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UNIVERSITY OF SAN CARLOS

SCHOOL OF LAW AND GOVERNANCE






LABOR STANDARDS
CASE DIGESTS (S. Y. 2014-2015)










SUBMITTED BY:

GARCY KATE D. GO LLB 2 (EH306)


SUBMITTED TO:
ATTY. JEFFERSON M. MARQUEZ



Garcy Kate D. Go LLB2 EH306 Page 2

TABLE OF CONTENTS

Basic Principles
1. Singer Sewing Machine vs. NLRC, 193 SCRA 271
2. Manila Golf Club vs. IAC, 237 SCRA 207
3. Encyclopedia Britanica vs. NLRC, 264 SCRA 4 [96]
4. Carungcong vs. Sunlife, 283 SCRA 319
5. Ramos vs. CA, 380 SCRA 467
6. Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004
7. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]
8. Phil. Global Communication vs. De Vera, 459 SCRA 260 [2005]
9. ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006
10. Francisco vs. NLRC, 500 SCRA 690 [06]
11. Nogales et al., vs. Capitol Medical Center et al., G.R. No. 142625, December 19, 2006
12. Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15, 2007
13. Calamba Medical Center vs. NLRC et al., G.R. No. 176484, Nov. 25, 2008
14. Escasinas et al., vs. Shangri-las Mactan Island Resort et al., G.R. No. 178827, March 4, 2009
15. Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc., et al., G.R. No. 167622, January 25, 2011
16. Caong, Jr. vs. Begualos, GR No. 179428, Jan. 26, 2011
17. Atok Big Wedge Company vs. Gison, G.R. No. 169510, August 8, 2011
18. Semblante et al., vs. Court of Appeals, et al., G.R. No. 196426, August 15, 2011
19. Bernarte vs. Phil. Basketball Association et al., G.R. No. 192084, September 14, 2011
20. Lirio vs. Genovia, G.r. No. 169757, November 23, 2011
21. Jao vs. BCC Products Sales Inc. G.R. No. 163700, April 18, 2012
22. Legend Hotel (Manila) vs. Realuyo G.R. No. 153511, July 18, 2012
23. The New Philippine Skylanders, Inc., vs. Dakila, G.r. No. 199547, Sept. 24, 2012
24. Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482, March 12, 2014
HIRING OF EMPLOYEE
25. Ollendorf vs. Abrahanson, 38 Phil 585
26. Del Castillo vs. Richmond, 45 Phil. 679
27. PT&T vs. NLRC, 272 SCRA 596 [1997]
28. Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils., G.R. No. 162994, Sept. 17, 2004
29. City of Manila vs. Laguio, G.R. No. 118127, April 12, 2005
30. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006
31. Del Monte Phils vs. Velasco, G.R. No. 153477, March 6, 2007
32. Yrasuegui vs. Phil Air Lines, G.R. No. 168081, October 17, 2008
WAGE & THE WAGE RATIONALITAZION ACT
33. Ilaw at Buklod ng Manggagawa vs. NLRC, 198 SCRA 586 [1991]
34. Employers Confederation of the Phils., vs. NWPC, 201 SCRA 759 [1991]
35. Mabeza vs. NLRC, 271 SCRA 670
36. Joy Brothers Inc., vs. NWPC, 273 SCRA 622 [1997]
37. Prubankers Asso. Vs. Prudential Bank, 302 SCRA 74 [1999]
38. Millare vs. NLRC, 305 SCRA 501
39. International School Alliance of Educators vs. Quisumbing, 333 SCRA 13 [2000]
40. Bankard Employees Union vs. NLRC, G.R. No. 140689, Feb. 17, 2004
41. Odango vs. NLRC, G.R. No. 147420, June 10, 2004
42. C. Planas Commercial vs. NLRC, G.R. No. 144619, Nov. 11, 2005
43. EJR Crafts Corp., vs. CA, G.R. No. 154101, March 10, 2006
44. Pag Asa Steel Works vs. CA, G.R. No. 166647, March 31, 2006
45. Metropolitan Bank vs. NWPC, G.R. No. 144322, Feb. 6, 2007
46. Equitable Bank vs. Sadac, G.R. No. 164772, June 8, 2006, citing Songco vs. NLRC, 183 SCRA 618
47. S.I.P. Food House et al., vs. Batolina, GR No. 192473, Oct 11, 2010
48. SLL International Cables Specialist vs. NLRC, GR No. 172161, March 2, 2011
49. Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. G.R. No. 176985, April 1, 2013
50. Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant, G.R. No. 198783, April 15, 2013
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51. The National Wages & Productivity Commission et al., vs. The Alliance of Progressive Labor et al., GR No.
150326, March 12, 2014
WAGE ENFORCEMENT AND RECOVERY
52. Rajah Humabon Hotel vs. Trajano, 226 SCRA 332
53. Guico vs. Sec of Labor, G.R. No. 131750, November 16, 1998
54. Ex-Bataan Vetrerans Security Agency vs.. Sec. Of Labor, et al., G.R. No. 152396, November 20, 2007, citing
Cireneo Bowling Plaza vs. Sensing, G.R. No. 146572, Jan. 14, 2005
55. Sapio vs. Undaloc Construction et al., G.R. No. 155034, May 22, 2008
56. Hon. Secretary of Labor vs. Panay Veterans Security and Investigation Agency, G.R. No. 167708, August 22,
2008
57. National Mines and Allied Workers Union vs. Marcopper Mining Corp., G.R. No. 174641, Nov. 11, 2008
58. Jethro Intelligence & Security Corp., vs. SOLE, et al., GR No. 172537, Aug. 14, 2009
59. Phil Hoteliers Inc., et al., vs. National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit Hotel
Nikko Chpater, GR No. 181972, Aug. 25, 2009
60. Tiger Construction and Development Corp vs. Abay et al., GR No. 164141, Feb. 26, 2010
61. Peoples Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al., GR No. 179652, March 6, 2012 Resolution
on the main Decision of May 8, 2009
62. Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10, 2012
WAGE PROTECTION PROVISION & PROHIBITIONS REGARDING WAGES
63. GAA vs. CA, 140 SCRA 304
64. Nestle Phils., vs. NLRC, 193 SCRA 504
65. Five J Taxi vs. NLRC, 235 SCRA 556
66. Phil. Veterans Bank vs. NLRC, G.R. No. 130439, Oct. 26, 1999
67. Phil Appliances Corp., vs. CA, G.R. No. 149434, June 3, 2004
68. Agabon vs. NLRC, G.R. No. 158693, Nov. 17, 2004
69. American Wire & Cable Daily Rated Employees vs. American Wire, G.R. No. 155059, April 29, 2005
70. Honda Phils., vs. Samahang Malayang Manggagawa sa Honda, G.R. No. 145561, June 15, 2005
71. Producers Bank vs. NLRC, 355 SCRA 506
72. Jardin vs. NLRC, G.R. No. 119268, February 23,2000
73. Manila Jockeys Club Employees Labor Union vs. Manila Jockey Club, G.R. No. 167601, March 7, 2007
74. San Miguel Corp et al., vs. Layoc, Jr., et al., G.R. No. 149640, October 19, 2007
75. San Miguel Corp., vs. Pontillas, G.R. No. 155178, May 7, 2008
76. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU, G.R. No. 170734,
May 14, 2008, citing Davao Fruits vs. Asso. Labor Union, 225 SCRA 562 and Sevilla Trading vs. AVA Tomas
Services, G.R. No. 152456, April 28, 2004
77. Aguanza vs. Asian Terminal Inc., et al., GR No. 163505, Aug. 14, 2009
78. Genesis Transport Service Inc et al., vs. Unyon ng Malayang Manggagawa ng Genesis Transport et al., GR No.
182114, April 5, 2010
79. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, GR No. 188949, July 26, 2010
80. SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010
81. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No. 188169, November 28, 2011
82. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013
83. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb 26, 2014
84. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso., GR No. 181806, March 12,
2014
85. Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014, citing2011 Nina Jewelry
Manufacturing of Metal Arts Inc. vs. Montecillo
PAYMENT OF WAGES
86. Congson vs. NLRC, 243 SCRA 260 [1995]
87. North Davao Mining vs. NLRC, 254 SCRA 721 [1996]
88. National Federation of Labor vs. CA, G.R. No. 149464, Oct. 19, 2004
89. Heirs of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006
CONDITIONS OF EMPLOYMENT
90. San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997]
91. Simedarby vs. NLRC, 289 SCRA 86 [1998]
92. Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]
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93. Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007
94. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008
MINIMUM LABOR STANDARD BENEFITS
95. Union of Filipro Employees vs. Vicar, 205 SCRA 203 [1992]
96. National Sugar Refinery Corp., vs. NLRC, 220 SCRA 452 [1993]
97. Salazar vs. NLRC, 256 SCRA 273 [1996]
98. Labor Congress of the Phils., vs. NLRC, G.R. No. 1239381, May 21, 1998
99. Mercidar Fishing Corp., vs. NLRC, G.R. No. 112574, October 8, 1998
100. San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002
101. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002
102. Lambo vs. NLRC, 317 SCRA 420
103. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004
104. Asian Transmission vs. CA, 425 SCRA 478 [2004]
105. Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005
106. San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005
107. Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006
108. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No. 1577745, October 19, 2007,
citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420, June
10, 2004
109. Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing Cagampan vs. NLRC, 195 SCRA 533
[1998]
110. PNCC Skyway Traffic Management and Security Division Workers Organization, GR No. 171231, Feb. 17, 2010
111. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr. G.R. No. 198662, Sept. 12, 2012
112. Villuga vs. NLRC, 225 SCRA 537 [1993]
113. CJC Trading vs. NLRC, 246 SCRA 724 [1995]
114. Pantranco North Express vs. NLRC, 259 SCRA 161 [1996]
115. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004
116. Rufina Patis vs. Alusitain, G.R. No. 146202, July 14, 2004
117. Sta Catalina College vs. NLRC, 416 SCRA 243
118. Honda Phils., vs. Samahan ng mga Manggagawa sa Honda, G.R. No. 145561, June 15, 2005
119. Jaculbe vs. Silliman University, G.R. No. 156934, March 16, 2007
120. Intercontinental Broadcasting Corp., vs. Amarilla, G.R. No. 162775, October 27, 2006
121. Letran Calamba Faculty & Employees Association vs. NLRC et al., G.R. No. 156225, January 29, 2008
122. Reyes vs. NLRC et al., G.R. No. 160233, August 8, 2007, citing Boie Takeda Chemicals vs. Dela Serna, 228 SCRA
329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380 [1995]
123. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU, G.R. No. 170734,
May 14, 2008
124. Universal Robina Sugar Milling Corp. vs. Caballeda, G.R. No. 156644, July 28, 2008
125. Cercado vs. Uniprom, Inc. G.R. No. 188154, October 13, 2010
126. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al., G.R. No. 198662, September 12, 2012
127. Padillo vs. Rural bank of Nabunturan Inc. G.r. No. 199338, Jan. 21, 2013
128. T/SGP Larkins vs. NLRC, G.R. No. 92432, February 23, 1995
129. UERM Memorial Medical Center vs. NLRC, G.R. No. 110419, March 3, 1997
130. Phil Tranco Services vs. NLRC, G.R. No. 124100, April 1, 1998
131. St. Martin Funeral Homes vs. NLRC, G.R. No. 130866, September 16, 1998
132. Ludo & Luym Corp., vs. Saornido, G.R. No. 140960, January 20, 2003
133. Hansin Engineering & Construction vs. CA, G.R. No. 165910, April 10, 2006
134. Phil. Journalist Inc. vs. NLRC, G.R. No. 166421, Sept. 5, 2006
135. Balagtas Multi-purpose Coop. Vs. CA, G.R. No. 159268, Oct. 27, 2006
136. St. Martin Funeral Homes vs. NLRC, G.R. No. 142351, Nov. 22, 2006
137. DOLE Phils. Vs. Esteva, G.R. No. 161115, Nov. 30, 2006
138. Intercontinental Broadcasting Corp., vs. Panganiban, G.R. No. 151407, February 6, 2007
139. Far East Agricutural Supply vs. Lebatique, G.R. No. 162813, February 12, 2007
140. Letran Calamba Faculty & Employees Association vs. NLRC, G.R. No. 156225, January 29, 2008
141. Metro Transit Organization vs. Piglas NFWU-KMU et al., G.R. No. 175460, April 14, 2008
142. J.K. Mercado & Sons Agricultural Enterprises, Inc., vs Sto. Tomas, G.R.No. 158084, August 29, 2008
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143. J. Phil. Marine Inc., vs. NLRC, G.R. No. 1753661, August 11, 2008; but see Ilagan vs. Court of Appeals, G.R. No.
162089, July 9, 2008
144. Sy vs. ALC Industries, G.R. No. 168339, October 10, 2008
145. PCI Travel Corp., vs. NLRC, G.R. No. 154379, October 31, 2008
146. Lopez vs. Q. C. Sports Club, G.R. No. 164032, January 19, 2009
147. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012
148. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012
149. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012

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BASIC PRINCIPLES

Singer Sewing Machine vs. NLRC
January 24, 1991, 193 SCRA 271
Facts: Singer Machine Collectors Union-Baguio (SIMACUB), private respondent, filed a petition
for direct certification as the sole and exclusive bargaining agent of all collectors of the Singer
Sewing Machine Company (Singer). Singer opposed the petition claiming that the collectors are
not employees but are independent contractors as evidenced by the Collection Agency
Agreement (Agreement) between them. The Med-Arbiter granted the petition. Aggrieved,
Singer appealed to the Secretary of Labor. The Secretary of Labor affirmed the Med-Arbiters
Decision and denied Singers motion for reconsideration, hence, this petition for certiorari to
review the order and resolution of the Secretary of Labor and Employment.
Singer alleges that the collectors are not employees but independent contractors. It supported
its allegation by stating the following stipulations in the Agreement: (a) a collector is designated
as a collecting agent who is to be considered at all times as an independent contractor and not
employee of Singer, (b) collection are to be made monthly or oftener, (c) an agent is paid a
commission of 6% of all collections plus a bonus, xxx , (g) his services shall be terminated in case
of failure to satisfy the required performance required.
Private respondent, on the other hand, relied on other features of the same Agreement. Among
which are that an agent shall utilize only receipt forms authorized and issued by Singer; an
agent has to submit and deliver at least once a week or as often as required a report of all
collections made using report forms furnished by Singer; and the monthly collection quota,
which quota they deemed as a control measure over the means by which an agent is to
perform his services. They also relied on Article 280 of the Labor Code and on Section 8 Rule 8,
Book III of the Omnibus Rules defining job-contracting.
Issue: Whether or not collectors of Singer are employees and therefore are constitutionally
granted the right to join or form labor organization for purposes of collective bargaining.
Ruing: No, collectors of Singer are not employees. Hence, they are not entitled to the
constitutional right to join or form labor organization for purposes of collective bargaining. The
Supreme Court mainly applied the control test where the existence of employer-employee
relationship is determined by the following elements: (a) selection and engagement of the
employee, (b) payment of wages, (c) power of dismissal and (d) power to control the
employees conduct although the latter is the most important element.
In that regard, it was ruled that the element on the power to control the employees conduct
the most important element was absent. The forms, schedule of delivery and quota were
controls used only for the result of the job, if they were really controls. There were also other
circumstances uncontroverted in the pleadings that made the Supreme Court rule that they are
independent contractors like: (1) collectors are not required to observe office hours nor report
everyday; (2) they do not have to devote their time exclusively for Singer; (3) the manner and
method of effecting collections are left to their discretion xxx (5) they are paid strictly on
commission basis. These circumstances negate that Singer had any control as to the manner by
which collectors perform collections.
Art. 280 is not instructive because it only deals with casual and regular employees while the
provision in the Omnibus Rules is only relevant in ascertaining whether the employer is
solidarily liable with the contractor or subcontractor.
Garcy Kate D. Go LLB2 EH306 Page 7

Manila Golf Club vs. IAC
September 27, 1994, G.R. No. 64948

Facts: Three separate proceedings, all initiated by Llamar and his fellow caddies gave rise to the
present petition for review which was originally filed with the Social Security Commission (SSC)
via petition of 17 persons who styled themselves "Caddies of Manila Golf and Country Club-
PTCCEA" for coverage and availment of benefits under the Social Security Act as amended,
"PTCCEA" being the acronym of a labor organization, the "Philippine Technical, Clerical,
Commercial Employees Association," with which the petitioners claimed to be affiliated. The
petition alleged in essence 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. At about the same time, two other proceedings bearing on the same question were filed or
were pending.
The respondent Club filed answer praying for the dismissal of the petition, alleging in substance
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 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: Whether or not persons rendering caddying services for members of golf clubs and their
guests in said clubs' courses or premises are the employees of such clubs and therefore within
the compulsory coverage of the Social Security System (SSS).

Ruling: The private respondent Fermin Llamar, is not an employee of petitioner Manila Golf and
Country Club and that petitioner is under no obligation to report him for compulsory coverage
to the Social Security System. No pronouncement as to costs.

The caddies were paid by the players, not by the Club, and that they observed no definite
working hours and earned no fixed income. The Court does not agree that the facts necessarily
or logically point to such an employer-employee relationship, and to the exclusion of any form
of arrangements, other than of employment that would make the Llamars services available to
the members and guest of the Manila Golf Club. 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 sufference 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.

The Court agrees with petitioner 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.
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Encyclopedia Britannica (Philippines), Inc. vs NLRC
November 4, 1996, G.R. No. 87098
Facts: Limjoco, herein private respondent, was a Sales Division of Encyclopedia Britannica and
was in charge of selling the products through some sales representatives. As compensation, he
would receive commissions from the products sold by his agents. He was also allowed to use
the petitioners name, goodwill and logo. It was agreed that office expenses would be deducted
from Limjocos commissions.
In 1974, Limjoco resigned to pursue his private business and filed a complaint against petitioner
for alleged non-payment of separation pay and other benefits and also illegal deduction from
sales commissions. Petitioner alleged that Limjoco was not an employee of the company but an
independent dealer authorized to promote and sell its products and in return, received
commissions therein. Petitioner also claims that it had no control and supervision over the
complainant as to the manners and means he conducted his business operations. Limjoco
maintained otherwise. He alleged he was hired by the petitioner and was assigned in the sales
department.
The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC also affirmed the
decision and opined that there was no evidence supporting allegation that Limjoco was an
independent contractor or dealer.
Issue: Whether or not there was an employee-employer relationship between the parties.
Ruling: There was no employee-employer relationship. In determining the relationship, the
following elements must be present: selection and engagement of the employee, payment of
wages, power of dismissal and power to control the employees conduct. The power of control
is commonly regarded as the most crucial and determinative indicator of the presence or
absence of an employee-employer relationship. Under the control test, an employee-employer
relationship exists where the person for whom the services are performed reserves a right to
control not only the end to be achieved, but also the manner and means to be employed in
reaching that end.
The issuance of guidelines by the petitioner was merely guidelines on company policies which
sales managers follow and impose on their respective agents. Limjoco was not an employee of
the company since he had the free rein in the means and methods for conducting the
marketing operations. He was merely an agent or an independent dealer of the petitioner. He
was free to conduct his work and he was free to engage in other means of livelihood.
In ascertaining the employee-employer relationship, the factual circumstances must be
considered. The element of control is absent where a person who works for another does so
more or less at his own pleasure and is not subject to definite hours or conditions of work, and
in turn is compensated in according to the result of his efforts and not the amount thereof.
Hence, there was no employee-employer relationship.

Garcy Kate D. Go LLB2 EH306 Page 9

Carungcong vs Sunlife, 283 SCRA 319

Facts: Susan Carungcong began her career as an agent of Sun Life Assurance Company of
Canada by signing a Career Agents or Unit Managers Agreement, which provided that she
shall be an Independent Contractor, that there were limitations on her authority, and that the
contract may be terminated by death, or written notice with or without cause. Later, she signed
a further agreement entitled Managers Supplementary Agreement, which provided the same
provisions with that of the first agreement. Later, she signed a third agreement entitled New
Business Manager. This third contract also provided limitations on her authority and that she
should be considered as an Independent Contractor not an employee.

Due to some anomaly in the way Susan Carungcong prepared the report so that she will be
reimbursed with her expenses incurred for the purpose of gaining or producing income such
that she made it appear that she paid for the food of her agents but in fact and in truth she did
not. So she was given a letter advising of the termination of her relationship with Sunlife. So she
filed a complaint before the NLRC and was adjudged to have been illegally dismissed because
there was an employer-employee relationship.

Issues: Whether or not there was an employer-employee relationship between Carungcong and
Sunlife.

Ruling: The Supreme Court ruled that there was no employer-employee relationship, which
means that Carungcong was an Independent Contractor not an Employee, because control,
which was one of the elements of the four-fold test was absent. Absence of control means that
there was no employer-employee relationship between the parties. Hence, Carungcong was
not illegally dismissed.

The Supreme Court reasoned that Insurance business is imbibed with public interest and thus
subject to regulation by the State. The State, in order to protect the public, enacted the
Insurance Code, which provided for the rules and regulations to be followed by the Insurance
companies. Thus, as an inevitable consequence the Insurance Company, like Sunlife, issued
rules and regulations to be followed by Carungcong but this control was latent in the kind of
business which Carungcong was into and these rules and regulations were mainly aimed at
promoting the results the parties so desired and did not necessarily create any employer-
employee relationship, where the employers controls had to interfere in the methods and
means by which the employee would like to employ to arrive at the desired result.

Garcy Kate D. Go LLB2 EH306 Page 10

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. Guiterrez tried to intubate Erlinda. The nail beds of Erlinda were bluish and there was a
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: Whether or not there was an employee-employer relationship that existed between the
Medical Center and Drs. Hosaka and Guiterrez.

Held: No, employer-employee relationship between the doctors and hospital did not exist.

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.

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.

Garcy Kate D. Go LLB2 EH306 Page 11

Sonza vs. ABS-CBN
June 10, 2004, GR No. 138051

Facts: In May 1994, ABS-CBN signed an agreement with Mel and Joey Management and
Developments Corporation (MJMDC), a television program. Referred to in the Agreement as
Agent, MJMDC agreed to provide Sonzas services exclusively to ABS-CBN as talent for radio
and television. ABS-CBN agreed to pay 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.

On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President Lopez stating that he
will irrevocably resign in view of the recent events concerning his program and career, that he is
waiving and renouncing recovery of the remaining amount stipulated in the Agreement, but
reserves the right to seek recovery of the other benefits under said agreement.

On April 30, 1996, Sonza filed a complaint against ABS-CBN before the Department of Labor and
Employment, NCR alleging that ABS-CBN did not pay his salary, separation pay, service
incentive leave, 13
th
month pay , signing bonus, travel allowance and amounts due under the
Employees Stock Option Plan (ESOP). ABS-CBN moved for the dismissal of the complaint on the
ground that there was no employer-employee relationship between them. ABS-CBN insists that
Sonza was an independent contractor.

Issue: Whether an employer-employee relationship exists.

Ruling: The Court sustained ABS-CBNs contention and hence, dismissed the petition.

The Supreme Court ratiocinated that Independent contractors often present themselves to
possess unique skills, expertise, talent, to distinguish them from ordinary employees. The
specific selection and hiring of Sonza, because of his unique skills, talent, and celebrity status
not possessed by an ordinary employee, is a circumstance indicative of an independent
contractual relationship. Whatever benefits Sonza enjoyed arose from a contract and not
because of an employer-employee relationship. Sonzas talent fees are so huge and out of the
ordinary that they indicate more an independent contractual relationship.

Applying the control test in the case at bar, the Court found that Sonza is not an employee but
an independent contractor. First, ABS-CBN engaged Sonzas services specifically to co-host the
Mel and Jay program. ABS-CBN did not assign any other work to Sonza. To perform his work,
Sonza only needed his skills and talent. Sonza delivered his lines appeared on the television and
sounded on radio, all outside the control of ABS-CBN. Sonza did not have to work eight hours a
day. The Agreement required Sonza to attend only rehearsals and tapings. ABS-CBN could not
dictate the contents of Sonzas script. Sonza had a free hand on what to say or discuss in his
shows. Clearly, ABS-CBN did not exercise control over the means and methods of performance
of Sonzas work.

Garcy Kate D. Go LLB2 EH306 Page 12

Lazaro vs. Social Security Commission
July 30, 2004, G.R. No. 138254

Facts: Private respondent Laudato filed a petition before the SSC for social security coverage
and remittance of unpaid monthly social security contributions against her three employers.
Among the respondents was herein petitioner Angelito L. Lazaro (Lazaro), proprietor of Royal
Star Marketing (Royal Star), which is engaged in the business of selling home appliances.
Petitioner states that 1) Laudato was not a sales supervisor of Royal Star, but was a mere sales
agent whom he paid purely on commission basis.2) Laudato was not subjected to definite hours
and conditions of work. As such, Laudato could not be deemed an employee of Royal Star
while respondents contended 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.

Issue: Whether or not respondent is an employee, bringing her under the coverage of the Social
Security Act.

Ruling: Ladauto is an employee of Royal Star. 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. 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.

Neither does it follow that a person who does not observe normal hours of work cannot be
deemed an employee. A supervisor is exempt from the observance of normal hours of work for
his compensation is measured by the number of sales he makes. 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.

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.

Garcy Kate D. Go LLB2 EH306 Page 13

Phil. Global Comm. vs. De Vera
G.R. No. 157214; June 7, 2005

Facts: Philippine Global Communications inc. is a corporation engaged in the business of
communication services and allied activities while Ricardo de Vera is a physician by profession
whom petitioner enlisted to attend to the medical needs of its employees. The controversy rose
when petitioner terminated his engagement.

In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized the
respondents proposal in a document denominated as retainership contract which will be for a
period of one year, subject to renewal and clearly stated that respondent will cover the
retainership the company previously with Dr. Eulau. The agreement went until 1994, in the
years 1995-1996, it was renewed verbally. The turning point of the parties relationship was
when petitioner, thru a letter bearing the subject TERMINATION RETAINERSHIP CONTRACT,
informed Dr. de Vera of its decision to discontinue the latters retainer contract because the
management has decided that it would be more practical to provide medical services to its
employees through accredited hospitals near the company premises.

On January 1997, de Vera filled a complaint for illegal dismissal before the NLRC, alleging that
he had been actually employed by the company as its company physician since 1991. The
commission rendered decision in favor of Philcom and dismissed the complaint saying that de
Vera was an independent contractor. On appeal to NLRC, it reversed the decision of the Labor
Arbiter stating that de Vera is a regular employee and directed the company to reinstate him.
Philcom appealed to the CA where it rendered decision deleting the award but reinstating de
Vera. Philcom filed this petition involving the difference of a job contracting agreements from
employee-employer relationship.

Issue: Whether or not there exists an employee-employer relationship between the parties.

Ruling: SC ruled that there was no such relationship existing between Dr. de Vera and Phil.
Com.

Upon reading the contract dated September 6, 1982, signed by the complainant himself , it
clearly states that is a retainership contract. The retainer fee is indicated thereon and the
duration of the contract for one year is also clearly indicated in paragraph 5 of the Retainership
Contract. The complainant cannot claim that he was unaware that the contract was good only
for one year, as he signed the same without any objections. The complainant also accepted its
renewal every year thereafter until 1994. As a literate person and educated person, the
complainant cannot claim that he does not know what contract he signed and that it was
renewed on a year to year basis.The labor arbiter added the indicia, not disputed by
respondent, that from the time he started to work with petitioner, he never was included in its
payroll; was never deducted any contribution for remittance to the Social Security System (SSS);
and was in fact subjected by petitioner to the ten (10%) percent withholding tax for his
professional fee, in accordance with the National Internal Revenue Code, matters which are
simply inconsistent with an employer-employee relationship.The elements of an employer-
employee relationship are wanting in this case. The record are replete with evidence showing
that respondent had to bill petitioner for his monthly professional fees. It simply runs against
the grain of common experience to imagine that an ordinary employee has yet to bill his
employer to receive his salary.

The power to terminate the parties relationship was mutually vested on both. Either may
terminate the arrangement at will, with or without cause. Remarkably absent is the element of
control whereby the employer has reserved the right to control the employee not only as to the
Garcy Kate D. Go LLB2 EH306 Page 14

result of the work done but also as to the means and methods by which the same is to be
accomplished.
Petitioner had no control over the means and methods by which respondent went about
performing his work at the company premises. In fine, the parties themselves practically agreed
on every terms and conditions of the engagement, which thereby negates the element of
control in their relationship.

Principle of Law: Any agreement may provide that one party shall render services for and in
behalf of another, no matter how necessary for the latters business, even without being hired
as an employee. There was no employee-employer relationship in a case where element of
control of the employer over the employee is absent.

Garcy Kate D. Go LLB2 EH306 Page 15

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 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 13
th
Month Pay with Damages against the petitioner before the NLRC.

Issue: WON the respondents are regular employees?

Ruling: Respondents are considered regular employees of ABS-CBN and are entitled to the
benefits granted to all regular employees.

Where a person has rendered at least one year of service, regardless of the nature of the
activity performed, or where the work is continuous or intermittent, the employment is
considered regular as long as the activity exists. The reason being that a customary
appointment is not indispensable before one may be formally declared as having attained
regular status. Article 280 of the Labor Code provides:
REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer except where the
employment has been fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment is for the duration
of the season.

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.
Garcy Kate D. Go LLB2 EH306 Page 16


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.

Garcy Kate D. Go LLB2 EH306 Page 17

Francisco vs. NLRC, 500 SCRA 690 (06)

Facts: In 1995, petitioner was hired by Kasei Corporation during its 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 Liaison Officer to the City of
Makati to secure business permits, construction permits and other licenses for the initial
operation of the company. In 1996, she was designated Acting Manager, and was able to
perform the duties of such for 5 years. As of December 31, 2000 her salary was P27,500.00 plus
P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. In January
2001, she was replaced by Liza R. Fuentes as Manager. She alleged that she was required to
sign a prepared resolution for her replacement but she was assured that she would still be
connected with Kasei Corporation. Thereafter, Kasei Corporation reduced her salary by
P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00
as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the
company was not earning well. On October 2001, she did not receive her salary from the
company. She made repeated follow-ups with the company cashier but she was advised that
the company was not earning well. On October 15, 2001, petitioner asked for her salary from
Acedo and the rest of the officers but she was informed that she is no longer connected with
the company. Since she was no longer paid her salary, petitioner did not report for work and
filed an action for constructive dismissal before the labor arbiter. The Labor Arbiter ruled in
favor of the petitioner. The NLRC affirmed with modification the Decision of the Labor Arbiter.
On appeal, the Court of Appeals reversed the NLRC decision. The appellate court denied
petitioners motion for reconsideration, hence, the present recourse.

Issue: Whether there was an employer-employee relationship between petitioner and private
respondent Kasei Corporation.

Held: 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. In
the United States, the touchstone of economic reality in analyzing possible employment
relationships for purposes of the Federal Labor Standards Act is dependency. By analogy, the
benchmark of economic reality in analyzing possible employment relationships for purposes of
the Labor Code ought to be the economic dependence of the worker on his employer. Under
the broader economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13
th
month pay, bonuses and
allowances, as well as deductions and Social Security contributions from August 1, 1999 to
December 18, 2000. When petitioner was designated General Manager, respondent
corporation made a report to the SSS signed by Irene Ballesteros. Petitioners membership in
the SSS as manifested by a copy of the SSS specimen signature card which was signed by the
President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of
the SSS evinces the existence of an employer-employee relationship between petitioner and
Respondent Corporation. It is therefore apparent that petitioner is economically dependent on
Respondent Corporation for her continued employment in the latters line of business. The
petition is GRANTED.
Garcy Kate D. Go LLB2 EH306 Page 18

Nogales et. al. vs. Capitol Medical Center
G.R. No. 142625, December 19, 2006

Facts: Pregnant Corazon Nogales ("Corazon") was under the exclusive prenatal care of Dr. Oscar
Estrada ("Dr. Estrada"). Corazon was admitted at the CMC. Dr. Estrada ordered the injection of
ten grams of magnesium sulfate. However, Dr. Ely Villaflor ("Dr. Villaflor"), who was assisting
Dr. Estrada, administered only 2.5 grams of magnesium sulfate. Dr. Estrada, assisted by Dr.
Villaflor, applied low forceps to extract Corazon's baby. In the process, piece of cervical tissue
was allegedly torn. The baby came out in an apnic, cyanotic, weak and injured condition.
Corazon began to manifest moderate vaginal bleeding which rapidly became profuse. Dr. Noe
Espinola ("Dr. Espinola"), head of the Obstetrics-Gynecology Department of the CMC, was
apprised of Corazon's condition by telephone. Upon being informed that Corazon was bleeding
profusely, Dr. Espinola ordered immediate hysterectomy. Despite Dr. Espinola's efforts,
Corazon died.

Petitioners filed a complaint for damages with the Regional Trial Court. 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.

Trial court rendered judgment finding Dr. Estrada solely liable for damages.

The Court of Appeals upheld the trial court's ruling, finding Dr. Estrada as an independent
contractor-physician. The Court of Appeals applied the "borrowed servant" doctrine
considering that Dr. Estrada was an independent contractor who was merely exercising hospital
privileges. This doctrine provides that once the surgeon enters the operating room and takes
charge of the proceedings, the acts or omissions of operating room personnel, and any
negligence associated with such acts or omissions, are imputable to the surgeon.

Issues: (1.) Whether CMC is vicariously liable for the negligence of Dr. Estrada;
(2.) WON there is employer-employee relationship between Dr. Estrada and CMC

Held: Dr. Estrada is not an employee of CMC, but an independent contractor. However, CMC is
still vicariously liable.

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. Dr. Estrada is not an
employee of CMC, but an independent contractor.

In general, a hospital is not liable for the negligence of an independent contractor-physician.
There is, however, an exception to this principle. The hospital may be liable if the physician is
the "ostensible" agent of the hospital. This exception is also known as the "doctrine of apparent
authority." 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 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. The doctrine of apparent
authority is A specie of the doctrine of estoppel. Article 1431 of the Civil Code provides that
"through estoppel, an admission or representation is rendered conclusive upon the person
making it, and cannot be denied or disproved as against the person relying thereon." CMC
impliedly held out Dr. Estrada as a member of its medical staff.
Garcy Kate D. Go LLB2 EH306 Page 19


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. First, CMC granted staff privileges to Dr. Estrada. Second, CMC
made Rogelio sign consent forms printed on CMC letterhead. Third, Dr. Estrada's referral of
Corazon's profuse vaginal bleeding to Dr. Espinola, who was then the Head of the Obstetrics
and Gynecology Department of CMC, gave the impression that Dr. Estrada as a member of
CMC's medical staff was collaborating with other CMC-employed specialists in treating Corazon.
WHEREFORE, the Court PARTLY GRANTS the petition. The Court finds respondent Capitol
Medical Center vicariously liable for the negligence of Dr. Oscar Estrada.

Garcy Kate D. Go LLB2 EH306 Page 20

Coca cola Bottlers vs. Dr. Climaco
GR No. 146881 February 5, 2007

Facts: Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-cola Bottlers
Phil.(petitioner) by virtue of a Retainer Agreement. Among the terms and conditions under
their retainer agreement are:
1. That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31, 1988. Either
party may terminate the contract upon giving a 30-day written notice to the other;
2. That petitioner shall compensate respondent a retainer fee of P3,800/month. The
DOCTOR may charge professional fee for hospital services rendered in line with his
specialization;
3. That in consideration of the retainers fee, the DOCTOR agrees to perform the duties
and obligations in the COMPREHENSIVE MEDICAL PLAN, made an integral part of this
retainer agreement;
4. That the DOCTOR shall observe clinic hours at the companys premises from Monday to
Saturday of a minimum of two (2) hours each day or a maximum of TWO (2) hours each
day or treatment from 7:30 a.m. to 8:30 a.m and 3:00pm to 4:00pm. It is further
understood that the DOCTOR shall be on call at all times during the other workshifts to
attend to emergency case(s);
5. That no employee-employer relationship shall exist between the company and the
DOCTOR.

The retainer agreement expired after 1 year. However, despite the non-renewal of the
agreement, respondent continued to perform his functions as company doctor to petitioner
until he received a letter dated march 9, 1995 from the company ending their retainership
agreement.

Respondent thereafter filed a complaint before the NLRC seeking recognition as a regular
employee of petitioner and thus prayed from payment of all the benefits of a regular employee
including 13th month pay, COLA, holiday pay, service incentive leave, and Christmas bonus.
Also, respondent filed another complaint for illegal dismissal against petitioner.

In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant complaint was dismissed
by the Labor Arbiters and subsequently affirmed by the NLRC on the ground that no employer-
employee relationship existed between petitioner company and respondent.

However when it was elevated to CA for review, the latter ruled that employer-employee
relationship existed between the parties after applying the four-fold test: (1) power to hire
employee (2) payment of wages (3) power to dismissal (4) and power to control over the
employee with respect to the means and methods by which the work is to be accomplished.

The CA held it in this wise:
1. First, the agreement provide the company desires to engage on a retainer basis the
services of a physician and the said DOCTOR is accepting such engagement. This clearly
shows that coca-cola company exercised its power to hire.
2. Secondly, the agreement showed that petitioner would compensate the doctor for
P3,800/month. This would represent the element of payment of wages.
3. Thirdly, it was provided in the agreement that the same shall be valid only for 1 year.
the said term notwithstanding, either party may terminated the contract upon giving
30-day written notice. This would show that petitioner had the power to dismissal.
4. Lastly, the agreement reveal that Coca-cola control over the conduct of respondent in
the latters performance of his duties sas a doctor for the company.

Hence, this petition filed by Coca-cola company
Garcy Kate D. Go LLB2 EH306 Page 21

Issue: Whether or not there exist an employer-employee relationship between the parties.

Ruling: The Court agrees with the finding of the Labor Arbiter and the NLRC.

The Court held that the Labor Arbiter and the NLRC correctly found that petitioner company
lacked the power of control over the performance by respondent of his duties.

The Court citing the case of Neri vs. NLRC said, petitioner company, through the Comprehensive
Medical Plan, provided guidelines merely to ensure that the end result was achieved. In other
words, what was sought to be controlled by the petitioner company was actually the end result
of the task. The guidelines or the Comprehensive Medical Plan were laid down merely to
ensure that the desired end result was achievedbut did not control the means and methods by
which respondent performed his assigned tasks.

The Supreme Court further held that, 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. Such is not the prevailing situation here. The respondent does
not dispute that fact that outside of the two (2) hours that he is required to be at petitioner
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, respondent maintains his own private clinic attending his private practice in
the city, where he services his patients and bills them accordingly.

The Court finds that the requirement to be on call for emergency cases do not amount to such
control, but are necessary incidents to the Retainership Agreement.

The Supreme Court also notes that the Agreement granted to both parties the power to
terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not
wield the sole power of dismissal or termination.
Therefore, the petition was GRANTED.

Garcy Kate D. Go LLB2 EH306 Page 22

Calamba mdeical center VS. NLRC, et. Al.
GR No. 176484, Nov. 28, 2008

Facts: Calamba Medical Center, engaged the services of medical doctors-spouses Dr.
Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians.Reporting at the
hospital twice-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.

The work schedules of the members of the team of resident physicians were fixed by
petitioner's medical director Dr. Desipeda, and they were issued ID, enrolled in the SSS and
withheld tax from them.

After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and
a fellow employee Diosdado Miscala, the former was given a preventive suspension and his
wife Dr. Merceditha was not given any schedule after sending the Memorandum. On March
1998, Dr. Ronaldo filed a complaint for illegal suspension and Dr. Merceditha for illegal
dismissal.

Issue: Whether or not there exists an employer-employee relationship between petitioner and
the spouses-respondents?

Ruling: 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.

Garcy Kate D. Go LLB2 EH306 Page 23

Escasias, et. al. vs. Shangrila-Las Mactan Island Resort, et. al

Facts: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged
in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her
clinic at respondent Shangri-lasMactan Island Resort (Shangri-la) in Cebu of which she was a
retained physician.
In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint
for regularization, underpayment of wages, non-payment of holiday pay, night shift differential
and 13th month pay differential against respondents, claiming that they are regular employees
of Shangri-la.
Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor,
that Article 157 of the Labor Code, as amended, does not make it mandatory for a covered
establishment to employ health personnel, that the services of nurses is not germane nor
indispensable to its operations, and that respondent doctor is a legitimate individual contractor
who has the power to hire, fire and supervise the work of nurses under her.
Issue: Whether or not there exists an employer-employee relationship between Shangri-la and
petitioners.
Ruling: The Court holds that respondent doctor is a legitimate independent contractor. That
Shangri-la provides the clinic premises and medical supplies for use of its employees and guests
do not necessarily prove that respondent doctor lacks substantial capital and investment.
Besides, the maintenance of a clinic and provision of medical services to its employees is
required under Art. 157, which are not directly related to Shangri-las principal business
operation of hotels and restaurants.
As to payment of wages, respondent doctor is the one who underwrites the following: salaries,
SSS contributions and other benefits of the staff; group life, group personal accident insurance
and life/death insurance for the staff with minimum benefit payable at 12 times the employees
last drawn salary, as well as value added taxes and withholding taxes, sourced from her
P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-las guests
who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as
workers, pay their SSS premium as well as their wages if they were not indeed her employees.
With respect to the supervision and control of the nurses and clinic staff, it is not disputed that
a document, Clinic Policies and Employee Manual claimed to have been prepared by
respondent doctor exists, to which petitioners gave their conformity and in which they
acknowledged their co-terminus employment status. It is thus presumed that said document,
and not the employee manual being followed by Shangri-las regular workers, governs how they
perform their respective tasks and responsibilities.

In fine, as Shangri-la does not control how the work should be performed by petitioners, it is
not petitioners employer.

Garcy Kate D. Go LLB2 EH306 Page 24

Tongko vs. The Manufacturers Life Insurance Co., Inc. November 7, 2008

Facts: Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation
engaged in life insurance business. Renato A. Vergel De Dios was, during the period material,
its President and Chief Executive Officer. Gregorio V. Tongko started his professional
relationship with Manulife on July 1, 1977 by virtue of a Career Agent's Agreement (Agreement)
he executed with Manulife.

In the Agreement, it is provided that:

It is understood and agreed that the Agent is an independent contractor and nothing contained
herein shall be construed or interpreted as creating an employer-employee relationship
between the Company and the Agent.

The Company may terminate this Agreement for any breach or violation of any of the
provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days
from the time of the discovery of the breach. No waiver, extinguishment, abandonment,
withdrawal or cancellation of the right to terminate this Agreement by the Company shall be
construed for any previous failure to exercise its right under any provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at any time without cause,
by giving to the other party fifteen (15) days notice in writing.

In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In
1990, he became a Branch Manager. As the CA found, Tongko's gross earnings from his work at
Manulife, consisting of commissions, persistency income, and management overrides. The
problem started sometime in 2001, when Manulife instituted manpower development
programs in the regional sales management level. Relative thereto, De Dios addressed a letter
dated November 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales
Managers Meeting. Stating that Tongkos Region was the lowest performer (on a per Manager
basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in
this area. Other issues were:"Some Managers are unhappy with their earnings and would want
to revert to the position of agents." And "Sales Managers are doing what the company asks
them to do but, in the process, they earn less." Tongko was then terminated.

Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife
for illegal dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed
the complaint for lack of an employer-employee relationship.

The NLRC's First Division, while finding an employer-employee relationship between Manulife
and Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife
filed an appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29,
2005, finding the absence of an employer-employee relationship between the parties and
deeming the NLRC with no jurisdiction over the case. Hence, Tongko filed this petition.

Issue: Wehther or not Tongko was an employee of Manulife and that he was illegally dismissed.

Ruling: Yes. In the instant case, Manulife had the power of control over Tongko that would
make him its employee.Several factors contribute to this conclusion.

In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided
that:
The Agent hereby agrees to comply with all regulations and requirements of the Company as
herein provided as well as maintain a standard of knowledge and competency in the sale of the
Garcy Kate D. Go LLB2 EH306 Page 25

Company's products which satisfies those set by the Company and sufficiently meets the
volume of new business required of Production Club membership.Under this provision, an
agent of Manulife must comply with three (3) requirements: (1) compliance with the
regulations and requirements of the company; (2) maintenance of a level of knowledge of the
company's products that is satisfactory to the company; and (3) compliance with a quota of
new businesses.

Among the company regulations of Manulife are the different codes of. The fact that Tongko
was obliged to obey and comply with the codes of conduct was not disowned by respondents.

Thus, with the company regulations and requirements alone, the fact that Tongko was an
employee of Manulife may already be established. Certainly, these requirements controlled the
means and methods by which Tongko was to achieve the company's goals.

More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform
administrative duties that establishes his employment with Manulife.

Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a
certain number of agents, in addition to his other administrative functions, leads to no other
conclusion that he was an employee of Manulife.

Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the
burden of proving the validity of the termination of employment rests on the employer. Failure
to discharge this evidential burden would necessarily mean that the dismissal was not justified,
and, therefore, illegal.

The Labor Code provides that an employer may terminate the services of an employee for just
cause and this must be supported by substantial evidence. The settled rule in administrative
and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in
determining the legality of an employer's dismissal of an employee, and not even a
preponderance of evidence is necessary as substantial evidence is considered sufficient.
Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if other minds,
equally reasonable, might conceivably opine otherwise.

Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife
even failed to identify the specific acts by which Tongko's employment was terminated much
less support the same with substantial evidence. To repeat, mere conjectures cannot work to
deprive employees of their means of livelihood. Thus, it must be concluded that Tongko was
illegally dismissed.

Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko
not being its employee is not entitled to such notices. Since we have ruled that Tongko is its
employee, however, Manulife clearly failed to afford Tongko said notices. Thus, on this ground
too, Manulife is guilty of illegal dismissal.

Garcy Kate D. Go LLB2 EH306 Page 26

Caong, Jr. vs. Begualos, GR No. 179428, Jan. 26, 2011

Facts: Petitioners filed a complaint against the respondent on the grounds of illegal dismissal.
Their allegations are they were not availed of the due process of law when they were
dismissed, there was no just cause and the respondent disregarded that there are days that
boundary could not be met due to the scarcity of passengers. The respondent countered that
they were not employees hence they are not covered by the labor code, and that there is no
such illegal dismissal since he only suspended them because they have arrears to be paid which
was resulted from the lack of payment of boundary.
The labor arbiter favored the respondents contention, that there was no illegal dismissal, the
respondent was just imposing sanction on the petitioners for not paying the full amount of
boundary, thus resulted to suspension.
The petitioner appealed the case, however it was denied thus the case went up to the Supreme
Court.
Issue: Whether or not there was employee and employer relationship between the parties and
there was an illegal dismissal in case.
Ruling: Yes, there is employee and employer relationship.
The Supreme Court held that in boundary system, it shall not be treated as lessee and lessor
relationship, the existence of boundary does not negate the employee and employer
relationship.
However on the issue of illegal dismissal, the court ruled that there is no illegal dismissal. Since
the respondent was just exercising his prerogative as an employer, thus he has the right to
suspend them due to not paying the full amount of boundary.

Garcy Kate D. Go LLB2 EH306 Page 27

Atok Big Wedge Company vs Gison
GR No. 169510, August 8, 2011

Facts: Respondent was engaged as part-time consultant on retainer basis by petitioner. As a
consultant on retainer basis, respondent assisted petitioner's retained legal counsel with
matters pertaining to the prosecution of cases against illegal surface occupants within the area
covered by the company's mineral claims. Respondent was likewise tasked to perform liaison
work with several government agencies, which he said was his expertise.Petitioner did not
require respondent to report to its office on a regular basis, except when occasionally
requested by the management to discuss matters needing his expertise as a consultant. As
payment for his services, respondent received a retainer fee of P3,000.00 a month. The said
arrangement continued for the next eleven years.

Sometime thereafter, since respondent was getting old, he requested that petitioner cause his
registration with the Social Security System (SSS), but petitioner did not accede to his request.
He later reiterated his request but it was ignored by petitioner considering that he was only a
retainer/consultant.

On the same date petitioner, issued a memorandum advising respondent that within 30 days
from receipt thereof, petitioner is terminating his retainer contract with the company since his
services are no longer necessary. Respondent filed a complaint for illegal dismissal, unfair labor
practice, underpayment of wages, non-payment of 13th month pay, vacation pay, and sick
leave pay with the National Labor Relations Commission (NLRC).

ISSUE: Whether or not there existed an employer-employee relationship between the
petitioner and respondent.

Ruling: To ascertain the existence of an employer-employee relationship jurisprudence has
invariably adhered to the four-fold test, to wit: a. the selection and engagement of the
employee; b. the payment of wages; c. the power of dismissal; and d. the power to control the
employee's conduct, or the so-called "control test."

Of these four, the last one is the most important. The so-called "control test" is commonly
regarded as the most crucial and determinative indicator of the presence or absence of an
employer-employee relationship. Under the control test, an employer-employee relationship
exists where the person for whom the services are performed reserves the right to control not
only the end achieved, but also the manner and means to be used in reaching that end.
Applying the aforementioned test, an employer-employee relationship is apparently absent in
the case at bar. Among other things, respondent was not required to report everyday during
regular office hours of petitioner. Respondent's monthly retainer fees were paid to him either
at his residence or a local restaurant. More importantly, petitioner did not prescribe the
manner in which respondent would accomplish any of the tasks in which his expertise as a
liaison officer was needed; respondent was left alone and given the freedom to accomplish the
tasks using his own means and method. Respondent was assigned tasks to perform, but
petitioner did not control the manner and methods by which respondent performed these
tasks. Verily, the absence of the element of control on the part of the petitioner engenders a
conclusion that he is not an employee of the petitioner.
Garcy Kate D. Go LLB2 EH306 Page 28

Semblante et al., vs. Court of Appeals, et al.,
G.R. No. 196426, August 15, 2011

Facts: Petitioners Marticio Semblante and Dubrick Pilar assert that they were hired by
respondents-spouses Vicente and Maria Luisa Loot, the owners of Gallera de Mandaue (the
cockpit), as the official masiador and sentenciador, respectively, of the cockpit sometime in
1993.
As the masiador, Semblante calls and takes the bets from the gamecock owners and other
bettors and orders the start of the cockfight. He also distributes the winnings after deducting
the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees
the proper gaffing of fighting cocks, determines the fighting cocks physical condition and
capabilities to continue the cockfight, and eventually declares the result of the cockfight.
For their services as masiado rand sentenciador, Semblante receives PhP 2,000 per week or a
total of PhP 8,000 per month, while Pilar gets PhP 3,500 a week or PhP 14,000 per month. They
work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly derbies
and cockfights held on special holidays. Their working days start at 1:00 p.m. and last until
12:00 midnight, or until the early hours of the morning depending on the needs of the cockpit.
Petitioners had both been issued employees identification cards that they wear every time
they report for duty. They alleged never having incurred any infraction and/or violation of the
cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry into the cockpit upon the
instructions of respondents, and were informed of the termination of their services effective
that date. This prompted petitioners to file a complaint for illegal dismissal against
respondents.
Respondents denied that petitioners were their employees and alleged that they were
associates of respondents independent contractor, Tomas Vega. Respondents claimed that
petitioners have no regular working time or day and they are free to decide for themselves
whether to report for work or not on any cockfighting day. In times when there are few
cockfights in Gallera de Mandaue, petitioners go to other cockpits in the vicinity. Lastly,
petitioners, so respondents assert, were only issued identification cards to indicate that they
were free from the normal entrance fee and to differentiate them from the general public.
In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners to be
regular employees of respondents as they performed work that was necessary and
indispensable to the usual trade or business of respondents for a number of years. The Labor
Arbiter also ruled that petitioners were illegally dismissed, and so ordered respondents to pay
petitioners their back wages and separation pay.
Respondents counsel received the Labor Arbiters Decision on September 14, 2004. And
within the 10-day appeal period, he filed the respondents appeal with the NLRC on September
24, 2004, but without posting a cash or surety bond equivalent to the monetary award granted
by the Labor Arbiter.
The NLRC held in its Resolution of October 18, 2006 that there was no employer-employee
relationship between petitioners and respondents, respondents having no part in the selection
and engagement of petitioners, and that no separate individual contract with respondents was
ever executed by petitioners.
The CA upheld the NLRC decision.

Issues: Whether or not there exists an employer/employee relationship between Semblante, et
al. and the spouses LOOT.
Ruling: The petitioners are NOT employees of respondents, since their relationship fails to pass
muster the four-fold test of employment We have repeatedly mentioned in countless decisions:
(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, which is the most important
element.
Garcy Kate D. Go LLB2 EH306 Page 29

As found by both the NLRC and the CA, respondents had no part in petitioners selection and
management; petitioners compensation was paid out of the arriba (which is a percentage
deducted from the total bets), not by petitioners; and petitioners performed their functions as
masiador and sentenciador free from the direction and control of respondents. In the conduct
of their work, petitioners relied mainly on their expertise that is characteristic of the cockfight
gambling, and were never given by respondents any tool needed for the performance of their
work.
Respondents, not being petitioners employers, could never have dismissed, legally or illegally,
petitioners, since respondents were without power or prerogative to do so in the first place.



Garcy Kate D. Go LLB2 EH306 Page 30

Bernarte vs. Phil. Basketball Association et al.,
G.R. No. 192084, September 14, 2011

Facts: Complainants, Jose Mel Bernarte and Renato Guevarra, aver that they were invited to
join the PBA as referees. During the leadership of Commissioner Emilio Bernardino, they were
made to sign contracts on a year-to-year basis. During the term of Commissioner Eala, however,
changes were made on the terms of their employment.

Bernarte, was not made to sign a contract during the first conference of the All-Filipino Cup
which was from February 23, 2003 to June 2003. It was only during the second conference
when he was made to sign a one and a half month contract for the period July 1 to August 5,
2003.

January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising him
that his contract would not be renewed citing his unsatisfactory performance on and off the
court. It was a total shock for Bernarte who was awarded Referee of the year in 2003. He felt
that the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon.

Guevarra alleges that he was invited to join the PBA pool of referees in February 2001. On
March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a yearly contract as
Regular Class C referee. On May 6, 2003, respondent Martinez issued a memorandum to
Guevarra expressing dissatisfaction over his questioning on the assignment of referees
officiating out-of-town games. Beginning February 2004, he was no longer made to sign a
contract.

The Court of Appeals denied the motion for reconsideration.

Complainants entered into two contracts of retainer with the PBA in the year 2003. The first
contract was for the period January 1, 2003 to July 15, 2003; and the second was for September
1 to December 2003. After the lapse of the latter period, PBA decided not to renew their
contracts.

Complainants were not illegally dismissed because they were not employees of the PBA. Their
respective contracts of retainer were simply not renewed. PBA had the prerogative of whether
or not to renew their contracts, which they knew were fixed.

Labor Arbiters decision, on 31 March 2005, declared petitioner an employee whose dismissal
by respondents was illegal. Accordingly, the Labor Arbiter ordered the reinstatement of
petitioner and the payment of back wages, moral and exemplary damages and attorneys fees.

In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiters judgment. The dispositive
portion of the NLRCs decision reads:

WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor
Arbiter Teresita D. Castillon-Lora dated March 31, 2005 is AFFIRMED.

The Court of Appeals found petitioner an independent contractor since respondents did not
exercise any form of control over the means and methods by which petitioner performed his
work as a basketball referee. The Court of Appeals held:

While the NLRC agreed that the PBA has no control over the referees acts of blowing the
whistle and making calls during basketball games, it, nevertheless, theorized that the said acts
refer to the means and methods employed by the referees in officiating basketball games for
the illogical reason that said acts refer only to the referees skills. How could a skilled referee
Garcy Kate D. Go LLB2 EH306 Page 31

perform his job without blowing a whistle and making calls? Worse, how can the PBA control
the performance of work of a referee without controlling his acts of blowing the whistle and
making calls?

Issues: Whether petitioner is an employee of respondents, which in turn determines whether
petitioner was illegally dismissed

Ruling: At any rate, the NLRC declared the issue on the finality of the Labor Arbiters decision
moot as respondents appeal was considered in the interest of substantial justice. We agree
with the NLRC. The ends of justice will be better served if we resolve the instant case on the
merits rather than allowing the substantial issue of whether petitioner is an independent
contractor or an employee linger and remain unsettled due to procedural technicalities.

The existence of an employer-employee relationship is ultimately a question of fact. As a
general rule, factual issues are beyond the province of this Court. However, this rule admits of
exceptions, one of which is where there are conflicting findings of fact between the Court of
Appeals, on one hand, and the NLRC and Labor Arbiter, on the other, such as in the present
case.

To determine the existence of an employer-employee relationship, case law has consistently
applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employee on the means and methods by which the work is accomplished. The so-called
control test is the most important indicator of the presence or absence of an employer-
employee relationship.

We agree with respondents that once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or decision is
to be made. The referees decide whether an infraction was committed, and the PBA cannot
overrule them once the decision is made on the playing court. The referees are the only,
absolute, and final authority on the playing court. Respondents or any of the PBA officers
cannot and do not determine which calls to make or not to make and cannot control the
referee when he blows the whistle because such authority exclusively belongs to the referees.
The very nature of petitioners job of officiating a professional basketball game undoubtedly
calls for freedom of control by respondents.

Moreover, the following circumstances indicate that petitioner is an independent contractor:
(1) the referees are required to report for work only when PBA games are scheduled, which is
three times a week spread over an average of only 105 playing days a year, and they officiate
games at an average of two hours per game; and (2) the only deductions from the fees received
by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight hours per day for
five days a week, petitioner is required to report for work only when PBA games are scheduled
or three times a week at two hours per game. In addition, there are no deductions for
contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual
deductions from employees salaries. These undisputed circumstances buttress the fact that
petitioner is an independent contractor, and not an employee of respondents.






Garcy Kate D. Go LLB2 EH306 Page 32

Lirio vs Genovia
G.R. No. 169757, NOVEMBER 23, 2011

Facts: On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar
Lirio and/or Celkor Ad Sonicmix Recording Studio for illegal dismissal, non-payment of
commission and award of moral and exemplary damages.

In his Position Paper, respondent Genovia alleged, among others, that on August 15, 2001, he
was hired as studio manager by petitioner Lirio, owner of Celkor Ad Sonicmix Recording Studio
(Celkor). He was employed to manage and operate Celkor and to promote and sell the
recording studio's services to music enthusiasts and other prospective clients. He received a
monthly salary of P7,000.00. They also agreed that he was entitled to an additional commission
of P100.00 per hour as recording technician whenever a client uses the studio for recording,
editing or any related work. He was made to report for work from Monday to Friday from 9:00
a.m. to 6 p.m. On Saturdays, he was required to work half-day only, but most of the time, he
still rendered eight hours of work or more. All the employees of petitioner, including
respondent, rendered overtime work almost every day, but petitioner never kept a daily time
record to avoid paying the employees overtime pay.

Respondent stated that a few days after he started working as a studio manager, petitioner
approached him and told him about his project to produce an album for his 15-year-old
daughter, Celine Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked
respondent to compose and arrange songs for Celine and promised that he (Lirio) would draft a
contract to assure respondent of his compensation for such services. As agreed upon, the
additional services that respondent would render included composing and arranging musical
scores only, while the technical aspect in producing the album, such as digital editing, mixing
and sound engineering would be performed by respondent in his capacity as studio manager
for which he was paid on a monthly basis. Petitioner instructed respondent that his work on
the album as composer and arranger would only be done during his spare time, since his other
work as studio manager was the priority. Respondent then started working on the album.

Respondent alleged that before the end of September 2001, he reminded petitioner about his
compensation as composer and arranger of the album. Petitioner verbally assured him that he
would be duly compensated. By mid-November 2001, respondent finally finished the
compositions and musical arrangements of the songs to be included in the album. Before the
month ended, the lead and back-up vocals in the ten (10) songs were finally recorded and
completed. From December 2001 to January 2002, respondent, in his capacity as studio
manager, worked on digital editing, mixing and sound engineering of the vocal and
instrumental audio files.

Thereafter, respondent was tasked by petitioner to prepare official correspondence, establish
contacts and negotiate with various radio stations, malls, publishers, record companies and
manufacturers, record bars and other outlets in preparation for the promotion of the said
album. By early February 2002, the album was in its manufacturing stage. ELECTROMAT,
manufacturer of CDs and cassette tapes, was tapped to do the job. The carrier single of the
album, which respondent composed and arranged, was finally aired over the radio on February
22, 2002.

On February 26, 2002, respondent again reminded petitioner about the contract on his
compensation as composer and arranger of the album. Petitioner told respondent that since he
was practically a nobody and had proven nothing yet in the music industry, respondent did not
deserve a high compensation, and he should be thankful that he was given a job to feed his
family. Petitioner informed respondent that he was entitled only to 20% of the net profit, and
not of the gross sales of the album, and that the salaries he received and would continue to
Garcy Kate D. Go LLB2 EH306 Page 33

receive as studio manager of Celkor would be deducted from the said 20% net profit share.
Respondent objected and insisted that he be properly compensated. On March 14, 2002,
petitioner verbally terminated respondents services, and he was instructed not to report for
work.

Respondent asserts that he was illegally dismissed as he was terminated without any valid
grounds, and no hearing was conducted before he was terminated, in violation of his
constitutional right to due process. Having worked for more than six months, he was already a
regular employee. Although he was a so called studio manager, he had no managerial
powers, but was merely an ordinary employee.

Respondent prayed for his reinstatement without loss of seniority rights, or, in the alternative,
that he be paid separation pay, back wages and overtime pay; and that he be awarded unpaid
commission in the amount of P2,000.00 for services rendered as a studio technician as well as
moral and exemplary damages.

Respondents evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which
was certified correct by petitioner,
[2]
and Petty Cash Vouchers
[3]
evidencing receipt of payroll
payments by respondent from Celkor.

In defense, petitioner stated in his Position Paper
[4]
that respondent was not hired as studio
manager, composer, technician or as an employee in any other capacity of Celkor. Respondent
could not have been hired as a studio manager, since the recording studio has no personnel
except petitioner. Petitioner further claimed that his daughter Celine Mei Lirio, a former
contract artist of ABS-CBN Star Records, failed to come up with an album as the latter aborted
its project to produce one. Thus, he decided to produce an album for his daughter and
established a recording studio, which he named Celkor Ad Sonicmix Recording Studio. He
looked for a composer/arranger who would compose the songs for the said album. In July 2001,
Bob Santiago, his son-in-law, introduced him to respondent, who claimed to be an amateur
composer, an arranger with limited experience and musician without any formal musical
training. According to petitioner, respondent had no track record as a composer, and he was
not known in the field of music. Nevertheless, after some discussion, respondent verbally
agreed with petitioner to co-produce the album based on the following terms and
conditions: (1) petitioner shall provide all the financing, equipment and recording
studio; (2) Celine Mei Lirio shall sing all the songs; (3) respondent shall act as composer and
arranger of all the lyrics and the music of the five songs he already composed and the revival
songs; (4) petitioner shall have exclusive right to market the album; (5) petitioner was entitled
to 60% of the net profit, while respondent and Celine Mei Lirio were each entitled to 20% of the
net profit; and (6) respondent shall be entitled to draw advances of P7,000.00 a month, which
shall be deductible from his share of the net profits and only until such time that the album has
been produced.

According to petitioner, they arrived at the foregoing sharing of profits based on the mutual
understanding that respondent was just an amateur composer with no track record whatsoever
in the music industry, had no definite source of income, had limited experience as an arranger,
had no knowledge of the use of sound mixers or digital arranger and that
petitioner would help and teach him how to use the studio equipment; that petitioner would
shoulder all the expenses of production and provide the studio and equipment as well as his
knowledge in the use thereof; and Celine Mei Lirio would sing the songs. They embarked on the
production of the album on or about the third week of August 2002.

Petitioner asserted that from the aforesaid terms and conditions, his relationship with
respondent is one of an informal partnership under Article 1767of the New Civil Code, since
they agreed to contribute money, property or industry to a common fund with the intention of
Garcy Kate D. Go LLB2 EH306 Page 34

dividing the profits among themselves. Petitioner had no control over the time and manner by
which respondent composed or arranged the songs, except on the result thereof. Respondent
reported to the recording studio between 10:00 a.m. and 12:00 noon. Hence, petitioner
contended that no employer-employee relationship existed between him and the respondent,
and there was no illegal dismissal to speak of.

Issue: Whether or not employer-employee relationship exists?

Ruling: Yes. The elements to determine the existence of an employment relationship are: (a)
the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employees conduct. The most
important element is the employers control of the employees conduct, not only as to the
result of the work to be done, but also as to the means and methods to accomplish it.


It is settled that no particular form of evidence is required to prove the existence of an
employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted.

In this case, the documentary evidence presented by respondent to prove that he was an
employee of petitioner are as follows: (a) a document denominated as "payroll" (dated July 31,
2001 to March 15, 2002) certified correct by petitioner,
[31]
which showed that respondent
received a monthly salary of P7,000.00 (P3,500.00 every 15
th
of the month and
another P3,500.00 every 30
th
of the month) with the corresponding deductions due to absences
incurred by respondent; and (2) copies of petty cash vouchers,
[32]
showing the amounts he
received and signed for in the payrolls.

The said documents showed that petitioner hired respondent as an employee and he was paid
monthly wages of P7, 000.00. Petitioner wielded the power to dismiss as respondent stated
that he was verbally dismissed by petitioner, and respondent, thereafter, filed an action for
illegal dismissal against petitioner. The power of control refers merely to the existence of the
power. It is not essential for the employer to actually supervise the performance of duties of
the employee, as it is sufficient that the former has a right to wield the power. Nevertheless,
petitioner stated in his Position Paper that it was agreed that he would help and teach
respondent how to use the studio equipment. In such case, petitioner certainly had the power
to check on the progress and work of respondent.

Garcy Kate D. Go LLB2 EH306 Page 35

Charlie Jao vs Bcc Products Sales, Inc.
GR No. 163700, April 18, 2012

Facts: Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President,
respondent Terrance Ty (Ty), employed him as comptroller starting from September 1995 with
a monthly salary of P20,000.00 to handle the financial aspect of BCC's business; that on October
19, 1995, the security guards of BCC, acting upon the instruction of Ty, barred him from
entering the premises of BCC where he then worked; that his attempts to report to work in
November and December 12, 1995 were frustrated because he continued to be barred from
entering the premises of BCC; and that he filed a complaint dated December 28, 1995 for illegal
dismissal, reinstatement with full backwages, non-payment of wages, damages and attorney's
fees.

Respondents countered that petitioner was not their employee but the employee of Sobien
Food Corporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him as
its comptroller in BCC to oversee BCC's finances and business operations and to look after SFC's
interests or investments in BCC.; that their issuance of the ID to petitioner was only for the
purpose of facilitating his entry into the BCC premises in relation to his work of overseeing the
financial operations of BCC for SFC; that the ID should not be considered as evidence of
petitioner's employment in BCC; that petitioner executed an affidavit in March 1996, 20 stating,
among others, as follows:

1. I am a CPA (Certified Public Accountant) by profession but presently associated with, or
employed by, Sobien Food Corporation with the same business address as abovestated;
2. In the course of my association with, or employment by, Sobien Food Corporation (SFC,
for short), I have been entrusted by my employer to oversee and supervise collections
on account of receivables due SFC from its customers or clients; for instance, certain
checks due and turned over by one of SFC's customers is BCC Product Sales, Inc.,
operated or run by one Terrance L. Ty, (President and General manager).

Petitioner counters, however, that the affidavit did not establish the absence of an employer-
employee relationship between him and respondents because it had been executed in March
1996, or after his employment with respondents had been terminated on December 12, 1995;
and that the affidavit referred to his subsequent employment by SFC following the termination
of his employment by BCC.

Issue: The sole issue is whether or not an employer-employee relationship existed between
petitioner and BCC.

Ruling: In determining the presence or absence of an employer-employee relationship, the
Court has consistently looked for the following incidents, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee on the means and methods by which the work is
accomplished. The last element, the so-called control test, is the most important element.

Petitioner presented no document setting forth the terms of his employment by BCC. The
failure to present such agreement on terms of employment may be understandable and
expected if he was a common or ordinary laborer who would not jeopardize his employment by
demanding such document from the employer, but may not square well with his actual status
as a highly educated professional.

Petitioner's admission that he did not receive his salary for the three months of his employment
by BCC, as his complaint for illegal dismissal and non-payment of wages and the criminal case
for estafa he later filed against the respondents for non-payment of wages indicated, further
Garcy Kate D. Go LLB2 EH306 Page 36

raised grave doubts about his assertion of employment by BCC. If the assertion was true, we
are puzzled how he could have remained in BCC's employ in that period of time despite not
being paid the first salary of P20,000.00/month. Moreover, his name did not appear in the
payroll of BCC despite him having approved the payroll as comptroller.

Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of
the insincerity of petitioner's assertion of employment by BCC. In the petition for review on
certiorari, he averred that he had been barred from entering the premises of BCC on October
19, 1995, 27 and thus was illegally dismissed. Yet, his complaint for illegal dismissal stated that
he had been illegally dismissed on December 12, 1995 when respondents' security guards
barred him from entering the premises of BCC, 28 causing him to bring his complaint only on
December 29, 1995, and after BCC had already filed the criminal complaint against him. The
wide gap between October 19, 1995 and December 12, 1995 cannot be dismissed as a trivial
inconsistency considering that the several incidents affecting the veracity of his assertion of
employment by BCC earlier noted herein transpired in that interval.

With all the grave doubts thus raised against petitioner's claim, we need not dwell at length on
the other proofs he presented, like the affidavits of some of the employees of BCC, the ID, and
the signed checks, bills and receipts. Suffice it to be stated that such other proofs were easily
explainable by respondents and by the aforestated circumstances showing him to be the
employee of SFC, not of BCC.

Garcy Kate D. Go LLB2 EH306 Page 37

Legend Hotel vs Realuyo
GR 153511, July 18, 2012

Facts: This labor case for illegal dismissal involves a pianist employed to perform in the
restaurant of a hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa, filed
a complaint for alleged unfair labor practice, constructive illegal dismissal, and the
underpayment/nonpayment of his premium pay for holidays, separation pay, service incentive
leave pay, and 13111 month pay.

Respondent averred that he had worked as a pianist at the Legend Hotels Tanglaw Restaurant
from September 1992 with an initial rate of P400.00/night that was given to him after each
nights performance; that his rate had increased to P750.00/night; and that during his
employment, he could not choose the time of performance, which had been fixed from 7:00
pm to 10:00 pm for three to six times/week. He added that the Legend Hotels restaurant
manager had required him to conform with the venues motif; that he had been subjected to
the rules on employees representation checks and chits, a privilege granted to other
employees; that on July 9, 1999, the management had notified him that as a cost-cutting
measure his services as a pianist would no longer be required effective July 30, 1999; that he
disputed the excuse, insisting that Legend Hotel had been lucratively operating as of the filing
of his complaint; and that the loss of his employment made him bring his complaint.
2


Issue: Whether there exists an employer-employee relationship

Ruling: Employer-employee relationship existed between the parties. The issue of whether or
not an employer-employee relationship existed between petitioner and respondent is
essentially a question of fact. The factors that determine the issue include who has the power
to select the employee, who pays the employees wages, who has the power to dismiss the
employee, and who exercises control of the methods and results by which the work of the
employee is accomplished.
10
Although no particular form of evidence is required to prove the
existence of the relationship, and any competent and relevant evidence to prove the
relationship may be admitted,

a finding that the relationship exists must nonetheless rest on
substantial evidence, which is that amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion.

A review of the circumstances reveals that respondent was, indeed, petitioners employee. He
was undeniably employed as a pianist in petitioners Madison Coffee Shop/Tanglaw Restaurant
from September 1992 until his services were terminated on July 9, 1999.

First of all, petitioner actually wielded the power of selection at the time it entered into the
service contract dated September 1, 1992 with respondent. This is true, notwithstanding
petitioners insistence that respondent had only offered his services to provide live music at
petitioners Tanglaw Restaurant, and despite petitioners position that what had really
transpired was a negotiation of his rate and time of availability. The power of selection was
firmly evidenced by, among others, the express written recommendation dated January 12,
1998 by Christine Velazco, petitioners restaurant manager, for the increase of his
remuneration.

Secondly, petitioner argues that whatever remuneration was given to respondent were only his
talent fees that were not included in the definition of wage under the Labor Code. Respondent
was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six nights
a week. Such rate of remuneration was later increased to P750.00 upon restaurant manager
Velazcos recommendation. There is no denying that the remuneration denominated as talent
fees was fixed on the basis of his talent and skill and the quality of the music he played during
Garcy Kate D. Go LLB2 EH306 Page 38

the hours of performance each night, taking into account the prevailing rate for similar talents
in the entertainment industry

Respondents remuneration, albeit denominated as talent fees, was still considered as included
in the term wage in the sense and context of the Labor Code, regardless of how petitioner
chose to designate the remuneration.

Thirdly, the power of the employer to control the work of the employee is considered the most
significant determinant of the existence of an employer-employee relationship. This is the so-
called control test, and is premised on whether the person for whom the services are
performed reserves the right to control both the end achieved and the manner and means used
to achieve that end.
A review of the records shows, however, shows that respondent performed his work as a
Pianist under petitioners supervision and control. Specifically, petitioners control of both the
end achieved and the manner and means used to achieve that end was demonstrated by the
following, to wit:
a) He could not choose the time of his performance, which petitioners had fixed from 7:00
pm to 10:00 pm, three to six times a week;
b) He could not choose the place of his performance;
c) The restaurants manager required him at certain times to perform only Tagalog songs
or music, or to wear barong Tagalog to conform to the Filipiniana motif; and
d) He was subjected to the rules on employees representation check and chits, a privilege
granted to other employees.

Garcy Kate D. Go LLB2 EH306 Page 39

The New Philippine Skylanders, Inc., vs. Dakila
G.r. No. 199547, Sept. 24, 2012

Facts: November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor
union affiliated with the Philippine Association of Free Labor Unions (PAFLU) September
(PAFLU), won in the certification election conducted among the rank and file employees of
Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders Employees Association-
WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of
Labor.

In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason
PAFLUs supposed deliberate and habitual dereliction of duty toward its members. Attached to
the notice was a copy of the resolution adopted and signed by the officers and members of
PSEA authorizing their local union to disaffiliate from its mother federation.

PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its
name to Philippine Skylanders Employees Association -National Congress of Workers (PSEA-
NCW), and to maintain continuity within the organization, allowed the former officers of PSEA-
PAFLU to continue occupying their positions as elected officers in the newly-forged PSEA-NCW.

On 17 March, 1994, PSEA-NCW entered into a collective bargaining agreement with PSI which
was immediately registered with the Department of Labor and Employment.

PAFLU requested for the accounting. PSI through its personnel manager Francisco Dakila denied
the request.

PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its
president Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside
from PSIs refusal to bargain collectively with its workers, the company through its president
and personnel manager, was also liable for interfering with its employees union activities

Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco
Dakila. Through Ayroso PAFLU claimed that Dakila was present in PSEAs organizational meeting
thereby confirming his illicit participation in union activities. Ayroso added that the members of
the local union had unwittingly fallen into the manipulative machinations of PSI and were lured
into endorsing a collective bargaining agreement which was detrimental to their interests.

PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional
party respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario
Cabanias, Pepito Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn
Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes,
Manuel Cadiente, and Herminia Riosa, were equally guilty of unfair labor practice since they
brazenly allowed themselves to be manipulated and influenced by petitioner Francisco Dakila.

Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation
was an inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter. PSEA was no
longer affiliated with PAFLU, Ayroso or PAFLU for that matter had no personality to file the
instant complaint.

Labor Arbiter declared PSEAs disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and
their respective officers guilty of unfair labor practice.

As PSEA-NCWs personality was not accorded recognition, its collective bargaining agreement
with PSI was struck down for being invalid.
Garcy Kate D. Go LLB2 EH306 Page 40


PSI, PSEA and their respective officers appealed to the National Labor Relations Commission
(NLRC). But the NLRC upheld the Decision ofthe Labor Arbiter.

Ruling: Local unions have a right to separate from their mother federation on the ground that
as separate and voluntary associations, local unions do not owe their creation and existence to
the national federation to which they are affiliated but, instead, to the will of their members.
The sole essence of affiliation is to increase, by collective action, the common bargaining power
of local unions for the effective enhancement and protection of their interests. Admittedly,
there are times when without succor and support local unions may find it hard, unaided by
other support groups, to secure justice for them. Yet the local unions remain the basic units of
association, free to serve their own interests subject to the restraints imposed by the
constitution and by-laws of the national federation, and free also to renounce the affiliation
upon the terms laid down in the agreement which brought such affiliation into existence.

There is nothing shown in the records nor is it claimed by PAFLU that the local union was
expressly forbidden to disaffiliate from the federation nor were there any conditions imposed
for a valid breakaway. As such, the pendency of an election protest involving both the mother
federation and the local union did not constitute a bar to a valid disaffiliation. Neither was it
disputed by PAFLU that 111 signatories out of the 120 members of the local union, or an
equivalent of 92.5% of the total union membership supported the claim of disaffiliation and had
in fact disauthorized PAFLU from instituting any complaint in their behalf.

It was entirely reasonable then for PSI to enter into a collective bargaining agreement with
PSEA-NCW. As PSEA had validly severed itself from PAFLU, there would be no restrictions which
could validly hinder it from subsequently affiliating with NCW and entering into a collective
bargaining agreement in behalf of its members.

The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give
PAFLU the license to act independently of the local union.

Garcy Kate D. Go LLB2 EH306 Page 41

Tesoro et al., vs. Metro Manila Retreaders Inc., et al.,
GR No. 171482, March 12, 2014

This case concerns the effect on the status of employment of employees who entered into a
Service Franchise Agreement with their employer.

Facts: On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro, Pedro Ang,
and Gregorio Sharp used to work as salesmen for respondents Metro Manila Retreaders, Inc.,
Northern Luzon Retreaders, Inc., or Power Tire and Rubber Corporation. These are sister
companies collectively called Bandag. Bandag offered repair and retread services for used
tires. In 1998, however, Bandag developed a franchising scheme that would enable others to
operate tire and retreading businesses using its trade name and service system. Petitioners quit
their jobs as salesmen and entered into separate Service Franchise Agreements (SFAs) with
Bandag for the operation of their respective franchises. Under this SFA, Bandag would provide
funding with the petitioners subject to regular liquidation of revolving funds. The expenses of
these funds will be deducted from their sale in order to determine their income. After some
time, petitioners began to default on their obligations to submit periodic liquidations of their
operational expenses in relation to the revolving funds Bandag provided them. Bandag
terminated their SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, nonpayment of wages,
incentive pay, 13th month pay and damages against Bandag with the National Labor Relations
Commission (NLRC). Petitioners contend that despite the SFA, they remained employees of
Bandag. For its part, Bandag pointed out that petitioners freely resigned from their
employment and decided to avail themselves of the opportunity to be independent
entrepreneurs under the franchise scheme that Bandag had. Thus, no employeremployee
relationship existed between petitioners and Bandag.

Issue: Whether or not petitioners remained to be Bandags salesmen under the franchise
scheme it entered into with them.

Ruling: No, petitioners were no longer employees of Bandag the moment they entered into the
SFA. Franchising is a business method of expansion that allows an individual or group of
individuals to market a product or a service and to use of the patent, trademark, trade name
and the systems prescribed by the owner.

The tests for determining employeremployee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employee with respect to the means and methods by which
the work is to be accomplished. The last is called the control test, the most important
element.

When petitioners agreed to operate Bandags franchise branches in different parts of the
country, they knew that this substantially changed their former relationships. They were to
cease working as Bandags salesmen, the positions they occupied before they ventured into
running separate Bandag branches. They were to cease receiving salaries or commissions. Their
incomes were to depend on the profits they made. Yet, petitioners did not then complain of
constructive dismissal. They took their chances, ran their branches, Gregorio Sharp in La Union
for several months and Ashmor Tesoro in Baguio and Pedro Ang in Pangasinan for over a year.
Clearly, their belated claim of constructive dismissal is quite hollow.

It is pointed out that Bandag continued, like an employer, to exercise control over petitioners
work. It points out that Bandag: (a) retained the right to adjust the price rates of products and
services; (b) imposed minimum processed tire requirement (MPR); (c) reviewed and regulated
Garcy Kate D. Go LLB2 EH306 Page 42

credit applications; and (d) retained the power to suspend petitioners services for failure to
meet service standards. But uniformity in prices, quality of services, and good business
practices are the essence of all franchises. A franchisee will damage the franchisors business if
he sells at different prices, renders different or inferior services, or engages in bad business
practices. These business constraints are needed to maintain collective responsibility for
faultless and reliable service to the same class of customers for the same prices.

This is not the control contemplated in employeremployee relationships. Control in such
relationships addresses the details of day to day work like assigning the particular task that has
to be done, monitoring the way tasks are done and their results, and determining the time
during which the employee must report for work or accomplish his assigned task.

Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employer
employee relationship with Bandag. These funds do not represent wages. They are more in the
nature of capital advances for operations that Bandag conceptualized to attract prospective
franchisees. Petitioners incomes depended on the profits they make, controlled by their
individual abilities to increase sales and reduce operating costs.

Garcy Kate D. Go LLB2 EH306 Page 43

HIRING OF EMPLOYEE

Ollendor vs Abrahanson 38 Phil 585

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?

Ruling: 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 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.

Garcy Kate D. Go LLB2 EH306 Page 44

Del Castillo vs. Richmond
G.R. No. L-21127; February 9, 1924

Facts: The case was instituted to declare the contract of services entered into by Alfonso del
Castillo as null and void. Del Castillo 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.

The said contract constituted an illegal and unreasonable restriction upon the right of the
plaintiff to contract and was contrary to public policy. It will be noted that the restrictions
placed upon the plaintiff are strictly limited (a) to a limited district or districts, and (b) during
the time while the defendant or his heirs may own or have open a drugstore, or have an
interest in any other one within said limited district.

Issue: Whether or not the said restraint is reasonable.

Ruling: SC ruled that the restriction is reasonable and not contrary to public policy.

The law concerning contracts which tend to restrain business or trade has gone through a long
series of changes from time to time with the changing conditions of trade and commerce. With
trifling exceptions, said changes have been a continuous development of a general rule.

The early cases show plainly a disposition to avoid and annul all contracts which prohibited or
restrained any one from using lawful trade " at any time or at any place," as being against the
benefit of the state. Later, however, 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 provided there is a limitation upon either
time or place. A contract, however, which restrains a man entering into a business or trade
without either a limitation as to time or place, will be held invalid.

As stated in the case of Ollendorf vs. Abrahamson, The public welfare of course must always be
considered, and if it be not involved and the restraint upon one party is not greater than
protection to the other requires, contracts like the one we are discussing will be sustained. The
general tendency, we believe, of modern authority, is to make the test whether the restraint is
reasonably necessary for the protection of the contracting parties. If the contract is reasonably
necessary to protect the interest of the parties, it will be upheld.

In that case we held that a contract by which an employee agrees to refrain at a given length of
time, after the expiration of the term of his employment, from engaging in business,
competitive with that of his employer, is not void as being in restraint of trade if the restraint
imposed is not greater than that which is necessary to afford a reasonable protection.

Garcy Kate D. Go LLB2 EH306 Page 45

PT & T vs. NLRC
G.R. No. 118978; May 23, 1997

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

It now appears that private respondent had made the a representation that she was single even
though she contracted marriage months before, in the two successive reliever agreements
which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about
the same later, its branch supervisor sent to private respondent a memorandum requiring her
to explain the discrepancy. In that memorandum, she was reminded about the companys
policy of not accepting married women for employment.

Private respondent was dismissed from the company effective January 29, 1992, which she
readily contested by initiating a complaint for illegal dismissal. Labor Arbiter handed down a
decision declaring that private respondent, who had already gained the status of a regular
employee, was illegally dismissed by petitioner. On appeal to the National Labor Relations
Commission (NLRC), said public respondent upheld the labor arbiter and it ruled that private
respondent had indeed been the subject of an unjust and unlawful discrimination by her
employer, PT&T.

Issue: Whether or not discrimination merely by reason of the marriage of a female employee is
expressly prohibited by Article 136.

Ruling: SC ruled that the stipulation is violative of Art. 136 of the Labor Code.

An employer is free to regulate, according to his discretion and best business judgment, all
aspects of employment, from hiring to firing, except in cases of unlawful discrimination or
those which may be provided by law. 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.

Respondents act of concealing the true nature of her status from PT&T could not be properly
characterized as willful or in bad faith as she was moved to act the way she did mainly because
she wanted to retain a permanent job in a stable company. In other words, she was practically
forced by that very same illegal company policy into misrepresenting her civil status for fear of
being disqualified from work.

The government, to repeat, abhors any stipulation or policy in the nature of that adopted by
petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:

ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to
require as a condition of employment or continuation of employment that a
woman shall not get married, or to stipulate expressly or tacitly that upon
getting married, a woman employee shall be deemed resigned or separated, or
to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of marriage.
Garcy Kate D. Go LLB2 EH306 Page 46

Under American jurisprudence, job requirements which establish employer preference or
conditions relating to the marital status of an employee are categorized as a sex-plus
discrimination where it is imposed on one sex and not on the other. Further, the same should
be evenly applied and must not inflict adverse effects on a racial or sexual group which is
protected by federal job discrimination laws.

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.

Garcy Kate D. Go LLB2 EH306 Page 47

Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils.
G.R. No. 162994, Sept. 17, 2004

Facts: Petitioner Pedro Tecson was hired by respondent Glaxo Wellcome Philppines(glaxo) as
medical representative on Oct.24,1994 thereafter signed a contract of employment which
stipulates among others that he agrees to study and abide existing company rules; to disclose
to management any existing of future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies and if ever that such management find
such conflict of interest,he must resign. 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. If management perceives a conflict of interest or a potential conflict between such
relationship and the employees employment with the company, the management and the
employee will explore the possibility of a transfer to another department in a non-
counterchecking position or preparation for employment outside the company after six
months.

Reminders from Tecsons district manager did not stop him from marrying.Tecson married
Bettsy, an Astras Branch Coordinatior in Albay. She supervised the district managers and
medical representatives of her company and prepared marketing strategies for Astra in that
area.

Tecson was reassigned to another place and was not given products that the Astra company
has and he was not included in products seminars and training.

Tecson requested for time in complying said policy by asking for a transfer in the Glaxos milk
division in which the other company had no counterpart. Thereafter, he bought the matter to
Grievance Committee but the parties failed to resolve such issue, Glaxo offered Tecson a
separation pay of one-half () month pay for every year of service, or a total of P50,000.00 but
he declined the offer. On November 15, 2000, the National Conciliation and Mediation Board
(NCMB) rendered its Decision declaring as valid Glaxos policy on relationships between its
employees and persons employed with competitor companies, and affirming Glaxos right to
transfer Tecson to another sales territory.

Tecson filed for a petition for review on the CA and the CA promulgated that the NCMB did not
err in rendering its decision. A recon was filed in appellate court but it was denied, hence this
petition for certiorari. Petitioners contention it was violative of constitutional law which is the
equal protection clause and he was constructively dismissed while the respondents contention
that it is a valid exercise of it s management prerogatives.

Issue: Whether or not the policy of a pharmaceutical company prohibiting its employees from
marrying employees of another pharmaceutical company is valid?

Ruling: This petition was denied. 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.

Garcy Kate D. Go LLB2 EH306 Page 48

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.

The challenged company policy does not violate the equal protection clause of the Constitution
as petitioners erroneously suggest. It is a settled principle that the commands of the equal
protection clause are addressed only to the state or those acting under color of its authority.

From the wordings of the contractual provision and the policy in its employee handbook, it is
clear that Glaxo does not impose an absolute prohibition against relationships between its
employees and those of competitor companies. Its employees are free to cultivate
relationships with and marry persons of their own choosing. What the company merely seeks
to avoid is a conflict of interest between the employee and the company that may arise out of
such relationships.

There was no merit in Tecsons contention that he was constructively dismissed when he was
transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-
Agusan del Sur sales area, and when he was excluded from attending the companys seminar
on new products which were directly competing with similar products manufactured by Astra.
Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable, or unlikely; when there is a
demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by
an employer becomes unbearable to the employee. The record does not show that Tecson was
demoted or unduly discriminated upon by reason of such transfer.

Garcy Kate D. Go LLB2 EH306 Page 49

City of Manila vs. Laguio
G.R. No. 118127, April 12, 2005

Facts: Private respondent Malate Tourist Development Corporation (MTDC) is a corporation
engaged in the business of operating hotels, motels, hostels and lodging houses.
[5]
It built and
opened Victoria Court in Malate which was licensed as a motel although duly accredited with
the Department of Tourism as a hotel.
[6]
On 28 June 1993, MTDC filed a Petition for Declaratory
Relief with Prayer for a Writ of Preliminary Injunction and/or Temporary Restraining
Order
[7]
(RTC Petition) with the lower court impleading as defendants, herein petitioners City of
Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the members of the City Council
of Manila (City Council). MTDC prayed that the Ordinance, insofar as it includes motels and
inns as among its prohibited establishments, be declared invalid and unconstitutional.
[8]

Enacted by the City Council
[9]
on 9 March 1993 and approved by petitioner City Mayor on 30
March 1993, the said Ordinance is entitled

AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING
CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-
MALATE AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.

In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly included in its
enumeration of prohibited establishments, motels and inns such as MTDCs Victoria Court
considering that these were not establishments for amusement or entertainment and they
were not services or facilities for entertainment, nor did they use women as tools for
entertainment, and neither did they disturb the community, annoy the inhabitants or
adversely affect the social and moral welfare of the community.

Issue: Whether or not Ordinance No. 7783 of City of Manila is a valid exercise of police power.

Ruling: It is undoubtedly one of the fundamental duties of the City of Manila to make all
reasonable regulations looking to the promotion of the moral and social values of the
community. However, the worthy aim of fostering public morals and the eradication of the
communitys social ills can be achieved through means less restrictive of private rights; it can be
attained by reasonable restrictions rather than by an absolute prohibition. The closing down
and transfer of businesses or their conversion into businesses allowed under
the Ordinance have no reasonable relation to the accomplishment of its purposes. Otherwise
stated, the prohibition of the enumerated establishments will not per se protect and promote
the social and moral welfare of the community; it will not in itself eradicate the alluded social
ills of prostitution, adultery, fornication nor will it arrest the spread of sexual disease in Manila.
It is readily apparent that the means employed by the Ordinance for the achievement of its
purposes, the governmental interference itself, infringes on the constitutional guarantees of a
persons fundamental right to liberty and property.

Persons desirous to own, operate and patronize the enumerated establishments under Section
1 of the Ordinance may seek autonomy for these purposes.

Motel patrons who are single and unmarried may invoke this right to autonomy to consummate
their bonds in intimate sexual conduct within the motels premisesbe it stressed that their
consensual sexual behavior does not contravene any fundamental state policy as contained in
the Constitution.
[72]
Adults have a right to choose to forge such relationships with others in the
confines of their own private lives and still retain their dignity as free persons. The liberty
protected by the Constitution allows persons the right to make this choice.
[73]
Their right to
liberty under the due process clause gives them the full right to engage in their conduct without
intervention of the government, as long as they do not run afoul of the law. Liberty should be
the rule and restraint the exception.
Garcy Kate D. Go LLB2 EH306 Page 50

Liberty in the constitutional sense not only means freedom from unlawful government
restraint; it must include privacy as well, if it is to be a repository of freedom. The right to be let
alone is the beginning of all freedomit is the most comprehensive of rights and the right most
valued by civilized men

All considered, the Ordinance invades fundamental personal and property rights and impairs
personal privileges. It is constitutionally infirm. The Ordinance contravenes statutes; it is
discriminatory and unreasonable in its operation; it is not sufficiently detailed and explicit that
abuses may attend the enforcement of its sanctions. And not to be forgotten, the City Council
under the Code had no power to enact the Ordinance and is therefore ultra vires, null and void.

Garcy Kate D. Go LLB2 EH306 Page 51

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?

Ruling: Petitioners sole contention that "the company did not just want to have two or more of
its employees related between the third degree by affinity and/or consanguinity" is lame.

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

The requirement is 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.

Garcy Kate D. Go LLB2 EH306 Page 52


Del Monte Phils. V. Velasco G.R. No. 153477; March 6, 2007

Facts: Lolita Velasco was hired by Del Monte as seasonal employee and was subsequently
regularized by Del Monte. On June 1987, petitioner warned Velasco of its absences and was
repeatedly reminded that her absence without permission may result to forfeiture of her
vacation leave.

Another warning was sent due to her absences without permission which eventually led to the
forfeiture of her vacation entitlement. On September 1994, a notice of hearing was sent to
Velasco informing her of the charges filed against her for violating the Absence without leave
rule. On January 1995, after the hearing, Del Monte terminated the services of Velasco due to
excessive absence without leave. Feeling aggrieved, Velasco filed a case for illegal dismissal. She
asserted that she was absent since she was suffering urinary tract infection and she was
pregnant.

She sent an application for leave to the supervisor. Upon check up of the company doctor,
Velasco was advised to rest. On the following check-ups, she was again advised to rest where
this time, she was not able to get secure a leave.

The Labor Arbiter rendered decision that she was an incorrigible absentee. Respondent
appealed to the NLRC. NLRC vacated the decision of the Labor Arbiter. It decided that
respondent was illegally dismissed and was entitled to reinstatement. Petitioner appealed to CA
where it dismissed its claim and affirmed NLRC, thus, this petition.

Issue: Whether or not the dismissal was illegal?

Ruling: Yes. In this case, by the measure of substantial evidence, what is controlling is the
finding of the NLRC and the CA that respondent was pregnant and suffered from related
ailments. It would be unreasonable to isolate such condition strictly to the dates stated in the
Medical Certificate or the Discharge Summary. It can be safely assumed that the absences that
are not covered by, but which nonetheless approximate, the dates stated in the Discharge
Summary and Medical Certificate, are due to the continuing condition of pregnancy and related
illnesses, and, hence, are justified absences.

The termination was illegal since it comes within the purview of the prohibited acts provided in
Article 137 of the Labor Code. Based on Article 137, it shall be unlawful for any employer (1) to
deny any woman employee the benefits provided for in this Chapter or to discharge any
woman employed by him for the purpose of preventing her from enjoying any of the benefits
provided under this Code; (2) to discharge such woman on account of her pregnancy, or while
on leave or in confinement due to her pregnancy; and (3) to discharge or refuse the admission
of such woman upon returning to her work for fear that she may again be pregnant.
The respondent was illegally dismissed by the petitioner on account of her pregnancy. The act
of the employer is unlawful, it being contrary to law.

Garcy Kate D. Go LLB2 EH306 Page 53

YRASUEGUI V. PHIL. AIRLINEGR NO. 168081; Oct. 17, 2008

Facts: This case portrays the peculiar story of an international flight steward who was dismissed
because of his failure to adhere to the weight standards of the airline company.

Petitioner was a former international flight steward of PAL. He had problems meeting the
required weight standards for cabin and crew. He was advised to go on leave without pay
several times to address his weight concerns, to no avail. PAL had him grounded until such time
he satisfactorily complies with the weight standards and he was directed to report every two
weeks for weight checks.

On November 5, 1992, petitioner weighed 205 lbs, way beyond his ideal weight of 166 lbs. On
June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his
ideal weight, and considering the utmost leniency extended to him which spanned a period
covering a total of almost five (5) years, his services were considered terminated effective
immediately

The Labor Arbiter ruled that he was illegally dismissed. The Labor Arbiter held that the weight
standards of PAL are reasonable in view of the nature of the job of petitioner.
[15]
However, the
weight standards need not be complied with under pain of dismissal since his weight did not
hamper the performance of his duties.
[16]
Assuming that it did, petitioner could be transferred
to other positions where his weight would not be a negative factor. NLRC affirmed the decision
of the Labor Arbiter, with modifications.

The CA, however, reversed the ruling. Contrary to the NLRC ruling, the weight standards of PAL
are meant to be a continuing qualification for an employees position. The failure to adhere to
the weight standards is an analogous cause for the dismissal of an employee under Article
282(e) of the Labor Code in relation to Article 282(a). It is not willful disobedience as the NLRC
seemed to suggest.

Issue: Whether or not the petitioner was illegally dismissed.

Ruling: I. The obesity of petitioner is a ground for dismissal under Article 282(e)
[44]
of the Labor
Code. [T]he standards violated in this case were not mere orders of the employer; they were
the prescribed weights that a cabin crew must maintain in order to qualify for and keep his or
her position in the company. In other words, they were standards that establish continuing
qualifications for an employees position.

By its nature, these qualifying standards are norms that apply prior to and after an employee is
hired. They applyprior to employment because these are the standards a job applicant must
initially meet in order to be hired. They apply after hiring because an employee must continue
to meet these standards while on the job in order to keep his job. Under this perspective, a
violation is not one of the faults for which an employee can be dismissed

II. The dismissal of petitioner can be predicated on the bona fide occupational qualification
defense. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Being
overwieight impedes mobility in times of emergencies where seconds are precious.

Petitioner was not, therefore, illegally dismissed. He is entitled to a separation pay, including
his regular allowances.

Garcy Kate D. Go LLB2 EH306 Page 54

WAGE & THE WAGE RATIONALIZATION ACT

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

Facts: The union known as Ilaw at Buklod Ng Manggagawa (IBM) said to represent 4,500
employees of San Miguel Corporation, more or less, working at the various plants, offices, and
warehouses located at the National Capital Region presented to the company a "demand" for
correction of the significant distortion in the workers' wages. In that demand, the Union
explicitly invoked Section 4 (d) of RA 6727 which reads as follows: Where the application of the
increases in the wage rates under this Section results in distortions as defined under existing
laws in the wage structure within an establishment and gives rise to a dispute therein, such
dispute shall first be settled voluntarily between the parties and in the event of a deadlock, the
same shall be finally resolved through compulsory arbitration by the regional branches of the
National Labor Relations Commission having jurisdiction over the workplace. It shall be
mandatory for the NLRC to conduct continuous hearings and decide any dispute arising under
this Section within twenty (20) calendar days from the time said dispute is formally submitted
to it for arbitration. The pendency of a dispute arising from a wage distortion shall not in any
way delay the applicability of the increase in the wage rates prescribed under this Section.

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

Ruling: Strike is not legal as a means of resolving wage distortion. The strike involving the issue
of wage distortion is illegal as a means of resolving it. The legality of these activities is usually
dependent on the legality of the purposes sought to be attained and the means employed
therefore. It goes without saying that these joint or coordinated activities may be forbidden or
restricted by law or contract. In the instance of "distortions of the wage structure within an
establishment" resulting from "the application of any prescribed wage increase by virtue of a
law or wage order," Section 3 of Republic Act No. 6727 prescribes a specific, detailed and
comprehensive procedure for the correction thereof, thereby implicitly excluding strikes or
lockouts or other concerted activities as modes of settlement of the issue.

The provision states that the employer and the union shall negotiate to correct the distortions.
Any dispute arising from wage distortions shall be resolved through the grievance procedure
under their collective bargaining agreement and, if it remains unresolved, through voluntary
arbitration. Unless otherwise agreed by the parties in writing, such dispute shall be decided by
the voluntary arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the
time said dispute was referred to voluntary arbitration. In cases where there are no collective
agreements or recognized labor unions, the employers and workers shall endeavor to correct
such distortions. Any dispute arising there from shall be settled through the National
Conciliation and Mediation Board and, if it remains unresolved after ten (10) calendar days of
conciliation, shall be referred to the appropriate branch of the National Labor Relations
Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and
decide the dispute within twenty (20) calendar days from the time said dispute is submitted for
compulsory arbitration. The pendency of a dispute arising from a wage distortion shall not in
any way delay the 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."
Garcy Kate D. Go LLB2 EH306 Page 55

Employers Confederation of the Phils.vs. NWPC

Facts: The Regional Tripartite Wages and Productivity Board of the National Capital Region
issued Wage Order No. NCR-01-A pursuant to the authority given by RA No. 6727, otherwise
known as the Wage Rationalization Act. Wage Order No.NCR-01-A, amending the formerly
issued WO No. NCR-1 increasing the minimum wage by Php 17.00 daily in the National Capital
Region, read as follows:

Sec.1 Upon the effectivity of this wage order, all workers and employees in the private sector in
the NCR already receiving wages above the statutory minimum wage rates up to Php 125.00
per day shall also receive an increase of Php 17.00 per day.

Employers Confederation of the Philippines assailed the RTWPBs grant of an across the board
wage increase to workers already being paid more than the existing minimum wage rates (that
is up to Php 125.00 a day) as an alleged excess of authority, and alleged that under RA No.
6727, the boards may only prescribe minimum wages and not determine salary ceilings.
ECOP added that RA No. 6727 was meant to promote collective bargaining as the primary mode
of settling wages, and in its opinion, the board cannot preempt collective bargaining
agreements by establishing ceilings. Another contention by ECOP was that wage is a legislative
function, and RA No. 6727 delegated to the regional boards no more than the power to grant
minimum wages and in the absence of a clear statutory authority the boards may no more
than adjust floor wages.

Issue: Whether the RTWPB-NCR has authority to determine salary ceilings.

Ruling: As provided by the NWPC, the determination of wages generally involves two methods,
the floor wage method and the salary ceiling method The "floor-wage" method involves the
fixing of a determinate amount to be added to the prevailing statutory minimum wage rates.
On the other hand, in the "salary-ceiling" method, the wage adjustment was to be applied to
employees receiving a certain denominated salary ceiling. In other words, workers already
being paid more than the existing minimum wage (up to a certain amount stated in the Wage
Order) are also to be given a wage increase.

The RTWPB,in this case, in issuing WO No. NCR-01-A fixed minimum wages according to the
salary ceiling method.

Disputes are appropriate subjects of collective bargaining and grievance procedure, but
bargaining has helped very little in correcting wage distortions. With the establishment of the
salary ceiling method as a practice in minimum wage fixing, wage distortion disputes were
minimized.

It is not disputed that wage fixing is a legislative function, nevertheless the rule is it can be
validly delegated provided that sufficient standards are set forth. What these standards are
provided for under Art. 124 of the Act (RA No. 6727).

RA No. 6727 did not intend the boards to set floor wages alone. If such be the case, the Act
would have no need for a board but an accountant to keep track of the latest consumer price
index, or better, would have Congress done it as the need arises. The Act sought a thinking
group bound by statutory standards.

Garcy Kate D. Go LLB2 EH306 Page 56

Mabeza vs NLRC 271 SCRA 670

Facts: Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her
co-employees 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.||| The instrument provides among others
4. That we have no complaints against the management of the Hotel Supreme
as we are paid accordingly and that we are treated well.
5. That we are executing this affidavit voluntarily without any force or
intimidation and for the purpose of informing the authorities concerned and to
dispute the alleged report of the Labor Inspector of the Department of Labor
and Employment conducted on the said establishment on February 2, 1991.
As gleaned from the affidavit, the same was drawn by management for the sole purpose of
refuting findings of the Labor Inspector of DOLE (in an inspection of respondent's establishment
on February 2, 1991) apparently adverse to the private respondent.
After she refused to proceed to the City Prosecutor's Office on the same day the affidavit
was submitted to the Cordillera Regional Office of DOLE petitioner avers 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.
Issue: Whether or not the dismissal by the private respondent of petitioner constitutes an
unfair labor practice.
Ruling: The pivotal question in any case where unfair labor practice on the part of the employer
is alleged is whether or not the employer has 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. Without doubt, the act of compelling employees to sign
an instrument indicating that the employer observed labor standards provisions of law when he
might have not, together with the act of terminating or coercing those who refuse to cooperate
with the employer's scheme constitutes unfair labor practice. The first act clearly preempts the
right of the hotel's workers to seek better terms and conditions of employment through
concerted action.
For refusing to cooperate with the private respondent's scheme, petitioner was obviously held
up as an example to all of the hotel's employees, that they could only cause trouble to
management at great personal inconvenience. Implicit in the act of petitioner's termination and
the subsequent filing of charges against her was the warning that they would not only be
deprived of their means of livelihood, but also possibly, their personal liberty.

Garcy Kate D. Go LLB2 EH306 Page 57

JOY BROTHERS INC vs. NWPC, 273 SCRA 622

Facts: A wage order was issued which provided for wage increase for all private sector workers
and employees in the NCR receiving 154 pesos. Petitioner applied for exemption from said
wage order on the ground that it was a distressed establishment. The RTWPB denied
petitioners application for exemption after holding that the corporation accumulated profits
amounting to 40,000 for the period under review.

Issue: Whether or not petitioner is exempted

Ruling: The NWPC Revised Guidelines on Exemption provided that exemption from compliance
with the wage increase may be granted to distressed establishment whose paid-up capital has
been impaired by at least 25% or which registers capital deficiency or negative net worth.

Since wage order was published on December 1, 1993 and thus became effective on December
16, 1993, the coverage of the interim period shall be the three quarter prior to December 16,
1993, the third quarter ending on September 30, 1993. The petitioner errs in claiming that said
interim period is up to December 15, 1993 or December 31, 1993.
Hence, petitioner is not exempted.

Garcy Kate D. Go LLB2 EH306 Page 58

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-and-file employees at its Cebu, Mabolo and P. del
Rosario branches, the branches covered by Wage Order No. RB VII-03.

On June 7, 1994, Prubankers Association wrote the petitioner requesting that the Labor
Management Committee be immediately convened to discuss and resolve the alleged wage
distortion created in the salary structure upon the implementation of the said wage orders. It
demanded in the Labor Management Committee meetings that the petitioner extend the
application of the wage orders to its employees outside Regions V and VII, claiming that the
regional implementation of the said orders created a wage distortion in the wage rates of
petitioner's employees nationwide. As the grievance could not be settled in the said meetings,
the parties agreed to submit the matter to voluntary arbitration.

Issue: WON a wage distortion resulted from respondent's implementation of the Wage Orders.

Ruling: The court ruled that there is no wage distortion since the wage order implementation
covers all the branches of the bank.

The hierarchy of positions was still preserved. The levels of different pay classes was not
eliminated. The statutory definition of wage distortion is found in Article 124 of the Labor Code,
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.


Garcy Kate D. Go LLB2 EH306 Page 59

Millare vs NLRC, 305 SCRA 501

Facts: Petitioners numbering one hundred sixteen (116) 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.

PICOP grants the following allowances:
Staff allowance/managers allowance to those who live in rented houses near the mill site
which ceases whenever a vacancy occurs in the companys free housing facilities.
Transportation allowance in the form of advances for actual transportation expenses
subject to liquidation is given to key officers and managers who use their own vehicles in
the performance of their duties. This privilege is discontinued when the conditions no
longer obtain.
Bislig allowance is given to managers and officers on account of the hostile environment
prevailing therein. Once the recipient is transferred elsewhere, the allowance ceases.

Applying Art. 97, par. (f), of the Labor Code which defines "wage," the Executive Labor Arbiter
opined that the subject allowances, being customarily furnished by respondent PICOP and
regularly received by petitioners, formed part of the latter's wages.

On appeal, the National Labor Relations Commission (NLRC) did not view in favor of the
Executive Labor Arbiter. On 7 October 1994 it set aside the assailed decision by decreeing that
the allowances did not form part of the salary base used in computing separation pay.

Issue: Whether or not the allowances in question are considered facilities customarily
furnished.

Ruling: The Staff/Manager's allowance may fall under "lodging" but the transportation and
Bislig allowances are not embraced in "facilities" on the main consideration that they are
granted as well as the Staff/Manager's allowance for respondent PICOP's benefit and
convenience, i.e., to insure that petitioners render quality performance. In determining whether
a privilege is a facility, the criterion is not so much its kind but its purpose. That the assailed
allowances were for the benefit and convenience of respondent company was supported by the
circumstance that they were not subjected to withholding tax.

In addition, 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.
Garcy Kate D. Go LLB2 EH306 Page 60

International Alliance of Educators vs. Quisumbing, 333 SCRA 13 [2000]

Facts: International school, Inc., pursuant to Presidential Decree 732, is a domestic educational
institution established primarily for dependents of foreign diplomatic personnel and other
temporary residents. The decree authorizes the School to employ its 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.

Accordingly, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School grants foreign-
hires certain benefits not accorded local-hires. These include housing, transportation, shipping
costs, taxes, and home leave allowance. Foreign-hires are also paid a salary rate twenty-five
percent (25%) more than that of local-hires. The School justifies the difference on two
significant economic disadvantages that foreign-hires have to endure, namely: (a) the
dislocation factor and (b) limited tenure.

Petitioner union claims that the point-of-hire classification by the School is discriminatory to
Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination.
When the CBA negotiation reached a deadlock, the Secretary of Labor assumed jurisdiction. The
Acting Secretary upheld the point-of-hire classification for the distinction in salary rates, as he
said: The principle equal pay for equal work does not find application in the present case. The
international character of the School requires the hiring of foreign personnel to deal with
different nationalities and different cultures, among the student population.

The Acting Secretary of Labor found that the non-Filipino local-hires received the same benefits
as the Filipino local-hires. The parties CBA points to the conditions and provisions for salary and
professional compensation:
The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary
schedule. The 25% differentiation is reflective of the agreed value of displacement and
contracted status of the OSRS as differentiated from the tenured status of Locally Recruited
Staff (LRS).

Issue: Is the ruling of the Acting Secretary of Labor justified?

Ruling: If an employer accords employees the same position and rank, the presumption is that
these employees perform equal work. There is no evidence that foreign-hires perform 25%
more efficiently or effectively than local-hires. Both groups have similar functions and
responsibilities, which they perform under similar conditions.

While the need of the School to attract foreign-hires is recognized, salaries should not be used
as an enticement to the prejudice of local-hires. The local-hires perform the same services as
foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the
dislocation factor and the foreign-hires limited tenure affecting foreign-hires are adequately
compensated by certain benefits accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes, and home leave allowances.

The State has the right and duty to regulate the relations between labor and capital. These
relations are not merely contractual but are so impressed with public interest that labor
contracts, collective bargaining agreements included, public policy, courts will not hesitate to
strike down these stipulations. We find the point-of-hire classification by employed by
respondent School to justify the distinction in the salary rates of foreign-hires and local-hires to
be an invalid classification. There is no reasonable distinction between the services rendered by
foreign-hires and local-hires.
Garcy Kate D. Go LLB2 EH306 Page 61

BANKARD EMPLOYEES UNION v. NLRC
GR No. 140689, Feb. 17, 2004

Facts: Bankard, Inc. classifies its employees by levels, to wit: Level I, Level II, Level III, Level IV,
Level V. On November 28, 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.

Bankards move drew the Bankard Employees Union_WATU, the duly certified exclusive
bargaining agent of the regular rank and file employees of Bankard to press for the increase in
the salary of its old, regular employees. Its request remained unheeded. So it filed a Notice of
Strike on August 26, 1993 on the ground of discrimination and other acts of Unfair Labor
Practice.

Petitioner maintains that for purposes of wage distortion, the classification is not one based on
levels or ranks but on two groups of employees, the newly hired and the old, in each and
every level, and not between and among the different ranks in the salary structure.

Issue: Whether the unilateral adoption by an employer of an upgraded salary scale that
increased the hiring rates of new employees without increasing the salary rates of old
employees resulted in wage distortion within the contemplation of Article 124 of the Labor
Code.

Ruling: Prubankers Association v. Prudential Bank and Trust Company laid down the four
elements of wage distortion, to wit: (1) An existing hierarchy of position 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; (4) The existence of the distortion in the same region of the country.
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.

To determine the existence of wage distortion, the historical classification of the employees
prior to the wage increase must be established. Likewise, it must be shown that as between the
different classification of employees, there exists a historical gap or difference.
In the present case, the employees of private respondent have been historically classified in
levels I to IV and not on the basis of their length of service. The entry of new employees to the
company ipso facto places them under any of the level mentioned in the new salary scale which
private respondent adopted. Petition cannot make a contrary classification of private
respondents employees without encroaching upon recognized management prerogative of
formulating a wage structure. In this case, one based on level.

It is thus clear that there is no hierarchy of positions between the newly hired and regular
employees of Bankard, hence, the first element of wage distortion provided in the Prubankers
case is wanting. 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.
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.

Even assuming that there is a decrease In the wage gap between the pay of the old employees
and the newly hired employees, to the courts mind the gap is NOT significant as to obliterate
or result in severe contraction of the intentional quantitive differences in the salary rates
between the employee group./
Garcy Kate D. Go LLB2 EH306 Page 62

Aside from that the alleged wage distortion as the increase in the wages and salaries of new-
hires was not due to a prescribed law or wage order.

If the compulsory mandate under Article 124 of the Labor Code 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.

In fine, absent any indication that the voluntary increase of salary rates by an employer was
done arbitrarily and illegally for the purpose of circumventing the laws or was devoid of any
legitimate purpose other than to discriminate against the regular employees, this Court will not
step in to interfere with this management prerogative.










































Garcy Kate D. Go LLB2 EH306 Page 63

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.

Ruling: Petitioners are not entitled to money claims or wage differentials.

The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules and
Policy Instructions No. 9 issued by the Secretary of Labor which was declared null and void since
in the guise of clarifying the Labor 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.

Garcy Kate D. Go LLB2 EH306 Page 64

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, nonpayment 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.

Ruling: Petitioners have not successfully shown that they had applied for the exemption.

R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage
rate of all workers and employees in the private sector. Section 4 of the Act provides for
exemption from the coverage, thus: Sec. 4. (c) Exempted from the provisions of this Act are
household or domestic helpers and persons employed in the personal service of another,
including family drivers. Also, retail/service establishments regularly employing not more than
ten (10) workers may be exempted from the applicability of this Act upon application with and
as determined by the appropriate Regional Board in accordance with the applicable rules and
regulations issued by the Commission. Whenever an application for exemption has been duly
filed with the appropriate Regional Board, action on any complaint for alleged non-compliance
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.






Garcy Kate D. Go LLB2 EH306 Page 65

EJR CRAFTS CO. VS. CA ,G.R. No. 154101; March 10, 2006

Facts: On August 22, 1997, an inspection was conducted on the premises of petitoners offices
wherein it was found that certain violations of labor standards laws were committed. On the
same day, the Notice of Inspection Result was received by and explained to, the manager, with
the corresponding directive that necessary restitution be effected within five days from said
receipt.

As no restitution was made, the Regional Office conducted summary investigations. Despite
due notice, petitioner failed to appear for two consecutive scheduled hearings. Furthermore,
petitioner failed to question the findings of the Labor Inspector received by and explained to
the manager.

The inspection was prompted by the filing of respondents sometime in 1997 against petitioner
a complaint for underpayment of wages, regular holiday pay, and other benefits.

On November 6, 1997, the Regional Director issued a ruling against petitioner, which was
appealed, but later on denied.

On the petition, petitioner argued that the Regional Director has no jurisdiction over the case
since respondents have ceased to be connected with petitioner at the time of the filing of the
complaint as well as when the inspection/investigation was conducted. Thus, there being no
ER-EE relationship, the claims of payment of monetary benefits fall within the exclusive and
original jurisdiction of the Labor Arbiter.

Issue: Whether or not the Regional Director had jurisdiction to hear the case.

Ruling: Yes, it does.

Aside from photocopies of documents entitled Release and Quitclaim, no other evidence was
adduced by the petitioner to substantiate this claim. These documents, being mere
photocopies are unreliable and incompetent without the original and deserves little credence
or weight.

As is well-settled, if doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the employee. Since it is a time-
honored rule that in controversies between a laborer and his master, doubts reasonably arising
from the evidence, or in the interpretation of agreements and writings should be resolved in
the formers favor.

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, the Regional Director has jurisdiction to hear and decide the instant case in
conformity with Article 128(b) of the Labor Code.










Garcy Kate D. Go LLB2 EH306 Page 66

Pag Asa Steel Works vs. CA
GR No. 166647, March 31, 2006

Facts: Petitioner is a corporation duly organized and existing under Philippine laws and is
engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel Workers Union is the
duly authorized bargaining agent of the rank-and-file employees of petitioner. On Jan. 8, 1998,
the Regional Tripartite Wages and Productivity Board (Wage Board) of the NCR issued Wage
Order No. NCR-06. It provided for an increase of P13.00 per day in the salaries of employees
receiving the minimum wage, and a consequent increase in the minimum wage rate to P198.00
per day. Petitioner and the Union negotiated on how to go about the wage adjustments.
Petitioner forwarded a letter to the Union with the list of the salary adjustments of the rank-
and-file employees after the implementation of Wage Order No. NCR-06. On Sept. 23, 1999,
petitioner and the Union entered into a CBA, effective July 1, 1999 until July 1, 2004.

On Nov. 1, 2000, W age Order No. NCR-08 9 took effect. Section 1 thereof provides: Upon the
effectivity of this Wage Order, 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 P26.50 per day, thereby setting the new minimum wage rate in the National Capital Region
at P250.00 per day.

Then Union president requested petitioner to implement the increase under Wage Order No.
NCR-08 in favor of the company's rank-and-file employees. Petitioner rejected the request,
claiming that since none of the employees were receiving a daily salary rate lower than P250.00
and there was no wage distortion, it was not obliged to grant the wage increase.The Union
elevated the matter to the NCMB. When the parties failed to settle, they agreed to refer the
case to voluntary arbitration.

The Union alleged that it has been the company's practice to grant a wage increase under a
government-issued wage order, aside from the yearly wage increases in the CBA. It averred that
petitioner paid the salary increases provided under the previous wage orders in full (aside from
the yearly CBA increases), regardless of whether there was a resulting wage distortion, or
whether Union members' salaries were above the minimum wage rate. Wage Order No. NCR-
06, where rank-and-file employees were given different wage increases ranging from P10.00 to
P13.00, was an exception since the adjustments were the result of the formula agreed upon by
the Union and the employer after negotiations. The Union averred that all of their CBAs with
petitioner had a "collateral agreement" where petitioner was mandated to pay the equivalent
of the wage orders across-the-board, or at least to negotiate how much will be paid. It pointed
out that an established practice cannot be discontinued without running afoul of Article 100 of
the Labor Code on non-diminution of benefits.

For its part, petitioner alleged that there is no such company practice and that it complied with
the previous wage orders (Wage Order Nos. NCR-01-05) because some of its employees were
receiving wages below the minimum prescribed under said orders. As for Wage Order No. NCR-
07, petitioner alleged that its compliance was in accordance with its verbal commitment to the
Union during the CBA negotiations that it would implement any wage order issued in 1999.
Petitioner further averred that it applied the wage distortion formula prescribed under Wage
Order Nos. NCR-06 and NCR-07 because an actual distortion occurred as a result of their
implementation. It asserted that at present, all its employees enjoy regular status and that
none receives a daily wage lower than the P250.00 minimum wage rate prescribed under Wage
Order No. NCR-08.

Issue: Whether or not the petitioner is obliged to grant an increase to its employees as a matter
of practice.

Garcy Kate D. Go LLB2 EH306 Page 67

Ruling: The petition is meritorious. We rule that petitioner is not obliged to grant the wage
increase under Wage Order No. NCR-08 either by virtue of the CBA, or as a matter of company
practice. We agree with petitioner's contention that the issue on the ambiguity of the CBA and
its failure to express the true intention of the parties has not been expressly raised before the
voluntary arbitration proceedings.

It is submitted that employers (unless exempt) in Metro Manila (including the [petitioner]) are
mandated to implement the said wage order but limited to those entitled thereto. There is no
legal basis to implement the same across-the-board. A perusal of the record shows that the
lowest paid employee before the implementation of Wage Order #8 is P250.00/day and none
was receiving below P223.50 minimum. This could only mean that the union can no longer
demand for any wage distortion adjustment. Neither could they insist for an adjustment of
P26.50 increase under Wage Order #8. 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 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.

We find no evidence to prove that the grant of a wage-order-mandated increase to all the
employees regardless of their salary rates on an agreement collateral to the CBA had ripened
into company practice before the effectivity of Wage Order No. NCR-08. Respondent Union
failed to adduce proof on the salaries of the employees prior to the issuance of each wage
order to establish its allegation that, even if the employees were receiving salaries above the
minimum wage and there was no wage distortion, they were still granted salary increase. Only
the following lists of salaries of respondent Union's members were presented in evidence: (1)
before Wage Order No. NCR-06 was issued; (2) after Wage Order No. NCR-06 was
implemented; (3) after the grant of the first year increase under the CBA; (4) after Wage Order
No. NCR-07 was implemented; and (5) after the second year increase in the CBA was
implemented.

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. In this case, petitioner granted the increase
under Wage Order No. NCR-07 on its belief that it was obliged to do so under the CBA.

WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 65171 and Resolution dated January 11, 2005 are REVERSED and SET
ASIDE. The Decision of the Voluntary Arbitrator is REINSTATED. No costs.

















Garcy Kate D. Go LLB2 EH306 Page 68

Metropolitan Bank vs. NWPC
GR No. 144322, Feb. 6, 2007

Facts: The Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan,
by virtue of RA No. 6727, otherwise known as the Wage Rationalization Act, issued Wage Order
No. R-02-03. Section 1 of the Order states as follows:
Sec. 1 Upon effectivity of this Wage Order, all employees/workers in the private sector
throughout Region II, regardless of the status of the employment are granted an across
the board increase of Php 15.00 daily.

The Bankers Council for Personnel Management (BCPM), on behalf of its member banks,
requested exemption from the coverage of the Wage Order since its member banks are already
paying more than the prevailing minimum wage rate in the National Capital Region (NCR),
which is their principal place of business. NWPC denied such request.

Metropolitan Bank and Trust Company later filed a petition for Certiorari and Prohibition with
the Court of Appeals seeking for the nullification of the WO on grounds that RTWPB acted
beyond its authority when it issued the WO without any ceiling or qualification and that the
implementation of the WO will cause the petitioner, and other similarly situated employers, to
incur huge financial losses and suffer labor unrest.

Issue: Whether Wage Order No. R-02-03 is valid.

Ruling: There are two ways of fixing the minimum wage: the "floor-wage" method and the
"salary-ceiling" method. The "floor-wage" method involves the fixing of a determinate amount
to be added to the prevailing statutory minimum wage rates. On the other hand, in the "salary-
ceiling" method, the wage adjustment was to be applied to employees receiving a certain
denominated salary ceiling. In other words, workers already being paid more than the existing
minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage
increase.

In the present case, the RTWPB did not determine or fix the minimum wage rate by the "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. The Wage Order granted additional benefits not contemplated by R.A. No. 6727.

The WO herein question is null and 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 WO,
Sec. 1 is declared valid with respect to employees earning the prevailing minimum wage rate.

Garcy Kate D. Go LLB2 EH306 Page 69

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

Facts: Ricardo Sadac was appointed Vice President of the Legal Department of petitioner Bank
effective 1 August 1981, and subsequently General Counsel thereof on 8 December 1981. On
June 1989, nine lawyers of petitioner 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 9 November 1989, respondent
Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual
members of the Board of Directors thereof. After learning of the filing of the complaint,
petitioner Bank terminated the services of respondent Sadac. Finally, on 10 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 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. Hence, this petition.

Issue: Whether or not the computation of back wages shall include the general increases.

Ruling: To resolve the issue, the court revisits its pronouncements on the interpretation of the
term back wages. Back wages in general are granted on grounds of equity for earnings which a
worker or employee has lost due to his illegal dismissal. It is not private compensation or
damages but is awarded in furtherance and effectuation of the public objective of the Labor
Code. Nor is it a redress of a private right but rather in the nature of a command to the
employer to make public reparation for dismissing an employee either due to the formers
unlawful act or bad faith.

In the case of Bustamante v. National Labor Relations Commission, It said that the Court
deems it appropriate to reconsider such earlier ruling on the computation of back wages by
now holding that conformably with the evident legislative intent as expressed in Rep. Act No.
6715, back wages to be awarded to an illegally dismissed employee, should not, as a general
rule, be diminished or reduced by the earnings derived by him elsewhere during the period of
his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating
the legality (illegality) of his dismissal, must still earn a living to support himself and family,
while full backwages have to be paid by the employer as part of the price or penalty he has to
pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep.
Act No. 6715 is to give more benefits to workers than was previously given them. Thus, a
closer adherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages"
as meaning exactly that, i.e., without deducting from backwages the earnings derived
elsewhere by the concerned employee during the period of his illegal dismissal.

There is no vested right to salary increases. Sadac may have received salary increases in the
past only proves fact of receipt but does not establish a degree of assuredness that is inherent
in backwages. The conclusion is that Sadacs computation of his full backwages which includes
his prospective salary increases cannot be permitted.

Garcy Kate D. Go LLB2 EH306 Page 70

SIP Food House et al vs. Batolina, GR No. 192473

Facts: The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of
the Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to
operate a canteen in the new GSIS Building, but had no capability and expertise in this
area. Thus, it engaged the services of the petitioner S.I.P. Food House (SIP), owned by the
spouses Alejandro and Esther Pablo, as concessionaire. The respondents Restituto Batolina and
nine (9) others (the respondents) worked as waiters and waitresses in the canteen.

In February 2004, GMPC terminated SIPs contract as GMPC concessionaire.The termination of
the concession contract caused the termination of the respondents employment, prompting
them to file a complaint for illegal dismissal, with money claims, against SIP and the spouses
Pablo. NLRC ruled in favor of the petitioner and CA affirmed the ruling of NLRC.SIP seeks a
reversal of the appellate courts ruling that it was the employer of the respondents, claiming
that it was merely a labor-only contractor of GMPC

Issue: Whether or not SIP was liable to them for their statutory benefits, although it was not
made to answer for their lost employment due to the involuntary nature of the canteens
closure

Ruling: The employer-employee relationship issue.

The CA ruled out SIPs claim that it was a labor-only contractor or a mere agent of GMPC. We
agree with the CA; SIP and its proprietors could not be considered as mere agents of GMPC
because they exercised the essential elements of an employment relationship with the
respondents such as hiring, payment of wages and the power of control, not to mention that
SIP operated the canteen on its own account as it paid a fee for the use of the building and for
the privilege of running the canteen. The fact that the respondents applied with GMPC in
February 2004 when it terminated its contract with SIP, is another clear indication that the two
entities were separate and distinct from each other. We thus see no reason to disturb the CAs
findings.

The respondents money claims

We likewise affirm the CA ruling on the monetary award to Batolina and the other
complainants. The free board and lodging SIP furnished the employees cannot operate as a set-
off for the underpayment of their wages. We held in Mabeza v. National Labor Relations
Commission

that the employer cannot simply deduct from the employees wages the value of
the board and lodging without satisfying the following requirements: (1) proof that such
facilities are customarily furnished by the trade; (2) voluntary acceptance in writing by the
employees of the deductible facilities; and (3) proof of the fair and reasonable value of the
facilities charged. As the CA aptly noted, it is clear from the records that SIP failed to comply
with these requirements.

On the collateral issue of the proper computation of the monetary award, we also find the CA
ruling to be in order. Indeed, in the absence of evidence that the employees worked for 26
days a month, no need exists to recompute the award for the respondents who were explicitly
claiming for their salaries and benefits for the services rendered from Monday to Friday or 5
days a week or a total of 20 days a month.

Garcy Kate D. Go LLB2 EH306 Page 71

SLL INTERNATIONAL CABLES SPECIALIST vs. NLRC

Facts: Sometime in 1996, and January 1997, private respondents were hired by petitioner
Lagon as apprentice or trainee cable/lineman. The three were paid the full minimum wage and
other benefits but since they were only trainees, they did not report for work regularly but
came in as substitutes to the regular workers or in undertakings that needed extra workers to
expedite completion of work. Soon after they were engaged as private employees for their
Islacom project in Bohol. Private respondents started on March 15, 1997 until December 1997.
Upon the completion of their project, their employment was also terminated. Private
respondents received the amount of P145.00, the minimum prescribed daily wage for Region
VII. In July 1997, the amount of P145 was increased to P150.00 and in October of the same
year, the latter was increased to P155.00.

On May 21, 1999, private respondents for the 4
th
time worked with Lagon's project in Camarin,
Caloocan City with Furukawa Corporation as the general contractor. Their contract would
expire on February 28, 2000, the period of completion of the project. From May 21, 1997-
December 1999, private respondents received the wage of P145.00. At this time, the minimum
prescribed rate for Manila was P198.00. In January to February 28, the three received the wage
of P165.00. The existing rate at that time was P213.00.

For reasons of delay on the delivery of imported materials from Furukawa Corporation, the
Camarin project was not completed on the scheduled date of completion. Face[d] with
economic problem[s], Lagon was constrained to cut down the overtime work of its worker[s][,]
including private respondents. Thus, when requested by private respondents on February 28,
2000 to work overtime, Lagon refused and told private respondents that if they insist, they
would have to go home at their own expense and that they would not be given anymore time
nor allowed to stay in the quarters. This prompted private respondents to leave their work and
went home to Cebu. On March 3, 2000, private respondents filed a complaint for illegal
dismissal, non-payment of wages, holiday pay, 13
th
month pay for 1997 and 1998 and service
incentive leave pay as well as damages and attorney's fees

Issue: Whether or not the respondent should be allowed to recover the differential due to the
failure of the petitioner to pay the minimum wage.
Whether or not value of the facilities that the private respondents enjoyed should be included
in the computation of the "wages" received by them

Ruling: As a general rule, on payment of wages, a party who alleges payment as a defense has
the burden of proving it. Specifically with respect to labor cases, the burden of proving payment
of monetary claims rests on the employer, the rationale being that the pertinent personnel
files, payrolls, records, remittances and other similar documents -- which will show that
overtime, differentials, service incentive leave and other claims of workers have been paid --
are not in the possession of the worker but in the custody and absolute control of the
employer.

In this case, petitioners, aside from bare allegations that private respondents received wages
higher than the prescribed minimum, failed to present any evidence, such as payroll or payslips,
to support their defense of payment. Thus, petitioners utterly failed to discharge the onus
probandi.

On whether the value of the facilities should be included in the computation of the "wages"
received by private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that
an employer may provide subsidized meals and snacks to his employees provided that the
subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In such
cases, the employer may deduct from the wages of the employees not more than 70% of the
Garcy Kate D. Go LLB2 EH306 Page 72

value of the meals and snacks enjoyed by the latter, provided that such deduction is with the
written authorization of the employees concerned.

Moreover, before the value of facilities can be deducted from the employees' wages, the
following requisites must all be attendant: first, proof must be shown that such facilities are
customarily furnished by the trade; second, the provision of deductible facilities must be
voluntarily accepted in writing by the employee; and finally, facilities must be charged at
reasonable value.
[20]
Mere availment is not sufficient to allow deductions from employees'
wages.
[21]


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

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

For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these
were cases of dismissal with just and authorized causes. The present case involves the matter
of the failure of the petitioners to comply with the payment of the prescribed minimum wage.

The Court sustains the deletion of the award of differentials with respect to respondent Roldan
Lopez. As correctly pointed out by the CA, he did not work for the project in Antipolo.

Garcy Kate D. Go LLB2 EH306 Page 73

Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc.
G.R. No. 176985, April 1, 2013

Fact: Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers
Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a District Sales
Supervisor (DSS) for Las Pias City, Metro Manila.

As stipulated in respondent's existing Retirement Plan Rules and Regulations at the time, the
Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the
computation of retirement benefits, as follows: Basic Monthly Salary + Monthly Average
Performance Incentive (which is the total performance incentive earned during the year
immediately preceding 12 months) No. of Years in Service.

Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives
(SMI) and to the amount of PhP496,016.67 which respondent allegedly deducted illegally,
representing the unpaid accounts of two dealers within his jurisdiction, petitioner filed a
complaint before the NLRC on June 11, 2002 for the payment of his "Full Retirement Benefits,
Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and Exemplary
Damages, and Attorney's Fees."

(Apparently, Petitioner argued that the granting of SMI to all retired DSSs regardless of whether
or not they qualify to the same had ripened into company practice. The only two pieces of
evidence that he stubbornly presented throughout the entirety of this case are the sworn
statements of Renato C. Hidalgo (Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of
respondent who retired in 2000 and 1998, respectively. They claimed that the SMI was included
in their retirement package even if they did not meet the sales and collection qualifiers.
Therefore, the failure of employer to grant him his SMI is a violation on the principle of non-
diminution of benefits.)

Issue: WON the granting of SMI to all retired DSSs regardless of whether or not they qualify to
the same had ripened into company practice

Ruling: Generally, employees have a vested right over existing benefits voluntarily granted to
them by their employer. Thus, any benefit and supplement being enjoyed by the employees
cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of
non-diminution of benefits is actually founded on the Constitutional mandate to protect the
rights of workers, to promote their welfare, and to afford them full protection. In turn, said
mandate 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."
There is diminution of benefits when the following requisites are present:
1. the grant or benefit is founded on a policy or has ripened into a practice over a long
period of time;
2. the practice is consistent and deliberate;
3. the practice is not due to error in the construction or application of a doubtful or
difficult question of law; and
4. The diminution or discontinuance is done unilaterally by the employer.

To be considered as a regular company practice, the employee must prove by substantial
evidence that the giving of the benefit is done over a long period of time, and that it has been
made consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as
to the length of time that company practice should have been exercised in order to constitute
voluntary employer practice. The common denominator in previously decided cases appears to
Garcy Kate D. Go LLB2 EH306 Page 74

be the regularity and deliberateness of the grant of benefits over a significant period of time. It
requires an indubitable showing that the employer agreed to continue giving the benefit
knowing fully well that the employees are not covered by any provision of the law or
agreement requiring payment thereof. In sum, the benefit must be characterized by regularity,
voluntary and deliberate intent of the employer to grant the benefit over a considerable period
of time.

Upon review of the entire case records, We find no substantial evidence to prove that the
grant of SMI to all retired DSSs regardless of whether or not they qualify to the same had
ripened into company practice.

The granting of the SMI in the retirement package of Velazquez was an isolated incident and
could hardly be classified as a company practice that may be considered an enforceable
obligation. To repeat, the principle against diminution of benefits is applicable only if the
grant or benefit is founded on an express policy or has ripened into a practice over a long
period of time which is consistent and deliberate; it presupposes that a company practice,
policy and tradition favorable to the employees has been clearly established; and that the
payments made by the company pursuant to it have ripened into benefits enjoyed by
them. Certainly, a practice or custom is, as a general rule, not a source of a legally demandable
or enforceable right. Company practice, just like any other fact, habits, customs, usage or
patterns of conduct, must be proven by the offering party who must allege and establish
specific, repetitive conduct that might constitute evidence of habit or company practice.

Garcy Kate D. Go LLB2 EH306 Page 75

Royal Plant Workers Union vs. Coca-Cola Bottlers Philippines Inc.
GR No. 198783, April 15, 2013

Facts: Under the employ of each bottling plant of Coca-Cola are bottling operators. In the case
of the plant in Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while
there are 12-14 bottling operators who man its Bottling Line 2. All of them are male and they
are members of herein respondent Royal Plant Workers Union (ROPWU).

In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their
request. In 1988, the bottling operators of then Bottling Line 1 followed suit and asked to be
provided also with chairs. Their request was likewise granted. Sometime in September 2008,
the chairs provided for the operators were removed pursuant to a national directive of
petitioner. This directive is in line with the "I Operate, I Maintain, I Clean" program of petitioner
for bottling operators, wherein every bottling operator is given the responsibility to keep the
machinery and equipment assigned to him clean and safe. The program reinforces the task of
bottling operators to constantly move about in the performance of their duties and
responsibilities.

With this task of moving constantly to check on the machinery and equipment assigned to him,
a bottling operator does not need a chair anymore, hence, petitioners directive to remove
them. Furthermore, CCBPI rationalized that the removal of the chairs is implemented so that
the bottling operators will avoid sleeping, thus, prevent injuries to their persons. As bottling
operators are working with machines which consist of moving parts, it is imperative that they
should not fall asleep as to do so would expose them to hazards and injuries. In addition,
sleeping will hamper the efficient flow of operations as the bottling operators would be unable
to perform their duties competently.

Issue: Whether or not the removal of the bottling operators chairs was a valid exercise of
management prerogative. ---YES

Ruling: According to the Union, such removal constitutes a violation of the 1) Occupational
Health and Safety Standards which provide that every worker is entitled to be provided by the
employer with appropriate seats, among others; 2) policy of the State to assure the right of
workers to a just and humane condition of work as provided for in Article 3 of the Labor Code;8
3) Global Workplace Rights Policy of CCBPI which provides for a safe and healthy workplace by
maintaining a productive workplace and by minimizing the risk of accident, injury and exposure
to health risks; and 4) diminution of benefits provided in Article 100 of the Labor Code.

The Court has held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place, and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers, and discipline,
dismissal and recall of workers. The exercise of management prerogative, however, is not
absolute as it must be exercised in good faith and with due regard to the rights of labor.10

In the present controversy, it cannot be denied that CCBPI removed the operators chairs
pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean" program,
launched to enable the Union to perform their duties and responsibilities more efficiently. The
chairs were not removed indiscriminately. They were carefully studied with due regard to the
welfare of the members of the Union. The removal of the chairs was compensated by: a) a
reduction of the operating hours of the bottling operators from a two-and-one-half (2 )-hour
rotation period to a one-and-a-half (1 ) hour rotation period; and b) an increase of the break
period from 15 to 30 minutes between rotations.
Garcy Kate D. Go LLB2 EH306 Page 76

Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted
to avoid instances of operators sleeping on the job while in the performance of their duties and
responsibilities and because of the fact that the chairs were not necessary considering that the
operators constantly move about while working. In short, the removal of the chairs was
designed to increase work efficiency. Hence, CCBPIs exercise of its management prerogative
was made in good faith without doing any harm to the workers rights.

The rights of the Union under any labor law were not violated. There is no law that requires
employers to provide chairs for bottling operators. There was no violation either of the Health,
Safety and Social Welfare Benefit provisions under Book IV of the Labor Code of the Philippines.
As shown in the foregoing, the removal of the chairs was compensated by the reduction of the
working hours and increase in the rest period. The directive did not expose the bottling
operators to safety and health hazards.

The Union should not complain too much about standing and moving about for one and one-
half (1 ) hours because studies show that sitting in workplaces for a long time is hazardous to
ones health. The CBA between the Union and CCBPI contains no provision whatsoever
requiring the management to provide chairs for the operators in the production/manufacturing
line while performing their duties and responsibilities.

The Court completely agrees with the CA ruling that the removal of the chairs did not violate
the general principles of justice and fair play because the bottling operators working time was
considerably reduced from two and a half (2 ) hours to just one and a half (1 ) hours and the
break period, when they could sit down, was increased to 30 minutes between rotations. The
bottling operators new work schedule is certainly advantageous to them because it greatly
increases their rest period and significantly decreases their working time. A break time of thirty
(30) minutes after working for only one and a half (1 ) hours is a just and fair work schedule.
The operators chairs cannot be considered as one of the employee benefits covered in Article
10016 of the Labor Code. In the Courts view, the term "benefits" mentioned in the non-
diminution rule refers to monetary benefits or privileges given to the employee with monetary
equivalents.

Such benefits or privileges form part of the employees wage, salary or compensation making
them enforceable obligations.

This Court has already decided several cases regarding the non-diminution rule where the
benefits or privileges involved in those cases mainly concern monetary considerations or
privileges with monetary equivalents. Without a doubt, equating the provision of chairs to the
bottling operators is something within the ambit of "benefits'' in the context of Article 100 of
the Labor Code is unduly stretching the coverage of the law. The interpretations of Article 100
of the Labor Code do not show even with the slightest hint that such provision of chairs for the
bottling operators may be sheltered under its mantle.

Garcy Kate D. Go LLB2 EH306 Page 77

National Wages and Productivity Commission et al., vs The Alliance of Progressive Labor et al.
G.R. No. 150326, March 12, 2014

Facts: On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize
wages throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of
the different regions.

Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered
the NWPC to formulate policies and guidelines on wages, incomes and productivity
improvement at the enterprise, industry and national levels; to prescribe rules and guidelines
for the determination of appropriate minimum wage and productivity measures at the regional,
provincial or industry levels; and to review regional wage levels set by the RTWPBs to
determine whether the levels were in accordance with the prescribed guidelines and national
development plans, among others.

On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of Republic Act
No. 6727, tasked the RTWPBs to determine and fix minimum wage rates applicable in their
region, provinces or industries therein; and to issue the corresponding wage orders, subject to
the guidelines issued by the NWPC.

Consequently, the RTWPBNCR issued Wage Order No. NCR07 on October 14, 1999 imposing
an increase of P25.50/day on the wages of all private sector workers and employees in the NCR
and pegging the minimum wage rate in the NCR at P223.50/day.
6
However, Section 2 and
Section 9 of Wage Order No. NCR07 exempted certain sectors and industries from its
coverage

Section 2. The adjustment in this Order does not cover the following:

A. [W]orkers in the following sectors which were granted corresponding wage
increases on January 1, 1999 as prescribed by Wage Order No. NCR06:
a.1. Agriculture workers
Plantation P12.00

Nonplantation P18.50



a.2. Cottage/handicraft industry P16.00



a.3. Private hospitals with bed capacity of 100 or less P12.00



a.4. Retail/Service establishments

Employing 1115 workers P12.00

Employing not more than 10 workers P19.00


B. Workers in small establishments employing less that ten (10) workers.

x x x x

Section 9. Upon application with and as determined by the Board, based on
documentation and other requirements in accordance with applicable rules and
regulations issued by the Commission, the following may be exempt from the
applicability of this Order:

1. Distressed establishments as defined in the NPWC Guidelines No. 01, series of
1996;

Garcy Kate D. Go LLB2 EH306 Page 78

2. Exporters including indirect exporters with at least 50% export sales and with
forward contracts with their foreign buyers/principals entered into on or twelve
(12) months before the date of publication of this Order may be exempt during
the lifetime of said contract but not to exceed twelve (12) months from the
effectivity of this Order.

Feeling aggrieved by their noncoverage by the wage adjustment, the Alliance of Progressive
Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with
the NWPC assailing Section 2(A) and Section 9(2) of Wage Order No. NCR07. They contended
that neither the NWPC nor the RTWPBNCR had the authority to expand the noncoverage and
exemptible categories under the wage order; hence, the assailed sections of the wage order
should be voided.

The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No. NCR07. It
observed that the RTWPBs power to determine exemptible categories was adjunct to its wage
fixing function conferred by Article 122(e) of the Labor Code, as amended by Republic Act No.
6727; that such authority of the RTWPB was also recognized in NWPC Guidelines No. 01, Series
of 1996.

The APL and TNMR assailed the decisions of the NWPC on certiorari in the CA, contending that
the power of the RTWPBNCR to determine exemptible categories was not an adjunct to its
wage fixing function. CA favored the respondents and granted the petition for certiorari.
Hence, this appeal by petition for review on certiorari by the NWPC and RTWPBNCR.
Issue: Whether or not the RTWPBNCR had
Ruling: the RTWPBNCR had the authority to provide additional exemptions from the minimum
wage adjustments embodied in Wage Order No. NCR07
The NWPC promulgated NWPC Guidelines No. 00195 (Revised Rules of Procedure on Minimum
Wage Fixing) to govern the proceedings in the NWPC and the RTWPBs in the fixing of minimum
wage rates by region, province and industry. Section 1 of Rule VIII of NWPC Guidelines No. 001
95 recognized the power of the RTWPBs to issue exemptions from the application of the wage
orders subject to the guidelines issued by the NWPC
(this is the rationale behind exemption)

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS
Exemption of establishments from compliance with the wage increases and cost of living
allowances prescribed by the Boards may be granted in order to (1) assist establishments
experiencing temporary difficulties due to losses maintain the financial viability of their
businesses and continued employment of their workers; (2) encourage the establishment of
new businesses and the creation of more jobs, particularly in areas outside the National Capital
Region and Export Processing Zones, in line with the policy on industry dispersal; and (3) ease
the burden of micro establishments, particularly in the retail and service sector, that have a
limited capacity to pay.

The following categories of establishments may be exempted upon application with and as
determined by the Board:

1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10) workers
4. Establishments adversely affected by natural calamities

Garcy Kate D. Go LLB2 EH306 Page 79

Under the guidelines, the RTWPBs could issue exemptions from the application of the wage
orders as long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC
enumerated four exemptible establishments, but the list was not exclusive. The RTWPBs had
the authority to include in the wage orders establishments that belonged to, or to exclude from
the four enumerated exemptible categories.

If the exemption was outside of the four exemptible categories, like here, the exemptible
category should be: (1) in accord with the rationale for exemption; (2) reviewed/approved by
the NWPC; and (3) upon review, the RTWPB issuing the wage order must submit a strong and
justifiable reason or reasons for the inclusion of such category. It is the compliance with the
second requisite that is at issue here.

The NWPC, in arriving at its decision, weighed the arguments of the parties and ruled that the
RTWPBNCR had substantial and justifiable reasons in exempting the sectors and
establishments enumerated in Section 2(A) and Section 9(2) based on the public hearings and
consultations, meetings, socialeconomic data and informations gathered prior to the issuance
of Wage Order No. NCR07. The very fact that the validity of the assailed sections of Wage
Order No. NCR07 had been already passed upon and upheld by the NWPC meant that the
NWPC had already given the wage order its necessary legal imprimatur. Accordingly, the
requisite approval or review was complied with.

The RTWPBs are the thinking group of men and women guided by statutory standards and
bound by the rules and guidelines prescribed by the NWPC. In the nature of their functions, the
RTWPBs investigate and study all the pertinent facts to ascertain the conditions in their
respective regions. Hence, they are logically vested with the competence to determine the
applicable minimum wages to be imposed as well as the industries and sectors to exempt from
the coverage of their wage orders.

Lastly, Wage Order No. NCR07 is presumed to be regularly issued in the absence of any strong
showing of grave abuse of discretion on the part of RTWPBNCR. The presumption of validity is
made stronger by the fact that its validity was upheld by the NWPC upon review.

Garcy Kate D. Go LLB2 EH306 Page 80

WAGE ENFORCEMENT AND RECOVERY

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

Facts: Subsequent to the initial pleading filed by respondent-employees before the regional
director of DOLE for redress in regard to underpaid wages and non-payment of benefits,
petitioners were instructed to allow the inspection of the employment records of respondents
on April 4, 1989. However, no inspection could be done on that date on account of the picket
staged by other workers. At the re-scheduled examination after closure of petitioners' business
on April 16, 1989, instead of presenting the payrolls and daily time records of private
respondents, petitioner Peter Po submitted a motion to dismiss on the supposition that the
regional director has no jurisdiction over the case because the employer-employee relationship
had been served as a result of the closure of petitioners' business, apart from the fact that each
of the claims of private respondents exceeded the jurisdictional limit of P5,000.00 pegged by
Republic Act No. 6715 or the New Labor Relations Law.

Issue: Who between the Regional Director of DOLE and the Labor Arbiter has jurisdictional
competence over the complaint of private respondents?

Ruling: 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 house helper 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.

Garcy Kate D. Go LLB2 EH306 Page 81

Guico vs. Sec of Labor

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.

On October 30, 1995, Regional Director Guerrero N. Cirilo issued an Orderfavorable to the 21
employees. First, he ruled that the purported Receipt, Waiver and Quitclaim dated December
21 and 22, 1994, could not cause the dismissal of the labor standards case against the
petitioner since the same were executed before the filing of the said case. Moreover, the
employees repudiated said waiver and quitclaim. Second, he held that despite the salary
increase granted by the petitioner, the daily salary of the employees was still below the
minimum daily wage rate of P119.00 under Wage Order No. RB-I-03. Thirdly, he held that the
removal of the commission and incentive schemes during the pendency of the case violated the
prohibition against elimination or diminution of benefits under Article 100 of the Labor Code, as
amended. The Regional Director awarded the claimants ONE MILLION EIGHTY ONE THOUSAND
SEVEN HUNDRED FIFTY SIX PESOS AND SEVENTY CENTAVOS (P1,081,756.70) representing their
backwages, well over P5,000.

On October 24, 1997, the respondent Secretary denied the Motion for Reconsideration. He
ruled that the Regional Director has jurisdiction over the case citing Article 128 (b) of the Labor
Code, as amended. He pointed out that Republic Act No. 7730 repealed the jurisdictional
limitations imposed by Article 129 on the visitorial and enforcement powers of the Secretary of
Labor and Employment or his duly authorized representatives. In addition, he held that
petitioner is now estopped from questioning the computation made by the Regional Director as
a result of the compromise agreement he entered into with the employees. Lastly, he
reiterated his ruling that the Receipt, Waiver and Quitclaim signed by the employees was not
valid.

Issue: Whether or not the Regional Director of the Department of Labor and employment can
award claims even more than P5,000.

Held: Yes, the Regional Director can award claims of over P5,000. 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.

Garcy Kate D. Go LLB2 EH306 Page 82

EX-BATAAN VETERANS SECURITY AGENCYVS. SOLE, G.R. No. 152396; November 20, 2007

Facts Petitioner is in the business of providing security services while respondents are
employees assigned to the National Power Corporation. On February 20, 1996, respondents
instituted a complaint for underpayment of wages against petitioner before the Regional Office
of the DOLE. On March 7, 1996, the Regional Office conducted a complaint inspection of the
Plant, and violations of labor standards laws were found. On the same date, the Regional Office
issued a notice of hearing, requiring petitioner and respondents to attend.

On August 19, 1996, the Director of the Regional Office issued an order in favor of respondents.
Petitioner filed a motion for reconsideration, questioning the jurisdiction of the Regional
Director, which was denied. Petitioner appealed to the SOLE, which affirmed the Regional
Directors orders. Petitioner appealed to the CA, which dismissed the petition. In the petition,
the petitioners argue that 1) The Regional Director did not acquire jurisdiction over petitioner
because he failed to comply with section 11, Rule 14 of the 1997 Rules of Civil Procedure. The
notice of hearing was served at the Plant, not at petitioners main office, and addressed to its
VP. 2) Under articles 129 and 217(b) of the Labor Code, the Labor Arbiter, not the Regional
Director, has exclusive and original jurisdiction over the case because the individual monetary
claim of respondents exceeds P5000. 3) The case falls under the exception clause in article
128(b) of the Labor Code. The Regional Director should have certified the case to the
arbitration branch of the NLRC.

Issue: (1.) Whether or not the SOLE or his duly authorized representatives acquired jurisdiction
over petitioner. (2.) Whether or not the SOE or his duly authorized representatives have
jurisdiction over the money claims which exceed P5000.

Ruling:
1. YES, THEY HAVE.
The Rules on the Disposition of Labor Standards Cases in the Regional Offices (rules) specifically
state that notices and copies of orders shall be served on the parties or their duly authorized
representatives at their last known address or, if they are represented by counsel, through the
latter. The rules shall be liberally construedand only in the absence of any applicable provision
will the Rules of Court apply in a suppletory character.

In this case, EBVSAI does not deny having received the notices of hearing. In fact, on 29 March
and 13 June 1996, Danilo Burgos and Edwina Manao, detachment commander and bookkeeper
of EBVSAI, respectively, appeared before the Regional Director. They claimed that the 22
March 1996 notice of hearing was received late and manifested that the notices should be sent
to the Manila office. Thereafter, the notices of hearing were sent to the Manila office. They
were also informed of EBVSAIs violations and were asked to present the employment records
of the private respondents for verification. They were, moreover, asked to submit, within 10
days, proof of compliance or their position paper. The Regional Director validly acquired
jurisdiction over EBVSAI. EBVSAI can no longer question the jurisdiction of the Regional
Director after receiving the notices of hearing and after appearing before the Regional Director.

2. YES, THEY DO.
While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has
jurisdiction to hear and decide cases where the aggregate money claims of each employee
exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized representatives.

Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by
R.A. No. 7730) thus:
Garcy Kate D. Go LLB2 EH306 Page 83

Art. 128 Visitorial and enforcement power. --- (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.

The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the
Labor Code by the phrase (N)otwithstanding the provisions of Articles 129 and 217of this Code
to the contrary x x x thereby retaining and further strengthening the power of the Secretary of
Labor or his duly authorized representatives to issue compliance orders to give effect to the
labor standards provisions of said Code and other labor legislation based on the findings of
labor employment and enforcement officer or industrial safety engineer made in the course of
inspection.

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 exceeds
P5,000.
However, if the labor standards case is covered by the exception clause in Article 128(b) of the
Labor Code, then the Regional Director will have to endorse the case to the appropriate
Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives
of jurisdiction, the following elements must be present: (a) that the employer contests the
findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve
such issues, there is a need to examine evidentiary matters; and (c) that such matters are not
verifiable 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.
The Court notes that EBVSAI did not contest the findings of the labor regulations officer during
the hearing or after receipt of the notice of inspection results. It was only in its supplemental
motion for reconsideration before the Regional Director that EBVSAI questioned the findings of
the labor regulations officer and presented documentary evidence to controvert the claims of
private respondents. But even if this was the case, the Regional Director and the Secretary of
Labor still looked into and considered EBVSAIs documentary evidence and found that such did
not warrant the reversal of the Regional Directors order. The Secretary of Labor also doubted
the veracity and authenticity of EBVSAIs documentary evidence. Moreover, the pieces of
evidence presented by EBVSAI were verifiable in the normal course of inspection because all
employment records of the employees should be kept and maintained in or about the premises
of the workplace, which in this case is in Ambuklao Plant, the establishment where private
respondents were regularly assigned.

Garcy Kate D. Go LLB2 EH306 Page 84

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.

Ruling: Appellate Court was right.

In his Comment on the Petition for Certiorari with Prayer for Temporary Restraining and/or
Preliminary Injunctionfiled with the Court of Appeals on 22 November 2001, petitioner did not
raise this procedural issue. Neither did he do so when he moved for reconsideration of the 8
May 2002 Decision of the Court of Appeals. It is only now before this Court that petitioner
proffered the same. This belated submission spells doom for petitioner. More fundamentally,
an examination of the Court of Appeals rollo belies petitioner as it confirms that the alleged
missing documents were in fact attached to the petition.

To counter petitioner's assertions, respondents submitted typewritten and signed payroll
sheets from 2 September to 8 December 1996, from 26 May to 15 June 1997, and from 12
January to 31 May 1998. These payroll sheets clearly indicate that petitioner did receive a daily
salary of P141.00.

Moreover, absent any evidence to the contrary, good faith must be presumed in this case.
Entries in the payroll, being entries in the course of business, enjoy the presumption of
regularity under 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.

Garcy Kate D. Go LLB2 EH306 Page 85

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

Facts: Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent
Panay Veterans Security and Investigation Agency, Inc. as security guards sometime in 1988.
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 on July 6, 2000. 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. This prompted them to file a complaint for violation of labor standards in the
regional office of the Department of Labor and Employment in the National Capital Region
(DOLE-NCR).

A labor inspector acted on the complaint, Manuel M. Cayabyab. He conducted an inspection on
October 3, 2000. His assessment is that the respondents should comply with the labor
standards through payment or question in it to the DOLE-NCR within 5 days.
Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned the
labor employment officers findings. Thus, in his May 10, 2001 order, the Regional Director of
the DOLE-NCR adopted the findings and computation of Cayabyab as to the unpaid benefits due
to petitioners Agapay and Alonso, Jr.

Respondents moved for reconsideration but the DOLE-NCR Regional Director denied it.
Undeterred, respondents filed an appeal (with motion to reduce cash or surety bond) to the
Secretary of Labor and Employment. In his July 9, 2002 order, the Secretary of Labor and
Employment 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 May 10, 2001 order was declared final and executory. The
Secretary of Labor and Employment denied reconsideration.

Respondents elevated the case to the CA, at first the CA dismissed their appeal and upheld the
DOLEs decision. But the CA granted their reconsideration and modified DOLEs decision,
Invoking the case of Star Angel Handicraft v. National Labor Relations Commission.
Thus, the case was appealed by the petitioner in supreme court.

Issue: whether or not the CA was right in granting the appeal.

Ruling: No, the employers motion to reduce the appeal the bond was no in accordance with
the art. 128 of Labor code, the last paragraph of the said provision provides: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

Clearly the respondents did not post bail, when they appealed the case at the DOLE-NCR.
The CAs amended decision also contradicted the spirit that animates all labor laws, the
promotion of social justice and the protection of workers. The posting of a cash or surety bond
to perfect an appeal of an order involving a monetary award has a two-fold purpose: (1) to
assure the employee that, if he finally prevails in the case, the monetary award will be given to
him upon dismissal of the employers appeal and (2) to discourage the employer from using the
appeal to delay or evade payment of his obligations to the employee.[17] The CA disregarded
these pro-labor objectives when it treated respondents failure to post the required bond with
undue leniency. The CA should have resolved any doubt in the implementation and
interpretation of the Labor Code and its implementing rules in favor of labor.
Garcy Kate D. Go LLB2 EH306 Page 86

Moreover, Star Angel Handicraft permitted the filing of a motion for reduction of the appeal
bond because the Court recognized the NLRCs existing practice at that time to allow the
reduction of the appeal bond upon motion of appellant and on meritorious grounds. In fact,
the practice was subsequently institutionalized in the rules of procedure of the NLRC which
now allow the reduction of the amount of the bond in justifiable cases and upon motion of the
appellant.



Garcy Kate D. Go LLB2 EH306 Page 87

National Mines and Allied Workers Union vs. Marcopper Mining Corp.,
G.R. No. 174641, Nov. 11, 2008

Facts: DENR ordered the indefinite suspension of MARCOPPER's operations for causing damage
to the environment of the Province of Marinduque by spilling the company's mine waste or
tailings from an old underground impounding area into the Boac River, in violation of its ECC.
NAMAWU was the exclusive bargaining representative of the rank-and-file workers of
MARCOPPER. It filed a complaint with the NLRC against MARCOPPER for nonpayment of wages,
separation pay, damages, and attorney's fees.

NAMAWU claimed that due to the indefinite suspension of MARCOPPER's operations, its
members were not paid the wages due them for six months. It further claimed that its
members are also entitled to be paid their separation pay pursuant to their collective
bargaining agreement with MARCOPPER and under existing implementing rules of the Labor
Code. There had been an illegal strike which occurred.

Issue: Whether or not it is necessary that MARCOPPER file an appeal bond

RULING: In the context of the NLRC appeal bond that is directly at issue, MARCOPPER had every
reason to claim in its April 10, 2000 appeal to the NLRC that it should be excused from filing an
appeal bond with respect to the NAMAWU members who were no longer company employees.
The CA decision decreeing the termination of employment of those involved in the illegal strike
case had already been issued at that time. We subsequently ruled on the same issue during the
time the environmental incident case was pending before the NLRC. Thus, when the NLRC
dismissed MARCOPPER's appeal for failure to file the requisite appeal bond corresponding to
the 615 NAMAWU members, the termination of employment of these NAMAWU members was
already a settled matter that the NLRC was in no position to disregard. In this light, the CA was
correct in reversing the dismissal of MARCOPPER's appeal for failure to file an appeal bond.
Pursued to its logical end, the CA conclusions should lead to the dismissal of NAMAWU's
complaint with respect to its 615 previously dismissed members.

Garcy Kate D. Go LLB2 EH306 Page 88

JETHRO INTELLIGENCE & SECURITY CORPORATION vs. Secretary of Labor

Facts: Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security service contractor
with a security service contract agreement with co-petitioner Yakult Phils., Inc. (Yakult). On the basis of a
complaint
1
filed by respondent Frederick Garcia (Garcia), one of the security guards deployed by Jethro,
for underpayment of wages, legal/special holiday pay, premium pay for rest day, 13th month pay, and
night shift differential, the Department of Labor and Employment (DOLE)-Regional Office No. IV
conducted an inspection at Yakults premises in Calamba, Laguna in the course of which several labor
standards violations were noted, including keeping of payrolls and daily time records in the main office,
underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE as
required under Department Order No. 18-02.

By Order
3
of September 9, 2004, the DOLE Regional Director, noting petitioners failure to rectify the
violations noted during the above-stated inspection within the period given for the purpose, found them
jointly and severally liable to herein respondents for the aggregate amount of EIGHT HUNDRED NINE
THOUSAND TWO HUNDRED TEN AND 16/100 PESOS (P809,210.16) representing their wage differentials,
regular holiday pay, special day premium pay, 13th month pay, overtime pay, service incentive leave
pay, night shift differential premium and rest day premium.

Jethro appealed to the Secretary of Labor and Employment (SOLE), faulting the Regional Director for,
among other things, basing the computation of the judgment award on Garcias affidavit instead of on
the data reflected in the payrolls for 2001 to 2004 which was denied.

Issue: Whether or not SOLE or his duly authorized representative has jurisdiction over money claims
that exceed 5,000.

Ruling: In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does
not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed
the inspection results and there is a need to examine evidentiary matters to resolve the issues raised,
the payrolls presented by it were considered in the ordinary course of inspection. While the
employment records of the employees could not be expected to be found in Yakults premises
in Calamba, as Jethros offices are in Quezon City, the records show that Jethro was given ample
opportunity to present its payrolls and other pertinent documents during the hearings and to rectify the
violations noted during the ocular inspection. It, however, failed to do so, more particularly to submit
competent proof that it was giving its security guards the wages and benefits mandated by law.

Jethros failure to keep payrolls and daily time records in Yakults premises was not the only labor
standard violation found to have been committed by it; it likewise failed to register as a service
contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the
wages and benefits in accordance with the rates prescribed by law.

Garcy Kate D. Go LLB2 EH306 Page 89

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 non-compliance of Dusit Hotel
with WO No. 9, while there was an on-going compulsory arbitration before the National Labor
Relations Commission (NLRC) due to a bargaining deadlock between the Union and Dusit Hotel;
and requesting immediate assistance on this matter. On 24 May 2002, Rasing sent Dir. Maraan
another letter following-up his previous request for assistance.

Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO
Natividad) to conduct an inspection of Dusit Hotel premises on 24 April 2002. In the first
Inspection, the report showed that Dusit Hotel is exempt from complying with WO no. 9. Due to
the Second request for inspection, DOLE representative conducted another round of inspection
and the Labor Standards Officer noted the following in her inspection report:
* Non-presentation of records/payrolls
* Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO
Chapter, there are one hundred forty-four (144) affected in the implementation of Wage Order
No. NCR-09-> ECOLA covering the periods from Nov. 5/01 to present.

Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect
restitution and/or correction of the noted violations within five days from receipt of the Notice,
and to submit any question on the findings of the labor inspector within the same period,
otherwise, an order of compliance would be issued. The Notice of Inspection Result was duly
received by Dusit Hotel Assistant Personnel Manager Rogelio Santos.
In the meantime, the NLRC rendered a Decision 9 dated 9 October 2002 in NLRC-NCR-CC No.
000215-02 the compulsory arbitration involving the Collective Bargaining Agreement (CBA)
deadlock between Dusit Hotel and the Union granting the hotel employees the following
wage increases, in accord with the CBA:

Effective January 1, 2001 - P500.00/month
Effective January 1, 2002 - P550.00/month
Effective January 1, 2003 - P600.00/month

On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises,
DOLE-NCR, through Dir. Maraan, issued the Order 10 directing Dusit Hotel to pay 144 of its
employees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO
No. 9; plus, the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727,
11 as amended by Republic Act No. 8188.
Garcy Kate D. Go LLB2 EH306 Page 90

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 NLRC in the
latter's Decision dated 9 October 2002. Whether Dusit Hotel is liable for the double indemnity
for violation of the wage order.

Ruling: The Court rules in the negative. It must be noted that the hotel employees have a right
to their share in the service charges collected by Dusit Hotel, pursuant to Article 96 of the Labor
Code of 1991, to wit:

Article 96.Service charges. All service charges collected by hotels, restaurants and similar
establishments shall be distributed at the rate of eighty-five percent (85%) for all covered
employees and fifteen percent (15%) for management. The share of employees shall be equally
distributed among them. In case the service charge is abolished, the share of the covered
employees shall be considered integrated in their wages.

Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its
employees and management their respective shares in the service charges collected, the hotel
cannot claim that payment thereof to its 82 employees constitute substantial compliance with
the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees' right to their
shares in the service charges collected by Dusit Hotel is distinct and separate from their right to
ECOLA; gratification by the hotel of one does not result in the satisfaction of the other.

The Court, however, finds no basis to hold Dusit Hotel liable for double indemnity. Under
Section 2 (m) of DOLE Department Order No. 10, Series of 1998, 30 the Notice of Inspection
Result "shall specify the violations discovered, if any, together with the officer's
recommendation and computation of the unpaid benefits due each worker with an advice that
the employer shall be liable for double indemnity in case of refusal or failure to correct the
violation within five calendar days from receipt of notice". A careful review of the Notice of
Inspection Result dated 29 May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals
that the said Notice did not contain such an advice. Although the Notice directed Dusit Hotel to
correct its noted violations within five days from receipt thereof, it was not sufficiently apprised
that failure to do so within the given period would already result in its liability for double
indemnity. The lack of advice deprived Dusit Hotel of the opportunity to decide and act
accordingly within the five-day period, as to avoid the penalty of double indemnity. By 22
October 2002, the 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.
Garcy Kate D. Go LLB2 EH306 Page 91

Although the Court is mindful of the fact that labor embraces individuals with a weaker and
unlettered position as against capital, it is equally mindful of the protection that the law
accords to capital. While the Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that every labor dispute will be
automatically decided in favor of labor. Management also has its own rights which, as such, are
entitled to respect and enforcement in the interest of simple fair play.


Garcy Kate D. Go LLB2 EH306 Page 92

Tiger Construction and Development Corp. vs. Abay et al.

The general rule is that any decision rendered without jurisdiction is a total nullity and may be
struck down at any time, the party that asserts it must be in good faith and not evidently
availing thereof simply to thwart the execution of an award that has long become final and
executory.

Facts: On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others
before the Regional Office of the Department of Labor and Employment (DOLE), an inspection
was conducted by DOLE officials at the premises of petitioner TCDC. Several labor standard
violations were noted, such as deficiencies in record keeping, non-compliance with various
wage orders, non-payment of holiday pay, and underpayment of 13
th
month pay. The case was
then set for summary hearing.

Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217 of the
same Code, this instant case should be referred back to the National Labor Relations
Commission (NLRC) Sub-Arbitration Branch V, Naga City, on the ground that the aggregate
money claim of each worker exceeds the jurisdictional amount of this Office [which] is (sic) Five
Thousand Pesos Only (P5,000.00).

Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas (Secretary Sto.
Tomas), in an apparent reversal of Director Manalos endorsement, issued another inspection
authority on August 2, 2002 in the same case. Pursuant to such authority, DOLE officials
conducted another investigation of petitioners premises and the same violations were
discovered.

According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground
of lack of jurisdiction, which dismissal had attained finality; hence, all proceedings before the
DOLE regional office after July 25, 2002 were null and void for want of jurisdiction.
aving the case in her office once more, Director Manalo finally issued an Order dated January
29, 2003 denying petitioners motion for reconsideration for lack of merit

Issue: Whether or not the petitioner can still assail the January 29, 2003 Order of Director
Manalo allegedly on the ground of lack of jurisdiction, after said Order has attained finality and
is already in the execution stage.

Ruling: The petition lacks merit. Petitioner admits that it failed to appeal the January 29, 2003
Order within the period prescribed by law. It likewise admits that the case was already in the
execution process when it resorted to a belated appeal to the DOLE Secretary. Petitioner,
however, excuses itself from the effects of the finality of the Order by arguing that it was
allegedly issued without jurisdiction and may be assailed at any time.

Director Manalos initial endorsement of the case to the NLRC, on the mistaken opinion that
the claim was within the latters jurisdiction, did not oust or deprive her of jurisdiction over the
case. She therefore retained the jurisdiction to decide the case when it was eventually returned
to her office by the DOLE Secretary. Jurisdiction or authority to try a certain case is conferred by
law and not by the interested parties, much less by one of them, and should be exercised
precisely by the person in authority or body in whose hands it has been placed by the law.
[18]


We also cannot accept petitioners theory that Director Manalos initial endorsement of the
case to the NLRC served as a dismissal of the case, which prevented her from subsequently
assuming jurisdiction over the same. The said endorsement was evidently not meant as a final
disposition of the case; it was a mere referral to another agency, the NLRC, on the mistaken
belief that jurisdiction was lodged with the latter. It cannot preclude the regional director from
Garcy Kate D. Go LLB2 EH306 Page 93

subsequently deciding the case after the mistake was rectified and the case was returned to her
by the DOLE Secretary, particularly since it was a labor case where procedural lapses may be
disregarded in the interest of substantial justice.

In view of our ruling above that the January 29, 2003 Order was rendered with jurisdiction and
can no longer be questioned (as it is final and executory), we can no longer entertain
petitioners half-hearted and unsubstantiated arguments that the said Order was allegedly
based on erroneous computation and included non-employees. Likewise, we find no more need
to address petitioners contention that the CA erred in dismissing its petition on the ground of
its belated compliance with the requirement of certification against forum-shopping.

Garcy Kate D. Go LLB2 EH306 Page 94

Peoples Broadcasting (Bombo Radyo Phils) vs. Sec of DOLE et al.
March 6, 2012 Resolution on the main Decision of May 8, 2009

Facts: Jandeleon Juezan (Juezan) filed a complaint before the DOLE against Bombo Radyo
Phils. (Bombo Radyo) for illegal deduction, non-payment of service incentive leave, 13th
month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed
payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth. On the basis of the
complaint, the DOLE conducted a plant level inspection. The Labor Inspector in his report
wrote, Management representative informed that (Juezan) complainant is a drama talent hired
on a per drama participation basis hence no employer-employer relationship existed between
them. As proof of this, management presented photocopies of cash vouchers, billing statement,
employments of specific undertaking, etc. The management has no control of the talent if he
ventures into another contract with other broadcasting industries.

Issue: Whether or not the Secretary of Labor has the power to determine the existence of an
employer-employee relationship.

Ruling: Yes. No limitation in the law was placed upon the power of the DOLE to determine the
existence of an employer-employee relationship. No procedure was laid down where the DOLE
would only make a preliminary finding, that the power was primarily held by the NLRC. The law
did not say that the DOLE would first seek the NLRCs determination of the existence of an
employer-employee relationship, or that should the existence of the employer-employee
relationship be disputed, the DOLE would refer the matter to the NLRC. The DOLE must have
the power to determine whether or not an employer-employee relationship exists, and from
there to decide whether or not to issue compliance orders in accordance with Art. 128(b) of the
Labor Code, as amended by RA 7730.

The DOLE, in determining the existence of an employer-employee relationship, has a ready set
of guidelines to follow, the same guide the courts themselves use. The elements to determine
the existence of an employment relationship are: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; (4) the employers power to
control the employees conduct. The use of this test is not solely limited to the NLRC. The DOLE
Secretary, or his or her representatives, can utilize the same test, even in the course of
inspection, making use of the same evidence that would have been presented before the NLRC.

The determination of the existence of an employer-employee relationship by the DOLE must be
respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730
would be rendered nugatory if the alleged employer could, by the simple expedient of disputing
the employer-employee relationship, force the referral of the matter to the NLRC. The Court
issued the declaration that at least a prima facie showing of the absence of an employer-
employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE
that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same
does successfully refute the existence of an employer-employee relationship.

If the DOLE makes a finding that there is an existing employer-employee relationship, it takes
cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction
only if the employer-employee relationship has already been terminated, or it appears, upon
review, that no employer-employee relationship existed in the first place.

It must also be remembered that the power of the DOLE to determine the existence of an
employer-employee relationship need not necessarily result in an affirmative finding. The DOLE
may well make the determination that no employer-employee relationship exists, thus
divesting itself of jurisdiction over the case. It must not be precluded from being able to reach
its own conclusions, not by the parties, and certainly not by this Court.
Garcy Kate D. Go LLB2 EH306 Page 95

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to
make a determination as to the existence of an employer-employee relationship in the exercise
of its visitorial and enforcement power, subject to judicial review, not review by the NLRC.

To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards
provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that
there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the
exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the
jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is
accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter,
under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and
exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other
terms and conditions of employment, if accompanied by a claim for reinstatement. If a
complaint is filed with the NLRC, and there is still an existing employer-employee relationship,
the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be
questioned through a petition for certiorari under Rule 65 of the Rules of Court.

Garcy Kate D. Go LLB2 EH306 Page 96

Superior Packaging Corp. vs. Balagsay et al., October 10, 2012

Facts: The petitioner engaged the services of Lancer to provide reliever services to its business,
which involves the manufacture and sale of commercial and industrial corrugated boxes.
According to petitioner, the respondents were engaged for four (4) months from February to
June 1998 and their tasks included loading, unloading and segregation of corrugated boxes.

Thereafter, respondents filed complaint against the petitioner and President, Cesar Luz (Luz),
for underpayment of wages, non-payment of premium pay for worked rest, overtime pay and
non-payment of salary. Upon receipt Department of Labor and Employment (DOLE) conducted
an inspection of the petitioners premises and found several violations, to wit:
(1) Non-presentation of payrolls and daily time records;
(2) Non-submission of annual report of safety organization;
(3) Medical and accident/illness reports;
(4) Non-registration of establishment under Rule 1020 of Occupational and Health
Standards; and
(5) No trained first aide.

Due to the petitioners failure to appear in the summary investigations conducted by the DOLE,
an Order

was issued on June 18, 2003 finding in favor of the respondents and adopting the
computation of the claims submitted. Petitioner and Luz were ordered, among others, to pay
respondents their total claims in the amount of Eight Hundred Forty Thousand Four Hundred
Sixty-Three Pesos and 38/100 (P 840,463.38).

Petitioner filed a motion for reconsideration on the ground that respondents are not its
employees but of Lancer and that they pay Lancer in lump sum for the services rendered. The
DOLE, however, denied its motion because petitioner failed to support its claim that the
respondents are not its employees, and even assuming that they were employed by Lancer, the
petitioner still cannot escape liability as Section 13 of the Department Order No. 10, Series of
1997, makes a principal jointly and severally liable with the contractor to contractual
employees to the extent of the work performed when the contractor fails to pay its employees
wages.

Their appeal to the Secretary of DOLE was dismissed thus, l petitioner and Luz filed a petition
for certiorari with the Court of Appeals (CA).

On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the modification in
that Luz was absolved of any personal liability under the award.
Hence, this petition for review under Rule 45 of the Rules of Court.

Issue: Whether or not DOLE has authority to determine the existence of an employer-employee
relationship? Whether Superior Packaging Corporation may be held solidarily liable with Lancer
Staffing & Services Network, Inc. (Lancer) for respondents unpaid money claims?

Ruling: The petition is bereft of merit.

The DOLE clearly acted within its authority when it determined the existence of an employer-
employee relationship between the petitioner and respondents as it falls within the purview of
its visitorial and enforcement power under Article 128(b) of the Labor Code. The determination
of the existence of an employer-employee relationship by the DOLE must be respected.

With regard to the contention that there is no evidence to support the finding that the
respondents rendered overtime work and that they worked on their rest day, the resolution of
Garcy Kate D. Go LLB2 EH306 Page 97

this argument requires a review of the factual findings and the evidence presented, Court said
that it is not a trier of facts and it applies with greater force in labor cases. Hence, where the
factual findings of the labor tribunals or agencies conform to, and are affirmed by, the CA, the
same are accorded respect and finality, and are binding to Supreme Court.

It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent
contractor but was engaged in "labor-only contracting"; hence, the petitioner was considered
an indirect employer of respondents and liable to the latter for their unpaid money claims.

At the time of the respondents employment in 1998, the applicable regulation was DOLE
Department Order No. 10, Series of 1997. Under said Department Order, labor-only contracting
was defined as follows:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an
employer shall be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which are
directly related to the principal business or operations of the employer in which workers are
habitually employed.

Labor-only contracting is prohibited and the person acting as contractor shall be considered
merely as an agent or intermediary of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by him.

According to the CA, the totality of the facts and surrounding circumstances of this case point
to such conclusion that Lancer was, indeed, a labor-only contractor. Aside from these is the
undisputed fact that the petitioner failed to produce any written service contract that might
serve as proof of its alleged agreement with Lancer.

Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that
there is an employer-employee relationship between the principal and the employees of the
supposed contractor, and the "labor only" contractor is considered as a mere agent of the
principal, the real employer. The former becomes solidarily liable for all the rightful claims of
the employees.

Petitioner therefore, being the principal employer and Lancer, being the labor-only contractor,
are solidarily liable for respondents unpaid money claims.

Garcy Kate D. Go LLB2 EH306 Page 98

WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES

Gaa vs. CA
G.R. No. L-44169; December 3, 1985

Facts: Rosario Gaa is occupying a managerial/ supervisory position in El Grande Hotel. 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.

Issue: Whether or not the renumeration of Gaa are exempted from execution or attachment
pursuant to Art. 1708 of the Civil Code.

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


Garcy Kate D. Go LLB2 EH306 Page 99

Nestle Phils. vs. NLRC
G.R. No. 85197 March 18, 1991
Facts: The private respondents were employed by the petitioner either as sales representatives
or medical representatives. By reason of the nature of their work they were each allowed to
avail of the company's car loan policy. Under that policy, the company advances the purchase
price of a car to be paid back by the employee through monthly deductions from his salary, the
company retaining the ownership of the motor vehicle until it shall have been fully paid for. All
of the private respondents availed of the petitioner's car loan policy.
Respondents were dismissed from service because of their participation in the strike/ certain
irregularities. As such, they filed a case of illegal dismissal before the NLRC. In the Notices of
Dismissal, they were asked by the Company to settle the accounts payable of their car loans or
return the car for proper disposition. The Company filed a civil suit to recover possession of the
cars. Private respondents sought a temporary restraining order in the NLRC to stop the
company from cancelling their car loans and collecting their monthly amortizations pending the
final resolution of their appeals in the illegal dismissal case. NLRC granted the TRO.
Issue: Whether or not NLRC is correct in granting the TRO in favor of the respondents pending
the case of illegal dismissal.
Ruling: Nestl's demand for payment of the private respondents' amortizations on their car
loans, or, in the alternative, the return of the cars to the company, is not a labor, but a civil,
dispute. It involves debtor-creditor relations, rather than employee-employer relations. The
NLRC gravely abused its discretion and exceeded its jurisdiction by issuing the writ of injunction
to stop the company from enforcing the civil obligation of the private respondents under the
car loan agreements and from protecting its interest in the cars which, by the terms of those
agreements, belong to it (the company) until their purchase price shall have been fully paid by
the employee. The terms of the car loan agreements are not in issue in the labor case. The
rights and obligations of the parties under those contracts may be enforced by a separate civil
action in the regular courts, not in the NLRC.


Garcy Kate D. Go LLB2 EH306 Page 100

Five J Taxi vs. NLRC
G.R. No. 111474 August 22, 1994

Facts: Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the
petitioners as taxi drivers. Aside from the daily "boundary", 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.

Issue: Whether or not the car wash payment is an illegal deduction as contemplated in the
Labor Code.

Ruling: SC held that the amount doled out was paid directly to the person who washed the unit,
thus we find nothing illegal in this practice, much more 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.Car washing after a tour of duty is a practice in the taxi industry,
and is, in fact, dictated by fair play.


Garcy Kate D. Go LLB2 EH306 Page 101

Phil. Veterans Bank vs. NLRC
G.R. No. 130439 October 26, 1999

Facts: Due to financial losses, the Philippine Veterans Bank was placed in receivership pursuant
to the order of the Central Bank of the Philippines. Consequently, its employees, including
private respondent Dr. Jose Teodorico V. Molina, were terminated from work and given their
respective separation pay and other benefits. Dr. Molina filed a complaint before NLRC. He
demanded the implementation of the Wage Orders No. 1 and 2. Both the Labor Arbiter and
NLRC granted the petition of Molina.

Issue: Whether or not Molina is entitled to the increase of his salary pursuant to Wage Orders
No. 1 and 2.

Ruling: SC held that Molinas salary is within the coverage of the said wage orders. W.O. 1
expressly states that employees having a monthly salary of not more than P3,802.08 are
entitled to receive the mandated wage increase. Undeniably, MOLINA was receiving a monthly
salary of P3,754.60. This fact alone leaves no doubt that he should benefit from said wage
order. On the other hand, W.O. 2 raised the ceiling for entitlement to the wage increase. If
MOLINA was covered by the earlier wage order, with more reason should the later wage order
apply to him.


Garcy Kate D. Go LLB2 EH306 Page 102

Philippine Appliances Corp. vs. CA
G.R. No. 149434; June 3, 2004

Facts: Petitioner is a domestic corporation engaged in the business of manufacturing
refrigerators, freezers and washing machines. Respondent United Philacor Workers Union-
NAFLU is the duly elected collective bargaining representative of the rank-and-file employees of
petitioner. During the collective bargaining negotiations between petitioner and respondent
union in 1997 (for the last two years of the collective bargaining agreement covering the period
of July 1, 1997 to August 31, 1999), petitioner offered the amount of four thousand pesos
(P4,000.00) to each employee as an "early conclusion bonus". Upon conclusion of the CBA
negotiations, petitioner accordingly gave this early signing bonus. After the expiration of the
CBA, both parties negotiated for a new CBA. However, it resulted to a deadlock. The
respondent union filed before the NCMB a notice of strike due to bargaining deadlock. The
Department of Labor and Employment took cognizance of the case and ordered, among other
things, herein petitioner to award signing bonus. Petitioner argued that the award of the
signing bonus was patently erroneous since it was not part of the employees salaries or
benefits or of the collective bargaining agreement. It is not demandable or enforceable since it
is in the nature of an incentive.

Issue: Whether or not the award of a signing bonus by the Secretary of Labor is correct.

Ruling: SC held that the signing bonus must not be awarded.
The CBA negotiation between petitioner and respondent union failed notwithstanding the
intervention of the NCMB. Respondent union went on strike for eleven days and blocked the
ingress to and egress from petitioners two work plants. The labor dispute had to be referred to
the Secretary of Labor and Employment because neither of the parties was willing to
compromise their respective positions regarding the four remaining items which stood
unresolved. While we do not fault any one party for the failure of the negotiations, it is
apparent that there was no more goodwill between the parties and that the CBA was clearly
not signed through their mutual efforts alone. Hence, the payment of the signing bonus is no
longer justified and to order such payment would be unfair and unreasonable for petitioner.
Furthermore, we have consistently ruled that a bonus is not a demandable and enforceable
obligation.

Garcy Kate D. Go LLB2 EH306 Page 103

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 claimsand 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.

Ruling: The dismissal is legal and entitles them of payment of benefits.
Dismissals based on just causes contemplate acts or omissions attributable to the employee
while dismissals based on authorized causes involve grounds under the Labor Code which allow
the employer to terminate employees. A termination for an authorized cause requires payment
of separation pay. When the termination of employment is declared illegal, reinstatement and
full back wages are mandated under Article 279. If reinstatement is no longer possible where
the dismissal was unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must
give the employee two written notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to
be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized
causes under Articles 283 and 284, the employer must give the employee and the Department
of Labor and Employment written notices 30 days prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just
cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for
health reasons under Article 284, and due process was observed; (2) the dismissal is without
just or authorized cause but due process was observed; (3) the dismissal is without just or
authorized cause and there was no due process; and (4) the dismissal is for just or authorized
cause but due process was not observed.

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot
be cured, it should not invalidate the dismissal. However, the employer should be held liable
for non-compliance with the procedural requirements of due process. The present case
squarely falls under the fourth situation. The dismissal should be upheld because it was
established that the petitioners abandoned their jobs to work for another company. Private
respondent, however, did not follow the notice requirements and instead argued that sending
notices to the last known addresses would have been useless because they did not reside there
anymore. Unfortunately for the private respondent, this is not a valid excuse because the law
mandates the twin notice requirements to the 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 13
th
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 13
th
month pay is included in the definition of
wage under Article 97(f) of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 104

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.

Ruling: 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.

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.

Garcy Kate D. Go LLB2 EH306 Page 105

Honda Philippines Vs. Samahan Ng Malayang Manggagawa Sa Honda

Facts: Petitioner Honda and Respondent union forged a Collective Bargaining Agreement which
averred that Honda shall maintain the present practice in the implementation of the 13
th
and
14
th
month pay. Such CBA is effective until 2000. In the later part of 1998, the parties started
re-negotiations.

However, when the talk between the parties did not go well, respondent union filed a Notice to
Strike on the ground of bargaining deadlock. Honda then filed a notice of Lockout in which the
DOLE ordered the party to cease and desist from committing acts.

The union filed a second Notice of Strike on ground of unfair labor, in which they went into
pocketing of the premises of Honda. DOLE then assumed jurisdiction and subjected the issue to
the NLRC for compulsory arbitration for which the employees were ordered to return to work.
The management of Honda, on 22 Nov. 1999, then issued a memorandum announcing its new
computation of the 13
th
and 14
th
month pay to be granted to employees whereby the 31-day
strike shall be considered unworked days for purposes of computing said benefits.

Thus, the union opposed the pro-rated computation of the bonuses and the matter was
brought before the Grievance Machinery. The Labor Arbiter ordered Honda to compute each
provision in full month basic pay. Ca affirmed the decision of the labor arbiter.

Issue: WON the pro-rated computation of the 13
th
month pay and the other bonuses in
question is valid and lawful

Ruling: Such pro-rated computation is invalid.

It is well noted that the CBA refers to the negotiated contract between a legitimate labor
organization and the employer. It is the law between the parties and compliance therewith is
mandated by express policy of the law.

Honda did not adduce evidence to show that the 13
th
month, 14
th
month and financial
assistance benefits were previously subject to pro-rating. Thus, such was an implicit acceptance
that prior to the strike, a full month basic pay computation was the present practice intended
to be maintained in the CBA.

Lastly, to allow pro-ration of the 13
th
month pay is to undermine the wisdom behind the law
and the mandate that the workingmans welfare should be the primordial and paramount
consideration. DENIED.

Garcy Kate D. Go LLB2 EH306 Page 106

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.

Ruling: Employees who have retired still have the personality to file a complaint.

Retirement results from a voluntary agreement between the employer and the employee
whereby the latter after reaching a certain age agrees to sever his employment with the
former. The very essence of retirement is the termination of employer-employee relationship.

Retirement of the employee does not in itself affect his employment status especially when it
involves all rights and benefits due to him, since these must be protected as though there had
been no interruption of service. It must be borne in mind that the retirement scheme was part
of the employment package and the benefits to be derived therefrom constituted as it were a
continuing consideration of services rendered as well as an effective inducement foe remaining
with the corporation. It is intended to help the employee enjoy the remaining years of his life.

When the retired employees were requesting that their retirement benefits be granted, they
were not pleading for generosity but merely demanding that their rights, embodied in the CBA,
be recognized. When an employee has retired but his benefits under the law or CBA have not
yet been given, he still retains, for the purpose of prosecuting his claims, the status of an
employee entitled to the protection of the Labor Code, one of which is the protection of the
labor union.



















Garcy Kate D. Go LLB2 EH306 Page 107

Jardin vs. NLRC

Facts: Angel Jardin, et. Al. are drivers of Philjama International Inc., a domestic corporation
engaged in the operation of Goodman Taxi. Jardin, et. al. drive Philjamas taxicabs evry other
day on a 24 hour work schedule under the boaundary system. Philjama admitted that a
deduction of Php 30.00 is regularly against Jardin et. al.s daily earnings. Such fee is supposedly
for the washing of the taxi units.

Believing that the imposed deductions of Php 30.00 on their daily wages is illegal, Jardin et. al
formed a labor union to protect their rights and interests. Learning about the plans of Jardin et.
al, Philjama terminated them from service. Jardin et. al believed that they were dismissed
because of the formed labor union in which they are leaders and active members. Because of
this, Jardin et. al. filed a complaint against Philjama for unfair labor practice, illegal dismissal
and illegal deduction of washing fees.

The labor arbiter dismissed the case for lack of merit. On appeal, the NLRC reversed the labor
arbiters judgment declaring that the dismissal was illegal and ordered that Jardin et. al. be
reinstated. Philjama filed its motion for reconsideration. On its second motion for
reconsideration, NLRC then reversed its prior decision saying that there exists no employee-
employer relationship between the parties; thus, it has no jurisdiction to hear and decide the
case. It held that the relationship between the parties is that of a leasehold which is covered by
the Civil Code rather than the Labor Code.

Aggrieved, Jardin et. al sought for reconsideration. Such was denied by the NLRC. Consequently,
they raised the case to the Supreme Court.

Issues: a.) Whether NLRC has jurisdiction to entertain Philjamas second motion for
reconsideration which is admittedly a pleading prohibited under NLRC rules.
b.) Whether there exists an employer-employee relationship.

Ruling: NLRC committed grave abuse of discretion for entertaining Philjamas second motion
for reconsideration. As provided for under Rule 7, Sec. 14 of its New Rules of Procedure, only
one motion for reconsideration from the same party shall be entertained by the NLRC. When
Philjama filed its first motion for reconsideration, which was denied, the NLRC already had
ample time to rectify errors/mistakes it may have committed before recourse to courts may be
had. Thus, when Philjama filed its second motion for reconsideration, public respondent should
have forthwith denied it.

There exists an employer-employee relationship between Jardin et. al and Philjama
International, Inc.

SC said, to quote:
In a number of cases decided by this Court, we ruled that the relationship between jeepney
owners/operators on one hand and jeepney drivers on the other under the boundary system is
that of employer-employee and not of lessor-lessee.

We explained that in the lease of chattels, the lessor loses complete control over the chattel
leased although the lessee cannot be reckless in the use thereof, otherwise he would be
responsible for the damages to the lessor. In the case of jeepney owners/operators and
jeepney drivers, the former exercise supervision and control over the latter. The management
of the business is in the owners hands. The owner as holder of the certificate of public
convenience must see to it that the driver follows the route prescribed by the franchising
authority and the rules promulgated as regards its operation. Now, the fact that the drivers do
not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the
Garcy Kate D. Go LLB2 EH306 Page 108

owner/operator is not sufficient to withdraw the relationship between them from that of
employer and employee.

We have applied by analogy the abovestated doctrine to the relationships between bus
owner/operator and bus conductor, auto-calesa owner/operator and driver, and recently
between taxi owners/operators and taxi drivers in the case of Martinez vs. NLRC, 272 SCRA 793,
800 (1997) Hence, petitioners are undoubtedly employees of private respondent because as
taxi drivers they perform activities which are usually necessary or desirable in the usual
business or trade of their employer.

The deduction of Php 30.00 that is supposedly for the washing of taxi units is not illegal in the
context of the law. 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. Car washing after tour of duty is
indeed a practice in the taxi industry and is in fact dictated by fair play. --- Hence, Jardin et.al
(drivers) are not entitled to reimbursement of washing charges.

Garcy Kate D. Go LLB2 EH306 Page 109

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

Facts: Manila Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate
and maintain horse races, entered into a Collective Bargaining Agreement (CBA) with Manila
Jockey Club Employees Labor Union-PTGWO. Under Section 1 Article IV of their 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. 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 with exception to those monthly compensation which includes work
performed during Saturday, Sunday, and Holiday when races are held at the Club. The CBA
likewise reserved in management prerogatives including the determination of the work
schedule. An inter-office memorandum was later issued declaring that the hours of work of
regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are
held, that is, every Tuesday and Thursday. The memorandum, however, sustained the 9:00 a.m.
to 5:00 p.m. schedule for non-race days.

Before the voluntary arbitrators of the National Conciliation and Mediation Board, petitioners
questioned the memorandum as violative of the prohibition against non-diminution of wages
and benefits guaranteed the CBA which specified the work schedule of respondent's employees
to be from 9:00 a.m. to 5:00 p.m. They 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.

Issue: Whether or not the change in the work schedule violated Article 100 of the Labor Code
on the non-diminution of wages and benefits guaranteed under the parties CBA.

Ruling: No. It was evident that the change in work schedule was justified, it being a
management prerogative. Respondent, as employer, cited the change in the program of horse
races as reason for the adjustment of the employees work schedule. It rationalized that when
the CBA was signed, the horse races started at 10:00 a.m. When the races were moved to 2:00
p.m., there was no other choice for management but to change the employees' work schedule
as there was no work to be done in the morning. It is true that Section 1, Article IV of the CBA
provides for 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. from Mondays to Saturdays. However, Section 2, Article XI expressly reserves on
respondent the prerogative to change existing methods or facilities to change the schedules of
work.

Moreover, Manila Jockey Club was not obliged to allow all its employees to render overtime
work every day 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.

Garcy Kate D. Go LLB2 EH306 Page 110

San Miguel Corp., 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, 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 or not the circumstances in the present case constitute an exception to the rule
that supervisory employees are not entitled to overtime pay.

Ruling: Article 82 of the Labor Code states that the provisions of the Labor Code on working
conditions and rest periods shall not apply to managerial employees.

The other provisions in the Title include normal hours of work (Article 83), hours worked
(Article 84), meal periods (Article 85), night shift differential (Article 86), overtime work (Article
87), undertime not offset by overtime (Article 88), emergency overtime work (Article 89), and
computation of additional compensation (Article 90). It is thus clear that, generally, managerial
employees such as respondents are not entitled to overtime pay for services rendered in excess
of eight hours a day. Respondents failed to show that the circumstances of the present case
constitute an exception to this general rule.

Aside from their allegations, respondents were not able to present anything to prove that
petitioners were obliged to permit respondents to render overtime work and give them the
corresponding overtime pay. Even if petitioners did not institute a "no time card policy,"
respondents could not demand overtime pay from petitioners if respondents did not render
overtime work. The requirement of rendering additional service differentiates overtime pay
from benefits such as thirteenth month pay or yearly merit increase. These benefits do not
require any additional service from their beneficiaries. Thus, overtime pay does not fall within
the definition of benefits under Article 100 of the Labor Code.





Garcy Kate D. Go LLB2 EH306 Page 111

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 monthly-paid
employee which entitled him to yearly increases in salary. On 19 October 1993, respondent
filed an action for recovery of damages due to discrimination under Article 100 of the Labor
Code of the Philippines (Labor Code), as amended, as well as for recovery of salary differential
and backwages, against petitioner. Respondent questioned the rate of salary increase given him
by petitioner.

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.

Ruling: Respondent was dismissed for a just cause.

An employer may terminate an employment for serious misconduct or willful disobedience by
the employee of the lawful orders of his employer or representative in connection with his
work. Willful disobedience requires the concurrence of two elements: (1) the 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 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.

Garcy Kate D. Go LLB2 EH306 Page 112

Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU,
G.R. No. 170734, May 14, 2008, citing Davao Fruits vs. Asso. Labor Union, 225 SCRA 562 and
Sevilla Trading vs. AVA Tomas Services, G.R. No. 152456, April 28, 2004

Facts: Petitioner is a company engaged in the manufacture of metal products, whereas
respondent is the labor union of petitioner's rank and file employees. Sometime in December
2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union
members in amounts proportional to the service they actually rendered in a year, which is less
than a full twelve (12) months. Respondent protested the prorated scheme, claiming that on
several occasions petitioner did not prorate the payment of the same benefits to seven (7)
employees who had not served for the full 12 months. According to respondent, the prorated
payment violates the rule against diminution of benefits under Article 100 of the Labor Code.
Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). The
parties submitted the case for voluntary arbitration.

The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that the
giving of the contested benefits in full, irrespective of the actual service rendered within one
year has not ripened into a practice. He also interpreted the phrase "for each year of service"
found in the pertinent CBA provisions to mean that an employee must have rendered one year
of service in order to be entitled to the full benefits provided in the CBA.
Respondent filed a Petition for Review before the Court of Appeals. The appellate court found
that petitioner had an existing voluntary practice of paying the aforesaid benefits in full to its
employees; thereby rejecting the claim that petitioner erred in paying full benefits to its seven
employees. The appellate court noted that aside from the affidavit of petitioner's officer, it has
not presented any evidence in support of its position that it has no voluntary practice of
granting the contested benefits in full and without regard to the service actually rendered
within the year.

Issues: 1. Whether or not the petitioners should grant 13th month pay, bonus and leave
encashment in full regardless of actual service rendered.
2. Whether or not the prorated payment of the said benefits constitutes diminution of
benefits under Article 100 of the Labor Code.

Ruling: On the first issue, according to petitioner, there is a one-year cutoff in the entitlement
to the benefits provided in the CBA, which is evident from the wording of its pertinent
provisions as well as of the existing law. There is no doubt that in order to be entitled to the full
monetization of sixteen (16) days of vacation and sick leave, one must have rendered at least
one year of service. The clear wording of the provisions does not allow any other
interpretation. Anent the 13th month pay and bonus, the CBA provisions did not give any
meaning different from that given by the law, thus it should be computed at 1/12 of the total
compensation, which an employee receives for the whole calendar year. The bonus is also
equivalent to the amount of the 13th month pay given, or in proportion to the actual service
rendered by an employee within the year.

On the second issue, it is a settled rule that 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."

Garcy Kate D. Go LLB2 EH306 Page 113

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.

Petitioner claims that its full payment of benefits regardless of the length of service to the
company does not constitute voluntary employer practice. It points out that the payments had
been erroneously made and they occurred in isolated cases in the years 1992, 1993, 1994,
1999, 2002 and 2003. According to petitioner, it was only in 2003 that the accounting
department discovered the error. Petitioner further argues that for a grant of a benefit to be
considered a practice, it should have been practiced over a long period of time and must be
shown to be consistent, deliberate and intentional, which is not what happened in this case.

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. 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.
Petition denied.

Garcy Kate D. Go LLB2 EH306 Page 114

Aguanza vs. Asian Terminal Inc., et al., GR No. 163505, Aug. 14, 2009

Facts: Petitioner GualbertoAguanza was employed with respondent company Asian Terminal,
Inc. from April 15, 1989 to October 1997. He was initially employed as Derickman or Crane
Operator and was assigned as such aboard Bismark IV, a floating crane barge owned by Asian
Terminals, Inc. based at the port of Manila. Aside from his basic pay, he received meal
allowance, fixed overtime pay and out-of port allowance [when the barge is assigned outside
Metro Manila].

Sometime in September 1997, the Bismark IV, together with its crew, was temporarily assigned
at the Mariveles Grains Terminal in Mariveles, Bataan. Then, on October 20, 1997, respondent
James Keith issued a memo to the crew of Bismark IV stating that the barge had been
permanently transferred to the Mariveles Grains terminal beginning October 1, 1997 and
because of that, its crew would no longer be entitled to out of port benefits of 16 hours
overtime and P200 a day out-of port allowance. Due to the said development, Aguanza
questioned the diminution of his benefits. Aguanza insisted on reporting to work in Manila
although his barge, Bismark IV, and its other crew were already permanently based in
Mariveles, Bataan. Aguanza was not allowed to time in in Manila because his work was in
Mariveles, Bataan. He therefore was not able to render his services, and was accordingly not
paid for doing nothing. Because of private respondents refusal to give him any work
assignment and pay his salary, Aguanza filed a complaint for illegal dismissal against
respondents.

Issue: Was Aguanza constructively dismissed?

Ruling: No. The transfer of operations is a valid exercise of management prerogative. Aguanza
asserts that his transfer constituted constructive dismissal, while ATI asserts that Aguanzas
transfer was a valid exercise of management prerogative.

ATIs transfer of Bismark IVs base from Manila to Bataan was, contrary to Aguanzas assertions,
a valid exercise of management prerogative. The transfer of employees has been traditionally
among the acts identified as a management prerogative subject only to limitations found in law,
collective bargaining agreement, and general principles of fair play and justice. Even as the law
is solicitous of the welfare of employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied. On the other hand, the transfer
of an employee may constitute constructive dismissal "when continued employment is
rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee." Aguanzas situation is not within the purview of this
discussion.

When ATI transferred Bismark IVs operations to Bataan, ATI offered Aguanza similar terms:
basic pay for 40 hours of work from Monday to Friday, overtime pay for work done in excess of
eight hours per day, overtime pay for work done on Saturdays and Sundays, no additional
allowance and no transportation for working in Bataan. The circumstances of the case made no
mention of the salary structure in case Bismark IV being assigned work outside of Bataan;
however, we surmise that it would not be any different from the salary structure applied for
work done out-of-port. We, thus, agree with the NLRC and the appellate court when they
stated that the fixed overtime of 16 hours, out-of-port allowance and meal allowance
previously granted to Aguanza were merely supplements or employment benefits given on
condition that Aguanzas assignment was out-of-port. The fixed overtime and allowances were
not part of Aguanzas basic salary. Aguanzas basic salary was not reduced; hence, there was no
violation of the rule against diminution of pay.
Garcy Kate D. Go LLB2 EH306 Page 115

Genesis Transport Service Inc et al., vs. Unyon ng Malayang Manggagawa ng Genesis
Transport et al., GR No. 182114, April 5, 2010

Facts: Respondent Juan Taroy was hired by petitioner Genesis Transport as driver on
commission basis at 9% of the gross revenue per trip. He, after due notice and hearing,
terminated from employment after an accident on April 20, 2002 where he was deemed to
have been driving recklessly. He then filed a complaint for illegal dismissal and payment of
service incentive leave pay, claiming that he was singled out for termination because of his
union activities, other drivers who had met accidents not having been dismissed from
employment. He later amended his complaint to implead his co-respondent union and add as
grounds unfair labor practice and reimbursement of illegal deductions on tollgate fees, and
payment of service incentive leave pay.

Upon appeal, with respect to 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?

Ruling: 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% 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.

Garcy Kate D. Go LLB2 EH306 Page 116

Central Azucarera De Tarlac Vs. Central Azucarerade Tarlac Labor Union-Nlu

Facts: Petitioner is a domestic corporation engaged in the business of sugar manufacturing,
while respondent is a legitimate labor organization which serves as the exclusive bargaining
representative of petitioners rank-and-file employees. The controversy stems from the
interpretation of the term basic pay, essential in the computation of the 13th-month pay.

The facts of this case are not in dispute. In compliance with Presidential Decree (P.D.) No. 851,
petitioner granted its employees the mandatory thirteenth (13th) - month pay since 1975. The
formula used by petitioner in computing the 13th-month pay was: Total Basic Annual Salary
divided by twelve (12). Included in petitioners computation of the Total Basic Annual Salary
were the following: basic monthly salary; first eight (8) hours overtime pay on Sunday and
legal/special holiday; night premium pay; and vacation and sick leaves for each year.
Throughout the years, petitioner used this computation until 2006.
On November 6, 2004, respondent staged a strike. During the pendency of the strike,
petitioner declared a temporary cessation of operations.
The suspension of operation was lifted on June 2006, but the rank-and-file employees were
allowed to report for work on a fifteen (15) day-per-month rotation basis that lasted until
September 2006. In December 2006, petitioner gave the employees their 13
th
-month pay based
on the employees total earnings during the year divided by 12.
Respondent objected to this computation. It averred that petitioner did not adhere to the usual
computation of the 13
th
-month pay. NLRC ruled in favor of the respondent and CA reversed itd
ruling and ruled in favor of the Unyon. Hence the petition.

Issue: Whether or not Azucarera did not adhere to the proper computation of the 13th-month
pay.

Ruling: The 13
th
-month pay mandated by Presidential Decree (P.D.) No. 851 represents an
additional income based on wage but not part of the wage. It is equivalent toone-twelfth
(1/12) of the total basic salary earned by an employee within a calendar year. All rank-and-file
employees, regardless of their designation or employment status and irrespective of the
method by which their wages are paid, are entitled to this benefit, provided that they have
worked for at least one month during the calendar year. If the employee worked for only a
portion of the year, the 13
th
-month pay is computed pro rata.

On November 16, 1987, the Revised Guidelines on the Implementation of the 13
th
-Month Pay
Law was issued. Significantly, under this Revised Guidelines, it was specifically stated that
the minimum 13
th
-month pay required by law shall not be less than one-twelfth (1/12) of the
total basic salary earned by an employee within a calendar year.

Furthermore, the term basic salary of an employee for the purpose of computing the 13
th
-
month pay was interpreted to include all remuneration or earnings paid by the employer for
services rendered, but does not include allowances and monetary benefits which are not
integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation
and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living
allowances. However, these salary-related benefits should be included as part of the basic
salary in the computation of the 13
th
-month pay if, by individual or collective agreement,
company practice or policy, the same are treated as part of the basic salary of the employees.

Based on the foregoing, it is clear that there could have no erroneous interpretation or
application of what is included in the term basic salary for purposes of computing the 13
th
-
month pay of employees. From the inception of P.D. No. 851 on December 16, 1975, clear-cut
administrative guidelines have been issued to insure uniformity in the interpretation,
Garcy Kate D. Go LLB2 EH306 Page 117

application, and enforcement of the provisions of P.D. No. 851 and its implementing
regulations.

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that
benefits given to employees cannot be taken back or reduced unilaterally by the employer
because the benefit has become part of the employment contract, written or unwritten.

The
rule against diminution of benefits applies if it is shown that the grant of the benefit is based on
an express policy or has ripened into a practice over a long period of time and that the practice
is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error
in the construction or application of a doubtful or difficult question of law. But even in cases of
error, it should be shown that the correction is done soon after discovery of the error.

This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a
badge of bad faith.

Garcy Kate D. Go LLB2 EH306 Page 118

SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010

Facts: Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and
existing under the laws of the Republic of the Philippines and registered with the Philippine
Economic Zone Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a German
national, is its president. Thus, the wages of SHS employees are paid out by ECCP, through its
Accounting Services Department headed by Juliet Taguiang (Taguiang). Manuel F. Diaz
(respondent) was hired by petitioner SHS as Manager for Business Development on
probationary status

During respondents employment, Hartmannshenn was often abroad and, because of business
exigencies, his instructions to respondent were either sent by electronic mail or relayed
through telephone or mobile phone. During meetings with the respondent, Hartmannshenn
expressed his dissatisfaction over respondents poor performance. respondent acknowledged
his poor performance and offered to resign from the company.

On November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on
November 22 and 24, 2005, notified respondent of his arrival through electronic mail messages
and advised him to get in touch with him. Respondent claimed that he never received the
messages. Hartmannshenn instructed Taguiang not to release respondents salary.

Respondent served on SHS a demand letter and a resignation letter. It is precisely because of
illegal and unfair labor practices such as these that I offer my resignation with neither regret
nor remorse.

Appealing for the release of his salary respondent filed a Complaint against the petitioners for
illegal dismissal; non-payment of salaries/wages and 13th month pay with prayer for
reinstatement and full backwages; exemplary damages, and attorneys fees, costs of suit, and
legal interest.

Issues: Whether or not the temporary withholding of respondents salary/wages by petitioners
was a valid exercise of management prerogative.

Ruling: Withholding respondents salary was not a valid exercise of management prerogative.
Management prerogative refers to the right of an employer to regulate all aspects of
employment, such as the freedom to prescribe work assignments, working methods, processes
to be followed, regulation regarding transfer of employees, supervision of their work, lay-off
and discipline, and dismissal and recall of work. Although management prerogative refers to
the right to regulate all aspects of employment, it cannot be understood to include the right
to temporarily withhold salary/wages without the consent of the employee.

Any withholding of an employees wages by an employer may only be allowed in the form of
wage deductions under the circumstances provided in Article 113 of the Labor Code, as set
forth below:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium on
the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has
been recognized by the employer or authorized in writing by the individual worker
concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.
Garcy Kate D. Go LLB2 EH306 Page 119

There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it would foreclose any
choice by him except to forego his continued employment. It exists where there is cessation of
work because continued employment is rendered impossible, unreasonable or unlikely, as an
offer involving a demotion in rank and a diminution in pay.

In this case, the withholding of respondents salary does not fall under any of the circumstances
provided under Article 113. Neither was it established with certainty that respondent did not
work from November 16 to November 30, 2005. Hence, the Court agrees with the LA and the
CA that the unlawful withholding of respondents salary amounts to constructive dismissal.

Garcy Kate D. Go LLB2 EH306 Page 120

Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo,
G.R. No. 188169, November 28, 2011

Facts: Respondents were employed as goldsmiths by the petitioner Nia Jewelry Manufacturing
of Metal Arts, Inc. There were incidents of theft involving goldsmiths in Nia Jewelry's employ:
The petitioner imposed a policy for goldsmiths, which were intended to answer for any loss or
damage which Nia Jewelry may sustain by reason of the goldsmiths' fault or negligence in
handling the gold entrusted to them, requiring them to post cash bonds or deposits in varying
amounts but in no case exceeding 15% of the latter's salaries per week.

The petitioner alleged that the goldsmiths were given the option not to post deposits, but to
sign authorizations allowing the former to deduct from the latter's salaries amounts not
exceeding 15% of their take home pay should it be found that they lost the gold entrusted to
them. The deposits shall be returned upon completion of the goldsmiths' work and after an
accounting of the gold received.

The respondents claimed otherwise insisting that petitioner left the goldsmiths with no option
but to post the deposits. The next day after the policy was imposed, the respondents no longer
reported for work and signified their defiance against the new policy which at that point had
not even been implemented yet. The respondents alleged that they were constructively
dismissed by the petitioner as their continued employments were made dependent on their
readiness to post the required deposits. The respondents then filed a complaint for illegal
dismissal and for the award of separation pay against the petitioner, and later filed their
amended complaint which excluded their earlier prayer for separation pay but sought
reinstatement and payment of back wages, attorney's fees and 13th month pay.

Issues:
1) Whether or not Nia Jewelry Manufacturing of Metal Arts, Inc. may impose the policy
for their goldsmiths requiring them to post cash bonds or deposits; and
2) Whether or not there is constructive dismissal.

Ruling: 1) NO, the Nia Jewelry may not impose the policy. Articles 113 and 114 of the Labor
Code are clear as to what are the exceptions to the general prohibition against requiring
deposits and effecting deductions from the employees' salaries.

ART. 113. Wage Deduction No employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except:
a) (a)In cases where the worker is insured with his consent by the employer, and
the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;
b) (b)For union dues, in cases where the right of the worker or his union to check-
off has been recognized by the employer or authorized in writing by the
individual worker concerned; and
c) (c)In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.
Article 114.Deposits for loss or damage No employer shall require his worker to make
deposits from which deductions shall be made for the reimbursement of loss of or
damage to tools, materials, or equipment supplied by the employer, except when the
employer is engaged in such trades, occupations or business where the practice of
making deposits is a recognized one, or is necessary or desirable as determined by the
Secretary of Labor in appropriate rules and regulations.

The petitioners should first establish that the making of deductions from the salaries is
authorized by law, or regulations issued by the Secretary of Labor. The petitioners failed to
Garcy Kate D. Go LLB2 EH306 Page 121

prove that their imposition of the new policy upon the goldsmiths under Nia Jewelry's employ
falls under the exceptions specified in Articles 113 and 114 of the Labor Code.

2) There is NO constructive dismissal. Constructive dismissal occurs when there is cessation of
work because continued employment is rendered impossible, unreasonable or unlikely; when
there is a demotion in rank or diminution in pay or both; or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee.

The petitioners did not whimsically or arbitrarily impose the policy to post cash bonds or make
deductions from the workers' salaries. As attested to by the respondents' fellow goldsmiths in
their Joint Affidavit, the workers were convened and informed of the reason behind the
implementation of the new policy. Instead of airing their concerns, the respondents just
promptly stopped reporting for work.


Garcy Kate D. Go LLB2 EH306 Page 122

Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013

Facts: Petitioner Antonio Locsin II was the Regional Sales Manager of respondent Mekeni Food
Corporation. He was hired on February 2004 to oversee the NCR and Luzon operation. In
addition to his compensation and benefit package, a car was offered to him under which one-
half of the cost of the vehicle is to be paid by the company and the other half to be deducted
from petitioner's salary. The car valued at 280,000 which Locsin paid through salary deductions
of 5,000 per month.

On February 2006, Locsin resigned. A total of 112,500.00 had already been deducted from his
monthly salary and applied as part of his share in the car plan. Upon resignation, petitioner
made personal and written follow-ups regarding his unpaid salaries, commissions, benefits, and
offer to purchase his service vehicle. Mekeni replied that the company car plan benefit applied
only to employees who have been with the company for five years; for this reason, the balance
that petitioner should pay on his service vehicle stood at P116,380.00 if he opts to purchase the
same.

On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S. Garcia, a
Complaint for the recovery of monetary claims consisting of unpaid salaries, commissions,
sick/vacation leave benefits, and recovery of monthly salary deductions which were earmarked
for his cost-sharing in the car plan.

Issue: Whether or not petitioner is entitled to a refund of all the amounts applied to the cost of
the service vehicle under the car plan.

Ruling: Any benefit or privilege enjoyed by petitioner from using the service vehicle was merely
incidental and insignificant, because for the most part the vehicle was under Mekeni's control
and supervision. Free and complete disposal is given to the petitioner only after the vehicle's
cost is covered or paid in full. Until then, the vehicle remains at the beck and call of Mekeni.
Given the vast territory petitioner had to cover to be able to perform his work effectively and
generate business for his employer, the service vehicle was an absolute necessity, or else
Mekeni's business would suffer adversely. Thus, it is clear that while petitioner was paying for
half of the vehicle's value, Mekeni was reaping the full benefits from the use thereof.

Under Article 22 of the Civil Code, every person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the expense of
the latter without just or legal ground, shall return the same to him." Article 2142 of the same
Code likewise clarifies that there are certain lawful, voluntary and unilateral acts which give rise
to the juridical relation of quasi-contract, to the end that no one shall be unjustly enriched or
benefited at the expense of another. In the absence of specific terms and conditions governing
the car plan arrangement between the petitioner and Mekeni, a quasi-contractual relation was
created between them. Consequently, Mekeni may not enrich itself by charging petitioner for
the use of its vehicle which is otherwise absolutely necessary to the full and effective
promotion of its business. It may not, under the claim that petitioner's payments constitute
rents for the use of the company vehicle, refuse to refund what petitioner had paid, for the
reasons that the car plan did not carry such a condition; the subject vehicle is an old car that is
substantially, if not fully, depreciated; the car plan arrangement benefited Mekeni for the most
part; and any personal benefit obtained by petitioner from using the vehicle was merely
incidental.

Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart contribution
to the cost of the vehicle; that is not property or money that belongs to him, nor was it
intended to be given to him in lieu of the car plan. Mekeni's share of the vehicle's cost was not
part of petitioner's compensation package. The vehicle is an asset that belonged to Mekeni.
Garcy Kate D. Go LLB2 EH306 Page 123

Just as Mekeni is unjustly enriched by failing to refund petitioner's payments, so should
petitioner not be awarded the value of Mekeni's counterpart contribution to the car plan, as
this would unjustly enrich him at Mekeni's expense.

Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's payments under
the car plan agreement amounting only to the extent of the contribution Locsin made, totalling
to the amount of P112,500.00.


Garcy Kate D. Go LLB2 EH306 Page 124

TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb 26, 2014

Facts: On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation
workers union (THS-GQ Union) filed their Complaint for Unfair Labor Practice (ULP) by way of
union busting, and Illegal Lockout, with moral and exemplary damages and attorneys fees,
against T&H Shopfitters Corporation (T&H Shopfitters) and Gin Queen Corporation before the
Labor Arbiter (LA).

1st CAUSE:
In their desire to improve their working conditions, respondents and other employees of held
their first formal meeting on November 23, 2003 to discuss the formation of a union. The
following day, seventeen (17) employees were barred from entering petitioners factory
premises located in Castillejos, Zambales, and ordered to transfer to T&H Shopfitters
warehouse at Subic Bay Freeport Zone (SBFZ) purportedly because of its expansion. Afterwards,
the said seventeen (17) employees were repeatedly ordered to go on forced leave due to the
unavailability of work.

Respondents contended that the affected employees were not given regular work assignments,
while subcontractors were continuously hired to perform their functions. Respondents sought
the assistance of the National Conciliation and Mediation Board. Subsequently, an agreement
between petitioners and THS-GQ Union was reached. Petitioners agreed to give priority to
regular employees in the distribution of work assignments. Respondents averred, however, that
petitioners never complied with its commitment but instead hired contractual workers. Instead,
Respondents claimed that the work weeks of those employees in the SBFZ plant were
drastically reduced to only three (3) days in a month.

2nd CAUSE:
On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was
issued to hold the certification election in both T&H Shopfitters and Gin Queen.
On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The
officers and members of the THS-GQ Union were purportedly excluded from the field trip. On
the evening of the field trip, a certain Angel Madriaga, a sales officer of petitioners, campaigned
against the union in the forthcoming certification election.
When the certification election was scheduled on October 11, 2004, the employees were
escorted from the field trip to the polling center in Zambales to cast their votes. The remaining
employees situated at the SBFZ plant cast their votes as well. Due to the heavy pressure
exerted by petitioners, the votes for "no union" prevailed.

3rd CAUSE:
A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin Queen, informed
its employees of the expiration of the lease contract between Gin Queen and its lessor in
Castillejos, Zambales and announced the relocation of its office and workers to Cabangan,
Zambales.

When the respondents, visited the site in Cabangan, discovered that it was a "talahiban" or
grassland. The said union officers and members were made to work as grass cutters in
Cabangan, under the supervision of a certain Barangay Captain Greg Pangan. Due to these
circumstances, the employees assigned in Cabangan did not report for work. The other
employees who likewise failed to report in Cabangan were meted out with suspension.

PETITIONERS DEFENSE:
In its defense, Petitioners also stress that they cannot be held liable for ULP for the reason that
there is no employer-employee relationship between the former and respondents. Further, Gin
Queen avers that its decision to implement an enforced rotation of work assignments for
Garcy Kate D. Go LLB2 EH306 Page 125

respondents was a management prerogative permitted by law, justified due to the decrease in
orders from its customers, they had to resort to cost cutting measures to avoid anticipated
financial losses. Thus, it assigned work on a rotational basis. It explains that its failure to present
concrete proof of its decreasing orders was due to the impossibility of proving a negative
assertion. It also asserts that the transfer from Castillejos to Cabangan was made in good faith
and solely because of the expiration of its lease contract in Castillejos. It was of the impression
that the employees, who opposed its economic measures, were merely motivated by spite in
filing the complaint for ULP against it.

Issues: Whether ULP acts were committed by petitioners against respondents.

Ruling: ULP were committed by petitioners against respondents.

Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly
Article 248) of the Labor Code,13 to wit:
Article 257. Unfair labor practices of employers.It shall be unlawful for an employer to
commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;
x x x x
(c) To contract out services or functions being performed by union members when such
will interfere with, restrain, or coerce employees in the exercise of their right to self-
organization;
x x x x
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any labor organization.
x x x

The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its
employees, to the exclusion of union members, before the scheduled certification election; 2)
the active campaign by the sales officer of petitioners against the union prevailing as a
bargaining agent during the field trip; 3) escorting its employees after the field trip to the
polling center; 4) the continuous hiring of subcontractors performing respondents functions; 5)
assigning union members to the Cabangan site to work as grass cutters; and 6) the enforcement
of work on a rotational basis for union members, taken together, reasonably support an
inference that, indeed, such were all orchestrated to restrict respondents free exercise of their
right to self-organization.

The Court is of the considered view those petitioners undisputed actions prior and immediately
before the scheduled certification election, while seemingly innocuous, unduly meddled in the
affairs of its employees in selecting their exclusive bargaining representative.


Garcy Kate D. Go LLB2 EH306 Page 126

Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso.,
GR No. 181806, March 12, 2014

Facts: Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational
institution duly organized and existing under the laws of the Philippines. Respondent Wesleyan
University-Philippines Faculty and Staff Association, on the other hand, is a duly registered
labor organization acting as the sole and exclusive bargaining agent of all rank-and-file faculty
and staff employees of petitioner.

In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May 31, 2008.
On August 16, 2005, petitioner, through its President, Atty. Maglaya , issued a Memorandum
providing guidelines on the implementation of vacation and sick leave credits as well as
vacation leave commutation which states that vacation and sick leave credits are not automatic
as leave credits would be earned on a month-to-month and only vacation leave is commuted or
monetized to cash which is effected after the second year of continuous service of an
employee.

Respondents questioned the guidelines for being violative of existing practices and the CBA
which provide that all covered employees are entitled to 15 days sick leave and 15 days
vacation leave with pay every year and that after the second year of service, all unused
vacation leave shall be converted to cash and paid to the employee at the end of each school
year, not later than August 30 of each year.

Respondent file a grievance complaint on the implementation of the vacation and sick leave
policy. Petitioner also announced its plan of implementing a one-retirement policy which was
unacceptable to respondent.

Respondent submitted affidavits to prove that there is an established practice of giving two
retirement benefits, one from the Private Education Retirement Annuity Association (PERAA)
Plan and another from the CBA Retirement Plan.

The Voluntary Arbitrator rendered a Decision declaring the one-retirement policy and the
Memorandum dated August 16, 2005 contrary to law. CA also affirmed the ruling of the
Voluntary Arbitrator.

Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the
PERAA Plan are one and the same. It maintains that there is no established company practice or
policy of giving two retirement benefits to its employees. Respondent belies the claims of
petitioner and asserts that there are two retirement plans as the PERAA Retirement Plan, which
has been implemented for more than 30 years, is different from the CBA Retirement Plan.
Respondent further avers that it has always been a practice of petitioner to give two retirement
benefits and that this practice was established by substantial evidence as found by both the
Voluntary Arbitrator and the CA.

Issue: Whether or not the respondents are entitled to two retirement plans.

Ruling: The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits
employers from eliminating or reducing the benefits received by their employees. This rule,
however, applies only if the benefit is based on an express policy, a written contract, or has
ripened into a practice. To be considered a practice, it must be consistently and deliberately
made by the employer over a long period of time. Respondent was able to present substantial
evidence in the form of affidavits to support its claim that there are two retirement plans.
Based on the affidavits, petitioner has been giving two retirement benefits as early as 1997.
Petitioner, on the other hand, failed to present any evidence to refute the veracity of these
Garcy Kate D. Go LLB2 EH306 Page 127

affidavits. Petitioner's assertion that there is only one retirement plan as the CBA Retirement
Plan and the PERAA Plan are one and the same is not supported by any evidence.

The Memorandum dated August 16, 2005 is contrary to the existing CBA. It limits the available
leave credits of an employee at the start of the school year. The Memorandum dated imposes a
limitation not agreed upon by the parties nor stated in the CBA, so it must be struck down.


Garcy Kate D. Go LLB2 EH306 Page 128

Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014,
Citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo

Facts: The respondent was employed as a sales clerk and assigned at the petitioners boutique.
Her primary tasks were attending to all customer needs, ensuring efficient inventory,
coordinating orders from clients, cashiering and reporting to the accounting department. The
petitioner learned that some of their employees had access to their POS system with the use of
a universal password given to them by a certain Elmer Flores, who in turn learned of the
password from the respondent. The petitioner then conducted an investigation and asked the
petitioner to explain why she should not be disciplinarily dealt with. During the investigation
the respondent was placed under preventive suspension. After investigation the petitioner
terminated the respondent on the grounds of loss of trust or confidence. This respondent was
given her final wage and benefits less the inventory variance incurred by the store. This urged
the respondent to file a complaint for illegal dismissal, illegal suspension, holiday pay, rest day
and separation pay. The labor arbiter ruled in her favour awarding her backwages. The
petitioner appealed the decision in the NLRC and the decision was reversed. However, upon the
respondents petition for certiorari in the court of appeals the decision was reinstated. Hence,
this petition.

Issue: Whether the negative sales variance could be validly deducted from the respondents
wage?

Ruling: No, it cannot be deducted in this case.

Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except in cases where the
employer is authorized by law or regulations issued by the Secretary of Labor and Employment,
among others. The Omnibus Rules Implementing the Labor Code, meanwhile, provides:

SECTION 14. Deduction for loss or damage. Where the employer is engaged in a
trade, occupation or business where the practice of making deductions or requiring
deposits is recognized to answer for the reimbursement of loss or damage to tools,
materials, or equipment supplied by the employer to the employee, the employer may
make wage deductions or require the employees to make deposits from which
deductions shall be made, subject to the following conditions:
a) That the employee concerned is clearly shown to be responsible for the loss or
damage;
b) That the employee is given reasonable opportunity to show cause why deduction
should not be made;
c) That the amount of such deduction is fair and reasonable and shall not exceed
the actual loss or damage; and
d) That the deduction from the wages of the employee does not exceed 20 percent
of the employee's wages in a week.

In this case, the petitioner failed to sufficiently establish that Esteban was responsible for the
negative variance it had in its sales for the year 2005 to 2006 and that Esteban was given the
opportunity to show cause the deduction from her last salary should not be made.

Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v. Montecillo, that:

[T]he petitioners should first establish that the making of deductions from the salaries is
authorized by law, or regulations issued by the Secretary of Labor. Further, the posting
of cash bonds should be proven as a recognized practice in the jewelry manufacturing
business, or alternatively, the petitioners should seek for the determination by the
Garcy Kate D. Go LLB2 EH306 Page 129

Secretary of Labor through the issuance of appropriate rules and regulations that the
policy the former seeks to implement is necessary or desirable in the conduct of
business. The petitioners failed in this respect. It bears stressing that without proofs that
requiring deposits and effecting deductions are recognized practices, or without
securing the Secretary of Labor's determination of the necessity or desirability of the
same, the imposition of new policies relative to deductions and deposits can be made
subject to abuse by the employers. This is not what the law intends.

Garcy Kate D. Go LLB2 EH306 Page 130

PAYMENT OF WAGES

Congson vs. NLRC
G.R. No. 114250; April 5, 1995

Facts: Dominico C. Congson is the registered owner of Southern Fishing Industry. Respondents
were hired as piece-rate employees uniformly paid at a rate of P1.00 per tuna weighing thirty
(30) to eighty (80) kilos per movement. They work for 7 days a week. Due to alleged scarcity of
tuna, Congson notified his proposal to reduce the rate-per-tuna movement. When they
reported the following day, they found out that they were already replaced with new set of
workers. They wanted to have a dialogue with the management, but they waited in vain. Thus,
they filed a case before NLRC for underpayment of wages (violation of the minimum wage law)
and non-payment of overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)-day
service incentive leave pay; and for constructive dismissal.

Petitioner conceded that his payment of wages falls below the minimum wage law. He averred
that NLRC should have considered as forming a substantial part of private respondents' total
wages the cash value of the tuna liver and intestines private respondents were entitled to
retrieve. He argued that the combined value of the cash wage and monetary value of the tuna
liver and intestines clearly exceeded the minimum wage fixed by law.

Both the Labor Arbiter and the NLRC ruled in favor of the respondents.

Issue: Whether or not the form of payment by Congson is valid pursuant to Article 102 of the
Labor Code.

Ruling: 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 informs 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.

Garcy Kate D. Go LLB2 EH306 Page 131

North Davao Mining vs. NLRC
G.R. No. 112546; March 13, 1996

Facts: Due to financial losses, North Davao Mining Corporation laid off workers. Respondent
Wilfredo Guillema is one among several employees of North Davao who were separated by
reason of the companys closure on May 31, 1992. 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 (30) days pay for every year of service.
Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and
other peace and order problems, 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.

Issue: Whether or not 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.

Ruling: SC, affirming the decision of the Labor Arbiter, finds that the hours spent by
complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered
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 two (2) days in a
month as prayed for. Corollary, we likewise hold respondents liable for the transportation
expenses incurred by complainants at P40.00 round trip fare during pay days.



Garcy Kate D. Go LLB2 EH306 Page 132

National Federation of Labor vs. CA, G.R. No. 149464, Oct. 19, 2004

Facts: American Rubber Company, Inc. (ARCI) entered into a Farm Management Agreement
(FMA) with Sime Darby Pilipinas, Inc. (SDPI) to manage, administer, develop, cultivate and
improve the rubber plantation in Latuan, Isabela, Basilan. However, SDPI decided to terminate
the FMA with ARCI and cease operation of the rubber plantation in Latuan, Isabela, Basilan
effective January 17, 1998. Thus on December 17, 1997, SDPI served formal notices of
termination to all employees of the plantation effective January 17, 1997. In complaince with
the collective bargaining agreement of the National Federation of Labor (NFL), which was the
duly registered bargaining agent of SDPI, and SDPI, the separation pay of the employees was
computed in accordance with the provisions of the Labor Code. On January 17, 1998, each of
the herein petitioners received their separation pay which was equivalent to one-half pay for
every year of service, and other benefits which were all lumped in one check. However, the
petitioners filed a complaint for deficiency in separation pay raising the issue of non-payment
of the exact computation of separation pay. They contended that the private respondents is
bound by its policy of granting separation pay equivalent to one-month pay for every year of
service to its retrenched employees.

Issue: Whether or not the petitioners are entitled to separation pay equivalent to one month
pay for every year of employment with private respondents.

Ruling: According to the Supreme Court, Article 283 of the Labor Code provides that employees
who are dismissed due to closures that are not due to business insolvency should be paid
separation pay equivalent to one-month pay or at least one-half month pay for every year of
service, whichever is higher. In the case at bar, the petitioners had served the respondent SDPI
for a period longer than six months. Hence, their separation pay computed at one-half month
pay per year of service is more than the minimum one month pay. Also, the court emphasized
that the collective bargaining agreement should prevail as a contract governing the employer
and the employees respecting the terms of employment, which in this case, they agreed on the
terms of termination pay should be in accordance with the provisions of the Labor Code.
Consequently, Artcle 283 of the Labor Code, which grants separation pay equivalent to one-
month pay or one-half month pay for every year of service, whichever is higher, to the
employees retrenched due to business closures, should apply.

Garcy Kate D. Go LLB2 EH306 Page 133

Heirs of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006

Facts: The Heir 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 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 sister-in-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.
Garcy Kate D. Go LLB2 EH306 Page 134

Issue: WON the respondent is entitled to 13th month pay.

Ruling: The award of 13th month pay must be deleted. Respondent is not a rank-and-file
employee and is, therefore, not entitled to thirteenth-month pay. However, the NLRC and the
CA are correct in refusing to award 14th and 15th month pay as well as the monthly salary
increase of 10 percent per year for two years based on her latest salary rate. The respondent
must show that these benefits are due to her as a matter of right. Mere allegations by the
respondent do not suffice in the absence of proof supporting the same. With respect to salary
increases in particular, the respondent must likewise show that she has a vested right to the
same, such that her salary increases can be made a component in the computation of back
wages. 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.

Garcy Kate D. Go LLB2 EH306 Page 135

CONDITIONS OF EMPLOYMENT

San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997]

Facts: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios
Hospital Employees Association, sent a letter requesting for the expeditious implementation
and payment by respondent, San Juan De Dios Hospital, of the '40-hours/5-day workweek' with
compensable weekly two (2) days off provided for by Policy Instruction No. 54 issued by the
Secretary of Labor. Said policy instruction purports to implement R.A. No. 5901, otherwise
known as An Act Prescribing Forty Hours A Week of Labor For Government and Private
Hospitals Or Clinic Personnel. 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. However, the Labor Arbiter and, subsequently, NLRC dismissed the
complaint. Hence, this petition ascribing grave abuse of discretion on the part of NLRC in
concluding that Policy Instructions No. 54 proceeds from a wrong interpretation of R.A. 5901
and Article 83 of the Labor Code.

Issue: Whether or not Policy Instruction No. 54, entitling a full weekly wage of 7 days upon
completion of 40-hour/5-day workweek, is valid based on existing labor laws.

Ruling: Policy Instruction No. 54 is void, it being inconsistent with and repugnant to the
provision of Article 83 of the Labor Code, as well as to R.A. No. 5901.

A perusal of R. A. No. 5901 reveals nothing therein that gives two days off with pay for health
personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of
House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the
bill's sole purpose is to shorten the working hours of health personnel and not to dole out a two
days off with pay. Petitioners' position is also negated by the very rules and regulations
promulgated by the Bureau of Labor Standards which implement Republic Act No. 5901.
Section 15 of aforementioned implementing rules grants specific rate of additional
compensation for work performed on Sunday or for work performed in excess of forty hours a
week. Policy Instruction No. 54 unduly extended the statute.

Article 83 merely provides: (1) the regular office hour of eight hours a day, five days per week
for health personnel, and (2) where the exigencies of service require that health personnel
work for six days or forty-eight hours then such health personnel shall be entitled to an
additional compensation of at least thirty percent of their regular wage for work on the sixth
day. There is nothing in the law that supports then Secretary of Labor and petitioners
assertion. 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.

Garcy Kate D. Go LLB2 EH306 Page 136

Simedarby vs. NLRC, 289 SCRA 86 [1998]

Facts: Prior to the present controversy, the factory employees of Sime Darby Pilipinas, Inc.
enjoyed a 30-minute paid on call lunch break in their daily work schedule of 7:45 am to 3:45
pm. The petitioner company passed a memorandum dated Aug 12 1992 advising all factory-
based workers, except those in the Warehouse and Quality Assurance Department, of a change
in work schedule that discontinued the 30-minute paid on call lunch break and set an
uninterrupted 1 hour lunch break in lieu thereof.

Private respondents then filed a complaint for unfair labor practice, discrimination, and evasion
of liability with the Labor Arbiter who dismissed the complaint, ruling that the elimination of
the 30-minute lunch break was a valid exercise of management prerogative. Appeal was made
to respondent NLRC who reversed the decision of the Labor Arbiter, declaring that the new
work schedule deprived the employees of the benefits of a time-honored company practice and
that such change also resulted in an unjust diminution of employee benefits.

The OSG recommended the present petition to be granted, alleging that the new memorandum
containing the work schedule was not discriminatory not did it constitute unfair labor practice.

Issue: Whether or not the memorandum dated Aug 14 1992 discontinuing the 30-minute paid
on call lunch break constituted unfair labor practice and diminution of benefits

Ruling: The Supreme Court sustained petitioner, holding that it is clearly a management
prerogative to fix the work schedules of company employees. Under the old schedule, the
employees are compensated during their 30-minute lunch break, but in essence it is still
working time since the workers could be called upon to work. Whereas in the new schedule,
the employees are given a longer break of 1 hour, though uncompensated, it is uninterrupted
as workers on their break are no longer on call. The change in schedule would improve
company productivity as well as enhance the comfort of workers who could enjoy an
uninterrupted break.

The Supreme Court also reiterated the policy that while social justice and the protection of the
working class is ensured by the Constitution, the same fundamental law also protects the right
of the management to regulate all aspects of employment as well as to retain the prerogative
of changing work schedules according to the exigencies of the enterprise. So long as this
prerogative is exercised in good faith, the Court upholds such exercise.


Garcy Kate D. Go LLB2 EH306 Page 137

Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]

Facts: Private respondent (Dr. Herminio A. Fabros) was employed as flight surgeon at petitioner
company (PAL). He was assigned at (PAL Medical Clinic at Nichols) and was on duty from 4:00
in the afternoon until 12:00 midnight.

On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have
his dinner at his residence, which was about five-minute drive away. A few minutes later, the
clinic received an emergency call from the PAL Cargo Services. One of its employees, Mr.
Manuel Acosta, had suffered a heart attack. Upon receiving the call 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 was rushed by Mr. Eusebio 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, in turn, required
private respondent to explain why no disciplinary sanction should be taken against him.

In his explanation, private respondent asserted that he was entitled to a thirty-minute meal
break; that he immediately left his residence upon being informed by Mr. Eusebio about the
emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and
brought the patient to the hospital without waiting for him.

Finding private respondents explanation unacceptable, the management charged private
respondent with abandonment of post while on duty.

Petitioner argues that being a full-time employee, private respondent is obliged to stay in the
company premises for not less than eight (8) hours. Hence, he may not leave the company
premises during such time, even to take his meals.

Issue: WON being a full-time employee, private respondent is obliged to stay in the company
premises for not less than eight (8) hours.

Ruling: NO. Employees are not prohibited from going out of the premises as long as they return
to their post on time.

Articles 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work.The normal hours of work of any employee shall not
exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100)
shall hold regular office hours for eight (8) hours a day, for five (5) days a week,
exclusive of time for meals, except where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in which case they shall be
entitled to an additional compensation of at least thirty per cent (30%) of their regular
wage for work on the sixth day. For purposes of this Article, health personnel shall
include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social
workers, laboratory technicians, paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel. (emphasis supplied)
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.

Garcy Kate D. Go LLB2 EH306 Page 138

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
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, therefore, of going home to take his dinner does not constitute
abandonment.

Garcy Kate D. Go LLB2 EH306 Page 139

Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007

Facts: On 17 December 1997, Linton issued a memorandum addressed to its employees
informing them of the company's decision to suspend its operations from December 18, 1997
to January 5, 1998 due to the currency crisis that affected its business operations. Linton
submitted an establishment termination report to the Department of Labor and Employment
(DOLE) regarding the temporary closure of the establishment covering the said period. The
company's operation was to resume on January 6, 1998. On January 7, 1997, Linton issued
another memorandum informing them that effective January 12, 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.

Ruling: The compressed workweek arrangement was unjustified and illegal.

The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in
determining when an employer can validly reduce the regular number of working days. The said
bulletin states that a reduction of the number of regular working days is valid where the
arrangement is resorted to by the employer to prevent serious losses due to causes beyond his
control, such as when there is a substantial slump in the demand for his goods or services or
when there is lack of raw materials. Although the bulletin stands more as a set of directory
guidelines than a binding set of implementing rules, it has one main consideration, consistent
with the ruling in Philippine Graphic Arts Inc., in determining the validity of reduction of
working hours that the company was suffering from losses.

Certainly, management has the prerogative to come up with measures to ensure profitability or
loss minimization. However, such privilege is not absolute. Management prerogative must be
exercised in good faith and with due regard to the rights of labor. As previously stated, financial
losses must be shown before a company can validly opt to reduce the work hours of its
employees. However, to date, no definite guidelines have yet been set to determine whether
the alleged losses are sufficient to justify the reduction of work hours. If the standards set in
determining the justifiability of financial losses under Article 283 (i.e., retrenchment) or Article
286 (i.e., suspension of work) of the Labor Code were to be considered, petitioners would end
up failing to meet the standards. On the one hand, Article 286 applies only when there is a bona
fide suspension of the employer's operation of a business or undertaking for a period not
exceeding six (6) months.

Records show that Linton continued its business operations during the effectivity of the
compressed workweek, which spanned more than the maximum period. On the other hand, for
retrenchment to be justified, any claim of actual or potential business losses must satisfy the
following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses
are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to
be effective in preventing the expected losses; and (4) the alleged losses, if already incurred, or
the expected imminent losses sought to be forestalled, are proven by sufficient and convincing
evidence. Linton failed to comply with these standards.


Garcy Kate D. Go LLB2 EH306 Page 140

Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008

Facts: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its
principal office is located in Caloocan City. Petitioners are its regular employees, occupying the
positions of helper, shipment helper and factory workers, assigned to the Production
Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining
representative of the rank-and-file employees.

Tryco and the petitioners signed a Memorandum of Agreement (MOA), providing for a
compressed workweek schedule to be implemented in the company effective May 20, 1996. As
provided, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular
working hours, and no overtime pay shall be due and payable to the employee for work
rendered during those hours. The MOA specifically stated that the employee waives the right to
claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday
considering that the compressed workweek schedule is adopted in lieu of the regular workweek
schedule which also consists of 46 hours. However, should an employee be permitted or
required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay.

On a letter dated March 26, 1997, the Bureau of Animal Industry of the Department of
Agriculture reminded Tryco that its production should be conducted in San Rafael, Bulacan, not
in Caloocan City.

Accordingly, Tryco issued a Memorandum dated April 7, 1997 which directed petitioner Aya-ay
to report to the companys plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco
reiterated the order on April 18, 1997. Subsequently, through a Memorandum dated May 9,
1997, Tryco also directed the other petitioners Egera, Lario and Barte to report to the
companys plant site in Bulacan.

BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes
unfair labor practice. In protest, BMT declared a strike on May 26, 1997.

In August 1997, petitioners filed their separate complaints for illegal dismissal, underpayment
of wages, nonpayment of overtime pay and service incentive leave, and refusal to bargain
against Tryco and its President, Wilfredo C. Rivera. Petitioners alleged that the company acted
in bad faith during the CBA negotiations because it sent representatives without authority to
bind the company, and this was the reason why the negotiations failed. Also, the management
transferred petitioners from Caloocan to San Rafael, Bulacan to paralyze the union. They
prayed for the company to pay them their salaries from May 26 to 31, 1997, service incentive
leave, and overtime pay, and to implement Wage Order No. 4.

Issue: Whether or not the company committed Unfair Labor Practices

Ruling: NO. Petitioners mainly contend that the transfer orders amount to a constructive
dismissal. They maintain that the letter of the Bureau of Animal Industry is not credible because
it is not authenticated; it is only a ploy, solicited by respondents to give them an excuse to
effect a massive transfer of employees. There is not proof to support this claim. Absent any
evidence, the allegation is not only highly irresponsible but is grossly unfair to the government
agency concerned.

Also, Trycos decision to transfer its production activities to San Rafael, Bulacan, regardless of
whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the
scope of its inherent right to control and manage its enterprise effectively.

Garcy Kate D. Go LLB2 EH306 Page 141

When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it
does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the
employee may not complain that it amounts to a constructive dismissal. In this case, the
transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other
privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground
that it would cause them great inconvenience since they are all residents of Metro Manila and
they would incur additional expenses to travel daily from Manila to Bulacan. Such contention is
untenable because the Court has previously declared that mere incidental inconvenience is not
sufficient to warrant a claim of constructive dismissal. The distance from Caloocan to San
Rafael, Bulacan is not considerably great so as to compel petitioners to seek living
accommodations in the area and prevent them from commuting to Metro Manila daily to be
with their families.

Finally, MOA is enforceable and binding against the petitioners. Where it is shown that the
person making the waiver did so voluntarily, with full understanding of what he was doing, and
the consideration for the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking. In addition, D.O. No. 21 sanctions the waiver of
overtime pay in consideration of the benefits that the employees will derive from the adoption
of a compressed workweek scheme. Moreover, the adoption of a compressed workweek
scheme in the company will help temper any inconvenience that will be caused the petitioners
by their transfer to a farther workplace. 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

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.

Garcy Kate D. Go LLB2 EH306 Page 142

MINIMUM LABOR STANDARD BENEFITS

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.

Ruling: Field personnel are not entitled to holiday pay.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines field
personnel as "non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty."

The law requires that the actual hours of work in the field be reasonably ascertained. The
company has no way of determining whether or not these sales personnel, even if they report
to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the
hours in between in actual field work. Moreover, the requirement that "actual hours of work in
the field cannot be determined with reasonable certainty" must be read in conjunction with
Rule IV, Book III of the Implementing Rules which provides:

"Rule IV Holidays with Pay. SECTION 1. Coverage. This rule shall apply to
all employees except: (e) Field personnel and other employees whose time and
performance is unsupervised by the employer

The clause "whose time and performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours of work in the field cannot
be determined with reasonable certainty." The former clause is still within the scope and
purview of Article 82 which defines field personnel. Hence, in deciding whether or not an
employee's actual working hours in the field can be determined with reasonable certainty,
query must be made as to whether or not such employee's time and performance is constantly
supervised by the employer.

The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on
sales target; (2) good collection performance; (3) proper compliance with good market hygiene;
(4) good merchandising work; (5) minimal market returns and (6) proper truck maintenance.
The criteria indicate that these sales personnel are given incentive bonuses precisely because of
the difficulty in measuring their actual hours of field work. These employees are evaluated by
the result of their work and not by the actual hours of field work which are hardly susceptible
to determination.



Garcy Kate D. Go LLB2 EH306 Page 143

National Sugar Refinery Corp., vs. NLRC

Facts: Petitioner owns a corporation fully owned by the government which operates 3 sugar
refineries in the country. One day, petitioner implemented a JEP or Job Evaluation Program
affecting all employees from rank-and-file to department heads. All positions were re-
evaluated and all employees including the members of the respondent union were granted
salary adjustments and increases in benefits commensurate to their actual duties and functions.
Before the JEP, the members of the respondent union were treated in the same manner as
rank-and-file employees and entitled to overtime pay, rest day, and holiday pay. But with the
implementation of the JEP, the members of the respondent union were considered managerial
staff for purposes of compensation and benefits they enjoyed a 50% increase in their basic pay,
an increased COLA and an allowance for holiday or rest day work. Two years after JEP
implementation, the members of the union filed a case against petitioner for payment of
overtime; rest day and holiday pay invoking Article 100 on Non-diminution of Benefits.

Issue: Are they correct?

Ruling: NO. The Supreme Court found creditable merit for the petitioner. The members of the
respondent union are supervisory employees as defined in Article 212(m) of the Labor Code.
But for purposes of determining whether they are entitled to overtime pay, rest day pay and
holiday pay, said employees should be considered as officers and members of the managerial
staff as defined under Article 82, Book III of the Labor Code and amplified in Section 2 Rule I
Book III of the Rules Implementing the Labor Code. Perforce, they are not entitled to the
mentioned benefits.

The distinction made by the NLRC on the basis of whether or not the union members are
managerial employees, to determine the latters entitlement to the questioned benefits, is
misplaced and inappropriate. It is admitted that that these union members are supervisory
employees and this is one instance where nomenclatures or titles of their jobs conform to the
nature of their functions. Hence, to distinguish them from a managerial employee as defined in
Article 82 or 212(m) of the Labor Code is puerile and inefficacious.

The controversy actually involved here seeks a determination of whether or not these
supervisory employees ought to be considered as officers and members of the managerial staff.
The distinction therefore should have been made along that line and its corresponding
conceptual criteria. The payment of the benefits to the employees did not ripen into a
contractual obligation. Prior to the JEP, they could not be categorically classified as officers and
members of the managerial staff considering that they were treated merely on the same level
as rank-and-file. Consequently, the payment thereof could not be constitutive of voluntary
employer practice, which cannot now be unilaterally withdrawn by the petitioner.

To be considered as such, it should have been practiced over a long period of time, and must be
shown to have been consistent and deliberate. The test requires a showing that the employer
agreed to continue giving the benefits knowing full well that said employees are not covered by
the law requiring payment thereof. In the case at bar, respondent union failed to establish that
petitioner has been motivated or is wont to give these benefits out of pure generosity.








Garcy Kate D. Go LLB2 EH306 Page 144

Salazar vs. NLRC, g.r. no. 109210; april 17, 1996

Facts: On 17 April 1990, private respondent, at a monthly salary of P4,500.00, 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.
Arguments

Petitioner:
1) Since he performs his duties in the project site or away from the principal place of
business of his employer (herein private respondent), he falls under the category of
"field personnel." However, his case constitutes the exception to the exception because
his actual working hours can be determined as evidenced by the disbursement vouchers
containing payments of petitioner's salaries and overtime services. Field personnel may
include managerial employees.
2) Private respondent compensated him for his overtime services as indicated in the
various disbursement vouchers he submitted as evidence. Thus, he is entitled to the
benefits.
3) He is entitled to separation pay.

Issue: Whether or not petitioner may be considered as managerial employee.
Whether or not petitioner is entitled to separation pay.

Ruling:
1. NO, HE MAY NOT.

In his original complaint, petitioner stated that the nature of his work is "supervisory-
engineering." Similarly, in his own petition and in other pleadings submitted to this Court,
petitioner confirmed 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 I, Book III of the Omnibus Rules Implementing the Labor
Code, nonetheless he is still not entitled to payment of the aforestated benefits because he falls
squarely under another exempt category"officers or members of a managerial staff" as defined
under sec. 2(c) of the abovementioned implementing rules.

That 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 therefrom.
Garcy Kate D. Go LLB2 EH306 Page 145


2. NO, HE IS NOT.

The applicable provision is Article 280 of the Labor Code which defines the term "project
employee," thus:
Art. 280. 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 period 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.

In the case at bench, it was duly established that private respondent hired petitioner as project
or construction engineer specifically for its Monte de Piedad building project.
Accordingly, as project employee, petitioner's services are deemed coterminous with the
project, that is, petitioner's services may be terminated as soon as the project for which he was
hired is completed.

Petitioner, thus, has no legal right to demand separation pay. Policy Instruction No. 20 entitled
"Stabilizing Employer-Employee Relations in the Construction Industry" explicitly mandates
that:
xxx xxx xxx
Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the
number of projects in which they have been employed by a particular construction company.
Moreover, the company is not required to obtain a clearance from the Secretary of Labor in
connection with such termination. What is required of the company is a report to the nearest
Public Employment Office for statistical purposes.
xxx xxx xxx
Department Order No. 19 of the Department of Labor and Employment (DOLE) entitled
"Guidelines Governing the Employment of Workers in the Construction Industry" promulgated
on 1 April 1993, reiterates the same rule.

Garcy Kate D. Go LLB2 EH306 Page 146

Labor Congress of the Phils., vs. NLRC, G.R. No. 1239381, May 21, 1998

Facts: The 99 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

Issue: Whether or not petitioners are entitled back wages.

Ruling: Petitioners are therefore entitled to reinstatement with full back wages pursuant to
Article 279 of the Labor Code, as amended by R.A. No. 6715. Nevertheless, the records disclose
that taking into account the number of employees involved, the length of time that has lapsed
since their dismissal, and the perceptible resentment and enmity between petitioners and
private respondents which necessarily strained their relationship, reinstatement would be
impractical and hardly promotive of the best interests of the parties. In lieu of reinstatement
then, separation pay at the rate of one month for every year of service, with a fraction of at
least six (6) months of service considered as one (1) year, is in order.

That being said, the amount of backwages to which each petitioner is entitled, however, cannot
be fully settled at this time. Petitioners, as piece-rate workers, have been paid by the piece.
There is need to determine the varying degrees of production and days worked by each worker.

Garcy Kate D. Go LLB2 EH306 Page 147

Mercidar Fishing Corp., vs. NLRC, G.R. No. 112574, October 8, 1998

Facts: This case originated from a complaint filed on September 20, 1990 by private respondent
Fermin Agao, Jr. against petitioner for illegal dismissal, violation of P.D. No. 851, and non-
payment of five days service incentive leave for 1990. Private respondent had been employed
as a "bodegero" or ship's quartermaster on February 12, 1998. He complained that he had been
constructively dismissed by the petitioner when the latter refused him assignments aboard its
after he had reported to work on May 28, 1990.

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 certification September 10, petitioner refused to issue
the certificate unless he submitted his resignation. Since private respondent refused to submit
such letter unless he was given separation pay, petitioner prevented him from entering the
premises.

Petitioner, on the other hand, alleged that it was private respondent who actually abandoned
his work.

Issue: Whether or not the fishing crew members are considered field personnel as classified in
Art. 82 of the Labor Code.

Ruling: Art. 82 of the Labor Code provide:
"The provisions of this title [Working Conditions and Rest Periods] shall apply to all
employees in all establishments and undertakings whether to 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 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 workin 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 petitioners 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.

Garcy Kate D. Go LLB2 EH306 Page 148

San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002

Facts: On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan District
Office, conducted a routine inspection in the premises of San Miguel Corporation (SMC) in Sta.
Filomena, Iligan City. 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, Alan M. Macaraya, Director IV of DOLE Iligan District Office issued a
compliance order, dated 17 December 1993, 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 to the DOLE main office in Manila. However, the appeal was dismissed for lack of
merit and the order of Director Macaraya was affirmed. SMC went to SC for relief via a petition
for certiorari, which the Court referred to the Court of Appeals. The appellate court modified
the order with regards the payment of Muslim holiday pay from 200% to 150% of the
employee's basic salary. Its motion for reconsideration having been denied for lack of merit,
SMC filed a petition for certiorari before the SC

Issues:
(a) Whether or not public respondents seriously erred and committed grave abuse of
discretion when they granted Muslim Holiday Pay to non-Muslim employees of SMC.
(b) Whether or not SMC was not accorded with due process of law in the issuance of the
compliance order.
(c) Whether or not regional director Macaraya, undersecretary Trajano and undersecretary
Espanol have jurisdiction in issuing the assailed compliance orders.

Ruling: The court ruled the issues in negative.
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:

Art. 169. 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 Mirj (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-l-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month
of Dhl-Hijja.

Art. 170. 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.

Garcy Kate D. Go LLB2 EH306 Page 149

The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which
provides:
Art. 94. 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.

Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "the provisions
of this Code shall be applicable only to Muslims." However, there should be no distinction
between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. Wages
and other emoluments granted by law to the working man are determined on the basis of the
criteria laid down by laws and certainly not on the basis of the workers faith or religion. In
addition, the 1999 Handbook on Workers Statutory Benefits, categorically stated: Considering
that all private corporations, offices, agencies, and entities or establishments operating within
the designated Muslim provinces and cities are required to observe Muslim holidays, both
Muslim and Christians working within the Muslim areas may not report for work on the days
designated by law as Muslim holidays.

On the question regarding the jurisdiction of the Regional Director Allan M. Macaraya, Article
128, Section B of the Labor Code, as amended by Republic Act No. 7730, provides: Article 128.
Visitorial and enforcement power. -

(b) Notwithstanding the provisions of Article 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 the inspection. The
Secretary or his duly authorized representative 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.

In the case before us, Regional Director Macaraya acted as the duly authorized representative
of the Secretary of Labor and Employment and it was within his power to issue the compliance
order to SMC. In addition, the Court agrees with the Solicitor General that the petitioner did not
deny that it was not paying Muslim holiday pay to its non-Muslim employees. Indeed,
petitioner merely contends that its non-Muslim employees are not entitled to Muslim holiday
pay. Hence, the issue could be resolved even without documentary proofs. In any case, there
was no indication that Regional Director Macaraya failed to consider any documentary proof
presented by SMC in the course of the inspection.

Anent the allegation that petitioner was not accorded due process, the court finds that SMC
was furnished a copy of the inspection order and it was received by and explained to its
Personnel Officer. Further, a series of summary hearings were conducted by DOLE on 19
November 1992, 28 May 1993 and 4 and 5 October 1993. Thus, SMC could not claim that it was
not given an opportunity to defend itself.

Garcy Kate D. Go LLB2 EH306 Page 150

Tan vs. Lagrama
G.R. No. 151228; August 15, 2002

Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general
manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama
is a painter, making ad billboards and murals for the motion pictures shown at the Empress,
Supreme, and Crown Theaters for more than 10 years, from September 1, 1988 to October 17,
1998.

On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided:
"Nangihi na naman ka sulod sa imong drawinganan." ("You again urinated inside your work
area.") When Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko
gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas." ("Don't say anything
further. I don't want you to draw anymore. From now on, no more drawing. Get out.")

Lagrama denied the charge against him. He claimed that he was not the only one who entered
the drawing area and that, even if the charge was true, it was a minor infraction to warrant his
dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no
other choice but to leave the premises. Lagrama filed a complaint with the National Labor
Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and
sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary
differential, and damages.

As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the
parties to file their position papers. It declared that the dismissal illegal and order the payment
of monetary benefits. Tan appealed to the NLRC and reversing the decision of the Labor Arbiter.

Issue: Whether or not the respondent was illegally dismissed and thus entitled to payment of
benefits provided by law.

Ruling: The respondent was illegally dismissed and entitled to benefits. The Implementing Rules
of the Labor Code provide that no worker shall be dismissed except for a just or authorized
cause provided by law and after due process. This provision has two aspects: (1) the legality of
the act of dismissal, that is, dismissal under the grounds provided for under Article 282 of the
Labor Code and (2) the legality in the manner of dismissal. The illegality of the act of dismissal
constitutes discharge without just cause, while illegality in the manner of dismissal is dismissal
without due process.

In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his
sight as the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed.
Urinating in a work place other than the one designated for the purpose by the employer
constitutes violation of reasonable regulations intended to promote a healthy environment
under Art. 282(1) of the Labor Code for purposes of terminating employment, but the same
must be shown by evidence. Here there is no evidence that Lagrama did urinate in a place other
than a rest room in the premises of his work.

Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor
Arbiter found that the relationship between the employer and employee has been so strained
that the latter's reinstatement would no longer serve any purpose. The parties do not dispute
this finding. Hence, the grant of separation pay in lieu of reinstatement is appropriate.

This is of course in addition to the payment of bac kwages 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.
Garcy Kate D. Go LLB2 EH306 Page 151

The Bureau of Working Conditions 32 classifies workers paid by results into two groups,
namely; (1) those whose time and performance is supervised by the employer, and (2) those
whose time and performance is unsupervised by the employer. The first involves an element of
control and supervision over the manner the work is to be performed, while the second does
not. If a piece worker is supervised, there is an employer-employee relationship, as in this case.
However, such an employee is not entitled to service incentive leave pay since, as pointed out
in Makati Haberdashery v. NLRC 33 and Mark Roche International v. NLRC, 34 he is paid a fixed
amount for work done, regardless of the time he spent in accomplishing such work.


Garcy Kate D. Go LLB2 EH306 Page 152

Lambo vs. NLRC
G.R. No. 111042; October 26, 1999

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.

Petitioners allege that they were dismissed by private respondents as they were about to file a
petition with the Department of Labor and Employment (DOLE) for the payment of benefits
such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that
they abandoned their work.

Issue: Whether or not the petitioners are entitled to the minimum benefits provided by law.

Ruling: The petitioners are entitled to the minimum benefits provided by law. There is no
dispute that petitioners were employees of private respondents although they were paid not
on the basis of time spent on the job but according to the quantity and the quality of work
produced by them. There are two categories of employees paid by results: (1) those whose
time and performance are supervised by the employer. (Here, there is an element of control
and supervision over the manner as to how the work is to be performed. A piece-rate worker
belongs to this category especially if he performs his work in the company premises.); and (2)
those whose time and 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.

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
Garcy Kate D. Go LLB2 EH306 Page 153

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.

Considerable time has elapsed since petitioners dismissal, so that reinstatement would now be
impractical and hardly in the best interest of the parties. In lieu of reinstatement, separation
pay should be awarded to petitioners at the rate of one month salary for every year of service,
with a fraction of at least six (6) months of service being considered as one (1) year. The
awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding
that petitioners are regular employees, although paid on a piece-rate basis.



Garcy Kate D. Go LLB2 EH306 Page 154

R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004

Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. However,
he was transferred to the petitioner R & E Transport, Inc. upon cessation of La Mallorcas
business operations. In January 1995, he got sick and was forced to apply for partial disability
with the SSS, which was then granted. Upon recovery, he reported back to work in September
1998 but was no longer allowed on account of his old age. Latag asked the petitioner, through
its administrative officer for his retirement pay pursuant to Republic Act 7641 but he was
ignored. Latag filed a case for payment of his retirement pay before the NLRC.

Upon Pedro Latags death on April 30, 1999, he was substituted by his wife, the respondent
Avelina Latag. Labor Arbiter rendered a decision in favour of Latag. Petitioner filed the quitclaim
and motion to dismiss where the Labor Arbiter issued an order for Writ of Execution.
Petitioners interposed an appeal before NLRC. Appeal was dismissed for failure to post a cash
or surety bond, as mandated by law.

Issue: Whether or not Latag is entitled to retirement benefits considering she signed a waiver of
quitclaim.

Ruling: The Supreme Court ruled that the respondent is entitled to retirement benefits despite
of the waiver of quitclaims.

As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it
ruled that the document was invalid and could not bar her from demanding the benefits legally
due her husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary
of schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims
and waivers that bargain these away.

Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc.
Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement
age, who has served at least five (5) years in said establishment, may retire and shall be entitled
to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year. Unless the parties
provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus
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. Hence, it is
clear that the late Pedro M. Latag is entitled to retirement benefits.



Garcy Kate D. Go LLB2 EH306 Page 155

Asian Transmission vs. CA, 425 SCRA 478 [2004]

Facts: The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano
B. Trajano, issued an Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia,
that employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked,
which[,] apart from being Good Friday [and, therefore, a legal holiday], is also Araw ng
Kagitingan [which is also a legal holiday].

Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy
Thursday and Araw ng Kagitingan.

Despite the explanatory bulletin, petitioner, 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.

The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor Union (BATLU), and 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.

In the assailed decision, the Court of Appeals upheld the findings of the Voluntary Arbitrator.

Issue: Whether or not daily-paid employees are entitled to be paid for two regular holidays
which fall on the same day.

Ruling: The Court dismissed the petition and ruled that petitioners should pay its 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.

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."

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.


Garcy Kate D. Go LLB2 EH306 Page 156

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

Facts: Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc., since May 1995, as driver-conductor with travel routes Manila-Tuguegarao via
Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on
commission basis, seven percent (7%) of the total gross income per travel, on a twice a month
basis.

On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya,
the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter
vehicle suddenly stopped at a sharp curve without giving any warning. Respondent averred that
the accident happened because he was compelled by the management to go back to Roxas,
Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in
Manila from Roxas, Isabela.

Respondent further alleged that he was not allowed to work until he fully paid the amount of
P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and
that despite respondent's pleas for reconsideration, the same was ignored by management.
After a month, management sent him a letter of termination. Thus, on 02 February 2000,
respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of
13th month pay and service incentive leave pay against Autobus.

On 29 September 2000, based on the pleadings and supporting evidence presented by the
parties, Labor Arbiter decided that the complaint be dismissed where the respondent must pay
to the complainant

Issue: Whether or not respondent is entitled to service incentive leave.

Ruling: The respondent is entitled to service incentive leave.

The disposition of the issue revolves around the proper interpretation of Article 95 of the Labor
Code vis--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."
Garcy Kate D. Go LLB2 EH306 Page 157

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 the general and unlimited terms are restrained and limited by the
particular terms that they follow. Hence, employees engaged on task or contract basis or paid
on purely commission basis are not automatically exempted from the grant of service incentive
leave, unless, they fall under the classification of field personnel.

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 field personnel?

According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural
employees who regularly perform their duties away from the principal place of business or
branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty. This definition is further elaborated in the Bureau of
Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial
Employees Association 10 which states that:

As a general rule, field personnel are those whose performance of their job/service is
not supervised by the employer or his representative, the workplace being away from
the principal office and whose hours and days of work cannot be determined with
reasonable certainty; hence, they are paid specific amount for rendering specific service
or performing specific work. If required to be at specific places at specific times,
employees including drivers cannot be said to be field personnel despite the fact that
they are performing work away from the principal office of the employee.

At this point, it is necessary to stress that the definition of a "field personnel" is not merely
concerned with the location where the employee regularly performs his duties but also with
the fact that the employee's performance is unsupervised by the employer. As discussed above,
field personnel are those who regularly perform their duties away from the principal place of
business of the employer and whose actual hours of work in the field cannot be determined
with reasonable certainty. Thus, in order to conclude whether an employee is a field employee,
it is also necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or
not the employee's time and performance are constantly supervised by the employer.
Respondent is not a field personnel but a regular employee who performs tasks usually
necessary and desirable to the usual trade of petitioner's business. Accordingly, respondent is
entitled to the grant of service incentive leave.

The clear policy of the Labor Code is to grant service incentive leave pay to workers in all
establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing
Rules and Regulations provides that "every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of five days with pay."

Service incentive leave is a right which accrues to every employee who has served "within 12
months, whether continuous or broken reckoned from the date the employee started working,
including authorized absences and paid regular holidays unless the working days in the
establishment as a matter of practice or policy, or that provided in the employment contracts,
is less than 12 months, in which case said period shall be considered as one year." It is also
"commutable to its money equivalent if not used or exhausted at the end of the year." In other
words, an employee who has served for one year is entitled to it. He may use it as leave days or
he may collect its monetary value. To limit the award to three years, as the solicitor general
recommends, is to unduly restrict such right.

Garcy Kate D. Go LLB2 EH306 Page 158

San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005

Facts: On April 17, 2000, respondent was employed by petitioner as key account specialist. On
March 9, 2001, petitioner informed respondent that her probationary employment will be
severed at the close of the business hours of March 12, 2001. On March 13, 2001, respondent
was refused entry to petitioners premises. On June 24, 2002, respondent filed a complaint
against petitioner for illegal dismissal and underpayment/non-payment of monetary benefits.

Issue: Whether or not respondent is a regular employee of petitioner.

Ruling: Affirmative. In termination cases, like the present controversy, the burden of proving
the circumstances that would justify the employees 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. Hence, respondent whose employment
exceeded six months is undoubtedly a regular employee of petitioner.

Moreover, even assuming that the employment of respondent from April 7, 2000 to September
3, 2000, is only temporary, and that the reckoning period of her probationary employment is
September 4, 2000, she should still be declared a regular employee because by the time she
was dismissed on March 12, 2001, her alleged probationary employment already exceeded six
months, i.e., six months and eight days to be precise. A worker was found to be a regular
employee notwithstanding the presentation by the employer of a Payroll Authority indicating
that said employee was hired on probation, since it was shown that he was terminated four
days after the 6th month of his purported probationary employment.

Neither will petitioners belated claim that respondent became a probationary employee
starting October 1, 2000 work against respondent. As earlier stated, the payroll authorities
indicating that respondents probationary status became effective as of such date are of scant
evidentiary value since it does not show the conformity of respondent. At any rate, in the
interpretation of employment contracts, whether oral or written, all doubts must be resolved in
favor of labor.

Hence, the contract of employment in the instant case, which appears to be an oral agreement
since no written form was presented by petitioner, should be construed as one vesting
respondent with a regular status and security of tenure.

Regarding the argument of redundancy, 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 determination that the employees services are no longer necessary or sustainable and,
therefore, properly terminable is an exercise of business judgment of the employer. The
wisdom or soundness of this judgment is not subject to discretionary review of the Labor
Garcy Kate D. Go LLB2 EH306 Page 159

Arbiter and the NLRC, provided there is no violation of law and no showing that it was
prompted by an arbitrary or malicious act. In other words, it is not enough for a company to
merely declare that it has become overmanned. It must produce adequate proof of such
redundancy to justify the dismissal of the affected employees.

The following evidence may be proffered to substantiate redundancy: the new staffing pattern,
feasibility studies/proposal, on the viability of the newly created positions, job description and
the approval by the management of the restructuring.

In the case at bar, petitioner presented an affidavit of its Sales Manager and a memorandum of
the company both to the effect that there is a need to redeploy its regular employees and
terminate the employment of temporary employees, in view of an excess in manpower. These
documents, however, do not satisfy the requirement of substantial evidence that a reasonable
mind might accept as adequate to support a conclusion.

Moreover, the lingering doubt as to the existence of redundancy or of petitioners so called
restructuring, realignment or reorganization which resulted in the dismissal of not only
probationary employees but also of regular employees, is highlighted by the non-presentation
by petitioner of the required notice to the DOLE and to the separated employees. If there was
indeed a valid redundancy effected by petitioner, these notices and the proof of payment of
separation pay to the dismissed regular employees should have been offered to establish that
there was excess manpower in petitioners GMA-KAG caused by a decline in the sales volume.
In balancing the interest between labor and capital, the prudent recourse in termination cases
is to safeguard the prized security of tenure of employees and to require employers to present
the best evidence obtainable, especially so because in most cases, the documents or proof
needed to resolve the validity of the termination, are in the possession of employers. A
contrary ruling would encourage employers to prevent the regularization of an employee by
simply invoking a feigned or unsubstantiated redundancy program.

Granting that petitioner was able to substantiate the validity of its reorganization or
restructuring, it nevertheless, failed to effect a fair and reasonable criterion in dismissing
respondent. The criteria in implementing a redundancy are: (a) less preferred status, e.g.
temporary employee; (b) efficiency; and (c) seniority.

It is evident from the foregoing that the criterion allegedly used by petitioner in reorganizing its
sales unit was the employment status of the employee. However, in the implementation
thereof, petitioner erroneously classified respondent as a probationary employee, resulting in
the dismissal of the latter. Verily, the absence of criteria and the erroneous implementation of
the criterion selected, both render invalid the redundancy because both have the ultimate
effect of illegally dismissing an employee.

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. As a regular employee
of petitioner from the date of her employment on April 17, 2000, 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, however, 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.
Garcy Kate D. Go LLB2 EH306 Page 160

Anent attorneys fees, in actions for recovery of wages or where an employee was forced to
litigate and thus incurred expenses to protect his rights and interests, a maximum of 10% of the
total monetary award by way of attorneys fees is justifiable under Article 111 of the Labor
Code, Section 8, Rule VIII, Book III of its Implementing Rules, and paragraph 7, Article 2208 of
the Civil Code. The award of attorneys fees is proper and there need not be any showing that
the employer acted maliciously or in bad faith when it withheld the wages. There need only be
a showing that the lawful wages were not paid accordingly, as in the instant controversy.

Garcy Kate D. Go LLB2 EH306 Page 161

Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006

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.

Respondent BPC is a domestic corporation duly organized and existing under Philippine laws
and is represented herein by its General Manager HUDSON CHUA, the individual respondent.
Respondents allege that complainant's separation from service was done pursuant to Art. 283
of the Labor Code. The respondent BPC was on temporary closure due to repair and general
maintenance and it applied for clearance with the Department of Labor and Employment,
Regional Office No. XI, to shut down and to dismiss employees. And due to the insistence of
herein complainant he was paid his separation benefits.

Consequently, when respondent BPC partially reopened in January 2001, Pearanda failed to
reapply.

The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was
premature because he was still employed by BPC. Petitioners money claims for illegal
dismissal was also weakened by his quitclaim and admission during the clarificatory conference
that he accepted separation benefits, sick and vacation leave conversions and thirteenth month
pay.

Issue: Whether or not 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.

Ruling: The petitioner is not entitled to overtime pay and other monetary benefits.

The Court disagrees with the NLRC's finding that petitioner was a managerial employee.
However, petitioner was a member of the managerial staff, which also takes him out of the
coverage of labor standards. Like managerial employees, officers and member of the
managerial staff are not entitled to the provisions of law on labor standards.

The Implementing Rules of the Labor Code define members of a managerial staff as those with
the following duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to
management policies of the employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose
primary duty consists of the management of the establishment in which he is
employed or subdivision thereof; or (ii) execute under general supervision work
Garcy Kate D. Go LLB2 EH306 Page 162

along specialized or technical lines requiring special training, experience, or
knowledge; or (iii) execute under general supervision special assignments and
tasks; and
(4) who do not devote more than 20 percent of their hours worked in a workweek
to activities which are not directly and closely related to the performance of the
work described in paragraphs (1), (2), and (3) above."

The petitioners work involves:
1. To supply the required and continuous steam to all consuming units at minimum
cost.
2. To supervise, check and monitor manpower workmanship as well as operation of
boiler and accessories.
3. To evaluate performance of machinery and manpower.
4. To follow-up supply of waste and other materials for fuel.
5. To train new employees for effective and safety white working.
6. Recommend parts and suppliers purchases. acEHSI
7. To recommend personnel actions such as: promotion, or disciplinary action.
8. To check water from the boiler, feedwater and softener, regenerate softener if
beyond hardness limit.
9. Implement Chemical Dosing.
10. Perform other task as required by the superior from time to time." 34

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.


Garcy Kate D. Go LLB2 EH306 Page 163

Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No. 1577745,
October 19, 2007, citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995], and Odango
vs. NLRC, G.R. No. 147420, June 10, 2004

Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees
Union-ALU (respondent) entered into a Collective Bargaining Agreement (CBA) covering
petitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998. On
June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter
to petitioner demanding holiday pay for all employees, as provided for in the CBA. Petitioner,
on the other hand, in its Position Paper, insisted payment of the holiday pay in compliance with
the CBA provisions, stating that payment was presumed since the formula used in determining
the daily rate of pay of the covered employees is Basic Monthly Salary divided by 30 days or
Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the
employees are already paid their regular and special days, the days when no work is done, the
51 un-worked Sundays and the 51 un-worked Saturdays.

Issue: Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday pay.

Held: Leyte IV Electric Cooperative is not liable for underpayment of holiday pay. 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.
Garcy Kate D. Go LLB2 EH306 Page 164

Bahia Shipping Services vs. Chua,
G.R. No. 162195, April 8, 2008, citing Cagampan vs. NLRC, 195 SCRA 533 [1998]

Facts: Reynaldo Chua, herein respondent, was under the employ of Bahia Shipping Services,
Inc., herein petitioner, as a restaurant waiter on board the M/S Black Watch , a luxury cruise
ship liner. His employment is 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, respondent, on board the cruise ship, left Manila for Heathrow, England.
About four months into his employment, or on February 15, 1997, responded reported to work
an hour and a half (1 ) late. Due to the incident, respondent was issued a warning-
termination form by the master of the cruise ship, Thor Fleten on February 17, 1997, who
likewise conducted an inquisitorial hearing to investigate the incident on March 8, 1997.

Thereafter, on March 9, 1997, respondent was dismissed from service on the strength of an
unsigned and undated notice of dismissal. Attached to the dismissal notice is the alleged
minutes or records of the investigation and hearing.

On March 24, 1997, respondent filed a complaint for illegal dismissal and other monetary
claims. He claims that he was underpaid in the amount of US$110.00 per month for a period of
five (5) months, since he was only paid US$300.00 per month, instead of US$410.00 per
month, which was stipulated in his contract. Aside from underpayment, he alleged that
US$20.00 per month was also deducted from his salary by petitioner for union dues.

Issue: In the computation of the award, should the guaranteed overtime pay per month be
included as part of his salary?

Ruling: There is no factual or legal basis in the inclusion of his "guaranteed overtime" pay into
his monthly salary computation for the entire unexpired period of his contract.

The Court ruled in Cagampan v. National Labor Relations Commission, 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.

Petitioners contention that there is no factual or legal basis for the inclusion of said amount
since respondents repatriation is well-taken.


Garcy Kate D. Go LLB2 EH306 Page 165

PNCC Skyway Traffic Management and Security Division Workers Organization,
GR No. 171231, Feb. 17, 2010

Facts: Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and
Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly organized and
operating under and by virtue of the laws of the Philippines. On November 15, 2002, petitioner
and respondent entered into a Collective Bargaining Agreement (CBA) incorporating the terms
and conditions of their agreement which included vacation leave and expenses for security
license provisions.

A memorandum was passed by the respondents scheduling the leaves of the laborers.
Petitioner objected to the implementation of this memorandum and contended that their
union members have the preference in scheduling their vacation leave. On the other hand,
respondent argued that Article VIII, Section 1 (b) gives the management the final say regarding
the vacation leave schedule of its employees. Respondent may take into consideration the
employees' preferred schedule, but the same is not controlling.

Issue: Whether or not it is the prerogative of PNCC to schedule leaves of its employees.

Ruling: Yes. 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 leave shall be
under the option of the employer. The preference requested by the employees is not
controlling because respondent retains its power and prerogative to consider or to ignore said
request. 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.

Garcy Kate D. Go LLB2 EH306 Page 166

Radio Mindanao Network, Inc. vs. Ybarola

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15,
1977 and June 1, 1983, respectively, by RMN. They eventually became account managers,
soliciting advertisements and servicing various clients of RMN.

The respondents services were terminated as a result of RMNs reorganization/restructuring;
they were given their separation pay P 631,250.00 for Ybarola, and P 481,250.00 for Rivera.
Sometime in December 2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were
later consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with
several money claims, including attorneys fees. They indicated that their monthly salary rates
were P 60,000.00 for Ybarola and P 40,000.00 for Rivera.

The respondents argued that the release/quitclaim they executed should not be a bar to the
recovery of the full benefits due them; while they admitted that they signed release
documents, they did so due to dire necessity.

The petitioners denied liability, contending that the amounts the respondents received
represented a fair and reasonable settlement of their claims, as attested to by the
release/quitclaim affidavits which they executed freely and voluntarily. They belied the
respondents claimed salary rates, alleging that they each received a monthly salary of P
9,177.00, as shown by the payrolls.

The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the
payment of additional separation pay to the respondents P 490,066.00 for Ybarola and P
429,517.55 for Rivera.

On appeal by the petitioners to the National Labor Relations Commission (NLRC), the NLRC set
aside the labor arbiters decision and dismissed the complaint for lack of merit. It ruled that the
withholding tax certificate cannot be the basis of the computation of the respondents
separation pay as the tax document included the respondents cost-of-living allowance and
commissions; as a general rule, commissions cannot be included in the base figure for the
computation of the separation pay because they have to be earned by actual market
transactions attributable to the respondents From the NLRC, the respondents sought relief
from the CA through a petition for certiorari under Rule 65 of the Rules of Court.

The CA granted the petition and set aside the assailed NLRC dispositions. It reinstated the labor
arbiters separation pay award, rejecting the NLRCs ruling that the respondents commissions
are not included in the computation of their separation pay. It pointed out that in the present
case, the respondents earned their commissions through actual market transactions
attributable to them; these commissions, therefore, were part of their salary.

The appellate court declared the release/quitclaim affidavits executed by the respondents
invalid for being against public policy, citing two reasons: (1) the terms of the settlement are
unconscionable; the separation pay the respondents received was deficient by at least P
400,000.00 for each of them; and (2) the absence of voluntariness when the respondents
signed the document, it was their dire circumstances and inability to support their families that
finally drove them to accept the amount the petitioners offered. Significantly, they dallied and
it took them three months to sign the release/quitclaim affidavits.

Issue:Whether or not the release/quitclaim affidavits are invalid for being against public policy.

Garcy Kate D. Go LLB2 EH306 Page 167


Ruling: Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being
against public policy for two reasons: (1) the terms of the settlement are unconscionable; the
separation pay for termination due to reorganization/restructuring was deficient by
Php400,000.00 for each employee; they were given only half of the amount they were legally
entitled to; and (2) the absence of voluntariness when the employees signed the document, it
was their dire circumstances and inability to support their families that finally drove them to
accept the amount offered. Without jobs and with families to support, they dallied in executing
the quitclaim instrument, but were eventually forced to sign given their circumstances. To be
sure, a settlement under these terms is not and cannot be a reasonable one, given especially
the respondents length of service 25 years for Ybarola and 19 years for Rivera. Radio
Mindanao Network, Inc. and Eric S. Canoy vs. Domingo Z. Ybarola, et al. G.R. No. 198662.
September 12, 2012.

Garcy Kate D. Go LLB2 EH306 Page 168

Villuga vs. NLRC

Facts: Petitioner Elias Villuga was employed as cutter in the Broad Street Tailoring owned by
privaterespondent Rodolfo Zapanta. He was paid a fixed monthly salary of P840.00 and a
monthly transportation allowance of P40.00. In addition, Villuga was assigned the chore of
distributing work to the shop's tailors or sewers when both the shop's manager and assistant
manager would be absent. The other petitioners were either ironers, repairmen and sewers.
They were paid a fixed amount for every item ironed, repaired or sewn, regardless of the time
consumed in accomplishing the task. Petitioners did not fill up any time record since they did
not observe regular or fixed hours of work.

From February 17 to 22, 1978, Villuga failed to report for work allegedly due to illness. For not
properly notifying his employer, he was considered to have abandoned his work. Villuga
claimed that he was refused admittance when he reported for work after his absence, allegedly
due to his active participation in the union organized by private respondent's tailors. He further
claimed that he was not paid overtime pay, holiday pay, premium pay for work done on rest
days and holidays, service incentive leave pay and 13th month pay. Petitioners Abistado,
Mendoza, Brizuela and Oro also claimed that they were dismissed from their employment
because they joined the Philippine Social Security Labor Union (PSSLU). The other petitioners
claimed that they stopped working because private respondents gave them few pieces of work
to do after learning of their membership with PSSLU.

The Labor Arbiter rendered a decision ordering the dismissal of the complaint for unfair labor
practices, illegal dismissal and other money claims except petitioner Villuga's claim for 13th
month pay for the years 1976, 1977 and 1980. The NLRC affirmed the questioned decision.

Issue: Whether an employer-employee relationship exists and whether such employment is
managerial in character or that of a rank and file employee are primordial considerations
before extending labor benefits.

Ruling: Under Rule I, Section 2(c), Book III of the Implementing Rules of the Labor Code, to be a
member of a managerial staff, the following elements must concur or co-exist, to wit: (1) that
his primary duty consists of the performance of work directly related to management policies;
(2) that he customarily and regularly exercises discretion and independent judgment in the
performance of his functions; (3) that he regularly and directly assists in the management of the
establishment; and (4) that he does not devote twenty per cent of his time to work other than
those described above.

Garcy Kate D. Go LLB2 EH306 Page 169

CJC Trading vs. NLRC
G.R. No. 115884; July 20, 1995

Facts: Private respondents Ricardo Ausan, Jr. and Ernesto Alanan were employed by petitioner
since 1983 and 1978 as truck drivers and were paid on a "per trip or task basis." They filed
separate complaints on against petitioner CJC Trading, Incorporated and/or Ms. Celia J. Carlos
for illegal dismissal and non-payment of premium pay for holiday and rest day, service incentive
leave pay and thirteenth month pay. These cases were consolidated.

On 22 July 1993, a decision was rendered by the Labor Arbiter dismissing the complaints and
were not entitled to the labor standards benefits claimed by them because they were paid on a
"per trip or per task basis.

On appeal, NLRC affirmed in toto the decision of the Labor Arbiter.

Issue: Whether or not the respondents are entitled to the benefits provided by law.

Ruling: The employees are granted to retirement benefits. An employee who voluntarily resigns
is not entitled to separation pay unless otherwise stipulated in an employment contract or
collective bargaining agreement, or sanctioned by established employer practice or policy. The
Labor Code is devoid of any provision which grants separation pay to employees who
voluntarily resign. Neither was there anything in the record that shows that, in the instant case,
there is a collective bargaining agreement or any other agreement or established company
policy concerning the payment of separation pay to employees who resign.

Considering that private respondents were close to the age of sixty (60) at the time they
stopped working for petitioner and that they had been in the employ of petitioner for several
years, the Court, considers that this could be deemed to be in effect a prayer for the grant of
retirement benefits.

The pertinent law is Article 287 of the Labor Code, as amended by R.A. No. 7641, which reads:
Retirement. Any employee may be retired upon reaching the retirement age established in
the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he
may have earned under existing laws and any collective bargaining agreement and other
agreements: Provided, however, That an employee's retirement benefits under any collective
bargaining and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement
age, who has served at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year.

R.A. No. 7641 may be given effect where (1) the claimant for retirement benefits was still the
employee of the employer at the time the statute took effect; and (2) the claimant was in
compliance with the requirements for eligibility under the statute for such retirement benefits.
It appears that private respondents did not qualify for the benefits of R.A. No. 7641 under the
terms of this law itself. Since the record does not show any retirement plan or collective
bargaining agreement providing for retirement benefits to petitioner's employees, the
applicable retirement benefits to petitioner's employees, the applicable retirement age is the
optional retirement age of sixty (60) years according to Article 287, which would qualify the
Garcy Kate D. Go LLB2 EH306 Page 170

retiree to retirement benefits equivalent to one-half (1/2) month's salary for every year of
service. Unfortunately, at the time private respondent stopped working for petitioner, they had
not yet reached the age of sixty (60) years. The Court stresses that there is nothing to prevent
petitioners from voluntarily giving private respondents some financial assistance on an ex gratia
basis.


































Garcy Kate D. Go LLB2 EH306 Page 171

Pantranco North Express, Inc., vs. National Labor Relations Commission And Urbano Suiga

Facts: Urbano Suiga was hired by Pantranco North Express Inc. 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. Private respondent received P49,300.00 as retirement pay.

On February 15, 1990, private respondent filed a complaint for illegal dismissal against
petitioner with the Sub-Regional Arbitration Branch of the respondent Commission in Dagupan
City. The complaint was consolidated with two other cases of illegal dismissal having similar
facts and issues, filed by other employees, non-union members.

Collective Bargaining Agreement between petitioner company and the union states:

"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.

After hearings were held and position papers submitted, on March 26, 1990, Labor Arbiter
Olairez rendered his decision that the three complainants illegally and unjustly dismissed and
ordered the respondent to reinstate them to their former or substantially equivalent positions
without loss of seniority rights with full backwages and other benefits with a total of P31,618.12
plus additional backwages and other benefits but not to exceed 3 years and the corresponding
attorney's fees. The amounts already received by complainants shall be considered as advanced
payment of their retirement pay which shall be deducted when they shall actually retire or (be)
separated from the service. The order of reinstatement is immediately executory even pending
appeal. Petitioner appealed to public respondent, which issued the questioned Resolution
affirming the labor arbiter's decision in toto. Hence, this petition.

Issues:
(1) The National Labor Relations Commission gravely abused its discretion in holding
that the Labor Arbiter has jurisdiction over the case.
(2) The National Labor Relations Commission gravely abused its discretion in
affirming the Labor Arbiter's decision that private respondent Urbano Zuiga
(sic) was illegally dismissed."

Ruling: The petition is meritorious thus warranting reversal of the questioned Resolution.

Jurisdiction of Labor Arbiter

Article 261 of the Labor Code provides that 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 the Article, gross violations of a 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."

Garcy Kate D. Go LLB2 EH306 Page 172

The complaint of illegal dismissal of which original and exclusive jurisdiction under Article 217
has been conferred to the Labor Arbiters. The interpretation of the CBA or enforcement of the
company policy is only corollary to the complaint of illegal dismissal. Otherwise, an employee
who was on AWOL, or who committed offenses contrary to the personnel polices can no
longer file a case of illegal dismissal because the discharge is premised on the interpretation or
enforcement of the company polices.

Respondent voluntarily submitted the case to the jurisdiction of this labor tribunal. It adduced
arguments to the legality of its act, whether such act may be retirement and/or dismissal, and
prayed for reliefs on the merits of the case. A litigant cannot pray for reliefs on the merits and
at the same time attacks the jurisdiction of the tribunal.
The Court agrees with the public respondent's affirmance of the arbiter's decision in respect of
the question of jurisdiction.

In Sanyo Philippines Workers Union PSSLU vs. Caizares, the petitioner, the court ruled:

Only disputes involving the union and the company shall be referred to the grievance
machinery or voluntary arbitrators.In the instant case, both the union and the company
are united or have come to an agreement regarding the dismissal of private
respondents. No grievance between them exists which could be brought to a grievance
machinery. The dispute has to be settled before an impartial body. The grievance
machinery with members designated by the union and the company cannot be expected
to be impartial against the dismissed employees. Due process demands that the
dismissed workers grievances be ventilated before an impartial body. Since there has
already been an actual termination, the matter falls within the jurisdiction of the Labor
Arbiter."

Applying the same rationale to the case at bar, it cannot be said that the "dispute" is between
the union and petitioner company because both have previously agreed upon the provision on
"compulsory retirement" as embodied in the CBA. Also, it was only private respondent on his
own who questioned the compulsory retirement. Thus, the case is properly denominated as a
"termination dispute" which comes under the jurisdiction of labor arbiters.
Therefore, public respondent did not commit a grave abuse of discretion in upholding the
jurisdiction of the labor arbiter over this case.

Private Respondent's Compulsory Retirement Is Not Illegal Dismissal

"Retirement. -- In the absence of any collective bargaining agreement or other applicable
agreement concerning terms and condition of employment which provides for retirement at an
older age, an employee may be retired upon reaching the age of sixty (60) years."

Art. 287 of the Labor Code as worded permits employers and employees to fix the
applicable retirement age at below 60 years. Moreover, providing for early retirement does not
constitute diminution of benefits. In almost all countries today, early retirement, i.e., before
age 60, is considered a reward for services rendered since it enables an employee to reap the
fruits of his labor particularly retirement benefits, whether lump-sum or otherwise at an
earlier age, when said employee, in presumably better physical and mental condition, can enjoy
them better and longer. 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.
Garcy Kate D. Go LLB2 EH306 Page 173


A CBA incorporates the agreement reached after negotiations between employer and
bargaining agent with respect to terms and conditions of employment. A CBA is not an ordinary
contract. It is a labor contract within the contemplation of Article 1700 of the Civil Code of the
Philippines which governs the relations between labor and capital, it is not merely contractual
in nature but impressed with public interest, thus it must yield to the common good. As such, it
must be construed liberally rather than narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve.

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, The Retirement Pay Law," said statute sheds light on the present discussion when
it amended Art. 287 of the Labor Code worded that "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 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. Public respondent
committed a grave abuse of discretion in affirming the decision of the labor arbiter. The
compulsory retirement of private respondent effected in accordance with the CBA is legal and
binding.










Garcy Kate D. Go LLB2 EH306 Page 174

R&E Transport , Inc., And Honorio Enriquez, vs. Avelina Latag (February 13, 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, Latag filed 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.

Ruling: YES, the respondent is entitled to retirement benefits despite of the waiver of
quitclaims.

The Supreme Court upheld that the CA committed no error when it ruled that the Quitclaim
and Waiver was invalid and could not bar respondent Latag from demanding the benefits
legally due her husband despite the former having signed the document. This is not to 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:

Art. 287. Retirement. xxx xxx xxx 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. xxx xxx xxx

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.


Garcy Kate D. Go LLB2 EH306 Page 175

Rufina Patis Factory v. Alusitain

Facts: In March 1948, respondent Alusitain was hired as a laborer at the Rufina Patis Factory
owned and operated by petitioner Lucas. On February 19, 1991, respondent, then 63 years of
age, tendered his letter of resignation, and also executed a duly notarized affidavit of
separation from employment and submitted the same to the Pensions Department of the SSS.
Meanwhile, R.A. 7641 took effect in January 1993 providing, among others, that 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.

In 1995, respondent, claiming that he retired from the company on January 31, 1995, having
reached the age of 65 and due to poor health, demanded from petitioner the payment of his
retirement benefits in the amount of P86,710.00, which petitioner refused to pay. Respondent
filed a complaint before the NLRC against petitioners for non-payment of retirement benefits.
Petitioners maintained that respondent resigned from the company in 1991. On the other
hand, respondent maintained that he continued working for petitioners until January 1995, the
date of actual retirement, due to illness and old age, and that he merely accomplished the
documents in compliance with the requirements of the SSS in order to avail of his retirement
benefits. The Labor Arbiter upheld respondents position. The Court of Appeals upheld the
NLRC decision. Petitioners assert that the appellate court erred in applying retroactively R.A.
7641 as said law does not expressly provide for such retroactive application and to do so would
defeat the clear intent of Congress. Hence, this petition.

Issue: Whether or not respondent is entitled to his claim for retirement benefits.

Ruling: No. R.A. 7641 is a social legislation and may be given retroactive effect where (1) the
claimant for retirement benefits was still the employee of the employer at the time the statute
took effect; and (2) the claimant had complied with the requirements for eligibility under the
statute for such retirement benefits. It is thus clear that in order for respondent to claim
retirement benefits from petitioner, he has to prove that he was its employee at the time R.A.
7641 took effect. In the case at bar, it was incumbent on respondent to prove that he retired on
January 31, 1995 and not on February 20, 1991 as indicated on his letter of resignation.
Respondent failed to prove that he was an employee of petitioner at the time R.A. 7641 took
effect. Thus, his claim for retirement benefits must be disallowed.

Garcy Kate D. Go LLB2 EH306 Page 176

Sta. Catalina College v. NLRC; G.R. No. 144483; November 19, 2003

Facts: Hilaria was hired as an elementary school teacher at the Sta. Catalina College (petitioner
school) in San Antonio, Bian, Laguna. In 1970, she applied for and was granted a one year
leave of absence without pay on account of the illness of her mother. After the expiration in
1971 of her leave of absence, she had not been heard from by petitioner school.

In the meantime, she was employed as a teacher at the San Pedro Parochial School during
school year 1980-1981 and at the Liceo de San Pedro, Bian, Laguna during school year 1981-
1982.

In 1982, she applied anew at petitioner school which hired her with a monthly salary of Php
6,567.95.

On March 22, 1997, during the 51st Commencement Exercises of petitioner school, Hilaria was
awarded a Plaque of Appreciation for thirty years of service and Php 12,000.00 as gratuity pay.
On May 31, 1997, Hilaria reached the compulsory retirement age of 65. Retiring pursuant to
Article 287 of the Labor Code, as amended by Republic Act 7641, petitioner school pegged her
retirement benefits at Php 59,038.35, computed on the basis of fifteen years of service from
1982 to 1997. Her service from 1955 to 1970 was excluded in the computation, petitioner
school having asserted that she had, in 1971, abandoned her employment.

From the Php 59,038.35 retirement benefits was deducted the amount of Php 28,853.09
representing reimbursement of the employers contribution to her retirement benefits under
the Private Education Retirement Annuity Association (PERAA) which Hilaria had already
received.

Issue: Whether or not the separation pay should be computed based on the length of
continuous service or merely years of service not being continuous.

Ruling: Hilaria was considered a new employee when she rejoined petitioner school upon re-
applying in 1982, her retirement benefits should thus be computed only on the basis of her
years of service from 1982 to 1997. The Court is not unmindful of Hilarias rendition of a total of
thirty years of teaching in petitioner school and should be accorded ample support in her
twilight years. Petitioner school in fact acknowledges her dedicated service to its students. She
can, however, only be awarded with what she is rightfully entitled to under the law.

Garcy Kate D. Go LLB2 EH306 Page 177

Honda Philippines vs. Samahan ng Malayang Manggagawa sa Honda
G.R. No. 145561, June 15, 2005

Facts: Honda Phils, Inc (company) and Samahan ng Malayang Manggagawa sa Honda (union)
started renegotiations of their CBA. When there was a bargaining deadlock, the union filed a
notice of strike. The company likewise filed a notice of lockout. SOLE assumed jurisdiction and
ordered both parties to desist from their strike and lockout.

However, the union subsequently filed a second notice of strike onthe ground of unfair labor
practice, alleging that the company illegally contracted out work to the detriment of
the workers. The union went on strike. SOLE assumed jurisdiction and certified the case to
NLRC for compulsory arbitration. The striking employees were ordered to return to work and
management accepted them back.

Honda then issued a memorandum announcing its new computationof the 13th and 14th
month pay whereby the 31-day strike shall be considered unworked days for the purpose of
computing said benefits. The amount equivalent to 1/12 of the employees basic salary shall be
deducted from the bonuses (because they did not work for 1 month). Furthermore, Honda
wanted a pro-rata payment of the 13th month pay.

The union opposed said computation because it was contrary to the Sections 3 and 6 in their
current CBA which mandates that the company shall maintain the present practice in the
implementation of the 13th month pay and that the 14th month pay shall be computed in the
same way as the former.

The Bureau of Working Conditions (BWC) sided with the company. But the issue was
unresolved by the grievance machinery, so it wassubmitted for voluntary arbitration. The
Voluntary Arbiter invalidated Hondas computation and ordered the computation of the
benefits based on the full month basic pay.

CA affirmed, hence this petition.

Issues:
(1) Whether or not there is ambiguity in the CBA provisions concerning the 13th and 14th
month pay
(2) Whether or not the proposed computation of Honda deducting 1/12 of the employees basic
salary from the 13th and 14th month pay and its pro-rata payment are valid

Ruling:
(1) YES. A collective bargaining agreement refers to the negotiated contract between a
legitimate labor organization and the employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit. The parties in a CBA may establish
such stipulations, clauses, terms and conditions as they may deem convenient as long as they
are not contrary to law, morals, good customs, public order or public policy. Where the CBA is
clear and unambiguous, it becomes the law between the parties.

However, there are times when the CBA provisions may become contentious. In this case,
Honda wanted to implement a pro-ratedcomputation based on the no work, no pay rule.
Honda argues that the phrase present practice in the CBA refers to the manner of payment of
the bonuses (50% in May and 50% in December). The union, on the other hand, insists that the
CBA provisions necessarily relate to the computation of the benefits.

As the voluntary arbitrator has correctly observed, there is ambiguity in the assailed CBA
provisions because they did not categorically state whether the computation of the 13th and
Garcy Kate D. Go LLB2 EH306 Page 178

14th month pay would be based on a one full months basic salary of the employees, or pro-
rated based on the compensation actually received.

(2) NO. The ambiguity in the CBA provisions was correctly resolved by the arbitrator by relying
on Article 1702 of the Civil Code, which provides that in case of doubt, all labor legislation and
all labor contracts shall be construed in favor of the safety and decent living of the laborer. CA
is also correct in ruling that the computation of the 13th month pay should be based on the
length of service and not on the actual wage earned by the worker.

PD 851 or the 13th Month Pay Law was issued to protect the level of wages of workers from
worldwide inflation. Under the IRR of said law, the minimum 13th month pay shall not be less
than 1/12 of the total basic salary earned by an employee within a calendar year.The Court has
interpreted basic salary to mean, NOT the amount actually received by an employee, but
1/12 of their standard monthly wage multiplied by their length of service within a given
calendar year.

The IRR also provide for a pro-ration of this benefit ONLY in cases of resignation or separation
from work. In the present case, there being no resignation/separation, the computation of the
13th month pay should not be pro-rated but should be given in full.

Moreover, it has not been proven that Honda has been implementing pro-rating of the 13th
month pay before the present case. It is not a company practice. In fact, there was an implicit
acceptance that prior to the strike, a full month basic pay computation was the present
practice intended in the CBA. It was the second strike that prompted the company to adopt
the pro-rata computation.


















Garcy Kate D. Go LLB2 EH306 Page 179

Jaculbe vs. Silliman University
G.R. No. 156934; March 16, 2007

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 35th year of service
with the university and was due for automatic retirement on November 18, 1993, at which time
she would be 57 years old. This was pursuant to 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 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. On
November 18, 1993, respondent compulsorily retired petitioner. The labor arbiter rendered a
decision finding respondent guilty of illegal dismissal and ordered that petitioner be reinstated
and paid full back wages. On appeal, the NLRC reversed the labor arbiters decision and
dismissed the complaint. the CA affirmed the NLRC.

Issue: Whether or not 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.

Ruling: Retirement plans allowing employers to retire employees who are less than the
compulsory retirement age of 65 are not per se repugnant to the constitutional guaranty of
security of tenure. 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.
Garcy Kate D. Go LLB2 EH306 Page 180

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.



Garcy Kate D. Go LLB2 EH306 Page 181

Intercontinental Broadcasting Corp. vs. Panganiban
G.R. No. 151407, Februarry 6, 2007

Facts: Ireneo Panganiban (respondent) 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 a civil case with the RTC of Quezon City, Branch 93 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 respondents claim was a labor money
claim, but this was denied by the RTC. Thus, Santiago filed a petition for certiorari with the CA
which granted Santiagos petition for lack of jurisdiction and set aside the RTCs Orders.

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. The
Labor Arbiter (LA) ordered respondents reinstatement with full backwages, and the payment
of his unpaid commission, damages and attorneys fees. Petitioner appealed to the NLRC but
due to petitioners failure to post a bond, the appeal was dismissed. The decision was deemed
final and executory.

Issue: WON respondents claim for unpaid commissions has already prescribed.

Ruling: Yes. Respondents claim had already prescribed as of September 1991. In addition, the
claims of private respondent for reinstatement, backwages and benefits in conjunction with his
employment from 1986 to 1988 have prescribed.

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
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 could have interrupted the running of the
three-year prescriptive period, its consequent dismissal by the CA 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 respondents 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.



Garcy Kate D. Go LLB2 EH306 Page 182

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.

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.

Ruling: 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, especially when such findings are
supported by substantial evidence and there is no cogent basis to reverse the same, as in this
case.






Garcy Kate D. Go LLB2 EH306 Page 183

Reyes vs. NLRC et al.
G.R. No. 160233; August 8, 2007

Facts: Petitioner was employed as a salesman at private respondent's Grocery Division in Davao
City on August 12, 1977. He was eventually appointed as unit manager of Sales Department-
South Mindanao District, a position he held until his retirement on November 30, 1997.
Thereafter, he received a letter regarding the computation of his separation pay. Insisting that
his retirement benefits and 13th month pay must be based on the average monthly salary of
P42,766.19, which consists of P10,919.22 basic salary and P31,846.97 average monthly
commission, petitioner refused to accept the check issued by private respondent in the amount
of P200,322.21. Instead, he filed a complaint before the arbitration branch of the NLRC for
retirement benefits, 13th month pay, tax refund, earned sick and vacation leaves, financial
assistance, service incentive leave pay, damages and attorney's fees.

Petitioner contends that the commissions form part of the basic salary, citing the case of
Philippine Duplicators, Inc. v. National Labor Relations Commission, wherein the Court held that
commissions earned by salesmen form part of their basic salary. Private respondent counters
that petitioner knew that the overriding commission is not included in the basic salary because
it had not been considered as such for a long time in the computation of the 13th month pay,
leave commissions, absences and tardiness.

Issue: Whether or not the average monthly sales commission of thirty one thousand eight
hundred forty six and 97/100 (Php31,846.97) should be included in the computation of his
retirement benefits and 13
th
month pay.

Ruling: This Court has held, in Philippine Duplicators that, the salesmen's commissions,
comprising a pre-determined percentage of the selling price of the goods sold by each
salesman, were properly included in the term basic salary for purposes of computing the 13th
month pay. The salesmen's commission are not overtime payments, nor profit-sharing
payments nor any other fringe benefit but a portion of the salary structure which represents an
automatic increment to the monetary value initially assigned to each unit of work rendered by
a salesman.

Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical
representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji
Xerox Co., were excluded from the term basic salary because these were paid to the medical
representatives and rank-and-file employees as productivity bonuses, which are generally tied
to the productivity, or capacity for revenue production, of a corporation and such bonuses
closely resemble profit-sharing payments and have no clear direct or necessary relation to the
amount of work actually done by each individual employee. Further, commissions paid by the
Boie-Takeda Company to its medical representatives could not have been sales commissions in
the same sense that Philippine Duplicators paid the salesmen their sales commissions. Medical
representatives are not salesmen; they do not effect any sale of any article at all.

In fine, whether or not a commission forms part of the basic salary depends upon the
circumstances or conditions for its payment, which indubitably are factual in nature for they
will require a re-examination and calibration of the evidence on record.

As to the main issue whether petitioner's commissions be considered in the computation of his
retirement benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code,
as amended by Republic Act No. 7641, otherwise known as The New Retirement Law, 22
provides: Retirement. Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract
In the absence of a retirement plan or agreement providing for retirement benefits of
Garcy Kate D. Go LLB2 EH306 Page 184

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.

At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary
corresponding to his position as Unit Manager. Thus, as correctly ruled by public respondent
NLRC, the "overriding commissions" paid to him by Universal Robina Corp. could not have been
'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales
commissions. Unit Managers are not salesmen; they do not effect any sale of article at all.
Therefore, any commission which they receive is certainly not the basic salary which measures
the standard or amount of work of complainant as Unit Manager. Accordingly, the additional
payments made to petitioner were not in fact sales commissions but rather partook of the
nature of profit-sharing business. Certainly, from the foregoing, the doctrine in Boie-Takeda
Chemicals and Philippine Fuji Xerox Corporation, which pronounced that commissions are
additional pay that does not form part of the basic salary, applies to the present case. Aside
from the fact that as unit manager petitioner did not enter into actual sale transactions, but
merely supervised the salesmen under his control, the disputed commissions were not regularly
received by him. Only when the salesmen were able to collect from the sale transactions can
petitioner receive the commissions. Conversely, if no collections were made by the salesmen,
then petitioner would receive no commissions at all. In fine, the commissions which petitioner
received were not part of his salary structure but were profit-sharing payments and had no
clear, direct or necessary relation to the amount of work he actually performed. The collection
made by the salesmen from the sale transactions was the profit of private respondent from
which petitioner had a share in the form of a commission. Hence, petition is denied.
















Garcy Kate D. Go LLB2 EH306 Page 185

Arco Metal Products vs. Samahan ng Manggagawa sa Arco-Metal-NAFLU
G.R. No. 170734; May 14, 2008

Facts: Petitioner is a company engaged in the manufacture of metal products, whereas
respondent is the labor union of 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). The
parties submitted the case for voluntary arbitration.

Issue: Whether or not the prorated payment of the benefits constitute a violation under Art.
100 of the Labor Code.

Ruling: SC ruled in favor of the respondents. The voluntary grant of the benefits has been an
established company practice. It has been a company practice which grants full benefits to its
employees regardless of the length of service rendered.

There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of
vacation and sick leave, one must have rendered at least one year of service. The clear wording
of the provisions does not allow any other interpretation. Anent the 13
th
month pay and bonus,
we agree with the findings of Labor Arbiter Mangabat that the CBA provisions did not give any
meaning different from that given by the law, thus it should be computed at 1/12 of the total
compensation which an employee receives for the whole calendar year. The bonus is also
equivalent to the amount of the 13
th
month pay given, or in proportion to the actual service
rendered by an employee within the year.

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
Davao Fruits 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. Meanwhile in Davao Integrated Port Stevedoring Services v.
Abarquez, the Court ordered the payment of the cash equivalent of the unenjoyed sick leave
benefits to its intermittent workers after finding that said workers had received these benefits
for almost four years until the grant was stopped due to a different interpretation of the CBA
provisions. We held that the employer cannot unilaterally withdraw the existing privilege of
commutation or conversion to cash given to said workers, and as also noted that the employer
had in fact granted and paid said cash equivalent of the unenjoyed portion of the sick leave
benefits to some intermittent workers.

Garcy Kate D. Go LLB2 EH306 Page 186

Universal Robina Sugar Milling Corp., vs Caballeda
[G.R. 156644. July 28, 2008]
Facts: Agripino Caballeda worked as welder for URSUMCO from March 1989 until June 23,
1997 while Alejandro Cadalin worked for URSUMCO as crane operation from 1976 up to June
15, 1997.
John Gokongwei, Jr. President of URSUMCO issued a memorandum establishing the company
policy on Compulsory Retirement. All employees corporate-wide who attain 60 years of age on
or before April 30, 1991 shall be considered retired on May 31, 1991. Subsequently, on
December 9, 1992, Republic Act No. 7641 was enacted into law and it took effect on January 7,
1993, amending Article 287 of the Labor Code.
Agripino and Alejandro having reached the age of 60, were allegedly forced to retire by
URSUMCO. They both accepted their retirement benefits. Later on, Agripino filed a complaint
for illegal dismissal because his compulsory retirement was in violation of the provisions of RA
7641 and, was in effect, a form of illegal dismissal.
Issues:
(1) Whether RA 7641 can be given retroactive effect?
(2) Whether or not Agripino Caballeda and Alejandro Cadalin voluntarily retired
from the service?
Ruling: The issue of retroactivity has long been settled in the case of Enriquez Security Services,
Inc. vs. Cabotaje.
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
wellbeing of workers during their twilight years soon following their life of labor. There
should be little doubt about the fact that the law can apply to labor contracts still existing
at the time the statute has taken effect, and that its benefits can be reckoned not only
from the date of the law's enactment but retroactively to the time said employment
contracts have started.
This doctrine has been repeatedly upheld and clarified in several cases. Pursuant thereto, this
Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive
effect: (1) the claimant for retirement benefits was still in the employ of the employer at the
time the statute took effect; and (2) the claimant had complied with the requirements for
eligibility for such retirement benefits under the statute.
When respondents were compulsorily retired from the service, RA 7641 was already in full
force and effect. The petitioners failed to prove that the respondents did not comply with the
requirements for eligibility under the law for such retirement benefits. In sum, the
aforementioned requisites were adequately satisfied, thus, warranting the retroactive
application of R.A. 7641 in this case.
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.
Garcy Kate D. Go LLB2 EH306 Page 187

In this case, it may be stressed that the CBA does not per se specifically provide for the
compulsory retirement age nor does it provide for an optional retirement plan. It merely
provides that the retirement benefits accorded to an employee shall be in accordance with law.
Thus, we must apply Art. 287 of the Labor Code which provides for two types of retirement: (a)
compulsory and (b) optional. The first takes place at age 65, while the second is primarily
determined by the collective bargaining agreement or other employment contract or
employer's retirement plan. In the absence of any provision on optional retirement in a
collective bargaining agreement, other employment contract, or employer's retirement plan, an
employee may optionally retire upon reaching the age of 60 years or more, but not beyond 65
years, provided he has served at least five years in the establishment concerned. That
prerogative is exclusively lodged in the employee.
Indubitably, the voluntariness of the respondents' retirement is the meat of the instant
controversy. Generally, the law looks with disfavor on quitclaims and releases by employees
who have been inveigled or pressured into signing them by unscrupulous employers seeking to
evade their legal responsibilities and frustrate just claims of employees. They are frowned upon
as contrary to public policy. A quitclaim is ineffective in barring recovery of the full measure of a
worker's rights, and the acceptance of benefits therefrom does not amount to estoppel.
In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if
the employer is able to prove the following requisites: (1) the employee executes a deed of
quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the
consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to
law, public order, public policy, morals or good customs or prejudicial to a third person with a
right recognized by law. In this case, petitioners failed to establish all the foregoing requisites.
To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus,
it is clear from the decisions of the LA, NLRC and CA that petitioners are still liable to pay
Alejandro the differential on his retirement benefits. On the other hand, Agripino was actually
and totally deprived of his retirement benefit. In Becton Dickinson Phils., Inc. v. National Labor
Relations Commission, we held:
There is no nexus between intelligence, or even the position which the employee held in
the company when it concerns the pressure which the employer may exert upon the free
will of the employee who is asked to sign a release and quitclaim. The employee is
confronted with the same dilemma of whether signing a release and quitclaim and accept
what the company offers them, or refusing to sign and walk out without receiving anything,
may do succumb to the same pressure, being very well aware that it is going to take quite a
while before he can recover whatever he is entitled to, because it is only after a protracted
legal battle starting from the labor arbiter level, all the way to this Court, can he receive
anything at all. The Court understands that such a risk of not receiving anything
whatsoever, coupled with the probability of not immediately getting any gainful
employment or means of livelihood in the meantime, constitutes enough pressure upon
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.
Garcy Kate D. Go LLB2 EH306 Page 188

Lourdes Cercado vs Uniprom Inc.
G.R. NO. 188154 October 13, 2010

Fact: Petitioner Lourdes cerdaco was an employee of UNIPROM Inc. for 22 years since
December 15, 1978. When respondent came up with a retirement plan, sometime in 1980 and
then amended in 2001, which provides that any employee with a minimum of 20 years of
service, regardless of age, may be retired at the option of the employer. In December 2000,
UNIPROM implemented a company-wide retirement program, including herein petitioner. She
was offered an early retirement package amounting to P171, 982.90 but Cercado rejected the
offer. UNIPROM exercised its option under the retirement plan and decided to retire petitioner
effective February 15, 2001 so she was no longer given any work assignment after the said
date. This prompted the petitioner to file a complaint for illegal dismissal before the Labor
Arbiter, alleging that UNIPROM did not have abona fide retirement plan, and even if there was,
she didnt consent thereto. Respondent averred that Cercado was automatically covered by the
retirement plan when she agreed to the companys rules and regulations, and that her
retirement was an exercise of management prerogative.

Issues:
1. Whether or not UNIPROM has a bona fide retirement plan
2. Whether or not petitioner was validly retired pursuant thereto

Ruline: Petition is meritorious.

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.
1. Yes, UNIPROM had a bona fide retirement plan. Article 287 of the Labor Code, as
amended by R.A 7641, pegs the age for compulsory retirement at 65 years old, while the
minimum age for optional retirement is set at 60 years. However, an employer is free to
impose a retirement age earlier than the foregoing mandates. This has been upheld in
numerous cases as a valid exercise of management prerogative.
In this case, petitioner was retired by UNIPROM at the age of 47, after having served the
company for 22 years, pursuant to the companys retirement plan, which provides that
employees who have rendered at least 20 years of service can be retired at the option
of the copany. Respondents retirement plan can be expediently stamped with validity
and justified under the all encompassing phrase management prerogative.
2. No, petitioner was not validly retired. Jurisprudence has upheld that it is axiomatic that
a retirement plan giving the employer the option to retire its employees below below
the ages provided by law must be assented to and accepted by the latter, otherwise its
adhesive imposition will amount to a deprivation of property without due process. In
decided cases, the retirement plans were either embodied in the CBA, or established
after consultations and negotiations with the emplyees bargaining representative. The
cnsent of the employees to be retired even before the statutory retirement age of 65
years was thus clear and unequivocal. Acceptance by the employees of an early
retirement age must be explicit, voluntary, free and uncompelled.

WhHEREFORE, petition is granted.

Garcy Kate D. Go LLB2 EH306 Page 189

Radio Mindanao Network, Inc. And Eric S. Canoy, vs. Domingo Z. Ybarola, Jr.
And Alfonso E. Rivera, Jr., [G.R. No. 198662. September 12, 2012.]

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15,
1977 and June 1, 1983, respectively, by Radio Mindanao Network (RMN). They eventually
became account managers, soliciting advertisements and servicing various clients of RMN.
On September 15, 2002, the respondents' services were terminated as a result of RMN's
reorganization/restructuring; they were given their separation pay P631,250.00 for Ybarola,
and P481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim
affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were
later consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with
several money claims, including attorney's fees. They indicated that their monthly salary rates
were P60,000.00 for Ybarola and P40,000.00 for Rivera.

Issue: Whether the amounts the respondents received represented a fair and reasonable
settlement of their claims

Ruling: The petitioners insist that the respondents' commissions were not part of their salaries,
because they failed to present proof that they earned the commission due to actual market
transactions attributable to them. They submit that the commissions are profit-sharing
payments which do not form part of their salaries. We are not convinced. If these commissions
had been really profit-sharing bonuses to the respondents, they should have received the same
amounts, yet, as the NLRC itself noted, Ybarola and Rivera received P372,173.11 and
P586,998.50 commissions, respectively, in 2002. The variance in amounts the respondents
received as commissions supports the CA's finding that the salary structure of the respondents
was such that they only received a minimal amount as guaranteed wage; a greater part of their
income was derived from the commissions they get from soliciting advertisements; these
advertisements are the "products" they sell. As the CA aptly noted, this kind of salary structure
does not detract from the character of the commissions being part of the salary or wage paid to
the employees for services rendered to the company, as the Court held in Philippine
Duplicators, Inc. v. NLRC.

The petitioners' reliance on our ruling in Talam v. National Labor Relations
Commission, regarding the "proper appreciation of quitclaims," as they put it, is misplaced.
While Talam, in the cited case, and Ybarola and Rivera, in this case, are not unlettered
employees, their situations differ in all other respects.

In Talam, the employee received a valuable consideration for his less than two years of service
with the company; he was not shortchanged and no essential unfairness took place. In this
case, as the CA noted, the separation pay the respondents each received was deficient by at
least P400,000.00; thus, they were given only half of the amount they were legally entitled to.
To be sure, a settlement under these terms is not and cannot be a reasonable one, given
especially the respondents' length of service 25 years for Ybarola and 19 years for Rivera.
The CA was correct when it opined that the respondents were in dire straits when they
executed the release/quitclaim affidavits. Without jobs and with families to support, they
dallied in executing the quitclaim instrument, but were eventually forced to sign given their
circumstances.



Garcy Kate D. Go LLB2 EH306 Page 190

Eleazar S. Padillo, Vs. Rural Bank Of Nabunturan, Inc. And Mark S. Oropeza
G.R. No. 199338. January 21, 2013

Facts: On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed by
respondent Rural Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity
problems which arose sometime in 2003, the Bank took out retirement/insurance plans with
Philippine American Life and General Insurance Company (Philam Life) for all its employees in
anticipation of its possible closure and the concomitant severance of its personnel. In this
regard, the Bank procured Philam Plan Certificate of Full Payment No. 88204, Plan Type
02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in favor of Padillo for a benefit
amount of P100,000.00 and which was set to mature on July 11, 2009. .During the latter part of
2007, Padillo suffered a mild stroke due to hypertension which consequently impaired his
ability to effectively pursue his work. On September 10, 2007, he wrote a letter addressed to
respondent Oropeza, the president of the bank, expressing his intention to avail of an early
retirement package. Despite several follow-ups, his request remained unheeded. On October 3,
2007, Padillo was separated from employment due to his poor and failing health as reflected in
a Certification dated December 4, 2007 issued by the Bank. Not having received his claimed
retirement benefits, Padillo filed with the NLRC a complaint for the recovery of unpaid
retirement benefits.

Ruling: The Labor Code provision on termination on the ground of disease under Article 297
does not apply in this case, considering that it was the petitioner and not the Bank who severed
the employment relations. It was Padillo who voluntarily retired and that he was not
terminated by the Bank.

Under article 300 of the labor code, in the absence of any applicable agreement, an employee
must (1) retire when he is at least sixty (60) years of age and (2) serve at least (5) years in the
company to entitle him/her to a retirement benefit of at least one-half (1/2) month salary for
every year of service, with a fraction of at least six (6) months being considered as one whole
year. Notably, these age and tenure requirements are cumulative and non-compliance with one
negates the employee's entitlement to the retirement benefits under Article 300 of the Labor
Code.

In this case, it is undisputed that there exists no retirement plan, collective bargaining
agreement or any other equivalent contract between the parties which set out the terms and
condition for the retirement of employees, with the sole exception of the Philam Life Plan
which premiums had already been paid by the Bank. In the absence of any applicable contract
or any evolved company policy, Padillo should have met the age and tenure requirements set
forth under Article 300 of the Labor Code to be entitled to the retirement benefits provided
therein. Unfortunately, while Padillo was able to comply with the five (5) year tenure
requirement as he served for twenty-nine (29) years he, however, fell short with respect
to the sixty (60) year age requirement given that he was only fifty-five (55) years old when he
retired. Therefore, without prejudice to the proceeds due under the Philam Life Plan,
petitioners' claim for retirement benefits must be denied.








Garcy Kate D. Go LLB2 EH306 Page 191

T/SGP Larkins vs. NLRC
G.R. No. 92432; February 23, 1995

Facts: Petitioner was 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.
On August 10, 1988, 3 AGS terminated the contract for the maintenance and upkeep of the
dormitories with the De Guzman Custodial Services. The employees thereof, including private
respondents, were allowed to continue working for 3 AGS. It was left to the new contractor, the
JAC Maintenance Services owned by Joselito Cunanan, to decide whether it would retain their
services. Joselito Cunanan, however, chose to bring in his own workers. As a result, the workers
of the De Guzman Custodial Services were requested to surrender their base passes to Lt. Col.
Frankhauser or to petitioner.

It is petitioners contention that the questioned resolutions are null and void because
respondent Labor Arbiter did not acquire jurisdiction to entertain and decide the case.
Petitioner alleges that she never received nor was served, any summons or copies of the
original and amended complaints, and therefore the Labor Arbiter had no jurisdiction over her
person under Article XIV of the R.P. ? U.S. Military Bases Agreement.

Issue: WON the Labor Arbiter acquires jurisdiction over the respondent.

Ruling: The Agreement Between the Republic of the Philippines and the United States of
America Concerning Military Bases, otherwise known as the R.P. ? U.S. Military Bases
Agreement, governed the rights, duties, authority, and the exercise thereof by Philippine and
American nationals inside the U.S. military bases in the country.

Article XIV thereof, governing the procedure for service of summons on persons inside U.S.
military bases, provides that:

. . . [N]o process, civil or criminal, shall be served within any base except with the permission of
the commanding officer of such base; but should the commanding officer refuse to grant such
permission he shall forthwith take the necessary steps . . . . to serve such process, as the case
may be, and to provide the attendance of the server of such process before the appropriate
court in the Philippines or procure such server to make the necessary affidavit or declaration to
prove such service as the case may require.

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 servers
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 (Rollo, p. 11).

Respondents do not dispute petitioners claim that no summons was ever issued and served on
her. They contend, however, that they sent notices of the hearings to her (Rollo, pp. 12-13).

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 (cf. Vda. de Macoy v. Court of
Appeals, 206 SCRA 244 [1992]; Filmerco Commercial Co., Inc. v. Intermediate Appellate Court,
149 SCRA 193 [1987]). In the absence of service of summons or a valid waiver thereof, the
Garcy Kate D. Go LLB2 EH306 Page 192

hearings and judgment rendered by the Labor Arbiter are null and void (cf. Vda. de Macoy v.
Court of Appeals, supra.)

Petitioner, in the case at bench, appealed to the NLRC and participated in the oral argument
before the said body. This, however, does not constitute a waiver of the lack of summons and a
voluntary submission of her person to the jurisdiction of the Labor Arbiter. (De los Santos v.
Montera, 221 SCRA 15 [1993]).

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
(United States of America v. Guinto, 182 SCRA 644 [1990]). However, private respondents
named 3 AGS as one of the respondents in their complaint (Rollo, p. 10).

Under the Agreement Between the Government of the Republic of the Philippines and the
Government of the United States of America Relating to the Employment of Philippine
Nationals in the United States Military Bases in the Philippines otherwise known as the Base
Labor Agreement of May 27, 1968, any dispute or disagreement between the United States
Armed Forces and Filipino employees should be settled under grievance or labor relations
procedures established therein (Art. II) or by the arbitration process provided in the
Romualdez-Bosworth Memorandum of Agreement dated September 5, 1985. If no agreement
was reached or if the grievance procedure failed, the dispute was appealable by either party to
a Joint Labor Committee established in Article III of the Base Labor Agreement.

Unquestionably therefore, 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 (Filmerco Commercial
Co. v. Intermediate Appellate Court, supra.; Sy v. Navarro, 81 SCRA 458 [1978]).
The petition for certiorari is GRANTED.

























Garcy Kate D. Go LLB2 EH306 Page 193

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

Facts: On December 14, 1987, RA 6640 took effect mandating a 10-peso increase on the
prevailing daily minimum wage (DMW) resulting to a 95-peso difference in the salaries of rank-
and-file employees (union members) and faculty members (non-union). On July 1, 1989, RA
6727 took effect again increasing the DMW by 25 pesos resulting in a difference of P237.42
between the salaries of the 2 employee groups. In September 1987, petitioners increased the
hiring rate to P188.00 per month. On 12 April 1988, Policy Instruction No. 54 was issued by the
then Secretary of Labor Franklin Drilon providing that the personnel in subject hospitals and
clinics are entitled to a full weekly wage of seven days if they have completed the 40-hour/5-
day workweek in any given workweek.

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 and directed petitioner to pay P17,082,448.56 as salary differentials and P2,000.00
each as exemplary damages. 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' MR 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.

Ruling: The applicable law is Article 223 of the Labor Code, as amended by Republic Act No.
6715, which provides:

"In case of a judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary
award in the judgment appealed from."

We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC 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
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."
Garcy Kate D. Go LLB2 EH306 Page 194

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 respondents is only a little
more than P17 million.

Case remanded to NLRC for continuation of proceedings.



























Garcy Kate D. Go LLB2 EH306 Page 195

PHIL TRANCO SERVICES v. NLRC
G.R. No. 124100, April 1, 1998

Facts: Nieva was employed as a driver by petitioner assigned to the Legaspi City-Pasay City
route. Nieva sideswiped an owner-type jeep and a criminal complaint was filed against him.
Philtranco posted a bail bond for Nieva. After having been suspended for thirty days, he tried to
report to work but was told to wait until his case was settled. The case was finally settled, he
again reported to work but was requested to file a new application as he was no longer
considered an employee of Philtranco, allegedly for being absent without leave from October
19 to November 20, 1989.

Nieva filed a complaint for illegal dismissal and demanded for Thirteenth-Month Pay with the
NLRCs National Capital Region Arbitration Branch in Manila. Philtranco filed a motion to
dismiss on the ground of improper venue, stating that the complaint should have been lodged
with the 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.

Issue: Whether or not NLRCs NCR Arbitration Branch in Manila was the proper venue for the
filing of Nievas complaint for illegal dismissal?

Ruling: Yes, the NLRCs NCR Arbitration Branch was the proper venue for the filing of the
complaint. 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/petitioner's 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. Moreover, Nieva, as a driver of Philtranco, was assigned to the Legazpi
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 employer is regularly assigned
when the cause of action arose." 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 Nieva's workplace by reason of his plying the Legazpi City-Pasay City
route.

Garcy Kate D. Go LLB2 EH306 Page 196

St. Martin Funeral Homes vs. NLRC,
G.R. No. 130866, September 16, 1998

Facts: Respondent Aricayos filed a complaint for illegal dismissal to the labor arbiter. There
being no employer-employee relationship between the two, petition was dismissed for lack of
jurisdiction. Arcayos appealed to NLRC contending errors of the labor arbiter.

Issue: Whether or not the Supreme Court has jurisdiction over NLRC appeals?

Ruling: First established in 1972, decisions of NLRC were declared to be appealable to the
Secretary of labor and, ultimately to the President. But under the present state law, there is no
provision for appeals from NLRC decisions. The court held that there is an underlying power of
the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even
though not right of review is given by statute, that the purpose of jurisdiction review is to keep
the administrative agency within its jurisdiction and protect the substantial rights of the parties;
and that is part of the checks and balances which restricts the separation of powers and
forestalls arbitrary and unjust jurisdictions.

Subsequently under RA 7902, effective March 1995, the mode for judicial review over NLRC
decisions in that of a petition for Certiorari under Rule 65. The same confuses by declaring that
the CA has no appellate jurisdiction over decisions falling within the appellate jurisdiction of SC,
including the NLRC decisions.

Therefore, all references in the amended Section 9 of BP 129 to supposed appeals from NLRC to
SC are interpreted and hereby declared to mean and refer to petitions for certiorari under Rule
65. All such petitions should henceforth be initially filed in the doctrine on the hierarchy of
courts as appropriate forum for the relief desired.

Case remanded to CA.



Garcy Kate D. Go LLB2 EH306 Page 197

Ludo & Luym Corp. vs. Soarnido
G.R. No. 140960, January 20, 2003

Facts: LUDO engaged the arrastre services of Cresencio Lu Arrastre Services (CLAS) for the
loading and unloading of its finished products at the wharf. Accordingly, several arrastre
workers were deployed by CLAS to perform the services needed by LUDO. These arrastre
workers were subsequently hired, on different dates, as regular rank-and-file employees of
LUDO every time the latter needed additional manpower services. Said employees thereafter
joined respondent union, the LUDO Employees Union (LEU), which acted as the exclusive
bargaining agent of the rank-and-file employees. 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 so that they could get
higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for
voluntary arbitration. 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.

The Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator. Petitioner
contends that the appellate court erred when it upheld the award of benefits which were
beyond the terms of submission agreement and 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.

Issue: WON the appellate court gravely erred when it upheld the award of benefits which were
beyond the terms of submission agreement.

Ruling: 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.13 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.












Garcy Kate D. Go LLB2 EH306 Page 198

HANJIN ENGINEERING & CONSTRUCTION v. CA
GR No. 165910

Facts: On October 18, 1991 and August 21, 1992, Hanjin and the Philippine Government,
through the National Irrigation Administration (NIA), executed contracts for the construction of
the Malinao Dam at Pilar, Bohol, with a projected completion period of 1,050 calendar days,
including main canal and lateral projects for 750 days.

From August 1995 to August 1996, Hanjin
contracted the services of 712 carpenters, masons, truck drivers, helpers, laborers, heavy
equipment operators, leadmen, engineers, steelmen, mechanics, electricians and others.

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. Only 521 of the complainants affixed their signatures in the complaints.

Petitioners alleged that the complainants were mere project employees in its Bohol Irrigation
Project.

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, 13
th
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.

Petitioners filed a Motion for the Reconsideration of the decision (with a motion to conduct
clarificatory hearings). 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.

Issue: WON respondents regular employees entitled to their moneys.

Ruling: The CA, for its part, affirmed the findings of the Labor Arbiter and the NLRC, and held
that respondents were regular employees of petitioner Hanjin:

In the instant case, petitioners belatedly submitted copies of Appointment(s) as Contract
Worker(s) allegedly signed by private respondents at the time they commenced work, and
which provided for an employment of six (6) months only, a period applicable for probationary
employment. While it may be allowed that in the instant case the workers were initially hired
for specific projects or undertakings for a period of six (6) months or less, the repeated re-hiring
and the continuing need for their services over a long span of time (from 1991 to 1995) have
undeniably made them regular employees. Thus, we held that where the employment of
project employees is extended long after the supposed appointments has been finished, the
employees are removed from the scope of project employees and considered regular
employees. How can one properly explain private respondents continuous employment from
1991 to 1996 when their appointment was for a measly period of six months? It is clear,
therefore, that as aptly established by the NLRC, these piecemeal appointments have been
imposed to preclude the acquisition of tenurial security. While length of time may not be a
Garcy Kate D. Go LLB2 EH306 Page 199

controlling test for project employment, it can be a strong factor in determining whether the
employee was hired for a specific undertaking or in fact tasked to perform functions which are
vital, necessary and indispensable to the usual business or trade of the employer.

Furthermore, it is noteworthy to emphasize that these appointments were submitted only as
attachments to petitioners motion for reconsideration. As borne out by the records and even
mentioned in the decision of the Labor Arbiter, petitioners were already required during the
initial hearings before the Labor Arbiter to submit additional documents in their possession
necessary to support their case. Instead of complying, petitioners still had to wait for the
adverse decision of the NLRC before they submitted the same. Likewise, in the NLRCs assailed
decision, petitioners failure to present these appointments were adverted to, thus, the NLRC
ruled that nowhere in the records can the said contracts be found. Despite sufficient time,
from the time they were required by the Labor Arbiter to present additional evidence up to the
time the appeal was resolved by the NLRC, petitioners were not able to present said
employment contracts. Petitioners hesitation to submit the same is well-founded. It is a well-
settled rule that when the evidence tends to prove a material fact which imposes a liability on a
party, and he has it in his power to produce evidence which from its very nature must
overthrow the case made against him if it is not founded on fact, and he refuses to produce
such evidence, the presumption arises that the evidence, if produced, would operate to his
prejudice, and support the case of his adversary.

Moreover, it is required under Policy Instruction No. 20, Series of 1993, that in case of project
employees, the termination of their employment in the particular project or undertaking must
be reported to the Department of Labor and Employment (DOLE) Regional Office having
jurisdiction over the workplace within thirty (30) days following the date of his separation from
work. In Ochoco v. National Labor Relations Commission, the failure of the employer to report
to the nearest employment office the termination of employment of workers everytime it
completed a project was considered by this Court as proof that the dismissed employees were
not project employees but regular employees. On this requirement, petitioners were silent,
until the Decision of the NLRC reminded them. To prove that petitioners allegedly complied
with said requirement, they again belatedly submitted machine copies of reports allegedly
made to the DOLE of Bohol. To explain away their failure to produce certified true copies of the
same, petitioners allege that the NLRC should have given evidentiary weight to the machine
copies which are for all legal intents and purposes already public records in the custody of the
DOLE duly recorded in a public office. The same argument can be taken against herein
petitioners in that, for all the time it took them to produce said machine copies, it would have
been more prudent for them to have it certified by the DOLE in Bohol. Under the Rules of
Evidence, and as stated by petitioners, the original document need not be produced when the
same is a public record in the custody of a public office or is recorded in a public office. Thus,
proof of such documents may be made by a duly authenticated copy of the original document
or record. It is essential, furthermore, that the copies be made in the manner provided by the
rules and that all requirements in connection therewith be complied with before such copy be
properly admissible in evidence. Considering that the documents submitted by petitioners are
mere machine copies, the NLRC cannot be compelled to give them evidentiary weight.

The appellate court, the NLRC and the Labor Arbiter are thus one in finding that respondents
were not project employees, and in sustaining respondents claim of illegal dismissal due to
petitioners failure to adduce contrary evidence. Well-settled is the rule that findings of fact of
quasi-judicial agencies, like the NLRC, are accorded not only respect but at times even finality if
such findings are supported by substantial evidence. Such findings of facts can only be set aside
upon showing of grave abuse of discretion, fraud or error of law,none of which have been
shown in this case.


Garcy Kate D. Go LLB2 EH306 Page 200

Phil. Journalistic Inc., vs NLRC G.R. 166421 September 5, 2006

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 complainant-employees effective July 1, 2001 without loss of
seniority rights and benefits; 17 of them who were previously retrenched were agreed to be
given full and complete payment of their respective monetary claims, while 14 others would be
paid their monetary claims minus what they received by way of separation pay.

The compromise agreement was submitted to the NLRC for approval. All the employees
mentioned in the agreement and in the NLRC Resolution affixed their signatures thereon. They
likewise signed the Joint Manifesto and Declaration of Mutual Support and Cooperation which
had also been submitted for the consideration of the labor tribunal. The NLRC forthwith issued
another Resolution on July 25, 2002, which among others declared that the compromise
agreement was approved and NCMB-NCR-NS-03-087-00 was deemed closed and terminated.

In the meantime, however, the Union filed another Notice of Strike on July 1, 2002. In an Order
dated September 16, 2002, the DOLE Secretary certified the case to the Commission for
compulsory arbitration. The case was docketed as NCMB-NCR- NS-07-251-02. In its Resolution
dated July 31, 2003, the NLRC ruled that the complainants were not illegally dismissed. The May
31, 2001 Resolution declaring the retrenchment program illegal did not attain finality as "it had
been academically mooted by the compromise agreement entered into between both parties
on July 9, 2001." The Union assailed the ruling of the NLRC before the CA via petition for
certiorari under Rule 65. In its Decision dated August 17, 2004, the appellate court held that the
NLRC gravely abused its discretion in ruling for PJI. The compromise agreement referred only to
the award given by the NLRC to the complainants in the said case, that is, the obligation of the
employer to the complainants.

Issue: WON the petitioner s petition for certiorari under Rule 65 of the Revised Rules of Civil
Procedure is a proper remedy in this case.

Ruling: At the outset, we note that this case was brought before us via petition for certiorari
under Rule 65 of the Revised Rules of Civil Procedure. The proper remedy, however, was to file
a petition under Rule 45. It must be stressed that certiorari under Rule 65 is "a remedy narrow
in scope and inflexible in character. It is not a general utility tool in the legal workshop."
Moreover, the special civil action for certiorari will lie only when a court has acted without or in
excess of jurisdiction or with grave abuse of discretion.

Be that as it may, a petition for certiorari may be treated as a petition for review under Rule 45.
Such move is in accordance with the liberal spirit pervading the Rules of Court and in the
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.

Garcy Kate D. Go LLB2 EH306 Page 201

Balagtas Multi-purpose Coop. v. CA

Facts: Balagtas Multi-Purpose Cooperative, Inc. is a duly organized and existing cooperative
under the laws of the Philippines. Sometime in April 1991, Balagtas hired Josefina G. Hipolito-
Herrero, as part time manager in its office. Subsequently, Josefina made known of her intention
to take a leave of absence. Her proposal was immediately approved. However, after the lapse
of her leave of absence, Josefina did not report for work anymore. Later on, she filed her
resignation.

Consequently Josefina filed a complaint with the Provincial Office of the Department of Labor in
Malolos, Bulacan for illegal dismissal, and non-payment of 13th month pay or Christmas Bonus.
She also prayed for reinstatement and paid backwages as well as moral damages.

The Labor Arbiter rendered judgment in favor of complainant and against respondents and
ordered the latter to pay the former 13th month pay, backwages and separation pay.
Aggrieved, herein petitioners appealed the decision to NLRC but failed to post either a cash or
surety bond as required by Article 223 of the Labor Code. They filed a manifestation and motion
instead, stating, that under Republic Act No. 6938, Article 62(7) of the Cooperative Code of the
Philippines, petitioners are exempt from putting up a bond in an appeal from the decision of
the inferior court. NLRC ordered respondents to post a cash or surety bond in the amount of
P218,000.00, within 10 inextendible days from receipt of the Order, failure of which shall
constitute a waiver and non-perfection of the appeal. Balagtas appealed to CA, which dismissed
the petition holding that the exemption from putting up a bond by a cooperative applies to
cases decided by inferior courts only.

Issues:
(1) WON cooperatives are exempted from filing a cash or surety bond required to
perfect an employers appeal under Section 223 of Presidential Decree No. 442
(the Labor Code);
(2) WON a certification issued by the Cooperative Development Authority
constitutes substantial compliance with the requirement for the posting of a
bond.

Ruling:
(1) No. Petitioners argue that there are certain benefits and privileges expressly granted to
cooperative under the Cooperative Code. It invoked the provision on Article 62
regarding the exemption from payment of an appeal bond, to wit: (7)All cooperatives
shall be exempt from putting up a bond for bringing an appeal against the decision of an
inferior court or for seeking to set aside any third party claim: Provided, That a
certification of the Authority showing that the net assets of the cooperative are in
excess of the amount of the bond required by the court in similar cases shall be
accepted by the court as a sufficient bond.

However, it is only one among a number of such privileges which appear under the article
entitled Tax and Other Exemptions of the code. The provision cited by petitioners cannot be
taken in isolation and must be interpreted in relation to the Cooperative Code in its entirety.
Exceptions are to be strictly but reasonably construed; they extend only so far as their language
warrants, and all doubts should be resolved in favor of the general provision rather than the
exceptions.

(2) No. Article 119 of the Cooperative Code itself expressly embodies the legislative
intention to extend the coverage of labor statutes to cooperatives. For this reason,
petitioners must comply with the requirement set forth in Article 223 of the Labor Code
in order to perfect their appeal to the NLRC. It must be pointed out that the right to
Garcy Kate D. Go LLB2 EH306 Page 202

appeal is not a constitutional, natural or inherent right. It is a privilege of statutory origin
and, therefore, available only if granted or provided by statute. The law may validly
provide limitations or qualifications thereto or relief to the prevailing party in the event
an appeal is interposed by the losing party.

In this case, the obvious and logical purpose of an appeal bond is to insure, during the period of
appeal, against any occurrence that would defeat or diminish recovery by the employee under
the judgment if the latter is subsequently affirmed.

Therefore, no error can be ascribed to the CA for holding that the phrase inferior courts
appearing in Article 62 paragraph (7) of the Cooperative Code does not extend to quasi-judicial
agencies and that, petitioners are not exempt from posting the appeal bond required under
Article 223 of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 203

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

Facts: On September 16, 1998, the Supreme Court rendered the landmark decision in G.R. No.
130866, holding for the first time that all petitions for certiorari under Rule 65 assailing the
decisions of the NLRC should henceforth be filed with the CA, thus 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 employer-employee
relationship.

Ruling: 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 issue on employment. Without these vital documents,
petitioner cannot be given the relief prayed for.




Garcy Kate D. Go LLB2 EH306 Page 204

DOLE Phils. vs. Esteva, G.R. No. 161115, November 30, 2006

Facts: Petitioner is a corporation duly recognized and existing in accordance with Philippine
laws, engaged principally in the production and processing of pineapple for the export market.
Its plantation is located in Polomolok, South Cotabato .

Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was
organized in accordance with R.A. No. 6938, otherwise known as the Cooperative Code of the
Philippines , and duly registered with the Cooperative Development Authority (CDA) on 6
January 1993. Members of CAMPCO live in communities surrounding petitioners plantation
and are relatives of petitioners employees.

On 17 August 1993, petitioner and CAMPCO entered into a Service Contract. The Service
Contract referred to petitioner as the Company, while CAMPCO was the Contractor. The
said contract was good for six months.

Pursuant to the contract, CAMPCO members rendered services to petitioner. The parties
apparently extended or renewed the same for the succeeding years without executing another
written contract.

However, due to investigations and reliable information, the Regional Director of DOLE
exercised his visitorial and enforcement power and found out that CAMPCO is engaged in labor-
only contracting together with two other cooperatives.

The Law cited was Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor
Code. (pertaining to Labor-only contracting 1. no substantial capital; 2. work is directly
related to the principal business of the principal b. in such case, the one who alleges as
contractor is deemed an agent of the principal while the latter will latter is considered the
indirect employer for purposes of enforcement of the labor rights.)

Before the NLRC, respondents contended that they have been working more than one year too
petitioner. While some of the respondents were still working for petitioner, others were put on
stay home status on varying dates in the years 1994, 1995, and 1996 and were no longer
furnished with work thereafter. They, then, filed a case before the NLRC for illegal dismissal,
regularization, wage differentials, damages and attorneys fees.

Respondents argued that they should be considered regular employees of petitioner given that:
1. they were performing jobs that were usually necessary and desirable in the usual business of
petitioner; 2. petitioner exercised control over respondents, not only as to the results, but also
as to the manner by which they performed their assigned tasks; and 3. CAMPCO, a labor-only
contractor, was merely a conduit of petitioner. As regular employees of petitioner, respondents
asserted that they were entitled to security of tenure and those placed on stay home status
for more than six months had been constructively and illegally dismissed. Respondents further
claimed entitlement to wage differential, moral damages, and attorneys fees.

NLRC affirmed the Labor Arbiters decision. CA also affirmed.

Issues: Whether the lower courts were correct in ruling that Petitioner is the employer of
respondents and that CAMPCO be considered merely as agent of the company

Ruling: In summary, this Court finds that CAMPCO was a labor-only contractor and, thus,
petitioner is the real employer of the respondents, with CAMPCO acting only as the agent or
intermediary of petitioner. Due to the nature of their work and length of their service,
respondents should be considered as regular employees of petitioner. Petitioner constructively
Garcy Kate D. Go LLB2 EH306 Page 205

dismissed a number of the respondents by placing them on "stay home status" for over six
months, and was therefore guilty of illegal dismissal. Petitioner must accord respondents the
status of regular employees, and reinstate the respondents who it constructively and illegally
dismissed, to their previous positions, without loss of seniority rights and other benefits, and
pay these respondents backwages from the date of filing of the Complaint with the NLRC on 19
December 1996 up to actual reinstatement.

CRITERIA TO ESTABLISH THE EXISTENCE OF AN INDEPENDENT AND PERMISSIBLE CONTRACTOR
RELATIONSHIP

generally established by the following criteria: whether or not the contractor is carrying on an
independent business; the nature and extent of the work; the skill required; the term and
duration of the relationship; the right to assign the performance of a specified piece of work;
the control and supervision of the work to another; the employer's power with respect to the
hiring, firing and payment of the contractor's workers; the control of the premises; the duty to
supply the premises tools, appliances, materials and labor; and the mode, manner and terms of
payment

SEVERAL FACTORS ARE PRESENT IN THE CASE TO ESTABLISH A LABOR- ONLY CONTRACTING
ARRANGEMENT BY BETWEEN THE MANAGEMENT AND CAMPCO

While there is present in the relationship of petitioner and CAMPCO some factors suggestive of
an independent contractor relationship (i.e., CAMPCO chose who among its members should be
sent to work for petitioner; petitioner paid CAMPCO the wages of the members, plus a
percentage thereof as administrative charge; CAMPCO paid the wages of the members who
rendered service to petitioner), many other factors are present which would indicate a labor-
only contracting arrangement between petitioner and CAMPCO.

First, although petitioner touts the multi-million pesos assets of CAMPCO, it does well to
remember that such were amassed in the years following its establishment. In 1993, when
CAMPCO was established and the Service Contract between petitioner and CAMPCO was
entered into, CAMPCO only had P6,600.00 paid-up capital, which could hardly be considered
substantial. It only managed to increase its capitalization and assets in the succeeding years by
continually and defiantly engaging in what had been declared by authorized DOLE officials as
labor-only contracting.

Second, CAMPCO did not carry out an independent business from petitioner. It was precisely
established to render services to petitioner to augment its workforce during peak seasons.
Petitioner was its only client. Even as CAMPCO had its own office and office equipment, these
were mainly used for administrative purposes; the tools, machineries, and equipment actually
used by CAMPCO members when rendering services to the petitioner belonged to the latter.

Third, petitioner exercised control over the CAMPCO members, including respondents.
Petitioner attempts to refute control by alleging the presence of a CAMPCO supervisor in the
work premises. Yet, the mere presence within the premises of a supervisor from the
cooperative did not necessarily mean that CAMPCO had control over its members. Section 8(1),
Rule VIII, Book III of the implementing rules of the Labor Code, as amended, required for
permissible job contracting that the contractor undertakes the contract work on his account,
under his own responsibility, according to his own manner and method, free from the control
and direction of his employer or principal in all matters connected with the performance of the
work except as to the results thereof. As alleged by the respondents, and unrebutted by
petitioner, CAMPCO members, before working for the petitioner, had to undergo instructions
and pass the training provided by petitioners personnel. It was petitioner who determined and
prepared the work assignments of the CAMPCO members. CAMPCO members worked within
Garcy Kate D. Go LLB2 EH306 Page 206

petitioners plantation and processing plants alongside regular employees performing identical
jobs, a circumstance recognized as an indicium of a labor-only contractorship.

Fourth, CAMPCO was not engaged to perform a specific and special job or service. In the
Service Contract of 1993, CAMPCO agreed to assist petitioner in its daily operations, and
perform odd jobs as may be assigned. CAMPCO complied with this venture by assigning
members to petitioner. Apart from that, no other particular job, work or service was required
from CAMPCO, and it is apparent, with such an arrangement, that CAMPCO merely acted as a
recruitment agency for petitioner. Since the undertaking of CAMPCO did not involve the
performance of a specific job, but rather the supply of manpower only, CAMPCO clearly
conducted itself as a labor-only contractor.

Lastly, CAMPCO members, including respondents, performed activities directly related to the
principal business of petitioner. They worked as can processing attendant, feeder of canned
pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail
processing attendant, and etc., functions which were, not only directly related, but were very
vital to petitioners business of production and processing of pineapple products for export.

The findings enumerated in the preceding paragraphs only support what DOLE Regional
Director Parel and DOLE Undersecretary Trajano had long before conclusively established, that
CAMPCO was a mere labor-only contractor

EMPLOYER- EMPLOYEE RELATIONSHIP EXIST BETWEEN THE PETITIONER AND THE RESPONDENT
WITH THE DECLARATION THAT CAMPCO WAS ENGAGED IN THE PROHIBITED ACTS OF LABOR-
ONLY CONTRACTING

The declaration that CAMPCO is indeed engaged in the prohibited activities of labor-only
contracting, then consequently, an employer-employee relationship is deemed to exist
between petitioner and respondents, since CAMPCO shall be considered as a mere agent or
intermediary of petitioner

RESPONDENTS ARE CONSIDERED REGULAR EMPLOYEES FOR THEY PERFORMED ACTIVITIES
THAT ARE NECESSARY OR DESIRABLE TO THE USUAL BUSINESS OF THE PETITIONER

Since respondents are now recognized as employees of petitioner, this Court is tasked to
determine the nature of their employment. In consideration of all the attendant circumstances
in this case, this Court concludes that respondents are regular employees of petitioner.

In the instant Petition, petitioner is engaged in the manufacture and production of pineapple
products for export. Respondents rendered services as processing attendant, feeder of canned
pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail
processing attendant, and etc., functions they performed alongside regular employees of the
petitioner. There is no doubt that the activities performed by respondents are necessary or
desirable to the usual business of petitioner.

Petitioner likewise want this Court to believe that respondents employment was dependent on
the peaks in operation, work backlogs, absenteeism, and excessive leaves. However, bearing in
mind that respondents all claimed to have worked for petitioner for over a year, a claim which
petitioner failed to rebut, then respondents continued employment clearly demonstrates the
continuing necessity and indispensability of respondents employment to the business of
petitioner.

Garcy Kate D. Go LLB2 EH306 Page 207

THE COMPANYS ACT OF PLACING SOME OF THE RESPONDENTS ON "STAY HOME STATUS" AND
NOT GIVING THEM WORK ASSIGNMENTS FOR MORE THAN SIX MONTHS WERE ALREADY
TANTAMOUNT TO CONSTRUCTIVE AND ILLEGAL DISMISSAL

Respondents, as regular employees of petitioner, are entitled to security of tenure. They could
only be removed based on just and authorized causes as provided for in the Labor Code, as
amended, and after they are accorded procedural due process. Therefore, petitioners acts of
placing some of the respondents on "stay home status" and not giving them work assignments
for more than six months were already tantamount to constructive and illegal dismissal

Garcy Kate D. Go LLB2 EH306 Page 208

Intercontinental Broadcasting Corp. vs. Panganiban
G.R. No. 151407, Februarry 6, 2007

Facts: Ireneo Panganiban (respondent) 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 a civil case with the RTC of Quezon City, Branch 93 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 respondents claim was a labor money
claim, but this was denied by the RTC. Thus, Santiago filed a petition for certiorari with the CA
which granted Santiagos petition for lack of jurisdiction and set aside the RTCs Orders.

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. The
Labor Arbiter (LA) ordered respondents reinstatement with full backwages, and the payment
of his unpaid commission, damages and attorneys fees. Petitioner appealed to the NLRC but
due to petitioners failure to post a bond, the appeal was dismissed. The decision was deemed
final and executory.

Issue: WON respondents claim for unpaid commissions has already prescribed.

Ruling: Yes. Respondents claim had already prescribed as of September 1991. In addition, the
claims of private respondent for reinstatement, backwages and benefits in conjunction with his
employment from 1986 to 1988 have prescribed.

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
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 could have interrupted the running of the
three-year prescriptive period, its consequent dismissal by the CA 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 respondents 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.



Garcy Kate D. Go LLB2 EH306 Page 209

Far East Agricultural Supply, Inc. Vs. Jimmy Lebatique And The Honorable Court Of Appeals
G.R. No. 162813 February 12, 2007

Facts: On March 4, 1996, Far East hired Jimmy Lebatique as truck driver to animal feeds to the
companys clients. He had a daily wage of P223.50. On January 24, 2000, Lebatique complained
of nonpayment of overtime work particularly on January 22, 2000, when he was required to
make a second delivery in Novaliches, Quezon City. That same day Lebatique was suspended
apparently for illegal use of company vehicle. Even so, Lebatique reported for work the next
day but he was prohibited from entering the company premises.

On January 26, 2000, Lebatique sought the assistance of DOLE Public Assistance and Complaints
Unit concerning the nonpayment of his overtime pay. Lebatique explained that he had never
been paid for overtime work since he started working for the company. He also told Alexander
(general manager) that Manuel (Alexanders brother) had fired him. After talking to Manuel,
Alexander terminated Lebatique and told him to look for another job.

On March 20, 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.

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit.
The NLRC held that there was no dismissal to speak of since Lebatique was merely suspended.
Further, it found that Lebatique was a field personnel, hence, not entitled to overtime pay and
service incentive leave pay. Lebatique sought reconsideration but was denied.

The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was suspended
on January 24, 2000 but was illegally dismissed on January 29, 2000 when Alexander told him to
look for another job. It also found that Lebatique was not a field personnel and therefore
entitled to payment of overtime pay, service incentive leave pay, and 13th month pay.

Issues
1) WON Lebatique was illegally dismissed
2) WON Lebatique was a field personnel, not entitled to overtime pay

Ruling:
1) YES. It is well settled that in cases of illegal dismissal, the burden is on the employer to
prove that the termination was for a valid cause. In this case, petitioners failed to discharge
such burden. Petitioners aver that Lebatique was merely suspended for one day but he
abandoned his work thereafter. To constitute abandonment as a just cause for dismissal,
there must be: (a) absence without justifiable reason; and (b) a clear intention, as
manifested by some overt act, to sever the employer-employee relationship.

When Lebatique was verbally told by Alexander Uy, the companys General Manager, to
look for another job, Lebatique was in effect dismissed. Even assuming earlier he was
merely suspended for illegal use of company vehicle, the records do not show that he was
afforded the opportunity to explain his side. It is clear also from the sequence of the events
leading to Lebatiques dismissal that it was Lebatiques complaint for nonpayment of his
overtime pay that provoked the management to dismiss him, on the erroneous premise
that a truck driver is a field personnel not entitled to overtime pay.

2) NO. Lebatique is not a field personnel. Article 82 of the Labor Code is decisive on the
question of who are referred to by the term "field personnel

Garcy Kate D. Go LLB2 EH306 Page 210

"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.

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 employees
performance is unsupervised by the employer.

Lebatique is not a field personnel as defined above for the following reasons: (1) company
drivers, including Lebatique, are directed to deliver the goods at a specified time and place;
(2) they are not given the discretion to solicit, select and contact prospective clients; and (3)
Far East issued a directive that company drivers should stay at the clients premises during
truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m. Lebatique, therefore,
is a regular employee whose tasks are usually necessary and desirable to the usual trade
and business of the company. Thus, he is entitled to the benefits accorded to regular
employees of Far East, including overtime pay and service incentive leave pay.

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 managements control to
determine the correct overtime pay due Lebatique.


Garcy Kate D. Go LLB2 EH306 Page 211

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.

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.

Ruling: 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.


Garcy Kate D. Go LLB2 EH306 Page 212

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.

On 13 September 2004, the Labor Arbiter rendered judgment in favor of respondents.
Petitioners appealed to the National Labor Relations Commission (NLRC). In a Resolution dated
19 May 2006, the NLRC dismissed petitioners' appeal for non-perfection since it failed to post
the required bond. Without filing a Motion for Reconsideration of the afore-quoted NLRC
Resolution, petitioners filed a Petition for Certiorari with the Court of Appeals assailing the
same. On 24 August 2006, the Court of Appeals issued a Resolution dismissing the Petition.

Issue: WON petitioner can directly file the extraordinary remedy of certiorari without filing first
a motion for reconsideration with the NLRC.

Ruling: Petitioners' failure to file a motion for reconsideration against the assailed Resolution of
the NLRC rendered its petition for certiorari before the appellate court as fatally defective.

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
Garcy Kate D. Go LLB2 EH306 Page 213

exhaustively passed upon by the lower court. As the Court of Appeals reasoned, the issue
before the NLRC is both factual and legal at the same time, involving as it does the
requirements of the property bond for the perfection of the appeal, as well as the finding that
petitioners failed to perfect the same. Evidently, the burden is on petitioners seeking exception
to the rule to show sufficient justification for dispensing with the requirement.

Certiorari cannot be resorted to as a shield from the adverse consequences of petitioners' own
omission of the filing of the required motion for reconsideration.

Nonetheless, even if we are to disregard the petitioners' procedural faux pas with the Court of
Appeals, and proceed to review the propriety of the 19 May 2006 NLRC Resolution, we still
arrive at the conclusion that the NLRC did not err in denying petitioners' appeal for its failure to
file a bond in accordance with the Rules of Procedure of the NLRC.





Garcy Kate D. Go LLB2 EH306 Page 214

J.K. Mercado & Sons Agricultural Enterprises, Inc., vs. Sto. Tomas,
G.R. No. 158084, August 29, 2008

Facts: On December 3, 1993, the RTWPB of Region IX issued Wage Order No. 3 granting a Cost
of Living Allowance to covered workers. J.K. Mercado & Sons Agricultural Enterprises, Inc.,
petitioner, filed for an exemption from the coverage of such order. Said application was denied
by the regional wage board for lack of merit.

Despite denial of such application, private respondents were still not given benefits due them
from said wage order. Private respondents filed a Writ of Execution and Writ of Garnishment
seeking for its enforcement. Petitioner filed a motion to Quash the Writ of Execution arguing
that the rights of the respondents already prescribed as per stated in Article 291 of the Labor
Code regarding any issue concerning a wage order.

Ruling of the Regional Director: The Motion to Quash was denied and held that unpaid benefits
have not prescribed and that the private respondents need not file a claim to be entitled
thereto. Petitioner filed a Notice of Appeal alleging that the Regional Director abused his
discretion in issuing the writ of execution in the absence of any motion filed by private
respondents. Appeal was then denied which prompted the petiotioner to file a Motion for
Reconsideration. Ruling of the Court of Appeals: The Motion for Reconsideration was also
denied due to lack of merit. Hence, present petition.

Issues:
1. Whether or not the Honorable Court of Appeals committed an error in holding
that Article 291 of the Labor Code is not applicable to recovery of benefits under
the subject Wage Order No. RTWPB-XI-03, which entitled respondents to a cost
of living allowance (COLA).
2. Whether or not the Court of Appeals committed an error in holding that the
cost of living allowance (COLA) granted by Wage Order No. RTWPB-XI-03 can be
enforced without the appropriate case having been filed by herein private
respondents within the three (3) year prescriptive period.
3. Whether or not the claim of the private respondents for cost of living allowance
(COLA) pursuant to Wage Order No. RTWPB-XI-03 has already prescribed
because of the failure of the respondents to make the appropriate claim within
the three (3) year prescriptive period provided by Article 291 of the Labor Code,
as amended.

Ruling: The Court sees no error on the part of the Court of Appeals. Art. 291 of the
Labor Code applies to money claims in general and provides for a 3-year prescriptive
period to file them.

On the other hand, respondent employees money claims in this case had been reduced to a
judgment, in the form of a Wage Order, which has become final and executory. The
prescription applicable, therefore, is not the general one that applies to money claims, but the
specific one applying to judgments. Thus, the right to enforce the judgment, having been
exercised within five years, has not yet prescribed.

Stated otherwise, a claimant has three years to press a money claim. Once judgment is
rendered in her favor, she has five years to ask for execution of the judgment, counted from its
finality. This is consistent with the rule on statutory construction that a general provision
should yield to a specific one and with the mandate of social justice that doubts should be
resolved in favor of labor.

WHEREFORE, the petition is DENIED.
Garcy Kate D. Go LLB2 EH306 Page 215

J. Phil. Marine Inc. vs. NLRC
G.R. No. 168339, October 10, 2008

Facts: The herein respondent, was a cook aboard vessels plying overseas, filed before the
National Labor Relations Commission (NLRC) a pro-forma complaint against petitioners for
unpaid money claims, moral and exemplary damages, and attorneys fees and thereafter filed
two amended pro forma complaints praying for the award of overtime pay, vacation leave pay,
sick leave pay, and disability/medical benefits, he having, by his claim, contracted enlargement
of the heart and severe thyroid enlargement in the discharge of his duties as cook which
rendered him disabled.

Labor Arbiter Fe Superiaso-Cellan dismissed respondents complaint for lack of merit but the
NLRC reversed the Labor Arbiters decision and awarded US$50,000.00 disability benefit to
respondent. The Court of Appeals dismissed petitioners petition for, inter alia, failure to attach
to the petition all material documents, and for defective verification and certification.
Petitioners Motion for Reconsideration of the appellate courts Resolution was denied; hence,
they filed the present Petition for Review on Certiorari.

During the pendency of the case, against the advice of his counsel, entered into a compromise
agreement with petitioners, he thereupon signed a Quitclaim and Release subscribed and
sworn to before the Labor Arbiter. Petitioners filed before this Court a Manifestation dated
May 7, 2007 informing that, inter alia, they and respondent had forged an amicable settlement.

Respondents counsel also filed before this Court, purportedly on behalf of respondent, a
Comment on the present petition. The parties having forged a compromise agreement as
respondent in fact has executed a Quitclaim and Release, the Court dismisses the petition.

Issue: WON the compromise agreement/deed of quit claim entered by the parties is valid?

Ruling: Article 227 of the Labor Code provides:

Any compromise settlement, including those involving labor standard laws, voluntarily agreed
upon by the parties with the assistance of the Department of Labor, shall be final and binding
upon the parties. The National Labor Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of non-compliance thereof or if there is
prima facie evidence that the settlement was obtained through fraud, misrepresentation, or
coercion.

In Olaybar v. NLRC , the Court, recognizing the conclusiveness of compromise settlements as a
means to end labor disputes, held that Article 2037 of the Civil Code, which provides that *a+
compromise has upon the parties the effect and authority of res judicata, applies suppletorily
to labor cases even if the compromise is not judicially approved.

That respondent was not assisted by his counsel when he entered into the compromise does
not render it null and void. Eurotech Hair Systems, Inc. v. Go so enlightens:
A compromise agreement is valid as long as the consideration is reasonable and the employee
signed the waiver voluntarily, with a full understanding of what he was entering into. All that is
required for the compromise to be deemed voluntarily entered into is personal and specific
individual consent. Thus, contrary to respondents contention, the employees counsel need
not be present at the time of the signing of the compromise agreement.
It bears noting that, as reflected earlier, the Quitclaim and Waiver was subscribed and sworn to
before the Labor Arbiter.
Petition DISMISSED

Garcy Kate D. Go LLB2 EH306 Page 216

Sy vs. ALC Industries, G.R. No. 168339, October 10, 2008

Facts: Ma. Gregorietta Leila C. Sy (Sy) was hired by ALC Industries, Inc.(ALCII) as a supervisor in
its purchasing office. She was thereafter assigned to ALCII's construction project in Davao City
as business manager and supervisor of the Administrative Division from May 1997 to April 15,
1999. Sy filed a complaint before the labor arbiter alleging that ALCII refused to pay her salary
beginning August 1998 and allowances beginning June 1998. Despite several notices and
warnings, ALCII did not file a position paper to controvert Sy's claims.

The labor arbiter ordered ALCII and/or Dexter Ceriales to pay petitioner P282,560 representing
her unpaid salary and allowance. ALCII filed an appeal with the NLRC without posting any cash
or surety bond. NLRC dismissed respondents' appeal. Thereafter ALCII filed a motion for
reconsideration which was also denied by NLRC. ALCII questioned the NLRC's denial of their
motion for clarification and reconsideration in the CA via a petition for certiorari. The CA set
aside the resolutions of the NLRC and the decision of the labor arbiter. Sy filed a Rule 45
petition in the Supreme Court questioning the CA decision and resolution on the ground that
the decision of the labor arbiter had become final and executory.

Issues: (1) Can the employer file an appeal with the NLRC without posting a cash bond? (2) Did
the CA acquire jurisdiction over the labor case?

Rulings: (1) Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final
and executory unless appealed to the Commission by any or both parties within ten calendar
days from receipt of such decisions, awards, or orders In case of a judgment involving a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly accredited by the Commission in
the amount equivalent to the monetary award in the judgment appealed from.
As the right to appeal is merely a statutory privilege, it must be exercised only in the manner
and in accordance with the provisions of the law. Otherwise, the right to appeal is lost.

Liberal construction of the NLRC rules is allowed only in meritorious cases, where there is
substantial compliance with the NLRC Rules of Procedure or where the party involved
demonstrates a willingness to abide by the rules by posting a partial bond. Failure to post an
appeal bond during the reglementary period was directly violative of Article 223 of the Labor
Code.

The payment of the appeal bond is a jurisdictional requisite for the perfection of an appeal to
the NLRC. The lawmakers intended to make the posting of a cash or surety bond by the
employer the exclusive means by which an employer's appeal may be perfected. It is intended
to assure the workers that if they prevail in the case, they will receive the money judgment in
their favor upon the dismissal of the employers' appeal. It was intended to discourage
employers from using an appeal to delay, or even evade, their obligation to satisfy their
employee's just and lawful claims.

(2) The filing of a joint undertaking/declaration, filed way beyond the ten-day reglementary
period for perfecting an appeal and as a substitute for the cash or surety bond, did not operate
to validate the lost appeal. The decision of the labor arbiter therefore became final and
executory for failure of respondents to perfect their appeal within the reglementary period.
Clearly, the CA no longer had jurisdiction to entertain respondents' appeal from the labor
arbiter's decision.

Garcy Kate D. Go LLB2 EH306 Page 217

PCI Travel Corp vs NLRC
GR no. 154379

Facts: Sometime in 1994, respondent PCI Travel Employees Union filed a Complaint for unfair
labor practice against petitioner PCI Travel Corporation. It claimed that petitioner had been
filling up positions left by regular rank-and-file with contractual employees, but were
performing work which were usually necessary and desirable in the usual business or trade of
the petitioner. Respondent prayed that the Labor Arbiter order the petitioner to pay the
contractual employees the differentials between the wages/benefits of regular employees
and the actual wages/benefits paid to them from the first day of their employment, plus moral
and exemplary damages, and attorneys fees of not less than P300,000.00 per employee.

Petitioner manifested that while it was ready and willing to prove that said employees were
provided by independent legitimate contractors and that it was not engaged in labor-only
contracting in a position paper yet to be submitted, petitioner prayed that the Labor Arbiter
first resolve the issues raised in their motion to dismiss.

Labor Arbiter rendered a decision on the merits dated October 16, 1998, in favor of the
respondent.

Appeal, the NLRC affirmed with modification the decision of the Labor Arbiter deleting the
awards of damages for lack of sufficient basis.

Appeal, the CA issued the assailed Resolution dismissing the petition outright for petitioners
failure to attach copies of pleadings and documents relevant and pertinent to the
petition. More importantly, the verification and certification of non-forum shopping was signed
by Elizabeth Legarda, President of the petitioner-corporation, without submitting any proof
that she was duly authorized to sign for, and bind the petitioner-corporation in these
proceedings.

Issue: Whether or not the president of the PCI Travel was not an authorized representative of
the petitioner to sign the verification and certification against forum shopping, without need of
a board resolution.

Ruling: It must be borne in mind that Sec. 23, in relation to Sec. 25, of the Corporation Code,
clearly enunciates that all corporate powers are exercised, all business conducted, and all
properties controlled by the board of directors. A corporation has a separate and distinct
personality from its directors and officers and can only exercise its corporate powers through
the board of directors. Thus, it is clear that an individual corporate officer cannot solely
exercise any corporate power pertaining to the corporation without authority from the board
of directors. This has been our constant holding in cases instituted by a corporation.

In a slew of cases, however, we have recognized the authority of some corporate officers to
sign the verification and certification against forum shopping. The SC has held that the following
officials or employees of the company can sign the verification and certification without need of
a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a
corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and
(5) an Employment Specialist in a labor case.

With this issue settled, that the President of the corporation can sign the verification and
certification without need of a board resolution, there thus exists a compelling reason for the
reinstatement of the petition before the Court of Appeals.


Garcy Kate D. Go LLB2 EH306 Page 218


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

Facts: Claiming that it is a registered independent labor organization and the incumbent
collective bargaining agent of Quezon City Sports Club (QCSC), the Kasapiang Manggagawa sa
Quezon City Sports Club (union) filed a complaint for unfair labor practice against QCSC on 12
November 1997.

The Union averred that it was ordered to submit a new information sheet. It immediately
wrote a letter addressed to the general manager, Angel Sadang, to inquire about the
information sheet, only to be insulted by the latter. The members of the union were not paid
their salaries on 30 June 1997. A board member, Antonio Chua allegedly harassed one of the
employees and told him not to join the strike and even promised a promotion. On 4 July 1997,
the union wrote a letter to the management for the release of the members salaries for the
period 16-30 June 1997, implementation of Wage Order No. 5, and granting of wage increases
mandated by the Collective Bargaining Agreement (CBA). When its letter went unanswered,
the union filed a notice of strike on 10 July 1997 for violation of Article 248 (a)(c)(e) of the Labor
Code, nonpayment of overtime pay, refusal to hear its grievances, and malicious refusal to
comply with the economic provisions of the CBA. After conducting a strike vote, it staged a
strike on 12 August 1997. On 16 August 1997, the QCSC placed some of its employees under
temporary lay-off status due to redundancy. It appears that on 22 December 1997, QCSC also
filed a petition for cancellation of registration against the union.

The Labor Arbiter (Lustria) found QCSC guilty of unfair labor practice. QCSC appealed from the
labor arbiters decision. It also filed a motion for reduction of the appeal bond to
P4,000,000.00. The NLRC ordered the posting of an additional P6,000,000.00) .QCSC filed a
supplement to its appeal, citing a decision (Dinopol decision) dated 9 October 1998 of Labor
Arbiter Ernesto Dinopol declaring the strike of the union illegal. The dispositive portion reads:

WHEREFORE, in view of the Unions having violated the no-strike-no-lockout
provision of the Collective Bargaining Agreement, the strike it staged on August
12, 1998 is hereby declared illegal and consequently, pursuant to Article 264 of
the Labor Code, the individual respondents, namely: RONILO C. LEE, EDUARDO V.
SANTIA, CECILLE C. PANGAN, ROMEO M. MORGA, GENARO C. BANDO AND ALEX
J. SANTIAGO, who admitted in paragraph 1 of their position paper that they are
officers/members of the complaining Union are hereby declared to have lost their
employment status.

Meanwhile, the National Labor Relations Commission (NLRC) rendered a decision granting the
appeal and reversing the Lustria decision. It ratiocinated:

Be that as it may, We are of the view that the Decision in NLRC CASE NO. 00-09-
0663-97 must perforce prevail over the appealed Decision and the latter to yield to
it. It must remain undisturbed following the established doctrine on primacy and
finality of decision. It bears stressing at this juncture, at the risk of being
repetitious, that in NLRC Case No. 00-09-0663-97 the employment status of herein
individual complainants was already declared lost or forfeited as of August 12,
1998, the day the illegal strike was staged. From then on, they ceased to be
employees of respondent Sports Club. The forfeiture of their employment status
carries with it the extinction of their right to demand for and be entitled to the
economic benefits accorded them by law and the existing CBA. For, such right is
premised on the fact of employment.
Garcy Kate D. Go LLB2 EH306 Page 219

The other complainants (petitioners) meanwhile filed a motion for reconsideration which was
denied by the NLRC. They filed a petition for certiorari under Rule 65 before the Court of
Appeals but was denied.

Issues:
1. Do the simultaneous filing of the motion to reduce the appeal bond and posting of the
reduced amount of bond within the reglementary period for appeal constitute substantial
compliance with Article 223 of the Labor Code?
2. Whether the NLRC erred in declaring them to have lost their employment contrary to the
Dinopol decision which only affected a few of the employees who were union members.

Ruling:
First issue:
Under the Rules, appeals involving monetary awards are perfected only upon compliance with
the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the
memorandum of appeal; and (3) payment of the required cash or surety bond.

Thus, the posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decision of the labor arbiter. The filing of the bond is not only
mandatory but also a jurisdictional requirement that must be complied with in order to confer
jurisdiction upon the NLRC. Non-compliance with the requirement renders the decision of the
labor arbiter final and executory. This requirement is intended to assure the workers that if
they prevail in the case, they will receive the money judgment in their favor upon the dismissal
of the employers appeal. It is intended to discourage employers from using an appeal to delay
or evade their obligation to satisfy their employees just and lawful claims.

However, Section 6 of the New Rules of Procedure of the NLRC also mandates, among others,
that no motion to reduce bond shall be entertained except on meritorious grounds and upon
the posting of a bond in a reasonable amount in relation to the monetary award. Hence, the
NLRC has the full discretion to grant or deny the motion to reduce the amount of the appeal
bond.

In the case of Nicol v. Footjoy Industrial Corporation ruled that the bond requirement on
appeals involving monetary awards had been and could be relaxed in meritorious cases such as:
(1) there was substantial compliance with the Rules; (2) the surrounding facts and
circumstances constitute meritorious grounds to reduce the bond; (3) a liberal interpretation of
the requirement of an appeal bond would serve the desired objective of resolving controversies
on the merits; or (4) the appellants, at the very least, exhibited their willingness and/or good
faith by posting a partial bond during the reglementary period. Applying these jurisprudential
guidelines, we find and hold that the NLRC did not err in reducing the amount of the appeal
bond and considering the appeal as having been filed within the reglementary period.

The posting of the amount of P4,000,000.00 simultaneously with the filing of the motion to
reduce the bond to that amount, as well as the filing of the memorandum of appeal, all within
the reglementary period, altogether constitute substantial compliance with the Rules.

Second issue:
We rule in favor of petitioners.

The assailed Dinopol decision involves a complaint for illegal strike filed by QCSC on the ground
of a no-strike no lockout provision in the CBA. The challenged decision was rendered in
accordance with law and is supported by factual evidence on record. In the notice of strike, the
union did not state in particular the acts which allegedly constitute unfair labor practice.
Moreover, by virtue of the no-strike no lockout provision in the CBA, the union was
Garcy Kate D. Go LLB2 EH306 Page 220

prohibited from staging an economic strike, i.e., to force wage or other concessions from the
employer which he is not required by law to grant. However, it should be noted that while the
strike declared by the union was held illegal, only the union officers were declared as having
lost their employment status. In effect, there was a ruling only with respect to some union
members while the status of all others had remained disputed.

There is no conflict between the Dinopol and the Lustria decisions. While both rulings involve
the same parties and same issues, there is a distinction between the remedies sought by the
parties in these two cases. In the Dinopol decision, it was QCSC which filed a petition to declare
the illegality of the 12 August 1997 strike by the union. The consequence of the declaration of
an illegal strike is termination from employment, which the Labor Arbiter did so rule in said
case. However, not all union members were terminated. In fact, only a few union officers were
validly dismissed in accordance with Article 264 of the Labor Code. Corollarily, the other union
members who had merely participated in the strike but had not committed any illegal acts were
not dismissed from employment. Hence, the NLRC erred in declaring the employment status of
all employees as having been lost or forfeited by virtue of the Dinopol decision.

On the other hand, the Lustria decision involved the unfair labor practices alleged by the union
with particularity. In said case, Labor Arbiter Lustria sided with the Union and found QCSC guilty
of such practices. As a consequence, the affected employees were granted backwages and
separation pay. The grant of backwages and separation pay however was not premised on the
declaration of the illegality of the strike but on the finding that these affected employees were
constructively dismissed from work, as evidenced by the layoffs effected by the company.

Therefore, with respect to petitioners and union officers Alex J. Santiago, Ma. Cecilia Pangan,
Ronilo E. Lee, and Genaro Bando, who apparently had been substituted by present petitioner
Teresita Bando, the Dinopol decision declaring them as having lost their employment status still
stands.

To recapitulate, the NLRC erred in setting aside the Lustria decision, as well as in deleting the
award of backwages and separation pay, despite the finding that the affected employees had
been constructively dismissed.

Based on the foregoing, the Lustria decision should be upheld and therefore reinstated
except as regards the four petitioners.


Garcy Kate D. Go LLB2 EH306 Page 221

Lockheed Detective and Watchman Agency, Inc. vs. University Of The Philippines
G.R. No. 185918, April 18, 2012

Facts: The petition is for review on certiorari under Rule 45. Petitioner Lockheed entered into a
contract of security with the University of the Philippines. On 1998, several of the guards
assigned to UP filed a complaint for unpaid wages, 25% overtime pay, premium pay for rest
days and special holidays, holiday pay, service incentive leave pay, night shift differentials, 13th
month pay, refund of cash bond, refund of deductions for the Mutual Benefits Aids System
(MBAS), unpaid wages from December 16-31, 1998, and attorney's fees.

The Labor Arbiter declared UP solidarily liable. The decision was appealed but sustained by the
NLCR, albeit a few modifications. The parties motion to reconsider were likewise denied. On
July 25, 2005, a Notice of Garnishment 10 was issued to Philippine National Bank (PNB) UP
Diliman Branch for the satisfaction of the award of P12,142,522.69 (inclusive of execution fee).
On August 16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP contended that the
funds being subjected to garnishment at PNB are government/public funds. However, the
execution of the garnishment was carried out. UP elevated their case to the court of appeals.
On reconsideration, however, the CA issued the assailed Amended Decision. It held that
without departing from its findings that the funds covered in the savings account sought to be
garnished do not fall within the classification of public funds, it reconsiders the dismissal of the
petition in light of the ruling in the case of National Electrification Administration v. Morales
which mandates that all money claims against the government must first be filed with the
Commission on Audit (COA).

Lockheed appealed this decision to the Supreme Court. Arguing mainly that the NEA case
should not apply and that UP could be both sued and held liable. And that the quashal of
garnishment sought was moot because it had already become fait accompli.

Issues: Whether or not the NEA Case applies and the funds be garnished directly bypassing the
COA. Whether or not the previous garnishment and withdrawal of funds was fait accompli.

Ruling: YES. This Court finds that the CA correctly applied the NEA case. Like NEA, UP is a
juridical personality separate and distinct from the government and has the capacity to sue and
be sued. Thus, also like NEA, it cannot evade execution, and its funds may be subject to
garnishment or levy. However, before execution may be had, a claim for payment of the
judgment award must first be filed with the COA. (suability does not immediately mean
liability).

NO. As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing
that can be done since the funds of UP had already been garnished, since the garnishment was
erroneously carried out and did not go through the proper procedure (the filing of a claim with
the COA), UP is entitled to reimbursement of the garnished funds plus interest of 6% per
annum, to be computed from the time of judicial demand to be reckoned from the time UP
filed a petition for certiorari before the CA which occurred right after the withdrawal of the
garnished funds from PNB.




Garcy Kate D. Go LLB2 EH306 Page 222

Portillo v. Rudolf Lietz

Facts: Potillo was hired by Rudolf in Lietz Co. under the condition that Potillo will not engage in
any other gainful employment by himself or with any other company either directly or
indirectly without written consent of Lietz Inc., otherwise Potillo will be liable for liquidated
damages.

Upon his promotion, Potillo signed another letter agreement containing a Goodwill Clause
stating that:
on the termination of his employment and for a period of three (3)
years thereafter, he shall not engage directly or indirectly as employee,
manager, proprietor, or solicitor for himself or others in a similar or
competitive business or the same character of work which he was
employed by Lietz Inc. to do and perform. Should he breach this good will
clause of this Contract, he shall pay Lietz Inc. as liquidated damages the
amount of 100% of his gross compensation over the last 12 months.

Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit
interview, Portillo declared that she intended to engage in businessa rice dealership, selling rice
in wholesale.

On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her of the "Goodwill
Clause" in the last letter agreement she had signed.

Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines, Limited to
head its Pharma Raw Material Department. Ed Keller Limited is purportedly a direct competitor
of Lietz Inc.

Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and
commissions went unheeded. Lietz Inc. gave Portillo the run around, on the pretext that her
salaries and commissions were still being computed.

Subsequently, Portillo filed a complaint with the National Labor Relations Commission (NLRC)
for non-payment of 1 months salary, two (2) months commission, 13th month pay, plus moral,
exemplary and actual damages and attorneys fees.

In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount
of P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillos money
claims should be offset against her liability to Lietz Inc. for liquidated damages for Portillos
alleged breach of the "Goodwill Clause" in the employment contract when she became
employed with Ed Keller Philippines, Limited.

Issue:
1. Who has jurisdiction over the present controversy?
2. Whether Portillos money claims for unpaid salaries may be offset against respondents
claim for liquidated damages.

Ruling:
1. Jurisdiction belongs to the Civil Courts.

Petitioner seeks protection under the civil laws and claims no benefits under the Labor
Code. The primary relief sought is for liquidated damages for breach of a contractual
obligation. The other items demanded are not labor benefits demanded by workers
generally taken cognizance of in labor disputes, such as payment of wages, overtime
Garcy Kate D. Go LLB2 EH306 Page 223

compensation or separation pay. The items claimed are the natural consequences
flowing from breach of an obligation, intrinsically a civil dispute.

Furthermore, non-compete clause, as in the "Goodwill Clause" refers to post-
employment relations of the parties. The "Goodwill Clause" or the "Non-Compete
Clause" is a contractual undertaking effective after the cessation of the employment
relationship between the parties. In accordance with jurisprudence, breach of the
undertaking is a civil law dispute, not a labor law case.

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to
recover damages based on the parties contract of employment as redress for
respondents breach thereof. Such cause of action is within the realm of Civil Law, and
jurisdiction over the controversy belongs to the regular courts. More so must this be in
the present case, what with the reality that the stipulation refers to the
postemployment relations of the parties.

2. No, it may not be.

Indeed, the application of compensation in this case is effectively barred by Article 113
of the Labor Code which prohibits wage deductions except in three circumstances:

ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any
person, shall make any deduction from wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and
the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to check-
off has been recognized by the employer or authorized in writing by the
individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.



Garcy Kate D. Go LLB2 EH306 Page 224

Building Care Corp. / Leopard Security and Investigation Agency v. Macaraeg

Facts: Petitioners are in the business of providing security services to their clients.

They hired respondent as a security guard beginning August 25, 1996, assigning her at Genato
Building in Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She
was re-assigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she was
allegedly no longer given any assignment.

Thus, on September 9, 2008, respondent filed a complaint against petitioners for illegal
dismissal, underpayment of salaries, non-payment of separation pay and refund of cash bond.
Respondent claimed that petitioners failed to give her an assignment for more than nine
months, amounting to constructive dismissal, and this compelled her to file the complaint for
illegal dismissal.

On the other hand, petitioners alleged in their position paper that respondent was relieved
from her post as requested by the client because of her habitual tardiness, persistent
borrowing of money from employees and tenants of the client, and sleeping on the job.

On May 13, 2009, the Labor Arbiter rendered a Decision dismissing the charge of illegal
dismissal as wanting in merit but ordering the Respondents Leopard Security and Investigation
Agency and Rupert Protacio to pay complainant a financial assistance in the amount of
P5,000.00.

Respondent then filed a Notice of Appeal with the National Labor Relations Commission (NLRC),
but in a Decision dated October 23, 2009, the NLRC dismissed the appeal for having been filed
out of time, thereby declaring that the Labor Arbiter's Decision had become final and executory
on June 16, 2009.

Upon elevating to the CA via a petition for certiorari, the court reversed and set aside the
Decision of the NLRC and in lieu thereof, a new judgment is entered declaring petitioner to
have been illegally dismissed.

Issue: Whether the CA erred in liberally applying the rules of procedure and ruling that
respondent's appeal should be allowed and resolved on the merits despite having been filed
out of time.

Ruling: Yes, it erred.

It should be emphasized that the resort to a liberal application, or suspension of the application
of procedural rules, must remain as the exception to the well-settled principle that rules must
be complied with for the orderly administration of justice.

The relaxation of procedural rules in the interest of justice was never intended to be a license
for erring litigants to violate the rules with impunity. Liberality in the interpretation and
application of the rules can be invoked only in proper cases and under justifiable causes and
circumstances.

The desired leniency cannot be accorded absent valid and compelling reasons for such a
procedural lapse.

Although the CA justified such a reversal of the NLRCs decision on the ground that the belated
filing of respondent's appeal before the NLRC was the fault of respondent's former counsel,
note, however, that neither respondent nor her former counsel gave any explanation or reason
Garcy Kate D. Go LLB2 EH306 Page 225

citing extraordinary circumstances for her lawyer's failure to abide by the rules for filing an
appeal. Respondent merely insisted that she had not been remiss in following up her case with
said lawyer. It is a basic rule that the negligence and mistakes of counsel bind the client.

It should also be borne in mind that the right of the winning party to enjoy the finality of the
resolution of the case is also an essential part of public policy and the orderly administration of
justice. Hence, such right is just as weighty or equally important as the right of the losing party
to appeal or seek reconsideration within the prescribed period.25
When the Labor Arbiter's Decision became final, petitioners attained a vested right to said
judgment. They had the right to fully rely on the immutability of said Decision.