G.R. No.

L-18353             July 31, 1963

SAN MIGUEL BREWERY, INC., petitioner, vs.

DEMOCRATIC LABOR ORGANIZATION, ET AL., respondents.

FACTS: Private respondent Union claims, among others, that the outside or field sales personnel of herein
petitioner be entitled to an overtime pay as mandated under the Eight-Hour Labor Law and extra pay for the work
done by its security guards during Sundays and holidays.

Petitioner contends, as for the claim for overtime pay, that the commission already paid to the sales agents takes
the place of such overtime compensation. As for the claim of extra pay for Sundays and holidays, it contended
that the guards are already paid on a monthly basis and are given one day off which may take the place of the work
they may perform either on Sunday or any holiday.

ISSUE: Whether or not the claims for overtime pay and extra pay for Sundays and Holidays of herein concerned
personnel should be granted.

HELD: As to the overtime pay, the Eight-Hour Labor Law only has application where an employee or laborer is
paid on a monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he is made to work
beyond the requisite period of 8 hours, he should be paid the additional compensation prescribed by law. This law
has no application when the employee or laborer is paid on a piece-work, "pakiao", or commission basis,
regardless of the time employed.

The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a greater extent, works
individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within
the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra
compensation. He works away from his employer's place of business, is not subject to the personal supervision of
his employer, and his employer has no way of knowing the number of hours he works per day.

As to the extra pay for the work done on Sundays and Holiday, Section 4 of Commonwealth Act No. 444
expressly provides that no person, firm or corporation may compel an employee or laborer to work during Sundays
and legal holidays unless he is paid an additional sum of 25% of his regular compensation. This proviso is
mandatory, regardless of the nature of compensation. The only exception is with regard to public utilities who
perform some public service.

G.R. No. L-6339             April 20, 1954

MANUEL LARA, ET AL., plaintiffs-appellants, vs.

PETRONILO DEL ROSARIO, JR., defendant-appellee.

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FACTS: Defendant is a taxi operator who employed 3 mechanics and 49 taxi drivers, who were paid on the
commission basis, or 20 per cent of the gross return, and who have worked for him from 2 to 37 months already.

Without notice to the said workers, defendant sold the 25 taxi units, as a result of which, they lost their jobs.

They brought this action against Del Rosario to recover compensation for overtime work rendered beyond eight
hours and on Sundays and legal holidays, and one month salary (mesada) provided for in article 302 of the Code of
Commerce because the failure of their former employer to give them one month notice.

ISSUE: Whether or not plaintiffs are entitled to extra compensation for work performed in excess of 8 hours a
day, Sundays and holidays included.

HELD: No. Laborer or employee with no fixed salary, wages or remuneration but receiving as compensation from
his employer uncertain and variable amount depending upon the work done or the result of said work (piece work)
irrespective of the amount of time employed, is not covered by the Eight-Hour Labor Law and is not entitled to
extra compensation should he work in excess of 8 hours a day. And this seems to be the condition of employment
of the plaintiffs.

A driver in the taxi business of the defendant, like the plaintiffs, in one day could operate his taxi cab eight hours,
or less than eight hours or in excess of 8 hours, or even 24 hours on Saturdays, Sundays, and holidays, with no
limit or restriction other than his desire, inclination and state of health and physical endurance. He could drive
continuously or intermittently, systematically or haphazardly, fast or slow, etc. depending upon his exclusive wish
or inclination. One day when he feels strong, active and enthusiastic he works long, continuously, with diligence
and industry and makes considerable gross returns and receives as much as his 20 per cent commission. Another
day when he feels despondent, run down, weak or lazy and wants to rest between trips and works for less number
of hours, his gross returns are less and so is his commission. In other words, his compensation for the day depends
upon the result of his work, which in turn depends on the amount of industry, intelligence and experience applied
to it, rather than the period of time employed. In short, he has no fixed salary or wages.

G.R. No. L-16275             February 23, 1961

PAN AMERICAN WORLD AIRWAYS SYSTEM (PHILIPPINES), petitioner, vs.

PAN AMERICAN EMPLOYEES ASSOCIATION, respondent.

FACTS: Petitioner herein claims that the one-hour meal period should not be considered as overtime work (after
deducting 15 minutes), because the evidence showed that complainants could rest completely, and were not in any
manner under the control of the company during that period. To the contrary, during the so called meal period, the
mechanics were required to stand by for emergency work; that if they happened not to be available when called,
they were reprimanded by the leadman.

ISSUE: Whether or not the one-hour meal period should be considered as overtime work.

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HELD: Yes. The meal hour was not one of complete rest, but was actually a work hour, since for its duration, the
laborers had to be on ready call. Of course, if the Company practices in this regard should be modified to afford
the mechanics a real rest during that hour (f. ex., by installing an entirely different emergency crew, or any similar
arrangement).

[G.R. No. L-17068. December 30, 1961.]

NATIONAL SHIPYARDS AND STEEL CORPORATION, Petitioner, v. COURT OF INDUSTRIAL

RELATIONS and DOMINADOR MALONDRAS, Respondents.

FACTS: The petitioner NASSCO, a government-owned and controlled corporation, is the owner of several barges
and tugboats used in the transportation of cargoes and personnel in connection with its business of shipbuilding
and repair. In order that its bargemen could immediately be called to duty whenever their services are needed, they
are required to stay in their respective barges, for which reason they are given living quarters therein as well as
subsistence allowance of P1.50 per day during the time they are on board. However, upon prior authority of their
superior officers, they may leave their barges when said barges are idle.

Respondent Malondras contends that he should be paid overtime compensation for every hour in excess of the
regular working hours that he was on board his vessel or barge each day, irrespective of whether or not he actually
put in work during those hours.

ISSUE: Whether or not seamen, like herein petitioner Malondras is entitled to overtime pay for work rendered
beyond the eight-hour period.

HELD: Seamen are required to stay on board their vessels by the very nature of their duties, and it is for this
reason that, in addition to their regular compensation, they are given free living quarters and subsistence
allowances when required to be on board. It could not have been the purpose of our law to require their employers
to pay them overtime even when they are not actually working: otherwise, every sailor on board a vessel would be
entitled to overtime for sixteen hours each day, even if he had spent all those hours resting or sleeping in his bunk,
after his regular tour of duty. The correct criterion in determining whether or not sailors are entitled to overtime
pay is not, therefore, whether they were on board and can not leave ship beyond the regular eight working hours a
day, but whether they actually rendered service in excess of said number of hours.

G.R. No. L-21348             June 30, 1966

RED V COCONUT PRODUCTS, LTD., petitioner, vs.

COURT OF INDUSTRIAL RELATIONS, TANGLAW NG PAGGAWA, ALBERTO DELA CRUZ, ET
AL., respondents.

FACTS: Tanglaw ng Paggawa and Red V Coconut Products, Ltd. entered into a collective bargaining agreement
provided among other things for payment of differentials to night shift workers in the desiccated coconut
factory.1äwphï1.ñët

It clearly asserted that (1) petitioners-laborers "are working in the Red V Coconut Products, Ltd." and (2) they
"work in two (2) shifts (Blue and Red shifts) consisting of approximately 12 hours each shift." Evidence was
adduced to the effect that the aforesaid petitioners-workers were engaged on a piece-work basis.

ISSUE: Whether or not the laborers are entitled to night-shift differentials, negating their status as piece-workers.

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HELD: Although the Eight-Hour Labor Law provides that it does not cover those workers who prefer to be paid
on piece-work basis (Sec. 2, CA 444), nothing in said law precludes an agreement for the payment of overtime
compensation to piece-workers. And in agreeing to the provision for payment of shift differentials to the
petitioners-workers aforementioned, in the bargaining agreement, as well as in actually paying to them said
differentials, though not in full, the company in effect freely adhered to an application and implementation of the
Eight-Hour Labor Law, or its objectives, to said workers.

And, finally, the laborers in question are not strictly under the full concept of piece-workers as contemplated by
law for the reason that their hours of work — that is, 12 hours per shift — are fixed by the employer. As ruled by
this Court in Lara v. Del Rosario, 94 Phil. 780, 781-782, the philosophy underlying the exclusion of piece workers
from the Eight-Hour Labor Law is that said workers are paid depending upon the work they do "irrespective of the
amount of time employed" in doing said work. Such freedom as to hours of work does not obtain in the case of the
laborers herein involved, since they are assigned by the employer to work in two shifts for 12 hours each shift.
Thus it cannot be said that for all purposes these workers fall outside the law requiring payment of compensation
for work done in excess of eight hours.

[G.R. No. L-28607. May 31, 1971.]

SHELL OIL WORKERS’ UNION, Petitioner, v. SHELL COMPANY OF THE PHILIPPINES, LTD., and
THE COURT OF INDUSTRIAL RELATIONS, Respondents.

FACTS: Union called a strike due to the Company’s insistence on dissolving its security guard section stationed
at its Pandacan Installation despite its continuance being included in the existing CBA. The strike was certified by
the President to the CIR.

In President’s certification, it is said that the strike ‘was a result of the transfer by the Company of the eighteen
(18) security guards to its other department and the consequent hiring of a private security agency to undertake the
work of said security guards.’

Union: 18 security guards are part of the bargaining unit and covered by the existing CBA and as such, their
transfers and eventual dismissals are illegal, being done in violation of the existing contract, prayed that said
security guards be reinstated with full back wages from the time of their dismissal up to the time of their actual
reinstatement.

Company: Company maintained that in contracting out the security service and redeploying the 18 security guards
affected, it was merely performing its legitimate prerogative to adopt the most efficient and economical method of
operation, said guards were transferred to other sections with increase, except for four (4) guards, in rates of pay
and with transfer bonus, action was motivated by business consideration in line with past established practice and
made after notice to and discussion with the Union, the 18 guards concerned were dismiss for wilfully refusing to
obey the transfer order; and that the strike staged by the Union on May 25, 1967 is illegal. Company prayed,
among others, for the dismissal of the Union’s petition and the said Union’s strike be declared illegal followed by
the termination of the employee status of those responsible and who participated in said illegal strike

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However, Company was bent on the dissolution,which was communicated to the Unions in a panel to panel
meeting in1967. Counter-offer by the Union to reduce working days from 6 to 5 was rejected by the Company
because it was highly unusual and impracticable.

When Union consulted with the members, the majority made clear that if the Company continued with their plan,
there would be a strike.

Company released a notice of reassignment. Union decided to hold a strike immediately if the circular was
implemented.

The next day, the Union went on strike when the guards from the new security agency were trying to pass the main
gate.

Conciliation efforts of the Dept. of Labor were unsuccessful.

When President certified the strike, CIR released a return to work order.

CIR declared the strike illegal there being no compliance with the statutory requisites before an economic strike
could be staged.

ISSUES: WON CIR erred in declaring the strike to be illegal (YES)

HELD: SC: Even if the regime of unionization and collective bargaining leaves room for the free exercise of
management rights, we are unable to close our eyes to the violation of a contract still in force implicit in such
dissolution thus giving rise to an unfair labor practice.

The harsh and unwarranted sanction imposed, the dismissal of the security guards and the officers of the Union,
cannot stand.

strike cannot be declared illegal, there being a violation of the collective bargaining agreement by Shell Company.
Even if it were otherwise, however, this Court cannot lend sanction of its approval to the outright dismissal of all
union officers, a move that certainly would have the effect of considerably weakening a labor organization, and
thus in effect frustrate the policy of the Industrial Peace Act to encourage unionization.

the serious acts of violence occurring in the course of the strike could be made the basis for holding responsible a
leader or a member of the Union guilty of their commission, what was decided by respondent Court should not be
disturbed

the stand of Shell Company as to the scope of management prerogative is not devoid of plausibility if it were not
bound by what was stipulated. The growth of industrial democracy fostered by the institution of collective
bargaining with the workers entitled to be represented by a union of their choice, has no doubt contracted the
sphere of what appertains solely to the employer. It would be going too far to assert, however, that a decision on
each and every aspect of the productive process must be reached jointly by an agreement between labor and
management.

freedom to manage the business remains with management. It still has plenty of elbow room for making its wishes
prevail. In much the same way that labor unions may be expected to resist to the utmost what they consider to be
an unwelcome intrusion into their exclusive domain, they cannot justly object to management equally being
jealous of its prerogatives.ch

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Company cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are
essential for its operation. HOWEVER, while management has the final say on such matter, the labor union is not
to be completely left out.

In this particular case though, what was stipulated in an existing collective bargaining contract certainly precluded
Shell Company from carrying out what otherwise would have been within its prerogative if to do so would be
violative thereof.

crucial question: whether the then existing collective bargaining contract running for three years from August 1,
1966 to December 31, 1969 constituted a bar to such a decision reached by management. (YES)

there was specific coverage concerning the security guard section in the collective bargaining contract. It is found
not only in the body thereof but in the two appendices concerning the wage schedules as well as the premium pay
and the night compensation to which the personnel in such section were entitled. It was thus an assurance of
security of tenure, at least, during the lifetime of the agreement.

Not enough that the guards would not be unemployed as they would be transferred to another position with an
increase in pay and with a transfer bonus. For what is involved is the integrity of the agreement reached, the terms
of which should be binding of both parties. One of them may be released, but only with the consent of the other.
The right to object belongs to the latter, and if exercised, must be respected. Such a state of affairs should continue
during the existence of the contract.

Furthermore, the Company had already conducted studies and decided, as early as 1964 to dissolve the section but
they still entered into the CBA with the Union. They did not need to agree to all the stipulations or reserved the
right to dissolve and reassign the guards. There is no justification for the Company’s insistence on pushing through
with the dissolution without violating the CBA.

The Company, in failing to manifest fealty to the stipulations of the CBA is guilty of unfair labor practice.

Republic Savings Bank v. Court of Industrial Relations: “It being expressly provided in the industrial Peace Act
that [an] unfair labor practice is committed by a labor union or its agent by its refusal ‘to bargain collectively with
the employer’ and this Court having decided in the Republic Savings Bank case that collective bargaining does not
end with the execution of an agreement, being a continuous process, the duty to bargain necessarily imposing on
the parties the obligation to live up to the terms of such a collective bargaining agreement if entered into, it is
undeniable that non-compliance therewith constitutes an unfair labor practice.”

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G.R. No. L-37790 March 25, 1976

MAFINCO TRADING CORPORATION, petitioner, vs.

THE HON. BLAS F. OPLE, in his capacity as Secretary of Labor, The NATIONAL LABOR RELATIONS
COMMISSION RODRIGO REPOMANTA and REY MORALDE, respondents.

FACTS: Rodrigo Repomanta and Moralde executed a peddling contract with herein petitioner MAFINCO and
agreed to “buy and sell" Cosmos soft drinks. The contracts were to remain in force for one year unless sooner
terminated by either party upon five days notice to the other.

As it is, the contracts for terminated in the instance of MAFINCO. Repomanta and Moralde complained for illegal
dismissal before the NLRC. They contend that their peddling contracts were terminated because of their activities
in organizing a union among the peddlers. They further argue that the peddling contracts were a scheme to
camouflage an employer-employee relationship and thus evade the coverage of labor laws.

Mafinco filed a motion to dismiss the complaint on the ground that the NLRC had no jurisdiction because
Repomanta and Moralde were not its employees but were independent contractors. It stressed that there was
termination of the contract, not a dismissal of an employee.

ISSUE: Whether or not there is employer-employee relationship to constitute possible illegal dismissal of
employee, and therefore the case is within the jurisdiction of the NLRC

HELD: No. Repomanta and Moralde were not employees of Mafinco but were independent contractors. Hence,
the old NLRC had no jurisdiction over the termination of the peddling contract.

Repomanta and Moralde voluntarily executed with Mafinco formal peddling contracts which indicate the manner
in which they would sell Cosmos soft drinks. That Circumstance signifies that they were acting as independent
businessmen. They were to sign or not to sign that contract. If they did not want to sell Cosmos products under the
conditions defined in that contract; they were free to reject it.

But having signed it, they were bound by its stipulations and the consequences thereof under existing labor laws.
One such stipulation is the right of the parties to terminate the contract upon five days' prior notice (Par. 9).

"In determining the existence of employer-employee relationship, the following elements are generally considered,
namely: (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-although the latter is the most important element"

[G.R. No. L-18559. June 30, 1964.]

PHILIPPINE AIR LINES EMPLOYEES’ ASSOCIATION, otherwise known as "PALEA", as assignee of

the employees of the PHILIPPINE AIR LINES, INC., Plaintiff-Appellant, v. PHILIPPINE AIR LINES,
INC., otherwise known as "PAL", Defendant-Appellant.

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FACTS: On January 4, 1956, plaintiff Philippine Air Lines Employees’ Association otherwise known as the
PALEA — whose members are regular employees of defendant Philippine Air Lines Incorporated — otherwise
known as PAL — and the latter entered into a collective bargaining contract effective up to January 4, 1959,
stipulating, inter alia, that the regular working hours of said employees shall be on the basis of forty-eight (48)
hours a week. Soon after the approval of Republic Act No. 1880, on June 22, 1957, providing that the "legal
number of hours of labor", except for "schools, courts, hospitals and health clinics . . . shall his eight (8) hours a
day, for five (5) days a week or a total of forty (40) hours a week exclusive of time for lunch", and that said Act
"shall also be applicable to all laborers employed in government-owned and controlled corporations", plaintiff
made representations with the defendant for the extension, to the members of the former, of the benefits of said
Act, upon the theory that the PAL is a government controlled corporation, over 54% of its authorized capital stock
being admittedly owned by the National Development Co. — otherwise known as the NDC — which is wholly
owned and controlled by the government. As these representations did not meet with the approval of the PAL,
which contended that it is not a government owned and controlled corporation, plaintiff began this suit in the Court
of First Instance of Manila, on August 7, 1958, and prayed in its complaint, as twice amended, that the PAL be
declared a government controlled corporation subject to the provisions of said Act, and compelled to shorten the
hours of work for its employees and daily wagers, from 48 to 40 hours a week, from Monday thru Friday, at the
rate of eight (8) hours a day, "but, if the exigencies of the service demands, to pay the overtime rates for services
rendered or to be rendered beyond the 40 hours a week required by said Republic Act No. 1880", in addition to
attorney’s fees and costs.

ISSUE/s: 1)Whether or not PAL is a government controlled corporation. 2)Whether or not working hours of PAL
employees governed by their collective bargaining agreement with plaintiff or by Republic Act No. 1880.

HELD: More decisive is the fact that Republic Act No. 1880 reflects a humanitarian policy of the government
aimed at the protection and promotion of the health of laborers, workers and employees. It is only logical that such
policy be controlled not only in bureaus, offices or agencies of the government performing purely political
functions, but, also, in corporation either owned or controlled by the government. Indeed, what is not sufficiently
enlightened and humane as regards the treatment accorded to persons discharging sovereign functions cannot be
otherwise with respect to those engaged in corporate or proprietary functions. Moreover, when a corporation is
owned or controlled by the government, it is only natural that the latter’s policy be binding upon the management
of such corporation. In any event, in Cervantes v. Auditor General (91 Phil., 359), we held that ‘there can be no
question that the NAFCO" — 51% (3.19% less that the amount of shares of the PAL owned by the (NDC) of the
capital stock of which was subscribed by the national government — "is a government controlled corporation."

Republic Act No. 1880 has been passed in the exercise of the police power of the state, the validity of which is not
impugned by the defendant, and that it must prevail over the provisions of the aforementioned agreement.

[G.R. No. L-65428. February 20, 1984.]

BAGUIO WATER DISTRICT, Petitioner, v. HON. CRESENCIANO B. TRAJANO in his official capacity

as the Director of the Bureau of Labor Relations of the Ministry of Labor and Employment, and BAGUIO
WATER DISTRICT EMPLOYEES LABOR UNION, Respondents.

FACTS: The Baguio Water District was formed pursuant to Title II — Local Water District Law — of P.D. No.
198, as amended. The BWD is by Sec. 6 of that decree "a quasi-public corporation performing public service and
supplying public wants."

This is a petition to review the decision of the public respondent which affirmed that of a Med-Arbiter calling for a
certification election among the regular rank and file employees of the Baguio Water District (BWD).
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ISSUE: Whether or not the employees of BWD are considered government employees.

HELD: Baguio Water District is a corporation created pursuant to a special law, P.D. No. 198, as amended. After
P.D. No. 198 was amended by P.D. No. 1479, its officers and employees became part of the Civil Service (Sec. 1,
Art. XII-B, Constitution, P.D. No. 868). Any controversy arising from their employment status is removed from
the jurisdiction of the Labor Arbiter and the NLRC pursuant to Art. 277 of the Labor Code, as amended.

G.R. No. L-50568 November 7, 1979

OCEANIC PHARMACAL EMPLOYEES UNION (FFW), complainant/appellant, vs.

HON. AMADO G. INCIONG and OCEANIC PHARMACAL INC, respondents/appellees.

FACTS: The Union objected to the discontinuance of the holiday pay and when an amicable settlement could not
be reached, the Union filed a complaint against the Company for unfair labor practice and violation of the CBA
regarding holiday pay.

Respondent contends that discontinuance of the of the benefit justified by Section 2, Rule IV, Book III of the
Rules and Regulation Implementing the Labor Code and Policy Instructions No. 9 of the Minister of Labor, as
stated in the second paragraph of the Company's memorandum dated October 25, 1976? These issuances are
respectively as follows:

Section 2. Status of employees paid by the month. — Employees who are uniformly paid by the
month, irrespective of the number of working days therein, with a salary of not less than the
statutory or established minimum wages shall be presumed to be paid for all days in the month
whether worked or not.

ISSUE: Whether or not the discontinuance of the holiday pay of herein employees is lawful.

HELD: There is no legal basis for the withdrawal of holiday benefits by the Company. Consequently, its violation
of the Supplementary Agreement constitutes unfair labor practice.

1. Section 2, Rule IV, Book Ill of the Rules and Regulations Implementing the Labor Code was promulgated on
February 16, 1976. On the other hand, Policy Instructions No. 9 was issued on February 23, 1976. Since the said
rules and policy instructions were already existing and effective prior to the execution of the Supplementary
Agreement on April 27, 1976, it is clear that respondent company agreed to continue giving holiday pay to its
monthly paid employees knowing fully well that said employees are not covered by the law requiring payment of
holiday pay. When respondent company, therefore, interposed the condition that it "shall continue to extend the
said benefits unless otherwise directed by other new requirements, rules, laws, decrees, etc. on the subject," it was
referring to laws, decrees, rules, etc. other than the abovecited issuances.

2. Even granting arguendo that the said issuance were promulgated after the execution of the agreement, there is
still no justification for withdrawal of holiday pay benefits by respondent. company, in view of Section 11, Rule
IV, Book III of the Implementing Rules and Regulations, which explicitly provides:

Sec. 11. Relation to agreements.— Nothing in this Rule shall justify an employer in withdrawing or
reducing any benefits, supplements or payments for unworked holidays as provided it) existing
individual or collective agreement or employer practice or policy."

G.R. No. L-58870 December 18, 1987

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CEBU INSTITUTE OF TECHNOLOGY (CIT), petitioner, vs.
HON. BLAS OPLE, in his capacity as Minister, Ministry of Labor and Employment, ET. AL.

FACTS: In a nutshell, the present controversy was precipitated by the claims of some school personnel for
allowances and other benefits and the refusal of the private schools concerned to pay said allowances and benefits
on the ground that said items should be deemed included in the salary increases they had paid out of the 60%
portion of the proceeds from tuition fee increases provided for in section 3 (a) of Pres. Decree No. 451.

Petitioner school claims that the case at bar is a money claim and should therefore be within the original and
exclusive jurisdiction of the Labor Arbiter pursuant to article 217 of the Labor Code, as amended.

ISSUE: Whether or not the Ministry of Labor and Employment lacks jurisdiction to try the case.

HELD: Section 3(a) of Pres. Dec. No. 451 imposes among the conditions for the approval of tuition fee
increases, the allocation of 60% per cent of the incremental proceeds thereof for increases in salaries or wages of
school personnel and not for any other item such as allowances or other fringe benefits.

Contrary to the petitioner's protestation of lack of jurisdiction, the Secretary of Labor or his duly authorized
representatives (which includes Regional Directors) are accorded the power to investigate complaints for non-
compliance with labor laws, particularly those which deal with labor standards such as payment of wages and
other forms of compensation, working hours, industrial safety, etc, Article 128 of the Labor Code.

Furthermore, Policy Instruction No. 6 which deals with the distribution of jurisdiction over labor cases restates
inter alia that "(L)abor standards cases arising from violation of labor standards laws discovered in the course of
inspection or complaints where employer-employee relations still exist" are under the exclusive original
jurisdiction of the Regional Director.

Even assuming that respondent Regional Director was without jurisdiction to entertain the case at bar, petitioner is
now barred at this stage to claim lack of jurisdiction having actively participated in the proceedings below.
Petitioner never questioned the jurisdiction of the respondent Regional Director.

G.R. No. L-65482 December 1, 1987

JOSE RIZAL COLLEGE, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF
TEACHERS/OFFICE WORKERS, respondents.

FACTS: Petitioner JRU employs collegiate faculty who are paid on the basis of student contract hour. In the
programming of these student contract hours, legal holidays are excluded and labelled in the schedule as "no class
day. " If a regular week day is declared a holiday, the school calendar is extended to compensate for that day. Thus
petitioner argues that the advent of any of the legal holidays within the semester will not affect the faculty's salary
because this day is not included in their schedule while the calendar is extended to compensate for special
holidays. Thus the programmed number of lecture hours is not diminished.

ISSUE: Whether or not the school faculty who according to their contracts are paid per lecture hour are entitled to
unworked holiday pay.

HELD: Petitioner is exempt from paying hourly paid faculty members their pay for regular holidays, but is
ordered to pay said faculty members their regular hourly rate on days declared as special holidays or for some
reason classes are called off or shortened for the hours they are supposed to have taught, whether extensions of
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class days be ordered or not; in case of extensions said faculty members shall likewise be paid their hourly rates
should they teach during said extensions.

It is readily apparent that the declared purpose of the holiday pay which is the prevention of diminution of the
monthly income of the employees on account of work interruptions is defeated when a regular class day is
cancelled on account of a special public holiday and class hours are held on another working day to make up for
time lost in the school calendar.

[G.R. No. 76746. July 27, 1987.]

DURABUILT RECAPPING PLANT & COMPANY and EDUARDO LAO, GENERAL

MANAGER, Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION, HON. COMM. RICARDO
C. CASTRO, HON. ARBITER AMELIA M. GULOY, KAPISANAN NG MGA MANGGAGAWA SA
DURABUILT and REYNALDO BODEGAS, Respondents.

FACTS: The illegal dismissal of the private respondent is conceded by the petitioner. It is willing to pay
backwages. However, the petitioner argues that for days where no work was required and could be done by its
employees, no wages could have been earned and, thereafter, lost by said employees to justify an award of
backwages.

ISSUE: Whether or not the proper basis for the computation of backwages in favor of an illegally dismissed
employee is the monthly fixed pay.

HELD: Where the failure of workers to work was not due to the employer’s fault, the burden of economic loss
suffered by the employees should not be shifted to the employer. Each party must bear his own loss.

Indeed, it would neither be fair nor just to allow respondent to recover something he has not earned and could not
have earned and to further penalize the petitioner company over and above the losses it had suffered due to lack of
raw materials and the energy-saving programs of the government. The private respondent cannot be allowed to
enrich himself at the expense of the petitioner company. The computation of backwages should be based on daily
rather than on monthly pay schedules where, as in the case at bar, such basis is more realistic and accurate.

G.R. No. 113347 June 14, 1996

FILIPINAS SYNTHETIC FIBER CORPORATION (FILSYN), petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER VOLTAIRE A. BALITAAN,
FELIPE LOTERTE and DE LIMA TRADING & GENERAL SERVICES, respondents.

FACTS: Petitioner contracted with De Lima Trading and General Services (DE LIMA) for the performance of
specific janitorial services, pursuant to which Felipe Loterte, among others, was deployed at FILSYN to take care
of the plants and maintain general cleanliness around the premises.

Loterte sued FILSYN and DE LIMA for illegal dismissal, underpayment of wages, non-payment of legal holiday
pay, service incentive leave pay and 13th month pay.

The LA, affirmed by NLRC, held FILSYN liable there being an employer-employee relationship between it and
Loterte,

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ISSUE: Whether or not there is employer-employee relationship between FILSYN and Loterte.

HELD: DE LIMA is an independent job contractor, not a mere labor-only contractor. Under the Labor Code, two
(2) elements must exist for a finding of labor-only contracting: (a) the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment, machineries, work premises,
among others, and (b) the workers recruited and placed by such persons are performing activities directly related
to the principal business of such employer. These two (2) elements do not exist in the instant case. Consequently,
DE LIMA being an independent job contractor, no direct employer-employee relationship exists between
petitioner FILSYN and private respondent Felipe Loterte. 

With respect to its liability, however, petitioner cannot totally exculpate itself from the fact that respondent DE
LIMA is an independent job contractor. Notwithstanding the lack of a direct employer-employee relationship
between FILSYN and Felipe Loterte, the
former is still jointly and severally liable with respondent DE LIMA for Loterte's monetary claims under Art. 109
of the Labor Code.

G.R. Nos. 82763-64 March 19, 1990

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P. ORTIGUERRA, and
LABOR ALLIANCE FOR NATIONAL DEVELOPMENT, respondents.

FACTS: This Petition for Certiorari addresses itself to the 12 February 1986 Order of the National Labor
Relations Commission directing petitioner Development Bank of the Philippines (DBP) to remit the sum of
P6,292,380.00 "out of proceeds of the foreclosed properties of Lirag Textile Mills Inc., sold at public auction in
order to satisfy the judgment" in NLRC Cases Nos. NCR-3-2581-82 and 2-2090-82, payment of money claims of
illegally dismissed employees of LIRAG.

ISSUE: Whether or not the payment of the money claims of illegally dismissed employees must be preferred.

HELD: No. In fine, the right to preference given to workers under Article 110 of the Labor Code cannot exist in
any effective way prior to the time of its presentation in distribution proceedings. It will find application when, in
proceedings such as insolvency, such unpaid wages shall be paid in full before the "claims of the Government and
other creditors" may be paid. But, for an orderly settlement of a debtor's assets, all creditors must be convened,
their claims ascertained and inventoried, and thereafter the preferences determined in the course of judicial
proceedings which have for their object the subjection of the property of the debtor to the payment of his debts or
other lawful obligations. Thereby, an orderly determination of preference of creditors' claims is assured (Philippine
Savings Bank vs. Lantin, No. L-33929, September 2, 1983, 124 SCRA 476); the adjudication made will be
binding on all parties-in-interest, since those proceedings are proceedings in rem; and the legal scheme of
classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code is
preserved in harmony.

G.R. No. L-56568 May 20, 1987

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REPUBLIC OF THE PHILIPPINES, represented by the Bureau of Customs and the Bureau of Internal
Revenue, petitioner, vs.
HONORABLE E.L. PERALTA, PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE OF
MANILA, BRANCH XVII, QUALITY TABACCO CORPORATION, FRANCISCO, FEDERACION
OBRERO DE LA INDUSTRIA TABAQUERA Y OTROS TRABAJADORES DE FILIPINAS (FOITAF)
USTC EMPLOYEES ASSOCIATION WORKERS UNION-PTGWO, respondents.

FACTS: In the voluntary insolvency proceedings of Quality Tobacco Corporation (the "Insolvent"), among other
claims inventoried were the claims of USTC and FOITAF (the "Unions") for separation pay of their respective
members embodied in final awards of the National Labor Relations Commission and the claims of the Bureau of
Customs and the Bureau of Internal Revenue.

ISSUE: Whether or not the claims of wages by the Unions must be preferred over the claims of the government
(BOC and BIR) pursuant to Article 110 of the Labor Code.

HELD: Article 110 of the Labor Code, in determining the reach of its terms, cannot be viewed in isolation.
Rather, Article 110 must be read in relation to the provisions of the Civil Code concerning the classification,
concurrence and preference of credits, which provisions find particular application in insolvency proceedings
where the claims of all creditors, preferred or non-preferred, may be adjudicated in a binding manner. 

Classification of Credits

(a) special preferred credits listed in Articles 2241 and 2242,

(b) ordinary preferred credits listed in Article 2244; and

(c) common credits under Article 2245.

The claim of the Bureau of Customs for unpaid customs duties and taxes enjoys the status of a specially preferred
credit under Article 2241, No. 1, of the Civil Code.

It follows that the claim of the Bureau of Internal Revenue for unpaid tobacco inspection fees constitutes a claim
for unpaid internal revenue taxes which gives rise to a tax lien upon all the properties and assets, movable and
immovable, of the Insolvent as taxpayer. Clearly, under Articles 2241 No. 1, 2242 No. 1, and 2246-2249 of the
Civil Code, this tax claim must be given preference over any other claim of any other creditor, in respect of any
and all properties of the Insolvent.

Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages
either upon all of the properties or upon any particular property owned by their employer. Claims for unpaid wages
do not therefore fall at all within the category of specially preferred claims established under Articles 2241 and
2242 of the Civil Code, except to the extent that such claims for unpaid wages are already covered by Article
2241, number 6. "claims for laborers' wages, on the goods manufactured or the work done;" or by Article 2242,
number 3: "claims of laborers and other workers engaged in the construction, reconstruction or repair of buildings,
canals and other works, upon said buildings, canals or other works." To the extent that claims for unpaid wages
fall outside the scope of Article 2241, number 6 and 2242, number 3, they would come within the ambit of the
category of ordinary preferred credits under Article 2244.

Applying Article 2241, number 6 to the instant case, the claims of the Unions for separation pay of their members
constitute liens attaching to the processed leaf tobacco, cigars and cigarettes and other products produced or
manufactured by the Insolvent, but not to other assets owned by the Insolvent. And even in respect of such tobacco
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and tobacco products produced by the Insolvent, the claims of the Unions may be given effect only after the
Bureau of Internal Revenue's claim for unpaid tobacco inspection fees shall have been satisfied out of the products
so manufactured by the Insolvent.

Article 2242, number 3, also creates a lien or encumbrance upon a building or other real property of the Insolvent
in favor of workmen who constructed or repaired such building or other real property. Article 2242, number 3,
does not however appear relevant in the instant case, since the members of the Unions to whom separation pay is
due rendered services to the Insolvent not (so far as the record of this case would show) in the construction or
repair of buildings or other real property, but rather, in the regular course of the manufacturing operations of the
Insolvent. The Unions' claims do not therefore constitute a lien or encumbrance upon any immovable property
owned by the Insolvent, but rather, as already indicated, upon the Insolvent's existing inventory (if any of
processed tobacco and tobacco products.

We come to the question of what impact Article 110 of the Labor Code has had upon the complete scheme of
classification, concurrence and preference of credits in insolvency set out in the Civil Code. We believe and so
hold that Article 110 of the Labor Code did not sweep away the overriding preference accorded under the scheme
of the Civil Code to tax claims of the government or any subdivision thereof which constitute a lien upon
properties of the Insolvent. It is frequently said that taxes are the very lifeblood of government. The effective
collection of taxes is a task of highest importance for the sovereign. It is critical indeed for its own survival. It
follows that language of a much higher degree of specificity than that exhibited in Article 110 of the Labor Code is
necessary to set aside the intent and purpose of the legislator that shines through the precisely crafted provisions of
the Civil Code. It cannot be assumed simpliciter that the legislative authority, by using in Article 110 the words
"first preference" and "any provision of law to the contrary notwithstanding" intended to disrupt the elaborate and
symmetrical structure set up in the Civil Code. Neither can it be assumed casually that Article 110 intended to
subsume the sovereign itself within the term "other creditors" in stating that "unpaid wages shall be paid in full
before other creditors may establish any claim to a share in the assets of employer." Insistent considerations of
public policy prevent us from giving to "other creditors" a linguistically unlimited scope that would embrace the
universe of creditors save only unpaid employees.

G.R. No. L-44717 August 28, 1985

THE CHARTERED BANK EMPLOYEES ASSOCIATION, petitioner, vs.

HON. BLAS F. OPLE, in his capacity as the Incumbent Secretary of Labor, and THE CHARTERED
BANK, respondents.

FACTS: Chartered Bank Employees Association, in representation of its monthly paid employees/members,
complained before the MOLE against Chartered Bank, for the payment of ten (10) unworked legal holidays, as
well as for premium and overtime differentials for worked legal holidays.

On appeal, the Minister of Labor set aside the decision of the NLRC its decision on Section 2, Rule IV, Book Ill of
the Integrated Rules and Policy Instruction No. 9, which respectively provide: Sec. 2. Status of employees paid by
the month. Employees who are uniformly paid by the month, irrespective of the number of working days therein,
with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days
in the month whether worked or not. In Policy Instruction No. 9, the then Secretary of Labor went as far as to
categorically state that the benefit is principally intended for daily paid employees.

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ISSUE: Whether or not the Minister of Labor gravely abused his discretion in promulgating Section 2, Rule IV,
Book III of the Integrated Rules and Policy Instruction No. 9 as guidelines for the implementation of Articles 82
and 94 of the Labor Code and in applying said guidelines to this case.

HELD: We ruled that Section 2, Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9, are
contrary to the provisions of the Labor Code and, therefore, invalid.

It is elementary in the rules of statutory construction that when the language of the law is clear and unequivocal
the law must be taken to mean exactly what it says. In the case at bar, the provisions of the Labor Code on the
entitlement to the benefits of holiday pay are clear and explicit it provides for both the coverage of and exclusion
from the benefit.

'All doubts in the implementation and interpretation of the provisions of this Code, including its implementing
rules and regulations, shall be resolved in favor of labor.'

Whenever monthly paid employees work on a holiday, they are given an additional 100% base pay on top of a
premium pay of 50%. If the employees' monthly pay already includes their salaries for holidays, they should be
paid only premium pay but not both base pay and premium pay.

G.R. No. L-69746-47 March 31, 1989

BANK OF THE PHILIPPINE ISLANDS EMPLOYEES UNION-ALU, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION (NLRC) and BANK OF THE PHILIPPINE
ISLANDS, respondents. (and two (2) other cases)

FACTS: Atty. Ignacio Lacsina represented herein petitioner PBIEU in THESE cases. He filed a motion for the
entry of attorney's lien for legal services to be rendered by him as counsel of BPIEU in the negotiation of the new
collective bargaining agreement with BPI.

Labor Arbiter issued an order directing the respondent bank to check off the amount of 5 % of the total economic
benefits due its employees under the new collective bargaining agreement between the bank and the union
corresponding to the first year of effectivity thereof and to deliver the amount collected to Atty. Lacsina or to his
duly authorized representative. 

Accordingly, BPI deducted the amount of P 200.00 from each of the employees who had signed the authorization.

The petitioners now impugn this order as contrary to the provisions and spirit of the Labor Code. While conceding
that Lacsina is entitled to payment for his legal services, they argue that this must be made not by the individual
workers directly, as this is prohibited by law, but by the union itself from its own funds.

ISSUE: Whether or not the deduction was valid.

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HELD: The Court reads the afore-cited provision as prohibiting the payment of attorney's fees only when it is
effected through forced contributions from the workers from their own funds as distinguished from the union
funds. The purpose of the provision is to prevent imposition on the workers of the duty to individually contribute
their respective shares in the fee to be paid the attorney for his services on behalf of the union in its negotiations
with the management. The obligation to pay the attorney's fees belongs to the union and cannot be shunted to the
workers as their direct responsibility. Neither the lawyer nor the union itself may require the individual workers to
assume the obligation to pay the attorney's fees from their own pockets. So categorical is this intent that the law
also makes it clear that any agreement to the contrary shall be null and void ab initio.

We see no such imposition in the case at bar. A reading of the above-cited resolution will clearly show that the
signatories thereof have not been in any manner compelled to undertake the obligation they have there assumed.
On the contrary it is plain that they were voluntarily authorizing the check-off of the attorney's fees from their
payment of benefits and the turnover to Lacsina of the amounts deducted, conformably to their agreement with
him. There is no compulsion here. And significantly, the authorized deductions affected only the workers who
adopted and signed the resolution and who were the only ones from whose benefits the deductions were made by
BPI. No similar deductions were taken from the other workers who did not sign the resolution and so were not
bound by it.

G.R. No. 118746 September 7, 1995

ATTY. WILFREDO TAGANAS, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, MELCHOR ESCULTURA, ET AL., respondents.

FACTS: Petitioner Atty. Wilfredo E. Taganas represented herein private respondents in a labor suit for illegal
dismissal, underpayment and non-payment of wages, thirteenth-month pay, attorney's fees and damages
conditioned upon a contingent fee arrangement granting the equivalent of fifty percent of the judgment award plus
three hundred pesos appearance fee per hearing.

During the execution stage of the decision, petitioner moved to enforce his attorney's charging lien. Private
respondents, aggrieved for receiving a reduced award due to the attorney's charging lien, contested the validity of
the contingent fee arrangement they have with petitioner, albeit four of the fourteen private respondents have
expressed their conformity thereto.

LA reduced the amount of contingent fee from fifty percent of the judgment award to ten percent.

ISSUE: Whether or not the reduction of petitioner's contingent fee may be warranted.

HELD: The fifty percent of the judgment award as attorney's fees is excessive and unreasonable.

A contingent fee arrangement is an agreement laid down in an express contract between a lawyer and a client in
which the lawyer's professional fee, usually a fixed percentage of what may be recovered in the action is made to
depend upon the success of the litigation. This arrangement is valid in this jurisdiction. It is, however, under the
supervision and scrutiny of the court to protect clients from unjust charges. Section 13 of the Canons of
Professional Ethics states that "[a] contract for a contingent fee, where sanctioned by law, should be reasonable
under all the circumstances of the case including the risk and uncertainty of the compensation, but should always
be subject to the supervision of a court, as to its reasonableness".

The financial capacity and economic status of the client have to be taken into account in fixing the reasonableness
of the fee. Noting that petitioner's clients were lowly janitors who receive miniscule salaries and that they were
precisely represented by petitioner in the labor dispute for reinstatement and claim for backwages, wage
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differentials, emergency cost of living allowance, thirteenth-month pay and attorney's fees to acquire what they
have not been receiving under the law and to alleviate their living condition, the reduction of petitioner's
contingent fee is proper. Labor cases, it should be stressed, call for compassionate justice.

G.R. No. 102636 September 10, 1993

METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO V.

BALINANG, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and METROPOLITAN BANK and
TRUST COMPANY, respondents.

FACTS: the bank entered into a collective bargaining agreement with the MBTCEU, granting a monthly P900
wage increase to its regular employees.

Barely a month later, or on 01 January 1989, Republic Act 6727 had been enacted increasing the minimum wage
rate of P25/day. If expressly provided for and agreed upon in the collective bargaining agreements, all increase in
the daily basic wage rates granted by the employers three (3) months before the effectivity of this Act shall be
credited as compliance with the increases in the wage rates prescribed herein, provided that, where such increases
are less than the prescribed increases in the wage rates under this Act, the employer shall pay the difference.

Pursuant to the above provisions, the bank gave the P25 increase per day, or P750 a month, to its probationary
employees and to those who had been promoted to regular or permanent status before 01 July 1989 but whose
daily rate was P100 and below. The bank refused to give the same increase to its regular employees who were
receiving more than P100 per day and recipients of the P900 CBA increase.

Contending that the bank's implementation of Republic Act 6727 resulted in a substantially reduced salary gap, the
MBTCEU sought from the bank the correction of the alleged distortion in pay.

ISSUE: Whether or not there is wage distortion.

HELD: The definition of "wage distortion,"  aforequoted, shows that such distortion can so exist when, as a result
of an increase in the prescribed wage rate, an "elimination or severe contraction of intentional quantitative
differences in wage or salary rates" would occur "between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other
logical bases of differentiation." In mandating an adjustment, the law did not require that there be an elimination or
total abrogation of quantitative wage or salary differences; a severe contraction thereof is enough.

Apex Mining Company, Inc. v. NLRC: 

. . . . (T)o compel employers simply to add on legislated increases in salaries

or allowances without regard to what is already being paid, would be to penalize employers
who grant their workers more than the statutorily prescribed minimum rates of increases.
Clearly, this would be counter-productive so far as securing the interests of labor is
concerned. . . .

In her dissent, Presiding Commissioner Edna Bonto-Perez opined:

There may not be an obliteration nor elimination of said quantitative distinction/difference

aforecited but clearly there is a contraction. Would such contraction be severe as to warrant the
necessary correction sanctioned by the law in point, RA 6727? It is may considered view that the
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 quantitative intended distinction in pay between the two groups of workers in respondent company
was contracted by more than fifty (50%) per cent or in particular by more or less eighty-three (83%)
per cent hence, there is no doubt that there is an evident severe contraction resulting in the
complained of wage distortion.

Nonetheless, the award of P750.00 per month to all of herein individual complainants as ordered by
the Labor Arbiter below, to my mind is not the most equitable remedy at bar, for the same would be
an across the board increase which is not the intention of RA 6727. For that matter, herein
complainants cannot by right claim for the whole amount of P750.00 a month or P25.00 per day
granted to the workers covered by the said law in the sense that they are not covered by the said
increase mandated by RA 6727. They are only entitled to the relief granted by said law by way of
correction of the pay scale in case of distortion in wages by reason thereof.

Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on 21 May 1991 by
the Regional Tripartite Wages and Productivity Commission for correction of pay scale structures
in case of wage distortion as in the case at bar which is:

Minimum Wage = % x Prescribed = Distortion

—————— Increased Adjustment
Actual Salary

would be the most equitable and fair under the circumstances obtaining in this case.

[G.R. NO. 140689. February 17, 2004]

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS, Petitioner, v. NATIONAL

LABOR RELATIONS COMMISSION and BANKARD, INC., Respondents.

FACTS: Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level I, Level II, Level III, Level IV,
and Level V. On May 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. The New Salary Scale
increased the hiring rates of new employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and Levels
II, III and IV by nine hundred pesos (P900.00).

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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 levels or ranks in the salary structure.

ISSUE: Whether or not 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.

HELD: Prubankers Association v. Prudential Bank and Trust Company5 laid down the four elements of wage
distortion, to wit: (1.) An existing hierarchy of positions with corresponding salary rates; (2) A significant change
in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; (3) The
elimination of the distinction between the two levels; and (4) The existence of the distortion in the same region of
the country.

There is no hierarchy of positions between the newly hired and regular employees of Bankard, hence, the first
element of wage distortion provided in Prubankers is wanting.

Even assuming that there is a decrease in the wage gap between the pay of the old employees and the newly hired
employees, to Our mind said gap is not significant as to obliterate or result in severe contraction of the intentional
quantitative differences in the salary rates between the employee group. As already stated, the classification under
the wage structure is based on the rank of an employee, not on seniority. For this reason, ,wage distortion does not
appear to exist.

G.R. Nos. 174040-41               September 22, 2010

INSULAR HOTEL EMPLOYEES UNION-NFL, Petitioner, vs.

WATERFRONT INSULAR HOTEL DAVAO, Respondent.

FACTS: That sometime in 2000, respondent Waterfront sent DOLE Region XI a Notice of Suspension of
Operations (to be implemented for 6 months) due to serious business losses.

During the period of suspension, DIHFEU-NFL, the recognized labor organization of Waterfront, sent a proposed
agreement to help the company resume its business and for employees to keep their jobs. In the proposal, the union
agreed to lessen the then wage of employees and expressly waived its rights to renegotiate the same, among others.
Thus, in 2001, respondent resumed its business operations. However, in 2002, the mother federation of the union
filed a complaint before the NCMV alleging that the diminution of wage and benefits were done through an
unlawful moa. The MOA was also not signed and ratifies, as required in the union's CBL.

ISSUE: Whether or not the diminution of wage was unlawful.

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HELD: No. The labor code does not prohibit a union from offering and agreeing to reduce wages and benefits of
the employees. The right to free collective bargaining, as stated in jurisprudence, includes the right to suspend it.

Furthermore, although the MOA was not ratified in accordance to its CBL, the same does not render it invalid. The
record shows that after the MOA was signed, the members of the union individually signed the reconfirmation of
employment which contained the new salary and benefits scheme.

Even assuming arguendo that Article 100 applies to the case at bar, this Court agrees with respondent that the
same does not prohibit a union from offering and agreeing to reduce wages and benefits of the employees.

Applied to the case at bar, while the terms of the MOA undoubtedly reduced the salaries and certain benefits
previously enjoyed by the members of the Union, it cannot escape this Court's attention that it was the execution of
the MOA which paved the way for the re-opening of the hotel, notwithstanding its financial distress. More
importantly, the execution of the MOA allowed respondents to keep their jobs. It would certainly be iniquitous for
the members of the Union to sign new contracts prompting the re-opening of the hotel only to later on renege on
their agreement on the fact of the non-ratification of the MOA.

x x x A local union does not owe its existence to the federation with which it is affiliated. It is a separate and
distinct voluntary association owing its creation to the will of its members. Mere affiliation does not divest the
local union of its own personality, neither does it give the mother federation the license to act independently
of the local union. It only gives rise to a contract of agency, where the former acts in representation of the latter.
Hence, local unions are considered principals while the federation is deemed to be merely their agent. x x x57

G.R. No. L-12444             February 28, 1963

STATES MARINE CORPORATION and ROYAL LINE, INC., petitioners, vs.

CEBU SEAMEN'S ASSOCIATION, INC., respondent.

FACTS: Aside from the payment of the respective salaries or wages, set opposite the names of the crew members,
the petitioners bound themselves to supply the crew with ship's provisions, daily subsistence or daily rations,
which include food.

When the Minimum Wage Law became effective, however, the companies began deducting the cost of meals from
the wages or salaries of crew members; but no such deductions were made from the salaries of the deck officers
and engineers in all the boats of the petitioners.

It is argued that the food or meals given to the deck officers, marine engineers and unlicensed crew members in
question, were mere "facilities" which should be deducted from wages, and not "supplements" which, according to
said section 19, should not be deducted from such wages, because it is provided therein: "Nothing in this Act shall
deprive an employee of the right to such fair wage ... or in reducing supplements furnished on the date of
enactment."

ISSUE: Whether or not the deduction is legal.

HELD: The deductions are not authorized. In the coastwise business of transportation of passengers and freight,
the men who compose the complement of a vessel are provided with free meals by the shipowners, operators or
agents, because they hold on to their work and duties, regardless of "the stress and strain concomitant of a bad
weather, unmindful of the dangers that lurk ahead in the midst of the high seas."

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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 meals were freely given to crew members prior to August 4, 1951, while they were on the high
seas "not as part of their wages but as a necessary matter in the maintenance of the health and efficiency of the
crew personnel during the voyage", the deductions therein made for the meals given after August 4, 1951, should
be returned to them, and the operator of the coastwise vessels affected should continue giving the same benefit..

G.R. No. 198783               April 15, 2013

ROYAL PLANT WORKERS UNION, Petitioner, vs.

COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT, Respondent.

FACTS: The bottling operators took issue with the removal of the chairs. 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 ½)-
hour rotation period to a one-and-a-half (1 ½) hour rotation period; and b) an increase of the break period from 15
to 30 minutes between rotations.

The Union basically claims that the CCBPI’s decision to unilaterally remove the operators’ chairs from the
production/manufacturing lines of its bottling plants is not valid because it violates some fundamental labor
policies. 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; 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.

Petitioner argued that the removal of the chairs is valid as it is a legitimate exercise of management prerogative, it
does not violate the Labor Code and it does not violate the CBA it contracted with respondent. On the other hand,
respondent espoused the contrary view.

ISSUE: Whether or not the removal of chairs of the operators assigned at the production/manufacturing line while
performing their duties and responsibilities is valid.

HELD: The removal of the chairs was designed to increase work efficiency. Hence, CCBPI’s exercise of its
management prerogative was made in good faith without doing any harm to the workers’ rights.

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The operators’ chairs cannot be considered as one of the employee benefits covered in Article 100 of the Labor
Code. The term "benefits" mentioned in the non-diminution rule refers to monetary benefits or privileges given to
the employee with monetary equivalents.

Take Note: Court has already ruled in a number of cases that a decision or award of a voluntary arbitrator is
appealable to the CA via a petition for review under Rule 43.

[G.R. No. 185556, March 28 : 2011]

SUPREME STEEL CORPORATION, PETITIONER, VS. NAGKAKAISANG MANGGAGAWA NG

SUPREME INDEPENDENT UNION (NMS-IND-APL), RESPONDENT.

FACTS: On July 27, 2005, respondent filed a notice of strike with the National Conciliation and Mediation Board
(NCMB) on the ground that petitioner violated certain provisions of the CBA. The parties failed to settle their
dispute. Consequently, the Secretary of Labor certified the case to the NLRC for compulsory arbitration pursuant
to Article 263(g) of the Labor Code.

Respondent alleged eleven CBA violations, enumerated as follows: (1) denial to four employees of the CBA-
provided wage increase, (2) contracting-out labor, (3) failure to provide shuttle service, (4) refusal to answer for
medical expenses incurred by three employees, (5) failure to comply with time-off provision, (6) visitors free
access to company premises, (7) failure to comply with reporting time-off provision, (8) dismissal of an employee
supposedly due to disease, (9) denial of paternity leave benefit to two employees, (10) discrimination and
harassment, and (11) non-implementation of COLA in Wage Order Nos. RBIII-10 and 11.

Out of the eleven issues raised by respondent, eight were decided in its favor; two (denial of paternity leave benefit
and discrimination of union members) were decided in favor of petitioner; while the issue on visitors free access to
company premises was deemed settled during the mandatory conference. Petitioners appeal to the CA was
dismissed.

According to the CA, petitioner failed to show that the NLRC committed grave abuse of discretion in finding that
it violated certain provisions of the CBA.With regard to wage increase, The CA concluded that, based on the
wording of the CBA, which uses the words "general increase" and "over and above," it cannot be said that the
parties have intended the anniversary increase to be given in lieu of the CBA wage increase. The CA declared that
the withdrawal of the COLA under Wage Order No. RBIII-10 from the employees who were not minimum wage
earners amounted to a diminution of benefits because such grant has already ripened into a company practice.
Based on the principle of liberal construction of the CBA, the CA likewise sustained the NLRCs rulings on
theissues pertaining to medical expenses, the shuttle service, time-off for attendance in grievance
meetings/hearings, and time-off due to brownouts. Finally, the CA affirmed the NLRCs finding that Madayags
dismissal was illegal. It emphasized that the burden to prove that the employees disease is of such nature or at such
stage that it cannot be cured within a period of six months rests on the employer, who failed to prove such.

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ISSUE: 

HELD: It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and
compliance therewith is mandated by the express policy of the law. If the terms of aCBA are clear and there is no
doubt as to the intention of the contracting parties, the literal meaning of its stipulation shall prevail. Moreover, the
CBA must be construed liberally rather than narrowly and technically and the Court must place a practical and
realistic construction upon it. Any doubt in the interpretation of any law or provision affecting labor should be
resolved in favor of labor. Upon these well-established precepts, the CAs findings and conclusions on all the issues
are sustained, except the issue pertaining to the denial of the COLA under Wage Order No. RBIII-10 and 11 to the
employees who are not minimum wage earners, which respondent avers as a diminution of benefits.

Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the employees.
There is diminution of benefits when it is shown that:

[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.

The implementation of the COLA under Wage Order No. RBIII-10 across the board, which only lasted for less
than a year, cannot be considered as having been practiced "over a long period of time." While it is true that
jurisprudence has not laid down any rule requiring a specific minimum number of years in order for a practice to
be considered as a voluntary act of the employer, under existing jurisprudence on this matter, an act carried out
within less than a year would certainly not qualify as such. Hence, the withdrawal of the COLA Wage Order No.
RBIII-10 from the salaries of non-minimum wage earners did not amount to a "diminution of benefits" under the
law. PARTIALLY GRANTED.

G.R. No. 162994             September 17, 2004

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners, vs.

GLAXO WELLCOME PHILIPPINES, INC., Respondent.

FACTS: 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, which they contend as valid exercise of its management prerogatives and does not
violate the equal protection clause. The policy is also aimed at preventing a competitor company from gaining
access to its secrets, procedures and policies.

Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals
(Astra), a competitor of Glaxo. Even before they got married, Tecson received several reminders from his District
Manager regarding the conflict of interest which his relationship with Bettsy might engender. Still, love prevailed,
and Tecson married Bettsy in September 1998.

Tecson applied for a transfer in Glaxo’s milk division, thinking that since Astra did not have a milk division, the
potential conflict of interest would be eliminated. His application was denied in view of Glaxo’s "least-movement-
possible" policy.

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Because the parties failed to resolve the issue at the grievance machinery level, they submitted the matter for
voluntary arbitration.

Petitioner claims that the policy restricts the employees’ right to marry, and that hewas constructively dismissed as
shown by the following circumstances: (1) he was transferred from the Camarines Sur-Camarines Norte sales area
to the Butuan-Surigao-Agusan sales area, (2) he suffered a diminution in pay, (3) he was excluded from attending
seminars and training sessions for medical representatives, and (4) he was prohibited from promoting respondent’s
products which were competing with Astra’s products.

Glaxo gave Tecson several chances to eliminate the conflict of interest brought about by his relationship with
Bettsy. When their relationship was still in its initial stage, Tecson’s supervisors at Glaxo constantly reminded him
about its effects on his employment with the company and on the company’s interests. After Tecson married Bettsy,
Glaxo gave him time to resolve the conflict by either resigning from the company or asking his wife to resign from
Astra. Glaxo even expressed its desire to retain Tecson in its employ because of his satisfactory performance and
suggested that he ask Bettsy to resign from her company instead. Glaxo likewise acceded to his repeated requests
for more time to resolve the conflict of interest. When the problem could not be resolved after several years of
waiting, Glaxo was constrained to reassign Tecson to a sales area different from that handled by his wife for
Astra. Notably, the Court did not terminate Tecson from employment but only reassigned him to another area
where his home province, Agusan del Sur, was included. In effecting Tecson’s transfer, Glaxo even considered the
welfare of Tecson’s family.

ISSUE: Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying
employees of any competitor company

HELD: Clearly, the foregoing dispels any suspicion of unfairness and bad faith on the part of Glaxo.

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 Glaxo’s
employees is reasonable under the circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests
against the possibility that a competitor company will gain access to its secrets and procedures.

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.

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.

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