Labor Midterm Cases

1 |S E L E C T E D C A S E S O N L A B O R S T A N D A R D S
BASIC PRINCIPLES

SINGER SEWING MACHINE VS. NLRC, 193 SCRA 271

FACTS:
The respondent union filed a petition for direct certification as the sole and exclusive bargaining agent of
all collectors of the Singer Sewing Machine Company, Baguio City branch. The Company opposed the
petition mainly on the ground that the union members are actually not employees but are independent
contractors as evidenced by the collection agency agreement which they signed.

ISSUE: Whether or not the collection agreement agency was correct that the Union members were not
their employees

HELD:
The present case mainly calls for the application of the control test, which if not satisfied, would lead us
to conclude that no employer-employee relationship exists. Hence, if the union members are not
employees, no right to organize for purposes of bargaining, nor to be certified as such bargaining agent
can ever be recognized. The following elements are generally considered in the determination of the
employer-employee relationship; "(1) the selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the employee's conduct although the
latter is the most important element
The Agreement confirms the status of the collecting agent in this case as an independent contractor not
only because he is explicitly described as such but also because the provisions permit him to perform
collection services for the company without being subject to the control of the latter except only as to the
result of his work. The plain language of the agreement reveals that the designation as collection agent
does not create an employment relationship and that the applicant is to be considered at all times as an
independent contractor.
The requirement that collection agents utilize only receipt forms and report forms issued by the Company
and that reports shall be submitted at least once a week is not necessarily an indication of control over
the means by which the job of collection is to be performed. The agreement itself specifically explains
that receipt forms shall be used for the purpose of avoiding a co-mingling of personal funds of the agent
with the money collected on behalf of the Company. Likewise, the use of standard report forms as well as
the regular time within which to submit a report of collection are intended to facilitate order in office
procedures. Even if the report requirements are to be called control measures, any control is only with
respect to the end result of the collection since the requirements regulate the things to be done after the
performance of the collection job or the rendition of the service.
The monthly collection quota is a normal requirement found in similar contractual agreements and is so
stipulated to encourage a collecting agent to report at least the minimum amount of proceeds.
The last and most important element of the control test is not satisfied by the terms and conditions of the
contracts. There is nothing in the agreement which implies control by the Company not only over the end
to be achieved but also over the means and methods in achieving the end.
The last and most important element of the control test is not satisfied by the terms and conditions of the
contracts. There is nothing in the agreement which implies control by the Company not only over the end
to be achieved but also over the means and methods in achieving the end
The Court finds that since private respondents are not employees of the Company, they are not entitled
to the constitutional right to join or form a labor organization for purposes of collective bargaining.
Accordingly, there is no constitutional and legal basis for their "union" to be granted their petition for
direct certification.

MANILA GOLF CLUB, vs. IAC 237 SCRA 207

FACTS:
This was a petition of seventeen (17) persons who styled themselves "Caddies of Manila Golf and Country
Club-PTCCEA" for coverage and availment of benefits under the Social Security Act as amended,
"PTCCEA" being the acronym of a labor organization, the "Philippine Technical, Clerical, Commercial
Employees Association," with which the petitioners claimed to be affiliated. The petition alleged in
essence that although the petitioners were employees of the Manila Golf and Country Club, a domestic
corporation, the latter had not registered them as such with the SSS.
The respondent Club, alleging in substance that the petitioners, caddies by occupation, were allowed into
the Club premises to render services as such to the individual members and guests playing the Club's golf
course and who themselves paid for such services; that as such caddies, the petitioners were not subject
to the direction and control of the Club as regards the manner in which they performed their work; and
hence, they were not the Club's employees.

ISSUE:

Whether or Not there was an employer-employee relationship between the petitioning caddies and the
respondent Club.

HELD:
The Court does not agree that said facts necessarily or logically point to such a relationship, and to the
exclusion of any form of arrangements, other than of employment, that would make the respondent's
services available to the members and guest of the petitioner.
As long as it is, the list made in the appealed decision detailing the various matters of conduct, dress,
language, etc. covered by the petitioner's regulations, does not, in the mind of the Court, so circumscribe
the actions or judgment of the caddies concerned as to leave them little or no freedom of choice
whatsoever in the manner of carrying out their services. In the very nature of things, caddies must
submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation
within the premises and grounds of whatever club they do their work in. For all that is made to appear,
they work for the club to which they attach themselves on sufference but, on the other hand, also
without having to observe any working hours, free to leave anytime they please, to stay away for as long
they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be
meted them beyond barring them from the premises which, it may be supposed, the Club may do in any
case even absent any breach of the rules, and without violating any right to work on their part. All these
considerations clash frontally with the concept of employment.
It seems to the Court, however, that the intendment of such fact that the Club suggests the rate of fees
payable by the players to the caddies is to the contrary, showing that the Club has not the measure of
control over the incidents of the caddies' work and compensation that an employer would possess.
The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer
control than an assurance that the work is fairly distributed, a caddy who is absent when his turn number
is called simply losing his turn to serve and being assigned instead the last number for the day.
By and large, there appears nothing in the record to refute the petitioner's claims.

ENCYCLOPEDIA BRITANNICA VS. NLRC, 264 SCRA 4

FACTS:
Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia Britannica
and was in charge of selling petitioners products through some sales representatives. As compensation,
private respondent received commissions from the products sold by his agents. He was also allowed to
use petitioners name, goodwill and logo. It was, however, agreed upon that office expenses would be
deducted from private respondents commissions. Petitioner would also be informed about appointments,
promotions, and transfers of employees in private respondents district.
On June 14, 1974, private respondent Limjoco resigned from office to pursue his private business. Then
on October 30, 1975, he filed a complaint against petitioner Encyclopaedia Britannica with the
Department of Labor and Employment, claiming for non-payment of separation pay and other benefits,
and also illegal deduction from his sales commissions.

ISSUE: WON Limjoco is entitled to receive separation and other benefits granted to employees.

HELD:
In determining the existence of an employer-employee relationship the following elements must be
present: 1) selection and engagement of the employee; 2) payment of wages; 3) power of dismissal; and
4) the power to control the employees conduct. Of the above, control of employees conduct is
commonly regarded as the most crucial and determinative indicator of the presence or absence of an
employer-employee relationship.
[3]
Under the control test, an employer-employee relationship exists
where the person for whom the services are performed reserves the right to control not only the end to
be achieved, but also the manner and means to be used in reaching that end.
There was a need for the petitioner to issue memoranda to private respondent so that the latter would be
apprised of the company policies and procedures. Nevertheless, private respondent Limjoco and the
other agents were free to conduct and promote their sales operations. The periodic reports to the
petitioner by the agents were but necessary to update the company of the latters performance and
business income.
Private respondent was not an employee of the petitioner company. While it was true that the petitioner
had fixed the prices of the products for reason of uniformity and private respondent could not alter them,
the latter, nevertheless, had free rein in the means and methods for conducting the marketing
operations. He selected his own personnel and the only reason why he had to notify the petitioner about
such appointments was for purpose of deducting the employees salaries from his commissions.
Private respondent was merely an agent or an independent dealer of the petitioner. He was free to
conduct his work and he was free to engage in other means of livelihood.


CARUNGCONG VS. SUNLIFE, 283 SCRA 319

FACTS:
Susan Carungcong began her career in the insurance industry in 1974 as an agent of Sun Life Assurance
Company of Canada (hereinafter Sun Life). The contract set out in detail the terms and conditions
particularly those concerning the commissions payable to her under which her relationship with the
company would be governed. This contract was superseded some five years later when she signed two
(2) new agreements. The first, denominated "Career Agent's (or Unit Manager's) Agreement," dealt with
such matters as the agent's commissions, his obligations, limitations on his authority, and termination of
the agreement by death, or by written notice "with or without cause." It declared that the "Agent shall be
an independent contractor and none of the terms of . . (the) Agreement shall be construed as creating an
employer-employee relationship." The second was titled, "MANAGER'S Supplementary Agreement."
Making explicit reference to the first, said second contract explicitly described as a "further agreement"
contained provisions regarding remuneration (overriding commissions in accordance with a fixed
schedule), limitation of authority, and termination of the agreement inter alia by written notice "without
cause."
Subsequently, Carungcong and Sun Life executed another Agreement "made and effective as of
January 1, 1986" by which the former was named New Business Manager with the function generally
"to manage a New Business Office established by the latter to obtain applications for life insurance
policies and other products offered by or distributed through Sun Life and to perform such other duties in
connection therewith as Sun Life may require from time to time."
4
The Agreement governed such
matters as the New Business Manager's duties; limitations on authority; compensation; expenses;
termination of relation, by among others, notice in writing with or without cause. Like the "Career Agent's
(or Unit Manager's) Agreement" first signed by Carungcong,

this latest Agreement stressed that the
"New Business Manager in performance of his duties defined herein, shall be considered an independent
contractor and not . . an employee of Sun Life," and that "(u)nder no circumstance shall the New
Business Manager and/or his employees be considered employees of Sun Life."
Respondent had been receiving reports of anomalies in relation to special fund availments from unit
managers and agents. Carungcong was confronted with and asked to explain the discrepancies set out in
the report.

ISSUE: WON there existed an employer-employee relationship between Caruncong and Sunlife?

HELD:
Carungcong was an independent contractor and not an employee of Sun Life.
The contracts she had willingly and knowingly signed with Sun Life

repeatedly and clearly provided that
said agreements were terminable by either party by written notice with or without cause.
Noteworthy is that this last agreement of January 1, 1986 emphasized, like the "Career Agent's (or Unit
Manager's) Agreement" first signed by her,
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that in the performance of her duties defined herein.
Carungcong would be considered an independent contractor and not . . an employee of Sun Life," and
that "(u)nder no circumstance shall the New Business Manager and/or his employees be considered
employees of Sun Life."

RAMOS VS. CA, 380 SCRA 467

FACTS:
Petitioner Erlinda Ramos, after seeking professional medical help, was advised to undergo an operation
for the removal of a stone in her gall bladder (cholecystectomy). She was referred to Dr. Hosaka, a
surgeon, who agreed to perform the operation on her. The operation was scheduled for June 17, 1985
at 9:00 in the morning at private respondent De Los Santos Medical Center (DLSMC). Since neither
petitioner Erlinda nor her husband, petitioner Rogelio, knew of any anesthesiologist, Dr. Hosaka
recommended to them the services of Dr. Gutierrez.
Petitioner Erlinda was admitted to the DLSMC the day before the scheduled operation. By 7:30 in the
morning of the following day, petitioner Erlinda was already being prepared for operation. At around 9:30
in the morning, Dr. Hosaka had not yet arrived. By 10:00 in the morning, when Dr. Hosaka was still not
around, petitioner Rogelio already wanted to pull out his wife from the operating room. Dr. Hosaka finally
arrived at the hospital at around 12:10 in the afternoon, or more than three (3) hours after the scheduled
operation.
Dr. Gutierrez was trying to intubate the patient. Dr. Hosaka instructed someone to call Dr. Calderon,
another anesthesiologist. When he arrived, Dr. Calderon attempted to intubate the patient. The nailbeds
of the patient remained bluish. At almost 3:00 in the afternoon, Erlinda being wheeled to the Intensive
Care Unit (ICU). The doctors explained to petitioner Rogelio that his wife had bronchospasm. Erlinda
stayed in the ICU for a month. She was released from the hospital only four months later or on

November 15, 1985. Since the ill-fated operation, Erlinda remained in comatose condition until she died
on August 3, 1999.

ISSUE: Whether or not respondents De los Santos Medical Center and Drs. Orlino Hosaka and Perfecta
Gutierrez are solidarily liable for the injury suffered by petitioner Erlinda

HELD:
There is no employer-employee relationship between DLSMC and Drs. Gutierrez and Hosaka which would
hold DLSMC solidarily liable for the injury suffered by petitioner Erlinda.
The admission of a physician to membership in DLSMCs medical staff as active or visiting consultant is
first decided upon by the Credentials Committee thereof, which is composed of the heads of the various
specialty departments such as the Department of Obstetrics and Gynecology, Pediatrics, Surgery with the
department head of the particular specialty applied for as chairman. The Credentials Committee then
recommends to DLSMC's Medical Director or Hospital Administrator the acceptance or rejection of the
applicant physician, and said director or administrator validates the committee's
recommendation. Similarly, in cases where a disciplinary action is lodged against a consultant, the same
is initiated by the department to whom the consultant concerned belongs and filed with the Ethics
Committee consisting of the department specialty heads. The medical director/hospital administrator
merely acts as ex-officio member of said committee.
Neither is there any showing that it is DLSMC which pays any of its consultants for medical services
rendered by the latter to their respective patients. Moreover, the contract between the consultant in
respondent hospital and his patient is separate and distinct from the contract between respondent
hospital and said patient. The first has for its object the rendition of medical services by the consultant
to the patient, while the second concerns the provision by the hospital of facilities and services by its staff
such as nurses and laboratory personnel necessary for the proper treatment of the patient.
Further, no evidence was adduced to show that the injury suffered by petitioner Erlinda was due to a
failure on the part of respondent DLSMC to provide for hospital facilities and staff necessary for her
treatment.

SONZA VS ABS-CBN, G.R. NO. 138051, JUNE 10, 2004

FACTS:
Respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement ("Agreement") with
the Mel and Jay Management and Development Corporation ("MJMDC") wherein the agreement involved
providing SONZAs services exclusively to ABS-CBN as talent for radio and television. The Agreement
listed the services SONZA would render to ABS-CBN. ABS-CBN agreed to pay for SONZAs services a
monthly talent fee of P310,000 for the first year and P317,000 for the second and third year of the
Agreement.

On April 1996, Sonza wrote a letter to ABS-CBM President Eugenio Lopez III about a recent event
concerning his programs and career, and that the said violation of the company has breached the
agreement, thus, the notice of rescission of Agreement was sent.
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and
Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his
salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance
and amounts due under the Employees Stock Option Plan ("ESOP").

ISSUE: WON an employer-employee relationship existed between Sonza and ABS-CBN.

HELD:
Case law has consistently held that the elements of an employer-employee relationship are:
Selection and Engagement of Employee. ABS-CBN engaged SONZAs services to co-host its television and
radio programs because of SONZAs peculiar skills, talent and celebrity status. Independent contractors
often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary
employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity
status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity
status, ABS-CBN would not have entered into the Agreement with SONZA but would have hired him
through its personnel department just like any other employee.

Payment of Wages. ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to
MJMDC. All the talent fees and benefits paid to SONZA were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate on
benefits such as "SSS, Medicare, 13th month pay" which the law automatically incorporates into every
employer-employee contract. Whatever benefits SONZA enjoyed arose from contract and not because of

an employer-employee relationship. SONZAs talent fees, amounting to P317,000 monthly in the second
and third year, are so huge and out of the ordinary that they indicate more an independent contractual
relationship rather than an employer-employee relationship. The power to bargain talent fees way above
the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an
independent contractual relationship.
Power of Dismissal. For violation of any provision of the Agreement, either party may terminate their
relationship. SONZA failed to show that ABS-CBN could terminate his services on grounds other than
breach of contract, such as retrenchment to prevent losses as provided under labor laws. During the life
of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as "AGENT and Jay Sonza shall
faithfully and completely perform each condition of this Agreement." Even if it suffered severe business
losses, ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay SONZAs talent
fees during the life of the Agreement. This circumstance indicates an independent contractual relationship
between SONZA and ABS-CBN.

Power of Control. First, ABS-CBN did not exercise control over the means and methods of Sonzas work.
ABS-CBN was not involved in the actual performance that produced the finished product of SONZAs
work. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to
modify the program format and airtime schedule "for more effective programming."
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ABS-CBNs sole
concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise
control over the means and methods of performance of SONZAs work. Even if ABS-CBN was completely
dissatisfied with the means and methods of SONZAs performance of his work, or even with the quality or
product of his work, ABS-CBN could not dismiss or even discipline SONZA. All that ABS-CBN could do is
not to broadcast SONZAs show but ABS-CBN must still pay his talent fees in full.

ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to continue paying
in full SONZAs talent fees, did not amount to control over the means and methods of the performance of
SONZAs work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of
performance of his work - how he delivered his lines and appeared on television - did not meet ABS-
CBNs approval. This proves that ABS-CBNs control was limited only to the result of SONZAs work,
whether to broadcast the final product or not. In either case, ABS-CBN must still pay SONZAs talent fees
in full until the expiry of the Agreement.

ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel & Jay" programs.
However, the equipment, crew and airtime are not the "tools and instrumentalities" SONZA needed to
perform his job. What SONZA principally needed were his talent or skills and the costumes necessary for
his appearance. Even though ABS-CBN provided SONZA with the place of work and the necessary
equipment, SONZA was still an independent contractor since ABS-CBN did not supervise and control his
work. ABS-CBNs sole concern was for SONZA to display his talent during the airing of the programs.
Second, ABS-CBN did not subject Sonza to its rules and standards of performance. The Agreement
stipulates that SONZA shall abide with the rules and standards of performance "covering talents" of ABS-
CBN. The Agreement does not require SONZA to comply with the rules and standards of performance
prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the Agreement
refers to the "Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which
has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics." The KBP code applies to
broadcasters, not to employees of radio and television stations. Broadcasters are not necessarily
employees of radio and television stations. Clearly, the rules and standards of performance referred to in
the Agreement are those applicable to talents and not to employees of ABS-CBN. In any event, not all
rules imposed by the hiring party on the hired party indicate that the latter is an employee of the
former. In this case, SONZA failed to show that these rules controlled his performance. We find that
these general rules are merely guidelines towards the achievement of the mutually desired result, which
are top-rating television and radio programs that comply with standards of the industry.
Lastly, being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an
independent contractor can validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control. The hiring of exclusive talents is a widespread
and accepted practice in the entertainment industry. This practice is not designed to control the means
and methods of work of the talent, but simply to protect the investment of the broadcast station. The
broadcast station normally spends substantial amounts of money, time and effort "in building up its
talents as well as the programs they appear in and thus expects that said talents remain exclusive with
the station for a commensurate period of time." Normally, a much higher fee is paid to talents who agree
to work exclusively for a particular radio or television station. In short, the huge talent fees partially
compensates for exclusivity, as in the present case.


LAZARO VS. SOCIAL SECURITY COMMISSION, 435 SCRA 472 [2004]

FACTS:
Private respondent Rosalina M. Laudato (Laudato) filed a petition before the SSC for social security
coverage and remittance of unpaid monthly social security contributions against her three (3) employers.
Among the respondents was herein petitioner Angelito L. Lazaro (Lazaro), proprietor of Royal Star
Marketing (Royal Star), which is engaged in the business of selling home appliances. Laudato alleged
that despite her employment as sales supervisor of the sales agents for Royal Star from April of 1979 to
March of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsory
coverage or remit Laudatos social security contributions.
Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a
mere sales agent whom he paid purely on commission basis. Lazaro also maintained that Laudato was
not subjected to definite hours and conditions of work. As such, Laudato could not be deemed an
employee of Royal Star.

ISSUE: WON Laudato was an employee of Royal Star.

HELD:
Laudato was an employee of Royal Star. The fact that Laudato was paid by way of commission does not
preclude the establishment of an employer-employee relationship. Neither does it follow that a person
who does not observe normal hours of work cannot be deemed an employee. Laudato was a sales
supervisor and not a mere agent. As such, Laudato oversaw and supervised the sales agents of the
company, and thus was subject to the control of management as to how she implements its polici es and
its end results. Laudatos calling cards from Royal Star indicate that she is indeed a sales supervisor.
Laudato was an employee of Royal Star is supported by substantial evidence which includes the cash
vouchers issued by Royal Star to Laudato, calling cards of Royal Star denominating Laudato as a Sales
Supervisor of the company, and Certificates of Appreciation issued by Royal Star to Laudato in
recognition of her unselfish and loyal efforts in promoting the company. In the case at bar, there is no
showing that Royal Star was similarly precluded from exerting control or interference over the manner by
which Laudato performed her duties.

PHIL. GLOBAL COMMUNICATION VS. DE VERA, 459 SCRA 260 [2005]

FACTS:
Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of
communication services and allied activities, while respondent Ricardo De Vera is a physician by
profession whom petitioner enlisted to attend to the medical needs of its employees. The parties agreed
and formalized respondents proposal in a document denominated as retainership contract which will be
for a period of one year subject to renewal.

The turning point in the parties relationship surfaced in December 1996 when Philcom, thru a
letter bearing on the subject boldly written as TERMINATION RETAINERSHIP CONTRACT, informed
De Vera of its decision to discontinue the latters retainers contract with the Company effective at the
close of business hours of December 31, 1996 because management has decided that it would be more
practical to provide medical services to its employees through accredited hospitals near the company
premises. De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission
(NLRC), alleging that that he had been actually employed by Philcom as its company physician since 1981
and was dismissed without due process.

ISSUE: Whether an employer-employee relationship exists between petitioner and respondent.

HELD:
Applying the four-fold test to this case, we initially find that it was respondent himself who sets the
parameters of what his duties would be in offering his services to petitioner borne in a letter.
Significantly, the letter was substantially the basis finding that there existed no employer-employee
relationship between petitioner and respondent in addition to the fact that the complainant was not
considered an employee was recognized by the complainant himself in a signed letter to the respondent.
The tenor of this letter indicates that the complainant was proposing to extend his time with the
respondent and seeking additional compensation for said extension. This shows that the respondent
PHILCOM did not have control over the schedule of the complainant as it [is] the complainant who is
proposing his own schedule and asking to be paid for the same. This is proof that the complainant
understood that his relationship with the respondent PHILCOM was a retained physician and not as an
employee. If he were an employee he could not negotiate as to his hours of work.


It was not disputed by respondent, that from the time he started to work with petitioner, he never was
included in its payroll; was never deducted any contribution for remittance to the Social Security System
(SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding tax for his
professional fee, in accordance with the National Internal Revenue Code, matters which are simply
inconsistent with an employer-employee relationship.

Finally, remarkably absent from the parties arrangement is the element of control, whereby the
employer has reserved the right to control the employee not only as to the result of the work done but
also as to the means and methods by which the same is to be accomplished. Here, petitioner had no
control over the means and methods by which respondent went about performing his work at the
company premises. He could even embark in the private practice of his profession, not to mention the
fact that respondents work hours and the additional compensation therefore were negotiated upon by
the parties. In fine, the parties themselves practically agreed on every terms and conditions of
respondents engagement, which thereby negates the element of control in their relationship.

ABS-CBN VS. NAZARENO, G.R. NO. 164156, SEPT. 26, 2006

FACTS:
ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production
assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio
programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued
ABS-CBN employees identification cards and were required to work for a minimum of eight hours a day,
including Sundays and holidays. They were made to: a) Prepare, arrange airing of commercial
broadcasting based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate,
arrange personalities for air interviews; c) Coordinate, prepare schedule of reporters for scheduled news
reporting and lead-in or incoming reports; d) Facilitate, prepare and arrange airtime schedule for public
service announcement and complaints; e) Assist, anchor program interview, etc; and f) Record, log
clerical reports, man based control radio.

Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA)
to be effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since petitioner refused to
recognize PAs as part of the bargaining unit, respondents were not included to the CBA.
Due to a memorandum assigning PAs to non-drama programs, and that the DYAB studio operations
would be handled by the studio technician. There was a revision of the schedule and assignments and
that respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to
Leo Lastimosa.

On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and
13
th
Month Pay with Damages against the petitioner before the NLRC.

ISSUE: WON the respondents are regular employees.

HELD:
Respondents are considered regular employees of ABS-CBN and are entitled to the benefits granted to all
regular employees.
Where a person has rendered at least one year of service, regardless of the nature of the activity
performed, or where the work is continuous or intermittent, the employment is considered regular as
long as the activity exists. The reason being that a customary appointment is not indispensable before
one may be formally declared as having attained regular status. Article 280 of the Labor Code provides:

REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary notwithstanding
and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

Any employee who has rendered at least one year of service, whether continuous or intermittent, is
deemed regular with respect to the activity performed and while such activity actually exists. The fact
that respondents received pre-agreed talent fees instead of salaries, that they did not observe the
required office hours, and that they were permitted to join other productions during their free time are
not conclusive of the nature of their employment. They are regular employees who perform several
different duties under the control and direction of ABS-CBN executives and supervisors.


There are two kinds of regular employees under the law: (1) those engaged to perform activities
which are necessary or desirable in the usual business or trade of the employer; and (2) those casual
employees who have rendered at least one year of service, whether continuous or broken, with
respect to the activities in which they are employed.

What determines whether a certain employment is regular or otherwise is the character of the activities
performed in relation to the particular trade or business taking into account all the circumstances, and in
some cases the length of time of its performance and its continued existence.

The employer-employee relationship between petitioner and respondents has been proven by the ff:
(1)In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status
was required from them because they were merely hired through petitioners personnel department just
like any ordinary employee;(2) The so-called talent fees of respondents correspond to wages given as a
result of an employer-employee relationship. Respondents did not have the power to bargain for huge
talent fees, a circumstance negating independent contractual relationship; (3) Petitioner could always
discharge respondents should it find their work unsatisfactory, and respondents are highly dependent on
the petitioner for continued work; (4)The degree of control and supervision exercised by petitioner over
respondents through its supervisors negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of
the employer and when the worker, relative to the employer, does not furnish an
independent business or professional service, such work is a regular employment of such
employee and not an independent contractor.

FRANCISCO VS. NLRC, 500 SCRA 690 [06]

FACTS:
Petitioner was hired by Kasei Corporation during the incorporation stage. She was designated as
accountant and corporate secretary and was assigned to handle all the accounting needs of the company.
She was also designated as Liason Officer to the City of Manila to secure permits for the operation of the
company.

In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment
of all employees and perform management administration functions. In 2001, she was replaced by Liza
Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which was until
September. She asked for her salary but was informed that she was no longer connected to the
company. She did not anymore report to work since she was not paid for her salary. She filed an action
for constructive dismissal with the Labor Arbiter.

ISSUE: WON there was an employer-employee relationship.

HELD:
Petitioner is an employee of Kasei Corporation. In addition to the standard of right-of-control, the
existing economic conditions prevailing between the parties, like the inclusion of the employee in the
payrolls, can help in determining the existence of an employer-employee relationship.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers
power to control the employee with respect to the means and methods by which the work is to be
accomplished; and (2) the underlying economic realities of the activity or relationship.

Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services performed
are an integral part of the employers business; (2) the extent of the workers investment in equipment
and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers
opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the
success of the claimed independent enterprise; (6) the permanency and duration of the relationship
between the worker and the employer; and (7) the degree of dependency of the worker upon the
employer for his continued employment in that line of business. The proper standard of economic
dependence is whether the worker is dependent on the alleged employer for his continued employment
in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporations Technical
Consultant. It is therefore apparent that petitioner is economically dependent on respondent corporation
for her continued employment in the latters line of business.


There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation.
She was selected and engaged by the company for compensation, and is economically dependent upon
respondent for her continued employment in that line of business. Her main job function involved
accounting and tax services rendered to Respondent Corporation on a regular basis over an indefinite
period of engagement. Respondent Corporation hired and engaged petitioner for compensation, with the
power to dismiss her for cause. More importantly, Respondent Corporation had the power to control
petitioner with the means and methods by which the work is to be accomplished.

NOGRALES, ET. AL. VS. CAPITOL MEDICAL CENTER, ET. AL.,
G.R. NO. 142625, DECEMBER 19, 2006

FACTS:
Corazon was under the exclusive care of Dr Oscar Estrada beginning the fourth month of her pregnancy.
While on her last trimester of pregnancy, Dr Estrada noted an increase of her blood pressure and
development of leg edema indicating preeclampsia which is a dangerous complication of pregnancy.

Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting Spouses
Nogales to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her immediate
admission to the Capitol Medical Center. Eventually, Corazon died after giving birth to the child, which
prompted the petitioners to file a complaint for damages against CMC, Dr. Estrada and other physicians
and a certain nurse for Corazons death. Petitioners mainly contended that defendant physicians and CMC
personnel were negligent in the treatment and management of Corazon's condition. Petitioners charged
CMC with negligence in the selection and supervision of defendant physicians and hospital staff.

ISSUE: WON CMC is vicariously liable for the negligence of Dr. Estrada.

HELD:
CMC is vicariously liable. In the present case, the Court finds no single evidence pointing to CMC's
exercise of control over Dr. Estrada's treatment and management of Corazon's condition. It is undisputed
that throughout Corazon's pregnancy, she was under the exclusive prenatal care of Dr. Estrada. At the
time of Corazon's admission at CMC and during her delivery, it was Dr. Estrada, assisted by Dr. Villaflor,
who attended to Corazon. There was no showing that CMC had a part in diagnosing Corazon's condition.
While Dr. Estrada enjoyed staff privileges at CMC, such fact alone did not make him an employee of CMC.

CMC merely allowed Dr. Estrada to use its facilities

when Corazon was about to give birth, which CMC
considered an emergency. Considering these circumstances, Dr. Estrada is not an employee of CMC, but
an independent contractor.

In general, a hospital is not liable for the negligence of an independent contractor-physician. There is,
however, an exception to this principle. The hospital may be liable if the physician is the "ostensible"
agent of the hospital.

This exception is also known as the "doctrine of apparent authority." The doctrine
of apparent authority essentially involves two factors to determine the liability of an independent-
contractor physician.

The first factor focuses on the hospital's manifestations and is sometimes described as an inquiry whether
the hospital acted in a manner which would lead a reasonable person to conclude that the individual who
was alleged to be negligent was an employee or agent of the hospital. In this regard, the hospital need
not make express representations to the patient that the treating physician is an employee of the
hospital; rather a representation may be general and implied. In the instant case, CMC impliedly held out
Dr. Estrada as a member of its medical staff. Through CMC's acts, CMC clothed Dr. Estrada with apparent
authority thereby leading the Spouses Nogales to believe that Dr. Estrada was an employee or agent of
CMC. CMC cannot now repudiate such authority.

The second factor focuses on the patient's reliance. It is sometimes characterized as an inquiry on
whether the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with
ordinary care and prudence.

The records show that the Spouses Nogales relied upon a perceived employment relationship with CMC in
accepting Dr. Estrada's services. Rogelio testified that he and his wife specifically chose Dr. Estrada to
handle Corazon's delivery not only because of their friend's recommendation, but more importantly
because of Dr. Estrada's "connection with a reputable hospital, the [CMC]." In other words, Dr. Estrada's
relationship with CMC played a significant role in the Spouses Nogales' decision in accepting Dr. Estrada's
services as the obstetrician-gynecologist for Corazon's delivery. Moreover, as earlier stated, there is no
showing that before and during Corazon's confinement at CMC, the Spouses Nogales knew or should
have known that Dr. Estrada was not an employee of CMC.

Even simple negligence is not subject to blanket release in favor of establishments like hospitals but may
only mitigate liability depending on the circumstances.

When a person needing urgent medical attention
rushes to a hospital, he cannot bargain on equal footing with the hospital on the terms of admission and
operation. Such a person is literally at the mercy of the hospital. There can be no clearer example of a
contract of adhesion than one arising from such a dire situation. Thus, the release forms of CMC cannot
relieve CMC from liability for the negligent medical treatment of Corazon.

COCA-COLA BOTTLERS PHILS. VS. DR. CLIMACO, G.R. NO. 146881, FEBRUARY 15, 2007

FACTS:
Dr. Dean Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtue
of a Retainer Agreement for a period of 1 year with a monthly salary of Three Thousand Eight Hundred
(P3,800.00).
The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one expired
on December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued to
perform his functions as company doctor to Coca-Cola until he received a letter from petitioner company
concluding their retainership agreement effective 30 days from receipt thereof.
Petitioner was already making inquiries regarding his status with the company. First, he wrote a letter
addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee on Membership,
Philippine College of Occupational Medicine. In response, Dr. Sy wrote a letter to the Personnel Officer of
Coca-Cola Bottlers Phils., Bacolod City, stating that respondent should be considered as a regular part-
time physician, having served the company continuously for four (4) years. He likewise stated that
respondent must receive all the benefits and privileges of an employee under Article 157 (b) of the Labor
Code.

ISSUE: WON there existed an employer-employee relationship between Coca-Cola and Dr. Climaco.

HELD:
No employer-employee relationship exists between the parties. The Court, in determining the existence of
an employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power
to control the employees conduct, or the so-called "control test," considered to be the most important
element.

The Labor Arbiter and the NLRC correctly found that Coca-Cola lacked the power of control over the
performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical
Plan, which contains the respondents objectives, duties and obligations, does not tell respondent "how to
conduct his physical examination, how to immunize, or how to diagnose and treat his patients, employees
of Coca-Cola, in each case."

The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved,
but did not control the means and methods by which respondent performed his assigned tasks. It is
precisely because the company lacks the power of control that the contract provides that respondent
shall be directly responsible to the employee concerned and their dependents for any injury, harm or
damage caused through professional negligence, incompetence or other valid causes of action.

Complainant does not dispute the fact that outside of the two (2) hours that he is required to be at
respondent companys premises, he is not at all further required to just sit around in the premises and
wait for an emergency to occur so as to enable him from using such hours for his own benefit and
advantage. In fact, complainant maintains his own private clinic attending to his private practice in the
city, where he services his patients, bills them accordingly -- and if it is an employee of respondent
company who is attended to by him for special treatment that needs hospitalization or operation, this is
subject to a special billing. More often than not, an employee is required to stay in the employers
workplace or proximately close thereto that he cannot utilize his time effectively and gainfully for his own
purpose.

CALAMBA MEDICAL CENTER VS. NLRC ET. AL.,
G.R. NO. 176484, NOV. 25, 2008

FACTS:
Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr.
Merceditha Lanzanas as part of its team of resident physicians. Reporting at the hospital twice-a-week on
twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each. Also resident

physicians were also given a percentage share out of fees charged for out-patient treatments, operating
room assistance and discharge billings, in addition to their fixed monthly retainer.

The work schedules of the members of the team of resident physicians were fixed by petitioner's medical
director Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax from them.
After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and a fellow
employee Diosdado Miscala, the former was given a preventive suspension and his wife Dr. Merceditha
was not given any schedule after sending the Memorandum. On March 1998, Dr. Ronaldo filed a
complaint for illegal suspension and Dr. Merceditha for illegal dismissal.

ISSUE: WON there existed an employer-employee relationship between petitioner and the spouses-
respondents.

HELD:
Drs. Lanzanas are declared employee by the petitioner hospital. Under the "control test," an
employment relationship exists between a physician and a hospital if the hospital controls both the means
and the details of the process by which the physician is to accomplish his task.
That petitioner exercised control over respondents gains light from the undisputed fact that in the
emergency room, the operating room, or any department or ward for that matter, respondents' work is
monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consent
of petitioner or its medical director, no operations can be undertaken in those areas. For control test to
apply, it is not essential for the employer to actually supervise the performance of duties of the
employee, it being enough that it has the right to wield the power.
With respect to respondents' sharing in some hospital fees, this scheme does not sever the employment
tie between them and petitioner as this merely mirrors additional form or another form of compensation
or incentive similar to what commission-based employees receive as contemplated in Article 97 (f) of the
Labor Code.
Moreover, respondents were made subject to petitioner-hospital's Code of Ethics, the provisions of which
cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior,
and offenses against persons, property and the hospital's interest.
More importantly, petitioner itself provided incontrovertible proof of the employment status of
respondents, namely, the identification cards it issued them, the payslips and BIR W-2 (now 2316) Forms
which reflect their status as employees, and the classification as "salary" of their remuneration. Moreover,
it enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting at this juncture that
mandatory coverage under the SSS Law is premised on the existence of an employer-employee
relationship, except in cases of compulsory coverage of the self-employed.

ESCASIAS, ET. AL. VS. SHANGRILA-LAS MACTAN ISLAND RESORT, ET. AL.,
G.R. NO. 178827, MARCH 4, 2009

FACTS:
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and
1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent
Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician.

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for
regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th
month pay differential against respondents, claiming that they are regular employees of Shangri-la.
Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor, that
Article 157 of the Labor Code, as amended, does not make it mandatory for a covered establishment to
employ health personnel, that the services of nurses is not germane nor indispensable to its operations,
and that respondent doctor is a legitimate individual contractor who has the power to hire, fire and
supervise the work of nurses under her.

ISSUE: Whether or not there exists an employer-employee relationship between Shangri-la and
petitioners.

HELD:
The Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides
the clinic premises and medical supplies for use of its employees and guests do not necessarily prove that
respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and
provision of medical services to its employees is required under Art. 157, which are not directly related to
Shangri-las principal business operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS
contributions and other benefits of the staff; group life, group personal accident insurance and life/death
insurance for the staff with minimum benefit payable at 12 times the employees last drawn salary, as
well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and
70% share of the service charges from Shangri-las guests who avail of the clinic services. It is unlikely
that respondent doctor would report petitioners as workers, pay their SSS premium as well as their
wages if they were not indeed her employees.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a
document, Clinic Policies and Employee Manual claimed to have been prepared by respondent doctor
exists, to which petitioners gave their conformity and in which they acknowledged their co-terminus
employment status. It is thus presumed that said document, and not the employee manual being
followed by Shangri-las regular workers, governs how they perform their respective tasks and
responsibilities.

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

TONGKO VS. MANUFACTURER LIFE INSURANCE CO. (PHILS), INC., ET. AL.,
G.R. NO. 167622, JANUARY 25, 2011

FACTS:
The case arose from a complaint for illegal dismissal with various claims filed by Tongko against Manulife.
Tongko alleged that he was an employee of the company since the latter exercised control over
him. Manulife claims otherwise insisting that he was an agent.

ISSUE: WON an employer-employee relationship exist.

HELD:
The Supreme Court held that if the specific rules and regulations that are enforced against insurance
agents or managers are such that would directly affect the means and methods by which such agents or
managers would achieve the objectives set by the insurance company, they are employees of the
insurance company.

Applying said standard, the Court held that Tongko was an employee of Manulife since the latter had the
power of control over the former. The Court accorded much weight on the various codes of conduct that
Tongko had to observe pursuant to the agency agreement. It held: Thus, with the company regulations
and requirements alone, the fact that Tongko was an employee of Manulife may already be established.
Certainly, these requirements controlled the means and methods by which Tongko was to achieve the
companys goals. More importantly, Manulifes evidence establishes the fact that Tongko was tasked to
perform administrative duties that establishes his employment with Manulife.

In short, the Supreme Court ruled in favor of Tongko which prompted Manulife to file its Motion for
Reconsideration. In disposing of this Motion for Reconsideration, the Supreme Court placed heavy
significance on the application of the Civil Code and Insurance provisions on agency. The original
Agreement of Tongko with the company dictates that he is an insurance agent. No other documentary
evidence was found to support subsequent stipulations as to their relationship that would negate the
agency, and not employment, relationship on the original agreement.
It was found by the Court that Tongko declared himself as business or self-employed person in his
income tax return. In a sense, an independent contractor. This bolsters the content of the Agreement
mentioned above that he was an insurance agent in the context of the Insurance Code and the Civil
Code. To the Court, this aspect of the evidence was not considered in its original decision, which had
they been given importance, would have changed the decision as it is an admission against interest on
the part of Tongko.

Another principle that surfaced here is the concept of estoppel. Tongkos previous admissions in several
years of tax returns as an independent agent, as against his belated claim that he was all along an
employee, are too diametrically opposed to be simply dismissed or ignored.

As to the value of the Code of Conduct relied upon by Tongko in claiming that he is an employee, the
Court posits: What, to Tongko, serve as evidence of labor law control are the codes of conduct that
Manulife imposes on its agents in the sale of insurance. The mere presentation of codes or of rules and
regulations, however, is not per se indicative of labor law control as the law and jurisprudence teach us.

As already recited above, the Insurance Code imposes obligations on both the insurance company and its
agents in the performance of their respective obligations under the Code, particularly on licenses and
their renewals, on the representations to be made to potential customers, the collection of premiums, on
the delivery of insurance policies, on the matter of compensation, and on measures to ensure ethical
business practice in the industry.

The general law on agency, on the other hand, expressly allows the principal an element of control over
the agent in a manner consistent with an agency relationship. In this sense, these control measures
cannot be read as indicative of labor law control. Foremost among these are the directives that the
principal may impose on the agent to achieve the assigned tasks, to the extent that they do not involve
the means and manner of undertaking these tasks. The law likewise obligates the agent to render an
account; in this sense, the principal may impose on the agent specific instructions on how an account
shall be made, particularly on the matter of expenses and reimbursements. To these extents, control can
be imposed through rules and regulations without intruding into the labor law concept of control for
purposes of employment.
The Court further held that a commitment to abide by the rules and regulations of an insurance company
does not ipso facto make the insurance agent an employee. Neither do guidelines somehow restrictive of
the insurance agents conduct necessarily indicate control as this term is defined in jurisprudence.
Guidelines indicative of labor law control, should not merely relate to the mutually desirable result
intended by the contractual relationship; they must have the nature of dictating the means or methods to
be employed in attaining the result, or of fixing the methodology and of binding or restricting the party
hired to the use of these means. In fact, results-wise, the principal can impose production quotas and
can determine how many agents, with specific territories, ought to be employed to achieve the
companys objectives. These are management policy decisions that the labor law element of control
cannot reach. Thus, as will be shown more fully , Manulifes codes of conduct, all of which do not intrude
into the insurance agents means and manner of conducting their sales and only control them as to the
desired results and Insurance Code norms, cannot be used as basis for a finding that the labor law
concept of control existed between Manulife and Tongko.

Thus, the Court did not see the existence of such relationship and reversed its earlier ruling which
granted Tongko millions in backwages and damages, among others.

CAONG, JR.,VS. BEGUALOS,
GR NO. 179428, JAN. 26, 2011

Petitioners namely Primo E. Caong, Alexander Tresquio and Loriano Daluyon are employed by herein
respondent as drivers by his jeepneys under a boundary agreement. On November 2001, they filed
separate complaints alleging illegal dismissal for failure to remit exact amount of daily boundary fee.

During the mandatory conference, respondent manifested that petitioners were not dismissed and could
still drive his jeepneys as long as the arrears are paid. Petitioners refused to do so. Petitioners alleged
that they were illegally dismissed and were not afforded due process when they were dismissed without
notice. They contended that (a) they were not afforded due process, (b) there was no just cause for the
dismissal and that (c) there was a disregard that there are days when the full amount of boundary cannot
be raised due to the scarcity of passengers.

Respondent in his defense mentioned that the petitioners were lessees of his jeepneys and they have not
been paying the full amount of the jeepneys rental. He added that on November 4, he gathered all his
lessees and told them that effective November 5, those that would fail to pay the full payment of the
rental will not be allowed to rent his jeepneys. He further informed his lessees that his jeepneys were
acquired on instalment basis and that the lease the drivers are paying him are necessary for the monthly
amortization of said jeeneys. However, despite this, petitioners did not pay arrears amounting to 10,
315.00, 10,760.00 d 6,890.00. He stressed that he would renew contract with the petitioners as long as
the petitioners pay the arrears incurred.
The Labor Arbiter and the National Labor Relations Commission decided in favour of respondent
dismissing case and upholding that what was implemented was merely a sanction to the drivers for
failure to pay lease or rental. This was affirmed by the Court of Appeals. In its decision it said that the
employer-employee relationship was not severed but merely suspended. At the same time, the drivers
can return to work upon fulfilment of the condition that the arrears is paid.

Ruling:
It has been settled that the relationship between jeepney owners/operators and drivers under the
boundary system is that of an employer-employee and not lessor-lessee. This is not negated by the fact
that the drivers do not receive a fixed amount but only based on the excess of the so called boundary.


The employer-employee relationship was not severed but was only temporarily suspended. Respondents
policy of suspending drivers who fail to remit the full amount of their boundary was fair and reasonable.

It is acknowledged that an employer has free rein and enjoys a wide latitude of discretion to regulate all
aspects of employment, including the prerogative to instill discipline on his employees and to impose
penalties, including dismissal, if warranted, upon erring employees. This is a management prerogative.
Indeed, the manner in which management conducts its own affairs to achieve its purpose is within the
management's discretion. The only limitation on the exercise of management prerogative is that the
policies, rules, and regulations on work-related activities of the employees must always be fair and
reasonable, and the corresponding penalties, when prescribed, commensurate to the offense involved
and to the degree of the infraction. (Caong, Jr. v. Regualos, G.R. No. 179428, January 26, 2011)

ATOK BIG WEDGE COMPANY, VS. JESUS P. GISON
G.R. NO. 169510, AUGUST 8, 2011

Respondent Jesus P. Gison was engaged as part-time consultant on retainer basis by Atok Big Wedge
Company through its Assistant Vice President and Acting Assistant Vice Manager Rutillo Torres. As a
consultant on retainer basis, respondent assisted petitioner's retained legal counsel with matters
pertaining to the prosecution of cases against illegal surface occupants within the area covered by the
company's mineral claims. Respondent was likewise tasked to perform liaison work with several
government agencies, which he said was his expertise. However, respondent was not required to report
in the office on a regular basis unless needed by the company in relation to his being a consultant. He is
paid 3,000 php a month of which was delivered in his residence or to him through a meeting in a
restaurant. A retainer agreement was executed between parties but such agreement cannot be found.
Such arrangement lasted for eleven (11) years.

Dispute between parties arose when petitioner refused to register respondent with the Social Security
System. This resulted to petitioner, through his resident manager Cera, issued a memorandum advising
respondent that within 30 days from receipt thereof, the retainer contract is terminated since services of
Gison is no longer needed.

As a result thereof, herein respondent filed an action against petitioner for illegal dismissal, unfair labor
practice, underpayment of wages, non-payment of 13
th
month pay, vacation pay and sick leave pay with
theNational Laor Relations Commission Regional Arbitration Branch.

In his petition, respondent alleged that he started by assisting the company in relation to their 700 million
crop damage case. It was agreed that there was no employer-employee relationship but upon
termination of the case, he however continued to take charge of some liaison matters and public relations
on behalf of Atok. Because of the length of his service, he invited the attention of the top officers of the
company saying that he is already entitled of benefits due to an employee. This was ignored by the
management. Despite that, he continued to represent company and was even enjoying the privilege of
securing interest free salary loans through salary deduction.

The Labor Arbiter and the NLRC decided in favor of herein petitioner stating that there was no employer-
employee relationship. Herein respondent, under Rule 65, appealed case in the Court of Appeals. CA
reversed ruling of the Labor Arbiter and the NLRC ordering herein petitioner to reinstate respondent and
to pay him full backwages inclusive of allowances and other benefits of their monetary equivalent
computed from the time these were withheld from him up to the time of his actual and effective
reinstatement.

The Court of Appeals in its decision opined that the NLRC and the Labor Arbiter may have overlooked
Article 280 of the Labor Code which distinguishes two kinds of employees regular and casual
employees. In consideration of the eleven (11) years of service rendered by herein respondent, he is
deemed entitled of the rights and privileges of a regular employee.

Issue:
Whether or not an employer-employee relationship exists between petitioner and the respondent.

Ruling:
In determining whether an employer-employee relationship exists, jurisprudence adheres to the four-fold
test: (1) selection of employee; (2) payment of wages; (3) the power of dismissal; and (4) the power to
control employees conduct. Among the four, the last or the control test is the most controlling. In it, the
employer has the power to control the employee not only in relation to the end product but as to the
means and manner of achieving the end.

Based on the circumstances, there was no employer-employee relationship. Respondent was not required
to report everyday and payment was done only at his residence or the local restaurant. At the same time,
respondent may be given tasks to perform but these tasks were to be performed according to his own
means and method. Respondent even admit that there was a prior agreement that there will be no
employer-employee relationship between them.

Contrary to the conclusion of the CA, respondent is not an employee, much more a regular employee of
petitioner. The appellate court's premise that regular employees are those who perform activities which
are desirable and necessary for the business of the employer is not determinative in this case. In fact,
any agreement may provide that one party shall render services for and in behalf of another, no matter
how necessary for the latter's business, even without being hired as an employee.
Considering that there is no employer-employee relationship between the parties, the termination of
respondent's services by the petitioner after due notice did not constitute illegal dismissal warranting his
reinstatement and the payment of full backwages, allowances and other benefits.

MARTICIO SEMBLANTE and DUBRICK PILAR, vs. COURT OF APPEALS, 19TH DIVISION, now
SPECIAL FORMER 19TH DIVISION,
GALLERA DE MANDAUE/SPOUSES VICENTE and MARIA LUISA LOOT,
G.R. No. 196426. August 15, 2011.

Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were hired by
respondents-spouses Vicente and Maria Luisa Loot, as the official masiador and sentenciador, of Galleria
la Mandaue, a cockpit sometime in 1993.

As masiador and sentenciador, Semblante receives PhP2,000 per week or a total of PhP8,000 per month,
while Pilar gets PhP3,500 a week or PhP14,000 per month. They work every Tuesday, Wednesday,
Saturday, and Sunday every week, excluding monthly derbies and cockfights held on special holidays.
Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the
morning depending on the needs of the cockpit. Petitioners had both been issued employees'
identification cards and have been conscious of the cockpit rules and regulations. However, on November
14, 2003, petitioners were denied entry into the cockpit and were informed that they are already
terminated of their services immediately effective. This prompted petitioners to file a complaint for illegal
dismissal against respondents.

In answer, respondents denied that petitioners were their employees and alleged that they were
associates of respondents' independent contractor, Tomas Vega. Respondents claimed that petitioners
have no regular working time or day and they are free to decide for themselves whether to report for
work or not on any cockfighting day. And lastly, IDs are merely issued so that they can access the
cockpit without mixing with the general public.

The Labor Arbiter in its Decision dated June 16, 2004, ruled that petitioners are regular employees of
respondents as they performed work necessary and indispensable to the usual trade or business of
respondents. It was added that petitioners were illegally dismissed by herein petitioner and thus entitled
with backwages and separation pay.

Upon respondents Motion for Reconsideration, the NLRC held in its Resolution of October 18, 2006 that
there was no employer-employee relationship between petitioners and respondents - respondents having
no part in the selection and engagement of petitioners, and that no separate individual contract with
respondents was ever executed by petitioners.

Petitioners via petition for certiorari file in the appellate court arguing that there was a grave abuse of
discretion on the part of the NLRC. The Court of Appeals however affirmed the decision of NLRC.

Issue: Whether or Not there was an employer-employee relationship between parties?

Ruling:
There is no employer-employee relationship.

Applying the four-fold test in determining whether there is an employer-employee relationship, it is ruled
that petitioners are NOT employees of respondents. This can be adduced through the following:
1. Respondents had no part in petitioners' selection and management;

2. Petitioners' compensation was paid out of the arriba (which is a percentage deducted from the
total bets), not by petitioners; and
3. Petitioners performed their functions as masiador and sentenciador free from the direction and
control of respondents.

Thus, respondents, not being petitioners' employers, could never have dismissed, legally or illegally,
petitioners, since respondents were without power or prerogative to do so.

JOSE MEL BERNARTE, vs. PHILIPPINE BASKETBALL ASSOCIATION (PBA),
JOSE EMMANUEL M. EALA, and PERRY MARTINEZ,
G.R. No. 192084. September 14, 2011

Complainants (Jose Mel Bernarte and Renato Guevarra) alleged that they were invited to become
referees in the PBA. During the leadership of Commissioner Emilio Bernardino, they were made to sign
contracts on a year-to-year basis. However such terms were changed upon the administration of
Commissioner Eala.

Both petitioners have not been allowed to sign their contract on managements basis that they have been
performing unsatisfactorily.

The Labor Arbiter declared petitioners as employees dismissed illegally. Accordingly, the Labor Arbiter
ordered the reinstatement of petitioner and the payment of backwages, moral and exemplary damages
and attorney's fees. This was affirmed by the NLRC.

Respondents filed a petition for certiorari with the Court of Appeals, which overturned the decisions of
the NLRC and Labor Arbiter. The Court of Appeals found petitioner an independent contractor since
respondents did not exercise any form of control over the means and methods by which petitioner
performed his work as a basketball referee.

Issue:
Whether or Not there is an employer-employee relationship among parties

Ruling:
No, there is no employer-employee relationship.

In this case, PBA admits repeatedly engaging petitioner's services, as shown in the retainer contracts.
PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as stipulated in the retainer
contract.

The following circumstances indicate that petitioner is an independent contractor: (1) the referees are
required to report for work only when PBA games are scheduled, which is three times a week spread over
an average of only 105 playing days a year, and they officiate games at an average of two hours per
game; and (2) the only deductions from the fees received by the referees are withholding taxes.

In other words, unlike regular employees who ordinarily report for work eight hours per day for five days
a week, petitioner is required to report for work only when PBA games are scheduled or three times a
week at two hours per game. In addition, there are no deductions for contributions to the Social Security
System, Philhealth or Pag-Ibig, which are the usual deductions from employees' salaries. These
undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an
employee of respondents.

Generally, "if an employer has the right to control and direct the work of an individual, not only as to the
result to be achieved, but also as to details by which the result is achieved, an employer/employee
relationship is likely to exist."

A position that requires special skills and independent judgment weights in favor of independent
contractor status. . . . Unskilled work, on the other hand, suggests an employment relationship. In
addition, the fact that PBA repeatedly hired petitioner does not by itself prove that petitioner is an
employee of the former. For a hired party to be considered an employee, the hiring party must have
control over the means and methods by which the hired party is to perform his work, which is absent in
this case. The continuous rehiring by PBA of petitioner simply signifies the renewal of the contract
between PBA and petitioner, and highlights the satisfactory services rendered by petitioner warranting
such contract renewal. Conversely, if PBA decides to discontinue petitioner's services at the end of the
term fixed in the contract, whether for unsatisfactory services, or violation of the terms and conditions of

the contract, or for whatever other reason, the same merely results in the non-renewal of the contract,
as in the present case. The non-renewal of the contract between the parties does not constitute illegal
dismissal of petitioner by respondents.

LIRIO VS. GENOVIA
G.R. No. 169757, November 23, 2011

Facts:

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

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

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

After the album was completed and released, respondent again reminded petitioner about the contract
on his compensation as composer and arranger of the album. Petitioner told respondent that since he
was practically a nobody and had proven nothing yet in the music industry, respondent did not deserve a
high compensation, and he should be thankful that he was given a job to feed his family. Petitioner
informed respondent that he was entitled only to 20% of the net profit, and not of the gross sales of the
album, and that the salaries he received and would continue to receive as studio manager of Celkor
would be deducted from the said 20% net profit share. Respondent objected and insisted that he be
properly compensated. On March 14, 2002, petitioner verbally terminated respondents services, and he
was instructed not to report for work.

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

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

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

In defense, petitioner stated in his Position Paper that respondent was not hired as studio manager,
composer, technician or as an employee in any other capacity of Celkor. Respondent could not have been
hired as a studio manager, since the recording studio has no personnel except petitioner.

According to petitioner, respondent had no track record as a composer, and he was not known in the
field of music. Nevertheless, after some discussion, respondent verbally agreed with petitioner to co-
produce the album.


Petitioner asserted that his relationship with respondent is one of an informal partnership and that he had
no control over the time and manner by which respondent composed or arranged the songs, except on
the result thereof. Respondent reported to the recording studio between 10:00 a.m. and 12:00 noon.
Hence, petitioner contended that no employer-employee relationship existed between him and the
respondent, and there was no illegal dismissal to speak of.

The Labor Arbiter rendered a decision finding that an employer-employee relationship existed between
petitioner and respondent, and that respondent was illegally dismissed.

However, the NLRC reversed and set aside the decision of the Labor Arbiter on the ground that
respondent failed to prove his employment tale with substantial evidence. It held that respondent failed
to proved with substantial evidence that he was selected and engaged by petitioner, that petitioner had
the power to dismiss him, and that they had the power to control him not only as to the result of his
work, but also as to the means and methods of accomplishing his work.

The Court of Appeals rendered a decision reversing and setting aside the resolution of the NLRC, and
reinstating the decision of the Labor Arbiter.

Issue:

Whether respondent is an employee of the petitioner, which in turn determines whether respondent was
illegally dismissed.

Ruling:

The Supreme Court affirmed the assailed decision of the Court of Appeals.

Before a case for illegal dismissal can prosper, it must first be established that an employer-employee
relationship existed between petitioner and respondent.

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

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

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

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

On the other hand, petitioner failed to prove that his relationship with respondent was one of
partnership. Such claim was not supported by any written agreement. The Court notes that in the payroll
dated July 31, 2001 to March 15, 2002, there were deductions from the wages of respondent for his
absence from work, which negates petitioners claim that the wages paid were advances for respondents
work in the partnership.

The Court agrees with the Court of Appeals that the evidence presented by the parties showed that an
employer-employee relationship existed between petitioner and respondent.


In termination cases, the burden is upon the employer to show by substantial evidence that the
termination was for lawful cause and validly made.Article 277 (b) of the Labor Code puts the burden of
proving that the dismissal of an employee was for a valid or authorized cause on the employer, without
distinction whether the employer admits or does not admit the dismissal. For an employees dismissal to
be valid, (a) the dismissal must be for a valid cause, and (b) the employee must be afforded due process.
Procedural due process requires the employer to furnish an employee with two written notices before the
latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his
sought, which is the equivalent of a charge; and (2) the notice informing the employee of hi s dismissal,
to be issued after the employee has been given reasonable opportunity to answer and to be heard on his
defense. Petitioner failed to comply with these legal requirements; hence, the Court of Appeals correctly
affirmed the Labor Arbiters finding that respondent was illegally dismissed, and entitled to the payment
of backwages, and separation pay in lieu of reinstatement.

JAO VS. BCC PRODUCT SALES INC.,
G.R. NO. 163700, APRIL 18, 2012

Facts:
Petitioner maintained that respondent BCC Product Sales Inc. (BCC) and its President, Terrance
Ty, employed him as comptroller starting from September 1995 with a monthly salary of P20,000.00 to
handle the financial aspect of BCCs business. On October 19,1995, the security guards of BCC, acting
upon the instruction of Ty, barred him from entering the premises of BCC where he then worked. His
attempts to report to work in November and December 12, 1995 were frustrated because he continued
to be barred from entering the premises of BCC. He then filed a complaint for illegal dismissal,
reinstatement with full backwages, non-payment of wages, damages and attorneys fees.
Respondents countered that petitioner was not their employee but the employee of Sobien Food
Corporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him as its
comptroller in BCC to oversee BCCs finances and business operations and to look after SFCs interests or
investments in BCC.

Issue:
Whether or not an employer-employee relationship existed between petitioner Jao and BCC

Ruling:
The Supreme Court speaking through Justice Bersamin declared that the court cannot side with
petitioner.
In determining the presence or absence of an employer-employee relationship, the Court has
consistently looked for the following incidents, to wit: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employee on the means and methods by which the work is accomplished. The last element, the so-called
control test, is the most important element.
Hereunder are some of the circumstances and incidents occurring while petitioner was supposedly
employed by BCC that debunked his claim against respondents. It can be deduced from the March 1996
affidavit of petitioner that respondents challenged his authority to deliver some 158 checks to SFC.
Considering that he contested respondents challenge by pointing to the existing arrangements between
BCC and SFC, it should be clear that respondents did not exercise the power of control over him, because
he thereby acted for the benefit and in the interest of SFC more than of BCC.

LEGEND HOTEL (MANILA) V. REALUYO,
G.R. NO. 153511, JULY 18, 2012

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

Ruling:
The issue of whether or not an employer-employee relationship existed between petitioner and
respondent is essentially a question of fact. 9 The factors that determine the issue include who has the

power to select the employee, who pays the employee's wages, who has the power to dismiss the
employee, and who exercises control of the methods and results by which the work of the employee is
accomplished. 10 Although no particular form of evidence is required to prove the existence of the
relationship, and any competent and relevant evidence to prove the relationship may be admitted, 11 a
finding that the relationship exists must nonetheless rest on substantial evidence, which is that amount of
relevant evidence that a reasonable mind might accept as adequate to justify a conclusion. 12

Generally, the Court does not review factual questions, primarily because the Court is not a trier of facts.
However, where, like here, there is a conflict between the factual findings of the Labor Arbiter and the
NLRC, on the one hand, and those of the CA, on the other hand, it becomes proper for the factual issues
and to look into the records of the case and re-examine the questioned findings. 13

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

First of all, petitioner actually wielded the power of selection at the time it entered into the service
contract dated September 1, 1992 with respondent. This is true, notwithstanding petitioner's insistence
that respondent had only offered his services to provide live music at petitioner's Tanglaw Restaurant,
and despite petitioner's position that what had really transpired was a negotiation of his rate and time of
availability. The power of selection was firmly evidenced by, among others, the express written
recommendation dated January 12, 1998 by Christine Velazco, petitioner's restaurant manager, for the
increase of his remuneration. 14

Petitioner could not seek refuge behind the service contract entered into with respondent. It is the law
that defines and governs an employment relationship, whose terms are not restricted to those fixed in
the written contract, for other factors, like the nature of the work the employee has been called upon to
perform, are also considered. The law affords protection to an employee, and does not countenance any
attempt to subvert its spirit and intent. Any stipulation in writing can be ignored when the employer
utilizes the stipulation to deprive the employee of his security of tenure. The inequality that characterizes
employer-employee relations generally tips the scales in favor of the employer, such that the employee is
often scarcely provided real and better options.

THE NEW PHILIPPINE SKYLANDERS, INC. and/or JENNIFER M. EANO-
BOTE vs. FRANCISCO N. DAKILA
G.R. No. 199547. September 24, 2012

Facts:
Dakila was employed by petitioner corporation as early as 1987 and terminated for cause in April 1997
when the corporation was sold. In May 1997, he was rehired as consultant by the petitioners under a
Contract for Consultancy Services dated April 30, 1997.

On April 19, 2007, respondent Dakila informed petitioners through a letter of his compulsory retirement
effective May 2, 2007 and sought for the payment of his retirement benefits pursuant to the Collective
Bargaining Agreement. Instead of the company acting upon his retirement benefits, he was however
terminated from service on May 1, 2007.

Respondent Dakila filed a complaint for constructive illegal dismissal, non-payment of retirement benefits,
under/non-payment of wages and other benefits of a regular employee, and damages against petitioners,
The New Philippine Skylanders, Inc. and its President and General Manager, Jennifer M. Eano-Bote,
before the NLRC. He averred, among others, that the consultancy contract was a scheme to deprive him
of the benefits of regularization. In support of his claim, he submitted, among others, copies of his time
cards, Official Business Itinerary Slips, Daily Attendance Sheets and other documents prescribing the
manner in which his tasks were to be accomplished under the control of the petitioners and
acknowledging his status as a regular employee of the corporation.

Petitioners asserted however that Dakila was a consultant and not their regular employee. The latter was
not included in petitioners' payroll and paid a fixed amount under the consultancy contract. He was not
required to observe regular working hours and was free to adopt means and methods to accomplish his
task except as to the results of the work required of him. Hence, no employer-employee relationship
existed between them.

Issue: WON there was an employer-employee relationship between herein petitioner and respondent.

Ruling:
The issue of illegal dismissal is premised on the existence of an employer-employee relationship between
the parties herein.

Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages computed
from the time he was illegally dismissed. However, considering that respondent Dakila was terminated on
May 1, 2007, or one (1) day prior to his compulsory retirement on May 2, 2007, his reinstatement is no
longer feasible. Accordingly, the NLRC correctly held him entitled to the payment of his retirement
benefits pursuant to the CBA. On the other hand, his backwages should be computed only for days prior
to his compulsory retirement which in this case is only a day. Consequently, the award of reinstatement
wages pending appeal must be deleted for lack of basis.

ASHMOR M. TESORO, PEDRO ANG and GREGORIO SHARP, vs. METRO MANILA RETREADERS,
INC. (BANDAG) and/or NORTHERN LUZON RETREADERS, INC. (BANDAG) and/or POWER
TIRE AND RUBBER CORP. (BANDAG)
G.R. No. 171482. March 12, 2014

Petitioners Ashmor M. Tesoro, Pedro Ang, and Gregorio Sharp used to work as salesmen for respondents
Metro Manila Retreaders, Inc., Northern Luzon Retreaders, Inc., or Power Tire and Rubber Corporation,
apparently sister companies, collectively called "Bandag." In 1998, however, Bandag developed a
franchising scheme that would enable others to operate tire and retreading businesses using its trade
name and service system.

Petitioners quit their jobs as salesmen and entered into separate Service Franchise Agreements (SFAs)
with Bandag for the operation of their respective franchises. Under the SFAs, Bandag would provide
funding support to the petitioners subject to a regular or periodic liquidation of their revolving funds. The
expenses out of these funds would be deducted from petitioners' sales to determine their incomes.
At first, petitioners managed and operated their respective franchises without any problem. After a length
of time, however, they began to default on their obligations to submit periodic liquidations of their
operational expenses in relation to the revolving funds Bandag provided them. Consequently, Bandag
terminated their respective SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, non-payment of wages, incentive pay,
13th month pay and damages against Bandag.

Issue: WON petitioners remained to be Bandag's salesmen under the franchise scheme it entered into
with them.

Ruling:
Bandag's SFAs created on their faces an arrangement that gave petitioners the privilege to operate and
maintain Bandag branches in the way of franchises, providing tire repair and retreading services, with
petitioners earning profits based on the performance of their branches.

However, did petitioners remain to be Bandag's employees after they began operating those branches?
The tests for determining employer-employee relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control
the employee with respect to the means and methods by which the work is to be accomplished. The last
is called the "control test," the most important element.

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

It is pointed out that Bandag continued, like an employer, to exercise control over petitioners' work. It
points out that Bandag: (a) retained the right to adjust the price rates of products and services; (b)
imposed minimum processed tire requirement (MPR); (c) reviewed and regulated credit applications; and
(d) retained the power to suspend petitioners' services for failure to meet service standards.


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


HIRING AN EMPLOYEE

OLLENDORF VS. ABRAHAMSON, 38 PHIL 585

FACTS:
Plaintiff is and for a long time past has been engaged in the city of Manila and elsewhere in the Philippine
Islands in the business of manufacturing ladies embroidered underwear for export. Plaintiff imports the
material from which this underwear is made and adopts decorative designs which are embroidered upon
it by Filipino needle workers from patterns selected and supplied by him. Most of the embroidery work is
done in the homes of the workers. The embroidered material is then returned to plaintiff's factory in
Manila where it is made into finished garments and prepared for export. The embroiderers employed by
plaintiff are under contract to work for plaintiff exclusively. Some fifteen thousand home workers and
eight hundred factory workers are engaged in this work for plaintiff, and some two and a half million
pesos are invested in his business.

On September 10, 1915, plaintiff and defendant entered into a contract wherein petitioner agreed to
employ defendant for a term of two years at a salary rate of P50.00 per week. In said contract,
respondent also bound himself to devote his entire time, attention, energies and industry to the
promotion of the furtherance of the business and interest of petitioner and to perform during the term of
this contract such duties as may be assigned to him and failure by respondent to comply with these
conditions to the satisfaction of petitioner shall entitle the latter to discharge and dismiss the respondent
from employment. The contract, upon expiration, may be renewed for a like, longer or shorter period as
may be agreed upon.

In addition, respondent also bound himself, his heirs, successors and assigns, not to enter into or engage
himself directly or indirectly, nor permit any other person under his control to enter in or engage in a
similar or competitive business to that of petitioner anywhere within the Philippine Islands for a period of
five years from the date of the contract.

Under the terms of this agreement defendant entered the employ of plaintiff and worked for him until
April, 1916, when defendant, on account of ill health, left plaintiff's employ and went to the United
States. While in plaintiff's establishment, he had full opportunity to acquaint himself with plaintiff's
business method and business connection. The duties performed by him were such as to make it
necessary that he should have this knowledge of plaintiff's business. Defendant had a general knowledge
of the Philippine embroidery business before his employment by plaintiff, having been engaged in similar
work for several years.

Some months after his departure for the United States, defendant returned to Manila as the manager of
the Philippine Underwear Company, a corporation. This corporation does not maintain a factory in the
Philippine Islands, but sends material and embroidery designs from New York to its local representative
here who employs Filipino needle workers to embroider the designs and make up the garments in their
homes. The only difference between plaintiff's business and that of the firm by which the defendant is
employed, is the method of doing the finishing work -- the manufacture of the embroidered material into
finished garments. Defendant admits that both firms turn out the same class of goods and that they are
exported to the same market. It also clearly appears from the evidence that defendant has employed to
work his form some of the same workers employed by the plaintiff.

Shortly after defendant's return to Manila and the commencement by him of the discharge of the duties
of his position as local manager of the Philippine Embroidery Company, plaintiff commenced an action,
the principal purpose of which is to prevent by injunction, any further breach of that part of defendant's
contract of employment by plaintiff, by which he agreed that he would not "enter into or engage himself
directly or indirectly . . . in a similar or competitive business to that of (plaintiff) anywhere within the
Philippine Islands for a period of five years . . ." from the date of the agreement. Arguments of
respondent were: (1) Plaintiff failed to substantiate the averments of his complaints to the effect that the
business in which the defendant is employed is competitive with that of plaintiff; (2) The contract is void
for lack of mutuality, and (3) The contract is void as constituting an unreasonable restraint of trade

ISSUE: Whether or not the disputed stipulation in the employment contract is valid as a condition for
pre-employment.

HELD:
Yes, it is. The rule in this jurisdiction is that the obligations created by contracts have the force of law
between the contracting parties and must be enforced in accordance with their tenor. The only limitation

upon the freedom of contractual agreement is that the pacts established shall not be contrary to "law,
morals or public order."
In the nature of things, it is impossible to frame a general rule by which to determine in advance the
precise point at which the right of freedom of contract must yield to the superior interest of community in
keeping trade and commerce free from unreasonable restrictions. But it has consistently been adhered to
that If the restraint is no greater than is reasonably necessary for the protection of the party in whose
favor it is imposed it is upheld, but if it goes beyond this is declared void. Public welfare is first
considered, and if it be not involved, and the restraint upon one party is not greater than protection to
the other party requires, the contract may be sustained. The question is, whether, under the particular
circumstances of the case and the nature of the particular contract involved in it, the contract is, or is
not, unreasonable.
The validity of restraints upon trade or employment is to be determined by the intrinsic reasonableness of
restriction in each case, rather than by any fixed rule, and that such restrictions may be upheld when not
contrary to afford a fair and reasonable protection to the party in whose favor it is imposed.
Examining the contract here in question from this stand point, it does not seem so with respect to an
employee whose duties are such as of necessity to give him an insight into the general scope and details
of his employers business. A business enterprise may and often does depend for its success upon the
owner's relations with other dealers, his skill in establishing favorable connections, his methods of buying
and selling -- a multitude of details, none vital if considered alone, but which in the aggregate constitute
the sum total of the advantages which the result of the experience or individual aptitude and ability of
the man or men by whom the business has been built up. Failure or success may depend upon the
possession of these intangible but all important assets, and it is natural that their possessor should seek
to keep them from falling into the hands of his competitors. It is with this object in view that such
restrictions as that now under consideration are written into contracts of employment. Their purpose is
the protection of the employer, and if they do not go beyond what is reasonably necessary to effectuate
this purpose they should be upheld.
If there is one thing more than another which is essential to the trade and commerce of this country, it is
the inviolability of contract deliberately entered into; and to allow a person of mature age, and not
imposed upon, to enter into a contract, to obtain the benefit of it, and then to repudiate it and the
obligation which he has undertaken, is prima facie, at all events, contrary to the interest of any and every
country. The public policy which allows a person to obtain employment on certain terms understood by
and agreed to by him, and to repudiate his contract, conflicts with, and must, to avail the defendant, for
some sufficient reason, prevail over, the manifest public policy, which, as a rule holds him to his bond.

DEL CASTILLO VS. RICHMOND, 45 PHIL. 679

FACTS:
Petitioner Del Castillo and respondent Richmond entered into a contract of agreement for the
employment of petitioner, and stipulated that he be employed as pharmacist in respondents pharmacy,
with P125 monthly remuneration, that he agrees not to open, nor own, nor have interest directly or
indirectly in any other drugstore either in his own name or in the name of another, nor have connection
with or be employed by any other drugstore as pharmacist or in any capacity in any drugstore situated
within a radius of four miles from the district of Legaspi, municipality and province of Albay.
Del Castillo challenged the validity of the provision on restriction, and alleged that it constitutes an illegal
and unreasonable restriction upon his liberty to contract, are contrary to public policy and are
unnecessary in order to constitute just and reasonable protection of respondent, and ask for it to be
declared null and void and of no effect.

ISSUE: Whether the provision on restriction of the contract is illegal and unreasonable restriction upon
the right of petitioner to contract and was contrary to public policy.

HELD:
Contract by virtue of which one person promises not to engage in any particular business for a definite
time and within a limited space are generally held valid. The rule is well established that a contract in
restraint of trade is valid provided that the limitation upon one party is not greater than the protection to
the other requires such contract would reasonably necessary for the protection of the contracting parties.
In this case the restraint is reasonably necessary to protect the interest of the parties, therefore it is not
illegal.


PT&T VS. NLRC, 272 SCRA 596 [1997]

FACTS:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and Telephone
Company (hereafter, PT&T) invokes the alleged concealment of civil status and defalcation of company
funds as grounds to terminate the services of an employee. That employee, herein private respondent
Grace de Guzman, contrarily argues that what really motivated PT&T to terminate her services was her
having contracted marriage during her employment, which is prohibited by petitioner in its company
policies. She thus claims that she was discriminated against in gross violation of law, such a proscription
by an employer being outlawed by Article 136 of the Labor Code.

ISSUE: WON the policy of not accepting or considering as disqualified from work any woman worker who
contracts marriage is valid?

HELD:
Petitioners policy of not accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women
workers by our labor laws and by no less than the Constitution. The Constitution, cognizant of the
disparity in rights between men and women in almost all phases of social and political life, provides a
gamut of protective provisions. Acknowledged as paramount in the due process scheme is the
constitutional guarantee of protection to labor and security of tenure. Thus, an employer is required, as
a condition sine qua non prior to severance of the employment ties of an individual under his employ, to
convincingly establish, through substantial evidence, the existence of a valid and just cause in dispensing
with the services of such employee, ones labor being regarded as constitutionally protected property.
The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner
PT&T. The Labor Code states, in no uncertain terms, as follows:

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

In the case at bar, it can easily be seen from the memorandum sent to private respondent by the branch
supervisor of the company, with the reminder, that youre fully aware that the company is not accepting
married women employee (sic), as it was verbally instructed to you. Again, in the termination notice sent
to her by the same branch supervisor, private respondent was made to understand that her severance
from the service was not only by reason of her concealment of her married status but, over and on top of
that, was her violation of the companys policy against marriage (and even told you that married women
employees are not applicable [sic] or accepted in our company.)

Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right
of a woman to be free from any kind of stipulation against marriage in connection with her employment,
but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the
freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible
and inalienable right. Hence, while it is true that the parties to a contract may establish any agreements,
terms, and conditions that they may deem convenient, the same should not be contrary to law, morals,
good customs, public order, or public policy. Carried to its logical consequences, it may even be said that
petitioners policy against legitimate marital bonds would encourage illicit or common-law relations and
subvert the sacrament of marriage.

DUNCAN ASSO. OF DETAILMAN-PTGWO VS. GLAXO WELLCOME PHILS.,
G.R. NO. 162994, SEPT. 17, 2004

FACTS:
Petitioner was hired by respondent as medical representative on October 24, 1995. Thereafter, Tecson
signed a contract of employment which stipulates, among others, that he agrees to study and abide by
existing company rules; to disclose to management any existing or future relationship by consanguinity or
affinity with co-employees or employees of competing drug companies and should management find that
such relationship poses a possible conflict of interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform
management of any existing or future relationship by consanguinity or affinity with co-employees or
employees of competing drug companies. If management perceives a conflict of interest or a potential
conflict between such relationship and the employees employment with the company, the management
and the employee will explore the possibility of a "transfer to another department in a non-

counterchecking position" or preparation for employment outside the company after six months.
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.
In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave rise to a conflict of
interest. Tecson requested for time to comply with the company policy against entering into a
relationship with an employee of a competitor company. Meanwhile, in September 1999, Tecson applied
for a transfer in Glaxos 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 Glaxos "least-movement-
possible" policy.
In November 1999, Tecson was transferred to another area. The latter asked Glaxo to reconsider its
decision, but his request was denied. Tecson sought Glaxos reconsideration regarding his transfer and
brought the matter to Glaxos Grievance Committee. Glaxo, however, remained firm in its decision and
gave Tescon until February 7, 2000 to comply with the transfer order. Tecson defied the transfer order
and continued acting as medical representative in the Camarines Sur-Camarines Norte sales area.
The argument of petitioner was that Glaxos policy against employees marrying employees of competitor
companies violates the equal protection clause of the Constitution because it creates invalid distinctions
among employees on account only of marriage. They claim that the policy restricts the employees right
to marry. On the other hand, respondent contends: (1) The company policy prohibiting its employees
from having a relationship with and/or marrying an employee of a competitor company is a valid exercise
of its management prerogatives and does not violate the equal protection clause; (2) As a company
engaged in the promotion and sale of pharmaceutical products, it has a genuine interest in ensuring that
its employees avoid any activity, relationship or interest that may conflict with their responsibilities to the
company, thus, expecting its employees to avoid having personal or family interests in any competitor
company which may influence their actions and decisions and consequently deprive Glaxo of legitimate
profits, and also aiming at preventing a competitor company from gaining access to its secrets,
procedures and policies; (3) The policy does not prohibit marriage per se but only proscribes existing or
future relationships with employees of competitor companies, and is therefore not violative of the equal
protection clause and that it maintains that considering the nature of its business, the prohibition is based
on valid grounds; (4) Tecsons marriage to Bettsy, an employee of Astra, posed a real and potential
conflict of interest as Astras products were in direct competition with 67% of the products sold by Glaxo.,
hence, Glaxos enforcement of the foregoing policy in Tecsons case was a valid exercise of its
management prerogatives; (5) Tecson can no longer question the assailed company policy because when
he signed his contract of employment, he was aware that such policy was stipulated therein. In said
contract, he also agreed to resign from respondent if the management finds that his relationship with an
employee of a competitor company would be detrimental to the interests of Glaxo.

ISSUE: Whether or not Glaxos policy against its employees marrying employees from competitor
companies is valid.

HELD:
Yes. Glaxos policy prohibiting an employee from having a relationship with an employee of a competitor
company is a valid exercise of management prerogative. Further, the challenged policy has been
implemented by Glaxo impartially and disinterestedly for a long period of time. Glaxo has a right to guard
its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and
information from competitors, especially so that it and Astra are rival companies in the highly competitive
pharmaceutical industry. The prohibition against personal or marital relationships with employees of
competitor companies upon Glaxos employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down the assailed
company policy, Glaxo only aims to protect its interests against the possibility that a competitor company
will gain access to its secrets and procedures. That Glaxo possesses the right to protect its economic
interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and
enforce such a policy to protect its right to reasonable returns on investments and to expansion and
growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The
law also recognizes that management has rights which are also entitled to respect and enforcement in
the interest of fair play.

It is a legitimate business practice to guard business confidentiality and protect a competitive position by
even-handedly disqualifying from jobs male and female applicants or employees who are married to a
competitor. The policy was applied to men and women equally, and the employers business was highly
competitive and that gaining inside information would constitute a competitive advantage. Significantly,
the company actually enforced the policy after repeated requests to the employee to comply with the
policy. Indeed, the application of the policy was made in an impartial and even-handed manner, with due

regard for the lot of the employee. Additionally, 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.

The policy being questioned is not a policy against marriage. An employee of the company remains free
to marry anyone of his or her choosing. The policy is not aimed at restricting a personal prerogative that
belongs only to the individual. However, an employees personal decision does not detract the employer
from exercising management prerogatives to ensure maximum profit and business success. The assailed
company policy which forms part of respondents Employee Code of Conduct and of its contracts with its
employees was made known to him prior to his employment. Tecson, therefore, was aware of that
restriction when he signed his employment contract and when he entered into a relationship with Bettsy.
Since Tecson knowingly and voluntarily entered into a contract of employment with Glaxo, the
stipulations therein have the force of law between them and, thus, should be complied with in good
faith." He is therefore estopped from questioning said policy.

CITY OF MANILA VS. LAGUIO,
G.R. NO. 118127, APRIL 12, 2005

FACTS:
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the
business of operating hotels, motels, hostels and lodging houses. 5 It built and opened Victoria Court in
Malate which was licensed as a motel although duly accredited with the Department of Tourism.

Petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the members of the
City Council of Manila (City Council) passed an Ordinance entitled AN ORDINANCE PROHIBITING THE
ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT,
ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA, PRESCRIBING PENALTIES
FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.

In summary, the ordinance prohibits any person in Ermita- Malate area to engage in any business
providing certain forms of amusement, entertainment, services and facilities where women are used as
tools in entertainment. The City Mayor is also prohibited from issuing permits, temporary or otherwise, or
from granting licenses payments for the operation of said business. Lastly, Owners and/or operator of
establishments engaged in said business are given three (3) months from the date of approval of the
ordinance within which to wind up business operations or to transfer to any place outside of the Ermita-
Malate area.

MTDC advanced that the Ordinance was invalid and unconstitutional for the reasons: 1. That the City
Council has no power to prohibit the operation of motels as Local Government Code of 1991 grants to the
City Council only the power to regulate the establishment, operation and maintenance of hotels, motels,
inns, pension houses, lodging houses and other similar establishments; 2. The Ordinance does not
constitute a proper exercise of police power as the compulsory closure of the motel business has no
reasonable relation to the legitimate municipal interests sought to be protected; 3. The Ordinance
violates MTDC's constitutional rights in that: (a) it is confiscatory and constitutes an invasion of plaintiff's
property rights; (b) the City Council has no power to find as a fact that a particular thing is a nuisance
per se nor does it have the power to extrajudicially destroy it; and 4. The Ordinance constitutes a denial
of equal protection under the law as no reasonable basis exists for prohibiting the operation of motels
and inns, but not pension houses, hotels, lodging houses or other similar establishments, and for
prohibiting said business in the Ermita-Malate area but not outside of this area.

Petitioners City of Manila and Lim maintained that the City Council had the power to "prohibit certain
forms of entertainment in order to protect the social and moral welfare of the community. Petitioners
likewise asserted that the Ordinance was enacted by the City Council of Manila to protect the social and
moral welfare of the community in conjunction with its police power.

Judge Laguio rendered the assailed Decision, enjoining the petitioners from implementing the Ordinance
declaring it null and void. Hence this petition.

ISSUE: Is the Ordinance enacted by the City of Manila valid and constitutional as exercised within its
police power?

HELD:

No, the Ordinance is unconstitutional. The test of a valid Ordinance must satisfy two requirements: it
must pass muster under the test of constitutionality and the test of consistency with the prevailing laws.
To successfully invoke the exercise of police power as the rationale for the enactment of the Ordinance,
and to free it from the imputation of constitutional infirmity, not only must it appear that the interests of
the public generally, as distinguished from those of a particular class, require an interference with private
rights, but the means adopted must be reasonably necessary for the accomplishment of the purpose and
not unduly oppressive upon individuals.

Furthermore, to transfer to another place outside Ermita-Malate or substituting said establishments to the
prescribed one enumerated will not strike down illegal prostitution. Sexual immorality, being a human
frailty, may take place in the most innocent of places that it may even take place in the substitute
establishments enumerated under Section 3 of the Ordinance.

The Ordinance is an unwarranted and unlawful curtailment of property and personal rights of citizens. For
being unreasonable and an undue restraint of trade, it cannot, even under the guise of exercising police
power, be upheld as valid.

The Ordinance also violates the Equal Protection Clause as there is no substantial distinction and
classification in the establishments prohibites as to those allowed. Failing the test of constitutionality, the
Ordinance likewise failed to pass the test of consistency with prevailing laws.

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

STAR PAPER CORP. VS. SIMBOL,
G.R. NO. 164774, APIL 12, 2006

FACTS:
Simbol was employed by the company on Oct 1993. He met Alma Dayrit, also an employee of the
company, whom he married. Prior to the marriage, Ongsitco advised the couple that should they decide
to get married, one of them should resign pursuant to a company policy to which Simbol complied.
1. 1.New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd
degree of relationship, already employed by the company.
2. In case of two of our employees (both singles [sic], one male and another female) developed a
friendly relationship during the course of their employment and then decided to get married, one
of them should resign to preserve the policy stated above.

ISSUE: WON the policy of the employer banning spouses from working in the same company violates the
rights of the employee under the Constitution and the Labor Code or is a valid exercise of management
prerogative?

HELD:
Petitioners sole contention that "the company did not just want to have two or more of its employees
related between the third degree by affinity and/or consanguinity" is lame.
Article 136 of the Labor Code which provides:
It shall be unlawful for an employer to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon
getting married a woman employee shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.
The requirement that a company policy must be reasonable under the circumstances to qualify as a valid
exercise of management prerogative. It is significant to note that in the case at bar, respondents were
hired after they were found fit for the job, but were asked to resign when they married a co-employee.
Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit,
then an employee of the Repacking Section, could be detrimental to its business operations. e. The policy
is premised on the mere fear that employees married to each other will be less efficient. If we uphold the
questioned rule without valid justification, the employer can create policies based on an unproven
presumption of a perceived danger at the expense of an employees right to security of tenure.

The questioned policy may not facially violate Article 136 of the Labor Code but it creates a
disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny
is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of
petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the

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

DEL MONTE PHILS. VS. VELASCO,
G.R. NO. 153477, MARCH 6, 2007

FACTS:
Lolita M. Velasco (respondent) worked with Del Monte Philippines (petitioner) as a seasonal employee
and was regularized. Her latest assignment was as Field Laborer. Respondent was warned in writing on
her absences. The respondent, thru a letter, was again warned in writing by petitioner about her
absences without permission and a forfeiture of her vacation leave entitlement was imposed against her.
In view of the said alleged absences without permission, a notice of hearing was sent to respondent
notifying her of the charges filed against her for violating the Absence Without Official Leave rule: that is
for excessive absence without permission. After hearing, the petitioner terminated the services of
respondent due to excessive absences without permission.

Feeling aggrieved, respondent filed a case for illegal dismissal against petitioner asserting that her
dismissal was illegal because she was on the family way suffering from urinary tract infection, a
pregnancy-borne, at the time she committed the alleged absences.

ISSUE: Whether the petitioner discharged the respondent on account of pregnancy, a prohibited act.

HELD:
The Supreme Court is convinced that the petitioner terminated the services of respondent on account of
her pregnancy which justified her absences. The petitioner cannot terminate respondents services on
account of pregnancy because in doing so, petitioner will, in effect, be violating the Labor Code which
prohibits an employer to discharge an employee on account of the latters pregnancy. Art. 137 provide
the following:

Art. 137. Prohibited acts. It shall be unlawful for any employer:
1) To deny any woman employee the benefits provided for in this Chapter or to discharge any
woman employed by him for the purpose of preventing her from enjoying any of the benefits
provided under this Code;
2) To discharge such woman on account of her pregnancy, while on leave or in confinement due to
her pregnancy; or
3) To discharge or refuse the admission of such woman upon returning to her work for fear that she
may again be pregnant. (Emphasis supplied)

YRASUEGUI VS. PHIL AIR LINES,
G.R. NO. 168081, OCTOBER 17, 2008

FACTS:
Petitioner Yrasuegui, an international flight steward of Philippine Airlines Inc. (PAL) was dismissed
because of his failure to adhere to the weight standards of the airline company. In consequence thereof,
petitioner filed a complaint for illegal dismissal against PAL before the Labor Arbiter (LA). Te Labor Arbiter
ruled that the petitioner was illegally dismissed. It also issued a writ of execution directing the
reinstatement of the petitioner without loss of seniority and other benefits, and also the payment of
backwages. Respondent PAL appealed to the NLRC which affirmed the LAs decision. Respondent PAL
appealed to the Court of Appeals. CA reversed the NLRC case.

ISSUE: Whether the dismissal of the petitioner valid.

HELD:
The Court upheld the legality of the petitioners dismissal. Separation pay, however, should be awarded
in favor of the employee as an act of social justice or based on equity. This is so because his dismissal is
not serious misconduct. Neither is it reflective of his moral character.
The obesity of petitioner, when placed in the context of his work as flight attendant, becomes an
analogous cause under Article 282 (e) of the Labor ode. His obesity may not be unintended, but is
nonetheless voluntary. Voluntariness basically means that the just cause is solely attributable to the
employee without any external force influencing or controlling his actions. This element runs through all
just causes under Art. 282, whether they be in nature of a wrongful action or omission. Gross and
habitual neglect, a recognized just cause, is considered voluntary although it lacks the element of intent
found in Art. 282 (a), (c), and (d).

Employment in particular jobs may not be limited to persons of a particular sex, religion, or national
origin unless the employer can show that sex, religion, or national origin is an actual qualification for
performing the job. The qualification is called a bona fide occupational qualification (BFOQ). In the
United States, there are a few federal and many state job discrimination laws that contain an exception
allowing an employer to engage in an otherwise unlawful form of prohibited discrimination when the
action is based on a BFOQ necessary to the normal operation of a business or enterprise.


WAGE & THE WAGE RATIONALIZATION ACT

ILAW AT BUKLOD NG MANGGAGAWA VS. NLRC,
198 SCRA 586 [1991]

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

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

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

The provision states that the employer and the union shall negotiate to correct the distortions. Any
dispute arising from wage distortions shall be resolved through the grievance procedure under their
collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless
otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or
panel of voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to
voluntary arbitration. In cases where there are no collective agreements or recognized labor unions, the
employers and workers shall endeavor to correct such distortions. Any dispute arising there from shall be
settled through the National Conciliation and Mediation Board and, if it remains unresolved after ten (10)
calendar days of conciliation, shall be referred to the appropriate branch of the National Labor Relations
Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous hearings and decide the
dispute within twenty (20) calendar days from the time said dispute is submitted for compulsory
arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the
applicability of any increase in prescribed wage rates pursuant to the provisions of law or Wage Order.
The legislative intent that solution of the problem of wage distortions shall be sought by voluntary
negotiation or arbitration, and not by strikes, lockouts, or other concerted activities of the employees or
management, is made clear in the rules implementing RA 6727 issued by the Secretary of Labor and
Employment pursuant to the authority granted by Section 13 of the Act. Section 16, Chapter I of these
implementing rules, after reiterating the policy that wage distortions be first settled voluntarily by the
parties and eventually by compulsory arbitration, declares that, "Any issue involving wage distortion shall
not be a ground for a strike/lockout."

EMPLOYERS CONFEDERATION OF THE PHILS. VS. NWPC, 201 SCRA 759 [1991]

FACTS:
Petitioner questions the validity of Wage Order No. NCR-01-A dated October 23, 1990 of the RTWPB-
NCR, amending a previous wage order promulgated by it on October 15, 1990, which increased the
minimum wage byP17.00 daily. This new wage order granted an increase of P17.00 per day to employees
in the private sector in the NCR who were already receiving wages above the statutory minimum rates up
to P125.00. Petitioner appealed to the NWPC, which appeal was dismissed. Thus, the petition
.
Petitioner contends that following: (1)The across-the-board wage increase is an excess of authority; (2)
Under R.A. No. 6727, the Boards may only prescribe minimum wages, not determine salary ceilings(3)
R.A. No. 6727 was meant to promote collective bargaining as the primary mode of settling wages, and

the board cannot pre-empt collective bargaining agreements by establishing ceilings; (4) Wage is a
legislative function, and R.A. No. 6727 delegated to the regional boards no more than the power to grant
minimum wage adjustments and in the absence of clear statutory authority. The boards may no more
than adjust floor wages.

On the other hand, the respondent argues that: (1) The Board, in prescribing an across-the-board hike,
did not in reality grant additional or other benefits to workers and employees, such as the extension of
wage increases to employees and workers already receiving more than minimum wages, but rather, fixed
minimum wages according to the salary-ceiling method; and (2) R.A. No. 6727 is intended to correct
wage distortions and the salary-ceiling method in determining wages is meant precisely to rectify wage
distortions.

ISSUE: Whether or not the Wage Order was promulgated in excess of the Boards functions.

HELD:
No. In the National Wages and Productivity Commission's Order of November 6, 1990, the Commission
noted that the determination of wages has generally involved two methods, the "floor-wage" method and
the "salary-ceiling" method. The first method involves the fixing of determinate amount that would be
added to the prevailing statutory minimum wage. The other involves "the salary-ceiling method" whereby
the wage adjustment is applied to employees receiving a certain denominated salary ceiling. Apparently,
the wage order provisions that wage distortions shall be resolved through the grievance procedure was
perceived by legislators as ineffective in checking industrial unrest resulting from wage order
implementations. With the establishment of the second method as a practice in minimum wage fixing,
wage distortion disputes were minimized.

The increasing trend is toward the second mode, the salary-cap method, which has reduced disputes
arising from wage distortions (brought about, apparently, by the floor-wage method). Of course, disputes
are appropriate subjects of collective bargaining and grievance procedures, but as the Commission
observed and as we are ourselves agreed, bargaining has helped very little in correcting wage distortions.
Precisely, Republic Act No. 6727 was intended to rationalize wages, first, by providing for full-time boards
to police wages round-the-clock, and second, by giving the boards enough powers to achieve this
objective. Congress meant the boards to be creative in resolving the annual question of wages without
labor and management knocking on the legislature's door at every turn. If Republic No. 6727 intended
the boards alone to set floor wages, the Act would have no need for a board but an accountant to keep
track of the latest consumer price index, or better, would have Congress done it as the need arises, as
the legislature, prior to the Act, has done so for years. The fact of the matter is that the Act sought a
"thinking" group of men and women bound by statutory standards.

It is true that wage-fixing, like rate constitutes an act Congress; it is also true, however, that Congress
may delegate the power to fix rates provided that, as in all delegations cases, Congress leaves sufficient
standards. As this Court has indicated, it is impressed that the standards embodied in article 124 of the
Labor Code are sufficient, and in the light of the floor-wage method's failure.

Apparently, ECOP is of the mistaken impression that Republic Act No. 6727 is meant to "get the
Government out of the industry" and leave labor and management alone in deciding wages. The Court
does not think that the law intended to deregulate the relation between labor and capital for several
reasons provided by the basic principles in the Constitution, making it the States duty to intervene when
the common good so demands.

The Act is meant to rationalize wages, that is, by having permanent boards to decide wages rather than
leaving wage determination to Congress year after year and law after law. The Court is not of course
saying that the Act is an effort of Congress to pass the buck, or worse, to abdicate its duty, but simply, to
leave the question of wages to the expertise of experts.

The concept of minimum wage means more than setting a floor wage to upgrade existing wages, as
ECOP takes it to mean. The statute would have no need for a board if the question were simply "how
much". The State is concerned, in addition, that wages are not distributed unevenly, and more important,
that social justice is subserved.

MABEZA VS. NLRC, 271 SCRA 670

FACTS:
Around the first week of May 1991, petitioner and her co-employees at the Hotel Supreme in Baguio City
were asked by the hotels management to sign an instrument attesting to the latters compliance with

minimum wage and other labor standards provisions of law. The affidavit was drawn by management for
the sole purpose of refuting findings of the Labor Inspector of DOLE, in an inspection of respondents
establishment on February 2, 1991, apparently adverse to the private respondent. Petitioner refused to
go to the City Prosecutors Office to swear to the veracity and contents of the affidavit as instructed by
management. The affidavit was nevertheless submitted on the same day to the Regional Office of the
DOLE in Baguio City. However, due to the refusal, she was ordered by the hotel management to turn
over the keys to her living quarters and to remove her belongings from the hotel premises.

She reluctantly filed a leave of absence from her job, which was denied by management. When she
attempted to return to work on May 10, 1991, the hotels cashier informed her that she should not report
to work, and instead, continue with her unofficial leave of absence. Consequently, on May 13, 1991,
three days after her attempt to return to work, petitioner filed a complaint for illegal dismissal before the
Arbitration Branch of the NLRC, CAR, Baguio City. In addition, she alleged underpayment of wages, and
non-payment of other benefits.

Respondent argues: (1) Petitioner surreptitiously left without notice to the management and that she
actually abandoned her work when she failed to return on May 8, 1991; (2) There was no basis for the
money claims for underpayment and other benefits as these were paid in the form of facilities to
petitioner and the hotels other employees; (3) According to the affidavit signed, his employees have no
problems with management; and (4) The hotel lost confidence in petitioner as evidenced by the criminal
complaint of qualified theft filed before the Prosecutors Office on July 4, 1991.

ISSUE:
1. Whether or not the dismissal constitutes an unfair labor practice.
2. Whether or not the money claims are valid.

HELD:
1.Yes. The pivotal question in any case where unfair labor practice on the part of the employer is alleged
is whether or not the employer has exerted pressure, in the form of restraint, interference or coercion,
against his employee's right to institute concerted action for better terms and conditions of employment.
Without doubt, the act of compelling employees to sign an instrument indicating that the employer
observed labor standards provisions of law when he might have not, together with the act of terminating
or coercing those who refuse to cooperate with the employer's scheme constitutes unfair labor practice.
The first act clearly preempts the right of the hotel's workers to seek better terms and conditions of
employment through concerted action. This actuation is analogous to the situation envisaged in
paragraph (f) of Article 248 of the Labor Code" which distinctly makes it an unfair labor practice "to
dismiss, discharge or otherwise prejudice or discriminate against an employee for having given or being
about to give testimony" under the Labor Code. For in not giving positive testimony in favor of her
employer, petitioner had reserved not only her right to dispute the claim and proffer evidence in support
thereof but also to work for better terms and conditions of employment.

For refusing to cooperate with the private respondent's scheme, petitioner was obviously held up as an
example to all of the hotel's employees, that they could only cause trouble to management at great
personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of charges
against her was the warning that they would not only be deprived of their means of livelihood, but also
possibly, their personal liberty.

2. Yes. Respondent claims that the reason the monetary benefits received by petitioner between 1981 to
1987 were less than minimum wage was because petitioner did not factor in the meals, lodging, electric
consumption and water she received during the period in her computations. Granting that meals and
lodging were provided and indeed constituted facilities, such facilities could not be deducted without the
employer complying first with certain legal requirements. Without satisfying these requirements, the
employer simply cannot deduct the value from the employee's ages. First, proof must be shown that such
facilities are customarily furnished by the trade. Second, the provision of deductible facilities must be
voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair and reasonable
value. These requirements were not met in the instant case. Private respondent "failed to present any
company policy or guideline to show that the meal and lodging are part of the salary;" he failed to
provide proof of the employee's written authorization; and, he failed to show how he arrived at the
valuations.

More significantly, the food and lodging, or the electricity and water consumed by the petitioner were not
facilities but supplements. A benefit or privilege granted to an employee for the convenience of the
employer is not a facility. The criterion in making a distinction between the two not so much lies in the
kind (food, lodging) but the purpose. Considering, therefore, that hotel workers are required to work

different shifts and are expected to be available at various odd hours, their ready availability is a
necessary matter in the operations of a small hotel, such as the private respondent's hotel.

It is therefore evident that petitioner is entitled to the payment of the deficiency in her wages equivalent
to the full wage applicable from May 13, 1988 up to the date of her illegal dismissal, and other benefits.
However, the claims covering the period of October 1987 up to the time of filing the case on May 13,
1988 are barred by prescription as P.D. 442 (as amended) and its implementing rules limit all money
claims arising out of employer-employee relationship to three (3) years from the time the cause of action
accrues.

JOY BROTHERS INC. VS. NWPC, 273 SCRA 622 [1997]

FACTS:
Wage Order No. NCR-03, providing for a twenty-seven peso wage increase for all private sector workers
and employees in the National Capital Region receiving one hundred fifty-four pesos (P154.00) and below
daily, was approved November 29, 1993.

On February 1994, petitioner applied for exemption from said wage order on the ground that it was a
distressed establishment. The RTWPB denied petitioner's application for exemption after holding that the
corporation accumulated profits amounting to P38,381.80 for the period under review. Petitioner's motion
for reconsideration was likewise denied by the Wages and Productivity Board on January 5, 1995. On
appeal to the National Wages and Productivity Commission, petitioner was again denied relief.

More specifically, petitioner contends that the interim period to be reckoned with is from January 1, 1993
to December 15, 1993 and not merely up to September 30, 1993 as held by respondent Commission.
Significantly, the period up to December 31, 1993 will reflect losses in petitioner corporation's books, but
not if the covered interim period is only up to September 30, 1993.

ISSUE: WON petitioner Corporation falls within the exemption for distressed establishments.

HELD:
The petitioner company is not entitled to exemption of the wage order since it is not a distressed
establishment. Under Section 5 of Wage Order No. NCR-03, distressed firms may be exempted from the
provisions of the Order upon application with and due determination of the Board. NWPC Guidelines No.
01, Series of 1992, providing for the Revised Guidelines on Exemption indicate the criteria to qualify for
exemption as follows:

For Distressed Establishments: In the case of a stock corporation, partnership, single proprietorship, non-
stock, non-profit organization or cooperative engaged in a business activity or charging fees for its
services When accumulated losses for the last 2 full accounting periods and interim period, if any,
immediately preceding the effectivity of the Order have impaired by at least 25 percent the: Paid-up
capital at the end of the last full accounting period preceding the effectivity of the Order, in the case of
corporations: Total invested capital at the beginning of the last full accounting period preceding the
effectivity of the Order in the case of partnerships and single proprietorships. Establishments operating
for less than two (2) years may be granted exemption when accumulated losses for said period have
impaired by at least 25% the paid-up capital or total invested capital, as the case may be."

Section 8, paragraph a, of the Rules Implementing Wage Order No. NCR-03 provides that exemption
from compliance with the wage increase may be granted to distressed establishments whose paid-up
capital has been impaired by at least twenty-five percent (25%) or which registers capital deficiency or
negative net worth.

The Guidelines expressly require interim quarterly financial statements for the period immediately
preceding December 16, 1993. The last two full accounting periods here are 1991 and 1992, for which
years petitioner incurred net profits of P53,607.00 and P60,188.00, respectively.

PRUBANKERS ASSO. VS. PRUDENTIAL BANK,
302 SCRA 74 [1999]

FACTS:
The RTWPB Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living Allowance
(COLA) to workers in the private sector who had rendered service for at least three (3) months before its

effectivity, and for the same period thereafter, in the following categories: P17.50 in the cities of Naga
and Legaspi; P15.50 in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and P10.00 for all
other areas in the Bicol Region.

On November 1993, RTWPB Region VII issued Wage Order No. RB VII-03, which directed the integration
of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the basic pay of all workers. It also
established an increase in the minimum wage rates for all workers and employees in the private sector as
follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the
municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of
Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran. The bank granted a COLA of P17.50 to its
employees at its Naga Branch, the only branch covered by Wage Order No. RB 5-03, and integrated the
P150.00 per month COLA into the basic pay of its rank-and-file employees at its Cebu, Mabolo and P. del
Rosario branches, the branches covered by Wage Order No. RB VII-03.

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

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

HELD:
The court ruled that there is no wage distortion since the wage order implementation covers all the
branches of the bank. The hierarchy of positions was still preserved. The levels of different pay classes
was not eliminated. The statutory definition of wage distortion is found in Article 124 of the Labor Code,
as amended by Republic Act No. 6727, which reads: Standards/Criteria for Minimum Wage Fixing . .
."As used herein, a wage distortion shall mean a situation where an increase in prescribed wage results in
the elimination or severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of service, or other logical bases of
differentiation."

Wage distortion involves four elements: (1) An existing hierarchy of positions with corresponding salary
rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in
the salary rate of a higher one; (3)The elimination of the distinction between the two levels and (4) The
existence of the distortion in the same region of the country.

A disparity in wages between employees holding similar positions but in different regions does not
constitute wage distortion as contemplated by law. As stated, it is the hierarchy of positions and the
disparity of their corresponding wages and other emoluments that are sought to be preserved by the
concept of wage distortion.

MILLARE VS. NLRC, 305 SCRA 501

FACTS:
Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit Manager,
Section Manager, Department Manager, Division Manager and Vice President in the mill site of
respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur.
In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of
restrictive government regulations on logging and the economic crisis. To avert further losses, it
undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners
received separation pay computed at the rate of one (1) month basic pay for every year of service.
Believing however that the allowances they allegedly regularly received on a monthly basis during their
employment should have been included in the computation thereof they lodged a complaint for
separation pay differentials.

ISSUE: Whether the allowances are included in the definition of "facilities" in Art. 97, par. (f), of the
Labor Code, being necessary and indispensable for their existence and subsistence.

HELD:

The allowances are not part of the wages of the employees. wage is defined in letter (f) as the
remuneration or earnings, however designated, capable of being expressed in terms of money, whether
fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a written or unwritten contract of employment for
work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable
value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished
by the employer to the employee.

When an employer customarily furnishes his employee board, lodging or other facilities, the fair and
reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in
"wage." Customary is founded on long-established and constant practice connoting regularity. The
receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part
of salary because the nature of the grant is a factor worth considering. The court agrees with the
observation of the Office of the Solicitor General that the subject allowances were temporarily, not
regularly, received by petitioners. Although it is quite easy to comprehend "board" and "lodging," it is not
so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives
meaning to the term as including articles or services for the benefit of the employee or his family but
excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to
the conduct of the employer's business.

In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose.
Revenue Audit Memo Order No. 1-87 pertinently provides
3.2 . . . transportation, representation or entertainment expenses shall not constitute taxable
compensation if:
(a) It is for necessary travelling and representation or entertainment expenses paid or incurred by
the employee in the pursuit of the trade or business of the employer, and
(b) The employee is required to, and does, make an accounting/liquidation for such expense in
accordance with the specific requirements of substantiation for such category or expense.
Board and lodging allowances furnished to an employee not in excess of the latter's needs and given free
of charge, constitute income to the latter except if such allowances or benefits are furnished to the
employee for the convenience of the employer and as necessary incident to proper performance of his
duties in which case such benefits or allowances do not constitute taxable income.

The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the
Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board,
lodging and other facilities customarily furnished by an employer to his employees." Petitioners'
allowances do not represent such fair and reasonable value as determined by the proper authority simply
because the Staff/Manager's allowance and transportation allowance were amounts given by respondent
company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance
was given in consideration of being assigned to the hostile environment then prevailing in Bislig. The
inevitable conclusion is that subject allowances did not form part of petitioners' wages.

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS VS. QUISUMBING,
333 SCRA 13 [2000]

FACTS:
International school, Inc., pursuant to Presidential Decree 732, is a domestic educational institution
established primarily for dependents of foreign diplomatic personnel and other temporary residents. The
decree authorizes the School to employ its teaching and management personnel selected by it either
locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise
applicable laws and regulations attending their employment, except laws that have been or will be
enacted for the protection of employees.

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

Petitioner union claims that the point-of-hire classification by the School is discriminatory to Filipinos and
that the grant of higher salaries to foreign-hires constitutes racial discrimination. When the CBA
negotiation reached a deadlock, the Secretary of Labor assumed jurisdiction. The Acting Secretary

upheld the point-of-hire classification for the distinction in salary rates, as he said The principle equal
pay for equal work does not find application in the present case. The international character of the
School requires the hiring of foreign personnel to deal with different nationalities and different cultures,
among the student population.

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

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

HELD:
If an employer accords employees the same position and rank, the presumption is that these employees
perform equal work. There is no evidence that foreign-hires perform 25% more efficiently or effectively
than local-hires. Both groups have similar functions and responsibilities, which they perform under similar
conditions. While the need of the School to attract foreign-hires is recognized, salaries should not be used
as an enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-
hires and they ought to be paid the same salaries as the latter. For the same reason, the dislocation
factor and the foreign-hires limited tenure affecting foreign-hires are adequately compensated by
certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation,
shipping costs, taxes, and home leave allowances.

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

BANKARD EMPLOYEES UNION VS. NLRC,
G.R. NO. 140689, FEB. 17, 2004

FACTS:
Bankard, Inc. classifies its employees by levels. 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.
Accordingly, the salaries of employees who fell below the new minimum rates were also adjusted to
reach such rates under their levels. Bankards move drew the Bankard Employees Union-WATU
(petitioner), the duly certified exclusive bargaining agent of the regular rank and file employees of
Bankard, to press for the increase in the salary of its old, regular employees. Bankard took the position,
however, that there was no obligation on the part of the management to grant to all its employees the
same increase in an across-the-board manner. As the continued request of petitioner for increase in the
wages and salaries of Bankards regular employees remained unheeded, it filed a Notice of Strike on
August 26, 1993 on the ground of discrimination and other acts of Unfair Labor Practice (ULP). A director
of the National Conciliation and Mediation Board treated the Notice of Strike as a "Preventive Mediation
Case" based on a finding that the issues therein were "not strikeable." Petitioner filed another Notice of
Strike on October 8, 1993 on the grounds of refusal to bargain, discrimination, and other acts of ULP -
union busting. The strike was averted, however, when the dispute was certified by the Secretary of Labor
and Employment for compulsory arbitration. The Second Division of the NLRC, by Order of May 31, 1995,
finding no wage distortion, dismissed the case for lack of merit.

The petitioner contends that there is wage distortion 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. The
obligation to rectify wage distortion is not confined to wage distortion resulting from government decreed
law or wage order.

ISSUE: WON the unilateral adoption by employer of an upgraded salary scale result in wage distortion.

HELD:

No. Normally, a company has a wage structure or method of determining the wages of its employees. In
a problem dealing with "wage distortion," the basic assumption is that there exists a grouping or
classification of employees that establishes distinctions among them on some relevant or legitimate
bases. Involved in the classification of employees are various factors such as the degrees of
responsibility, the skills and knowledge required, the complexity of the job, or other logical basis of
differentiation. The differing wage rate for each of the existing classes of employees reflects this
classification. To determine the existence of wage distortion, the "historical" classification of the
employees prior to the wage increase must be established. Likewise, it must be shown that as between
the different classification of employees, there exists a "historical" gap or difference.

The employees of private respondent have been "historically" classified into levels, and not on the basis
of their length of service. Put differently, the entry of new employees to the company ipso facto place[s]
them under any of the levels mentioned in the new salary scale which private respondent adopted
retroactive [to] April 1, 1993. Petitioner cannot make a contrary classification of private respondents
employees without encroaching upon recognized management prerogative of formulating a wage
structure, in this case, one based on level. It is thus clear that there is no hierarchy of positions between
the newly hired and regular employees of Bankard, hence, the first element of wage distortion provided
in Prubankers is wanting. While seniority may be a factor in determining the wages of employees, it
cannot be made the sole basis in cases where the nature of their work differs. Moreover, for purposes of
determining the existence of wage distortion, employees cannot create their own independent
classification and use it as a basis to demand an across-the-board increase in salary. the formulation of a
wage structure through the classification of employees is a matter of management judgment and
discretion. Whether or not a new additional scheme of classification of employees for compensation
purposes should be established by the Company (and the legitimacy or viability of the bases of distinction
there embodied) is properly a matter of management judgment and discretion, and ultimately, perhaps, a
subject matter for bargaining negotiations between employer and employees. It is assuredly something
that falls outside the concept of "wage distortion. Additionally, the third element is also wanting. Even
assuming that there is a decrease in the wage gap between the pay of the old employees and the newly
hired employees, 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. Petitioner cannot legally obligate Bankard to correct the
alleged "wage distortion" as the increase in the wages and salaries of the newly-hired was not due to a
prescribed law or wage order.

The wordings of Article 124 are clear. If it was the intention of the legislators to cover all kinds of wage
adjustments, then the language of the law should have been broad, not restrictive. If the compulsory
mandate under Article 124 to correct "wage distortion" is applied to voluntary and unilateral increases by
the employer in fixing hiring rates which is inherently a business judgment prerogative, then the hands of
the employer would be completely tied even in cases where an increase in wages of a particular group is
justified due to a re-evaluation of the high productivity of a particular group, or as in the present case,
the need to increase the competitiveness of Bankards hiring rate. An employer would be discouraged
from adjusting the salary rates of a particular group of employees for fear that it would result to a
demand by all employees for a similar increase, especially if the financial conditions of the business
cannot address an across-the-board increase.

Petitioner cites Metro Transit Organization, Inc. v. NLRC to support its claim that the obligation to rectify
wage distortion is not confined to wage distortion resulting from government decreed law or wage order.
Reliance on Metro Transit is however misplaced, as the obligation therein to rectify the wage distortion
was not by virtue of Article 124 of the Labor Code, but on account of a then existing "company practice"
that whenever rank-and-file employees were paid a statutorily mandated salary increase, supervisory
employees were, as a matter of practice, also paid the same amount plus an added premium. Wage
distortion is a factual and economic condition that may be brought about by different causes. In Metro
Transit, the reduction or elimination of the normal differential between the wage rates of rank-and-file
and those of supervisory employees was due to the granting to the former of wage increase, which was,
however, denied to the latter group of employees. The mere factual existence of wage distortion does
not, however, ipso facto result to an obligation to rectify it, absent a law or other source of obligation
which requires its rectification. Unlike in Metro Transit then where there existed a "company practice," no
such management practice is herein alleged to obligate Bankard to provide an across-the-board increase
to all its regular employees. Furthermore, Bankards right to increase its hiring rate, to establish minimum
salaries for specific jobs, and to adjust the rates of employees affected thereby is embodied in the
parties CBA. This CBA provision, which is based on legitimate business-judgment prerogatives of the
employer, is a valid and legally enforceable source of rights between the parties.


In fine, absent any indication that the voluntary increase of salary rates by an employer was done
arbitrarily and illegally for the purpose of circumventing the laws or was devoid of any legitimate purpose
other than to discriminate against the regular employees, this Court will not step in to interfere with this
management prerogative. Employees are of course not precluded from negotiating with its employer and
lobby for wage increases through appropriate channels, such as through a CBA.

ODANGO VS. NLRC,
G.R. NO. 147420, JUNE 10, 2004

FACTS:
Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday and half
of Saturday. After a routine inspection, the Regional Branch of the Department of Labor and Employment
found ANTECO liable for underpayment of the monthly salaries of its employees. On September 1989, the
DOLE directed ANTECO to pay its employees wage differentials amounting to P1,427,412.75. ANTECO
failed to pay. On various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with
the NLRC praying for payment of wage differentials, damages and attorneys fees.
On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting them wage
differentials amounting to P1,017,507.73 and attorneys fees of 10%. ANTECO appealed the Decision to
the NLRC where it reversed the Labor Arbiters Decision. The NLRC denied petitioners motion for
reconsideration. Petitioners then elevated the case to CA where it dismissed the petition for failure to
comply with Section 3, Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners
failed to allege the specific instances where the NLRC abused its discretion. The appellate court denied
petitioners motion for reconsideration.

ISSUE: Whether or not the petitioners are entitled to money claims.

HELD:
Petitioners are not entitled to money claims or wage differentials. The petitioners claim is based on
Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by the
Secretary of Labor which was declared null and void since in the guise of clarifying the Labor Codes
provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion.
Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The basic rule in this
jurisdiction is "no work, no pay." The right to be paid for un-worked days is generally limited to the ten
legal holidays in a year. Petitioners claim is based on a mistaken notion that Section 2, Rule IV of Book
III gave rise to a right to be paid for un-worked days beyond the ten legal holidays. Petitioners line of
reasoning is not only a violation of the "no work, no pay" principle, it also gives rise to an invidious
classification, a violation of the equal protection clause.

C. PLANAS COMMERCIAL VS. NLRC
G.R. NO. 144619, NOV. 11, 2005

FACTS:
Petitioner Cohu, owner of C. Planas Commercial, is engaged in wholesale of plastic products and fruits of
different kinds with more than 24 employees; that private respondents Dioleto Morente, Rudy Allauigan
and Alfredo Ofialda were hired by petitioners as helpers/laborers and that they were paid below the
minimum wage law for the past 3 years. They were required to work for more than 8 hours a day without
overtime pay; that they never enjoyed holiday pay and did not have a rest day as they worked for 7 days
a week; and they were not paid service incentive leave pay although they had been working for more
than one year. Private respondent Ofialda asked for night shift differential as he had worked from 8 p.m.
to 8 a.m. the following day for more than one year. Thus, a complaint for underpayment of wages,
nonpayment of overtime pay, holiday pay, service incentive leave pay and premium pay for holiday and
rest day and night shift differential.

Petitioners admitted that private respondents were their helpers who used to accompany the delivery
trucks and helped in the loading and unloading of merchandise being distributed to clients and they
usually started their work from 10 a.m. to 6 p.m.; that private respondents stopped working with
petitioners sometime in September 1993 as they were already working in other establishments/stalls in
Divisoria; that they only worked for 6 days a week; that they were not entitled to holiday and service
incentive leave pays for they were employed in a retail and service establishment regularly employing
less than ten workers.

Petitioner raised the defense of exemption from coverage of the minimum wage law and in support
thereof alleged that they regularly employed less than ten (10) workers to serve as basis for their

exemption under the law. Labor Arbiter dismissed private respondents money claims for lack of factual
and legal basis.

On appeal, NLRC states that petitioner must prove the exemption of the minimum wage law and affirmed
the decision of the Labor Arbiter to the other claims. On appeal , CA denied the petition for lack of merit
and affirmed in toto the NLRC decision. It said:
Having claimed exemption from the coverage of the minimum wage laws or order, it was incumbent upon
petitioner to prove such claim. Apart from simply denying private respondents allegation that it employs
more than 24 workers in its business, petitioner failed to adduce evidence to prove that it is, indeed, a
retail establishment which employs less than ten (10) employees. Its failure to present records of its
workers and their respective wages gives rise to the presumption that these are adverse to its claims.
Indeed, it is hard to believe that petitioner does not keep such records. More so, considering private
respondents claim that petitioner employs more than twenty four (24) employees and engaged in both
wholesale and retail business of fruits by volume on CONTAINER BASIS, not by price of fruit, but by
container size retail, involving millions of pesos capital, fruits coming from China, Australia and the United
States

ISSUE: WON C. Planas Commercial is exempted from the coverage the minimum wage law.

HELD:
R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage rate of all
workers and employees in the private sector. Section 4 of the Act provides for exemption from the
coverage, thus:
Sec. 4.
. . .
(c) Exempted from the provisions of this Act are household or domestic helpers and persons employed in
the personal service of another, including family drivers.
Retail/service establishments regularly employing not more than ten (10) workers may be exempted
from the applicability of this Act upon application with and as determined by the appropriate Regional
Board in accordance with the applicable rules and regulations issued by the Commission. Whenever an
application for exemption has been duly filed with the appropriate Regional Board, action on any
complaint for alleged non-compliance with this Act shall be deferred pending resolution of the application
for exemption by the appropriate Regional Board. In the event that applications for exemptions are not
granted, employees shall receive the appropriate compensation due them as provided for by this Act plus
interest of one percent (1%) per month retroactive to the effectivity of this Act.

Clearly, for a retail/service establishment to be exempted from the coverage of the minimum wage law, it
must be shown that the establishment is regularly employing not more than ten (10) workers and had
applied for exemptions with and as determined by the appropriate Regional Board in accordance with the
applicable rules and regulations issued by the Commission. Petitioners main defense in controverting
private respondents claim for underpayment of wages is that they are exempted from the application of
the minimum wage law, thus the burden of proving such exemption rests on petitioners. Petitioners had
not shown any evidence to show that they had applied for such exemption and if they had applied, the
same was granted.

In Murillo vs. Sun Valley Realty, Inc. where the respondents claim that petitioners therein are not entitled
to service incentive leave pay inasmuch as establishment employing less than ten (10) employees are
exempted by the Labor Code and the Implementing Rules from paying service incentive leave pay, we
held:
..the clear policy of the Labor Code is to include all establishments, except a few classes, under the
coverage of the provision granting service incentive leave to workers. Private respondents' claim is that
they fell within the exception. Hence, it was incumbent upon them to prove that they belonged to a class
excepted by law from the general rule. Specifically, it was the duty of respondents, not of petitioners, to
prove that there were less than ten (10) employees in the company. Having failed to discharge its task,
private respondents must be deemed to be covered by the general rule, notwithstanding the failure of
petitioners to allege the exact number of employees of the corporation. In other words, petitioners must
be deemed entitled to service incentive leave.

Petitioners claim exemption under the aforestated law. However, the best proof that they could have
adduced was their approved application for exemption in accordance with applicable guidelines issued by
the Commission.


EJR CRAFTS CORP. VS. COURT OF APPEALS
G.R. NO. 154101, MARCH 10, 2006

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

As no restitution was made, the Regional Office conducted summary investigations. However, despite
due notice, petitioner failed to appear for two consecutive scheduled hearings. Furthermore, petitioner
failed to question the findings of the Labor Inspector received by and explained to the manager.
The inspection was prompted by the filing of respondents sometime in 1997 against petitioner a
complaint for underpayment of wages, regular holiday pay, and other benefits.

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

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

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

HELD:
Yes. Aside from photocopies of documents entitled Release and Quitclaim, no other evidence was
adduced by the petitioner to substantiate this claim. These documents, being mere photocopies are
unreliable and incompetent without the original and deserves little credence or weight.
As is well-settled, if doubts exist between the evidence presented by the employer and the employee, the
scales of justice must be tilted in favor of the employee. Since it is a time-honored rule that in
controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writings should be resolved in the formers favor.
Considering thus that there still exists an employer-employee relationship between petitioner and private
respondents and that the case involves violations of labor standard provisions of the Labor Code, the
Regional Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of
the Labor Code.
PAG ASA STEEL WORKS VS. CA,
G.R. NO. 166647, MARCH 31, 2006

FACTS:
Petitioner is engaged in the manufacture of steel bars and wire rods while Pag-Asa Steel Workers Union
is the duly authorized bargaining agent of the rank-and-file employees.
RTWPB of NCR issued a wage order which provided for a P 13.00 increase of the salaries receiving
minimum wages. The Petitioner and the union negotiated on the increase. Petitioner forwarded a letter to
the union with the list of adjustments involving rank and file employees. In September 1999, the
petitioner and union entered into an collective bargaining agreement where it provided wage adjustments
namely P15, P25, P30 for three succeeding year. On the first year, the increase provided were followed
until RTWPB issued another wage order where it provided for a P25.50 per day increase in the salary of
employees receiving the minimum wage and increased the minimum wage to P223.50 per day. Petitioner
paid the P25.50 per day increase to all of its rank-and-file employees.
On November 2000, Wage Order No. NCR-08 was issued where it provided the increase of P26.50 per
day. The union president asked that the wage order be implemented where petitioner rejected the
request claiming that there was no wage distortion and it was not obliged to grant the wage increase.
The union submitted the matter for voluntary arbitration where it favored the position of the company
and dismissed the complaint. The matter was elevated to CA where it favored the respondents.

ISSUE: WON the company was obliged to grant the wage increase under the Wage Order as a matter of
practice.

HELD:
Company is not obliged to grant the wage increase. It is submitted that employers unless exempt are
mandated to implement the said wage order but limited to those entitled thereto. A perusal of the record
shows that the lowest paid employee before the implementation of Wage Order #8 is P250.00/day and
none was receiving below P223.50 minimum. This could only mean that the union can no longer demand

for any wage distortion adjustment. The provision of wage order #8 and its implementing rules are very
clear as to who are entitled to the P26.50/day increase, i.e., "private sector workers and employees in the
National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive an
increase of Twenty-Six Pesos and Fifty Centavos (P26.50) per day," and since the lowest paid is
P250.00/day the company is not obliged to adjust the wages of the workers.
The provision in the CBA that "Any Wage Order to be implemented by the Regional Tripartite Wage and
Productivity Board shall be in addition to the wage increase adverted above" cannot be interpreted in
support of an across-the-board increase. Wage Order No. NCR-08 clearly states that only those
employees receiving salaries below the prescribed minimum wage are entitled to the wage increase
provided therein, and not all employees across-the-board as respondent Union would want petitioner to
do. Considering therefore that none of the members of respondent Union are receiving salaries below the
P250.00 minimum wage, petitioner is not obliged to grant the wage increase to them. Moreover, to ripen
into a company practice that is demandable as a matter of right, the giving of the increase should not be
by reason of a strict legal or contractual obligation, but by reason of an act of liberality on the part of the
employer. Hence, even if the company continuously grants a wage increase as mandated by a wage
order or pursuant to a CBA, the same would not automatically ripen into a company practice.

METROPOLITAN BANK VS. NWPC,
G.R. NO. 144322, FEB. 6, 2007

FACTS:
The Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao, Cagayan, by virtue of RA
No. 6727, otherwise known as the Wage Rationalization Act, issued Wage Order No. R-02-03. Section 1
of the Order states as follows:
Sec. 1 Upon effectivity of this Wage Order, all employees/workers in the private sector throughout Region
II, regardless of the status of the employment are granted an across the board increase of Php 15.00
daily.
The Bankers Council for Personnel Management (BCPM), on behalf of its member banks, requested
exemption from the coverage of the Wage Order since its member banks are already paying more than
the prevailing minimum wage rate in the National Capital Region (NCR), which is their principal place of
business. NWPC denied such request.
Metropolitan Bank and Trust Company later filed a petition for Certiorari and Prohibition with the Court of
Appeals seeking for the nullification of the WO on grounds that RTWPB acted beyond its authority when
it issued the WO without any ceiling or qualification and that the implementation of the WO will cause the
petitioner, and other similarly situated employers, to incur huge financial losses and suffer labor unrest.

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

HELD:
There are two ways of fixing the minimum wage: the "floor-wage" method and the "salary-ceiling"
method. The "floor-wage" method involves the fixing of a determinate amount to be added to the
prevailing statutory minimum wage rates. On the other hand, in the "salary-ceiling" method, the wage
adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other
words, workers already being paid more than the existing minimum wage (up to a certain amount stated
in the Wage Order) are also to be given a wage increase.
In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floor-
wage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a wage
level nor a range to which a wage adjustment or increase shall be added. Instead, it granted an across-
the-board wage increase of P15.00 to all employees and workers of Region 2. In doing so, the RTWPB
exceeded its authority by extending the coverage of the Wage Order to wage earners receiving more
than the prevailing minimum wage rate, without a denominated salary ceiling. The Wage Order granted
additional benefits not contemplated by R.A. No. 6727.
The WO herein question is null and void insofar as it grants a wage increase to employees earning more
than the minimum wage rate; and pursuant to the separability clause of the WO, Sec. 1 is declared valid
with respect to employees earning the prevailing minimum wage rate.

EQUITABLE BANK VS. SADAC,
G.R. NO. 164772, JUNE 8, 2006, CITING SONGCO VS. NLRC, 183 SCRA 618

FACTS:
Effective 1 August 1981, respondent Sadac was appointed Vice President of the Legal Department of
petitioner Bank and subsequently General Counsel thereof. On 26 June 1989, nine lawyers of petitioner
Banks Legal Department, in a letter-petition to the Chairman of the Board of Directors, accused

respondent Sadac of abusive conduct, inter alia, and ultimately, petitioned for a change in leadership of
the department. On the ground of lack of confidence in respondent Sadac, under the rules of client and
lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in his custody in
all cases in which the latter was appearing as its counsel of record. On 9 November 1989, respondent
Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members
of the Board of Directors thereof. After learning of the filing of the complaint, petitioner Bank terminated
the services of respondent Sadac. Finally, on 10 August 1989, respondent Sadac was removed from his
office and ordered disentitled to any compensation and other benefits. The Labor Arbiter dismissed the
complaint for lack of merit. However, the NLRC reversed the Labor Arbiters decision and declared that
respondent Sadacs dismissal as illegal. The main arguments posed by respondent is on the computation
and determination of his backwages from the time he was illegally dismissed by the petitioner Bank.

ISSUE: Whether or not Sadac is entitled to check-up benefit, clothing allowance and cash conversion of
vacation leaves notwithstanding that respondent Sadac did not present any evidence to prove entitlement
to these claims.

HELD:
The court found in the records that, per petitioner Banks computation, the benefits to be
received by respondent are monthly rice subsidy, tuition fee allowance per year, and medicine allowance
per year. Contained nowhere is an acknowledgment of herein claimed benefits, namely, check-up benefit,
clothing allowance, and cash conversion of vacation leaves. We cannot sustain the rationalization that the
acknowledgment by petitioner Bank in its computation of certain benefits granted to respondent Sadac
means that the latter is also entitled to the other benefits as claimed by him but not acknowledged by
petitioner Bank. The rule is, he who alleges, not he who denies, must prove. Mere allegations by
respondent Sadac does not suffice in the absence of proof supporting the same.

S.I.P. FOOD HOUSE ET. AL. VS. BATOLINA,
G.R. NO. 192473, OCT. 11, 2010

FACTS:
The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the Government
Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to operate a canteen in the
new GSIS Building, but had no capability and expertise in this area. Thus, it engaged the services of the
petitioner S.I.P. Food House (SIP), owned by the spouses Alejandro and Esther Pablo, as concessionaire.
The respondents Restituto Batolina and nine (9) others (the respondents) worked as waiters and
waitresses in the canteen.
In February 2004, GMPC terminated SIPs contract as GMPC concessionaire.The termination of the
concession contract caused the termination of the respondents employment, prompting them to file a
complaint for illegal dismissal, with money claims, against SIP and the spouses Pablo. NLRC ruled in favor
of the petitioner and CA affirmed the ruling of NLRC.SIP seeks a reversal of the appellate courts ruling
that it was the employer of the respondents, claiming that it was merely a labor-only contractor of GMPC

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

HELD:
On the employer-employee relationship issue, the CA ruled out SIPs claim that it was a labor-only
contractor or a mere agent of GMPC. We agree with the CA; SIP and its proprietors could not be
considered as mere agents of GMPC because they exercised the essential elements of an employment
relationship with the respondents such as hiring, payment of wages and the power of control, not to
mention that SIP operated the canteen on its own account as it paid a fee for the use of the building and
for the privilege of running the canteen. The fact that the respondents applied with GMPC in February
2004 when it terminated its contract with SIP, is another clear indication that the two entities were
separate and distinct from each other. We thus see no reason to disturb the CAs findings.
On the respondents money claims, the court affirmed the CA ruling on the monetary award to Batolina
and the other complainants. The free board and lodging SIP furnished the employees cannot operate as
a set-off for the underpayment of their wages. We held in Mabeza v. National Labor Relations
Commission that the employer cannot simply deduct from the employees wages the value of the board
and lodging without satisfying the following requirements: (1) proof that such facilities are customarily
furnished by the trade; (2) voluntary acceptance in writing by the employees of the deductible facilities;
and (3) proof of the fair and reasonable value of the facilities charged. As the CA aptly noted, it is
clear from the records that SIP failed to comply with these requirements.
On the collateral issue of the proper computation of the monetary award, we also find the CA ruling to be
in order. Indeed, in the absence of evidence that the employees worked for 26 days a month, no need

exists to recompute the award for the respondents who were explicitly claiming for their salaries and
benefits for the services rendered from Monday to Friday or 5 days a week or a total of 20 days a
month.

SLL INTERNATIONAL CABLES SPECIALIST VS. NLRC,
G.R. NO. 172161, MARCH 2, 2011

FACTS:
Sometime in 1996, and January 1997, private respondents were hired by petitioner Lagon as apprentice
or trainee cable/lineman. The three were paid the full minimum wage and other benefits but since they
were only trainees, they did not report for work regularly but came in as substitutes to the regular
workers or in undertakings that needed extra workers to expedite completion of work. Soon after they
were engaged as private employees for their Islacom project in Bohol. Private respondents started on
March 15, 1997 until December 1997. Upon the completion of their project, their employment was also
terminated. Private respondents received the amount of P145.00, the minimum prescribed daily wage for
Region VII. In July 1997, the amount of P145 was increased to P150.00 and in October of the same year,
the latter was increased to P155.00.
On May 21, 1999, private respondents for the 4th time worked with Lagon's project in Camarin, Caloocan
City with Furukawa Corporation as the general contractor. Their contract would expire on February 28,
2000, the period of completion of the project. From May 21, 1997-December 1999, private respondents
received the wage of P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In
January to February 28, the three received the wage of P165.00. The existing rate at that time was
P213.00.

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

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

HELD:
1.As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of
proving it. Specifically with respect to labor cases, the burden of proving payment of monetary claims
rests on the employer, the rationale being that the pertinent personnel files, payrolls, records,
remittances and other similar documents -- which will show that overtime, differentials, service incentive
leave and other claims of workers have been paid -- are not in the possession of the worker but in the
custody and absolute control of the employer.
In this case, petitioners, aside from bare allegations that private respondents received wages higher than
the prescribed minimum, failed to present any evidence, such as payroll or payslips, to support their
defense of payment. Thus, petitioners utterly failed to discharge the onus probandi.

2.On whether the value of the facilities should be included in the computation of the "wages" received by
private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may
provide subsidized meals and snacks to his employees provided that the subsidy shall not be less that
30% of the fair and reasonable value of such facilities. In such cases, the employer may deduct from the
wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the latter,
provided that such deduction is with the written authorization of the employees concerned.

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


These requirements, however, have not been met in this case. SLL failed to present any company policy
or guideline showing that provisions for meals and lodging were part of the employee's salaries. It also
failed to provide proof of the employees' written authorization, much less show how they arrived at their
valuations. At any rate, it is not even clear whether private respondents actually enjoyed said facilities.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration above
and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part
of the laborers' basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item
(food, lodging, bonus or sick leave) given, but in the purpose for which it is given. In the case at bench,
the items provided were given freely by SLL for the purpose of maintaining the efficiency and health of its
workers while they were working at their respective projects.

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

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

RICARDO E. VERGARA, JR., vs. COCA-COLA BOTTLERS PHILIPPINES, INC.
G.R. No. 176985. April 1, 2013

Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc.
from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Pias
City, Metro Manila. As stipulated in respondent's existing Retirement Plan Rules and Regulations at the
time, the Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the
computation of retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance
Incentive (which is the total performance incentive earned during the year immediately preceding 12
months) x No. of Years in Service.

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

Ruling:
Generally, employees have a vested right over existing benefits voluntarily granted to them by their
employer. Thus, any benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is
actually founded on the Constitutional mandate to protect the rights of workers, to promote their welfare,
and to afford them full protection. In turn, said mandate is the basis of Article 4 of the Labor Code which
states that "all doubts in the implementation and interpretation of this Code, including its implementing
rules and regulations, shall be rendered in favor of labor."

There is diminution of benefits when the following requisites are present: (1) the grant or benefit is
founded on a policy or has ripened into a practice over a long period of time; (2) the practice is
consistent and deliberate; (3) the practice is not due to error in the construction or application of a
doubtful or difficult question of law; and (4) the diminution or discontinuance is done unilaterally by the
employer.

To be considered as a regular company practice, the employee must prove by substantial evidence that
the giving of the benefit is done over a long period of time, and that it has been made consistently and
deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that
company practice should have been exercised in order to constitute voluntary employer practice. The
common denominator in previously decided cases appears to be the regularity and deliberateness of the
grant of benefits over a significant period of time. It requires an indubitable showing that the employer
agreed to continue giving the benefit knowing fully well that the employees are not covered by any
provision of the law or agreement requiring payment thereof. In sum, the benefit must be characterized

by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable
period of time.

Upon review of the entire case records, We find no substantial evidence to prove that the grant of SMI to
all retired DSSs regardless of whether or not they qualify to the same had ripened into company practice.
Therefore, respondent's isolated act of including the SMI in the retirement package of Velazquez could
hardly be classified as a company practice that may be considered an enforceable obligation. The
principle against diminution of benefits is applicable only if the grant or benefit is founded on an express
policy or has ripened into a practice over a long period of time which is consistent and deliberate; it
presupposes that a company practice, policy and tradition favorable to the employees has been clearly
established; and that the payments made by the company pursuant to it have ripened into benefits
enjoyed by them. Certainly, a practice or custom is, as a general rule, not a source of a legally
demandable or enforceable right. Company practice, just like any other fact, habits, customs, usage or
patterns of conduct, must be proven by the offering party who must allege and establish specific,
repetitive conduct that might constitute evidence of habit or company practice.

ROYAL PLANT WORKERS UNION vs. COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT
G.R. No. 198783. April 15, 2013.

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

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

The bottling operators took issue with the removal of the chairs. Through the representation of herein
respondent, they initiated the grievance machinery of the Collective Bargaining Agreement (CBA) in
November 2008. Even after exhausting the remedies contained in the grievance machinery, the parties
were still against such measure. As such, respondent sent a Notice to Arbitrate, dated 16 July 2009, to
petitioner stating its position to submit the issue on the removal of the chairs for arbitration.
Nevertheless, before submitting to arbitration the issue, both parties availed of the conciliation/mediation
proceedings before the National Conciliation and Mediation Board (NCMB) Regional Branch No. VII. They
failed to arrive at an amicable settlement.

Isse: WON there was a diminution of benefits in the removal of the chairs

HELD:
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; 8 3) Global Workplace Rights
Policy of CCBPI which provides for a safe and healthy workplace by maintaining a productive workplace

and by minimizing the risk of accident, injury and exposure to health risks; and 4) diminution of benefits
provided in Article 100 of the Labor Code.

Opposing the Union's argument, CCBPI mainly contends that the removal of the subject chairs is a valid
exercise of management prerogative. The management decision to remove the subject chairs was made
in good faith and did not intend to defeat or circumvent the rights of the Union under the special laws,
the CBA and the general principles of justice and fair play.
The Court has held that management is free to regulate, according to its own discretion and judgment,
all aspects of employment, including hiring, work assignments, working methods, time, place, and
manner of work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers. The
exercise of management prerogative, however, is not absolute as it must be exercised in good faith and
with due regard to the rights of labor. Apparently, the decision to remove the chairs was done with good
intentions as CCBPI wanted to avoid instances of operators sleeping on the job while in the performance
of their duties and responsibilities and because of the fact that the chairs were not necessary considering
that the operators constantly move about while working. In short, the removal of the chairs was designed
to increase work efficiency. Hence, CCBPI's exercise of its management prerogative was made in good
faith without doing any harm to the workers' rights.

The rights of the Union under any labor law were not violated. There is no law that requires employers to
provide chairs for bottling operators. The CA correctly ruled that the Labor Code, specifically Article 132
11 thereof, only requires employers to provide seats for women. No similar requirement is mandated for
men or male workers. It must be stressed that all concerned bottling operators in this case are men.

There was no violation either of the Health, Safety and Social Welfare Benefit provisions under Book IV of
the Labor Code of the Philippines. As shown in the foregoing, the removal of the chairs was compensated
by the reduction of the working hours and increase in the rest period. The directive did not expose the
bottling operators to safety and health hazards.

Also, there was no violation of the CBA between the Union and CCBPI. It contains no provision
whatsoever requiring the management to provide chairs for the operators in the
production/manufacturing line while performing their duties and responsibilities. As can be gleaned from
the aforecited provision, the CBA expressly provides that benefits and/or privileges, not expressly given
therein but which are presently being granted by the company and enjoyed by the employees, shall be
considered as purely voluntary acts by the management and that the continuance of such benefits and/or
privileges, no matter how long or how often, shall not be understood as establishing an obligation on the
company's part. Since the matter of the chairs is not expressly stated in the CBA, it is understood that it
was a purely voluntary act on the part of CCBPI and the long practice did not convert it into an obligation
or a vested right in favor of the Union.

The operators' chairs cannot be considered as one of the employee benefits covered in Article 100 16 of
the Labor Code. In the Court's view, the term "benefits" mentioned in the non-diminution rule refers to
monetary benefits or privileges given to the employee with monetary equivalents. Such benefits or
privileges form part of the employees' wage, salary or compensation making them enforceable
obligations.

This Court has already decided several cases regarding the non-diminution rule where the benefits or
privileges involved in those cases mainly concern monetary considerations or privileges with monetary
equivalents. Some of these cases are: Eastern Telecommunication Phils., Inc. v. Eastern Telecoms
Employees Union, where the case involves the payment of 14th, 15th and 16th month bonuses; Central
Azucarera De Tarlac v. Central Azucarera De Tarlac Labor Union-NLU, 18 regarding the 13th month pay,
legal/special holiday pay, night premium pay and vacation and sick leaves; TSPIC Corp. v. TSPIC
Employees Union, 19 regarding salary wage increases; and American Wire and Cable Daily Employees
Union vs. American Wire and Cable Company, Inc., 20 involving service awards with cash incentives,
premium pay, Christmas party with incidental benefits and promotional increase.


Without a doubt, equating the provision of chairs to the bottling operators as something within the ambit
of "benefits" in the context of Article 100 of the Labor Code is unduly stretching the coverage of the law.
The interpretations of Article 100 of the Labor Code do not show even with the slightest hint that such
provision of chairs for the bottling operators may be sheltered under its mantle. 21

Jurisprudence recognizes the exercise of management prerogatives. Labor laws also discourage
interference with an employer's judgment in the conduct of its business. For this reason, the Court often
declines to interfere in legitimate business decisions of employers. The law must protect not only the
welfare of the employees, but also the right of the employers

THE NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC) and THE REGIONAL
TRIPARTITE WAGES AND PRODUCTIVITY BOARD (RTWPB)-NCR vs. THE ALLIANCE OF
PROGRESSIVE LABOR (APL) and
THE TUNAY NA NAGKAKAISANG MANGGAGAWA SA ROYAL (TNMR-APL)
G.R. No. 150326. March 12, 2014

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

Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered the NWPC
to formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise,
industry and national levels; to prescribe rules and guidelines for the determination of appropriate
minimum wage and productivity measures at the regional, provincial or industry levels; and to review
regional wage levels set by the RTWPBs to determine whether the levels were in accordance with the
prescribed guidelines and national development plans, among others. On the other hand, Article 122 (b)
of the Labor Code, also amended by Section 3 of Republic Act No. 6727, tasked the RTWPBs to
determine and fix minimum wage rates applicable in their region, provinces or industries therein; and to
issue the corresponding wage orders, subject to the guidelines issued by the NWPC. The RTWPBs were
also mandated to receive, process and act on applications for exemption from the prescribed wage rates
as may be provided by law or any wage order.

Consequently, the RTWPB-NCR issued Wage Order No. NCR-07 on October 14, 1999 imposing an
increase of P25.50/day on the wages of all private sector workers and employees in the NCR and pegging
the minimum wage rate in the NCR at P223.50/day. However, Section 2 and Section 9 of Wage Order No.
NCR-07 exempted Agricultural Workers, Cottage/ handicraft industry workers, those working in private
hospitals with bed capacity of 100 or less, those working in retail/service establishments with less than 15
employers and those working in establishments with less than 10 workers.

Feeling aggrieved by their non-coverage by the wage adjustment, the Alliance of Progressive Labor (APL)
and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with the NWPC assailing
Section 2 (A) and Section 9 (2) of Wage Order No. NCR-07. They contended that neither the NWPC nor
the RTWPB-NCR had the authority to expand the non-coverage and exemptible categories under the
wage order; hence, the assailed sections of the wage order should be voided.

Issue: WON the NWPC or RTWPB is with authority to expand the noncoverage and exemptible categories
under Wage Order No. NCR-07

Held:
NWPC has the authority to prescribe the rules and guidelines for the determination of the minimum wage
and productivity measures, and the RTWPB-NCR had the power to issue wage orders. On the other hand,
RTWPBs could issue exemptions from the application of the wage orders as long as the exemptions
complied with the rules of the NWPC. In its rules, the NWPC enumerated four exemptible establishments,
but the list was not exclusive. The RTWPBs had the authority to include in the wage orders
establishments that belonged to, or to exclude from the four enumerated exemptible categories. If the
exempted category was one of the listed ones, the RTWPB issuing the wage order must see to it that the
requisites stated in Section 3 and Section 4 of the NWPC Guidelines No. 01, Series of 1996 were complied
with before granting fully or partially the application of an establishment seeking to avail of the
exemption.

On the other hand, if the exemption was outside of the four exemptible categories the exemptible
category should be: (1) in accord with the rationale for exemption; (2) reviewed/approved by the NWPC;
and (3) upon review, the RTWPB issuing the wage order must submit a strong and justifiable reason or

reasons for the inclusion of such category. It is the compliance with the second requisite that is at issue
here.

The CA reversed the decisions of the NWPC dated February 28, 2000 and July 17, 2000 mainly on the
ground that Wage Order No. NCR-07, specifically its Section 2 (A) and Section 9 (2), had not been
reviewed or approved by the NWPC. However, the NWPC stated that it had reviewed and approved the
challenged sections when it upheld the validity of Wage Order No. NCR-07.

The wage orders issued by the RTWPBs could be reviewed by the NWPC motu proprio or upon appeal.
Any party aggrieved by the wage order issued by the RTWPBs could appeal. Here, APL and TNMR
appealed on October 26, 1999, submitting to the NWPC precisely the issue of the validity of the Section 2
(A) and Section 9 (2) of Wage Order No. NCR-07. The NWPC, in arriving at its decision, weighed the
arguments of the parties and ruled that the RTWPB-NCR had substantial and justifiable reasons in
exempting the sectors and establishments enumerated in Section 2 (A) and Section 9 (2) based on the
public hearings and consultations, meetings, social-economic data and informations gathered prior to the
issuance of Wage Order No. NCR-07. The very fact that the validity of the assailed sections of Wage
Order No. NCR-07 had been already passed upon and upheld by the NWPC meant that the NWPC had
already given the wage order its necessary legal imprimatur. Accordingly, the requisite approval or review
was complied with.


WAGE ENFORCEMENT AND RECOVERY

RAJAH HUMABON HOTEL VS. TRAJANO, 226 SCRA 332

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

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

HELD:
Regional Director had no jurisdiction over the case. Section 2 of EO No. 111, promulgated on December
24, 1986, which amended Article 128(b) of the Labor Code gives concurrent jurisdiction to both the
Secretary of Labor (or the various regional directors) and the labor arbiters over money claims among the
other cases mentioned by Article 217 of the Labor Code. This provision merely confirms/reiterates the
enforcement/adjudication authority of the Regional Director over uncontested money claims in cases
where an employer-employee relationship still exists.
However, with the enactment of Republic Act No. 6715, which took effect on March 21, 1989 or seven
days after the complaint at bar was filed on March 14, 1989, Articles 129 and 217 of the Labor Code were
amended, there is no doubt that the regional directors can try money claims only if the following
requisites concur: (1) the claim is presented by an employee or person employed in domestic or
household service, or househelper under the code; (2) the claimant, no longer being employed, does not
seek reinstatement; and (3) the aggregate money claim of the employee or housekeeper does not
exceed five thousand pesos (P5,000.00). Thus, the power to hear and decide employees' claims arising
from employer-employee relations, exceeding P5,000.00 for each employee should be left to the Labor
Arbiter as the exclusive repository of the power to hear and decide such claims.
In the instant case, a simple examination of the labor arbiter's impugned order dated September 25,
1989 readily shows that the aggregate claims of each of the twenty-five employees of petitioner are
above the amount of P5,000.00 fixed by Republic Act No. 6715. Therefore, the regional director had no
jurisdiction over the case. Hence, the petition is granted and the public respondent is directed to refer
the workers' money claims to the appropriate Labor Arbiter for proper disposition.

GUICO VS. SEC. OF LABOR,
G.R. NO. 131750, NOVEMBER 16, 1998

FACTS:
The case started when the Office of the Regional Director, Department of Labor and Employment
(DOLE), Region I, San Fernando, La Union, received a letter-complaint dated April 25, 1995, requesting
for an investigation of petitioner's establishment, Copylandia Services & Trading, for violation of labor
standards laws. Pursuant to the visitorial and enforcement powers of the Secretary of Labor and
Employment or his duly authorized representative under Article 128 of the Labor Code, as amended,
inspections were conducted at Copylandia's outlets on April 27 and May 2, 1995. The inspections yielded
the following violations involving twenty-one (21) employees who are copier operators: (1)
underpayment of wages; (2) underpayment of 13th month pay; and (3) no service incentive leave with
pay.
On October 30, 1995, Regional Director Guerrero N. Cirilo issued an Order favorable to the 21 employees.
First, he ruled that the purported Receipt, Waiver and Quitclaim dated December 21 and 22, 1994, could
not cause the dismissal of the labor standards case against the petitioner since the same were executed
before the filing of the said case. Moreover, the employees repudiated said waiver and quitclaim. Second,
he held that despite the salary increase granted by the petitioner, the daily salary of the employees was
still below the minimum daily wage rate of P119.00 under Wage Order No. RB-I-03. Thirdly, he held that
the removal of the commission and incentive schemes during the pendency of the case violated the
prohibition against elimination or diminution of benefits under Article 100 of the Labor Code, as amended.
The Regional Director awarded the claimants ONE MILLION EIGHTY ONE THOUSAND SEVEN HUNDRED

FIFTY SIX PESOS AND SEVENTY CENTAVOS (P1,081,756.70) representing their backwages, well over
P5,000. On October 24, 1997, the respondent Secretary denied the Motion for Reconsideration. He ruled
that the Regional Director has jurisdiction over the case citing Article 128 (b) of the Labor Code, as
amended. He pointed out that Republic Act No. 7730 repealed the jurisdictional limitations imposed by
Article 129 on the visitorial and enforcement powers of the Secretary of Labor and Employment or his
duly authorized representatives. In addition, he held that petitioner is now estopped from questioning the
computation made by the Regional Director as a result of the compromise agreement he entered into
with the employees. Lastly, he reiterated his ruling that the Receipt, Waiver and Quitclaim signed by the
employees was not valid.

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

HELD:
Yes, the Regional Director can award claims of over P5,000. The visitorial power of the Secretary of Labor
to order and enforce compliance with labor standard laws cannot be exercised where the individual claim
exceeds P5,000.00, can no longer be applied in view of the enactment of R.A. No. 7730 amending Article
128(b) of the Labor Code, viz: Art. 128 (b) Notwithstanding the provisions of Articles 129 and 217 of
this Code to the contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of the Code and other labor legislation
based on the findings of the labor employment and enforcement officers or industrial safety engineers
made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in the course of inspection.

EX-BATAAN VETERANS SECURITY AGENCY VS. SEC. OF LABOR, ET. AL.,
G.R. NO. 152396, NOVEMBER 20, 2007,
CITING CIRENEO BOWLING PLAZA VS. SENSING,
G.R. NO. 146572, JAN. 14, 2005

FACTS:
Ex-Bataan Veterans Security Agency, Inc. is in the business of providing security services while private
respondents are EBVSAI's employees assigned to the National Power Corporation at Ambuklao Hydro
Electric Plant, Bokod, Benguet (Ambuklao Plant). On 20 February 1996, private respondents led by
Alexander Pocding (Pocding) instituted a complaint for underpayment of wages against EBVSAI before
the Regional Office of the Department of Labor and Employment (DOLE). On 7 March 1996, the Regional
Office conducted a complaint inspection at the Ambuklao Plant where some violations were noted.

ISSUE: WON the Regional Director has jurisdiction over the money claims.

HELD:
The Regional Director has jurisdiction over the claim. Art. 128 Visitorial and enforcement power. --- x x x
(b) Notwithstanding the provisions of Article[s] 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his
duly authorized representatives shall have the power to issue compliance orders to give effect to [the
labor standards provisions of this Code and other] labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of inspection.
The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where the employer contests the findings of
the labor employment and enforcement officer and raises issues supported by documentary proofs which
were not considered in the course of inspection. x x x x
The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor Code.
This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v. Sensing, where we sustained the
jurisdiction of the DOLE Regional Director and held that "the visitorial and enforcement powers of the
DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even
where the individual claim exceedsP5,000."
However, if the labor standards case is covered by the exception clause in Article 128(b) of the Labor
Code, then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of
the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following
elements must be present: (a) that the employer contests the findings of the labor regulations officer and
raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary
matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also

provide that the employer shall raise such objections during the hearing of the case or at any time after
receipt of the notice of inspection results.
In this case, the Regional Director validly assumed jurisdiction over the money claims of private
respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in accordance
with Article 128(b) of the Labor Code and the case does not fall under the exception clause.

SAPIO VS. UNDALOC CONSTRUCTION, ET. AL.,
G.R. NO. 155034, MAY 22, 2008

FACTS:
The controversy started with a complaint filed by petitioner against Undaloc Construction and/or Engineer
Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory benefits.
Respondent Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in road
construction business in Cebu City. Petitioner had been employed as watchman from 1 May 1995 to 30
May 1998 when he was terminated on the ground that the project he was assigned to was already
finished, he being allegedly a project employee. But petitioner asserted that he was a regular employee
having been engaged to perform works which are "usually necessary or desirable" in respondents'
business.

ISSUE: WON the Appellate court erred in failing to dismiss respondent's petition for certiorari brought
before it on the ground that respondents failed to attach certified true copies of the NLRC's decision and
resolution denying the motion for reconsideration.

HELD:
Appellate Court was right. In his Comment on the Petition for Certiorari with Prayer for Temporary
Restraining and/or Preliminary Injunction filed with the Court of Appeals on 22 November 2001,
petitioner did not raise this procedural issue. Neither did he do so when he moved for reconsideration of
the 8 May 2002 Decision of the Court of Appeals. It is only now before this Court that petitioner proffered
the same. This belated submission spells doom for petitioner. More fundamentally, an examination of the
Court of Appeals rollo belies petitioner as it confirms that the alleged missing documents were in fact
attached to the petition.
To counter petitioner's assertions, respondents submitted typewritten and signed payroll sheets from 2
September to 8 December 1996, from 26 May to 15 June 1997, and from 12 January to 31 May 1998.
These payroll sheets clearly indicate that petitioner did receive a daily salary of P141.00.
Moreover, absent any evidence to the contrary, good faith must be presumed in this case. Entries in the
payroll, being entries in the course of business, enjoy the presumption of regularity under Rule 130,
Section 43 of the Rules of Court. Hence, while as a general rule, the burden of proving payment of
monetary claims rests on the employer, when fraud is alleged in the preparation of the payroll, the
burden of evidence shifts to the employee and it is incumbent upon him to adduce clear and convincing
evidence in support of his claim. Unfortunately, petitioner's bare assertions of fraud do not suffice to
overcome the disputable presumption of regularity.

HON. SECRETARY OF LABOR VS. PANAY VETERANS SECURITY AND INVESTIGATION AGENCY
G.R. NO. 167708, AUGUST 22, 2008

FACTS:
Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent Panay Veterans
Security and Investigation Agency, Inc. They were stationed at the plant site of Food Industries, Inc.
(FII) in Sta. Rosa, Laguna until FII terminated its contract with respondent security agency. They were
not given new assignments and their benefits (including 13th month pay, overtime pay and holiday pay
as well as wage differentials due to underpayment of wages) were withheld by respondent security
agency. In consequence, they filed a complaint for violation of labor standards in the regional office of
the (DOLE-NCR). The latter conducted an inspection of the respondent security agency. During such
inspection, respondent was not able to present its payroll as well as the daily time records submitted by
the petitioners. Hence, with such violation, DOLE inspector issued a notice of inspection and
concomitantly explained to the respondents that they have to comply with labor standards by paying the
claims of the petitioners or otherwise, they can question the notice to the DOLE-NCR within 5 days. Since
respondents did not do either of the aforementioned things, the Regional Director of DOLE-NCR adopted
the findings of the inspector. Respondents moved for reconsideration but it was denied. Respondents
filed an appeal (with motion to reduce cash or surety bond) to the SOLE. The SOLE found that
respondents failed to perfect their appeal since they did not post a cash or surety bond equivalent to the
monetary award. Thus, the appeal was dismissed and the DOLE-NCR Regional Directors order was

declared final and executory. The SOLE denied reconsideration. Respondents appealed to the Court of
Appeals.

ISSUE:
1. WON there was a perfected appeal.
2. Whether motion to reduce appeal bond allowed in appeals to the Secretary of Labor.

HELD:
1. Respondents failed to perfect their appeal in the manner prescribed by the Labor Code. Failure
either to file the appeal or post the bond within the prescribed period renders the order final and
executory. The legislative intent to make the bond an indispensable requisite for the perfection of an
appeal by the employer is underscored by the provision that an appeal by the employer may be
perfected only upon the posting of a cash or surety bond. The word only makes it clear that the
lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by
which an employers appeal may be perfected.
2. No. The jurisdiction of the NLRC is separate and distinct from that of the Secretary of Labor and
Employment. In the exercise of their respective jurisdictions, each agency is governed by its own rules of
procedure. In other words, the rules of procedure of the NLRC are different from (and do not apply in)
cases cognizable by the Secretary of Labor and Employment. Unlike the New Rules of Procedure of the
NLRC,]no provision in the Rules on the Disposition of Labor Standards Cases governs the filing of a
motion for the reduction of the amount of the bond. However, on matters that are not covered by the
Rules on the Disposition of Labor Standards Cases, the suppletory application of the Rules of Court is
authorized. In other words, the Rules on the Disposition of Labor Standards Cases does not sanction the
suppletory resort to the rules of procedure of the NLRC. By ruling that the rules of procedure of the NLRC
should be applied suppletorily to respondents appeal to the Secretary of Labor of Employment, the CA
effectively amended the Rules on the Disposition of Labor Standards Cases. In the process, it encroached
on the rule-making power of the Secretary of Labor and Employment.

NATIONAL MINES AND ALLIED WORKERS UNION VS. MARCOPPER MINING CORP
G.R. NO. 174641, NOV. 11, 2008

FACTS:
On April 1996, the Department of Environment and Natural Resources (DENR) ordered the indefinite
suspension of MARCOPPERs operations for causing damage to the environment of the Provi nce of
Marinduque by spilling the companys mine waste or tailings from an old underground impounding area
into the Boac River, in violation of its Environmental Compliance Certificate (ECC).
NAMAWU was the exclusive bargaining representative of the rank-and-file workers of MARCOPPER. On
April 10, 1996, it filed a complaint with the Regional Arbitration Branch No. IV of the NLRC against
MARCOPPER for nonpayment of wages, separation pay, damages, and attorneys fees; the case is
hereinafter referred to as the environmental incident case. NAMAWU claimed that due to the indefinite
suspension of MARCOPPERs operations, its members were not paid the wages due them for six months
(from April 12, 1996 to October 12, 1996) under Rule X, Book III, Section 3(b) of the Implementing Rules
and Regulations of the Labor Code.[8] It further claimed that its members are also entitled to be paid
their separation pay pursuant to their collective bargaining agreement with MARCOPPER and pursuant to
Book IV, Rule I, 4(b) of the Labor Codes implementing rules.
MARCOPPER denied liability, contending that NAMAWU had not been authorized by the individual
employees the real parties-in-interest to file the complaint; and that the complaint should be
dismissed for lack of certification of non-forum shopping, for the pendency of another action between the
same parties, and for lack of factual and legal basis.
MARCOPPER appealed the decision to the NLRC. In this appeal, it also moved that it be allowed not to
post an appeal bond for 615 NAMAWU members former MARCOPPER employees who had been
dismissed effective March 7, 1995 due to an earlier illegal strike. MARCOPPER, however, posted the
required bond for three non-striking employees, namely: Apollo V. Saet, Rogelio Regencia and Jose
Romasanta.

ISSUE: Whether CA erred in ruling that there was no need for MARCOPPER to post an appeal bond.

HELD:
The CA was correct in reversing the dismissal of MARCOPPERs appeal for failure to file an appeal
bond. The employment of the NAMAWU officers and members had been declared terminated on March 7,
1995 as a result of their failure to return to work after their strike of February 27, 1995. Thereafter, the
illegal strike litigation commenced, resulting in a decision by the NLRC on November 11, 1996 declaring
the strike illegal.
In the context of the NLRC appeal bond that is directly at issue, MARCOPPER had every reason to
claim in its April 10, 2000 appeal to the NLRC that it should be excused from filing an appeal bond with

respect to the NAMAWU members who were no longer company employees. The CA decision decreeing
the termination of employment of those involved in the illegal strike case had already been issued at that
time. We subsequently ruled on the same issue during the time the environmental incident case was
pending before the NLRC. Thus, when the NLRC dismissed MARCOPPERs appeal for failure to file the
requisite appeal bond corresponding to the 615 NAMAWU members, the termination of employment of
these NAMAWU members was already a settled matter that the NLRC was in no position to disregard.

JETHRO INTELLIGENCE & SECURITY CORP., VS. SOLE, ET. AL.
G.R. NO. 172537, AUG. 14, 2009

FACTS:
On the basis of a complaint filed by respondent Frederick Garcia (Garcia), one of the security guards
deployed by Jethro for underpayment of wages, legal/special holiday pay, premium pay for rest day, 13th
month pay, and night shift differential, the Department of Labor and Employment (DOLE)-Regional Office
conducted an inspection at Yakults premises in Calamba, Laguna in the course of which several labor
standards violations were noted, including keeping of payrolls and daily time records in the main office,
underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE.
The DOLE Regional Director, noting petitioners failure to rectify the violations noted during the
above-stated inspection within the period given for the purpose, found them jointly and severally liable to
herein respondents for the aggregate amount of EIGHT HUNDRED NINE THOUSAND TWO HUNDRED
TEN AND 16/100 PESOS (P809,210.16) representing their wage differentials, regular holiday pay, special
day premium pay, 13th month pay, overtime pay, service incentive leave pay, night shift differential
premium and rest day premium. This was affirmed by the Secretary of Labor and Employment (SOLE)
and by the Court of Appeals.
Unsatisfied, Jethro and Yakult went to the Supreme Court, alleging grave abuse of discretion on the part
of the DOLE Regional Director and the SOLE in this wise: (1) the SOLE has no jurisdiction over the case
because, following Article 129 of the Labor Code, the aggregate money claim of each employee exceeded
P5,000.00; (2) petitioner Jethro, as the admitted employer of respondents, could not be expected to keep
payrolls and daily time records in Yakults premises as its office is in Quezon City, hence, the inspection
conducted in Yakults plant had no basis.
Petitioners maintain that Garcias affidavit should not have been given weight, they not having been
afforded the opportunity to cross-examine him.

ISSUE:
1. Does the case fall under DOLE Regional Directors jurisdiction?
2. Is the lack of opportunity to cross examine detrimental to the case?

HELD:
1. Yes. While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has
jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds
P5,000.00, said provisions do not contemplate nor cover the visitorial and enforcement powers of the
Secretary of Labor or his duly authorized representatives. Rather, said powers are defined and set forth
in Article 128[1] of the Labor Code (as amended by R.A. No. 7730).
Art. 128 (b) retains and further strengthens the power of the Secretary of Labor or his duly authorized
representative to issue compliance orders to give effect to the labor standards provisions of said Code
and other labor legislation based on the findings of labor employment and enforcement officers or
industrial safety engineers made in the course of inspection. Non-compliance is within the SOLE
Representatives jurisdiction.
While the employment records of the employees could not be expected to be found in Yakults premises
in Calamba, as Jethros offices are in Quezon City, the records show that Jethro was given ample
opportunity to present its payrolls and other pertinent documents during the hearings and to rectify the
violations noted during the ocular inspection. It, however, failed to do so, more particularly to submit
competent proof that it was giving its security guards the wages and benefits mandated by law.
Jethros failure to keep payrolls and daily time records in Yakults premises was not the only labor
standard violation found to have been committed by it; it likewise failed to register as a service contractor
with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and
benefits in accordance with the rates prescribed by law.
2. No. Respecting petitioners objection to the weight given to Garcias affidavit, it bears noting that
said affidavit was not the only basis in arriving at the judgment award. The payrolls for June 16-30, 2003
and February 1-15, 2004 reveal that the overtime rates were below the required rate.That Garcia was not
cross-examined on his affidavit is of no moment. For, as Mayon Hotel and Restaurant vs. Adana instructs:
Article 221 of the Labor Code is clear: technical rules are not binding, and the application of technical
rules of procedure may be relaxed in labor cases to serve the demand of substantial justice. The rule of
evidence prevailing in court of law or equity shall not be controlling in labor cases and it is the spirit and

intention of the Labor Code that the Labor Arbiter shall use every and all reasonable means to ascertain
the facts in each case speedily and objectively and without regard to technicalities of law or procedure,
all in the interest of due process. Labor laws mandate the speedy administration of justice, with least
attention to technicalities but without sacrificing the fundamental requisites of due process

PHIL. HOTELIERS INC., ET. AL. VS. NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT
AND ALLIED INDUSTRIES-DUSIT HOTEL NIKKO CHAPTER,
G.R. NO. 181972, AUG. 25, 2009

FACTS:
Wage Order No. 9, approved by the Regional Tripartite Wages and Productivity Board (RTWPB) of the
National Capital Region (NCR), took effect on 5 November 2001. It grants P30.00 ECOLA to particular
employees and workers of all private sectors, identified as follows in Section 1 thereof:
Section 1. Upon the effectivity of this Wage Order, all private sector workers and employees in the
National Capital Region receiving daily wage rates of TWO HUNDRED FIFTY PESOS (P250.00) up to TWO
HUNDRED NINETY PESOS (P290.00) shall receive an emergency cost of living allowance in the amount of
THIRTY PESOS (P30.00) per day payable in two tranches as follows:
Amount of ECOLA Effectivity
P15.00 5 November 2001
P15.00 1 February 2002
On 20 March 2002, respondent National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit
Hotel Nikko Chapter (Union), through its President, Reynaldo C. Rasing (Rasing), sent a letter 4 to
Director Alex Maraan (Dir. Maraan) of the Department of Labor and Employment-National Capital Region
(DOLE-NCR), reporting the non-compliance of Dusit Hotel with WO No. 9, while there was an on-going
compulsory arbitration before the National Labor Relations Commission (NLRC) due to a bargaining
deadlock between the Union and Dusit Hotel; and requesting immediate assistance on this matter. On 24
May 2002, Rasing sent Dir. Maraan another letter following-up his previous request for assistance. Acting
on Rasing's letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO Natividad) to
conduct an inspection of Dusit Hotel premises on 24 April 2002. In the first Inspection, the report showed
that Dusit Hotel is exempt from complying with WO no. 9. Due to the Second request for inspection,
DOLE representative conducted another round of inspection and the Labor Standards Officer noted the
following in her inspection report:
* Non-presentation of records/payrolls
* Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO Chapter,
there are one hundred forty-four (144) affected in the implementation of Wage Order No. NCR-09->
ECOLA covering the periods from Nov. 5/01 to present.

Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect restitution
and/or correction of the noted violations within five days from receipt of the Notice, and to submit any
question on the findings of the labor inspector within the same period, otherwise, an order of compliance
would be issued. The Notice of Inspection Result was duly received by Dusit Hotel Assistant Personnel
Manager Rogelio Santos. In the meantime, the NLRC rendered a Decision 9 dated 9 October 2002 in
NLRC-NCR-CC No. 000215-02 the compulsory arbitration involving the Collective Bargaining Agreement
(CBA) deadlock between Dusit Hotel and the Union granting the hotel employees the following wage
increases, in accord with the CBA:
Effective January 1, 2001 - P500.00/month
On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises, DOLE-NCR,
through Dir. Maraan, issued the Order 10 directing Dusit Hotel to pay 144 of its employees the total
amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus, the penalty of
double indemnity, pursuant to Section 12 of Republic Act No. 6727, 11 as amended by Republic Act No.
8188.

Dusit Hotel filed a Motion for Reconsideration 13 of the DOLE-NCR Order dated 22 October 2002, arguing
that the NLRC Decision dated 9 October 2002, resolving the bargaining deadlock between Dusit Hotel and
the Union, and awarding salary increases under the CBA to hotel employees retroactive to 1 January
2001, already rendered the DOLE-NCR Order moot and academic. With the increase in the salaries of the
hotel employees ordered by the NLRC Decision of 9 October 2002, along with the hotel employees' share
in the service charges, the 144 hotel employees, covered by the DOLE-NCR Order of 22 October 2002,
would already be receiving salaries beyond the coverage of WO No. Acting on the Motion for
Reconsideration of Dusit Hotel, DOLE-NCR issued a Resolution 14 on 27 December 2002, setting aside its
earlier Order dated 22 October 2002 for being moot and academic, in consideration of the NLRC Decision

dated 9 October 2002; and dismissing the complaint of the Union against Dusit Hotel, for non-compliance
with WO No. 9, for lack of merit.

ISSUE: Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite the
increases in their salaries, retroactive to 1 January 2001, ordered by NLRC in the latter's Decision dated 9
October 2002. Whether Dusit Hotel is liable for the double indemnity for violation of the wage order.

HELD:
The Court rules in the negative. It must be noted that the hotel employees have a right to their share in
the service charges collected by Dusit Hotel, pursuant to Article 96 of the Labor Code of 1991, to wit:
Article 96. Service charges. All service charges collected by hotels, restaurants and similar
establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and
fifteen percent (15%) for management. The share of employees shall be equally distributed among them.
In case the service charge is abolished, the share of the covered employees shall be considered
integrated in their wages.

Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and
management their respective shares in the service charges collected, the hotel cannot claim that payment
thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No.
9. Undoubtedly, the hotel employees' right to their shares in the service charges collected by Dusit Hotel
is distinct and separate from their right to ECOLA; gratification by the hotel of one does not result in the
satisfaction of the other. The Court, however, finds no basis to hold Dusit Hotel liable for double
indemnity. Under Section 2 (m) of DOLE Department Order No. 10, Series of 1998, 30 the Notice of
Inspection Result "shall specify the violations discovered, if any, together with the officer's
recommendation and computation of the unpaid benefits due each worker with an advice that the
employer shall be liable for double indemnity in case of refusal or failure to correct the violation within
five calendar days from receipt of notice". A careful review of the Notice of Inspection Result dated 29
May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals that the said Notice did not contain
such an advice. Although the Notice directed Dusit Hotel to correct its noted violations within five days
from receipt thereof, it was not sufficiently apprised that failure to do so within the given period would
already result in its liability for double indemnity. The lack of advice deprived Dusit Hotel of the
opportunity to decide and act accordingly within the five-day period, as to avoid the penalty of double
indemnity. By 22 October 2002, the DOLE-NCR, through Dir. Maraan, already issued its Order directing
Dusit Hotel to pay 144 of its employees the total amount of P1,218,240.00, corresponding to their unpaid
ECOLA under WO No. 9; plus the penalty of double indemnity, pursuant to Section 12 of Republic Act No.
6727, as amended by Republic Act No. 8188.
Although the Court is mindful of the fact that labor embraces individuals with a weaker and unlettered
position as against capital, it is equally mindful of the protection that the law accords to capital. While the
Constitution is committed to the policy of social justice and the protection of the working class, it should
not be supposed that every labor dispute will be automatically decided in favor of labor. Management
also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple
fair play.

TIGER CONSTRUCTION AND DEVELOPMENT CORP. VS. ABAY, ET. AL.
G.R. NO. 164141, FEB. 26 2010

FACTS:
On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before the
Regional Office of the Department of Labor and Employment (DOLE), an inspection was conducted by
DOLE officials at the premises of petitioner TCDC. Several labor standard violations were noted, such as
deficiencies in record keeping, non-compliance with various wage orders, non-payment of holiday pay,
and underpayment of 13th month pay. The case was then set for summary hearing.
Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217 of the same
Code, this instant case should be referred back to the National Labor Relations Commission (NLRC) Sub-
Arbitration Branch V, Naga City, on the ground that the aggregate money claim of each worker exceeds
the jurisdictional amount of this Office [which] is (sic) Five Thousand Pesos Only (P5,000.00).
Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas (Secretary Sto. Tomas), in
an apparent reversal of Director Manalos endorsement, issued another inspection authority on August 2,
2002 in the same case. Pursuant to such authority, DOLE officials conducted another investigation of
petitioners premises and the same violations were discovered.

According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground of lack of
jurisdiction, which dismissal had attained finality; hence, all proceedings before the DOLE regional office
after July 25, 2002 were null and void for want of jurisdiction.

Having the case in her office once more, Director Manalo finally issued an Order dated January 29, 2003
denying petitioners motion for reconsideration for lack of merit

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

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

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

We also cannot accept petitioners theory that Director Manalos initial endorsement of the case to the
NLRC served as a dismissal of the case, which prevented her from subsequently assuming jurisdiction
over the same. The said endorsement was evidently not meant as a final disposition of the case; it was a
mere referral to another agency, the NLRC, on the mistaken belief that jurisdiction was lodged with the
latter. It cannot preclude the regional director from subsequently deciding the case after the mistake was
rectified and the case was returned to her by the DOLE Secretary, particularly since it was a labor case
where procedural lapses may be disregarded in the interest of substantial justice.
In view of our ruling above that the January 29, 2003 Order was rendered with jurisdiction and can no
longer be questioned (as it is final and executory), we can no longer entertain petitioners half-hearted
and unsubstantiated arguments that the said Order was allegedly based on erroneous computation and
included non-employees. Likewise, we find no more need to address petitioners contention that the CA
erred in dismissing its petition on the ground of its belated compliance with the requirement of
certification against forum-shopping.

PEOPLES BROADCASTING (BOMBO RADYO PHILS.) VS. SEC. OF DOLE, ET. AL.
G.R. NO. 179652, MAY 8, 2009

FACTS:
Jandeleon Juezan (respondent) filed a complaint against Peoples Broadcasting Service, Inc. (Bombo
Radyo Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive leave, 13th month
pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages
and non- coverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and Employment
(DOLE) Regional Office No. VII,Cebu City.

On the basis of the complaint, the DOLE conducted a plant level inspection on 23 September 2003. In the
Inspection Report Form, the Labor Inspector wrote under the heading Findings/Recommendations
non- diminution of benefits and Note: Respondent deny employer-employee relationship with the
complainant- see Notice of Inspection results.

Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification
was effected by petitioner; thus, summary investigations were conducted, with the parties eventually
ordered to submit their respective position papers.

In his Order dated 27 February 2004, DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional
Director) ruled that respondent is an employee of petitioner, and that the former is entitled to his money
claims amounting to P203, 726.30. Petitioner sought reconsideration of the Order, claiming that the
Regional Director gave credence to the documents offered by respondent without examining the
originals, but at the same time he missed or failed to consider petitioners evidence. Petitioners motion
for reconsideration was denied. On appeal to the DOLE Secretary, petitioner denied once more the
existence of employer-employee relationship. In its Order dated 27 January 2005, the Acting DOLE
Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and
instead submitted a Deed of Assignment of Bank Deposit. Petitioner maintained that there is no

employer-employee relationship had ever existed between it and respondent because it was the drama
directors and producers who paid, supervised and disciplined respondent. It also added that the case was
beyond the jurisdiction of the DOLE and should have been considered by the labor arbiter because
respondents claim exceeded P5,000.00.

ISSUE: Does the Secretary of Labor have the power to determine the existence of an employer-
employee relationship?

HELD:
No. Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee
relationship has terminated or such relationship has not arisen at all. The reason is obvious. In the
second situation especially, the existence of an employer-employee relationship is a matter which is not
easily determinable from an ordinary inspection, necessarily so, because the elements of such a
relationship are not verifiable from a mere ocular examination. The intricacies and implications of an
employer-employee relationship demand that the level of scrutiny should be far above the cursory and
the mechanical. While documents, particularly documents found in the employers office are the primary
source materials, what may prove decisive are factors related to the history of the employers business
operations, its current state as well as accepted contemporary practices in the industry. More often than
not, the question of employer-employee relationship becomes a battle of evidence, the determination of
which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial
body that is the NLRC.

It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to
make a determination of the existence of an employer-employee relationship. Such prerogatival
determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed,
such determination is merely preliminary, incidental and collateral to the DOLEs primary function of
enforcing labor standards provisions. The determination of the existence of employer-employee
relationship is still primarily lodged with the NLRC. This is the meaning of the clause in cases where the
relationship of employer-employee still exists in Art. 128 (b).

Thus, before the DOLE may exercise its powers under Article 128, two important questions must be
resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an
employer- employee relationship to speak of; and (2) Are there violations of the Labor Code or of any
labor law?
The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the
power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale
underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor
and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasi-
judicial body, which is the NRLC, rather than an administrative official of the executive branch of the
government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent
the first requisite, as the dissent proposes, his office confers jurisdiction on itself which it cannot
otherwise acquire.

The reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized
representatives was granted visitorial and enforcement powers for the purpose of determining violations
of, and enforcing, the Labor Code and any labor law, wage order, or rules and regulations issued
pursuant thereto. Necessarily, the actual existence of an employer-employee relationship affects the
complexion of the putative findings that the Secretary of Labor may determine, since employees are
entitled to a different set of rights under the Labor Code from the employer as opposed to non-
employees. Among these differentiated rights are those accorded by the labor standards provisions of
the Labor Code, which the Secretary of Labor is mandated to enforce. If there is no employer-employee
relationship in the first place, the duty of the employer to adhere to those labor standards with respect to
the non-employees is questionable.

At least a prima facie showing of such absence of relationship, as in this case, is needed to preclude the
DOLE from the exercise of its power. The Secretary of Labor would not have been precluded from
exercising the powers under Article 128 (b) over petitioner if another person with better-grounded claim
of employment than that which respondent had. Respondent, especially if he were an employee, could
have very well enjoined other employees to complain with the DOLE, and, at the same time, petitioner
could ill-afford to disclaim an employment relationship with all of the people under its aegis.

The most important consideration for the allowance of the instant petition is the opportunity for the Court
not only to set the demarcation between the NLRCs jurisdiction and the DOLEs prerogative but also the
procedure when the case involves the fundamental challenge on the DOLEs prerogative based on lack of
employer-employee relationship. As exhaustively discussed here, the DOLEs prerogative hinges on the

existence of employer-employee relationship, the issue is which is at the very heart of this case. And the
evidence clearly indicates private respondent has never been petitioners employee. But the DOLE did not
address, while the Court of Appeals glossed over, the issue. The peremptory dismissal of the instant
petition on a technicality would deprive the Court of the opportunity to resolve the novel controversy. The
petition is GRANTED.

SUPERIOR PACKAGING CORPORATION, vs. ARNEL BALAGSAY, ZALDY ALFORGNE, JAIME
ANGELES, REY APURA, GERALD CABALAN, JONALD CALENTENG, RAMIL CRODERO, JUNREY
CABALGUINTO, OSCAR DAYTO, RUFO DIONOLA, DIONILO ESMERALDA, BOOTS LADRILLO,
ELIEZER MAGHAMOY, LEO FLORES, RENATO PAGADORA, REYNALDO PLAZA, ROGER
SIBNEAO, EDWIN TONALBA, JOHN ACHARON, RODERICK RAMAS, SALVADOR ACURATO,
JULUIS BASUL, CARLOS RAYTA, LITO BELANO, ROGER CASIMIRO, RENE CURADA, NESTRO
ESTE, ROMMEL IMPELIDO, ZOILO ISLA, JHONIE OGARDO, EDWIN POSADAS, ALEXANDER
REGPALA, CHRISTOPHER SAMPIANO, RITCHIE SANCHES, ROLANDO SORIANO, ROWELL
ANCHETA, RICKY BORDAS, ANTONIO BEREN, RONALD DOMINGO, JERRY MORENO, ROLLY
ROSALES, RENATO RESTANO and ISIDRO SARIGNE
G.R. No. 178909. October 10, 2012.

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

Pursuant to a complaint filed by the respondents against the petitioner and its President, Cesar Luz (Luz),
for underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-
payment of salary, the Department of Labor and Employment (DOLE) conducted an inspection of the
petitioner's premises and found several violations, to wit: (1) non-presentation of payrolls and daily time
records; (2) non-submission of annual report of safety organization; (3) medical and accident/illness
reports; (4) non-registration of establishment under Rule 1020 of Occupational and Health Standards;
and (5) no trained first aide. 1 Due to the petitioner's failure to appear in the summary investigations
conducted by the DOLE, an Order 2 was issued on June 18, 2003 finding in favor of the respondents and
adopting the computation of the claims submitted. Petitioner and Luz were ordered, among others, to
pay respondents their total claims in the amount of Eight Hundred Forty Thousand Four Hundred Sixty-
Three Pesos and 38/100 (P840,463.38)

They filed a motion for reconsideration on the ground that respondents are not its employees but of
Lancer and that they pay Lancer in lump sum for the services rendered. The DOLE, however, denied its
motion in its Resolution 4 dated February 16, 2004, ruling that the petitioner failed to support its claim
that the respondents are not its employees, and even assuming that they were employed by Lancer, the
petitioner still cannot escape liability as Section 13 of the Department Order No. 10, Series of 1997,
makes a principal jointly and severally liable with the contractor to contractual employees to the extent of
the work performed when the contractor fails to pay its employees' wages.

Issue: WON Superior Packaging Corporation (petitioner) may be held solidarily liable with Lancer Staffing
& Services Network, Inc. (Lancer) for respondents' unpaid money claims.

Held:
Yes, Superior Packaging Corporation may be held solidarily liable with Lancer Staffing and Services
Network Inc.

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

At the time of the respondents' employment in 1998, the applicable regulation was DOLE Department
Order No. 10, Series of 1997. 25 Under said Department Order, labor-only contracting was defined as
follows:

Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall
be deemed to be engaged in labor-only contracting where such person:


(1) Does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises and other materials; and IDSaEA

(2) The workers recruited and placed by such persons are performing activities which are directly
related to the principal business or operations of the employer in which workers are habitually
employed.

Labor-only contracting is prohibited and the person acting as contractor shall be considered merely as an
agent or intermediary of the employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him. According to the CA, the totality of the facts and
surrounding circumstances of this case point to such conclusion. The Court agrees.

The ratio of Lancer's authorized capital stock of P400,000.00 as against its subscribed and paid-up capital
stock of P25,000.00 shows the inadequacy of its capital investment necessary to maintain its day-to-day
operations. And while the Court does not set an absolute figure for what it considers substantial capital
for an independent job contractor, it measures the same against the type of work which the contractor is
obligated to perform for the principal. Moreover, the nature of respondents' work was directly related to
the petitioner's business. The marked disparity between the petitioner's actual capitalization (P25,000.00)
and the resources needed to maintain its business, i.e., "to establish, operate and manage a personnel
service company which will conduct and undertake services for the use of offices, stores, commercial and
industrial services of all kinds," supports the finding that Lancer was, indeed, a labor-only contractor.
Aside from these is the undisputed fact that the petitioner failed to produce any written service contract
that might serve as proof of its alleged agreement with Lancer.

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


WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES
GAA VS. CA, 140 SCRA 304

FACTS:
Respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building at
T.M. Kalaw Street, Manila, while petitioner was then the building administrator. On December 12, 1973,
Europhil Industries commenced an action in the Court of First Instance of Manila for damages against
petitioner for having perpetrated certain acts that Europhil Industries considered a trespass upon its
rights, namely, cutting of its electricity, and removing its name from the building directory and gate
passes of its officials and employees. On June 28, 1974, said court rendered judgment in favor of
respondent Europhil Industries, ordering petitioner to pay the former the sum of P10,000.00 as actual
damages, P5,000.00 as moral damages, P5,000.00 as exemplary damages and to pay the costs.

The said decision having become final and executory, a writ of garnishment was issued pursuant
to which Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon El
Grande Hotel, where petitioner was then employed, garnishing her salary, commission and/or
remuneration. Petitioner then filed with the Court of First Instance of Manila a motion to lift said
garnishment.
Petitioner contends that her salaries, commission and or remuneration are exempted from
execution under article1708 of the New Civil Code.

ISSUE: Whether or not petitioners salaries, commission and or remuneration are exempted from
execution under article 1708 of the New Civil Code.

HELD:
No. ART. 1708. The laborer's wage shall not be subject to execution or attachment, except for
debts incurred for food, shelter, clothing and medical attendance.
It is beyond dispute that petitioner is not an ordinary or rank and file laborer but a responsibly placed
employee of El Grande Hotel, responsible for planning, directing, controlling, and coordinating the
activities of all housekeeping personnel so as to ensure the cleanliness, maintenance and orderliness of
all guest rooms, function rooms, public areas, and the surroundings of the hotel. Considering the
importance of petitioner's function in El Grande Hotel, it is undeniable that petitioner is occupying a
position equivalent to that of a managerial or supervisory position.
In its broadest sense, the word "laborer" includes everyone who performs any kind of mental or
physical labor, but as commonly and customarily used and understood, it only applies to one engaged in
some form of manual or physical labor. That is the sense in which the courts generally apply the term as
applied in exemption acts, since persons of that class usually look to the reward of a day's labor for
immediate or present support and so are more in need of the exemption than are other.
In determining whether a particular laborer or employee is really a "laborer," the character of the
word he does must be taken into consideration. He must be classified not according to the arbitrary
designation given to his calling, but with reference to the character of the service required of him by his
employer.
All men who earn compensation by labor or work of any kind, whether of the head or hands,
including judges, lawyers, bankers, merchants, officers of corporations, and the like, are in some sense
"laboring men." But they are not "laboring men" in the popular sense of the term, when used to refer
how the legislature used the term. Contractors, consulting or assistant engineers, agents,
superintendents, secretaries of corporations and livery stable keepers, do not come within the meaning of
the term.
A laborer, within the statute exempting from garnishment the wages of a "laborer," is one whose
work depends on mere physical power to perform ordinary manual labor, and not one engaged in
services consisting mainly of work requiring mental skill or business capacity, and involving the exercise
of intellectual faculties. It is a term ordinarily employed to denote one who subsists by physical toil in
contradistinction to those who subsists by professional skill. They are those persons who earn a
livelihood by their own manual labor.
Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared
what are to be exempted from attachment and execution. The term "wages" as distinguished from
"salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and
measured by the day, week, month, or season, while "salary" denotes a higher degree of employment, or
a superior grade of services, and implies a position of office: by contrast, the term wages " indicates
considerable pay for a lower and less responsible character of employment, while "salary" is suggestive of
a larger and more important services.
Wages are the compensation given to a hired person for service, and the same is true of 'salary'.
The words seem to be synonymous, convertible terms, though we believe that use and general
acceptation have given to the word 'salary' a significance somewhat different from the word 'wages' in

this: that the former is understood to relate to position of office, to be the compensation given for official
or other service, as distinguished from 'wages', the compensation for labor.
The SC did not think that the legislature intended the exemption in Article 1708 of the New Civil
Code to operate in favor of any but those who are laboring men or women in the sense that their work is
manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or
present support, and such persons are more in need of the exemption than any others. Petitioner is
definitely not within that class.

NESTLE PHILS. VS. NLRC, 193 SCRA 504

FACTS:
Four CBAs separately covering the petitioner's employees in its Alabang/Cabuyao factories;
Makati Administration Office. (Both Alabang/Cabuyao factories and Makati office were represented by the
respondent, Union of Filipro Employees [UFE]);Cagayan de Oro Factory represented by WATU; and
Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services (TUPAS),
all expired on June 30, 1987. UFE was certified as the sole and exclusive bargaining agent for all regular
rank-and-file employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales
Office.
In August 1987, while the parties were negotiating, the employees at Cabuyao resorted to a
"slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon collective
bargaining negotiations between the parties ensued. On September 1987, the UFE declared a bargaining
deadlock. On September 8, 1987, the Secretary of Labor assumed jurisdiction and issued a return to work
order. In spite of that order, the union struck, without notice, at the Alabang/Cabuyao factory, the Makati
office and Cagayan de Oro factory on September 11, 1987 up to December 8, 1987. The company
retaliated by dismissing the union officers and members of the negotiating panel who participated in the
illegal strike. The NLRC affirmed the dismissals on November 2, 1988. On January 26, 1988, UFE filed a
notice of strike on the same ground of CBA deadlock and unfair labor practices.

However, on March 30, 1988, the company was able to conclude a CBA with the union at the
Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory workers. The union
assailed the validity of those agreements and filed a case of unfair labor practice against the company on
November 16, 1988. After conciliation efforts of the NCMB yielded negative results, the dispute was
certified to the NLRC. The NLRC issued a resolution on June 5, 1989, whose pertinent disposition
regarding the union's demand for liberalization of the company's retirement plan for its workers. the
NLRC issued a resolution denying the motions for reconsideration. With regard to the Retirement Plan,
the NLRC held that anent management's objection to the modification of its Retirement Plan, the plan is
specifically mentioned in the previous bargaining agreements thereby integrating or incorporating the
provisions thereof to the agreement. By reason of its incorporation, the plan assumes a consensual
character which cannot be terminated or modified at will by either party. Consequently, it becomes part
and parcel of CBA negotiations.
Petitioner alleged that since its retirement plan is non-contributory, Nestle has the sole and
exclusive prerogative to define the terms of the plan because the workers have no vested and
demandable rights, the grant thereof being not a contractual obligation but merely gratuitous. At most
the company can only be directed to maintain the same but not to change its terms. It should be left to
the discretion of the company on how to improve or modify the same.

ISSUE: WON the workers have vested and demandable rights over the retirement plan.

HELD:
The employees have a vested and demandable right over the retirement plan. The inclusion of
the retirement plan in the collective bargaining agreement as part of the package of economic benefits
extended by the company to its employees to provide them a measure of financial security after they
shall have ceased to be employed in the company, reward their loyalty, boost their morale and efficiency
and promote industrial peace, gives "a consensual character" to the plan so that it may not be terminated
or modified at will by either party.
The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing
to the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact,
almost all of the benefits that the petitioner has granted to its employees under the CBA salary
increases, rice allowances, midyear bonuses, 13th and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation, sick & other leaves with pay are non-
contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the
Union's demand to increase the benefits due the employees under said plan, is a valid CBA issue.
The petitioner's contention, that employees have no vested or demandable right to a non-
contributory retirement plan, has no merit for employees do have a vested and demandable right over

existing benefits voluntarily granted to them by their employer. The latter may not unilaterally withdraw,
eliminate or diminish such benefits.

FIVE J TAXI VS. NLRC, 235 SCRA 556

FACTS:
Private respondents were hired by the petitioners as taxi drivers and, as such, they worked for 4
days weekly on a 24-hour shifting schedule. Aside from the daily "boundary" of P700.00 for air-
conditioned taxi or P450.00 for non-air-conditioned taxi, they were also required to pay P20.00 for car
washing, and to further make a P15.00 deposit to answer for any deficiency in their "boundary," for every
actual working day.
In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already
failed to report for work for unknown reasons. Later, petitioners learned that he was working for "Mine of
Gold" Taxi Company. With respect to Sabsalon, while driving a taxicab of petitioners on September 6,
1983, he was held up by his armed passenger who took all his money and thereafter stabbed him. He
was hospitalized and after his discharge, he went to his home province to recuperate.
In January, 1987, Sabsalon was re-admitted by petitioners as a taxi driver under the same terms
and conditions as when he was first employed, but his working schedule was made on an "alternative
basis," that is, he drove only every other day. However, on several occasions, he failed to report for work
during his schedule.
On September 22, 1991, Sabsalon failed to remit his "boundary" of P700.00 for the previous day.
Also, he abandoned his taxicab in Makati without fuel refill worth P300.00. Despite repeated requests of
petitioners for him to report for work, he adamantly refused. Afterwards it was revealed that he was
driving a taxi for "Bulaklak Company."
Sometime in 1989, Maldigan requested petitioners for the reimbursement of his daily cash
deposits for 2 years, but herein petitioners told him that not a single centavo was left of his deposits as
these were not even enough to cover the amount spent for the repairs of the taxi he was driving. This
was allegedly the practice adopted by petitioners to recoup the expenses incurred in the repair of their
taxicab units. When Maldigan insisted on the refund of his deposit, petitioners terminated his services.
Sabsalon, on his part, claimed that his termination from employment was effected when he refused to
pay for the washing of his taxi seat covers.
On November 27, 1991, private respondents filed a complaint with the Manila Arbitration Office
of the National Labor Relations Commission charging petitioners with illegal dismissal and illegal
deductions. That complaint was dismissed. Thus, the petition to the SC.

ISSUES:
1. Whether or not respondent Maldigan is entitled to their reimbursement of their daily cash
deposits.
2. Whether or not respondent Sabsalon may be compelled to pay for the washing of his taxi seat
covers.

HELD:
1. No. The P15.00 daily deposits made by respondents to defray any shortage in their "boundary" is
covered by the general prohibition in Article 114 of the Labor Code against requiring employees
to make deposits, and that there is no showing that the Secretary of Labor has recognized the
same as a "practice" in the taxi industry. Consequently, the deposits made were illegal and the
respondents must be refunded therefor.
Article 114 of the Labor Code provides as follows:
Art. 114. Deposits for loss or damage. No employer shall require his worker to
make deposits from which deductions shall be made for the reimbursement of loss of or
damage to tools, materials, or equipment supplied by the employer, except when the
employer is engaged in such trades, occupations or business where the practice of
making deposits is a recognized one, or is necessary or desirable as determined by the
Secretary of Labor in appropriate rules and regulations.
It can be deduced therefrom that the said article provides the rule on deposits for loss or
damage to tools, materials or equipments supplied by the employer. Clearly, the same does not
apply to or permit deposits to defray any deficiency which the taxi driver may incur in the
remittance of his "boundary." Also, when private respondents stopped working for petitioners,
the alleged purpose for which petitioners required such unauthorized deposits no longer existed.
In other case, any balance due to private respondents after proper accounting must be returned
to them with legal interest.
2. Yes. There is no dispute that as a matter of practice in the taxi industry, after a tour of duty, it is
incumbent upon the driver to restore the unit he has driven to the same clean condition when he

took it out. And as claimed by petitioners, respondents were made to shoulder the expenses for
washing, the amount doled out was paid directly to the person who washed the unit, thus we
find nothing illegal in this practice, much more to consider the amount paid by the driver as
illegal deduction in the context of the law.
Consequently, private respondents are not entitled to the refund of the P20.00 car wash
payments they made. It will be noted that there was nothing to prevent private respondents from
cleaning the taxi units themselves, if they wanted to save their P20.00. Also car washing after a
tour of duty is a practice in the taxi industry, and is, in fact, dictated by fair play.

PHIL. VETERANS BANK VS. NLRC,
G.R. NO. 130439, OCT. 26, 1999

FACTS:
In 1983, petitioner Philippine Veterans Bank was placed under receivership by the Central Bank
(now Bangko Sentral) by virtue of Resolution No. 334 issued by the Monetary Board. Petitioner was
subsequently placed under liquidation on 15 June 1985.
Consequently, its employees, including private respondent Dr. Jose Teodorico V. Molina
(MOLINA), were terminated from work and given their respective separation pay and other benefits. To
assist in the liquidation, some of petitioners former employees were rehired, among them MOLINA,
whose re-employment commenced on 15 June 1985.
On 11 May 1991, MOLINA filed a complaint against Renan V. Santos, Pacifico U. Cervantes and
Alfredo L. Dizon, members of the liquidation team. Docketed as NLRC-NCR Case No. 05-02940-91, the
complaint demanded the implementation of Wage Orders Nos. NCR-01 and NCR-02
(hereafter W.O. 1 and W.O. 2) as well as moral damages and attorneys fees in the amount of
P300,000.
In his position paper, MOLINA alleged that he started working for petitioner as a legal assistant
on 17 March 1974. When petitioner was placed under liquidation in 1985, he was retained as Manager II
in the Legal Department, where he continued to receive a monthly salary of P3,754.60.
W.O. 1 expressly states that employees having a monthly salary of not more than P3,802.08 are
entitled to receive the mandated wage increase.
W.O. 2 raised the ceiling for entitlement to the wage increase.
Meanwhile, W.O. 1 took effect on 10 November 1990, prescribing a P17-increase in the daily
wage of employees whose monthly salary did not exceed P3,802.08. On the other hand, W.O. 2, which
became effective on 8 January 1991, mandated a P12-increase in the daily wage of employees whose
monthly salary did not exceed P4,319.16. MOLINA claimed that his salary should have been adjusted in
compliance with said wage orders.

ISSUE: Are W.O. 1 and W.O. 2 applicable to MOLINA?

HELD:
Supreme Court ruled in affirmative. The documents attached to your query show that the Bank
has been consistently using the factor of 365 days in computing your equivalent monthly salary prior to
its being placed under receivership by the Central Bank. This is evident in the wage and allowance
increases granted under previous Presidential Decrees and Wage Orders, which were given by the Bank
on monthly basis, i.e., where the rest days are unworked [sic] but paid. This is also indicated in the
appointment and service records of bank personnel who started out as daily paid employees and were
eventually promoted as permanent employees with fixed monthly salaries. However, when R.A. 6640
went into force, the Bank unilaterally reduced the factor to 262 instead of maintaining factor 365 as was
the practice/policy long before the effectivity of the Act. And when R.A 6727 took effect, the Bank
reverted to the old practice/policy of using factor 365 days in computing your equivalent monthly rate
salary.
May we add that the old practice of the bank in using factor 365 days in a year in
determining your equivalent monthly salary cannot unilaterally be changed by your
employer without the consent of the employees, such practice being now a part of the terms and
conditions of your employment. An employment agreement, whether written or unwritten, is a bilateral
contract and as such either party thereto cannot change or amend the terms thereof without the consent
of the other party thereto.
From the foregoing, it is clear that you are entitled to the wage increase under R.A. 6440
computed on the basis of 365 paid days and to the corresponding salary differentials as a result of the
application of this factor. [Emphasis supplied]
Evidently, the use of the 365 factor is binding and conclusive, forming as it did part of the
employment contract. Petitioner can no longer invoke the 26.16 factor after it voluntarily adopted the
365 factor as a policy even prior to its receivership. To abandon such policy and revert to its old practice
of using the 26.16 factor would be a diminution of a labor benefit, which is prohibited by the Labor Code.

It cannot be doubted that the 365 factor favors petitioners employees, including MOLINA, because it
results in a higher determination of their monthly salary

PHIL. APPLIANCES CORP. VS. CA
G.R. NO. 149434, JUNE 3, 2004

FACTS:
Petitioner is a domestic corporation engaged in the business of manufacturing refrigerators,
freezers and washing machines. Respondent United Philacor Workers Union-NAFLU is the duly elected
collective bargaining representative of the rank-and-file employees of petitioner. During the collective
bargaining negotiations between petitioner and respondent union in 1997 (for the last two years of the
collective bargaining agreement covering the period of July 1, 1997 to August 31, 1999), petitioner
offered the amount of four thousand pesos (P4,000.00) to each employee as an "early conclusion bonus".
Petitioner claims that this bonus was promised as a unilateral incentive for the speeding up of
negotiations between the parties and to encourage respondent union to exert their best efforts to
conclude a CBA. Upon conclusion of the CBA negotiations, petitioner accordingly gave this early signing
bonus.
In view of the expiration of this CBA, respondent union sent notice to petitioner of its desire to
negotiate a new CBA. Petitioner and respondent union began their negotiations. On October 22, 1999,
after eleven meetings, respondent union expressed dissatisfaction at the outcome of the negotiations and
declared a deadlock. A few days later, on October 26, 1999, respondent union filed a Notice of Strike with
the National Conciliation and Mediation Board (NCMB), Region IV in Calamba, Laguna, due to the
bargaining deadlock.
A conciliation and mediation conference was held on October 30, 1999 at the NCMB in Imus,
Cavite, before a Conciliator. The conciliation meetings started with eighteen unresolved items between
petitioner and respondent union. At the meeting on November 20, 1999, respondent union accepted
petitioners proposals on fourteen items, leaving the following items unresolved: wages, rice subsidy,
signing, and retroactive bonus.
Petitioner and respondent union failed to arrive at an agreement concerning these four remaining
items. On January 18, 2000, respondent union went on strike at the petitioners plant at Barangay
Maunong, Calamba, Laguna and at its washing plant at Paraaque, Metro Manila. The strike lasted for
eleven days and resulted in the stoppage of manufacturing operations as well as losses for petitioner,
which constrained it to file a petition before the Department of Labor and Employment (DOLE). Labor
Secretary assumed jurisdiction over the dispute and, on January 28, 2000, ordered the striking workers
to return to work within twenty-four hours from notice and directed petitioner to accept back the said
employees.
On April 14, 2000, SOLE issued the Order ruling in favor of Companys proposal on signing
bonus, pegging the amount of P3,000 bonus as fair and reasonable under the circumstances.
Petitioner argues that the award of the signing bonus was patently erroneous since it was not
part of the employees salaries or benefits or of the collective bargaining agreement. It is not demandable
or enforceable since it is in the nature of an incentive. As no CBA was concluded through the mutual
efforts of the parties, the purpose for the signing bonus was not served.

ISSUE: Whether or not the award of the signing bonus is warranted.

HELD:
No. The signing bonus is a grant motivated by the goodwill generated when a CBA is successfully
negotiated and signed between the employer and the union. A signing bonus is not a benefit which may
be demanded under the law. It may not be demanded as a matter of right. If it is not agreed upon by the
parties or unilaterally offered as an additional incentive, the condition for awarding it must be duly
satisfied.
In the case at bar, two things militate against the grant of the signing bonus: first, the non-
fulfillment of the condition for which it was offered, i.e., the speedy and amicable conclusion of the CBA
negotiations; and second, the failure of respondent union to prove that the grant of the said bonus is a
long established tradition or a "regular practice" on the part of petitioner. Petitioner admits, and
respondent union does not dispute, that it offered an "early conclusion bonus" or an incentive for a swift
finish to the CBA negotiations. The offer was first made during the 1997 CBA negotiations and then again
at the start of the 1999 negotiations. The bonus offered is consistent with the very concept of a signing
bonus.
In the case at bar, the CBA negotiation between petitioner and respondent union failed
notwithstanding the intervention of the NCMB. Respondent union went on strike for eleven days and
blocked the ingress to and egress from petitioners two work plants. The labor dispute had to be referred
to the Secretary of Labor and Employment because neither of the parties was willing to compromise their
respective positions regarding the four remaining items which stood unresolved. While we do not fault

any one party for the failure of the negotiations, it is apparent that there was no more goodwill between
the parties and that the CBA was clearly not signed through their mutual efforts alone. Hence, the
payment of the signing bonus is no longer justified and to order such payment would be unfair and
unreasonable for petitioner.
Furthermore, we have consistently ruled that a bonus is not a demandable and enforceable
obligation.

True, it may nevertheless be granted on equitable considerations as when the giving of such
bonus has been the companys long and regular practice.

To be considered a "regular practice," however,
the giving of the bonus should have been done over a long period of time, and must be shown to have
been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable
showing that the employer agreed to continue giving the benefits knowing fully well that said employees
are not covered by the law requiring payment thereof.

Respondent does not contest the fact that
petitioner initially offered a signing bonus only during the previous CBA negotiation. Previous to that,
there is no evidence on record that petitioner ever offered the same or that the parties included a signing
bonus among the items to be resolved in the CBA negotiation. Hence, the giving of such bonus cannot be
deemed as an established practice considering that the same was given only once, that is, during the
1997 CBA negotiation.

AGABON VS. NLRC
G.R. NO. 158693, NOV. 17, 2004

FACTS:
Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and
installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny
Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they
were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims

and on
December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered
private respondent to pay the monetary claims.

ISSUE: WON respondents dismissal is illegal and if not, entitles them benefits.

HELD:
The dismissal is legal and entitles them of payment of benefits. Dismissals based on just causes
contemplate acts or omissions attributable to the employee while dismissals based on authorized causes
involve grounds under the Labor Code which allow the employer to terminate employees. A termination
for an authorized cause requires payment of separation pay. When the termination of employment is
declared illegal, reinstatement and full back wages are mandated under Article 279. If reinstatement is
no longer possible where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must
give the employee two written notices and a hearing or opportunity to be heard if requested by the
employee before terminating the employment: a notice specifying the grounds for which dismissal is
sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of
the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284,
the employer must give the employee and the Department of Labor and Employment written notices 30
days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just
cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health
reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized
cause but due process was observed; (3) the dismissal is without just or authorized cause and there was
no due process; and (4) the dismissal is for just or authorized cause but due process was not observed.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be
cured, it should not invalidate the dismissal. However, the employer should be held liable for non-
compliance with the procedural requirements of due process. The present case squarely falls under the
fourth situation. The dismissal should be upheld because it was established that the petitioners
abandoned their jobs to work for another company. Private respondent, however, did not follow the
notice requirements and instead argued that sending notices to the last known addresses would have
been useless because they did not reside there anymore. Unfortunately for the private respondent, this
is not a valid excuse because the law mandates the twin notice requirements to the employees last
known address. Thus, it should be held liable for non-compliance with the procedural requirements of
due process.
The Court ruled that respondent is liable for petitioners holiday pay, service incentive leave pay
and 13
th
month pay without deductions. The evident intention of Presidential Decree No. 851 is to grant
an additional income in the form of the 13
th
month pay to employees not already receiving the same so
as to further protect the level of real wages from the ravages of world-wide inflation. Clearly, as

additional income, the 13
th
month pay is included in the definition of wage under Article 97(f) of the
Labor Code.

AMERICAN WIRE & CABLE DAILY RATED EMPLOYEES VS. AMERICAN WIRE
G.R. NO. 155059, APRIL 29, 2005

FACTS:
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and
cables. There are two unions in this company, the American Wire and Cable Monthly-Rated Employees
Union (Monthly-Rated Union) and the American Wire and Cable Daily-Rated Employees Union (Daily-
Rated Union). On 16 February 2001, an original action was filed before the NCMB of the Department of
Labor and Employment (DOLE) 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 the following:
a. Service Award;
b. 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;
c. Christmas Party; and
d. Promotional Increase.
The petitioner submits that the withdrawal of the private respondent of the 35% premium pay
for selected days during the Holy Week and Christmas season, the holding of the Christmas Party and its
incidental benefits, and the giving of service awards violated Article 100 of the Labor Code. The grant of
these benefits was a customary practice that can no longer be unilaterally withdrawn by private
respondent without the tacit consent of the petitioner. The benefits in question were given by the
respondent to the petitioner consistently, deliberately, and unconditionally since time immemorial. The
benefits/entitlements were not given to petitioner due to an error in interpretation, or a construction of a
difficult question of law, but simply, the grant has been a practice over a long period of time. As such, it
cannot be withdrawn from the petitioner at respondents whim and caprice, and without the consent of
the former. The benefits given by the respondent cannot be considered as a bonus as they are not
founded on profit. Even assuming that it can be treated as a bonus, the grant of the same, by reason
of its long and regular concession, may be regarded as part of regular compensation.

The respondent corporation avers that the grant of all subject benefits has not ripened into
practice that the employees concerned can claim a demandable right over them. The grant of these
benefits was conditional based upon the financial performance of the company and that
conditions/circumstances that existed before have indeed substantially changed thereby justifying the
discontinuance of said grants. The companys financial performance was affected by the recent political
turmoil and instability that led the entire nation to a bleeding economy. Hence, it only necessarily follows
that the companys financial situation at present is already very much different from where it was three
or four years ago.

ISSUE: Whether or not the private respondent is guilty of violating Article 100 of the Labor Code, as
amended, when the benefits/entitlements given to the members of petitioner union were withdrawn.

HELD:
The benefits/entitlements subjects of the instant case are all bonuses which were given by the
private respondent out of its generosity and munificence. The additional 35% premium pay for work done
during selected days of the Holy Week and Christmas season, the holding of Christmas parties with raffle,
and the cash incentives given together with the service awards are all in excess of what the law requires
each employer to give its employees. Since they are above what is strictly due to the members of
petitioner-union, the granting of the same was a management prerogative, which, whenever
management sees necessary, may be withdrawn, unless they have been made a part of the wage or
salary or compensation of the employees. A bonus is an amount granted and paid to an employee for his
industry and loyalty which contributed to the success of the employers business and made possible the
realization of profits. It is an act of generosity granted by an enlightened employer to spur the employee
to greater efforts for the success of the business and realization of bigger profits. The granting of a
bonus is a management prerogative, something given in addition to what is ordinarily received by or
strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it
is made part of the wage, salary or compensation of the employee.
The consequential question therefore that needs to be settled is if the subject
benefits/entitlements, which are bonuses, are demandable or not. Stated another way, can these
bonuses be considered part of the wage or salary or compensation making them enforceable obligations?
The Court does not believe so. For a bonus to be enforceable, it must have been promised by the
employer and expressly agreed upon by the parties, or it must have had a fixed amount and had been a
long and regular practice on the part of the employer. The benefits/entitlements in question were never

subjects of any express agreement between the parties. They were never incorporated in the Collective
Bargaining Agreement (CBA). As observed by the Voluntary Arbitrator, the records reveal that these
benefits/entitlements have not been subjects of any express agreement between the union and the
company, and have not yet been incorporated in the CBA. In fact, the petitioner has not denied having
made proposals with the private respondent for the service award and the additional 35% premium pay
to be made part of the CBA.
The Christmas parties and its incidental benefits, and the giving of cash incentive together with
the service award cannot be said to have fixed amounts. What is clear from the records is that over the
years, there had been a downtrend in the amount given as service award. There was also a downtrend
with respect to the holding of the Christmas parties in the sense that its location changed from paid
venues to one which was free of charge, evidently to cut costs. Also, the grant of these two
aforementioned bonuses cannot be considered to have been the private respondents long and regular
practice. To be considered a regular practice, the giving of the bonus should have been done over a
long period of time, and must be shown to have been consistent and deliberate. The downtrend in the
grant of these two bonuses over the years demonstrates that there is nothing consistent about it.
Further, as held by the Court of Appeals: Anent the Christmas party and raffle of prizes, We agree with
the Voluntary Arbitrator that the same was merely sponsored by the respondent corporation out of
generosity and that the same is dependent on the financial performance of the company for a particular
year
The additional 35% premium pay for work rendered during selected days of the Holy Week and
Christmas season cannot be held to have ripened into a company practice that the petitioner herein have
a right to demand. Aside from the general averment of the petitioner that this benefit had been granted
by the private respondent since time immemorial, there had been no evidence adduced that it had been
a regular practice. As propitiously observed by the Court of Appeals: Notwithstanding that the subject
35% premium pay was deliberately given and the same was in excess of that provided by the law, the
same however did not ripen into a company practice on account of the fact that it was only granted for
two (2) years and with the express reservation from respondent corporations owner that it cannot
continue to rant the same in view of the companys current financial situation.
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. Having thus ruled that the additional 35% premium pay for
work rendered during selected days of the Holy Week and Christmas season, the holding of Christmas
parties with its incidental benefits, and the grant of cash incentive together with the service award are all
bonuses which are neither demandable nor enforceable obligations of the private respondent.

HONDA PHILS. VS. SAMAHANG MALAYANG MANGGAGAWA SA HONDA,
G.R. NO. 145561, JUNE 15, 2005

FACTS:
A Collective Bargaining Agreement (CBA) was forged between petitioner Honda and respondent
which contained provisions on 13
th
Month Pay (The COMPANY shall maintain the present practice in the
implementation [of] the 13
th
month pay), 14
th
Month Pay (The COMPANY shall grant a 14
th
Month Pay,
computed on the same basis as computation of 13
th
Month Pay, and an agreement by the COMPANY to
continue the practice of granting, in its discretion, financial assistance to covered employees in December
of each year, of not less than 100% of basic pay. This CBA is effective until year 2000. In the latter part
of 1998, the parties started re-negotiations for the fourth and fifth years of their CBA. When the talks
between the parties bogged down, respondent union filed a Notice of Strike on the ground of bargaining
deadlock. Thereafter, Honda filed a Notice of Lockout. On March 31, 1999, then Department of Labor
and Employment (DOLE) Secretary assumed jurisdiction over the labor dispute and ordered the parties to
cease and desist from committing acts that would aggravate the situation. Both parties complied
accordingly.
On May 11, 1999, however, respondent union filed a second Notice of Strike on the ground of
unfair labor practice alleging that Honda illegally contracted out work to the detriment of the workers.
Respondent union went on strike and picketed the premises of Honda on May 19, 1999. On June 16,
1999, DOLE Acting Secretary assumed jurisdiction over the case and certified the same to the National
Labor Relations Commission (NLRC) for compulsory arbitration. The striking employees were ordered to
return to work and the management accepted them back under the same terms prior to the strike
staged.
On November 22, 1999, the management of Honda issued a memorandum announcing its new
computation of the 13
th
and 14
th
month pay to be granted to all its employees whereby the thirty-one
(31)-day long strike shall be considered unworked days for purposes of computing said benefits. As per
the companys new formula, the amount equivalent to 1/12 of the employees basic salary shall be
deducted from these bonuses, with a commitment however that in the event that the strike is declared
legal, Honda shall pay the amount deducted. Respondent union opposed the pro-rated computation of
the bonuses in a letter dated November 25, 1999. The matter was brought before the Grievance

Machinery in accordance with the parties existing CBA but when the issue remained unresolved, it was
submitted for voluntary arbitration. In his decision dated May 2, 2000, Voluntary Arbitrator invalidated
Hondas computation.

ISSUE: Whether or not the pro-rated computation of the 13
th
month pay and other bonuses in question
is valid and lawful.

HELD:
A collective bargaining agreement refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it
becomes the law between the parties and compliance therewith is mandated by the express policy of the
law. In some instances, however, the provisions of a CBA may become contentious, as in this case. A
cursory reading of the provisions will show that they did not state categorically whether the computation
of the 13
th
month pay, 14
th
month pay and the financial assistance would be based on one full months
basic salary of the employees, or pro-rated based on the compensation actually received. The arbitrator
thus properly resolved the ambiguity in favor of labor as mandated by Article 1702 of the Civil Code. The
Court of Appeals affirmed the arbitrators finding and added that the computation of the 13
th
month pay
should be based on the length of service and not on the actual wage earned by the worker.
Presidential Decree No. 851, otherwise known as the 13
th
Month Pay Law, which required all
employers to pay their employees a 13
th
month pay, was issued to protect the level of real wages from
the ravages of worldwide inflation. Under the Revised Guidelines on the Implementation of the 13
th
month pay issued on November 16, 1987, the salary ceiling of P1,000.00 under P.D. No. 851 was
removed. It further provided that the minimum 13
th
month pay required by law shall not be less than
one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. The guidelines
pertinently provides that the basic salary of an employee for the purpose of computing the 13
th
month
pay shall include all remunerations or earnings paid by his employer for services rendered but does not
include allowances and monetary benefits which are not considered or integrated as part of the regular or
basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime premium,
night differential and holiday pay, and cost-of-living allowances.
For employees receiving regular wage, we have interpreted basic salary to mean, not the
amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their
length of service within a given calendar year. Thus, we exclude from the computation of basic salary
payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums
for work done on rest days and special holidays. The 13
th
month pay due an employee was computed
based on the employees basic monthly wage multiplied by the number of months worked in a calendar
year prior to separation from employment. The revised guidelines also provided for a pro-ration of this
benefit only in cases of resignation or separation from work. As the rules state, under these
circumstances, an employee is entitled to a pay in proportion to the length of time he worked during the
year, reckoned from the time he started working during the calendar year.
More importantly, it has not been refuted that Honda has not implemented any pro-rating of the
13
th
month pay before the instant case. Honda did not adduce evidence to show that the 13
th
month, 14
th
month and financial assistance benefits were previously subject to deductions or pro-rating or that these
were dependent upon the companys financial standing. This is an implicit acceptance that prior to the
strike, a full month basic pay computation was the present practice intended to be maintained in the
CBA.
With regard to the length of time the company practice should have been exercised to constitute
voluntary employer practice which cannot be unilaterally withdrawn by the employer, we hold that
jurisprudence has not laid down any rule requiring a specific minimum number of years. Some may be 6
years (Davao Fruits Corporation vs. Associated Labor Unions), 3 and 9 months (Davao Integrated Port
Stevedoring Services vs. Abarquez), 3 years and 4 months (Tiangco vs. Leogardo, Jr.), or two years
(Sevilla Trading Company vs. Semana). This, we rule constitutes voluntary employer practice which
cannot be unilaterally withdrawn by the employer without violating Art. 100 of the Labor Code.
Lastly, the foregoing interpretation of law and jurisprudence is more in keeping with the
underlying principle for the grant of this benefit. It is primarily given to alleviate the plight of workers
and to help them cope with the exorbitant increases in the cost of living. To allow the pro-ration of the
13
th
month pay in this case is to undermine the wisdom behind the law and the mandate that the
workingmans welfare should be the primordial and paramount consideration. What is more, the factual
milieu of this case is such that to rule otherwise inevitably results to dissuasion, if not a deterrent, for
workers from the free exercise of their constitutional rights to self-organization and to strike in
accordance with law.


PRODUCERS BANK VS. NLRC
355 SCRA 506

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

ISSUE: WON the employees who have retired have no personality to file an action since there is no
longer an employer-employee relationship.

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

JARDIN VS. NLRC
G.R. NO. 119268, FEBRUARY 23, 2000

FACTS:
Petitioners were drivers of private respondent, Philjama International Inc., a domestic
corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondent's
taxicabs every other day on a 24-hour work schedule under the boundary system. Under this
arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent
admittedly regularly deducts from petitioners, daily earnings the amount of P30.00 supposedly for the
washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union
to protect their rights and interests.
Upon learning about the plan of petitioners, private respondent refused to let petitioners drive
their taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners
suspected that they were singled out because they were the leaders and active members of the proposed
union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair
labor practice, illegal dismissal and illegal deduction of washing fees. In a decision dated August 31,
1992, the labor arbiter dismissed said complaint for lack of merit.
On appeal, the NLRC, in a decision dated April 28, 1994, reversed and set aside the judgment of
the labor arbiter. Private respondent's first motion for reconsideration was denied. Remaining hopeful,
private respondent filed another motion for reconsideration. This time, public respondent, in its decision
dated October 28, 1994, granted aforesaid second motion for reconsideration. It ruled that it lacks
jurisdiction over the case as petitioners and private respondent have no employer-employee relationship.
It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the
Labor Code.

ISSUES:
1. Whether or not the second motion for reconsideration was properly entertained.
2. Whether or not there is an existence of employee-employer relationship.
3. Whether or not the deduction of car wash is valid.


HELD:
1. No. The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled
meaning in the jurisprudence of procedure. It means such capricious and whimsical exercise of
judgment by the tribunal exercising judicial or quasi-judicial power as to amount to lack of
power. In labor cases, this Court has declared in several instances that disregarding rules it is
bound to observe constitutes grave abuse of discretion on the part of labor tribunal.
In this case before us, private respondent exhausted administrative remedy available to
it by seeking reconsideration of public respondent's decision dated April 28, 1994, which public
respondent denied. With this motion for reconsideration, the labor tribunal had ample
opportunity to rectify errors or mistakes it may have committed before resort to courts of justice
can be had. Thus, when private respondent filed a second motion for reconsideration, public
respondent should have forthwith denied it in accordance with Rule 7, Section 14 of its New
Rules of Procedure which allows only one motion for reconsideration from the same party.
The rationale for allowing only one motion for reconsideration from the same party is to
assist the parties in obtaining an expeditious and inexpensive settlement of labor cases. For
obvious reasons, delays cannot be countenanced in the resolution of labor disputes. The dispute
may involve no less than the livelihood of an employee and that of his loved ones who are
dependent upon him for food, shelter, clothing, medicine, and education. It may as well involve
the survival of a business or an industry.
The second motion for reconsideration filed by private respondent is indubitably a
prohibited pleading which should have not been entertained at all. Public respondent cannot just
disregard its own rules on the pretext of "satisfying the ends of justice", especially when its
disposition of a legal controversy ran afoul with a clear and long standing jurisprudence in this
jurisdiction as elucidated in the subsequent discussion. Clearly, disregarding a settled legal
doctrine enunciated by this Court is not a way of rectifying an error or mistake. In our view,
public respondent gravely abused its discretion in taking cognizance and granting private
respondent's second motion for reconsideration as it wrecks the orderly procedure in seeking
reliefs in labor cases.
2. Yes. The relationship between taxiowners/operators on one hand and taxi drivers on the other
under the boundary system is that of employer-employee and not of lessor-lessee. In the lease of
chattels, the lessor loses complete control over the chattel leased although the lessee cannot be
reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In
the case of taxi owners/operators and taxi drivers, the former exercise supervision and control
over the latter. The management of the business is in the owner's hands. The owner as holder of
the certificate of public convenience must see to it that the driver follows the route prescribed by
the franchising authority and the rules promulgated as regards its operation. Now, the fact that
the drivers do not receive fixed wages but get only that in excess of the so-called "boundary"
they pay to the owner/operator is not sufficient to withdraw the relationship between them from
that of employer and employee. Hence, petitioners are undoubtedly employees of private
respondent because as taxi drivers they perform activities which are usually necessary or
desirable in the usual business or trade of their employer.
3. Yes. After a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the
same clean condition when he took it out. Car washing after a tour of duty is indeed a practice in
the taxi industry and is in fact dictated by fair play. Hence, the drivers are not entitled to
reimbursement of washing charges.

MANILA JOCKEYS CLUB EMPLOYEES LABOR UNION VS. MANILA JOCKEY CLUB
G.R. NO. 167601, MARCH 7, 2007

FACTS:
Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila Jockey
Club, Inc., a corporation with a legislative franchise to conduct, operate and maintain horse races,
entered into a Collective Bargaining Agreement (CBA) effective January 1, 1996 to December 31, 2000.
The CBA governed the economic rights and obligations of respondents regular monthly paid rank-and-file
employees. In the CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and
from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday. The CBA likewise reserved in
respondent certain management prerogatives, including the determination of the work schedule. On
April 3, 1999, respondent issued an inter-office memorandum declaring that, effective April 20, 1999, the
hours of work of regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when horse races
are held, that is, every Tuesday and Thursday. The memorandum, however, maintained the 9:00 a.m. to
5:00 p.m. schedule for non-race days. On October 12, 1999, petitioner and respondent entered into an
Amended and Supplemental CBA retaining Section 1 of Article IV and Section 2 of Article XI, supra, and
clarified that any conflict arising therefrom shall be referred to a voluntary arbitrator for resolution.
Subsequently, before a panel of voluntary arbitrators of the National Conciliation and Mediation Board

(NCMB), petitioner questioned the above office memorandum as violative of the prohibition against non-
diminution of wages and benefits guaranteed under Section 1, Article IV, of the CBA which specified the
work schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. Petitioner claimed that as a
result of the memorandum, the employees are precluded from rendering their usual overtime work from
5:00 p.m. to 9:00 p.m. The NCMBs panel of voluntary arbitrators, in a decision dated October 18, 2001,
upheld respondent's prerogative to change the work schedule of regular monthly-paid employees under
Section 2, Article XI, of the CBA. Petitioner moved for reconsideration but the panel denied the motion.
Dissatisfied, petitioner then appealed the panels decision to the CA in CA-G.R. SP No. 69240. In the
herein assailed decision of December 17, 2004, the CA upheld that of the panel and denied petitioners
subsequent motion for reconsideration via its equally challenged resolution of April 4, 2005.

ISSUE: Whether or not MJCI did not relinquish its management prerogative when it stipulated a work
schedule in the CBA and whether or not MJCI violated the non- diminution provision of contained in
Art.100 of the labor code.

HELD:
MJCI did not relinquish its management prerogative when it stipulated a work schedule in the
CBA.
Every business enterprise endeavors to increase profits. As it is, t he Court will not interfere with
the business judgment of an employer in the exercise of its prerogative to devise means to improve its
operation, provided that it does not violate the law, CBAs, and the general principles of justice and fair
play. The Court thus held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods, time, place
and manner of work, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, layoff of workers and discipline, dismissal, and recall of workers. While it
is true that Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to 12:00
noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays, Section 2, Article XI, however,
expressly reserves on respondent the prerogative to change existing methods or facilities to change the
schedules of work.
The same provision of the CBA also grants respondent the prerogative to relieve employees from
duty because of lack of work. Petitioners argument, therefore, that the change in work schedule violates
Article 100 of the Labor Code because it resulted in the diminution of the benefit enjoyed by regular
monthly-paid employees of rendering overtime work with pay, is untenable. Section 1, Article IV, of the
CBA does not guarantee overtime work for all the employees but merely provides that "all work
performed in excess of seven (7) hours work schedule and on days not included within the work week
shall be considered overtime and paid as such." Respondent was not obliged to allow all its employees to
render overtime work everyday for the whole year, but only those employees whose services were
needed after their regular working hours and only upon the instructions of management. The
overtime pay was not given to each employee consistently, deliberately and unconditionally, but as a
compensation for additional services rendered. Thus, overtime pay does not fall within the definition of
benefits under Article 100 of the Labor Code on prohibition against elimination or diminution of benefits.

SAN MIGUEL CORP., ET. AL. VS. LAYOC, JR., ET. AL.
G.R. NO. 149640, OCTOBER 19, 2007

FACTS:
Respondents were among the "Supervisory Security Guards" of the Beer Division of San Miguel
Corporation. They started working as guards with the petitioner San Miguel Corporation assigned to the
Beer Division on different dates until such time that they were promoted as supervising security guards.
From the commencement of their employment, the private respondents were required to punch their
time cards for purposes of determining the time they would come in and out of the company's work
place. Corollary, the private respondents were availing the benefits for overtime, holiday and night
premium duty through time card punching. However, in the early 1990's, the San Miguel Corporation
embarked on a Decentralization Program aimed at enabling the separate divisions of the San Miguel
Corporation to pursue a more efficient and effective management of their respective operations.
As a result of the Decentralization Program, the Beer Division of the San Miguel Corporation
implemented on January 1, 1993 a "no time card policy" whereby the Supervisory I and II composing of
the supervising security guards of the Beer Division were no longer required to punch their time cards.
Consequently, on January 16, 1993, without prior consultation with the private respondents, the time
cards were ordered confiscated and the latter were no longer allowed to render overtime work. However,
in lieu of the overtime pay and the premium pay, the personnel of the Beer Division of the petitioner San
Miguel Corporation affected by the "No Time Card Policy" were given a 10% across-the-board increase on
their basic pay while the supervisors who were assigned in the night shift (6:00 p.m. to 6:00 a.m.) were
given night shift allowance ranging from P2,000.00 to P2,500.00 a month. Hence, this complaint filed for

unfair labor practice, violation of Article 100 of the Labor Code of the Philippines, and violation of the
equal protection clause and due process of law in relation to paragraphs 6 and 8 of Article 32 of the New
Civil Code of the Philippines.

ISSUE: Whether the circumstances in the present case constitute an exception to the rule that
supervisory employees are not entitled to overtime pay.

HELD:
Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions
and rest periods shall not apply to managerial employees
The other provisions in the Title include normal hours of work (Article 83), hours worked (Article
84), meal periods (Article 85), night shift differential (Article 86), overtime work (Article 87), undertime
not offset by overtime (Article 88), emergency overtime work (Article 89), and computation of additional
compensation (Article 90). It is thus clear that, generally, managerial employees such as respondents are
not entitled to overtime pay for services rendered in excess of eight hours a day. Respondents failed to
show that the circumstances of the present case constitute an exception to this general rule.
Aside from their allegations, respondents were not able to present anything to prove that
petitioners were obliged to permit respondents to render overtime work and give them the corresponding
overtime pay. Even if petitioners did not institute a "no time card policy," respondents could not demand
overtime pay from petitioners if respondents did not render overtime work. The requirement of rendering
additional service differentiates overtime pay from benefits such as thirteenth month pay or yearly merit
increase. These benefits do not require any additional service from their beneficiaries. Thus, overtime pay
does not fall within the definition of benefits under Article 100 of the Labor Code.

SAN MIGUEL CORP. VS PONTILLAS
G.R. NO. 155178, MAY 7, 2008

FACTS:
On 24 October 1980, petitioner employed respondent as a daily wage company guard. In 1984,
respondent became a monthly-paid employee which entitled him to yearly increases in salary.
Respondent alleged that his yearly salary increases were only a percentage of what the other security
guards received.
On 19 October 1993, respondent filed an action for recovery of damages due to discrimination
under Article 100 of the Labor Code of the Philippines (Labor Code), as amended, as well as for recovery
of salary differential and backwages, against petitioner. During the mandatory conference on 23
November 1993, respondent questioned the rate of salary increase given him by petitioner.
On 6 December 1993, petitioners Vice President and VisMin Operations Center Manager, issued a
Memorandum ordering, among others, the transfer of responsibility of the Oro Verde Warehouse to the
newly-organized VisMin Logistics Operations effective 1 January 1994. In compliance with Memorandum,
another Memorandum was issued dated 7 February 1994 addressed to VisMin Logistics Operations
Manager, effecting the formal transfer of responsibility of the security personnel and equipment in the
Oro Verde Warehouse to Security Officer of the VisMin Logistics Operations, effective 14 February 1994.
Simultaneously, it gave the same information to his Supervising Security Guards for them to relay the
information to the company security guards.
Respondent continued to report at Oro Verde Warehouse. He alleged that he was not properly
notified of the transfer and that he did not receive any written order from Capt. Fortich, his immediate
superior. Respondent also alleged that he was wary of the transfer because of his pending case against
petitioner. He further claimed that two other security guards continue to report at Oro Verde Warehouse
despite the order to transfer.
Petitioner alleged that respondent was properly notified of the transfer but he refused to receive
14 memoranda issued by Major Enriquez from 14-27 February 1994. Petitioner also alleged that
respondent was given notices of Guard Detail dated 9 February 1994 and 15 February 1994 but he still
refused to report for duty at the VisMin Logistics Operations.
In a letter dated 28 February 1994, petitioner informed respondent that an administrative
investigation would be conducted on 4 March 1994 relative to his alleged offenses of Insubordination or
Willful Disobedience in Carrying Out Reasonable Instructions of his superior. During the investigation,
respondent was given an opportunity to present his evidence and be assisted by counsel. In a letter
dated 7 April 1994, petitioner informed respondent of its decision to terminate him for violating company
rules and regulations, particularly for Insubordination or Willful Disobedience in Carrying Out Reasonable
Instructions of his superior.
On 15 June 1994, respondent filed an amended complaint against petitioner for illegal dismissal
and payment of backwages, termination pay, moral and exemplary damages, and attorneys fees.

ISSUE: Whether or not respondent was illegally dismissed.


HELD:
No. An employer may terminate an employment for serious misconduct or willful disobedience by
the employee of the lawful orders of his employer or representative in connection with his work. Willful
disobedience requires the concurrence of two elements: (1) the employees assailed conduct must have
been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must
have been reasonable, lawful, made known to the employee, and must pertain to the duties which he
had been engaged to discharge.

The records show that respondent was not singled out for the transfer. Respondents transfer
was the effect of the integration of the functions of the Mandaue Brewery Materials Management and
the Physical Distribution group into a unified logistics organization, the VisMin Logistics Operations. The
entire Oro Verde Warehouse, to which unit respondent belonged, was affected by the integration.
The Court disagrees that respondent was not formally notified of the transfer. As early as 9
February 1994, Major Enriquez, the head of the VisMin Logistics Operations and thus, respondents new
superior, issued a guard detail for 14-20 February 1994. All agency guards signed the detail, except
respondent who refused to sign. On 15 February 1994, Major Enriquez again issued a guard detail for 21-
27 February 1994. Again, all security guards concerned signed the detail except respondent who refused
to sign. Major Enriquez issued successive memoranda to respondent officially informing him of his
transfer to the VisMin Logistics Operations but respondent refused to sign all the notices.
The employer exercises the prerogative to transfer an employee for valid reasons and according
to the requirements of its business, provided the transfer does not result in demotion in rank or
diminution of the employees salary, benefits, and other privileges. In this case, we found that the order
of transfer was reasonable and lawful considering the integration of Oro Verde Warehouse with VisMin
Logistics Operations. Respondent was properly informed of the transfer but he refused to receive the
notices on the pretext that he was wary because of his pending case against petitioner. Respondent
failed to prove that petitioner was acting in bad faith in effecting the transfer. There was no demotion
involved, or even a diminution of his salary, benefits, and other privileges. Respondents persistent
refusal to obey petitioners lawful order amounts to willful disobedience under Article 282 of the Labor
Code.

ARCO METAL PRODUCTS CO., INC., ET. AL. VS. SAMAHAN NG MGA MANGGAGAWA SA ARCO
METAL-NAFLU, G.R. NO. 170734, MAY 14, 2008, CITING DAVAO FRUITS VS. ASSO. LABOR
UNION, 225 SCRA 562 AND SEVILLA TRADING VS. AVA TOMAS SERVICES,
G.R. NO. 152456, APRIL 28, 2004

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

ISSUE: WON the grant of 13
th
month pay, bonus, and leave encashment in full regardless of actual
service rendered constitutes voluntary employer practice and, consequently, whether or not the prorated
payment of the said benefits constitute diminution of benefits under Article 100 of the Labor Code.

HELD:
Any benefit and supplement being enjoyed by employees cannot be reduced, diminished,
discontinued or eliminated by the employer.
The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect
the rights of workers and promote their welfare and to afford labor full protection. Said mandate in turn
is the basis of Article 4 of the Labor Code which states that all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of
labor.
Jurisprudence is replete with cases which recognize the right of employees to benefits which
were voluntarily given by the employer and which ripened into company practice. Thus in DavaoFruits
Corporation v. Associated Labor Unions, et al.

where an employer had freely and continuously included in
the computation of the 13
th
month pay those items that were expressly excluded by the law, we held that
the act which was favorable to the employees though not conforming to law had thus ripened into a
practice and could not be withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading
Company v. Semana, we ruled that the employers act of including non-basic benefits in the computation

of the 13
th
month pay was a voluntary act and had ripened into a company practice which cannot be
peremptorily withdrawn.
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely,
voluntarily and consistently granting full benefits to its employees regardless of the length of service
rendered. True, there were only a total of seven employees who benefited from such a practice, but it
was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum
number of years within which a company practice must be exercised in order to constitute voluntary
company practice.

Thus, it can be six (6) years,

three (3) years,

or even as short as two (2) years.

Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error,
supported only by an affidavit of its manufacturing group head.

AGUANZA VS. ASIAN TERMINAL INC., ET. AL.
G.R. NO. 163505, AUG. 14, 2009

FACTS:
Petitioner Gualberto Aguanza was employed with respondent company Asian Terminal, Inc. from
April 15, 1989 to October 1997. He was initially employed as Derickman or Crane Operator and was
assigned as such aboard Bismark IV, a floating crane barge owned by Asian Terminals, Inc. based at the
port of Manila. Aside from his basic pay, he received meal allowance, fixed overtime pay and out-of port
allowance [when the barge is assigned outside Metro Manila].
Sometime in September 1997, the Bismark IV, together with its crew, was temporarily assigned
at the Mariveles Grains Terminal in Mariveles, Bataan. Then, on October 20, 1997, respondent James
Keith issued a memo to the crew of Bismark IV stating that the barge had been permanently transferred
to the Mariveles Grains terminal beginning October 1, 1997 and because of that, its crew would no longer
be entitled to out of port benefits of 16 hours overtime and P200 a day out-of port allowance.
Because of the said development, Aguanza questioned the diminution of his benefits. Aguanza insisted on
reporting to work in Manila although his barge, Bismark IV, and its other crew were already permanently
based in Mariveles, Bataan. [Aguanza] was not allowed to time in in Manila because his work was in
Mariveles, Bataan. He therefore was not able to render his services, and was accordingly not paid for
doing nothing.

ISSUE: Was Aguanza constructively dismissed?

HELD:
No. The transfer of operations is a valid exercise of management prerogative. Aguanza asserts
that his transfer constituted constructive dismissal, while ATI asserts that Aguanzas transfer was a valid
exercise of management prerogative.
ATIs transfer of Bismark IVs base from Manila to Bataan was, contrary to Aguanzas assertions,
a valid exercise of management prerogative. The transfer of employees has been traditionally among the
acts identified as a management prerogative subject only to limitations found in law, collective bargaining
agreement, and general principles of fair play and justice. Even as the law is solicitous of the welfare of
employees, it must also protect the right of an employer to exercise what are clearly management
prerogatives. The free will of management to conduct its own business affairs to achieve its purpose
cannot be denied.
On the other hand, the transfer of an employee may constitute constructive dismissal "when
continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in
rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee." Aguanzas situation is not within the purview of this discussion.

GENESIS TRANSPORT SERVICE INC., ET. AL., VS. UNYON NG MALAYANG
MANGGAGAWA NG GENESIS TRANSPORT, ET. AL.
G.R. NO. 182114, APRIL 5, 2010

FACTS:
Respondent Juan Taroy was hired on February 2, 1992 by petitioner Genesis Transport Service,
Inc. (Genesis Transport) as driver on commission basis at 9% of the gross revenue per trip. On May 10,
2002, Taroy was, after due notice and hearing, terminated from employment after an accident on April
20, 2002 where he was deemed to have been driving recklessly.
Taroy thus filed a complaint for illegal dismissal and payment of service incentive leave pay,
claiming that he was singled out for termination because of his union activities, other drivers who had
met accidents not having been dismissed from employment. Taroy later amended his complaint to
implead his herein co-respondent Unyon ng Malayang Manggagawa ng Genesis Transport (the union) as

complainant and add as grounds of his cause of action unfair labor practice (ULP), reimbursement of
illegal deductions on tollgate fees, and payment of service incentive leave pay.
Respecting the claim for refund of illegal deductions, Taroy alleged that in 1997, petitioner
started deducting from his weekly earnings an amount ranging from P160 to P900 representing toll fees,
without his consent and written authorization as required under Article 113 of the Labor Code and
contrary to company practice; and that deductions were also taken from the bus conductors earnings to
thus result to double deduction. Genesis Transport countered that Taroy committed several violations of
company rules for which he was given warnings or disciplined accordingly; that those violations, the last
of which was the April 20, 2002 incident, included poor driving skills, tardiness, gambling inside the
premises, use of shabu, smoking while driving, insubordination and reckless driving; and that Taroys
dismissal was on a valid cause and after affording him due process.

ISSUE: Whether or not Taroy is entitled to refund of legal deductions on tollgate fees, and payment of
service incentive leave pay.

HELD:
Albeit the amounts representing tollgate fees were deducted from gross revenues and not
directly from Taroys commissions, the labor tribunal and the appellate court correctly held that the
withholding of those amounts reduced the amount from which Taroys 9% commission would be
computed. Such a computation not only marks a change in the method of payment of wages, resulting in
a diminution of Taroys wages in violation of Article 113 vis--vis Article 100 of the Labor Code, as
amended. It need not be underlined that without Taroys written consent or authorization, the deduction
is considered illegal.
Besides, the invocation of the rule on company practice is generally used with respect to the
grant of additional benefits to employees, not on issues involving diminution of benefits.

CENTRAL AZUCARERA DE TARLAC VS. CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU,
G.R. NO. 188949, JULY 26, 2010

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

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

HELD:
The 13
th
-month pay mandated by Presidential Decree (P.D.) No. 851 represents an additional
income based on wage but not part of the wage. It is equivalent toone-twelfth (1/12) of the total basic
salary earned by an employee within a calendar year. All rank-and-file employees, regardless of their
designation or employment status and irrespective of the method by which their wages are paid, are
entitled to this benefit, provided that they have worked for at least one month during the calendar year.
If the employee worked for only a portion of the year, the 13
th
-month pay is computed pro rata.
On November 16, 1987, the Revised Guidelines on the Implementation of the 13
th
-Month Pay
Law was issued. Significantly, under this Revised Guidelines, it was specifically stated that the minimum
13
th
-month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned
by an employee within a calendar year.

Furthermore, the term basic salary of an employee for the purpose of computing the 13
th
-
month pay was interpreted to include all remuneration or earnings paid by the employer for services
rendered, but does not include allowances and monetary benefits which are not integrated as part of the
regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime,
premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related
benefits should be included as part of the basic salary in the computation of the 13
th
-month pay if, by
individual or collective agreement, company practice or policy, the same are treated as part of the basic
salary of the employees.
Based on the foregoing, it is clear that there could have no erroneous interpretation or
application of what is included in the term basic salary for purposes of computing the 13
th
-month pay of
employees. From the inception of P.D. No. 851 on December 16, 1975, clear-cut administrative guidelines
have been issued to insure uniformity in the interpretation, application, and enforcement of the
provisions of P.D. No. 851 and its implementing regulations.
Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that
benefits given to employees cannot be taken back or reduced unilaterally by the employer because the
benefit has become part of the employment contract, written or unwritten. The rule against diminution
of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened
into a practice over a long period of time and that the practice is consistent and deliberate. Nevertheless,
the rule will not apply if the practice is due to error in the construction or application of a doubtful or
difficult question of law. But even in cases of error, it should be shown that the correction is done soon
after discovery of the error.
This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a
badge of bad faith.

SHS PERFORATED MATERIALS, INC., ET. AL. VS. DIAZ,
G.R. NO. 185814, OCT. 13, 2010

FACTS:
Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing
under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone
Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a German national, is its president, in
which capacity he determines the administration and direction of the day-to-day business affairs of SHS.
Petitioner Hinrich Johann Schumacher(Schumacher), also a German national, is the treasurer and one of
the board directors. As such, he is authorized to pay all bills, payrolls, and other just debts of SHS of
whatever nature upon maturity. Schumacher is also the Executive Vice-President of the European
Chamber of Commerce of the Philippines (ECCP) which is a separate entity from SHS. Both entities have
an arrangement where ECCP handles the payroll requirements of SHS to simplify business operations and
minimize operational expenses. Thus, the wages of SHS employees are paid out by ECCP, through its
Accounting Services Department headed by Juliet Taguiang (Taguiang).
Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for Business Development
on probationary status Respondent was also instructed by Hartmannshenn to report to the SHS office and
plant at least two (2) days every work week to observe technical processes involved in the manufacturing
of perforated materials, and to learn about the products of the company, which respondent was hired to
market and sell.
During respondents employment, Hartmannshenn was often abroad and, because of business
exigencies, his instructions to respondent were either sent by electronic mail or relayed through
telephone or mobile phone. When he would be in the Philippines, he and the respondent held meetings.
As to respondents work, there was no close supervision by him. During meetings with the respondent,
Hartmannshenn expressed his dissatisfaction over respondents poor performance.
On November 29, 2005, Hartmannshenn instructed Taguiang not to release respondents salary.
Later that afternoon, respondent called and inquired about his salary. The next day, on November 30,
2005, respondent served on SHS a demand letter and a resignation letter. Hartmannshenn then accepted
respondents resignation and informed him that his salary would be released upon explanation of his
failure to report to work, and proof that he did, in fact, work for the period in question. He demanded
that respondent surrender all company property and information in his possession. Respondent agreed to
these "exit" conditions through electronic mail. Instead of complying with the said conditions, however,
respondent sent another electronic mail message to Hartmannshenn and Schumacher on December 1,
2005, appealing for the release of his salary.
To settle the issue amicably, petitioners counsel advised respondents counsel by telephone that a
check had been prepared in the amount of P50,000.00, and was ready for pick-up on December 5, 2005.
On the same date, a copy of the formal reply letter relating to the prepared payment was sent to the
respondents counsel by facsimile transmission. Despite being informed of this, respondent never picked
up the check. Respondent countered that his counsel received petitioners formal reply letter only on
December 20, 2005, stating that his salary would be released subsequent to the turn-over of all materials

owned by the company in his possession. Respondent claimed that the only thing in his possession was a
sample panels folder which he had already returned and which was duly received by Taguiang on
November 30, 2005.
On December 9, 2005, respondent filed a Complaint against the petitioners for illegal dismissal;
non-payment of salaries/wages and 13th month pay with prayer for reinstatement and full backwages;
exemplary damages, and attorneys fees, costs of suit, and legal interest.

ISSUE:
1. Whether or not the temporary withholding of respondents salary/wages by petitioners was a valid
exercise of management prerogative.
2. Whether or not respondent voluntarily resigned.
3. Whether or not respondent was constructively dismissed by petitioners.

HELD:
1. Management prerogative refers "to the right of an employer to regulate all aspects of
employment, such as the freedom to prescribe work assignments, working methods, processes to
be followed, regulation regarding transfer of employees, supervision of their work, lay-off and
discipline, and dismissal and recall of work." Although management prerogative refers to "the
right to regulate all aspects of employment," it cannot be understood to include the right to
temporarily withhold salary/wages without the consent of the employee. To sanction such an
interpretation would be contrary to Article 116 of the Labor Code, which provides:
ART. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any
person, directly or indirectly, to withhold any amount from the wages of a worker or induce him
to give up any part of his wages by force, stealth, intimidation, threat or by any other means
whatsoever without the workers consent.
Any withholding of an employees wages by an employer may only be allowed in the form
of wage deductions under the circumstances provided in Article 113 of the Labor Code, as set
forth below:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is
to recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor.
As correctly pointed out by the LA, "absent a showing that the withholding of
complainants wages falls under the exceptions provided in Article 113, the withholding thereof is
thus unlawful." Although it cannot be determined with certainty whether respondent worked for
the entire period from November 16 to November 30, 2005, the consistent rule is that if doubt
exists between the evidence presented by the employer and that by the employee, the scales of
justice must be tilted in favor of the latter in line with the policy mandated by Articles 2 and 3 of
the Labor Code to afford protection to labor and construe doubts in favor of labor. For petitioners
failure to satisfy their burden of proof, respondent is presumed to have worked during the period
in question and is, accordingly, entitled to his salary. Therefore, the withholding of respondents
salary by petitioners is contrary to Article 116 of the Labor Code and, thus, unlawful.
2. The Court agrees with the LA and the CA that respondent was forced to resign. What made it
impossible, unreasonable or unlikely for respondent to continue working for SHS was the
unlawful withholding of his salary. For said reason, he was forced to resign. It is of no moment
that he served his resignation letter on November 30, 2005, the last day of the payroll period and
a non-working holiday, since his salary was already due him on November 29, 2005, being the
last working day of said period. In fact, he was then informed that the wages of all the other SHS
employees were already released, and only his was being withheld. What is significant is that the
respondent prepared and served his resignation letter right after he was informed that his salary
was being withheld. It would be absurd to require respondent to tolerate the unlawful
withholding of his salary for a longer period before his employment can be considered as so
impossible, unreasonable or unlikely as to constitute constructive dismissal. Even granting that
the withholding of respondents salary on November 30, 2005, would not constitute an unlawful
act, the continued refusal to release his salary after the payroll period was clearly unlawful. The
petitioners claim that they prepared the check ready for pick-up cannot undo the unlawful
withholding.
3. The Court agrees with the LA and the CA that the unlawful withholding of respondents salary
amounts to constructive dismissal.
Respondent was constructively dismissed and, therefore, illegally dismissed. Although
respondent was a probationary employee, he was still entitled to security of tenure. Section 3 (2)

Article 13 of the Constitution guarantees the right of all workers to security of tenure. In using
the expression "all workers," the Constitution puts no distinction between a probationary and a
permanent or regular employee. This means that probationary employees cannot be dismissed
except for cause or for failure to qualify as regular employees.

NIA JEWELRY MANUFACTURING OF METAL ARTS, INC. (otherwise known as NIA
MANUFACTURING AND METAL ARTS, INC.) and ELISEA B. ABELLA, petitioners, vs. MADELINE
C. MONTECILLO and LIZA M. TRINIDAD, respondents.
G.R. No. 188169. November 28, 2011.

Facts:
Herein respondents were first employed as goldsmiths by the petitioner Nia Jewelry Manufacturing of
Metal Arts, Inc. (Nia Jewelry) in 1996 and 1994, respectively. Madeline's weekly rate was P1,500.00
while Liza's was P2,500.00. Petitioner Elisea Abella (Elisea) is Nia Jewelry's president and general
manager.

There were incidents of theft involving goldsmiths in Nia Jewelry's employ. As a result of this, Nia
Jewelry imposed a policy for goldsmiths requiring them to post cash bonds or deposits in varying
amounts but in no case exceeding 15% of the latter's salaries per week. The deposits were intended to
answer for any loss or damage which Nia Jewelry may sustain by reason of the goldsmiths' fault or
negligence in handling the gold entrusted to them. The deposits shall be returned upon completion of the
goldsmiths' work and after an accounting of the gold received. The respondents alleged that they were
constructively dismissed by Nia Jewelry as their continued employments were made dependent on their
readiness to post the required deposits.

Nia Jewelry averred that on August 14, 2004, the respondents no longer reported for work and signified
their defiance against the new policy which at that point had not even been implemented yet. On
September 7, 2004, the respondents filed against Nia Jewelry complaints for illegal dismissal and for the
award of separation pay. On September 20, 2004, the respondents filed their amended complaints which
excluded their earlier prayer for separation pay but sought reinstatement and payment of backwages,
attorney's fees and 13th month pay.

Issue:
WON the court of appeals gravely erred in finding that there was constructive dismissal in the present
case and ordering respondents' reinstatement as well as the payment of their backwages and other
monetary benefits without factual or legal bases

Held:
The Court finds no grounds to hold that the respondents were dismissed expressly or even constructively
by the petitioners. It was the respondents who merely stopped reporting for work. While it is conceded
that the new policy will impose an additional burden on the part of the respondents, it was not intended
to result in their demotion. Neither is a diminution in pay intended because as long as the workers
observe due diligence in the performance of their tasks, no loss or damage shall result from their
handling of the gold entrusted to them, hence, all the amounts due to the goldsmiths shall still be paid in
full. Further, the imposition of the new policy cannot be viewed as an act tantamount to discrimination,
insensibility or disdain against the respondents. For one, the policy was intended to be implemented upon
all the goldsmiths in Nia Jewelry's employ and not solely upon the respondents. Besides, as stressed by
the petitioners, the new policy was intended to merely curb the incidences of gold theft in the work
place. The new policy can hardly be said to be disdainful or insensible to the workers as to render their
continued employment unreasonable, unlikely or impossible.

The findings of the LA and the NLRC that no constructive dismissal occurred are supported by substantial
evidence, the CA thus erred in giving due course to and granting the petition filed before it. Hence, it is
not even necessary anymore to resolve the issue of whether or not the policy of posting cash bonds or
making deductions from the goldsmiths' salaries is proper.

Article 113 of the Labor Code is clear that there are only three exceptions to the general rule that no
deductions from the employees' salaries can be made. The exception which finds application in the
instant petition is in cases where the employer is authorized by law or regulations issued by the Secretary
of Labor to effect the deductions. On the other hand, Article 114 states that generally, deposits for loss or
damages are not allowed except in cases where the employer is engaged in such trades, occupations or
business where the practice of making deposits is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate rules or regulations.


ANTONIO LOCSIN II vs. MEKENI FOOD CORPORATION
G.R. No. 192105. December 9, 2013.

Facts:
Petitioner Antonio Locsin II was the Regional Sales Manager of respondent Mekeni Food Corporation. He
was hired on February 2004 to oversee the NCR and Luzon operation. In addition to his compensation
and benefit package, a car was offered to him under which one-half of the cost of the vehicle is to be
paid by the company and the other half to be deducted from petitioner's salary. The car valued at
280,000 which Locsin paid through salary deductions of 5,000 per month.
On February 2006, Locsin resigned. A total of 112,500.00 had already been deducted from his monthly
salary and applied as part of his share in the car plan. Upon resignation, petitioner made personal and
written follow-ups regarding his unpaid salaries, commissions, benefits, and offer to purchase his service
vehicle. Mekeni replied that the company car plan benefit applied only to employees who have been with
the company for five years; for this reason, the balance that petitioner should pay on his service vehicle
stood at P116,380.00 if he opts to purchase the same.

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

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

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

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

Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart contribution to the cost
of the vehicle; that is not property or money that belongs to him, nor was it intended to be given to him
in lieu of the car plan. Mekeni's share of the vehicle's cost was not part of petitioner's compensation
package. The vehicle is an asset that belonged to Mekeni. Just as Mekeni is unjustly enriched by failing to
refund petitioner's payments, so should petitioner not be awarded the value of Mekeni's counterpart
contribution to the car plan, as this would unjustly enrich him at Mekeni's expense.

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


T & H SHOPFITTERS CORPORATION/GIN QUEEN CORPORATION, STINNES HUANG, BEN
HUANG and ROGELIO MADRIAGA, petitioners, vs. T & H SHOPFITTERS CORPORATION/GIN
QUEEN WORKERS UNION, ELPIDIO ZALDIVAR, DARIOS GONZALES, WILLIAM DOMINGO,
BOBBY CASTILLO, JIMMY M. PASCUA, GERMANO M. BAJO, RICO L. MANZANO, ALLAN L.
CALLORINA, ROMEO BLANCO, GILBERT M. GARCIA, CARLOS F. GERILLO, EDUARDO A.
GRANDE, EDILBRANDO MARTICIO, VIVENCIO SUSANO, ROLANDO GARCIA, JR., MICHAEL
FABABIER, ROWELL MADRIAGA, PRESNIL TOLENTINO, MARVIN VENTURA, FRANCISCO
RIVARES, PLACIDO TOLENTINO and ROLANDO ROMERO, respondents.
G.R. No. 191714, February 26, 2014

Facts:
Herein respondents, all of whom are officers and/or members of THS-GQ union, filed their Complaint for
Unfair Labor Practice (ULP) by way of union busting, and Illegal Lockout, with moral and exemplary
damages and attorney's fees, against T&H Shopfitters Corporation (T&H Shopfitters) and Gin Queen
Corporation (Gin Queen) (collectively referred to as "petitioners"), before the Labor Arbiter (LA).

Respondents treated T&H Shopfitters and Gin Queen as a single entity and their sole employer. In their
desire to improve their working conditions, respondents and other employees of petitioners held their first
formal meeting on November 23, 2003 to discuss the formation of a union. The following day or on
November 24, 2003, seventeen (17) employees were barred from entering petitioners' factory premises
located in Castillejos, Zambales, and ordered to transfer to T&H Shopfitters' warehouse at Subic Bay
Freeport Zone (SBFZ) purportedly because of its expansion. Afterwards, the said seventeen (17)
employees were repeatedly ordered to go on forced leave due to the unavailability of work.

On December 18, 2003, the Department of Labor and Employment (DOLE), Regional Office No. III issued
a certificate of registration in favor of THS-GQ Union.

Respondents contended that the affected employees were not given regular work assignments, while
subcontractors were continuously hired to perform their functions. This development prompted
respondents to seek the assistance of the National Conciliation and Mediation Board. Subsequently, an
agreement between petitioners and THS-GQ Union was reached. Petitioners agreed to give priority to
regular employees in the distribution of work assignments. Respondents averred, however, that
petitioners never complied with its commitment but instead hired contractual workers.

Petitioner Ben Huang (Huang), Director for Gin Queen, informed its employees of the expiration of the
lease contract between Gin Queen and its lessor in Castillejos, Zambales and announced the relocation of
its office and workers to Cabangan, Zambales. Some of the respondents, who visited the site in
Cabangan, discovered that it was a "talahiban" or grassland. Later, the said union officers and members
were made to work as grass cutters in Cabangan, under the supervision of a certain Barangay Captain
Greg Pangan. Due to these circumstances, the employees assigned in Cabangan did not report for work.
As a consequence, the THS-GQ Union president was made to explain why he should not be terminated
for insubordination. The other employees who likewise failed to report in Cabangan were meted out with
suspension.

Issue:
Whether or not petitioner gin queen corporation is liable to the respondents for unfair labor practice

Held:
In the case at bench, petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article
257 (formerly Article 248) of the Labor Code.

The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to
the exclusion of union members, before the scheduled certification election; 2) the active campaign by
the sales officer of petitioners against the union prevailing as a bargaining agent during the field trip; 3)
escorting its employees after the field trip to the polling center; 4) the continuous hiring of subcontractors
performing respondents' functions; 5) assigning union members to the Cabangan site to work as grass
cutters; and 6) the enforcement of work on a rotational basis for union members, all reek of interference
on the part of petitioners.

Indubitably, the various acts of petitioners, taken together, reasonably support an inference that, indeed,
such were all orchestrated to restrict respondents' free exercise of their right to self-organization. The
Court is of the considered view that petitioners' undisputed actions prior and immediately before the
scheduled certification election, while seemingly innocuous, unduly meddled in the affairs of its
employees in selecting their exclusive bargaining representative. In Holy Child Catholic School v. Hon.

Patricia Sto. Tomas, the Court ruled that a certification election was the sole concern of the workers, save
when the employer itself had to file the petition . . ., but even after such filing, its role in the certification
process ceased and became merely a bystander. Thus, petitioners had no business persuading and/or
assisting its employees in their legally protected independent process of selecting their exclusive
bargaining representative. The fact and peculiar timing of the field trip sponsored by petitioners for its
employees not affiliated with THS-GQ Union, although a positive enticement, was undoubtedly
extraneous influence designed to impede respondents in their quest to be certified. This cannot be
countenanced.

Not content with achieving a "no union" vote in the certification election, petitioners launched a vindictive
campaign against union members by assigning work on a rotational basis while subcontractors performed
the latter's functions regularly. Worse, some of the respondents were made to work as grass cutters in an
effort to dissuade them from further collective action. Again, this cannot be countenanced. HSAcaE

More importantly, petitioners' bare denial of some of the complained acts and unacceptable explanations,
a mere afterthought at best, cannot prevail over respondents' detailed narration of the events that
transpired. At this juncture, it bears to emphasize that in labor cases, the quantum of proof necessary is
substantial evidence, 18 or that amount of relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine
otherwise

WESLEYAN UNIVERSITY-PHILS., VS. WESLEYAN UNIVERSITY-PHILS.,
FACULTY & STAFF ASSO.,
GR NO. 181806, MARCH 12, 2014

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

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

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

Respondent file a grievance complaint on the implementation of the vacation and sick leave policy.
Petitioner also announced its plan of implementing a one-retirement policy which was unacceptable to
respondent. Respondent submitted affidavits to prove that there is an established practice of giving two
retirement benefits, one from the Private Education Retirement Annuity Association (PERAA) Plan and
another from the CBA Retirement Plan.

The Voluntary Arbitrator rendered a Decision declaring the one-retirement policy and the Memorandum
dated August 16, 2005 contrary to law. CA also affirmed the ruling of the Voluntary Arbitrator.
Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan
are one and the same. It maintains that there is no established company practice or policy of giving two
retirement benefits to its employees. Respondent belies the claims of petitioner and asserts that there are
two retirement plans as the PERAA Retirement Plan, which has been implemented for more than 30
years, is different from the CBA Retirement Plan. Respondent further avers that it has always been a
practice of petitioner to give two retirement benefits and that this practice was established by substantial
evidence as found by both the Voluntary Arbitrator and the CA.

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


RULING:
The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers from
eliminating or reducing the benefits received by their employees. This rule, however, applies only if the
benefit is based on an express policy, a written contract, or has ripened into a practice. To be considered
a practice, it must be consistently and deliberately made by the employer over a long period of time.
Respondent was able to present substantial evidence in the form of affidavits to support its claim that
there are two retirement plans. Based on the affidavits, petitioner has been giving two retirement
benefits as early as 1997. Petitioner, on the other hand, failed to present any evidence to refute the
veracity of these affidavits. Petitioner's assertion that there is only one retirement plan as the CBA
Retirement Plan and the PERAA Plan are one and the same is not supported by any evidence.
The Memorandum dated August 16, 2005 is contrary to the existing CBA. It limits the available leave
credits of an employee at the start of the school year. The Memorandum dated imposes a limitation not
agreed upon by the parties nor stated in the CBA, so it must be struck down.

BLUER THAN BLUE JOINT VENTURES CO., VS. ESTEBAN,
GR NO. 192582, APRIL 7, 2014, CITING2011 NINA JEWELRY MANUFACTURING OF METAL
ARTS INC. VS. MONTECILLO

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

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

HELD:
No, it cannot be deducted in this case.
Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except in cases where the employer is
authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The
Omnibus Rules Implementing the Labor Code, meanwhile, provides:

SECTION 14. Deduction for loss or damage. Where the employer is engaged in a trade, occupation or
business where the practice of making deductions or requiring deposits is recognized to answer for the
reimbursement of loss or damage to tools, materials, or equipment supplied by the employer to the
employee, the employer may make wage deductions or require the employees to make deposits from
which deductions shall be made, subject to the following conditions:
a. That the employee concerned is clearly shown to be responsible for the loss or damage;
b. That the employee is given reasonable opportunity to show cause why deduction should not be
made;
c. That the amount of such deduction is fair and reasonable and shall not exceed the actual loss
or damage; and
d. That the deduction from the wages of the employee does not exceed 20 percent of the
employee's wages in a week.
In this case, the petitioner failed to sufficiently establish that Esteban was responsible for the negative
variance it had in its sales for the year 2005 to 2006 and that Esteban was given the opportunity to show
cause the deduction from her last salary should not be made.

Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v. Montecillo, that:
The petitioners should first establish that the making of deductions from the salaries is authorized by law,
or regulations issued by the Secretary of Labor. Further, the posting of cash bonds should be proven as a
recognized practice in the jewelry manufacturing business, or alternatively, the petitioners should seek
for the determination by the Secretary of Labor through the issuance of appropriate rules and regulations

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


PAYMENT OF WAGES

CONGSON VS. NLRC, 243 SCRA 260 [1995]

FACTS:
Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on
various dates by petitioner as regular piece-rate workers. They were uniformly paid at a rate of P1.00 per
tuna weighing thirty (30) to eighty (80) kilos per movement, that is from the fishing boats down to
petitioner's storage plant at a load/unload cycle of work until the tuna catch reached its final
shipment/destination. They did the work of unloading tuna from fishing boats to truck haulers; unloading
them again at petitioner's cold storage plant for filing, storing, cleaning, and maintenance; and finally
loading the processed tuna for shipment. They worked seven (7) days a week.

During the first week of June 1990, petitioner notified his workers of his proposal to reduce the rate-per-
tuna movement due to the scarcity of tuna. Private respondents resisted petitioner's proposed rate
reduction. When they reported for work the next day, they were informed that they had been replaced by
a new set of workers. When they requested for a dialogue with the management, they were instructed to
wait for further notice. They waited for the notice of dialogue for a full week but in vain.

Private respondents filed a case against petitioner before the NLRC for underpayment of wages (non-
compliance with Rep. Act Nos. 6640 and 6727 and non-payment of overtime pay, 13th month pay,
holiday pay, rest day pay, and five (5)-day service incentive leave pay; and for constructive dismissal.
With respect to their monetary claims, private respondents charged petitioner with violation of the
minimum wage law, alleging that with petitioner's rates and the scarcity of tuna catches, private
respondents' average monthly earnings each did not exceed ONE THOUSAND PESOS (P1,000.00).

Accusing petitioner of constructive dismissal, private respondents claimed that petitioner refused to give
them work assignments and replaced them with new workers when they showed resistance to the
petitioner's proposed reduction of the rate-per-tuna movement.

Private respondents filed another case against petitioner containing an additional claim for separation pay
should their complaint for constructive dismissal be upheld.

ISSUE: WON the means of payment of the wage is valid.

HELD:
The means of payment of wage is invalid. The Labor Code expressly provides:
"Article 102. Forms of Payment. No employer shall pay the wages of an employee by means of,
promissory notes vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even
when expressly requested by the employee. Payment of wages by check or money order shall be allowed
when such manner of payment is customary on the date of effectivity of this Code, or is necessary
because as specified in appropriate regulations to be issued by the Secretary of Labor or as stipulated in
a collective bargaining agreement."

Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of
legal tender combined with tuna liver and intestines runs counter to the above cited provision of the
Labor Code. The fact that said method of paying the minimum wage was not only agreed upon by both
parties in the employment agreement but even expressly requested by private respondents, does not
shield petitioner. Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal
tender. The only instance when an employer is permitted to pay wages in forms other than legal tender,
that is, by checks or money order, is when the circumstances prescribed in the second paragraph of
Article 102 are present.

NORTH DAVAO MINING VS. NLRC, 254 SCRA 721 [1996]

FACTS:
Petitioner North Davao Mining Corporation (North Davao) was incorporated in 1974 as a 100% privately-
owned company. Later, the Philippine National Bank (PNB) became part owner thereof as a result of a
conversion into equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986,
PNB transferred all its loans to and equity in North Davao in favor of the national government which, by
virtue of Proclamation No. 50 dated December 8, 1986, later turned them over to petitioner Asset
Privatization Trust (APT). As of December 31, 1990 the national government holds 81.8% of the common
stock and 100% of the preferred stock of said company.

On May 31, 1992, petitioner North Davao completely ceased operations due to serious business reverses.
When it ceased operations, its remaining employees were separated and given the equivalent of 12.5
days' pay for every year of service, computed on their basic monthly pay, in addition to the commutation
to cash of their unused vacation and sick leaves. However, it appears that, during the life of the
petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been
giving separation pay equivalent to thirty (30) days' pay for every year of service. Moreover, inasmuch as
the region where North Davao Mining Corp. operated was plagued by insurgency and other
peace and order problems, the employees had to collect their salaries at a bank in Tagum,
Davao del Norte, some 58 kilometers from their workplace and about 2 1/2 hours' travel
time by public transportation; this arrangement lasted from 1981 up to 1990.

Subsequently, a complaint was filed with respondent Labor Arbiter by respondent Wilfredo Guillema and
271 other separated employees for: (1) additional separation pay of 17.5 days for every year of service;
(2) back wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5)
housing allowance; (6) food allowance; (7) post-employment medical clearance; and (8) future medical
allowance, all of which amounted to P58,022,878.31 as computed by private respondent.

The Labor Arbiter rendered a decision ordering petitioner North Davao to pay the complainants the
following:
(a) Additional separation pay of 17.5 days for every year of service;
(b) Backwages equivalent to two (2) days a month times the number of years of service but not to
exceed three (3) years;
(c) Transportation allowance at P80 a month times the number of years of service but not to exceed
three (3) years.
The NLRC affirmed the decision of the Labor Arbiter.

ISSUE: WON the time spent in collecting wages in a place other than the place of employment is
compensable notwithstanding that the same is done during official time.

HELD:
The Supreme Court upholds the ruling of the Labor Arbiter: the hours spent by complainants in
collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked.
Considering further the distance between Amacan, Maco to Tagum which is 2 1/2 hours by travel and the
risks in commuting all the time in collecting complainants' salaries, would justify the granting of
backwages equivalent to two (2) days in a month as prayed for. The Court citing Section 4, Rule VIII,
Book III of the Omnibus Rules Implementing the Labor Code provides that:

Sec. 4. Place of payment. (a) As a general rule, the place of payment shall be at or near the place of
undertaking. Payment in a place other than the workplace shall be permissible only under the following
circumstances:
(1) When payment cannot be effected at or near the place of work by reason of the deterioration
of peace and order conditions, or by reason of actual or impending emergencies caused by
fire, flood, epidemic or other calamity rendering payment thereat impossible;
(2) When the employer provides free transportation to the employees back and forth; and
(3) Under any analogous circumstances; provided that the time spent by the employees in
collecting their wages shall be considered as compensable hours worked.

Corollary to the above findings, and for equitable reasons, the mining corporation is also liable for the
transportation expenses incurred by its employees at P40.00 round trip fare during pay days.

NATIONAL FEDERATION OF LABOR VS. CA,
G.R. NO. 149464, OCT. 19, 2004

FACTS:
American Rubber Company, Inc. (ARCI) was the registered and beneficial owner of a 1, 024-hectare
rubber plantation in Latuan, Isabela, Basila. ARCI entered into a Farm Management Agreement (FMA)
with SDPI, another domestic corporation, involving the 1,024-hectare rubber plantation in Latuan and
other rubber plantations. SDPI was given the right to manage, administer, develop, cultivate, and
improve the rubber plantations as an agro-industrial development project.

National Federation of Labor (NFL) was the duly registered bargaining agent of the daily-and-monthly-
paid rank-and-file employees of SDPI in the Latuan rubber plantation.SDPI and NFL executed a collective
bargaining agreement (CBA) in which they agreed that in case of permanent or temporary lay-off,

workers affected would be entitled to termination pay as provided by the Labor Code. The 150
petitioners were daily-and-monthly paid employees of SDPI in the Latuan plantation and were, likewise,
members of NFL.

On June 15, 1988, during the effectivity of the FMA between ARCI and SDPI, Republic Act No. 6657,
otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988, took effect. Prior to the
expiration of the June 30, 1998 deadline of the Comprehensive Agrarian Reform Act, SDPI decided to
terminate the FMA with ARCI and cease operation of the rubber plantation in Latuan, Isabela, Basilan.
SDPI served formal notices of termination to all the employees of the plantation. Separation pay for the
employees was computed pursuant to the provisions of the CBA between SDPI and NFL, in relation to the
Labor Code of the Philippines.

On January 17, 1998, each of the petitioners received his separation pay equivalent to one-half month
pay for every year of service, and other benefits which were all lumped in one Metrobank check. The
petitioners simultaneously executed individual Released and Quitclaim following the explanation to
them by Executive Labor Arbiter (ELA) Rhett Julius J. Plagata of the nature and legal effects of the said
quitclaims. The Labor Arbiter also assured that each of the petitioners executed his respected deed of
quitclaim voluntarily.

However, on April 2, 1998, the petitioners filed a complaint for illegal dismissal, deficiency in separation
pay, backwages, reinstatement, legal interest, moral damages, exemplary damages, attorneys fees, and
cost of litigation. And that SPDI has violated Art.102 of the Labor Code for paying them thru a check
which is not a legal tender.

ISSUE:
1. Whether or not check is a legal tender.
2. Whether or not the terminated employees are entitled to separation pay differential.

HELD:
1. The Supreme Court ruled that the payment of the separation pay and other benefits of the
dismissed employees thru check is not a violation of Art. 102 of the Labor Code. Second
paragraph of said Article provides that .. .. Payment of wages by check or money order shall be
allowed when such payment is customary on the date of effectivity of this Code, or is necessary
because of special circumstances as specified in appropriate regulations to be issued by the
Secretary of Labor or a stipulation in a collective bargaining agreement.
Wages shall be paid only by means of legal tender. The only instance when an employer is
permitted to pay wages in forms other than legal tender, that is by checks or money order, is
when the circumstances prescribed in the second paragraph of Article 102 are present.
In the present case, the petitioners separation pay, other benefits, and the wages from January
1 to 17 were paid in check. Strictly speaking, SDPI violated the Labor Code when it included
wages from January 1 to 17, 1998 in the check. Considering, however, the amount of other
monetary benefits to be paid, payment in check was the most convenient form for both the
petitioners and the respondent.
On the issue of separation pay differential, applying Article 283 of the Labor Code, the CA ruled
that separation pay due to business closures not due to business losses shall be equivalent to
one-month pay or at least one-half month pay for every year of service, whichever is higher.

2. Pursuant to the 1995 CBA between the SDPI and its Latuan daily-paid rank-and-file employees,
permanent or temporary lay-off workers affected would be entitled to termination pay as by the
Labor Code.[24] The parties did not incorporate in the CBA a specific provision providing that
employees terminated from employment due to the closure of business operations would be
entitled to separation pay equivalent to one-month pay for every year of service. The parties
opted to be bound by the provisions of the Labor Code and not by company policy. The
employees of the private respondent who were members of the NFL ratified the CBA which had
been in force and effect for three years before the closure of the plantation, without the NFL
initiating the revision thereof. Unless annulled, the CBA, as a contract governing the employer
and the employees respecting the terms of employment, should prevail.
Consequently, Article 283 of the Labor Code, which grants separation pay equivalent to one-
month pay or one-half month pay for every year of service, whichever is higher, to the
employees retrenched due to business closures, should apply.
While it is true that quitclaims are frowned upon in labor claims, this holds true only when the
consideration therefore is unconscionably low. Where, however, the consideration is substantial,
the efficacy and validity thereof has been upheld, more so, where the quitclaim was voluntarily
and willingly executed, as in the instant case.

Accordingly, the complainants are not entitled to, and cannot anymore be granted separation pay
differentials.
It bears stressing anew that the complainants were paid substantial amounts of separation pay in
the presence of the undersigned, before whom they executed and corresponding quitclaims and
releases and to whom they affirmed the voluntariness and their willingness as to the execution
thereof and receipt of separation benefits proffered to them by SDPI at that time, with
understanding as to the contents of the quitclaims and releases and the consequences of their
said acts.

HOUSE OF SARA LEE VS. CYNTHIA F. REY,
G.R. NO. 149013, AUG. 31, 2006

FACTS:
The House of Sara Lee is engaged in the direct selling of a variety of product lines for men and
women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items,
through its various outlets nationwide. In the pursuit of its business, the petitioner engages and
contracts with dealers to sell the aforementioned merchandise. These dealers, known either as
Independent Business Managers (IBMs) or Independent Group Supervisors (IGSs), depending on
whether they sell individually or through their own group, would obtain at discounted rates the
merchandise from the petitioner on credit or then sell the same products to their own customers at fixed
prices also determined by the petitioner.
In turn, the dealers are paid Services Fees, or sales commissions, the amount of which depends
on the volume and value of their sales. Under existing company policy, the dealers must remit to the
petitioner the proceeds of their sales within a designated credit period, which would either be 38 days for
IGSs or 52 days for IBMs, counted from the day the said dealers acquired the merchandise from the
petitioner. To discourage late remittances, the petitioner imposes a Credit Administration Charge, or
simply, a penalty charge, on the value of the unremitted payment.
The dealers under this system earn income through a profit margin between the discounted
purchase price they pay on credit to the petitioner and the fixed selling price their customers will have to
pay. On top of this margin, the dealer is given the Service Fee, a sales commission, based on the volume
of sales generated by him or her. Due to the sheer volume of sales generated by all of its outlets, the
petitioner has found the need to strictly monitor the 38- or 52-day rolling due date of each of its IBMs
and IGSs through the employment of Credit Administration Supervisors (CAS) for each branch. The
primary duty of the CAS is to strictly monitor each of these deadlines, to supervise the credit and
collection of payments and outstanding accounts due to the petitioner from its independent dealers and
various customers, and to screen prospective IBMs. To discharge these responsibilities, the CAS is
provided with a computer equipped with control systems through which data is readily generated. Under
this organizational setup, the CAS is under the direct and immediate supervision of the Branch Operations
Manager (BOM).
Cynthia Rey at the time of her dismissal from employment, held the position of Credit
Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first
employed by the petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In November
1993, respondent was transferred to the Cagayan de Oro City branch retaining the same position. In
January 1994, respondent was elevated to the position of CAS. At that time, the Branch Operations
Manager or BOM of the Cagayan de Oro City branch was a certain Mr. Jeremiah Villagracia. In March
1995, respondent was temporarily assigned to the Butuan City branch.
Sometime in June 1995, while respondent was still working in Butuan City, she allegedly
instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one
of the IBMs of the petitioner who happens to be respondents sister-in-law, from the 52-day limit to an
unauthorized term of 60 days. The respondent made the instruction just before the computer data for
the computation of the Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza
then reported this allegedly unauthorized act of respondent to her Branch Operations Manager, Mr.
Villagracia. Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified the records
and discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had been extended by
the respondent, but there were several other IBMs whose credit terms had been similarly extended
beyond the periods allowed by company policy. BOM Villagracia then summoned the respondent and
required her to explain the unauthorized credit extensions.

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

HELD:
The award of 13
th
month pay must be deleted. Respondent is not a rank-and-file employee and
is, therefore, not entitled to thirteenth-month pay. However, the NLRC and the CA are correct in refusing
to award 14
th
and 15
th
month pay as well as the monthly salary increase of 10 percent per year for two

years based on her latest salary rate. The respondent must show that these benefits are due to her as a
matter of right. Mere allegations by the respondent do not suffice in the absence of proof supporting the
same. With respect to salary increases in particular, the respondent must likewise show that she has a
vested right to the same, such that her salary increases can be made a component in the computation of
backwages. What is evident is that salary increases are a mere expectancy. They are by nature volatile
and dependent on numerous variables, including the companys fiscal situation, the employees future
performance on the job, or the employees continued stay in a position. In short, absent any proof, there
is no vested right to salary increases.


CONDITIONS OF EMPLOYMENT

SAN JUAN DE DIOS HOSPITAL VS. NLRC, 282 SCRA 316 [1997]

FACTS:
Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital
Employees Association, sent on July 08, 1991, a "four (4)-page letter with attached support signatures
requesting and pleading for the expeditious implementation and payment by respondent" Juan De Dios
Hospital "of the '40-HOURS/5-DAY WORKWEEK' with compensable weekly two (2) days off provided for
by Republic Act 5901 as clarified for enforcement by the Secretary of Labor's Policy Instructions No. 54
dated April 12, 1988." Respondent hospital failed to give a favorable response; thus, petitioners filed a
complaint regarding their "claims for statutory benefits under the above-cited law and policy issuance".
Petitioners appealed before public respondent National Labor Relations Commission (NLRC), which
affirmed the Labor Arbiter's decision. Petitioners' subsequent motion for reconsideration was denied;
hence, this petition.

Policy Instruction No. 54 provides:
To: All Concerned
Subject: Working Hours and Compensation of Hospital/Clinic Personnel
This issuance clarifies the enforcement policy of this Department on the working hours and compensation
of personnel employed by hospitals/clinics with a bed capacity of 100 or more and those located in cities
and municipalities with a population of one million or more.
Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day work week for hospital/clinic
personnel. At the same time, the Act prohibits the diminution of the compensation of these workers who
would suffer a reduction in their weekly wage by reason of the shortened workweek prescribed by the
Act. In effect, RA 5901 requires that the covered hospital workers who used to work seven (7) days a
week should be paid for such number of days for working only 5 days or 40 hours a week.

The evident intention of RA 5901 is to reduce the number of hospital personnel, considering the nature of
their work, and at the same time guarantee the payment to them of a full weekly wage for seven (7)
days. This is quite clear in the Exemplary Note of RA 5901 which states:
As compared with the other employees and laborers, these hospital and health clinic personnel are over-
worked despite the fact that their duties are more delicate in nature. If we offer them better working
conditions, it is believed that the "brain drain", that our country suffers nowadays as far as these
personnel are concerned will be considerably lessened. The fact that these hospitals and health clinics
personnel perform duties which are directly concerned with the health and lives of our people does not
mean that they should work for a longer period than most employees and laborers. They are also entitled
to as much rest as other workers. Making them work longer than is necessary may endanger, rather than
protect the health of their patients. Besides, they are not receiving better pay than the other workers.
Therefore, it is just and fair that they may be made to enjoy the privileges of equal working hours with
other workers except those excepted by law.

The Labor Code in its Article 83 adopts and incorporates the basic provisions of RA 5901 and retains its
spirit and intent which is to shorten the workweek of covered hospital personnel and at the same time
assure them of a full weekly wage.

Consistent with such spirit and intent, it is the position of the Department that personnel in subject
hospital and clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-
hour/5-day workweek in any given workweek. All enforcement and adjudicatory agencies of this
Department shall be guided by this issuance in the disposition of cases involving the personnel of covered
hospitals and clinics.

ISSUE: Whether or not Policy Instruction No. 54 is valid or not.

HELD:
No. Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901, otherwise known
as "An Act Prescribing Forty Hours A Week Of Labor For Government and Private Hospitals Or Clinic
Personnel", enacted on June 21, 1969. Reliance on Republic Act No. 5901, however, is misplaced for the
said statute has long been repealed with the passage of the Labor Code on May 1, 1974, Article 302 of
which explicitly provides: "All labor laws not adopted as part of this Code either directly or by reference
are hereby repealed. All provisions of existing laws, orders, decree, rules and regulations inconsistent
herewith are likewise repealed." Accordingly, only Article 83 of the Labor Code which appears to have
substantially incorporated or reproduced the basic provisions of Republic Act No. 5901 may support Policy
Instructions No. 54 on which the latter's validity may be gauged. Article 83 of the Labor Code states: Art.
83.

Normal Hours of Work. The normal hours of work of any employee shall not exceed eight (8) hours a
day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for
eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies
of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case
they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular
wage for work on the sixth day. For purposes of this Article, "health personnel" shall include: resident
physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.
A cursory reading of Article 83 of the Labor Code betrays petitioners' position that "hospital employees"
are entitled to "a full weekly salary with paid two (2) days' off if they have completed the 40-hour/5-day
workweek". What Article 83 merely provides are: (1) the regular office hour of eight hours a day, five
days per week for health personnel, and (2) where the exigencies of service require that health personnel
work for six days or forty-eight hours then such health personnel shall be entitled to an additional
compensation of at least thirty percent of their regular wage for work on the sixth day. There is nothing
in the law that supports then Secretary of Labor's assertion that "personnel in subject hospitals and
clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day
workweek in any given workweek". Needless to say, the Secretary of Labor exceeded his authority by
including a two days off with pay in contravention of the clear mandate of the statute. Such act the Court
shall not countenance. Administrative interpretation of the law, we reiterate, is at best merely advisory,
and the Court will not hesitate to strike down an administrative interpretation that deviates from the
provision of the statute.

Furthermore, Republic Act No. 5901 reveals nothing therein that gives two days off with pay for health
personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of House Bill
No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is
to shorten the working hours of health personnel and not to dole out a two days off with pay.
Further, petitioners' position is also negated by the very rules and regulations promulgated by the Bureau
of Labor Standards which implement Republic Act No. 5901.

If petitioners are entitled to two days off with pay, then there appears to be no sense at all why Section
15 of the implementing rules grants additional compensation equivalent to the regular rate plus at least
twenty-five percent thereof for work performed on Sunday to health personnel, or an "additional straight-
time pay which must be equivalent at least to the regular rate" "for work performed in excess of forty
hours a week.

SIMEDARBY VS. NLRC, 289 SCRA 86 [1998]

FACTS:
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other
rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an
association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present
controversy, all company factory workers in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its
monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality
Assurance Department working on shifts, a change in work schedule effective 14 September 1992.

Since private respondent felt affected adversely by the change in the work schedule and discontinuance
of the 30-minute paid "on call" lunch break, it filed on behalf of its members a complaint with the Labor
Arbiter for unfair labor practice, discrimination and evasion of liability.

However, the Labor Arbiter dismissed the complaint. Private respondent appealed to respondent National
Labor Relations Commission (NLRC) which sustained the Labor Arbiter and dismissed the appeal.
4

However, upon motion for reconsideration by private respondent, the NLRC, this time with two (2) new
commissioners replacing those who earlier retired, reversed its earlier decision of 20 April 1994 as well as
the decision of the Labor Arbiter.

ISSUE: Whether or not the act of management in revising the work schedule of its employees and
discarding their paid lunch break constitutive of unfair labor practice.

HELD:
No. The right to fix the work schedules of the employees rests principally on their employer. In the
instant case petitioner, as the employer, cites as reason for the adjustment the efficient conduct of its
business operations and its improved production.

It rationalizes that while the old work schedule included
a 30-minute paid lunch break, the employees could be called upon to do jobs during that period as they
were "on call." Even if denominated as lunch break, this period could very well be considered as working
time because the factory employees were required to work if necessary and were paid accordingly for
working. With the new work schedule, the employees are now given a one-hour lunch break without any
interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely
and effectively use this hour not only for eating but also for their rest and comfort which are conducive to
more efficiency and better performance in their work. Since the employees are no longer required to
work during this one-hour lunch break, there is no more need for them to be compensated for this
period. We agree with the Labor Arbiter that the new work schedule fully complies with the daily work
period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all
employees in the factory similarly situated whether they are union members or not.

The change effected by management with regard to working time is made to apply to all factory
employees engaged in the same line of work whether or not they are members of private respondent
union. Hence, it cannot be said that the new scheme adopted by management prejudices the right of
private respondent to self-organization.

Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain
that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right of
an employer to exercise what are clearly management prerogatives.

Thus, management is free to
regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay off of workers and discipline,
dismissal and recall of workers.

Further, management retains the prerogative, whenever exigencies of
the service so require, to change the working hours of its employees. So long as such prerogative is
exercised in good faith for the advancement of the employer's interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid agreements, this
Court will uphold such exercise.

While the Constitution is committed to the policy of social justice and the protection of the working class,
it should not be supposed that every dispute will be automatically decided in favor of labor. Management
also has rights which, as such, are entitled to respect and enforcement in the interest of simple fair play.
Although this Court has inclined more often than not toward the worker and has upheld his cause in his
conflicts with the employer, such favoritism has not blinded the Court to the rule that justice is in every
case for the deserving, to be dispensed in the light of the established facts and the applicable law and
doctrine.

PHIL. AIRLINES VS. NLRC, 302 SCRA 582 [1999]

FACTS:
PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight. On
February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at
his residence, which was about five-minute drive away. A few minutes later, the clinic received an
emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a
heart attack. The nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of
the emergency. The patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately
rushed him to the hospital. When private respondent reached the clinic at around 7:51 in the evening,
Mr. Eusebio had already left with the patient. Mr. Acosta died the following day.

Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight
Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required private respondent to
explain why no disciplinary sanction should be taken against him. In his explanation, private respondent
asserted that he was entitled to a thirty-minute meal break; that he immediately left his residence upon
being informed by Mr. Eusebio about the emergency and he arrived at the clinic a few minutes later;
that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him.

Finding private respondents explanation unacceptable, the management charged private respondent with
abandonment of post while on duty. He was given ten days to submit a written answer to the
administrative charge.

In his answer, private respondent reiterated the assertions in his previous explanation. He further denied
that he abandoned his post on February 17, 1994. He said that he only left the clinic to have his dinner
at home. In fact, he returned to the clinic at 7:51 in the evening upon being informed of the emergency.
After evaluating the charge as well as the answer of private respondent, petitioner company decided to
suspend private respondent for three months effective December 16, 1994. Private respondent filed a
complaint for illegal suspension against petitioner.

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

HELD:
The petitioner corporation is not correct.Supreme Court said:
Articles 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work.The normal hours of work of any employee shall not exceed eight (8)
hours a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for
eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies
of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case
they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular
wage for work on the sixth day. For purposes of this Article, health personnel shall include: resident
physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.
(emphasis supplied)

Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may prescribe, it shall be
the duty of every employer to give his employees not less than sixty (60) minutes time-off for their
regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:

Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of sex, not less than
one (1) hour time-off for regular meals, except in the following cases when a meal period of not less than
twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as
compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be performed on
machineries, equipment or installations to avoid serious loss which the employer would otherwise
suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as
compensable working time.

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

LINTON COMMERCIAL CO., INC. VS. HELIERA, ET. AL.
G.R. NO. 163147, OCTOBER 1, 2007

FACTS:
Linton is a domestic corporation engaged in the business of importation, wholesale, retail and fabrication
of steel and its by-products. Petitioner Desiree Ong is Lintons vice president. On 17 December 1997,
Linton issued a memorandum addressed to its employees informing them of the companys decision to
suspend its operations from 18 December 1997 to 5 January 1998 due to the currency crisis that affected
its business operations. Linton submitted an establishment termination report to the Department of Labor
and Employment (DOLE) regarding the temporary closure of the establishment covering the said period.
The companys operation was to resume on 6 January 1998.


On 7 January 1997, Linton issued another memorandum informing them that effective 12 January 1998,
it would implement a new compressed workweek of three (3) days on a rotation basis. In other words,
each worker would be working on a rotation basis for three working days only instead for six days a
week. On the same day, Linton submitted an establishment termination report concerning the rotation of
its workers. Linton proceeded with the implementation of the new policy without waiting for its approval
by DOLE.

Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of workdays with the
Arbitration Branch of the NLRC on 17 July 1998.

Petitioner argues the following:
1) The devaluation of the peso created a negative impact in international trade and affected their
business because a majority of their raw materials were imported. Their business suffered a net
loss of P3,569,706.57 primarily due to currency devaluation and the slump in the market.
Consequently, Linton decided to reduce the working days of its employees to three (3) days on a
rotation basis as a cost-cutting measure.
2) The compressed workweek was actually implemented on 12 January 1998 and not on 7 January
1998, and that Article 283 was not applicable to the instant case.
3) The reduction of workdays is not equivalent to constructive dismissal. There was no reduction of
salary but instead only a reduction of working days from six to three days per week. The
reduction of workdays, while not expressly covered by any of the provisions of the Labor Code, is
analogous to the situation contemplated in Article 286 of the Labor Code because the company
implemented the reduction of workdays to address its financial losses.
4) Since there was no retrenchment, the one-month notice requirement under Article 283 of the
Labor Code is not applicable.

Respondent contends that Linton implemented the reduction of work hours without observing Article 283
of the Labor Code, which required submission of notice thereof to DOLE one month prior to the
implementation of reduction of personnel, since Linton filed only the establishment termination report
enacting the compressed workweek on the very date of its implementation.

ISSUE: Whether or not had committed illegal reduction of work when it imposed a reduction of work
hours thereby affecting its employees.

HELD:
Yes. For the reduction of working hours to be valid, the following must be taken into consideration: the
arrangement was temporary, it was a more humane solution instead of a retrenchment of personnel,
there was notice and consultations with the workers and supervisors, a consensus were reached on how
to deal with deteriorating economic conditions and it was sufficiently proven that the company was
suffering from losses.

A reduction of the number of regular working days is valid where the arrangement is resorted to by the
employer to prevent serious losses due to causes beyond his control, such as when there is a substantial
slump in the demand for his goods or services or when there is lack of raw materials.

A close examination of petitioners financial reports for 1997-1998 shows that, while the company
suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings and operating
income. Clearly then, while Linton suffered from losses for that year, there remained enough earnings to
sufficiently sustain its operations. In business, sustained operations in the black is the ideal but being in
the red is a cruel reality. However, a year of financial losses would not warrant the immolation of the
welfare of the employees, which in this case was done through a reduced workweek that resulted in an
unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at
the slightest indication of losses would be contrary to the States policy to afford protection to labor and
provide full employment.

Certainly, management has the prerogative to come up with measures to ensure profitability or loss
minimization. However, such privilege is not absolute. Management prerogative must be exercised in
good faith and with due regard to the rights of labor.

As previously stated, financial losses must be shown before a company can validly opt to reduce the work
hours of its employees. However, to date, no definite guidelines have yet been set to determine whether
the alleged losses are sufficient to justify the reduction of work hours. If the standards set in
determining the justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e.,
suspension of work) of the Labor Code were to be considered, petitioners would end up failing to meet

the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of the
employers operation of a business or undertaking for a period not exceeding six (6) months. Records
show that Linton continued its business operations during the effectivity of the compressed workweek,
which spanned more than the maximum period. On the other hand, for retrenchment to be justified, any
claim of actual or potential business losses must satisfy the following standards: (1) the losses incurred
are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the
retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and
(4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are
proven by sufficient and convincing evidence. Linton failed to comply with these standards.

BISIG MANGGAGAWA SA TRYCO VS. NLRC,
G.R. NO. 151309, OCT. 15, 2008

FACTS:
Tryco and the petitioners signed separate Memoranda of Agreement (MOA), providing for a compressed
workweek schedule to be implemented in the company effective May 20, 1996. The MOA was entered
into pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990,
Guidelines on the Implementation of Compressed Workweek. As provided in the MOA, 8:00a.m. to
6:12p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay
shall be due and payable to the employee for work rendered during those hours. The MOA specifically
stated that the employee waives the right to overtime pay for work rendered after 5p.m. until 6:12p.m.
from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the
regular workweek schedule which also consists of 46 hours. However, should an employee be permitted
or required to work beyond 6:12p.m., such employee shall be entitled to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the
implementation of a compressed workweek in the company. In January 1997, BMT and Tryco negotiated
for the renewal of their collective bargaining agreement (CBA) but failed to arrive at a new agreement.

ISSUE: the MOA providing for compressed workweek is unenforceable as it is contrary to law.

HELD:
The MOA is enforceable and binding against the petitioner.
Where it is shown that the person making the waiver did so voluntarily, with full understanding of what
he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking. Notably, the MOA complied with the following conditions
set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a
compressed workweek scheme:
1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of
which shall not exceed their normal weekly hours of work prior to adoption of the compressed
workweek arrangement.
2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe
benefits of the employees.
3. If an employee is permitted or required to work in excess of his normal weekly hours of work
prior to the adoption of the compressed workweek scheme, all such excess hours shall be
considered overtime work and shall be compensated in accordance with the provisions of the
Labor Code or applicable CBA.
4. Appropriate waivers with respect to overtime premium pay for work performed in excess of eight
(8) hours a day may be devised by the parties to the agreement.
5. The effectivity and implementation of the new working time arrangement shall be by agreement
of the parties.
Considering that the MOA clearly states that the employee waives the payment of overtime pay in
exchange of a five-day workweek, there is no room for interpretation and its terms should be
implemented as they are written.


MINIMUM LABOR STANDARD BENEFITS

UNION OF FILIPRO EMPLOYEES VS. VICAR, 205 SCRA 203 [1992]

FACTS:
On November 8, 1985, respondent Filipro, Inc. (now Nestl Philippines, Inc.) filed with the National Labor
Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations
respecting claims of its monthly paid employees for holiday pay in the light of the Courts decicsion in
Chartered Bank Employees Association vs. Ople (138 SCRA 273 [1985]).

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration
and appointed respondent Benigno Vivar Jr. as voluntary arbitrator.

On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject
only to the exclusions and limitations specified in Article 82 and such other legal
restrictions as are provided for in the code.

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the
exclusion of salesmen, sales representatives, truck drivers, merchandisers, and medical representatives
(hereinafter referred to as sales personnel) from the award of overpayment for overtime, night
differential, vacation and sick leave benefits due to the use of 251 divisor. Petitioner UFE answered that
the award should be made effective from the date of effectivity of the Labor Code, that their sales
personnel are not field personnel and are therefore entitled to holiday pay.

ISSUE: Whether Nestls sales personnel are entitled to holiday pay.

HELD:
Nestls sales personnel are not entitled to holiday pay. The law requires that the actual hours of
work in the field be reasonably ascertained. The company has no way of determining whether or
nor these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come
back at 4:30 p.m., really spend the hours in between in actual field work. We concur with the following
disquisition by the respondent arbitrator: The requirement for the salesmen and other similarly situated
employees to report for work at office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the
realm of work in the field as defined in the Code but an exercise of purely management prerogative of
providing administrative control over such personnel. This does not in any manner provide a reasonable
level of determination on the actual fieldwork of the employees which can be reasonably ascertained.

The theoretical analysis that salesmen and other similarly-situated workers regularly report for work at
8:00 a.m. and return to their home station at 4:00 or 4:30 p.m., creating the assumption that their
fieldwork is supervised, is surface projection. Actual fieldwork begins after 8:00 a.m. and 4:00 or 4:30
p.m. comprises their hours of work in the field, the extent or scope and result of which are subject to
their individual capacity and industry and which cannot be determined with reasonable certainty. This
is the reason why effective supervision over fieldwork of salesmen and medical
representatives, truck drivers and merchandisers is practically a physical impossibility.
Consequently, they are excluded from the ten holidays with pay award.

NATIONAL SUGAR REFINERY CORP. VS NLRC, 220 SCRA 452 [1993]

FACTS:
Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery,
namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor,
Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior
Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor,
General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment
and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse,
Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day
Maintenance Supervisor and Motorpool Supervisor.

On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from
rank-and-file to department heads which was designed to rationalized the duties and functions of all
positions, reestablish levels of responsibility, and recognize both wage and operational structures. Jobs
were ranked according to effort, responsibility, training and working conditions and relative worth of the

job. As a result, all positions were re-evaluated, and all employees including the members of respondent
union were granted salary adjustments and increases in benefits commensurate to their actual duties and
functions. Two years after the implementation of the JE Program, specifically on June 20, 1990, the
members of herein respondent union filed a complainant with the executive labor arbiter for non-
payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.

ISSUE: WON the members of respondent union are entitled to overtime, rest day and holiday pay.

HELD:
The members of the union are not entitled to overtime, rest and holiday pay since they fall within the
classification of managerial employees which makes them a part of the exempted employees.

It must of necessity be ascertained first whether or not the union members, as supervisory employees,
are to be considered as officers or members of the managerial staff who are exempt from the coverage
of Article 82 of the Labor Code.

It is not disputed that the members of respondent union are supervisory employees, as defined
employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads:
'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline
employees. Supervisory employees are those who, in the interest of the employer effectively recommend
such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but
requires the use of independent judgment. All employees not falling within any of those above definitions
are considered rank-and-file employees of this Book."

Article 82 of the Labor Code states: The provisions of this title shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him for
support, domestic helpers, persons in the personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in Appropriate regulations.

As used herein, 'managerial employees' refer to those whose primary duty consists of the management of
the establishment in which they are employed or of a department or subdivision thereof, and to other
officers or members of the managerial staff.

Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they qualify for
exemption under the condition set forth herein:
(b) Managerial employees, if they meet all of the following conditions, namely:
(1) Their primary duty consists of the management of the establishment in which they
are employed or of a department or subdivision thereof:
(2) They customarily and regularly direct the work of two or more employees therein:
(3) They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to the hiring and firing and as to the promotion
or any other change of status of other employees are given particular weight.
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to
management policies of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary
duty consists of the management of the establishment in which he is employed or
subdivision thereof; or
a. (ii) execute under general supervision work along specialized or technical
lines requiring special training, experience, or knowledge; or
b. (iii) execute under general supervision special assignments and tasks;
(4) Who do not devote more 20 percent of their hours worked in a work-week to
activities which are not directly and closely related to the performance of the work
described in paragraphs (1), (2), and above."

They are clearly officers or members of the managerial staff because they meet all the conditions
prescribed by law and, hence, they are not entitled to overtime, rest day and supervisory employees
under Article 212 (m) should be made to apply only to the provisions on Labor Relations, while the right
of said employees to the questioned benefits should be considered in the light of the meaning of a
managerial employee and of the officers or members of the managerial staff, as contemplated under
Article 82 of the Code and Section 2, Rule I Book III of the implementing rules.

In other words, for purposes of forming and joining unions, certification elections, collective bargaining,
and so forth, the union members are supervisory employees. In terms of working conditions and rest
periods and entitlement to the questioned benefits, however, they are officers or members of the
managerial staff, hence they are not entitled thereto.

The union members will readily show that these supervisory employees are under the direct supervision
of their respective department superintendents and that generally they assist the latter in planning,
organizing, staffing, directing, controlling communicating and in making decisions in attaining the
company's set goals and objectives. These supervisory employees are likewise responsible for the
effective and efficient operation of their respective departments.

More specifically, their duties and functions include, among others, the following operations whereby the
employee:
1) assists the department superintendent in the following:
a) planning of systems and procedures relative to department activities;
b) organizing and scheduling of work activities of the department, which includes
employee shifting scheduled and manning complement;
c) decision making by providing relevant information data and other inputs;
d) attaining the company's set goals and objectives by giving his full support;
e) selecting the appropriate man to handle the job in the department; and
f) preparing annual departmental budget;
2) observes, follows and implements company policies at all times and recommends disciplinary
action on erring subordinates;
3) trains and guides subordinates on how to assume responsibilities and become more
productive;
4) conducts semi-annual performance evaluation of his subordinates and recommends
necessary action for their development/advancement;
5) represents the superintendent or the department when appointed and authorized by the
former;
6) coordinates and communicates with other inter and intra department supervisors when
necessary;
7) recommends disciplinary actions/promotions;
8) recommends measures to improve work methods, equipment performance, quality of service
and working conditions;
9) sees to it that safety rules and regulations and procedure and are implemented and followed
by all NASUREFCO employees, recommends revisions or modifications to said rules when
deemed necessary, and initiates and prepares reports for any observed abnormality within
the refinery;
10) supervises the activities of all personnel under him and goes to it that instructions to
subordinates are properly implemented; and
11) performs other related tasks as may be assigned by his immediate superior.
From the foregoing, it is apparent that the members of respondent union discharge duties and
responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined
in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.:
(1) their primary duty consists of the performance of work directly related to management
policies of their employer;
(2) they customarily and regularly exercise discretion and independent judgment;
(3) they regularly and directly assist the managerial employee whose primary duty consist of the
management of a department of the establishment in which they are employed
(4) they execute, under general supervision, work along specialized or technical lines requiring
special training, experience, or knowledge;
(5) they execute, under general supervision, special assignments and tasks; and
(6) they do not devote more than 20% of their hours worked in a work-week to activities which
are not directly and clearly related to the performance of their work hereinbefore described.
Under the facts obtaining in this case, The Court is constrained to agree with petitioner that the
union members should be considered as officers and members of the managerial staff and are, therefore,
exempt from the coverage of Article 82.

SALAZAR VS. NLRC, 256 SCRA 273 [1996]

FACTS:
On 17 April 1990, private respondent, at a monthly salary of P4,500.00, employed petitioner as
construction/project engineer for the construction of the Monte de Piedad building in Cubao, Quezon City.

Allegedly, by virtue of an oral contract, petitioner would also receive a share in the profits after
completion of the project and that petitioners services in excess of eight (8) hours on regular days and
services rendered on weekends and legal holidays shall be compensable overtime at the rate of P27.85
per hour.

On 16 April 1991, petitioner received a memorandum issued by private respondents project manager,
Engr. Nestor A. Delantar informing him of the termination of his services effective on 30 April 1991. On
13 September 1991, petitioner filed a complaint against private respondent for illegal dismissal, unfair
labor practice, illegal deduction, non-payment of wages, overtime rendered, service incentive leave pay,
commission, allowances, profit-sharing and separation pay with the NLRC-NCR Arbitration Branch, Manila.
The Labor Arbiter dismissed the case. It ruled that petitioner was a managerial employee and therefore
exempt from payment of benefits such as overtime pay, service incentive leave pay and premium pay for
holidays and rest days. It also stated that petitioner was also not entitled to separation pay. He was hired
as a project employee and his services were terminated due to the completion of the project. The NLRC
affirmed the decision of the Labor Arbiter.

ISSUE: Whether or not petitioner a a project employee is entitled to separation pay.

HELD:
Petitioner as a project employee is not entitled to separation pay.The applicable provision is Article 280 of
the Labor Code which defines the term project employee, thus: ART. 280. Regular and Casual
Employment. - The provisions of written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season. In the case at bench, it was duly established that private respondent hired
petitioner as project or construction engineer specifically for its Monte de Piedad building project. In his
own words, petitioner declared: 2. That complainant-petitioner herein, by virtue of an oral agreement
entered into with private respondent herein through its proprietor, president and general manager, Engr.
Honorio L. Carlos, on April 17 1990, began to work as a duly licensed Civil Engineer as construction or
project engineer of its contracted project, the Monte de Piedad Bank Building, at Cubao, Quezon City.
Accordingly, as project employee, petitioners services are deemed coterminous with the project, that is,
petitioners services may be terminated as soon as the project for which he was hired is completed. There
can be no dispute that petitioners dismissal was due to the completion of the construction of the Monte
de Piedad building. Petitioner himself stated that it took him and his assisting laborers until 15 May 1991
to complete the finishing touches on the said building. Petitioner, thus, has no legal right to demand
separation pay. Policy Instruction No. 20 entitled Stabilizing Employer-Employee Relations in the
Construction Industry explicitly mandates that: x x x Project employees are not entitled to termination
pay if they are terminated as a result of the completion of the project or any phase thereof in which they
are employed, regardless of the number of projects in which they have been employed by a particular
construction company.

LABOR CONGRESS OF THE PHILS. VS. NLRC
G.R. NO. 1239381, MAY 21, 1998

FACTS:
The 99 petitioners in this case were rank-and-file employees of Empire Food Products. They filed
complaints for money claims and violations of labor standards laws and another petition seeking
certification of their union as theur bargaining representative, the employer and the petitioners executed
a memorandum of agreement where the employer agreed to bargain with the union over the employees
demands. But no bargaining ever took place. Instead, the employees were dismissed allegedly for
abandoning their jobs. The employees, courageously assisted by LCP President Benigno Navarro (a non-
lawyer), complained of illegal dismissal, asked for reinstatement with backwages, and pursued their
claims for statutory benefits and damages.

There was never a question that the petitioners were employees of Empire Food Products although the
issue was raised whether they were regular employees or not. Finding the observations of the Office of
the Solicitor General most persuasive, the Supreme Court ruled that the petitioners were indeed regular
employees. Finding likewise that their dismissal was unjustified, the Court declared them entitled to
reinstatement, but, nevertheless, awarded separation pay in lieu of reinstatement in view of strained
relationship between the parties. Backwages were also awarded but the computation would have to be
done by NLRC since the petitioners earnings were variable because they were paid on piece-rate basis.

Working as repackers, they were paid a certain amount for every thousand pieces of cheese curls and
other products repacked.
The Court, after ruling in the regular status of the petitioners and their entitlement to backwages, next
delved on their claim for statutory benefits. This pertinent portion of the decision is reproduced below.

ISSUE: Whether or not petitioners, as piece-rate workers, are regular employees and thus entitled to
holiday pay, premium pay, 13
th
month pay and service incentive leave benefits.

HELD:
As to the other benefits, namely, holiday pay, premium pay, 13
th
month pay and service incentive leave
which the labor arbiter failed to rule on but which petitioners prayed for in their complaint, we hold that
petitioners are so entitled to these benefits.

The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as
nighttime pay, holiday pay, service incentive leave and 13
th
month pay, inter alia, field personnel and
other employees whose time and performance is unsupervised by the employer, including those who are
engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the performance thereof. Plainly, petitioners as
piece-rate workers do not fall within this group. As mentioned earlier, not only did petitioners labor under
the control of private respondents as their employer, likewise did petitioners toil throughout the year with
the fulfillment of their quota as supposed basis for compensation. Further, in Section 8 (b), Rule IV, Book
III which we quote hereunder, piece workers are specifically mentioned as being entitled to holiday pay.

Sec. 8 Holiday pay to certain employees.
Where a covered employee is paid by the results or output, such as payment on piece work, his holiday
pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding
the regular holiday: Provided, however, That in no case shall the holiday pay be less than the applicable
statutory minimum wage rate.

In addition, the Revised Guidelines on the Implementing of the 13
th
-Month Pay Law, in view of the
modifications of P.D. No. 851 by Memorandum Order No. 28, clearly exclude the employer of the piece-
rate workers from those exempted from paying 13
th
-month pay, to wit:

2. Exempted Employers
The following employers are still not covered by P.D. No. 851:
Employers of those who are paid on purely commission, boundary or task basis, and those who are paid
a fixed amount for performing specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the
required the 13
th
-month pay to such workers.

The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the
piece-rate category as those who are paid a standard amount for every piece or unit work produced that
is more or less regularly replicated, without regard to the time spent in producing the same.

As to overtime pay, the rules, however, are different. According to Sec. 2 (a), Rule 1, Book III of the
Implementing Rules, workers who are paid by results including those who are paid on piece-rate, takay,
pakiao, or task basis, if their output rates are in accordance with the standards prescribed under Sec. 8,
Rule VII, Book III of those regulations, or where such rates have been fixed by the Secretary of Labor in
accordance with the aforesaid section, are not entitled to receive overtime pay. Here, private respondents
did not allege adherence to the standards set forth in Sec. 8 nor with the rates prescribed by the
Secretary of Labor. As such, petitioners are beyond the ambit of exempted persons and are therefore
entitled to overtime pay. Once more, the National Labor Relations Commission would be in a better
position to determine the exact amounts owed petitioners, if any.

MERCIDAR FISHING CORP VS. NLRC, G.R. NO. 112574, OCTOBER 8, 1998

FACTS:
Private respondent had been employed as a bodegero or ships quartermaster on February 12,
1988. he complained that he has been constructively dismissed by petitioner when the latter refuse
him assignments aboard its boats after he has reported to work on May 28, 1990.

Private respondent alleged that he had been sick and thus allowed to go on leave for 1 month but
when he reported to work at the end of such period with a health clearance, he was told to come

back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give
him work.
Petitioner on the other hand, alleged that it was private respondent who actually abandoned his
work.Petitioner contends that NLRC palpably erred in ruling and sustaining the view that fishing crew
members, like Fermin Agao, Jr., cannot be classified as field personnel under Article 82 of the Labor
Code.

ISSUE: WON the fishing crew members are considered field personnel who have no statutory right to
service incentive leave pay.

HELD:
Fishing crew are still entitled to service incentive leave.
Art. 82 of the Labor Code provides: The provisions of this title [Working Conditions and Rest
Periods] shall apply to employees in all establishments and undertakings whether for profit or
not, but not to government employees, field personnel, members of the family of the employer
who are dependent on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the Secretary of Labor in
appropriate regulations.

"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from
the principal place of business or branch office of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty.

In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by
petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work
away from petitioner's business offices, the fact remains that throughout the duration of their work they
are under the effective control and supervision of petitioner through the vessel's patron or master.

SAN MIGUEL CORPS. CA,
G.R. NO. 146775, JAN. 30, 2002

FACTS:
The Department of Labor and Employment conducted a routine inspection in the premises of San Miguel
Corporation in Sta. Filomena, Iligan City. In the course of the inspection, it was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of the
inspection result to SMC and it was received by and explained to its personnel officer Elena dela Puerta.

SMC contested the findings and DOLE conducted summary hearings on 19 November 1992, 28 May 1993
and 4 and 5 October 1993. Still, SMC failed to submit proof that it was paying regular Muslim holiday pay
to its employees. Hence, Director IV of DOLE Iligan District Office issued a compliance order directing
SMC to consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim
employees holiday pay within thirty (30) days from the receipt of the order. SMC appealed but it was
dismissed.

ISSUE: WON the employees are entitled with regular Muslim holiday pay.

HELD:
The employees are entitled to regular Muslim holiday pay. Muslim holidays are provided under Articles
169 and 170, Title I, Book V, of Presidential Decree No. 1083, otherwise known as the Code of Muslim
Personal Laws, which states: Official Muslim holidays. The following are hereby recognized as legal
Muslim holidays:
(a) 'Amun Jadd (New Year), which falls on the first day of the first lunar month of Muharram;
(b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on the twelfth day of the
third lunar month of Rabi-ul-Awwal,
(c) Lailatul Isr Wal Mi'rj (Nocturnal Journey and Ascension of the Prophet Muhammad), which
falls on the twenty-seventh day of the seventh lunar month of Rajab:
(d) 'd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and
(e) 'd-ul-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dh'l-
Hijja.
Art. 170 provides the provinces and cities where officially observed. (1) Muslim holidays shall be
officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North
Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as
may hereafter be created; (2)Upon proclamation by the President of the Philippines, Muslim holidays may
also be officially observed in other provinces and cities.

The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which provides:
Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except
in retail and service establishments regularly employing less than ten (10) workers; (b) The employer
may require an employee to work on any holiday but such employee shall be paid a compensation
equivalent to twice his regular rate;
However, there should be no distinction between Muslims and non-Muslims as regards payment of
benefits for Muslim holidays. The Court reminds the respondent-appellant that wages and other
emoluments granted by law to the working man are determined on the basis of the criteria laid down by
laws and certainly not on the basis of the worker's faith or religion.

TAN VS. LAGRAMA,
G.R. NO. 151228, AUGUST 15, 2002

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

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

Lagrama denied the charge against him. He claimed that he was not the only one who entered the
drawing area and that, even if the charge was true, it was a minor infraction to warrant his dismissal.
However, everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but to
leave the premises.

Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X of the National Labor Relations
Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and sought
reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and
damages.

Petitioner argues that Lagrama was not his employee. He asserted that Lagrama was an independent
contractor who did his work according to his methods, while he (petitioner) was only interested in the
result thereof. Moreover, he was paid on a fixed piece-work basis, i.e., that he was paid for every
painting turned out as ad billboard or mural for the pictures shown in the three theaters, on the basis of
a "no mural/billboard drawn, no pay" policy. Also, it was the latter who refused to paint for him after he
was scolded for his habits.

ISSUE: Whether or not an employee-employer relationship existed.

HELD:
Yes. In determining whether there is an employer-employee relationship, we have applied a "four-fold
test," to wit: (1) whether the alleged employer has the power of selection and engagement of
employees; (2) whether he has control of the employee with respect to the means and methods by which
work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was
paid wages.

These elements of the employer-employee relationship are present in this case.

First, it was petitioner who engaged the services of Lagrama without the intervention of a third party. It
is the existence of the second element, the power of control, that requires discussion here. Of the four
elements of the employer-employee relationship, the "control test" is the most important. Compared to
an employee, an independent contractor is one who carries on a distinct and independent business and
undertakes to perform the job, work, or service on its own account and under its own responsibility
according to its own manner and method, free from the control and direction of the principal in all
matters connected with the performance of the work except as to the results thereof. Hence, while an
independent contractor enjoys independence and freedom from the control and supervision of his
principal, an employee is subject to the employer's power to control the means and methods by which
the employee's work is to be performed and accomplished.


In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an independent
contractor and never his employee, the evidence shows that the latter performed his work as painter
under the supervision and control of petitioner. Lagrama worked in a designated work area inside the
Crown Theater of petitioner, for the use of which petitioner prescribed rules. The rules included the
observance of cleanliness and hygiene and a prohibition against urinating in the work area and any place
other than the toilet or the rest rooms. Petitioner's control over Lagrama's work extended not only to the
use of the work area, but also to the result of Lagrama's work, and the manner and means by which the
work was to be accomplished.

Moreover, it would appear that petitioner not only provided the workplace, but supplied as well the
materials used for the paintings, because he admitted that he paid Lagrama only for the latter's services.
Private respondent Lagrama claimed that he worked daily, from 8 o'clock in the morning to 5 o'clock in
the afternoon. Petitioner disputed this allegation and maintained that he paid Lagrama P1,475.00 per
week for the murals for the three theaters which the latter usually finished in 3 to 4 days in one week.
Even assuming this to be true, the fact that Lagrama worked for at least 3 to 4 days a week proves
regularity in his employment by petitioner.

Second, petitioner had the right to hire and fire respondent. The right to hire and fire is another
important element of the employer-employee relationship. Indeed, the fact that, as petitioner himself
said, he waited for Lagrama to report for work but the latter simply stopped reporting for work reinforces
the conviction that Lagrama was indeed an employee of petitioner. For only an employee can nurture
such an expectancy, the frustration of which, unless satisfactorily explained, can bring about some
disciplinary action on the part of the employer.

Third, payment of wages is one of the four factors to be considered in determining the existence of
employer-employee relation. That Lagrama worked for Tan on a fixed piece-work basis is of no moment.
Payment by result is a method of compensation and does not define the essence of the relation. It is a
method of computing compensation, not a basis for determining the existence or absence of employer-
employee relationship. One may be paid on the basis of results or time expended on the work, and may
or may not acquire an employment status, depending on whether the elements of an employer-employee
relationship are present or not.

The Rules Implementing the Labor Code require every employer to pay his employees by means of
payroll. The payroll should show among other things, the employee's rate of pay, deductions made, and
the amount actually paid to the employee. In the case at bar, petitioner did not present the payroll to
support his claim that Lagrama was not his employee, raising speculations whether his failure to do so
proves that its presentation would be adverse to his case.

The primary standard for determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business of the employer.
In this case, there is such a connection between the job of Lagrama painting billboards and murals and
the business of petitioner. To let the people know what movie was to be shown in a movie theater
requires billboards. Petitioner in fact admits that the billboards are important to his business.

The fact that Lagrama was not reported as an employee to the SSS is not conclusive on the question of
whether he was an employee of petitioner. Otherwise, an employer would be rewarded for his failure or
even neglect to perform his obligation.

Neither does the fact that Lagrama painted for other persons affect or alter his employment relationship
with petitioner. That he did so only during weekends has not been denied by petitioner. On the other
hand, Samuel Villalba, for whom Lagrama had rendered service, admitted in a sworn statement that he
was told by Lagrama that the latter worked for petitioner.

Lagrama had been employed by petitioner since 1988. Under the law, therefore, he is deemed a regular
employee and is thus entitled to security of tenure, as provided in Art. 279 of Labor Code:
ART. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.

The Court has held that if the employee has been performing the job for at least one year, even if not
continuously but intermittently, the repeated and continuing need for its performance is sufficient
evidence of the necessity, if not indispensability, of that activity to the business of his employer. Hence,

the employment is also considered regular, although with respect only to such activity, and while such
activity exists.

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

LAMBO VS. NLRC, 317 SCRA 420

FACTS:
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C.
Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked
from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100
employees of private respondents, petitioners were paid on a piece-work basis, according to the style of
suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily
pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and
sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive
leave pay, separation pay, 13th month pay, and attorneys fees. After hearing, Labor Arbiter found
private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners claims. On
appeal, the NLRC reversed the decision of the Labor Arbiter. The NLRC held petitioners guilty of
abandonment of work and accordingly dismissed their claims except that for 13th month pay.

ISSUE: WON the petitioners are entitled to the minimum benefits provided by law.

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

Piece-rate payment is generally practiced in garment factories where work is done in the company
premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry,
such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. 4
Petitioners belong to the first category, i.e., supervised employees.

In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners
worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays.
The mere fact that they were paid on a piece-rate basis does not negate their status as regular
employees of private respondents. The term "wage" is broadly defined in Art. 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on
a time, task, piece or commission basis. Payment by the piece is just a method of compensation and does
not define the essence of the relations. Nor does the fact that petitioners are not covered by the SSS
affect the employer-employee relationship. As petitioners were illegally dismissed, they are entitled to
reinstatement with back wages. The Arbiter applied the rule in the Mercury Drug case, according to which
the recovery of back wages should be limited to three years without qualifications or deductions. Any
award in excess of three years is null and void as to the excess. The Labor Arbiter correctly ordered
private respondents to give separation pay.

R&E TRANSPORT VS. LATAG
G.R. NO. 155214, FEB. 13, 2004

FACTS:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased
from business operations, Latag transferred to petitioner. He was receiving an average daily salary of five
hundred pesos (P500.00) as a taxi driver.

Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which was
granted. When he recovered, he reported for work in September 1998 but was no longer allowed to
continue working on account of his old age.
Latag thus asked Felix Fabros, the administrative officer of petitioners, for his retirement pay pursuant to
Republic Act 7641 but he was ignored. Thus, on December 21, 1998, Latag filed a case for payment of
his retirement pay before the NLRC.

Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January
10, 2000, the Labor Arbiter rendered a decision in favor of Latag.

On January 21, 2000, Respondent Avelina Latag, with her then counsel, was invited to the office of
petitioners counsel and was offered the amount of P38,500.00, which she accepted. Respondent was
also asked to sign an already prepared quitclaim and release and a joint motion to dismiss the case.
After a day or two, respondent received a copy of the January 10, 2000 Decision of the Labor Arbiter.
"On January 24, 2000, petitioners filed the quitclaim and motion to dismiss. Thereafter, on May 23, 2000,
the Labor Arbiter issued an order, still upholding the January 10, 2000 decision of the Labor Arbiter.

On January 21, 2000, petitioners interposed an appeal before the NLRC. On March 14, 2001, the latter
dismissed the appeal for failure to post the required bond.

On April 10, 2001, petitioners filed a motion for reconsideration of the above resolution. On September
28, 2001, the NLRC came out with the assailed Decision, which gave due course to the motion for
reconsideration."

Respondent contends that under Article 223 of the Labor Code and Section 3, Rule VI of the New Rules
of Procedure of the NLRC, an employers appeal of a decision involving monetary awards may be
perfected only upon the posting of an adequate cash or surety bond.

On the other hand, petitioner argues that the CA erred in disregarding the factual findings of the NLRC
and in deciding to affirm those of the labor arbiter. Allegedly, the NLRC findings were based on
substantial evidence, while those of the labor arbiter were groundless. Petitioners add that the appellate
court should have refrained from tackling issues of fact and, instead, limited itself to those of jurisdiction
or grave abuse of discretion on the part of the NLRC.

ISSUE: WON Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.

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

Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287
of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. In the absence of
a retirement plan or agreement providing for retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which
is hereby declared the compulsory retirement age, who has served at least five (5) years in said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6) months being considered as one
whole year. Unless the parties provide for broader inclusions, the term one half-month salary shall mean
fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than
five (5) days of service incentive leaves

The rules implementing the New Retirement Law similarly provide the above-mentioned formula for
computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is
not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be
computed on the sole basis of his salary.

It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the
"boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing
their benefits should be the average daily income.


ASIAN TRANSMISSION VS. CA, 425 SCRA 478 [2004]

FACTS:
Petitioner, Asian Transmission Corporation, seeks via petition for certiorari under Rule 65 of the
1995 Rules of Civil Procedure the nullification of the March 28, 2000 Decision of the Court of Appeals
denying its petition to annul 1) the March 11, 1993 Explanatory Bulletin of the Department of Labor
and Employment (DOLE) entitled Workers Entitlement to Holiday Pay on April 9, 1993, Araw ng
Kagitingan and Good Friday, which bulletin the DOLE reproduced on January 23, 1998, 2) the July 31,
1998 Decision of the Panel of Voluntary Arbitrators ruling that the said explanatory bulletin applied as
well to April 9, 1998, and 3) the September 18, 1998 Resolution of the Panel of Voluntary Arbitration
denying its Motion for Reconsideration.

The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B.
Trajano, issued an Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia, that
employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which[,] apart
from being Good Friday [and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also
a legal holiday]. .
Despite the explanatory bulletin, petitioner [Asian Transmission Corporation] opted to pay its
daily paid employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian
Transmission Labor Union (BATLU) protested.

ISSUE: Whether or not Asian Transmission is bound to pay their employees the equivalent of two holiday
pay for both the Araw ng Kagitingan and Maundy Thursday falling on the same day.

HELD:
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State
shall afford protection to labor. Its purpose is not merely to prevent diminution of the monthly income of
the workers on account of work interruptions. In other words, although the worker is forced to take a
rest, he earns what he should earn, that is, his holiday pay. It is also intended to enable the worker to
participate in the national celebrations held during the days identified as with great historical and cultural
significance.
As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of
ten paid regular holidays. The provision is mandatory, regardless of whether an employee is paid on a
monthly or daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a statutory
benefit demandable under the law. Since a worker is entitled to the enjoyment of ten paid regular
holidays, the fact that two holidays fall on the same date should not operate to reduce to nine the ten
holiday pay benefits a worker is entitled to receive.
In the case at bar, there is nothing in the law which provides or indicates that the entitlement to
ten days of holiday pay shall be reduced to nine when two holidays fall on the same day.
Subject of interpretation in the case at bar is Article 94 of the Labor Code which reads:
ART. 94. Right to holiday pay. - (a) Every worker shall be paid his regular daily wage during
regular holidays, except in retail and service establishments regularly employing less than ten (10)
workers; (b) The employer may require an employee to work on any holiday but such employee shall be
paid a compensation equivalent to twice his regular rate; and (c) As used in this Article, holiday
includes: New Years Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth
of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of December and the
day designated by law for holding a general election, which was amended by Executive Order No. 203
issued on June 30, 1987, such that the regular holidays are now:
1. New Years Day January 1
2. Maundy Thursday Movable Date
3. Good Friday Movable Date
4. Araw ng Kagitingan April 9
5. Labor Day May 1
6. Independence Day June 12
7. National Heroes Day Last Sunday of August
8. Bonifacio Day November 30
9. Christmas Day December 25
10. Rizal Day December 30

AUTOBUS TRANSPORT SYSTEM VS. BAUTISTA,
G.R. NO. 156364, DEC. 13, 2005

FACTS:
Since 24 May 1995, Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-

Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven
percent (7%) of the total gross income per travel, on a twice a month basis.
On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva
Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter
vehicle suddenly stopped at a sharp curve without giving any warning.
He averred that the accident happened because he was compelled by the management to go
back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just
arrived in Manila from Roxas, Isabela. Bautist further alleged that he was not allowed to work until he
fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the
damaged buses and that despite respondents pleas for reconsideration, the same was ignored by
management. After a month, management sent him a letter of termination.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money
Claims for nonpayment of 13
th
month pay and service incentive leave pay against Autobus.
Petitioner, on the other hand, maintained that respondents employment was replete with
offenses involving reckless imprudence, gross negligence, and dishonesty. To support its claim,
petitioner presented copies of letters, memos, irregularity reports, and warrants of arrest pertaining to
several incidents wherein respondent was involved. Furthermore, petitioner avers that in the exercise of
its management prerogative, respondents employment was terminated only after the latter was provided
with an opportunity to explain his side regarding the accident on 03 January 2000.
On 29 September 2000, based on the pleadings and supporting evidence presented by the
parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision, finding that the complaint for illegal
dismissal has no leg to stand on (it was dismissed) but entitled Bautista to service incentive leave. The
NLRC affirmed the dismissal but deleted the part of the 13
th
month pay. The petition was also dismissed
by the CA for lack of merit.

ISSUE: Whether or not respondent is entitled to service incentive leave; 2. Whether or not the three 3-
year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to
respondents claim of service incentive leave pay.

HELD:
Petition was denied. Petitioners contention that respondent is not entitled to the grant of service
incentive leave just because he was paid on purely commission basis is misplaced. What must be
ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent
is whether or not he is a field personnel.
According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural
employees who regularly perform their duties away from the principal place of business or branch office
of the employer and whose actual hours of work in the field cannot be determined with reasonable
certainty.
At this point, it is necessary to stress that the definition of a field personnel is not merely
concerned with the location where the employee regularly performs his duties but also with the fact that
the employees performance is unsupervised by the employer. As discussed above, field personnel are
those who regularly perform their duties away from the principal place of business of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order
to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of
work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry
must be made as to whether or not the employees time and performance are constantly supervised by
the employer.
Bautista is not a field personnel but a regular employee who performs tasks usually necessary
and desirable to the usual trade of petitioners business. Accordingly, hes entitled to the grant of service
incentive leave.
Article 291 of the Labor Code states that all money claims arising from employer-employee
relationship shall be filed within three (3) years from the time the cause of action accrued; otherwise,
they shall be forever barred.
The prescriptive period with respect to his claim for service incentive leave pay only commenced
from the time the employer failed to compensate his accumulated service incentive leave pay at the time
of his dismissal. Since respondent had filed his money claim after only one month from the time of his
dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291
of the Labor Code.


SAN MIGUEL CORP., VS. DEL ROSARIO,
G.R. NO. 168194, DEC. 13, 2005

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

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

HELD:
Yes. The respondent is a regular employee.
In termination cases, like the present controversy, the burden of proving the circumstances that would
justify the employees dismissal rests with the employer. The best proof that petitioner should have
presented to prove the probationary status of respondent is her employment contract. None, having
been presented, the continuous employment of respondent as an account specialist for almost 11
months, from April 17, 2000 to March 12, 2001, means that she was a regular employee and not a
temporary reliever or a probationary employee.

And while it is true that by way of exception, the period of probationary employment may exceed six
months when the parties so agree, such as when the same is established by company policy, or when it
is required by the nature of the work, none of these exceptional circumstance were proven in the present
case. Hence, respondent whose employment exceeded six months is undoubtedly a regular employee of
petitioner.

The determination that the employees services are no longer necessary or sustainable and, therefore,
properly terminable is an exercise of business judgment of the employer. The wisdom or soundness of
this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is
no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words,
it is not enough for a company to merely declare that it has become overmanned. It must produce
adequate proof of such redundancy to justify the dismissal of the affected employees.
The following evidence may be proffered to substantiate redundancy: the new staffing pattern, feasibility
studies/proposal, on the viability of the newly created positions, job description and the approval by the
management of the restructuring.

In the case at bar, petitioner presented an affidavit of its Sales Manager and a memorandum of the
company both to the effect that there is a need to redeploy its regular employees and terminate the
employment of temporary employees, in view of an excess in manpower. These documents, however,
do not satisfy the requirement of substantial evidence that a reasonable mind might accept as adequate
to support a conclusion.

In balancing the interest between labor and capital, the prudent recourse in termination cases is to
safeguard the prized security of tenure of employees and to require employers to present the best
evidence obtainable, especially so because in most cases, the documents or proof needed to resolve the
validity of the termination, are in the possession of employers. A contrary ruling would encourage
employers to prevent the regularization of an employee by simply invoking a feigned or unsubstantiated
redundancy program.

Granting that petitioner was able to substantiate the validity of its reorganization or restructuring, it
nevertheless, failed to effect a fair and reasonable criterion in dismissing respondent. The criteria in
implementing a redundancy are: (a) less preferred status, e.g. temporary employee; (b) efficiency; and
(c) seniority. It is evident from the foregoing that the criterion allegedly used by petitioner in
reorganizing its sales unit was the employment status of the employee. However, in the implementation
thereof, petitioner erroneously classified respondent as a probationary employee, resulting in the
dismissal of the latter. Verily, the absence of criteria and the erroneous implementation of the criterion
selected, both render invalid the redundancy because both have the ultimate effect of illegally dismissing
an employee. Considering that respondent was illegally dismissed, she is entitled not only to
reinstatement but also to payment of full backwages, computed from the time her compensation was
actually withheld from her on March 13, 2001, up to her actual reinstatement.

Respondent is not, however, entitled to holiday pay because the records reveal that she is a monthly paid
regular employee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the Labor

Code, employees who are uniformly paid by the month, irrespective of the number of working days
therein, shall be presumed to be paid for all the days in the month whether worked or not.
Anent attorneys fees, in actions for recovery of wages or where an employee was forced to litigate and
thus incurred expenses to protect his rights and interests, a maximum of 10% of the total monetary
award by way of attorneys fees is justifiable under Article 111 of the Labor Code, Section 8, Rule VIII,
Book III of its Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. The award of
attorneys fees is proper and there need not be any showing that the employer acted maliciously or in
bad faith when it withheld the wages. There need only be a showing that the lawful wages were not
paid accordingly, as in the instant controversy.

PENARANDA VS. BAGANGA PLYWOOD CORP.,
G.R. NO. 159577, MAY 3, 2006

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

ISSUE: WON Pearanda is a regular, common employee entitled to monetary benefits under Art. 82 of
the Labor Code and is entitled to the payment of overtime pay and other monetary benefits.

HELD:
Petitioner is not entitled to overtime pay and other monetary benefits. The Court disagrees with
the NLRC's finding that petitioner was a managerial employee. However, petitioner was a member of the
managerial staff, which also takes him out of the coverage of labor standards. Like managerial
employees, officers and member of the managerial staff are not entitled to the provisions of law on labor
standards.
The Implementing Rules of the Labor Code define members of a managerial staff as those with
the following duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management
policies of the employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary
duty consists of the management of the establishment in which he is employed or
subdivision thereof; or (ii) execute under general supervision work along specialized or
technical lines requiring special training, experience, or knowledge; or (iii) execute under
general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a workweek to
activities which are not directly and closely related to the performance of the work
described in paragraphs (1), (2), and (3) above."
The petitioners work involves:
1. To supply the required and continuous steam to all consuming units at minimum cost.
2. To supervise, check and monitor manpower workmanship as well as operation of boiler and
accessories.
3. To evaluate performance of machinery and manpower.
4. To follow-up supply of waste and other materials for fuel.
5. To train new employees for effective and safety white working.
6. Recommend parts and suppliers purchases. acEHSI
7. To recommend personnel actions such as: promotion, or disciplinary action.
8. To check water from the boiler, feedwater and softener, regenerate softener if beyond
hardness limit.
9. Implement Chemical Dosing.
10. Perform other task as required by the superior from time to time."


The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a
member of the managerial staff. His duties and responsibilities conform to the definition of a member of
a managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved
overseeing the operation of the machines and the performance of the workers in the engineering section.
This work necessarily required the use of discretion and independent judgment to ensure the proper
functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of the managerial
staff.
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated
that he was the foreman responsible for the operation of the boiler. The term foreman implies that he
was the representative of management over the workers and the operation of the department.
Petitioner's evidence also showed that he was the supervisor of the steam plant. His classification as
supervisors is further evident from the manner his salary was paid. He belonged to the 10% of
respondent's 354 employees who were paid on a monthly basis; the others were paid only on a daily
basis.

LEYTE IV ELECTRIC COOPERATIVE INC. VS. LEYECO IV EMPLOYEES UNION-ALU,
G.R. NO. 1577745, OCTOBER 19, 2007,
CITING WELLINGTON INVESTMENT VS. TRAJANO, 245 SCRA 561 [1995],
AND ODANGO VS. NLRC, G.R. NO. 147420, JUNE 10, 2004

FACTS:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-
ALU (respondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rank-and-file
employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000, respondent,
through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay
for all employees, as provided for in the CBA. Petitioner, on the other hand, in its Position Paper, insisted
payment of the holiday pay in compliance with the CBA provisions, stating that payment was presumed
since the formula used in determining the daily rate of pay of the covered employees is Basic Monthly
Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said
formula, the employees are already paid their regular and special days, the days when no work is done,
the 51 un-worked Sundays and the 51 un-worked Saturdays.

ISSUE: WON Leyte IV Electric Cooperative is liable for underpayment of holiday pay.

HELD:
Leyte IV Electric Cooperative is not liable for underpayment of holiday pay. The Voluntary
Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions that
the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission of
respondent in its Position Paper that the employees were paid all the days of the month even if not
worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of
employees' salaries gains significance.
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano,
Producers Bank of the Philippines v. National Labor Relations Commission. In this case, the monthly
salary was fixed by Wellington to provide for compensation for every working day of the year including
the holidays specified by law and excluding only Sundays. In fixing the salary, Wellington used what it
called the "314 factor"; that is, it simply deducted 51 Sundays from the 365 days normally comprising a
year and used the difference, 314, as basis for determining the monthly salary. The monthly salary thus
fixed actually covered payment for 314 days of the year, including regular and special holidays, as well as
days when no work was done by reason of fortuitous cause, such as transportation strike, riot, or
typhoon or other natural calamity, or cause not attributable to the employees.
It was also applied in Odango v. National Labor Relations Commission, where Court ruled that
the use of a divisor that was less than 365 days cannot make the employer automatically liable for
underpayment of holiday pay. In said case, the employees were required to work only from Monday to
Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days,
less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant that the
employees were deprived of their holiday pay for some or all of the ten legal holidays. The 304-day
divisor used by the employer was clearly above the minimum of 287 days.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum
allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked
Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above the
minimum, indubitably, petitioner's employees are being given their holiday pay. Thus, the Voluntary
Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting respondent's
claim of non-payment of holiday pay, a "double burden" was imposed upon petitioner because it was

being made to pay twice for its employees' holiday pay when payment thereof had already been included
in the computation of their monthly salaries.

BAHIA SHIPPING SERVICES VS. CHUA,
G.R. NO. 162195, APRIL 8, 2008
CITING CAGAMPAN VS. NLRC, 195 SCRA 533 [1998]

FACTS:
Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping
Services, Inc., as a restaurant waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a
Philippine Overseas Employment Administration (POEA) approved employment contract dated October 9,
1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997. On October 18, 1996, the
private respondent left Manila for Heathrow, England to board the said sea vessel where he will be
assigned to work. On February 15, 1997, the private respondent reported for his working station one and
one-half hours late. On February 17, 1997, the master of the vessel served to the private respondent an
official warning-termination form pertaining to the said incident. On March 8, 1997, the vessel's master,
ship captain Thor Fleten conducted an inquisitorial hearing to investigate the said incident. Thereafter, on
March 9, 1997, private respondent was dismissed from the service on the strength of an unsigned and
undated notice of dismissal. An alleged record or minutes of the said investigation was attached to the
said dismissal notice.
On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other
monetary claims. The private respondent alleged that he was paid only US$300.00 per month as monthly
salary for five (5) months instead of US$410.00 as stipulated in his employment contract. Thus, he
claimed that he was underpaid in the amount of US$110.00 per month for that same period of five (5)
months. He further asserted that his salaries were also deducted US$20.00 per month by the petitioner
for alleged union dues.

ISSUE:
WON respondent is entitled to overtime pay which was incorporated in his award for the unexpired
portion of the contract despite the fact that he did not render overtime work.

HELD:
The inclusion of his "guaranteed overtime" pay into his monthly salary as basis in the
computation of his salaries for the entire unexpired period of his contract has no factual or legal basis
and the same should have been disallowed.
Petitioner contends that there is no factual or legal basis for the inclusion of said amount
because, after respondent's repatriation, he could not have rendered any overtime work. This time,
petitioner's contention is well-taken.
The Court had occasion to rule on a similar issue in Stolt-Nielsen Marine Services (Phils.), Inc. v.
National Labor Relations Commission, where the NLRC was questioned for awarding to an illegally
dismissed overseas worker fixed overtime pay equivalent to the unexpired portion of the latter's contract.
In resolving the question, the Court, citingCagampan v. National Labor Relations Commission, held that
although an overseas employment contract may guarantee the right to overtime pay, entitlement to such
benefit must first be established, otherwise the same cannot be allowed.

PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY
DIVISION WORKERS ORGANIZATION,
G.R. NO. 171231, FEB. 17, 2010

FACTS:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor
and Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly
organized and operating under and by virtue of the laws of the Philippines. They entered
into CBA. Pertinent provisions are as follows:
ARTICLE VIII VACATION LEAVE AND SICK LEAVE
Section 1. Vacation Leave.
[b]The company shall schedule the vacation leave of employees during the year taking
into consideration the request of preference of the employees.
PNCC then created a schedule of leaves for their employees. Petitioner objected to the
implementation of the said memorandum. It insisted that the individual members of the union have the
right to schedule their vacation leave. It opined that the unilateral scheduling of the employees' vacation
leave was done to avoid the monetization of their vacation leave in December 2004.

ISSUE: WON the PNCC has the sole discretion to schedule the vacation leaves of its employees.

HELD:
PNCC has the sole discretion to schedule the vacation leaves of its employees. The rule is that
where the language of a contract is plain and unambiguous, its meaning should be determined without
reference to extrinsic facts or aids. The intention of the parties must be gathered from that language,
and from that language alone. Stated differently, where the language of a written contract is clear and
unambiguous, the contract must be taken to mean that which, on its face, it purports to mean, unless
some good reason can be assigned to show that the words used should be understood in a different
sense.
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII,
Section 1 (b) of the CBA categorically provides that the scheduling of vacation leaves ha ll be under the
option of the employer. Thus, if the terms of a CBA are clear and leave no doubt upon the intention of
the contracting parties, the literal meaning of its stipulation shall prevail. In fine, the CBA must be strictly
adhered to and respected if its ends have to be achieved, being the law between the parties. In Faculty
Association of Mapua Institute of Technology (FAMIT) v. Court of Appeals, this Court held that the CBA
during its life time binds all the parties. The provisions of the CBA must be respected since its terms and
conditions constitute the law between the parties. The parties cannot be allowed to change the terms
they agreed upon on the ground that the same are not favorable to them.
The purpose of a vacation leave is to afford a laborer a chance to get a much-needed rest to
replenish his worn-out energy and acquire a new vitality to enable him to efficiently perform his duties,
and not merely to give him additional salary and bounty. Accordingly, the vacation leave privilege was not
intended to serve as additional salary, but as a non-monetary benefit. To give the employees the option
not to consume it with the aim of converting it to cash at the end of the year would defeat the very
purpose of vacation leave.

RADIO MINDANAO NETWORK INC. ET AL., VS. YBAROLA, JR.
G.R. NO. 198662, SEPT. 12, 2012

Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1,
1983, respectively, by RMN. Later on, they became account managers, soliciting advertisements and
servicing various clients of RMN. However, on September 15, 2002, the respondents services were
terminated due to RMNs reorganization/restructuring. They were given separation pays yet dissatisfied,
the respondents filed separate complaints against RMN and its President, Eric S. Canoy, for illegal
dismissal with several money claims.

The respondents argued that the release/quitclaim they executed should not be a bar to the recovery of
the full benefits due them. The petitioners on the other hand denied liability, contending that the
amounts the respondents received represented a fair and reasonable settlement of their claims and that
their quitclaims were done freely and voluntarily.

Issue:
WON herein respondents are not given their full benefits and thus entitled to additional compensation

Held:
The motion raises substantially the same arguments presented in the petition and there is no compelling
justification to grant the reconsideration prayed for. The petitioners insist that the respondents
commissions were not part of their salaries, because they failed to present proof that they earned the
commission due to actual market transactions attributable to them. They submit that the commissions
are profit-sharing payments which do not form part of their salaries.

The variance in amounts the respondents received as commissions supports the CAs finding that the
salary structure of the respondents was such that they only received a minimal amount as guaranteed
wage; a greater part of their income was derived from the commissions they get from soliciting
advertisements; these advertisements are the products they sell.

As the CA aptly noted, this kind of salary structure does not detract from the character of the
commissions being part of the salary or wage paid to the employees for services rendered to the
company, as the Court held in Philippine Duplicators, Inc. v. NLRC.

The petitioners reliance on our ruling in Talam v. National Labor Relations Commission is misplaced.
While Talam, in the cited case, and Ybarola and Rivera, in this case, are not unlettered employees, their
situations differ in all other respects. In Talam, the employee received a valuable consideration for his
less than two years of service with the company; he was not shortchanged and no essential unfairness

took place. In this case, as the CA noted, the separation pay the respondents each received was deficient
by at least P400,000.00; thus, they were given only half of the amount they were legally entitled to. To
be sure, a settlement under these terms is not and cannot be a reasonable one, given especially the
respondents length of service 25 years for Ybarola and 19 years for Rivera. The CA was correct when it
opined that the respondents were in dire straits when they executed the release/quitclaim affidavits.
Without jobs and with families to support they dallied in executing the quitclaim instrument, but were
eventually forced to sign given their circumstances.

Lastly, the petitioners are estopped from raising the issue of Canoy's personal liability. They did not raise
it before the NLRC in their appeal from the labor arbiter's decision, nor with the CA in their motion for
reconsideration of the appellate court's judgment. The risk of having Canoy's personal liability for the
judgment award did not arise only with the filing of the present petition, it had been there all along - in
the NLRC, as well as in the CA.


OTHER SPECIAL BENEFITS

VILLUGA VS. NLRC, 225 SCRA 537 [1993]

FACTS:
Petitioner Elias Villuga was employed as cutter in the Broad Street Tailoring owned by private
respondent Rodolfo Zapanta. He was paid a fixed monthly salary of P840.00 and a monthly
transportation allowance of P40.00. In addition, Villuga was assigned the chore of distributing work to the
shop's tailors or sewers when both the shop's manager and assistant manager would be absent. The
other petitioners were either ironers, repairmen and sewers. They were paid a fixed amount for every
item ironed, repaired or sewn, regardless of the time consumed in accomplishing the task. Petitioners did
not fill up any time record since they did not observe regular or fixed hours of work.
From February 17 to 22, 1978, Villuga failed to report for work allegedly due to illness. For not
properly notifying his employer, he was considered to have abandoned his work. Villuga claimed that he
was refused admittance when he reported for work after his absence, allegedly due to his active
participation in the union organized by private respondent's tailors. He further claimed that he was not
paid overtime pay, holiday pay, premium pay for work done on rest days and holidays, service incentive
leave pay and 13th month pay. Petitioners Abistado, Mendoza, Brizuela and Oro also claimed that they
were dismissed from their employment because they joined the Philippine Social Security Labor Union
(PSSLU). The other petitioners claimed that they stopped working because private respondents gave
them few pieces of work to do after learning of their membership with PSSLU.
The Labor Arbiter rendered a decision ordering the dismissal of the complaint for unfair labor
practices, illegal dismissal and other money claims except petitioner Villuga's claim for 13th month pay for
the years 1976, 1977 and 1980. The NLRC affirmed the questioned decision.

ISSUE: Whether an employer-employee relationship exists and whether such employment is managerial
in character or that of a rank and file employee are primordial considerations before extending labor
benefits.

HELD:
Under Rule I, Section 2(c), Book III of the Implementing Rules of the Labor Code, to be a
member of a managerial staff, the following elements must concur or co-exist, to wit: (1) that his primary
duty consists of the performance of work directly related to management policies; (2) that he customarily
and regularly exercises discretion and independent judgment in the performance of his functions; (3) that
he regularly and directly assists in the management of the establishment; and (4) that he does not
devote twenty per cent of his time to work other than those described above.

CJC TRADING VS. NLRC, 246 SCRA 724 [1995]

FACTS:
Private respondents Ricardo Ausan, Jr. and Ernesto Alanan were employed by petitioner since
1983 and 1978, respectively, as truck drivers and were paid on a "per trip or task basis." They filed
separate complaints against petitioner CJC Trading, Incorporated and/or Ms. Celia J. Carlos for illegal
dismissal and non-payment of premium pay for holiday and rest day, service incentive leave pay and
thirteenth month pay. The Labor Arbiter dismissed the complaints for lack of merit and holding that: (1)
respondent Ausan, Jr., after figuring in a non-work related accident which affected his right foot, told
petitioner that he no longer wanted to work because his injury might affect his driving; (2) respondent
Alanan voluntarily quit his job because of old age and weakness; and (3) private respondents were not
entitled to the labor standards benefits claimed by them because they were paid on a "per trip or per
task basis."On appeal, the NLRC affirmed in toto the decision of the Labor Arbiter but awarded private
respondents separation pay equivalent to one-half month salary for every year of service.

ISSUE: WON the pro-rated computation of the 13
th
and 14
th
month pays and other bonuses in question is
valid and lawful.

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

month pay shall constitute a violation of Article 100 of the Labor Code.

PANTRANCO NORTH EXPRESS VS. NLRC, 259 SCRA 161 [1996]

FACTS:
Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the
Pantranco Employees Association-PTGWO. He continued in petitioner's employ until August 12, 1989,
when he was retired at the age of fifty-two (52) after having rendered twenty five years' service. The
basis of his retirement was the compulsory retirement provision of the collective bargaining agreement
between the petitioner and the aforenamed union. On February 1990, private respondent filed a
complaint for illegal dismissal against petitioner with NLRC. The complaint was consolidated with two
other cases of illegal dismissal having similar facts and issues, filed by other employees, non-union
members.

ISSUE: WON the CBA stipulation on compulsory retirement after twenty-five years of service is legal and
enforceable.

HELD:
The CBA stipulation is legal and enforceable. The bone of contention in this case is the provision
on compulsory retirement after 25 years of service.
Article XI, Section 1 (e) (5) of the May 2, 1989 Collective Bargaining Agreement 8 between
petitioner company and the union states:
Section 1. The COMPANY shall formulate a retirement plan with the following main features:
(e) The COMPANY agrees to grant the retirement benefits herein provided to regular
employees who may be separated from the COMPANY for any of the following reasons:
(5) Upon reaching the age of sixty (60) years or upon completing twenty-five (25) years
of service to the COMPANY, whichever comes first, and the employee shall be
compulsory retired and paid the retirement benefits herein provided."
The said Code provides: Art. 287. Retirement. Any employee may be retired upon reaching the
retirement age established in the Collective Bargaining Agreement or other applicable employment
contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he
may have earned under existing laws and any collective bargaining or other agreement."

The Court agrees with petitioner and the Solicitor General. Art. 287 of the Labor Code as worded permits
employers and employees to fix the applicable retirement age at below 60 years. Moreover, providing for
early retirement does not constitute diminution of benefits. In almost all countries today, early
retirement, i.e., before age 60, is considered a reward for services rendered since it enables an employee
to reap the fruits of his labor particularly retirement benefits, whether lump-sum or otherwise at an
earlier age, when said employee, in presumably better physical and mental condition, can enjoy them
better and longer.

As a matter of fact, one of the advantages of early retirement is that the corresponding retirement
benefits, usually consisting of a substantial cash windfall, can early on be put to productive and profitable
uses by way of income-generating investments, thereby affording a more significant measure of financial
security and independence for the retiree who, up till then, had to contend with life's vicissitudes within
the parameters of his fortnightly or weekly wages. Thus we are now seeing many CBAs with such early
retirement provisions. And the same cannot be considered a diminution of employment benefits.

Being a product of negotiation, the CBA between the petitioner and the union intended the provision on
compulsory retirement to be beneficial to the employees-union members, including herein private
respondent. When private respondent ratified the CBA with the union, he not only agreed to the CBA but
also agreed to conform to and abide by its provisions. Thus, it cannot be said that he was illegally
dismissed when the CBA provision on compulsory retirement was applied to his case.

Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay Law", which went
into effect on January 7, 1993. Although passed many years after the compulsory retirement of herein
private respondent, nevertheless, the said statute sheds light on the present discussion when it amended

Art. 287 of the Labor Code, to make it read as follows: Retirement. Any employee may be
retired upon reaching the retirement age establish in the collective bargaining agreement or other
applicable employment contract.
In the absence of a retirement plan or agreement providing for retirement benefits of employees
in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond
sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least
five (5) years in the said establishment may retire . . ."


The aforequoted provision makes clear the intention and spirit of the law to give employers and
employees a free hand to determine and agree upon the terms and conditions of retirement. Providing in
a CBA for compulsory retirement of employees after twenty-five (25) years of service is legal and
enforceable so long as the parties agree to be governed by such CBA. The law presumes that employees
know what they want and what is good for them absent any showing that fraud or intimidation was
employed to secure their consent thereto.

R&E TRANSPORT VS. LATAG, G.R. NO. 155214, FEB. 13, 2004

FACTS:
Pedro Latag was a regular employee of La Mallorca Taxi Since March 1, 1961. When La Mallorca ceased
from business operations, he transferred to R.E. Transport, Inc (petitioner). In January 1995, Latag got
sick. He was forced to apply for partial disability with SSS which was granted. When he recovered, he
reported for work in September 1998 but was no longer allowed to continue working on account of his
old age. Latag thus asked Felix Fabros, the administrative officer of petitioners, for his retirement pay
pursuant to Republic Act 7641 but he was ignored. Thus, on December 21, 1998, he filed a case for
payment of his retirement pay before the NLRC.

On April 30, 1999, Latag died and was subsequently substituted by his wife, Avelina Latag. On January
10, 2000, The Labor Arbiter rendered a decision in favor of Latag ordering La Mallorca Taxi, R & E
Transport, Inc. and their owner/chief executive officer Honorio Enriquez to jointly and severally pay Mrs.
Latag the sum of P277, 500.00 by way of retirement pay for her deceased husband.

On January 21, 2000, Mrs. Latag with her counsel was invited to the office of petitioners' counsel. She
was offered the amount of P38, 500 which she accepted. She was asked to sign an already prepared
quitclaim and release and a joint motion to dismiss the case. After a day or two, respondent received a
copy of the January 10, 2000 Decision of the Labor Arbiter. On January 24, 2000, petitioners filed the
quitclaim and motion to dismiss. Thereafter, on May 23, 2000, the Labor Arbiter issued an order affirming
the January 10, 2000 decision and directing the Labor Arbitration Associate to prepare the Writ of
Execution. Petitioners interposed an appeal before the NLRC but was dismissed for failure to post a cash
or surety bond, as mandated by law. Petitioners filed a motion for reconsideration of the above
resolution. The NLRC came out with the assailed Decision, which gave due course to the motion for
reconsideration. Respondent appealed to the CA. The appellate court ruled that the Labor Arbiter's
decision had already become final and executory since petitioners' appeal was not perfected due to
failure to file cash or surety bond considering that the appealed judgment referred to the retirement pay
awarded by the Labor Arbiter.

ISSUE:
1. Whether or not the 23 years of employment of Pedro with La Mallorca Taxi must be added to his
14 years with R & E Transport, Inc., for a total of 37 years.
2. Whether or not the quit claim and waiver is valid.

HELD:
1. Number of Creditable Years of Service for Retirement Benefits. The Court supports the NLRC's
findings. Evidence sufficiently shows the following facts: 1) R & E Transport, Inc., was
established only in 1978; 2) Honorio Enriquez, its president, was not a stockholder of La Mallorca
Taxi; and 3) none of the stockholders of the latter company hold stocks in the former.
The question of whether a corporation is a mere alter ego is one of fact. Piercing the
veil of corporate fiction may be allowed only if the following elements concur: (1) control -- not
mere stock control, but complete domination -- not only of finances, but of policy and business
practice in respect to the transaction attacked, must have been such that the corporate entity as
to this transaction had at the time no separate mind, will or existence of its own; (2) such control
must have been used by the defendant to commit a fraud or a wrong to perpetuate the violation
of a statutory or other positive legal duty, or a dishonest and an unjust act in contravention of
plaintiffs legal right; and (3) the said control and breach of duty must have proximately caused
the injury or unjust loss complained of.
Respondent has not shown by competent evidence that one taxi company had stock
control and complete domination over the other or vice versa. In fact, no evidence was presented
to show the alleged renaming of La Mallorca Taxi to R & E Transport, Inc. The seven-year
gap between the time the former closed shop and the date when the latter came into being also
casts doubt on any alleged intention of petitioners to commit a wrong or to violate a statutory
duty. This lacuna in the evidence compels us to reverse the Decision of the CA affirming the labor
arbiters finding of fact that the basis for computing Pedros retirement pay should be 37 years,
instead of only 14 years.

2. As to the validity of the Quitclaim and Waiver, a quitclaim is ineffective in barring recovery of the
full measure of a workers rights, and the acceptance of benefits therefrom does not amount to
estoppel. Moreover, a quitclaim in which the consideration is scandalously low and inequitable
cannot be an obstacle to the pursuit of a workers legitimate claim.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport,
Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, provides:
Art. 287. Retirement. - x x x
x x x x x x x x x
In the absence of a retirement plan or agreement providing for retirement benefits of employees
in the establishment, an employee upon reaching the age of sixty (60) years or more, but not
beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has
served at least five (5) years in said establishment, may retire and shall be entitled to retirement
pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at
least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half-month salary shall mean
fifteen (15) days plus one-twelfth (1/12) of the 13
th
month pay and the cash equivalent of not
more than five (5) days of service incentive leaves.
x x x x x x x x x (Italics supplied)
The rules implementing the New Retirement Law similarly provide the above-mentioned
formula for computing the one-half month salary. Since Pedro was paid according to the
boundary system, he is not entitled to the 13
th
month and the service incentive pay; hence, his
retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in
excess of the boundary or fee they pay to the owners or operators of their vehicles. Thus, the
basis for computing their benefits should be the average daily income. In this case, the CA found
that Pedro was earning an average of five hundred pesos (P500) per day. We thus compute his
retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000. Compared with
this amount, the P38,850 he received, which represented just over one third of what was legally
due him, was unconscionable.

RUFINA PATIS VS. ALUSITAIN
G.R. NO. 146202, JULY 14, 2004

FACTS:
In 1948, respondent Juan Alusitain was hired as a laborer at the Rufina Patis factory owned and
operated by petitioner Jesus Lucas, Sr. After 43 years or in 1991, respondent tendered his resignation
letter which was accepted by petitioner. On January 7, 1993, RA 7641 took effect which provides that in
the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of 60 years or more, but not beyond 65 years which
is hereby declared the compulsory retirement age, who has served at least 5 years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one half month
salary for every year of service. Respondent filed for SSS pension benefits and continued working in the
factory until 1995 where he then resigned and asked for retirement benefits based on the computation of
RA 7641. Petitioner refused to give respondents demands which prompted the latter to file a case in
NLRC against the former and the factory for non-payment or retirement benefits. The Executive Labor
Arbiter ruled in favor of plaintiff. An appeal to NLRC affirmed the decision. An appeal to CA dismissed the
petition. Petitioner alleged that the CA erred in applying retroactively R.A. 7641 as said law does not
expressly provide for such retroactive application and to do so would defeat the clear intent of Congress.

ISSUE:
Whether or not the New Retirement Law [RA 7641] can be applied retroactively as in the case of
respondent.

HELD:
The Supreme Court held that R.A. 7641 may be given retroactive effect where (1) the claimant
for retirement benefits was still the employee of the employer at the time the statute took effect; and (2)
the claimant had complied with the requirements for eligibility under the statute for such retirement
benefits. In order for respondent to claim retirement benefits from petitioner Rufina Patis Factory, he has
to prove that he was its employee at the time R.A. 7641 took effect since the burden of proof lies in the
party who made the allegations. Respondent has not shown any scintilla of evidence that he was
employed with petitioner Rufina Patis Factory at the time R.A. 7641 took effect nor did he produce any
documentary evidence such as pay slips, income tax return, his identification card, or any other
independent evidence to substantiate his claim. Respondent having failed to prove that he was an

employee of petitioner at the time R.A. 7641 took effect, his claim for retirement benefits thereunder
must be disallowed.

STA. CATALINA COLLEGE VS. NLRC, 416 SCRA 243

FACTS:
In 1955, Hilaria was hired as an elementary school teacher at the Sta. Catalina College (petitioner
school). In 1970, she applied for and was granted a one year leave of absence without pay on account of
the illness of her mother. After the expiration in 1971 of her leave of absence, she had not been heard
from by petitioner school. In the meantime, she was employed as a teacher at 2 different schools during
school year 1980-1981 and1981-1982. In 1982, she applied anew at petitioner school which hired her.
On 1997, Hilaria was awarded a Plaque of Appreciation for thirty years of service and was given a
gratuity pay. Still the same year, Hilaria reached the compulsory retirement age of 65. Retiring pursuant
to Article 287 of the Labor Code, as amended by Republic Act 7641, petitioner school pegged her
retirement benefits computed on the basis of fifteen years of service from 1982 to 1997. Her service
from 1955 to 1970 was excluded in the computation, petitioner school having asserted that she had, in
1971, abandoned her employment. From retirement benefits was deducted an amount representing
reimbursement of the employers contribution to her retirement benefits under the Private Education
Retirement Annuity Association (PERAA) which Hilaria had already received. Deducted too was an
amount representing the gratuity pay which was given to her. Having failed to agree on how the
retirement benefits should be computed, Hilaria filed a complaint before the NLRC Regional Arbitration
against school for non-payment of retirement benefits. Labor Arbiter ruled in favor of the school on the
issue of respondents years of service. An appeal to NLRC revised the decision and changed respondents
years of service to 29 years and ruled that the gratuity pay shall not be deducted from the retirement
package. Appeal to CA by petitioners was dismissed holding that petitioners failed to prove that Hilaria
had abandoned her position in 1970, as petitioner school even gave her a Plaque of Appreciation for
thirty years of service precisely because of her thirty year continuous service, and that petitioner school
never sent notice to her dismissing her, hence, the employer-employee relationship was not severed and,
therefore, her services for petitioner school during the period from 1955-1970 should be credited in the
computation of her retirement benefits.

ISSUE: Should the retirement benefits or respondent be counted as a continuous years of service
granting that there was a 2 year gap from the year she first entered to the school and the year she was
rehired? And should the gratuity pay earlier awarded to Hilaria be deducted from the same benefits due
her?

HELD:
On the issue of respondents years of service, SC ruled that Hilaria cannot be credited for her
services in 1955-1970 in the determination of her retirement benefits. For, after her one year leave of
absence expired in 1971 without her requesting for extension thereof as in fact she had not been heard
from until she resurfaced in 1982 when she reapplied with petitioner school, she abandoned her teaching
position as in fact she was employed elsewhere in the interim and effectively relinquished the retirement
benefits accumulated during the said period.
On the issue of the gratuity pay, SC ruled that gratuity pay earlier awarded to Hilaria should not
be deducted from the retirement benefits due her, the same is in order. Gratuity pay is separate and
distinct from retirement benefits. It is paid purely out of generosity. Gratuity pay is paid to the beneficiary
for the past services or favor rendered purely out of the generosity of the giver or grantor. Gratuity,
therefore, is not intended to pay a worker for actual services rendered or for actual performance. It is a
money benefit or bounty given to the worker, the purpose of which is to reward employees who have
rendered satisfactory service to the company. Retirement benefits, on the other hand, are intended to
help the employee enjoy the remaining years of his life, releasing him from the burden of worrying for his
financial support, and are a form of reward for his loyalty to the employer.

HONDA PHILS. VS. SAMAHAN NG MGA MANGGAGAWA SA HONDA,
G.R. NO. 145561, JUNE 15, 2005

FACTS:
The case stems from the collective bargaining agreement between Honda and the respondent
union that it granted the computation of 14
th
month pay as the same as 13
th
month pay. Honda continues
the practice of granting financial assistance covered every December each year of not less than 100% of
the basic salary. In the latter part of 1998, the parties started to re-negotiate for the fourth and fifth
years of the CBA. The union filed a notice of strike on the ground of unfair labor practice for deadlock.
DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration.

The striking employees were ordered to return to work and management to accept them back under the
same terms prior to the strike staged. Honda issued a memorandum of the new computation of the 13
th

month and 14
th
month pay to be granted to all its employees whereby the 31 long strikes shall be
considered unworked days for purpose of computing the said benefits. The amount equivalent to of
the employees basic salary shall be deducted from these bonuses, with a commitment that in the event
that the strike is declared legal, Honda shall pay the amount.
The respondent union opposed the pro-rated computation of bonuses. This issue was submitted
to voluntary arbitration where it ruled that the companys implementation of the pro-rated computation is
invalid.

ISSUE: WON the pro-rated computation of the 13
th
and 14
th
month pays and other bonuses in question is
valid and lawful.

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

month pay shall constitute a violation of Article 100 of the Labor Code.

JACULBE VS. SILLIMAN UNIVERSITY,
G.R. NO. 156934, MARCH 16, 2007

FACTS:
Alpha C. Jaculbe, petitioner, began working for respondent's medical center as a nurse sometime
in 1958. In a letter dated December 3, 1992, respondent, through its Human Resources Development
Office, informed petitioner that she was approaching her 35th year of service with the university and was
due for automatic retirement on November 18, 1993, at which time she would be 57 years old. This was
pursuant to respondents retirement plan for its employees which provided that its members could be
automatically retired upon reaching the age of 65 or after 35 years of uninterrupted service to the
university. Petitioner emphatically insisted that the compulsory retirement under the plan was
tantamount to a dismissal and pleaded with respondent to be allowed to work until the age of 60 because
this was the minimum age at which she could qualify for SSS pension. But respondent stood pat on its
decision to retire her, citing company policy.
On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission
(NLRC) for termination of service with preliminary injunction and/or restraining order. On November 18,
1993, respondent compulsorily retired petitioner.

ISSUE: WON the respondents retirement plan imposing automatic retirement after 35 years of service
contravenes the security of tenure clause in the 1987 Constitution and the Labor Code.

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


Meanwhile, Rule IV, on contributions, stated:
The Plan is contributory. The University shall set aside an amount equivalent to 3% of the
basic salaries of the faculty and staff. To this shall be added a 5% deduction from the basic
salaries of the faculty and staff.
A member on leave with the University approval shall continue paying, based on his pay while on
leave, his leave without pay should pay his contributions to the Plan. However, a member, who has been
on leave without pay should pay his contributions based on his salary plus the Universitys contributions
while on leave or the full amount within one month immediately after the date of his reinstatement.
Provided[,] further that if a member has no sufficient source of income while on leave may pay within six
months after his reinstatement.
It was through no voluntary act of her own that petitioner became a member of the plan. In fact,
the only way she could have ceased to be a member thereof was if she stopped working for respondent
altogether. Furthermore, in the rule on contributions, the repeated use of the word shall ineluctably
pointed to the conclusion that employees had no choice but to contribute to the plan (even when they
were on leave).
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age agrees to sever his or her
employment with the former.

The truth was that petitioner had no choice but to participate in the plan,
given that the only way she could refrain from doing so was to resign or lose her job. It is axiomatic that
employer and employee do not stand on equal footing, a situation which often causes an employee to act
out of need instead of any genuine acquiescence to the employer. This was clearly just such an instance.
An employer is free to impose a retirement age less than 65 for as long as it has the employees
consent. Stated conversely, employees are free to accept the employers offer to lower the retirement
age if they feel they can get a better deal with the retirement plan presented by the employer. Thus,
having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely
assented to by her, respondent was guilty of illegal dismissal.

INTERCONTINENTAL BROADCASTING CORP. VS. AMARILLA,
G.R. NO. 162775, OCTOBER 27, 2006

FACTS:
On various dates, petitioner employed the following persons at its Cebu station: Candido C.
Quiones, Jr, Corsini R. Lagahit, as Studio Technician, Anatolio G. Otadoy, as Collector and Noemi
Amarilla, as Traffic Clerk. On March 1986, the government sequestered the station, including its
properties, funds and other assets, and took over its management and operations from its owner. In the
meantime, the four (4) employees retired from the company and received, on staggered basis, their
retirement benefits under the 1993 Collective Bargaining Agreement (CBA) between petitioner and the
bargaining unit of its employees.
In the meantime, a Php 1,500.00 salary increase was given to all employees of the company,
current and retired, effective July 1994. However, when the four retirees demanded theirs, petitioner
refused and instead informed them via a letter that their differentials would be used to offset the tax due
on their retirement benefits in accordance with the National Internal Revenue Code.
The four retirees filed separate complaints against IBC TV-13 Cebu and Station Manager Louella
F. Cabaero for unfair labor practice and non-payment of backwages. The complainants averred that
their retirement benefits are exempt from income tax under Article 32 of the NIRC.

ISSUE: Whether or not respondents salary differentials are part of their taxable gross income.

HELD:
For the retirement benefits to be exempt from the withholding tax, the taxpayer is burdened to prove the
concurrence of the following elements: (1) a reasonable private benefit plan is maintained by the
employer; (2) the retiring official or employee has been in the service of the same employer for at least
10 years; (3) the retiring official or employee is not less than 50 years of age at the time of his
retirement; and (4) the benefit had been availed of only once.

Respondents were qualified to retire optionally from their employment with petitioner. However, there is
no evidence on record that the 1993 CBA had been approved or was ever presented to the BIR; hence,
the retirement benefits of respondents are taxable.

An agreement to pay the taxes on the retirement benefits as an incentive to prospective retirees and for
them to avail of the optional retirement scheme is not contrary to law or to public morals. Petitioner had
agreed to shoulder such taxes to entice them to voluntarily retire early, on its belief that this would prove
advantageous to it. Respondents agreed and relied on the commitment of petitioner. For petitioner to

renege on its contract with respondents simply because its new management had found the same
disadvantageous would amount to a breach of contract.

LETRAN CALAMBA FACULTY & EMPLOYEES ASSOCIATION VS. NLRC,
ET. AL., G.R. NO. 156225, JANUARY 29, 2008

FACTS:
The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint

against Colegio de
San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its
members. The Labor Arbiter (LA) handling the consolidated cases, denied and dismissed the respective
complaints.

ISSUE: WON the pay of the faculty members for teaching overloads should be included as basis in the
computation of their 13
th
month pay?

HELD:
Teaching overload may not be considered part of basic salary. Under the Rules and Regulations
Implementing PD 851, the following compensations are deemed not part of the basic salary: a) cost-of-
living allowances granted pursuant to PD 525 and Letter of Instruction No. 174; b) profit sharing
payments; c) all allowances and monetary benefits which are not considered or integrated as part of the
regular basic salary of the employee at the time of the promulgation of the Decree on Dec 16, 1975.

Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued by the then Labor
Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic
salary and in the computation of the 13
th
-month pay.

The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic
salary includes within its meaning payments for sick, vacation, or maternity leaves, premium for works
performed on rest days and special holidays, pay for regular holidays and night differentials. As such they
are deemed not part of the basic salary and shall not be considered in the computation of the 13
th
-month
pay.

As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional compensation
other than and added to the regular wage or basic salary, for reason of which such is categorically
excluded from the definition of basic salary under the Supplementary Rules and Regulations
Implementing PD 851.

In the same manner that payment for overtime work and work performed during special holidays is
considered as additional compensation apart and distinct from an employee's regular wage or basic
salary, an overload pay, owing to its very nature and definition, may not be considered as part of a
teacher's regular or basic salary, because it is being paid for additional work performed in excess of the
regular teaching load.

REYES VS. NLRC, ET. AL, G.R. NO. 160233, AUGUST 8, 2007,
CITING BOIE TAKEDA CHEMICALS VS. DELA SERNA,
228 SCRA 329 [1993] & PHIL. DUPLICATORS VS. NLRC, 241 SCRA

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

considered as such for a long time in the computation of the 13th month pay, leave commissions,
absences and tardiness.

ISSUE: WON the average monthly sales commission should be included in the computation of his
retirement benefits and 13
th
month pay.

HELD:
Average monthly sales commission should not be included in the computation of his retirement
benefits and 13
th
month pay.
This Court has held, in Philippine Duplicators that, the salesmen's commissions, comprising a pre-
determined percentage of the selling price of the goods sold by each salesman, were properly included in
the term basic salary for purposes of computing the 13th month pay. The salesmen's commission are not
overtime payments, nor profit-sharing payments nor any other fringe benefit but a portion of the salary
structure which represents an automatic increment to the monetary value initially assigned to each unit
of work rendered by a salesman.
Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical
representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co.,
were excluded from the term basic salary because these were paid to the medical representatives and
rank-and-file employees as productivity bonuses, which are generally tied to the productivity, or capacity
for revenue production, of a corporation and such bonuses closely resemble profit-sharing payments and
have no clear direct or necessary relation to the amount of work actually done by each individual
employee. Further, commissions paid by the Boie-Takeda Company to its medical representatives could
not have been sales commissions in the same sense that Philippine Duplicators paid the salesmen their
sales commissions. Medical representatives are not salesmen; they do not effect any sale of any article at
all.
In fine, whether or not a commission forms part of the basic salary depends upon the
circumstances or conditions for its payment, which indubitably are factual in nature for they will require a
re-examination and calibration of the evidence on record.
As to the main issue whether petitioner's commissions be considered in the computation of his
retirement benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code, as
amended by Republic Act No. 7641, otherwise known as The New Retirement Law, 22 provides:
Retirement. Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract In the absence of a
retirement plan or agreement providing for retirement benefits of employees in the establishment, an
employee upon reaching the age of sixty (60) years or more, but not beyond sixty five (65) years which
is hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one half (1/2)
month salary for every year of service, a fraction of at least six (6) months being considered as one
whole year. Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall
mean fifteen (15) days plus one twelfth (1/12) of the 13th month pay and the cash equivalent of not
more than five (5) days of service incentive leaves.
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in
computing his retirement benefits is his latest salary rate of P10,919.22 as the commissions he received
are in the form of profit-sharing payments specifically excluded by the foregoing rules. Case law has it
that when these earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-
sharing statements, they are properly excluded in computing retirement pay. However, sales
commissions which are effectively an integral portion of the basic salary structure of an employee, shall
be included in determining the retirement pay.
At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary
corresponding to his position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the
"overriding commissions" paid to him by Universal Robina Corp. could not have been 'sales commissions'
in the same sense that Philippine Duplicators paid its salesmen sales commissions. Unit Managers are not
salesmen; they do not effect any sale of article at all. Therefore, any commission which they receive is
certainly not the basic salary which measures the standard or amount of work of complainant as Unit
Manager. Accordingly, the additional payments made to petitioner were not in fact sales commissions but
rather partook of the nature of profit-sharing business. Certainly, from the foregoing, the doctrine in
Boie-Takeda Chemicals and Philippine Fuji Xerox Corporation, which pronounced that commissions are
additional pay that does not form part of the basic salary, applies to the present case. Aside from the fact
that as unit manager petitioner did not enter into actual sale transactions, but merely supervised the
salesmen under his control, the disputed commissions were not regularly received by him. Only when the
salesmen were able to collect from the sale transactions can petitioner receive the commissions.
Conversely, if no collections were made by the salesmen, then petitioner would receive no commissions
at all. In fine, the commissions which petitioner received were not part of his salary structure but were
profit-sharing payments and had no clear, direct or necessary relation to the amount of work he actually

performed. The collection made by the salesmen from the sale transactions was the profit of private
respondent from which petitioner had a share in the form of a commission.

ARCO MTAL PRODUCTS CO., INC., ET. AL. VS. SMAHAN NG MGA
MANGGAGAWA SA ARCO METAL-NAFLU,
G.R. NO. 170734, MAY 14, 2008UNIVERSAL ROBINA SUGAR MILLING CORP. VS.
CABALLEDA, G.R. NO. 156644, JULY 28, 2008

FACTS:
Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor
union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the 13th
month pay, bonus, and leave encashment of three union members in amounts proportional to the service
they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the
prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same
benefits to seven (7) employees who had not served for the full 12 months. According to respondent,
the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code.
Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). The parties
submitted the case for voluntary arbitration.
ISSUE: Whether or not the prorated payment of the benefits constitute a violation under Art. 100 of the
Labor Code.
RULING:
SC ruled in favor of the respondents. The voluntary grant of the benefits has been an established
company practice. It has been a company practice which grants full benefits to its employees regardless
of the length of service rendered.
There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and
sick leave, one must have rendered at least one year of service. The clear wording of the provisions does
not allow any other interpretation. Anent the 13th month pay and bonus, we agree with the findings of
Labor Arbiter Mangabat that the CBA provisions did not give any meaning different from that given by
the law, thus it should be computed at 1/12 of the total compensation which an employee receives for
the whole calendar year. The bonus is also equivalent to the amount of the 13th month pay given, or in
proportion to the actual service rendered by an employee within the year.
Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional
mandate to "protect the rights of workers and promote their welfare, and to afford labor full
protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts
in the implementation and interpretation of this Code, including its implementing rules and regulations
shall be rendered in favor of labor. Jurisprudence is replete with cases which recognize the right of
employees to benefits which were voluntarily given by the employer and which ripened into company
practice. Thus in Davao Fruits Corporation v. Associated Labor Unions, et al. where an employer had
freely and continuously included in the computation of the 13th month pay those items that were
expressly excluded by the law, we held that the act which was favorable to the employees though not
conforming to law had thus ripened into a practice and could not be withdrawn, reduced, diminished,
discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the employers act of
including non-basic benefits in the computation of the 13th month pay was a voluntary act and had
ripened into a company practice which cannot be peremptorily withdrawn. Meanwhile in Davao
Integrated Port Stevedoring Services v. Abarquez, the Court ordered the payment of the cash equivalent
of the unenjoyed sick leave benefits to its intermittent workers after finding that said workers had
received these benefits for almost four years until the grant was stopped due to a different interpretation
of the CBA provisions. We held that the employer cannot unilaterally withdraw the existing privilege
of commutation or conversion to cash given to said workers, and as also noted that the employer had in
fact granted and paid said cash equivalent of the unenjoyed portion of the sick leave benefits to some
intermittent workers.


CERCADO VS. UNIPROM, INC. ,
G.R. NO. 188154, OCTOBER 13, 2010

FACTS:
Petitioner Lourdes A. Cercado (Cercado) started working for respondent UNIPROM, Inc.
(UNIPROM) on December 15, 1978 as a ticket seller assigned at Fiesta Carnival, Araneta Center, Quezon
City. Later on, she was promoted as cashier and then as clerk typist.
On April 1, 1980, UNIPROM instituted an Employees Non-Contributory Retirement Plan which
provides that any participant with twenty (20) years of service, regardless of age, may be retired at his
option or at the option of the company.
On January 1, 2001, UNIPROM amended the retirement plan in compliance with Republic Act
(R.A.) No. 7641. Under the revised retirement plan, UNIPROM reserved the option to retire employees
who were qualified to retire under the program.
UNIPROM exercised its option under the retirement plan, and decided to retire Cercado effective
at the end of business hours on February 15, 2001. A check of even date in the amount of P100,811.70,
representing her retirement benefits under the regular retirement package, was issued to her. Cercado
refused to accept the check. And Cercado was no longer given any work. She then filed a case against
UNIPROM before the LA for illegal dismissal before the Labor Arbiter (LA), alleging, among others, that
UNIPROM did not have a bona fide retirement plan, and that even if there was, she did not consent
thereto.

ISSUE: Whether or not UNIPROM has a bona fide retirement plan; and whether petitioner was validly
retired pursuant thereto.

HELD:
Hence, consistent with the Courts ruling in Jaculbe, having terminated petitioner merely on the
basis of a provision in the retirement plan which was not freely assented to by her, UNIPROM is guilty of
illegal dismissal. Petitioner is thus entitled to reinstatement without loss of seniority rights and to full
backwages computed from the time of her illegal dismissal in February 16, 2001 until the actual date of
her reinstatement. If reinstatement is no longer possible because the position that petitioner held no
longer exists, UNIPROM shall pay backwages as computed above, plus, in lieu of reinstatement,
separation pay equivalent to one-month pay for every year of service. This is consistent with the
preponderance of jurisprudence relative to the award of separation pay in case reinstatement is no longer
feasible.

RADIO MINDANAO NETWORK INC. ET AL., VS. YBAROLA, JR.
G.R. NO. 198662, SEPT. 12, 2012

Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1,
1983, respectively, by RMN. Later on, they became account managers, soliciting advertisements and
servicing various clients of RMN. However, on September 15, 2002, the respondents services were
terminated due to RMNs reorganization/restructuring. They were given separation pays yet dissatisfied,
the respondents filed separate complaints against RMN and its President, Eric S. Canoy, for illegal
dismissal with several money claims.

The respondents argued that the release/quitclaim they executed should not be a bar to the recovery of
the full benefits due them. The petitioners on the other hand denied liability, contending that the
amounts the respondents received represented a fair and reasonable settlement of their claims and that
their quitclaims were done freely and voluntarily.

Issue:
WON herein respondents are not given their full benefits and thus entitled to additional compensation

Held:
The motion raises substantially the same arguments presented in the petition and there is no compelling
justification to grant the reconsideration prayed for. The petitioners insist that the respondents
commissions were not part of their salaries, because they failed to present proof that they earned the
commission due to actual market transactions attributable to them. They submit that the commissions
are profit-sharing payments which do not form part of their salaries.

The variance in amounts the respondents received as commissions supports the CAs finding that the
salary structure of the respondents was such that they only received a minimal amount as guaranteed
wage; a greater part of their income was derived from the commissions they get from soliciting
advertisements; these advertisements are the products they sell.


As the CA aptly noted, this kind of salary structure does not detract from the character of the
commissions being part of the salary or wage paid to the employees for services rendered to the
company, as the Court held in Philippine Duplicators, Inc. v. NLRC.

The petitioners reliance on our ruling in Talam v. National Labor Relations Commission is misplaced.
While Talam, in the cited case, and Ybarola and Rivera, in this case, are not unlettered employees, their
situations differ in all other respects. In Talam, the employee received a valuable consideration for his
less than two years of service with the company; he was not shortchanged and no essential unfairness
took place. In this case, as the CA noted, the separation pay the respondents each received was deficient
by at least P400,000.00; thus, they were given only half of the amount they were legally entitled to. To
be sure, a settlement under these terms is not and cannot be a reasonable one, given especially the
respondents length of service 25 years for Ybarola and 19 years for Rivera. The CA was correct when it
opined that the respondents were in dire straits when they executed the release/quitclaim affidavits.
Without jobs and with families to support they dallied in executing the quitclaim instrument, but were
eventually forced to sign given their circumstances.

Lastly, the petitioners are estopped from raising the issue of Canoy's personal liability. They did not raise
it before the NLRC in their appeal from the labor arbiter's decision, nor with the CA in their motion for
reconsideration of the appellate court's judgment. The risk of having Canoy's personal liability for the
judgment award did not arise only with the filing of the present petition, it had been there all along - in
the NLRC, as well as in the CA.

ELEAZAR S. PADILLO, vs. RURAL BANK OF NABUNTURAN, INC. and MARK S. OROPEZA,
G.R. NO. 199338. JANUARY 21, 2013

Facts:
On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed by respondent Rural Bank
of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity problems which arose sometime in
2003, the Bank took out retirement/insurance plans with Philippine American Life and General Insurance
Company (Philam Life) for all its employees in anticipation of its possible closure and the concomitant
severance of its personnel.
In this regard, the Bank procured Philam Plan Certificate of Full Payment No. 88204, Plan Type
02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in favor of Padillo for a benefit amount of
P100,000.00 and which was set to mature on July 11, 2009. .During the latter part of 2007, Padillo
suffered a mild stroke due to hypertension which consequently impaired his ability to effectively pursue
his work. On September 10, 2007, he wrote a letter addressed to respondent Oropeza, the president of
the bank, expressing his intention to avail of an early retirement package. Despite several follow-ups, his
request remained unheeded. On October 3, 2007, Padillo was separated from employment due to his
poor and failing health as reflected in a Certification dated December 4, 2007 issued by the Bank. Not
having received his claimed retirement benefits, Padillo filed with the NLRC a complaint for the recovery
of unpaid retirement benefits.

Issue: WON Padillo is entitled to receive Retirement Benefits

Held:
The Labor Code provision on termination on the ground of disease under Article 297 does not apply in
this case, considering that it was the petitioner and not the Bank who severed the employment relations.
It was Padillo who voluntarily retired and that he was not terminated by the Bank.

Under article 300 of the labor code, in the absence of any applicable agreement, an employee must (1)
retire when he is at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle
him/her to a retirement benefit of at least one-half (1/2) month salary for every year of service, with a
fraction of at least six (6) months being considered as one whole year. Notably, these age and tenure
requirements are cumulative and non-compliance with one negates the employee's entitlement to the
retirement benefits under Article 300 of the Labor Code.

In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any
other equivalent contract between the parties which set out the terms and condition for the retirement of
employees, with the sole exception of the Philam Life Plan which premiums had already been paid by the
Bank. In the absence of any applicable contract or any evolved company policy, Padillo should have met
the age and tenure requirements set forth under Article 300 of the Labor Code to be entitled to the
retirement benefits provided therein. Unfortunately, while Padillo was able to comply with the five (5)
year tenure requirement as he served for twenty-nine (29) years he, however, fell short with
respect to the sixty (60) year age requirement given that he was only fifty-five (55) years old when he

retired. Therefore, without prejudice to the proceeds due under the Philam Life Plan, petitioners' claim for
retirement benefits must be denied.


2011 NLRC RULES OF PROCEDURE
T/SGP LARKINS VS. NLRC
G.R. NO. 92432, FEBRUARY 23, 1995

Facts:
Petitioner was a member of the United States Air Force (USAF) assigned to oversee the dormitories of the
Third Aircraft Generation Squadron (3 AGS) at Clark Air Base, Pampanga.

On August 10, 1988, 3 AGS terminated the contract for the maintenance and upkeep of the dormitories
with the De Guzman Custodial Services. The employees thereof, including private respondents, were
allowed to continue working for 3 AGS. It was left to the new contractor, the JAC Maintenance Services
owned by Joselito Cunanan, to decide whether it would retain their services. Joselito Cunanan, however,
chose to bring in his own workers. As a result, the workers of the De Guzman Custodial Services were
requested to surrender their base passes to Lt. Col. Frankhauser or to petitioner.

It is petitioner's contention that the questioned resolutions are null and void because respondent Labor
Arbiter did not acquire jurisdiction to entertain and decide the case. Petitioner alleges that she never
received nor was served, any summons or copies of the original and amended complaints, and therefore
the Labor Arbiter had no jurisdiction over her person under Article XIV of the R.P. ? U.S. Military Bases
Agreement.

Issue: WON the Labor Arbiter acquires jurisdiction over the respondent.

Ruling:
The "Agreement Between the Republic of the Philippines and the United States of America Concerning
Military Bases," otherwise known as the R.P. ? U.S. Military Bases Agreement, governed the rights,
duties, authority, and the exercise thereof by Philippine and American nationals inside the U.S. military
bases in the country.

Article XIV thereof, governing the procedure for service of summons on persons inside U.S. military
bases, provides that:
. . . [N]o process, civil or criminal, shall be served within any base except with the
permission of the commanding officer of such base; but should the commanding officer
refuse to grant such permission he shall forthwith take the necessary steps . . . . to serve
such process, as the case may be, and to provide the attendance of the server of such
process before the appropriate court in the Philippines or procure such server to make
the necessary affidavit or declaration to prove such service as the case may require.
Summonses and other processes issued by Philippine courts and administrative agencies for
United States Armed Forces personnel within any U.S. base in the Philippines could be served therein
only with the permission of the Base Commander. If he withholds giving his permission, he should
instead designate another person to serve the process, and obtain the server's affidavit for filing with the
appropriate court.

Respondent Labor Arbiter did not follow said procedure. He instead, addressed the summons to Lt. Col.
Frankhauser and not the Base Commander (Rollo, p. 11).

Respondents do not dispute petitioner's claim that no summons was ever issued and served on her. They
contend, however, that they sent notices of the hearings to her (Rollo, pp. 12-13).

Notices of hearing are not summonses. The provisions and prevailing jurisprudence in Civil Procedure
may be applied by analogy to NLRC proceedings (Revised Rules of the NLRC, Rule I, Sec. 3). It is basic
that the Labor Arbiter cannot acquire jurisdiction over the person of the respondent without the latter
being served with summons (cf. Vda. de Macoy v. Court of Appeals, 206 SCRA 244 [1992]; Filmerco
Commercial Co., Inc. v. Intermediate Appellate Court, 149 SCRA 193 [1987]). In the absence of service
of summons or a valid waiver thereof, the hearings and judgment rendered by the Labor Arbiter are null
and void (cf. Vda. de Macoy v. Court of Appeals, supra.)

Petitioner, in the case at bench, appealed to the NLRC and participated in the oral argument before the
said body. This, however, does not constitute a waiver of the lack of summons and a voluntary
submission of her person to the jurisdiction of the Labor Arbiter. (De los Santos v. Montera, 221 SCRA 15
[1993]).

Be that as it may, on the assumption that petitioner validly waived service of summons on her, still the
case could not prosper. There is no allegation from the pleadings filed that Lt. Col. Frankhauser and

petitioner were being sued in their personal capacities for tortious acts (United States of America v.
Guinto, 182 SCRA 644 [1990]). However, private respondents named 3 AGS as one of the respondents in
their complaint (Rollo, p. 10).

Under the "Agreement Between the Government of the Republic of the Philippines and the Government
of the United States of America Relating to the Employment of Philippine Nationals in the United States
Military Bases in the Philippines" otherwise known as the Base Labor Agreement of May 27, 1968, any
dispute or disagreement between the United States Armed Forces and Filipino employees should be
settled under grievance or labor relations procedures established therein (Art. II) or by the arbitration
process provided in the Romualdez-Bosworth Memorandum of Agreement dated September 5, 1985. If
no agreement was reached or if the grievance procedure failed, the dispute was appealable by either
party to a Joint Labor Committee established in Article III of the Base Labor Agreement.

Unquestionably therefore, no jurisdiction was ever acquired by the Labor Arbiter over the case and the
person of petitioner and the judgment rendered is null and void (Filmerco Commercial Co. v.
Intermediate Appellate Court, supra.; Sy v. Navarro, 81 SCRA 458 [1978]).

The petition for certiorari is GRANTED.

UERM MEMORIAL MEDICAL CENTER VS. NLRC
G.R. NO. 110419, MARCH 3, 1997
Facts:
A complaint was filed by the private respondents, represented by the Federation of Free Workers (FFW),
claiming salary differentials under Republic Act Nos. 6640 and 6727, correction of the wage distortion and
the payment of salaries for Saturdays and Sundays under Policy Instruction No. 54.

Labor Arbiter Nieves de Castro sustained the private respondents except for their claim of wage
distortion. Respondents are directed to pay the 517 individual complainants a total of P17,082,448.56
plus exemplary damages of P2,000 each.

Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of Appeal
with a Real Estate Bond consisting of land and various improvements therein worth P102,345,650. 2 The
private respondents moved to dismiss the appeal on the ground that Article 223 of the Labor Code, as
amended, requires the posting of a cash or surety bond. The NLRC directed petitioners to post a cash or
surety bond of P17,082,448.56 with a warning that failure to do so would cause the dismissal of the
appeal. The petitioners filed a Motion for Reconsideration alleging it is not in a viable financial condition
to post a cash bond nor to pay the annual premium of P700,000.00 for a surety bond. On 6 October
1992, the NLRC dismissed petitioners' appeal. Petitioners' Motion for Reconsideration was also denied by
the NLRC in a resolution 3 dated 7 June 1993.

Issue: WON in perfecting an appeal to the National Labor Relations Commission (NLRC) a property bond
is excluded by the two forms of appeal bond ? cash or surety ? as enumerated in Article 223 of the
Labor Code.

Ruling:
The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which
provides:

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the judgment appealed from.

The intention of the lawmakers to make the bond an indispensable requisite for the perfection of
an appeal by the employer is underscored by the provision that an appeal by the employer may
be perfected "only upon the posting of a cash or surety bond." The word "only" makes it
perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the
employer to be the exclusive means by which an employer's appeal may be perfected. The
requirement is intended to discourage employers from using an appeal to delay, or even evade,
their obligation to satisfy their employees' just and lawful claims.

Considering, however, that the current policy is not to strictly follow technical rules but rather to take into
account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of
the case, especially since petitioner disputes the allegation that private respondent was illegally
dismissed.


We reiterate this policy which stresses the importance of deciding cases on the basis of their substantive
merit and not on strict technical rules. In the case at bar, the judgment involved is more than P17 million
and its precipitate execution can adversely affect the existence of petitioner medical center. Likewise, the
issues involved are not insignificant and they deserve a full discourse by our quasi-judicial and judicial
authorities. We are also confident that the real property bond posted by the petitioners sufficiently
protects the interests of private respondents should they finally prevail. It is not disputed that the real
property offered by petitioners is worth P102,345,650. The judgment in favor of private respondent is
only a little more than P17 million.

PHIL. TRANCO SERVICES VS. NLRC
G.R. NO. 124100, APRIL 1, 1998

Facts:
Nieva was employed as a driver by petitioner assigned to the Legaspi City-Pasay City route. Nieva
sideswiped an owner-type jeep and a criminal complaint was filed against him. Philtranco posted a bail
bond for Nieva. After having been suspended, he was told to wait until his case was settled. The case
was finally settled he was requested to file a new application as he was no longer considered an
employee of Philtranco, allegedly for being absent without leave from October 19 to November 20, 1989.

Nieva filed a complaint for illegal dismissal and demanded for 13th month pay with the NLRCs National
Capital Region Arbitration Branch in Manila. Philtranco filed a motion to dismiss on the ground of
improper venue, stating that the complaint should have been lodged with the NLRCs Regional Arbitration
Branch in Legaspi City, not only because Nieva was a resident thereof, but also because the latter was
hired, assigned, and based in Legaspi City.

Issue: WON NLRCs NCR Arbitration Branch in Manila was a proper venue for the filing of Nievas
complaints for illegal dismissal

Ruling:
The filing of the complaint with the National Capital Region Arbitration Branch was proper, Manila being
considered as part of Nievas workplace by reason of his plying the Legaspi City-Pasay City route. In fact,
Section 1(a), Rule IV of the New Rules of Procedure of the NLRC is merely permissive. Provisions on
venue are intended to assure convenience for the employee and his witnesses and to promote the ends
of justice provided that it is not oppressive to the employer.

ST. MARTIN FUNERAL HOMES VS. NLRC
G.R. NO. 130866, SEPTEMBER 16, 1998

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

The labor arbiter rendered a decision in favor of petitioner declaring that no employer-employee
relationship existed between the parties and, therefore, his office had no jurisdiction over the case.

On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and remanding
the case to the labor arbiter for immediate appropriate proceedings. Petitioner then filed a motion for
reconsideration which was denied by the NLRC in its resolution dated August 18, 1997 for lack of merit.

Issue: WON the Court has the power to review decisions of the NLRC.

Ruling:
When the issue was raised in an early case on the argument that this Court has no jurisdiction to review
the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal provision for
appellate review thereof, the Court nevertheless rejected that thesis. It held that there is an underlying
power of the courts to scrutinize the acts of such agencies on questions of law and jurisdiction even
though no right of review is given by statute; that the purpose of judicial review is to keep the
administrative agency within its jurisdiction and protect the substantial rights of the parties; and that it is
that part of the checks and balances which restricts the separation of powers and forestalls arbitrary and
unjust adjudications.

Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of
the aggrieved party is to timely file a motion for reconsideration as a precondition for any further or
subsequent remedy, and then seasonably avail of the special civil action of certiorari under Rule 65, for
which said Rule has now fixed the reglementary period of sixty days from notice of the decision.
Curiously, although the 10-day period for finality of the decision of the NLRC may already have lapsed as
contemplated in Section 223 of the Labor Code, it has been held that this Court may still take cognizance
of the petition for certiorari on jurisdictional and due process considerations if filed within the
reglementary period under Rule 65.
Sec. 9. Jurisdiction. The Court of Appeals shall exercise: (3) Exclusive appellate jurisdiction over
all final judgments, decisions, resolutions, orders or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards or commissions, including the Securities and Exchange Commission,
the Social Security Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as amended,
the provisions of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of the
fourth paragraph of Section 17 of the Judiciary Act of 1948.

LUDO & LUYM CORP. VS. SOARNIDO,
G.R. NO. 140960, JANUARY 20, 2003

Facts:
LUDO engaged the arrastre services of Cresencio Lu Arrastre Services (CLAS) for the loading and
unloading of its finished products at the wharf. Accordingly, several arrastre workers were deployed by
CLAS to perform the services needed by LUDO. These arrastre workers were subsequently hired, on
different dates, as regular rank-and-file employees of LUDO every time the latter needed additional
manpower services. Said employees thereafter joined respondent union, the LUDO Employees Union
(LEU), which acted as the exclusive bargaining agent of the rank-and-file employees. Respondent union
entered into a collective bargaining agreement with LUDO which provides certain benefits to the
employees, the amount of which vary according to the length of service rendered by the availing
employee. Thereafter, the union requested LUDO to include in its members period of service the time
during which they rendered arrastre services to LUDO through the CLAS so that they could get higher
benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration.
Voluntary Arbitrator ruled that: (1) the respondent employees were engaged in activities necessary and
desirable to the business of petitioner, and (2) CLAS is a labor-only contractor of petitioner. The Court of
Appeals affirmed in toto the decision of the Voluntary Arbitrator. Petitioner contends that the appellate
court erred when it upheld the award of benefits which were beyond the terms of submission agreement
and that the arbitrator must confine its adjudication to those issues submitted by the parties for
arbitration, which in this case is the sole issue of the date of regularization of the workers. Hence, the
award of benefits by the arbitrator was done in excess of jurisdiction.

Issue: WON the appellate court gravely erred when it upheld the award of benefits which were beyond
the terms of submission agreement.

Ruling:
Generally, the arbitrator is expected to decide only those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to make
a final settlement since arbitration is the final resort for the adjudication of disputes.13 The succinct
reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a labor
controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence, thus: In
general, the arbitrator is expected to decide those questions expressly stated and limited in the
submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the
arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the
submission empowers the arbitrator to decide whether an employee was discharged for just cause, the
arbitrator in this instance can reasonable assume that his powers extended beyond giving a yes-or-no
answer and included the power to reinstate him with or without back pay.

HANSIN ENGINEERING & CONSTRUCTION VS. CA,
G.R. NO. 165910, APRIL 10, 2006

Facts:
Hanjin is a construction company that had been contracted by the Philippine Government for the
construction of various foreign-financed projects. Hanjin and the Philippine Government entered into
contracts for the construction of the Malinao Dam at Pilar, Bohol, with a projected completion period of

1,050 calendar days, including main canal and lateral projects for 750 days. From August 1995 to August
1996, Hanjin contracted the services of 712 carpenters, masons, truck drivers, helpers, laborers, heavy
equipment operators, leadmen, engineers, steelmen, mechanics, electricians and others.

In April 1998, 712 employees filed complaints for illegal dismissal and for payment of benefits against
petitioners, before the NLRC. The complainants averred that they were regular employees of Hanjin and
that they were separated from employment without any lawful or just cause. Only 521 of the
complainants affixed their signatures in the complaints.

Petitioners alleged that the complainants were mere project employees in its Bohol Irrigation Project and
that 2 of the workers were charged with qualified theft before the RTC. Some of the complainants had
already migrated to USA or had died, while 117 of them were still under the employ of Hanjin. Petitioner
stated that some of the complainants had voluntarily resigned; 14 were absent without prior approved
leave; 15 had signed a Motion to Withdraw from the complaint; and many of the complainants were
separated on account of the completion of the project. However, petitioners failed to append any
document to support their claim.

Labor Arbiter rendered judgment in favor of the 428 complainants, granting separation pay and
attorney's fees to each of them stating that the complainants were regular employees of petitioner and
their claims for underpayment, holiday pay, premium pay for holiday and rest day, 13th month pay, and
service incentive leave would be computed after sufficient data were made available. Petitioners appealed
the decision to the NLRC, which affirmed with modification the Labor Arbiter's ruling. Petitioners filed a
Motion for the Reconsideration of the decision (with a motion to conduct clarificatory hearings)

NLRC partially granted petitioners' motion. Unsatisfied, petitioners filed a Petition for Certiorari under Rule
65 of the Revised Rules of Court in the CA. CA dismissed the petition and affirmed the NLRC's ruling that
the dismissed employees were regular employees. The CA stressed that petitioners failed to refute the
claim of the respondents that they were regular employees. Petitioners moved to reconsider the decision,
which the CA denied.

Issue: WON respondents are project employees.

Ruling:
While respondent alleged that "complainants all signed a contract of employment at the time they were
hired indicating therein the particular project they will be working on, the period and other conditions
provided in their contracts which complainants fully knew and understood," nowhere in the records can
the said contracts be found. Moreover, let it be stressed that under DO No. 19, Series of 1993 on project
employment, six (6) indicators are enumerated therein and one of which is that: "(T)he termination of his
employment in the particular project/undertaking is reported to the Department of Labor and
Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the
date of his separation from work x x x."

In this particular case, the records do not show that a similar report was ever made by respondent to the
Department of Labor and Employment. Such failure of respondent employer to report to the nearest
employment office of the Department of Labor, the termination of the workers it claimed as project
employees at the time it completed the project, is proof that complainants were not project employees.

The principal test for determining whether particular employees are properly characterized as project
employees is: whether or not the project employees were assigned to carry out a specific project or
undertaking, the duration of which were specified at the time the employees were engaged for that
project. Predetermination of the duration or period of project employment is essential in resolving
whether one is a project employee or not. In the instant case, the completion of the project for which the
complainants were hired was not determined at the start of their employment, there being no substantial
proof thereof. The fact that complainants had rendered more than one year of service at the time of their
dismissal and there being no substantial evidence to support that they were engaged to work on a
specific project or undertaking, overturns respondents allegation that complainants were project
employees hired for a specific fixed project for a limited period of time.

Complainants herein were, therefore, non-project employees, but regular employees. Admittedly, being a
duly licensed contractor firm in the Philippines, respondent is the awardee of several construction
projects and in many occasions it has been given the priority in the awarding of subsequent projects.

In the light of the above facts and circumstances, the respondent's main defense that completion of the
project worked on by the complainants constitute a valid cause of termination is unsustainable. To
repeat, there is no substantial evidence on record to sustain this contention. The mere allegation of the

respondents that under their employment contracts the complainants were made to understand that they
were project employees is definitely not persuasive or unworthy of credence. The best evidence of which
would have been the alleged contracts. These employees signed duly notarized waivers/quitclaims and
who did not recant later. In the absence of evidence showing the contrary, said quitclaims were executed
voluntarily and without any force or intimidation.

Petitioners submitted to the NLRC dubious machine copies of only some of respondents? contracts,
including alleged employment termination reports submitted to the DOLE. The NLRC found the contracts
barren of probative weight and utterly insufficient to buttress the contention of petitioners that
respondents were only project employees.

Contrary to the representation of respondent's counsel, the original copies of the reports made to DOLE
were never produced and submitted to this Commission. Neither were they presented for comparison
with the machine copies. These machine copies were not also certified as true copies by the DOLE.

The actual continuous employment of complainants by respondent Hanjin since 1991 until 1995
overcomes the piecemeal "appointments" covering for periods of six (6) months or less. From these short
term but repeated "appointments," it is apparent that the periods have been imposed to preclude the
acquisition of tenurial security by the employee and which kind of employment contracts should be
disregarded for being contrary to public policy.

The appellate court, the NLRC and the Labor Arbiter are thus one in finding that respondents were not
project employees, and in sustaining respondents' claim of illegal dismissal due to petitioners? failure to
adduce contrary evidence. Well-settled is the rule that findings of fact of quasi-judicial agencies, like the
NLRC, are accorded not only respect but at times even finality if such findings are supported by
substantial evidence. Such findings of facts can only be set aside upon showing of grave abuse of
discretion, fraud or error of law, none of which have been shown in this case.

PHIL. JOURNALIST INC. VS. NLRC,
G.R. NO. 166421, SEPT. 5, 2006

Facts:
The Philippine Journalists, Inc. (PJI) is a domestic corporation engaged in the publication and sale of
newspapers and magazines. The exclusive bargaining agent of all the rank-and-file employees in the
company is the Journal Employees Union (Union for brevity). Sometime in April 2005, the Union filed a
notice of strike before the National Conciliation and Mediation Board (NCMB), claiming that PJI was guilty
of unfair labor practice. PJI was then going to implement a retrenchment program due to over-staffing
or bloated work force and continuing actual losses sustained by the company for the past three years
resulting in negative stockholders equity of P127.0 million. The Secretary of the Department of Labor
and Employment (DOLE) certified the labor dispute to the National Labor Relations Commission (NLRC)
for compulsory arbitration pursuant to Article 263 (g) of the Labor Code.

The parties were required to submit their respective position papers. PJI filed a motion to dismiss,
contending that the Secretary of Labor had no jurisdiction to assume over the case and thus erred in
certifying it to the Commission. The NLRC denied the motion. PJI, thereafter, filed a Motion to Defer
Further Proceedings, alleging, among others, that the filing of its position paper might jeopardize
attempts to settle the matter extrajudicially, which the NLRC also denied. The case was, thereafter,
submitted for decision wherein it adjudged PJI liable in the total amount of P6,447,008.57.

Thereafter, the parties executed a Compromise Agreement dated July 9, 2001, where PJI undertook to
reinstate the 31 complainant-employees effective July 1, 2001 without loss of seniority rights and
benefits; 17 of them who were previously retrenched were agreed to be given full and complete payment
of their respective monetary claims, while 14 others would be paid their monetary claims minus what
they received by way of separation pay. The agreement stated that the parties entered the agreement
[i]n a sincere effort at peace and reconciliation as well as to jointly establish a new era in labor
management relations marked by mutual trust, cooperation and assistance, enhanced by open, constant
and sincere communication with a view of advancing the interest of both the company and its
employees. The compromise agreement was submitted to the NLRC for approval. All the employees
mentioned in the agreement and in the NLRC Resolution affixed their signatures thereon. They likewise
signed the Joint Manifesto and Declaration of Mutual Support and Cooperation.

Issue: WON an NLRC Resolution, which includes a pronouncement that the members of a union had been
illegally dismissed, is abandoned or rendered moot and academic by a compromise agreement
subsequently entered into between the dismissed employees and the employer; this, in turn, raises
the question of whether such a compromise agreement constitutes res judicata to a new complaint

later filed by other union members-employees, not parties to the agreement, who likewise claim to
have been illegally dismissed.

Ruling:
The petition is denied. The nature of a compromise is spelled out in Article 2028 of the New Civil
Code: it is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an
end to one already commenced. Parties to a compromise are motivated by the hope of gaining,
balanced by the dangers of losing. It contemplates mutual concessions and mutual gains to avoid the
expenses of litigation, or, when litigation has already begun, to end it because of the uncertainty of the
result. Article 227 of the Labor Code of the Philippines authorizes compromise agreements voluntarily
agreed upon by the parties, in conformity with the basic policy of the State to promote and emphasize
the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and
conciliation, as modes of settling labor or industrial disputes. As the Court held in Reformist Union of R.B.
Liner, Inc. v. NLRC, the provision bestows finality to unvitiated compromise agreements, particularly if
there is no allegation that either party did not comply with what was incumbent upon them under the
agreement. The provision reads:
ART. 227 Compromise Agreements. 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. The National Labor Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of noncompliance thereof or if
there is prima facie evidence that the settlement was obtained through fraud,
misrepresentation, or coercion.
Thus, a judgment rendered in accordance with a compromise agreement is not appealable, and
is immediately executory unless a motion is filed to set aside the agreement on the ground of fraud,
mistake, or duress, in which case an appeal may be taken against the order denying the motion. Under
Article 2037 of the Civil Code, a compromise has upon the parties the effect and authority of res
judicata, even when effected without judicial approval; and under the principle of res judicata, an issue
which had already been laid to rest by the parties themselves can no longer be relitigated.

In AFP Mutual Benefit Association, Inc. v. Court of Appeals, the Court spelled out the distinguishing
features of a compromise agreement that is basically intended to resolve a matter already in litigation, or
what is normally termed as a judicial compromise. The Court held that once approved, the agreement
becomes more than a mere contract binding upon the parties, considering that it has been entered as the
courts determination of the controversy and has the force and effect of any other judgment. The Court
went on to state: Adjective law governing judicial compromises annunciate that once approved by the
court, a judicial compromise is not appealable and it thereby becomes immediately executory but this rule
must be understood to refer and apply only to those who are bound by the compromise and, on the
assumption that they are the only parties to the case, the litigation comes to an end except only as
regards to its compliance and the fulfillment by the parties of their respective obligations thereunder. The
reason for the rule, said the Court in Domingo v. Court of Appeals [325 Phil. 469], is that when both
parties so enter into the agreement to put a close to a pending litigation between them and ask that a
decision be rendered in conformity therewith, it would only be natural to presume that such action
constitutes an implicit waiver of the right to appeal against that decision. The order approving the
compromise agreement thus becomes a final act, and it forms part and parcel of the judgment that can
be enforced by a writ of execution unless otherwise enjoined by a restraining order.

Thus, contrary to the allegation of petitioners, the execution and subsequent approval by the NLRC of the
agreement forged between it and the respondent Union did not render the NLRC resolution ineffectual,
nor rendered it moot and academic. The agreement becomes part of the judgment of the court or
tribunal, and as a logical consequence, there is an implicit waiver of the right to appeal.
In any event, the compromise agreement cannot bind a party who did not voluntarily take part in the
settlement itself and gave specific individual consent. It must be remembered that a compromise
agreement is also a contract; it requires the consent of the parties, and it is only then that the agreement
may be considered as voluntarily entered into.

The case of Golden Donuts, Inc. v. National Labor Relations Commission, which petitioners erroneously
rely upon, is instructive on this point. The Court therein was confronted with the following questions: x x
x (1) whether or not a union may compromise or waive the rights to security of tenure and money claims
of its minority members, without the latters consent, and (2) whether or not the compromise agreement
entered into by the union with petitioner company, which has not been consented to nor ratified by
respondents minority members has the effect of res judicata upon them.
Speaking through Justice Reynato C. Puno, the Court held that pursuant to Section 23, Rule 138
of the then 1964 Revised Rules of Court, a special authority is required before a lawyer may compromise
his clients litigation; thus, the union has no authority to compromise the individual claims of members

who did not consent to the settlement. The Court also stated that the authority to compromise cannot
lightly be presumed and should be duly established by evidence, and that a compromise agreement is
not valid when a party in the case has not signed the same or when someone signs for and in behalf of
such party without authority to do so; consequently, the affected employees may still pursue their
individual claims against their employer. The Court went on to state that a judgment approving a
compromise agreement cannot have the effect of res judicata upon non-signatories since the requirement
of identity of parties is not satisfied. A judgment upon a compromise agreement has all the force and
effect of any other judgment, and, conclusive only upon parties thereto and their privies, hence, not
binding on third persons who are not parties to it.
A careful perusal of the wordings of the compromise agreement will show that the parties agreed
that the only issue to be resolved was the question of the monetary claim of several employees. The
agreement was later approved by the NLRC. The case was considered closed and terminated and the
Resolution dated May 31, 2001 fully implemented insofar as the employees mentioned in paragraphs 2c
and 2d of the compromise agreement were concerned. Hence, the CA was correct in holding that the
compromise agreement pertained only to the monetary obligation of the employer to the dismissed
employees, and in no way affected the Resolution in NCMB-NCR-NS-03-087-00 dated May 31, 2001
where the NLRC made the pronouncement that there was no basis for the implementation of petitioners
retrenchment program.
To reiterate, the rule is that when judgment is rendered based on a compromise agreement, the
judgment becomes immediately executory, there being an implied waiver of the parties right to appeal
from the decision. The judgment having become final, the Court can no longer reverse, much less modify
it.

BALAGTAS MULTI PURPOSE COOP. VS. CA,
G.R. NO. 159268, OCT. 27, 2006
Facts:
Balagtas Multi-Purpose Cooperative, Inc. is a duly organized and existing cooperative under the
laws of the Philippines. Sometime in April 1991, Balagtas hired Josefina G. Hipolito-Herrero, as part time
manager in its office. Subsequently, Josefina made known of her intention to take a leave of absence.
Her proposal was immediately approved. However, after the lapse of her leave of absence, Josefina did
not report for work anymore. Later on, she filed her resignation.
Consequently Josefina filed a complaint with the Provincial Office of the Department of Labor in
Malolos, Bulacan for illegal dismissal, and non-payment of 13th month pay or Christmas Bonus. She also
prayed for reinstatement and paid backwages as well as moral damages.
The Labor Arbiter rendered judgment in favor of complainant and against respondents and
ordered the latter to pay the former 13th month pay, backwages and separation pay. Aggrieved, herein
petitioners appealed the decision to NLRC but failed to post either a cash or surety bond as required by
Article 223 of the Labor Code. They filed a manifestation and motion instead, stating, that under Republic
Act No. 6938, Article 62(7) of the Cooperative Code of the Philippines, petitioners are exempt from
putting up a bond in an appeal from the decision of the inferior court. NLRC ordered respondents to post
a cash or surety bond in the amount of P218,000.00, within 10 inextendible days from receipt of the
Order, failure of which shall constitute a waiver and non-perfection of the appeal. Balagtas appealed to
CA, which dismissed the petition holding that the exemption from putting up a bond by a cooperative
applies to cases decided by inferior courts only.

Issues:
1. WON cooperatives are exempted from filing a cash or surety bond required to perfect an
employers appeal under Section 223 of Presidential Decree No. 442 (the Labor Code);
2. WON a certification issued by the Cooperative Development Authority constitutes substantial
compliance with the requirement for the posting of a bond.

Ruling:
1. No. Petitioners argue that there are certain benefits and privileges expressly granted to
cooperative under the Cooperative Code. It invoked the provision on Article 62 regarding the
exemption from payment of an appeal bond, to wit: (7)All cooperatives shall be exempt from
putting up a bond for bringing an appeal against the decision of an inferior court or for seeking to
set aside any third party claim: Provided, That a certification of the Authority showing that the
net assets of the cooperative are in excess of the amount of the bond required by the court in
similar cases shall be accepted by the court as a sufficient bond.
However, it is only one among a number of such privileges which appear under the
article entitled Tax and Other Exemptions of the code. The provision cited by petitioners cannot
be taken in isolation and must be interpreted in relation to the Cooperative Code in its entirety.
Exceptions are to be strictly but reasonably construed; they extend only so far as their language
warrants, and all doubts should be resolved in favor of the general provision rather than the
exceptions.

2. No. Article 119 of the Cooperative Code itself expressly embodies the legislative intention to
extend the coverage of labor statutes to cooperatives. For this reason, petitioners must comply
with the requirement set forth in Article 223 of the Labor Code in order to perfect their appeal to
the NLRC. It must be pointed out that the right to appeal is not a constitutional, natural or
inherent right. It is a privilege of statutory origin and, therefore, available only if granted or
provided by statute. The law may validly provide limitations or qualifications thereto or relief to
the prevailing party in the event an appeal is interposed by the losing party.
In this case, the obvious and logical purpose of an appeal bond is to insure, during the
period of appeal, against any occurrence that would defeat or diminish recovery by the employee
under the judgment if the latter is subsequently affirmed.
Therefore, no error can be ascribed to the CA for holding that the phrase inferior courts
appearing in Article 62 paragraph (7) of the Cooperative Code does not extend to quasi-judicial
agencies and that, petitioners are not exempt from posting the appeal bond required under
Article 223 of the Labor Code.

ST. MARTIN FUNERAL HOMES VS. NLRC,
G.R. NO. 142351, NOV. 22, 2006
Facts:
The owner of petitioner St. Martin Funeral Homes, Inc. (St. Martin) is Amelita Malabed. Prior to
January 1996, Amelitas mother managed the funeral parlor. In 1995, Aricayos was granted financial
assistance by Amelitas mother. As a sign of appreciation, respondent extended assistance in managing
St. Martin without compensation and no written employment contract between Amelitas mother and
respondent Aricayos; furthermore, respondent Aricayos was not even listed as an employee in the
Companys payroll.
When Amelitas mother died in January 1996, Amelita took over as manager of St. Martin. Much
to her chagrin, she found out that St. Martin had arrearages in the payment of BIR taxes and other fees
owing to the government, but company records tended to show that payments were made thereon. As a
result, Amelita removed the authority from respondent Aricayos and his wife from taking part in
managing St. Martins operations.
Aggrieved, respondent Aricayos accused St. Martin of his illegal dismissal as Operations Manager
of the company. He believed that the cause of his termination was Amelitas suspicion that he pocketed
PhP 38,000.00 which was set aside for payment to the BIR of St. Martins valued added taxes.On October
25, 1996, the Labor Arbiter rendered a Decision, in favor of petitioner declaring that his office had no
jurisdiction over the case.
NLRC issued a Resolution annulling the Arbiters Decision and remanded the case to him for
appropriate proceedings, to determine the factual issue of the existence of employer-employee
relationship between the parties. When its motion for reconsideration was rejected by the NLRC,
petitioner filed a petition for certiorari under Rule 65 before this Court, docketed as G.R. No. 130866.
On September 16, 1998, this Court through Justice Jose Vitug, rendered the landmark Decision in
this case then docketed as G.R. No. 130866, holding for the first time that all petitions for certiorari under
Rule 65 assailing the decisions of the NLRC should henceforth be filed with the CA

Issue: WON a petitioner can file his petition for certiorari under Rule65 to assail the decision of a lower
court like NLRC.

Ruling:
A petition for certiorari under Rule65 must first be filed at the Court of Appeals. Said court has a
concurrent jurisdiction on petitions for certiorari, mandamus, prohibitions. This is in consonance with the
hierarchy of courts.

DOLE PHILS. VS. ESTEVA,
G.R. NO. 161115, NOV. 30, 2006

Facts:
Petitioner is a corporation engaged principally in the production and processing of pineapple for
the export market. Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO).
CAMPCO was organized in accordance with Republic Act No. 6938, otherwise known as the Cooperative
Code of the Philippines. Pursuant to the Service Contract, CAMPCO members rendered services to
petitioner. The number of CAMPCO members that report for work and the type of service they
performed depended on the needs of petitioner at any given time. Although the Service Contract
specifically stated that it shall only be for a period of six months, i.e., from 1 July to 31 December 1993,
the parties had apparently extended or renewed the same for the succeeding years without executing
another written contract. It was under these circumstances that respondents came to work for
petitioner. DOLE organized a Task Force that conducted an investigation into the alleged labor-only

contracting activities of the cooperatives. The Task Force identified six cooperatives that were engaged in
labor-only contracting, one of which was CAMPCO. In this case, respondents alleged that they started
working for petitioner at various times in the years 1993 and 1994, by virtue of the Service Contract
executed between CAMPCO and petitioner. All of the respondents had already rendered more than one
year of service to petitioner. While some of the respondents were still working for petitioner, others were
put on stay home status on varying dates in the years 1994, 1995, and 1996 and were no longer
furnished with work thereafter. Together, respondents filed a Complaint with the NLRC for illegal
dismissal, regularization, wage differentials, damages and attorneys fees. Petitioner denied that
respondents were its employees. It explained that it found the need to engage external services to
augment its regular workforce, which was affected by peaks in operation, work backlogs, absenteeism,
and excessive leaves. It used to engage the services of individual workers for definite periods specified
in their employment contracts and never exceeding one year. However, such an arrangement became
the subject of a labor case, in which petitioner was accused of preventing the regularization of such
workers.

Issues:WON the court of appeals was correct when it made its own factual findings and disregarded the
factual findings of the labor arbiter and the NLRC. WON CAMPCO was a mere labor-only
contractor.

Ruling:
The Court in the exercise of its equity jurisdiction may look into the records of the case and re-
examine the questioned findings. As a corollary, this Court is clothed with ample authority to review
matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is
necessary to arrive at a just decision of the case. The same principles are now necessarily adhered to and
are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through a
petition for certiorari; thus, we see no error on its part when it made anew a factual determination of the
matters and on that basis reversed the ruling of the NLRC.
On the second issue, CAMPCO was a mere labor-only contractor. First, although petitioner touts
the multi-million pesos assets of CAMPCO, it does well to remember that such were amassed in the years
following its establishment. In 1993, when CAMPCO was established and the Service Contract between
petitioner and CAMPCO was entered into, CAMPCO only had P6,600.00 paid-up capital, which could
hardly be considered substantial. It only managed to increase its capitalization and assets in the
succeeding years by continually and defiantly engaging in what had been declared by authorized DOLE
officials as labor-only contracting. Second, CAMPCO did not carry out an independent business from
petitioner. It was precisely established to render services to petitioner to augment its workforce during
peak seasons. Petitioner was its only client. Even as CAMPCO had its own office and office equipment,
these were mainly used for administrative purposes; the tools, machineries, and equipment actually used
by CAMPCO members when rendering services to the petitioner belonged to the latter. Third, petitioner
exercised control over the CAMPCO members, including respondents. Petitioner attempts to refute
control by alleging the presence of a CAMPCO supervisor in the work premises. Yet, the mere presence
within the premises of a supervisor from the cooperative did not necessarily mean that CAMPCO had
control over its members. Section 8(1), Rule VIII, Book III of the implementing rules of the Labor Code,
as amended, required for permissible job contracting that the contractor undertakes the contract work on
his account, under his own responsibility, according to his own manner and method, free from the control
and direction of his employer or principal in all matters connected with the performance of the work
except as to the results thereof. As alleged by the respondents, and unrebutted by petitioner, CAMPCO
members, before working for the petitioner, had to undergo instructions and pass the training provided
by petitioners personnel. It was petitioner who determined and prepared the work assignments of the
CAMPCO members. CAMPCO members worked within petitioners plantation and processing plants
alongside regular employees performing identical jobs, a circumstance recognized as an indicium of a
labor-only contractorship. Fourth, CAMPCO was not engaged to perform a specific and special job or
service. In the Service Contract of 1993, CAMPCO agreed to assist petitioner in its daily operations, and
perform odd jobs as may be assigned. CAMPCO complied with this venture by assigning members to
petitioner. Apart from that, no other particular job, work or service was required from CAMPCO, and it is
apparent, with such an arrangement, that CAMPCO merely acted as a recruitment agency for petitioner.
Since the undertaking of CAMPCO did not involve the performance of a specific job, but rather the supply
of manpower only, CAMPCO clearly conducted itself as a labor-only contractor. Lastly, CAMPCO members,
including respondents, performed activities directly related to the principal business of petitioner. They
worked as can processing attendant, feeder of canned pineapple and pineapple processing, nata de coco
processing attendant, fruit cocktail processing attendant, and etc., functions which were, not only directly
related, but were very vital to petitioners business of production and processing of pineapple products
for export.
The declaration that CAMPCO is indeed engaged in the prohibited activities of labor-only
contracting, then consequently, an employer-employee relationship is deemed to exist between petitioner
and respondents, since CAMPCO shall be considered as a mere agent or intermediary of petitioner.

Since respondents are now recognized as employees of petitioner, this Court is tasked to
determine the nature of their employment. In consideration of all the attendant circumstances in this
case, this Court concludes that respondents are regular employees of petitioner. As such, they are
entitled to security of tenure. They could only be removed based on just and authorized causes as
provided for in the Labor Code, as amended, and after they are accorded procedural due process.
Therefore, petitioners acts of placing some of the respondents on stay home status and not giving
them work assignments for more than six months were already tantamount to constructive and illegal
dismissal.

INTERCONTINENTAL BROADCASTING CORP. VS. PANGANIBAN,
G.R. NO. 151407, FEBRUARRY 6, 2007
Facts:
Ireneo Panganiban (respondent) was employed as Assistant General Manager of the
Intercontinental Broadcasting Corporation (petitioner) from May 1986 until his preventive suspension on
August 26, 1988. Respondent resigned from his employment on September 2, 1988.
On April 12, 1989, respondent filed a civil case with the RTC of Quezon City, Branch 93 against
the members of the Board of Administrators (BOA) of petitioner alleging, among others, non-payment of
his unpaid commissions. A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the
ground of lack of jurisdiction, as respondent's claim was a labor money claim, but this was denied by the
RTC. Thus, Santiago filed a petition for certiorari with the CA which granted Santiago's petition for lack of
jurisdiction and set aside the RTC's Orders.
Thereafter, respondent was elected by the BOA as Vice-President for Marketing in July 1992. He
resigned in April 1993. On July 24, 1996, respondent filed against petitioner a complaint for illegal
dismissal, separation pay, retirement benefits, unpaid commissions, and damages. The Labor Arbiter (LA)
ordered respondent's reinstatement with full backwages, and the payment of his unpaid commission,
damages and attorney's fees. Petitioner appealed to the NLRC but due to petitioner's failure to post a
bond, the appeal was dismissed. The decision was deemed final and executory.

Issue: WON respondent's claim for unpaid commissions has already prescribed.

Ruling:
Yes. Respondent's claim had already prescribed as of September 1991. In addition, the claims of
private respondent for reinstatement, backwages and benefits in conjunction with his employment from
1986 to 1988 have prescribed.
The applicable law in this case is Article 291 of the Labor Code which provides that "all money
claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed
within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred."
The term "money claims" covers all money claims arising from an employer-employee relation
the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial
demand by the creditor, and (c) a written acknowledgment of the debt by the debtor.
On this point, the Court ruled that although the commencement of a civil action stops the
running of the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff
leaves the parties in exactly the same position as though no action had been commenced at all. Hence,
while the filing of Civil Case could have interrupted the running of the three-year prescriptive period, its
consequent dismissal by the CA due to lack of jurisdiction effectively canceled the tolling of the
prescriptive period within which to file his money claim, leaving respondent in exactly the same position
as though no civil case had been filed at all. The running of the three-year prescriptive period not having
been interrupted by the filing of Civil Case respondent's cause of action had already prescribed on
September 2, 1991, three years after his cessation of employment on September 2, 1988. Consequently,
when respondent filed his complaint for illegal dismissal, separation pay, retirement benefits, and
damages in July 24, 1996, his claim, clearly, had already been barred by prescription.

FAR EAST AGRICULTURAL SUPPLY VS. LEBATIGUE,
G.R. NO. 162813, FEBRUARY 12, 2007
Facts:
Petitioner Far East Agricultural Supply hired private respondent Jimmy Lebatique as truck driver
tasked to deliver animal feeds. On January 24, 2000, Lebatique complained of nonpayment of overtime
work particularly on January 22, 2000, when he was required to make a second delivery in Novaliches.
That same day Lebatique was suspended apparently for illegal use of company vehicle. He reported for
work the next day but was prohibited from entering the company premises.
On January 26, 2000, Lebatique sought assistance concerning the nonpayment of his overtime
pay. According to him, two days later, he received a telegram from petitioners requiring him to report for
work. He reported for work on January 29, 2000 and was asked to explain why he was claiming overtime

pay. Later, Lebatique was terminated and was told to look for another job. On March 20, 2000, Lebatique
filed a complaint for illegal dismissal and nonpayment of overtime pay.

Issue: What is the prescriptive period for money claims?

Ruling:
All money claims arising from an employer-employee relationship shall be filed within three years
from the time the cause of action accrued; otherwise, they shall be forever barred (Article 291, LC). If it
is established that the benefits being claimed have been withheld from the employee for a period longer
than three years, the amount pertaining to the period beyond the three-year prescriptive period is
therefore barred by prescription. The amount that can only be demanded by the aggrieved employee
shall be limited to the amount of the benefits withheld within three years before the filing of the
complaint.
Lebatique timely filed his claim for service incentive leave pay, considering that in this situation,
the prescriptive period commences at the time he was terminated. On the other hand, his claim regarding
nonpayment of overtime pay since he was hired in March 1996 is a different matter. In the case of
overtime pay, he can only demand for the overtime pay withheld for the period within three years
preceding the filing of the complaint on March 20, 2000. However, we find insufficient the selected time
records presented by petitioners to compute properly his overtime pay. The Labor Arbiter should have
required petitioners to present the daily time records, payroll, or other documents in managements
control to determine the correct payment due to him.
It is immaterial that Lebatique had filed a complaint for nonpayment of overtime pay the day he
was suspended by managements unilateral act. What matters is that he filed the complaint for illegal
dismissal on March 20, 2000, after he was told not to report for work, and his filing was well within the
prescriptive period allowed under the law.

LETRAN CALAMBA FACULTY & EMPLOYEES ASSOCIATION VS. NLRC,
G.R. NO. 156225, JANUARY 29, 2008
Facts:
On October 8, 1992, the Letran Calamba Faculty and Employees Association (petitioner) filed
with Regional Arbitration Branch No. IV of the National Labor Relations Commission (NLRC) a Complaint
against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary
claims due its members. On January 29, 1993, respondent filed its Position Paper denying all the
allegations of petitioner. On March 10, 1993, petitioner filed its Reply. Prior to the filing of the above-
mentioned complaint, petitioner filed a separate complaint against the respondent for money claims with
Regional Office No. IV of the Department of Labor and Employment (DOLE). On the other hand, pending
resolution of the NLRC Case, respondent filed with NLRC Regional Arbitration Branch No. IV a petition to
declare as illegal a strike staged by petitioner in January 1994.

Issue: WON the factual findings of the NLRC can be reviewed in Certiorari Proceedings.

Ruling:
This Court held in Odango v. National Labor Relations Commission that: The appellate courts
jurisdiction to review a decision of the NLRC in a petition for certiorari is confined to issues of jurisdiction
or grave abuse of discretion. An extraordinary remedy, a petition for certiorari is available only and
restrictively in truly exceptional cases. The sole office of the writ of certiorari is the correction of errors of
jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of
jurisdiction. It does not include correction of the NLRCs evaluation of the evidence or of its factual
findings. Such findings are generally accorded not only respect but also finality. A party assailing such
findings bears the burden of showing that the tribunal acted capriciously and whimsically or in total
disregard of evidence material to the controversy, in order that the extraordinary writ of certiorari will lie.
In the instant case, the Court finds no error in the ruling of the CA that since nowhere in the
petition is there any acceptable demonstration that the LA or the NLRC acted either with grave abuse of
discretion or without or in excess of its jurisdiction, the appellate court has no reason to look into the
correctness of the evaluation of evidence which supports the labor tribunals' findings of fact.
Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding
on the Supreme Court, unless patently erroneous. It is not the function of the Supreme Court to analyze
or weigh all over again the evidence already considered in the proceedings below. In a petition for review
on certiorari, this Courts jurisdiction is limited to reviewing errors of law in the absence of any showing
that the factual findings complained of are devoid of support in the records or are glaringly erroneous.
Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor
cases. Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise
because their jurisdiction is confined to specific matters, are generally accorded not only great respect

but even finality. They are binding upon this Court unless there is a showing of grave abuse of discretion
or where it is clearly shown that they were arrived at arbitrarily or in utter disregard of the evidence on
record. We find none of these exceptions in this case.
In petitions for review on certiorari like the instant case, the Court invariably sustains the
unanimous factual findings of the LA, the NLRC and the CA, specially when such findings are supported
by substantial evidence and there is no cogent basis to reverse the same, as in this case.

METRO TRANSIT ORGANIZATION VS. PIGLAS NFWU KMU ET. AL.
G.R. NO. 175460, APRIL 14, 2008
Facts:
Petitioner Metro Transit Organization, Inc. (MTO) is a government owned and controlled
corporation which entered into a Management and Operations Agreement (MOA) with the Light Rail
Transit Authority (LRTA) for the operation of the LRT Baclaran-Monumento Line. For purposes of CBA,
petitioner MTO's rank and file employees formed the Pinag-isang Lakas ng Manggagawa sa Metro, Inc.-
National Federation of Labor (PIGLAS). Meanwhile, its managerial and supervisory employees created
their own union bearing the name Supervisory Employees Association of Metro (SEAM). Petitioners MTO
and PIGLAS entered into a CBA. SEAM similarly negotiated with petitioner MTO under a separate CBA.
Allegedly disgruntled with PIGLAS, some rank and file employees formed another union under the
umbrella of the PTGWO-TUCP, which negotiated with management for certification as the new bargaining
agent. The intra-union dispute was settled through a certification election which PIGLAS won. Thereafter,
PIGLAS renegotiated the CBA demanding higher benefits. Due to a bargaining deadlock, PIGLAS filed a
Notice of Strike before the NCMB and staged a strike. Consequently, Hon. Bienvenido E. Laguesma, then
Secretary of DOLE, issued an Order of Assumption of Jurisdiction/Return to Work, directing the striking
employees to immediately return to work, and petitioner MTO to take them back under the same terms
and conditions of employment prevailing prior to the strike.
The striking PIGLAS members refused to accede to the Return to Work Order. Following their
continued non-compliance, the LRTA formally informed petitioner MTO that it had issued a Board
Resolution which: (1) allowed the expiration of LRTA's MOA with petitioner MTO; and (2) directed the
LRTA to take over the operations and maintenance of the LRT Line. By virtue of said Resolution,
petitioner MTO sent termination notices to its employees. Resultantly, respondents filed with the Labor
Arbiter Complaints against petitioners and the LRTA for illegal dismissal, unfair labor practice for union
busting, moral and exemplary damages; and attorney's fees.
The Labor Arbiter rendered judgment in favor of respondents. Petitioners appealed to the NLRC, which
dismissed petitioners' appeal for non-perfection since it failed to post the required bond. Without filing a
Motion for Reconsideration, petitioners filed a Petition for Certiorari with the Court of Appeals, which
dismissed the Resolution. Petitioners moved for the reconsideration of the appellate court's dismissal of
its Petition. The Court of Appeals, however, found no cogent reason to disturb its original conclusions.
Hence, petitioners come to this Court.

Issue: WON a cash or security bond is necessary to perfect an appeal.

Ruling:
In cases involving a monetary award, an employer seeking to appeal the decision of the Labor
Arbiter to the NLRC is unconditionally required by Article 223 of the Labor Code to post a cash or surety
bond equivalent to the amount of the monetary award adjudged. It should be stressed that the intention
of lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the
employer is underscored by the provision that an appeal by the employer may be perfected only upon the
posting of a cash or surety bond. The word "only" makes it perfectly clear that the lawmakers intended
the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's
appeal may be perfected. Moreover, it bears stressing that the perfection of an appeal in the manner and
within the period prescribed by law is not only mandatory but jurisdictional, and failure to conform to the
rules will render the judgment sought to be reviewed final and unappealable. It cannot be
overemphasized that the NLRC Rules, akin to the Rules of Court, promulgated by authority of law, have
the force and effect of law.
As borne by the records, petitioners filed a property bond which was conditionally accepted by
the NLRC subject to the some conditions specified in its Order. In it, the NLRC warned that failure of the
petitioners to comply with the conditions would result in the dismissal of the appeal for non-perfection
thereof. Petitioners were directed to comply with its given conditions within 10 days from receipt of the
Order with a caveat that their failure will result in the dismissal of the appeal. Subsequently, in its 19 May
2006 Resolution, the NLRC finally made a factual finding that petitioners failed to comply with the
conditions attached to their posting of the property bond. Thus, the NLRC dismissed petitioners' appeal
for non-perfection thereof.
Essentially, the failure of petitioners to comply with the conditions for the posting of the property
bond is tantamount to a failure to post the bond as required by law. What is even more salient is the fact

that the NLRC had stressed that petitioners had, for more than a month from receipt of its 24 February
2006 Order, to comply with the conditions set forth therein for the posting of the property bond. It
cannot be gainsaid that the NLRC had given petitioners a period of 10 days from receipt of the Order with
a warning that non-compliance would result in the dismissal of their appeal for failure to perfect the
same. Petitioners therefore disregarded the rudiments of the law in the perfection of their appeal. We are
without recourse but to take petitioners' failure against their interest.
The Petition is denied.

J.K. MERCADO & SONS AGRICULTURAL ENTERPRISES, INC. VS. STO. TOMAS,
G.R. NO. 158084, AUGUST 29, 2008
Facts:
On December 3, 1993, the Regional Tripartite Wages and Productivity Board, Region XI, issued
Wage Order No. RTWPB-XI-03, granting a Cost of Living Allowance (COLA) to covered workers.
On January 28, 1994, petitioner filed an application for exemption from the coverage of the
aforesaid wage order. Thus, however, was denied by the regional wage board for lack of merit and
ordered the petitioner to pay its covered workers the allowance prescribed under said Wage Order.
Notwithstanding the said order, private respondents were not given the benefits due them. Thus,
private respondents filed an Urgent Motion for Writ of Execution, and Writ of Garnishment seeking the
enforcement of subject wage order against several entities including herein petitioner.
The OIC-Regional Director, Region XI, issued a Writ of Execution for the enforcement of the
Order dated April 11, 1994 of the Regional Tripartite Wages and Productivity Board.
On November 17, 1998 and November 23, 1998, respectively, petitioner filed a Motion to Quash
the Writ of Execution and a Supplemental Motion to the Motion to Quash. Petitioner argued that herein
private respondents' right had already prescribed due to their failure to move for the execution of the
April 11, 1994 Order within the period provided under Article 291 of the Labor Code, as amended, or
within three (3) years from the finality of the said order. Regional Director denied the motion, thus the
petitioner filed a notice of appeal which was thereafter denied for lack of merit. Hence a petition was filed
in SC.

Issues:
Whether or not the Article 291 of the Labor Code is not applicable to recovery of benefits under the
subject Wage Order, which entitled respondents to a cost of living allowance (COLA)?
Whether or not the claim of the private respondents for cost of living allowance (COLA) pursuant to the
Wage Order has already prescribed because of the failure of the respondents to make the appropriate
claim within the three (3) year prescriptive period provided by Article 291 of the Labor Code, as
amended.
Ruling:
Art. 291 of the Labor Code applies to money claims in general and provides for a 3-year
prescriptive period to file them.
On the other hand, respondent employees' money claims in this case had been reduced to a
judgment, in the form of a Wage Order, which has become final and executory. The prescription
applicable, therefore, is not the general one that applies to money claims, but the specific one applying to
judgments. Thus, the right to enforce the judgment, having been exercised within five years, has not yet
prescribed.
Stated otherwise, a claimant has three years to press a money claim. Once judgment is rendered
in her favor, she has five years to ask for execution of the judgment, counted from its finality. This is
consistent with the rule on statutory construction that a general provision should yield to a specific one
and with the mandate of social justice that doubts should be resolved in favor of labor.

WHEREFORE, the petition is DENIED.

J. PHIL. MARINE INC. VS. NLRC, G.R. NO. 175361, AUGUST 11, 2008, BUT SEE ILAGAN VS.
COURT OF APPEALS,
G.R. NO. 168339, OCTOBER 10, 2008

Facts:
The herein respondent, was a cook aboard vessels plying overseas, filed before the National
Labor Relations Commission (NLRC) a pro-forma complaint against petitioners for unpaid money claims,
moral and exemplary damages, and attorneys fees and thereafter filed two amended pro forma
complaints praying for the award of overtime pay, vacation leave pay, sick leave pay, and

disability/medical benefits, he having, by his claim, contracted enlargement of the heart and severe
thyroid enlargement in the discharge of his duties as cook which rendered him disabled.
Labor Arbiter Fe Superiaso-Cellan dismissed respondents complaint for lack of merit but the
NLRC reversed the Labor Arbiters decision and awarded US$50,000.00 disability benefit to respondent.
The Court of Appeals dismissed petitioners petition for, inter alia, failure to attach to the petition all
material documents, and for defective verification and certification. Petitioners Motion for
Reconsideration of the appellate courts Resolution was denied; hence, they filed the present Petition for
Review on Certiorari.
During the pendency of the case, against the advice of his counsel, entered into a compromise
agreement with petitioners. He thereupon signed a Quitclaim and Release subscribed and sworn to
before the Labor Arbiter. Petitioners filed before this Court a Manifestation dated May 7, 2007 informing
that, inter alia, they and respondent had forged an amicable settlement.
Respondents counsel also filed before this Court, purportedly on behalf of respondent, a
Comment on the present petition. The parties having forged a compromise agreement as respondent in
fact has executed a Quitclaim and Release, the Court dismisses the petition.

Issue: WON the compromise agreement/deed of quit claim entered by the parties is valid?

Ruling:
Article 227 of the Labor Code provides:
Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by
the parties with the assistance of the Department of Labor, shall be final and binding upon the parties.
The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved
therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement
was obtained through fraud, misrepresentation, or coercion.
In Olaybar v. NLRC, the Court, recognizing the conclusiveness of compromise settlements as a
means to end labor disputes, held that Article 2037 of the Civil Code, which provides that [a]
compromise has upon the parties the effect and authority of res judicata, applies suppletorily to labor
cases even if the compromise is not judicially approved.
That respondent was not assisted by his counsel when he entered into the compromise does not
render it null and void. Eurotech Hair Systems, Inc. v. Go so enlightens:
A compromise agreement is valid as long as the consideration is reasonable and the employee
signed the waiver voluntarily, with a full understanding of what he was entering into. All that is required
for the compromise to be deemed voluntarily entered into is personal and specific individual consent.
Thus, contrary to respondents contention, the employees counsel need not be present at the time of the
signing of the compromise agreement.
It bears noting that, as reflected earlier, the Quitclaim and Waiver was subscribed and sworn to
before the Labor Arbiter. Petition DISMISSED

SY VS. ALC INDUSTRIES
G.R. NO. 168339, OCTOBER 10, 2008
Facts:
Petitioner was hired by respondent corporation ALCII as a supervisor in its purchasing office. She
was thereafter assigned to ALCII's construction project in Davao City as business manager and supervisor
of the Administrative Division. Her Davao assignment was from May 1997 to April 15, 1999.
Petitioner alleged that respondents refused to pay her salary beginning August 1998 and
allowances beginning June 1998, despite her almost weekly verbal follow-up. Petitioner filed a complaint
before the labor arbiter for unpaid salaries and allowances. Despite several notices and warnings,
respondents did not file a position paper to controvert petitioner's claims. The case was submitted for
resolution based solely on petitioner's allegations and evidence.
In his June 30, 2000 decision, the labor arbiter ordered ALCII and/or Dexter Ceriales to pay
petitioner P282,560 representing her unpaid salary and allowance.
Respondents filed an appeal with motion for reduction of bond in the National Labor Relations
Commission (NLRC) without posting any cash or surety bond. In a resolution dated September 6, 2001,
the NLRC dismissed respondents' appeal. It ruled that respondents failed to adduce substantial evidence
to support their arguments of non-liability. Moreover, it found no justifiable reason to grant a reduction in
the required bond.
Respondents were able to file a motion for reconsideration on time, accompanied by a joint
undertaking/declaration in lieu of the cash or surety bond. Nevertheless, respondents' motion for
reconsideration was denied.
On August 2, 2002, respondents filed a motion for clarification but this was likewise denied.
Respondents questioned the NLRC's denial of their motion for clarification and reconsideration in the CA
via a petition for certiorari and prohibition.

In its March 30, 2005 decision, the CA set aside the resolutions of the NLRC and the decision of
the labor arbiter and dismissed petitioner's complaint.

Issue: WON the decision of the Labor Arbiter has become final and executory.

Ruling:
The filing of a joint undertaking/declaration was filed way beyond the ten-day reglementary period for
perfecting an appeal and as a substitute for the cash or surety bond, did not operate to validate the lost
appeal.
The decision of the labor arbiter therefore became final and executory for failure of respondents
to perfect their appeal within the reglementary period. Clearly, the CA no longer had jurisdiction to
entertain respondents' appeal from the labor arbiter's decision.
Respondents point out that we have occasionally allowed exceptions to mandatory and
jurisdictional requirements in the perfection of appeals, such as disregarding unintended lapses on the
basis of strong and compelling reasons. This is true. However, the obvious motive behind respondents'
plea for liberality is to thwart petitioner's claims. This we cannot allow. Respondents' lapses were far from
unintentional. They were deliberate attempts to circumvent established rules.
Respondents' other contention that they were deprived of due process is likewise devoid of merit.
Due process is satisfied when the parties are afforded fair and reasonable opportunity to explain their
respective sides of the controversy. In Mariveles Shipyard Corp. v. CA, it was held that the requirements
of due process in labor cases before a Labor Arbiter is satisfied when the parties are given the
opportunity to submit their position papers to which they are supposed to attach all the supporting
documents or documentary evidence that would prove their respective claims, in the event that the Labor
Arbiter determines that no formal hearing would be conducted or that such hearing was not necessary.

To extend the period of appeal is to prolong the resolution of the case, a circumstance which would give
the employer the opportunity to wear out the energy and meager resources of the workers to the point
that they would be constrained to give up for less than what they deserve in law.

PCI TRAVEL CORP VS. NLRC
G.R. NO. 154379, OCTOBER 31, 2008

Facts:
A complaint for unfair labor practice was filed against petitioner by respondent NUBE-
AMEXPEA/PCI Travel Employees Union with the latter claiming that the former had been filling up
positions left by regular rank-and-file with contractual employees, but were performing work which were
usually necessary and desirable in the usual business or trade of the petitioner. Petitioner moved to
dismiss the complaint on the ground that the Union was not the real party-in-interest and then they
manifested their readiness to prove that said employees were provided by independent legitimate
contractors and that it was not engaged in labor-only contracting in position paper yet to be submitted,
but the motion to dismiss is to be resolved first.
However, the Labor Arbiter rendered a decision in favor of the respondent ruling that a motion to
dismiss was a prohibited pleading. The same was affirmed by the NLRC but with modification deleting the
awards of damages. Before the CA, the petition was dismissed for failure to attach copies of pleadings
and documents relevant and pertinent to the same and the because of the absence of proof that
Elizabeth Legarda (petitioners president) was duly authorized to sign the verification and certification of
non-forum shopping.

Issue(s):
1. Whether the President of a corporation is authorized to sign the verification and certification
against non-forum shopping without need of a board resolution.
2. Whether or not the appellate court has erred in dismissing the petition on a single technicality.

Ruling:
While it must be borne in mind that under the Corporation Code, an individual corporate officer
cannot solely exercise any corporate power pertaining to the corporation without the authority from the
board of directors, the Supreme Court however had ruled otherwise in a long line of cases before it.
Summing it up, the following officials or employees of the company can sign the verification and
certification without need of a board resolution: (1) Chairperson of the BOD, (2) President, (3) General
Manager or Acting GM, (4) Personnel Officer and (5) an Employment Specialist in a labor case.
Thus, that the President of the corporation can sign the verification and certification without need
of a board resolution, there thus exists a compelling reason for the reinstatement of the petition before
the CA.
A perusal of the petition for certiorari would reveal that petitioner intended to show the grave
abuse of discretion committed by the labor tribunals in not allowing the petitioner the ample opportunity

to submit its position paper on the alleged violation of the CBA. The Labor Arbiter and the NLRC viewed it
as a waiver on its part and hastened to rule that since the complainants allegations remain unrebutted,
they are deemed correct and valid. Due process dictates that a person should be given the opportunity
to be heard. Unfortunately, this was not accorded to the petitioner and such right was even foreclosed
when the appellate court dismissed the petition before it on technical grounds.
The policy of our judicial system is to encourage full adjudication of the merits of an appeal. Ends
of justice are better served when both parties are heard and the controversy decided on its merits. Thus,
in the exercise of its equity jurisdiction, the Court will not hesitate to reverse the dismissal of appeals that
are grounded merely on technicalities.

LOPEZ VS. Q.C. SPORTS CLUB
G.R. NO. 164032, JANUARY 19, 2009

Facts:
Claiming that it is a registered independent labor organization and the incumbent collective
bargaining agent of Quezon City Sports Club (QCSC), the Kasapiang Manggagawa sa Quezon City Sports
Club (union) filed a complaint for unfair labor practice against QCSC on 12 November 1997.
The Union averred that it was ordered to submit a new information sheet. It immediately wrote
a letter addressed to the general manager, Angel Sadang, to inquire about the information sheet, only to
be insulted by the latter. The members of the union were not paid their salaries on 30 June 1997. A
board member, Antonio Chua allegedly harassed one of the employees and told him not to join the strike
and even promised a promotion. On 4 July 1997, the union wrote a letter to the management for the
release of the members salaries for the period 16-30 June 1997, implementation of Wage Order No. 5,
and granting of wage increases mandated by the Collective Bargaining Agreement (CBA). When its letter
went unanswered, the union filed a notice of strike on 10 July 1997 for violation of Article 248 (a)(c)(e) of
the Labor Code, nonpayment of overtime pay, refusal to hear its grievances, and malicious refusal to
comply with the economic provisions of the CBA. After conducting a strike vote, it staged a strike on 12
August 1997. On 16 August 1997, the QCSC placed some of its employees under temporary lay-off status
due to redundancy. It appears that on 22 December 1997, QCSC also filed a petition for cancellation of
registration against the union.

Issues:
1. Do the simultaneous filing of the motion to reduce the appeal bond and posting of the reduced
amount of bond within the reglementary period for appeal constitute substantial compliance with
Article 223 of the Labor Code?
2. Whether the NLRC erred in declaring them to have lost their employment contrary to the Dinopol
decision which only affected a few of the employees who were union members.

Ruling:
First issue:
Under the Rules, appeals involving monetary awards are perfected only upon compliance with the
following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of
appeal; and (3) payment of the required cash or surety bond.
Thus, the posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decision of the labor arbiter. The filing of the bond is not only mandatory but
also a jurisdictional requirement that must be complied with in order to confer jurisdiction upon the
NLRC. Non-compliance with the requirement renders the decision of the labor arbiter final and executory.
This requirement is intended to assure the workers that if they prevail in the case, they will receive the
money judgment in their favor upon the dismissal of the employer's appeal. It is intended to discourage
employers from using an appeal to delay or evade their obligation to satisfy their employees' just and
lawful claims.
However, Section 6 of the New Rules of Procedure of the NLRC also mandates, among others,
that no motion to reduce bond shall be entertained except on meritorious grounds and upon the posting
of a bond in a reasonable amount in relation to the monetary award. Hence, the NLRC has the full
discretion to grant or deny the motion to reduce the amount of the appeal bond.
In the case of Nicol v. Footjoy Industrial Corporation ruled that the bond requirement on appeals
involving monetary awards had been and could be relaxed in meritorious cases such as: (1) there was
substantial compliance with the Rules; (2) the surrounding facts and circumstances constitute meritorious
grounds to reduce the bond; (3) a liberal interpretation of the requirement of an appeal bond would
serve the desired objective of resolving controversies on the merits; or (4) the appellants, at the very
least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary
period. Applying these jurisprudential guidelines, we find and hold that the NLRC did not err in reducing
the amount of the appeal bond and considering the appeal as having been filed within the reglementary
period.
The posting of the amount of P4,000,000.00 simultaneously with the filing of the motion to

reduce the bond to that amount, as well as the filing of the memorandum of appeal, all within the
reglementary period, altogether constitute substantial compliance with the Rules.

Second issue:
We rule in favor of petitioners.
The assailed Dinopol decision involves a complaint for illegal strike filed by QCSC on the ground
of a "no-strike no lockout" provision in the CBA. The challenged decision was rendered in accordance with
law and is supported by factual evidence on record. In the notice of strike, the union did not state in
particular the acts which allegedly constitute unfair labor practice. Moreover, by virtue of the "no-strike no
lockout" provision in the CBA, the union was prohibited from staging an economic strike, i.e., to force
wage or other concessions from the employer which he is not required by law to grant. However, it
should be noted that while the strike declared by the union was held illegal, only the union officers were
declared as having lost their employment status. In effect, there was a ruling only with respect to some
union members while the status of all others had remained disputed.
There is no conflict between the Dinopol and the Lustria decisions. While both rulings involve the
same parties and same issues, there is a distinction between the remedies sought by the parties in these
two cases. In the Dinopol decision, it was QCSC which filed a petition to declare the illegality of the 12
August 1997 strike by the union. The consequence of the declaration of an illegal strike is termination
from employment, which the Labor Arbiter did so rule in said case. However, not all union members were
terminated. In fact, only a few union officers were validly dismissed in accordance with Article 264 of the
Labor Code. Corollarily, the other union members who had merely participated in the strike but had not
committed any illegal acts were not dismissed from employment. Hence, the NLRC erred in declaring the
employment status of all employees as having been lost or forfeited by virtue of the Dinopol decision.
On the other hand, the Lustria decision involved the unfair labor practices alleged by the union
with particularity. In said case, Labor Arbiter Lustria sided with the Union and found QCSC guilty of such
practices. As a consequence, the affected employees were granted backwages and separation pay. The
grant of backwages and separation pay however was not premised on the declaration of the illegality of
the strike but on the finding that these affected employees were constructively dismissed from work, as
evidenced by the layoffs effected by the company.
Therefore, with respect to petitioners and union officers Alex J. Santiago, Ma. Cecilia Pangan,
Ronilo E. Lee, and Genaro Bando, who apparently had been substituted by present petitioner Teresita
Bando, the Dinopol decision declaring them as having lost their employment status still stands.
To recapitulate, the NLRC erred in setting aside the Lustria decision, as well as in deleting the
award of backwages and separation pay, despite the finding that the affected employees had been
constructively dismissed.
Based on the foregoing, the Lustria decision should be upheld and therefore reinstated
except as regards the four petitioners.

LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC.
VS. UNIVERSITY OF THE PHILIPPINES
G.R. NO. 185918, APRIL 18, 2012

Facts:
Petitioner Lockheed entered into a contract of security with the University of the Philippines. On 1998,
guards assigned at the University of the Philippines filed a complaint for unpaid wages, 25% overtime
pay, premium pay for rest days and special holidays, holiday pay, service incentive leave pay, night shift
differentials, 13th month pay, refund of cash bond, refund of deductions for the Mutual Benefits Aids
System (MBAS), unpaid wages from December 16-31, 1998, and attorney's fees.

The Labor Arbiter declared UP solidarily liable. The decision was appealed but sustained by the NLCR,
albeit a few modifications. The parties motion to reconsider were likewise denied. On July 25, 2005, a
Notice of Garnishment 10 was issued to Philippine National Bank (PNB) UP Diliman Branch for the
satisfaction of the award of P12,142,522.69 (inclusive of execution fee).
On August 16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds
being subjected to garnishment at PNB are government/public funds. However, the execution of the
garnishment was carried out. UP elevated their case to the court of appeals. On reconsideration,
however, the CA issued the assailed Amended Decision. It held that without departing from its findings
that the funds covered in the savings account sought to be garnished do not fall within the classification
of public funds, it reconsiders the dismissal of the petition in light of the ruling in the case of National
Electrification Administration v. Morales which mandates that all money claims against the government
must first be filed with the Commission on Audit (COA).
Lockheed appealed this decision to the Supreme Court. Arguing mainly that the NEA case should not
apply and that UP could be both sued and held liable. And that the quashal of garnishment sought was
moot because it had already become fait accompli.

ISSUES:
Whether or not the NEA Case applies and the funds be garnished directly bypassing the COA.
Whether or not the previous garnishment and withdrawal of funds was fait accompli.

HELD:
YES. This Court finds that the CA correctly applied the NEA case. Like NEA, UP is a juridical personality
separate and distinct from the government and has the capacity to sue and be sued. Thus, also like NEA,
it cannot evade execution, and its funds may be subject to garnishment or levy. However, before
execution may be had, a claim for payment of the judgment award must first be filed with the COA.

NO. As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that can be
done since the funds of UP had already been garnished, since the garnishment was erroneously carried
out and did not go through the proper procedure (the filing of a claim with the COA), UP is entitled to
reimbursement of the garnished funds plus interest of 6% per annum, to be computed from the time of
judicial demand to be reckoned from the time UP filed a petition for certiorari before the CA which
occurred right after the withdrawal of the garnished funds from PNB.

PORTILLO VS. RUDOLF LIETZ, INC. ET AL.,
G.R. NO. 196539, OCTOBER 10, 2012

Facts:
Potillo was hired by Rudolf in Lietz Co. under the condition that Potillo will not engage in any other
gainful employment by himself or with any other company either directly or indirectly without written
consent of Lietz Inc., otherwise Potillo will be liable for liquidated damages.

Upon his promotion, Potillo signed another letter agreement containing a Goodwill Clause stating that:

on the termination of his employment and for a period of three (3) years thereafter, he shall not
engage directly or indirectly as employee, manager, proprietor, or solicitor for himself or others in a
similar or competitive business or the same character of work which he was employed by Lietz Inc. to do
and perform. Should he breach this good will clause of this Contract, he shall pay Lietz Inc. as liquidated
damages the amount of 100% of his gross compensation over the last 12 months.

Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit interview,
Portillo declared that she intended to engage in businessa rice dealership, selling rice in wholesale.
On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her of the "Goodwill Clause" in
the last letter agreement she had signed. Subsequently, Lietz Inc. learned that Portillo had been hired by
Ed Keller Philippines, Limited to head its Pharma Raw Material Department. Ed Keller Limited is
purportedly a direct competitor of Lietz Inc.

Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and commissions
went unheeded. Lietz Inc. gave Portillo the run around, on the pretext that her salaries and commissions
were still being computed. Subsequently, Portillo filed a complaint with the National Labor Relations
Commission (NLRC) for non-payment of 1 months salary, two (2) months commission, 13th month pay,
plus moral, exemplary and actual damages and attorneys fees.

In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount of
P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillos money claims should
be offset against her liability to Lietz Inc. for liquidated damages for Portillos alleged breach of the
"Goodwill Clause" in the employment contract when she became employed with Ed Keller Philippines,
Limited.

Issue:
Who has jurisdiction over the present controversy? Whether Portillos money claims for unpaid salaries
may be offset against respondents claim for liquidated damages.

Held:
Jurisdiction belongs to the Civil Courts.

Petitioner seeks protection under the civil laws and claims no benefits under the Labor Code. The primary
relief sought is for liquidated damages for breach of a contractual obligation. The other items demanded
are not labor benefits demanded by workers generally taken cognizance of in labor disputes, such as
payment of wages, overtime compensation or separation pay. The items claimed are the natural
consequences flowing from breach of an obligation, intrinsically a civil dispute.

Furthermore, non-compete clause, as in the "Goodwill Clause" refers to post-employment relations of the
parties. The "Goodwill Clause" or the "Non-Compete Clause" is a contractual undertaking effective after
the cessation of the employment relationship between the parties. In accordance with jurisprudence,
breach of the undertaking is a civil law dispute, not a labor law case.

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover damages
based on the parties contract of employment as redress for respondents breach thereof. Such cause of
action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts.

It must also be noted that the application of compensation in this case is effectively barred by Article 113
of the Labor Code which prohibits wage deductions except in three circumstances:

ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any
deduction from wages of his employees, except:

In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;

For union dues, in cases where the right of the worker or his union to check-off has been recognized by
the employer or authorized in writing by the individual worker concerned; and in cases where the
employer is authorized by law or regulations issued by the Secretary of Labor.

BUILDING CARE CORP. VS. MACARAEG,
G.R. NO. 198357, DECEMBER 10, 2012

Facts:
Petitioners are in the business of providing security services to their clients. They hired respondent as a
security guard beginning August 25, 1996, assigning her at Genato Building in Caloocan City. However,
on March 9, 2008, respondent was relieved of her post. She was re-assigned to Bayview Park Hotel from
March 9-13, 2008, but after said period, she was allegedly no longer given any assignment.

Thus, on September 9, 2008, respondent filed a complaint against petitioners for illegal dismissal,
underpayment of salaries, non-payment of separation pay and refund of cash bond. Respondent claimed
that petitioners failed to give her an assignment for more than nine months, amounting to constructive
dismissal, and this compelled her to file the complaint for illegal dismissal.

On the other hand, petitioners alleged in their position paper that respondent was relieved from her post
as requested by the client because of her habitual tardiness, persistent borrowing of money from
employees and tenants of the client, and sleeping on the job.

On May 13, 2009, the Labor Arbiter rendered a Decision dismissing the charge of illegal dismissal as
wanting in merit but ordering the Respondents Leopard Security and Investigation Agency and Rupert
Protacio to pay complainant a financial assistance in the amount of P5,000.00.

Respondent then filed a Notice of Appeal with the National Labor Relations Commission (NLRC), but in a
Decision dated October 23, 2009, the NLRC dismissed the appeal for having been filed out of time,
thereby declaring that the Labor Arbiter's Decision had become final and executory on June 16, 2009.

Upon elevating to the CA via a petition for certiorari, the court reversed and set aside the Decision of the
NLRC and in lieu thereof, a new judgment is entered declaring petitioner to have been illegally dismissed.

Issue:

Whether the CA erred in liberally applying the rules of procedure and ruling that respondent's appeal
should be allowed and resolved on the merits despite having been filed out of time.

Held:

It should be emphasized that the resort to a liberal application, or suspension of the application of
procedural rules, must remain as the exception to the well-settled principle that rules must be complied
with for the orderly administration of justice.


The relaxation of procedural rules in the interest of justice was never intended to be a license for erring
litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can
be invoked only in proper cases and under justifiable causes and circumstances.

The desired leniency cannot be accorded absent valid and compelling reasons for such a procedural
lapse.

Although the CA justified such a reversal of the NLRCs decision on the ground that the belated filing of
respondent's appeal before the NLRC was the fault of respondent's former counsel, note, however, that
neither respondent nor her former counsel gave any explanation or reason citing extraordinary
circumstances for her lawyer's failure to abide by the rules for filing an appeal. Respondent merely
insisted that she had not been remiss in following up her case with said lawyer. It is a basic rule that the
negligence and mistakes of counsel bind the client.

It should also be borne in mind that the right of the winning party to enjoy the finality of the resolution of
the case is also an essential part of public policy and the orderly administration of justice. Hence, such
right is just as weighty or equally important as the right of the losing party to appeal or seek
reconsideration within the prescribed period.25
When the Labor Arbiter's Decision became final, petitioners attained a vested right to said judgment.
They had the right to fully rely on the immutability of said Decision.

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