You are on page 1of 30

Group 1 Case Digests Maternity Childrens to Phil.

1.01 Labor Law Defined
Maternity Childrens Hospital vs. Secretary of Labor G.R. No. 78909 June 30, 1989
MCH is a semi-government hospital, managed by the Board of Directors of the Cagayan
de Oro Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as
holdover President. The hospital derives its finances from the club itself as well as from paying
patients, averaging 130 per month. It is also partly subsidized by the Philippine Charity
Sweepstakes Office and the Cagayan De Oro City government.
MCH has forty-one (41) employees. Aside from salary and living allowances, the
employees are given food, but the amount spent therefor is deducted from their respective
salaries On May 23, 1986, ten (10) employees of the petitioner employed in different
capacities/positions filed a complaint with the Office of the Regional Director of Labor and
Employment, Region X, for underpayment of their salaries and ECOLAS. On June 1986, the
Regional Director directed two of his Officers to inspect the records of the MCH to ascertain the
allegations in the complaints. Based on their inspection report and recommendation, the
Regional Director issued an Order dated August 4, 1986, directing the payment of P723,888.58,
representing under payment of wages and ECOLAs to all the MCH employees. MCH appealed
the Order to the Minister of Labor and Employment, Hon. Augusto S. Sanchez, who rendered a
Decision modifying the said Order in that deficiency wages and ECOLAs should be computed
only from May 23, 1983 to May 23, 1986.
On October 1986, the petitioner filed a motion for reconsideration which was denied by
the Secretary of Labor in his Order dated May 13, 1987, for lack of merit.
Whether or not the Regional Director had jurisdiction over the case and if so, the extent
of coverage of any award that should be forthcoming, arising from his visitorial and enforcement
powers under Article 128 of the Labor Code.
Labor standards refer to the minimum requirements prescribed by existing laws, rules,
and regulations relating to wages, hours of work, cost of living allowance and other monetary
and welfare benefits, including occupational, safety, and health standards (Section 7, Rule I,
Rules on the Disposition of Labor Standards Cases in the Regional Office, dated September
This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as
amended by E.O. No. 111. Under the present rules, a Regional Director exercises both visitorial
and enforcement power over labor standards cases, and is therefore empowered to adjudicate
money claims, provided there still exists an employer-employee relationship, and the findings
of the regional office is not contested by the employer concerned.
The Regional Director correctly applied the award with respect to those employees who
signed the complaint, as well as those who did not sign the complaint, but were still connected
with the hospital at the time the complaint was filed. However ,there is no legal justification for

the award in favor of those employees who were no longer connected with the hospital t the
time the complaint was filed. Article 129 of the Labor Code in aid of the enforcement power of
the Regional Director is not applicable where the employee seeking to be paid is separated from
service. His claim is purely money claim that has to be subject of arbitration proceedings and
therefore within the original and exclusive jurisdiction of the Labor Arbiter.
1.02 Law Classification
Charlito Penafranda V Baganga Plywood Corporation
In 1999, Pet was hired as an employee of Banganga Plywood Corporation to take charge of the
operations and maintenance of its steam plant boiler. In 2001, he filed a complaint for illegal
dismissal with money claims against BPC. He alleged that he was employed with a monthly
salary of 5,000 as foreman, boiler head, shift engineer and was illegally terminated. He was not
paid his overtime pay, premium pay for working during holidays, rest days and night shifts
differentials. Repsondent allege that complainants separation was done according to article 283
of labor code. It was a temporary closure for the clearance and Penafranda failed to apply. They
contended that being a managerial employee, he is not entitled to overtime pay and if ever he
rendered services beyond the normal hours of work and there was no authorization to do so.
Labor Arbitrer found that there was no illegal dismissal and was entitled for overtime pay.
Respondents appealed to NLRC and deleted the award of payment. Appealed to CA but
dismissed the petition of Certiorari. Hence, this appeal.
Whether Penafranda is entitled to the payment of overtime pay and other monetary benefits.
Article 82 of Labor Code exempts managerial employees from the coverage of Labor
Standards. Labor Standards provide to working conditions of employees including entitlement to
overtime and premium pay for working on rest days. Managerial employees are those who
primary duty consists of the management of establishment in which they are employed in the
department or subdivision.
The Implementing Rules of the Labor Code state that managerial employees are those who
meet the following conditions:
(1) Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof; (2) They customarily and regularly direct
the work of two or more employees therein; (3) They have the authority to hire or fire other
employees of lower rank; or their suggestions and recommendations as to the hiring and firing
and as to the promotion or any other change of status of other employees are given particular
The Court disagrees with the NLRCs 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 members of the
managerial staff are not entitled to the provisions of law on labor standards.32 The

Implementing Rules of the Labor Code define members of a managerial staff as those with the
following duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management
policies of the employer; (2) Customarily and regularly exercise discretion and
independent judgment; (3) (i) Regularly and directly assist a proprietor or a managerial
employee whose primary duty consists of the management of the establishment in which
he is employed or subdivision thereof; or (ii) execute under general supervision work
along specialized or technical lines requiring special training, experience, or knowledge;
or (iii) execute under general supervision special assignments and tasks.
Petitioner supervised the engineer section of steam boiler. He sees the operations of the
machines and performance of the workers. As supervisor, he is deemed a member of
managerial staff therefore he is not entitled for overtime and premium pay.
Batong Buhay Gold Mines, Inc. Vs. Honorable Dionisio Dela Serna, et al.
Petition for certiorari prayer for Preliminary Injunction and or Restraining order to annul 3 orders
issued by DOLE.
1250 employee filed a complaints against the petitioner for non-payment for non-payment of
their basic pay and allowances for 6 sets of date. The Labor Standard and Welfare Officer
submitted their recommendation, directing the petitioner to pay the respondent. The Regional
Director adopted the recommendation of the LSWO. They issued an order directing the
petitioner to put up a cash or surety bond otherwise writ of execution will be issued. Due to
failure to post such cash or surety bond a writ of execution was issued. The assigned Sheriff
executed the writ, he seized 3 units of Peterbuilt trucks and sold the same by public auction
same as the motor vehicles. The petitioner appealed to DOLE with the contention that the
Regional Director had no jurisdiction over the case. DOLE affirmed the decision of the Regional
Director. Motion for reconsideration were denied as well. Hence this petition.
Whether or not the Regional Director has jurisdiction over the complaint filed by the respondent
The subject labor standard case of the petition arose from the visitorial and enforcement power
by the Regional Director of Department of Labor and Employment. Labor Standards refers to
the minimum requirements prescribed by existing laws, rules and regulations relating to wages,
hours of work, cost of living allowance and other monetary and welfare benefits including
occupational safety and health standards.

xxx In case where the relationship of employer-employee still exists, the Minister of Labor and
Employment or his duly authorized representative shall have due notice and hearing,
compliance with the labor standards provision of this Code based on the findings of labor
regulation officers or industrial safety engineers made in the course of inspection, and to issue
writs of execution to the appropriate authority for the enforcement of their order except in case
where the employer contests the findings of the labor regulations officers without considering
evidentiary matters that are not verifiable in the ordinary course of inspection.
The ORDER upholding the jurisdiction of the Regional Director is AFFIRMED.
1.03 Basis for Enactment (Police Power)
CMS Estate vs SSS and SSC
Ponente: Justice Cuevas
Petitioner is a domestic corporation organized primarily for the purpose of real estate business.
It then amended its Articles of Incorporation in order to engage in a logging business. The
logging operation actually started on April 1, 1957 with 4 employees. As of Sept. 1, 1957, CMS
had 89 employees and laborers in the logging operation. A year after, CMS became a member
of SSS with respect to its real estate business. It then remitted an amount to SSS representing
the initial premium on the monthly salaries of the employees in its logging business. However,
CMS demanded a refund claiming that its logging business is not yet subject to compulsory
coverage. It was denied by the SSC on the ground that the logging business is a mere
expansion. It now submits as one of its main points that the SSS Act of 1954 was erroneously
held by the Commission as the exercise of the police power of the State.
Whether or not the SSS Act of 1954 is an exercise of the police power of the State;
Yes. The Social Security Law was enacted pursuant to the policy of the government to develop,
establish gradually and perfect a social security system which shall be suitable to the needs of
the people throughout the Philippines and shall provide protection against the hazards of
disability, sickness, old age and death. It is thus clear that said enactment implements the
general welfare mandate of the Constitution and constitutes a legitimate exercise of the police
power of the State. The taxing power of the State is exercised for the purpose of raising
revenues. However, SSS Laws emphasis is more on the promotion of the general welfare. It is
not a part of our Internal Revenue Code nor are the contributions and the premiums are
collectible by the BIR. The funds contributed to the system belong to the members who will
receive benefits, as a matter of right, whenever the hazards of law occur.
Associacion de Agricultures de Talisay-Silay, Inc., et al., plaintiffs-appellees,
Talisay-Silay Milling Co., Inc., et al., defendants-appellants.
G.R. No. L-19937, Feb. 19, 1979
Barredo, J.:

Republic Act No. 809 is a law which regulates the relations among persons engaged in
the sugar industry. It provides for the amount of percentage the millers and the planters shall
follow in the absence of written milling agreements between the majority of the planters and the
millers of sugarcane in any milling district in the Philippines.
The plaintiffs, Associacion de Agricultures de Talisay-Silay, Inc. and other six sugarcane
planters (PLANTERS, for brevity), alleged that, among other things, R.A. 809 be declared
applicable to one of the defendants, Talisay-Silay Milling Co., Inc. (CENTRAL, for brevity), with
regard to the sharing participation of the PLANTERS and the CENTRAL in the sugar byproducts, since majority of the planters have no milling contracts with the CENTRAL.
Defendant, CENTRAL, on the other hand, argued that, among other things, R.A. 809 is
invalid and unconstitutional because it infringes the constitutional guarantee on freedom of
contracts as the said Act provides for some mandatory provisions regarding the increase of
shares in favour of the sugar planters and laborers, without including the sugar millers.
The trial court ruled in favour of the constitutionality of R.A. 809 on the ground that its
enactment is a legitimate exercise of the police power of the state. Also, it declared that said law
is applicable to the Talisay-Silay Milling District because it appears that the majority of the
planters did not have milling contracts with the CENTRAL.
Meanwhile, the new counsel for the ENTRAL formally withdrew the CENTRALS
assignments of errors with regard to, among other things, the challenge against the
constitutionality of R.A. 809. But because of its transcendental importance, the Court has opted
to nevertheless pass on the judgment of the said Act regarding the constitutional provisions on
freedom of contract and the police power of the state in regulating the relationships among the
three main components of the sugar industry: the planters, the millers, and the laborers.
Whether or not R.A. 809 is unconstitutional on the ground that it is an invalid exercise of
police power in relation to its mandatory provision regarding re-adjustment of the
distribution of benefits which allegedly affects the constitutional guarantee on freedom of
contracts between the planters and millers.
Negative. it is therefore beyond cavil that xxx the unfortunate plight of the farm laborers
crying for just and urgent amelioration and confronted with the usual constitutional objections
whenever contractual relations are sought to be regulated, Congress ultimately availed of the
states police power, in the face of which all arguments about freedom of contract and
impairment of contractual obligations have generally been held not to prevail.
In Lutz vs. Araneta (G.R. No. L-2859, Dec. 22, 1959), this Court recognized the propriety
of exercising police power xxx in order that our sugar industry may be stabilized, and to that
end, it was held that the legislature could provide that the distribution of benefits from the
proceeds of sugar be re-adjusted among the components of the industry to enable it to resist
the added strain of the increase in taxes that it had to sustain them.
The primary purpose of the law to insure that the sugar plantation workers are paid just
wages is, indeed, stated by the authors themselves xxx thus: The necessity for increasing the

share of the planters and the laborers xxx is not a new question nut an admitted fact even
before xxx. President Quezon appointed Justice Moran to make a study of the distribution of
sugar resulting from the milling of sugarcane between the CENTRALS and the PLANTERS with
a view to ameliorating the condition of the planters laborers, and after xxx Justice Moran filed
his report xxx recommending an increase in the participation of sugar planters, even in violation
of existing milling contracts, contending that such law is constitutional as a valid exercise of
police power xxx The National Sugar Board xxx confirmed xxx the findings of Justice Moran.
True it is that xxx police power cannot be resorted to just anytime the legislature wishes,
but it is not correct to say that it is indispensable that exceptional circumstance must exist
before police power can be exercised. As very aptly pointed out by the able amicus curiae xxx
gone are the days when the courts could be found adhering to the doctrine that interference
with contracts can only be justified by exceptional circumstances, for the test of validity today
under the due process clause, even in the case of legislation interfering with existing contracts,
is reasonableness xxx and there is not enough showing here of unreasonableness in the
legislation in question xxx.
We find all the provisions of the impugned act to be germane to the end being pursued
1.04 Sources of Law
B. Contract
Kasapian ng Malayang Manggagawa sa Coca-Cola (KASAMMA-CCO) CFW Local 245 v.
CA, 487 SCRA 487 (2006) G.R. No. 159828, April 19, 2006
On December 26, 1998, a MOA was executed and signed by the petitioner and private
respondent company after their Collective Bargaining Agreement (CBA) for the years 1995-1998
had expired. The MOA aimed to provide salary increases, economic and non-economic benefits
including the regularization of contractual, casual, and/or agency workers who have been
working with the respondent for more than a year as it was clearly contained in the provision of
the said MOA. In addition, this MOA also formed part of the CBA for the years 1998-2001.
In compliance with the MOA, 61 employees have been accorded regular employment
status. Thereafter, the petitioner demanded that the 61 regularized employees must be paid and
given other benefits retroactive to December 1, 1998 as it was stated in the MOA. On the other
hand, the private respondent company contended that the effectivity of the regularization of the
61 employees were on May 1 and October 1, 1999 and so refused such demand from the
petitioner. On November 5, 1999, a complaint was filed by the petitioner before the NLRC
against the respondent alleging that the respondent violated the said MOA. On December 9,
1999, the Manila and Antipolo plants of the respondent company have been closed and the
affected employees were given a notice of termination effective on March 1, 2000. Thereafter, a
notice of closure to the DOLE was submitted by the respondent company. From December 9,
1999 to February 29, 2000, the employees were still paid even if they were not working
anymore. The complaint filed by the petitioner was amended in order to include non-payment of
overtime pay and 13th month pay, illegal dismissal, unfair labor practice, recovery of moral and
exemplary damages, and attorneys fees.

1. Whether or not the private respondent company violated the MOA when it did not
recognize the regularization of the 61 employees effective on December 1, 1998
2. Whether or not the closure of Manila and Antipolo plants was legal
1. Yes. The private respondent violated the MO for failure to recognize the regularization of
the 61 employyes effective on December 1, 1998. As it was clearly stated in the
provisions of the MOA, non-regular employee, which includes casual, contractual, pr
agency worker, who has already served the company and is presently occupying or has
occupied the position to be filled-up for at least one yearn shall be given priority in fillingup the position by converting his non-regular employment status to regular employment
status, effective December 1, 1998. This clearly shows that the effectivity date of
regularization was December 1, 1998. In addition, under the Article 280 of the Labor
Code, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered as a regular employee with respect
to the activity in which he is employed... Thus, even without the provision in the MOA,
the 61 employees should have been regularized employees after the lapse of one year
of service in the company.
2. Yes. The closure of the plants was legal and not tainted with bad faith. The reason for
closure was due to legitimate business considerations such as the production lines at
the two plants have very low line efficiency, the quality of water supply at such plants
was rapidly deteriorating, and the rehabilitation of such plants was not feasible due to
the huge capital investment required as well as the congestion of the areas. The
decision made by the company was also a result of the study conducted on the said
plants. In addition, the company complied with the requirements stated in the Labor
Code in closing a business since the employees were given notice on December 9, 1999
that their termination will be effective March 1, 2000. They were also paid from
December 9, 1999 to February 29, 2000 even if they were not required to report for
Wherefore, premises considered, the assailed decisions of the CA and NLRC are hereby
AFFIRMED with MODIFICATIONS. The 61 employees are hereby declared employees as of
December 1, 1998 and are entitled to the CBA salary increases, mid-year gratuity pay, one
sack of rice, overtime pay, and 13 th month pay as provided for in the MOA. No costs. So
C. Collective Bargaining Agreement
NO. 146650 : Jan. 13 2003
On February 22, 1996, a new five-year collective bargaining agreement (CBA) wasexecuted by
petitioner Dole Philippines and Pawis ng Makabayang Obrero (PAMAO), covering February

1996 to February 2001. One of the provisions in the new CBA reads: (Section 3 of Art.XVIII)
Dole agrees to grant a meal allowance of Php 10.00 to all employees who render at least 2
hours or more of actual overtime work on a workday, and free meals, as presently practice, not
exceeding Php 25.00 after 3 hours of actual overtime work. Pursuant to the provisions of the
CBA, some departments reverted to the previous practice of granting free meals after exactly 3
hours OT but other departments granted free meals only after more than 3 hours OT. PAMAO
then filed a complaint alleging Doles non-compliance to the CBA.
WON free meals should be granted after exactly 3hours of ot work.
WON the petitioner has the right to determine when to grant free meals and its conditions.
It is clear from the intent of the provision, based on the fact that the same provision appeared in
earlier CBAs that a Dole employee is entitled to a free meal after rendering exactly or no less
than, 3 hours of OT and not more than 3 hours of OT.
The petitioner also cannot invoke the principle of management prerogative, that the employer
has the power to grant benefits over and beyond the minimum standards of law or the Labor
Code. The exercise of this principle is not unlimited. It is subject to the limitations found in law, a
collective bargaining agreement or the general principles of fair play and justice. The cba is the
norm of conduct between the petitioner and private respondent and compliance therewith is
mandated by express policy of the law. Sc denied the petition of dole.
D. Past Practices
Davao Fruits Corp. v. Associated Labor Union
It has been a company practice of Davao Fruits Corp. since 1975 to include in the computation
of its employees 13 month pay computation sick leaves, maternity leaves, vacation leaves, as
well as payment done during rest days and special holidays, and pay for regular holidays.
However, in 1982, they excluded said items from the computation.
As a result, ALU filed a complaint seeking to recover the 13th pay differentials of the employees
using the old company practice of computing the 13 month pay. In Davao Fruits Corporations
defense, they claim that the past practice was a mistake; that they only discovered the error in
1981 after the decision on the case of San Miguel Corp. v. Inciong was rendered by the court. In
this case, it was established that in the computation of the 13 th month pay, other earnings and
remunerations, such as computation sick leaves, maternity leaves, vacation leaves, as well as
payment done during rest days and special holidays, and pay for regular holidays are deemed
not included in an employees basic salary.
Whether or not regardless of long-standing company practice, the company may exclude sick
leaves, maternity leaves, vacation leaves, as well as payment done during rest days and special
holidays, and pay for regular holidays in the computation of the 13th month pay of its employees.

No. The company claims that they are merely seeking to correct their error of including in the 13
month pay computation, sick leaves, maternity leaves, vacation leaves, as well as payment
done during rest days and special holidays, and pay for regular holidays. However, contrary to
their claim that the error was only discovered in 1981, Supplementary rules and regulations
implementing the 13th month pay had already cleared the doubts regarding the computation
since 1976. Hence, from 1976, they had freely, voluntarily and continuously included in the
computation of its employees 13th month pay sick leaves, maternity leaves, vacation leaves, as
well as payment done during rest days and special holidays, and pay for regular holidays. The
considerable length of time has negated any claim of mistake.
Furthermore, a company practice favorable to the employees cannot be reduced, diminished, or
discontinued by the employer. (Sec. 10, IRR PD 851 & Art.100 Labor Code).
is United Workers of the Philippines
(SMTFM-UWP), its officers and members vs. NLRC
GR No. 113856, 7 September 1998
Petitioner SMTFM was the certified collective bargaining representative of all regular rank and
file employees of private respondent Top Form Manufacturing Philippines, Inc. In a collective
bargaining negotiation held on 27 February 1990, the parties agreed to discuss unresolved
economic issues. According to the minutes of the meeting, Article VII of the collective bargaining
agreement (CBA) was discussed wherein the across the board wage increase was brought up
but was not included in the CBA because the union dropped such proposal after due reliance on
the representation of the company. Thereafter, Wage Orders 01 and 02 were issued on 15
October 1990 and 20 December 1990, respectively. The union demanded implementation of the
said wage orders on an across-the-board basis. Private respondent refused to accede to that
demand and instead implemented a scheme of increases purportedly to wage distortion.
1) Whether or not private respondent committed unfair labor practice in its refusal to implement
an across-the-board wage increase;
2) Whether or not an employer committed an unfair labor practice by bargaining in bad faith and
discriminating against its employees; and
3) Whether or not there was a significant wage distortion of the wage structure as a result of the
manner by which said wage orders were implemented.
1) No. The across-the-board wage increase is not part of the CBA. Agreements between the
parties may only be demandable in law if incorporated in the CBA. The Minutes only reflects the
proceedings and discussions undertaken in the process of bargaining for worker benefits in the
same way that the minutes of court proceedings show what transpired therein. The petitioner
union had the right and the opportunity to insist on the foreseeable fulfillment of the private
respondents promise by demanding its incorporation in the CBA but they did not.
2) No. With the execution of the CBA, bad faith bargaining can no longer be imputed upon any
of the parties thereto. All provisions in the CBA are supposed to have been jointly and voluntarily
incorporated therein by the parties. The CBA is proof enough that private respondent exerted
reasonable effort at good faith bargaining.

3) The NLRC has jurisdiction over this matter. The factual findings of the NLRC are generally
accorded with respect and finality provided that its decisions are supported by substantial
evidence and devoid of any taint of unfairness or arbitrariness.
Therefore, the High Court denied the petition and affirmed the decision of the NLRC.

American Wire & Cable Daily Rated Employees vs American Wire

G.R. 155059 April 29, 2005
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.
WON the respondent company violated Article 100 of the Labor Code.
The company is not guilty of violating Art. 100 of the Labor Code.
Article 100 of the Labor Code provides:
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.
To hold that an employer should be forced to distribute bonuses which it granted out of
kindness is to penalize him for his past generosity.

PAG-ASA Steel Workers V CA


Pag-asa steel works incorporation is a corporation duly organized and existing under Philippine
laws and is engaged in the manufacture of the steel bars and wire rods. Pagasa steel workers is
a duly authorized bargaining agent of the rank and file employees of the petitioners. In 1998, the
regional Tripartite Wages and Productivity Board issued wage order no. NCR -06 providing an
increase of 13P in the salaries of employees receiving the minimum wage and a consequent
increase on the rate to 198 per day. Petitioner and the Union negotiated on how to go about the
wage adjustments. The PAG-ASA and union entered into a collective bargaining agreement
which granted an increase of 15P- first year; 25P-Second Year; 30P-third year. In 1999, Wage
order no. 077 was issued providing 25.50 per day increase in the salary of employees receiving
the minimum wage and increased the minimum to 223.50P. On that same year, a wage order
no. 089 was issued provided for the setting of the new minimum wage at 250 or an increase of
25. The union requested the company to implement the increase under wage order NCR-08.
Company rejected claiming that since none of them were receiving a daily salary rate lower than
250 and there was no wage distortion. It was not obliged to grant the wage increase. 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. NCR06, 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 negotiation. 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. It is understood that these additional wage increases will be paid not as wage orders
but as agreed additional salary increases using the wage orders merely as a device to fix or
determine how much the additional wage increases shall be paid. The CA rendered judgment
in favor of the Union. Hence this petition
Whether the company was obliged to grant the wage increase under the wage order issued as a
matter of practice.
No, It is not obliged to grant the wage increase. There is no company practice of granting a
wage-order-mandated increase in addition to the CBA-mandated wage increase. It points out
that, as admitted by respondent Union, the previous wage orders were not automatically
implemented and were made applicable only after negotiations. Petitioner argues that the
previous wage orders were implemented because at that time, some employees were receiving
salaries below the minimum wage and the resulting wage distortion had to be remedied. The
wage order provides that only those in the private sector in the NCR receiving the daily wage
rate of 223 per day would receive an increase, thereby setting the wage rate to 250P. There is
no dispute that when the wage order was issued, the lowest paid employee of the company was
receiving a wage higher than 250P. As such employee had no right to demand the increase. 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 error of the CA lies in its considering only the CBA
in interpreting the wage adjustment provision, without taking into account Wage Order No. NCR08, and the fact that the members of respondent Union were already receiving salaries higher
than P250.00 a day when it was issued. The CBA cannot be considered independently of the
wage order which respondent Union relied on for its claim.
E. Company Policies
China Banking Corporation VS. Callejo, Sr. Tinga and Chico-Nazario, JJ.
The respondent was an employee of the petitioner. He was promoted several times, until he
became the Assistant Vice-President of Branch Banking for Mindanao Area. Prior to the
respondents last promotion, he approved several Draw Against Uncollected Deposit/ Bills
(DAUD/BP) accommodations amounting to Php 2,441,375 without authority from the Executive
Committee or Board of Directions. Under the petitioners bank standard operating procedures,
DAUD/BP accommodations may be granted only by a bank officer upon expres authority from
its Executive Committee or Board of Directors, and under the penalty for such violation.
Forfeiture of benefits/privileges may also be effected in cases where infractions or violations
were incurred in connection with or arising from the application/ availment thereof. As a result of
the DAUD/BP accommodations that were approved were return unpaid. The petitioner informed
the respondent regarding what happened. Thereafter, the petitioner replied, accepting full
responsibility with what happened and notifying the petitioner for his resignation. The petitioner
notify the respondent that they will withhold a specific amount from his separation pay, mid year
bonus, and profit sharing due to what happened. The respondent filed a petition with the
contention that he vehemently denied having offered to pledge his property to the bank or
withholding of his separation pay and other benefits. The CA decided in favor of the respondent
and denied as well the motion for reconsideration of the petitioner.
Whether or not the CA did not commit grave abuse of discretion in affirming the decision of the
NLRC which withhold the separation pay and other benefits of the respondent on the ground
that the latter was informed nor offer to pledge his property to the back nor proposed to withhold
of his separation pay and other benefits when he became an employee of said petitioner.
It had been indubitably shown that the respondent admitted that he violated the petitioner banks
standard operating procedure.
The petitioner Banks Code of Ethics provides that restitutions/ forfeiture of benefits may be
imposed on the employees for, inter alia, infraction of the banks standard operating procedures.

It is well recognized that company policies and regulations are, unless shown to be oppressive
or contrary to law, generally binding and valid on the parties and must be complied with until
finally revised or amended unilaterally or preferably through negotiation or by authority.
1.05 Law and Worker
Cebu Royal Plant vs Deputy Minister of Labor (Law and Worker)
Ponente: Justice Cruz
Ramon Pilones, the private respondent, is employed as a syrup man a job involved in the
processing of soft drinks. He was dismissed from his job because he was diagnosed with
pulmonary tuberculosis (minimal) although it was not certified as incurable within six months as
to justify his separation. Thereafter, he filed a complaint against the petitioner and the Minister of
Labor ruled in favor of him. The petitioner claims that the respondent is only on probation and is
therefore not entitled to security of tenure and that his sickness is prejudicial to the public. On
the other hand, Pilones claims that he is already a regular worker and is therefore entitled to
security of tenure.
Whether or not the dismissal is justified on the ground of his sickness;
No. In order submitted by the petitioner, it was shown that the respondent was employed on
probation on Feb. 16, 1978. The probation ended on Aug. 17, 1978, but he continued working
and was only dismissed on Aug. 21, 1978, four days after he ceased to be on probation. Under
Article 282 (281 now) of the Labor Code an employee who is allowed to work after a
probationary period shall be considered as a regular employee. Hence, he was already a
regular when he was dismissed. The applicable rule on the ground for dismissal invoked against
him is Sec. 8 Rule 1 , Book VI of the IRR of the Labor Code. The record does not contain any
certification from a competent public health authority that it cannot be cured within a period of
six months. Also, the petitioner file its application for clearance to terminate the employment of
Pilones only after 7 days from his actual dismissal has passed.
**We take this opportunity to reaffirm our concern for the lowly worker who, often at the mercy of
his employers, must look up to the law for his protection. Fittingly, that law regards him with
tenderness ad even favor and always with faith and hope in his capacity to help in shaping the
nations future. It is error to take him for granted.
1.06 Labor Case
Lapanday Agricultural Development Corp., petitioner,
Vs Court of Appeals and Commando Security Agency, Inc., respondents.
G.R. No. 112139, Jan. 31, 2000
Gonzaga-Reyes, J.:


Petitioner, owner of a banana plantation, and private respondent, a security agency and
an independent contractor, entered into a Guard service Contract wherein the latter will provide
security guards in the banana plantation of the former.
Thereafter, Wage Order Nos. 5 and 6 were promulgated increasing the minimum wage
at that time. With that, private respondent demanded that the said contact be upgraded in
compliance with Wage Order Nos. 5 and 6, but to no avail. With the refusal of petitioner, the
contract had expired without the rate adjustment being implemented.
The trial court ruled in favour of private respondent. Petitioner then moved for
reconsideration but was denied. Hence, the present petition.
Petitioner contended that the wage increase due to security guards was not paid by
private respondent and therefore, not collectible by the latter from petitioner. Also, petitioner
asserted that it is the National Labor Relations Commission (NLRC) and not the civil courts that
has jurisdiction to resolve the issue and therefore, making the trial courts decision without force
and effect.
On the other hand, private respondent contended that the increase in wages is due, not
to security guards, but to themselves since the latter are not parties to the contract and thus,
making it immaterial whether private respondent paid the wages of their security guards or not.
Also, private respondent raised that the Regional Trial Court (RTC), and not the NLRC, that has
jurisdiction on the matter since money claims involved in the contract did not arise from
employer-employee relationship, making it intrinsically a civil dispute.
1. Whether or not the NLRC has the jurisdiction over the subject matter, and not the
RTC, since the issue involved refers to the enforcement of wage adjustment as
mandated by Wage Order Nos. 5 and 6.
2. Whether or not petitioner is liable to private respondent, by virtue of their service
contract, for wage increases provided under the said wage orders.
1. Negative. xxx the RTC has jurisdiction over the subject matter xxx. Where no
employer-employee relationship exists between the parties and no issue is involved
which may be resolved by reference to the Labor Code, xxx it is the Regional Trial
Court that has jurisdiction.
xxx private respondent is not seeking any relief under the Labor Code but seeks
payment of a sum of money and damages on account of petitioners alleged breach
of its obligation xxx. The action is within the realm of civil law xxx. While the
resolution xxx involves the application of labor laws, reference to the Labor Code
was only for the determination of the solidary liability of the petitioner and the
respondent xxx.
2. Negative. xxx private respondent has not actually paid the security guards the wage
increases granted under the wage orders in question. Xxx Accordingly, private
respondent has no cause of action against petitioner to recover the wage increases.
Xxx the increases in wages are intended for the benefit of the laborers and the
contractor may not assert a claim against the principal for salary wage adjustments

that it has not actually paid. xxx it is only when contractor pays the increases
mandated that it can claim an adjustment from the principal to cover the increases
payable to the security guards.

Villamaria v. CA, 487 SCRA 571 [2006], G.R. No. 165881, April 19, 2006
Villamaria, the petitioner, was the proprietor of Villamaria Motors where the respondent
works as one of the drivers of the jeepneys on a boundary basis. On August 1997, Villamaria
verbally agreed to sell the jeepney to Bustamante. Subsequently, contract was executed
between the parties entitled Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng
Boundary-Hulog on the said jeepney. Through this boundary-hulog scheme, an amount of
P550 a day shall be remitted by Bustamante for a period of four years. Failure to pay the
boundary-hulog for three days, the vehicle will be held by the petitioner until the respondent pay
his boundary which also includes a penalty of P50 a day. In addition, failure to remit the daily
boundary-hulog for a period of one week will cease the legal effect of the contract and the
vehicle must be returned to the petitioner. It is also contained in the agreement that the
respondent would have to make a downpayment of P10,000 and other requirements which the
respondent needs to follow such as to use the vehicle for transporting passengers only, display
an identification card in front of the windshield of the vehicle, pay for the cost for replacing any
parts of the vehicle that would be lost or damaged due to his negligence, pay for the annual
registration fees, etc.
The respondent continued driving the vehicle after the execution of contract. The annual
registration fees of the vehicle were not paid by the respondent which is part of the contract, but
the petitioner still allowed him to drive the vehicle. In 1999, the respondent failed to pay the
respective boundary-hulog, so a Paalala or reminder was served by the petitioner reminding
the respondent to pay the required boundary-hulog. On July 24, 2000, the vehicle was taken by
the petitioner from the respondent and barred him (respondent) from driving the said vehicle.
Thus, a complaint was filed by Bustamante (respondent) and his wife Teresita on August 15,
2000 against Villamaria (petitioner) for illegal dismissal and the judgement was rendered by the
Labor Arbiter in favour of the spouses Villamaria. Bustamante (respondent) appealed before
NLRC but the appeal was dismissed. The respondent elevated the matter to CA and the CA
reversed and set aside the decision of NLRC. Hence, this petition for review on certiorari was
filed by Villamaria.
Whether or not the existence of boundary-hulog agreement negates the employer-employee

No. The existence of boundary-hulog agreement did not negate the employer-employee
relationship between the parties considering that the petitioner retained his control of
respondents conduct as the driver of the vehicle. In fact, a dual juridical relationship was
created between the parties through this agreement; that of employer-employee and vendorvendee. As cited in the case of National Labor Union v. Dinglasan, an employer-employee
relationship is present in the jeepney owner/operator-driver relationship. Under this boundaryhulog scheme, there is a positive suspensive condition meaning the respondent would not be
able to acquire the vehicle until he has not complied and fulfilled the conditions stated in the
agreement. Failure to comply with the condition in the agreement would result to the termination
of vendor-vendee relationship as well as the employer-employee relationship unless the
petitioner would still allow the respondent to continue driving the vehicle on a boundary basis.
In light of all the foregoing, the petition is DENIED. The decision of the CA is AFFIRMED. Costs
against petitioner.
1.07 Case Decision
Anino vs NLRC 290 scra 489 (1998) G.r No. 123226; may 21, 1998
Complainants allege that they are employees of respondent Hinatuan Mining Corporation
(HMC) holding supervisory positions. Sometime in September 1993, complainants planned the
formation of a supervisors union with HMC. The plan was received enthusiastically by practically
all employees with supervisory rank, and shortly thereafter the HINATUAN MINING
SUPERVISORY UNION (HIMSU) was formally organized and registered with the DOLE.
Complainants were elected official and active members of HIMSU.
On or about 03 November 1993, HIMSU formally notified the company of its legal existence
through a letter addressed to the President of HMC. . It formally informed the company of its
desire for a collective bargaining agreement and submitted its proposals therefore under letter
dated 16 November 1993. The complainant claims that the company completely ignored the
unions proposal and did not answer the HIMSU about it, which constraint the union to file an
unfair labor practice case against HMC on May13, 1994.
In order to weaken and if possible destroy the union, respondents, in the guise of retrenchment,
dismissed the complainants who are the active leaders of the union under letter dated 16 June
1994. Complainants aver that their dismissal was done with malicious intent to cause them and
the union damage for their legitimate exercise of the right to self-organization, in open defiance
of Art. 248 of the Labor Code.
Because of their dismissal, complainants state that they were deprived of their salaries, and
suffered moral damages for mental anguish, serious anxiety, social humiliation, besmirched
reputation and other similar hurt. Complainants then pray that respondents: (a) be declared
guilty of unfair labor practices; (b) be ordered to reinstate complainants to their former positions
with back wages.
Whether or not there was a valid retrenchment of the complainants.

Jurisprudence prescribes the minimum standards necessary to prove the validity of a
retrenchment. Retrenchment is resorted to by an employer because of losses in the operation of
a business occasioned by lack of work and considerable reduction in the volume of business. It
is a management prerogative consistently recognized and affirmed by this Court, subject only to
faithful compliance with the substantive and procedural requirements laid down by law
(article283) and jurisprudence to justify retrenchment, the following requisites must be complied
with: "(a) the losses expected should be substantial and not merely
de minimis in extent; (b) the substantial losses apprehended must be reasonably imminent; (c)
the retrenchment must be reasonably necessary and likely to effectively prevent the expected
losses; and (d) the alleged losses, if already incurred, and the expected imminent losses sought
to be forestalled must be proved by sufficient and convincing evidence."In termination cases,
the burden of proving that the dismissal was for a valid or authorized cause rests upon the
employer. In the case at bar, Respondent Corporation did not submit an iota of evidence to
show losses in its business operations and the economic havoc it would sustain imminently. It
merely claimed that retrenchment was undertaken as a measure of self-preservation to prevent
losses brought about by the continuing decline of nickel prices and export volume in the mining
SC GRANTED the petition and the challenged NLRC Decision is SET ASIDE. The Decision of
Labor Arbiter Rogelio P. Legaspi in NLRC is REINSTATED.

EDI Staff v Magsino Case Decision

Magsino worked as supervisor for EDI Staff which is a recruitment agency. Part of her duties is
to ensure that requirements for deployment for abroad of employees are complied with. One of
these is the remittance of repatriation bonds to POEA officers. The EDI Management received
reports that Magsino has ordered the document analyst to turn over to her premium payments
of repatriation bonds, and that 1 year premium payments allegedly in her possession is
unaccounted for. Magsino was required and given an opportunity to explain, however, instead of
complying she resigned. The management did not accept her resignation because of the
pending investigation. Eventually, she was terminated by the company for loss of trust and
confidence, and after due notice to her. Magsino then filed a complaint for illegal dismissal
claiming that she had been dismissed without cause and notice.
Whether or not Magsino was legally dismissed
No. In an unlawful dismissal case, the employer has the burden of proving the lawful cause for
the employers dismissal. In this case, the alleged lawful cause of termination is loss of
confidence. However, EDI failed to prove the amount of money the document analyst handed
over to Magsino nor was there any proof of the amount of money Magsino allegedly turned over
to the POEA officer. Proof of the amounts is necessary to determine if respondent was

responsible for any defalcation. Mere allegations of the amount lost without records indicate that
the discovered anomalies have no basis as well.
1.09 Management Function
Alan D. Gustilo vs. Wyeth Philippines, Inc.
GR No. 149629, 4 October 2004
Gustilo was employed by Wyeth Phils., Inc. as a pharmaceutical territory manager. He was in
charge of the various branches in Metro Bacolod City and Negros Occidental. Among his tasks
were visiting hospitals, pharmacies, drugstores and physicians; preparing and submitting his
pre-dated itinerary; and submitting periodic reports of his daily call visits, monthly itinerary and
weekly locator and incurred expenses. His employment records show that on various dates,
private respondent has reprimanded and suspended him for habitually neglecting to submit his
periodic reports. When Wyeth assigned Gustilo in charge of promoting 4 pharmaceutical
products, the petitioner committed to make an average of 18 daily calls to physicians, submit
promptly all periodic reports, and ensure 95% territory program performance every cycle.
However, Gustilo failed to achieve its objectives which prompted private respondent to send him
2 notices charging him with willful violation of company rules and regulations and directed him to
submit a written explanation. Petitioner thereafter explained that he was overworked and an
object of reprisal by his immediate supervisor, Filemon Verzano, Jr. Upon the recommendation
of a review panel, Wyeth terminated the services of Gustilo.
Gustilo filed with the Regional Arbiter Branch No. 6 in Bacolod City a complaint against Wyeth
for illegal suspension and illegal dismissal. The Labor Arbiter found that Gustilo was illegally
dismissed and ordered Wyeth and Verzano to pay petitioner P991,157.90 representing
backwages, separation and benefits. Wyeth thereafter appealed to the NLRC which affirmed the
Labor Arbiters decision with modification on the award which ordered reinstatement of the
petitioner instead of separation pay. Upon petition of Wyeth for Certiorari and TRO and a writ of
preliminary injunction, the CA reversed NLRCs ruling and dismissed Gustilos complaint for
illegal dismissal as his service was terminated based on Article 282 of the Labor Code (gross
and habitual neglect by the employee of his duties). However, he was awarded with separation
pay considering the mitigating factors of length of service, loyalty awards and Verzanos grudge
against petitioner.
Whether or not Gustilo is entitled to separation pay.
No. Gustilo was dismissed with just cause. The SC held that the employer has prerogative to
prescribed reasonable rules and regulations necessary or proper for the conduct of its business
or concern to provide certain disciplinary measures to implement said rules and to assure that
the same be complied with. At the same time, it is one of the fundamental duties of the
employee to yield obedience to all reasonable rules, orders, and instructions of the employer,
and willful or intentional disobedience thereof, as a general rule, justifies rescission of the
contract of service and the preemptory dismissal of the employee.
A series of irregularities when put together may constitute serious misconduct, which under
Article 282 of the Labor Code, as amended, is a just cause for dismissal. The rule embodied in

the Omnibus Rules implementing the Labor Code is that a person dismissed for cause as
defined therein is not entitled to separation pay. In the case at bar, there is no exceptional
circumstances to warrant the grant of separation pay or financial assistance to the petitioner.
Those who invoke social justice may do so only if their hands are clean and their motives
blameless. Therefore, the petition is denied.
Philcom Employees Union v. Phil. Global Communications & Philcom Corp.
The CBA between Philcom Employees Union (UNION) and Phil. Global Communications
(PHILCOM) expired. Jul. 1997: Negotiations for the new CBA began. Oct. 21: While
negotiations were ongoing, UNION filed Notice of Strike #1 w/ NCMB on the ground of
perceived unfair labor practices (ULP) committed by PHILCOM In view of the filing of Notice of
Strike #1, PHILCOM suspended negotiations. Nov. 4: Due to the suspension, PEU filed Notice
of Strike #2 for bargaining deadlock. Nov. 17, 1997: While conciliation meetings were ongoing
between UNION officers and PHILCOM, the UNION members and officers not in attendance
staged a strike at the company premises, (1) barricading the egresses and (2) setting up a
stationary picket at the entrance.
Nov. 19, 1997: Acting on PHILCOMs motion, Acting SOLE Trajano issued an
Assumption of Jurisdiction Order (AOJ) over the dispute, thereby enjoining the strike. The
workers continued to strike, hence on Nov. 28, a second AOJ was issued, ordering the striking
employees to return to work.
In compliance with the SOLEs AOJ, the parties submitted position papers. UNION
raised ULP, with specific allegations (detailed and answered in the Ratio, infra). PHILCOM
raised illegality of the strike. The UNION moved to strike out the allegation of illegal strike, since
there was no petition to declare the strike illegal. In response, PHILCOM however said that it
was precisely due to the strike that the dispute was assumed to the SOLE. Oct. 2, 1998: The
SOLE issued an Order, inter alia (1) denying the UNIONs motion to strike out, (2) and
dismissing the ULP charge against PHILCOM, and (3) ordering the workers to return to work
and PHILCOM to accept them back on the same terms and conditions before the strike. The
UNIONs partial MR, questioning the dismissal of the ULP charge, was denied, so it filed a
petition for certiorari in the CA.
The CA deny the petition and affirm the SOLE, causing the UNION to appeal to the SC.
Whether or not PHILCOM commit Unfair Labor Practice
The acts complained of by the UNION as ULP were either unsubstantiated or a valid
exercise of management prerogative.
PHILCOM did not commit ULP. ULP refers to acts that violate the workers right to
organize. Therefore, the prohibited acts are related to the workers (1) right to self-organization,
and (2) to the observance of the CBA. Without that element, the acts, no matter how unfair, are
not ULP.

The law on ULP is not intended to deprive employers of their fundamental right to
prescribe and enforce rules as they deem necessary to the proper, productive, and profitable
operations of their business. PABX transfer and contractualization: This was done in anticipation
of the companys switch to an automatic PABX machine which requires no operator. Absent any
malice on its part, management is at liberty to abolish positions it no longer deems necessary.
Massive contractualization: That only 160/400 employees are rank and file does not, in
itself, indicate ULP, since [maintaining said ratio] is company prerogative. Here, it did not
threaten the security of tenure of regular employees or union members.
Promotion of union members: Neither unlawful or economic inducement; the promotion
of employees rests upon discretion of management (management prerogative). That the
promotions were manifestly beneficial to the employees should not give rise to speculation that
the promotions were extended merely to deprive the union of members. That the promotions
were made around the time o the CBA negotiations does not make PHILCOMs actions ULP,
since the promotions were made based on the availability of positions. Management disallowed
leave of union members/officers to attend union seminar: This is belied by the evidence
submitted by the UNION itself, since the company granted the leave and merely requested for
details. Those denied leave were urgently needed. Disinformation scheme, surveillance (i.e.
asking guards to spy on union members), interference with union affairs, black propaganda:
Baseless and unsupported by facts. Issuance of memoranda/notices without giving copies to
the union: The CBA does not obligate PHILCOM to give the UNION a copy of each and every
memorandum or notice sent to the employees, as such would be unreasonable and impractical.
Assuming PHILCOM violated the CBA, there is no showing that it was flagrant or
malicious. The law requires the violation to be flagrant or malicious in order to be ULP.
The strike was clearly illegal because The State has a no-strike policy with regard to vital
industries. The issues of who (1) participated in the illegal strike, (2) committed illegal acts, or
(3) defied the return-to-work orders is a question of fact that must be resolved by the SOLE.
DOLE Philippines Incorporation V Pawis ng Makabayang Obrero
A new 5 years Collective Bargaining Agreement from 1996 to 2001 was executed by DOLE and
Pawis. There is no disputed section on meal allowance under Section 3 of Article 8 of Bonuses
which reads, The company agrees to grant a meal allowance of 10P to all employees who
render at least 2 hours or more actual overtime work on a workday and free meals, not
exceeding 25P after 3 hours of actual overtime work. Other departments continued the practice
of granting free meals only after more than 3 hours of overtime work. DOLE asserts that after 3
hours should be mean after more than 3 hours. They invoke the power to grant benefits over
and beyond the minimum of the law belong to the employer. That according to the principle,
even if the law is solicitous of the welfare of the employees, it must also protect the right of the
employers. It claims that it has the right to determine whether it will grant a free meal benefit, to
see it otherwise would amount to an impairment of the rights of the employer.
1. Whether the phrase after 3 hours should be interpreted as more than 3 hours

2. Whether the power of employer is not subject to any limitations.

1. The disputed provision of CBA is clear and ambiguous. The literal meaning of free meals
after 3 hours of overtime work should prevail which is simply that an employee shall be
entitled to a free meal if he has rendered exactly, or no less than, 3 hours of overtime
2. We do not think so, The exercise of management prerogative is not unlimited. It is
subject to the limitations found in law, a collective bargaining agreement or the general
principles of fair play and justice. This situation constitutes one of the limitations. The
CBA is the norm of conduct between petitioner and private respondent and compliance
therewith is mandated by the express policy of law.
Rene P. Valiao Vs. CA, NLRC, West Negros College.
Petition for review on certiorari is the decision of the CA and its resolution denying the
motion for reconsideration.
Petitioner was an employee of the respondent West Negros College. Due to his poor
performance,tardiness and absences, he was transferred from different positions (Student
Affairs Director) Typist, Information Assistant, Records Evaluator. He was even been suspended
for dishonesty in reporting his actual attendance. During his last position in the College, the
petitioner did not went to work without any permissions or notice to his immediate superior. And
it turned out that petitioner was in Bacolod and he was involved in an illegal drug issue and was
arrested. The event was publicized, petitioner was asked by the College to explain the said
matter. And due to failure to explain he was dismissed from work. 3 days after the dismissal, the
petitioner wrote to the President of WNC explaining his side. The WNC then withdrew their
dismissal and grant the petitioners request. The WNC also conducted an investigation
regarding the said matter. The petitioner was dismissed after the said investigation for serious
misconduct and gross and habitual neglect of duties. He filed a complaint against WNC for
illegal suspension, illegal dismissal, backwage salary differential for salary increases and other
benefits granted after his dismissal as well as for moral and exemplary damages and attorneys
WNC answered that, since the petitioner was terminated for a valid cause after a due
hearing. The latters claim for moral and exemplary damages, and attorneys fees had no basis
in fact and in law.
Labor Arbiter decide in favor of the private petitioner, with complaint, but found out that the
dismissal was valid on the ground that frequent absenteeism and tardiness constituted not only
willful disobedience but also gross and habitual neglect of duties. The NLRC affirmed the
decision except for the claim for damages and attorneys fee for lack of evidentiary support.
Motion for Reconsideration was denied.

Hence this petition.

Whether or not the CA erred in affirming the decision wherein the suspension and dismissal
of the petitioner on the ground that it is within the limitations of the management functions.
Xxx For an employees dismissal to be valid: a.) the dismissal must be for a valid cause; b.)
the employee must be afforded due process. Xxx
Xxx Serious misconduct and habitual neglect of duties are among the just causes for
termination an employee under the Labor Code. The Labor Arbiters findings that petitioners
habitual absenteeism and tardiness constitutes gross and habitual neglect of duties. Xxx He
was given notice and hearing to defend
Xxx There is no sufficient basis shown to justify his preventive suspension xxx During the
pendency of the investigation the employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to life or property
of the employer o of his co-workers. But in this case there is no indication that the petitioner
posed a serious threat to life and property of the employer or his co-employees.
Resolution issued by the CA is AFFIRMED with MODIFICATION in that the award for
attorneys fee is deleted.
1.09 Compromise and Waiver
Acua vs Court of Appeals
Ponente: Justice Leonardo Quisumbing
The petitioners are OFWs deployed by the private respondent, a licensed recruitment agency to
its principal, 3d Pre-Color Plastic Inc., in Taiwan for an employment for a period of two years.
After paying their placement fees, they flew to Taiwan. Upon arriving at the job site, they were
made to sign a contract which states that their salary is only 11, 840, significantly lower than the
agreed salary in the Philippines. They were likewise informed that the dormitory which would
serve as their living quarters are still under construction. They were requested to temporarily
bear with the inconvenience but were assured that their quarters would be completed in a short
time. Petitioners claim that they were brought to a small room with a cement floor so dirty and
smelling with foul odor. They also complained of the womens comfort room being out of order.
Due to unbearable working conditions, they left their jobs and booked a flight home at their own
expense. When they arrived home, they went to the private respondents office and demanded
the return of their placement fees and plane fare. The latter refused but later offered a
settlement. They claimed they signed a waiver, otherwise they would not be refunded. They filed
a complaint for illegal dismissal and non-payment or underpayment of salaries or wages,
overtime pay etc., The Labor Aribiter ruled in favor of petitioners. The private respondents
appealed but it was denied. However, the CA ruled for the respondents.

Whether or not the quitclaims signed by the petitioners are valid;
Yes, Quitclaims executed by the employees are commonly frowned upon as contrary to public
policy and ineffective to bar claims for the full measure of the workers legal rights considering
the economic disadvantage of the employee and the inevitable pressure upon him by financial
necessity. Nonetheless, the so called economic difficulty confronting the employee is not an
acceptable ground to annul the compromise agreement unless it is accompanied by a gross
disparity between the actual claim and the amount of settlement. A perusal of the records
reveals that petitioners were not in any way deceived, coerced or intimidated into signing a
quitclaim waiver and the amount given to them were actually higher than the amount due to
Oriental Shipmanagement Co., Inc., petitioners,
vs. Court of Appeals, Felicisimo Cuesta and Wilfredo Gonzaga, respondents.
G.R.No. 153750, Jan. 25, 2006
Quisimbing, J.:
Private respondents were hired as Third Engineers on board a vessel for a one-year
contract through petitioner,a recruitment agency which hires seafarers for employment on board
vessels accredited to it.
Kara Seal Shipping Co. Ltd., the owner and manager of the vessel where private
respondents were employed, signed an agreement with International Transport Workers
Federation (ITF) for the increase of the monthly salary of the said employees. However, when
an ITF inspector boarded the vessel for a routine check, he discovered that the seafarers had
not been paid according to the agreement. While the Shipmaster assured the ITF inspector for
compliance, he still never complied and instead, ordered private respondents for repatriation
and made them sign Letters of Indemnity which contain an acknowledgment that they had
received whatever is due to them and a waiver of the right to institute legal actions against
private respondents.
Petitioner contended that the Letters of Indemnity were voluntarily signed by private
respondents, as evidenced by their signatures.
On the other hand, private respondents argued that the Letters of Indemnity were not
voluntarily executed by them.
Whether or not the Letters of Indemnity were voluntarily executed by private
respondents merely on the ground that their signatures were affixed on the said waiver,
and therefore making it valid.

Negative. The Letters of Indemnity contained a waiver by petitioner and Kara Seal of
the right to institute disciplinary action against respondents. Hence, respondents were under the
impression that they would be disciplinary dealt with if they would not sign the waiver.
xxx we are convinced that respondents were forced to sign the Letters of Indemnity.
Thus, said Letters of Indemnity must be deemed void. The stamp and signature of the ITF
representative thereon add nothing to render the letters of any legal effect, but instead add to
the impression of pressure exerted by ITF on the individual Filipino seamen.
xxx it is the employers duty to prove that such quitclaims were voluntary. The employees
acknowledgment of his termination with nary a protest or objection is not enough to satisfy the
requirement of voluntariness xxx.

Periquet v. NLRC, 186 SCRA 724 [1990], G.R. No. 91298, June 22,1990.
The petitioner, who was working as a toll collector in the Construction Development
Corporation of the Philippines (CDCP), was dismissed because of wilful breach of trust and
unauthorized possession of accountable toll tickets allegedly found in her purse during a
surprise inspection. A complaint for illegal dismissal was filed by the petitioner alleging that she
had been framed. The labor arbiter ordered the reinstatement of the petitioner within ten days
without loss of seniority rights and other privileges and with fun back wages to be computed
from the date of her actual dismissal up to the date of her actual reinstatement and this order
was affirmed by NLRC on August 29, 1980. However, there was no evidence showing that she
demanded for reinstatement. In fact, a compromise agreement was entered into by the parties
indicating that the petitioner waived her right to reinstatement and received the sum of
P14,000.00 as her back wages from the date of dismissal up to the date of agreement. On
March 16, 1987, the petitioner was given the position of Xerox machine operator after she
applied for re-employment with the CDCP. A letter was written by the petitioner on June 27,
1988 which is addressed to the new management of CDCP asking for the rights granted by the
decision date August 29, 1980 and claiming that the waiver she had signed was invalid. On
November 10, 1988, another quitclaim and release or a settlement releasing the private
respondent was signed by the petitioner which contained the additional payment of the private
respondent amounting to P9,544.00 as her back pay for three years.
After almost nine years, a motion was filed by the petitioner for the issuance of a writ of
execution of the decision. The labor arbiter granted the said motion which required the payment
to the petitioner of the sum of P205,207.42 from the private respondent and the NLRC sheriff
garnished the said amount. Thereafter, the appeal of CDCP was sustained by NLRC and set
aside the previous order. The NLRC held that the motion for execution was time-barred since
there was only a five year period for filling such motion as stated by Sec. 6, Rule 39 of the
Revised Rules of court and Art. 224 of the Labor Code. In addition, the claim of the petitioner

that she had not been reinstated was rejected by the NLRC alleging that the petitioner had
waived her rights to reinstatement through the settlement made between the parties.
Whether or not the petitioner is entitled for reinstatement and the payment of her backwages
and other privileges despite the fact that she executed a quitclaim releasing the private
respondent from said liabilities.
No. The Court denied the petition given the fact that the petitioner had entered into a
compromise agreement with CDCP waiving her right to reinstatement and received a sum of
P14,000.00 as her back wages from the date of dismissal up to the date of agreement. In
addition, the petitioner made another quitclaim and release with the private respondent after she
had claimed that the first waiver was invalid and asked for the rights granted by the decision
dated August 29, 1980. In this quitclaim and release, the petitioner again received an additional
payment amounting to P9,544.00.
Further, waivers and quitclaims are valid and binding if it was voluntarily entered into by
both parties. As it was stated in Art. 227, Book 5 Labor Relations, Any compromise settlement,
including those involving labor standard laws, voluntarily agreed upon by the parties with the
assistance of the Bureau or the regional office of the Department of Labor, shall be final and
binding upon the parties. In this case, it showed that the petitioner had voluntarily with his full
knowledge entered into a compromise agreement which shall result to a valid and binding
agreement. Thus, the petition is DENIED with costs against the petitioner. It is so ordered.
EMCO plywood corp. vs. abelgas (g.r no. 148532. April 14, 2004)

The petitioner EMCO is a domestic corporation engaged in the business of wood
processing, where the respondents used to be assigned as regular workers.
On January 20, 1993 and of March 2, 1993, EMCO, represented by Lim, informed
the Department of Labor and Employment (DOLE) of its intention to retrench some of its
workers. The intended retrenchment was grounded on purported financial difficulties occasioned
by alleged lack of raw materials, frequent machinery breakdown, low market demand and
expiration of permit to operate its sawmill department. A memorandum was thereafter issued by
EMCO, addressed to all its foremen, section heads, supervisors and department heads,
to retrench their workers.

Per EMCOs notice to the DOLE, one hundred four (104) workers were proposed for inclusion in
its retrenchment program. As it turned out, though, EMCO terminated two hundred fifty (250)
workers.Among them were herein respondents.
About two (2) years later, respondents, through their labor union, lodged a compliant against
EMCO for illegal dismissal, damages and attorneys fees. They questioned the validity of their
retrenchment and the sufficiency of the separation pay received by them.
EMCO countered by interposing the defense of lack of cause of action, contending that
respondents, by signing the quitclaims in favor of EMCO, had, in fact, waived whatever claims
they may have against the latter.
Finding for EMCO, the Labor Arbiter dismissed respondents complaint.
Respondents subsequent appeal to the NLRC was dismissed for lack of merit and the decision
of the Labor Arbiter was affirmed. Notably, the NLRC glossed over the issue of whether
respondents were validly retrenched, and anchored its dismissal of the appeal on the effect of
respondents waivers or quitclaims.

1. Whether or not petitioners had substantially complied with the requisites for a valid
2.whether or not the quitclaims/waivers executed by respondents are valid and binding.

1. The SC ruled :The Petition has no merit, because retrenchment is only a measure of
last resort when other less drastic means have been tried and found to be inadequate,
The only less drastic measure that EMCO undertook was the rotation work scheme: the
three-day-work per employee per week schedule. It did not try other measures, such as
cost reduction, lesser investment on raw materials, adjustment of the work routine to
avoid the scheduled power failure, reduction of the bonuses and salaries of both
management and rank-and-file, improvement of manufacturing efficiency, trimming of
marketing and advertising costs, and so on. The fact that petitioners did not resort to
other such measures seriously belies their claim that retrenchment was done in good
faith to avoid losses.

2. In Trendline Employees Association-Southern Philippines Federation of Labor (TEASPFL) v. NLRC and Philippine Carpet Employees Association v. Philippine Carpet
Manufacturing Corporation, similar retrenchments were found to be illegal, as the
employers had failed to prove that they were actually suffering from poor financial
conditions. In these cases, the Quitclaims were deemed illegal, as the employees
consents had been vitiated by mistake or fraud.
These rulings are applicable to the case at bar. Because the retrenchment was illegal and
of no effect, the Quitclaims were therefore not voluntarily entered into by respondents. Their
consent was similarly vitiated by mistake or fraud. The law looks with disfavor upon quitclaims
and releases by employees pressured into signing by unscrupulous employers minded to evade
legal responsibilities.
As a rule, deeds of release or quitclaim cannot bar employees from demanding benefits to
which they are legally entitled or from contesting the legality of their dismissal. The acceptance
of those benefits would not amount to estoppel. The amounts already received by the present
respondents as consideration for signing the Quitclaims should, however, be deducted from
their respective monetary awards.
WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED.
Costs against petitioners.

Sarocam v. Interorient Maritime

Mr. Sarocam worked as a ship officer for Interorient Maritime. While the vessel was
navigating, he fell from a ladder and suffered lumbar sprain. The examining physician
recommended his repatriation. This was approved by Interorient.
Mr. Sarocam was then examined by the company physician. During his first check-up, his spine
x-ray results was normal. He was prescribed with Alaxan for his back pains. On his second
check-up, Mr. Sarocams back no longer hurt, and was declared fit to work. Barely three months
from being declared fit to work, Mr. Sarocam executed a quitclaim accepting his sickwages and
freeing his employees from further liability.
Months after, Mr. Sarocam filed a complaint seeking disability benefits. He argued that
quitclaims are frowned upon for being contrary to public policy, and because of this reason, the
quitclaim he executed is invalid.
Whether or not quitclaims (waivers) are invalid.
No. While Mr. Sarocam is correct that quitclaims are frowned upon for being contrary to public
policy, the court has likewise recognized legitimate waivers that represent a voluntary and

reasonable settlement of a workers claim which should be respected as law between the
parties. In the present case, Mr. Sarocam, by his own hand wrote that he has read and
understood the contents of the quitclaim. Because the agreement has been voluntarily entered
into, it is binding on the parties, and hence, Mr. Sarocam has freed his employers from liabilities.
Hence, he can no longer ask for disability benefits.
Section 2. Labor and the Constitution
2.01Historical Background/Rationale
Antamoc Goldfields Mining Company vs CIR
GR No. L-46892, 28 June 1940
The National Labor Union, representing the workers of Antamoc Goldfield Mining
Company, sent a letter to the management demanding higher pay and better working
conditions. Management accepted some of their demands and rejected the others.
Consequently, the workers went on strike. The Department of Labor intervened and an amicable
settlement between the parties was entered into. Despite this, another strike was subsequently
held. A stoning incident occurred which resulted in the dismissal of 45 workers. The matter was
heard in the Court of Industrial Relations (CIR) where witnesses for both petitioners and
respondents testified. The CIR ordered one of its special agents to proceed to the premises of
the mines and to conduct further investigation which disclosed that the precipitate and
unwarranted dismissal of the 45 men after the incident seems to have been spurred by an over
anxious desire on the part of the company to get rid of these men. It was also found out that
more than 400 workers of different classes (mockers, miners, timbermen, trammers and
capataces) coming from different mines in the region have been employed by Antamoc as fresh
laborers and that almost all, if not all, of these men are not members of the National Labor
Union. The CIR rules that the discharges and indefinite suspensions were made by Antamoc
without first securing the consent of the CIR in violation of a previous order enjoining them from
discharging any laborer involved in the dispute without just cause and without previous authority
of the Court. Antamok insists in its right not to be restrained or interfered with by the CIR.
Consequently, they assail the validity of Commonwealth Act No. 103 which created the CIR on
the ground that it deprives them of liberty and property without due process of law.
Whether or not Commonwealth Act No. 103 is unconstitutional.

HELD: No. In Commonwealth Act No. 103, and by it, the Government no performs the role of
mere mediator or intervenor but that of the supreme arbiter. The policy of laissez faire has to
some extent given way to the assumption by the government of the right of intervention even in
contractual relations affected with public interests. Embodying the spirit of the present epoch,
general provisions were inserted in the Constitution which are intended to bring about the
needed social and economic equilibrium between component elements of society through the
application of what may be termed as the justicia communis advocated by Grotius and Leibnits
many years ago to be secured through the counterbalancing of economic and social forces and
opportunities which should be regulated, if not controlled by the State of placed, as it were, in
custodia societatis. The provision on the promotion of social justice to ensure the well-being
and economic security of all the people was thus inserted as vital principle in our Constitution
(under Section 5, Article II). And in order that this declaration of principle may not just be an
empty medley of words, the Constitution in various sections thereof has provided the means
towards its realization. For instance, Section 6 of Article XIII declares that the State shall afford
protection to labor, especially to working women and minors, and shall regulate the relations
between landowner and tenant, and between labor and capital in industry and in agriculture.
The same section also states that the State may provide for compulsory arbitration. In
extraordinary cases mentioned in Section 16 of Article VI, the President of the Philippines may
be authorized by law, for a limited period and subject to such restrictions as the National
Assembly may prescribe, to promulgate rules and regulations to carry out such a declared
national policy. In our Bill of Rights, we now find the following provision: The right to form
associations or societies for purposes not contrary to law shall not be abridged.
By and large, these provision in our Constitution all evince and express the need of shifting
emphasis to community interest with a view to affirmative enhancement of human values. In
conformity with the constitutional objective and cognizant of the historical fact that industrial and
agricultural disputes had given rise to disquietude, bloodshed and revolution in our country, the
National Assembly enacted Commonwealth Act No. 103, entitled An Act to Afford Protection of
Labor by Creating a Court of Industrial Relations Empowered to Fix Minimum Wages for
Laborers and Maximum Rental to be Paid by Tenants, and to Enforce Compulsory Arbitration
Between Employers or Landlords, and Employees or Tenants, respectively; and by Prescribing
Penalties for the Violation of the Orders, and later, Commonwealth Act No. 213, entitled: An
Act to Define and Regulate Legitimate Labor Organizations.
Commonwealth Act No. 213 was enacted in pursuance of what appears to be the
deliberate embodiment of a new social policy, founded on the conception of a society integrated
not by independent individuals at dealing at arms length, but by interdependent members of a
consolidated whole whose interests must be protected against mutual aggression and warfare
among and between divers and diverse units which are impelled by countervailing and opposite
individual and group interests, and this is particularly true in the relationship between labor and
capital. Social and industrial disturbances which fifty years ago were feudal-like and of isolated
importance may now well result in a serious strain upon the entire economic organism of the
nation. Several attempts at meeting and solving our peculiar social and economic problems
have already been made. The system of voluntary arbitration devised by Act no. 4055 of the
defunct Philippine Legislature has apparently been abandoned by the enactment of the
aforementioned Commonwealth Acts no. 103 and 213.

2.02Nature of Provision


Individual respondents were port stewards of catering sub-department on the passenger
services department of petitioner. Their salaries were deducted due to the mishandling of
companys properties which the respondents resented. On August 27, 1984, represented by the
union, individual respondents made a formal notice regarding the deductions thru Mr. Abad,
Manager for care taking who was on vacation leave but no action was taken. They then filed a
formal grievance pursuant to the collective bargaining agreement.
On his return, Mr. Abad on December 7, 1984, he informed the grievants and scheduled
meeting. Thereafter, the individual respondents refused to do ramp inventory thinking that since
there was no action taken by Mr. Abad five days after they filed the petition, it shall be resolved
in their favor. But Mr. Abad denied the petition and suspended individual respondents. He also
pointed out that it was only proper that employees were charged for the mishandling of
companys property.
Private respondents filed a complaint for illegal suspension to the labor arbiter. The
decision was ruled in favor of the petitioner and the complaint was set aside. The labor arbiters
decision was appealed to the respondent commission who rendered decision setting aside the
labor arbiters order of dismissal. Petitioners motion for reconsideration was denied.
Whether or not the grievance submitted to Mr. Abad should be resolve in favor of the
aggrieved party .
The petition hinges on the interpretation of Sec. 2, Art. IV of the PAL-PALEA CBA about
the processing of grievances. Petitioner submits that since the grievance machinery was made
for both labor and management, employees are duty-bound to thresh out first all the remedies
before the management and give them opportunity to act on it. But due to the absence of Mr.
Abad the grievance was not acted upon.
The court held that the employees should not bear the dire effects of Mr. Abads absence. The
management should had someone else to look after the grievance during his absence. Under
the policy of social justice, the law bends over backward to accommodate the interests of the
working class on the humane justification that those with less privileges in life should have more
privileges in law.