Club over the incidents of the caddies' work and compensation that an employer would possess. Court agree that the group rotation system socalled, is less a measure of employer control than an assurance that the work is fairly distributed, a caddy who is absent when his turn number is called simply losing his turn to serve and being assigned instead the last number for the day. Moreover, a caddy is not required to exercise his occupation in the premises of petitioner. He may work with any other golf club or he may seek employment a caddy or otherwise with any entity or individual without restriction by petitioner. Therefore, Llamar is not an employee of petitioner Manila Golf and Country Club and the petitioner does not have an obligation to report him for compulsory coverage of SSS.

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Encyclopaedia Britannica (Phil) Inc., vs. NLRC (264 SCRA 4) Facts: The private respondent Limjoco was a Sales Division Manager of the petitioner Encyclopaedia Britannica and was in charge of selling petitioner’s products through some sales representatives. As compensation, private respondent received commissions from the products sold by his agents. He was also allowed to use petitioner’s name, goodwill and logo. It was, however, agreed upon that office expenses would be deducted from private respondent’s commissions. Moreover, the petitioner would be informed about appointments, promotions, and transfers of employees in the private respondent’s district. In 1974, Limjoco resigned from office to pursue his private business. He then filed a complaint against petitioner Encyclopaedia Britannica with DOLE, claiming for non-payment of separation pay and other benefits, and also illegal deduction from his sales commissions. Petitioner alleged that Limjoco was not an employee but an independent dealer authorized to promote and sell its products who in return, received commissions there from. Limjoco did not have any salary and his income from the company was dependent on the volume of sales accomplished and he had his own separate office, financed the business expenses, and maintained his own workforce. The salaries of his secretary, utility man, and sales representatives were chargeable to his commissions. Thus, petitioner argued that it had no control and supervision over the complainant as to the manner and means he conducted his business operations. Also, the Limjoco did not even report to the office of the petitioner and did not observe fixed office hours. Issue: Whether or not there exist an employer-employee relationship and necessarily entitles Limjoco of his claims Ruling: Limjoco was merely an agent or an independent dealer of the Encyclopaedia Britannica. In ascertaining whether the relationship is that of employer-employee or one of independent contractor, each case must be determined by its own facts and all features of the relationship are to be considered. Limjoco was free to conduct his work and he was free to engage in other means of livelihood. At the time he was connected with the petitioner company, private respondent was also a director and later the president of the Farmers’ Rural Bank. Had he been an employee of the company, he could not be employed elsewhere and he would be required to devote full time for petitioner. If private respondent was indeed an employee, it was rather unusual for him to wait for more than a year from his separation from work before he decided to file his claims. The element of control is absent where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated in according to the result of his efforts and not the amount thereof. Therefore, there was no employee-employer relationship.

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Carungcong vs. NLRC, Sun Life Assurance Co. of Canada (283 SCRA 319) Facts: Carungcong began as an agent of Sun Life in 1974, she signed an ―Agent’s Agreement‖ and was designated to solicit applications for insurance and annuity services. The contract set out in detail the terms and conditions — particularly those concerning the commissions payable to her — under which her relationship with the company would be governed. Five years later, said contract was superseded by 2 new agreements. First, is the "Career Agent's (or Unit Manager's) Agreement," dealt with such matters as the agent's commissions, his obligations, limitations on his authority, and termination of the agreement by death, or by written notice "with or without cause." It declared that the "Agent shall be an independent contractor and none of the terms of agreement shall be construed as creating an employer-employee relationship. The second was titled, "MANAGER'S Supplementary Agreement" where it contained provisions regarding remuneration, limitation of authority, and termination of the agreement inter alia by written notice "without cause." Carungcong and Sun Life subsequently executed another Agreement stressing that the "New Business Manager in performance of his duties defined herein, shall be considered an independent contractor and not as an employee of Sun Life," and that "under no circumstance shall the New Business Manager and/or his employees be considered employees of Sun Life." After receiving reports of anomalies in relation thereto from unit managers and agents by the company’s VP, the Manager of Sun Life's Internal Audit Department, commenced an inquiry into the special fund availments of Carungcong and other New Business Managers which later prompted the petitioner’s termination. Carungcong promptly instituted proceedings for vindication in the Arbitration Branch of the National Labor Relations Commissions. The Labor Arbiter found that an employer-employee relationship existed between her and Sun Life. On appeal, the National Labor Relations Commission reversed the Arbiter’s judgment. It affirmed that no employment relationship existed between Carungcong and Sun Life. Issue: Whether or not there existed an employer-employee relationship between Caruncong and Sunlife Ruling: Carungcong was an independent contractor and not an employee of Sun Life. The contracts she had willingly and knowingly signed with Sun Life repeatedly and clearly provided that said agreements were terminable by either party by written notice with or without cause. The rules and regulations of the company are not sufficient to establish an employeremployee relationship. It does not necessarily create any employer-employee relationship where the employers’ controls have to interfere in the methods and means by which employee would like employ to arrive at the desired results. Carungcong admitted that she was free to work as she pleases, at the place and time she felt convenient for her to do so. She was not paid to a fixed salary and was mainly paid by commissions depending on the volume of her performance.

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Ramos vs Court of Appeals ( 380 SCRA 467) Facts: Erlinda Ramos was advised to undergo an operation for the removal of her stone in the gall bladder. She was referred to Dr. Hosaka, a surgeon, who agreed to do the operation. The operation was scheduled on June 17, 1985 in the De los Santos Medical Center. Erlinda was admitted to the medical center the day before the operation. On the following day, she was ready for operation as early as 7:30am. However, around 9:30am, Dr. Hosaka has not yet arrived. By 10:00am, Rogelio wanted to pull out his wife from the operating room. Dr. Hosaka finally arrived at 12:10pm more than 3 hours of the scheduled operation. Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluish discoloration in her left hand. At 3:00 pm, Erlinda was being wheeled to the Intensive Care Unit and stayed there for a month. Since the ill-fated operation, Erlinda remained in comatose condition until she died. The Ramos family sued them for damages. Issue: Whether or not there was an employee-employer relationship that existed between the Medical Center and Drs. Hosaka and Guiterrez. Ruling: There is no employer-employee relationship between the doctors and the hospital. In applying the four-fold test, DLSMC cannot be considered an employer of the respondent doctors. It has been consistently held that in determining whether an employer-employee relationship exists between the parties, the following elements must be present: (1) selection and engagement of services; (2) payment of wages; (3) the power to hire and fire; and (4) the power to control not only the end to be achieved, but the means to be used in reaching such an end. The hospital does not hire consultants but it accredits and grants him the privilege of maintaining a clinic and/or admitting patients. It is the patient who pays the consultants. The hospital cannot dismiss the consultant but he may lose his privileges granted by the hospital. The hospital’s obligation is limited to providing the patient with the preferred room accommodation and other things that will ensure that the doctor’s orders are carried out.

Sonza vs ABS-CBN (G.R. No. 138051. June 10, 2004) Facts: ABS-CBN signed an agreement with Mel & Jay Management and Development Corp for a radio and television program on May 1994. ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of P310,000 for the first year and P317,000 for the second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month. On April 1996, Sonza wrote a letter to ABS-CBN President Eugenio Lopez III about a recent event concerning his programs and career, and that the said violation of the company has breached the agreement, thus, the notice of rescission of Agreement was sent. At the end of the same month, Sonza filed a complaint against ABS-CBN before the DOLE for non-payment of salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP) which was opposed
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by ABS-CBN on the ground that there was no employer-employee relationship existed between the parties. The Labor Arbiter dismissed the complaint and found that there is no employee-employer relationship. NLRC affirmed the decision of the Labor Arbiter. CA also affirmed the decision of NLRC. Issue: Whether or not there was employer-employee relationship between the parties. Ruling: There was no employer-employee relationship that existed, but that of an independent contractor. Case law has consistently held that the elements of an employee-employer relationship are selection and engagement of the employee, the payment of wages, the power of dismissal and the employer’s power to control the employee on the means and methods by which the work is accomplished. The last element, the so-called "control test", is the most important element. ABS-CBN engaged SONZA’s services specifically to co-host the "Mel & Jay" programs. ABSCBN did not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBN’s control. SONZA did not have to render eight hours of work per day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. ABS-CBN could not dictate the contents of SONZA’s script. However, the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. The Agreement stipulates that SONZA shall abide with the rules and standards of performance "covering talents" of ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the Agreement refers to the "Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics." The KBP code applies to broadcasters, not to employees of radio and television stations. Broadcasters are not necessarily employees of radio and television stations. Clearly, the rules and standards of performance referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN. Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control. The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry. This practice is not designed to control the means and methods of work of the talent, but simply to protect the investment of the broadcast station. The broadcast station normally spends substantial amounts of money, time and effort "in building up its talents as well as the programs they appear in and thus expects that said talents remain exclusive with the station for a commensurate period of time." Normally, a much higher fee is paid to talents who agree to work exclusively for a particular radio or television station. In short, the huge talent fees partially compensates for exclusivity.

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Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonza’s work. A radio broadcast specialist who works under minimal supervision is an independent contractor.

Lazaro vs Social Security Commission (435 SCRA 472) Facts: Rosalina Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her three (3) employers. Among them was Angelito Lazaro, proprietor of Royal Star, which is engaged in the business of selling home appliances. Laudato alleged that despite her employment as sales supervisor of the sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsory coverage or remit Laudato’s social security contributions. Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a mere sales agent whom he paid purely on commission basis. Lazaro also maintained that Laudato was not subjected to definite hours and conditions of work. As such, she could not be deemed an employee of Royal Star. Issue: Whether or not Laudato is considered employee of Royal Star Marketing Ruling: Laudato is an employee of Royal Star and as such is entitled to the coverage of Social Security Law. It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of the ―control test,‖ that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of the work done, but also as to the means and methods by which the same is accomplished. The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. Laudato oversaw and supervised the sales agents of the company, and thus was subject to the control of management as to how she implements its policies and its end results. The finding of the SSC that Laudato was an employee of Royal Star is supported by substantial evidence. The SSC examined the cash vouchers issued by Royal Star to Laudato, calling cards of Royal Star denominating Laudato as a ―Sales Supervisor‖ of the company, and Certificates of Appreciation issued by Royal Star to Laudato in recognition of her unselfish and loyal efforts in promoting the company. A piece of documentary evidence appreciated by the SSC is Memorandum dated 3 May 1980 of Teresita Lazaro, General Manager of Royal Star, directing that no commissions were to be given on all ―main office‖ sales from walk-in customers and enjoining salesmen and sales supervisors to observe this new policy. The Memorandum evinces the fact that Royal Star exercised control over its sales supervisors or agents such as Laudato as to the means and methods through which these personnel performed their work.

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Philippine Global Communications, Inc., vs. De Vera (495 SCRA 260) Facts: Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of communication services and allied activities, while respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. On Ma1981, 15, De Vera, via a letter dated 15 May 1981, offered his services to the petitioner. The parties agreed and formalized respondent's proposal in a document denominated as RETAINERSHIP CONTRACT which will be for a period of one year subject to renewal. The retainership arrangement went on from 1981 to 1994 with changes in the retainer's fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally. Philcom informed De Vera of its decision to discontinue the latter's "retainer's contract with the Company effective at the close of business hours of December 31, 1996" because management has decided that it would be more practical to provide medical services to its employees through accredited hospitals near the company premises. De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC), alleging that that he had been actually employed by Philcom as its company physician since 1981 and was dismissed without due process. Issue: Whether or not there was employer-employee relationship between the parties. Ruling: There was no employer-employee relationship that existed. In determining the existence of an employer-employee relationship, the court has invariably adhered to the four-fold test, to wit: [1] the selection and engagement of the employee; [2] the payment of wages; [3] the power of dismissal; and [4] the power to control the employee's conduct, or the so-called "control test", considered to be the most important element. PHILCOM did not have control over the schedule of the respondent as it is the respondent who is proposing his own schedule and asking to be paid for the same. This is proof that the respondent understood that his relationship with PHILCOM was a retained physician and not as an employee. If he were an employee he could not negotiate as to his hours of work. Remarkably absent from the parties' arrangement is the element of control, whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished. Petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. The parties themselves practically agreed on every terms and conditions of respondent's engagement, which thereby negates the element of control in their relationship. Article 157 of the Labor Code clearly and unequivocally allows employers in non-hazardous establishments to engage "on retained basis" the service of a dentist or physician. Nowhere does the law provide that the physician or dentist so engaged thereby becomes a regular employee. The very phrase that they may be engaged "on retained basis", revolts against the idea that this engagement gives rise to an employer-employee relationship.

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ABS-CBN vs Nazareno (G.R. No. 164156. September 26, 2006) Facts: ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees’ identification cards and were required to work for a minimum of eight hours a day, including Sundays and holidays. They were made to: a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate, arrange personalities for air interviews; c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports; d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints; e) Assist, anchor program interview, etc; and f) Record, log clerical reports, man based control radio. Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA. Due to a memorandum assigning PA’s to non-drama programs, and that the DYAB studio operations would be handled by the studio technician. There was a revision of the schedule and assignments and that respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa. On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. Issue: Whether or not the respondents are regular employees Ruling: Respondents are considered regular employees of ABS-CBN and are entitled to the benefits granted to all regular employees. Where a person has rendered at least one year of service, regardless of the nature of the activity performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity exists. The reason being that a customary appointment is not indispensable before one may be formally declared as having attained regular status. Article 280 of the Labor Code provides: REGULAR AND CASUAL EMPLOYMENT.—The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.
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Any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity performed and while such activity actually exists. The fact that respondents received pre-agreed ―talent fees‖ instead of salaries, that they did not observe the required office hours, and that they were permitted to join other productions during their free time are not conclusive of the nature of their employment. They are regular employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors. There are two kinds of regular employees under the law: (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed. The employer-employee relationship between petitioner and respondents has been proven. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required from them because they were merely hired through petitioner’s personnel department just like any ordinary employee. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship. Respondents are highly dependent on the petitioner for continued work. The degree of control and supervision exercised by petitioner over respondents through its supervisors negates the allegation that respondents are independent contractors. The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor.

Francisco vs NLRC (500 SCRA 690) Facts: Francisco was hired by Kasei Corporation during the incorporation stage. She was designated as accountant and corporate secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liason Officer to the City of Manila to secure permits for the operation of the company. In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of all employees and perform management administration functions. In 2001, she was replaced by Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which was until September. She asked for her salary but was informed that she was no longer connected to the company. She did not anymore report to work since she was not paid for her salary. She filed an action for constructive dismissal with the Labor Arbiter. The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision while CA reversed it. Issue: Whether or not there was an employer-employee relationship
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Ruling: Petitioner is an employee of Kasei Corporation. The court held that in this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. Generally, courts have relied on the so-called right of control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship. The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employer’s business; (2) the extent of the worker’s investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business. The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical Consultant. It is therefore apparent that petitioner is economically dependent on the respondent Corporation for her continued employment in the latter’s line of business. There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and engaged by the company for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job function involved accounting and tax services rendered to Respondent Corporation on a regular basis over an indefinite period of engagement. Respondent Corporation hired and engaged petitioner for compensation, with the power to dismiss her for cause. More importantly, Respondent Corporation had the power to control petitioner with the means and methods by which the work is to be accomplished.

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Nogales et al., vs Capitol Medical Center (G.R. No. 142625, December 19, 2006) Facts: Corazon was under the exclusive care of Dr. Oscar Estrada beginning the fourth month of her pregnancy. While on her last trimester of pregnancy, Dr Estrada noted an increase of her blood pressure and development of leg edema indicating preeclampsia which is a dangerous complication of pregnancy. Around midnight of May 25, 1976, Corazon started to experience mild labor pains prompting Spouses Nogales to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her immediate admission to the Capitol Medical Center. Eventually, Corazon died after giving birth to the child, which prompted the petitioners to file a complaint for damages against CMC, Dr. Estrada and other physicians and a certain nurse for Corazon’s death. Petitioners mainly contended that defendant physicians and CMC personnel were negligent in the treatment and management of Corazon's condition. Petitioners charged CMC with negligence in the selection and supervision of defendant physicians and hospital staff. Issue: Whether or not CMC is vicariously liable for the negligence of Dr. Estrada Ruling: CMC is vicariously liable. In Ramos v. Court of Appeals, Court had the occasion to determine the relationship between a hospital and a consultant or visiting physician and the liability of such hospital for that physician's negligence, to wit: While "consultants" are not, technically employees, a point which respondent hospital asserts in denying all responsibility for the patient's condition, the control exercised, the hiring, and the right to terminate consultants all fulfills the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. While the Court in Ramos did not expound on the control test, such test essentially determines whether an employment relationship exists between a physician and a hospital based on the exercise of control over the physician as to details. Specifically, the employer (or the hospital) must have the right to control both the means and the details of the process by which the employee (or the physician) is to accomplish his task In the present case, the Court finds no single evidence pointing to CMC's exercise of control over Dr. Estrada's treatment and management of Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she was under the exclusive prenatal care of Dr. Estrada. At the time of Corazon's admission at CMC and during her delivery, it was Dr. Estrada, assisted by Dr. Villaflor, who attended to Corazon. There was no showing that CMC had a part in diagnosing
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Corazon's condition. While Dr. Estrada enjoyed staff privileges at CMC, such fact alone did not make him an employee of CMC. CMC merely allowed Dr. Estrada to use its facilities when Corazon was about to give birth, which CMC considered an emergency. Considering these circumstances, Dr. Estrada is not an employee of CMC, but an independent contractor. In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an exception to this principle. The hospital may be liable if the physician is the "ostensible" agent of the hospital. This exception is also known as the "doctrine of apparent authority." In Gilbert v. Sycamore Municipal Hospital, the Illinois Supreme Court explained the doctrine of apparent authority in this wise: Under the doctrine of apparent authority a hospital can be held vicariously liable for the negligent acts of a physician providing care at the hospital, regardless of whether the physician is an independent contractor, unless the patient knows, or should have known, that the physician is an independent contractor. The elements of the action have been set out as follows: "For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that: (1) the hospital, or its agent, acted in a manner that would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital; (2) where the acts of the agent create the appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquiesced in them; and (3) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence." The element of "holding out" on the part of the hospital does not require an express representation by the hospital that the person alleged to be negligent is an employee. Rather, the element is satisfied if the hospital holds itself out as a provider of emergency room care without informing the patient that the care is provided by independent contractors. In the instant case, CMC impliedly held out Dr. Estrada as a member of its medical staff. Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales to believe that Dr. Estrada was an employee or agent of CMC. Even simple negligence is not subject to blanket release in favor of establishments like hospitals but may only mitigate liability depending on the circumstances. When a person needing urgent medical attention rushes to a hospital, he cannot bargain on equal footing with the hospital on the terms of admission and operation. Such a person is literally at the mercy of the hospital. There can be no clearer example of a contract of adhesion than one arising from such a dire situation. Therefore, CMC is also liable for the negligent medical treatment of Corazon.

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Coca-Cola Bottlers Phils., vs Dr. Climaco (G.R. No. 146881, February 15, 2007) Facts: Dr. Climaco is a medical doctor who was hired by the petitioner by virtue of retainer agreement. The agreement states that there is no employer-employee relationship between the parties. The retainer agreement was renewed annually. The last one expired on Dec. 31, 1993. Despite of the non-renewal of the agreement, respondent continued to perform his functions as company doctor until he received a letter in March 1995 concluding their retainer agreement. Respondent filed a complaint before the NLRC seeking recognition as a regular employee of the petitioner company and prayed for the payment of all benefits of a regular employee. In the decision of the Labor Arbiter, the company lacked control over the respondent’s performance of his duties. Respondent appealed where it rendered that no employer-employee relationship existed between the parties. The CA ruled that an employer-employee relationship existed. Issue: Whether or not there exists an employer-employee relationship between Coca-Cola and Dr. Climaco Ruling: No employer-employee relationship exists between the parties. The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, or the so-called "control test," considered to be the most important element. The Labor Arbiter and the NLRC correctly found that Coca-Cola lacked the power of control over the performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical Plan, which contains the respondent’s objectives, duties and obligations, does not tell respondent ―how to conduct his physical examination, how to immunize, or how to diagnose and treat his patients, employees of Coca-Cola, in each case.’’ The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control the means and methods by which respondent performed his assigned tasks. It is precisely because the company lacks the power of control that the contract provides that respondent shall be directly responsible to the employee concerned and their dependents for any injury, harm or damage caused through professional negligence, incompetence or other valid causes of action. Considering that there is no employer-employee relationship between the parties, the termination of the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent.

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Calamba Medical Center vs NLRC (G.R. No. 176484, November 25, 2008) Facts: Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians. Reporting at the hospital twice-aweek on twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each. Also resident physicians were given a percentage share out of fees charged for out-patient treatments, operating room assistance and discharge billings, in addition to their fixed monthly retainer. The work schedules of the members of the team of resident physicians were fixed by petitioner's medical director Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax from them. After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and a fellow employee Diosdado Miscala, the former was given a preventive suspension and his wife Dr. Merceditha was not given any schedule after sending the Memorandum. On March 1998, Dr. Ronaldo filed a complaint for illegal suspension and Dr. Merceditha for illegal dismissal. Issue: Whether or not there exists an employer-employee relationship between petitioner and the spouses-respondents Ruling: Doctors-spouses Lanzanas are declared employee by the petitioner hospital. Under the "control test," an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the physician is to accomplish his task. That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, the operating room, or any department or ward for that matter, respondents' work is monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consent of petitioner or its medical director, no operations can be undertaken in those areas. For control test to apply, it is not essential for the employer to actually supervise the performance of duties of the employee, it being enough that it has the right to wield the power. With respect to respondents' sharing in some hospital fees, this scheme does not sever the employment tie between them and petitioner as this merely mirrors additional form or another form of compensation or incentive similar to what commission-based employees receive as contemplated in Article 97 (f) of the Labor Code. Moreover, respondents were made subject to petitioner-hospital's Code of Ethics, the provisions of which cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior, and offenses against persons, property and the hospital's interest. More importantly, petitioner itself provided incontrovertible proof of the employment status of respondents, namely, the identification cards it issued them, the payslips and BIR Forms which
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reflect their status as employees, and the classification as "salary" of their remuneration. Moreover, it enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage under the SSS Law is premised on the existence of an employer-employee relationship, except in cases of compulsory coverage of the self-employed.

Escasinas et al., vs. Shangri-la’s Mactan Island Resort et al., (G.R. No. 167622, January 25, 2011) Facts: Registered nurses Escasinas and Singco were engaged in 1999 and 1996, respectively, by Dr. Pepito to work in her clinic at Shangri-la's Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician. Petitioners filed with the National Labor Relations Commission (NLRC) Regional Arbitration Branch) a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor whom it retained via Memorandum of Agreement (MOA). NLRC declared petitioners to be regular employees of Shangri-la and was affirmed by the CA. Issue: Whether or not there exists an employer-employee relationship between the parties Ruling: There is no employer-employee relationship between the petitioners and Shangri-la. The existence of an independent and permissible contractor relationship is generally established by considering the following determinants: whether 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. On the other hand, existence of an employer- employee relationship is established by the presence of the following determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration. Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its employees and guests does not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its employees is required under Art. 157, which are not directly related to Shangri-la's principal business — operation of hotels and restaurants. Shangri-la does not control how the work should be performed by petitioners; it is not petitioners' employer.
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Tongko vs. Manufacturer Life Insurance Co., (Phils), Inc., et al., (G.R. No. 167622, January 25, 2011)

Facts: Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business. Renato A. Vergel De Dios was, during the period material, its President and Chief Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977 by virtue of a Career Agent's Agreement (Agreement) he executed with Manulife. In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife, consisting of commissions, persistency income, and management overrides. The problem started sometime in 2001, when Manulife instituted manpower development programs in the regional sales management level. Relative thereto, De Dios addressed a letter dated November 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers Meeting. Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for illegal dismissal. Howeve, the Labor Arbiter dismissed the complaint for lack of an employer-employee relationship On the decision of November 7, 2008, the court ruled that Tongko was an employee of Manulife and was illegally dismissed. However, Manulife disagreed with the Court’s decision and filed a motion for reconsideration. This resulted to the reversal of the November 7, 2008 decision, granted the Manulife's motion for reconsideration and, accordingly, dismissed Tongko's petition. Petitioner Tongko's bid, through his Motion for Reconsideration, to set aside the June 29, 2010 resolution that reversed the decision of November 7, 2008 Issue: Whether or not Tongko was an employee of Manulife and was illegally dismissed Ruling: An employee-employer relationship is notably absent in this case as the complainant was a sales agent. This case better supports the majority's position that a sales agent, who fails to show control in the concept of labor law, cannot be considered an employee, even if the company exercised control in the concept of a sales agent. Control over the performance of the task of one providing service — both with respect to the means and manner, and the results of the service — is the primary element in determining whether an employment relationship exists. We resolve the petitioner's Motion against his favor since he failed to show that the control Manulife exercised over him was the control required to exist in an employer-employee relationship; Manulife's control fell short of this norm and carried only the characteristic of the relationship between an insurance company and its agents, as defined by the Insurance Code and by the law of agency under the Civil Code.
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To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually desirable result intended by the contractual relationship; they must have the nature of dictating the means and methods to be employed in attaining the result. Tested by this norm, Manulife's instructions regarding the objectives and sales targets, in connection with the training and engagement of other agents, are among the directives that the principal may impose on the agent to achieve the assigned tasks. They are targeted results that Manulife wishes to attain through its agents. Manulife's codes of conduct, likewise, do not necessarily intrude into the insurance agents' means and manner of conducting their sales. Codes of conduct are norms or standards of behavior rather than employer directives into how specific tasks are to be done. These codes, as well as insurance industry rules and regulations, are not per se indicative of labor law control under our jurisprudence. The motion for reconsideration was denied with finality.

Caong, Jr. vs. Regualos (G.R. No. 179428, January 26, 2011) Facts: Petitioners Caong, Tresquio, and Daluyon were employed by respondent Regualos under a boundary agreement, as drivers of his jeepneys. In November 2001, they filed separate complaints for illegal dismissal against respondent who barred them from driving the vehicles due to deficiencies in their boundary payments. Petitioners questioned respondent's policy of automatically dismissing the drivers who fail to remit the full amount of the boundary as it allegedly (a) violates their right to due process; (b) does not constitute a just cause for dismissal; (c) disregards the reality that there are days when they could not raise the full amount of the boundary because of the scarcity of passengers. According to the Labor Arbiter, an employer-employee relationship existed between respondent and petitioners. The latter were not dismissed considering that they could go back to work once they have paid their arrears. The Labor Arbiter opined that, as a disciplinary measure, it is proper to impose a reasonable sanction on drivers who cannot pay their boundary payments. He emphasized that respondent acquired the jeepneys on loan or installment basis and relied on the boundary payments to comply with his monthly amortizations. NLRC and CA affirmed the decision. Issue: Whether or not there exists an employer-employee relationship and whether or not the petitioners were illegally dismissed Ruling: It is already settled that the relationship between jeepney owners/operators and jeepney drivers under the boundary system is that of employer-employee and not of lessor-lessee. The fact that the drivers do not receive fixed wages but only get the amount in excess of the so-called "boundary" that they pay to the owner/operator is not sufficient to negate the relationship between them as employer and employee.
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Petitioners were not dismissed from employment but merely suspended pending payment of their arrears. It is acknowledged that an employer has free rein and enjoys a wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline on his employees and to impose penalties, including dismissal, if warranted, upon erring employees. This is a management prerogative. Indeed, the manner in which management conducts its own affairs to achieve its purpose is within the management's discretion. The only limitation on the exercise of management prerogative is that the policies, rules, and regulations on work-related activities of the employees must always be fair and reasonable, and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction Under a boundary scheme, the driver remits the "boundary," which is a fixed amount, to the owner/operator and gets to earn the amount in excess thereof. Thus, on a day when there are many passengers along the route, it is the driver who actually benefits from it. It would be unfair then if, during the times when passengers are scarce, the owner/operator will be made to suffer by not getting the full amount of the boundary. Unless clearly shown or explained by an event that irregularly and negatively affected the usual number of passengers within the route, the scarcity of passengers should not excuse the driver from paying the full amount of the boundary.

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

Facts: Sometime in February 1992, respondent Gison was engaged as part-time consultant on retainer basis by petitioner Atok Big Wedge Company, Inc. through its then Asst. Vice-President and Acting Resident Manager, Torres. As a consultant on retainer basis, respondent assisted petitioner's retained legal counsel with matters pertaining to the prosecution of cases against illegal surface occupants within the area covered by the company's mineral claims. Respondent was likewise tasked to perform liaison work with several government agencies, which he said was his expertise. Petitioner did not require respondent to report to its office on a regular basis, except when occasionally requested by the management to discuss matters needing his expertise as a consultant. Since respondent was getting old, he requested that petitioner cause his registration with the Social Security System (SSS), but petitioner did not accede to his request. He later reiterated his request but it was ignored by respondent considering that he was only a retainer/consultant. On February 4, 2003, respondent filed a Complaint with the SSS against petitioner for the latter's refusal to cause his registration with the SSS. On the same date, Cera, in his capacity as resident manager of petitioner, issued a Memorandum advising respondent that within 30 days from receipt thereof, petitioner is terminating his retainer contract with the company since his services are no longer necessary. Respondent filed a Complaint for illegal dismissal, unfair labor practice, underpayment of wages, non-payment of 13th month pay, vacation pay, and sick leave pay against the petitioners.

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Issue: Whether or not there exists an employer-employee relationship between the parties Ruling: There is no employer-employee relationship. To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct, or the so-called "control test." Of these four, the last one is the most important. The socalled "control test" is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employeremployee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end. Applying the control test, an employer-employee relationship is apparently absent in the case at bar. Among other things, respondent was not required to report everyday during regular office hours of petitioner. Respondent's monthly retainer fees were paid to him either at his residence or a local restaurant. More importantly, petitioner did not prescribe the manner in which respondent would accomplish any of the tasks in which his expertise as a liaison officer was needed; respondent was left alone and given the freedom to accomplish the tasks using his own means and method. Respondent was assigned tasks to perform, but petitioner did not control the manner and methods by which respondent performed these tasks. Verily, the absence of the element of control on the part of the petitioner engenders a conclusion that he is not an employee of the petitioner. Considering that there is no employer-employee relationship between the parties, the termination of respondent's services by the petitioner after due notice did not constitute illegal dismissal warranting his reinstatement and the payment of full backwages, allowances and other benefits.

Semblante et al., vs. Court of Appeals, et al.,(G.R.No. 196426, August 15, 2011) Facts: Petitioners Semblante and Pilar assert that they were hired by respondents-spouses Loot, the owners of Gallera de Mandaue (the cockpit), as the official masiador and sentenciador, respectively, of the cockpit sometime in 1993. As the masiador, Semblante calls and takes the bets from the gamecock owners and other bettors and orders the start of the cockfight. He also distributes the winnings after deducting the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing of fighting cocks, determines the fighting cocks' physical condition and capabilities to continue the cockfight, and eventually declares the result of the cockfight.

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On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of respondents, and were informed of the termination of their services effective that date. This prompted petitioners to file a complaint for illegal dismissal against respondents. Issue: Whether or not there exists an employer-employee relationship between the parties and whether or not the petitioners were illegally dismissed Ruling: It is evident that petitioners are NOT employees of respondents, since their relationship fails to pass muster the four-fold test of employment: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct, which is the most important element. Petitioners' compensation was paid out of the arriba (which is a percentage deducted from the total bets), not by petitioners; and petitioners performed their functions as masiador and sentenciador free from the direction and control of respondents. In the conduct of their work, petitioners relied mainly on their "expertise that is characteristic of the cockfight gambling," and were never given by respondents any tool needed for the performance of their work. Respondents, not being petitioners' employers, could never have dismissed, legally or illegally, petitioners, since respondents were without power or prerogative to do so in the first place. The rule on the posting of an appeal bond cannot defeat the substantive rights of respondents to be free from an unwarranted burden of answering for an illegal dismissal for which they were never responsible.

Bernante vs. Phil. Basketball Association et al., (G.R.No. 192084, September 14, 2011) Facts: Bernarte and Guevarra aver that they were invited to join the PBA as referees. During the leadership of Commissioner Bernardino, they were made to sign contracts on a year-to-year basis. During the term of Commissioner Eala, however, changes were made on the terms of their employment. On January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising him that his contract would not be renewed citing his unsatisfactory performance on and off the court. It was a total shock for Bernarte who was awarded Referee of the year in 2003. He felt that the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon. On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool of referees in February 2001. On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a yearly contract as Regular Class C referee. On May 6, 2003, respondent Martinez issued a memorandum to Guevarra expressing dissatisfaction over his questioning on the assignment of referees officiating out-of-town games. Beginning February 2004, he was no longer made to sign a contract.
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Issue: Whether or not petitioner is an employee of respondents and was illegally dismissed Ruling: Petitioner is not an employee of the respondents. To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee on the means and methods by which the work is accomplished. The so-called "control test" is the most important indicator of the presence or absence of an employer-employee relationship. In this case, PBA admits repeatedly engaging petitioner's services, as shown in the retainer contracts. PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as stipulated in the retainer contract. PBA can terminate the retainer contract for petitioner's violation of its terms and conditions The very nature of petitioner's job of officiating a professional basketball game undoubtedly calls for freedom of control by respondents. Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the referees are required to report for work only when PBA games are scheduled, which is three times a week spread over an average of only 105 playing days a year, and they officiate games at an average of two hours per game; and (2) the only deductions from the fees received by the referees are withholding taxes. In other words, unlike regular employees who ordinarily report for work eight hours per day for five days a week, petitioner is required to report for work only when PBA games are scheduled or three times a week at two hours per game. In addition, there are no deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual deductions from employees' salaries. These undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an employee of respondents. Furthermore, the applicable foreign case law declares that a referee is an independent contractor, whose special skills and independent judgment is required specifically for such position and cannot possibly be controlled by the hiring party. The non-renewal of the contract between the parties does not constitute illegal dismissal of petitioner by respondents.

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Lirio vs. Genovia (G.R.No.169757,November 23, 2011) Facts: On July 9, 2002, respondent Genovia filed a complaint against petitioner Lirio and/or Celkor Ad Sonicmix Recording Studio for illegal dismissal, non-payment of commission and award of moral and exemplary damages. Genovia stated that a few days after he started working as a studio manager, petitioner approached him and told him about his project to produce an album for his 15-year-old daughter, Celine Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked respondent to compose and arrange songs for Celine and promised that he (Lirio) would draft a contract to assure respondent of his compensation for such services. As agreed upon, the additional services that respondent would render included composing and arranging musical scores only, while the technical aspect in producing the album, such as digital editing, mixing and sound engineering would be performed by respondent in his capacity as studio manager for which he was paid on a monthly basis. Petitioner instructed respondent that his work on the album as composer and arranger would only be done during his spare time, since his other work as studio manager was the priority. Respondent then started working on the album. From December 2001 to January 2002, respondent, in his capacity as studio manager, worked on digital editing, mixing and sound engineering of the vocal and instrumental audio files. On March 14, 2002, petitioner verbally terminated respondent's services, and he was instructed not to report for work. Respondent asserts that he was illegally dismissed as he was terminated without any valid grounds, and no hearing was conducted before he was terminated, in violation of his constitutional right to due process. Having worked for more than six months, he was already a regular employee. Although he was a so called "studio manager," he had no managerial powers, but was merely an ordinary employee. Issue: Whether or not there exists an employer-employee relationship between the parties and whether or not the respondent was illegally dismissed Ruling: Respondent is an employee of the petitioner. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee's conduct. The most important element is the employer's control of the employee's conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. In this case, the documentary evidence presented by respondent to prove that he was an employee of petitioner are as follows: (a) a document denominated as "payroll" (dated July 31, 2001 to March 15, 2002) certified correct by petitioner, which showed that respondent received a monthly salary of P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the month) with the corresponding deductions due to absences incurred by respondent;
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and (2) copies of petty cash vouchers, showing the amounts he received and signed for in the payrolls. Moreover, it is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence or in the interpretation of agreements and writing should be resolved in the former's favor. The policy is to extend the doctrine to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection of labor. For an employee's dismissal to be valid, (a) the dismissal must be for a valid cause, and (b) the employee must be afforded due process. Procedural due process requires the employer to furnish an employee with two written notices before the latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his dismissal is sought, which is the equivalent of a charge; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be heard on his defense. Petitioner failed to comply with these legal requirements; hence, the Court of Appeals correctly affirmed the Labor Arbiter's finding that respondent was illegally dismissed, and entitled to the payment of backwages, and separation pay in lieu of reinstatement.

Jao vs. BCC Products Sales Inc. (G.R.No. 163700, April 18,2012)

Facts: Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President, respondent Ty, employed him as comptroller starting from September 1995 with a monthly salary of P20,000.00 to handle the financial aspect of BCC's business; that on October 19, 1995, the security guards of BCC, acting upon the instruction of Ty, barred him from entering the premises of BCC where he then worked; that his attempts to report to work in November and December 12, 1995 were frustrated because he continued to be barred from entering the premises of BCC; and that he filed a complaint dated December 28, 1995 for illegal dismissal, reinstatement with full backwages, non-payment of wages, damages and attorney's fees. Respondents countered that petitioner was not their employee but the employee of Sobien Food Corporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him as its comptroller in BCC to oversee BCC's finances and business operations and to look after SFC's interests or investments in BCC. Issue: Whether or not an employer-employee relationship existed between petitioner and BCC Ruling: The petitioner is not an employee of BCC but of SFC. In determining the presence or absence of an employer-employee relationship, the Court has consistently looked for the following incidents, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to
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control the employee on the means and methods by which the work is accomplished. The last element, the so-called control test, is the most important element. Petitioner presented no document setting forth the terms of his employment by BCC. The failure to present such agreement on terms of employment may be understandable and expected if he was a common or ordinary laborer who would not jeopardize his employment by demanding such document from the employer, but may not square well with his actual status as a highly educated professional. The confusion about the date of his alleged illegal dismissal provides another indicium of the insincerity of petitioner's assertion of employment by BCC. In the petition for review on certiorari, he averred that he had been barred from entering the premises of BCC on October 19, 1995, and thus was illegally dismissed. Yet, his complaint for illegal dismissal stated that he had been illegally dismissed on December 12, 1995 when respondents' security guards barred him from entering the premises of BCC, causing him to bring his complaint only on December 29, 1995, and after BCC had already filed the criminal complaint against him. The wide gap between October 19, 1995 and December 12, 1995 cannot be dismissed as a trivial inconsistency considering that the several incidents affecting the veracity of his assertion of employment by BCC earlier noted herein transpired in that interval.

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III

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Ollendorff vs Abrahamson (38 Phil. 585) Facts: An agreement was entered into by Ollendorff and Abrahamson whereby the former agreed to employ Abrahamson and the latter bound himself to work for him for a period of 2yrs with a salary of P50 per week. Included in the agreement is a prohibition of Abrahamson from engaging in a similar or competitive business to anywhere within the Philippine Islands for a period of five years. The duties performed by the defendant were such to make it necessary for him to be generally knowledgeable of Ollendorff’s business, moreover, he had been engaged in similar work for several years even before his employment of the plaintiff’s embroidery business. After some months from his departure for the US, Abrahamson returned to Manila and is now a manager of the Philippine Underwear Co. This corporation, unlike Ollendorff’s, does not maintain a factory in Phil. Islands but send material and embroidery designs from New York to its local representative here who employs Filipino needle workers to embroider the designs and make up the garments in their homes. The only difference between plaintiff's business and that of the firm by which the defendant is employed, is the method of doing the finishing work -- the manufacture of the embroidered material into finished garments. Plaintiff commenced an action to prevent by injunction, any further breach of that part of defendant's contract of employment by which he agreed that he would not "enter into or engage himself directly or indirectly . . . in a similar or competitive business to that of (plaintiff) anywhere within the Philippine Islands for a period of five years . . ." from the date of the agreement. Issue: Whether or not the part of the agreement restraining the defendant from engaging into similar business of the plaintiff is void Ruling: The contract was valid. The only limitation upon the freedom of contractual agreement is that the pacts established shall not be contrary to "law, morals or public order." (Civil Code, art. 1255.) A business enterprise may and often does depend for its success upon the owner's relations with other dealers, his skill in establishing favorable connections, his methods of buying and selling -a multitude of details, none vital if considered alone, but which in the aggregate constitute the sum total of the advantages which the result of the experience or individual aptitude and ability of the man or men by whom the business has been built up. Failure or success may depend upon the possession of these intangible but all important assets, and it is natural that their possessor should seek to keep them from falling into the hands of his competitors. It is with this object in view that such restrictions as that now under consideration are written into contracts of employment. Their purpose is the protection of the employer, and if they do not go beyond what is reasonably necessary to effectuate this purpose they should be upheld

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Del Castillo vs Richmond (45 Phil. 679) Facts: Richmond and del Castillo entered into a ―Contract of Rendering Services‖ where the plaintiff alleges that the provisions and conditions contained in the contract constitute an illegal and unreasonable restriction upon his liberty to contract, are contrary to public policy, and are unnecessary in order to constitute a just and reasonable protection to the defendant; and asked that the same be declared null and void and of no effect. Issue: Whether or not the provisions and conditions contained in the contract constitute an illegal and unreasonable restriction upon plaintiffs’ liberty to contract Ruling: The restriction is reasonable and not contrary to public policy. The law concerning contracts which tend to restrain business or trade has gone through a long series of changes from time to time with the changing conditions of trade and commerce. With trifling exceptions, said changes have been a continuous development of a general rule. Later, the rule became well established that if the restraint was limited to "a certain time" and within "a certain place," such contracts were valid and not "against the benefit of the state." Later cases, and we think the rule is now well established, have held that a contract in restraint of trade is valid providing there is a limitation upon either time or place. A contract, however, which restrains a man from entering into a business or trade without either a limitation as to time or place, will be held invalid. A contract by which an employee agrees refrain a given length of time, after the expiration of the term of his employment, from engaging in business, competitive with that of his employer, is not void as being in restraint of trade if the restraint imposed is not greater than that which is necessary to afford a reasonable protection.

Philippine Telegraph and Telephone Company vs. NLRC (272 SCRA 596)

Facts: Grace de Guzman was initially hired by petitioner as a reliever for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under the Reliever Agreement which she signed with Petitioner Company, her employment was to be immediately terminated upon expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondent’s services as reliever were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated.

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It now appears that private respondent had made the representation that she was single even though she contracted marriage months before, in the two successive reliever agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor sent to private respondent a memorandum requiring her to explain the discrepancy. In that memorandum, she was reminded about the company’s policy of not accepting married women for employment. Private respondent was dismissed from the company effective January 29, 1992, which she readily contested by initiating a complaint for illegal dismissal. Labor Arbiter handed down a decision declaring that private respondent, who had already gained the status of a regular employee, was illegally dismissed by petitioner. On appeal to the NLRC, said public respondent upheld the labor arbiter and it ruled that private respondent had indeed been the subject of an unjust and unlawful discrimination by her employer, PT&T. Issue: Whether or not discrimination merely by reason of the marriage of a female employee is expressly prohibited by Article 136 Ruling: Petitioner’s policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution. Respondent’s act of concealing the true nature of her status from PT&T could not be properly characterized as willful or in bad faith as she was moved to act the way she did mainly because she wanted to retain a permanent job in a stable company. In other words, she was practically forced by that very same illegal company policy into misrepresenting her civil status for fear of being disqualified from work. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows: ―ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage.‖ Petitioner’s policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right. Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioner’s policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage.
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Duncan Association of Detailman-PTGWO vs. Glaxo Wellcome Phils. (G.R. No.162994. September 17, 2004) Facts: Petitioner Pedro A. Tecson was hired by respondent Glaxo Wellcome Philippines, Inc. as medical representative on October 1995, after Tecson had undergone training and orientation. Tecson signed a contract of employment which stipulates, among others, that he agrees to study and abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest, to resign from the company. The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with coemployees or employees of competing drug companies. If management perceives a conflict of interest or a potential conflict between such relationship and the employee’s employment with the company, the management and the employee will explore the possibility of a ―transfer to another department in a non-counterchecking position‖ or preparation for employment outside the company after six months. Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines Norte sales area. Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in Albay. Despite of warnings, Tecson married Bettsy. The superiors of Tecson reminded him of the company policy and suggested that either him or Bettsy shall resign from their respective companies. Tecson requested more time to resolve the issue. In November of 1999, Glaxo transferred Tecson to Mindanao area involving the provinces of Butuan, Surigao and Agusan del Sur. Tecson did not agree to the reassignment and referred this matter to the grievance committee. It was resolved and was submitted to voluntary arbitration. The NCMB rendered decision that Glaxo’s policy was a valid one. Aggrieved, Tecson filed a petition to the CA where CA held that Glaxo’s policy prohibiting its employees from having personal relationships with employees of competitor companies is a valid exercise of its management prerogatives. Issue: Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company is valid Ruling: Glaxo’s policy prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of management prerogative. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry.
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The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.

City of Manila vs. Laguio (G.R.No.118127, April 12, 2005) Facts: The private respondent, Malate Tourist Development Corporation (MTOC) is a corporation engaged in the business of operating hotels, motels, hostels, and lodgin houses. It built and opened Victoria Court in Malate which was licensed as a motel although duly accredited with the Department of Tourism as a hotel. March 30, 1993 - City Mayor Alfredo S. Lim approved an ordinance enacted which prohibited certain forms of amusement, entertainment, services and facilities where women are used as tools in entertainment and which tend to disturb the community, annoy the inhabitants, and adversely affect the social and moral welfare of the community. The Ordinance also provided that in case of violation and conviction, the premises of the erring establishment shall be closed and padlocked permanently. June 28, 1993 - MTOC filed a Petition with the lower court, praying that the Ordinance, insofar as it included motels and inns as among its prohibited establishments, be declared invalid and unconstitutional for several reasons but mainly because it is not a valid exercise of police power and it constitutes a denial of equal protection under the law. Judge Laguio ruled for the petitioners. The case was elevated to the Supreme Court. Issues: Whether or not the City of Manila validly exercised police power Whether or not there was a denial of equal protection under the law Ruling: The Ordinance infringes the due process clause since the requisites for a valid exercise of police power are not met. The prohibition of the enumerated establishments will not per se protect and promote the social and moral welfare of the community; it will not in itself eradicate the alluded social ills for prostitution, adultery, fornication nor will it arrest the spread of sexual diseases in
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Manila. It is baseless and insupportable to bring within that classification sauna parlors, massage parlors, karaoke bars, night clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns. These are lawful pursuits which are not per se offensive to the moral welfare of the community. Sexual immorality, being a human frailty, may take place in the most innocent places.... Every house, building, park, curb, street, or even vehicles for that matter will not be exempt from the prohibition. Simply because there are no "pure" places where there are impure men. The Ordinance seeks to legislate morality but fails to address the core issues of morality. Try as the Ordinance may to shape morality, it should not foster the illusion that it can make a moral man out of it because immorality is not a thing, a building or establishment; it is in the hearts of men. The Ordinance violates equal protection clause and is repugnant to general laws; it is ultra vires. The Local Government Code merely empowers local government units to regulate, and not prohibit, the establishments enumerated in Section 1 thereof. All considered, the Ordinance invades fundamental personal and property rights adn impairs personal privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is discriminatory and unreasonable in its operation; it is not sufficiently detailed and explicit that abuses may attend the enforcement of its sanctions. And not to be forgotten, the City Council unde the Code had no power to enact the Ordinance and is therefore ultra vires null and void.

Star Paper Corp., vs Simbol (G.R. 164774, April 12, 2006) Facts: Simbol was employed by the company on Oct 1993. He met Alma Dayrit, also an employee of the company, whom he married. Prior to the marriage, Ongsitco advised the couple that should they decide to get married, one of them should resign pursuant to a company policy to which Simbol complied. 1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of relationship, already employed by the company. 2. In case of two of our employees (both singles [sic], one male and another female) developed a friendly relationship during the course of their employment and then decided to get married, one of them should resign to preserve the policy stated above. Issue: Whether or not the policy of the employer banning spouses from working in the same company violates the rights of the employee under the Constitution and the Labor Code or is a valid exercise of management prerogative? Ruling: Petitioners’ sole contention that "the company did not just want to have two or more of its employees related between the third degree by affinity and/or consanguinity" is lame.
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Article 136 of the Labor Code which provides: It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. The requirement that a company policy must be reasonable under the circumstances to qualify as a valid exercise of management prerogative. It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations. e. The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employee’s right to security of tenure. The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employee’s right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company.

Del Monte Phils vs Velasco (G.R.No.153477, March 6, 2007) Facts: Lolita M. Velasco (respondent) started working with Del Monte Philippines (petitioner) on October 21, 1976 as a seasonal employee and was regularized on May 1, 1977. Her latest assignment was as Field Laborer. On June 16, 1987, respondent was warned in writing due to her absences. On May 4, 1991, respondent, thru a letter, was again warned in writing by petitioner about her absences without permission and a forfeiture of her vacation leave entitlement for the year 1990-1991 was imposed against her. On September 17, 1994, a notice of hearing was sent to respondent notifying her of the charges filed against her by the company, more specifically, for violating the Absence Without Official Leave Rule. She was subsequently dismissed. The respondent filed a case for illegal dismissal, asserting that her dismissal was illegal because she was suffering from a urinary tract infection related to her pregnancy and that her doctor had advised her to stay home for a few days. She declared that she did not file the adequate leave of absence because a medical certificate was already sufficient per company policy. The Labor Arbiter dismissed the complaint. On appeal, both the NLRC and the CA declared the dismissal of complainant as illegal for being contrary to Art. 137 (2) of the Labor Code, prohibiting the discharge of a woman on account of her pregnancy.
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Issues: Whether or not the employment of respondent had been validly terminated on the ground of excessive absences without permission Whether the act of the petitioner in discharging the respondent on account of pregnancy a prohibited act

Ruling: The Court affirmed the ruling of the Court of Appeals. Respondent’s rule penalizing with discharge any employee incurring six (6) or more absences without permission or subsequent justification is admittedly within the purview of the labor standard. However, while it is not disputed that complainant incurred absences exceeding 6 days, respondent was able to subsequently justify her absences in accordance with company rules and policy: that she was pregnant at the time she incurred the absences; that the fact of pregnancy and its related illnesses had been duly proven through substantial evidence; that the respondent attempted to file leaves of absence but the petitioner’s supervisor refused to received them; that she could not have filed prior leaves due to her continuing condition, and that petitioner dismissed the respondent on account of her pregnancy, a prohibited act. Art. 137 of the Labor Code provides: ―It shall be unlawful for any employer: x x x (2.) To discharge such woman on account of her pregnancy, while on leave or in confinement due to her pregnancy; x x x.‖

Yrasuegui vs Philippine Airlines (G.R.No.168081,October 17, 2008) Facts: Petitioner Yrasuegui, an international flight steward of Philippine Airlines Inc. (PAL) was dismissed because of his failure to adhere to the weight standards of the airline company. In consequence thereof, petitioner filed a complaint for illegal dismissal against PAL before the Labor Arbiter (LA). The Labor Arbiter ruled that the petitioner was illegally dismissed. It also issued a writ of execution directing the reinstatement of the petitioner without loss of seniority and other benefits, and also the payment of backwages. Respondent PAL appealed to the NLRC which affirmed the LA’s decision. Respondent PAL appealed to the Court of Appeals. CA reversed the NLRC case. Issue: Whether the dismissal of the petitioner valid. Ruling: The Court upheld the legality of the petitioner’s dismissal.

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Separation pay, however, should be awarded in favor of the employee as an act of social justice or based on equity. This is so because his dismissal is not serious misconduct. Neither is it reflective of his moral character. The obesity of petitioner, when placed in the context of his work as flight attendant, becomes an analogous cause under Article 282 (e) of the Labor Code. His obesity may not be unintended, but is nonetheless voluntary. ―Voluntariness basically means that the just cause is solely attributable to the employee without any external force influencing or controlling his actions. This element runs through all just causes under Art. 282, whether they be in nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the element of intent found in Art. 282 (a), (c), and (d). Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin unless the employer can show that sex, religion, or national origin is an actual qualification for performing the job. The qualification is called a bona fide occupational qualification (BFOQ). In the United States, there are a few federal and many state job discrimination laws that contain an exception allowing an employer to engage in an otherwise unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the normal operation of a business or enterprise.

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IV

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Ilaw at Buklod Manggagawa vs NLRC (198 SCRA 586) Facts: The union known as Ilaw at Buklod Ng Manggagawa (IBM) said to represent 4,500 employees of San Miguel Corporation, more or less, working at the various plants, offices, and warehouses located at the National Capital Region presented to the company a "demand" for correction of the significant distortion in the workers' wages. In that demand, the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows: Where the application of the increases in the wage rates under this Section results in distortions as defined under existing laws in the wage structure within an establishment and gives rise to a dispute therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock, the same shall be finally resolved through compulsory arbitration by the regional branches of the National Labor Relations Commission having jurisdiction over the workplace. It shall be mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under this Section within twenty (20) calendar days from the time said dispute is formally submitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of the increase in the wage rates prescribed under this Section. Issue: Whether or not the strike is legal in the resolution of wage distortion Ruling: Strike is not legal as a means of resolving wage distortion. The strike involving the issue of wage distortion is illegal as a means of resolving it. The legality of these activities is usually dependent on the legality of the purposes sought to be attained and the means employed therefore. It goes without saying that these joint or coordinated activities may be forbidden or restricted by law or contract. In the instance of "distortions of the wage structure within an establishment" resulting from "the application of any prescribed wage increase by virtue of a law or wage order," Section 3 of Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the correction thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as modes of settlement of the issue. The provision states that the employer and the union shall negotiate to correct the distortions. Any dispute arising from wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary arbitration. In cases where there are no collective agreements or recognized labor unions, the employers and workers shall endeavor to correct such distortions. Any dispute arising there from shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the
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applicability of any increase in prescribed wage rates pursuant to the provisions of law or Wage Order. The legislative intent that solution of the problem of wage distortions shall be sought by voluntary negotiation or arbitration, and not by strikes, lockouts, or other concerted activities of the employees or management, is made clear in the rules implementing RA 6727 issued by the Secretary of Labor and Employment pursuant to the authority granted by Section 13 of the Act. Section 16, Chapter I of these implementing rules, after reiterating the policy that wage distortions be first settled voluntarily by the parties and eventually by compulsory arbitration, declares that, "Any issue involving wage distortion shall not be a ground for a strike/lockout."

Employees Confederation of the Philippines (ECOP) vs. NWPC (201 SCRA 759) 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 P17.00 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: 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 wellbeing 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;
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(b) (c) (d) (e) (f) (g) (h) (i)

Wage adjustment vis-a-vis the consumer price index; The cost of living and changes or increases therein; The needs of workers and their families; The need to induce industries to invest in the countryside; Improvements in standards of living; The prevailing wage levels; Fair return of the capital invested and capacity to pay of employers; 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

Mabeza vs NLRC (271 SCRA 670)

Facts: Petitioner Norma Mabeza contends that on the first week of May 1991, she and her coemployees at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument attesting to the latter's compliance with minimum wage and other labor standard provisions of law. Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the veracity and contents of the affidavit as instructed by management. The affidavit was nevertheless submitted on the same day to the Regional Office of the Department of Labor and Employment in Baguio City. The affidavit was drawn by management for the sole purpose of refuting findings of the Labor Inspector of DOLE apparently adverse to the private respondent. After she refused to proceed to the City Prosecutor's Office, petitioner states that she was ordered by the hotel management to turn over the keys to her living quarters and to remove her belongings from the hotel premises. According to her, respondent strongly chided her for refusing to proceed to the City Prosecutor's Office to attest to the affidavit. She thereafter reluctantly filed a leave of absence from her job which was denied by management. When she attempted to return to work on May 1991, the hotel's cashier informed her that she should not report to work and, instead, continue with her unofficial leave of absence. Consequently, three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal before the Arbitration Branch of the National Labor Relations Commission — CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of

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wages, non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits. Responding to the allegations for illegal dismissal, private respondent Peter Ng alleged before Labor Arbiter that petitioner surreptitiously left her job without notice to the management and that she actually abandoned her work. He maintained that there was no basis for the money claims for underpayment and other benefits as these were paid in the form of facilities to petitioner and the hotel's other employees. Labor Arbiter dismissed the complaint. On April 1994, respondent NLRC promulgated its assailed Resolution affirming the Labor Arbiter's decision. Issue: Whether or not the employer’s exerted pressure, in the form of restraint, interference or coercion, against his employee's right to institute concerted action for better terms and conditions of employment constitutes unfair labor practice. Ruling: The Court ruled that there was unfair labor practice. Without doubt, the act of compelling employees to sign an instrument indicating that the employer observed labor standards provisions of law when he might have not, together with the act of terminating or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of employment through concerted action. For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an example to all of the hotel's employees, that they could only cause trouble to management at great personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of charges against her was the warning that they would not only be deprived of their means of livelihood, but also possibly, their personal liberty. Granting that meals and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer complying first with certain legal requirements. Without satisfying these requirements, the employer simply cannot deduct the value from the employee's wages. 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. Finally, facilities must be charged at fair and reasonable value. These requirements were not met in the instant case. More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. The criterion in making a distinction between the two not so much lies in the kind (food, lodging) but the purpose. Considering that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as the private respondent's hotel.

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Joy Brothers Inc., vs NWPC (273 SCRA 622)

Facts: Wage Order No. NCR-03, providing for a twenty-seven peso wage increase for all private sector workers and employees in the National Capital Region receiving one hundred fifty-four pesos (P154.00) and below daily, was approved November 29, 1993. On February 1994, petitioner applied for exemption from said wage order on the ground that it was a distressed establishment. The RTWPB denied petitioner's application for exemption after holding that the corporation accumulated profits amounting to P38,381.80 for the period under review. Petitioner's motion for reconsideration was likewise denied by the Wages and Productivity Board on January 5, 1995. On appeal to the National Wages and Productivity Commission, petitioner was again denied relief. More specifically, petitioner contends that the interim period to be reckoned with is from January 1, 1993 to December 15, 1993 and not merely up to September 30, 1993 as held by respondent Commission. Significantly, the period up to December 31, 1993 will reflect losses in petitioner corporation's books, but not if the covered interim period is only up to September 30, 1993. Issue: Whether or not Petitioner Corporation falls within the exemption for distressed establishments. Ruling: The petitioner company is not entitled to exemption of the wage order since it is not a distressed establishment. Under Section 5 of Wage Order No. NCR-03, distressed firms may be exempted from the provisions of the Order upon application with and due determination of the Board. NWPC Guidelines No. 01, Series of 1992, providing for the Revised Guidelines on Exemption indicate the criteria to qualify for exemption as follows: For Distressed Establishments: In the case of a stock corporation, partnership, single proprietorship, non-stock, non-profit organization or cooperative engaged in a business activity or charging fees for its services —When accumulated losses for the last 2 full accounting periods and interim period, if any, immediately preceding the effectivity of the Order have impaired by at least 25 percent the: Paid-up capital at the end of the last full accounting period preceding the effectivity of the Order, in the case of corporations: Total invested capital at the beginning of the last full accounting period preceding the effectivity of the Order in the case of partnerships and single proprietorships. Establishments operating for less than two (2) years may be granted exemption when accumulated losses for said period have impaired by at least 25% the paid-up capital or total invested capital, as the case may be." Section 8, paragraph a, of the Rules Implementing Wage Order No. NCR-03 provides that exemption from compliance with the wage increase may be granted to distressed establishments whose paid-up capital has been impaired by at least twenty-five percent (25%) or which registers capital deficiency or negative net worth. The Guidelines expressly require interim quarterly financial statements for the period immediately preceding December 16, 1993. The last two full accounting periods here are 1991
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and 1992, for which years petitioner incurred net profits of P53,607.00 and P60,188.00, respectively.

Prubankers Association vs Prudential Bank (302 SCRA 74) [1999]

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

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

Liduvino Millares, et al., vs NLRC (305 SCRA 501)

Facts: Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur. In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials. Issue: Whether the allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their existence and subsistence Ruling: The allowances are not part of the wages of the employees. Wage is defined in letter (f) as 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
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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. When an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." Customary is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. The court agrees with the observation of the Office of the Solicitor General that the subject allowances were temporarily, not regularly, received by petitioners. Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer's business. In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. Revenue Audit Memo Order No. 1-87 pertinently provides —3.2… transportation, representation or entertainment expenses shall not constitute taxable compensation if: (a) It is for necessary travelling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade or business of the employer, and (b) The employee is required to, and does, make an accounting/liquidation for such expense in accordance with the specific requirements of substantiation for such category or expense.Board and lodging allowances furnished to an employee not in excess of the latter's needs and given free of charge, constitute income to the latter except if such allowances or benefits are furnished to the employee for the convenience of the employer and as necessary incident to proper performance of his duties in which case such benefits or allowances do not constitute taxable income. The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig. The inevitable conclusion is that subject allowances did not form part of petitioners' wages.

International School Alliance of Educators vs Quisumbing, 333 SCRA 13(2000) Facts: International School, Inc., pursuant to PD 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and
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management personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted for the protection of employees. The School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: (a) What is one's domicile? (b) Where is one's home economy? (c) To which country does one owe economic allegiance? (d) Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines? Should the answer to any of these queries point to the Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire. The School grants foreign-hires certain benefits not accorded local- hires. These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education. Issue: Whether or not local hire teachers shall enjoy same salary as foreign hire teachers where they perform the same work. Ruling: Employees are entitled to same salary for performance of equal work. Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favorable conditions of work, which ensure, in particular: ( a) Remuneration which provides all workers, as a minimum, with: (i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work; The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. This rule applies to the School. The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires. The Court finds this argument a little inconsiderate. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others receive more. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly.

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In this case, the employer has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions.

Bankard Employees Union vs. NLRC (G.R. No.140689. February 17, 2004)

Facts: Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III, Level IV, and Level V. On May 1993, its Board of Directors approved a New Salary Scale, made retroactive to April 1, 1993, for the purpose of making its hiring rate competitive in the industry’s labor market. The New Salary Scale increased the hiring rates of new employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and Levels II, III and IV by nine hundred pesos (P900.00). Accordingly, the salaries of employees who fell below the new minimum rates were also adjusted to reach such rates under their levels. This made Bankard Employees Union-WATU (petitioner), the duly certified exclusive bargaining agent of the regular rank and file employees of Bankard, to request for the increase in the salary of its old, regular employees. Bankard insisted that there was no obligation on the part of the management to grant to all its employees the same increase in an across-the-board manner. Petioner filed a notice of strike. The strike was averted when the dispute was certified by the Secretary of Labor and Employment for compulsory arbitration. NLRC finding no wage distortion dismissed the case for lack of merit. Petitioner’s motion for reconsideration of the dismissal of the case was denied. Issue: Whether the unilateral adoption by an employer of an upgraded salary scale that increased the hiring rates of new employees without increasing the salary rates of old employees resulted in wage distortion within the contemplation of Article 124 of the Labor Code. Ruling: The Court will not interfere in the management prerogative of the petitioner. The employees are not precluded to negotiate through the provisions of the CBA. Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among others, Article 124 of the Labor Code), the term "wage distortion" was explicitly defined as... a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. In the case of Prubankers Association v. Prudential Bank and Trust Company, it laid down the four elements of wage distortion, to wit: (1.) An existing hierarchy of positions with
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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. Normally, a company has a wage structure or method of determining the wages of its employees. In a problem dealing with "wage distortion," the basic assumption is that there exists a grouping or classification of employees that establishes distinctions among them on some relevant or legitimate bases. Involved in the classification of employees are various factors such as the degrees of responsibility, the skills and knowledge required, the complexity of the job, or other logical basis of differentiation. The differing wage rate for each of the existing classes of employees reflects this classification. Put differently, the entry of new employees to the company ipso facto places them under any of the levels mentioned in the new salary scale which private respondent adopted retroactive to April 1, 1993. While seniority may be a factor in determining the wages of employees, it cannot be made the sole basis in cases where the nature of their work differs. Moreover, for purposes of determining the existence of wage distortion, employees cannot create their own independent classification and use it as a basis to demand an across-the-board increase in salary. The wordings of Article 124 are clear. If it was the intention of the legislators to cover all kinds of wage adjustments, then the language of the law should have been broad, not restrictive as it is currently phrased: Article 124. Standards/Criteria for Minimum Wage Fixing. Where the application of any prescribed wage increase by virtue of a law or Wage Order issued by any Regional Board results in distortions of the wage structure within an establishment, the employer and the union shall negotiate to correct the distortions. Any dispute arising from the wage distortions shall be resolved through the grievance procedure under their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Article 124 is entitled "Standards/Criteria for Minimum Wage Fixing." It is found in CHAPTER V on "WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION" which principally deals with the fixing of minimum wage. Article 124 should thus be construed and correlated in relation to minimum wage fixing, the intention of the law being that in the event of an increase in minimum wage, the distinctions embodied in the wage structure based on skills, length of service, or other logical bases of differentiation will be preserved. If the compulsory mandate under Article 124 to correct "wage distortion" is applied to voluntary and unilateral increases by the employer in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the employer would be completely tied even in cases where an increase in wages of a particular group is justified due to a re-evaluation of the high productivity of a particular group, or as in the present case, the need to increase the competitiveness of Bankard’s hiring rate. An employer would be discouraged from adjusting the salary rates of a particular group of employees for fear that it would result to a demand by all employees for a similar increase, especially if the financial conditions of the business cannot address an across-the-board increase.

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Wage distortion is a factual and economic condition that may be brought about by different causes. The mere factual existence of wage distortion does not, however, ipso facto result to an obligation to rectify it, absent a law or other source of obligation which requires its rectification.

Odango vs NLRC (G.R.No. 147420, June 10, 2004)

Facts: Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday and half of Saturday. After a routine inspection, the Regional Branch of the Department of Labor and Employment found ANTECO liable for underpayment of the monthly salaries of its employees. On September 1989, the DOLE directed ANTECO to pay its employees wage differentials amounting to P1,427,412.75. ANTECO failed to pay. On various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with the NLRC praying for payment of wage differentials, damages and attorney’s fees. On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting them wage differentials amounting to P1,017,507.73 and attorney’s fees of 10%. ANTECO appealed the Decision to the NLRC where it reversed the Labor Arbiter’s Decision. The NLRC denied petitioners’ motion for reconsideration. Petitioners then elevated the case to CA where it dismissed the petition for failure to comply with Section 3, Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners failed to allege the specific instances where the NLRC abused its discretion. The appellate court denied petitioners’ motion for reconsideration. Issue: Whether or not the petitioners are entitled to money claims. Ruling: Petitioners are not entitled to money claims or wage differentials. The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by the Secretary of Labor which was declared null and void since in the guise of clarifying the Labor Code’s provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion. Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days is generally limited to the ten legal holidays in a year. Petitioners’ claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten legal holidays. Petitioners’ line of reasoning is not only a violation of the "no work, no pay" principle, it also gives rise to an invidious classification, a violation of the equal protection clause.
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C. Planas Commercial vs. NLRC (G.R. No. 144619. November 11, 2005)

Facts: In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for underpayment of wages, non payment of overtime pay, holiday pay, service incentive leave pay, and premium pay for rest day and holiday and night shift differential against petitioners in the Arbitration Branch of NLRC. It alleged that Cohu is engaged in the business of wholesale of plastic products and fruits of different kinds with more than 24 employees. Respondents were hired on January 1990, May 1990 and July 19991 as laborers and were paid below the minimum wage for the past 3 years. They were required to work for more than 8 hours a day and never enjoyed the minimum benefits. Petitioners filed their comment stating that the respondents were their helpers. The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an appeal with the NLRC where it granted the money claims of Ofialda, Morente and Allaguian. Petitioners appealed with the CA but it was denied. It said that the company having claimed of exemption of the coverage of the minimum wage shall have the burden of proof to the claim. In the present petition, the Petitioners insist that C. Planas Commercial is a retail establishment principally engaged in the sale of plastic products and fruits to the customers for personal use, thus exempted from the application of the minimum wage law; that it merely leases and occupies a stall in the Divisoria Market and the level of its business activity requires and sustains only less than ten employees at a time. Petitioners contend that private respondents were paid over and above the minimum wage required for a retail establishment, thus the Labor Arbiter is correct in ruling that private respondents’ claim for underpayment has no factual and legal basis. Petitioners claim that since private respondents alleged that petitioners employed 24 workers, it was incumbent upon them to prove such allegation which private respondents failed to do. Issue: Whether or not petitioner is exempted from the application of minimum wage law. Ruling: The contention of the petitioners that they are exempted by the law must be proven. The petitioners have not successfully shown that they had applied for the exemption. R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage rate of all workers and employees in the private sector. Section 4 of the Act provides for exemption from the coverage, thus: Sec. 4. (c) Exempted from the provisions of this Act are household or domestic helpers and persons employed in the personal service of another, including family drivers. Also, retail/service establishments regularly employing not more than ten (10) workers may be exempted from the applicability of this Act upon application with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission. Whenever an application for exemption has been duly filed with the appropriate Regional Board, action on any complaint for alleged non-compliance
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with this Act shall be deferred pending resolution of the application for exemption by the appropriate Regional Board. In the event that applications for exemptions are not granted, employees shall receive the appropriate compensation due them as provided for by this Act plus interest of one percent (1%) per month retroactive to the effectivity of this Act. Clearly, for a retail/service establishment to be exempted from the coverage of the minimum wage law, it must be shown that the establishment is regularly employing not more than ten (10) workers and had applied for exemptions with and as determined by the appropriate Regional Board in accordance with the applicable rules and regulations issued by the Commission.

EJR Crafts Corp., vs. CA (G.R.No.154101, March 10, 2006)

Facts: In 1997, private respondents filed a complaint for underpayment of wages, regular holiday pay, overtime pay, non-payment of 13th month pay and service incentive leave pay against petitioner before the Regional Office, NCR of the Department of Labor and Employment (DOLE). Acting on the complaint, Regional Director issued an inspection authority to Senior Labor Enforcement Officer. On August 1997, an inspection was conducted on the premises of petitioner’s offices wherein the following violations of labor standards law were discovered, to wit: non-presentation of employment records (payrolls and daily time records); underpayment of wages, regular holiday pay, and overtime pay; and non-payment of 13th month pay and service incentive leave pay. On the same day, the Notice of Inspection Result was received by and explained to the manager of petitioner corporation Mr. Jae Kwan Lee, with the corresponding directive that necessary restitution be effected within five days from said receipt. As no restitution was made, the Regional Office thereafter conducted summary investigations. However, despite due notice, petitioner failed to appear for two consecutive scheduled hearings. Petitioner failed to question the findings of the Labor Inspector received by and explained to the corporation’s manager. Petitioner then filed a Motion for Reconsideration of said Order arguing that the Regional Director has no jurisdiction over the case as private respondents were allegedly no longer connected with petitioner corporation at the time of the filing of the complaint and when the inspection was conducted, and that private respondents’ claims are within the exclusive and original jurisdiction of the Labor Arbiters. Issue: Whether or not the Regional Director has jurisdiction over the claims of the private respondents Ruling: Regional Director has jurisdiction to hear and decide the instant case.
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The Court favors the respondents in the money claims against the petitioner company. It is admitted that for the Regional Director to exercise the power to order compliance, or the socalled "enforcement power" under Article 128(b) of P.D. No. 442 as amended, it is necessary that the employer-employee relationship still exists. In support of its contention that it is the Labor Arbiter and not the Regional Director who has jurisdiction over the claims of herein private respondents, petitioner contends that at the time the complaint was filed, the private respondents were no longer its employees. Considering thus that there still exists an employer-employee relationship between petitioner and private respondents and that the case involves violations of labor standard provisions of the Labor Code, we agree with the Undersecretary of Labor and the appellate court that the Regional Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of the Labor Code which states: Art. 128. Visitorial and Enforcement Power. –(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

PAG-ASA Steel Works, Inc. vs. CA and PAG-ASA Steel Workers Union (G.R. No.166647. March 31, 2006)

Facts: Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under Philippine laws and is engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel Workers Union is the duly authorized bargaining agent of the rank-and-file employees. RTWPB of NCR issued a wage order which provided for a P 13.00 increase of the salaries receiving minimum wages. The Petitioner and the union negotiated on the increase. Petitioner forwarded a letter to the union with the list of adjustments involving rank and file employees. In September 1999, the petitioner and union entered into an collective bargaining agreement where it provided wage adjustments namely P15, P25, P30 for three succeeding year. On the first year, the increase provided were followed until RTWPB issued another wage order where it provided for a P25.50 per day increase in the salary of employees receiving the minimum wage and increased the minimum wage to P223.50 per day. Petitioner paid the P25.50 per day increase to all of its rank-and-file employees.
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On November 2000, Wage Order No. NCR-08 was issued where it provided the increase of P26.50 per day. The union president asked that the wage order be implemented where petitioner rejected the request claiming that there was no wage distortion and it was not obliged to grant the wage increase. The union submitted the matter for voluntary arbitration where it favored the position of the company and dismissed the complaint. The matter was elevated to CA where it favored the respondents. Hence, this petition. Issue: Whether or not the company was obliged to grant the wage increase under Wage Order No. NCR-08 as a matter of practice. Ruling: The Court favors the petitioner that wage increase shall not be granted by virtue of CBA or matter of practice by the company. It is submitted that employers unless exempt are mandated to implement the said wage order but limited to those entitled thereto. There is no legal basis to implement the same across-the-board. A perusal of the record shows that the lowest paid employee before the implementation of Wage Order #8 is P250.00/day and none was receiving below P223.50 minimum. This could only mean that the union can no longer demand for any wage distortion adjustment. The provision of wage order #8 and its implementing rules are very clear as to who are entitled to the P26.50/day increase, i.e., "private sector workers and employees in the National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an increase of Twenty-Six Pesos and Fifty Centavos (P26.50) per day," and since the lowest paid is P250.00/day the company is not obliged to adjust the wages of the workers. The provision in the CBA that "Any Wage Order to be implemented by the Regional Tripartite Wage and Productivity Board shall be in addition to the wage increase adverted above" cannot be interpreted in support of an across-the-board increase. If such were the intentions of this provision, then the company could have simply accepted the original demand of the union for such across-the-board implementation, as set forth in their original proposal. The fact that the company rejected this proposal can only mean that it was never its intention to agree, to such across-the-board implementation. Wage Order No. NCR-08 clearly states that only those employees receiving salaries below the prescribed minimum wage are entitled to the wage increase provided therein, and not all employees across-the-board as respondent Union would want petitioner to do. Considering therefore that none of the members of respondent Union are receiving salaries below the P250.00 minimum wage, petitioner is not obliged to grant the wage increase to them. Moreover, to ripen into a company practice that is demandable as a matter of right, the giving of the increase should not be by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the employer. Hence, even if the company continuously grants a wage increase as mandated by a wage order or pursuant to a CBA, the same would not automatically ripen into a company practice.

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Metropolitan Bank vs. NWPC (G.R.No. 144322, February 6,2007)

Facts: On October 1995, the Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwise known as the Wage Rationalization Act, issued Wage Order No. R02-03 (Wage Order), as follows: Section 1. Upon effectivity of this Wage Order, all employees/workers in the private sector throughout Region II, regardless of the status of employment are granted an across-the-board increase of P15.00 daily. The Wage Order was published in a newspaper of general circulation on December 2, 1995 and took effect on January 1, 1996. Its Implementing Rules were approved on February 14, 1996. Per Section 13 of the Wage Order, any party aggrieved by the Wage Order may file an appeal with the National Wages and Productivity Commission (NWPC) through the RTWPB within 10 calendar days from the publication of the Wage Order. Banker’s Council in a letter inquiry to NWPC requested for ruling to seek exemption from coverage of the wage order since the members bank are paying more than the regular wage. NWPC replied that the member banks are covered by the wage order and does not fall with the exemptible categories. In another letter inquiry, Metrobank asked for the interpretation of the applicability of the wage order. NWPC referred it to RTWPB. RTWPB in return clarified that establishments in Region 2 are Issue: Whether or not the wage order is void thus it has no legal effect and the RTWPB acted in excess of its jurisdiction. Ruling: Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase to employees earning more than the minimum wage rate; and pursuant to the separability clause of the Wage Order, Section 1 is declared valid with respect to employees earning the prevailing minimum wage rate. The powers of NWPC are enumerated in ART. 121. Powers and Functions of the Commission. The Commission shall have the following powers and functions: (d) To review regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance with prescribed guidelines and national development plans; (f) To review plans and programs of the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent with national development plans; (g) To exercise technical and administrative supervision over the Regional Tripartite Wages and Productivity Boards. R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment generation in the countryside through industrial
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dispersal; and to allow business and industry reasonable returns on investment, expansion and growth. In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power to prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial or industry levels; and authorized the RTWPB to determine and fix the minimum wage rates applicable in their respective regions, provinces, or industries therein and issue the corresponding wage orders, subject to the guidelines issued by the NWPC. Pursuant to its wage fixing authority, the RTWPB may issue wage orders which set the daily minimum wage rates, based on the standards or criteria set by Article 124 of the Labor Code. The Court declared that there are two ways of fixing the minimum wage: the "floor-wage" method and the "salary-ceiling" method. The "floor-wage" method involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On the other hand, in the "salary-ceiling" method, the wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage increase. In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floorwage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-the-board wage increase of P15.00 to all employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the Wage Order to wage earners receiving more than the prevailing minimum wage rate, without a denominated salary ceiling. As correctly pointed out by the OSG, the Wage Order granted additional benefits not contemplated by R.A. No. 6727.

Equitable Bank vs. Sadac (G.R. No.164772. June 8, 2006)

Facts: Ricardo Sadac was appointed Vice President of the Legal Department of petitioner Bank effective 1 August 1981, and subsequently General Counsel thereof on 8 December 1981. On June 1989, nine lawyers of petitioner Bank’s Legal Department, in a letter-petition to the Chairman of the Board of Directors, accused respondent Sadac of abusive conduct and ultimately, petitioned for a change in leadership of the department. On the ground of lack of confidence in Sadac, under the rules of client and lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record. In reaction thereto, Sadac requested for a full hearing and formal investigation but the same remained unheeded. On 9 November 1989, respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. After learning of the filing of the complaint,
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petitioner Bank terminated the services of respondent Sadac. Finally, on 10 August 1989, Sadac was removed from his office Labor Arbiter rendered decision that Sadac’s termination was illegal and entitled to reinstatement and payment of full back wages. NLRC affirmed the decision upon appeal by the Bank. Sadac filed for execution of judgment where it gave its computation which amounted to P 6.03 M representing his back wages and the increases he should have received during the time he was illegally dismissed. The Bank opposed to Sadac’s computation. The Labor Arbiter favor Sadac’s computation. NLRC, upon appeal by the bank, reversed the decision. CA reversed the decision of NLRC. Hence, this petition. Issue: Whether or not the computation of back wages shall include the general increases. Ruling: To resolve the issue, the court revisits its pronouncements on the interpretation of the term backwages. Backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. It is not private compensation or damages but is awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress of a private right but rather in the nature of a command to the employer to make public reparation for dismissing an employee either due to the former’s unlawful act or bad faith. In the case of Bustamante v. National Labor Relations Commission, It said that the Court deems it appropriate to reconsider such earlier ruling on the computation of back wages by now holding that conformably with the evident legislative intent as expressed in Rep. Act No. 6715, back wages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. There is no vested right to salary increases. Sadac may have received salary increases in the past only proves fact of receipt but does not establish a degree of assuredness that is inherent in backwages. The conclusion is that Sadac’s computation of his full backwages which includes his prospective salary increases cannot be permitted.

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S.I.P. Food House et al., vs. Batolina (G.R.No.192473, October 11, 2010)

Facts: The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to operate a canteen in the new GSIS Building, but had no capability and expertise in this area. Thus, it engaged the services of the petitioner S.I.P. Food House (SIP), owned by the spouses Alejandro and Esther Pablo, as concessionaire. The respondents Restituto Batolina and nine (9) others (the respondents) worked as waiters and waitresses in the canteen. In February 2004, GMPC terminated SIP’s ―contract as GMPC concessionaire,‖ because of GMPC’s decision ―to take direct investment in and management of the GMPC canteen;‖ SIP’s continued refusal to heed GMPC’s directives for service improvement; and the alleged interference of the Pablos’ two sons with the operation of the canteen. The termination of the concession contract caused the termination of the respondents’ employment, prompting them to file a complaint for illegal dismissal, with money claims, against SIP and the spouses Pablo. Issues: Whether or not there existed an employer-employee relationship Whether or not the respondents are entitled of money claims Ruling: SIP and its proprietors could not be considered as mere agents of GMPC because they exercised the essential elements of an employment relationship with the respondents such as hiring, payment of wages and the power of control, not to mention that SIP operated the canteen on its own account as it paid a fee for the use of the building and for the privilege of running the canteen. The fact that the respondents applied with GMPC in February 2004 when it terminated its contract with SIP, is another clear indication that the two entities were separate and distinct from each other. The free board and lodging SIP furnished the employees cannot operate as a set-off for the underpayment of their wages. The court held in Mabeza v. National Labor Relations Commission that the employer cannot simply deduct from the employee’s wages the value of the board and lodging without satisfying the following requirements: (1) proof that such facilities are customarily furnished by the trade; (2) voluntary acceptance in writing by the employees of the deductible facilities; and (3) proof of the fair and reasonable value of the facilities charged. As the CA aptly noted, it is clear from the records that SIP failed to comply with these requirements. On the collateral issue of the proper computation of the monetary award, the Court also find the CA ruling to be in order. Indeed, in the absence of evidence that the employees worked for 26 days a month, no need exists to recompute the award for the respondents who were ―explicitly claiming for their salaries and benefits for the services rendered from Monday to Friday or 5 days a week or a total of 20 days a month.‖ Petition was dismissed.

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SLL International Cables Specialist vs. NLRC (G.R.No.172161, March 2, 2011) Facts: Sometime in 1996, and January 1997, private respondents Roldan Lopez (Lopez for brevity) and Danilo Cañete (Cañete for brevity), and Edgardo Zuñiga (Zuñiga for brevity) respectively, were hired by petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but since they were only trainees, they did not report for work regularly but came in as substitutes to the regular workers or in undertakings that needed extra workers to expedite completion of work. After their training, Zuñiga, Cañete and Lopez were engaged as project employees by the petitioners in their Islacom project in Bohol. Private respondents started on March 15, 1997 until December 1997. Upon the completion of their project, their employment was also terminated. Private respondents received the amount of P145.00, the minimum prescribed daily wage for Region VII. In July 1997, the amount of P145 was increased to P150.00 by the Regional Wage Board (RWB) and in October of the same year, the latter was increased to P155.00. Sometime in March 1998, Zuñiga and Cañete were engaged again by Lagon as project employees for its PLDT Antipolo, Rizal project, which ended sometime in (sic) the late September 1998. As a consequence, Zuñiga and Cañete’s employment was terminated. For this project, Zuñiga and Cañete received only the wage of P145.00 daily. The minimum prescribed wage for Rizal at that time was P160.00. On May 21, 1999, private respondents for the 4th time worked with Lagon’s project in Camarin, Caloocan City with Furukawa Corporation as the general contractor. Their contract would expire on February 28, 2000, the period of completion of the project. From May 21, 1997-December 1999, private respondents received the wage of P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In January to February 28, the three received the wage of P165.00. The existing rate at that time was P213.00. For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project was not completed on the scheduled date of completion. Face[d] with economic problem[s], Lagon was constrained to cut down the overtime work of its worker[s][,] including private respondents. Thus, when requested by private respondents on February 28, 2000 to work overtime, Lagon refused and told private respondents that if they insist, they would have to go home at their own expense and that they would not be given anymore time nor allowed to stay in the quarters. This prompted private respondents to leave their work and went home to Cebu. On March 3, 2000, private respondents filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well as damages and attorney’s fees. Issues: Whether or not only regular employees are entitled to the minimum wage Whether the value of the facilities should be included in the computation of the "wages" received by private respondents Ruling: Private respondents are entitled to be paid the minimum wage, whether they are regular or nonregular employees.
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Section 3, Rule VII of the Rules to Implement the Labor Code specifically enumerates those who are not covered by the payment of minimum wage. Project employees are not among them. As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving it. Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar documents — which will show that overtime, differentials, service incentive leave and other claims of workers have been paid — are not in the possession of the worker but in the custody and absolute control of the employer. In this case, petitioners, aside from bare allegations that private respondents received wages higher than the prescribed minimum, failed to present any evidence, such as payroll or payslips, to support their defense of payment. Thus, petitioners utterly failed to discharge the onus probandi. On whether the value of the facilities should be included in the computation of the "wages" received by private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may provide subsidized meals and snacks to his employees provided that the subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In such cases, the employer may deduct from the wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the latter, provided that such deduction is with the written authorization of the employees concerned. Moreover, before the value of facilities can be deducted from the employees’ wages, the following requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished 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.

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V

VI

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Rajah Humabon Hotel, Inc. vs. Trajano et at. (G.R.No.100222-23,September 14, 1993) Facts: Subsequent to the initial pleading filed by respondent-employees before the regional director of DOLE for redress in regard to underpaid wages and non-payment of benefits, petitioners were instructed to allow the inspection of the employment records of respondents on April 4, 1989. However, no inspection could be done on that date on account of the picket staged by other workers. At the re-scheduled examination after closure of petitioners' business on April 16, 1989, instead of presenting the payrolls and daily time records of private respondents, petitioner Peter Po submitted a motion to dismiss on the supposition that the regional director has no jurisdiction over the case because the employer-employee relationship had been served as a result of the closure of petitioners' business, apart from the fact that each of the claims of private respondents exceeded the jurisdictional limit of P5,000.00 pegged by Republic Act No. 6715 or the New Labor Relations Law. Issue: Who between the regional director of DOLE and the labor arbiter has jurisdictional competence over the complaint of private respondents? Ruling: Section 2 of EO No. 111, promulgated on December 24, 1986, which amended Article 128(b) of the Labor Code gives concurrent jurisdiction to both the Secretary of Labor (or the various regional directors) and the labor arbiters over money claims among the other cases mentioned by Article 217 of the Labor Code. This provision merely confirms/reiterates the enforcement/adjudication authority of the Regional Director over uncontested money claims in cases where an employer-employee relationship still exists. However, with the enactment of Republic Act No. 6715, which took effect on March 21, 1989 or seven days after the complaint at bar was filed on March 14, 1989, Articles 129 and 217 of the Labor Code were amended, there is no doubt that the regional directors can try money claims only if the following requisites concur: (1) the claim is presented by an employee or person employed in domestic or household service, or househelper under the code; (2) the claimant, no longer being employed, does not seek reinstatement; and (3) the aggregate money claim of the employee or housekeeper does not exceed five thousand pesos (P5,000.00). Thus, the power to hear and decide employees' claims arising from employer-employee relations, exceeding P5,000.00 for each employee should be left to the Labor Arbiter as the exclusive repository of the power to hear and decide such claims. In the instant case, a simple examination of the labor arbiter's impugned order dated September 25, 1989 readily shows that the aggregate claims of each of the twenty-five employees of petitioner are above the amount of P5,000.00 fixed by Republic Act No. 6715. Therefore, the regional director had no jurisdiction over the case. Hence, the petition is granted and the public respondent is directed to refer the workers' money claims to the appropriate Labor Arbiter for proper disposition.

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Guico vs Sec of Labor (G.R.No. 131750, November 16, 1998) Facts: The case started when the Office of the Regional Director, Department of Labor and Employment (DOLE), Region I, San Fernando, La Union, received a letter-complaint dated April 25, 1995, requesting for an investigation of petitioner's establishment, Copylandia Services & Trading, for violation of labor standards laws. Pursuant to the visitorial and enforcement powers of the Secretary of Labor and Employment or his duly authorized representative under Article 128 of the Labor Code, as amended, inspections were conducted at Copylandia's outlets on April 27 and May 2, 1995. The inspections yielded the following violations involving twentyone (21) employees who are copier operators: (1) underpayment of wages; (2) underpayment of 13th month pay; and (3) no service incentive leave with pay. Issue: Whether or not the Regional Director has jurisdiction over the labor standards case Ruling: Regional Director has jurisdiction over the case citing Article 128 (b) of the Labor Code, as amended. We sustain the jurisdiction of the respondent Secretary. As the respondent correctly pointed out, this Court's ruling in Servando — that the visitorial power of the Secretary of Labor to order and enforce compliance with labor standard laws cannot be exercised where the individual claim exceeds P5,000.00, can no longer be applied in view of the enactment of R.A. No. 7730 amending Article 128(b) of the Labor Code, viz: Art. 128 (b) — Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of the Code and other labor legislation based on the findings of the labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (Emphasis supplied.) The records of the House of Representatives show that Congressmen Alberto S. Veloso and Eriberto V. Loreto sponsored the law. In his sponsorship speech, Congressman Veloso categorically declared that "this bill seeks to do away with the jurisdictional limitations imposed through said ruling (referring to Servando) and to finally settle any lingering doubts on the
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visitorial and enforcement powers of the Secretary of Labor and Employment."Petitioner's reliance on Servando is thus untenable.

Ex – Bataan Veterans Security Agency vs Sec of Labor (G.R. 152396, November 20, 2007) Facts: Ex-Bataan Veterans Security Agency, Inc. is in the business of providing security services while private respondents are EBVSAI's employees assigned to the National Power Corporation at Ambuklao Hydro Electric Plant, Bokod, Benguet (Ambuklao Plant). On 20 February 1996, private respondents led by Alexander Pocding (Pocding) instituted a complaint for underpayment of wages against EBVSAI before the Regional Office of the Department of Labor and Employment (DOLE). On 7 March 1996, the Regional Office conducted a complaint inspection at the Ambuklao Plant where some violations were noted. Issue: Whether or not the Regional Director has jurisdiction over the money claims Ruling: The Regional Director has jurisdiction over the claim. Art. 128 Visitorial and enforcement power. --- x x x (b) Notwithstanding the provisions of Article[s] 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to [the labor standards provisions of this Code and other] labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. x x x x The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor Code. This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v. Sensing, where we sustained the jurisdiction of the DOLE Regional Director and held that "the visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceedsP5,000." However, if the labor standards case is covered by the exception clause in Article 128(b) of the Labor Code, then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable
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in the normal course of inspection. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results. In this case, the Regional Director validly assumed jurisdiction over the money claims of private respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in accordance with Article 128(b) of the Labor Code and the case does not fall under the exception clause.

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

Facts: The controversy started with a complaint filed by petitioner against Undaloc Construction and/or Engineer Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory benefits. Respondent Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in road construction business in Cebu City. Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when he was terminated on the ground that the project he was assigned to was already finished, he being allegedly a project employee. But petitioner asserted that he was a regular employee having been engaged to perform works which are "usually necessary or desirable" in respondents' business. Issue: Whether or not the Appellate court erred in failing to dismiss respondent's petition for certiorari brought before it on the ground that respondents failed to attach certified true copies of the NLRC's decision and resolution denying the motion for reconsideration Ruling: Appellate Court was right. In his Comment on the Petition for Certiorari with Prayer for Temporary Restraining and/or Preliminary Injunction filed with the Court of Appeals on 22 November 2001, petitioner did not raise this procedural issue. Neither did he do so when he moved for reconsideration of the 8 May 2002 Decision of the Court of Appeals. It is only now before this Court that petitioner proffered the same. This belated submission spells doom for petitioner. More fundamentally, an examination of the Court of Appeals rollo belies petitioner as it confirms that the alleged missing documents were in fact attached to the petition. To counter petitioner's assertions, respondents submitted typewritten and signed payroll sheets from 2 September to 8 December 1996, from 26 May to 15 June 1997, and from 12 January to 31 May 1998. These payroll sheets clearly indicate that petitioner did receive a daily salary of P141.00. Moreover, absent any evidence to the contrary, good faith must be presumed in this case. Entries in the payroll, being entries in the course of business, enjoy the presumption of regularity under
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Rule 130, Section 43 of the Rules of Court. Hence, while as a general rule, the burden of proving payment of monetary claims rests on the employer, when fraud is alleged in the preparation of the payroll, the burden of evidence shifts to the employee and it is incumbent upon him to adduce clear and convincing evidence in support of his claim. Unfortunately, petitioner's bare assertions of fraud do not suffice to overcome the disputable presumption of regularity.

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

Facts: Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent Panay Veteran’s Security and Investigation Agency, Inc. They were stationed at the plant site of Food Industries, Inc. (FII) in Sta. Rosa, Laguna until FII terminated its contract with respondent security agency. They were not given new assignments and their benefits (including 13th month pay, overtime pay and holiday pay as well as wage differentials due to underpayment of wages) were withheld by respondent security agency. In consequence, they filed a complaint for violation of labor standards in the regional office of the (DOLE-NCR). The latter conducted an inspection of the respondent security agency. During such inspection, respondent was not able to present its payroll as well as the daily time records submitted by the petitioners. Hence, with such violation, DOLE inspector issued a notice of inspection and concomitantly explained to the respondents that they have to comply with labor standards by paying the claims of the petitioners or otherwise, they can question the notice to the DOLE-NCR within 5 days. Since respondents did not do either of the aforementioned things, the Regional Director of DOLE-NCR adopted the findings of the inspector. Respondents moved for reconsideration but it was denied. Respondents filed an appeal (with motion to reduce cash or surety bond) to the SOLE. The SOLE found that respondents failed to perfect their appeal since they did not post a cash or surety bond equivalent to the monetary award. Thus, the appeal was dismissed and the DOLE-NCR Regional Director’s order was declared final and executory. The SOLE denied reconsideration. Respondents appealed to the Court of Appeals. Issues: Whether or not there was a perfected appeal; whether motion to reduce appeal bond allowed in appeals to the Secretary of Labor. Ruling: 1.) Respondents failed to perfect their appeal in the manner prescribed by the Labor Code. The rule is that, to perfect an appeal of the Regional Director’s order involving a monetary award in cases which concern the visitorial and enforcement powers of the Secretary of Labor and Employment, the appeal must be filed and the cash or surety bond equivalent to the monetary award must be posted within ten calendar days from receipt of the order. Failure either to file the appeal or post the bond within the prescribed period renders the order final and executory. The legislative intent to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that ―an appeal by the employer may be perfected only upon the posting of a cash or surety bond.‖ The word ―only‖ makes it clear that the
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lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer’s appeal may be perfected 2.) No. The jurisdiction of the NLRC is separate and distinct from that of the Secretary of Labor and Employment. In the exercise of their respective jurisdictions, each agency is governed by its own rules of procedure. In other words, the rules of procedure of the NLRC are different from (and do not apply in) cases cognizable by the Secretary of Labor and Employment. Unlike the New Rules of Procedure of the NLRC,]no provision in the Rules on the Disposition of Labor Standards Cases governs the filing of a motion for the reduction of the amount of the bond. However, on matters that are not covered by the Rules on the Disposition of Labor Standards Cases, the suppletory application of the Rules of Court is authorized. In other words, the Rules on the Disposition of Labor Standards Cases does not sanction the suppletory resort to the rules of procedure of the NLRC. By ruling that the rules of procedure of the NLRC should be applied suppletorily to respondents’ appeal to the Secretary of Labor of Employment, the CA effectively amended the Rules on the Disposition of Labor Standards Cases. In the process, it encroached on the rule-making power of the Secretary of Labor and Employment

National Mines and Workers Union vs Marcopper Mining Corp (G.R.No. 174641, November 11, 2008) Facts: On April 1996, the Department of Environment and Natural Resources (DENR) ordered the indefinite suspension of MARCOPPER’s operations for causing damage to the environment of the Province of Marinduque by spilling the company’s mine waste or tailings from an old underground impounding area into the Boac River, in violation of its Environmental Compliance Certificate (ECC). NAMAWU was the exclusive bargaining representative of the rank-and-file workers of MARCOPPER. On April 10, 1996, it filed a complaint with the Regional Arbitration Branch No. IV of the NLRC against MARCOPPER for nonpayment of wages, separation pay, damages, and attorney’s fees; the case is hereinafter referred to as the―environmental incident case.‖ NAMAWU claimed that due to the indefinite suspension of MARCOPPER’s operations, its members were not paid the wages due them for six months (from April 12, 1996 to October 12, 1996) under Rule X, Book III, Section 3(b) of the Implementing Rules and Regulations of the Labor Code.[8] It further claimed that its members are also entitled to be paid their separation pay pursuant to their collective bargaining agreement with MARCOPPER and pursuant to Book IV, Rule I, 4(b) of the Labor Code’s implementing rules. MARCOPPER denied liability, contending that NAMAWU had not been authorized by the individual employees – the real parties-in-interest – to file the complaint; and that the complaint should be dismissed for lack of certification of non-forum shopping, for the pendency of another action between the same parties, and for lack of factual and legal basis. MARCOPPER appealed the decision to the NLRC. In this appeal, it also moved that it be allowed not to post an appeal bond for 615 NAMAWU members – former MARCOPPER employees who had been dismissed effective March 7, 1995 due to an earlier illegal strike. MARCOPPER, however, posted the required bond for three non-striking employees, namely: Apollo V. Saet, Rogelio Regencia and Jose Romasanta.
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Issue: Whether CA erred in ruling that there was no need for MARCOPPER to post an appeal bond Ruling: The CA was correct in reversing the dismissal of MARCOPPER’s appeal for failure to file an appeal bond. The employment of the NAMAWU officers and members had been declared terminated on March 7, 1995 as a result of their failure to return to work after their strike of February 27, 1995. Thereafter, the illegal strike litigation commenced, resulting in a decision by the NLRC on November 11, 1996 declaring the strike illegal. In the context of the NLRC appeal bond that is directly at issue, MARCOPPER had every reason to claim in its April 10, 2000 appeal to the NLRC that it should be excused from filing an appeal bond with respect to the NAMAWU members who were no longer company employees. The CA decision decreeing the termination of employment of those involved in the illegal strike case had already been issued at that time. We subsequently ruled on the same issue during the time the environmental incident case was pending before the NLRC. Thus, when the NLRC dismissed MARCOPPER’s appeal for failure to file the requisite appeal bond corresponding to the 615 NAMAWU members, the termination of employment of these NAMAWU members was already a settled matter that the NLRC was in no position to disregard.

Jethro Intelligence & Security Corp., vs. SOLE, et al., (G.R.No. 172537, August 14, 2009)

Facts: Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security service contractor with a security service contract agreement with co-petitioner Yakult Phils., Inc. (Yakult). On the basis of a complaint filed by respondent Frederick Garcia (Garcia), one of the security guards deployed by Jethro, for underpayment of wages, legal/special holiday pay, premium pay for rest day, 13th month pay, and night shift differential, the Department of Labor and Employment (DOLE)-Regional Office No. IV conducted an inspection at Yakult's premises in Calamba, Laguna in the course of which several labor standards violations were noted, including keeping of payrolls and daily time records in the main office, underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE as required under Department Order No. 1802. By Order 3 of September 9, 2004, the DOLE Regional Director, noting petitioners' failure to rectify the violations noted during the inspection within the period given for the purpose, found them jointly and severally liable to herein respondents. Jethro appealed to the Secretary of Labor and Employment (SOLE), faulting the Regional Director. However, SOLE affirmed with some modifications the order issued by the Regional Director. Petitioners attribute grave abuse of discretion on the part of the DOLE Regional Director and the SOLE.

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Issue: Whether or not SOLE has jurisdiction to hear the case Ruling: The Secretary of Labor correctly assumed jurisdiction over the case as it does not come under the exception clause in Art. 128 (b) of the Labor Code, viz: Art. 128.Visitorial and enforcement power. — (b)Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the finding of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. It bears emphasis that the SOLE, under Article 106 of the Labor Code, as amended, exercises quasi-judicial power, at least to the extent necessary to determine violations of labor standards provisions of the Code and other labor legislation. He/she or the Regional Directors can issue compliance orders and writs of execution for the enforcement thereof. The significance of and binding effect of the compliance orders of the DOLE Secretary is enunciated in Article 128 of the Labor Code, as amended, viz.: ART. 128.Visitorial and enforcement power. — (d)It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor or his duly authorized representatives issued pursuant to the authority granted under this article, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this article.

Phil Hoteliers Inc., vs National Union of Workers in Hotel Restaurant & Allied Industries – Dusit Hotel Nikko Chapter (G.R.No. 181972, August 25, 2009) Facts: Wage Order No. 9, approved by the Regional Tripartite Wages and Productivity Board (RTWPB) of the National Capital Region (NCR), took effect on 5 November 2001. It grants P30.00 ECOLA to particular employees and workers of all private sectors, identified as follows in Section 1 thereof: Section 1. Upon the effectivity of this Wage Order, all private sector workers and employees in the National Capital Region receiving daily wage rates of TWO
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HUNDRED FIFTY PESOS (P250.00) up to TWO HUNDRED NINETY PESOS (P290.00) shall receive an emergency cost of living allowance in the amount of THIRTY PESOS (P30.00) per day payable in two tranches as follows: Amount of ECOLA Effectivity P15.00 5 November 2001 P15.00 1 February 2002 On 20 March 2002, respondent National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit Hotel Nikko Chapter (Union), through its President, Reynaldo C. Rasing (Rasing), sent a letter 4 to Director Alex Maraan (Dir. Maraan) of the Department of Labor and Employment-National Capital Region (DOLE-NCR), reporting the non-compliance of Dusit Hotel with WO No. 9, while there was an on-going compulsory arbitration before the National Labor Relations Commission (NLRC) due to a bargaining deadlock between the Union and Dusit Hotel; and requesting immediate assistance on this matter. On 24 May 2002, Rasing sent Dir. Maraan another letter following-up his previous request for assistance. Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO Natividad) to conduct an inspection of Dusit Hotel premises on 24 April 2002. In the first Inspection, the report showed that Dusit Hotel is exempt from complying with WO no. 9. Due to the Second request for inspection, DOLE representative conducted another round of inspection and the Labor Standards Officer noted the following in her inspection report: * Non-presentation of records/payrolls * Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO Chapter, there are one hundred forty-four (144) affected in the implementation of Wage Order No. NCR-09-> ECOLA covering the periods from Nov. 5/01 to present. Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect restitution and/or correction of the noted violations within five days from receipt of the Notice, and to submit any question on the findings of the labor inspector within the same period, otherwise, an order of compliance would be issued. The Notice of Inspection Result was duly received by Dusit Hotel Assistant Personnel Manager Rogelio Santos. In the meantime, the NLRC rendered a Decision 9 dated 9 October 2002 in NLRC-NCR-CC No. 000215-02 — the compulsory arbitration involving the Collective Bargaining Agreement (CBA) deadlock between Dusit Hotel and the Union — granting the hotel employees the following wage increases, in accord with the CBA: Effective January 1, 2001 - P500.00/month Effective January 1, 2002 - P550.00/month Effective January 1, 2003 - P600.00/month On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises, DOLE-NCR, through Dir. Maraan, issued the Order 10 directing Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus, the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, 11 as amended by Republic Act No. 8188. Dusit Hotel filed a Motion for Reconsideration 13 of the DOLE-NCR Order dated 22 October 2002, arguing that the NLRC Decision dated 9 October 2002, resolving the bargaining deadlock between Dusit Hotel and the Union, and awarding salary increases under the CBA to hotel employees retroactive to 1 January 2001, already rendered the DOLE-NCR Order moot and
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academic. With the increase in the salaries of the hotel employees ordered by the NLRC Decision of 9 October 2002, along with the hotel employees' share in the service charges, the 144 hotel employees, covered by the DOLE-NCR Order of 22 October 2002, would already be receiving salaries beyond the coverage of WO No. Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR issued a Resolution 14 on 27 December 2002, setting aside its earlier Order dated 22 October 2002 for being moot and academic, in consideration of the NLRC Decision dated 9 October 2002; and dismissing the complaint of the Union against Dusit Hotel, for non-compliance with WO No. 9, for lack of merit. Issues: Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite the increases in their salaries, retroactive to 1 January 2001, ordered by NLRC in the latter's Decision dated 9 October 2002 Whether Dusit Hotel is liable for the double indemnity for violation of the wage order Ruling: The Court rules in the negative. It must be noted that the hotel employees have a right to their share in the service charges collected by Dusit Hotel, pursuant to Article 96 of the Labor Code of 1991, to wit: Article 96. Service charges. — All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages. Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and management their respective shares in the service charges collected, the hotel cannot claim that payment thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees' right to their shares in the service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA; gratification by the hotel of one does not result in the satisfaction of the other. The Court, however, finds no basis to hold Dusit Hotel liable for double indemnity. Under Section 2 (m) of DOLE Department Order No. 10, Series of 1998, 30 the Notice of Inspection Result "shall specify the violations discovered, if any, together with the officer's recommendation and computation of the unpaid benefits due each worker with an advice that the employer shall be liable for double indemnity in case of refusal or failure to correct the violation within five calendar days from receipt of notice". A careful review of the Notice of Inspection Result dated 29 May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals that the said Notice did not contain such an advice. Although the Notice directed Dusit Hotel to correct its noted violations within five days from receipt thereof, it was not sufficiently apprised that failure to do so within the given period would already result in its liability for double indemnity. The lack of advice deprived Dusit Hotel of the opportunity to decide and act accordingly within the five-day period, as to avoid the penalty of double indemnity. By 22 October 2002, the DOLE70

NCR, through Dir. Maraan, already issued its Order directing Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, as amended by Republic Act No. 8188. Although the Court is mindful of the fact that labor embraces individuals with a weaker and unlettered position as against capital, it is equally mindful of the protection that the law accords to capital. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play.

Tiger Construction and Development Corp vs. Abay et al., (G.R.No.164141, February 26,2010) Facts: Reynaldo Abay and fifty-nine (59) others filed before the Regional Office of the Department of Labor and Employment (DOLE). An inspection was conducted by DOLE officials at the premises of petitioner TCDC. Several labor standard violations were noted, such as deficiencies in record keeping, non-compliance with various wage orders, non-payment of holiday pay, and underpayment of 13th month pay. The case was then set for summary hearing. However, before the hearing could take place, the Director of Regional Office No. V, Director Manalo, issued an Order on July 25, 2002. Before the NLRC could take any action, DOLE Secretary Sto. Tomas, in an apparent reversal of Director Manalo's endorsement, issued another inspection authority. Pursuant to such authority, DOLE officials conducted another investigation of petitioner's premises and the same violations were discovered. Director Manalo issued forthwith a Writ of Execution on February 12, 2003. On May 14, 2003, while the sheriff was in the process of enforcing the Writ of Execution, TCDC filed an admittedly belated appeal with the DOLE Secretary. Acting on the ill-timed appeal, Secretary Sto. Tomas issued an Order 6 dated January 19, 2004 dismissing petitioner's appeal for lack of merit and held that jurisdiction over the case properly belongs with the regional director; hence, Director Manalo's endorsement to the NLRC was a clear error. Such mistakes of its agents cannot bind the State, thus Director Manalo was not prevented from continuing to exercise jurisdiction over the case. Issues: Whether petitioner can still assail the Order of Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has attained finality and is already in the execution stage Ruling: Orders issued without jurisdiction are considered null and void and, as a general rule, may be assailed at any time. However, in this case, Director Manalo acted within her jurisdiction.
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Under Article 128 (b) of the Labor Code, the DOLE Secretary and her representatives, the regional directors, have jurisdiction over labor standards violations based on findings made in the course of inspection of an employer's premises. The said jurisdiction is not affected by the amount of claim involved, as RA 7730 had effectively removed the jurisdictional limitations found in Articles 129 and 217 of the Labor Code insofar as inspection cases, pursuant to the visitorial and enforcement powers of the DOLE Secretary, are concerned. The last sentence of Article 128 (b) of the Labor Code recognizes an exception to the jurisdiction of the DOLE Secretary and her representatives, but such exception is neither an issue nor applicable here.

People’s Broadcasting (Bombo Radyo Phils) vs Secretary of DOLE et al., (G.R.No.179652, May 8, 2009)

Facts: Jandeleon Juezan filed a complaint against People’s Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) 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 before the Department of Labor and Employment (DOLE) Regional Office No. VII,Cebu City. On the basis of the complaint, the DOLE conducted a plant level inspection on 23 September 2003. In the Inspection Report Form, the Labor Inspector wrote under the heading ―Findings/Recommendations‖ ―non-diminution of benefits‖ and ―Note: Respondent deny employer-employee relationship with the complainant- see Notice of Inspection results.‖ Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to submit their respective position papers. In his Order dated 27 February 2004, DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled that respondent is an employee of petitioner, and that the former is entitled to his money claims amounting to P203, 726.30. Petitioner sought reconsideration of the Order, claiming that the Regional Director gave credence to the documents offered by respondent without examining the originals, but at the same time he missed or failed to consider petitioner’s evidence. Petitioner’s motion for reconsideration was denied.[ On appeal to the DOLE Secretary, petitioner denied once more the existence of employer-employee relationship. In its Order dated 27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit. Petitioner maintained that there is no employer-employee relationship had ever existed between it and respondent because it was the drama directors and producers who paid, supervised and disciplined respondent. It also added that the case was beyond the jurisdiction of the DOLE and should have been considered by the labor arbiter because respondent’s claim exceeded P5,000.00.

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Issue: Whether the Secretary of Labor has the power to determine the existence of an employeremployee relationship Ruling: Secretary of Labor has the power to determine the existence of an employer-employee relationship. Clearly 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 reason is obvious. In the second situation especially, the existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, 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 cursory and the mechanical. While documents, particularly documents found in the employer’s office are the primary source materials, what may prove decisive are factors related to the history of the employer’s business operations, its current state as well as accepted contemporary practices in the industry. More often than not, the question of employeremployee 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 that is 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. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the DOLE’s 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 employeremployee still exists‖ in Art. 128 (b). Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (2) 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, on a matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the executive branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the dissent proposes, his office confers jurisdiction on itself which it cannot otherwise acquire. Reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives was granted visitorial and enforcement powers for the purpose of determining violations of, and enforcing, the Labor Code and any labor law, wage order, or rules and
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regulations issued pursuant thereto. Necessarily, the actual existence of an employer-employee relationship affects the complexion of the putative findings that the Secretary of Labor may determine, since employees are entitled to a different set of rights under the Labor Code from the employer as opposed to non-employees. Among these differentiated rights are those accorded by the ―labor standards‖ provisions of the Labor Code, which the Secretary of Labor is mandated to enforce. If there is no employer-employee relationship in the first place, the duty of the employer to adhere to those labor standards with respect to the non-employees is questionable. 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. The Secretary of Labor would not have been precluded from exercising the powers under Article 128 (b) over petitioner if another person with better-grounded claim of employment than that which respondent had. Respondent, especially if he were an employee, could have very well enjoined other employees to complain with the DOLE, and, at the same time, petitioner could ill-afford to disclaim an employment relationship with all of the people under its aegis. The most important consideration for the allowance of the instant petition is the opportunity for the Court not only to set the demarcation between the NLRC’s jurisdiction and the DOLE’s prerogative but also the procedure when the case involves the fundamental challenge on the DOLE’s prerogative based on lack of employer-employee relationship. As exhaustively discussed here, the DOLE’s prerogative hinges on the existence of employer-employee relationship, the issue is which is at the very heart of this case. And the evidence clearly indicates private respondent has never been petitioner’s employee.

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VII

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Gaa vs Court of Appeals (140 SCRA 304)

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: Petitioner is not covered by Article 1708 since she does not fall within 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 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
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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.

Nestle Phils Inc., vs NLRC (193 SCRA 504) Facts: Four CBAs 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.
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Issue: Whether or not the workers have vested and demandable rights over the retirement plan Ruling: The 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. The petitioner's contention, that employees have no vested or demandable right to a noncontributory 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.

Five J Taxi vs. NLRC (235 SCRA 556) Facts: Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi drivers and, as such, they worked for 4 days weekly on a 24-hour shifting schedule. 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. In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already failed to report for work for unknown reasons. Petitioners learned that he was working for Mine of Gold Taxi Company. With respect to Sabsalon, while driving a taxicab of petitioners on September 1983, he was held up by his armed passenger who took all his money and thereafter stabbed him. He was hospitalized and after his discharge, he went to this home province to recuperate. In January, 1987, Sabsalon was re-admitted by petitioners as a taxi driver under the same terms and conditions as when he was first employed, but his working schedule was made on an alternative basis where he drove only every other day. However, on several occasions, he failed to report for work during his schedule. On September 22, 1991, Sabsalon failed to remit his
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boundary of P700.00 for the previous day. Also, he abandoned his taxicab in Makati without fuel refill worth P300.00. Despite repeated requests of petitioners for him to report for work, he adamantly refused. Afterwards it was revealed that he was driving a taxi for Bulaklak Company. Sometime in 1989, Maldigan requested petitioners for the reimbursement of his daily cash deposits for 2 years, but herein petitioners told him that not a single centavo 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 petitioners 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. On November 27, 1991, private respondents filed a complaint with the manila Arbitration Office of the National Labor Relations Commission charging petitioners with illegal dismissal and illegal deductions. Issue: Whether or not the deductions made were illegal and if illegal, considered a prohibition regarding wages. Ruling: The Court declares that the deposits made amounts to the prohibition provided by law. The deposits made were illegal and the respondents must be refunded. Article 114 of the Labor Code provides as follows: 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. It can be deduced that the said article provides the rule on deposits for loss or damage to tools, materials or equipments supplied by the employer. Clearly, the same does not apply to or permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his boundary. On the matter of the car wash payments, the labor arbiter had this to say in his decision: "Anent the issue of illegal deductions, there is no dispute that as a matter of practice in the taxi industry, after a tour of duty, it is incumbent upon the driver to restore the unit he has given to the same clean condition when he took it out, and as claimed by the respondents (petitioners in the present case), complainant(s) (private respondents herein) were made to shoulder the expenses for washing, the amount doled out was paid directly to the person who washed the unit, thus we find nothing illegal in this practice, much more (sic) to consider the amount paid by the driver as illegal deduction in the context of the law." Consequently, private respondents are not entitled to the refund of the P20.00 car wash payments they made. It will be noted that there was nothing to prevent private respondents from cleaning the taxi units themselves, if they wanted to save their P20.00. Also, as the Solicitor General
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correctly noted, car washing after a tour of duty is a practice in the taxi industry, and is, in fact, dictated by fair play.

Philippine Veterans Bank vs NLRC (G.R. No.130439. October 26, 1999)

Facts: In 1983, petitioner Philippine Veterans Bank was placed under receivership by the Central Bank (now Bangko Sentral). Petitioner was subsequently placed under liquidation on 15 June 1985. Consequently, its employees, including private respondent Dr. Jose Teodorico V. Molina, were terminated from work and given their respective separation pay and other benefits. To assist in the liquidation, some of petitioner’s former employees were rehired, among them Molina, whose re-employment commenced on 15 June 1985. On 11 May 1991, MOLINA filed a complaint against members of the liquidation team. The complaint demanded the implementation of Wage Orders Nos. NCR-01 and NCR-02 (hereafter W.O. 1 and W.O. 2) as well as moral damages and attorney’s fees in the amount of P300,000. Meanwhile, W.O. 1 took effect on November 1990, prescribing a P17-increase in the daily wage of employees whose monthly salary did not exceed P3,802.08. On the other hand, W.O. 2 became mandated a P12-increase in the daily wage of employees whose monthly salary did not exceed P4,319.16. Molina claimed that his salary should have been adjusted in compliance with said wage orders. The liquidation team countered that MOLINA was not entitled to any salary increase because he was already receiving a monthly salary of P6,654.60. Labor Arbiter rejected the 26.16 factor used by the liquidators in computing the daily wage of MOLINA, adopting instead the factor of ―365 days.‖ Consequently, they were ordered to pay Molina the wage differentials due him under W.O. 1 and W.O. 2. On appeal, the NLRC sustained the labor arbiter’s ruling after concluding that Molina was a regular employee of petitioner with a basic monthly salary of P3,754.60 at the time of his dismissal on 31 January 1992. He was, therefore, entitled to the wage increases mandated by the aforesaid wage orders. Issue: Whether Molina is entitled to wage increase computation that used the 365 days factor. Ruling: Molina is entitled to the wage increase computation using the 365 days as factor. The documents attached show that the Bank has been consistently using the factor of 365 days in computing your equivalent monthly salary prior to its being placed under receivership by the Central Bank. This is evident in the wage and allowance increases granted under previous Presidential Decrees and Wage Orders, which were given by the Bank on monthly basis, i.e., where the rest days are unworked but paid. This is also indicated in the appointment and service records of bank personnel who started out as daily paid employees and were eventually promoted as permanent employees with fixed monthly salaries. However, when R.A. 6640 went into force, the Bank unilaterally reduced the factor to 262 instead of maintaining factor 365 as was the practice/policy
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long before the effectivity of the Act. And when R.A 6727 took effect, the Bank reverted to the old practice/policy of using factor 365 days in computing your equivalent monthly rate salary. May we add that the old practice of the bank in using factor 365 days in a year in determining equivalent monthly salary cannot unilaterally be changed by your employer without the consent of the employees, such practice being now a part of the terms and conditions of your employment. An employment agreement, whether written or unwritten, is a bilateral contract and as such either party thereto cannot change or amend the terms thereof without the consent of the other party thereto. It is clear that respondent is entitled to the wage increase under R.A. 6440 computed on the basis of 365 paid days and to the corresponding salary differentials as a result of the application of this factor. Evidently, the use of the 365 factor is binding and conclusive, forming as it did part of the employment contract. To abandon such policy and revert to its old practice of using the 26.16 factor would be a diminution of a labor benefit, which is prohibited by the Labor Code. It cannot be doubted that the 365 factor favors petitioner’s employees because it results in a higher determination of their monthly salary.

Philippine Appliance Corp., vs Court of Appeals (G.R.No. 149434. June 3, 2004)

Facts: During the collective bargaining negotiations between petitioner and respondent union in 1997, petitioner offered the amount of P4, 000.00 to each employee as an ―early conclusion bonus‖. Petitioner claims that this bonus was promised as a unilateral incentive for the speeding up of negotiations between the parties and to encourage respondent union to exert their best efforts to conclude a CBA. Upon conclusion of the CBA negotiations, petitioner accordingly gave this early signing bonus. In view of the expiration of this CBA, respondent union sent notice to petitioner of its desire to negotiate a new CBA. Petitioner and respondent union began their negotiations. On October 22, 1999, after eleven meetings, respondent union expressed dissatisfaction at the outcome of the negotiations and declared a deadlock. A few days later, on October 26, 1999, respondent union filed a Notice of Strike with the NCMB, Region IV in Calamba, Laguna, due to the bargaining deadlock. The conciliation meetings started with eighteen unresolved items between petitioner and respondent union. At the meeting, respondent union accepted petitioner’s proposals on fourteen items, leaving the following items unresolved: wages, rice subsidy, signing, and retroactive bonus. Petitioner and respondent union failed to arrive at an agreement concerning these four remaining items. On January 2000, respondent union went on strike at the petitioner’s plant. The strike lasted for eleven days and resulted in the stoppage of manufacturing operations as well as losses for petitioner, which constrained it to file a petition before the Department of Labor and Employment. Labor Secretary assumed jurisdiction over the dispute and, on January 2000,
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ordered the striking workers to return to work within twenty-four hours from notice and directed petitioner to accept back the said employees. It rendered decision fixing the amount of wage increase and directed to conclude a CBA to include the items granted in the conference. Petitioner contested on the awarding of signing bonus. Issue: Whether or not signing bonus is covered under the maintenance of existing benefits. Ruling: The payment of signing bonus is not covered under the existing benefits. The Court has consistently ruled that a bonus is not a demandable and enforceable obligation. True, it may nevertheless be granted on equitable considerations as when the giving of such bonus has been the company’s long and regular practice. To be considered a ―regular practice,‖ however, the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof. Respondent does not contest the fact that petitioner initially offered a signing bonus only during the previous CBA negotiation. Previous to that, there is no evidence on record that petitioner ever offered the same or that the parties included a signing bonus among the items to be resolved in the CBA negotiation. Hence, the giving of such bonus cannot be deemed as an established practice considering that the same was given only once, that is, during the 1997 CBA negotiation.

Agabon vs NLRC (G.R. No.158693. November 17, 2004)

Facts: Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims. Issue: Whether or not respondent’s dismissal is illegal and if not, entitles them benefits.
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Ruling: The dismissal is legal and entitles them of payment of benefits. Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full back wages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted. Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed. In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural requirements of due process. The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employee’s last known address. Thus, it should be held liable for noncompliance with the procedural requirements of due process. The Court ruled that respondent is liable for petitioners’ holiday pay, service incentive leave pay and 13th month pay without deductions. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same so as ―to further protect the level of real wages from the ravages of worldwide inflation.‖ Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code.

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American Wire & Cable Daily Rated Employees vs American Wire (G.R. No.155059. April 29, 2005)

Facts: American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables. There are two unions in this company, the American Wire and Cable Monthly-Rated Employees Union and the American Wire and Cable Daily-Rated Employees Union. On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and Employment by the two unions for voluntary arbitration. They alleged that the private respondent, without valid cause, suddenly and unilaterally withdrew and denied certain benefits and entitlements which they have long enjoyed. These are Service Award, 35% premium pay of an employee’s basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29, Christmas Party and Promotional Increase. Issue: Whether or not the respondent company violated Article 100 of the Labor Code. Ruling: The Court ruled that company is not guilty of violating Art. 100 of the Labor Code, to wit: PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. – Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code. The certain benefits and entitlements are considered bonuses. A bonus can only be enforceable and demandable if it has ripened into a company practice. It must also be expressly agreed by the employer and employee or it must be on a fixed amount. The assailed benefits were never subjects of any agreement between the union and the company. It was never incorporated in the CBA. Since all these benefits are in the form of bonuses, it is neither enforceable nor demandable.

Honda Philippines Inc., vs Samahang Manggagawa sa Honda (G.R.No.145561, June 15, 2005)

Facts: The case stems from the collective bargaining agreement between Honda and the respondent union that it granted the computation of 14th month pay as the same as 13th month pay. Honda continues the practice of granting financial assistance covered every December each year of not less than 100% of the basic salary. In the latter part of 1998, the parties started to re-negotiate for
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the fourth and fifth years of the CBA. The union filed a notice of strike on the ground of unfair labor practice for deadlock. DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration. The striking employees were ordered to return to work and management to accept them back under the same terms prior to the strike staged. Honda issued a memorandum of the new computation of the 13th month and 14th month pay to be granted to all its employees whereby the 31 long strikes shall be considered unworked days for purpose of computing the said benefits. The amount equivalent to ½ of the employees’ basic salary shall be deducted from these bonuses, with a commitment that in the event that the strike is declared legal, Honda shall pay the amount. The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to voluntary arbitration where it ruled that the company’s implementation of the pro-rated computation is invalid. Issue: Whether or not the pro-rated computation of the 13th and 14th month pays and other bonuses in question is valid and lawful Ruling: The pro-rated computation is invalid. The pro-rated computation of Honda as a company policy has not ripened into a company practice and it was the first time they implemented such practice. The payment of the 13th month pay in full month payment by Honda has become an established practice. The length of time where it should be considered in practice is not being laid down by jurisprudence. The voluntary act of the employer cannot be unilaterally withdrawn without violating Article 100 of the Labor Code. The court also rules that the withdrawal of the benefit of paying a full month salary for 13th month pay shall constitute a violation of Article 100 of the Labor Code.

Producers Bank vs NLRC (335 SCRA 506) Facts: Petitioner was placed by Central Bank of the Philippines (Bangko Sentral ng Pilipinas) under a conservator for the purpose of protecting its assets. When the respondents ought to implement the CBA (Sec. 1, Art. 11) regarding the retirement plan and pertaining to uniform allowance, the acting conservator of the petition expressed objection resulting an impasse between the petitioner bank and respondent union. The deadlock continued for at least six months. The private respondent, to resolve the issue filed a case against petitioner for unfair labor practice and flagrant violation of the CBA.

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The Labor Arbiter dismissed the petition. NLRC reversed the findings and ordered the implementation of the CBA. Issue: Whether or not the employees who have retired have no personality to file an action since there is no longer an employer-employee relationship. Ruling: The Court rules that employees who have retired still have the personality to file a complaint. Retirement results from a voluntary agreement between the employer and the employee whereby the latter after reaching a certain age agrees to sever his employment with the former. The very essence of retirement is the termination of employer-employee relationship. Retirement of the employee does not in itself affect his employment status especially when it involves all rights and benefits due to him, since these must be protected as though there had been no interruption of service. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted as it were a continuing consideration of services rendered as well as an effective inducement foe remaining with the corporation. It is intended to help the employee enjoy the remaining years of his life. When the retired employees were requesting that their retirement benefits be granted, they were not pleading for generosity but merely demanding that their rights, embodied in the CBA, be recognized. When an employee has retired but his benefits under the law or CBA have not yet been given, he still retains, for the purpose of prosecuting his claims, the status of an employee entitled to the protection of the Labor Code, one of which is the protection of the labor union.

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

Facts: Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondent’s taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from petitioners’ daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests. Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of
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washing fees. In a dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit. Issue: Whether or not the deduction for the washing of taxi units is illegal. Ruling: The deduction made for the car wash is not illegal. In Five J Taxi vs. NLRC, the court views that it is not illegal in the context of the law. We note that after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair play. Hence, the drivers are not entitled to reimbursement of washing charges.

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

Facts: Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate and maintain horse races, entered into a Collective Bargaining Agreement (CBA) effective January 1, 1996 to December 31, 2000. The CBA governed the economic rights and obligations of respondent’s regular monthly paid rank-and-file employees. In the CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday. On April 3, 1999, respondent issued an inter-office memorandum declaring that, effective April 20, 1999, the hours of work of regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and Thursday. The memorandum, however, maintained the 9:00 a.m. to 5:00 p.m. schedule for non-race days. On October 12, 1999, petitioner and respondent entered into an Amended and Supplemental CBA retaining Section 1 of Article IV and Section 2 of Article XI, supra, and clarified that any conflict arising therefrom shall be referred to a voluntary arbitrator for resolution. Subsequently, before a panel of voluntary arbitrators of the National Conciliation and Mediation Board (NCMB), petitioner questioned the above office memorandum as violative of the prohibition against non-diminution of wages and benefits guaranteed under Section 1, Article IV, of the CBA which specified the work schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. Petitioner claimed that as a result of the memorandum, the employees are precluded from rendering their usual overtime work from 5:00 p.m. to 9:00 p.m. The NCMB’s panel of voluntary arbitrators, in a decision dated October 18, 2001, upheld respondent's prerogative to change the work schedule of regular monthly-paid employees under
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Section 2, Article XI, of the CBA. Petitioner moved for reconsideration but the panel denied the motion. Issue: Whether or not the respondent violated the non-diminution of benefits under Article 100 of the Labor Code. Ruling: The respondent did not violate the principle of non-diminution of benefits. The provision of the CBA also grants respondent the prerogative to relieve employees from duty because of lack of work. Petitioner’s argument, therefore, that the change in work schedule violates Article 100 of the Labor Code because it resulted in the diminution of the benefit enjoyed by regular monthly-paid employees of rendering overtime work with pay, is untenable. Section 1, Article IV, of the CBA does not guarantee overtime work for all the employees but merely provides that "all work performed in excess of seven (7) hours work schedule and on days not included within the work week shall be considered overtime and paid as such." Respondent was not obliged to allow all its employees to render overtime work everyday for the whole year, but only those employees whose services were needed after their regular working hours and only upon the instructions of management. The overtime pay was not given to each employee consistently, deliberately and unconditionally, but as a compensation for additional services rendered. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code on prohibition against elimination or diminution of benefits.

San Miguel Corp., vs Layoc Jr. et al., (G.R. No. 149640. October 19, 2007) Facts: Respondents were among the "Supervisory Security Guards" of the Beer Division of San Miguel Corporation. They started working as guards with the petitioner San Miguel Corporation assigned to the Beer Division on different dates until such time that they were promoted as supervising security guards. From the commencement of their employment, the private respondents were required to punch their time cards for purposes of determining the time they would come in and out of the company's work place. Corollary, the private respondents were availing the benefits for overtime, holiday and night premium duty through time card punching. However, in the early 1990's, the San Miguel Corporation embarked on a Decentralization Program aimed at enabling the separate divisions of the San Miguel Corporation to pursue a more efficient and effective management of their respective operations. As a result of the Decentralization Program, the Beer Division of the San Miguel Corporation implemented on January 1, 1993 a "no time card policy" whereby the Supervisory I and II composing of the supervising security guards of the Beer Division were no longer required to punch their time cards. Consequently, on January 16, 1993, without prior consultation with the private respondents, the time cards were ordered confiscated and the latter were no longer
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allowed to render overtime work. However, in lieu of the overtime pay and the premium pay, the personnel of the Beer Division of the petitioner San Miguel Corporation affected by the "No Time Card Policy" were given a 10% across-the-board increase on their basic pay while the supervisors who were assigned in the night shift (6:00 p.m. to 6:00 a.m.) were given night shift allowance ranging from P2,000.00 to P2,500.00 a month. Hence, this complaint filed for unfair labor practice, violation of Article 100 of the Labor Code of the Philippines, and violation of the equal protection clause and due process of law in relation to paragraphs 6 and 8 of Article 32 of the New Civil Code of the Philippines. Issue: Whether the circumstances in the present case constitute an exception to the rule that supervisory employees are not entitled to overtime pay. Ruling: Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions and rest periods shall not apply to managerial employees. The other provisions in the Title include normal hours of work (Article 83), hours worked (Article 84), meal periods (Article 85), night shift differential (Article 86), overtime work (Article 87), undertime not offset by overtime (Article 88), emergency overtime work (Article 89), and computation of additional compensation (Article 90). It is thus clear that, generally, managerial employees such as respondents are not entitled to overtime pay for services rendered in excess of eight hours a day. Respondents failed to show that the circumstances of the present case constitute an exception to this general rule. Aside from their allegations, respondents were not able to present anything to prove that petitioners were obliged to permit respondents to render overtime work and give them the corresponding overtime pay. Even if petitioners did not institute a "no time card policy," respondents could not demand overtime pay from petitioners if respondents did not render overtime work. The requirement of rendering additional service differentiates overtime pay from benefits such as thirteenth month pay or yearly merit increase. These benefits do not require any additional service from their beneficiaries. Thus, overtime pay does not fall within the definition of benefits under Article 100 of the Labor Code. Hence, the petition is granted.

San Miguel Corp vs Pontillas (G.R.No.155178,May 7, 2008) Facts: On 24 October 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas (respondent) as a daily wage company guard. In 1984, respondent became a monthly-paid employee which entitled him to yearly increases in salary. On 19 October 1993, respondent filed an action for recovery of damages due to discrimination under Article 100 of the Labor Code of the Philippines (Labor Code), as amended, as well as for recovery of salary differential and backwages, against petitioner. Respondent questioned the rate of salary increase given him by petitioner.
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On 6 December 1993, Ricardo F. Elizagaque (Elizagaque), petitioner’s Vice President and VisMin Operations Center Manager, issued a Memorandum ordering, among others, the transfer of responsibility of the Oro Verde Warehouse to the newly-organized VisMin Logistics Operations effective 1 January 1994. Respondent continued to report at Oro Verde Warehouse. He alleged that he was not properly notified of the transfer and that he did not receive any written order from Capt. Fortich, his immediate superior. In a letter dated 28 February 1994, petitioner informed respondent that an administrative investigation.In a letter dated 7 April 1994, petitioner informed respondent of its decision to terminate him for violating company rules and regulations, particularly for Insubordination or Willful Disobedience in Carrying Out Reasonable Instructions of his superior. Issue: Whether or not respondent’s dismissal from employment is legal. Ruling: Respondent was dismissed for a just cause. An employer may terminate an employment for serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. Willful disobedience requires the concurrence of two elements: (1) the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. The records show that respondent was not singled out for the transfer. Respondent’s transfer was the effect of the integration of the functions of the Mandaue Brewery – Materials Management and the Physical Distribution group into a unified logistics organization, the VisMin Logistics Operations. Moreover, the employer exercises the prerogative to transfer an employee for valid reasons and according to the requirements of its business, provided the transfer does not result in demotion in rank or diminution of the employee’s salary, benefits, and other privileges. In this case, we found that the order of transfer was reasonable and lawful considering the integration of Oro Verde Warehouse with VisMin Logistics Operations. Respondent was properly informed of the transfer but he refused to receive the notices on the pretext that he was wary because of his pending case against petitioner. Respondent failed to prove that petitioner was acting in bad faith in effecting the transfer. There was no demotion involved, or even a diminution of his salary, benefits, and other privileges. Respondent’s persistent refusal to obey petitioner’s lawful order amounts to wilful disobedience under Article 282 of the Labor Code.

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Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco Metal – NAFLU (G.R. 170734, May 14, 2008)

Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioner’s rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). Issue: Whether or not the grant of 13th month pay, bonus, and leave encashment in full regardless of actual service rendered constitutes voluntary employer practice and, consequently, whether or not the prorated payment of the said benefits constitute diminution of benefits under Article 100 of the Labor Code. Ruling: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare and to afford labor full protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor. Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily given by the employer and which ripened into company practice. Thus in DavaoFruits Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously included in the computation of the 13th month pay those items that were expressly excluded by the law, we held that the act which was favorable to the employees though not conforming to law had thus ripened into a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the employer’s act of including non-basic benefits in the computation of the 13th month pay was a voluntary act and had ripened into a company practice which cannot be peremptorily withdrawn. In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of the length of service rendered. True, there were only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice must be exercised in
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order to constitute voluntary company practice. Thus, it can be six (6) years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group head.

Aguanza vs. Asian Terminal Inc. et al (G.R.No.163505, August 14,2009) Facts: Aguanza was employed with respondent company Asian Terminal, Inc. from April 15, 1989 to October 1997. He was initially employed as Derickman or Crane Operator and was assigned as such aboard Bismark IV, a floating crane barge owned by Asian Terminals, Inc. based at the port of Manila. On October 20, 1997, respondent James Keith issued a memo to the crew of Bismark IV stating that the barge had been permanently transferred to the Mariveles Grains terminal beginning October 1, 1997 and because of that, its crew would no longer be entitled to out of port benefits of 16 hours overtime and P200 a day allowance. On September 28, 1998, the Labor Arbiter found that respondents illegally dismissed Aguanza. Aguanza was willing to report back to work despite the lack of agreement on his demands but without prejudice to his claims. Respondents appealed from the Labor Arbiter's judgment and appealed to the NLRC which dismissed Aguanza's complaint and set aside the decision of the Labor Arbiter. Issue: Whether or not Aguanza's transfer was a valid exercise of management prerogative Ruling: ATI's transfer of Bismark IV's base from Manila to Bataan was, contrary to Aguanza's assertions, a valid exercise of management prerogative. The transfer of employees has been traditionally among the acts identified as a management prerogative subject only to limitations found in law, collective bargaining agreement, and general principles of fair play and justice. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. On the other hand, the transfer of an employee may constitute constructive dismissal "when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee".
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Aguanza even asserted, contrary to his acts, that he bound himself to work in such place where ATI might assign or transfer him. ATI did not dismiss Aguanza; rather, Aguanza refused to report to his proper workplace.

Genesis Transport Service et al., vs UMM Genesis Transport (G.R.No.182114,April 5, 2010)

Facts: Respondent Juan Taroy was hired by petitioner Genesis Transport as driver on commission basis at 9% of the gross revenue per trip. He, after due notice and hearing, terminated from employment after an accident on April 20, 2002 where he was deemed to have been driving recklessly. He then filed a complaint for illegal dismissal and payment of service incentive leave pay, claiming that he was singled out for termination because of his union activities, other drivers who had met accidents not having been dismissed from employment. He later amended his complaint to implead his co-respondent union and add as grounds unfair labor practice and reimbursement of illegal deductions on tollgate fees, and payment of service incentive leave pay. Upon appeal, with respect to Taroy’s claim for refund, the Labor Arbiter ruled in his favor for if, as contended by Genesis Transport, tollgate fees form part of overhead expense, why were not expenses for fuel and maintenance also charged to overhead expense. The Labor Arbiter thus concluded that ―it would appear that the tollgate fees are deducted from the gross revenues and not from the salaries of drivers and conductors, but certainly the deduction thereof diminishes the take home pay of the employees. Issue: Whether the tollgate fee deductions which resulted to an underpayment given to Taroy is illegal Ruling: The deduction is considered illegal. The amounts representing tollgate fees were deducted from gross revenues and not directly from Taroy’s commissions, the labor tribunal and the appellate court correctly held that the withholding of those amounts reduced the amount from which Taroy’s 9% commission would be computed. Such a computation not only marks a change in the method of payment of wages, resulting in a diminution of Taroy’s wages in violation of Article 113 vis-à-vis Article 100 of the Labor Code, as amended. It need not be underlined that without Taroy’s written consent or authorization, the deduction is considered illegal. Besides, the invocation of the rule on ―company practice‖ is generally used with respect to the grant of additional benefits to employees, not on issues involving diminution of benefits.

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Central Azucarera De Tarlac vs Central Azucarera De Tarlac Labor Union-NLU (G.R.No.188949, July 26, 2010) Facts: Petitioner is a domestic corporation engaged in the business of sugar manufacturing, while respondent is a legitimate labor organization which serves as the exclusive bargaining representative of petitioner's rank-and-file employees. The controversy stems from the interpretation of the term "basic pay," essential in the computation of the 13th-month pay. In compliance with Presidential Decree (P.D.) No. 851, petitioner granted its employees the mandatory thirteenth (13th)-month pay since 1975. The formula used by petitioner in computing the 13th-month pay was: Total Basic Annual Salary divided by twelve (12). Included in petitioner's computation of the Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and sick leaves for each year. Throughout the years, petitioner used this computation until 2006. Respondent staged a strike. During the pendency of the strike, petitioner declared a temporary cessation of operations. In December 2005, all the striking union members were allowed to return to work. In December 2006, petitioner gave the employees their 13th-month pay based on the employee's total earnings during the year divided by 12. Respondent objected to this computation. It averred that petitioner did not adhere to the usual computation of the 13th-month pay. It claimed that the divisor should have been eight (8) instead of 12, because the employees worked for only 8 months in 2006. It likewise asserted that petitioner did not observe the company practice of giving its employees the guaranteed amount equivalent to their one month pay, in instances where the computed 13th-month pay was less than their basic monthly pay. The respondent filed a complaint against petitioner for money claims based on the alleged diminution of benefits/erroneous computation of 13th-month pay before the Regional Arbitration Branch of NLRC. Issue: Whether or not basic salary shall be included in the computation of the 13th-month pay Ruling: The Rules and Regulations Implementing P.D. No. 851, promulgated on December 22, 1975, defines 13th-month pay and basic salary as follows: Sec. 2.Definition of certain terms. — As used in this issuance: (a)"Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year; (b)"Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.
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The practice of petitioner in giving 13th-month pay based on the employees' gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn. The argument of petitioner that the grant of the benefit was not voluntary and was due to error in the interpretation of what is included in the basic salary deserves scant consideration. No doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to decipher. The voluntariness of the grant of the benefit was manifested by the number of years the employer had paid the benefit to its employees. Petitioner only changed the formula in the computation of the 13th-month pay after almost 30 years and only after the dispute between the management and employees erupted. This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith.

SHS Perforated Materials, Inc. et al, vs Diaz (G.R.No.185814, October 13, 2010)

Facts: SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone Authority. Petitioner Hartmannshenn, a German national, is its president, in which capacity he determines the administration and direction of the day-to-day business affairs of SHS. Petitioner Schumacher, also a German national, is the treasurer and one of the board directors. As such, he is authorized to pay all bills, payrolls, and other just debts of SHS of whatever nature upon maturity. Schumacher is also the Executive Vice-President of the European Chamber of Commerce of the Philippines (ECCP) which is a separate entity from SHS. Both entities have an arrangement where ECCP handles the payroll requirements of SHS to simplify business operations and minimize operational expenses. Thus, the wages of SHS employees are paid out by ECCP, through its Accounting Services Department headed by Taguiang. During respondent's employment, Hartmannshenn was often abroad and, because of business exigencies, his instructions to respondent were either sent by electronic mail or relayed through telephone or mobile phone. When he would be in the Philippines, he and the respondent held meetings. As to respondent's work, there was no close supervision by him. On December 9, 2005, respondent filed a Complaint against the petitioners for illegal dismissal; non-payment of salaries/wages and 13th month pay with prayer for reinstatement and full backwages; exemplary damages, and attorney's fees, costs of suit, and legal interest. The Labor Arbiter declared complainant as having been illegally dismissed and further ordering his immediate reinstatement without loss of seniority rights and benefits. However, NLRC reversed the decision of the Labor Arbiter explaining that the withholding of respondent's salary was a valid exercise of management prerogative. Issues: Whether or not the temporary withholding of respondent's salary/wages by petitioners was a valid exercise of management prerogative Whether or not respondent voluntarily resigned.

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Ruling: Management prerogative refers "to the right of an employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work." Although management prerogative refers to "the right to regulate all aspects of employment," it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the employee. To sanction such an interpretation would be contrary to Article 116 of the Labor Code, which provides: ART. 116.Withholding of wages and kickbacks prohibited. — It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker's consent. Any withholding of an employee's wages by an employer may only be allowed in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below: ART. 113.Wage Deduction. — No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: (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. Absent a showing that the withholding of complainant's wages falls under the exceptions provided in Article 113, the withholding thereof is thus unlawful. In this case, the withholding of respondent's salary does not fall under any of the circumstances provided under Article 113. Neither was it established with certainty that respondent did not work from November 16 to November 30, 2005. Hence, the Court agrees with the LA and the CA that the unlawful withholding of respondent's salary amounts to constructive dismissal.

Niña Jewelry Manufacturing of Metal Arts Inc. vs Montecillo (G.R.No188169, November 28, 2011) Facts: Madeline Montecillo (Madeline) and Liza Trinidad (Liza) hereinafter referred to collectively as the respondents, were first employed as goldsmiths by the petitioner Niña Jewelry Manufacturing of Metal Arts, Inc. (Niña Jewelry) in 1996 and 1994, respectively. Madeline's weekly rate was P1,500.00 while Liza's was P2,500.00. Petitioner Elisea Abella (Elisea) is Niña Jewelry's president and general manager.

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On August 13, 2004, Niña Jewelry imposed a policy for goldsmiths requiring them to post cash bonds or deposits in varying amounts but in no case exceeding 15% of the latter's salaries per week. The deposits were intended to answer for any loss or damage which Niña Jewelry may sustain by reason of the goldsmiths' fault or negligence in handling the gold entrusted to them. The deposits shall be returned upon completion of the goldsmiths' work and after an accounting of the gold received. Niña Jewelry alleged that the goldsmiths were given the option not to post deposits, but to sign authorizations allowing the former to deduct from the latter's salaries amounts not exceeding 15% of their take home pay should it be found that they lost the gold entrusted to them. The respondents claimed otherwise insisting that Niña Jewelry left the goldsmiths with no option but to post the deposits. The respondents alleged that they were constructively dismissed by Niña Jewelry as their continued employments were made dependent on their readiness to post the required deposits. Issue: Whether or not the petitioners constructively dismissed the respondents Ruling: Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. The petitioners did not whimsically or arbitrarily impose the policy to post cash bonds or make deductions from the workers' salaries. As attested to by the respondents' fellow goldsmiths in their Joint Affidavit, the workers were convened and informed of the reason behind the implementation of the new policy. Instead of airing their concerns, the respondents just promptly stopped reporting for work and no dismissal, constructive or otherwise, occurred.

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VIII

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Congson vs NLRC (243 SCRA 260) Facts: Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on various dates 3 by petitioner as regular piece-rate workers. They were uniformly paid at a rate of P1.00 per tuna weighing thirty (30) to eighty (80) kilos per movement. They worked seven (7) days a week. During the first week of June 1990, petitioner notified his workers of his proposal to reduce the rate-per-tuna movement due to the scarcity of tuna. Private respondents resisted petitioner's proposed rate reduction. When they reported for work the next day, they were informed that they had been replaced by a new set of workers. On June 1990, private respondents filed a case against petitioner before the NLRC for underpayment of wages (non-compliance with Rep. Act Nos. 6640 and 6727) and non-payment of overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)-day service incentive leave pay; and for constructive dismissal. With respect to their monetary claims, private respondents charged petitioner with violation of the minimum wage law, alleging that with petitioner's rates and the scarcity of tuna catches, private respondents' average monthly earnings each did not exceed ONE THOUSAND PESOS (P1,000.00). In addition to the amount of P1.00 per 'bariles' per movement herein complainants get the intestines and liver of the tuna as part of their salary. That for every tuna delivered, herein complainants extract at least three (3) kilos of intestines and liver. That the minimum prevailing price of tuna intestine and liver in 1986 to 1990 range from P15.00 to P20.00/kilo. The value of the tuna intestine and liver should be computed in arriving at the daily wage of herein complainants because the very essence of the agreement between complainants and respondent is: complainants shall be paid only P1.00 per tuna per movement BUT the intestines and liver of the tuna delivered shall go to the herein complainants. It should be noted that tuna intestines and liver are easily disposed of in any public market. What they are after, in truth and in fact is the tuna intestines and liver which they can easily convert into cash." Quite clearly, petitioner admits that the P1.00-per-tuna movement is the actual wage rate applied to private respondents as expressly agreed upon by both parties. Petitioner further admits that private respondents were entitled to retrieve the tuna intestines and liver as part of their compensation. Finally, petitioner does not refute Labor Arbiter when the latter fixed private respondents' individual monthly wage at P2,670 computed at the mandatory daily wage of P89.00. Petitioner therefore argues that the combined value of private respondents' cash wage and the monetary value of the tuna liver and intestines clearly exceeded the minimum wage fixed by law. Issue: Whether or not the means of payment of the wage is valid.

Ruling: The Court does not agree with the petitioner. The Labor Code expressly provides:
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"Article 102. Forms of Payment. — No employer shall pay the wages of an employee by means of, promissory notes vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee. Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of effectivity of this Code, or is necessary because as specified in appropriate regulations to be issued by the Secretary of Labor or as stipulated in a collective bargaining agreement." Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of legal tender combined with tuna liver and intestines runs counter to the abovecited provision of the Labor Code. The fact that said method of paying the minimum wage was not only agreed upon by both parties in the employment agreement but even expressly requested by private respondents, does not shield petitioner. Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance when an employer is permitted to pay wages in forms other than legal tender, that is, by checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are present.

North Davao Mining vs NLRC (254 SCRA 721)

Facts: Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason of the company’s closure on May 31, 1992, and who were the complainants in the cases before the respondent labor arbiter. On May 31, 1992, petitioner North Davao completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos per year, for each of the five years prior to its closure. All told five months prior to its closure, its total liabilities had exceeded its assets by 20.392 billion pesos. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days’ pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty days’ pay for every year of service. Moreover, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 ½hours’ travel time by public transportation; this arrangement lasted from 1981 up to 1990. Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo Guillema and 271 other seperated employees for additional separation pay; back wages; transportation allowance; hazard pay; etc., amounting to P58,022,878.31. Issue: Whether or not the time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time.

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Ruling: Hours spent by complainants in collecting salaries shall be considered compensable hours worked. It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not official. Records also show that on February 12,1992, when an inspection was conducted by the Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that petitioners had violated labor standards law, one of which is the place of payment of wages. Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that: Place of payment. - (a) As a general rule, the place of payment shall be at or near the place of undertaking. Payment in a place other than the workplace shall be permissible only under the following circumstances: (1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; (2) When the employer provides free transportation to the employees back and forth; and (3) Under any analogous circumstances; provided that the time spent by the employees in collecting their wages shall be considered as compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2½ hours by travel and the risks in commuting all the time in collecting complainants’ salaries, would justify the granting of backwages equivalent to 2 days in a month.

National Federation of Labor vs CA (G.R.No.149464, October 19, 2004)

Facts: American Rubber Company, Inc. (ARCI) is a domestic corporation existing in and incorporated under the laws of the Philippines. It was the registered and beneficial owner of a 1,024-hectare rubber plantation in Latuan, Isabela, Basilan. ARCI entered into a Farm Management Agreement (FMA) with SDPI, another domestic corporation, involving the 1,024-hectare rubber plantation in Latuan and other rubber plantations. SDPI was given the right to manage, administer, develop, cultivate, and improve the rubber plantations as an agro-industrial development project, specifically for planting rubber trees, processing of and marketing of its products and providing technical expertise for a period of twenty-five years, or up to the year 2011. National Federation of Labor (NFL) was the duly registered bargaining agent of the daily-andmonthly-paid rank-and-file employees of SDPI in the Latuan rubber plantation. SDPI and NFL executed a collective bargaining agreement (CBA) in which they agreed that in case of permanent or temporary lay-off, workers affected would be entitled to termination pay as
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provided by the Labor Code. The 150 petitioners were daily-and-monthly-paid employees of SDPI in the Latuan plantation and were, likewise, members of NFL. On June 15, 1988, during the effectivity of the FMA between ARCI and SDPI, Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988, took effect. Prior to the expiration of the June 30, 1998 deadline, SDPI decided to terminate the FMA with ARCI and cease operation of the rubber plantation. When the 150 daily-and-monthly-paid rankand-file employees received their individual termination letters, the members of the NFL metand approved Resolution No. 1, Series of 1998, requesting SDPI that the separation pay benefits for its members be segregated from regular workdays, vacation leave, unused sick leave and other benefits. Issues: Whether or not the CA erred in holding that the petitioners are entitled to separation pay equivalent to one-half month pay for every year of employment with the private respondent Ruling: CA did not err. Article 283 of the Labor Code provides that employees who are dismissed due to closures that are not due to business insolvency should be paid separation pay equivalent to one-month pay or to at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one whole year, thus: ART. 283.Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. In this case, the petitioners had served the respondent SDPI for a period longer than six months. Hence, their separation pay computed at one-half month pay per year of service is more than the minimum one-month pay.

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House of Sara Lee vs Rey (G.R.No.149013, August 31, 2006)

Facts: The House of Sara Lee is engaged in the direct selling of a variety of product lines for men and women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items, through its various outlets nationwide. In the pursuit of its business, the petitioner engages and contracts with dealers to sell the aforementioned merchandise. These dealers, known either as ―Independent Business Managers‖ (IBMs) or ―Independent Group Supervisors‖ (IGSs), depending on whether they sell individually or through their own group, would obtain at discounted rates the merchandise from the petitioner on credit or then sell the same products to their own customers at fixed prices also determined by the petitioner. In turn, the dealers are paid ―Services Fees,‖ or sales commissions, the amount of which depends on the volume and value of their sales. Under existing company policy, the dealers must remit to the petitioner the proceeds of their sales within a designated credit period, which would either be 38 days for IGSs or 52 days for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner. To discourage late remittances, the petitioner imposes a ―Credit Administration Charge,‖ or simply, a penalty charge, on the value of the unremitted payment. The dealers under this system earn income through a profit margin between the discounted purchase price they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On top of this margin, the dealer is given the Service Fee, a sales commission, based on the volume of sales generated by him or her. Due to the sheer volume of sales generated by all of its outlets, the petitioner has found the need to strictly monitor the 38- or 52day ―rolling due date‖ of each of its IBMs and IGSs through the employment of ―Credit Administration Supervisors‖ (CAS) for each branch. The primary duty of the CAS is to strictly monitor each of these deadlines, to supervise the credit and collection of payments and outstanding accounts due to the petitioner from its independent dealers and various customers, and to screen prospective IBMs. To discharge these responsibilities, the CAS is provided with a computer equipped with control systems through which data is readily generated. Under this organizational setup, the CAS is under the direct and immediate supervision of the Branch Operations Manager (BOM). Cynthia Rey at the time of her dismissal from employment, held the position of Credit Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first employed by the petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent was transferred to the Cagayan de Oro City branch retaining the same position. In January 1994, respondent was elevated to the position of CAS. At that time, the Branch Operations Manager or BOM of the Cagayan de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent was temporarily assigned to the Butuan City branch. Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one of the IBMs of the petitioner who happens to be respondent’s sister-in-law, from the 52day limit to an ―unauthorized‖ term of 60 days. The respondent made the instruction just before the computer data for the computation of the Service Fee accruing to Ms. Rey-Petilla was about
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to be generated. Ms. Mendoza then reported this allegedly unauthorized act of respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified the records and discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had been extended by the respondent, but there were several other IBMs whose credit terms had been similarly extended beyond the periods allowed by company policy. BOM Villagracia then summoned the respondent and required her to explain the unauthorized credit extensions. Respondent received a favorable decision from the Labor Arbiter granting her payment of 13th month pay and other monetary benefits. Issue: Whether or not respondent is entitled to 13th month pay. Ruling: The award of 13th month pay must be deleted. Respondent is not a rank-and-file employee and is, therefore, not entitled to thirteenth-month pay. However, the NLRC and the CA are correct in refusing to award 14th and 15th month pay as well as the ―monthly salary increase of 10 percent per year for two years based on her latest salary rate.‖ The respondent must show that these benefits are due to her as a matter of right. Mere allegations by the respondent do not suffice in the absence of proof supporting the same. With respect to salary increases in particular, the respondent must likewise show that she has a vested right to the same, such that her salary increases can be made a component in the computation of backwages. What is evident is that salary increases are a mere expectancy. They are by nature volatile and dependent on numerous variables, including the company’s fiscal situation, the employee’s future performance on the job, or the employee’s continued stay in a position. In short, absent any proof, there is no vested right to salary increases.

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IX

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San Juan de Dios Hospital vs NLRC (282 SCRA 316)

Facts: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees Association sent a four (4)-page letter with attached support signatures requesting and pleading for the expeditious implementation and payment by respondent Juan De Dios Hospital of the 40 HOURS/5-DAY WORKWEEK with compensable weekly two (2) days off provided for by Republic Act 5901 as clarified for enforcement by the Secretary of Labor’s Policy Instructions No. 54 dated April 12, 1988.‖ Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regarding their claims for statutory benefits under the above-cited law and policy issuance. On February 26, 1992, the Labor Arbiter dismissed the complaint. Petitioners appealed before public respondent National Labor Relations Commission which affirmed the Labor Arbiter’s decision. Issue: Whether Policy Instructions No. 54 issued by then Labor Secretary (now Senator) Franklin M. Drilon is valid or not. Ruling: The policy instruction is not valid. This issuance clarifies the enforcement policy of this Department on the working hours and compensation of personnel employed by hospital/clinics with a bed capacity of 100 or more and those located in cities and municipalities with a population of one million or more. Reliance on Republic Act No. 5901, however, is misplaced for the said statute, as correctly ruled by respondent NLRC, and has long been repealed with the passage of the Labor Code on May 1, 1974. Article 302 of which explicitly provide: ―All labor laws not adopted as part of this Code either directly or by reference are hereby repealed. All provisions of existing laws, orders, decrees, rules and regulations inconsistent herewith are likewise repealed.‖ Accordingly, only Article 83 of the Labor Code which appears to have substantially incorporated or reproduced the basic provisions of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latter’s validity may be gauged. Article 83 of the Labor Code states: Normal Hours of Work. -The normal hours of work of any employee shall not exceed eight (8) hours a day. ―Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, ―health personnel‖ shall include: resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.‖
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A cursory reading of Article 83 of the Labor Code betrays petitioners’ position that ―hospital employees‖ are entitled to ―a full weekly salary with paid two (2) days’ off if they have completed the 40-hour/5-day workweek‖. What Article 83 merely provides are: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2) where the exigencies of service require that health personnel work for six days or forty-eight hours then such health personnel shall be entitled to an additional compensation of at least thirty percent of their regular wage for work on the sixth day. There is nothing in the law that supports then Secretary of Labor’s assertion that ―personnel in subject hospitals and clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in any given workweek‖. Needless to say, the Secretary of Labor exceeded his authority by including a two days off with pay in contravention of the clear mandate of the statute. Administrative interpretation of the law is at best merely advisory, and the Court will not hesitate to strike down an administrative interpretation that deviates from the provision of the statute.

Sime Darby Pilipinas Inc., vs NLRC (289 SCRA 86)

Facts: Prior to the present controversy, all company factory workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid ―on call‖ lunch break. On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a change in work schedule effective 14 September 1992 thus – 7:45 A.M. – 4:45 P.M. (Mon to Fri) 7:45 A.M. – 11:45 P.M. (Sat). Coffee break time will be ten minutes only anytime between: 9:30 A.M. –10:30 A.M. and 2:30 P.M. –3:30 P.M. Lunch break will be between: 12:00 NN –1:00 P.M. (Mon to Fri). Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their work and break time schedules will be maintained as it is now. Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid ―on call‖ lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this Court the Labor Arbiter dismissed the complaint on the ground that the change in the work schedule and the elimination of the 30-minute paid lunch break of the factory workers constituted a valid exercise of management prerogative and that the new work schedule, break time and one-hour lunch break did not have the effect of diminishing the benefits granted to factory workers as the working time did not exceed eight (8) hours. Issue: Whether or not the act of management in revising the work schedule of its employees and discarding their paid lunch break constitutive of unfair labor practice.
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Ruling: The revision of work schedule is a management prerogative and does not amount to unfair labor practice in discarding the paid lunch break. The right to fix the work schedules of the employees rests principally on their employer. In the instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production. It rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could be called upon to do jobs during that period as they were ―on call.‖ Even if denominated as lunch break, this period could very well be considered as working time because the factory employees were required to work if necessary and were paid accordingly for working. With the new work schedule, the employees are now given a one-hour lunch break without any interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period. The Court agrees with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly situated whether they are union members or not.

Philippine Airlines vs NLRC (302 SCRA 582)

Facts: Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight. On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at his residence, which was about five-minute drive away. A few minutes later, the clinic received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of the emergency. The patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately rushed him to the hospital. When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following day. Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon required private respondent to explain why no disciplinary sanction should be taken against him. In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him.
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Finding private respondent’s explanation unacceptable, the management charged private respondent with abandonment of post while on duty. He was given ten days to submit a written answer to the administrative charge. In his answer, private respondent reiterated the assertions in his previous explanation. He further denied that he abandoned his post on February 17, 1994. He said that he only left the clinic to have his dinner at home. In fact, he returned to the clinic at 7:51 in the evening upon being informed of the emergency. After evaluating the charge as well as the answer of private respondent, petitioner company decided to suspend private respondent for three months effective December 16, 1994. Issue: Whether or not being a full-time employee is obliged to stay in the company premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time, even to take his meals. Ruling: The Court does not agree with the petitioner. Articles 83 and 85 of the Labor Code read: Normal hours of work—The normal hours of work of any employee shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, ―health personnel‖ shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. Art. 85. Meal periods.—Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals. Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states: Sec. 7. Meal and Rest Periods.—Every employer shall give his employees, regardless of sex, not less than one (1) hour time-off for regular meals, except in the following cases when a meal period of not less than twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as compensable hours worked of the employee; (a) Where the work is non-manual work in nature or does not involve strenuous physical exertion; (b) Where the establishment regularly operates not less than sixteen hours a day; (c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the employer would otherwise suffer; and
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(d) Where the work is necessary to prevent serious loss of perishable goods. Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time. Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that employees must take their meals within the company premises. Employees are not prohibited from going out of the premises as long as they return to their posts on time. Private respondent’s act of going home to take his dinner does not constitute abandonment.

Linton Commercial Co., vs Hellera (G.R.No. 163147,October 10, 2007)

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

Issue: Whether or not there was an illegal reduction of work when Linton implemented a compressed workweek by reducing from six to three the number of working days with the employees working on a rotation basis. Ruling: The compressed workweek arrangement was unjustified and illegal. The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in determining when an employer can validly reduce the regular number of working days. The said bulletin states that a reduction of the number of regular working days is valid where the arrangement is resorted to by the employer to prevent serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials. Although the bulletin stands more as a set of directory guidelines than a binding set of implementing rules, it has one main consideration, consistent with the ruling in Philippine Graphic Arts Inc., in determining the validity of reduction of working hours — that the company was suffering from losses.
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Certainly, management has the prerogative to come up with measures to ensure profitability or loss minimization. However, such privilege is not absolute. Management prerogative must be exercised in good faith and with due regard to the rights of labor. As previously stated, financial losses must be shown before a company can validly opt to reduce the work hours of its employees. However, to date, no definite guidelines have yet been set to determine whether the alleged losses are sufficient to justify the reduction of work hours. If the standards set in determining the justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered, petitioners would end up failing to meet the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of the employer's operation of a business or undertaking for a period not exceeding six (6) months. Records show that Linton continued its business operations during the effectivity of the compressed workweek, which spanned more than the maximum period. On the other hand, for retrenchment to be justified, any claim of actual or potential business losses must satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence. Linton failed to comply with these standards.

Bisig Manggagawa sa Tryco vs NLRC (GR No. 151309, October 15, 2008) Facts: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located in Caloocan City. Petitioners Joselito Lariño, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the positions of helper, shipment helper and factory workers, respectively, assigned to the Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees. Tryco and the petitioners signed separate Memorand[a] of Agreement (MOA), providing for a compressed workweek schedule to be implemented in the company. The MOA was entered into pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay. Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal Industry of the Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City. BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor practice. Petitioners filed their separate complaints for illegal dismissal, underpayment of wages, nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its President.
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The Labor Arbiter dismissed the case for lack of merit. This was affirmed by the NLRC, and later on by the CA. Issue: Whether or not the CA erred in affirming the ruling of the Labor Arbiter and the NLRC Ruling: Petitioners mainly contend that the transfer orders amount to a constructive dismissal. We do not agree. Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. This prerogative extends to the management's right 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. Management's prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is, therefore, generally not constitutive of constructive dismissal. Thus, the consequent transfer of Tryco's personnel, assigned to the Production Department was well within the scope of its management prerogative. When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. However, the employer has the burden of proving that the transfer of an employee is for valid and legitimate grounds. The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. Objection to a transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer. Finally, we do not agree with the petitioners' assertion that the MOA is not enforceable as it is contrary to law. The MOA is enforceable and binding against the petitioners. Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a compressed workweek scheme: 1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement; 2.There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the employees; 3.If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the adoption of the compressed workweek scheme, all such excess hours
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shall be considered overtime work and shall be compensated in accordance with the provisions of the Labor Code or applicable Collective Bargaining Agreement (CBA); 4.Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day may be devised by the parties to the agreement. 5.The effectivity and implementation of the new working time arrangement shall be by agreement of the parties. Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of a five-day workweek, there is no room for interpretation and its terms should be implemented as they are written.

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Union Filipro Employees vs Vivar (205 SCRA 203)

Facts: Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday pay. Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. Arbitrator Vivar rendered a decision directing Filipro to pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code. However, the respondent arbitrator refused to take cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986. Issue: Whether or not sales personnel are excluded in the payment of holiday pay. Ruling: Field personnel are not entitled to holiday pay. Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty." The law requires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual field work. Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides: "Rule IV Holidays with Pay. SECTION 1.Coverage. — This rule shall apply to all employees except: (e) Field personnel and other employees whose time and performance is unsupervised by the employer The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly supervised by the employer. The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good merchandising work; (5) minimal market returns and (6) proper truck maintenance. The
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criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring their actual hours of field work. These employees are evaluated by the result of their work and not by the actual hours of field work which are hardly susceptible to determination. In San Miguel Brewery, Inc. v. Democratic Labor Organization, the Court had occasion to discuss the nature of the job of a salesman. It states that : "The reasons for excluding an outside salesman are fairly apparent. Such a 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."

National Sugar Refinery Corp vs NLRC (220 SCRA 452) Facts: Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool Supervisor. On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads which was designed to rationalized the duties and functions of all positions, reestablish levels of responsibility, and recognize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions. The Courts glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended. On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery. Two years after the
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implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code. Issue: Whether or not the members of respondent union are entitled to overtime, rest day and holiday pay. Ruling: The members of the union are not entitled to overtime, rest and holiday pay since they fall within the classification of managerial employees which makes them a part of the exempted employees. It must of necessity be ascertained first whether or not the union members, as supervisory employees, are to be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code. It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads: ―'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of those above definitions are considered rank-and-file employees of this Book." Article 82 of the Labor Code states: ―The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in Appropriate regulations.‖ As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. 'Sec. 2.Exemption. — The provisions of this rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: (b)Managerial employees, if they meet all of the following conditions, namely: (1)Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof: (2)They customarily and regularly direct the work of two or more employees therein: (3)They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight. (c)Officers or members of a managerial staff if they perform the following duties and responsibilities: (1)The primary duty consists of the performance of work directly related to management policies of their employer;
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(2)Customarily and regularly exercise discretion and independent judgment; (3)(i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; (4)Who do not devote more 20 percent of their hours worked in a work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and above." They are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only to the provisions on Labor Relations, while the right of said employees to the questioned benefits should be considered in the light of the meaning of a managerial employee and of the officers or members of the managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. In other words, for purposes of forming and joining unions, certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working conditions and rest periods and entitlement to the questioned benefits, however, they are officers or members of the managerial staff, hence they are not entitled thereto. The union members will readily show that these supervisory employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in planning, organizing, staffing, directing, controlling communicating and in making decisions in attaining the company's set goals and objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their respective departments. More specifically, their duties and functions include, among others, the following operations whereby the employee: 1) assists the department superintendent in the following: a) planning of systems and procedures relative to department activities; b) organizing and scheduling of work activities of the department, which includes employee shifting scheduled and manning complement; c) decision making by providing relevant information data and other inputs; d) attaining the company's set goals and objectives by giving his full support; e) selecting the appropriate man to handle the job in the department; and f) preparing annual departmental budget; 2) observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates; 3) trains and guides subordinates on how to assume responsibilities and become more productive; 4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for their development/advancement; 5) represents the superintendent or the department when appointed and authorized by the former; 6) coordinates and communicates with other inter and intra department supervisors when necessary; 7) recommends disciplinary actions/promotions;
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8) recommends measures to improve work methods, equipment performance, quality of service and working conditions; 9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees, recommends revisions or modifications to said rules when deemed necessary, and initiates and prepares reports for any observed abnormality within the refinery; 10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented; and 11) performs other related tasks as may be assigned by his immediate superior. From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist the managerial employee whose primary duty consist of the management of a department of the establishment in which they are employed (4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20% of their hours worked in a work-week to activities which are not directly and clearly related to the performance of their work hereinbefore described. Under the facts obtaining in this case, The Court is constrained to agree with petitioner that the union members should be considered as officers and members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday.

Salazar vs NLRC (1996) 256 SCRA 273 Facts: On April 1990, private respondent employed petitioner as construction/project engineer for the construction of the Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtue of an oral contract, petitioner would also receive a share in the profits after completion of the project and that petitioner's services in excess of eight (8) hours on regular days and services rendered on weekends and legal holidays shall be compensable overtime at the rate of P27.85 per hour. On 16 April 1991, petitioner received a memorandum issued by private respondent's project manager, Engr. Nestor A. Delantar informing him of the termination of his services effective on 30 April 1991. On 13 September 1991, petitioner filed a complaint against private respondent for illegal dismissal, unfair labor practice, illegal deduction, non-payment of wages, overtime rendered,
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service incentive leave pay, commission, allowances, profit-sharing and separation pay with the NLRC-NCR Arbitration Branch, Manila. Issue: Whether or not petitioner is entitled to separation pay. Ruling: The petitioner is not entitled to separation pay. Petitioner admitted that his job was to supervise the laborers in the construction project. Hence, although petitioner cannot strictly be classified as a managerial employee under Art. 82 of the Labor Code, and sec. 2(b), Rule 1, Book III of the Omnibus Rules Implementing the Labor Code, nonetheless he is still not entitled to payment of the aforestated benefits because he falls squarely under another exempt category — "officers or members of a managerial staff" as defined under sec. 2(c) of the abovementioned implementing rules: SECTION 2.Exemption. — The provisions of this Rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein: (c) Officers or members of a managerial staff if they perform the following duties and responsibilities: (1) The primary duty consists of the performance of work directly related to management policies of their employer; (2) Customarily and regularly exercise discretion and independent judgment; (3) [i] Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or [ii] execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or [iii] execute under general supervision special assignments and tasks; and (4) who do not devote more than 20 percent of their hours worked in a work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above. The petitioner was paid overtime benefits does not automatically and necessarily denote that petitioner is entitled to such benefits. Art. 82 of the Labor Code specifically delineates who are entitled to the overtime premiums and service incentive leave pay provided under Art. 87, 93, 94 and 95 of the Labor Code and the exemptions thereto. As previously determined petitioner falls under the exemptions and therefore has no legal claim to the said benefits. It is well and good that petitioner was compensated for his overtime services. However, this does not translate into a right on the part of petitioner to demand additional payment when, under the law, petitioner is clearly exempted there from.

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Labor Congress of the Philippines vs NLRC (G.R. No. 1239381. May 21, 1998)

Facts: The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire Food Products, which hired them on various dates. Petitioners filed against private respondents a complaint for payment of money claims and for violation of labor standards laws They also filed a petition for direct certification of petitioner Labor Congress of the Philippines as their bargaining representative. In an Order dated October 24, 1990, Mediator Arbiter approved the memorandum of agreement and certified LCP "as the sole and exclusive bargaining agent among the rank-and-file employees of Empire Food Products for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions of employment". On November 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for collective bargaining. On January 1991, petitioners filed a complaint against private respondents for Unfair Labor Practice by way of Illegal Lockout and/or Dismissal; Union busting thru Harassments [sic], threats, and interfering with the rights of employees to selforganization; Violation of the Memorandum of Agreement dated October 23, 1990; Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated by the Regional Wage Board; Actual, Moral and Exemplary Damages." Issue: Whether or not the petitioners are entitled to labor standard benefits considering they are paid by piece rate worker. Ruling: The petitioners are so entitled to these benefits namely, holiday pay, premium pay, 13th month pay and service incentive leave. Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were regular employees of private respondents. First, as to the nature of petitioners' tasks were necessary or desirable in the usual business of private respondents, who were engaged in the manufacture and selling of such food products; second, petitioners worked for private respondents throughout the year, and third, the length of time that petitioners worked for private respondents. Thus, while petitioners' mode of compensation was on a "per piece basis," the status and nature of their employment was that of regular employees. The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave and 13th month pay, "field personnel and other employees whose time and performance is unsupervised by the employer, including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof." Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not only did petitioners labor under the control of private respondents as their employer, likewise did
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petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. Further, in Section 8(b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as being entitled to holiday pay. SEC. 8. Holiday pay of certain employees. — (b) Where a covered employee is paid by results or output, such as payment on piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those exempted from paying 13th month pay, to wit: 2.EXEMPTED EMPLOYERS The following employers are still not covered by P.D. No. 851: d.Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers. The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same. As to overtime pay, the rules, however, are different. According to Sec 2(e), Rule I, Book III of the Implementing Rules, workers who are paid by results including those who are paid on piecework, takay, pakiao, or task basis, if their output rates are in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid section, are not entitled to receive overtime pay. As such, petitioners are beyond the ambit of exempted persons and are therefore entitled to overtime pay.

Mercidar Fishing Corp., vs NLRC (G.R. No. 1112574. October 8, 1998)

Facts: This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr. against petitioner for illegal dismissal, violation of P.D. No. 851, and non-payment of five days service incentive leave for 1990. Private respondent had been employed as a "bodegero" or ship's quartermaster on February 12, 1988. He complained that he had been constructively dismissed by petitioner when the latter refused him assignments aboard its boats after he had reported to work on May 28, 1990.

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Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month from April 28, 1990 but that when he reported to work at the end of such period with a health clearance, he was told to come back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give him work. For this reason, private respondent asked for a certificate of employment from petitioner on September 6, 1990. However, when he came back for the certificate on September 10, petitioner refused to issue the certificate unless he submitted his resignation. Since private respondent refused to submit such letter unless he was given separation pay, petitioner prevented him from entering the premises. Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. Issue: Whether or not the fishing crew members are considered field personnel as classified in Art. 82 of the Labor Code. Ruling: Art. 82 of the Labor Code provides: ―The provisions of this title [Working Conditions and Rest Periods] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.‖ "Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioner's business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel's patron or master.

San Miguel Corp., vs Court of Appeals (G.R. No. 146775. January 30, 2002)

Facts: On 17 October 1992, the Department of Labor and Employment conducted a routine inspection in the premises of San Miguel Corporation in Sta. Filomena, Iligan City. In the course of the inspection, it was discovered that there was underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of the inspection result to SMC and it was received by and explained to its personnel officer Elena dela Puerta. SMC contested the findings and DOLE conducted summary hearings on 19 November 1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit proof that it was paying regular
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Muslim holiday pay to its employees. Hence, Director IV of DOLE Iligan District Office issued a compliance order directing SMC to consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim employees holiday pay within thirty (30) days from the receipt of the order. SMC appealed but it was dismissed. Issue: Whether or not the employees are entitled with regular Muslim holiday pay. Ruling: The employees are entitled to regular Muslim holiday pay. Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal Laws, which states: Official Muslim holidays. — The following are hereby recognized as legal Muslim holidays: (a) 'Amun Jadîd (New Year), which falls on the first day of the first lunar month of Muharram; (b) Maulid-un-Nabî (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar month of Rabi-ul-Awwal, (c) Lailatul Isrâ Wal Mi'râj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on the twenty-seventh day of the seventh lunar month of Rajab: (d) 'Îd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal, commemorating the end of the fasting season; and (e) 'Îd-ul-Adhâ (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhû'l-Hijja. Art. 170 provides the provinces and cities where officially observed. — (1) Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created; (2)Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in other provinces and cities. The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which provides: Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; However, there should be no distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. The Court reminds the respondent-appellant that wages and other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker's faith or religion. At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that ". . . nothing herein shall be construed to operate to the prejudice of a non-Muslim." In addition, the 1999 Handbook on Workers' Statutory Benefits states considering that all private corporations, offices, agencies, and entities or establishments operating within the designated Muslim provinces and cities are required to observe Muslim holidays, both Muslim and Christians working within the Muslim areas may not report for work on the days designated by law as Muslim holidays.

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Tan vs Lagarama (G.R. No. 151228. August 15, 2002) Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than 10 years, from September 1, 1988 to October 17, 1998. On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na naman ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas." ("Don't say anything further. I don't want you to draw anymore. From now on, no more drawing. Get out.") Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing area and that, even if the charge was true, it was a minor infraction to warrant his dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but to leave the premises. Lagrama filed a complaint with the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and damages. As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to file their position papers. It declared that the dismissal illegal and order the payment of monetary benefits. Tan appealed to the NLRC and reversing the decision of the Labor Arbiter. Issue: Whether or not the respondent was illegally dismissed and thus entitled to payment of benefits provided by law. Ruling: The respondent was illegally dismissed and entitled to benefits. The Implementing Rules of the Labor Code provide that no worker shall be dismissed except for a just or authorized cause provided by law and after due process. This provision has two aspects: (1) the legality of the act of dismissal, that is, dismissal under the grounds provided for under Article 282 of the Labor Code and (2) the legality in the manner of dismissal. The illegality of the act of dismissal constitutes discharge without just cause, while illegality in the manner of dismissal is dismissal without due process. In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed. Urinating in a work place other than the one designated for the purpose by the employer constitutes violation of reasonable regulations intended to promote a healthy environment under Art. 282(1) of the Labor Code for purposes of terminating employment, but the same must be shown by evidence. Here there is no evidence that Lagrama did urinate in a place other than a rest room in the premises of his work.
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Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter found that the relationship between the employer and employee has been so strained that the latter's reinstatement would no longer serve any purpose. The parties do not dispute this finding. Hence, the grant of separation pay in lieu of reinstatement is appropriate. This is of course in addition to the payment of backwages which, in accordance with the ruling in Bustamante v. NLRC should be computed from the time of Lagrama's dismissal up to the time of the finality of this decision, without any deduction or qualification. The Bureau of Working Conditions 32 classifies workers paid by results into two groups, namely; (1) those whose time and performance is supervised by the employer, and (2) those whose time and performance is unsupervised by the employer. The first involves an element of control and supervision over the manner the work is to be performed, while the second does not. If a piece worker is supervised, there is an employer-employee relationship, as in this case. However, such an employee is not entitled to service incentive leave pay since, as pointed out in Makati Haberdashery v. NLRC 33 and Mark Roche International v. NLRC, 34 he is paid a fixed amount for work done, and regardless of the time he spent in accomplishing such work. Lambo vs NLRC (317 SCRA 420) Facts: Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00. On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and attorney’s fees. After hearing, Labor Arbiter found private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners’ claims. On appeal, the NLRC reversed the decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13th month pay. Issue: Whether or not the petitioners are entitled to the minimum benefits provided by law. Ruling: The petitioners are entitled to the minimum benefits provided by law. There is no dispute that petitioners were employees of private respondents although they were paid not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of employees paid by results: (1) those whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and
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performance are unsupervised. (Here, the employer’s control is over the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. 4 Petitioners belong to the first category, i.e., supervised employees. In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of private respondents. The term "wage" is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the essence of the relations. Nor does the fact that petitioners are not covered by the SSS affect the employer-employee relationship. As petitioners were illegally dismissed, they are entitled to reinstatement with back wages. The Arbiter applied the rule in the Mercury Drug case, according to which the recovery of back wages should be limited to three years without qualifications or deductions. Any award in excess of three years is null and void as to the excess. The Labor Arbiter correctly ordered private respondents to give separation pay.

R&E Transport vs Latag (G.R. No. 155214. February 13, 2004) Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which was granted. When he recovered, he reported for work in September 1998 but was no longer allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, on December 21, 1998, Latagfiled a case for payment of his retirement pay before the NLRC. Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in favor of Latag. Issue: Whether or not Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.

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Ruling: The respondent is entitled to retirement benefits despite of the waiver of quitclaims. There is no dispute the fact that the late Pedro M. Latag is entitled to retirement benefits. Rather, the bone of contention is the number of years that he should be credited with in computing those benefits. The findings of the NLRC that Pedro must be credited only with his service to R & E Transport, Inc., because the evidence shows that the aforementioned companies are two different entities. After a careful and painstaking review of the evidence on record, the court supports the NLRC's findings. As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the document was invalid and could not bar her from demanding the benefits legally due her husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away. Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. — In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus onetwelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary. It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000.

Asian Transmission vs Court of Appeals (425 SCRA 478) Facts: The Department of Labor and Employment (DOLE) issued an Explanatory Bulletin dated March 11, 1993 wherein it clarified that employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which apart from being Good Friday is also Araw ng Kagitingan, both legal holidays.
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The bulletin reads: "On the correct payment of holiday compensation on April 9, 1993 which apart from being Good Friday is also Araw ng Kagitingan, i.e., two regular holidays falling on the same day, this Department is of the view that the covered employees are entitled to at least two hundred percent (200%) of their basic wage even if said holiday is unworked. The first 100% represents the payment of holiday pay on April 9, 1993 as Good Friday and the second 100% is the payment of holiday pay for the same date as Araw ng Kagitingan. Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng Kagitingan. Despite the explanatory bulletin, [Asian Transmission Corporation opted to pay its daily paid employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested. In accordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement (CBA) existing between petitioner and BATLU, the controversy was submitted for voluntary arbitration. On July 31, 1998, the Office of the Voluntary Arbitrator rendered a decision directing petitioner to pay its covered employees "200% and not just 100% of their regular daily wages for the unworked April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitingan and Maundy Thursday." Issue: Whether or not the employees are entitled to the computation embodied in the bulletin clarification. Ruling: The employees are entitled to the computation given in the bulletin clarification. Subject of interpretation in the case at bar is Article 94 of the Labor Code which reads: Right to holiday pay. — (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; and (c) As used in this Article, "holiday" includes: New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of December and the day designated by law for holding a general election, which was amended by Executive Order No. 203 issued on June 30, 1987, such that the regular holidays are now: 1.New Year's Day January 1 2.Maundy Thursday Movable Date 3.Good Friday Movable Date 4.Araw ng Kagitingan April 9 (Bataan and Corregidor Day) 5.Labor Day May 1 6.Independence Day June 12 7.National Heroes Day Last Sunday of August 8.Bonifacio Day November 30 9.Christmas Day December 25 10.Rizal Day December 30 The Court agrees with the voluntary arbitrator. The Voluntary Arbitrator held that Article 94 of the Labor Code provides for holiday pay for every regular holiday, the computation of which is
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determined by a legal formula which is not changed by the fact that there are two holidays falling on one day, like on April 9, 1998 when it was Araw ng Kagitingan and at the same time was Maundy Thursday; and that that the law, as amended, enumerates ten regular holidays for every year should not be interpreted as authorizing a reduction to nine the number of paid regular holidays "just because April 9 (Araw ng Kagitingan) in certain years, like 1993 and 1998, is also Holy Friday or Maundy Thursday." Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protection to labor. Its purpose is not merely "to prevent diminution of the monthly income of the workers on account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay." 8 It is also intended to enable the worker to participate in the national celebrations held during the days identified as with great historical and cultural significance. Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes Day (last Sunday of August), Bonifacio Day (November 30) and Rizal Day (December 30) were declared national holidays to afford Filipinos with a recurring opportunity to commemorate the heroism of the Filipino people, promote national identity, and deepen the spirit of patriotism. Labor Day (May 1) is a day traditionally reserved to celebrate the contributions of the working class to the development of the nation, while the religious holidays designated in Executive Order No. 203 allow the worker to celebrate his faith with his family. As reflected above, Art. 94 of the Labor Code, as amended, afford a worker the enjoyment of ten paid regular holidays. The provision is mandatory, regardless of whether an employee is paid on a monthly or daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit demandable under the law. Since a worker is entitled to the enjoyment of ten paid regular holidays, the fact that two holidays fall on the same date should not operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive.

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

Facts: Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc., since May 1995, as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis. On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning. Respondent averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela.
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Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent's pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter of termination. Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus. On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter decided that the complaint be dismissed where the respondent must pay to the complainant. Issue: Whether or not respondent is entitled to service incentive leave. Ruling: The respondent is entitled to service incentive leave. The disposition of the issue revolves around the proper interpretation of Article 95 of the Labor Code vis-à-vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides: RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall apply to all employees except: (d)Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; A careful examination of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty." The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow. Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.
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What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a field personnel. According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association 10 which states that: As a general rule, field personnel are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employee's performance is unsupervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee's time and performance are constantly supervised by the employer. Respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioner's business. Accordingly, respondent is entitled to the grant of service incentive leave. The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that "every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay." Service incentive leave is a right which accrues to every employee who has served "within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year." It is also "commutable to its money equivalent if not used or exhausted at the end of the year." In other words, an employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such right.

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San Miguel Corp., vs Del Rosario (G.R. No. 168194. December 13, 2005) Facts: On April 17, 2000, respondent was employed by petitioner as key account specialist. On March 9, 2001, petitioner informed respondent that her probationary employment will be severed at the close of the business hours of March 12, 2001. On March 13, 2001, respondent was refused entry to petitioner's premises. On June 24, 2002, respondent filed a complaint against petitioner for illegal dismissal and underpayment/non-payment of monetary benefits. Respondent alleged that petitioner feigned an excess in manpower because after her dismissal, it hired new recruits and re-employed two of her batch mates. On the other hand, petitioner claimed that respondent was a probationary employee whose services were terminated as a result of the excess manpower that could no longer be accommodated by the company. The Labor Arbiter declared respondent a regular employee because her employment exceeded six months and holding that she was illegally dismissed as there was no authorized cause to terminate her employment. On appeal to NLRC, it modified the previous decision. Issue: Whether or not the respondent was an employee and was illegally terminated. If so, is she entitled to monetary benefits? Ruling: In termination cases, the burden of proving the circumstances that would justify the employee's dismissal rests with the employer. The best proof that petitioner should have presented to prove the probationary status of respondent is her employment contract. None, having been presented, the continuous employment of respondent as an account specialist for almost 11 months, from April 17, 2000 to March 12, 2001, means that she was a regular employee and not a temporary reliever or a probationary employee. And while it is true that by way of exception, the period of probationary employment may exceed six months when the parties so agree, such as when the same is established by company policy, or when it is required by the nature of the work, none of these exceptional circumstance were proven in the present case. Thus, respondent whose employment exceeded six months is undoubtedly a regular employee of petitioner. Her termination from employment must be for a just or authorized cause, otherwise, her dismissal would be illegal. Petitioner tried to justify the dismissal of respondent under the authorized cause of redundancy. It thus argued in the alternative that even assuming that respondent qualified for regular employment, her services still had to be terminated because there are no more regular positions in the company. Undoubtedly, petitioner is invoking a redundancy which allegedly resulted in the termination not only of the trainees, probationers but also of some of its regular employees. Redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The criteria in implementing a redundancy are: (a) less preferred
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status, e.g. temporary employee; (b) efficiency; and (c) seniority. What further militated against the alleged redundancy advanced by petitioner is their failure to refute respondent's assertion that after her dismissal, it hired new recruits and re-employed two of her batch mates. The Court finds that petitioner was not able to discharge the burden of proving that the dismissal of respondent was valid. Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also to payment of full back wages, computed from the time her compensation was actually withheld from her on March 13, 2001, up to her actual reinstatement. She is likewise entitled to other benefits, i.e., service incentive leave pay and 13th month pay computed from such date also up to her actual reinstatement. Respondent is not entitled to holiday pay because the records reveal that she is a monthly paid regular employee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor Code, employees who are uniformly paid by the month, irrespective of the number of working days therein, shall be presumed to be paid for all the days in the month whether worked or not.

Penaranda vs Baganga Plywood Corp (G.R. No. 159577. May 3, 2006) Facts: Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee of Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler. In May 2001, Peñaranda filed a Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the NLRC. After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers and submit supporting documents. Peñaranda alleges that he was employed by respondent Baganga on March 15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000. he alleges that his services were terminated without the benefit of due process and valid grounds in accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claimed for payment of damages and attorney's fees having been forced to litigate the present complaint. Respondent BPC is a domestic corporation duly organized and existing under Philippine laws and is represented herein by its General Manager HUDSON CHUA, the individual respondent. Respondents allege that complainant's separation from service was done pursuant to Art. 283 of the Labor Code. The respondent BPC was on temporary closure due to repair and general maintenance and it applied for clearance with the Department of Labor and Employment, Regional Office No. XI, to shut down and to dismiss employees. And due to the insistence of herein complainant he was paid his separation benefits. Consequently, when respondent BPC partially reopened in January 2001, Peñaranda failed to reapply.

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The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was premature because he was still employed by BPC. Petitioner’s money claims for illegal dismissal was also weakened by his quitclaim and admission during the clarificatory conference that he accepted separation benefits, sick and vacation leave conversions and thirteenth month pay. Issue: Whether or not Peñaranda is a regular, common employee entitled to monetary benefits under Art. 82 of the Labor Code and is entitled to the payment of overtime pay and other monetary benefits. Ruling: The petitioner is not entitled to overtime pay and other monetary benefits. The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However, petitioner was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and member of the managerial staff are not entitled to the provisions of law on labor standards. The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties and responsibilities: (1)The primary duty consists of the performance of work directly related to management policies of the employer; (2)Customarily and regularly exercise discretion and independent judgment; (3)(i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and (4)who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above." The petitioner’s work involves: 1.To supply the required and continuous steam to all consuming units at minimum cost. 2.To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories. 3.To evaluate performance of machinery and manpower. 4.To follow-up supply of waste and other materials for fuel. 5.To train new employees for effective and safety white working. 6.Recommend parts and suppliers purchases. acEHSI 7.To recommend personnel actions such as: promotion, or disciplinary action. 8.To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit. 9.Implement Chemical Dosing. 10.Perform other task as required by the superior from time to time." The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff under the Implementing Rules.
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Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation of the machines and the performance of the workers in the engineering section. This work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial staff. Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was the foreman responsible for the operation of the boiler. The term foreman implies that he was the representative of management over the workers and the operation of the department. Petitioner's evidence also showed that he was the supervisor of the steam plant. His classification as supervisors is further evident from the manner his salary was paid. He belonged to the 10% of respondent's 354 employees who were paid on a monthly basis; the others were paid only on a daily basis.

Leyte IV Electric Cooperative Inc., vs LEYECO IV Employees Union – ALU (G.R. No. 157775. October 19, 2007)

Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU (respondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all employees, as provided for in the CBA. Petitioner, on the other hand, in its Position Paper, insisted payment of the holiday pay in compliance with the CBA provisions, stating that payment was presumed since the formula used in determining the daily rate of pay of the covered employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the employees are already paid their regular and special days, the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays. Issue: Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday pay. Ruling: The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission of respondent in its Position Paper that the employees were paid all the days of the month even if not worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of employees' salaries gains significance. This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43 Producers Bank of the Philippines v. National Labor Relations Commission. In this case, the
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monthly salary was fixed by Wellington to provide for compensation for every working day of the year including the holidays specified by law — and excluding only Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that is, it simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as basis for determining the monthly salary. The monthly salary thus fixed actually covered payment for 314 days of the year, including regular and special holidays, as well as days when no work was done by reason of fortuitous cause, such as transportation strike, riot, or typhoon or other natural calamity, or cause not attributable to the employees. It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the use of a divisor that was less than 365 days cannot make the employer automatically liable for underpayment of holiday pay. In said case, the employees were required to work only from Monday to Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant that the employees were deprived of their holiday pay for some or all of the ten legal holidays. The 304-day divisor used by the employer was clearly above the minimum of 287 days. In this case, the employees are required to work only from Monday to Friday. Thus, the minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above the minimum, indubitably, petitioner's employees are being given their holiday pay. Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting respondent's claim of non-payment of holiday pay, a "double burden" was imposed upon petitioner because it was being made to pay twice for its employees' holiday pay when payment thereof had already been included in the computation of their monthly salaries. Hence, the petition is granted.

Bahia Shipping Services Inc., vs Chua (G.R. No. 162195. April 8, 2008)

Facts: Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping Services, Inc., as a restaurant waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a Philippine Overseas Employment Administration (POEA) approved employment contract dated October 9, 1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997. On October 18, 1996, the private respondent left Manila for Heathrow, England to board the said sea vessel where he will be assigned to work. On February 15, 1997, the private respondent reported for his working station one and one-half hours late. On February 17, 1997, the master of the vessel served to the private respondent an official warningtermination form pertaining to the said incident. On March 8, 1997, the vessel's master, ship captain Thor Fleten conducted an inquisitorial hearing to investigate the said incident. Thereafter, on March 9, 1997, private respondent was dismissed from the service on the strength of an unsigned and undated notice of dismissal. An alleged record or minutes of the said investigation was attached to the said dismissal notice.

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On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other monetary claims. The private respondent alleged that he was paid only US$300.00 per month as monthly salary for five (5) months instead of US$410.00 as stipulated in his employment contract. Thus, he claimed that he was underpaid in the amount of US$110.00 per month for that same period of five (5) months. He further asserted that his salaries were also deducted US$20.00 per month by the petitioner for alleged union dues. Private respondent argued that it was his first offense committed on board the vessel. He adverted further that the petitioner has no proof of being a member of the AMOSUP or the ITF to justify its claim to deduct the said union dues [from] his monthly salary. Issue: Whether or not reporting for work one and one-half hours late and abandoning his work are valid grounds for dismissal. Ruling: It being settled that the dismissal of respondent was illegal, it follows that the latter is entitled to payment of his salary for the unexpired portion of his contract, as provided under Republic Act (R.A.) No. 8042, considering that his employment was pre-terminated on March 9, 1997 or four months prior to the expiration of his employment contract on July 17, 1997. Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee is entitled to the twin reliefs of (a) either reinstatement or separation pay, if reinstatement is no longer viable, and (b) backwages. Both are distinct reliefs given to alleviate the economic damage suffered by an illegally dismissed employee and, thus, the award of one does not bar the other. Both reliefs are rights granted by substantive law which cannot be defeated by mere procedural lapses. Substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. The order of the Court of Appeals to award backwages being a mere legal consequence of the finding that respondents were illegally dismissed by petitioners, there was no error in awarding the same. The Court has consistently applied the foregoing exception to the general rule. It does so yet again in the present case. Section 10 of R.A. No. 8042, entitles an overseas worker who has been illegally dismissed to "his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whichever is less." The CA correctly applied the interpretation of the Court in Marsaman Manning Agency, Inc. v. National Labor Relations Commission that the second option which imposes a three months salary cap applies only when the term of the overseas contract is fixed at one year or longer; otherwise, the first option applies in that the overseas worker shall be entitled payment of all his salaries for the entire unexpired period of his contract.

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PNCC Skyway Traffic Management & Security Division Workers Organization vs PNCC Skyway Corp., (G.R. No. 171231, February 17, 2010) Facts: Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and by virtue of the laws of the Philippines. They entered into CBA. Pertinent provisions are as follows: ARTICLE VIII VACATION LEAVE AND SICK LEAVE Section 1. Vacation Leave. [b]The company shall schedule the vacation leave of employees during the year taking into consideration the request of preference of the employees. PNCC then created a schedule of leaves for their employees. Petitioner objected to the implementation of the said memorandum. It insisted that the individual members of the union have the right to schedule their vacation leave. It opined that the unilateral scheduling of the employees' vacation leave was done to avoid the monetization of their vacation leave in December 2004. Issue: Whether or not the PNCC has the sole discretion to schedule the vacation leaves of its employees. Ruling: PNCC has the sole discretion to schedule the vacation leaves of its employees. The rule is that where the language of a contract is plain and unambiguous, its meaning should be determined without reference to extrinsic facts or aids. The intention of the parties must be gathered from that language, and from that language alone. Stated differently, where the language of a written contract is clear and unambiguous, the contract must be taken to mean that which, on its face, it purports to mean, unless some good reason can be assigned to show that the words used should be understood in a different sense. In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation leaves ha ll be under the option of the employer. Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. In fine, the CBA must be strictly adhered to and respected if its ends have to be achieved, being the law between the parties. In Faculty Association of Mapua Institute of Technology (FAMIT) v. Court of Appeals, this Court held that the CBA during its life time binds all the parties. The provisions of the CBA must be respected since its terms and conditions constitute the law between the parties. The parties cannot be allowed to change the terms they agreed upon on the ground that the same are not favorable to them.

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The purpose of a vacation leave is to afford a laborer a chance to get a much-needed rest to replenish his worn-out energy and acquire a new vitality to enable him to efficiently perform his duties, and not merely to give him additional salary and bounty. Accordingly, the vacation leave privilege was not intended to serve as additional salary, but as a non-monetary benefit. To give the employees the option not to consume it with the aim of converting it to cash at the end of the year would defeat the very purpose of vacation leave.

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XI

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Villuga vs NLRC (225 SCRA 537) Facts: Petitioner Elias Villuga was employed as cutter in the tailoring shop owned by private respondent Rodolfo Zapanta and known as Broad Street Tailoring. As cutter, he was paid a fixed monthly salary of P840.00 and a monthly transportation allowance of P40.00. In addition to his work as cutter, Villuga was assigned the chore of distributing work to the shop's tailors or sewers when both the shop's manager and assistant manager would be absent. He saw to it that their work conformed with the pattern he had prepared and if not, he had them redone, repaired or resewn. From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due to illness. For not properly notifying his employer, he was considered to have abandoned his work. In a complaint dated March 27, 1978, filed with the Regional Office of the Department of Labor, Villuga claimed that he was refused admittance when he reported for work after his absence, allegedly due to his active participation in the union organized by private respondent's tailors. He further claimed that he was not paid overtime pay, holiday pay, premium pay for work done on rest days and holidays, service incentive leave pay and 13th month pay. Issue: Whether or not there existed an employer-employee relationship and the exclusion of Villuga from receiving the benefits is valid Ruling: The exclusion of Villuga from the benefits claimed under Article 87 (overtime pay and premium pay for holiday and rest day work), Article 94, (holiday pay), and Article 95 (service incentive leave pay) of the Labor Code, on the ground that he is a managerial employee is unwarranted. He is definitely a rank and file employee hired to perform the work of a cutter and not hired to perform supervisory or managerial functions. The fact that he is uniformly paid by the month does not exclude him from the benefits of holiday pay Private respondent's claim that petitioner Villuga abandoned his work acceptable is untenable. For abandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustified refusal of the employee to resume his employment. Mere absence is not sufficient; it must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore. At any rate, dismissal of an employee due to his prolonged absence without leave by reason of illness duly established by the presentation of a medical certificate is not justified. In the case at bar, however, considering that petitioner Villuga absented himself for four (4) days without leave and without submitting a medical certificate to support his claim of illness, the imposition of a sanction is justified, but surely, not dismissal, in the light of the fact that this is petitioner's first offense. In lieu of reinstatement, petitioner Villuga should be paid separation pay where reinstatement can no longer be effected in view of the long passage of time or because of the realities of the situation. But petitioner should not be granted backwages in addition to reinstatement as the same is not just and equitable under the circumstances considering that he was not entirely free from blame.

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CJC Trading vs NLRC (246 SCRA 724)

Facts: Private respondents Ricardo Ausan, Jr. and Ernesto Alanan were employed by petitioner since 1983 and 1978, respectively, as truck drivers and were paid on a "per trip or task basis." They filed separate complaints on 23 August 1992 and 15 September 1992, respectively, against petitioner CJC Trading, Incorporated and/or Ms. Celia J. Carlos for illegal dismissal and nonpayment of premium pay for holiday and rest day, service incentive leave pay and thirteenth month pay. These cases were consolidated. The Labor Arbiter dismissed the complaints for lack of merit. NLRC affirmed in toto the decision of the Labor Arbiter. Petitioner contends that the NLRC committed a grave abuse of discretion in rendering the minute resolutions. It argues that because there was no finding that private respondents had been dismissed illegally, they are deemed to have abandoned their jobs and that accordingly, there was no legal basis for the award of separation pay. Private respondents, on the other hand, claim that there was no grave abuse of discretion on the part of the NLRC in awarding them separation pay and also aver that the NLRC's resolution had already become final and executor, and hence there is nothing more for this Court to examine. Issue: Whether or not there is a need for the award of separation pay to the private respondents Ruling: The award of separation pay is authorized in the situations dealt with in Articles 283 and 284 of the Labor Code, and as well as in cases where there is illegal dismissal and reinstatement is no longer feasible under Section 4(b), Rule I, Book VI of the Implementing Rules and Regulations of the Labor Code. By way of exception, the Court has allowed grants of separation pay to stand as "a measure of social justice" where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. The instant case, however, does not fall under any of the above mentioned instances. The facts, as found by the NLRC, show that private respondents had informed petitioner that they intended to quit their jobs and this decision was arrived at by private respondents on their own volition. We find no reason and petitioner has shown none, for departing from the rule that this Court is bound by the findings of fact of the NLRC, there being no showing that the latter had gravely abused their discretion or otherwise acted without or in excess of its jurisdiction. There was no dismissal of private respondents by petitioner here. Neither, upon the other hand, can this be considered a case of abandonment as petitioner claims because the elements of abandonment are not present. Rather, we have before us a case of voluntary resignation.

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Pantranco North Express vs NLRC (259 SCRA 161)

Facts: Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the Pantranco Employees Association-PTGWO. He continued in petitioner's employ until August 12, 1989, when he was retired at the age of fifty-two (52) after having rendered twenty five years' service. The basis of his retirement was the compulsory retirement provision of the collective bargaining agreement between the petitioner and the aforenamed union. On February 1990, private respondent filed a complaint for illegal dismissal against petitioner with NLRC. The complaint was consolidated with two other cases of illegal dismissal having similar facts and issues, filed by other employees, non-union members. Issue: Whether or not the CBA stipulation on compulsory retirement after twenty-five years of service is legal and enforceable. Ruling: The CBA stipulation is legal and enforceable. The bone of contention in this case is the provision on compulsory retirement after 25 years of service. Article XI, Section 1 (e) (5) of the May 2, 1989 Collective Bargaining Agreement 8 between petitioner company and the union states: Section 1. The COMPANY shall formulate a retirement plan with the following main features: (e) The COMPANY agrees to grant the retirement benefits herein provided to regular employees who may be separated from the COMPANY for any of the following reasons: (5) Upon reaching the age of sixty (60) years or upon completing twenty-five (25) years of service to the COMPANY, whichever comes first, and the employee shall be compulsory retired and paid the retirement benefits herein provided." The said Code provides: Art. 287.Retirement. — Any employee may be retired upon reaching the retirement age established in the Collective Bargaining Agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining or other agreement." The Court agrees with petitioner and the Solicitor General. Art. 287 of the Labor Code as worded permits employers and employees to fix the applicable retirement age at below 60 years. Moreover, providing for early retirement does not constitute diminution of benefits. In almost all countries today, early retirement, i.e., before age 60, is considered a reward for services rendered since it enables an employee to reap the fruits of his labor — particularly retirement benefits, whether lump-sum or otherwise — at an earlier age, when said employee, in presumably better physical and mental condition, can enjoy them better and longer.

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As a matter of fact, one of the advantages of early retirement is that the corresponding retirement benefits, usually consisting of a substantial cash windfall, can early on be put to productive and profitable uses by way of income-generating investments, thereby affording a more significant measure of financial security and independence for the retiree who, up till then, had to contend with life's vicissitudes within the parameters of his fortnightly or weekly wages. Thus we are now seeing many CBAs with such early retirement provisions. And the same cannot be considered a diminution of employment benefits. Being a product of negotiation, the CBA between the petitioner and the union intended the provision on compulsory retirement to be beneficial to the employees-union members, including herein private respondent. When private respondent ratified the CBA with the union, he not only agreed to the CBA but also agreed to conform to and abide by its provisions. Thus, it cannot be said that he was illegally dismissed when the CBA provision on compulsory retirement was applied to his case. Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay Law", which went into effect on January 7, 1993. Although passed many years after the compulsory retirement of herein private respondent, nevertheless, the said statute sheds light on the present discussion when it amended Art. 287 of the Labor Code, to make it read as follows: Retirement. — Any employee may be retired upon reaching the retirement age establish in the collective bargaining agreement or other applicable employment contract. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment may retire . . ." The aforequoted provision makes clear the intention and spirit of the law to give employers and employees a free hand to determine and agree upon the terms and conditions of retirement. Providing in a CBA for compulsory retirement of employees after twenty-five (25) years of service is legal and enforceable so long as the parties agree to be governed by such CBA. The law presumes that employees know what they want and what is good for them absent any showing that fraud or intimidation was employed to secure their consent thereto.

R&E Transport vs Latag (G.R. No. 155214. February 13, 2004)

Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from business operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which was granted. When he recovered, he reported for work in September 1998 but was no longer allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the
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administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, on December 21, 1998, Latagfiled a case for payment of his retirement pay before the NLRC. Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in favor of Latag. Issue: Whether or not Latag is entitled to retirement benefits considering she signed a waiver of quitclaim. Ruling: The respondent is entitled to retirement benefits despite of the waiver of quitclaims. There is no dispute the fact that the late Pedro M. Latag is entitled to retirement benefits. Rather, the bone of contention is the number of years that he should be credited with in computing those benefits. The findings of the NLRC that Pedro must be credited only with his service to R & E Transport, Inc., because the evidence shows that the aforementioned companies are two different entities. After a careful and painstaking review of the evidence on record, the court supports the NLRC's findings. As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the document was invalid and could not bar her from demanding the benefits legally due her husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away. Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. — In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus onetwelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary. It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the average daily income. In this case, the CA found that
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Pedro was earning an average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000.

Rufina Patis vs Alusitain (G.R.No.146202, July 14, 2004)

Facts: In March 1948, Alusitain was hired as a laborer at the Rufina Patis Factory owned and operated by petitioner Lucas. After close to forty three years or on February 19, 1991, Alusitain admittedly tendered his letter of resignation. On May 22, 1991, Alusitain executed a duly notarized affidavit of separation from employment and submitted the same on even date to the Pensions Department of the Social Security System (SSS). Sometime in 1995, Alusitain, claiming that he retired from the company on January 31, 1995, having reached the age of 65 7 and due to poor health, verbally demanded from petitioner Lucas for the payment of his retirement benefits under Republic Act No. 7641. By his computation, he claimed that he was entitled to P86, 710.00. Petitioner Lucas, however, refused to pay the retirement benefits of Alusitain and the latter filed a complaint before the NLRC against petitioners Rufina Patis Factory and Lucas for non-payment of retirement benefits. NLRC rendered judgment in favor of Alusitain. Issue: Whether or not the respondent was an employee of Rufina at the time RA7641 took effect and entitled to claim retirement benefits Ruling: In CJC Trading, Inc. v. NLRC, the Court, speaking through Justice Feliciano, held that R.A. 7641 may be given retroactive effect where (1) the claimant for retirement benefits was still the employee of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility under the statute for such retirement benefits. Moreover, it is a basic rule in evidence, however, that the burden of proof is on the part of the party who makes the allegations — ei incumbit probatio, qui dicit, non qui negat. If he claims a right granted by law, he must prove his claim by competent evidence, relying on the strength of his own evidence and not upon the weakness of that of his opponent. In the case at bar, it was incumbent on Alusitain to prove that he retired on January 31, 1995 and not on February 20, 1991 as indicated on his letter of resignation. As the following discussion will show, he utterly failed to discharge the onus. Alusitain's retraction is highly suspect. Other than his bare and self-serving allegations and the sworn statement of his daughter which, as reflected above, cannot be relied upon, he has not shown any scintilla of evidence that he was employed with petitioner Rufina Patis Factory at the time R.A. 7641 took effect. He did not produce any documentary evidence such as pay slips, income tax return, his identification card, or any other independent evidence to substantiate his claim.
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Alusitain having failed to prove that he was an employee of petitioner at the time R.A. 7641 took effect, his claim for retirement benefits thereunder must be disallowed.

Sta. Catalina College vs NLRC (416 SCRA 243)

Facts: In June 1955, respondent Hilaria G. Tercero was hired as an elementary school teacher by petitioner Sta. Catalina College in San Antonio, Biñan, Laguna. In 1970, she applied for and was granted a one year leave of absence without pay on account of the illness of her mother. After the expiration in 1971 of her leave of absence, she had not been heard from by petitioner school. In 1982, she applied anew at petitioner school which hired her with a monthly salary of P6,567.95 Hilaria reached the compulsory retirement age of 65. Retiring pursuant to Article 287 of the Labor Code, as amended by Republic Act 7641, petitioner school pegged her retirement benefits at P59,038.35, computed on the basis of fifteen years of service from 1982 to 1997. Her service from 1955 to 1970 was excluded in the computation, petitioner school having asserted that she had, in 1971, abandoned her employment. Hilaria insisted, however, that her retirement benefits should be computed on the basis of her thirty years of service, inclusive of the period from 1955 to 1970. Hilaria filed a complaint before the NLRC against petitioner school and/or petitioner Sr. Loreta Oranza for non-payment of retirement benefits. The Labor Arbiter ruled in favor of petitioner school. On appeal, the NLRC set aside the Labor Arbiter's decision. Petitioners brought the case on certiorari to the Court of Appeals which dismissed the petition. Issue: Whether or not Hilaria is entitled with retirement benefits Ruling: Article 287 of the Labor Code, as amended by Republic Act 7641 or the New Retirement Law, provides: ART. 287.Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (½) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
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Unless the parties provide for broader inclusions, the term one half (½) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

In Hilaria's case, her retirement pay as computed by petitioners amounts to P59,038.35, P28,853.09 of which had already been given to her under the PERAA. Since the computed amount of her retirement pay is much lower than that provided under the law, she is entitled to receive the difference between the actual amount of her retirement benefits as required by law and that provided for under the PERAA. Although she did not appeal from the NLRC decision awarding her P85,287.72, this Court awards the entire amount of the retirement benefits to which she is rightfully entitled under the law. Technical rules of procedure are not binding in labor cases. The application of technical rules of procedure may be relaxed to serve the demands of substantial justice.

Honda Phils., Inc., vs Samahan ng Malayang Manggagawa sa Honda (G.R. No.145561. June 15, 2005)

Facts: The case stems from the collective bargaining agreement between Honda and the respondent union that it granted the computation of 14th month pay as the same as 13th month pay. Honda continues the practice of granting financial assistance covered every December each year of not less than 100% of the basic salary. In the latter part of 1998, the parties started to re-negotiate for the fourth and fifth years of the CBA. The union filed a notice of strike on the ground of unfair labor practice for deadlock. DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration. The striking employees were ordered to return to work and management to accept them back under the same terms prior to the strike staged. Honda issued a memorandum of the new computation of the 13th month and 14th month pay to be granted to all its employees whereby the 31 long strikes shall be considered unworked days for purpose of computing the said benefits. The amount equivalent to ½ of the employees’ basic salary shall be deducted from these bonuses, with a commitment that in the event that the strike is declared legal, Honda shall pay the amount. The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to voluntary arbitration where it ruled that the company’s implementation of the pro-rated computation is invalid. Issue: Whether or not the pro-rated computation of the 13th and 14th month pays and other bonuses in question is valid and lawful.

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Ruling: The Court ruled that the pro-rated computation is invalid. The pro-rated computation of Honda as a company policy has not ripened into a company practice and it was the first time they implemented such practice. The payment of the 13th month pay in full month payment by Honda has become an established practice. The length of time where it should be considered in practice is not being laid down by jurisprudence. The voluntary act of the employer cannot be unilaterally withdrawn without violating Article 100 of the Labor Code. The court also rules that the withdrawal of the benefit of paying a full month salary for 13th month pay shall constitute a violation of Article 100 of the Labor Code.

Jaculbe vs Siliman University (G.R. No. 156934. March 16, 2007)

Facts: Sometime in 1958, petitioner began working for respondent’s university medical center as a nurse. In a letter in December 1992, respondent, through its Human Resources Development Office, informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18, 1993, at which time she would be 57 years old. This was pursuant to respondent’s retirement plan for its employees which provided that its members could be automatically retired ―upon reaching the age of 65 or after 35 years of uninterrupted service to the university.‖ Respondent required certain documents in connection with petitioner’s impending retirement. A brief exchange of letters between petitioner and respondent followed. Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS pension. But respondent stood pat on its decision to retire her, citing ―company policy.‖ On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for ―termination of service with preliminary injunction and/or restraining order.‖ Issue: Whether or not the respondent’s retirement plan imposing automatic retirement after 35 years of service contravenes the security of tenure clause in the 1987 Constitution and the Labor Code. Ruling: Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are not per se repugnant to the constitutional guaranty of security of tenure.
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Article 287 of the Labor Code provides: Retirement - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. The rules and regulations of the plan show that participation therein was not voluntary at all. Rule III of the plan, on membership, stated: SECTION 1 – MEMBERSHIP, All full-time Filipino employees of the University will automatically become members of the Plan, provided, however, that those who have retired from the University, even if rehired, are no longer eligible for membership in the Plan. A member who continues to serve the University cannot withdraw from the Plan. SECTION 2 – EFFECTIVITY OF MEMBERSHIP, Membership in the Plan starts on the day a person is hired on a full-time basis by the University. SECTION 3 – TERMINATION OF MEMBERSHIP, Termination of membership in the Plan shall be upon the death of the member, resignation or termination of employee’s contract by the University, or retirement from the University. Meanwhile, Rule IV, on contributions, stated: The Plan is contributory. The University shall set aside an amount equivalent to 3½% of the basic salaries of the faculty and staff. To this shall be added a 5% deduction from the basic salaries of the faculty and staff. A member on leave with the University approval shall continue paying, based on his pay while on leave, his leave without pay should pay his contributions to the Plan. However, a member, who has been on leave without pay should pay his contributions based on his salary plus the University’s contributions while on leave or the full amount within one month immediately after the date of his reinstatement. Provided[,] further that if a member has no sufficient source of income while on leave may pay within six months after his reinstatement. It was through no voluntary act of her own that petitioner became a member of the plan. In fact, the only way she could have ceased to be a member thereof was if she stopped working for respondent altogether. Furthermore, in the rule on contributions, the repeated use of the word ―shall‖ ineluctably pointed to the conclusion that employees had no choice but to contribute to the plan (even when they were on leave). Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age agrees to sever his or her employment with the former. The truth was that petitioner had no choice but to participate in the plan, given that the only way she could refrain from doing so was to resign or lose her job. It is axiomatic that employer and employee do not stand on equal footing, a situation which often causes an employee to act out of need instead of any genuine acquiescence to the employer. This was clearly just such an instance. An employer is free to impose a retirement age less than 65 for as long as it has the employees’ consent. Stated conversely, employees are free to accept the employer’s offer to lower the retirement age if they feel they can get a better deal with the retirement plan presented by the employer. Thus, having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her, respondent was guilty of illegal dismissal.

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

Facts: On various dates, petitioner employed the following persons at its Cebu station: Candido C. Quiñones, Jr, Corsini R. Lagahit, as Studio Technician, Anatolio G. Otadoy, as Collector and Noemi Amarilla, as Traffic Clerk. On March 1986, the government sequestered the station, including its properties, funds and other assets, and took over its management and operations from its owner, Roberto Benedicto. However, in December 1986, the government and Benedicto entered into a temporary agreement under which the latter would retain its management and operation. On November 1990, the Presidential Commission on Good Government (PCGG) and Benedicto executed a Compromise Agreement, where Benedicto transferred and assigned all his rights, shares and interests in petitioner station to the government. In the meantime, the four employees retired from the company and received, on staggered basis, their retirement benefits under the 1993 Collective Bargaining Agreement between petitioner and the bargaining unit of its employees. In the meantime, a P1,500.00 salary increase was given to all employees of the company, current and retired, effective July 1994. However, when the four retirees demanded theirs, petitioner refused and instead informed them via a letter that their differentials would be used to offset the tax due on their retirement benefits in accordance with the National Internal Revenue Code (NIRC). The four retirees filed separate complaints against IBC TV-13 Cebu and Station Manager Louella F. Cabañero for unfair labor practice and non-payment of backwages before the NLRC. Issue: Whether or not the retirement benefits of respondents are part of their gross income. Ruling: The Court agrees with petitioner that under the CBA, it is not obliged to pay for the taxes on the respondents' retirement benefits. CBA did not provide a provision where petitioner obliged itself to pay the taxes on the retirement benefits of its employees. The Court also agrees with petitioner that, under the NIRC, the retirement benefits of respondents are part of their gross income subject to taxes. Section 28 (b) (7) (A) of the NIRC of 1986 23 provides: Gross Income. — (b) Exclusions from gross income. — The following items shall not be included in gross income and shall be exempt from taxation under this Title: (7) Retirement benefits, pensions, gratuities, etc. — A.) Retirement benefits received by officials and employees of private firms whether individuals or corporate, in accordance with a reasonable private benefit plan maintained by the employer: Provided, That the retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty years of age at the time of his retirement: Provided, further, That the benefits granted under this subparagraph shall be availed of by an official or employee only once. For purposes of this subsection, the term "reasonable private benefit plan" means a pension, gratuity, stock bonus or profit-sharing plan maintained by an employer for the benefit of some or all of his officials or employees, where contributions are
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made by such employer for officials or employees, or both, for the purpose of distributing to such officials and employees the earnings and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose other than for the exclusive benefit of the said official and employees. Revenue Regulation No. 12-86, the implementing rules of the foregoing provisions, provides: (b) Pensions, retirements and separation pay. — Pensions, retirement and separation pay constitute compensation subject to withholding tax, except the following: (1) Retirement benefit received by official and employees of private firms under a reasonable private benefit plan maintained by the employer, if the following requirements are met: (i) The retirement plan must be approved by the Bureau of Internal Revenue; (ii) The retiring official or employees must have been in the service of the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of retirement; and (iii) The retiring official or employee shall not have previously availed of the privilege under the retirement benefit plan of the same or another employer. Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the concurrence of the following elements: (1) a reasonable private benefit plan is maintained by the employer; (2) the retiring official or employee has been in the service of the same employer for at least 10 years; (3) the retiring official or employee is not less than 50 years of age at the time of his retirement; and (4) the benefit had been availed of only once. Article VIII of the 1993 CBA provides for two kinds of retirement plans - compulsory and optional. Thus: ARTICLE VIII RETIREMENT Section 1: Compulsory Retirement — Any employee who has reached the age of Fifty Five (55) years shall be retired from the COMPANY and shall be paid a retirement pay in accordance with the following schedule: LENGTH OF SERVICE RETIREMENT BENEFITS 1 year-below 5 yrs. 15 days for every year of service 5 years-9 years 30 days for every year of service 10 years-14 years 50 days for every year of service 15 years-19 years 65 days for every year of service 20 years or more 80 days for every year of service A supervisor who reached the age of Fifty (50) may at his/her option retire with the same retirement benefits provided above. Section 2: Optional Retirement — Any covered employee, regardless of age, who has rendered at least five (5) years of service to the COMPANY may voluntarily retire and the COMPANY agrees to pay Long Service Pay to said covered employee in accordance with the following schedule: LENGTH OF SERVICE RETIREMENT BENEFITS 5-9 years 15 days for every year of service 10-14 years 30 days for every year of service
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15-19 years 50 days for every year of service 20 years or more 60 days for every year of service Section 3: Fraction of a Year — In computing the retirement under Section 1 and 2 of this Article, a fraction of at least six (6) months shall be considered as one whole year. Moreover, the COMPANY may exercise the option of extending the employment of an employee. Section 4: Severance of Employment Due to Illness — When a supervisor suffers from disease and/or permanent disability and her/his continued employment is prohibited by law or prejudicial to her/his health of the health of his co-employees, the COMPANY shall not terminate the employment of the subject supervisor unless there is a certification by a competent public health authority that the disease is of such a nature or at such stage that it can not be cured within a period of six (6) months even with proper medical treatment. The supervisor may be separated upon payment by the COMPANY of separation pay pursuant to law, unless the supervisor falls within the purview of either Sections 1 or 2 hereof. In which case, the retirement benefits indicated therein shall apply, whichever is higher. Section 5: Loyalty Recognition — The COMPANY shall recognize the services of the supervisor/director who have reached the following number of years upon retirement by granting him/her a plaque of appreciation and any lasting gift: 10 years but below 15 years (P3,000.00) worth; 15 years but below 20 year (P7,000.00) worth; 20 years and more (P10,000.00) worth. Respondents were qualified to retire optionally from their employment with petitioner. there is no record that the 1993 CBA had been approved or was ever presented to the BIR. Hence, the retirement benefits of respondents are taxable. Under Section 80 of the NIRC, petitioner, as employer, was obliged to withhold the taxes on said benefits and remit the same to the BIR. Section 80. Liability for Tax. — (A) Employer. — The employer shall be liable for the withholding and remittance of the correct amount of tax required to be deducted and withheld under this Chapter. If the employer fails to withhold and remit the correct amount of tax as required to be withheld under the provision of this Chapter, such tax shall be collected from the employer together with the penalties or additions to the tax otherwise applicable in respect to such failure to withhold and remit.

Letran Calamba Faculty and Employees Association vs NLRC (G.R. No. 156225. January 29, 2008)

Facts: The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members. The Labor Arbiter (LA) handling the consolidated cases, denied and dismissed the respective complaints.
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Issue: Whether or not the pay of the faculty members for teaching overloads should be included as basis in the computation of their 13th month pay Ruling: Teaching overload may not be considered part of basic salary. Under the Rules and Regulations Implementing PD 851, the following compensations are deemed not part of the basic salary: a) cost-of-living allowances granted pursuant to PD 525 and Letter of Instruction No. 174; b) profit sharing payments; c) all allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the employee at the time of the promulgation of the Decree on Dec 16, 1975. Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13th-month pay. The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay. As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional compensation other than and added to the regular wage or basic salary, for reason of which such is categorically excluded from the definition of basic salary under the Supplementary Rules and Regulations Implementing PD 851. In the same manner that payment for overtime work and work performed during special holidays is considered as additional compensation apart and distinct from an employee's regular wage or basic salary, an overload pay, owing to its very nature and definition, may not be considered as part of a teacher's regular or basic salary, because it is being paid for additional work performed in excess of the regular teaching load.

Reyes vs NLRC (G.R. No. 160233. August 8, 2007) Facts: Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City on August 12, 1977. He was eventually appointed as unit manager of Sales Department-South Mindanao District, a position he held until his retirement on November 30, 1997. Thereafter, he received a letter regarding the computation of his separation pay. Insisting that his retirement benefits and 13th month pay must be based on the average monthly salary of P42,766.19, which consists of P10,919.22 basic salary and P31,846.97 average monthly commission, petitioner refused to accept the check issued by private respondent in the amount of P200,322.21. Instead, he filed a complaint before the arbitration branch of the NLRC for retirement benefits, 13th
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month pay, tax refund, earned sick and vacation leaves, financial assistance, service incentive leave pay, damages and attorney's fees. Petitioner contends that the commissions form part of the basic salary, citing the case of Philippine Duplicators, Inc. v. National Labor Relations Commission, wherein the Court held that commissions earned by salesmen form part of their basic salary. Private respondent counters that petitioner knew that the overriding commission is not included in the basic salary because it had not been considered as such for a long time in the computation of the 13th month pay, leave commissions, absences and tardiness. Issue: Whether or not the average monthly sales commission of thirty one thousand eight hundred forty six and 97/100 (Php31,846.97) should be included in the computation of his retirement benefits and 13th month pay. Ruling: This Court has held, in Philippine Duplicators that, the salesmen's commissions, comprising a pre-determined percentage of the selling price of the goods sold by each salesman, were properly included in the term basic salary for purposes of computing the 13th month pay. The salesmen's commission are not overtime payments, nor profit-sharing payments nor any other fringe benefit but a portion of the salary structure which represents an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman. Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co., were excluded from the term basic salary because these were paid to the medical representatives and rank-and-file employees as productivity bonuses, which are generally tied to the productivity, or capacity for revenue production, of a corporation and such bonuses closely resemble profit-sharing payments and have no clear direct or necessary relation to the amount of work actually done by each individual employee. Further, commissions paid by the Boie-Takeda Company to its medical representatives could not have been sales commissions in the same sense that Philippine Duplicators paid the salesmen their sales commissions. Medical representatives are not salesmen; they do not effect any sale of any article at all. In fine, whether or not a commission forms part of the basic salary depends upon the circumstances or conditions for its payment, which indubitably are factual in nature for they will require a re-examination and calibration of the evidence on record. As to the main issue whether petitioner's commissions be considered in the computation of his retirement benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known as The New Retirement Law, 22 provides: Retirement. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract… In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one half (1/2) month salary for every year of service, a
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fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall mean fifteen (15) days plus one twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his retirement benefits is his latest salary rate of P10,919.22 as the commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. Case law has it that when these earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing statements, they are properly excluded in computing retirement pay. However, sales commissions which are effectively an integral portion of the basic salary structure of an employee, shall be included in determining the retirement pay. At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary corresponding to his position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the "overriding commissions" paid to him by Universal Robina Corp. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales commissions. Unit Managers are not salesmen; they do not effect any sale of article at all. Therefore, any commission which they receive is certainly not the basic salary which measures the standard or amount of work of complainant as Unit Manager. Accordingly, the additional payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business. Certainly, from the foregoing, the doctrine in Boie-Takeda Chemicals and Philippine Fuji Xerox Corporation, which pronounced that commissions are additional pay that does not form part of the basic salary, applies to the present case. Aside from the fact that as unit manager petitioner did not enter into actual sale transactions, but merely supervised the salesmen under his control, the disputed commissions were not regularly received by him. Only when the salesmen were able to collect from the sale transactions can petitioner receive the commissions. Conversely, if no collections were made by the salesmen, then petitioner would receive no commissions at all. In fine, the commissions which petitioner received were not part of his salary structure but were profit-sharing payments and had no clear, direct or necessary relation to the amount of work he actually performed. The collection made by the salesmen from the sale transactions was the profit of private respondent from which petitioner had a share in the form of a commission. Hence, petition is denied.

Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco Metal – NAFLU (G.R. No. 170734, May 14, 2008)

Facts:

Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioner’s rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. According to respondent, the prorated payment violates the rule against
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diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). Issue: Whether or not the grant of 13th month pay, bonus, and leave encashment in full regardless of actual service rendered constitutes voluntary employer practice and, consequently, whether or not the prorated payment of the said benefits constitute diminution of benefits under Article 100 of the Labor Code. Ruling: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare and to afford labor full protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor. Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily given by the employer and which ripened into company practice. Thus in DavaoFruits Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously included in the computation of the 13th month pay those items that were expressly excluded by the law, we held that the act which was favorable to the employees though not conforming to law had thus ripened into a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the employer’s act of including non-basic benefits in the computation of the 13th month pay was a voluntary act and had ripened into a company practice which cannot be peremptorily withdrawn. In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of the length of service rendered. True, there were only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice must be exercised in order to constitute voluntary company practice. Thus, it can be six (6) years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group head. Hence, petition was denied.

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Universal Sugar Milling Corp., vs Caballeda (GR No. 156644, July 28, 2008)

Facts: Agripino Caballeda worked as welder for URSUMCO from March 1989 until June 23, 1997 while Alejandro Cadalin worked for URSUMCO as crane operation from 1976 up to June 15, 1997. John Gokongwei, Jr. President of URSUMCO issued a memorandum establishing the company policy on ―Compulsory Retirement.‖ All employees corporate-wide who attain 60 years of age on or before April 30, 1991 shall be considered retired on May 31, 1991. Subsequently, on December 9, 1992, Republic Act No. 7641 was enacted into law and it took effect on January 7, 1993, amending Article 287 of the Labor Code. Agripino and Alejandro having reached the age of 60, were allegedly forced to retire by URSUMCO. They both accepted their retirement benefits. Later on, Agripino filed a complaint for illegal dismissal because his compulsory retirement was in violation of the provisions of RA 7641 and, was in effect, a form of illegal dismissal. Issues: Whether RA 7641 can be given retroactive effect Whether or not Agripino Caballeda and Alejandro Cadalin voluntarily retired from the service. Ruling: The issue of retroactivity has long been settled in the case of Enriquez Security Services, Inc. vs. Cabotaje, to wit: RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as a curative statute that — absent a retirement plan devised by, an agreement with, or a voluntary grant from, an employer — can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little doubt about the fact that the law can apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the law's enactment but retroactively to the time said employment contracts have started. This doctrine has been repeatedly upheld and clarified in several cases. Pursuant thereto, this Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant for retirement benefits was still in the employ of the employer at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility for such retirement benefits under the statute. When respondents were compulsorily retired from the service, RA 7641 was already in full force and effect. The petitioners failed to prove that the respondents did not comply with the requirements for eligibility under the law for such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus, warranting the retroactive application of R.A. 7641 in this case.
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Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former. The age of retirement is primarily determined by the existing agreement between the employer and the employees. However, in the absence of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years. In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement benefits accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the Labor Code which provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective bargaining agreement or other employment contract or employer's retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or employer's retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned. That prerogative is exclusively lodged in the employee. Indubitably, the voluntariness of the respondents' retirement is the meat of the instant controversy. Generally, the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees. They are frowned upon as contrary to public policy. A quitclaim is ineffective in barring recovery of the full measure of a worker's rights, and the acceptance of benefits therefrom does not amount to estoppel. In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if the employer is able to prove the following requisites: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. In this case, petitioners failed to establish all the foregoing requisites. To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is clear from the decisions of the LA, NLRC and CA that petitioners are still liable to pay Alejandro the differential on his retirement benefits. On the other hand, Agripino was actually and totally deprived of his retirement benefit. In Becton Dickinson Phils., Inc. v. National Labor Relations Commission, we held: There is no nexus between intelligence, or even the position which the employee held in the company when it concerns the pressure which the employer may exert upon the free will of the employee who is asked to sign a release and quitclaim. The employee is confronted with the same dilemma of whether signing a release and quitclaim and accept what the company offers them, or refusing to sign and walk out without receiving anything, may do succumb to the same pressure, being very well aware that it is going to take quite a while before he can recover whatever he is entitled to, because it is only after a protracted legal battle starting from the labor arbiter level, all the way to this Court, can he receive anything at all. The Court understands that such a risk of not receiving anything whatsoever, coupled with the probability of not immediately getting any gainful employment or means of livelihood in the meantime, constitutes enough pressure upon
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anyone who is asked to sign a release and quitclaim in exchange of some amount of money which may be way below what he may be entitled to based on company practice and policy or by law. Absent any convincing proof of voluntariness in the submission of the documentary requirements and the execution of the quitclaim, we cannot simply assume that respondents were not subjected to the very same pressure. Respondents vigorously pursued this case all the way up to the Supreme Court. Without doubt, this is a manifestation that respondents had no intention of relinquishing their employment, wholly incompatible to petitioners' assertion that respondents voluntarily retired. Respondents did not voluntarily retire but were forced to retire, tantamount to illegal dismissal.

Cercado vs Uniprom, Inc. (G.R.No.188154, October 13, 2010)

Facts: Petitioner Cercado started working for respondent UNIPROM, Inc. (UNIPROM) on December 15, 1978 as a ticket seller assigned at Fiesta Carnival, Araneta Center, Quezon City. Later on, she was promoted as cashier and then as clerk typist. On April 1, 1980, UNIPROM instituted an Employees' Non-Contributory Retirement Plan which provides that any participant with twenty (20) years of service, regardless of age, may be retired at his option or at the option of the company. On January 1, 2001, UNIPROM amended the retirement plan in compliance with Republic Act (R.A.) No. 7641. Under the revised retirement plan, 6 UNIPROM reserved the option to retire employees who were qualified to retire under the program. Sometime in December 2000, UNIPROM implemented a company-wide early retirement program for its 41 employees, including herein petitioner, who, at that time, was 47 years old, with 22 years of continuous service to the company. She was offered an early retirement package amounting to P171,982.90, but she rejected the same. UNIPROM exercised its option under the retirement plan, and decided to retire Cercado effective at the end of business hours on February 15, 2001. A check of even date in the amount of P100,811.70, representing her retirement benefits under the regular retirement package, was issued to her. Cercado refused to accept the check. Issues: Whether or not UNIPROM has a bona fide retirement plan and whether petitioner was validly retired pursuant thereto. Ruling: In this case, petitioner was retired by UNIPROM at the age of 47, after having served the company for 22 years, pursuant to UNIPROM's Employees' Non-Contributory Retirement Plan, which provides that employees who have rendered at least 20 years of service may be retired at the option of the company. At first blush, respondent's retirement plan can be expediently stamped with validity and justified under the all encompassing phrase "management prerogative," which is what the CA did. However, it is axiomatic that a retirement plan giving
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the employer the option to retire its employees below the ages provided by law must be assented to and accepted by the latter, otherwise, its adhesive imposition will amount to a deprivation of property without due process of law. Verily, petitioner was forced to participate in the plan, and the only way she could have rejected the same was to resign or lose her job. The assailed CA Decision did not really make a finding that petitioner actually accepted and consented to the plan. The CA simply declared that petitioner was deemed aware of the retirement plan on account of the length of her employment with respondent. Implied knowledge, regardless of duration, cannot equate to the voluntary acceptance required by law in granting an early retirement age option to an employer. The law demands more than a passive acquiescence on the part of employees, considering that an employer's early retirement age option involves a concession of the former's constitutional right to security of tenure. Acceptance by the employees of an early retirement age option must be explicit, voluntary, free, and uncompelled. While an employer may unilaterally retire an employee earlier than the legally permissible ages under the Labor Code, this prerogative must be exercised pursuant to a mutually instituted early retirement plan. In other words, only the implementation and execution of the option may be unilateral, but not the adoption and institution of the retirement plan containing such option. For the option to be valid, the retirement plan containing it must be voluntarily assented to by the employees or at least by a majority of them through a bargaining representative. Hence, consistent with the Court's ruling in Jaculbe, having terminated petitioner merely on the basis of a provision in the retirement plan which was not freely assented to by her, UNIPROM is guilty of illegal dismissal. Petitioner is thus entitled to reinstatement without loss of seniority rights and to full backwages computed from the time of her illegal dismissal in February 16, 2001 until the actual date of her reinstatement. If reinstatement is no longer possible because the position that petitioner held no longer exists, UNIPROM shall pay backwages as computed above, plus, in lieu of reinstatement, separation pay equivalent to one-month pay for every year of service. This is consistent with the preponderance of jurisprudence relative to the award of separation pay in case reinstatement is no longer feasible.

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XII

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T/Sgt. Larkins vs NLRC (G.R.No.92432, February 23,1995) Facts: On August 12, 1988, private respondents filed a complaint with the Regional Arbitration Branch No. III of the NLRC, San Fernando, Pampanga, against petitioner Larkins, a member of the United States Air Force (USAF) assigned to oversee the dormitories of the Third Aircraft Generation Squadron (3 AGS) at Clark Air Base, Pampanga., Lt. Col. Frankhauser, and Cunanan (the new contractor ) for illegal dismissal and underpayment of wages. Petitioner and Lt. Col. Frankhauser failed to answer the complaint and to appear at the hearings. They, likewise, failed to submit their position paper, which the Labor Arbiter deemed a waiver on their part to do so. On the basis of private respondents' position paper and supporting documents, the Labor Arbiter rendered a decision granting all the claims of private respondents. He found both Lt. Col. Frankhauser and petitioner "guilty of illegal dismissal" and ordered them to reinstate private respondents with full back wages, or if that is no longer possible, to pay private respondents' separation pay. Petitioner appealed to the NLRC claiming that the Labor Arbiter never acquired jurisdiction over her person because no summons or copies of the complaints, both original and amended, were ever served on her. In her "Supplemental Memorandum to Memorandum of Appeal," petitioner argued that the attempts to serve her with notices of hearing were not in accordance with the provisions of the RP-US Military Bases Agreement of 1947. Issue: Whether or not the questioned resolutions are null and void. Ruling: No jurisdiction was ever acquired by the Labor Arbiter over the case and the person of petitioner and the judgment rendered is null and void. Summonses and other processes issued by Philippine courts and administrative agencies for United States Armed Forces personnel within any U.S. base in the Philippines could be served therein only with the permission of the Base Commander. If he withholds giving his permission, he should instead designate another person to serve the process, and obtain the server's affidavit for filing with the appropriate court. Respondent Labor Arbiter did not follow said procedure. He instead, addressed the summons to Lt. Col. Frankhauser and not the Base Commander. Respondents do not dispute petitioner's claim that no summons was ever issued and served on her. They contend, however, that they sent notices of the hearings to her Notices of hearing are not summonses. The provisions and prevailing jurisprudence in Civil Procedure may be applied by analogy to NLRC proceedings (Revised Rules of the NLRC, Rule I, Sec. 3). It is basic that the Labor Arbiter cannot acquire jurisdiction over the person of the respondent without the latter being served with summons. In the absence of service of summons or a valid waiver thereof, the hearings and judgment rendered by the Labor Arbiter are null and void. Petitioner, in the case at bench, appealed to the NLRC and participated in the oral argument before the said body. This, however, does not constitute a waiver of the lack of summons and a voluntary submission of her person to the jurisdiction of the Labor Arbiter. She may have raised
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in her pleadings grounds other than lack of jurisdiction, but these grounds were discussed in relation to and as a result of the issue of the lack of jurisdiction. In effect, petitioner set forth only one issue and that is the absence of jurisdiction over her person. If an appearance before the NLRC is precisely to question the jurisdiction of the said agency over the person of the defendant, then this appearance is not equivalent to service of summons. Be that as it may, on the assumption that petitioner validly waived service of summons on her, still the case could not prosper. There is no allegation from the pleadings filed that Lt. Col. Frankhauser and petitioner were being sued in their personal capacities for tortious acts. However, private respondents named 3 AGS as one of the respondents in their complaint. Private respondents were dismissed from their employment by Lt. Col. Frankhauser acting for and in behalf of the U.S. Government. The employer of private respondents was neither Lt. Col. Frankhauser nor petitioner. The employer of private respondents, as found by NLRC, was the U.S. Government which, by right of sovereign power, operated and maintained the dormitories at Clark Air Base for members of the USAF. Indeed, assuming that jurisdiction was acquired over the United States Government and the monetary claims of private respondents proved, such awards will have to be satisfied not by Lt. Col. Frankhauser and petitioner in their personal capacities, but by the United States government.

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

Facts: A complaint was filed by the private respondents, represented by the Federation of Free Workers (FFW), claiming salary differentials under Republic Act Nos. 6640 and 6727, correction of the wage distortion and the payment of salaries for Saturdays and Sundays under Policy Instruction No. 54. Labor Arbiter Nieves de Castro sustained the private respondents except for their claim of wage distortion. Respondents are directed to pay the 517 individual complainants a total of P17,082,448.56 plus exemplary damages of P2,000 each. Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of Appeal with a Real Estate Bond consisting of land and various improvements therein worth P102,345,650. 2 The private respondents moved to dismiss the appeal on the ground that Article 223 of the Labor Code, as amended, requires the posting of a cash or surety bond. The NLRC directed petitioners to post a cash or surety bond of P17,082,448.56 with a warning that failure to do so would cause the dismissal of the appeal. The petitioners filed a Motion for Reconsideration alleging it is not in a viable financial condition to post a cash bond nor to pay the annual premium of P700,000.00 for a surety bond. On 6 October 1992, the NLRC dismissed petitioners' appeal. Petitioners' Motion for Reconsideration was also denied by the NLRC in a resolution 3 dated 7 June 1993.

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Issue: Whether or not in perfecting an appeal to the National Labor Relations Commission (NLRC) a property bond is excluded by the two forms of appeal bond ? cash or surety ? as enumerated in Article 223 of the Labor Code. Ruling: The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which provides: In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC 4 we ruled: . . . that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from for the appeal to be perfected, may be considered a jurisdictional requirement, nevertheless, adhering to the principle that substantial justice is better served by allowing the appeal on the merits threshed out by the NLRC, the Court finds and so holds that the foregoing requirement of the law should be given a liberal interpretation. Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission 5 we held: The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected. The requirement is intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims. Considering, however, that the current policy is not to strictly follow technical rules but rather to take into account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of the case, especially since petitioner disputes the allegation that private respondent was illegally dismissed. We reiterate this policy which stresses the importance of deciding cases on the basis of their substantive merit and not on strict technical rules. In the case at bar, the judgment involved is more than P17 million and its precipitate execution can adversely affect the existence of petitioner medical center. Likewise, the issues involved are not insignificant and they deserve a full discourse by our quasi-judicial and judicial authorities. We are also confident that the real property bond posted by the petitioners sufficiently protects the interests of private respondents should they finally prevail. It is not disputed that the real property offered by petitioners is worth P102,345,650. The judgment in favor of private respondent is only a little more than P17 million.
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Philtranco Services vs NLRC (G.R. No. 124100. April 1, 1998)

Facts: Nieva was employed as a driver by petitioner assigned to the Legaspi City-Pasay City route. Nieva sideswiped an owner-type jeep and a criminal complaint was filed against him. Philtranco posted a bail bond for Nieva. After having been suspended, he was told to wait until his case was settled. The case was finally settled he was requested to file a new application as he was no longer considered an employee of Philtranco, allegedly for being absent without leave from October 19 to November 20, 1989. Nieva filed a complaint for illegal dismissal and demanded for 13th month pay with the NLRC’s National Capital Region Arbitration Branch in Manila. Philtranco filed a motion to dismiss on the ground of improper venue, stating that the complaint should have been lodged with the NLRC’s Regional Arbitration Branch in Legaspi City, not only because Nieva was a resident thereof, but also because the latter was hired, assigned, and based in Legaspi City. Issue: Whether or not NLRC’s NCR Arbitration Branch in Manila was a proper venue for the filing of Nieva’s complaints for illegal dismissal Ruling: The filing of the complaint with the National Capital Region Arbitration Branch was proper, Manila being considered as part of Nieva’s workplace by reason of his plying the Legaspi CityPasay City route. In fact, Section 1(a), Rule IV of the New Rules of Procedure of the NLRC is merely permissive. Provisions on venue are intended to assure convenience for the employee and his witnesses and to promote the ends of justice provided that it is not oppressive to the employer.

St. Martin Funeral Homes vs NLRC (G.R. No. 130866. September 16, 1998) Facts: Private respondent alleges that he started working as Operations Manager of petitioner St. Martin Funeral Home on February 6, 1995. Petitioner on the other hand claims that private respondent was not its employee but only the uncle of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. When the mother of Amelita passed away, the latter then took over the management of the business and made some changes in the business operation and private respondent and his wife were no longer allowed to participate in the management thereof. As a consequence, the latter filed a complaint charging that petitioner had illegally terminated his employment.

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The labor arbiter rendered a decision in favor of petitioner declaring that no employer-employee relationship existed between the parties and, therefore, his office had no jurisdiction over the case. On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and remanding the case to the labor arbiter for immediate appropriate proceedings. Petitioner then filed a motion for reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for lack of merit Issue: Whether or not the Court has the power to review decisions of the NLRC. Ruling: When the issue was raised in an early case on the argument that this Court has no jurisdiction to review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that there is an underlying power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even though no right of review is given by statute; that the purpose of judicial review is to keep the administrative agency within its jurisdiction and protect the substantial rights of the parties; and that it is that part of the checks and balances which restricts the separation of powers and forestalls arbitrary and unjust adjudications. Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of the aggrieved party is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, and then seasonably avail of the special civil action of certiorari under Rule 65, for which said Rule has now fixed the reglementary period of sixty days from notice of the decision. Curiously, although the 10-day period for finality of the decision of the NLRC may already have lapsed as contemplated in Section 223 of the Labor Code, it has been held that this Court may still take cognizance of the petition for certiorari on jurisdictional and due process considerations if filed within the reglementary period under Rule 65. Sec. 9. Jurisdiction. The Court of Appeals shall exercise: (3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission, the Social Security Commission, the Employees Compensation Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

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Ludo & Luym Corp., vs Saornido (G.R. No. 140960. January 20, 2003) Facts: On April 1992, respondent union entered into a collective bargaining agreement with LUDO which provides certain benefits to the employees, the amount of which vary according to the length of service rendered by the availing employee. Thereafter, the union requested LUDO to include in its members’ period of service the time during which they rendered arrastre services to LUDO through the CLAS when they were not yet hired as regular rank-and-file employees so that they could get higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration. The parties accordingly executed a submission agreement raising the sole issue of the date of regularization of the workers for resolution by the Voluntary Arbitrator. In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the respondent employees were engaged in activities necessary and desirable to the business of petitioner, and (2) CLAS is a labor-only contractor of petitioner. It disposed of the case thus: WHEREFORE, in view of the foregoing, this Voluntary Arbitrator finds the claims of the complainants meritorious and so hold that: a. the 214 complainants, as listed in the Annex A, shall be considered regular employees of the respondents six (6) months from the first day of service at CLAS; b. the said complainants, being entitled to the CBA benefits during the regular employment, are awarded a) sick leave, b) vacation leave & c) annual wage and salary increases during such period in the amount of FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO HUNDRED SIXTY ONE PESOS AND SIXTY ONE CENTAVOS (P5,707,261.61) as computed in "Annex A"; c. the respondents shall pay attorney’s fees of ten (10) percent of the total award; d. an interest of twelve (12) percent per annum or one (1) percent per month shall be imposed to the award from the date of promulgation until fully paid if only to speed up the payment of these long over due CBA benefits deprived of the complaining workers. Accordingly, all separation and/or retirement benefits shall be construed from the date of regularization aforementioned subject only to the appropriate government laws and other social legislation. In due time, LUDO filed a motion for reconsideration, which was denied. On appeal, the Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator. Petitioner contends that the appellate court gravely erred when it upheld the award of benefits which were beyond the terms of submission agreement. Petitioner asserts that the arbitrator must confine its adjudication to those issues submitted by the parties for arbitration, which in this case is the sole issue of the date of regularization of the workers. Hence, the award of benefits by the arbitrator was done in excess of jurisdiction. On the matter of the benefits, respondents argue that the arbitrator is empowered to award the assailed benefits because notwithstanding the sole issue of the date of regularization, standard companion issues on reliefs and remedies are deemed incorporated. Otherwise, the whole arbitration process would be rendered purely academic and the law creating it inutile. Issue: Whethern or not a Voluntary Arbitrator can award benefits not claimed in the submission agreement.
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Ruling: Arbitrator can award benefits not claimed in the submission agreement. The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators and Labor Arbiters is clearly defined and specifically delineated in the Labor Code. The pertinent provisions of the Labor Code, read: Art. 217. Jurisdiction of Labor Arbiters and the Commission. --- (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases: 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement. Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks." In construing the above provisions, we held in San Jose vs. NLRC, that the jurisdiction of the Labor Arbiter and the Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in the Labor Code, Articles 217, 261 and 262, can possibly include money claims in one form or another. Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC, compulsory arbitration has been defined both as "the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties, and as a mode of arbitration where the parties are compelled to accept the resolution of their dispute through arbitration by a third party.

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While a voluntary arbitrator is not part of the governmental unit or labor department’s personnel, said arbitrator renders arbitration services provided for under labor laws. Generally, the arbitrator is expected to decide only those questions expressly delineated by the submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make a final settlement since arbitration is the final resort for the adjudication of disputes. The succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a labor controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence, thus: In general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the submission empowers the arbitrator to decide whether an employee was discharged for just cause, the arbitrator in this instance can reasonable assume that his powers extended beyond giving a yes-or-no answer and included the power to reinstate him with or without back pay. In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of his own authority subject only, in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already indicated, viewed his authority as embracing not merely the determination of the abstract question of whether or not a performance bonus was to be granted but also, in the affirmative case, the amount thereof. By the same token, the issue of regularization should be viewed as two-tiered issue. While the submission agreement mentioned only the determination of the date or regularization, law and jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate prerogative to accomplish the reason for which the law on voluntary arbitration was created speedy labor justice. It bears stressing that the underlying reason why this case arose is to settle, once and for all, the ultimate question of whether respondent employees are entitled to higher benefits. To require them to file another action for payment of such benefits would certainly undermine labor proceedings and contravene the constitutional mandate providing full protection to labor.

Hanjin Engineering and Construction Co. Ltd. vs Court of Appeals (G.R. No. 165910. April 10, 2006)

Facts: Hanjin is a construction company that had been contracted by the Philippine Government for the construction of various foreign-financed projects. Hanjin and the Philippine Government entered into contracts for the construction of the Malinao Dam at Pilar, Bohol, with a projected completion period of 1,050 calendar days, including main canal and lateral projects for 750 days. From August 1995 to August 1996, Hanjin contracted the services of 712 carpenters, masons, truck drivers, helpers, laborers, heavy equipment operators, leadmen, engineers, steelmen, mechanics, electricians and others.
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In April 1998, 712 employees filed complaints for illegal dismissal and for payment of benefits against petitioners, before the NLRC. The complainants averred that they were regular employees of Hanjin and that they were separated from employment without any lawful or just cause. Only 521 of the complainants affixed their signatures in the complaints. Petitioners alleged that the complainants were mere project employees in its Bohol Irrigation Project and that 2 of the worekers were charged with qualified theft before the RTC. Some of the complainants had already migrated to USA or had died, while 117 of them were still under the employ of Hanjin. Petitioner stated that some of the complainants had voluntarily resigned; 14 were absent without prior approved leave; 15 had signed a Motion to Withdraw from the complaint; and many of the complainants were separated on account of the completion of the project. However, petitioners failed to append any document to support their claim. Labor Arbiter rendered judgment in favor of the 428 complainants, granting separation pay and attorney's fees to each of them stating that the complainants were regular employees of petitioner and their claims for underpayment, holiday pay, premium pay for holiday and rest day, 13th month pay, and service incentive leave would be computed after sufficient data were made available. Petitioners appealed the decision to the NLRC, which affirmed with modification the Labor Arbiter's ruling. Petitioners filed a Motion for the Reconsideration of the decision (with a motion to conduct clarificatory hearings) NLRC partially granted petitioners' motion. Unsatisfied, petitioners filed a Petition for Certiorari under Rule 65 of the Revised Rules of Court in the CA. CA dismissed the petition and affirmed the NLRC's ruling that the dismissed employees were regular employees. The CA stressed that petitioners failed to refute the claim of the respondents that they were regular employees. Petitioners moved to reconsider the decision, which the CA denied. Issue: Whether or not respondents are project employees Ruling: While respondent alleged that "complainants all signed a contract of employment at the time they were hired indicating therein the particular project they will be working on, the period and other conditions provided in their contracts which complainants fully knew and understood," nowhere in the records can the said contracts be found. Moreover, let it be stressed that under DO No. 19, Series of 1993 on project employment, six (6) indicators are enumerated therein and one of which is that: "(T)he termination of his employment in the particular project/undertaking is reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work x x x." In this particular case, the records do not show that a similar report was ever made by respondent to the Department of Labor and Employment. Such failure of respondent employer to report to the nearest employment office of the Department of Labor, the termination of the workers it claimed as project employees at the time it completed the project, is proof that complainants were not project employees.
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The principal test for determining whether particular employees are properly characterized as project employees is: whether or not the project employees were assigned to carry out a specific project or undertaking, the duration of which were specified at the time the employees were engaged for that project. Predetermination of the duration or period of project employment is essential in resolving whether one is a project employee or not. In the instant case, the completion of the project for which the complainants were hired was not determined at the start of their employment, there being no substantial proof thereof. The fact that complainants had rendered more than one year of service at the time of their dismissal and there being no substantial evidence to support that they were engaged to work on a specific project or undertaking, overturns respondent’s allegation that complainants were project employees hired for a specific fixed project for a limited period of time. Complainants herein were, therefore, non-project employees, but regular employees. Admittedly, being a duly licensed contractor firm in the Philippines, respondent is the awardee of several construction projects and in many occasions it has been given the priority in the awarding of subsequent projects. In the light of the above facts and circumstances, the respondent's main defense that completion of the project worked on by the complainants constitute a valid cause of termination is unsustainable. To repeat, there is no substantial evidence on record to sustain this contention. The mere allegation of the respondents that under their employment contracts the complainants were made to understand that they were project employees is definitely not persuasive or unworthy of credence. The best evidence of which would have been the alleged contracts. These employees signed duly notarized waivers/quitclaims and who did not recant later. In the absence of evidence showing the contrary, said quitclaims were executed voluntarily and without any force or intimidation. Petitioners submitted to the NLRC dubious machine copies of only some of respondents? contracts, including alleged employment termination reports submitted to the DOLE. The NLRC found the contracts barren of probative weight and utterly insufficient to buttress the contention of petitioners that respondents were only project employees. Contary to the representation of respondent's counsel, the original copies of the reports made to DOLE were never produced and submitted to this Commission. Neither were they presented for comparison with the machine copies. These machine copies were not also certified as true copies by the DOLE. The actual continuous employment of complainants by respondent Hanjin since 1991 until 1995 overcomes the piecemeal "appointments" covering for periods of six (6) months or less. From these short term but repeated "appointments," it is apparent that the periods have been imposed to preclude the acquisition of tenurial security by the employee and which kind of employment contracts should be disregarded for being contrary to public policy. The appellate court, the NLRC and the Labor Arbiter are thus one in finding that respondents were not project employees, and in sustaining respondents' claim of illegal dismissal due to petitioners? failure to adduce contrary evidence. Well-settled is the rule that findings of fact of quasi-judicial agencies, like the NLRC, are accorded not only respect but at times even finality if such findings are supported by substantial evidence. Such findings of facts can only be set aside upon showing of grave abuse of discretion, fraud or error of law, none of which have been shown in this case.
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Phil. Journalistic Inc., vs NLRC (G.R. No. 166421. September 5, 2006)

Facts: In NLRC’s Resolution dated May 31, 2001, petitioner Philippine Journalists, Inc. (PJI) was adjudged liable in the total amount of P6,447,008.57 for illegally dismissing 31 complainantsemployees and that there was no basis for the implementation of petitioner's retrenchment program. Thereafter, the parties executed a Compromise Agreement dated July 9, 2001, where PJI undertook to reinstate the 31 complainant-employees effective July 1, 2001 without loss of seniority rights and benefits; 17 of them who were previously retrenched were agreed to be given full and complete payment of their respective monetary claims, while 14 others would be paid their monetary claims minus what they received by way of separation pay. The compromise agreement was submitted to the NLRC for approval. All the employees mentioned in the agreement and in the NLRC Resolution affixed their signatures thereon. They likewise signed the Joint Manifesto and Declaration of Mutual Support and Cooperation which had also been submitted for the consideration of the labor tribunal. The NLRC forthwith issued another Resolution on July 25, 2002, which among others declared that Thus, the compromise agreement was approved and NCMB-NCR-NS-03-087-00 was deemed closed and terminated. In the meantime, however, the Union filed another Notice of Strike on July 1, 2002. In an Order dated September 16, 2002, the DOLE Secretary certified the case to the Commission for compulsory arbitration. The case was docketed as NCMB-NCR- NS-07-251-02. In its Resolution dated July 31, 2003, the NLRC ruled that the complainants were not illegally dismissed. The May 31, 2001 Resolution declaring the retrenchment program illegal did not attain finality as "it had been academically mooted by the compromise agreement entered into between both parties on July 9, 2001." The Union assailed the ruling of the NLRC before the CA via petition for certiorari under Rule 65. In its Decision dated August 17, 2004, the appellate court held that the NLRC gravely abused its discretion in ruling for PJI. The compromise agreement referred only to the award given by the NLRC to the complainants in the said case, that is, the obligation of the employer to the complainants. Issue: Whether or not the petitioner’s petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure is a proper remedy in this case. Ruling: At the outset, we note that this case was brought before us via petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure. The proper remedy, however, was to file a petition under Rule 45. It must be stressed that certiorari under Rule 65 is "a remedy narrow in scope and inflexible in character. It is not a general utility tool in the legal workshop." Moreover, the special civil action for certiorari will lie only when a court has acted without or in excess of jurisdiction or with grave abuse of discretion. Be that as it may, a petition for certiorari may be treated as a petition for review under Rule 45. Such move is in accordance with the liberal spirit pervading the Rules of Court and in the
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interest of substantial justice. As the instant petition was filed within the prescribed fifteen-day period, and in view of the substantial issues raised, the Court resolves to give due course to the petition and treat the same as a petition for review on certiorari.

Balagtas Multi-Purpose Coop vs Court of Appeals (G.R. No. 159268. October 27, 2006)

Facts: Balagtas Multi-Purpose Cooperative, Inc. is a duly organized and existing cooperative under the laws of the Philippines. Sometime in April 1991, Balagtas hired Josefina G. Hipolito-Herrero, as part time manager in its office. Subsequently, Josefina made known of her intention to take a leave of absence. Her proposal was immediately approved. However, after the lapse of her leave of absence, Josefina did not report for work anymore. Later on, she filed her resignation. Consequently Josefina filed a complaint with the Provincial Office of the Department of Labor in Malolos, Bulacan for illegal dismissal, and non-payment of 13th month pay or Christmas Bonus. She also prayed for reinstatement and paid backwages as well as moral damages. The Labor Arbiter rendered judgment in favor of complainant and against respondents and ordered the latter to pay the former 13th month pay, backwages and separation pay. Aggrieved, herein petitioners appealed the decision to NLRC but failed to post either a cash or surety bond as required by Article 223 of the Labor Code. They filed a manifestation and motion instead, stating, that under Republic Act No. 6938, Article 62(7) of the Cooperative Code of the Philippines, petitioners are exempt from putting up a bond in an appeal from the decision of the inferior court. NLRC ordered respondents to post a cash or surety bond in the amount of P218,000.00, within 10 inextendible days from receipt of the Order, failure of which shall constitute a waiver and non-perfection of the appeal. Balagtas appealed to CA, which dismissed the petition holding that the exemption from putting up a bond by a cooperative applies to cases decided by inferior courts only. Issues: 1. Whether cooperatives are exempted from filing a cash or surety bond required to perfect an employer’s appeal under Section 223 of Presidential Decree No. 442 (the Labor Code); and, 2. Whether a certification issued by the Cooperative Development Authority constitutes substantial compliance with the requirement for the posting of a bond. Ruling: 1. No. Petitioners argue that there are certain benefits and privileges expressly granted to cooperative under the Cooperative Code. It invoked the provision on Article 62 regarding the exemption from payment of an appeal bond, to wit: (7)All cooperatives shall be exempt from putting up a bond for bringing an appeal against the decision of an inferior court or for seeking to set aside any third party claim: Provided, That a certification of the Authority showing that the
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net assets of the cooperative are in excess of the amount of the bond required by the court in similar cases shall be accepted by the court as a sufficient bond. However, it is only one among a number of such privileges which appear under the article entitled ―Tax and Other Exemptions‖ of the code. The provision cited by petitioners cannot be taken in isolation and must be interpreted in relation to the Cooperative Code in its entirety. Exceptions are to be strictly but reasonably construed; they extend only so far as their language warrants, and all doubts should be resolved in favor of the general provision rather than the exceptions. 2. No. Article 119 of the Cooperative Code itself expressly embodies the legislative intention to extend the coverage of labor statutes to cooperatives. For this reason, petitioners must comply with the requirement set forth in Article 223 of the Labor Code in order to perfect their appeal to the NLRC. It must be pointed out that the right to appeal is not a constitutional, natural or inherent right. It is a privilege of statutory origin and, therefore, available only if granted or provided by statute. The law may validly provide limitations or qualifications thereto or relief to the prevailing party in the event an appeal is interposed by the losing party. In this case, the obvious and logical purpose of an appeal bond is to insure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the employee under the judgment if the latter is subsequently affirmed. Therefore, no error can be ascribed to the CA for holding that the phrase ―inferior courts‖ appearing in Article 62 paragraph (7) of the Cooperative Code does not extend to ―quasi-judicial agencies‖ and that, petitioners are not exempt from posting the appeal bond required under Article 223 of the Labor Code.

St. Martin Funeral Homes vs NLRC (G.R. No. 142351 November 22, 2006)

Facts: The owner of petitioner St. Martin Funeral Homes, Inc. (St. Martin) is Amelita Malabed. Prior to January 1996, Amelita’s mother managed the funeral parlor. In 1995, Aricayos was granted financial assistance by Amelita’s mother. As a sign of appreciation, respondent extended assistance in managing St. Martin without compensation and no written employment contract between Amelita’s mother and respondent Aricayos; furthermore, respondent Aricayos was not even listed as an employee in the Company’s payroll. When Amelita’s mother died in January 1996, Amelita took over as manager of St. Martin. Much to her chagrin, she found out that St. Martin had arrearages in the payment of BIR taxes and other fees owing to the government, but company records tended to show that payments were made thereon. As a result, Amelita removed the authority from respondent Aricayos and his wife from taking part in managing St. Martin’s operations.

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Aggrieved, respondent Aricayos accused St. Martin of his illegal dismissal as Operations Manager of the company. He believed that the cause of his termination was Amelita’s suspicion that he pocketed PhP 38,000.00 which was set aside for payment to the BIR of St. Martin’s valued added taxes.On October 25, 1996, the Labor Arbiter rendered a Decision, in favor of petitioner declaring that his office had no jurisdiction over the case. NLRC issued a Resolution annulling the Arbiter’s Decision and remanded the case to him for appropriate proceedings, to determine the factual issue of the existence of employer-employee relationship between the parties. When its motion for reconsideration was rejected by the NLRC, petitioner filed a petition for certiorari under Rule 65 before this Court, docketed as G.R. No. 130866. On September 16, 1998, this Court through Justice Jose Vitug, rendered the landmark Decision in this case then docketed as G.R. No. 130866, holding for the first time that all petitions for certiorari under Rule 65 assailing the decisions of the NLRC should henceforth be filed with the CA Issue: Whether or not a petitioner can file his petition for certiorari under Rule65 to assail the decision of a lower court like NLRC. Ruling: A petition for certiorari under Rule65 must first be filed at the Court of Appeals. Said court has a concurrent jurisdiction on petitions for certiorari, mandamus, prohibitions. This is in consonance with the hierarchy of courts.

DOLE Phils. vs Esteva (G.R. No. 161115. November 30, 2006) Facts: Petitioner is a corporation engaged principally in the production and processing of pineapple for the export market. Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines. Pursuant to the Service Contract, CAMPCO members rendered services to petitioner. The number of CAMPCO members that report for work and the type of service they performed depended on the needs of petitioner at any given time. Although the Service Contract specifically stated that it shall only be for a period of six months, i.e., from 1 July to 31 December 1993, the parties had apparently extended or renewed the same for the succeeding years without executing another written contract. It was under these circumstances that respondents came to work for petitioner. DOLE organized a Task Force that conducted an investigation into the alleged labor-only contracting activities of the cooperatives. The Task Force identified six cooperatives that were engaged in labor-only contracting, one of which was CAMPCO. In this case, respondents alleged that they started working for petitioner at various times in the years 1993 and 1994, by virtue of the Service Contract executed between CAMPCO and petitioner. All of the respondents had already rendered more than one year of service to petitioner. While some of the respondents were still working for petitioner, others were put on ―stay home status‖ on varying dates in the years 1994, 1995, and 1996 and were no
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longer furnished with work thereafter. Together, respondents filed a Complaint with the NLRC for illegal dismissal, regularization, wage differentials, damages and attorney’s fees. Petitioner denied that respondents were its employees. It explained that it found the need to engage external services to augment its regular workforce, which was affected by peaks in operation, work backlogs, absenteeism, and excessive leaves. It used to engage the services of individual workers for definite periods specified in their employment contracts and never exceeding one year. However, such an arrangement became the subject of a labor case, in which petitioner was accused of preventing the regularization of such workers. Issues: 1. Whether or not the court of appeals was correct when it made its own factual findings and disregarded the factual findings of the labor arbiter and the NLRC. 2. Whether or not CAMPCO was a mere labor-only contractor. Ruling: The Court in the exercise of its equity jurisdiction may look into the records of the case and reexamine the questioned findings. As a corollary, this Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary to arrive at a just decision of the case. The same principles are now necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of the matters and on that basis reversed the ruling of the NLRC. On the second issue, CAMPCO was a mere labor-only contractor. First, although petitioner touts the multi-million pesos assets of CAMPCO, it does well to remember that such were amassed in the years following its establishment. In 1993, when CAMPCO was established and the Service Contract between petitioner and CAMPCO was entered into, CAMPCO only had P6,600.00 paid-up capital, which could hardly be considered substantial. It only managed to increase its capitalization and assets in the succeeding years by continually and defiantly engaging in what had been declared by authorized DOLE officials as labor-only contracting. Second, CAMPCO did not carry out an independent business from petitioner. It was precisely established to render services to petitioner to augment its workforce during peak seasons. Petitioner was its only client. Even as CAMPCO had its own office and office equipment, these were mainly used for administrative purposes; the tools, machineries, and equipment actually used by CAMPCO members when rendering services to the petitioner belonged to the latter. Third, petitioner exercised control over the CAMPCO members, including respondents. Petitioner attempts to refute control by alleging the presence of a CAMPCO supervisor in the work premises. Yet, the mere presence within the premises of a supervisor from the cooperative did not necessarily mean that CAMPCO had control over its members. Section 8(1), Rule VIII, Book III of the implementing rules of the Labor Code, as amended, required for permissible job contracting that the contractor undertakes the contract work on his account, under his own responsibility, according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. As alleged by the respondents, and unrebutted by petitioner, CAMPCO members, before working for the petitioner, had to undergo instructions and pass the training provided by petitioner’s personnel. It was petitioner who determined and prepared the work assignments of
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the CAMPCO members. CAMPCO members worked within petitioner’s plantation and processing plants alongside regular employees performing identical jobs, a circumstance recognized as an indicium of a labor-only contractorship. Fourth, CAMPCO was not engaged to perform a specific and special job or service. In the Service Contract of 1993, CAMPCO agreed to assist petitioner in its daily operations, and perform odd jobs as may be assigned. CAMPCO complied with this venture by assigning members to petitioner. Apart from that, no other particular job, work or service was required from CAMPCO, and it is apparent, with such an arrangement, that CAMPCO merely acted as a recruitment agency for petitioner. Since the undertaking of CAMPCO did not involve the performance of a specific job, but rather the supply of manpower only, CAMPCO clearly conducted itself as a labor-only contractor. Lastly, CAMPCO members, including respondents, performed activities directly related to the principal business of petitioner. They worked as can processing attendant, feeder of canned pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions which were, not only directly related, but were very vital to petitioner’s business of production and processing of pineapple products for export. The declaration that CAMPCO is indeed engaged in the prohibited activities of labor-only contracting, then consequently, an employer-employee relationship is deemed to exist between petitioner and respondents, since CAMPCO shall be considered as a mere agent or intermediary of petitioner. Since respondents are now recognized as employees of petitioner, this Court is tasked to determine the nature of their employment. In consideration of all the attendant circumstances in this case, this Court concludes that respondents are regular employees of petitioner. As such, they are entitled to security of tenure. They could only be removed based on just and authorized causes as provided for in the Labor Code, as amended, and after they are accorded procedural due process. Therefore, petitioner’s acts of placing some of the respondents on ―stay home status‖ and not giving them work assignments for more than six months were already tantamount to constructive and illegal dismissal.

Intercontinental Broadcasting Corp., vs Panganiban (G.R. No. 151407, February 06, 2007)

Facts: Ireneo Panganiban was employed as Assistant General Manager of the Intercontinental Broadcasting Corporation (petitioner) from May 1986 until his preventive suspension on August 26, 1988. Respondent resigned from his employment on September 2, 1988. On April 12, 1989, respondent filed with the Regional Trial Court of Quezon City, Branch 93, Civil Case No. Q-892244 against the members of the Board of Administrators (BOA) of petitioner alleging, among others, non-payment of his unpaid commissions. A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of lack of jurisdiction, as respondent's claim was a labor money claim, but this was denied by the RTC per Orders dated October 19, 1990 and November 23, 1990. Thus, Santiago filed a petition for certiorari with the CA, docketed as CA-G.R. SP No. 23821, and in a Decision dated October 29, 1991, the CA granted Santiago's petition for lack of jurisdiction and set aside the RTC's Orders dated October 19, 1990 and November 23, 1990.
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Express acknowledgment of debt by petitioners in a letter sent by Pio S. Kaimo, Jr., Audit Group Head addressed to IBC Gen. Manager Ceferino M. Basilio (Annex A of Motion for Reconsideration) - January 21, 1993.Thereafter, respondent was elected by the BOA as VicePresident for Marketing in July 1992. He resigned in April 1993. On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal, separation pay, retirement benefits, unpaid commissions, and damages. From date of dismissal of CA-G.R. SP No. 23821 up to the date of express acknowledgment of debt, only a period of 1 year and 3 months has passed by. The CA ruled that respondent's money claim had not yet prescribed, as it was interrupted in two instances: first, by the filing of Civil Case No. Q-89-2244 by respondent with the RTC; and second, by the express acknowledgment of the debt by petitioners. Issue: Whether or not respondent's claim for unpaid commissions in the amount has already prescribed. Ruling: Respondent's claim had already prescribed as of September 1991. The applicable law in this case is Article 291 of the Labor Code which provides that "all money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred." The term "money claims" covers all money claims arising from an employer-employee relation. Like other causes of action, the prescriptive period for money claims is subject to interruption, and in the absence of an equivalent Labor Code provision for determining whether the said period may be interrupted, Article 1155 of the Civil Code may be applied, to wit: ART. 1155. The prescription of actions is interrupted when they are filed before the Court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor. Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor. On this point, the Court ruled that although the commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been commenced at all. Hence, while the filing of Civil Case No. Q-89-2244 could have interrupted the running of the three-year prescriptive period, its consequent dismissal by the CA in CA-G.R. SP No. 23821 due to lack of jurisdiction effectively canceled the tolling of the prescriptive period within which to file his money claim, leaving respondent in exactly the same position as though no civil case had been filed at all. The running of the three-year prescriptive period not having been interrupted by the filing of Civil Case No. Q-89-2244, respondent's cause of action had already prescribed on September 2, 1991, three years after his cessation of employment on September 2, 1988. Consequently, when respondent filed his complaint for illegal dismissal, separation pay, retirement benefits, and damages in July 24, 1996, his claim, clearly, had already been barred by prescription.
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Far East Agricultural Supply vs Lebatigue (G.R. No. 162813, February 12, 2007)

Facts: Far East hired on March 1996 private respondent Jimmy Lebatique as truck driver with a daily wage of P223.50. He delivered animal feeds to the company's clients. On January 26, 2000, Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public Assistance and Complaints Unit concerning the nonpayment of his overtime pay. On January 2000, Alexander asked him why he was claiming overtime pay. Lebatique explained that he had never been paid for overtime work since he started working for the company. He also told Alexander that Manuel had fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for another job. On March 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The Labor Arbiter found that Lebatique was illegally dismissed, and ordered his reinstatement and the payment of his full back wages, 13th month pay, service incentive leave pay, and overtime pay. Issue: Whether or not respondent is entitled to all money claims prayed for covering since he worked with the petitioner. Ruling: He can only demand for the overtime pay withheld for the period within three years preceding the filing of the complaint on March 20, 2000. The case is hereby REMANDED to the Labor Arbiter for further proceedings to determine the exact amount of overtime pay and other monetary benefits due Jimmy Lebatique which herein petitioners should pay without further delay. Note that all money claims arising from an employer-employee relationship shall be filed within three years from the time the cause of action accrued; otherwise, they shall be forever barred. Further, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three years before the filing of the complaint. Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive period commences at the time he was terminated. On the other hand, his claim regarding nonpayment of overtime pay since he was hired in March 1996 is a different matter. In the case of overtime pay, he can only demand for the overtime pay withheld for the period within three years preceding the filing of the complaint on March 20, 2000. However, we find insufficient the selected time records presented by petitioners to compute properly his overtime
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pay. The Labor Arbiter should have required petitioners to present the daily time records, payroll, or other documents in management's control to determine the correct overtime pay due Lebatique.

Letran Calamba Faculty & Employees Association vs NLRC (G.R. No. 156225. January 29, 2008)

Facts: On October 8, 1992, the Letran Calamba Faculty and Employees Association (petitioner) filed with Regional Arbitration Branch No. IV of the National Labor Relations Commission (NLRC) a Complaint against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members. On January 29, 1993, respondent filed its Position Paper denying all the allegations of petitioner. On March 10, 1993, petitioner filed its Reply. Prior to the filing of the above-mentioned complaint, petitioner filed a separate complaint against the respondent for money claims with Regional Office No. IV of the Department of Labor and Employment (DOLE). On the other hand, pending resolution of the NLRC Case, respondent filed with NLRC Regional Arbitration Branch No. IV a petition to declare as illegal a strike staged by petitioner in January 1994. Issue: Whether or not the factual findings of the NLRC can be reviewed in Certiorari Proceedings. Ruling: This Court held in Odango v. National Labor Relations Commission that: The appellate court’s jurisdiction to review a decision of the NLRC in a petition for certiorari is confined to issues of jurisdiction or grave abuse of discretion. An extraordinary remedy, a petition for certiorari is available only and restrictively in truly exceptional cases. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction. It does not include correction of the NLRC’s evaluation of the evidence or of its factual findings. Such findings are generally accorded not only respect but also finality. A party assailing such findings bears the burden of showing that the tribunal acted capriciously and whimsically or in total disregard of evidence material to the controversy, in order that the extraordinary writ of certiorari will lie. In the instant case, the Court finds no error in the ruling of the CA that since nowhere in the petition is there any acceptable demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess of its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence which supports the labor tribunals' findings of fact. Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the Supreme Court, unless patently erroneous. It is not the function of the Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings below. In a petition for review on certiorari, this Court’s jurisdiction is limited to reviewing
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errors of law in the absence of any showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous. Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases. Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only great respect but even finality. They are binding upon this Court unless there is a showing of grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in utter disregard of the evidence on record. We find none of these exceptions in this case. In petitions for review on certiorari like the instant case, the Court invariably sustains the unanimous factual findings of the LA, the NLRC and the CA, especially when such findings are supported by substantial evidence and there is no cogent basis to reverse the same, as in this case.

Metro Transit Organization vs Piglas NFWU-KMU et al., (G.R. No. 175460. April 14, 2008)

Facts: Petitioner MTO is a government owned and controlled corporation which entered into a Management and Operations Agreement (MOA) with the Light Rail Transit Authority (LRTA) for the operation of the Light Rail Transit (LRT) Baclaran-Monumento Line. Petitioner Jose L. Cortez, Jr. was sued in his official capacity as then Undersecretary of the Department of Transportation and Communications and Chairman of the Board of Directors of petitioner MTO. Respondents filed with the Labor Arbiter Complaints against petitioners and the LRTA for the following: (1) illegal dismissal; (2) unfair labor practice for union busting; (3) moral and exemplary damages; and (4) attorney's fees. On 13 September 2004, the Labor Arbiter rendered judgment in favor of respondents. Petitioners appealed to the National Labor Relations Commission (NLRC). In a Resolution dated 19 May 2006, the NLRC dismissed petitioners' appeal for non-perfection since it failed to post the required bond. Without filing a Motion for Reconsideration of the afore-quoted NLRC Resolution, petitioners filed a Petition for Certiorari with the Court of Appeals assailing the same. On 24 August 2006, the Court of Appeals issued a Resolution dismissing the Petition. Issue: Whether or not petitioner can directly file the extraordinary remedy of certiorari without filing first a motion for reconsideration with the NLRC. Ruling: Petitioners' failure to file a motion for reconsideration against the assailed Resolution of the NLRC rendered its petition for certiorari before the appellate court as fatally defective.

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It must be primarily established that petitioners contravened the procedural rule for the extraordinary remedy of certiorari. The rule is, for the writ to issue, it must be shown that there is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law. The settled rule is that a motion for reconsideration is a condition sine qua non for the filing of a petition for certiorari. Its purpose is to grant an opportunity for the court to correct any actual or perceived error attributed to it by the re-examination of the legal and factual circumstances of the case. The rationale of the rule rests upon the presumption that the court or administrative body which issued the assailed order or resolution may amend the same, if given the chance to correct its mistake or error. We have held that the "plain," "speedy," and "adequate remedy" referred to in Section 1, Rule 65 of the Rules of Court is a motion for reconsideration of the questioned Order or Resolution. As we consistently held in numerous cases, a motion for reconsideration is indispensable for it affords the NLRC an opportunity to rectify errors or mistakes it might have committed before resort to the courts can be had. In the case at bar, petitioners directly went to the Court of Appeals on certiorari without filing a motion for reconsideration with the NLRC. The motion for reconsideration would have aptly furnished a plain, speedy, and adequate remedy. As a rule, the Court of Appeals, in the exercise of its original jurisdiction, will not take cognizance of a petition for certiorari under Rule 65, unless the lower court has been given the opportunity to correct the error imputed to it. The Court of Appeals correctly ruled that petitioners' failure to file a motion for reconsideration against the assailed Resolution of the NLRC rendered its petition for certiorari before the appellate court as fatally defective. We agree in the Court of Appeals' finding that petitioners' case does not fall under any of the recognized exceptions to the filing of a motion for reconsideration, to wit: (1) when the issue raised is purely of law; (2) when public interest is involved; (3) in case of urgency; or when the questions raised are the same as those that have already been squarely argued and exhaustively passed upon by the lower court. As the Court of Appeals reasoned, the issue before the NLRC is both factual and legal at the same time, involving as it does the requirements of the property bond for the perfection of the appeal, as well as the finding that petitioners failed to perfect the same. Evidently, the burden is on petitioners seeking exception to the rule to show sufficient justification for dispensing with the requirement. Certiorari cannot be resorted to as a shield from the adverse consequences of petitioners' own omission of the filing of the required motion for reconsideration. Nonetheless, even if we are to disregard the petitioners' procedural faux pas with the Court of Appeals, and proceed to review the propriety of the 19 May 2006 NLRC Resolution, we still arrive at the conclusion that the NLRC did not err in denying petitioners' appeal for its failure to file a bond in accordance with the Rules of Procedure of the NLRC.

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J.K. Mercado & Sons Agricultural Enterprises, Inc., vs Sto. Tomas (G.R.N.o.158084, August 29, 2008) Facts: On December 3, 1993, the Regional Tripartite Wages and Productivity Board, Region XI, issued Wage Order No. RTWPB-XI-03, granting a Cost of Living Allowance (COLA) to covered workers. On January 28, 1994, petitioner filed an application for exemption from the coverage of the aforesaid wage order. Thus, however, was denied by the regional wage board in an Order dated April 11, 1994. Notwithstanding the said order, private respondents were not given the benefits due them under Wage Order. On July 10, 1998, private respondents filed an Urgent Motion for Writ of Execution, and Writ of Garnishment seeking the enforcement of subject wage order against several entities including herein petitioner. In reaction thereto, petitioner submitted an Inquiry stating that it is not a party to the aforesaid case and has not entered appearance therein. The OIC-Regional Director issued a Writ of Execution for the enforcement of the Order. Petitioner filed a Motion to Quash the Writ of Execution and a Supplemental Motion to the Motion to Quash, and argued that herein private respondents' right had already prescribed due to their failure to move for the execution of the Order within the period provided under Article 291 of the Labor Code, as amended, or within three (3) years from the finality of the said order. Regional Director denied the Motion to Quash in an Order. Court of Appeals ruled that Article 291 of the Labor Code is not applicable to recovery of benefits under the subject Wage Order which entitled respondents to a cost of living allowance (COLA). Issue: Whether or not the claim of the private respondents for cost of living allowance (COLA) pursuant to the Wage Order has already prescribed because of the failure of the respondents to make the appropriate claim within the three (3) year prescriptive period provided by Article 291 of the Labor Code, as amended. Ruling: Respondent employees' money claims in this case had been reduced to a judgment, in the form of a Wage Order, which has become final and executory. The prescription applicable, therefore, is not the general one that applies to money claims, but the specific one applying to judgments. Thus, the right to enforce the judgment, having been exercised within five years, has not yet prescribed. Stated otherwise, a claimant has three years to press a money claim. Once judgment is rendered in her favor, she has five years to ask for execution of the judgment, counted from its finality. This is consistent with the rule on statutory construction that a general provision should yield to a specific one and with the mandate of social justice that doubts should be resolved in favor of labor.

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J.Phil Marine Inc., vs NLRC (G.R.No.1753661, August 11, 2008) Facts: Warlito E. Dumalaog (respondent), who served as cook aboard vessels plying overseas, filed on March 4, 2002 before the National Labor Relations Commission (NLRC) a pro-forma complaint against petitioners ─ manning agency J-Phil Marine, Inc. (J-Phil), its then president Jesus Candava, and its foreign principal Norman Shipping Services ─ for unpaid money claims, moral and exemplary damages, and attorney’s fees. Respondent thereafter filed two amended pro forma complaints praying for the award of overtime pay, vacation leave pay, sick leave pay, and disability/medical benefits, he having, by his claim, contracted enlargement of the heart and severe thyroid enlargement in the discharge of his duties as cook which rendered him disabled. During the pendency of the case before the Court, respondent, against the advice of his counsel, entered into a compromise agreement with petitioners. He thereupon signed a Quitclaim and Release subscribed and sworn to before the Labor Arbiter. Issues: Whether or not the compromise agreement shall be final and binding upon the parties Ruling: Article 227 of the Labor Code provides: Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of noncompliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion. In Olaybar v. NLRC, the Court, recognizing the conclusiveness of compromise settlements as a means to end labor disputes, held that Article 2037 of the Civil Code, which provides that ―[a] compromise has upon the parties the effect and authority of res judicata,‖ applies suppletorily to labor cases even if the compromise is not judicially approved. That respondent was not assisted by his counsel when he entered into the compromise does not render it null and void. Eurotech Hair Systems, Inc. v. Go so enlightens: A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver voluntarily, with a full understanding of what he was entering into. All that is required for the compromise to be deemed voluntarily entered into is personal and specific individual consent. Thus, contrary to respondent’s contention, the employee’s counsel need not be present at the time of the signing of the compromise agreement.

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Sy vs ALC Industries (G.R.No. 168339, October 10, 2008) Facts: Petitioner was hired by respondent corporation ALCII as a supervisor in its purchasing office. She was thereafter assigned to ALCII's construction project in Davao City as business manager and supervisor of the Administrative Division. Her Davao assignment was from May 1997 to April 15, 1999. Petitioner alleged that respondents refused to pay her salary beginning August 1998 and allowances beginning June 1998, despite her almost weekly verbal follow-up. Petitioner filed a complaint before the labor arbiter for unpaid salaries and allowances. Despite several notices and warnings, respondents did not file a position paper to controvert petitioner's claims. The case was submitted for resolution based solely on petitioner's allegations and evidence. In its March 30, 2005 decision, the CA set aside the resolutions of the NLRC and the decision of the labor arbiter and dismissed petitioner's complaint. When her motion for reconsideration was denied, she filed a Rule 45 petition in this Court questioning the CA decision and resolution on the ground that the decision of the labor arbiter had become final and executory. Issue: Whether or not Rule 45 petition would be granted questioning CA decision Ruling: Article 223 of the Labor Code provides: Article 223.Appeal. — Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten calendar days from receipt of such decisions, awards, or orders. . . . . In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. Section 1, Rule VI of the Rules of Procedure of the NLRC, as amended, likewise provides that the appeal must be filed within ten days from receipt of the decision, resolution or order of the labor arbiter. Moreover, Section 6 of the same rules provides that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. As the right to appeal is merely a statutory privilege, it must be exercised only in the manner and in accordance with the provisions of the law. Otherwise, the right to appeal is lost. Although the NLRC Rules of Procedure may be liberally construed in the determination of labor disputes, there is, however, a caveat to this policy. Liberal construction of the NLRC rules is allowed only in meritorious cases, where there is substantial compliance with the NLRC Rules of Procedure or where the party involved demonstrates a willingness to abide by the rules by posting a partial bond.

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The decision of the labor arbiter therefore became final and executory for failure of respondents to perfect their appeal within the reglementary period. Clearly, the CA no longer had jurisdiction to entertain respondents' appeal from the labor arbiter's decision. The petition is hereby GRANTED. CA decision and resolution are REVERSED and SET ASIDE. The resolutions of the NLRC affirming the decision of the labor arbiter are hereby REINSTATED.

PCI Travel Corp., vs NLRC (G.R.No.154379, October 31, 2008)

Facts: Sometime in 1994, respondent NUBE-AMEXPEA/PCI Travel Employees Union filed a Complaint for unfair labor practice against petitioner PCI Travel Corporation. It claimed that petitioner had been filling up positions left by regular rank-and-file with contractual employees, but were performing work which were usually necessary and desirable in the usual business or trade of the petitioner. Petitioner moved to dismiss the complaint on the ground that the Union was not the real party-ininterest. Subsequently, petitioner manifested that while it was ready and willing to prove that said employees were provided by independent legitimate contractors and that it was not engaged in labor-only contracting in a position paper yet to be submitted, petitioner prayed that the Labor Arbiter first resolve the issues raised in their motion to dismiss. Ruling that a motion to dismiss was a prohibited pleading, the Labor Arbiter rendered a decision on the merits dated October 16, 1998, in favor of the respondent. On appeal, the NLRC affirmed with modification the decision of the Labor Arbiter deleting the awards of damages for lack of sufficient basis. The CA issued the assailed Resolution dismissing the petition outright for petitioner's failure to attach copies of pleadings and documents relevant and pertinent to the petition. More importantly, the verification and certification of non-forum shopping was signed by Elizabeth Legarda, President of the petitioner-corporation, without submitting any proof that she was duly authorized to sign for, and bind the petitioner-corporation in these proceedings. Issue: Whether or not the President of a corporation is authorized to sign the verification and certification against forum shopping without proof of authorization from the corporation Ruling: The President of the corporation can sign the verification and certification without need of a board resolution, there thus exists a compelling reason for the reinstatement of the petition before the Court of Appeals. A perusal of the petition for certiorari would reveal that petitioner intended to show the grave abuse of discretion committed by the labor tribunals in not allowing the petitioner the ample opportunity to submit its position paper on the alleged violation of the CBA. The Labor Arbiter and the NLRC viewed it as a waiver on its part and hastened to rule that "since the complainant's allegations remain unrebutted, they are deemed correct and valid.
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Due process dictates that a person should be given the opportunity to be heard. Unfortunately, this was not accorded to the petitioner and such right was even foreclosed when the appellate court dismissed the petition before it on technical grounds. The policy of our judicial system is to encourage full adjudication of the merits of an appeal. Ends of justice are better served when both parties are heard and the controversy decided on its merits. Thus, in the exercise of its equity jurisdiction, the Court will not hesitate to reverse the dismissal of appeals that are grounded merely on technicalities

Lopez vs Q.C. Sports Club (G.R.No.164032, January 19,2009)

Facts: Claiming that it is a registered independent labor organization and the incumbent collective bargaining agent of Quezon City Sports Club (QCSC), the Kasapiang Manggagawa sa Quezon City Sports Club (union) filed a complaint for unfair labor practice against QCSC. The Union averred that it was ordered to submit a new information sheet. It immediately wrote a letter addressed to the general manager, Angel Sadang, to inquire about the information sheet, only to be insulted by the latter. The members of the union were not paid their salaries. A board member, Antonio Chua allegedly harassed one of the employees and told him not to join the strike and even promised a promotion. On July 4, 1997, the union wrote a letter to the management for the release of the members' salaries for the period June 16-30 1997, implementation of Wage Order No. 5, and granting of wage increases mandated by the Collective Bargaining Agreement (CBA). When its letter went unanswered, the union filed a notice of strike on for violation of Article 248 (a) (c) (e) of the Labor Code, nonpayment of overtime pay, refusal to hear its grievances, and malicious refusal to comply with the economic provisions of the CBA. After conducting a strike vote, it staged a strike. The QCSC placed some of its employees under temporary lay-off status due to redundancy. It appears that QCSC also filed a petition for cancellation of registration against the union. Labor Arbiter declared the strike of the union illegal. The other complainants (petitioners) meanwhile filed a motion for reconsideration which was denied by the NLRC. Thus, they filed a petition for certiorari under Rule 65 before the Court of Appeals. The petition was dismissed for lack of merit. Issue: Whether or not the simultaneous filing of the motion to reduce the appeal bond and posting of the reduced amount of bond within the reglementary period for appeal constitute substantial compliance with Article 223 of the Labor Code Ruling: Article 223 of the Labor Code partly provides that:

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Art. 223.Appeal. — Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: a.If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter; b.If the decision, order or award was secured through fraud or coercion, including graft and corruption; c.If made purely on questions of law; and d.If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. Likewise, Sections 4 (a) and 6 of Rule VI of the New Rules of Procedure of the NLRC, as amended, provide: SEC. 4.Requisites for Perfection of Appeal. — (a) The Appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be verified by appellant himself in accordance with Section 4, Rule 7 of the Rules of Court, with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 6 of this Rule; shall be accompanied by a memorandum of appeal in three (3) legibly typewritten copies which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of the date when the appellant received the appealed decision, resolution or order and a certificate of non-forum shopping with proof of service on the other party of such appeal. A mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period of perfecting an appeal. jur2005 SEC. 6.Bond. — In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to the monetary award, exclusive of damages and attorney's fees. xxx xxx xxx No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the monetary award. The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall not stop the running of the period to perfect an appeal. Under the Rules, appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or surety bond. Thus, the posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter. The intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly expressed in the provision that an appeal by the employer may be
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perfected "only upon the posting of a cash or surety bond.The filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance with the requirement renders the decision of the labor arbiter final and executory. This requirement is intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer's appeal. It is intended to discourage employers from using an appeal to delay or evade their obligation to satisfy their employees' just and lawful claims. The NLRC erred in setting aside the Lustria decision, as well as in deleting the award of backwages and separation pay, despite the finding that the affected employees had been constructively dismissed. The petition is GRANTED IN PART, granting the monetary claims of petitioners is REINSTATED.

Lockheed Detective & Watchman Agency vs University of the Philippines (G.R.No. 185918, April 18, 2012)

Facts: Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed) entered into a contract for security services with respondent University of the Philippines (UP). In 1998, several security guards assigned to UP filed separate complaints against Lockheed and UP for payment of underpaid wages, 25% overtime pay, premium pay for rest days and special holidays, holiday pay, service incentive leave pay, night shift differentials, 13th month pay, refund of cash bond, refund of deductions for the Mutual Benefits Aids System (MBAS), unpaid wages from December 16-31, 1998, and attorney's fees. On July 25, 2005, a Notice of Garnishment was issued to Philippine National Bank (PNB) UP Diliman Branch for the satisfaction of the award. In a letter dated August 9, 2005, PNB informed UP that it has received an order of release dated August 8, 2005 issued by the Labor Arbiter directing PNB UP Diliman Branch to release to the NLRC Cashier, through the assigned NLRC the judgment award/amount. PNB likewise reminded UP that the bank only has 10 working days from receipt of the order to deliver the garnished funds and unless it receives a notice from UP or the NLRC before the expiry of the 10day period regarding the issuance of a court order or writ of injunction discharging or enjoining the implementation and execution of the Notice of Garnishment and Writ of Execution, the bank shall be constrained to cause the release of the garnished funds in favor of the NLRC. On August 16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds being subjected to garnishment at PNB are government/public funds. On the other hand, Lockheed contends that UP has its own separate and distinct juridical entity from the national government and has its own charter. Thus, it can be sued and be held liable.
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Issue: Whether or not the hasty garnishment of UP’s funds in its PNB account is valid Ruling: The garnishment was erroneously carried out and did not go through the proper procedure (the filing of a claim with the COA), UP is entitled to reimbursement of the garnished funds plus interest of 6% per annum, to be computed from the time of judicial demand to be reckoned from the time UP filed a petition for certiorari before the CA which occurred right after the withdrawal of the garnished funds from PNB. UP is a juridical personality separate and distinct from the government and has the capacity to sue and be sued. Thus, it cannot evade execution, and its funds may be subject to garnishment or levy. However, before execution may be had, a claim for payment of the judgment award must first be filed with the COA. Under Commonwealth Act No. 327, as amended by Section 26 of P.D. No. 1445, it is the COA which has primary jurisdiction to examine, audit and settle "all debts and claims of any sort" due from or owing the Government or any of its subdivisions, agencies and instrumentalities, including government-owned or controlled corporations and their subsidiaries. With respect to money claims arising from the implementation of Republic Act No. 6758, their allowance or disallowance is for COA to decide, subject only to the remedy of appeal by petition for certiorari to this Court.

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