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Labor Standards Case

Digests

Labor Standards Case Digests

Contents
PASEI vs Torres (1992) G.R. 101279............................................................................7
San Juan de Dios Hospital vs NLRC (1997) G.R. 126383.............................................8
Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R. 156225....9
Asuncion vs NLRC (2001) G.R. 129329.....................................................................10
Singer Sewing Machine vs NLRC () 193 SCRA 271....................................................12
Manila Golf & Country Club, Inc., vs IAC and Fermin Llamar (1994) G.R. 64948.......13
Encyclopaedia Britannica (Phil) Inc., vs NLRC (1996) G.R. 87098.............................14
Carungcong vs NLRC, Sun Life Assurance Co. of Canada (1997) G.R. 118086.........15
Ramos vs Court of Appeals () 380 SCRA 467............................................................16
Sonza vs ABS-CBN (2004) G.R. 138051....................................................................17
Lazaro vs Social Security Commission (2004) G.R. 138254......................................19
ABS-CBN vs Nazareno (2006) G.R. 164156...............................................................20
Francisco vs NLRC (2006) 500 SCRA 690..................................................................22
Nogales et al., vs Capitol Medical Center (2006) G.R. 142625.................................23
Coca-Cola Bottlers Phils., vs Dr. Climaco (2007) G.R. 146881..................................26
Calamba Medical Center vs NLRC (2008) G.R. 176484.............................................27
Ollendorff vs Abrahamson (1918) G.R. 13228..........................................................29
Del Castillo vs Richmond (1924) G.R. L-21127.........................................................30
Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978..........................31
Duncan Asso. Of Detailman-PTGWO vs Glaxo Wellcome Phils., (2004) G.R. 162994 32
Star Paper Corp., vs Simbol (2006) G.R. 164774......................................................33
Rivera vs Solidbank (2006) G.R. 163269..................................................................34
Yrasuegui vs Philippine Airlines (2008) G.R. 168081................................................35
Ilaw at Buklod Manggagawa vs NLRC (1991) 198 SCRA 586....................................37
Employers Confederation of the Phils vs NWPC (1991) 201 SCRA 759.....................39
Mabeza vs NLRC () 271 SCRA 670............................................................................41
Joy Brothers Inc., vs NWPC (1997) 273 SCRA 622....................................................43
Prubankers Association vs Prudential Bank (1999) 302 SCRA 74.............................43
Millares et al., vs NLRC () 305 SCRA 501..................................................................46
International School Alliance of Educators vs Quisumbing (2000) 333 SCRA 13......48
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Bankard Employees Union vs NLRC (2004) G.R. 140689..........................................50


Odango vs NLRC (2005) G.R. 147420.......................................................................52
C. Planas Commercial vs NLRC (2005) G.R. 144619.................................................53
EJR Crafts Corp., vs CA (2006)..................................................................................54
Pag Asa Steel Works vs CA (2006) G.R. 166647.....................................................55
Equitable PCI Bank vs Sadac (2006) G.R. 164772....................................................56
Metropolitan Bank vs NWPC (2007) G.R. 144322.....................................................57
Rajah Humabon Hotel vs Trajano (1993) G.R. 100222-23.........................................60
Guico vs Sec of Labor (1998) G.R. 131750...............................................................61
EJR Crafts Corp., vs Court of Appeals (2006) G.R. 154101........................................62
Ex Bataan Veterans Security Agency vs Sec of Labor (2007) G.R. 152396............63
Catholic Vicariate Baguio City vs Hon. Sto. Tomas (2008) G.R.167334.....................64
Sapio vs Undaloc Construction (2008) G.R. 155034.................................................66
Hon. Secretary of Labor vs Panay Veterans Security and Investigation Agency (2008)
G.R. 167708.............................................................................................................. 67
Peoples Broadcasting vs Secretary of DOLE (2009) G.R. 179652............................69
Phil Hoteliers Inc., vs National Union of Workers in Hotel Restaurant & Allied
Industries Dusit Hotel Nikko Chapter (2009) G.R. 181972.....................................71
Gaa vs Court of Appeals (1985) 140 SCRA 304........................................................75
Nestle Phils Inc., vs NLRC (1991) 193 SCRA 504.......................................................76
Five J Taxi vs NLRC (1992) 235 SCRA 556.................................................................78
Manila Electric Co vs Sec of Labor (1999) G.R. 127598............................................80
Philippine Veterans Bank vs NLRC (1999) G.R. 130439............................................81
Philippine Appliance Corp., vs Court of Appeals (2004) G.R. 149434.......................83
Special Steel Products vs Villareal (2004) G.R. 143304............................................84
Agabon vs NLRC (2004) G.R. 158693.......................................................................85
American Wire & Cable Daily Rated Employees vs American Wire (2005) G.R.
155059..................................................................................................................... 86
Honda Philippines Inc., vs Samahang Manggagawa sa Honda (2005) G.R. 145561. 87
Producers Bank vs NLRC () 335 SCRA 506................................................................88
Jardin vs NLRC (2000) G.R. 119268..........................................................................89
Manila Jockey Club Employees Labor Union vs Manila Jockey Club (2007) G.R.
167601..................................................................................................................... 90
San Miguel Corp., vs Layoc Jr. Et al., (2007) G.R. 149640.........................................91
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San Miguel Corp vs Pontillas (2008) G.R. 155178.....................................................92


Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco Metal
NAFLU (2008) G.R. 170734.................................................................................... 93
Genesis Transport Service et al., vs UMM Genesis Transport (2010) G.R. 182114....94
Congson vs NLRC (1995) 243 SCRA 260...................................................................96
North Davao Mining vs NLRC (1996) 254 SCRA 721.................................................98
San Juan de Dios Hospital vs NLRC (1997) 282 SCRA 316......................................100
Sime Darby Pilipinas Inc., vs NLRC (1998) 289 SCRA 86.........................................102
Philippine Airlines vs NLRC (1999) 302 SCRA 582..................................................103
Linton Commercial Co., vs Hellera (2007) G.R. 163147..........................................105
Bisig Manggagawa sa Tryco vs NLRC (2008) G.R. 151309......................................106
Union Filipro Employees vs Vivar (1992) 205 SCRA 203.........................................108
National Sugar Refinery Corp vs NLRC (1993) 220 SCRA 452.................................110
Salazar vs NLRC (1996) 256 SCRA 273...................................................................113
Labor Congress of the Philippines vs NLRC (1998) G.R. 123938.............................114
Mercidar Fishing Corp., vs NLRC (1998) G.R. 112574.............................................116
San Miguel Corp., vs Court of Appeals (2002) G.R. 146775....................................117
Tan vs Lagarama (2002) G.R. 151228.....................................................................118
Lambo vs NLRC (1999) 317 SCRA 420....................................................................119
R&E Transport vs Latag (2004) G.R. 155214..........................................................120
Asian Transmission vs Court of Appeals (2004) 425 SCRA 478...............................121
Autobus Transport System vs Bautista (2005) G.R. 156364...................................123
San Miguel Corp., vs Del Rosario (2005) G.R. 168194............................................125
Penaranda vs Baganga Plywood Corp (2006) G.R. 159577....................................127
House of Sara Lee vs Rey (2006) G.R. 149013.......................................................129
Leyte IV Electric Cooperative Inc., vs LEYECO IV Employees Union ALU (2007) G.R.
157775................................................................................................................... 131
San Miguel Corp., et al., vs Layoc, Jr., et al., (2007) G.R. 149640...........................133
Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195....................................134
PNCC Skyway Traffic Management & Security Division Workers Organization vs PNCC
Skyway Corp., (2010) G.R. 171231.........................................................................135
Pantranco North Express vs NLRC (1996) 259 SCRA 161........................................137
R&E Transport vs Latag (2004) G.R. 155214..........................................................139

Labor Standards Case Digests

Gerlach vs Reuters Ltd., Phils., (2005) G.R. 148542...............................................140


Honda Phils., Inc., vs Samahan ng Malayang Manggagawa sa Honda (2005) G.R.
145561................................................................................................................... 142
Jaculbe vs Siliman University (2007) G.R. 156934..................................................143
Intercontinental Broadcasting Corp., vs Amarilla (2006) G.R. 162775....................145
Reyes vs NLRC (2007) G.R. 160233........................................................................148
Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R. 156225 150
Philippine Airlines Inc. vs Phil. Airlines Employees Association (2008) G.R. 142399
............................................................................................................................... 151
Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco Metal
NAFLU (2008) G.R. 170734..................................................................................152
Universal Sugar Milling Corp., vs Caballeda (2009) G.R. 156644...........................153
T/Sgt. Larkins vs NLRC (1995) G.R. 92432..............................................................156
UERM Memorial Medical Center vs NLRC (1997) G.R. 1104419..............................158
Philtranco Services vs NLRC (1998) G.R. 124100...................................................160
St. Martin Funeral Homes vs NLRC (1998) G.R. 130866.........................................161
Ludo & Luym Corp., vs Saornido (2003) G.R. 140690.............................................162
Hanjin Engineering and Construction Co. Ltd. vs Court of Appeals (2006) G.R.
165910................................................................................................................... 165
Phil. Journalistic Inc., vs NLRC (2006) G.R. 166421.................................................169
Balagtas Multi-Purpose Coop vs Court of Appeals (2006) G.R. 159268..................170
St. Martin Funeral Homes vs NLRC (2006) G.R. 142351.........................................172
DOLE Phils. vs Esteva (2006) G.R. 161115.............................................................173
Intercontinental Broadcasting Corp., vs Panganiban (2007) G.R. 151407..............175
Far East Agricultural Supply vs Lebatigue (2007) G.R. 162813...............................177
Letran Calamba Faculty & Employees Association vs NLRC (2008) G.R. 156225....178
Metro Transit Organization vs Piglas NFWU-KMU et al., (2008) G.R. 175460..........179

Labor Standards Case Digests

Labor Standards Case Digests

Labor Standards Case Digests

PASEI vs Torres (1992) G.R. 101279


Facts:
PASIE is the largest national organization of private employment and recruitment
agencies duly licensed and authorized by the POEA, to engage in the business of
obtaining overseas employment for Filipino land-based workers, including domestic
helpers.
On June 1991, as a result of published stories regarding the abuses suffered by Filipino
housemaids employed in Hong Kong, DOLE Secretary Ruben Torres issued Department
Order No. 16, Series of 1991, temporarily suspending the recruitment by private
employment agencies of "Filipino domestic helpers going to Hong Kong". The DOLE
itself, through the POEA took over the business of deploying such Hong Kong-bound
workers.
Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30,
Series of 1991, providing GUIDELINES on the Government processing and deployment of
Filipino domestic helpers to Hong Kong and the accreditation of Hong Kong recruitment
agencies intending to hire Filipino domestic helpers.
Pursuant to the previous issuances, the POEA Administrator also issued Memorandum
Circular No. 37, Series of 1991, on the processing of employment contracts of domestic
workers for Hong Kong.
Issues:
1. WON respondents acted with grave abuse of discretion and/or in excess of their
rule-making authority in issuing said circulars?
2. WON that the assailed DOLE and POEA circulars are contrary to the Constitution,
are unreasonable, unfair and oppressive?
Held: They are in accordance but legally invalid, defective and unenforceable for lack of
power publication and filing in the Office of the National Administrative Register as
required in Art 2 of CC, Art 5 of the Labor Code and Sec 3(1) and 4, Chap 2, Book VII of
the Administrative Code of 1987.
1. Article 36 of the Labor Code grants the Labor Secretary the power to restrict and
regulate recruitment and placement activities. On the other hand, the scope of
the regulatory authority of the POEA, which was created by Executive Order No.
797 on May 1, 1982 to take over the functions of the Overseas Employment
Development Board, the National Seamen Board, and the overseas employment
functions of the Bureau of Employment Services, is broad and far-ranging as
provided by Articles 15, 17 and 20 of the Labor Code.
2. The vesture of quasi-legislative and quasi-judicial powers in administrative bodies
is not unconstitutional, unreasonable and oppressive. It has been necessitated by
"the growing complexity of the modern society" (Solid Homes, Inc. vs. Payawal).
More and more administrative bodies are necessary to help in the regulation of
society's ramified activities. It is noteworthy that the assailed circulars do not
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Labor Standards Case Digests

prohibit the petitioner from engaging in the recruitment and deployment of


Filipino landbased workers for overseas employment. The power to "restrict and
regulate conferred by Article 36 of the Labor Code involves a grant of police
power. The questioned circulars are therefore a valid exercise of the police power
as delegated to the executive branch of Government.
San Juan de Dios Hospital vs NLRC (1997) G.R. 126383
Facts:
Petitioners, rank-and-file employees and members of San Juan de Dios Hospital
Employees Association sent a 4 page letter requesting and pleading for the expeditious
implementation and payment by the respondent 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 Labors Policy Instructions No. 54
dated April 12, 1988. Respondent hospital failed to give a favourable response; thus,
petitioners filed a complaint regarding their claims for statutory benefits under the
above-cited law and policy issuance. The Labor Arbiter dismissed the complaint which
was also confirmed by NLRC, hence the petition under Rule 65 of the Rules of Court.
Issue: WON Policy Instructions No. 54 issued by then Labor Secretary Franklin Drilon is
valid?
Held: It is invalid.
The Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901,
otherwise known as An Act Prescribing Forty Hours A Week Of Labor For Government
and Private Hospitals Or Clinic Personnel, but reliance to this RA is misplaced since it
has long been repealed with the passage of the Labor Code. 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 latters validity may be gauged.
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 Labors 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.
Further, petitioners' position is also negated by the very rules and regulations
promulgated by the Bureau of Labor Standards which implement Republic Act No. 5901.
Pertinent portions of the implementing rules provided in Sections 1,7, and 15 of the said
Act.

Labor Standards Case Digests

If petitioners are entitled to two days off with pay, then there appears to be no sense at
all why Section 15 of the implementing rules grants additional compensation equivalent
to the regular rate plus at least twenty-five percent thereof for work performed on
Sunday to health personnel, or an additional straight-time pay which must be
equivalent at least to the regular rate [f]or work performed in excess of forty hours a
week xxx. Policy Instructions No. 54 to our mind unduly extended the statute. The
Secretary of Labor moreover erred in invoking the spirit and intent of Republic Act No.
5901 and Article 83 of the Labor Code for it is an elementary rule of statutory
construction that when the language of the law is clear and unequivocal, the law must
be taken to mean exactly what it says.

Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R.


156225
Facts:
The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint
against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of
various monetary claims due its members. The Labor Arbiter (LA) handling the
consolidated cases, denied and dismissed the respective complaints.
Issue: WON the pay of the faculty members for teaching overloads should be included
as basis in the computation of their 13th month pay?
Held: Teaching overload may not be considered part of basic salary.
Under the Rules and Regulations Implementing PD 851, the following compensations are
deemed not part of the basic salary: a) cost-of-living allowances granted pursuant to PD
525 and Letter of Instruction No. 174; b) profit sharing payments; c) all allowances and
monetary benefits which are not considered or integrated as part of the regular basic
salary of the employee at the time of the promulgation of the Decree on Dec 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued
by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations
are excluded as part of the basic salary and in the computation of the 13 th-month pay.
The all-embracing phrase "earnings and other remunerations" which are deemed not
part of the basic salary includes within its meaning payments for sick, vacation, or
maternity leaves, premium for works performed on rest days and special holidays, pay
for regular holidays and night differentials. As such they are deemed not part of the
basic salary and shall not be considered in the computation of the 13 th-month pay.
As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional
compensation other than and added to the regular wage or basic salary, for reason of

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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.

Asuncion vs NLRC (2001) G.R. 129329


Facts:
On Aug 1993, Asuncion was employed as an accountant/bookkeeper by the respondent
(Mabini Medical Clinic). After the inspection conducted in the respondents company
premises for a violation of the lbor standards for non-coverage, on Aug 1994, private
respondent, Medical Director Wifrido Juco issued a memorandum to petitioner charging
her with chronic absenteeism, habitual tardiness, loitering and wasting of company
time, getting salary of an absent employee without acknowledging or signing for it, and
disobedience and insubordination for continued refusal of signing memos given to her.
Petitioner was then required to explain within 2 days why she will not be terminated.
Three days later, petitioner submitted her response to the memo but was also dismissed
on ground of disobedience of lawful orders and failure to submit her reply in 2 days. This
prompted petitioner to file for a case of illegal termination which was judged by the
Labor Arbiter to be true.
Issue: WON NLRC erred in finding that the petitioner was dismissed by the private
respondent for a just or authorized cause?
Held: Petitioner has been illegally terminated; she is necessarily entitled to
reinstatement to her former previous position without loss of seniority and the payment
of backwages.
It bears stressing that a workers employment is property in the constitutional sense.
He cannot be deprived of his work without due process. In order for the dismissal to be
valid, not only must it be based on just cause supported by clear and convincing
evidence, the employee must also be given an opportunity to be heard and defend
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himself. It is the employer who has the burden of proving that the dismissal was with
just or authorized cause. The failure of the employer to discharge this burden means
that the dismissal is not justified and that the employee is entitled to reinstatement and
back wages.
In the case at bar, both the handwritten listing and computer print-outs being unsigned,
the authenticity thereof is highly suspect and devoid of any rational probative value
especially in the light of the existence of the official record book of the petitioners
alleged absences and tardiness in the possession of the employer company. In the
memorandum charging petitioner and notice of termination, private respondents
referred to the record book as its basis for petitioners alleged absenteeism and
tardiness. Interestingly, however, the record book was never presented in evidence.
Private respondents had possession thereof and the opportunity to present the
same. Thus, private respondents unexplained and unjustified non-presentation of the
record book, which is the best evidence in its possession and control of the charges
against the petitioner, casts serious doubts on the factual basis of the charges of
absenteeism and tardiness. Private respondents claimed that they sent several notices
to the petitioner warning her of her absences, however, petitioner refused to receive the
same. The Court, likewise, takes note of the fact that the two-day period given to
petitioner to explain and answer the charges against her was most unreasonable,
considering that she was charged with several offenses and infractions (35 absences, 23
half-days and 108 tardiness), some of which were allegedly committed almost a year
before, not to mention the fact that the charges levelled against her lacked particularity.
The law mandates that every opportunity and assistance must be accorded to the
employee by the management to enable him to prepare adequately for his defense. In
Ruffy v. NLRC, the Court held that what would qualify as sufficient or ample
opportunity, as required by law, would be every kind of assistance that management
must accord to the employee to enable him to prepare adequately for his defense.

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Labor Standards Case Digests

Singer Sewing Machine vs NLRC () 193 SCRA 271


Facts:
Singer Machine Collectors Union-Baguio filed a petition for direct certification as the sole
and exclusive bargaining agent of all collectors of Singer Sewing Machine. 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.
Med-Arbiter ruled that there exists an employee-employer relationship and granted the
certification election which was affirmed by Sec. Drilon. The company files the present
petition on the determination of the relationship. The union insist that the provisions of
the Collection Agreement belie the companys position that the union members are
independent contractors.
Issue: WON there exists an employer-employee relationship between the parties.
Held: Respondents are not employees of the company.
The present case calls for the application of the control test, which if not satisfied, would
lead to the conclusion that no employee-employer relationship exists. If the union
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members are not employees, no right to organize for the purpose of bargaining or as a
bargaining agent cannot be recognized.
The following elements are generally considered in the determination of the
relationship: the selection and engagement of the employee, payment of wages, power
of dismissal and the power to control the employees 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 .

Manila Golf & Country Club, Inc., vs IAC and Fermin Llamar (1994) G.R. 64948
Facts:
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 although the petitioners were
employees of the Manila Golf and Country Club, a domestic corporation, the latter had
not registered them as such with the SSS.
In the case before the SSC, the respondent Club alleged that the petitioners, caddies by
occupation, were allowed into the Club premises to render services as such to the
individual members and guests playing the Club's golf course and who themselves paid
for such services; that as such caddies, the petitioners were not subject to the direction

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and control of the Club as regards the manner in which they performed their work; and
hence, they were not the Club's employees.
Issue: WON there exist an employer-employee relationship between the cadies and the
Golf Club?
Held: No existence of employer-employee relationship.
In the very nature of things, caddies must submit to some supervision of their conduct
while enjoying the privilege of pursuing their occupation within the premises and
grounds of whatever club they do their work in. For all that is made to appear, they
work for the club to which they attach themselves on sufferance but, on the other hand,
also without having to observe any working hours, free to leave anytime they please, to
stay away for as long they like. It is not pretended that if found remiss in the observance
of said rules, any discipline may be meted them beyond barring them from the premises
which, it may be supposed, the Club may do in any case even absent any breach of the
rules, and without violating any right to work on their part. All these considerations
clash frontally with the concept of employment.
The IAC would point to the fact that the Club suggests the rate of fees payable by the
players to the caddies as still another indication of the latter's status as employees. It
seems to the Court, however, that the intendment of such fact is to the contrary,
showing that the Club has not the measure of control over the incidents of the caddies'
work and compensation that an employer would possess. Court agree that the group
rotation system so-called, 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, as pointed out by petitioner which was never refuted that: has no means of
compelling the presence of a caddy. A caddy is not required to exercise his occupation
in the premises of petitioner. He may work with any other golf club or he may seek
employment a caddy or otherwise with any entity or individual without restriction by
petitioner.

Encyclopaedia Britannica (Phil) Inc., vs NLRC (1996) G.R. 87098


Facts:
Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner
Encyclopaedia Britannica and was in charge of selling petitioners products through
some sales representatives.
As compensation, private respondent received
commissions from the products sold by his agents. He was also allowed to use

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petitioners name, goodwill and logo. It was, however, agreed upon that office expenses
would be deducted from private respondents commissions. Petitioner would also be
informed about appointments, promotions, and transfers of employees in private
respondents district.
On June 1974, Limjoco resigned from office to pursue his private business. He then filed
a complaint against petitioner Encyclopaedia Britannica with DOLE, claiming for nonpayment of separation pay and other benefits, and also illegal deduction from his sales
commissions.
Petitioner alleged that Limjoco was not its employee but an independent dealer
authorized to promote and sell its products and 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. He also 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, moreover, the latter did not
even report to the office of the petitioner and did not observe fixed office hours
Issue: WON there exist an employer-employee relationship and necessarily entitles
Limjoco of his claims?
Held: Private respondent was merely an agent or an independent dealer of the
petitioner.
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.
Respondent 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. As he pointed out in his resignation
letter, Limjoco was aware of conflict with other interests which xxx have increasingly
required my personal attention. At the very least, it would indicate that petitioner has
no effective control over the personal activities of Limjoco, who as admitted by the
latter had other conflict of interest requiring his personal attention.
As pointed out 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 according to the result of his efforts and
not the amount thereof.

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Carungcong vs NLRC, Sun Life Assurance Co. of Canada (1997) G.R. 118086
Facts:
Susan Carungcong began as an agent of Sun Life in 1974, she signed an Agents
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;
second, was titled, "MANAGER'S Supplementary Agreement." Making explicit reference
to the first agreement "which became effective on the 1st day of July, 1979" said second
contract explicitly described as a "further agreement" contained provisions
regarding remuneration (overriding commissions in accordance with a fixed schedule),
limitation of authority, and termination of the agreement inter alia by written notice
"without cause."
Subsequently, Carungcong and Sun Life executed another Agreement - by which the
former was named New Business Manager with the function generally "to manage a
New Business Office established by her and to obtain applications for life insurance
policies and other products offered by or distributed through Sun Life and to perform
such other duties in connection therewith as Sun Life may require from time to time."
This latest Agreement stressed that the "New Business Manager in performance of his
duties defined herein, shall be considered an independent contractor and not . . 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 companys 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 petitioners termination. She then instituted
proceedings for vindication in the Arbitration Branch of the National Labor Relations
Commission where she succeeded in obtaining a favorable judgment finding that there
existed an employer-employee relationship between her and Sun Life; ruled that she
had been illegally dismissed, thus entitled to reinstatement without loss of seniority
rights and other benefits.
Issue: WON there existed an employer-employee relationship between Caruncong and
Sunlife?
Held: 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.

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Labor Standards Case Digests

Noteworthy is that this last agreement, it was emphasized, like the "Career Agent's (or
Unit Manager's) Agreement" first signed by her, that in the performance of her duties
defined herein. Carungcong would be considered an independent contractor and not . .
an employee of Sun Life," and that "(u)nder no circumstance shall the New Business
Manager and/or his employees be considered employees of Sun Life."

Ramos vs Court of Appeals () 380 SCRA 467


Facts:
Petitioner 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 7:30
am. Around 9:30, Dr. Hosaka has not yet arrived. By 10 am, Rogelio wanted to pull
out his wife from the operating room. Dr. Hosaka finally arrived at 12:10 pm 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 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 family of Ramos sued them for damages.
Issue: WON there was an employee-employer relationship that existed between the
Medical Center and Drs. Hosaka and Guiterrez.
Held: No employer-employee between the doctors and hospital.
Private Hospitals hire, fire and exercise real control over their attending and visiting
consultant staff. While consultants are not technically employees, the control
exercised, the hiring and the right to terminate consultants fulfill the hallmarks of an
employer-employee relationship with the exception of payment of wages. The
control test is determining.
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.

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Labor Standards Case Digests

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 hospitals obligation is limited to providing
the patient with the preferred room accommodation and other things that will
ensure that the doctors orders are carried out.
The court finds that there is no employer-employee relationship between the
doctors and the hospital.

Sonza vs ABS-CBN (2004) G.R. 138051


Facts:
In May 1994, ABS-CBN signed an agreement with Mel & Jay Management and
Development Corp for a radio and television program. ABS-CBN agreed to pay for
SONZAs 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 by ABS-CBN on the ground there was no
employer-employee relationship existed between the parties.
Issue: WON Sonza was an employee or independent contractor?
Held: There was no employer-employee relationship that existed, but that of an
independent contractor.
Case law has consistently held that the elements of an employer-employee relationship
are:
(a) The selection and engagement of the employee - ABS-CBN engaged SONZAs
services to co-host its television and radio programs because of SONZAs peculiar
skills, talent and celebrity status. The specific selection and hiring of SONZA,
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Labor Standards Case Digests

because of his unique skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship.
(b) The payment of wages - ABS-CBN directly paid SONZA his monthly talent fees
with no part of his fees going to MJMDC. All the talent fees and benefits paid to
SONZA were the result of negotiations that led to the Agreement. If SONZA were
ABS-CBNs employee, there would be no need for the parties to stipulate on
benefits such as "SSS, Medicare, x x x and 13th month pay" which the law
automatically incorporates into every employer-employee contract.
(c) The power of dismissal - For violation of any provision of the Agreement, either
party may terminate their relationship. During the life of the Agreement, ABS-CBN
agreed to pay SONZAs talent fees as long as "AGENT and Jay Sonza shall faithfully
and completely perform each condition of this Agreement." Even if it suffered
severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN
remained obligated to pay SONZAs talent fees during the life of the Agreement.
(d) The employers power to control the employee on the means and methods
by which the work is accomplished - The control test is the most important
test. This test is based on the extent of control the hirer exercises over a worker.
The greater the supervision and control the hirer exercises, the more likely the
worker is deemed an employee. The converse holds true as well the less control
the hirer exercises, the more likely the worker is considered an independent
contractor.
First, ABS-CBN engaged SONZAs services specifically to co-host the "Mel & Jay"
programs. ABS-CBN did not assign any other work to SONZA. To perform his work,
SONZA only needed his skills and talent. How SONZA delivered his lines, appeared
on television, and sounded on radio were outside ABS-CBNs control. SONZA did not
have to render eight hours of work per day. The Agreement required SONZA to
attend only rehearsals and tapings of the shows, as well as pre- and post-production
staff meetings. ABS-CBN could not dictate the contents of SONZAs script. However,
the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its
interests. The clear implication is that SONZA had a free hand on what to say or
discuss in his shows provided he did not attack ABS-CBN or its interests.
Second, The Agreement stipulates that SONZA shall abide with the rules and
standards of performance "covering talents" of ABS-CBN. The Agreement does
not require SONZA to comply with the rules and standards of performance
prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA
under the Agreement refers to the "Television and Radio Code of the Kapisanan ng
mga Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABSCBN) 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.
Lastly, being an exclusive talent does not by itself mean that SONZA is an employee
of ABS-CBN. Even an independent contractor can validly provide his services
exclusively to the hiring party. In the broadcast industry, exclusivity is not
necessarily the same as control. The hiring of exclusive talents is a widespread and

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Labor Standards Case Digests

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.

Lazaro vs Social Security Commission (2004) G.R. 138254


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 Laudatos 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.

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Labor Standards Case Digests

Issue: WON Laudato is considered employee of Royal Star Marketing?


Held: 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. In Grepalife v. Judico, the Court
upheld the existence of an employer-employee relationship between the insurance
company and its agents, despite the fact that the compensation that the agents on
commission received was not paid by the company but by the investor or the person
insured. The relevant factor remains, as stated earlier, whether the "employer" controls
or has reserved the right to control the "employee" not only as to the result of the work
to be done but also as to the means and methods by which the same is to be
accomplished. It should also be emphasized that the SSC, also as upheld by the Court
of Appeals, found that Laudato was a sales supervisor and not a mere agent. As such,
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.

ABS-CBN vs Nazareno (2006) G.R. 164156


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
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Labor Standards Case Digests

cards and were required to work for a minimum of eight hours a day, including Sundays
and holidays. They were made to: a) Prepare, arrange airing of commercial
broadcasting based on the daily operations log and digicart of respondent ABS-CBN; b)
Coordinate, arrange personalities for air interviews; c) Coordinate, prepare schedule of
reporters for scheduled news reporting and lead-in or incoming reports; d) Facilitate,
prepare and arrange airtime schedule for public service announcement and complaints;
e) Assist, anchor program interview, etc; and f) Record, log clerical reports, man based
control radio.
Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining
Agreement (CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999.
However, since petitioner refused to recognize PAs as part of the bargaining unit,
respondents were not included to the CBA.
Due to a memorandum assigning PAs to non-drama programs, and that the DYAB studio
operations would be handled by the studio technician. There was a revision of the
schedule and assignments and that respondent Gerzon was assigned as the full-time PA
of the TV News Department reporting directly to Leo Lastimosa.
On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment
Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive
Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the
NLRC.
Issue: WON the respondents are regular employees?
Held: Respondents are considered regular employees of ABS-CBN and are entitled to
the benefits granted to all regular employees.
Where a person has rendered at least one year of service, regardless of the nature of
the activity performed, or where the work is continuous or intermittent, the employment
is considered regular as long as the activity exists. The reason being that a customary
appointment is not indispensable before one may be formally declared as having
attained regular status. Article 280 of the Labor Code provides:
REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business or
trade of the employer except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the
season.
Any employee who has rendered at least one year of service, whether continuous or
intermittent, is deemed regular with respect to the activity performed and while such
activity actually exists. The fact that respondents received pre-agreed talent fees
instead of salaries, that they did not observe the required office hours, and that they
were permitted to join other productions during their free time are not conclusive of the
nature of their employment. They are regular employees who perform several different
duties under the control and direction of ABS-CBN executives and supervisors.

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Labor Standards Case Digests

There are two kinds of regular employees under the law: (1) those engaged to
perform activities which are necessary or desirable in the usual business or trade of
the employer; and (2) those casual employees who have rendered at least one year
of service, whether continuous or broken, with respect to the activities in which they
are employed.
What determines whether a certain employment is regular or otherwise is the character
of the activities performed in relation to the particular trade or business taking into
account all the circumstances, and in some cases the length of time of its performance
and its continued existence.
The employer-employee relationship between petitioner and respondents has been
proven by the ff:
First. In the selection and engagement of respondents, no peculiar or unique skill,
talent or celebrity status was required from them because they were merely
hired through petitioners personnel department just like any ordinary employee.
Second. The so-called talent fees of respondents correspond to wages given as
a result of an employer-employee relationship. Respondents did not have the
power to bargain for huge talent fees, a circumstance negating independent
contractual relationship.
Third. Petitioner could always discharge respondents should it find their work
unsatisfactory, and respondents are highly dependent on the petitioner for
continued work.
Fourth. The degree of control and supervision exercised by petitioner over
respondents through its supervisors negates the allegation that respondents are
independent contractors.
The presumption is that when the work done is an integral part of the regular
business of the employer and when the worker, relative to the employer, does
not furnish an independent business or professional service, such work is a
regular employment of such employee and not an independent contractor.

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Labor Standards Case Digests

Francisco vs NLRC (2006) 500 SCRA 690


Facts:
Petitoner 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: WON there was an employer-employee relationship.
Held: 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 socalled right of control test where the person for whom the services are performed
reserves a right to control not only the end to be achieved but also the means to be
used in reaching such end. 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 employers power to control the employee with respect to the means and
methods by which the work is to be accomplished; and (2) the underlying economic
realities of the activity or relationship.
In Sevilla v. Court of Appeals, the court observed the need to consider the existing
economic conditions prevailing between the parties, in addition to the standard of rightof-control like the inclusion of the employee in the payrolls, to give a clearer picture in
determining the existence of an employer-employee relationship based on an analysis
of the totality of economic circumstances of the worker.
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Labor Standards Case Digests

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 employers business; (2) the extent of
the workers investment in equipment and facilities; (3) the nature and degree of control
exercised by the employer; (4) the workers opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of the claimed
independent enterprise; (6) the permanency and duration of the relationship between
the worker and the employer; and (7) the degree of dependency of the worker upon the
employer for his continued employment in that line of business. The proper standard of
economic dependence is whether the worker is dependent on the alleged employer for
his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura,
the corporations Technical Consultant. It is therefore apparent that petitioner is
economically dependent on respondent corporation for her continued employment in
the latters line of business.
There can be no other conclusion that petitioner is an employee of respondent Kasei
Corporation. She was selected and engaged by the company for compensation, and is
economically dependent upon respondent for her continued employment in that line of
business. 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.

26

Labor Standards Case Digests

Nogales et al., vs Capitol Medical Center (2006) G.R. 142625


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 25 May 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 Corazons death. Petitioners mainly contended that defendant physicians and
CMC personnel were negligent in the treatment and management of Corazon's
condition. Petitioners charged CMC with negligence in the selection and supervision of
defendant physicians and hospital staff.
Issue: WON CMC is vicariously liable for the negligence of Dr. Estrada?
Held: 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:
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 fulfill 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
27

Labor Standards Case Digests


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 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 contractorphysician. There is, however, an exception to this principle. The hospital may be liable if
the physician is the "ostensible" agent of the hospital. This exception is also known as
the "doctrine of apparent authority." In Gilbert v. Sycamore Municipal Hospital, the
Illinois Supreme Court explained the doctrine of apparent authority in this wise:
Under the doctrine of apparent authority a hospital can be held vicariously liable for
the negligent acts of a physician providing care at the hospital, regardless of whether
the physician is an independent contractor, unless the patient knows, or should have
known, that the physician is an independent contractor. The elements of the action
have been set out as follows:
"For a hospital to be liable under the doctrine of apparent authority, a plaintiff must
show that: (1) the hospital, or its agent, acted in a manner that would lead a
reasonable person to conclude that the individual who was alleged to be negligent
was an employee or agent of the hospital; (2) where the acts of the agent create the
appearance of authority, the plaintiff must also prove that the hospital had
knowledge of and acquiesced in them; and (3) the plaintiff acted in reliance upon the
conduct of the hospital or its agent, consistent with ordinary care and prudence."

The element of "holding out" on the part of the hospital does not require an
express representation by the hospital that the person alleged to be negligent is
an employee. Rather, the element is satisfied if the hospital holds itself out as a
provider of emergency room care without informing the patient that the care is
provided by independent contractors.
The doctrine of apparent authority essentially involves two factors to determine the
liability of an independent-contractor physician.
The first factor focuses on the hospital's manifestations and is sometimes
described as an inquiry whether the hospital acted in a manner which would lead a
reasonable person to conclude that the individual who was alleged to be negligent was
28

Labor Standards Case Digests

an employee or agent of the hospital. In this regard, the hospital need not make
express representations to the patient that the treating physician is an
employee of the hospital; rather a representation may be general and implied.
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. CMC
cannot now repudiate such authority.
The second factor focuses on the patient's reliance. It is sometimes characterized
as an inquiry on whether the plaintiff acted in reliance upon the conduct of the hospital
or its agent, consistent with ordinary care and prudence.
The records show that the Spouses Nogales relied upon a perceived employment
relationship with CMC in accepting Dr. Estrada's services. Rogelio testified that he and
his wife specifically chose Dr. Estrada to handle Corazon's delivery not only because of
their friend's recommendation, but more importantly because of Dr. Estrada's
"connection with a reputable hospital, the [CMC]." In other words, Dr. Estrada's
relationship with CMC played a significant role in the Spouses Nogales' decision in
accepting Dr. Estrada's services as the obstetrician-gynecologist for Corazon's delivery.
Moreover, as earlier stated, there is no showing that before and during Corazon's
confinement at CMC, the Spouses Nogales knew or should have known that Dr. Estrada
was not an employee of CMC.
Even simple negligence is not subject to blanket release in favor of establishments like
hospitals but may only mitigate liability depending on the circumstances. When a
person needing urgent medical attention rushes to a hospital, he cannot bargain on
equal footing with the hospital on the terms of admission and operation. Such a person
is literally at the mercy of the hospital. There can be no clearer example of a contract of
adhesion than one arising from such a dire situation. Thus, the release forms of CMC
cannot relieve CMC from liability for the negligent medical treatment of Corazon.
Coca-Cola Bottlers Phils., vs Dr. Climaco (2007) G.R. 146881
Facts:
Dr. Dean Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers
Phils., Inc. by virtue of a Retainer Agreement for a period of 1 year with a monthly salary
of Three Thousand Eight Hundred (P3,800.00).
The Retainer Agreement, which began on January 1, 1988, was renewed annually. The
last one expired on December 31, 1993. Despite the non-renewal of the Retainer
Agreement, respondent continued to perform his functions as company doctor to CocaCola until he received a letter from petitioner company concluding their retainership
agreement effective 30 days from receipt thereof.
Petitioner was already making inquiries regarding his status with the company. First, he
wrote a letter addressed to Dr. Willie Sy, the Acting President and Chairperson of the
Committee on Membership, Philippine College of Occupational Medicine. In response,
Dr. Sy wrote a letter to the Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City,
stating that respondent should be considered as a regular part-time physician, having
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Labor Standards Case Digests

served the company continuously for four (4) years. He likewise stated that respondent
must receive all the benefits and privileges of an employee under Article 157 (b) of the
Labor Code.
Issue: WON there exists an employer-employee relationship between Coca-Cola and Dr.
Climaco?
Held: 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 employees 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 respondents 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.
Complainant does not dispute the fact that outside of the two (2) hours that he is
required to be at respondent companys premises, he is not at all further required to just
sit around in the premises and wait for an emergency to occur so as to enable him from
using such hours for his own benefit and advantage. In fact, complainant maintains his
own private clinic attending to his private practice in the city, where he services his
patients, bills them accordingly -- and if it is an employee of respondent company who is
attended to by him for special treatment that needs hospitalization or operation, this is
subject to a special billing. More often than not, an employee is required to stay in the
employers workplace or proximately close thereto that he cannot utilize his time
effectively and gainfully for his own purpose.
Calamba Medical Center vs NLRC (2008) G.R. 176484
Facts:
Calamba Medical Center, engaged the services of medical doctors-spouses Dr.
Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians.
Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents were
paid a monthly "retainer" of P4,800.00 each. Also resident physicians were also given a
percentage share out of fees charged for out-patient treatments, operating room
assistance and discharge billings, in addition to their fixed monthly retainer.
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Labor Standards Case Digests

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: WON there exists an employer-employee relationship between petitioner and the
spouses-respondents?
Held: Drs. 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 W-2 (now 2316) Forms which reflect their status as employees, and the
classification as "salary" of their remuneration. Moreover, it enrolled respondents in the
SSS and Medicare (Philhealth) program. It bears noting at this juncture that mandatory
coverage under the SSS Law is premised on the existence of an employer-employee
relationship, except in cases of compulsory coverage of the self-employed.

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Ollendorff vs Abrahamson (1918) G.R. 13228


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Facts:
An agreement was entered into by Ollendorff and Abrahamson whereby theformer
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 Ollendorffs
business, moreover, he had been engaged in similar work for several years even before
his employment of the plaintiffs 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 Ollendorffs,
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: WON the part of the agreement restraining the defendant from engaging into
similar business of the plaintiff is void?
Held: The contract was not void as constituting an unreasonable restraint of trade.
The rule in this jurisdiction is that the obligations created by contracts have the force of
law between the contracting parties and must be enforce in accordance with their tenor.
(Civil Code, art 1091.) 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.)
Following the rule in Mitchel vs. Reynolds, Court adopt the modern rule that the validity
of restraints upon trade or employment is to be determined by the intrinsinc
reasonableness of restriction in each case, rather than by any fixed rule, and that such
restrictions may be upheld when not contrary to afford a fair and reasonable protection
to the party in whose favor it is imposed.
Examining the contract here in question from this stand point, it does not seem so with
respect to an employee whose duties are such as of necessity to give him an insight
into the general scope and details of his employers business. A business enterprise may
and often does depend for its success upon the owner's relations with other dealers, his
skill in establishing favorable connections, his methods of buying and selling -- a
multitude of details, none vital if considered alone, but which in the aggregate
constitute the sum total of the advantages which the result of the experience or
individual aptitude and ability of the man or men by whom the business has been built
up. Failure or success may depend upon the possession of these intangible but all
important assets, and it is natural that their possessor should seek to keep them from
falling into the hands of his competitors. It is with this object in view that such
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Labor Standards Case Digests

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.

Del Castillo vs Richmond (1924) G.R. L-21127


Facts:
Shannon Richmond and Alfonso del Castillo entered into a Contract of Rendering
Services, whereby del Castillo agrees to enter the employ of Richmond as a pharmacist
with a monthly remuneration of P125 each month.
Paragraph 3 of the said contract read as follows:
3. That in consideration of the fact that the said Alfonso del Castillo has just graduated
as a pharmacist and up to the present time has not been employed in the capacity of
a pharmacist and in consideration of this employment and the monthly salary
mentioned in this contract, the said Alfonso del Castillo also agrees not to open, nor
own nor have any interest directly or indirectly in any other drugstore either in his
own name or in the name of another; nor have any connection with or be employed
by any other drugstore situated within a radius of our miles from the district of
Legaspi, municipality and Province of Albay, while the said Shannon Richmond or his
heirs may own or have open a drugstore, or have an interest in any other one within
the limits of the districts of Legaspi, Albay, and Daraga of the municipality of Albay,
Province of Albay.
The plaintiff alleges that the provisions and conditions contained in the third paragraph
of said contract constitute an illegal and unreasonable restriction upon his liberty to
contract, are contrary to public policy, and are unnecessary in order to constitute a just
and reasonable protection to the defendant; and asked that the same be declared null
and void and of no effect.
Issue: WON the provisions and conditions contained in the 3rd paragraph of said
contract constitute an illegal and unreasonable restriction upon plaintiffs liberty to
contract?
Held: The contract the annulment of which is sought by the plaintiff is neither
oppressive to him, nor unreasonably necessary to protect the defendant's business, nor
prejudicial to the public interest.
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.

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Labor Standards Case Digests

If the contract is reasonably necessary to protect the interest of the parties, it will be
upheld. (Ollendorff vs. Abrahamson, 38 Phil., 585.)
In that case we held that a contract by which an employee agrees to refrain for a given
length of time, after the expiration of the term of his employment, from engaging in a
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. In all cases like the present, the question is whether, under the
particular circumstances of the case and the nature of the particular contract involved
in it, the contract is, or is not, unreasonable
Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978
Facts:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph
and Telephone Company (hereafter, PT&T) invokes the alleged concealment of civil
status and defalcation of company funds as grounds to terminate the services of an
employee. That employee, herein private respondent Grace de Guzman, contrarily
argues that what really motivated PT&T to terminate her services was her having
contracted marriage during her employment, which is prohibited by petitioner in its
company policies. She thus claims that she was discriminated against in gross violation
of law, such a proscription by an employer being outlawed by Article 136 of the Labor
Code.
Issue: WON the policy of not accepting or considering as disqualified from work any
woman worker who contracts marriage is valid?
Held: Petitioners policy of not accepting or considering as disqualified from work any
woman worker who contracts marriage runs afoul of the test of, and the right against,
discrimination, afforded all women workers by our labor laws and by no less than the
Constitution.
The Constitution, cognizant of the disparity in rights between men and women in almost
all phases of social and political life, provides a gamut of protective provisions.
Acknowledged as paramount in the due process scheme is the constitutional guarantee
of protection to labor and security of tenure. Thus, an employer is required, as a
condition sine qua non prior to severance of the employment ties of an individual under
his employ, to convincingly establish, through substantial evidence, the existence of a
valid and just cause in dispensing with the services of such employee, ones labor being
regarded as constitutionally protected property. 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.

In the case at bar, it can easily be seen from the memorandum sent to private
respondent by the branch supervisor of the company, with the reminder, that youre
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Labor Standards Case Digests

fully aware that the company is not accepting married women employee (sic), as it was
verbally instructed to you. Again, in the termination notice sent to her by the same
branch supervisor, private respondent was made to understand that her severance from
the service was not only by reason of her concealment of her married status but, over
and on top of that, was her violation of the companys policy against marriage (and
even told you that married women employees are not applicable [sic] or accepted in our
company.
Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor
Code on the right of a woman to be free from any kind of stipulation against marriage in
connection with her employment, but it likewise assaults good morals and public policy,
tending as it does to deprive a woman of the freedom to choose her status, a privilege
that by all accounts inheres in the individual as an intangible and inalienable
right. Hence, while it is true that the parties to a contract may establish any
agreements, terms, and conditions that they may deem convenient, the same should
not be contrary to law, morals, good customs, public order, or public policy. Carried to
its logical consequences, it may even be said that petitioners policy against legitimate
marital bonds would encourage illicit or common-law relations and subvert the
sacrament of marriage.
Duncan Asso. Of Detailman-PTGWO vs Glaxo Wellcome Phils., (2004) G.R.
162994
Facts:
Petitioner Pedro Tecson was hired by respondent Glaxo as medical representative, after
Tecson had undergone training and orientation. Thereafter, 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 co-employees or employees of
competing drug companies.
Tecson was initially assigned to market Glaxos products in the Camarines SurCamarines Norte sales area. Subsequently, Tecson entered into a romantic relationship
with Bettsy, an employee of Astra, a competitor of Glaxo. She was Astras Branch
Coordinator in Albay and supervised the district managers and medical representatives
of her company and prepared marketing strategies for Astra in that area. The two
married even with the several reminders given by the District Manager to Tecson. In
January 1999, Tecsons superiors informed him that his marriage to Bettsy gave rise to a
conflict of interest. Tecsons superiors reminded him that he and Bettsy should decide
which one of them would resign from their jobs, although they told him that they
wanted to retain him as much as possible because he was performing his job well. This
situation eventually led to his constructive dismissal.
Issue: WON Glaxos policy prohibiting its employees from marrying an employee of a
competitor company is valid?

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Labor Standards Case Digests

Held: Glaxos policy prohibiting an employee from having a relationship with an


employee of a competitor company is a valid exercise of management prerogative.
Tecsons contract of employment with Glaxo being questioned, stipulates that Tescon
agrees to abide by the existing company rules of Glaxo, and to study and become
acquainted with such policies. In this regard, the Employee Handbook of Glaxo expressly
informs its employees of its rules regarding conflict of interest. No reversible error can
be ascribed to the Court of Appeals when it ruled that Glaxos 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.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxos employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying
down the assailed company policy, Glaxo only aims to protect its interests against the
possibility that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No
less than the Constitution recognizes the right of enterprises to adopt and enforce such
a policy to protect its right to reasonable returns on investments and to expansion and
growth. 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.
Star Paper Corp., vs Simbol (2006) G.R. 164774
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: WON 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?

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Labor Standards Case Digests

Held: 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.
Article 136 of the Labor Code which provides:
It shall be unlawful for an employer to require as a condition of employment
continuation of employment that a woman employee shall not get married, or
stipulate expressly or tacitly that upon getting married a woman employee shall
deemed resigned or separated, or to actually dismiss, discharge, discriminate
otherwise prejudice a woman employee merely by reason of her marriage.

or
to
be
or

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 employees 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
employees right to be free from arbitrary discrimination based upon stereotypes of
married persons working together in one company.

Rivera vs Solidbank (2006) G.R. 163269


Facts:
Rivera had been working for the Solidbank since 1977. In Dec 1994, deciding to devote
his time and attention to his poultry business in Cavite, Rivera applied for retirement.
Subsequently, Solidbank required Rivera to sign an undated Release, Waiver and
Quitclaim, Rivera acknowledged receipt of the net proceeds of his separation and
retirement benefits and promised that "[he] would not, at any time, in any manner
whatsoever, directly or indirectly engage in any unlawful activity prejudicial to the
interest of Solidbank, its parent, affiliate or subsidiary companies, their stockholders,
officers, directors, agents or employees, and their successors-in-interest and will not
disclose any information concerning the business of Solidbank, its manner or operation,
its plans, processes, or data of any kind."

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On May 1995, the Equitable employed Rivera as Manager of its Credit Investigation and
Appraisal Division of its Consumers Banking Group. Upon discovering this, Solidbank
First Vice-President for HRD Celia Villarosa wrote a letter informing Rivera that he had
violated the Undertaking. She likewise demanded the return of all the monetary benefits
he received in consideration of the SRP within five (5) days from receipt; otherwise,
appropriate legal action would be taken against him, when Rivera refused, Solidbank
filed complaint.
Issue: WON the one year employment ban imposed by Solidbank upon Rivera is null
and void for being unreasonable and oppressive and for constituting restraint of trade?
Held: The post-retirement competitive employment ban is unreasonable because it has
no geographical limits.
Article 1306 of the NCC provides that the contracting parties may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided they
are not contrary to law, morals, good customs, public order or public policy. On the face
of the Undertaking, the post-retirement competitive employment ban is unreasonable
because it has no geographical limits; respondent is barred from accepting any kind of
employment in any competitive bank within the proscribed period. Although the period
of one year may appear reasonable, the matter of whether the restriction is reasonable
or unreasonable cannot be ascertained with finality solely from the terms and conditions
of the Undertaking, or even in tandem with the Release, Waiver and Quitclaim.
Employer is burdened to establish that a restrictive covenant barring an employee from
accepting a competitive employment after retirement or resignation is not an
unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus,
unenforceable for being repugnant to public policy. As the Court stated in Ferrazzini v.
Gsell, cases involving contracts in restraint of trade are to be judged according to their
circumstances, to wit: x x x There are two principal grounds on which the doctrine is
founded that a contract in restraint of trade is void as against public policy. One is, the injury
to the public by being deprived of the restricted partys industry; and the other is, the injury
to the party himself by being precluded from pursuing his occupation, and thus being
prevented from supporting himself and his family.
In cases where an employee assails a contract containing a provision prohibiting him or
her from accepting competitive employment as against public policy, the employer has
to adduce evidence to prove that the restriction is reasonable and not greater than
necessary to protect the employers legitimate business interests. The restraint may not
be unduly harsh or oppressive in curtailing the employees legitimate efforts to earn a
livelihood and must be reasonable in light of sound public policy.
Yrasuegui vs Philippine Airlines (2008) G.R. 168081
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.

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Labor Standards Case Digests

In consequence thereof, petitioner filed a complaint for illegal dismissal against PAL
before the Labor Arbiter (LA). Te Labor Arbiter ruled that the petitioner was illegally
dismissed. It also issued a writ of execution directing the reinstatement of the petitioner
without loss of seniority and other benefits, and also the payment of backwages.
Respondent PAL appealed to the NLRC which affirmed the LAs decision. Respondent PAL
appealed to the Court of Appeals. CA reversed the NLRC case.
Issue: Whether the dismissal of the petitioner valid.
Held: The Court upheld the legality of the petitioners dismissal.
Separation pay, however, should be awarded in favor of the employee as an act of
social justice or based on equity. This is so because his dismissal is not serious
misconduct. Neither is it reflective of his moral character.
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 ode. 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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Labor Standards Case Digests

Ilaw at Buklod Manggagawa vs NLRC (1991) 198 SCRA 586


Facts:

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Labor Standards Case Digests

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: WON the strike is legal in the resolution of wage distortion.
Held: 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

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Labor Standards Case Digests

distortion shall not in any way delay the 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."

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Labor Standards Case Digests

Employers Confederation of the Phils vs NWPC (1991) 201 SCRA 759


Facts:
ECOP questioned the validity of the wage order issued by the RTWPB dated October 23,
1990 pursuant to the authority granted by RA 6727. The wage order increased the
minimum wage by P17.00 daily in the National Capital Region.
The wage order is applied to all workers and employees in the private sector of an
increase of P 17.00 including those who are paid above the statutory wage rate. ECOP
appealed with the NWPC but dismissed the petition.
The Solicitor General in its comment posits that the Board upon the issuance of the
wage order fixed minimum wages according to the salary method. Petitioners insist that
the power of RTWPB was delegated, through RA 6727, to grant minimum wage
adjustments and in the absence of authority, it can only adjust floor wages.
Issue: WON the wage order issues by RTWPB dated October 23, 1990 is valid.
Held: Wage order is valid.
The Court agrees with the Solicitor General. It noted that there are two ways in the
determination of wage, these are floor wage method and salary ceiling method. The
floor wage method involves the fixing of determinate amount that would be added to
the prevailing statutory minimum wage while the salary ceiling method involves where
the wage adjustment is applied to employees receiving a certain denominated salary
ceiling.
RA 6727 gave statutory standards for fixing the minimum wage.
ART. 124. Standards/Criteria for Minimum Wage Fixing The regional minimum
wages to be established by the Regional Board shall be as nearly adequate as is
economically feasible to maintain the minimum standards of living necessary for the
health, efficiency and general well-being of the employees within the framework of
the national economic and social development program. In the determination of such
regional minimum wages, the Regional Board shall, among other relevant factors,
consider the following:
(a)

The demand for living wages;

(b)

Wage adjustment vis-a-vis the consumer price index;

(c)

The cost of living and changes or increases therein;

(d)

The needs of workers and their families;

(e)

The need to induce industries to invest in the countryside;

(f)

Improvements in standards of living;

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Labor Standards Case Digests


(g)

The prevailing wage levels;

(h)

Fair return of the capital invested and capacity to pay of employers;

(i)

Effects of employment generation and family income; and

(j)
The equitable distribution of income and wealth along the imperatives of
economic and social development."

The wage order was not acted in excess of boards authority. The law gave reasonable
limitations to the delegated power of the board.

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Labor Standards Case Digests

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 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: WON the employers 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.
Held: 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

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Labor Standards Case Digests

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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Labor Standards Case Digests

Joy Brothers Inc., vs NWPC (1997) 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: WON petitioner
establishments.

Corporation

falls

within

the

exemption

for

distressed

Held: 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:

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Labor Standards Case Digests

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 and 1992, for which years petitioner incurred net profits of P53,607.00 and
P60,188.00, respectively.
Prubankers Association vs Prudential Bank (1999) 302 SCRA 74
Facts:
The RTWPB Region V issued Wage Order No. RB 05-03 which provided for a Cost of
Living Allowance (COLA) to workers in the private sector who had rendered service for
at least three (3) months 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-andfile 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.
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Labor Standards Case Digests

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

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Labor Standards Case Digests

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.
Held: 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
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Labor Standards Case Digests

payable by an employer to an employee under a written or unwritten contract of


employment for work done or to be done, or for services rendered or to be rendered and
includes the fair and reasonable value, as determined by the Secretary of Labor, of
board, lodging, or other facilities customarily furnished by the employer to the
employee.
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.

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Labor Standards Case Digests

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


Facts:
International School, Inc., pursuant to PD 732, is a domestic educational institution
established primarily for dependents of foreign diplomatic personnel and other
temporary residents. To enable the School to continue carrying out its educational
program and improve its standard of instruction, Section 2(c) of the same decree
authorizes the School to employ its own teaching and management personnel selected
by it either locally or abroad, from Philippine or other nationalities, such personnel being
exempt from otherwise applicable laws and regulations attending their employment,
except laws that have been or will be enacted for the protection of employees.
The School hires both foreign and local teachers as members of its faculty, classifying
the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to

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Labor Standards Case Digests

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 foreignhire.
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" foreignhires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The
compensation scheme is simply the School's adaptive measure to remain competitive
on an international level in terms of attracting competent professionals in the field of
international education.
Issue: WON local hire teachers shall enjoy same salary as foreign hire teachers where
they perform the same work.
Held: Employees are entitled to same salary for performance of equal work.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in
Article 7 thereof, provides: The States Parties to the present Covenant recognize the
right of everyone to the enjoyment of just and favorable conditions of work, which
ensure, in particular: ( a) Remuneration which provides all workers, as a minimum, with:
(i)
Fair wages and equal remuneration for work of equal value without distinction of
any kind, in particular women being guaranteed conditions of work not inferior to those
enjoyed by men, with equal pay for equal work; The foregoing provisions impregnably
institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal
work." Persons who work with substantially equal qualifications, skill, effort and
responsibility, under similar conditions, should be paid similar salaries. This rule applies
to the School.
The School contends that petitioner has not adduced evidence that local-hires perform
work equal to that of foreign-hires. The Court finds this argument a little inconsiderate.
If an employer accords employees the same position and rank, the presumption is that
these employees perform equal work. If the employer pays one employee less than the
rest, it is not for that employee to explain why he receives less or why the others
receive more. The employer has discriminated against that employee; it is for the
employer to explain why the employee is treated unfairly.
In this case, the employer has failed to discharge this burden. There is no evidence here
that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both
groups have similar functions and responsibilities, which they perform under similar
working conditions.

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Labor Standards Case Digests

Bankard Employees Union vs NLRC (2004) G.R. 140689


Facts:
Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III, Level IV, and
Level V. On May 1993, its Board of Directors approved a New Salary Scale, made
retroactive to April 1, 1993, for the purpose of making its hiring rate competitive in the
industrys labor market. The New Salary Scale increased the hiring rates of new
employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and Levels II, III
55

Labor Standards Case Digests

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. Petitioners motion for
reconsideration of the dismissal of the case was denied.
Issue: Whether the unilateral adoption by an employer of an upgraded salary resulted
in wage distortion within the contemplation of Article 124 of the Labor Code.
Held: There exists a wage distortion but the Court will not interfere in the management
prerogative of the petitioner.
Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among
others, Article 124 of the Labor Code), the term "wage distortion" was explicitly defined
as... a situation where an increase in prescribed wage rates results in the elimination or
severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate
the distinctions embodied in such wage structure based on skills, length of service, or
other logical bases of differentiation.
In the case of Prubankers Association v. Prudential Bank and Trust Company, it laid down
the four elements of wage distortion, to wit: (1.) An existing hierarchy of positions with
corresponding salary rates; (2) A significant change in the salary rate of a lower pay
class without a concomitant increase in the salary rate of a higher one; (3) The
elimination of the distinction between the two levels; and (4) The existence of the
distortion in the same region of the country.
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.

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Labor Standards Case Digests

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 Bankards hiring rate. An
employer would be discouraged from adjusting the salary rates of a particular group of
employees for fear that it would result to a demand by all employees for a similar
increase, especially if the financial conditions of the business cannot address an acrossthe-board increase.
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.

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Labor Standards Case Digests

Odango vs NLRC (2005) G.R. 147420


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
attorneys 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 attorneys fees of
10%. ANTECO appealed the Decision to the NLRC where it reversed the Labor Arbiters
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.
Held: 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 Codes 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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Labor Standards Case Digests

C. Planas Commercial vs NLRC (2005) G.R. 144619


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. 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.
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: WON petitioner is exempted from the application of minimum wage law.
Held: 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
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Labor Standards Case Digests

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 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.
EJR Crafts Corp., vs CA (2006)
Facts:
In 1997, private respondents filed a complaint for underpayment of wages, regular
holiday pay, overtime pay, non-payment of 13th month pay and service incentive leave
pay against petitioner before the Regional Office, NCR of the Department of Labor and
Employment (DOLE). Acting on the complaint, Regional Director issued an inspection
authority to Senior Labor Enforcement Officer.
On August 1997, an inspection was conducted on the premises of petitioners offices
wherein the following violations of labor standards law were discovered, to wit: nonpresentation 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 corporations manager. Petitioner then filed a
Motion for Reconsideration of said Order arguing that the Regional Director has no
jurisdiction over the case as private respondents were allegedly no longer connected
with petitioner corporation at the time of the filing of the complaint and when the
inspection was conducted, and that private respondents claims are within the exclusive
and original jurisdiction of the Labor Arbiters.
Issue: WON the Regional Director has jurisdiction over the claims of the private
respondents.
Held: Regional Director has jurisdiction to hear and decide the instant case.
The Court favors the respondents in the money claims against the petitioner company. It
is admitted that for the Regional Director to exercise the power to order compliance, or
the so-called "enforcement power" under Article 128(b) of P.D. No. 442 as amended,
it is necessary that the employer-employee relationship still exists.
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Labor Standards Case Digests

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 vs CA (2006) G.R. 166647


Facts:
Petitioner is engaged in the manufacture of steel bars and wire rods while 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.
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.
Issue: WON the company was obliged to grant the wage increase under the Wage
Order as a matter of practice.

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Held: Company is not obliged to grant the wage increase.


It is submitted that employers unless exempt are mandated to implement the said wage
order but limited to those entitled thereto. 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. 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.
Equitable PCI Bank vs Sadac (2006) G.R. 164772
Facts:
Ricardo Sadac was appointed VP of the Legal Department of petitioner Bank effective
August 1981, and subsequently General Counsel thereof on December 1981. On June
1989, nine lawyers of petitioner Banks Legal Department, in a letter-petition to the
Chairman of the Board of Directors, accused respondent Sadac of abusive conduct and
ultimately, petitioned for a change in leadership of the department. On the ground of
lack of confidence in Sadac, under the rules of client and lawyer relationship, petitioner
Bank instructed respondent Sadac to deliver all materials in his custody in all cases in
which the latter was appearing as its counsel of record. In reaction thereto, Sadac
requested for a full hearing and formal investigation but the same remained unheeded.
On November 1989, respondent Sadac filed a complaint for illegal dismissal with
damages against petitioner Bank and individual members of the Board of Directors
thereof. After learning of the filing of the complaint, petitioner Bank terminated the
services of respondent Sadac. Finally, on August 1989, Sadac was removed from his
office
Labor Arbiter rendered decision that Sadacs termination was illegal and entitled to
reinstatement and payment of full back wages. NLRC affirmed the decision upon
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appeal by the Bank. Sadac filed for execution of judgment where it gave its
computation which amounted to P 6.03 M representing his back wages and the
increases he should have received during the time he was illegally dismissed. The Bank
opposed to Sadacs computation. The Labor Arbiter favor Sadacs computation. NLRC,
upon appeal by the bank, reversed the decision. CA reversed the decision of NLRC.
Issue: WON the computation of back wages shall include the general increases.
Held: Respondent Sadac cannot take exception by arguing that jurisprudence speaks
only of wage and not salary, and therefore, the rule is inapplicable to him. It is
respondent Sadacs stance that he was not paid at the wage rate nor was he engaged in
some form of manual or physical labor as he was hired as Vice President of petitioner
Bank. He cites Gaa v. Court of Appeals where the Court distinguished between wage and
salary.
The reliance is misplaced. The distinction between salary and wage in Gaa was for the
purpose of Article 1708 of the Civil Code which mandates that, "[t]he laborers wage
shall not be subject to execution or attachment, except for debts incurred for food,
shelter, clothing and medical attendance." In labor law, however, the distinction
appears to be merely semantics. Paramount and Evangelista may have involved wage
earners, but the petitioner in Espejo was a General Manager with a monthly salary of
P9,000.00 plus privileges. That wage and salary are synonymous has been settled in
Songco v. National Labor Relations Commission. We said:
Broadly, the word "salary" means a recompense or consideration made to a person
for his pains or industry in another mans business. Whether it be derived from
"salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with
it the fundamental idea of compensation for services rendered. Indeed, there is
eminent authority for holding that the words "wages" and "salary" are in essence
synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins vs.
Cromwell, 85 N.Y.S.839, 841, 89 App. Div. 481; 38 Am. Jur. 496). "Salary," the
etymology of which is the Latin word "salarium," is often used interchangeably with
"wage", the etymology of which is the Middle English word "wagen". Both words
generally refer to one and the same meaning, that is, a reward or recompense for
services performed. Likewise, "pay" is the synonym of "wages" and "salary" (Blacks
Law Dictionary, 5th Ed). x x x (Italics supplied.)

Metropolitan Bank vs NWPC (2007) G.R. 144322


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
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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.
Bankers Council in a letter inquiry to NWPC requested for ruling to seek exemption from
coverage of the wage order since the members bank are paying more than the regular
wage. NWPC replied that the member banks are covered by the wage order and does
not fall with the exemptible categories. In another letter inquiry, Metrobank asked for
the interpretation of the applicability of the wage order. NWPC referred it to RTWPB.
RTWPB in return clarified that establishments in Region 2 are
Issue: WON the wage order is void thus it has no legal effect and the RTWPB acted in
excess of its jurisdiction.
Held: Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase to
employees earning more than the minimum wage rate; and pursuant to the separability
clause of the Wage Order, Section 1 is declared valid with respect to employees earning
the prevailing minimum wage rate.
The powers of NWPC are enumerated in ART. 121. Powers and Functions of the
Commission. - The Commission shall have the following powers and functions: (d) To
review regional wage levels set by the Regional Tripartite Wages and Productivity Boards
to determine if these are in accordance with prescribed guidelines and national
development plans; (f) To review plans and programs of the Regional Tripartite Wages
and Productivity Boards to determine whether these are consistent with national
development plans; (g) To exercise technical and administrative supervision over the
Regional Tripartite Wages and Productivity Boards.
R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum
wages and to promote productivity-improvement and gain-sharing measures to ensure a
decent standard of living for the workers and their families; to guarantee the rights of
labor to its just share in the fruits of production; to enhance employment generation in
the countryside through industrial dispersal; and to allow business and industry
reasonable returns on investment, expansion and growth.
In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power
to prescribe rules and guidelines for the determination of appropriate minimum wage
and productivity measures at the regional, provincial or industry levels; and authorized
the RTWPB to determine and fix the minimum wage rates applicable in their respective
regions, provinces, or industries therein and issue the corresponding wage orders,
subject to the guidelines issued by the NWPC. Pursuant to its wage fixing authority, the
RTWPB may issue wage orders which set the daily minimum wage rates, based on the
standards or criteria set by Article 124 of the Labor Code.
The Court declared that there are two ways of fixing the minimum wage: the "floorwage" 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.
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Labor Standards Case Digests

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

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Rajah Humabon Hotel vs Trajano (1993) G.R. 100222-23


Facts:
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Labor Standards Case Digests

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?
Held: Regional Director had no jurisdiction over the case.
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 (1998) G.R. 131750


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 twenty-one (21) employees who are copier
operators: (1) underpayment of wages; (2) underpayment of 13th month pay; and (3)
no service incentive leave with pay.
Issue: WON the Regional Director has jurisdiction over the labor standards case.
Held: 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 visitorial and enforcement powers of the Secretary of Labor and
Employment."Petitioner's reliance on Servando is thus untenable.
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EJR Crafts Corp., vs Court of Appeals (2006) G.R. 154101


Facts:
Sometime in 1997, private respondents filed a complaint for underpayment of wages,
regular holiday pay, overtime pay, nonpayment of 13th month pay and service
incentive leave pay against petitioner before the Regional Office, NCR of the DOLE.
Acting on the complaint, an inspection was conducted on the premises of petitioners
offices on August 22, 1997 wherein violations of labor standards law were discovered.
Petitioner argued that the Regional Director has no jurisdiction over the case as private
respondents were allegedly no longer connected with petitioner corporation at the time
of the filing of the complaint and when the inspection was conducted, and that private
respondents claims are within the exclusive and original jurisdiction of the Labor
Arbiters.
Issue: WON public respondent Regional Director has jurisdiction over the case.
Held: The Regional Director has jurisdiction over the case.
As found by both Undersecretary of Labor and the Court of Appeals, the said quitclaim
and release forms are unreliable and do not correspond to other documents on record
which would prove that private respondents were working for the petitioner up to
August 1997.
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, this Court rules 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 that:
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.

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Ex Bataan Veterans Security Agency vs Sec of Labor (2007) G.R. 152396


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: WON the Regional Director has jurisdiction over the money claims.
Held: 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."

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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 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.

Catholic Vicariate Baguio City vs Hon. Sto. Tomas (2008) G.R.167334


Facts:
Petitioner contracted KUNHWA to construct the retaining wall of the Baguio Cathedral.
KUNWHA, in turn, subcontracted CEREBA Builders (CEREBA) to do the formworks of the
church. The contract between KUNWHA and CEREBA lasted up to the completion of the
project or on 8 September 2000, KUNWHA failed to pay CEREBA. Consequently, the
latter failed to pay its employees.
Agbucay, along with 81 other employees, lodged a complaint against CEREBA, KUNWHA
and petitioner before the DOLE-CAR Regional Office for nonpayment of wages, special
and legal holiday premium pay. An inspection of the premises resulted in the discovery
of violations of labor standards law, such as nonpayment of wages and holiday pay from
28 June 2000 to 5 September 2000, non-presentation of employment records, and
others. Petitioner, KUNWHA and CEREBA were given five (5) days from receipt of the
notice of inspection results to rectify its violations. Despite the notice, the parties failed
to comply. A hearing was set wherein CEREBA manifested its willingness to pay the
affected employees on the condition that KUNWHA would pay its obligation to CEREBA.
Petitioner meanwhile manifested that the retention fee due to KUNWHA was sufficient to
pay the deficiencies due the affected employees.
On March 2001, the DOLE-CAR Regional Director issued an Order holding CEREBA,
KUNWHA and petitioner jointly and severally liable to the 82 affected workers in the
amount ofP1,029,952.80 or P12,560.40 for each employee. During the pendency of its
motion for reconsideration, KUNWHA voluntarily settled the deficiencies due the 23
affected workers amounting to P84,544.00
The Regional Director dismissed the complaint by reason of the said settlement. He also
advised the other employees to ventilate their claims in an appropriate forum
considering that no employer-employee relationship exists between the parties.
Issue: Whether the Secretary of Labor acquired jurisdiction over the appeal considering
that this case falls within the exception stated in Article 128(b) of the Labor Code.
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Held: Secretary of Labor acquired jurisdiction over the appeal and petitioner is barred
by estoppel from raising the issue of jurisdiction.
In resolving this jurisdictional issue, the Secretary of Labor relied on the limitations set
forth in Article 128(b) of the Labor Code and ruled, thus:
It is worthy to note that as regards the power granted to Regional Director by Article
128 of the Labor Code, as amended, only two (2) limitations are set forth: first, where
the employer contests the findings of the labor regulations officer, and raises issues
which cannot be resolved without considering evidentiary matters that are not
verifiable in the normal course of inspection, and second, where the employeremployee relationship no longer exists.
x x x Both of the above-stated limitations are wanting in this case. Records show that,
when this case was filed on August 29, 2000, complainants were still employed with
the respondent CEREBA working for KUNWHAs project with the Vicariate. There was
no proof that the subcontracting agreement between KUNWHA LUZON
CONSTRUCTION and CEREBA Builders was terminated as of July 2000. The letters
showing the poor performance of CEREBA Builders cannot be considered as a notice
of termination of the Subcontracting Agreement for the same do not state so.x x x
Succinctly put, since no written notice was served to respondent CEREBA Builders
terminating the Subcontracting Agreement, the employer-employee relationship
between KUNWHA and complainants existed until the completion of the
subcontracting agreement on September 18, 2000. Considering this, when the
complainants filed this case on August 29, 2000, the Regional Director validly
acquired jurisdiction over the case. And, jurisdiction once acquired is not lost upon
the instance of the parties but continues until the case is terminated.x x x
It is also equally important to note that, during the initial hearing of this case at the
Regional Office, the respondents failed to contest the findings of the Labor
Employment and Enforcement Officer. The respondents failed to present employment
records and any evidence to controvert the findings despite the reasonable period of
time afforded them. It was only when respondent KUNWHA filed its Motion for
Reconsideration from the Order dated March 12, 2001 of the Regional Director that it
submitted documents which the Vicariate now alleged to be not verifiable in the
summary nature of the labor inspection

Moreover, the issue of jurisdiction is clearly intertwined with the existence of employeremployee relationship. It is undisputed that the existence of an employer-employee
relationship is ultimately a question of fact.
Assuming arguendo the absence of an employer-employee relationship between the
parties, the Secretary of Labor, invoking Odin Security Agency v. De la Serna, correctly
declared that petitioner is now estopped from questioning the jurisdiction of the
Regional Director when it actively participated in the proceedings held therein. In said
case, petitioner also submitted to the jurisdiction of the Regional Director by taking part
in the hearings before him and by submitting a position paper. Similarly, it was only
when the order of the Regional Director was modified did petitioner question the
formers jurisdiction to hear and decide the case.

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Sapio vs Undaloc Construction (2008) G.R. 155034


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: WON 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.
Held: 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

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Labor Standards Case Digests

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 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


(2008) G.R. 167708
Facts:
Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent
Panay Veterans 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
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Labor Standards Case Digests

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 Directors order was
declared final and executory. The SOLE denied reconsideration. Respondents appealed
to the Court of Appeals.
Issues: WON there was a perfected appeal; whether motion to reduce appeal bond
allowed in appeals to the Secretary of Labor.
Held: 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 Directors 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 lawmakers intended the posting of a cash or surety bond by the employer
to be the exclusive means by which an employers 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 (2008) G.R.
174641
Facts:
On April 1996, the Department of Environment and Natural Resources (DENR) ordered
the indefinite suspension of MARCOPPERs operations for causing damage to the
environment of the Province of Marinduque by spilling the companys mine waste or
tailings from an old underground impounding area into the Boac River, in violation of its
Environmental Compliance Certificate (ECC).

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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 attorneys fees; the case is hereinafter referred to as theenvironmental
incident case. NAMAWU claimed that due to the indefinite suspension of MARCOPPERs
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 Codes
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.
Issue: Whether CA erred in ruling that there was no need for MARCOPPER to post an
appeal bond.
Held: The CA was correct in reversing the dismissal of MARCOPPERs 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 MARCOPPERs 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.

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Peoples Broadcasting vs Secretary of DOLE (2009) G.R. 179652


Facts:
Jandeleon Juezan filed a complaint against Peoples 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 petitioners evidence. Petitioners 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 respondents claim exceeded P5,000.00.
Issue: Whether the Secretary of Labor has the power to determine the existence of an
employer-employee relationship.
Held: Secretary of Labor has the power to determine the existence of an employeremployee relationship.
Clearly the law accords a prerogative to the NLRC over the claim when the employeremployee relationship has terminated or such relationship has not arisen at all. The
reason is obvious. In the second situation especially, the existence of an employeremployee 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 employeremployee relationship demand that the level of scrutiny should be far above the
cursory
and
the
mechanical. While documents, particularly documents found in the employers
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Labor Standards Case Digests

office are the primary source materials, what may prove decisive are factors related to
the history of the employers business operations, its current state as well as accepted
contemporary practices in the industry. More often than not, the question of employeremployee relationship becomes a battle of evidence, the determination of which should
be comprehensive and intensive and therefore best left to the specialized quasijudicial 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 DOLEs primary function of enforcing labor standards
provisions. The determination of the existence of employer-employee
relationship is still primarily lodged with the NLRC. This is the meaning of the
clause in cases where the relationship of employer-employee still exists in
Art. 128 (b).
Thus, before the DOLE may exercise its powers under 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 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
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Labor Standards Case Digests

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
NLRCs jurisdiction and the DOLEs prerogative but also the procedure
when the case involves the fundamental challenge on the DOLEs
prerogative
based
on
lack
of
employer-employee
relationship.
As exhaustively discussed here, the DOLEs 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 petitioners employee.

Phil Hoteliers Inc., vs National Union of Workers in Hotel Restaurant & Allied
Industries Dusit Hotel Nikko Chapter (2009) G.R. 181972
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 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 noncompliance 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:

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Labor Standards Case Digests

* 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-NCRCC 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 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

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Labor Standards Case Digests

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.
Held: 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 DOLENCR to Dusit Hotel, reveals that the said Notice did not contain such an advice.
Although the Notice directed Dusit Hotel to correct its noted violations within five days
from receipt thereof, it was not sufficiently apprised that failure to do so within the given
period would already result in its liability for double indemnity. The lack of advice
deprived Dusit Hotel of the opportunity to decide and act accordingly within the five-day
period, as to avoid the penalty of double indemnity. By 22 October 2002, the DOLE-NCR,
through Dir. Maraan, already issued its Order directing Dusit Hotel to pay 144 of its
employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA
under WO No. 9; plus the penalty of double indemnity, pursuant to Section 12 of
Republic Act No. 6727, as amended by Republic Act No. 8188.
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

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Labor Standards Case Digests

rights which, as such, are entitled to respect and enforcement in the interest of simple
fair play.

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Labor Standards Case Digests

Gaa vs Court of Appeals (1985) 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: WON the Petitioner is covered by Article 1708 of the New Civil Code.
Held: 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 work is manual. Persons belonging to this class usually look to the

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Labor Standards Case Digests

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 (1991) 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.

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Petitioner alleged that since its retirement plan is non-contributory, Nestle has the sole
and exclusive prerogative to define the terms of the plan because the workers have no
vested and demandable rights, the grant thereof being not a contractual obligation but
merely gratuitous. At most the company can only be directed to maintain the same but
not to change its terms. It should be left to the discretion of the company on how to
improve or modify the same.
Issue: WON the workers have vested and demandable rights over the retirement plan.
Held: 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 noncontributory 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
non-contributory retirement plan, has no merit for employees do have a vested and
demandable right over existing benefits voluntarily granted to them by their employer.
The latter may not unilaterally withdraw, eliminate or diminish such benefits.

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Five J Taxi vs NLRC (1992) 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 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

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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: WON the deductions made were illegal and if illegal, considered a prohibition
regarding wages.
Held: 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 correctly noted, car washing after a tour of duty is
a practice in the taxi industry, and is, in fact, dictated by fair play.

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Manila Electric Co vs Sec of Labor (1999) G.R. 127598


Facts:
MEWA is the duly recognized labor organization of the rank-and-file employees of
MERALCO. On September 7, 1995, MEWA informed MERALCO of its intention to renegotiate the terms and conditions of their existing 1992-1997 Collective Bargaining
Agreement (CBA) covering the remaining period of two years starting from December 1,
1995 to November 30, 1997. MERALCO signified its willingness to re-negotiate through
its letter dated October 17, 1995 and formed a CBA negotiating panel for the purpose.
On November 10, 1995, MEWA submitted its proposal to MERALCO, which, in turn,
presented a counter-proposal. Thereafter, collective bargaining negotiations proceeded.
However, despite the series of meetings between the negotiating panels of MERALCO
and MEWA, the parties failed to arrive at terms and conditions acceptable to both of
them.
On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch
of the National Conciliation and Mediation Board (NCMB) of the Department of Labor
and Employment (DOLE) which was docketed as NCMB-NCR-NS-04-152-96, on the
grounds of bargaining deadlock and unfair labor practices. The NCMB then conducted a
series of conciliation meetings but the parties failed to reach an amicable settlement.
MERALCO filed a petition to let the Secretary of DOLE to assume jurisdiction over the
case which was granted.
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Issue: Whether the members of MEWA are entitled to benefits given as bonuses, being
negotiated in the CBA.
Held: The members of MEWA are entitled to the benefits although in the form of
benefits which is a subject of the negotiation of CBA.
As a rule, a bonus is not a demandable and enforceable obligation; it may nevertheless
be granted on equitable consideration as when the giving of such bonus has
been the companys long and regular practice. To be considered a regular
practice, the giving of the bonus should have been done over a long period of time,
and must be shown to have been consistent and deliberate.
The ruling in National Sugar Refineries Corporation vs. NLRC: 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.
In this case, the record shows the MERALCO, aside from complying with the regular 13 th
month bonus, has further been giving its employees an additional Christmas bonus at
the tail-end of the year since 1988. While the special bonuses differed in amount and
bore different titles, it can not be denied that these were given voluntarily and
continuously on or about Christmas time.
The considerable length of time MERALCO has been giving the special grants to its
employees indicates a unilateral and voluntary act on its part, to continue giving said
benefits knowing that such act was not required by law.
Indeed, a company practice favorable to the employees has been established and the
payments made by MERALCO pursuant thereto ripened into benefits enjoyed by the
employees. Consequently, the giving of the special bonus can no longer be withdrawn
by the company as this would amount to a diminution of the employees existing
benefits.

Philippine Veterans Bank vs NLRC (1999) G.R. 130439


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 petitioners
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 attorneys fees in the amount of P300,000.

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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 arbiters 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.
Held: 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
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 petitioners employees because it results in a higher determination of their

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monthly salary.

Philippine Appliance Corp., vs Court of Appeals (2004) G.R. 149434

Facts:
During the collective bargaining negotiations between petitioner and respondent union
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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 petitioners
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 petitioners
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, 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 the signing bonus is covered under the maintenance of existing
benefits.
Held: 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 companys 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

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given only once, that is, during the 1997 CBA negotiation.

Special Steel Products vs Villareal (2004) G.R. 143304


Facts:
Special Steel Products, Inc., is a domestic corporation engaged in the principal business
of importation, sale, and marketing of BOHLER steel products. Respondents worked for
petitioner as assistant manager and salesman. Villareal obtained a car loan from Bank
of Commerce with petitioner as surety wherein they are jointly and severally agreed to
pay the bank in installment basis. In January 1997, Villareal resigned and joined HiGrade Industrial and Technical Products as Executive vice-president.
Respondent So was sponsored by petitioner to attend a training course in Kapfenberg,
Austria conducted by BOHLER. It rewarded Sos outstanding sales performance. When
So returned, the petitioner asked respondent So to sign a memorandum to work for the
company for three years. After 2 years and 4 months, So resigned from the company.
Petitioner ordered respondents an accounting of the various Christmas giveaways they
received. In return, respondents also demanded payment of their separation benefits,
commissions, monetary benefits but petitioner refused and withheld the 13 th month pay
and other benefits.
Issue: WON the employer can withhold its employees wages and benefits as lien to
protect its interest as surety in the car loan and for expenses in the training abroad.
Held: The employer cannot withhold respondents 13th month pay and other monetary
benefits.
Article 116 of the Labor Code, as amended, provides:
Withholding of wages and kickbacks prohibited. It shall be unlawful for any
person, directly or indirectly, to withhold any amount from the wages (and
benefits) 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
workers consent.

The above provision is clear and needs no further elucidation. Indeed, petitioner has no
legal authority to withhold respondents 13th month pay and other benefits. What an
employee has worked for, his employer must pay. Thus, an employer cannot simply
refuse to pay the wages or benefits of its employee because he has either defaulted in
paying a loan guaranteed by his employer; or violated their memorandum of
agreement; or failed to render an accounting of his employers property.

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Agabon vs NLRC (2004) G.R. 158693


Facts:
Private respondent Riviera Home Improvements, Inc. is engaged in the business of
selling and installing ornamental and construction materials. It employed 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: WON respondents dismissal is illegal and if not, entitles them benefits.
Held: 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
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Labor Standards Case Digests

be held liable for non-compliance with the procedural requirements of due process. The
present case squarely falls under the fourth situation. The dismissal should be upheld
because it was established that the petitioners abandoned their jobs to work for another
company. Private respondent, however, did not follow the notice requirements and
instead argued that sending notices to the last known addresses would have been
useless because they did not reside there anymore. Unfortunately for the private
respondent, this is not a valid excuse because the law mandates the twin notice
requirements to the employees last known address. Thus, it should be held liable for
non-compliance with the procedural requirements of due process.
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 13 th month pay to
employees not already receiving the same so as to further protect the level of real
wages from the ravages of world-wide inflation. Clearly, as additional income, the 13th
month pay is included in the definition of wage under Article 97(f) of the Labor Code.
American Wire & Cable Daily Rated Employees vs American Wire (2005) G.R.
155059
Facts:
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires
and cables. There are two unions in this company, the American Wire and Cable
Monthly-Rated Employees Union and the American Wire and Cable Daily-Rated
Employees Union.
On 16 February 2001, an original action was filed before the NCMB of the Department of
Labor and Employment by the two unions for voluntary arbitration. They alleged that
the private respondent, without valid cause, suddenly and unilaterally withdrew and
denied certain benefits and entitlements which they have long enjoyed. These are
Service Award, 35% premium pay of an employees basic pay for the work rendered
during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29,
Christmas Party and Promotional Increase.
Issue: WON the respondent company violated Article 100 of the Labor Code.
Held: The company is not guilty of violating Art. 100 of the Labor Code.
Article 100 of the Labor Code provides:
PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. Nothing in
this Book shall be construed to eliminate or in any way diminish supplements, or
other employee benefits being enjoyed at the time of promulgation of this Code.

The certain benefits and entitlements are considered bonuses. A bonus can only be
enforceable and demandable if it has ripened into a company practice. It must also be
expressly agreed by the employer and employee or it must be on a fixed amount.

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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 (2005) G.R.


145561
Facts:
The case stems from the collective bargaining agreement between Honda and the
respondent union that it granted the computation of 14 th 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 13 th 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 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 companys implementation of
the pro-rated computation is invalid.
Issue: WON the pro-rated computation of the 13 th and 14th month pays and other
bonuses in question is valid and lawful.
Held: The pro-rated computation is invalid.
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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.
The Labor Arbiter dismissed the petition. NLRC reversed the findings and ordered the
implementation of the CBA.
Issue: WON the employees who have retired have no personality to file an action since
there is no longer an employer-employee relationship.
Held: 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.

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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 (2000) G.R. 119268


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 respondents 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 washing fees. In a dated August 31, 1992, the labor arbiter
dismissed said complaint for lack of merit.
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Issue: WON the deduction for the washing of taxi units is illegal.
Held: 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 (2007) G.R.
167601
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 respondents 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
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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 NCMBs 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 Section 2, Article XI, of the CBA. Petitioner moved for reconsideration
but the panel denied the motion.
Issue: WON the respondent violated the non-diminution of benefits under Article 100 of
the Labor Code.
Held: 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. Petitioners 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., (2007) G.R. 149640
Facts:

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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 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.
Held: 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
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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.
San Miguel Corp vs Pontillas (2008) G.R. 155178
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 monthlypaid 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.
On 6 December 1993, Ricardo F. Elizagaque (Elizagaque), petitioners 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: WON respondents dismissal from employment is legal.
Held: 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 employees 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. Respondents 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 employees 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
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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. Respondents persistent refusal to obey petitioners
lawful order amounts to wilful disobedience under Article 282 of the Labor Code.

Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco
Metal NAFLU (2008) G.R. 170734
Facts:
Petitioner is a company engaged in the manufacture of metal products, whereas
respondent is the labor union of petitioners rank and file employees. Sometime in
December 2003, petitioner paid the 13 th month pay, bonus, and leave encashment of
three union members in amounts proportional to the service they actually rendered in a
year, which is less than a full twelve (12) months. Respondent protested the prorated
scheme, claiming that on several occasions petitioner did not prorate the payment of
the same 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: WON 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.
Held: 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 13 th month pay those
items that were expressly excluded by the law, we held that the act which was
favorable to the employees though not conforming to law had thus ripened into a

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practice and could not be withdrawn, reduced, diminished, discontinued or eliminated.


In Sevilla Trading Company v. Semana, we ruled that the employers act of including
non-basic benefits in the computation of the 13 th month pay was a voluntary act and
had ripened into a company practice which cannot be peremptorily withdrawn.
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.

Genesis Transport Service et al., vs UMM Genesis Transport (2010) G.R.


182114
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 corespondent union and add as grounds unfair labor practice and reimbursement of illegal
deductions on tollgate fees, and payment of service incentive leave pay.
Upon appeal, with respect to Taroys claim for refund, the Labor Arbiter ruled in his favor
for if, as contended by Genesis Transport, tollgate fees form part of overhead expense,
why were not expenses for fuel and maintenance also charged to overhead
expense. The Labor Arbiter thus concluded that it would appear that the tollgate fees
are deducted from the gross revenues and not from the salaries of drivers and
conductors, but certainly the deduction thereof diminishes the take home pay of the
employees.
Issue: Whether the tollgate fee deductions which resulted to an underpayment given to
Taroy is illegal?
Held: The deduction is considered illegal.
The amounts representing tollgate fees were deducted from gross revenues and not
directly from Taroys commissions, the labor tribunal and the appellate court correctly
held that the withholding of those amounts reduced the amount from which Taroys 9%
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commission would be computed. Such a computation not only marks a change in the
method of payment of wages, resulting in a diminution of Taroys wages in violation of
Article 113 vis--vis Article 100 of the Labor Code, as amended. It need not be
underlined that without Taroys written consent or authorization, the deduction is
considered illegal.
Besides, the invocation of the rule on company practice is generally used with respect
to the grant of additional benefits to employees, not on issues involving diminution of
benefits.

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Congson vs NLRC (1995) 243 SCRA 260


Facts:
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 nonpayment 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.
Issue: WON the means of payment of the wage is valid.
Held: The means of payment of wage is invalid.
The Labor Code expressly provides:
"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
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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
above cited provision of the Labor Code. The fact that said method of paying the
minimum wage was not only agreed upon by both parties in the employment
agreement but even expressly requested by private respondents, does not shield
petitioner. Article 102 of the Labor Code is clear. Wages shall be paid only by means of
legal tender. The only instance when an employer is permitted to pay wages 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.

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North Davao Mining vs NLRC (1996) 254 SCRA 721


Facts:
Respondent Wilfredo Guillema is one among several employees of North Davao who
were separated by reason of the companys 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 hours 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: WON 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.
Held: 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)

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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 2 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.

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San Juan de Dios Hospital vs NLRC (1997) 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 Labors 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 Arbiters decision.
Issue: Whether Policy Instructions No. 54 issued by then Labor Secretary (now Senator)
Franklin M. Drilon is valid or not.
Held: 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 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 latters 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.

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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.
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 Labors 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.

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Sime Darby Pilipinas Inc., vs NLRC (1998) 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.

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Issue: WON the act of management in revising the work schedule of its employees and
discarding their paid lunch break constitutive of unfair labor practice.
Held: 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 (1999) 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 fiveminute 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

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meal break; that he immediately left his residence upon being informed by Mr. Eusebio
about the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio
panicked and brought the patient to the hospital without waiting for him. Finding private
respondents explanation unacceptable, the management charged private respondent
with abandonment of post while on duty. 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.
Issue: WON being a full-time employee is obliged to stay in the company premises for
not less than eight (8) hours.
Held: Employees are not prohibited from going out of the premises as long as they
return to their posts on time.
Articles 83 and 85 of the Labor Code read: Normal hours of workThe 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
(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
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considered as compensable working time.

Thus, the eight-hour work period does not include the meal break. Nowhere in the law
may it be inferred that employees must take their meals within the company premises.
Employees are not prohibited from going out of the premises as long as they return to
their posts on time. Private respondents act of going home to take his dinner does not
constitute abandonment.

Linton Commercial Co., vs Hellera (2007) G.R. 163147


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

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

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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 (2008) G.R. 151309
Facts:
Tryco and the petitioners signed separate Memoranda of Agreement (MOA), providing
for a compressed workweek schedule to be implemented in the company effective May
20, 1996. 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, 8:00a.m. to 6:12p.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 overtime pay for work rendered
after 5p.m. until 6:12p.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 6:12p.m., such employee shall be entitled to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of Labor and
Employment of the implementation of a compressed workweek in the company. In
January 1997, BMT and Tryco negotiated for the renewal of their collective bargaining
agreement (CBA) but failed to arrive at a new agreement.
Issue: WON the MOA providing for compressed workweek is unenforceable as it is
contrary to law.
Held: The MOA is enforceable and binding against the petitioner.
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 shall be considered overtime work and shall be compensated in accordance
with the provisions of the Labor Code or applicable 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.

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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 (1992) 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: WON sales personnel are excluded in the payment of holiday pay.
Held: 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 criteria indicate that these sales personnel are given

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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."

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National Sugar Refinery Corp vs NLRC (1993) 220 SCRA 452


Facts:
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. Two years after the implementation of the JE Program,
specifically on June 20, 1990, the members of herein respondent union filed a
complainant with the executive labor arbiter for non-payment of overtime, rest day and
holiday pay allegedly in violation of Article 100 of the Labor Code.
Issue: WON the members of respondent union are entitled to overtime, rest day and
holiday pay.
Held: 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,
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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;
(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.

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

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, service incentive leave pay, commission, allowances, profit-sharing
and separation pay with the NLRC-NCR Arbitration Branch, Manila.
Issue: WON petitioner is entitled to separation pay.
Held: 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

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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.
Labor Congress of the Philippines vs NLRC (1998) G.R. 123938
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

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rights of employees to self-organization; 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: WON the petitioners are entitled to labor standard benefits considering they are
paid by piece rate worker.
Held: 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 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
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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 piece-work, 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 (1998) G.R. 112574


Facts:
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.
Issue: WON the fishing crew members are considered field personnel who have no
statutory right to service incentive leave pay.
Held: Fishing crew are still entitled to service incentive leave.
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 (2002) G.R. 146775


Facts:
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
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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 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: WON the employees are entitled with regular Muslim holiday pay.
Held: 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 Jadd (New Year), which falls on the first day of the first lunar month of
Muharram;
(b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on the
twelfth day of the third lunar month of Rabi-ul-Awwal,
(c) Lailatul Isr Wal Mi'rj (Nocturnal Journey and Ascension of the Prophet
Muhammad), which falls on the twenty-seventh day of the seventh lunar month
of Rajab:
(d) 'd-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) 'd-ul-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar
month of Dh'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

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on the basis of the criteria laid down by laws and certainly not on the basis of the
worker's faith or religion.

Tan vs Lagarama (2002) G.R. 151228


Facts:
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.
Issue: WON the respondent was illegally dismissed and thus entitled to payment of
benefits provided by law.
Held: The respondent was illegally dismissed and entitled to benefits.
The Implementing Rules of the Labor Code provide that no worker shall be dismissed
except for a just or authorized cause provided by law and after due process. This
provision has two aspects: (1) the legality of the act of dismissal, that is, dismissal
under the grounds provided for under Article 282 of the Labor Code and (2) the legality
in the manner of dismissal. The illegality of the act of dismissal constitutes discharge
without just cause, while illegality in the manner of dismissal is dismissal without due
process.
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out
of his sight as the latter tried to explain his side, petitioner made it plain that Lagrama
was dismissed. Urinating in a work place other than the one designated for the purpose
by the employer constitutes violation of reasonable regulations intended to promote a
healthy environment under Art. 282(1) of the Labor Code for purposes of terminating
employment, but the same must be shown by evidence. Here there is no evidence that
Lagrama did urinate in a place other than a rest room in the premises of his work.
Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the
Labor Arbiter found that the relationship between the employer and employee has been
so strained that the latter's reinstatement would no longer serve any purpose. The
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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.

Lambo vs NLRC (1999) 317 SCRA 420


Facts:
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3,
1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays
and holidays. As in the case of the other 100 employees of private respondents,
petitioners were paid on a piece-work basis, according to the style of suits they made.
Regardless of the number of pieces they finished in a day, they were each given a daily
pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal
dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday
and rest day, service incentive leave pay, separation pay, 13th month pay, and
attorneys fees. After hearing, Labor Arbiter found private respondents guilty of illegal
dismissal and accordingly ordered them to pay petitioners claims. On appeal, 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: WON the petitioners are entitled to the minimum benefits provided by law.
Held: The petitioners are entitled to the minimum benefits provided by law. There is no
dispute that petitioners were employees of private respondents although they were paid
not on the basis of time spent on the job but according to the quantity and the quality of
work produced by them. There are two categories of employees paid by results: (1)
those whose time and performance are supervised by the employer. (Here, there is an
element of control and supervision over the manner as to how the work is to be
performed. A piece-rate worker belongs to this category especially if he performs his
work in the company premises.); and (2) those whose time and performance are
unsupervised. (Here, the employers control is over the result of the work. Workers on
pakyao and takay basis belong to this group.) Both classes of workers are paid per unit
accomplished.

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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 companys premises from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. The mere fact that they were paid on a piece-rate basis
does not negate their status as regular employees of private respondents. The term
"wage" is broadly defined in Art. 97 of the Labor Code as remuneration or earnings,
capable of being expressed in terms of money whether fixed or ascertained on a time,
task, piece or commission basis. Payment by the piece is just a method of compensation
and does not define the essence of the relations. Nor does the fact that petitioners are
not covered by the SSS affect the employer-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 (2004) G.R. 155214
Facts:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La
Mallorca ceased from business operations, Latag transferred to R & E Transport, Inc. He
was receiving an average daily salary of five hundred pesos (P500.00) as a taxi driver.
Latag got sick in January 1995 and was forced to apply for partial disability with the SSS,
which was granted. When he recovered, he reported for work in September 1998 but
was no longer allowed to continue working on account of his old age. Latag thus asked
Felix Fabros, the administrative officer of [petitioners], for his retirement pay pursuant to
Republic Act 7641 but he was ignored.
On December 21, 1998, 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: WON Latag is entitled to retirement benefits considering she signed a waiver of
quitclaim.
Held: The respondent is entitled to retirement benefits despite of the waiver of
quitclaims.
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.
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Courts, however, are wary of schemes that frustrate workers' rights and benefits, and
look with disfavor upon quitclaims and waivers that bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport,
Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides:
Retirement. In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at least five (5) years in said
establishment, may retire and shall be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service, a fraction of at least six (6) months
being considered as one whole year. Unless the parties provide for broader inclusions,
the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of
the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves
The rules implementing the New Retirement Law similarly provide the above-mentioned
formula for computing the one-half month salary. Since Pedro was paid according to the
"boundary" system, he is not entitled to the 13th month 32 and the service incentive
pay; hence, his retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in
excess of the "boundary" or fee they pay to the owners or operators of their vehicles.
Thus, the basis for computing their benefits should be the average daily income.

Asian Transmission vs Court of Appeals (2004) 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.
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.
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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: WON the employees are entitled to the computation embodied in the bulletin
clarification.
Held: 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.
2.
3.
4.
5.
6.
7.
8.
9.
10.

New Year's Day


Maundy Thursday
Good Friday
Araw ng Kagitingan
Labor Day
Independence Day
National Heroes Day
Bonifacio Day
Christmas Day
Rizal Day

January 1
Movable Date
Movable Date
April 9 (Bataan and Corregidor Day)
May 1
June 12
Last Sunday of August
November 30
December 25
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 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

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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 (2005) G.R. 156364


Facts:
Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc., since
May 1995,
as driver-conductor with travel routes ManilaTuguegarao 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.

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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 twentyfour (24) hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the
amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the
damaged buses and that despite respondent's pleas for reconsideration, the same was
ignored by management. After a month, management sent him a letter of termination.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with
Money Claims for nonpayment of 13th month pay and service incentive leave pay
against Autobus.
Issue: WON respondent is entitled to service incentive leave.
Held: The respondent is entitled to service incentive leave.
The disposition of the issue revolves around the proper interpretation of Article 95 of the
Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and
Regulations of the Labor Code which provides: RIGHT TO SERVICE INCENTIVE LEAVE, (a)
Every employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall
apply to all employees except: (d)Field personnel and other employees whose
performance is unsupervised by the employer including those who are engaged on task
or contract basis, purely commission basis, or those who are paid in a fixed amount for
performing work irrespective of the time consumed in the performance thereof;
A careful examination of said provisions of law will result in the conclusion that the grant
of service incentive leave has been delimited by the Implementing Rules and
Regulations of the Labor Code to apply only to 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
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Labor Standards Case Digests

from the grant of service incentive leave, unless, they fall under the classification of
field personnel.
What must be ascertained in order to resolve the issue of propriety of the grant of
service incentive leave to respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, "field personnel" shall refer to nonagricultural 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 TechnicalClerical 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

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Labor Standards Case Digests

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.
San Miguel Corp., vs Del Rosario (2005) G.R. 168194
Facts:
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: WON the respondent was an employee and was illegally terminated. If so, is she
entitled to monetary benefits.
Held: Respondent was illegally dismissed and is thus entitled to monetary benefits.
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,
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Labor Standards Case Digests

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 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.

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Labor Standards Case Digests

Penaranda vs Baganga Plywood Corp (2006) G.R. 159577


Facts:
Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of
Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance
of its steam plant boiler. In May 2001, Pearanda filed a Complaint for illegal dismissal
with money claims against BPC and its general manager, Hudson Chua, before the
NLRC.
After the parties failed to settle amicably, the labor arbiter directed the parties to file
their position papers and submit supporting documents.
Pearanda alleges that he was employed by respondent Banganga on March 15, 1999
with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was
illegally terminated on December 19, 2000. he alleges that his services were terminated
without the benefit of due process and valid grounds in accordance with law.
Furthermore, he was not paid his overtime pay, premium pay for working during
holidays/rest days, night shift differentials and finally claimed for payment of damages
and attorney's fees having been forced to litigate the present complaint.
Issue: WON Pearanda is a regular, common employee entitled to monetary benefits
under Art. 82 of the Labor Code and is entitled to the payment of overtime pay and
other monetary benefits.
Held: 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:
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Labor Standards Case Digests


(1)
(2)
(3)

(4)

The primary duty consists of the performance of work directly related to


management policies of the employer;
Customarily and regularly exercise discretion and independent judgment;
(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
who do not devote more than 20 percent of their hours worked in a workweek
to activities which are not directly and closely related to the performance of
the work described in paragraphs (1), (2), and (3) above."

The petitioners work involves:


1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

To supply the required and continuous steam to all consuming units at


minimum cost.
To supervise, check and monitor manpower workmanship as well as operation
of boiler and accessories.
To evaluate performance of machinery and manpower.
To follow-up supply of waste and other materials for fuel.
To train new employees for effective and safety white working.
Recommend parts and suppliers purchases. acEHSI
To recommend personnel actions such as: promotion, or disciplinary action.
To check water from the boiler, feedwater and softener, regenerate softener if
beyond hardness limit.
Implement Chemical Dosing.
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.
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.

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House of Sara Lee vs Rey (2006) G.R. 149013


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 52-day rolling due date of each of its IBMs and IGSs
through the employment of Credit Administration Supervisors (CAS) for each branch.
The primary duty of the CAS is to strictly monitor each of these deadlines, to supervise
the credit and collection of payments and outstanding accounts due to the petitioner
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Labor Standards Case Digests

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 respondents sisterin-law, from the 52-day limit to an unauthorized term of 60 days. The respondent
made the instruction just before the computer data for the computation of the Service
Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported
this allegedly unauthorized act of respondent to her Branch Operations Manager, Mr.
Villagracia. Acting on the report, as the petitioner alleges, BOM Villagracia discreetly
verified the records and discovered that it was not only the 52-day credit term of IBM
Rey-Petilla that had been extended by the respondent, but there were several other
IBMs whose credit terms had been similarly extended beyond the periods allowed by
company policy. BOM Villagracia then summoned the respondent and required her to
explain the unauthorized credit extensions.
Issue: WON the respondent is entitled to 13th month pay.
Held: The award of 13th month pay must be deleted.
Respondent is not a rank-and-file employee and is, therefore, not entitled to thirteenthmonth pay. However, the NLRC and the CA are correct in refusing to award 14 th and 15th
month pay as well as the monthly salary increase of 10 percent per year for two years
based on her latest salary rate. The respondent must show that these benefits are due
to her as a matter of right. Mere allegations by the respondent do not suffice in the
absence of proof supporting the same. With respect to salary increases in particular,
the respondent must likewise show that she has a vested right to the same, such that
her salary increases can be made a component in the computation of backwages. What
is evident is that salary increases are a mere expectancy. They are by nature volatile
and dependent on numerous variables, including the companys fiscal situation, the
employees future performance on the job, or the employees continued stay in a
position. In short, absent any proof, there is no vested right to salary increases.

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Labor Standards Case Digests

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


G.R. 157775
Facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and 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 unworked Saturdays.
Issue: WON Leyte IV Electric Cooperative is liable for underpayment of holiday pay.
Held: Leyte IV Electric Cooperative is not liable for underpayment of holiday pay.
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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 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.

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San Miguel Corp., et al., vs Layoc, Jr., et al., (2007) G.R. 149640
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,
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without prior consultation with the private respondents, the time cards were ordered
confiscated and the latter were no longer 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.
Issue: Whether the circumstances in the present case constitute an exception to the
rule that supervisory employees are not entitled to overtime pay.
Held: The present case does not constitute an exception to the general rule.
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.
Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195
Facts:

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


the said incident. Thereafter, on March 9, 1997, private respondent was dismissed
from the service on the strength of an unsigned and undated notice of dismissal. An
alleged record or minutes of the said investigation was attached to the said
dismissal notice.
On March 24, 1997, the private respondent filed a complaint for illegal dismissal and
other monetary claims. The private respondent alleged that he was paid only
US$300.00 per month as monthly salary for five (5) months instead of US$410.00 as
stipulated in his employment contract. Thus, he claimed that he was underpaid in
the amount of US$110.00 per month for that same period of five (5) months. He
further asserted that his salaries were also deducted US$20.00 per month by the
petitioner for alleged union dues.
Issue: WON respondent is entitled to overtime pay which was incorporated in his award
for the unexpired portion of the contract despite the fact that he did not render
overtime work.
Held: The inclusion of his "guaranteed overtime" pay into his monthly salary as basis in
the computation of his salaries for the entire unexpired period of his contract has no
factual or legal basis and the same should have been disallowed.
Petitioner contends that there is no factual or legal basis for the inclusion of said
amount because, after respondent's repatriation, he could not have rendered any
overtime work. This time, petitioner's contention is well-taken.
The Court had occasion to rule on a similar issue in Stolt-Nielsen Marine Services
(Phils.), Inc. v. National Labor Relations Commission, where the NLRC was questioned for
awarding to an illegally dismissed overseas worker fixed overtime pay equivalent to the
unexpired portion of the latter's contract. In resolving the question, the Court,
citingCagampan v. National Labor Relations Commission, held that although an
overseas employment contract may guarantee the right to overtime pay, entitlement to
such benefit must first be established, otherwise the same cannot be allowed.
PNCC Skyway Traffic Management & Security Division Workers Organization vs
PNCC Skyway Corp., (2010) G.R. 171231
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.
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[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: WON the PNCC has the sole discretion to schedule the vacation leaves of its
employees.
Held: 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.
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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Pantranco North Express vs NLRC (1996) 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: WON the CBA stipulation on compulsory retirement after twenty-five years of
service is legal and enforceable.
Held: 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
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at an earlier age, when said employee, in presumably better physical and mental
condition, can enjoy them better and longer.
As a matter of fact, one of the advantages of early retirement is that the corresponding
retirement benefits, usually consisting of a substantial cash windfall, can early on be put
to productive and profitable uses by way of income-generating investments, thereby
affording a more significant measure of financial security and independence for the
retiree who, up till then, had to contend with life's vicissitudes within the parameters of
his fortnightly or weekly wages. Thus we are now seeing many CBAs with such early
retirement provisions. And the same cannot be considered a diminution of employment
benefits.
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.

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R&E Transport vs Latag (2004) G.R. 155214


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

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age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at least five (5) years in said
establishment, may retire and shall be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service, a fraction of at least six (6) months
being considered as one whole year. Unless the parties provide for broader inclusions,
the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of
the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves
The rules implementing the New Retirement Law similarly provide the above-mentioned
formula for computing the one-half month salary. Since Pedro was paid according to the
"boundary" system, he is not entitled to the 13th month 32 and the service incentive
pay; hence, his retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in
excess of the "boundary" or fee they pay to the owners or operators of their vehicles.
Thus, the basis for computing their benefits should be the average daily income. In this
case, the CA found that Pedro was earning an average of five hundred pesos (P500) per
day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of
service equals P105,000.
Gerlach vs Reuters Ltd., Phils., (2005) G.R. 148542
Facts:
Reuters Limited, Phils. (Reuters), a company engaged in news dissemination with offices
worldwide, hired Marilyn Odchimar Gerlach as its local correspondent. On October 1983,
respondent Reuters implemented a local Retirement Benefit Plan (Plan) for its Philippinehired employees. The Plan is funded by the company, but an employee-participant may
volunteer to contribute a percentage of his basic monthly salary to the fund. Petitioner
was automatically covered by the Plan by reason of her age and length of service.
However, she opted not to contribute to the fund. She worked in Reuters Philippines up
to December 23, 1983. On October 12, 1988, she was directed to return to Manila and
resume her post by December 15, 1988.
Petitioner received her retirement benefits under the Plan in the amount of P79,228.04,
which amount was determined by the trustee bank (Bank of the Philippine Island) in
accordance with the provisions of the Plan. The computation was based on her notional
salary. However, she questioned the amount she received as well as her entitlement to
a disturbance grant, contending that her retirement benefits must be computed on the
basis of her actual salary abroad, not on her notional salary.
Issue: WON petitioner is allowed to claim for additional retirement benefits.
Held: The petitioner is not entitled to the additional retirement benefits.
There are three kinds of retirement schemes. The first type is compulsory and
contributory in character. The second type is one set up by agreement between the
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employer and the employees in collective bargaining agreements or other agreements


between them. The third type is one that is voluntarily given by the employer, expressly
as in an announced company policy or impliedly as in a failure to contest the
employee's claim for retirement benefits. 28 It is this third type of retirement scheme
which covers respondent's Plan.
Article 287 of the Labor Code reads:
Article 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."

The first paragraph of the above provisions deals with the retirement age of an
employee established in (a) a collective bargaining agreement or (b) other applicable
employment contract. The second paragraph deals with the retirement benefits to be
received by a retiring employee which he may have earned under (a) an existing law,
(b) a collective bargaining or (c) other agreements.
Nonetheless, Section 14(a), Rule 1 of the Rules and Regulations Implementing Book VI
of the Labor Code, provides:
"Sec. 14. Retirement benefits. (a) An employee who is retired pursuant to a bona
fide retirement plan or in accordance with the applicable individual or collective
agreement or established employer policy shall be entitled to all the retirement
benefits provided therein . "

Thus, in the instant case, respondent based petitioner's retirement benefits on its Plan
and established policy, which is in accord with the above provision. Consequently,
petitioner's theory that the computation of her retirement benefits should be based on
her basic annual salary while stationed abroad is untenable.
The Court ruled that petitioner's retirement benefits must be based on her notional
Philippine salary. It is very clear that from the very start of her first assignment
overseas, respondent apprised her that the company's contribution to the Plan is based
on her notional Philippine salary.
In fact, under the Plan, the company's contribution to the fund is 10% of the basic
monthly salary of each participant. Respondent also informed petitioner of the amount
of her notional Philippine salary whenever she was transferred to her next overseas
assignment or when there were increases in her salary, both actual and notional.
Significantly, respondent was able to prove that it has been its practice worldwide that
the notional salary of an employee is its basis in computing its contribution to the
retirement plan for a local employee detailed abroad. It follows that the amount of

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retirement benefits of a retiring employee assigned abroad is based on his notional


salary.

Honda Phils., Inc., vs Samahan ng Malayang Manggagawa sa Honda (2005)


G.R. 145561
Facts:
The case stems from the collective bargaining agreement between Honda and the
respondent union that it granted the computation of 14 th 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
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memorandum of the new computation of the 13 th 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 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 companys implementation of
the pro-rated computation is invalid.
Issue: WON the pro-rated computation of the 13 th and 14th month pays and other
bonuses in question is valid and lawful.
Held: 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 (2007) G.R. 156934


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


petitioners 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: WON the respondents retirement plan imposing automatic retirement after 35
years of service contravenes the security of tenure clause in the 1987 Constitution and
the Labor Code.
Held: Retirement plans allowing employers to retire employees who are less than the
compulsory retirement age of 65 are not per se repugnant to the constitutional guaranty
of security of tenure.
Article 287 of the Labor Code provides: Retirement - Any employee may be retired upon
reaching the retirement age established in the collective bargaining agreement or other
applicable employment contract. By its express language, the Labor Code permits
employers and employees to fix the applicable retirement age at below 60 years.
The rules and regulations of the plan show that participation therein was not voluntary
at all. Rule III of the plan, on membership, stated:
SECTION 1 MEMBERSHIP, All full-time Filipino employees of the University will
automatically become members of the Plan, provided, however, that those who have
retired from the University, even if rehired, are no longer eligible for membership in
the Plan. A member who continues to serve the University cannot withdraw from the
Plan.
SECTION 2 EFFECTIVITY OF MEMBERSHIP, Membership in the Plan starts on the day
a person is hired on a full-time basis by the University.
SECTION 3 TERMINATION OF MEMBERSHIP, Termination of membership in the Plan
shall be upon the death of the member, resignation or termination of employees
contract by the University, or retirement from the University.

Meanwhile, Rule IV, on contributions, stated:


The Plan is contributory. The University shall set aside an amount equivalent to 3%
of the basic salaries of the faculty and staff. To this shall be added a 5% deduction
from the basic salaries of the faculty and staff.

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A member on leave with the University approval shall continue paying, based on
his pay while on leave, his leave without pay should pay his contributions to the
Plan. However, a member, who has been on leave without pay should pay his
contributions based on his salary plus the Universitys contributions while on
leave or the full amount within one month immediately after the date of his
reinstatement. Provided[,] further that if a member has no sufficient source of
income while on leave may pay within six months after his reinstatement.
It was through no voluntary act of her own that petitioner became a member of the
plan. In fact, the only way she could have ceased to be a member thereof was if she
stopped working for respondent altogether. Furthermore, in the rule on contributions,
the repeated use of the word shall ineluctably pointed to the conclusion that
employees had no choice but to contribute to the plan (even when they were on leave).
Retirement is the result of a bilateral act of the parties, a voluntary agreement between
the employer and the employee whereby the latter, after reaching a certain age agrees
to sever his or her employment with the former. The truth was that petitioner had no
choice but to participate in the plan, given that the only way she could refrain from
doing so was to resign or lose her job. It is axiomatic that employer and employee do
not stand on equal footing, a situation which often causes an employee to act out of
need instead of any genuine acquiescence to the employer. This was clearly just such
an instance.
An employer is free to impose a retirement age less than 65 for as long as it has the
employees consent. Stated conversely, employees are free to accept the employers
offer to lower the retirement age if they feel they can get a better deal with the
retirement plan presented by the employer. Thus, having terminated petitioner solely on
the basis of a provision of a retirement plan which was not freely assented to by her,
respondent was guilty of illegal dismissal.

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Intercontinental Broadcasting Corp., vs Amarilla (2006) G.R. 162775


Facts:
On various dates, petitioner employed the following persons at its Cebu station: Candido
C. Quiones, 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).
Issue: WON the retirement benefits of respondents are part of their gross income.
Held: 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 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.

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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
1 year-below 5 yrs.
5 years-9 years
10 years-14 years
15 years-19 years
20 years or more

RETIREMENT BENEFITS=
15 days for every year of
30 days for every year of
50 days for every year of
65 days for every year of
80 days for every year of

service
service
service
service
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
5-9 years
10-14 years
15-19 years
20 years or more

RETIREMENT BENEFITS
15 days for every year of service
30 days for every year of service
50 days for every year of service
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.
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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.

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Labor Standards Case Digests

Reyes vs NLRC (2007) G.R. 160233


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

13th month pay. The salesmen's commission are not overtime payments, nor profitsharing 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 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.

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Labor Standards Case Digests

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.

Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R.


156225
Facts:
The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint
against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of
various monetary claims due its members. The Labor Arbiter (LA) handling the
consolidated cases, denied and dismissed the respective complaints.
Issue: WON the pay of the faculty members for teaching overloads should be included
as basis in the computation of their 13th month pay?
Held: Teaching overload may not be considered part of basic salary.
Under the Rules and Regulations Implementing PD 851, the following compensations are
deemed not part of the basic salary: a) cost-of-living allowances granted pursuant to PD
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Labor Standards Case Digests

525 and Letter of Instruction No. 174; b) profit sharing payments; c) all allowances and
monetary benefits which are not considered or integrated as part of the regular basic
salary of the employee at the time of the promulgation of the Decree on Dec 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued
by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations
are excluded as part of the basic salary and in the computation of the 13 th-month pay.
The all-embracing phrase "earnings and other remunerations" which are deemed not
part of the basic salary includes within its meaning payments for sick, vacation, or
maternity leaves, premium for works performed on rest days and special holidays, pay
for regular holidays and night differentials. As such they are deemed not part of the
basic salary and shall not be considered in the computation of the 13 th-month pay.
As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional
compensation other than and added to the regular wage or basic salary, for reason of
which such is categorically excluded from the definition of basic salary under the
Supplementary Rules and Regulations Implementing PD 851.
In the same manner that payment for overtime work and work performed during special
holidays is considered as additional compensation apart and distinct from an
employee's regular wage or basic salary, an overload pay, owing to its very nature and
definition, may not be considered as part of a teacher's regular or basic salary, because
it is being paid for additional work performed in excess of the regular teaching load.

Philippine Airlines Inc. vs Phil. Airlines Employees Association (2008) G.R.


142399
Facts:
In 1987, petitioner PAL and respondent and PALEA entered into a CBA covering the
period of 1986-1989. Part of said agreement required PAL to pay its rank-and-file
employees 13th month pay and Christmas bonus. The 13 th month pay, equivalent to one
month current basic pay, shall be paid in advance in May consistent with the existing
practice while the Christmas bonus, equivalent to one month current basic pay as of
November 30, shall be paid in December.

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Labor Standards Case Digests

In 1988, prior to the payment of the 13 th month pay, PAL released a guideline stating
that the only employees eligible for payment of 13 th month pay are those ground
employees in the general payroll who are regular as of April 30, 1988. Others not falling
in said category shall receive their 13th month pay on or before December 24, 1988.
Respondent PALEA assailed the implementation of the said guideline on the ground that
all employees of PAL, regular or non-regular, must be paid their 13 th month pay. In
response thereto, PAL informed PALEA that rank-and-file employees who were
regularized after 30th of April 1988 were not entitled to the 13 th month pay as they were
already given their Christmas bonuses on December 9, 1988 per the Implementing
Rules of PD 851.
Issue: Whether the 13th month pay or mid-year bonus can be equated to the Christmas
bonus.
Held: The 13th month pay or mid-year bonus can be equated to the Christmas bonus.
In the case under consideration, the provision for the payment of the Christmas bonus,
apart from the 13th month pay, was incorporated into the 1986-1989 CBA between
respondent PALEA and petitioner PAL without any condition. The Christmas bonus,
payable in December of every year, is distinguished from the 13 thmonth pay, due yearly
in May, for which reason it was denominated as the mid-year bonus. Such being the
case, the only logical inference that could be derived therefrom is that petitioner PAL
intended to give the members of the bargaining unit, represented by respondent PALEA,
a Christmas bonus over and above its legally mandated obligation to grant the
13th month pay.
In United CMC Textile Workers Union v. The Labor Arbiter, one of the issues passed upon
by the Court was whether or not an employer who was already paying Christmas bonus
pursuant to a CBA, was still bound to pay the 13 th month pay pursuant to Presidential
Decree No. 851 which provides that A bonus under the CBA is an obligation created by
the contract between the management and workers while the 13 th month pay is
mandated by the law.Finding that the intention of the parties to the CBA was that the
Christmas bonus was meant to be on top of the 13th month pay, the Court ordered the
employer to pay the employees both.
It must be stressed that in the 1986-1989 CBA, petitioner PAL agreed to pay its
employees 1) the 13th month pay or the mid-year bonus, and 2) the Christmas
bonus. The 13th month pay, guaranteed by Presidential Decree No. 851, is explicitly
covered or provided for as the mid-year bonus in the CBA, while the Christmas bonus is
evidently and distinctly a separate benefit. Petitioner PAL may not be allowed to brush
off said distinction, and unilaterally and arbitrarily declare that for non-regular
employees, their Christmas bonus is the same as or equivalent to the 13 th month pay. As
it had willfully and intentionally agreed to under the terms of the CBA, petitioner PAL
must pay its regular and non-regular employees who are members of the bargaining
unit represented by respondent PALEA their 13 th month pay or mid-year bonus
separately from and in addition to their Christmas bonus.

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Labor Standards Case Digests

Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco
Metal NAFLU (2008) G.R. 170734
Facts:
Petitioner is a company engaged in the manufacture of metal products, whereas
respondent is the labor union of petitioners rank and file employees. Sometime in
December 2003, petitioner paid the 13 th month pay, bonus, and leave encashment of
three union members in amounts proportional to the service they actually rendered in a
year, which is less than a full twelve (12) months. Respondent protested the prorated
scheme, claiming that on several occasions petitioner did not prorate the payment of
the same 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: WON 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.
Held: 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 13 th month pay those
items that were expressly excluded by the law, we held that the act which was
favorable to the employees though not conforming to law had thus ripened into a
practice and could not be withdrawn, reduced, diminished, discontinued or eliminated.
In Sevilla Trading Company v. Semana, we ruled that the employers act of including
non-basic benefits in the computation of the 13 th month pay was a voluntary act and
had ripened into a company practice which cannot be peremptorily withdrawn.
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

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Labor Standards Case Digests

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.

Universal Sugar Milling Corp., vs Caballeda (2009) G.R. 156644


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: RA 7641 can be given retroactive effect; whether or not Agripino Caballeda and
Alejandro Cadalin voluntarily retired from the service.
Held:
The issue of retroactivity has long been settled in the case of Enriquez Security
Services, Inc. vs. Cabotaje.
RA 7641 is undoubtedly a social legislation. The law has been enacted as a
labor protection measure and as a curative statute that absent a retirement
plan devised by, an agreement with, or a voluntary grant from, an employer
can respond, in part at least, to the financial 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

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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.
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
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Labor Standards Case Digests


the free will of the employee who is asked to sign a release and quitclaim. The
employee is confronted with the same dilemma of whether signing a release and
quitclaim and accept what the company offers them, or refusing to sign and walk out
without receiving anything, may do succumb to the same pressure, being very well
aware that it is going to take quite a while before he can recover whatever he is
entitled to, because it is only after a protracted legal battle starting from the labor
arbiter level, all the way to this Court, can he receive anything at all. The Court
understands that such a risk of not receiving anything whatsoever, coupled with the
probability of not immediately getting any gainful employment or means of livelihood
in the meantime, constitutes enough pressure upon anyone who is asked to sign a
release and quitclaim in exchange of some amount of money which may be way
below what he may be entitled to based on company practice and policy or by law.

Absent any convincing proof of voluntariness in the submission of the documentary


requirements and the execution of the quitclaim, we cannot simply assume that
respondents were not subjected to the very same pressure. Respondents vigorously
pursued this case all the way up to the Supreme Court. Without doubt, this is a
manifestation that respondents had no intention of relinquishing their employment,
wholly incompatible to petitioners' assertion that respondents voluntarily retired.
Respondents did not voluntarily retire but were forced to retire, tantamount to illegal
dismissal.

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Labor Standards Case Digests

T/Sgt. Larkins vs NLRC (1995) G.R. 92432


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Labor Standards Case Digests

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: WON the questioned resolutions are null and void.
Held: 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
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Arbiter. She may have raised 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.

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UERM Memorial Medical Center vs NLRC (1997) G.R. 1104419


Facts:
Consequently, a complaint was filed by the private respondents, represented by the
Federation of Free Workers (FFW), claiming salary differentials under Republic Act Nos.
6640 and 6727, correction of the wage distortion and the payment of salaries for
Saturdays and Sundays under Policy Instruction No. 54.
Labor Arbiter Nieves de Castro sustained the private respondents except for their claim
of wage distortion. Within the reglementary period for appeal, the petitioners filed their
Notice and Memorandum of Appeal with a Real Estate Bond consisting of land and
various improvements therein worth P102,345,650.
The private respondents moved to dismiss the appeal on the ground that Article 223 of
the Labor Code, as amended, requires the posting of a cash or surety bond. The NLRC
directed petitioners to post a cash or surety bond of P17,082,448.56 with a warning that
failure to do so would cause the dismissal of the appeal.
The petitioners filed a Motion for Reconsideration alleging it is not in a viable financial
condition to post a cash bond nor to pay the annual premium of P700,000.00 for a
surety bond. On 6 October 1992, the NLRC dismissed petitioners' appeal. Petitioners'
Motion for Reconsideration was also denied by the NLRC in a resolution dated 7 June
1993.
Issue: WON in perfecting an appeal to the National Labor Relations Commission (NLRC)
a property bond is excluded by the two forms of appeal bond cash or surety as
enumerated in Article 223 of the Labor Code.
Held: Yes. The applicable law is Article 223 of the Labor Code, as amended by Republic
Act No. 6715, which provides:
"In case of a judgment involving a monetary award, an appeal by the employer may
be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from."

We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC
we ruled:
"x x x that while Article 223 of the Labor Code, as amended by Republic Act No. 6715,
requiring a cash or surety bond in the amount equivalent to the monetary award in
the judgment appealed from for the appeal to be perfected, may be considered a
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jurisdictional requirement, nevertheless, adhering to the principle that substantial
justice is better served by allowing the appeal on the merits threshed out by the
NLRC, the Court finds and so holds that the foregoing requirement of the law should
be given a liberal interpretation."

Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations
Commission we held: "The intention of the lawmakers to make the bond an
indispensable requisite for the perfection of an appeal by the employer is underscored
by the provision that an appeal by the employer may be perfected "only upon the
posting of a cash or surety bond." The word "only" makes it perfectly clear, that the
lawmakers intended the posting of a cash or surety bond by the employer to be the
exclusive means by which an employer's appeal may be perfected. The requirement is
intended to discourage employers from using an appeal to delay, or even evade, their
obligation to satisfy their employees' just and lawful claims.
Considering, however, that the current policy is not to strictly follow technical rules but
rather to take into account the spirit and intention of the Labor Code, it would be
prudent for us to look into the merits of the case, especially since petitioner disputes
the allegation that private respondent was illegally dismissed."
We reiterate this policy which stresses the importance of deciding cases on the basis of
their substantive merit and not on strict technical rules. In the case at bar, the judgment
involved is more than P17 million and its precipitate execution can adversely affect the
existence of petitioner medical center. Likewise, the issues involved are not insignificant
and they deserve a full discourse by our quasi-judicial and judicial authorities. We are
also confident that the real property bond posted by the petitioners sufficiently protects
the interests of private respondents should they finally prevail. It is not disputed that
the real property offered by petitioners is worth P102,345,650. The judgment in favor of
private respondent is only a little more than P17 million.

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Philtranco Services vs NLRC (1998) G.R. 124100


Facts:
Private respondent Roberto Nieva filed a complaint for illegal dismissal and 13th month
pay with the NLRCs National Capital Region Arbitration Branch in Manila. The case was
subsequently assigned to Labor Arbiter Cornelio L. Linsangan. On August 28, 1992,
petitioner and employer Philtranco filed a position paper with motion to dismiss, stating,
among other things, that the complaint should have been lodged with the NLRCs
Regional Arbitration Branch in Legaspi City, not only because Nieva was a resident
thereof, but also because the latter was hired, assigned, and based in Legaspi City.
The motion to dismiss was denied by the labor arbiter, and so with the subsequent
motions filed having the same argument. Thereafter, Philtranco presented its evidence
to prove that Nieva had abandoned his work, having been absent without leave from
October 19 to November 20, 1989.
Issue: WON the NLRC committed grave abuse of discretion amounting to lack of
jurisdiction when it denied the motion of Philtranco to dismiss complaint based on
improper venue.
Held: The petition lacks merit. As regards the first issue, this Court has previously
declared that the question of venue essentially pertains to the trial and relates more to
the convenience of the parties rather than upon the substance and merits of the case.
Provisions on venue are intended to assure convenience for the plaintiff and his
witnesses and to promote the ends of justice. In fact, Section 1(a), Rule IV of the New
Rules of Procedure of the NLRC, cited by Philtranco in support of its contention that
venue of the illegal dismissal case filed by Nieva is improperly laid, speaks of the
complainant/petitioners workplace, evidently showing that the rule is intended for the
exclusive benefit of the worker. This being the case, the worker may waive said benefit.
Furthermore, the aforesaid Section has been declared by this Court to be merely
permissive. In Dayag vs. NLRC, this Court held that: This provision is obviously
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permissive, for the said section uses the word may, allowing a different venue when
the interests of substantial justice demand a different one. In any case, as stated earlier,
the Constitutional protection accorded to labor is a paramount and compelling factor,
provided the venue chosen is not altogether oppressive to the employer. Moreover,
Nieva, as a driver of Philtranco, was assigned to the Legaspi City-Pasay City route.
Sulpicio Lines, Inc. vs. NLRC is exactly in point. In said case, we held that:
Section 1, Rule IV of the 1990 NLRC Rules additionally provides that, for purposes of
venue, workplace shall be understood as the place or locality where the employee is
regularly assigned when the cause of action arose. Since the private respondents
regular place of assignment is the vessel MV Cotabato Princess which plies the
Manila-Estancia-Iloilo-Zamboanga-Cotabato route, we are of the opinion that Labor
Arbiter Arthur L. Amansec was correct in concluding that Manila could be considered
part of the complainants territorial workplace.

From the foregoing, it is obvious that the filing of the complaint with the National Capital
Region Arbitration Branch was proper, Manila being considered as part of Nievas
workplace by reason of his plying the Legaspi City-Pasay City route.

St. Martin Funeral Homes vs NLRC (1998) G.R. 130866


Facts:
Private respondent alleges that he started working as Operations Manager of petitioner
St. Martin Funeral Home on February 6, 1995. However, there was no contract of
employment executed between him and petitioner nor was his name included in the
semi-monthly payroll. On January 22, 1996, he was dismissed from his employment for
allegedly misappropriating P38,000.00. Petitioner on the other hand claims that private
respondent was not its employee but only the uncle of Amelita Malabed, the owner of
petitioner St. Martins Funeral Home and in January 1996, the mother of Amelita passed
away, so the latter took over the management of the business.
Amelita made some changes in the business operation and private respondent and his
wife were no longer allowed to participate in the management thereof. As a
consequence, the latter filed a complaint charging that petitioner had illegally
terminated his employment. The labor arbiter rendered a decision in favor of petitioner
declaring that no employer-employee relationship existed between the parties and
therefore his office had no jurisdiction over the case.
Issue: WON the decision of the NLRC are appealable to the Court of Appeals.
Held: NLRC decisions are appealable to the Court of Appeals.
In view of the increasing number of labor disputes that find their way to the Supreme
Court, the legislative changes introduced over the years into the provisions of P.D. 442
(Labor Code of the Philippines) and B.P. 129 (Judiciary Reorganization Act of 1980) and

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the present state of the law where there is no provision for appeals from the decision of
the NLRC, the Court saw the need for reassessment of this procedural aspect.
The Court noted that there may have been an oversight in the course of the
deliberations on R.A. 7902, amending B.P. 129, or an imprecision in the terminology
used therein as from the records, Congress had intended to provide for judicial review of
the adjudication of the NLRC in labor cases by the Supreme Court, but there was an
inaccuracy in the term used for the intended mode of review.
The Court is, therefore, of the considered opinion that ever since appeals from the NLRC
to the SC were eliminated, the legislative intendment was that the special civil action
for certiorari was and still is the proper vehicle for judicial review of decisions of the
NLRC. The use of the word appeal in relation thereto and in the instances we have
noted could have been a lapsus plumae because appeals by certiorari and the original
action for certiorari are both modes of judicial review addressed to the appellate courts.
The important distinction between them, however, and with which the Court is
particularly concerned here is that the special civil action for certiorari is within the
concurrent original jurisdiction of this Court and the Court of Appeals; whereas to
indulge in the assumption that appeals by certiorari to the SC are allowed would not
subserve, but would subvert, the intention of the Congress as expressed in the
sponsorship speech on Senate Bill No. 1495.
Therefore, all references in the amended Section 9 of B.P No. 129 to supposed appeals
from the NLRC to the Supreme Court are interpreted and hereby declared to mean and
refer to petitions for certiorari under Rule 65. Consequently, all such petitions should
henceforth be initially filed in the Court of Appeals in strict observance of the doctrine
on the hierarchy of courts as the appropriate forum for the relief desired.
Ludo & Luym Corp., vs Saornido (2003) G.R. 140690
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
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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 attorneys 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: WON a Voluntary Arbitrator can award benefits not claimed in the submission
agreement.
Held: 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

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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 departments
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.

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Hanjin Engineering and Construction Co. Ltd. vs Court of Appeals (2006) G.R.
165910
Facts:
In April 1998, 712 employees filed complaints for illegal dismissal and for payment of
benefits against Hanjin and Nam Hyun Kim, the officer-in-charge of the project (herein
petitioners), before the National Labor Relations Commission (NLRC). The complainants
averred that they were regular employees of Hanjin and that they were separated from
employment without any lawful or just cause.
On May 12, 1998, the Labor Arbiter rendered judgment in favor of the 428
complainants, granting separation pay and attorneys fees to each of them. According
to the Labor Arbiter, the complainants were regular employees of petitioner Hanjin, and
their claims for underpayment, holiday pay, premium pay for holiday and rest day, 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 Arbiters ruling on January 28, 2000. The NLRC dismissed the complaints of 34
complainants and awarded monetary benefits to the others.
Petitioners filed a Motion for the Reconsideration of the decision (with a motion to
conduct clarificatory hearings). Petitioners appended to their motion machine copies of
some of the complainants employment contracts, as well as resignation letters of
others who were given monetary awards in the decision, it appearing that their names
appeared twice in the list. Petitioners also submitted to the NLRC folders consisting
mostly of payrolls.
On July 20, 2001, the NLRC issued a Resolution partially granting petitioners
motion.Unsatisfied, petitioners filed a Petition for Certiorari under Rule 65 of the Revised
Rules of Court in the CA.
On March 18, 2004, the CA dismissed the petition and affirmed the NLRCs ruling that
the dismissed employees (respondents) were regular employees. The CA stressed that
petitioners failed to refute the claim of the respondents that they were regular
employees. Petitioners moved to reconsider the decision, which the CA denied.
Petitioner then filed in the SC a petition for Certiorari under Rule 65 of the Revised Rules
of Court, as amended, with prayer for temporary restraining order/preliminary
injunction, seeking the annulment of the Decision of the Court of Appeals (CA) in CAG.R. SP No. 67601 as well as the Resolution denying the motion for reconsideration
thereof.
Issue: WON petitioners appeal under Rule 65 of the Revised Rules of Court is proper.
Held: Petitioners recourse to this Court via Rule 65 of the Revised Rules of Court was
inappropriate.

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Section 1, Article VIII, of the Constitution provides that judicial power shall be vested in
one Supreme Court and in such other courts as may be established by law. Judicial
power includes the duty of the courts of justice to determine whether or not there has
been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
bench or instrumentality of the government. The Court has original jurisdiction over
petitions for certiorari, prohibitions and mandamus, and may review on appeal or
certiorari as the law on the Rules of Court may provide final judgment and orders of
lower courts, and cases in which only questions of law is involved. However, if a petition
for certiorari involves the acts or omissions of a quasi-judicial agency and unless
otherwise provided by law or the Rules of Court, the petition for certiorari shall be final
and is cognizable only by the Court of Appeals. One such quasi-judicial agency is the
NLRC. Inasmuch as the appellate court has exclusive appellate jurisdiction over quasijudicial agencies under Rule 43, petitions for review on certiorari should be filed only
with the CA, unless otherwise provided by law or the Rules. Moreover, under Rule 45, a
party appealing from judgments or final orders or resolutions of the CA, the
Sandiganbayan, the Regional Trial Court or any other court, unless authorized by law,
may file with the Supreme Court a verified petition for review on certiorari, raising only
questions of law which must be distinctly set forth.
Thus, under the Constitution and the Revised Rules of Court, judicial review of the
decisions or final orders of the NLRC should be filed with the CA under Section 5 of Rule
65, on the ground that the NLRC has committed grave abuse of discretion amounting to
excess or lack of jurisdiction. The remedy of the aggrieved party from the CA decision,
in turn, shall be by petition for review on certiorari with this Court under Rule 45.
The aggrieved party is proscribed from assailing a decision or final order of the CA via
Rule 65 because such recourse is proper only if the party has no plain, speedy and
adequate remedy in the course of law. In this case, petitioners have an adequate
remedy, namely, a petition for review on certiorari under Rule 45 of the Rules of Court.
It must be stressed that the remedies of appeal under Rule 45 and an original action for
certiorari under Rule 65 are mutually exclusive.
The general rule is that a cert writ will not issue where the remedy of appeal is available
to the aggrieved party. The remedies of appeal in the ordinary course of law and that of
certiorari under Rule 65 of the Revised Rules of Court are mutually exclusive and not
alternative or cumulative. Hence, the special civil action for certiorari under Rule 65 is
not and cannot be a substitute for an appeal, where the latter remedy is available.
The proper recourse of the aggrieved party from a decision of the CA is a petition for
review on certiorari under Rule 45 of the Revised Rules of Court. On the other hand, if
the error subject of the recourse is one of jurisdiction, or the act complained of was
perpetrated by a quasi-judicial officer or agency with grave abuse of discretion
amounting to lack or excess of jurisdiction, the proper remedy available to the
aggrieved party is a petition for certiorari under Rule 65 of the said Rules.
Anent the first issue, in order to determine whether the recourse of petitioners is proper
or not, it is necessary to draw a line between an error of judgment and an error of
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jurisdiction. An error of judgment is one which the court may commit in the exercise of
its jurisdiction, and which error is reviewable only by an appeal. On the other hand, an
error of jurisdiction is one where the act complained of was issued by the court, officer
or a quasi-judicial body without or in excess of jurisdiction, or with grave abuse of
discretion which is tantamount to lack or in excess of jurisdiction. This error is
correctible only by the extraordinary writ of certiorari.
The supervisory jurisdiction of the court to issue a cert writ cannot be exercised in order
to review the judgment of the lower court as to its intrinsic correctness, either upon the
law or the facts of the case.
The general rule is that questions or findings of facts in the lower court, board or
tribunal, and the probative weight and sufficiency of the evidence upon which the said
findings were based are not reviewable by certiorari under Rule 65 of the Revised Rules
of Court. However, the sufficiency of the evidence may be inquired into in order to
determine whether jurisdictional facts were or were not proved or whether the lower
court had exceeded its jurisdiction. This exception arises out of the most important
office and function of the writ - the keeping of the lower court and tribunal within their
jurisdiction. If the decision of the lower court as to the sufficiency of the evidence to
establish jurisdictional facts were not reviewable, certiorari would be of no avail as a
remedy against an assumption of jurisdiction. For the purpose of enabling the reviewing
court to determine whether jurisdictional facts were established, it may delve into and
review the evidence on which such facts were based.
Concededly, there were occasions when this Court treated a petition for certiorari under
Rule 65 of the Revised Rules of Court as one filed under Rule 45, provided the petition is
filed within the prescribed period, and that there are special circumstances alleged
therein. The circumstances prevailing in the instant case do not justify a deviation from
the general rule. For one thing, the petition was filed way beyond the reglementary
period allowed under Rule 45 without any justifiable reason therefor; for another,
petitioners did not proffer any reasonable explanation which would warrant a deviation
from the general rule.
As gleaned from the records, petitioners received a copy of the assailed CA decision on
March 24, 2004 and filed its motion for reconsideration on April 6, 2004. Petitioners
received a copy of the Order dated October 11, 2004 denying their Motion for
Reconsideration on October 20, 2004. Instead of filing a petition under Rule 45, they
filed on November 23, 2004 the instant Petition for Certiorari under Rule 65.
Petitioners had until November 4, 2004 within which to file a petition for review on
certiorari on pure questions of law. However, as already stated, petitioners filed their
petition in this Court only on November 23, 2004; indubitably, the decision of the CA
had by then already become final and executory, beyond the purview of this Court to
act upon.
Since the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged
errors committed by it in the exercise of its jurisdiction would be errors of judgment

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which are reviewable by timely appeal and not by a special civil action of certiorari. If
the aggrieved party fails to do so within the reglementary period, and the decision
accordingly becomes final and executory, he cannot avail himself of the writ of
certiorari, his predicament being the effect of his deliberate inaction.
The appeal from a final disposition of the Court of Appeals is a petition for review under
Rule 45 and not a special civil action under Rule 65 of the Rules of Court, now Rule 45
and Rule 65, respectively, of the 1997 Rules of Civil Procedure. Rule 45 is clear that the
decisions, final orders or resolutions of the Court of Appeals in any case, i.e., regardless
of the nature of the action or proceeding involved, may be appealed to this Court by
filing a petition for review, which would be but a continuation of the appellate process
over the original case. Under Rule 45, the reglementary period to appeal is fifteen (15)
days from notice of judgment or denial of motion for reconsideration.
For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner must
show that he has no plain, speedy and adequate remedy in the ordinary course of law
against its perceived grievance. A remedy is considered "plain, speedy and adequate" if
it will promptly relieve the petitioner from the injurious effects of the judgment and the
acts of the lower court or agency. In this case, appeal was not only available but also a
speedy and adequate remedy.
Clearly, petitioners interposed the present special civil action of certiorari under Rule 65
as an alternative to their petition not because it is the speedy and adequate remedy but
to make up for the loss of their right of an ordinary appeal. It is elementary that the
special civil action of certiorari is not and cannot be a substitute for an appeal, where
the latter remedy is available, as it was in this case. A special civil action under Rule 65
of the Rules of Court cannot cure a partys failure to timely file a petition for review on
certiorari under Rule 45 of the Revised Rules of Court. Rule 65 is an independent action
that cannot be availed of as a substitute for the lost remedy of an ordinary appeal,
including that under Rule 45, especially if such loss or lapse was occasioned by a partys
neglect or error in the choice of remedies. There are exceptions to this rule: (a) when
public welfare and the advancement of public policy dictates; (b) when the broader
interest of justice so requires; (c) when the writs issued are null and void; or (d) when
the questioned order amounts to an oppressive exercise of judicial authority. None of
these recognized exceptions, however, is present in the case at bar. Petitioners failed to
show circumstances that would justify a deviation from the general rule as to make
available a petition for certiorari in lieu of taking an appeal.
Whether or not respondents were project employees or regular employees is a question
of fact. To arrive at a conclusion, the Court will have to delve into and weigh and
calibrate the documentary and testimonial evidence of the parties. However, the Court
is proscribed from re-examining the evidence on record and weighing the same in a
petition for certiorari under Rule 65 of the Revised Rules of Court. It must be stressed
that the only issue before the Court in a petition for certiorari under Rule 65 is whether
the CA committed grave abuse of discretion amounting to excess or lack of jurisdiction
in its decision. In this case, the CA aptly stated, thus:

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What is before us is a petition for certiorari under Rule 65 of the Rules of Court which
will lie only in cases where a grave abuse of discretion or an act without or in excess of
jurisdiction is clearly shown to have been committed by the respondent Commission,
and the Courts jurisdiction to review decisions or resolutions of the respondent NLRC
does not include a correction of its evaluation of the evidence. Moreover, it is a
fundamental rule that the factual findings of quasi-judicial agencies like the respondent
NLRC, if supported by substantial evidence, are generally accorded not only great
respect but even finality, and are binding upon this Court, unless the petitioner is able
to clearly demonstrate that respondent Commission had arbitrarily disregarded
evidence before it or had misapprehended evidence to such an extent as to compel a
contrary conclusion if such evidence had been properly appreciated, or if the findings of
the Labor Arbiter and the NLRC are contrary to each other.

Phil. Journalistic Inc., vs NLRC (2006) G.R. 166421


Facts:
In NLRCs Resolution dated May 31, 2001, petitioner Philippine Journalists, Inc. (PJI) was
adjudged liable in the total amount of P6,447,008.57 for illegally dismissing 31
complainants-employees and that there was no basis for the implementation of
petitioner's retrenchment program. Thereafter, the parties executed a Compromise
Agreement dated July 9, 2001, where PJI undertook to reinstate the 31 complainantemployees 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-03087-00 was deemed closed and terminated.

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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-07251-02. In its Resolution dated July 31, 2003, the NLRC ruled that the complainants were
not illegally dismissed. The May 31, 2001 Resolution declaring the retrenchment
program illegal did not attain finality as "it had been academically mooted by the
compromise agreement entered into between both parties on July 9, 2001."
The Union assailed the ruling of the NLRC before the CA via petition for certiorari under
Rule 65. In its Decision dated August 17, 2004, the appellate court held that the NLRC
gravely abused its discretion in ruling for PJI. The compromise agreement referred only
to the award given by the NLRC to the complainants in the said case, that is, the
obligation of the employer to the complainants.
Issue: WON the petitioners petition for certiorari under Rule 65 of the Revised Rules of
Civil Procedure is a proper remedy in this case.
Held: At the outset, we note that this case was brought before us via petition for
certiorari under Rule 65 of the Revised Rules of Civil Procedure. The proper remedy,
however, was to file a petition under Rule 45. It must be stressed that certiorari under
Rule 65 is "a remedy narrow in scope and inflexible in character. It is not a general
utility tool in the legal workshop." Moreover, the special civil action for certiorari will lie
only when a court has acted without or in excess of jurisdiction or with grave abuse of
discretion.
Be that as it may, a petition for certiorari may be treated as a petition for review under
Rule 45. Such move is in accordance with the liberal spirit pervading the Rules of Court
and in the interest of substantial justice. As the instant petition was filed within the
prescribed fifteen-day period, and in view of the substantial issues raised, the Court
resolves to give due course to the petition and treat the same as a petition for review on
certiorari.

Balagtas Multi-Purpose Coop vs Court of Appeals (2006) G.R. 159268


Facts:
Petitioner Josefina G. Hipolito-Herrero 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 against "Balagtas Multi-Purpose Cooperative, Inc. She
pray(ed) that she be reinstated and paid backwages as well as moral damages.
The case was referred to a Labor Arbiter. When the parties failed to settle their
differences, they were required to submit their respective position papers. Trial ensued.
On March 23, 1998, the Labor Arbiter rendered his decision favoring Josefina and
ordering petitioner to pay backwages and other money judgment.

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Aggrieved, Balagtas appealed the decision to the National Labor Relations Commission
(NLRC) but failed to post either a cash or surety bond as required by Article 223 of the
Labor Code. Instead, petitioners filed a manifestation and motion, stating, among
others, 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.
On July 20, 1998, the NLRC rendered the assailed order denying petitioners prayer and
on September 28, 1998, the LRC struck down petitioners' Motion for Reconsideration.
Petitioners then filed a petition for certiorari with the CA, alleging that the NLRC acted
with grave abuse of discretion amounting to excess or lack of jurisdiction in directing
them to post an appeal bond despite the clear mandate of Article 62, paragraph (7) of
Republic Act No. 6938 (Cooperative Code) which dispensed with such requirement.
After the parties submitted their respective pleadings, the CA resolved to dismiss the
petition in the assailed decision dated September 27, 2002 holding that the exemption
from putting up a bond by a cooperative applies to cases decided by inferior courts only.
Issue: 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).
Held: Petitioners are not exempt from posting the appeal bond required under Article
223 of the Labor Code.
The provision cited by petitioners cannot be taken in isolation and must be interpreted
in relation to the Cooperative Code in its entirety. It must be kept in mind that the
enactment of the Cooperative Code is pursuant to the State's declared policy of
fostering the "creation and growth of cooperatives as a practical vehicle for prompting
self-reliance and harnessing people power towards the attainment of economic
development and social justice." Towards this end, the government has been mandated
to "ensure the provision of technical guidance, financial assistance and other services to
enable said cooperatives to develop into viable and responsive economic enterprises
and thereby bring about a strong cooperative movement that is free from any
conditions that might infringe upon the autonomy or organizational integrity of
cooperatives."
In line with this, certain benefits and privileges were expressly granted to cooperative
entities under the statute. The provision invoked by petitioners regarding the exemption
from payment of an appeal bond is only one among a number of such privileges which
appear under the article entitled "Tax and Other Exemptions" of the code.
Considering that the above provision relates to "tax and other exemptions," the same
must be strictly construed. This follows the well-settled principle that 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.
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An express exception, exemption, or saving clause excludes other exceptions. Express


exceptions constitute the only limitations on the operation of a statute and no other
exception will be implied. The rule proceeds from the premise that the legislative body
would not have made specific enumerations in a statute, if it had the intention not to
restrict its meaning and confine its terms to those expressly mentioned. Consequently,
where a general rule is established by a statute with exceptions, the Court will not
curtail the former nor add to the latter by implication. Courts may not, in the guise of
interpretation, enlarge the scope of a statute and include therein situations not provided
nor intended by the lawmakers. Statutes which are plain and specific should be applied
without attempted construction and interpretation. Thus, where a provision of law
expressly limits its application to certain transactions, it cannot be extended to other
transactions by interpretation.
The term "court" has a settled meaning in this jurisdiction which cannot be reasonably
interpreted as extending to quasi-judicial bodies like the NLRC unless otherwise clearly
and expressly indicated in the wording of the statute. Simply because these tribunals or
agencies exercise quasi-judicial functions does not convert them into courts of law.
In any event, Article 119 of the Cooperative Code itself expressly embodies the
legislative intention to extend the coverage of labor statutes to cooperatives, to wit:
Art. 119. Compliance with Other Laws. (1) The Labor Code and all other labor laws
shall apply to all 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. This is consistent
with the State's constitutional mandate to afford full protection to labor in order to
forcefully and meaningfully underscore labor as a primary social and economic force.

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


Facts:
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

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petitions for certiorari under Rule 65 assailing the decisions of the NLRC should
henceforth be filed with the CA, thus:
Therefore, all references in the amended section 9 of B.P. No. 129 to supposed appeals
from the NLRC to the Supreme Court are interpreted and refer to petitions for certiorari
under Rule 65. Consequently, all such petitions should henceforth be initially filed in the
Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the
appropriate forum for the relief desired.
Thus, the petition was remanded to the CA and redocketed as CA-G.R. SP No. 49183.
Subsequently, the CA rendered the assailed September 30, 1999 Decision, dismissing
petitioner's appeal for lack of merit with the finding that respondent NLRC did not
commit grave abuse of discretion, in its pronouncement that the Labor Arbiter did not
make any finding on the alleged employer-employee relationship between the parties,
reasoning this way:
Actually the Labor Arbiter did not determine whether there is an employer-employee
relation between the parties because according to him, such issue should be resolved
by the regular court pursuant to the ruling of the Supreme Court in De la Salle
University vs. NLRC (135 SCRA 674, 677 (1988)).
For its part, respondent NLRC, is remanding the case to the Labor Arbiter, reminded the
latter that he is authorized by the NLRC Rules to determine, in an appropriate
proceeding the existence of an employer-employee relationship.
Issue: WON the Labor Arbiter made a determination of the presence of an employeremployee relationship.
Held: At the outset, it is clear that the issue submitted for resolution is a question of
fact which is proscribed by the rule disallowing factual issues in appeal by certiorari to
the Supreme Court under Rule 45. This is explicit in Rule 45, Section 1 that petitions of
this nature "shall raise only questions of law which must be distinctly set forth."
Petitioner St. Martin would like the Court to examine the pleadings and documentary
evidence extant on the records of the Labor Arbiter to determine if said official indeed
made a finding on the existence of the alleged employer-employee nexus between the
parties based on the facts contained in said pleadings and evidence. Evidently this issue
is embraced by the circumscription.
Even if we would like to relax the rule and allow the examination of the documentary
evidence as an exception to the general rule, we are precluded by the abject failure of
petitioner to attach to the petition important and material portions of the records as
would support the petition prescribed by Rule 45, Section 4. St. Martin asks us to find
out if the Labor Arbiter was correct in concluding that respondent Aricayos was not in its
employ; but committed the blunder of not attaching to the petition even the Decision of
the Labor Arbiter sought to be reviewed, the NLRC Decision, the position papers and
memoranda of the parties filed with the Labor Arbiter, the affidavits of petitioner's
employees, and other pieces of evidence that we can consider in resolving the factual

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issue on employment. Without these vital documents, petitioner cannot be given the
relief prayed for.
DOLE Phils. vs Esteva (2006) G.R. 161115
Facts:
Anent the first assignment of error, petitioner argues that judicial review under Rule 65
of the revised Rules of Civil Procedure is limited only to issues concerning want or
excess or jurisdiction or grave abuse of discretion. The special civil action for certiorari
is a remedy designed to correct errors of jurisdiction and not mere errors of judgment.
It is the contention of petitioner that the NLRC properly assumed jurisdiction over the
parties and subject matter of the instant case. The errors assigned by the respondents
in their Petition for Certiorari before the Court of Appeals do not pertain to the
jurisdiction of the NLRC; they are rather errors of judgment supposedly committed by
the the NLRC, in its Resolution, dated 29 February 2000, and are thus not the proper
subject of a petition for certiorari.
Petitioner also posits that the Petition for Certiorari filed by respondents with the Court
of Appeals raised questions of fact that would necessitate a review by the appellate
court of the evidence presented by the parties before the Labor Arbiter and the NLRC,
and that questions of fact are not a fit subject for a special civil action for certiorari.
Issue: WON questions of fact are not a fit subject for a special civil action for certiorari.
Held: There is no error on the CAs part when it made anew a factual determination of
the matters.
It has long been settled in the landmark case of St. Martin Funeral Home v. NLRC, that
the mode for judicial review over decisions of the NLRC is by a petition for certiorari
under Rule 65 of the revised Rules of Civil Procedure. The different modes of appeal,
namely, writ of error (Rule 41), petition for review (Rules 42 and 43), and petition for
review on certiorari (Rule 45), cannot be availed of because there is no provision on
appellate review of NLRC decisions in the Labor Code, as amended.
Although the same case recognizes that both the Court of Appeals and the Supreme
Court have original jurisdiction over such petitions, it has chosen to impose the strict
observance of the hierarchy of courts. Hence, a petition for certiorari of a decision or
resolution of the NLRC should first be filed with the Court of Appeals; direct resort to the
Supreme Court shall not be allowed unless the redress desired cannot be obtained in
the appropriate courts or where exceptional and compelling circumstances justify an
availment of a remedy within and calling for the exercise by the Supreme Court of its
primary jurisdiction. The rule is settled that the original and exclusive jurisdiction of this
Court to review a decision of respondent NLRC (or Executive Labor Arbiter as in this
case) in a petition for certiorari under Rule 65 does not normally include an inquiry into
the correctness of its evaluation of the evidence. Errors of judgment, as distinguished
from errors of jurisdiction, are not within the province of a special civil action for
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certiorari, which is merely confined to issues of jurisdiction or grave abuse of discretion.


It is thus incumbent upon petitioner to satisfactorily establish that respondent
Commission or executive labor arbiter acted capriciously and whimsically in total
disregard of evidence material to or even decisive of the controversy, in order that the
extraordinary writ of certiorari will lie. By grave abuse of discretion is meant such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction,
and it must be shown that the discretion was exercised arbitrarily or despotically. For
certiorari to lie, there must be capricious, arbitrary and whimsical exercise of power, the
very antithesis of the judicial prerogative in accordance with centuries of both civil law
and common law traditions.
The Court of Appeals, therefore, can grant the Petition for Certiorari if it finds that the
NLRC, in its assailed decision or resolution, committed grave abuse of discretion by
capriciously, whimsically, or arbitrarily disregarding evidence which is material or
decisive of the controversy; and the Court of Appeals cannot make this determination
without looking into the evidence presented by the parties. Necessarily, the appellate
court can only evaluate the materiality or significance of the evidence, which is alleged
to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC, in
relation to all other evidence on record.
As this Court elucidated in Garcia v. National Labor Relations Commission: In Ong v.
People, we ruled that certiorari can be properly resorted to where the factual findings
complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of
Appeals, we emphasized thus:
It has been said that a wide breadth of discretion is granted a court of justice in
certiorari proceedings. The cases in which certiorari will issue cannot be defined,
because to do so would be to destroy its comprehensiveness and usefulness. So wide is
the discretion of the court that authority is not wanting to show that certiorari is more
discretionary than either prohibition or mandamus. In the exercise of our superintending
control over inferior courts, we are to be guided by all the circumstances of each
particular case "as the ends of justice may require." So it is that the writ will be granted
where necessary to prevent a substantial wrong or to do substantial justice.
And in another case of recent vintage, we further held: In the review of an NLRC
decision through a special civil action for certiorari, resolution is confined only to issues
of jurisdiction and grave abuse of discretion on the part of the labor tribunal. Hence, the
Court refrains from reviewing factual assessments of lower courts and agencies
exercising adjudicative functions, such as the NLRC. Occasionally, however, the Court is
constrained to delve into factual matters where, as in the instant case, the findings of
the NLRC contradict those of the Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction may look into the
records of the case and re-examine 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
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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.

Intercontinental Broadcasting Corp., vs Panganiban (2007) G.R. 151407


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-89-2244 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.
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
Vice-President 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 CAG.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: WON respondent's claim for unpaid commissions in the amount has already
prescribed.
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Held: 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-892244, 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 (2007) G.R. 162813


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: WON respondent is entltled to all money claims prayed for covering since he
worked with the petitioner.
Held: 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.

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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 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 (2008) G.R. 156225
Facts:
Three cases were consolidated involving petitioner Letran Calamba Faculty and
Employees Association and Colegio de San Juan de Letran, Calamba, for money claims
and a petition to declare the subject strike illegal filed by respondent.
On July 28, 1999, the NLRC promulgated its Decision dismissing both appeals. Petitioner
filed a Motion for Reconsideration but the same was denied by the NLRC in its
Resolution dated June 21, 2000.Petitioner then filed a special civil action for certiorari
with the CA assailing the above-mentioned NLRC Decision and Resolution.
On May 14, 2002, the CA rendered the presently assailed judgment dismissing the
petition. Petitioner filed a Motion for Reconsideration but the CA denied it in its
Resolution promulgated on November 28, 2002. Citing Agustilo v. Court of Appeals,
petitioner contends that in a special civil action for certiorari brought before the CA, the
appellate court can review the factual findings and the legal conclusions of the NLRC.

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Petitioner avers that the CA, in concluding that the NLRC Decision was supported by
substantial evidence, failed to specify what constituted said evidence. Thus, petitioner
asserts that the CA acted arbitrarily in affirming the Decision of the NLRC.
Issue: WON the Court of Appeals erred in holding that the factual findings of the NLRC
cannot be reviewed in certiorari proceedings.
Held: Court finds no error in the ruling of the CA that since nowhere in the petition is
there any acceptable demonstration that the LA or the NLRC acted either with grave
abuse of discretion or without or in excess of its jurisdiction, the appellate court has no
reason to look into the correctness of the evaluation of evidence which supports the
labor tribunals' findings of fact.
Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA,
are binding on the Supreme Court, unless patently erroneous. It is not the function of
the Supreme Court to analyze or weigh all over again the evidence already considered
in the proceedings below. In a petition for review on certiorari, this Courts jurisdiction is
limited to reviewing errors of law in the absence of any showing that the factual findings
complained of are devoid of support in the records or are glaringly erroneous. Firm is the
doctrine that this Court is not a trier of facts, and this applies with greater force in labor
cases. Findings of fact of administrative agencies and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific matters, are
generally accorded not only great respect but even finality. They are binding upon this
Court unless there is a showing of grave abuse of discretion or where it is clearly shown
that they were arrived at arbitrarily or in utter disregard of the evidence on record. We
find none of these exceptions in the present case.
In petitions for review on certiorari like the instant case, the Court invariably sustains
the unanimous factual findings of the LA, the NLRC and the CA, specially when such
findings are supported by substantial evidence and there is no cogent basis to reverse
the same, as in this case.

Metro Transit Organization vs Piglas NFWU-KMU et al., (2008) G.R. 175460


Facts:
Petitioner MTO is a government owned and controlled corporation which entered into a
Management and Operations Agreement (MOA) with the Light Rail Transit Authority
(LRTA) for the operation of the Light Rail Transit (LRT) Baclaran-Monumento Line.
Petitioner Jose L. Cortez, Jr. was sued in his official capacity as then Undersecretary of
the Department of Transportation and Communications and Chairman of the Board of
Directors of petitioner MTO.
Respondents filed with the Labor Arbiter Complaints against petitioners and the LRTA for
the following: (1) illegal dismissal; (2) unfair labor practice for union busting; (3) moral
and exemplary damages; and (4) attorney's fees.
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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 nonperfection since it failed to post the required bond. Without filing a Motion for
Reconsideration of the afore-quoted NLRC Resolution, petitioners filed a Petition for
Certiorari with the Court of Appeals assailing the same. On 24 August 2006, the Court
of Appeals issued a Resolution dismissing the Petition.
Issue: WON petitioner can directly file the extraordinary remedy of certiorari without
filing first a motion for reconsideration with the NLRC.
Held: Petitioners' failure to file a motion for reconsideration against the assailed
Resolution of the NLRC rendered its petition for certiorari before the appellate court as
fatally defective.
It must be primarily established that petitioners contravened the procedural rule for the
extraordinary remedy of certiorari. The rule is, for the writ to issue, it must be shown
that there is no appeal, nor any plain, speedy and adequate remedy in the ordinary
course of law.
The settled rule is that a motion for reconsideration is a condition sine qua non for the
filing of a petition for certiorari. Its purpose is to grant an opportunity for the court to
correct any actual or perceived error attributed to it by the re-examination of the legal
and factual circumstances of the case. The rationale of the rule rests upon the
presumption that the court or administrative body which issued the assailed order or
resolution may amend the same, if given the chance to correct its mistake or error.
We have held that the "plain," "speedy," and "adequate remedy" referred to in Section
1, Rule 65 of the Rules of Court is a motion for reconsideration of the questioned Order
or Resolution. As we consistently held in numerous cases, a motion for reconsideration
is indispensable for it affords the NLRC an opportunity to rectify errors or mistakes it
might have committed before resort to the courts can be had.
In the case at bar, petitioners directly went to the Court of Appeals on certiorari without
filing a motion for reconsideration with the NLRC. The motion for reconsideration would
have aptly furnished a plain, speedy, and adequate remedy. As a rule, the Court of
Appeals, in the exercise of its original jurisdiction, will not take cognizance of a petition
for certiorari under Rule 65, unless the lower court has been given the opportunity to
correct the error imputed to it. The Court of Appeals correctly ruled that petitioners'
failure to file a motion for reconsideration against the assailed Resolution of the NLRC
rendered its petition for certiorari before the appellate court as fatally defective.
We agree in the Court of Appeals' finding that petitioners' case does not fall under any
of the recognized exceptions to the filing of a motion for reconsideration, to wit: (1)
when the issue raised is purely of law; (2) when public interest is involved; (3) in case of
urgency; or when the questions raised are the same as those that have already been
squarely argued and exhaustively passed upon by the lower court. As the Court of
Appeals reasoned, the issue before the NLRC is both factual and legal at the same time,
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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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