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UNIVERSITY OF SAN CARLOS

SCHOOL OF LAW AND GOVERNANCE

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

SUBMITTED BY:

GARCY KATE D. GO LLB 2 (EH306)

SUBMITTED TO:
ATTY. JEFFERSON M. MARQUEZ
TABLE OF CONTENTS

Basic Principles
1. Singer Sewing Machine vs. NLRC, 193 SCRA 271
2. Manila Golf Club vs. IAC, 237 SCRA 207
3. Encyclopedia Britanica vs. NLRC, 264 SCRA 4 [96]
4. Carungcong vs. Sunlife, 283 SCRA 319
5. Ramos vs. CA, 380 SCRA 467
6. Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004
7. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]
8. Phil. Global Communication vs. De Vera, 459 SCRA 260 [2005]
9. ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006
10. Francisco vs. NLRC, 500 SCRA 690 [06]
11. Nogales et al., vs. Capitol Medical Center et al., G.R. No. 142625, December 19, 2006
12. Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15, 2007
13. Calamba Medical Center vs. NLRC et al., G.R. No. 176484, Nov. 25, 2008
14. Escasinas et al., vs. Shangri-las Mactan Island Resort et al., G.R. No. 178827, March 4,
2009
15. Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc., et al., G.R. No. 167622, January
25, 2011
16. Caong, Jr. vs. Begualos, GR No. 179428, Jan. 26, 2011
17. Atok Big Wedge Company vs. Gison, G.R. No. 169510, August 8, 2011
18. Semblante et al., vs. Court of Appeals, et al., G.R. No. 196426, August 15, 2011
19. Bernarte vs. Phil. Basketball Association et al., G.R. No. 192084, September 14, 2011
20. Lirio vs. Genovia, G.r. No. 169757, November 23, 2011
21. Jao vs. BCC Products Sales Inc. G.R. No. 163700, April 18, 2012
22. Legend Hotel (Manila) vs. Realuyo G.R. No. 153511, July 18, 2012
23. The New Philippine Skylanders, Inc., vs. Dakila, G.r. No. 199547, Sept. 24, 2012
24. Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482, March 12, 2014
HIRING OF EMPLOYEE
25. Ollendorf vs. Abrahanson, 38 Phil 585
26. Del Castillo vs. Richmond, 45 Phil. 679
27. PT&T vs. NLRC, 272 SCRA 596 [1997]
28. Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils., G.R. No. 162994, Sept. 17,
2004
29. City of Manila vs. Laguio, G.R. No. 118127, April 12, 2005
30. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006
31. Del Monte Phils vs. Velasco, G.R. No. 153477, March 6, 2007
32. Yrasuegui vs. Phil Air Lines, G.R. No. 168081, October 17, 2008
WAGE & THE WAGE RATIONALITAZION ACT
33. Ilaw at Buklod ng Manggagawa vs. NLRC, 198 SCRA 586 [1991]
34. Employers Confederation of the Phils., vs. NWPC, 201 SCRA 759 [1991]
35. Mabeza vs. NLRC, 271 SCRA 670
36. Joy Brothers Inc., vs. NWPC, 273 SCRA 622 [1997]
37. Prubankers Asso. Vs. Prudential Bank, 302 SCRA 74 [1999]
38. Millare vs. NLRC, 305 SCRA 501
39. International School Alliance of Educators vs. Quisumbing, 333 SCRA 13 [2000]
40. Bankard Employees Union vs. NLRC, G.R. No. 140689, Feb. 17, 2004
41. Odango vs. NLRC, G.R. No. 147420, June 10, 2004
42. C. Planas Commercial vs. NLRC, G.R. No. 144619, Nov. 11, 2005
43. EJR Crafts Corp., vs. CA, G.R. No. 154101, March 10, 2006
44. Pag Asa Steel Works vs. CA, G.R. No. 166647, March 31, 2006
45. Metropolitan Bank vs. NWPC, G.R. No. 144322, Feb. 6, 2007
46. Equitable Bank vs. Sadac, G.R. No. 164772, June 8, 2006, citing Songco vs. NLRC, 183
SCRA 618
47. S.I.P. Food House et al., vs. Batolina, GR No. 192473, Oct 11, 2010
48. SLL International Cables Specialist vs. NLRC, GR No. 172161, March 2, 2011
49. Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. G.R. No. 176985, April 1, 2013
50. Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant, G.R. No. 198783,
April 15, 2013
51. The National Wages & Productivity Commission et al., vs. The Alliance of Progressive
Labor et al., GR No. 150326, March 12, 2014
WAGE ENFORCEMENT AND RECOVERY
52. Rajah Humabon Hotel vs. Trajano, 226 SCRA 332

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53. Guico vs. Sec of Labor, G.R. No. 131750, November 16, 1998
54. Ex-Bataan Vetrerans Security Agency vs.. Sec. Of Labor, et al., G.R. No. 152396,
November 20, 2007, citing Cireneo Bowling Plaza vs. Sensing, G.R. No. 146572, Jan. 14,
2005
55. Sapio vs. Undaloc Construction et al., G.R. No. 155034, May 22, 2008
56. Hon. Secretary of Labor vs. Panay Veterans Security and Investigation Agency, G.R. No.
167708, August 22, 2008
57. National Mines and Allied Workers Union vs. Marcopper Mining Corp., G.R. No. 174641,
Nov. 11, 2008
58. Jethro Intelligence & Security Corp., vs. SOLE, et al., GR No. 172537, Aug. 14, 2009
59. Phil Hoteliers Inc., et al., vs. National Union of Workers in Hotel, Restaurant and Allied
Industries-Dusit Hotel Nikko Chpater, GR No. 181972, Aug. 25, 2009
60. Tiger Construction and Development Corp vs. Abay et al., GR No. 164141, Feb. 26, 2010
61. Peoples Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al., GR No. 179652, March
6, 2012 Resolution on the main Decision of May 8, 2009
62. Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10, 2012
WAGE PROTECTION PROVISION & PROHIBITIONS REGARDING WAGES
63. GAA vs. CA, 140 SCRA 304
64. Nestle Phils., vs. NLRC, 193 SCRA 504
65. Five J Taxi vs. NLRC, 235 SCRA 556
66. Phil. Veterans Bank vs. NLRC, G.R. No. 130439, Oct. 26, 1999
67. Phil Appliances Corp., vs. CA, G.R. No. 149434, June 3, 2004
68. Agabon vs. NLRC, G.R. No. 158693, Nov. 17, 2004
69. American Wire & Cable Daily Rated Employees vs. American Wire, G.R. No. 155059, April
29, 2005
70. Honda Phils., vs. Samahang Malayang Manggagawa sa Honda, G.R. No. 145561, June 15,
2005
71. Producers Bank vs. NLRC, 355 SCRA 506
72. Jardin vs. NLRC, G.R. No. 119268, February 23,2000
73. Manila Jockeys Club Employees Labor Union vs. Manila Jockey Club, G.R. No. 167601,
March 7, 2007
74. San Miguel Corp et al., vs. Layoc, Jr., et al., G.R. No. 149640, October 19, 2007
75. San Miguel Corp., vs. Pontillas, G.R. No. 155178, May 7, 2008
76. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-
NAFLU, G.R. No. 170734, May 14, 2008, citing Davao Fruits vs. Asso. Labor Union, 225
SCRA 562 and Sevilla Trading vs. AVA Tomas Services, G.R. No. 152456, April 28, 2004
77. Aguanza vs. Asian Terminal Inc., et al., GR No. 163505, Aug. 14, 2009
78. Genesis Transport Service Inc et al., vs. Unyon ng Malayang Manggagawa ng Genesis
Transport et al., GR No. 182114, April 5, 2010
79. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, GR No.
188949, July 26, 2010
80. SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010
81. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No. 188169, November
28, 2011
82. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013
83. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb 26,
2014
84. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso., GR No.
181806, March 12, 2014
85. Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014, citing2011
Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo
PAYMENT OF WAGES
86. Congson vs. NLRC, 243 SCRA 260 [1995]
87. North Davao Mining vs. NLRC, 254 SCRA 721 [1996]
88. National Federation of Labor vs. CA, G.R. No. 149464, Oct. 19, 2004
89. Heirs of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006
CONDITIONS OF EMPLOYMENT
90. San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997]
91. Simedarby vs. NLRC, 289 SCRA 86 [1998]
92. Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]
93. Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007
94. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008
MINIMUM LABOR STANDARD BENEFITS
95. Union of Filipro Employees vs. Vicar, 205 SCRA 203 [1992]

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96. National Sugar Refinery Corp., vs. NLRC, 220 SCRA 452 [1993]
97. Salazar vs. NLRC, 256 SCRA 273 [1996]
98. Labor Congress of the Phils., vs. NLRC, G.R. No. 1239381, May 21, 1998
99. Mercidar Fishing Corp., vs. NLRC, G.R. No. 112574, October 8, 1998
100. San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002
101. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002
102. Lambo vs. NLRC, 317 SCRA 420
103. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004
104. Asian Transmission vs. CA, 425 SCRA 478 [2004]
105. Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005
106. San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005
107. Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006
108. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No.
1577745, October 19, 2007, citing Wellington Investment vs. Trajano, 245 SCRA 561
[1995], and Odango vs. NLRC, G.R. No. 147420, June 10, 2004
109. Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing Cagampan
vs. NLRC, 195 SCRA 533 [1998]
110. PNCC Skyway Traffic Management and Security Division Workers Organization, GR No.
171231, Feb. 17, 2010
111. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr. G.R. No. 198662, Sept. 12, 2012
112. Villuga vs. NLRC, 225 SCRA 537 [1993]
113. CJC Trading vs. NLRC, 246 SCRA 724 [1995]
114. Pantranco North Express vs. NLRC, 259 SCRA 161 [1996]
115. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004
116. Rufina Patis vs. Alusitain, G.R. No. 146202, July 14, 2004
117. Sta Catalina College vs. NLRC, 416 SCRA 243
118. Honda Phils., vs. Samahan ng mga Manggagawa sa Honda, G.R. No. 145561, June 15,
2005
119. Jaculbe vs. Silliman University, G.R. No. 156934, March 16, 2007
120. Intercontinental Broadcasting Corp., vs. Amarilla, G.R. No. 162775, October 27, 2006
121. Letran Calamba Faculty & Employees Association vs. NLRC et al., G.R. No. 156225,
January 29, 2008
122. Reyes vs. NLRC et al., G.R. No. 160233, August 8, 2007, citing Boie Takeda Chemicals
vs. Dela Serna, 228 SCRA 329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380 [1995]
123. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-
NAFLU, G.R. No. 170734, May 14, 2008
124. Universal Robina Sugar Milling Corp. vs. Caballeda, G.R. No. 156644, July 28, 2008
125. Cercado vs. Uniprom, Inc. G.R. No. 188154, October 13, 2010
126. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al., G.R. No. 198662, September
12, 2012
127. Padillo vs. Rural bank of Nabunturan Inc. G.r. No. 199338, Jan. 21, 2013
128. T/SGP Larkins vs. NLRC, G.R. No. 92432, February 23, 1995
129. UERM Memorial Medical Center vs. NLRC, G.R. No. 110419, March 3, 1997
130. Phil Tranco Services vs. NLRC, G.R. No. 124100, April 1, 1998
131. St. Martin Funeral Homes vs. NLRC, G.R. No. 130866, September 16, 1998
132. Ludo & Luym Corp., vs. Saornido, G.R. No. 140960, January 20, 2003
133. Hansin Engineering & Construction vs. CA, G.R. No. 165910, April 10, 2006
134. Phil. Journalist Inc. vs. NLRC, G.R. No. 166421, Sept. 5, 2006
135. Balagtas Multi-purpose Coop. Vs. CA, G.R. No. 159268, Oct. 27, 2006
136. St. Martin Funeral Homes vs. NLRC, G.R. No. 142351, Nov. 22, 2006
137. DOLE Phils. Vs. Esteva, G.R. No. 161115, Nov. 30, 2006
138. Intercontinental Broadcasting Corp., vs. Panganiban, G.R. No. 151407, February 6,
2007
139. Far East Agricutural Supply vs. Lebatique, G.R. No. 162813, February 12, 2007
140. Letran Calamba Faculty & Employees Association vs. NLRC, G.R. No. 156225, January
29, 2008
141. Metro Transit Organization vs. Piglas NFWU-KMU et al., G.R. No. 175460, April 14,
2008
142. J.K. Mercado & Sons Agricultural Enterprises, Inc., vs Sto. Tomas, G.R.No. 158084,
August 29, 2008
143. J. Phil. Marine Inc., vs. NLRC, G.R. No. 1753661, August 11, 2008; but see Ilagan vs.
Court of Appeals, G.R. No. 162089, July 9, 2008
144. Sy vs. ALC Industries, G.R. No. 168339, October 10, 2008
145. PCI Travel Corp., vs. NLRC, G.R. No. 154379, October 31, 2008
146. Lopez vs. Q. C. Sports Club, G.R. No. 164032, January 19, 2009

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147. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012
148. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012
149. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012

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BASIC PRINCIPLES

Singer Sewing Machine vs. NLRC


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

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Art. 280 is not instructive because it only deals with casual and regular
employees while the provision in the Omnibus Rules is only relevant in
ascertaining whether the employer is solidarily liable with the contractor or
subcontractor.

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

Facts: Three separate proceedings, all initiated by Llamar and his fellow
caddies gave rise to the present petition for review which was originally filed
with the Social Security Commission (SSC) via petition of 17 persons who
styled themselves "Caddies of Manila Golf and Country Club-PTCCEA" for
coverage and availment of benefits under the Social Security Act as
amended, "PTCCEA" being the acronym of a labor organization, the
"Philippine Technical, Clerical, Commercial Employees Association," with
which the petitioners claimed to be affiliated. The petition alleged in essence
that although the petitioners were employees of the Manila Golf and Country
Club, a domestic corporation, the latter had not registered them as such with
the SSS. At about the same time, two other proceedings bearing on the same
question were filed or were pending.
The respondent Club filed answer praying for the dismissal of the petition,
alleging in substance that the petitioners, caddies by occupation, were
allowed into the Club premises to render services as such to the individual
members and guests playing the Club's golf course and who themselves paid
for such services; that as such caddies, the petitioners were not subject to
the direction and control of the Club as regards the manner in which they
performed their work; and hence, they were not the Club's employees.

Issue: Whether or not persons rendering caddying services for members of


golf clubs and their guests in said clubs' courses or premises are the
employees of such clubs and therefore within the compulsory coverage of
the Social Security System (SSS).

Ruling: The private respondent Fermin Llamar, is not an employee of


petitioner Manila Golf and Country Club and that petitioner is under no
obligation to report him for compulsory coverage to the Social Security
System. No pronouncement as to costs.

The caddies were paid by the players, not by the Club, and that they
observed no definite working hours and earned no fixed income. The Court
does not agree that the facts necessarily or logically point to such an
employer-employee relationship, and to the exclusion of any form of
arrangements, other than of employment that would make the Llamars
services available to the members and guest of the Manila Golf Club. In the
very nature of things, caddies must submit to some supervision of their
conduct while enjoying the privilege of pursuing their occupation within the
premises and grounds of whatever club they do their work in. For all that is
made to appear, they work for the club to which they attach themselves on
sufference but, on the other hand, also without having to observe any
working hours, free to leave anytime they please, to stay away for as long
they like. It is not pretended that if found remiss in the observance of said
rules, any discipline may be meted them beyond barring them from the
premises which, it may be supposed, the Club may do in any case even
absent any breach of the rules, and without violating any right to work on
their part. All these considerations clash frontally with the concept of
employment.

The IAC would point to the fact that the Club suggests the rate of fees
payable by the players to the caddies as still another indication of the latter's
status as employees. It seems to the Court, however, that the intendment of
such fact is to the contrary, showing that the Club has not the measure of

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control over the incidents of the caddies' work and compensation that an
employer would possess.

The Court agrees with petitioner that the group rotation system so-called, is
less a measure of employer control than an assurance that the work is fairly
distributed, a caddy who is absent when his turn number is called simply
losing his turn to serve and being assigned instead the last number for the
day.

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Encyclopedia Britannica (Philippines), Inc. vs NLRC
November 4, 1996, G.R. No. 87098
Facts: Limjoco, herein private respondent, was a Sales Division of
Encyclopedia Britannica and was in charge of selling the products through
some sales representatives. As compensation, he would receive commissions
from the products sold by his agents. He was also allowed to use the
petitioners name, goodwill and logo. It was agreed that office expenses
would be deducted from Limjocos commissions.

In 1974, Limjoco resigned to pursue his private business and filed a


complaint against petitioner for alleged non-payment of separation pay and
other benefits and also illegal deduction from sales commissions. Petitioner
alleged that Limjoco was not an employee of the company but an
independent dealer authorized to promote and sell its products and in return,
received commissions therein. Petitioner also claims that it had no control
and supervision over the complainant as to the manners and means he
conducted his business operations. Limjoco maintained otherwise. He
alleged he was hired by the petitioner and was assigned in the sales
department.

The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC
also affirmed the decision and opined that there was no evidence supporting
allegation that Limjoco was an independent contractor or dealer.

Issue: Whether or not there was an employee-employer relationship


between the parties.

Ruling: There was no employee-employer relationship. In determining the


relationship, the following elements must be present: selection and
engagement of the employee, payment of wages, power of dismissal and
power to control the employees conduct. The power of control is commonly
regarded as the most crucial and determinative indicator of the presence or
absence of an employee-employer relationship. Under the control test, an
employee-employer relationship exists where the person for whom the
services are performed reserves a right to control not only the end to be
achieved, but also the manner and means to be employed in reaching that
end.

The issuance of guidelines by the petitioner was merely guidelines on


company policies which sales managers follow and impose on their
respective agents. Limjoco was not an employee of the company since he
had the free rein in the means and methods for conducting the marketing
operations. He was merely an agent or an independent dealer of the
petitioner. He was free to conduct his work and he was free to engage in
other means of livelihood.

In ascertaining the employee-employer relationship, the factual


circumstances must be considered. The element of control is absent where a
person who works for another does so more or less at his own pleasure and
is not subject to definite hours or conditions of work, and in turn is

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compensated in according to the result of his efforts and not the amount
thereof. Hence, there was no employee-employer relationship.

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Carungcong vs Sunlife, 283 SCRA 319

Facts: Susan Carungcong began her career as an agent of Sun Life


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

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

Issues: Whether or not there was an employer-employee relationship


between Carungcong and Sunlife.

Ruling: The Supreme Court ruled that there was no employer-employee


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

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

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Ramos vs Court of Appeals, 380 SCRA 467

Facts: Petitioner Erlinda Ramos was advised to undergo an operation for the
removal of her stone in the gall bladder. She was referred to Dr. Hosaka, a
surgeon, who agreed to do the operation. The operation was scheduled on
June 17, 1985 in the De los Santos Medical Center. Erlinda was admitted to
the medical center the day before the operation. On the following day, she
was ready for operation as early as 7:30 am. Around 9:30, Dr. Hosaka has not
yet arrived. By 10 am, Rogelio wanted to pull out his wife from the operating
room. Dr. Hosaka finally arrived at 12:10 pm more than 3 hours of the
scheduled operation.

Dr. Guiterrez tried to intubate Erlinda. The nail beds of Erlinda were bluish
and there was a discoloration in her left hand. At 3 pm, Erlinda was being
wheeled to the Intensive care Unit and stayed there for a month. Since the
ill-fated operation, Erlinda remained in comatose condition until she died.

The family of Ramos sued them for damages.

Issue: Whether or not there was an employee-employer relationship that


existed between the Medical Center and Drs. Hosaka and Guiterrez.

Held: No, employer-employee relationship between the doctors and hospital


did not exist.

Private hospitals hire, fire, and exercise real control over their attending and
visiting consultant staff. While consultants are not technically employees, the
control exercised, the hiring and the right to terminate consultants fulfill the
hallmarks of an employer-employee relationship with the exception of
payment of wages. The control test is determining.

In applying the four fold test, DLSMC cannot be considered an employer of


the respondent doctors. It has been consistently held that in determining
whether an employer-employee relationship exists between the parties, the
following elements must be present: (1) selection and engagement of
services; (2) payment of wages; (3) the power to hire and fire; and (4) the
power to control not only the end to be achieved, but the means to be used
in reaching such an end.

The hospital does not hire consultants but it accredits and grants him the
privilege of maintaining a clinic and/or admitting patients. It is the patient
who pays the consultants. The hospital cannot dismiss the consultant but he
may lose his privileges granted by the hospital. The hospitals obligation is
limited to providing the patient with the preferred room accommodation and
other things that will ensure that the doctors orders are carried out.

The court finds that there is no employer-employee relationship between the


doctors and the hospital.

Garcy Kate D. Go LLB2 EH306 Page 13


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

Facts: In May 1994, ABS-CBN signed an agreement with Mel and Joey
Management and Developments Corporation (MJMDC), a television program.
Referred to in the Agreement as Agent, MJMDC agreed to provide Sonzas
services exclusively to ABS-CBN as talent for radio and television. ABS-CBN
agreed to pay Sonzas services a monthly talent fee of P310, 000 for the first
year and P317,000 for the second and third year of the agreement.

On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President


Lopez stating that he will irrevocably resign in view of the recent events
concerning his program and career, that he is waiving and renouncing
recovery of the remaining amount stipulated in the Agreement, but reserves
the right to seek recovery of the other benefits under said agreement.

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

Issue: Whether an employer-employee relationship exists.

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

The Supreme Court ratiocinated that Independent contractors often present


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

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

Garcy Kate D. Go LLB2 EH306 Page 14


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

Facts: Private respondent Laudato filed a petition before the SSC for social
security coverage and remittance of unpaid monthly social security
contributions against her three employers. Among the respondents was
herein petitioner Angelito L. Lazaro (Lazaro), proprietor of Royal Star
Marketing (Royal Star), which is engaged in the business of selling home
appliances. Petitioner states that 1) Laudato was not a sales supervisor of
Royal Star, but was a mere sales agent whom he paid purely on commission
basis.2) Laudato was not subjected to definite hours and conditions of work.
As such, Laudato could not be deemed an employee of Royal Star while
respondents contended that despite her employment as sales supervisor of
the sales agents for Royal Star from April of 1979 to March of 1986, Lazaro
had failed during the said period, to report her to the SSC for compulsory
coverage or remit Laudatos social security contributions.

Issue: Whether or not respondent is an employee, bringing her under the


coverage of the Social Security Act.

Ruling: Ladauto is an employee of Royal Star. It is an accepted doctrine that


for the purposes of coverage under the Social Security Act, the determination
of employer-employee relationship warrants the application of the control
test, that is, whether the employer controls or has reserved the right to
control the employee, not only as to the result of the work done, but also as
to the means and methods by which the same is accomplished.

The fact that Laudato was paid by way of commission does not preclude the
establishment of an employer-employee relationship. The relevant factor
remains, as stated earlier, whether the"employer" controls or has reserved
the right to control the "employee" not only as to the result of the work to be
done but also as to the means and methods by which the same is to be
accomplished.

Neither does it follow that a person who does not observe normal hours of
work cannot be deemed an employee. A supervisor is exempt from the
observance of normal hours of work for his compensation is measured by the
number of sales he makes. Laudato oversaw and supervised the sales
agents of the company, and thus was subject to the control of management
as to how she implements its policies and its end results.

Royal Star exercised control over its sales supervisors or agents such as
Laudato as to the means and methods through which these personnel
performed their work.

Garcy Kate D. Go LLB2 EH306 Page 15


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

Facts: Philippine Global Communications inc. is a corporation engaged in the


business of communication services and allied activities while Ricardo de
Vera is a physician by profession whom petitioner enlisted to attend to the
medical needs of its employees. The controversy rose when petitioner
terminated his engagement.

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

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

Issue: Whether or not there exists an employee-employer relationship


between the parties.

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

Upon reading the contract dated September 6, 1982, signed by the


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

Garcy Kate D. Go LLB2 EH306 Page 16


evidence showing that respondent had to bill petitioner for his monthly
professional fees. It simply runs against the grain of common experience to
imagine that an ordinary employee has yet to bill his employer to receive his
salary.

The power to terminate the parties relationship was mutually vested on


both. Either may terminate the arrangement at will, with or without cause.
Remarkably absent is the element of control whereby the employer has
reserved the right to control the employee not only as to the result of the
work done but also as to the means and methods by which the same is to be
accomplished.
Petitioner had no control over the means and methods by which respondent
went about performing his work at the company premises. In fine, the parties
themselves practically agreed on every terms and conditions of the
engagement, which thereby negates the element of control in their
relationship.

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

Garcy Kate D. Go LLB2 EH306 Page 17


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

Facts: ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and


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

Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective


Bargaining Agreement (CBA) to be effective during the period from Dec 11,
1996 to Dec 11, 1999. However, since petitioner refused to recognize PAs as
part of the bargaining unit, respondents were not included to the CBA.

Due to a memorandum assigning PAs to non-drama programs, and that the


DYAB studio operations would be handled by the studio technician. There
was a revision of the schedule and assignments and that respondent Gerzon
was assigned as the full-time PA of the TV News Department reporting
directly to Leo Lastimosa.

On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular


Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium
Pay, Service Incentive Pay, Sick Leave Pay, and 13 th Month Pay with Damages
against the petitioner before the NLRC.

Issue: WON the respondents are regular employees?

Ruling: Respondents are considered regular employees of ABS-CBN and are


entitled to the benefits granted to all regular employees.

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

Garcy Kate D. Go LLB2 EH306 Page 18


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:

First. In the selection and engagement of respondents, no peculiar or unique


skill, talent or celebrity status was required from them because they were
merely hired through petitioners personnel department just like any ordinary
employee.

Second. The so-called talent fees of respondents correspond to wages


given as a result of an employer-employee relationship. Respondents did not
have the power to bargain for huge talent fees, a circumstance negating
independent contractual relationship.

Third. Petitioner could always discharge respondents should it find their work
unsatisfactory, and respondents are highly dependent on the petitioner for
continued work.

Fourth. The degree of control and supervision exercised by petitioner over


respondents through its supervisors negates the allegation that respondents
are independent contractors.

The presumption is that when the work done is an integral part of


the regular business of the employer and when the worker, relative
to the employer, does not furnish an independent business or
professional service, such work is a regular employment of such
employee and not an independent contractor.

Garcy Kate D. Go LLB2 EH306 Page 19


Francisco vs. NLRC, 500 SCRA 690 (06)

Facts: In 1995, petitioner was hired by Kasei Corporation during its


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

Issue: Whether there was an employer-employee relationship between


petitioner and private respondent Kasei Corporation.

Held: The determination of the relationship between employer and


employee depends upon the circumstances of the whole economic activity,
such as: (1) the extent to which the services performed are an integral part
of the employers business; (2) the extent of the workers investment in
equipment and facilities; (3) the nature and degree of control exercised by
the employer; (4) the workers opportunity for profit and loss; (5) the amount
of initiative, skill, judgment or foresight required for the success of the
claimed independent enterprise; (6) the permanency and duration of the
relationship between the worker and the employer; and (7) the degree of
dependency of the worker upon the employer for his continued employment
in that line of business.The proper standard of economic dependence is
whether the worker is dependent on the alleged employer for his continued
employment in that line of business. In the United States, the touchstone of
economic reality in analyzing possible employment relationships for
purposes of the Federal Labor Standards Act is dependency. By analogy, the
benchmark of economic reality in analyzing possible employment
relationships for purposes of the Labor Code ought to be the economic
dependence of the worker on his employer. Under the broader economic
reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years
before her dismissal, receiving check vouchers indicating her salaries/wages,
benefits, 13th month pay, bonuses and allowances, as well as deductions
and Social Security contributions from August 1, 1999 to December 18,
2000. When petitioner was designated General Manager, respondent

Garcy Kate D. Go LLB2 EH306 Page 20


corporation made a report to the SSS signed by Irene Ballesteros. Petitioners
membership in the SSS as manifested by a copy of the SSS specimen
signature card which was signed by the President of Kasei Corporation and
the inclusion of her name in the on-line inquiry system of the SSS evinces the
existence of an employer-employee relationship between petitioner and
Respondent Corporation. It is therefore apparent that petitioner is
economically dependent on Respondent Corporation for her continued
employment in the latters line of business. The petition is GRANTED.
Nogales et. al. vs. Capitol Medical Center
G.R. No. 142625, December 19, 2006

Facts: Pregnant Corazon Nogales ("Corazon") was under the exclusive


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

Petitioners filed a complaint for damages with the Regional Trial Court.
Petitioners mainly contended that defendant physicians and CMC personnel
were negligent in the treatment and management of Corazon's condition.
Petitioners charged CMC with negligence in the selection and supervision of
defendant physicians and hospital staff.

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

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

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

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


However, CMC is still vicariously liable.

The Court finds no single evidence pointing to CMC's exercise of control over
Dr. Estrada's treatment and management of Corazon's condition. It is
undisputed that throughout Corazon's pregnancy, she was under the
exclusive prenatal care of Dr. Estrada. Dr. Estrada is not an employee of CMC,
but an independent contractor.

Garcy Kate D. Go LLB2 EH306 Page 21


In general, a hospital is not liable for the negligence of an independent
contractor-physician. There is, however, an exception to this principle. The
hospital may be liable if the physician is the "ostensible" agent of the
hospital. This exception is also known as the "doctrine of apparent authority."
The doctrine of apparent authority essentially involves two factors to
determine the liability of an independent-contractor physician. The first
factor focuses on the hospital's manifestations and is sometimes described
as an inquiry whether the hospital acted in a manner which would lead a
reasonable person to conclude that the individual who was alleged to be
negligent was an employee or agent of the hospital. In this regard, the
hospital need not make express representations to the patient that the
treating physician is an employee of the hospital; rather a representation
may be general and implied. The doctrine of apparent authority is A specie of
the doctrine of estoppel. Article 1431 of the Civil Code provides that "through
estoppel, an admission or representation is rendered conclusive upon the
person making it, and cannot be denied or disproved as against the person
relying thereon." CMC impliedly held out Dr. Estrada as a member of its
medical staff.

Through CMC's acts, CMC clothed Dr. Estrada with apparent authority
thereby leading the Spouses Nogales to believe that Dr. Estrada was an
employee or agent of CMC. CMC cannot now repudiate such authority. First,
CMC granted staff privileges to Dr. Estrada. Second, CMC made Rogelio sign
consent forms printed on CMC letterhead. Third, Dr. Estrada's referral of
Corazon's profuse vaginal bleeding to Dr. Espinola, who was then the Head of
the Obstetrics and Gynecology Department of CMC, gave the impression that
Dr. Estrada as a member of CMC's medical staff was collaborating with other
CMC-employed specialists in treating Corazon. WHEREFORE, the Court
PARTLY GRANTS the petition. The Court finds respondent Capitol Medical
Center vicariously liable for the negligence of Dr. Oscar Estrada.

Garcy Kate D. Go LLB2 EH306 Page 22


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

Facts: Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-


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

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

Respondent thereafter filed a complaint before the NLRC seeking recognition


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

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

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

The CA held it in this wise:


1 First, the agreement provide the company desires to engage on a
retainer basis the services of a physician and the said DOCTOR is
accepting such engagement. This clearly shows that coca-cola
company exercised its power to hire.
2 Secondly, the agreement showed that petitioner would compensate
the doctor for P3,800/month. This would represent the element of
payment of wages.

Garcy Kate D. Go LLB2 EH306 Page 23


3 Thirdly, it was provided in the agreement that the same shall be valid
only for 1 year. the said term notwithstanding, either party may
terminated the contract upon giving 30-day written notice. This would
show that petitioner had the power to dismissal.
4 Lastly, the agreement reveal that Coca-cola control over the conduct of
respondent in the latters performance of his duties sas a doctor for the
company.

Hence, this petition filed by Coca-cola company


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

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

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

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

The Supreme Court further held that, an employee is required to stay in


the employers workplace or proximately close thereto that he
cannot utilize his time effectively and gainfully for his own purpose.
Such is not the prevailing situation here. The respondent does not dispute
that fact that outside of the two (2) hours that he is required to be at
petitioner companys premises, he is not at all further required to just sit
around in the premises and wait for an emergency to occur so as to enable
him from using such hours for his own benefit and advantage. In fact,
respondent maintains his own private clinic attending his private practice in
the city, where he services his patients and bills them accordingly.

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

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

Garcy Kate D. Go LLB2 EH306 Page 24


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

Facts: Calamba Medical Center, engaged the services of medical doctors-


spouses Dr. Ronaldo and Dr. Merceditha Lanzanas as part of its team of
resident physicians.Reporting at the hospital twice-a-week on twenty-four-
hour shifts, respondents were paid a monthly "retainer" of P4,800.00
each. Also resident physicians were also given a percentage share out of fees
charged for out-patient treatments, operating room assistance and discharge
billings, in addition to their fixed monthly retainer.

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

After an incident where Dr. Trinidad overheard a phone conversation between


Dr. Ronaldo and a fellow employee Diosdado Miscala, the former was given a
preventive suspension and his wife Dr. Merceditha was not given any
schedule after sending the Memorandum. On March 1998, Dr. Ronaldo filed a
complaint for illegal suspension and Dr. Merceditha for illegal dismissal.

Issue: Whether or not there exists an employer-employee relationship


between petitioner and the spouses-respondents?

Ruling: Drs. Lanzanas are declared employee by the petitioner hospital.


Under the "control test," an employment relationship exists between a
physician and a hospital if the hospital controls both the means and the
details of the process by which the physician is to accomplish his task.

That petitioner exercised control over respondents gains light from the
undisputed fact that in the emergency room, the operating room, or any
department or ward for that matter, respondents' work is monitored through
its nursing supervisors, charge nurses and orderlies. Without the approval or
consent of petitioner or its medical director, no operations can be undertaken
in those areas. For control test to apply, it is not essential for the employer to
actually supervise the performance of duties of the employee, it being
enough that it has the right to wield the power.

With respect to respondents' sharing in some hospital fees, this scheme does
not sever the employment tie between them and petitioner as this merely
mirrors additional form or another form of compensation or incentive similar
to what commission-based employees receive as contemplated in Article 97
(f) of the Labor Code.

Moreover, respondents were made subject to petitioner-hospital's Code of


Ethics,the provisions of which cover administrative and disciplinary measures
on negligence of duties, personnel conduct and behavior, and offenses
against persons, property and the hospital's interest.

More importantly, petitioner itself provided incontrovertible proof of the


employment status of respondents, namely, the identification cards it issued
them, the payslips and BIR W-2 (now 2316) Forms which reflect their status
as employees, and the classification as "salary" of their remuneration.
Moreover, it enrolled respondents in the SSS and Medicare (Philhealth)
program. It bears noting at this juncture that mandatory coverage under the

Garcy Kate D. Go LLB2 EH306 Page 25


SSS Law is premised on the existence of an employer-employee
relationship, except in cases of compulsory coverage of the self-employed.

Garcy Kate D. Go LLB2 EH306 Page 26


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

Facts: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco


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

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

Garcy Kate D. Go LLB2 EH306 Page 27


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

Facts: Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic


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

In the Agreement, it is provided that:

It is understood and agreed that the Agent is an independent contractor and


nothing contained herein shall be construed or interpreted as creating an
employer-employee relationship between the Company and the Agent.

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

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

In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency


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

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

The NLRC's First Division, while finding an employer-employee relationship


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

Garcy Kate D. Go LLB2 EH306 Page 28


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

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

In the Agreement dated July 1, 1977 executed between Tongko and Manulife,
it is provided that:
The Agent hereby agrees to comply with all regulations and requirements of
the Company as herein provided as well as maintain a standard of
knowledge and competency in the sale of the Company's products which
satisfies those set by the Company and sufficiently meets the volume of new
business required of Production Club membership.Under this provision, an
agent of Manulife must comply with three (3) requirements: (1) compliance
with the regulations and requirements of the company; (2) maintenance of a
level of knowledge of the company's products that is satisfactory to the
company; and (3) compliance with a quota of new businesses.

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

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

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

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

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

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

Here, Manulife failed to overcome such burden of proof. It must be reiterated


that Manulife even failed to identify the specific acts by which Tongko's
employment was terminated much less support the same with substantial

Garcy Kate D. Go LLB2 EH306 Page 29


evidence. To repeat, mere conjectures cannot work to deprive employees of
their means of livelihood. Thus, it must be concluded that Tongko was
illegally dismissed.

Moreover, as to Manulife's failure to comply with the twin notice rule, it


reasons that Tongko not being its employee is not entitled to such notices.
Since we have ruled that Tongko is its employee, however, Manulife clearly
failed to afford Tongko said notices. Thus, on this ground too, Manulife is
guilty of illegal dismissal.

Garcy Kate D. Go LLB2 EH306 Page 30


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

Facts: Petitioners filed a complaint against the respondent on the grounds of


illegal dismissal. Their allegations are they were not availed of the due
process of law when they were dismissed, there was no just cause and the
respondent disregarded that there are days that boundary could not be met
due to the scarcity of passengers. The respondent countered that they were
not employees hence they are not covered by the labor code, and that there
is no such illegal dismissal since he only suspended them because they have
arrears to be paid which was resulted from the lack of payment of boundary.

The labor arbiter favored the respondents contention, that there was no
illegal dismissal, the respondent was just imposing sanction on the
petitioners for not paying the full amount of boundary, thus resulted to
suspension.

The petitioner appealed the case, however it was denied thus the case went
up to the Supreme Court.

Issue: Whether or not there was employee and employer relationship


between the parties and there was an illegal dismissal in case.

Ruling: Yes, there is employee and employer relationship.

The Supreme Court held that in boundary system, it shall not be treated as
lessee and lessor relationship, the existence of boundary does not negate
the employee and employer relationship.

However on the issue of illegal dismissal, the court ruled that there is no
illegal dismissal. Since the respondent was just exercising his prerogative as
an employer, thus he has the right to suspend them due to not paying the
full amount of boundary.

Garcy Kate D. Go LLB2 EH306 Page 31


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

Facts: Respondent was engaged as part-time consultant on retainer basis by


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

Sometime thereafter, since respondent was getting old, he requested that


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

On the same date petitioner, issued a memorandum advising respondent


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

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


between the petitioner and respondent.

Ruling: To ascertain the existence of an employer-employee relationship


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

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

Garcy Kate D. Go LLB2 EH306 Page 32


given the freedom to accomplish the tasks using his own means and method.
Respondent was assigned tasks to perform, but petitioner did not control the
manner and methods by which respondent performed these tasks. Verily, the
absence of the element of control on the part of the petitioner engenders a
conclusion that he is not an employee of the petitioner.

Garcy Kate D. Go LLB2 EH306 Page 33


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

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

Garcy Kate D. Go LLB2 EH306 Page 34


Issues: Whether or not there exists an employer/employee relationship
between Semblante, et al. and the spouses LOOT.
Ruling: The petitioners are NOT employees of respondents, since their
relationship fails to pass muster the four-fold test of employment We have
repeatedly mentioned in countless decisions: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct, which is the
most important element.
As found by both the NLRC and the CA, respondents had no part in
petitioners selection and management; petitioners compensation was paid
out of the arriba (which is a percentage deducted from the total bets), not by
petitioners; and petitioners performed their functions as masiador
and sentenciador free from the direction and control of
respondents. In the conduct of their work, petitioners relied mainly on their
expertise that is characteristic of the cockfight gambling, and were never
given by respondents any tool needed for the performance of their work.
Respondents, not being petitioners employers, could never have dismissed,
legally or illegally, petitioners, since respondents were without power or
prerogative to do so in the first place.

Garcy Kate D. Go LLB2 EH306 Page 35


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

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

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

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

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

The Court of Appeals denied the motion for reconsideration.

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

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

Labor Arbiters decision, on 31 March 2005, declared petitioner an employee


whose dismissal by respondents was illegal. Accordingly, the Labor Arbiter
ordered the reinstatement of petitioner and the payment of back wages,
moral and exemplary damages and attorneys fees.

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

WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor


Arbiter Teresita D. Castillon-Lora dated March 31, 2005 is AFFIRMED.

The Court of Appeals found petitioner an independent contractor since


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

Garcy Kate D. Go LLB2 EH306 Page 36


While the NLRC agreed that the PBA has no control over the referees acts of
blowing the whistle and making calls during basketball games, it,
nevertheless, theorized that the said acts refer to the means and methods
employed by the referees in officiating basketball games for the illogical
reason that said acts refer only to the referees skills. How could a skilled
referee perform his job without blowing a whistle and making calls? Worse,
how can the PBA control the performance of work of a referee without
controlling his acts of blowing the whistle and making calls?

Issues: Whether petitioner is an employee of respondents, which in turn


determines whether petitioner was illegally dismissed

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

The existence of an employer-employee relationship is ultimately a question


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

To determine the existence of an employer-employee relationship, case law


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

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

Moreover, the following circumstances indicate that petitioner is an


independent contractor: (1) the referees are required to report for work only
when PBA games are scheduled, which is three times a week spread over an
average of only 105 playing days a year, and they officiate games at an
average of two hours per game; and (2) the only deductions from the fees
received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight
hours per day for five days a week, petitioner is required to report for work
only when PBA games are scheduled or three times a week at two hours per

Garcy Kate D. Go LLB2 EH306 Page 37


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.

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

Facts: On July 9, 2002, respondent Wilmer D. Genovia filed a complaint


against petitioner Cesar Lirio and/or Celkor Ad Sonicmix Recording Studio for
illegal dismissal, non-payment of commission and award of moral and
exemplary damages.

In his Position Paper, respondent Genovia alleged, among others, that on


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

Respondent stated that a few days after he started working as a studio


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

Respondent alleged that before the end of September 2001, he reminded


petitioner about his compensation as composer and arranger of the album.
Petitioner verbally assured him that he would be duly compensated. By mid-
November 2001, respondent finally finished the compositions and musical
arrangements of the songs to be included in the album. Before the month
ended, the lead and back-up vocals in the ten (10) songs were finally
recorded and completed. From December 2001 to January 2002, respondent,

Garcy Kate D. Go LLB2 EH306 Page 38


in his capacity as studio manager, worked on digital editing, mixing and
sound engineering of the vocal and instrumental audio files.

Thereafter, respondent was tasked by petitioner to prepare official


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

On February 26, 2002, respondent again reminded petitioner about the


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

Respondent asserts that he was illegally dismissed as he was terminated


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

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

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

In defense, petitioner stated in his Position Paper[4] that respondent was not
hired as studio manager, composer, technician or as an employee in any
other capacity of Celkor. Respondent could not have been hired as a studio
manager, since the recording studio has no personnel except petitioner.
Petitioner further claimed that his daughter Celine Mei Lirio, a former
contract artist of ABS-CBN Star Records, failed to come up with an album as
the latter aborted its project to produce one. Thus, he decided to produce an
album for his daughter and established a recording studio, which he named
Celkor Ad Sonicmix Recording Studio. He looked for a composer/arranger
who would compose the songs for the said album. In July 2001, Bob
Santiago, his son-in-law, introduced him to respondent, who claimed to be an
amateur composer, an arranger with limited experience and musician
without any formal musical training. According to petitioner, respondent had

Garcy Kate D. Go LLB2 EH306 Page 39


no track record as a composer, and he was not known in the field of music.
Nevertheless, after some discussion, respondent verbally agreed with
petitioner to co-produce the album based on the following terms and
conditions: (1) petitioner shall provide all the financing, equipment and
recording studio; (2) Celine Mei Lirio shall sing all the songs; (3) respondent
shall act as composer and arranger of all the lyrics and the music of the five
songs he already composed and the revival songs; (4) petitioner shall have
exclusive right to market the album; (5) petitioner was entitled to 60% of
the net profit, while respondent and Celine Mei Lirio were each entitled to
20% of the net profit; and (6) respondent shall be entitled to draw advances
of P7,000.00 a month, which shall be deductible from his share of the net
profits and only until such time that the album has been produced.

According to petitioner, they arrived at the foregoing sharing of profits based


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

Petitioner asserted that from the aforesaid terms and conditions, his
relationship with respondent is one of an informal partnership under Article
1767of the New Civil Code, since they agreed to contribute money, property
or industry to a common fund with the intention of dividing the profits among
themselves. Petitioner had no control over the time and manner by which
respondent composed or arranged the songs, except on the result
thereof. Respondent reported to the recording studio between 10:00 a.m.
and 12:00 noon. Hence, petitioner contended that no employer-employee
relationship existed between him and the respondent, and there was no
illegal dismissal to speak of.

Issue: Whether or not employer-employee relationship exists?

Ruling: Yes. The elements to determine the existence of an employment


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

It is settled that no particular form of evidence is required to prove the


existence of an employer-employee relationship. Any competent and
relevant evidence to prove the relationship may be admitted.

In this case, the documentary evidence presented by respondent to prove


that he was an employee of petitioner are as follows: (a) a document
denominated as "payroll" (dated July 31, 2001 to March 15, 2002) certified
correct by petitioner,[31] which showed that respondent received a monthly
salary of P7,000.00 (P3,500.00 every 15th of the month and
th
another P3,500.00 every 30 of the month) with the corresponding
deductions due to absences incurred by respondent; and (2) copies of petty

Garcy Kate D. Go LLB2 EH306 Page 40


cash vouchers,[32] showing the amounts he received and signed for in the
payrolls.

The said documents showed that petitioner hired respondent as an employee


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

Garcy Kate D. Go LLB2 EH306 Page 41


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

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

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

1. I am a CPA (Certified Public Accountant) by profession but presently


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

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

Issue: The sole issue is whether or not an employer-employee relationship


existed between petitioner and BCC.

Ruling: In determining the presence or absence of an employer-employee


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

Petitioner presented no document setting forth the terms of his employment


by BCC. The failure to present such agreement on terms of employment may

Garcy Kate D. Go LLB2 EH306 Page 42


be understandable and expected if he was a common or ordinary laborer
who would not jeopardize his employment by demanding such document
from the employer, but may not square well with his actual status as a highly
educated professional.

Petitioner's admission that he did not receive his salary for the three months
of his employment by BCC, as his complaint for illegal dismissal and non-
payment of wages and the criminal case for estafa he later filed against the
respondents for non-payment of wages indicated, further raised grave
doubts about his assertion of employment by BCC. If the assertion was true,
we are puzzled how he could have remained in BCC's employ in that period
of time despite not being paid the first salary of P20,000.00/month.
Moreover, his name did not appear in the payroll of BCC despite him having
approved the payroll as comptroller.

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

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

Garcy Kate D. Go LLB2 EH306 Page 43


Legend Hotel vs Realuyo
GR 153511, July 18, 2012

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

Respondent averred that he had worked as a pianist at the Legend Hotels


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

Issue: Whether there exists an employer-employee relationship

Ruling: Employer-employee relationship existed between the parties. The


issue of whether or not an employer-employee relationship existed between
petitioner and respondent is essentially a question of fact. The factors that
determine the issue include who has the power to select the employee, who
pays the employees wages, who has the power to dismiss the employee,
and who exercises control of the methods and results by which the work of
the employee is accomplished.10 Although no particular form of evidence is
required to prove the existence of the relationship, and any competent and
relevant evidence to prove the relationship may be admitted, a finding that
the relationship exists must nonetheless rest on substantial evidence, which
is that amount of relevant evidence that a reasonable mind might accept as
adequate to justify a conclusion.

A review of the circumstances reveals that respondent was, indeed,


petitioners employee. He was undeniably employed as a pianist in
petitioners Madison Coffee Shop/Tanglaw Restaurant from September 1992
until his services were terminated on July 9, 1999.

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

Garcy Kate D. Go LLB2 EH306 Page 44


Secondly, petitioner argues that whatever remuneration was given to
respondent were only his talent fees that were not included in the definition
of wage under the Labor Code. Respondent was paid P400.00 per three
hours of performance from 7:00 pm to 10:00 pm, three to six nights a week.
Such rate of remuneration was later increased to P750.00 upon restaurant
manager Velazcos recommendation. There is no denying that the
remuneration denominated as talent fees was fixed on the basis of his talent
and skill and the quality of the music he played during the hours of
performance each night, taking into account the prevailing rate for similar
talents in the entertainment industry

Respondents remuneration, albeit denominated as talent fees, was still


considered as included in the term wage in the sense and context of the
Labor Code, regardless of how petitioner chose to designate the
remuneration.

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

Garcy Kate D. Go LLB2 EH306 Page 45


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

Facts: November 1993 the Philippine Skylanders Employees Association


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

In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation


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

PSEA subsequently affiliated itself with the National Congress of Workers


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

On 17 March, 1994, PSEA-NCW entered into a collective bargaining


agreement with PSI which was immediately registered with the Department
of Labor and Employment.

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

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

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

PAFLU amended its complaint by including the elected officers of PSEA-PAFLU


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

Dakila moved for the dismissal of the complaint on the ground that the issue
of disaffiliation was an inter-union conflict which lay beyond the jurisdiction

Garcy Kate D. Go LLB2 EH306 Page 46


of the Labor Arbiter. PSEA was no longer affiliated with PAFLU, Ayroso or
PAFLU for that matter had no personality to file the instant complaint.

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

As PSEA-NCWs personality was not accorded recognition, its collective


bargaining agreement with PSI was struck down for being invalid.

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

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

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

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

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

Garcy Kate D. Go LLB2 EH306 Page 47


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

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

Facts: On various dates between 1991 and 1998, petitioners Ashmor M.


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

Aggrieved, petitioners filed a complaint for constructive dismissal, non


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

Issue: Whether or not petitioners remained to be Bandags salesmen under


the franchise scheme it entered into with them.

Ruling: No, petitioners were no longer employees of Bandag the moment


they entered into the SFA. Franchising is a business method of expansion
that allows an individual or group of individuals to market a product or a
service and to use of the patent, trademark, trade name and the systems
prescribed by the owner.

The tests for determining employeremployee relationship are: (a) the


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

When petitioners agreed to operate Bandags franchise branches in different


parts of the country, they knew that this substantially changed their former
relationships. They were to cease working as Bandags salesmen, the
positions they occupied before they ventured into running separate Bandag
branches. They were to cease receiving salaries or commissions. Their
incomes were to depend on the profits they made. Yet, petitioners did not
then complain of constructive dismissal. They took their chances, ran their

Garcy Kate D. Go LLB2 EH306 Page 48


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. But uniformity in prices, quality of
services, and good business practices are the essence of all franchises. A
franchisee will damage the franchisors business if he sells at different prices,
renders different or inferior services, or engages in bad business practices.
These business constraints are needed to maintain collective responsibility
for faultless and reliable service to the same class of customers for the same
prices.

This is not the control contemplated in employeremployee relationships.


Control in such relationships addresses the details of day to day work like
assigning the particular task that has to be done, monitoring the way tasks
are done and their results, and determining the time during which the
employee must report for work or accomplish his assigned task.

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

Garcy Kate D. Go LLB2 EH306 Page 49


Royale Homes Marketing Corp. vs. Alcantara
GR No. 195190, July 28, 2014

FACTS: Royale Homes, a corporation engaged in marketing real estates,


appointed Alcantara as its Marketing Director for a fixed period of one year.
His work consisted mainly of marketing Royale Homes' real estate
inventories on an exclusive basis. Royale Homes reappointed him for several
consecutive years
On December 17, 2003, Alcantara filed a Complaint for Illegal
Dismissal against Royale Homes alleging that he was dismissed from work
without any valid or just cause and in gross disregard of the proper
procedure for dismissing employees. He prayed t to be reinstated to his
former position without loss of seniority rights and other privileges, as well as
to be paid backwages, moral and exemplary damages, and attorney's fees
Royale Homes denied that Alcantara is its employee because: (1) it engaged
his services as an independent sales contract for one year only; (2) he never
received any salary, 13th month pay, overtime pay or holiday pay; (3) he
was paid on commission basis; (4) it had no control on how Alcantara would
accomplish his tasks
Labor Arbiter rendered a Decision holding that Alcantara is an employee of
Royale Homes
NLRC rendered its Decision ruling that Alcantara is not an employee but a
mere independent contractor of Royale Homes. It based its ruling mainly on
the contract
CA promulgated its Decision reversing the NLRC's Decision pointing out that
Royale Homes exercised some degree of control over Alcantara
since his jobis subject to company rules, regulations, and periodic
evaluations.

ISSUE: whether Alcantara was an independent contractor or an employee of


Royale Homes

RULING: Alcantara is not an employee of Royal Home but a mere


independent contractor
The juridical relationship of the parties based on their written contract
The primary evidence of the nature of the parties' relationship in this case is
the written contract that they signed. While the existence of employer-
employee relationship is a matter of law, the characterization made by the
parties in their contract as to the nature of their juridical relationship cannot
be simply ignored, particularly in this case where the parties' written
contract unequivocally states their intention at the time they entered into it.
In this case, the contract duly signed and not disputed by the parties,
conspicuously provides that "no employer-employee relationship
exists between" Royale Homes and Alcantara, as well as his sales

Garcy Kate D. Go LLB2 EH306 Page 50


agents. It is clear that they did not want to be bound by employer-employee
relationship at the time of the signing of the contract
Since "the terms of the contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulations
should control." No construction is even needed as they already expressly
state their intention.
The juridical relationship of the parties based on Control Test
In determining the existence of an employer-employee relationship, this
Court has generally relied on the four-fold test, to wit: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employer's power to control the employee with
respect to the means and methods by which the work is to be accomplished.
Among the four, the most determinative factor in ascertaining the existence
of employer- employee relationship is the "right of control test".
In the case, the CA ratiocinatedthat since the performance of his
tasks is subject to company rules, regulations, code of ethics, and
periodic evaluation, the element of control is present.
The court disagrees. Not every form of control is indicative of
employer-employee relationship.A person who performs work for another
and is subjected to its rules, regulations, and code of ethics does not
necessarily become an employee. As long as the level of control does not
interfere with the means and methods of accomplishing the assigned tasks,
the rules imposed by the hiring party on the hired party do not amount to the
labor law concept of control that is indicative of employer-employee
relationship
In this case, the rules, regulations, code of ethics, and periodic
evaluation alluded to by Alcantara do not involve control over the
means and methods by which he was to perform his job. In Tongko
Case, this Court held that guidelines or rules and regulations that do not
pertain to the means or methods to be employed in attaining the result are
not indicative of control as understood in labor law
Neither does the repeated hiring of Alcantara prove the existence of
employer-employee relationship. The continuous rehiring of Alcantara
simply signifies the renewal of his contract with Royale Homes, and
highlights his satisfactory services warranting the renewal of such contract
Payment of Wages
The element of payment of wages is also absent in this case.
Alcantara's remunerations consist only of commission override of 0.5%,
budget allocation, sales incentive and other forms of company support.
There is no proof that he received fixed monthly salary. No payslip or payroll
was ever presented and there is no proof that Royale Homes deducted from
his supposed salary withholding tax or that it registered him with the Social
Security System, Philippine Health Insurance Corporation, or Pag-Ibig Fund

Garcy Kate D. Go LLB2 EH306 Page 51


Fuji Television Network, Inc., vs. Arlene S. Espiritu
GR No. 204944-45, December 3, 2014

FACTS:

In 2005, Arlene was engaged by Fuji Television Network, Inc. (Fuji) as a news
correspondent/producer. Her employment contract initially provided for a
term of one (1) year but was successively renewed on a yearly basis with
salary adjustment upon every renewal. In 2009, Arlene was diagnosed with
lung cancer. She informed Fuji about her condition. In turn, the Chief of News
Agency of Fuji, Yoshiki Aoki, informed Arlene that the company will have a
problem renewing her contract since it would be difficult for her to perform
her job. Then Arlene and Fuji signed a non-renewal contract on May 5, 2009
where it was stipulated that her contract would no longer be renewed. The
day after Arlene signed the non-renewal contract, on May 6, 2009, she filed a
complaint for illegal dismissal. She alleged that she was forced to sign the
non-renewal contract when Fuji came to know of her illness and that Fuji
withheld her salaries and other benefits for March and April 2009 when she
refused to sign. She further alleged that claimed that she was left with no
other recourse but to sign the non-renewal contract, and it was only upon
signing that she was given her salaries and bonuses, in addition to
separation pay equivalent to four (4) years.

Labor Arbiter Borbolla dismissed Arlene's complaint because applying the


four-fold test Arlene was not Fuji's employee but an independent contractor.

National Labor Relations Commissionreversed the Labor Arbiter's


decision and held that Arlene was a regular employee with respect to the
activities for which she was employed since she continuously rendered
services that were deemed necessary and desirable to Fuji's business

Court of Appeals: affirmed the National Labor Relations Commission with


the modification that Fuji immediately reinstate Arlene to her position
as News Producer without loss of seniority rights, and pay her backwages,
13th-month pay, mid-year and year-end bonuses, sick leave and vacation
leave with pay until reinstated, moral damages, exemplary damages,
attorney's fees, and legal interest of 12% per annum of the total monetary
awards

CONTENTION OF FUJI: that Arlene was hired as an independent contractor;


that Fuji had no control over her work; that there was no illegal dismissal
because she freely agreed not to renew her fixed-term contract as evidenced
by her e-mail correspondences with Yoshiki Aoki

ISSUE: W/N Arlene was a regular employee, not an independent


contractor

RULING:

Garcy Kate D. Go LLB2 EH306 Page 52


The Court has often used the four-fold test to determine the existence of an
employer-employee relationship. Under the four-fold test, the "control test" is
the most important. In proving employer-employee relationship through
evidence, the Court ruled that:
There is no hard and fast rule designed to establish the aforesaid
elements. Any competent and relevant evidenceto prove the
relationship may be admitted. Identification cards, cash vouchers,
social security registration, appointment letters or employment
contracts, payrolls, organization charts, and personnel lists, serve as
evidence of employee status.
Arlene claims to be a regular employee. However Fuji insists that she was an
independent employee. The burden of proving that she was an independent
contractor lies with Fuji. In labor cases, the quantum of proof required is
substantial evidence.
Under Article 280, the provision classifies employees into regular, project,
seasonal, and casual. It further classifies regular employees into two kinds:
1. Those "engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer" (regular
employees)
2. Casual employees who have "rendered at least one year of service,
whether such service is continuous or broken."
The Court defines independent contractor as:
. . . one who carries on a distinct and independent business and
undertakes to perform the job, work, or service on its own account and
under one's own responsibility according to one's 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.
Moreover, no employer-employee relationship exists between independent
contractors and their principals who engage the contractor's services, but
there is an employer-employee relationship between the contractor and
workers hired to accomplish the work for the principal. Thus, their contracts
are governed by the Civil Code provisions on contracts and other applicable
laws.
In the facts of the case and using the four-fold test, Arlene was hired by Fuji
as a news producer, but there was no showing that she was hired because of
unique skills that would distinguish her from ordinary employees. Neither
was there any showing that she had a celebrity status. Her monthly salary
amounting to US$1,900.00 appears to be a substantial sum. Fuji had the
power to dismiss Arlene, as provided for in her professional employment
contract. Even the mode of transportation in carrying out her functions was
controlled by Fuji. Therefore, Arlene is a regular employee and not an
independent contractor.
There is also a test for determining regular employment where there is a
reasonable connection between the employee's activities and the usual
business of the employer. Article 280 provides that the nature of work must
be "necessary or desirable in the usual business or trade of the employer"
the test for determining regular employment. However, there may also be a
situation where an employee's work is necessary but is not always desirable
in the usual course of business of the employer. In this situation, there
is no regular employment.

Garcy Kate D. Go LLB2 EH306 Page 53


Fuji is engaged in the business of broadcasting, including news
programming. It is based in Japan and has overseas offices to cover
international news. Based on the record, Fuji's Manila Bureau Office is a small
unit and has a few employees. Arlene had to do all activities related to news
gathering.
Arlene's tasks included "monitoring and getting news stories, reporting and
interviewing subjects in front of a video camera, timely submission of news
and current events reports pertaining to the Philippines and going to Fuji's
regional office in Thailand." She also had to report for work in Fuji's office in
Manila from Mondays to Fridays, eight (8) hours per day. She
had no equipment and had to use the facilities of Fuji to accomplish her
tasks. Therefore, the successive renewals of Arlene's contract indicated the
necessity and desirability of her work in the usual course of Fuji's business.
Arlene had become a regular employee with the right to security of tenure.
Also, Arlene's contract indicating a fixed term did not automatically mean
that she could never be a regular employee. An employee can be a regular
employee with a fixed-term contract. The law does not preclude the
possibility that a regular employee may opt to have a fixed-term contract for
valid reasons. In the case of Brent: for as long as it was the employee who
requested, or bargained, that the contract have a "definite date of
termination," or that the fixed-term contract be freely entered into by the
employer and the employee, then the validity of the fixed-term contract will
be upheld.

WHEREFORE, having established that Arlene is a regular employee and not


an independent contractor, the petition is DENIED. The decision of the Court
of Appeals is AFFIRMED with the modification that backwages shall be
computed from June 2009

Garcy Kate D. Go LLB2 EH306 Page 54


Begino et.al. v. ABS-CBN Corp.

1. ABS-CBN Regional Network Group in Naga City employed Amalia Villafuerte as a manager.
2. 1996: ABS-CBN employed then petitioners Begino and Del Valle as cameramen/Editors for TV
broadcasting, ABS-CBN also employed Sumayao and Monina
3. Petitioners engaged their services thru Talent Contracts which are regularly renewed over three
months to 1 year.
4. Petitioners were also given Project Assignment forms which determined the duration of a
particular project as well as the budget and the technical requirements thereof. Petitioners were
then tasked to work on subsequent daily airings in respondents TV Patrol Bicol Program
5. The Talent contracts specifically provided that there is no employee-employer (ER-EE)
relationship between petitioners and respondents, but it additionally provided for:
a. Creation and performance of work according to ABS-CBNs standards, policies and
guidelines
b. The petitioners should not work for ABS-CBNs competing companies or any of the same
that had an adverse interest to that of ABS-CBN
c. The work they are doing is results oriented, which does not require them to have fixed or
normal hours of work
6. Petitioners remunerations were denominated as talent fees
7. Petitioners, claiming that they are employees of the respondent, filed a complaint against ABS-
CBN in the NLRC Sub-Regional Arbitration Brannch for regularization, underpayment of overtime
pay, holiday pay, 13th month pay, Service incentive leave pay, damages and attys fees,
contending that:
a. They performed functions necessary and desirable in ABS-CBN business
b. They are mandated to wear company IDs
c. They are provided all the equipment needed
d. They worked under the direct control and supervision of respondent Villafuerte
e. They were also bound on ABS-CBNs policy on attendance and punctuality
f. That ABS-CBN due to the Contracts, they earn less than what respondents usually pay
their regular rank-and-file employees
8. Respondents refuted the petitioners claim saying that:
a. The petitioners are independent contractors, they employed them due to lack of
manpower to man the business
b. They are known as talents and required to inform ABS-CBN of their availability through
Talent Information Forms to facilitate their appearance on designated project days
c. They cannot afford employing regular workers due to unpredictable viewer preferences
d. That through the talent contracts, petitioners were engaged because of their skills,
knowledge and expertise
e. That the policies were general guidelines only and does not subject petitioners to control
f. They were never subjected to control over the means and methods by which they do their
tasks
9. During the pendency of their case, petitioners were dismissed and they filed a second complaint,
adding illegal dismissal and unfair labor practice to their previous claims
10. 2nd claim of petitioners were dismissed for violation of rules against non-forum shopping because
the issues in the 1st complaint must be resolved first before resolving the 2nd complaint
11. Labor Arbiter resolved the first complaint in favor of petitioners, ordering ABS-CBN to pay a total
of P2,440,908.36 representing salaries/wage differentials, holiday pay, SIL, 13 th month pay and
attys fees. LA also ordered respondents to admit back complainants under the same terms
prevailing prior to their separation. LA said that they are employees because:
a. Petitioners have worked for more than a year
b. Petitioners are bound by exclusivity clause in the talent contracts
c. There was substantial control over them
12. Resp appealed to the NLRC which affirmed the LAs decision
13. Resp then appealed to the CA, CA reversed
14. Petitioners then appealed to SC
15. SC finds the petition impressed with merit
a. SC applied the four-fold test and the control test and found that there is a presence of an
EE-ER relationship
b. Based on article 280 of the Labor Code, petitioners are regular employees of ABS-CBN
due to the reasonable connection between the activity performed by the petitioners and
the business or trade of ABS-CBN
c. Also petitioners were continuously rehired over the years for its long running news
program which indicates that petitioners are regular employees
d. Even if the performance is not continuous or merely intermittent, the law deems the
repeated or continuing performance as sufficient evidence of the necessity, if not
indispensability of that activity in the business. Indeed, an employment stops being co-

Garcy Kate D. Go LLB2 EH306 Page 55


terminous with specific projects where the employee is continuously re-hired due to the
demands of the employers business
e. Exclusivity clause and the provision on equipments essential for their functions shows
that petitioners were subject to control of the respondents
f. Even if the performance is not continuous or merely intermittent, the law deems the
repeated or continuing performance as sufficient evidence of the necessity, if not
indispensability of that activity in the business.29 Indeed, an employment stops being co-
terminous with specific projects where the employee is continuously re-hired due to the
demands of the employers business
16. SC Reversed the CA decision and reinstated NLRC decision

Garcy Kate D. Go LLB2 EH306 Page 56


HIRING OF EMPLOYEE

Ollendor vs Abrahanson 38 Phil 585

Facts: An agreement was entered into by Ollendorff and Abrahamson


whereby theformer agreed to employ Abrahamson and the latter bound
himself to work for him for a period of 2yrs with a salary of P50 per week.
Included in the agreement is a prohibition of Abrahamson from engaging in a
similar or competitive business to anywhere within the Philippine Islands for
a period of five years. The duties performed by the defendant were such to
make it necessary for him to be generally knowledgeable of Ollendorffs
business, moreover, he had been engaged in similar work for several years
even before his employment of the plaintiffs embroidery business.

After some months from his departure for the US, Abrahamson returned to
Manila and is now a manager of the Philippine Underwear Co. This
corporation, unlike Ollendorffs, does not maintain a factory in Phil. Islands
but send material and embroidery designs from New York to its local
representative here who employs Filipino needle workers to embroider the
designs and make up the garments in their homes. The only difference
between plaintiff's business and that of the firm by which the defendant is
employed, is the method of doing the finishing work -- the manufacture of
the embroidered material into finished garments. Plaintiff commenced an
action to prevent by injunction, any further breach of that part of defendant's
contract of employment by which he agreed that he would not "enter into or
engage himself directly or indirectly . . . in a similar or competitive business
to that of (plaintiff) anywhere within the Philippine Islands for a period of five
years . . ." from the date of the agreement.

Issue: WON the part of the agreement restraining the defendant from
engaging into similar business of the plaintiff is void?

Ruling: The contract was not void as constituting an unreasonable restraint


of trade.
The rule in this jurisdiction is that the obligations created by contracts have
the force of law between the contracting parties and must be enforce in
accordance with their tenor. (Civil Code, art 1091.) The only limitation upon
the freedom of contractual agreement is that the pacts established shall not
be contrary to "law, morals or public order." (Civil Code, Art. 1255.)

Following the rule in Mitchel vs. Reynolds, Court adopt the modern rule that
the validity of restraints upon trade or employment is to be determined by
the intrinsinc reasonableness of restriction in each case, rather than by any
fixed rule, and that such restrictions may be upheld when not contrary to
afford a fair and reasonable protection to the party in whose favor it is
imposed.

Examining the contract here in question from this stand point, it does not
seem so with respect to an employee whose duties are such as of necessity
to give him an insight into the general scope and details of his employers
business. A business enterprise may and often does depend for its success
upon the owner's relations with other dealers, his skill in establishing
favorable connections, his methods of buying and selling -- a multitude of

Garcy Kate D. Go LLB2 EH306 Page 57


details, none vital if considered alone, but which in the aggregate constitute
the sum total of the advantages which the result of the experience or
individual aptitude and ability of the man or men by whom the business has
been built up. Failure or success may depend upon the possession of these
intangible but all important assets, and it is natural that their possessor
should seek to keep them from falling into the hands of his competitors. It is
with this object in view that such restrictions as that now under consideration
are written into contracts of employment. Their purpose is the protection of
the employer, and if they do not go beyond what is reasonably necessary to
effectuate this purpose they should be upheld.

Garcy Kate D. Go LLB2 EH306 Page 58


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

Facts: The case was instituted to declare the contract of services entered
into by Alfonso del Castillo as null and void. Del Castillo alleges that the
provisions and conditions contained in the third paragraph of said contract
constitute an illegal and unreasonable restriction upon his liberty to contract,
are contrary to public policy, and are unnecessary in order to constitute a
just and reasonable protection to the defendant; and asked that the same be
declared null and void and of no effect.

The said contract constituted an illegal and unreasonable restriction upon


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

Issue: Whether or not the said restraint is reasonable.

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

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

The early cases show plainly a disposition to avoid and annul all contracts
which prohibited or restrained any one from using lawful trade " at any time
or at any place," as being against the benefit of the state. Later, however,
the rule became well established that if the restraint was limited to "a certain
time" and within "a certain place", such contracts were valid and not "against
the benefit of the state." Later cases, and we think the rule is now well
established, have held that a contract in restraint of trade is valid provided
there is a limitation upon either time or place. A contract, however, which
restrains a man entering into a business or trade without either a limitation
as to time or place, will be held invalid.

As stated in the case of Ollendorf vs. Abrahamson, The public welfare of


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

In that case we held that a contract by which an employee agrees to refrain


at a given length of time, after the expiration of the term of his employment,
from engaging in business, competitive with that of his employer, is not void
as being in restraint of trade if the restraint imposed is not greater than that
which is necessary to afford a reasonable protection.

Garcy Kate D. Go LLB2 EH306 Page 59


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

Facts: Grace de Guzman was initially hired by petitioner as a reliever for a


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

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

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

Issue: Whether or not discrimination merely by reason of the marriage of a


female employee is expressly prohibited by Article 136.

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

An employer is free to regulate, according to his discretion and best business


judgment, all aspects of employment, from hiring to firing, except in cases
of unlawful discrimination or those which may be provided by law.
Petitioners policy of not accepting or considering as disqualified from work
any woman worker who contracts marriage runs afoul of the test of, and the
right against, discrimination, afforded all women workers by our labor laws
and by no less than the Constitution.

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

The government, to repeat, abhors any stipulation or policy in the nature of


that adopted by petitioner PT&T. The Labor Code states, in no uncertain
terms, as follows:

Garcy Kate D. Go LLB2 EH306 Page 60


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

Petitioners policy is not only in derogation of the provisions of Article 136 of


the Labor Code on the right of a woman to be free from any kind of
stipulation against marriage in connection with her employment, but it
likewise assaults good morals and public policy, tending as it does to deprive
a woman of the freedom to choose her status, a privilege that by all accounts
inheres in the individual as an intangible and inalienable right.

Hence, while it is true that the parties to a contract may establish any
agreements, terms, and conditions that they may deem convenient, the
same should not be contrary to law, morals, good customs, public order, or
public policy. Carried to its logical consequences, it may even be said that
petitioners policy against legitimate marital bonds would encourage illicit or
common-law relations and subvert the sacrament of marriage.

Garcy Kate D. Go LLB2 EH306 Page 61


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

Facts: Petitioner Pedro Tecson was hired by respondent Glaxo Wellcome


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

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

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

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

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

Issue: Whether or not the policy of a pharmaceutical company prohibiting its


employees from marrying employees of another pharmaceutical company is
valid?

Ruling: This petition was denied. Glaxo has a right to guard its trade
secrets, manufacturing formulas, marketing strategies and other confidential
programs and information from competitors, especially so that it and Astra
are rival companies in the highly competitive pharmaceutical industry.

Garcy Kate D. Go LLB2 EH306 Page 62


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.

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

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

There was no merit in Tecsons contention that he was constructively


dismissed when he was transferred from the Camarines Norte-Camarines Sur
sales area to the Butuan City-Surigao City-Agusan del Sur sales area, and
when he was excluded from attending the companys seminar on new
products which were directly competing with similar products manufactured
by Astra. Constructive dismissal is defined as a quitting, an involuntary
resignation resorted to when continued employment becomes impossible,
unreasonable, or unlikely; when there is a demotion in rank or diminution in
pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee. The record does not show that Tecson
was demoted or unduly discriminated upon by reason of such transfer.

Garcy Kate D. Go LLB2 EH306 Page 63


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

Facts: Private respondent Malate Tourist Development Corporation (MTDC) is


a corporation engaged in the business of operating hotels, motels, hostels
and lodging houses.[5] It built and opened Victoria Court in Malate which was
licensed as a motel although duly accredited with the Department of Tourism
as a hotel.[6] On 28 June 1993, MTDC filed a Petition for Declaratory Relief
with Prayer for a Writ of Preliminary Injunction and/or Temporary Restraining
Order[7] (RTC Petition) with the lower court impleading as defendants, herein
petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza,
and the members of the City Council of Manila (City Council). MTDC prayed
that the Ordinance, insofar as it includes motels and inns as among its
prohibited establishments, be declared invalid and unconstitutional.[8]
Enacted by the City Council[9] on 9 March 1993 and approved by petitioner
City Mayor on 30 March 1993, the said Ordinance is entitled

AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF


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

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

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


exercise of police power.

Ruling: It is undoubtedly one of the fundamental duties of the City of Manila


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

Persons desirous to own, operate and patronize the enumerated


establishments under Section 1 of the Ordinance may seek autonomy for
these purposes.

Garcy Kate D. Go LLB2 EH306 Page 64


Motel patrons who are single and unmarried may invoke this right to
autonomy to consummate their bonds in intimate sexual conduct within the
motels premisesbe it stressed that their consensual sexual behavior does
not contravene any fundamental state policy as contained in the
Constitution.[72] Adults have a right to choose to forge such relationships with
others in the confines of their own private lives and still retain their dignity
as free persons. The liberty protected by the Constitution allows persons the
right to make this choice.[73] Their right to liberty under the due process
clause gives them the full right to engage in their conduct without
intervention of the government, as long as they do not run afoul of the law.
Liberty should be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful
government restraint; it must include privacy as well, if it is to be a
repository of freedom. The right to be let alone is the beginning of all
freedomit is the most comprehensive of rights and the right most valued
by civilized men

All considered, the Ordinance invades fundamental personal and property


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

Garcy Kate D. Go LLB2 EH306 Page 65


Star Paper Corp., vs Simbol (2006) G.R. 164774

Facts: Simbol was employed by the company on Oct 1993. He met Alma
Dayrit, also an employee of the company, whom he married. Prior to the
marriage, Ongsitco advised the couple that should they decide to get
married, one of them should resign pursuant to a company policy to which
Simbol complied.

1. New applicants will not be allowed to be hired if in case he/she has [a]
relative, up to [the] 3rd degree of relationship, already employed by the
company.
2. In case of two of our employees (both singles [sic], one male and another
female) developed a friendly relationship during the course of their
employment and then decided to get married, one of them should resign to
preserve the policy stated above.

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

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

Article 136 of the Labor Code which provides:


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

The requirement is that a company policy must be reasonable under the


circumstances to qualify as a valid exercise of management prerogative. It is
significant to note that in the case at bar, respondents were hired after they
were found fit for the job, but were asked to resign when they married a co-
employee. Petitioners failed to show how the marriage of Simbol, then a
Sheeting Machine Operator, to Alma Dayrit, then an employee of the
Repacking Section, could be detrimental to its business operations. e. The
policy is premised on the mere fear that employees married to each other
will be less efficient. If we uphold the questioned rule without valid
justification, the employer can create policies based on an unproven
presumption of a perceived danger at the expense of an employees right to
security of tenure.

The questioned policy may not facially violate Article 136 of the Labor Code
but it creates a disproportionate effect and under the disparate impact
theory, the only way it could pass judicial scrutiny is a showing that it
is reasonable despite the discriminatory, albeit disproportionate, effect. The
failure of petitioners to prove a legitimate business concern in imposing the
questioned policy cannot prejudice the employees right to be free from
arbitrary discrimination based upon stereotypes of married persons working
together in one company.

Garcy Kate D. Go LLB2 EH306 Page 66


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

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

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

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

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

Issue: Whether or not the dismissal was illegal?

Ruling: Yes. In this case, by the measure of substantial evidence, what is


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

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

Garcy Kate D. Go LLB2 EH306 Page 67


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

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

Petitioner was a former international flight steward of PAL. He had problems


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

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

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

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

Issue: Whether or not the petitioner was illegally dismissed.

Ruling: I. The obesity of petitioner is a ground for dismissal under Article


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

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

II. The dismissal of petitioner can be predicated on the bona fide


occupational qualification defense. Aircrafts have constricted cabin space,
and narrow aisles and exit doors. Being overwieight impedes mobility in
times of emergencies where seconds are precious.

Garcy Kate D. Go LLB2 EH306 Page 68


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

Garcy Kate D. Go LLB2 EH306 Page 69


WAGE & THE WAGE RATIONALIZATION ACT

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

Facts: The union known as Ilaw at Buklod Ng Manggagawa (IBM) said to


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

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

Ruling: Strike is not legal as a means of resolving wage distortion. The


strike involving the issue of wage distortion is illegal as a means of resolving
it. The legality of these activities is usually dependent on the legality of the
purposes sought to be attained and the means employed therefore. It goes
without saying that these joint or coordinated activities may be forbidden or
restricted by law or contract. In the instance of "distortions of the wage
structure within an establishment" resulting from "the application of any
prescribed wage increase by virtue of a law or wage order," Section 3 of
Republic Act No. 6727 prescribes a specific, detailed and comprehensive
procedure for the correction thereof, thereby implicitly excluding strikes or
lockouts or other concerted activities as modes of settlement of the issue.

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

Garcy Kate D. Go LLB2 EH306 Page 70


The legislative intent that solution of the problem of wage distortions shall be
sought by voluntary negotiation or arbitration, and not by strikes, lockouts,
or other concerted activities of the employees or management, is made clear
in the rules implementing RA 6727 issued by the Secretary of Labor and
Employment pursuant to the authority granted by Section 13 of the Act.
Section 16, Chapter I of these implementing rules, after reiterating the policy
that wage distortions be first settled voluntarily by the parties and eventually
by compulsory arbitration, declares that, "Any issue involving wage distortion
shall not be a ground for a strike/lockout."

Garcy Kate D. Go LLB2 EH306 Page 71


Employers Confederation of the Phils.vs. NWPC

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

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

Employers Confederation of the Philippines assailed the RTWPBs grant of an


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

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

Ruling: As provided by the NWPC, the determination of wages generally


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

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

Disputes are appropriate subjects of collective bargaining and grievance


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

It is not disputed that wage fixing is a legislative function, nevertheless the


rule is it can be validly delegated provided that sufficient standards are set
forth. What these standards are provided for under Art. 124 of the Act (RA
No. 6727).

RA No. 6727 did not intend the boards to set floor wages alone. If such be the
case, the Act would have no need for a board but an accountant to keep
track of the latest consumer price index, or better, would have Congress

Garcy Kate D. Go LLB2 EH306 Page 72


done it as the need arises. The Act sought a thinking group bound by
statutory standards.

Garcy Kate D. Go LLB2 EH306 Page 73


Mabeza vs NLRC 271 SCRA 670

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

Garcy Kate D. Go LLB2 EH306 Page 74


JOY BROTHERS INC vs. NWPC, 273 SCRA 622

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

Issue: Whether or not petitioner is exempted

Ruling: The NWPC Revised Guidelines on Exemption provided that


exemption from compliance with the wage increase may be granted to
distressed establishment whose paid-up capital has been impaired by at
least 25% or which registers capital deficiency or negative net worth.

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

Garcy Kate D. Go LLB2 EH306 Page 75


Prubankers Association vs Prudential Bank (1999) 302 SCRA 74

Facts: The RTWPB Region V issued Wage Order No. RB 05-03 which
provided for a Cost of Living Allowance (COLA) to workers in the private
sector who had rendered service for at least three (3) months before its
effectivity, and for the same period thereafter, in the following categories:
P17.50 in the cities of Naga and Legaspi; P15.50 in the municipalities of
Tabaco, Daraga, Pili and the city of Iriga; and P10.00 for all other areas in
the Bicol Region.

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

On June 7, 1994, Prubankers Association wrote the petitioner requesting that


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

Issue: WON a wage distortion resulted from respondent's implementation of


the Wage Orders.

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

Garcy Kate D. Go LLB2 EH306 Page 76


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

Wage distortion involves four elements: (1) An existing hierarchy of positions


with corresponding salary rates; (2) A significant change in the salary rate of
a lower pay class without a concomitant increase in the salary rate of a
higher one; (3)The elimination of the distinction between the two levels and
(4) The existence of the distortion in the same region of the country.

A disparity in wages between employees holding similar positions but in


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

Garcy Kate D. Go LLB2 EH306 Page 77


Millare vs NLRC, 305 SCRA 501

Facts: Petitioners numbering one hundred sixteen (116) occupied the


positions of Technical Staff, Unit Manager, Section Manager, Department
Manager, Division Manager and Vice President in the mill site of respondent
Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del
Sur.

In 1992 PICOP suffered a major financial setback allegedly brought about by


the joint impact of restrictive government regulations on logging and the
economic crisis. To avert further losses, it undertook a retrenchment
program and terminated the services of petitioners.

Accordingly, petitioners received separation pay computed at the rate of one


(1) month basic pay for every year of service. Believing however that the
allowances they allegedly regularly received on a monthly basis during their
employment should have been included in the computation thereof they
lodged a complaint for separation pay differentials.

PICOP grants the following allowances:


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

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

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

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


customarily furnished.

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

In addition, the Secretary of Labor and Employment under Sec. 6, Rule VII,
Book III, of the Rules Implementing the Labor Code may from time to time fix

Garcy Kate D. Go LLB2 EH306 Page 78


in appropriate issuances the "fair and reasonable value of board, lodging and
other facilities customarily furnished by an employer to his employees."
Petitioners' allowances do not represent such fair and reasonable value as
determined by the proper authority simply because the Staff/Manager's
allowance and transportation allowance were amounts given by respondent
company in lieu of actual provisions for housing and transportation needs
whereas the Bislig allowance was given in consideration of being assigned to
the hostile environment then prevailing in Bislig.

Garcy Kate D. Go LLB2 EH306 Page 79


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

Facts: International school, Inc., pursuant to Presidential Decree 732, is a


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

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

Petitioner union claims that the point-of-hire classification by the School is


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

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

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

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

While the need of the School to attract foreign-hires is recognized, salaries


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

Garcy Kate D. Go LLB2 EH306 Page 80


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 v. NLRC
GR No. 140689, Feb. 17, 2004

Facts: Bankard, Inc. classifies its employees by levels, to wit: Level I, Level
II, Level III, Level IV, Level V. On November 28, 1993, its Board of Directors
approved a New Salary Scale , made retroactive to April 1, 1993, for the
purpose of making its hiring rate competitive in the industrys labor market.

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

Petitioner maintains that for purposes of wage distortion, the classification is


not one based on levels or ranks but on two groups of employees, the
newly hired and the old, in each and every level, and not between and
among the different ranks in the salary structure.

Issue: Whether the unilateral adoption by an employer of an upgraded


salary scale that increased the hiring rates of new employees without
increasing the salary rates of old employees resulted in wage distortion
within the contemplation of Article 124 of the Labor Code.

Ruling: Prubankers Association v. Prudential Bank and Trust Company laid


down the four elements of wage distortion, to wit: (1) An existing hierarchy
of position with corresponding salary rates, (2) A significant change in the
salary rate of a lower pay class without a concomitant increase in the salary
rate of a higher one; (3) The elimination of the distinction between the two
levels; (4) The existence of the distortion in the same region of the country.
Involved in the classification of employees are various factors such as the
degrees of responsibility, the skills and knowledge required, the complexity
of the job, or other logical basis of differentiation.

To determine the existence of wage distortion, the historical classification


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

It is thus clear that there is no hierarchy of positions between the newly hired
and regular employees of Bankard, hence, the first element of wage

Garcy Kate D. Go LLB2 EH306 Page 81


distortion provided in the Prubankers case is wanting. While seniority may be
a factor in determining the wages of employees, it cannot be made the sole
basis in cases where the nature of their work differs.
For purposes of determining the existence of wage distortion, employees
cannot create their own independent classification and use it as a basis to
demand an across-the-board increase in salary.

Even assuming that there is a decrease In the wage gap between the pay of
the old employees and the newly hired employees, to the courts mind the
gap is NOT significant as to obliterate or result in severe contraction of the
intentional quantitive differences in the salary rates between the employee
group./
Aside from that the alleged wage distortion as the increase in the wages
and salaries of new-hires was not due to a prescribed law or wage order.

If the compulsory mandate under Article 124 of the Labor Code to correct
wage distortion is applied to voluntary and unilateral increases by the
employer in fixing hiring rates which is inherently a business judgment
prerogative, then the hands of the employer would be completely tied even
in cases where an increase in wages of a particular group is justified.

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

Garcy Kate D. Go LLB2 EH306 Page 82


Odango vs NLRC (2005) G.R. 147420

Facts: Petitioners are monthly-paid employees of ANTECO whose workdays


are from Monday to Friday and half of Saturday. After a routine inspection,
the Regional Branch of the Department of Labor and Employment found
ANTECO liable for underpayment of the monthly salaries of its employees.
On September 1989, the DOLE directed ANTECO to pay its employees wage
differentials amounting to P1,427,412.75. ANTECO failed to pay. On various
dates in 1995, thirty-three (33) monthly-paid employees filed complaints with
the NLRC praying for payment of wage differentials, damages and attorneys
fees.

On November 1996, the Labor Arbiter rendered a Decision in favor of


petitioners granting them wage differentials amounting to P1,017,507.73 and
attorneys fees of 10%. ANTECO appealed the Decision to the NLRC where it
reversed the Labor Arbiters Decision. The NLRC denied petitioners motion
for reconsideration. Petitioners then elevated the case to CA where it
dismissed the petition for failure to comply with Section 3, Rule 46 of the
Rules of Court. The Court of Appeals explained that petitioners failed to
allege the specific instances where the NLRC abused its discretion. The
appellate court denied petitioners motion for reconsideration.

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

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

The petitioners claim is based on Section 2, Rule IV, Book III of the
Implementing Rules and Policy Instructions No. 9 issued by the Secretary of
Labor which was declared null and void since in the guise of clarifying the
Labor Codes provisions on holiday pay, they in effect amended them by
enlarging the scope of their exclusion.

Even assuming that Section 2, Rule IV of Book III is valid, their claim will still
fail. The basic rule in this jurisdiction is "no work, no pay." The right to be
paid for un-worked days is generally limited to the ten legal holidays in a
year. Petitioners claim is based on a mistaken notion that Section 2, Rule IV
of Book III gave rise to a right to be paid for un-worked days beyond the ten
legal holidays. Petitioners line of reasoning is not only a violation of the "no
work, no pay" principle, it also gives rise to an invidious classification, a
violation of the equal protection clause.

Garcy Kate D. Go LLB2 EH306 Page 83


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

Facts: In September 1993, Morente, Allauigan and Ofialda and others filed a
complaint for underpayment of wages, nonpayment of overtime pay, holiday
pay, service incentive leave pay, and premium pay for rest day and holiday
and night shift differential against petitioners in the Arbitration Branch of
NLRC. It alleged that Cohu is engaged in the business of wholesale of plastic
products and fruits of different kinds with more than 24 employees.
Respondents were hired on January 1990, May 1990 and July 19991 as
laborers and were paid below the minimum wage for the past 3 years. They
were required to work for more than 8 hours a day and never enjoyed the
minimum benefits. Petitioners filed their comment stating that the
respondents were their helpers.

The Labor Arbiter rendered a decision dismissing the money claims.


Respondents filed an appeal with the NLRC where it granted the money
claims. Petitioners appealed with the CA but it was denied. It said that the
company having claimed of exemption of the coverage of the minimum wage
shall have the burden of proof to the claim.

Petitioners insist that C. Planas Commercial is a retail establishment


principally engaged in the sale of plastic products and fruits to the customers
for personal use, thus exempted from the application of the minimum wage
law; that it merely leases and occupies a stall in the Divisoria Market and the
level of its business activity requires and sustains only less than ten
employees at a time. Petitioners contend that private respondents were paid
over and above the minimum wage required for a retail establishment, thus
the Labor Arbiter is correct in ruling that private respondents claim for
underpayment has no factual and legal basis. Petitioners claim that since
private respondents alleged that petitioners employed 24 workers, it was
incumbent upon them to prove such allegation which private respondents
failed to do.

Issue: WON petitioner is exempted from the application of minimum wage


law.

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

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

In the event that applications for exemptions are not granted, employees
shall receive the appropriate compensation due them as provided for by this

Garcy Kate D. Go LLB2 EH306 Page 84


Act plus interest of one percent (1%) per month retroactive to the effectivity
of this Act.

Garcy Kate D. Go LLB2 EH306 Page 85


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

Facts: On August 22, 1997, an inspection was conducted on the premises of


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

As no restitution was made, the Regional Office conducted summary


investigations. Despite due notice, petitioner failed to appear for two
consecutive scheduled hearings. Furthermore, petitioner failed to question
the findings of the Labor Inspector received by and explained to the
manager.

The inspection was prompted by the filing of respondents sometime in 1997


against petitioner a complaint for underpayment of wages, regular holiday
pay, and other benefits.

On November 6, 1997, the Regional Director issued a ruling against


petitioner, which was appealed, but later on denied.

On the petition, petitioner argued that the Regional Director has no


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

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

Ruling: Yes, it does.

Aside from photocopies of documents entitled Release and Quitclaim, no


other evidence was adduced by the petitioner to substantiate this claim.
These documents, being mere photocopies are unreliable and incompetent
without the original and deserves little credence or weight.

As is well-settled, if doubts exist between the evidence presented by the


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

Considering thus that there still exists an employer-employee relationship


between petitioner and private respondents and that the case involves
violations of labor standard provisions of the Labor Code, the Regional
Director has jurisdiction to hear and decide the instant case in conformity
with Article 128(b) of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 86


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

Facts: Petitioner is a corporation duly organized and existing under


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

On Nov. 1, 2000, W age Order No. NCR-08 9 took effect. Section 1 thereof
provides: Upon the effectivity of this Wage Order, private sector workers and
employees in the National Capital Region receiving the prescribed daily
minimum wage rate of P223.50 shall receive an increase of P26.50 per day,
thereby setting the new minimum wage rate in the National Capital Region at
P250.00 per day.

Then Union president requested petitioner to implement the increase under


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

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

For its part, petitioner alleged that there is no such company practice and
that it complied with the previous wage orders (Wage Order Nos. NCR-01-05)
because some of its employees were receiving wages below the minimum
prescribed under said orders. As for Wage Order No. NCR-07, petitioner

Garcy Kate D. Go LLB2 EH306 Page 87


alleged that its compliance was in accordance with its verbal commitment to
the Union during the CBA negotiations that it would implement any wage
order issued in 1999. Petitioner further averred that it applied the wage
distortion formula prescribed under Wage Order Nos. NCR-06 and NCR-07
because an actual distortion occurred as a result of their implementation. It
asserted that at present, all its employees enjoy regular status and that none
receives a daily wage lower than the P250.00 minimum wage rate prescribed
under Wage Order No. NCR-08.

Issue: Whether or not the petitioner is obliged to grant an increase to its


employees as a matter of practice.

Ruling: The petition is meritorious. We rule that petitioner is not obliged to


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

It is submitted that employers (unless exempt) in Metro Manila (including the


[petitioner]) are mandated to implement the said wage order but limited to
those entitled thereto. There is no legal basis to implement the same across-
the-board. A perusal of the record shows that the lowest paid employee
before the implementation of Wage Order #8 is P250.00/day and none was
receiving below P223.50 minimum. This could only mean that the union can
no longer demand for any wage distortion adjustment. Neither could they
insist for an adjustment of P26.50 increase under Wage Order #8. The
provision of wage order #8 and its implementing rules are very clear as to
who are entitled to the P26.50/day increase, i.e., "private sector workers and
employees in the National Capital Region receiving the prescribed daily
minimum wage rate of P223.50 shall receive an increase of P26.50 per day,"
and since the lowest paid is P250.00/day the company is not obliged to
adjust the wages of the workers.

We find no evidence to prove that the grant of a wage-order-mandated


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

Moreover, to ripen into a company practice that is demandable as a matter


of right, the giving of the increase should not be by reason of a strict legal or
contractual obligation, but by reason of an act of liberality on the part of the
employer. In this case, petitioner granted the increase under Wage Order No.
NCR-07 on its belief that it was obliged to do so under the CBA.

WHEREFORE, premises considered, the petition is GRANTED. The Decision of


the Court of Appeals in CA-G.R. SP No. 65171 and Resolution dated January

Garcy Kate D. Go LLB2 EH306 Page 88


11, 2005 are REVERSED and SET ASIDE. The Decision of the Voluntary
Arbitrator is REINSTATED. No costs.

Metropolitan Bank vs. NWPC


GR No. 144322, Feb. 6, 2007

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

The Bankers Council for Personnel Management (BCPM), on behalf of its


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

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

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

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

In the present case, the RTWPB did not determine or fix the minimum wage
rate by the "floor-wage method" or the "salary-ceiling method" in issuing the
Wage Order. The RTWPB did not set a wage level nor a range to which a
Garcy Kate D. Go LLB2 EH306 Page 89
wage adjustment or increase shall be added. Instead, it granted an across-
the-board wage increase of P15.00 to all employees and workers of Region 2.
In doing so, the RTWPB exceeded its authority by extending the coverage of
the Wage Order to wage earners receiving more than the prevailing
minimum wage rate, without a denominated salary ceiling. The Wage Order
granted additional benefits not contemplated by R.A. No. 6727.

The WO herein question is null and void insofar as it grants a wage increase
to employees earning more than the minimum wage rate; and pursuant to
the separability clause of the WO, Sec. 1 is declared valid with respect to
employees earning the prevailing minimum wage rate.

Garcy Kate D. Go LLB2 EH306 Page 90


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

Facts: Ricardo Sadac was appointed Vice President of the Legal Department
of petitioner Bank effective 1 August 1981, and subsequently General
Counsel thereof on 8 December 1981. On June 1989, nine lawyers of
petitioner Banks Legal Department, in a letter-petition to the Chairman of
the Board of Directors, accused respondent Sadac of abusive conduct and
ultimately, petitioned for a change in leadership of the department. On the
ground of lack of confidence in Sadac, under the rules of client and lawyer
relationship, petitioner Bank instructed respondent Sadac to deliver all
materials in his custody in all cases in which the latter was appearing as its
counsel of record. In reaction thereto, Sadac requested for a full hearing and
formal investigation but the same remained unheeded. On 9 November
1989, respondent Sadac filed a complaint for illegal dismissal with damages
against petitioner Bank and individual members of the Board of Directors
thereof. After learning of the filing of the complaint, petitioner Bank
terminated the services of respondent Sadac. Finally, on 10 August 1989,
Sadac was removed from his office

Labor Arbiter rendered decision that Sadacs termination was illegal and
entitled to reinstatement and payment of full back wages. NLRC affirmed
the decision upon appeal by the Bank. Sadac filed for execution of judgment
where it gave its computation which amounted to P 6.03 M representing his
back wages and the increases he should have received during the time he
was illegally dismissed. The Bank opposed to Sadacs computation. The
Labor Arbiter favor Sadacs computation. NLRC, upon appeal by the bank,
reversed the decision. CA reversed the decision of NLRC. Hence, this
petition.

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

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

In the case of Bustamante v. National Labor Relations Commission, It said


that the Court deems it appropriate to reconsider such earlier ruling on the
computation of back wages by now holding that conformably with the
evident legislative intent as expressed in Rep. Act No. 6715, back wages to
be awarded to an illegally dismissed employee, should not, as a general
rule, be diminished or reduced by the earnings derived by him elsewhere
during the period of his illegal dismissal. The underlying reason for this
Garcy Kate D. Go LLB2 EH306 Page 91
ruling is that the employee, while litigating the legality (illegality) of his
dismissal, must still earn a living to support himself and family, while full
backwages have to be paid by the employer as part of the price or penalty
he has to pay for illegally dismissing his employee. The clear legislative
intent of the amendment in Rep. Act No. 6715 is to give more benefits to
workers than was previously given them. Thus, a closer adherence to the
legislative policy behind Rep. Act No. 6715 points to "full backwages" as
meaning exactly that, i.e., without deducting from backwages the earnings
derived elsewhere by the concerned employee during the period of his
illegal dismissal.

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

Garcy Kate D. Go LLB2 EH306 Page 92


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

Facts: The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by


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

In February 2004, GMPC terminated SIPs contract as GMPC


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

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

Ruling: The employer-employee relationship issue.

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

The respondents money claims

We likewise affirm the CA ruling on the monetary award to Batolina and the
other complainants. The free board and lodging SIP furnished the employees
cannot operate as a set-off for the underpayment of their wages. We held
in Mabeza v. National Labor Relations Commission that the employer cannot
simply deduct from the employees wages the value of the board and lodging
without satisfying the following requirements: (1) proof that such facilities
are customarily furnished by the trade; (2) voluntary acceptance in writing
by the employees of the deductible facilities; and (3) proof of the fair and
reasonable value of the facilities charged. As the CA aptly noted, it is clear
from the records that SIP failed to comply with these requirements.

On the collateral issue of the proper computation of the monetary award, we


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

Garcy Kate D. Go LLB2 EH306 Page 93


Garcy Kate D. Go LLB2 EH306 Page 94
SLL INTERNATIONAL CABLES SPECIALIST vs. NLRC

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

On May 21, 1999, private respondents for the 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, 13 th month pay for 1997 and 1998 and
service incentive leave pay as well as damages and attorney's fees

Issue: Whether or not the respondent should be allowed to recover the


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

Ruling: As a general rule, on payment of wages, a party who alleges


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

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

Garcy Kate D. Go LLB2 EH306 Page 95


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. [20]
Mere availment is not sufficient to allow deductions from employees' wages.
[21]

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

In short, the benefit or privilege given to the employee which constitutes an


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

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

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

Garcy Kate D. Go LLB2 EH306 Page 96


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

Fact: Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-


Cola Bottlers Philippines, Inc. from May 1968 until he retired on January
31, 2002 as a District Sales Supervisor (DSS) for Las Pias City, Metro
Manila.

As stipulated in respondent's existing Retirement Plan Rules and Regulations


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

Claiming his entitlement to an additional PhP474,600.00 as Sales


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

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

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

Garcy Kate D. Go LLB2 EH306 Page 97


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.

Garcy Kate D. Go LLB2 EH306 Page 98


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

Garcy Kate D. Go LLB2 EH306 Page 99


Royal Plant Workers Union vs. Coca-Cola Bottlers Philippines Inc.

GR No. 198783, April 15, 2013

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

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

With this task of moving constantly to check on the machinery and


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

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

Ruling: According to the Union, such removal constitutes a violation of the


1) Occupational Health and Safety Standards which provide that every
worker is entitled to be provided by the employer with appropriate seats,
among others; 2) policy of the State to assure the right of workers to a just
and humane condition of work as provided for in Article 3 of the Labor

Garcy Kate D. Go LLB2 EH306 Page 100


Code;8 3) Global Workplace Rights Policy of CCBPI which provides for a safe
and healthy workplace by maintaining a productive workplace and by
minimizing the risk of accident, injury and exposure to health risks; and 4)
diminution of benefits provided in Article 100 of the Labor Code.

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

In the present controversy, it cannot be denied that CCBPI removed the


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

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

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

Garcy Kate D. Go LLB2 EH306 Page 101


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

The Court completely agrees with the CA ruling that the removal of the
chairs did not violate the general principles of justice and fair play because
the bottling operators working time was considerably reduced from two and
a half (2 ) hours to just one and a half (1 ) hours and the break period,
when they could sit down, was increased to 30 minutes between rotations.
The bottling operators new work schedule is certainly advantageous to them
because it greatly increases their rest period and significantly decreases
their working time. A break time of thirty (30) minutes after working for only
one and a half (1 ) hours is a just and fair work schedule.

The operators chairs cannot be considered as one of the employee benefits


covered in Article 10016 of the Labor Code. In the Courts view, the term
"benefits" mentioned in the non-diminution rule refers to monetary benefits
or privileges given to the employee with monetary equivalents.

Such benefits or privileges form part of the employees wage, salary or


compensation making them enforceable obligations.

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

Garcy Kate D. Go LLB2 EH306 Page 102


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

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

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

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

Consequently, the RTWPBNCR issued Wage Order No. NCR07 on October


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

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


following:

A. [W]orkers in the following sectors which were granted


corresponding wage increases on January 1, 1999 as prescribed
by Wage Order No. NCR06:
a.1. Agriculture workers
P12.0
Plantation
0
P18.5
Nonplantation
0

P16.0
a.2. Cottage/handicraft industry
0

a.3. Private hospitals with bed capacity of 100 P12.0


or less 0

a.4. Retail/Service establishments


P12.0
Employing 1115 workers
0
Employing not more than 10 P19.0
workers 0

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


workers.

Garcy Kate D. Go LLB2 EH306 Page 103


xxxx

Section 9. Upon application with and as determined by the


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

1. Distressed establishments as defined in the NPWC Guidelines No.


01, series of 1996;

2. Exporters including indirect exporters with at least 50% export


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

Feeling aggrieved by their noncoverage by the wage adjustment, the


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

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

The APL and TNMR assailed the decisions of the NWPC on certiorari in the
CA, contending that the power of the RTWPBNCR to determine exemptible
categories was not an adjunct to its wage fixing function. CA favored the
respondents and granted the petition for certiorari.
Hence, this appeal by petition for review on certiorari by the NWPC and
RTWPBNCR.

Issue: Whether or not the RTWPBNCR had


Ruling: the RTWPBNCR had the authority to provide additional exemptions
from the minimum wage adjustments embodied in Wage Order No. NCR07
The NWPC promulgated NWPC Guidelines No. 00195 (Revised Rules of
Procedure on Minimum Wage Fixing) to govern the proceedings in the NWPC
and the RTWPBs in the fixing of minimum wage rates by region, province and
industry. Section 1 of Rule VIII of NWPC Guidelines No. 00195 recognized the
power of the RTWPBs to issue exemptions from the application of the wage
orders subject to the guidelines issued by the NWPC
(this is the rationale behind exemption)

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS


Exemption of establishments from compliance with the wage increases and
cost of living allowances prescribed by the Boards may be granted in order to

Garcy Kate D. Go LLB2 EH306 Page 104


(1) assist establishments experiencing temporary difficulties due to losses
maintain the financial viability of their businesses and continued
employment of their workers; (2) encourage the establishment of new
businesses and the creation of more jobs, particularly in areas outside the
National Capital Region and Export Processing Zones, in line with the policy
on industry dispersal; and (3) ease the burden of micro establishments,
particularly in the retail and service sector, that have a limited capacity to
pay.

The following categories of establishments may be exempted upon


application with and as determined by the Board:

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

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

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

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

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

Lastly, Wage Order No. NCR07 is presumed to be regularly issued in the


absence of any strong showing of grave abuse of discretion on the part of
RTWPBNCR. The presumption of validity is made stronger by the fact that its
validity was upheld by the NWPC upon review.

Garcy Kate D. Go LLB2 EH306 Page 105


WAGE ENFORCEMENT AND RECOVERY

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

Facts: Subsequent to the initial pleading filed by respondent-employees


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

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

Ruling: Regional Director had no jurisdiction over the case.

Section 2 of EO No. 111, promulgated on December 24, 1986, which


amended Article 128(b) of the Labor Code gives concurrent jurisdiction to
both the Secretary of Labor (or the various regional directors) and the labor
arbiters over money claims among the other cases mentioned by Article 217
of the Labor Code. This provision merely confirms/reiterates the
enforcement/adjudication authority of the Regional Director over
uncontested money claims in cases where an employer-employee
relationship still exists.

However, with the enactment of Republic Act No. 6715, which took effect on
March 21, 1989 or seven days after the complaint at bar was filed on March
14, 1989, Articles 129 and 217 of the Labor Code were amended, there is no
doubt that the regional directors can try money claims only if the following
requisites concur: (1) the claim is presented by an employee or person
employed in domestic or household service, or house helper under the code;
(2) the claimant, no longer being employed, does not seek reinstatement;
and (3) the aggregate money claim of the employee or housekeeper does
not exceed five thousand pesos (P5,000.00). Thus, the power to hear and
decide employees' claims arising from employer-employee relations,
exceeding P5,000.00 for each employee should be left to the Labor Arbiter as
the exclusive repository of the power to hear and decide such claims.

In the instant case, a simple examination of the labor arbiter's impugned


order dated September 25, 1989 readily shows that the aggregate claims of
each of the twenty-five employees of petitioner are above the amount of
P5,000.00 fixed by Republic Act No. 6715. Therefore, the regional director
had no jurisdiction over the case. Hence, the petition is granted and the
public respondent is directed to refer the workers' money claims to the
appropriate Labor Arbiter for proper disposition.

Garcy Kate D. Go LLB2 EH306 Page 106


Guico vs. Sec of Labor

Facts: The case started when the Office of the Regional Director,
Department of Labor and Employment (DOLE), Region I, San Fernando, La
Union, received a letter-complaint dated April 25, 1995, requesting for an
investigation of petitioner's establishment, Copylandia Services & Trading,
for violation of labor standards laws. Pursuant to the visitorial and
enforcement powers of the Secretary of Labor and Employment or his duly
authorized representative under Article 128 of the Labor Code, as amended,
inspections were conducted at Copylandia's outlets on April 27 and May 2,
1995. The inspections yielded the following violations involving twenty-one
(21) employees who are copier operators: (1) underpayment of wages; (2)
underpayment of 13th month pay; and (3) no service incentive leave with
pay.

On October 30, 1995, Regional Director Guerrero N. Cirilo issued an


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

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

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

Held: Yes, the Regional Director can award claims of over P5,000. The
visitorial power of the Secretary of Labor to order and enforce compliance
with labor standard laws cannot be exercised where the individual claim
exceeds P5,000.00, can no longer be applied in view of the enactment of R.A.
No. 7730 amending Article 128(b) of the Labor Code, viz:
Art. 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of employer-
employee still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders
to give effect to the labor standards provisions of the Code and other labor
legislation based on the findings of the labor employment and enforcement

Garcy Kate D. Go LLB2 EH306 Page 107


officers or industrial safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue writs of execution
to the appropriate authority for the enforcement of their orders, except in
cases where the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary proofs
which were not considered in the course of inspection.

Garcy Kate D. Go LLB2 EH306 Page 108


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

Facts Petitioner is in the business of providing security services while


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

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

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

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

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

Garcy Kate D. Go LLB2 EH306 Page 109


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

Rather, said powers are defined and set forth in Article 128 of the Labor Code
(as amended by R.A. No. 7730) thus:
Art. 128 Visitorial and enforcement power. --- (b) Notwithstanding the
provisions of Article[s] 129 and 217 of this Code to the contrary, and in cases
where the relationship of employer-employee still exists, the Secretary of
Labor and Employment or his duly authorized representatives shall have the
power to issue compliance orders to give effect to [the labor standards
provisions of this Code and other] labor legislation based on the findings of
labor employment and enforcement officers or industrial safety engineers
made in the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate authority for
the enforcement of their orders, except in cases where the employer
contests the findings of the labor employment and enforcement officer and
raises issues supported by documentary proofs which were not considered
in the course of inspection.

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

The visitorial and enforcement powers of the DOLE Regional Director to order
and enforce compliance with labor standard laws can be exercised even
where the individual claim exceeds P5,000.
However, if the labor standards case is covered by the exception clause in
Article 128(b) of the Labor Code, then the Regional Director will have to
endorse the case to the appropriate Arbitration Branch of the NLRC. In order
to divest the Regional Director or his representatives of jurisdiction, the
following elements must be present: (a) that the employer contests the
findings of the labor regulations officer and raises issues thereon; (b) that in
order to resolve such issues, there is a need to examine evidentiary matters;
and (c) that such matters are not verifiable in the normal course of
inspection. The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt of the
notice of inspection results.

In this case, the Regional Director validly assumed jurisdiction over the
money claims of private respondents even if the claims exceeded P5,000
because such jurisdiction was exercised in accordance with Article 128(b) of
the Labor Code and the case does not fall under the exception clause.
The Court notes that EBVSAI did not contest the findings of the labor
regulations officer during the hearing or after receipt of the notice of
inspection results. It was only in its supplemental motion for reconsideration
before the Regional Director that EBVSAI questioned the findings of the labor
regulations officer and presented documentary evidence to controvert the

Garcy Kate D. Go LLB2 EH306 Page 110


claims of private respondents. But even if this was the case, the Regional
Director and the Secretary of Labor still looked into and considered EBVSAIs
documentary evidence and found that such did not warrant the reversal of
the Regional Directors order. The Secretary of Labor also doubted the
veracity and authenticity of EBVSAIs documentary evidence. Moreover, the
pieces of evidence presented by EBVSAI were verifiable in the normal course
of inspection because all employment records of the employees should be
kept and maintained in or about the premises of the workplace, which in this
case is in Ambuklao Plant, the establishment where private respondents
were regularly assigned.

Garcy Kate D. Go LLB2 EH306 Page 111


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

Facts: The controversy started with a complaint filed by petitioner against


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

Issue: WON the Appellate court erred in failing to dismiss respondent's


petition for certiorari brought before it on the ground that respondents failed
to attach certified true copies of the NLRC's decision and resolution denying
the motion for reconsideration.

Ruling: Appellate Court was right.

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

To counter petitioner's assertions, respondents submitted typewritten and


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

Moreover, absent any evidence to the contrary, good faith must be


presumed in this case. Entries in the payroll, being entries in the course of
business, enjoy the presumption of regularity under Rule 130, Section 43 of
the Rules of Court. Hence, while as a general rule, the burden of proving
payment of monetary claims rests on the employer, when fraud is alleged in
the preparation of the payroll, the burden of evidence shifts to the employee
and it is incumbent upon him to adduce clear and convincing evidence in
support of his claim. Unfortunately, petitioner's bare assertions of fraud do
not suffice to overcome the disputable presumption of regularity.

Garcy Kate D. Go LLB2 EH306 Page 112


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

Facts: Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired
by respondent Panay Veterans Security and Investigation Agency, Inc. as
security guards sometime in 1988. They were stationed at the plant site of
Food Industries, Inc. (FII) in Sta. Rosa, Laguna until FII terminated its contract
with respondent security agency on July 6, 2000. They were not given new
assignments and their benefits (including 13th month pay, overtime pay and
holiday pay as well as wage differentials due to underpayment of wages)
were withheld by respondent security agency. This prompted them to file a
complaint for violation of labor standards in the regional office of the
Department of Labor and Employment in the National Capital Region (DOLE-
NCR).

A labor inspector acted on the complaint, Manuel M. Cayabyab. He


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

Respondents moved for reconsideration but the DOLE-NCR Regional Director


denied it. Undeterred, respondents filed an appeal (with motion to reduce
cash or surety bond) to the Secretary of Labor and Employment. In his July 9,
2002 order, the Secretary of Labor and Employment found that respondents
failed to perfect their appeal since they did not post a cash or surety bond
equivalent to the monetary award. Thus, the appeal was dismissed and the
DOLE-NCR Regional Directors May 10, 2001 order was declared final and
executory. The Secretary of Labor and Employment denied reconsideration.

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

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

Ruling: No, the employers motion to reduce the appeal the bond was no in
accordance with the art. 128 of Labor code, the last paragraph of the said
provision provides:an order issued by the duly authorized representative of
the Secretary of Labor and Employment under this Article may be appealed
to the latter. In case said order involves a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited
by the Secretary of Labor and Employment in the amount equivalent
to the monetary award in the order appealed from

Clearly the respondents did not post bail, when they appealed the case at
the DOLE-NCR.

Garcy Kate D. Go LLB2 EH306 Page 113


The CAs amended decision also contradicted the spirit that animates all
labor laws, the promotion of social justice and the protection of workers. The
posting of a cash or surety bond to perfect an appeal of an order involving a
monetary award has a two-fold purpose: (1) to assure the employee that, if
he finally prevails in the case, the monetary award will be given to him upon
dismissal of the employers appeal and (2) to discourage the employer from
using the appeal to delay or evade payment of his obligations to the
employee.[17] The CA disregarded these pro-labor objectives when it treated
respondents failure to post the required bond with undue leniency. The CA
should have resolved any doubt in the implementation and interpretation of
the Labor Code and its implementing rules in favor of labor.
Moreover, Star Angel Handicraft permitted the filing of a motion for reduction
of the appeal bond because the Court recognized the NLRCs existing
practice at that time to allow the reduction of the appeal bond upon motion
of appellant and on meritorious grounds. In fact, the practice was
subsequently institutionalized in the rules of procedure of the NLRC which
now allow the reduction of the amount of the bond in justifiable cases and
upon motion of the appellant.

Garcy Kate D. Go LLB2 EH306 Page 114


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

Facts: DENR ordered the indefinite suspension of MARCOPPER's operations


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

NAMAWU claimed that due to the indefinite suspension of MARCOPPER's


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

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

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

Garcy Kate D. Go LLB2 EH306 Page 115


JETHRO INTELLIGENCE & SECURITY CORPORATION vs. Secretary of Labor

Facts: Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security


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

By Order3 of September 9, 2004, the DOLE Regional Director, noting petitioners


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

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

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

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

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

Garcy Kate D. Go LLB2 EH306 Page 116


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

Facts: Wage Order No. 9, approved by the Regional Tripartite Wages and
Productivity Board (RTWPB) of the National Capital Region (NCR), took effect
on 5 November 2001. It grants P30.00 ECOLA to particular employees and
workers of all private sectors, identified as follows in Section 1 thereof:
Section 1. Upon the effectivity of this Wage Order, all private sector
workers and employees in the National Capital Region receiving daily
wage rates of TWO HUNDRED FIFTY PESOS (P250.00) up to TWO
HUNDRED NINETY PESOS (P290.00) shall receive an emergency cost of
living allowance in the amount of THIRTY PESOS (P30.00) per day
payable in two tranches as follows:
Amount of ECOLAEffectivity
P15.00 5 November 2001
P15.00 1 February 2002
On 20 March 2002, respondent National Union of Workers in Hotel,
Restaurant and Allied Industries-Dusit Hotel Nikko Chapter (Union), through
its President, Reynaldo C. Rasing (Rasing), sent a letter 4 to Director Alex
Maraan (Dir. Maraan) of the Department of Labor and Employment-National
Capital Region (DOLE-NCR), reporting the non-compliance of Dusit Hotel with
WO No. 9, while there was an on-going compulsory arbitration before the
National Labor Relations Commission (NLRC) due to a bargaining deadlock
between the Union and Dusit Hotel; and requesting immediate assistance on
this matter. On 24 May 2002, Rasing sent Dir. Maraan another letter
following-up his previous request for assistance.

Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer


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

Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing


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

Effective January 1, 2001 - P500.00/month


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

Garcy Kate D. Go LLB2 EH306 Page 117


On 22 October 2002, based on the results of the second inspection of Dusit
Hotel premises, DOLE-NCR, through Dir. Maraan, issued the Order 10
directing Dusit Hotel to pay 144 of its employees the total amount of
P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus,
the penalty of double indemnity, pursuant to Section 12 of Republic Act No.
6727, 11 as amended by Republic Act No. 8188.
Dusit Hotel filed a Motion for Reconsideration 13 of the DOLE-NCR Order
dated 22 October 2002, arguing that the NLRC Decision dated 9 October
2002, resolving the bargaining deadlock between Dusit Hotel and the Union,
and awarding salary increases under the CBA to hotel employees retroactive
to 1 January 2001, already rendered the DOLE-NCR Order moot and
academic. With the increase in the salaries of the hotel employees ordered
by the NLRC Decision of 9 October 2002, along with the hotel employees'
share in the service charges, the 144 hotel employees, covered by the DOLE-
NCR Order of 22 October 2002, would already be receiving salaries beyond
the coverage of WO No.

Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR issued a


Resolution 14 on 27 December 2002, setting aside its earlier Order dated 22
October 2002 for being moot and academic, in consideration of the NLRC
Decision dated 9 October 2002; and dismissing the complaint of the Union
against Dusit Hotel, for non-compliance with WO No. 9, for lack of merit.

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

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

Article 96.Service charges. All service charges collected by hotels,


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

Since Dusit Hotel is explicitly mandated by the afore-quoted statutory


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

The Court, however, finds no basis to hold Dusit Hotel liable for double
indemnity. Under Section 2 (m) of DOLE Department Order No. 10, Series of
1998, 30 the Notice of Inspection Result "shall specify the violations
discovered, if any, together with the officer's recommendation and
computation of the unpaid benefits due each worker with an advice that the
employer shall be liable for double indemnity in case of refusal or failure to
correct the violation within five calendar days from receipt of notice". A

Garcy Kate D. Go LLB2 EH306 Page 118


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.

Garcy Kate D. Go LLB2 EH306 Page 119


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

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

Facts: On the basis of a complaint filed by respondents Reynaldo Abay and


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

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

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

According to petitioner, this July 25, 2002 Order was tantamount to a


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

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

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

Director Manalos initial endorsement of the case to the NLRC, on the


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

Garcy Kate D. Go LLB2 EH306 Page 120


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.

Garcy Kate D. Go LLB2 EH306 Page 121


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

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

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

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

The DOLE, in determining the existence of an employer-employee


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

The determination of the existence of an employer-employee relationship by


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

If the DOLE makes a finding that there is an existing employer-employee


relationship, it takes cognizance of the matter, to the exclusion of the
NLRC. The DOLE would have no jurisdiction only if the employer-employee

Garcy Kate D. Go LLB2 EH306 Page 122


relationship has already been terminated, or it appears, upon review, that no
employer-employee relationship existed in the first place.

It must also be remembered that the power of the DOLE to determine the
existence of an employer-employee relationship need not necessarily result
in an affirmative finding. The DOLE may well make the determination that no
employer-employee relationship exists, thus divesting itself of jurisdiction
over the case. It must not be precluded from being able to reach its own
conclusions, not by the parties, and certainly not by this Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is
fully empowered to make a determination as to the existence of an
employer-employee relationship in the exercise of its visitorial and
enforcement power, subject to judicial review, not review by the NLRC.

To recapitulate, if a complaint is brought before the DOLE to give effect to


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

Garcy Kate D. Go LLB2 EH306 Page 123


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

Facts: The petitioner engaged the services of Lancer to provide reliever


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

Thereafter, respondents filed complaint against the petitioner and President,


Cesar Luz (Luz), for underpayment of wages, non-payment of premium pay
for worked rest, overtime pay and non-payment of salary. Upon receipt
Department of Labor and Employment (DOLE) conducted an inspection of
the petitioners premises and found several violations, to wit:

(1)Non-presentation of payrolls and daily time records;

(2)Non-submission of annual report of safety organization;

(3)Medical and accident/illness reports;

(4)Non-registration of establishment under Rule 1020 of Occupational


and Health Standards; and

(5)No trained first aide.

Due to the petitioners failure to appear in the summary investigations


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

Petitioner filed a motion for reconsideration on the ground that respondents


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

Garcy Kate D. Go LLB2 EH306 Page 124


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

On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with
the modification in that Luz was absolved of any personal liability under the
award.

Hence, this petition for review under Rule 45 of the Rules of Court.

Issue: Whether or not DOLE has authority to determine the existence of an


employer-employee relationship? Whether Superior Packaging Corporation
may be held solidarily liable with Lancer Staffing & Services Network, Inc.
(Lancer) for respondents unpaid money claims?

Ruling: The petition is bereft of merit.

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

With regard to the contention that there is no evidence to support the finding
that the respondents rendered overtime work and that they worked on their
rest day, the resolution of this argument requires a review of the factual
findings and the evidence presented, Court said that it is not a trier of facts
and it applies with greater force in labor cases. Hence, where the factual
findings of the labor tribunals or agencies conform to, and are affirmed by,
the CA, the same are accorded respect and finality, and are binding to
Supreme Court.

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

Garcy Kate D. Go LLB2 EH306 Page 125


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

Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply


workers to an employer shall be deemed to be engaged in labor-only
contracting where such person:

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

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

Labor-only contracting is prohibited and the person acting as contractor shall


be considered merely as an agent or intermediary of the employer who shall
be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.

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

Finally, a finding that a contractor is a "labor-only" contractor is equivalent to


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

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

Garcy Kate D. Go LLB2 EH306 Page 126


WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING
WAGES

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

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


Grande Hotel. A Notice of Garnishment upon El Grande Hotel, where
petitioner was then employed, garnishing her "salary, commission and/or
remuneration." Petitioner then filed with the Court of First Instance of Manila
a motion to lift said garnishment on the ground that her "salaries,
commission and, or remuneration are exempted from execution under Article
1708 of the New Civil Code.

Issue: Whether or not the renumeration of Gaa are exempted from


execution or attachment pursuant to Art. 1708 of the Civil Code.

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

Garcy Kate D. Go LLB2 EH306 Page 127


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

Garcy Kate D. Go LLB2 EH306 Page 128


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

Facts: Private respondents Domingo Maldigan and Gilberto Sabsalon were


hired by the petitioners as taxi drivers. Aside from the daily "boundary", they
were also required to pay P20.00 for car washing, and to further make a
P15.00 deposit to answer for any deficiency in their "boundary," for every
actual working day.

Issue: Whether or not the car wash payment is an illegal deduction as


contemplated in the Labor Code.

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

Garcy Kate D. Go LLB2 EH306 Page 129


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

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

Issue: Whether or not Molina is entitled to the increase of his salary


pursuant to Wage Orders No. 1 and 2.

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

Garcy Kate D. Go LLB2 EH306 Page 130


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

Facts: Petitioner is a domestic corporation engaged in the business of


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

Issue: Whether or not the award of a signing bonus by the Secretary of


Labor is correct.

Ruling: SC held that the signing bonus must not be awarded.


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

Garcy Kate D. Go LLB2 EH306 Page 131


Agabon vs NLRC (2004) G.R. 158693

Facts: Private respondent Riviera Home Improvements, Inc. is engaged in


the business of selling and installing ornamental and construction materials.
It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board
and cornice installers on January 2, 1992 until February 23, 1999 when they
were dismissed for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money
claimsand on December 28, 1999, the Labor Arbiter rendered a decision
declaring the dismissals illegal and ordered private respondent to pay the
monetary claims.

Issue: WON respondents dismissal is illegal and if not, entitles them


benefits.

Ruling: The dismissal is legal and entitles them of payment of benefits.


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

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

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

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

Garcy Kate D. Go LLB2 EH306 Page 132


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 13th month pay to employees not already receiving the same
so as to further protect the level of real wages from the ravages of world-
wide inflation. Clearly, as additional income, the 13 th month pay is included
in the definition of wage under Article 97(f) of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 133


American Wire & Cable Daily Rated Employees vs American Wire
(2005) G.R. 155059

Facts: American Wire and Cable Co., Inc., is a corporation engaged in the
manufacture of wires and cables. There are two unions in this company, the
American Wire and Cable Monthly-Rated Employees Union and the American
Wire and Cable Daily-Rated Employees Union.

On 16 February 2001, an original action was filed before the NCMB of the
Department of Labor and Employment by the two unions for voluntary
arbitration. They alleged that the private respondent, without valid cause,
suddenly and unilaterally withdrew and denied certain benefits and
entitlements which they have long enjoyed. These are Service Award, 35%
premium pay of an employees basic pay for the work rendered during Holy
Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29,
Christmas Party and Promotional Increase.

Issue: WON the respondent company violated Article 100 of the Labor Code.

Ruling: The company is not guilty of violating Art. 100 of the Labor Code.

Article 100 of the Labor Code provides:


PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS.
Nothing in this Book shall be construed to eliminate or in any way
diminish supplements, or other employee benefits being enjoyed at
the time of promulgation of this Code.

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

The assailed benefits were never subjects of any agreement between the
union and the company. It was never incorporated in the CBA. Since all these
benefits are in the form of bonuses, it is neither enforceable nor demandable.

Garcy Kate D. Go LLB2 EH306 Page 134


Honda Philippines Vs. Samahan Ng Malayang Manggagawa Sa
Honda

Facts: Petitioner Honda and Respondent union forged a Collective


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

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

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

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

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

Ruling: Such pro-rated computation is invalid.

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

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

Lastly, to allow pro-ration of the 13 th month pay is to undermine the wisdom


behind the law and the mandate that the workingmans welfare should be
the primordial and paramount consideration. DENIED.

Garcy Kate D. Go LLB2 EH306 Page 135


Producers Bank vs NLRC () 335 SCRA 506

Facts: Petitioner was placed by Central Bank of the Philippines (Bangko


Sentral ng Pilipinas) under a conservator for the purpose of protecting its
assets. When the respondents ought to implement the CBA (Sec. 1, Art. 11)
regarding the retirement plan and pertaining to uniform allowance, the
acting conservator of the petition expressed objection resulting an impasse
between the petitioner bank and respondent union. The deadlock continued
for at least six months. The private respondent, to resolve the issue filed a
case against petitioner for unfair labor practice and flagrant violation of the
CBA.

The Labor Arbiter dismissed the petition. NLRC reversed the findings and
ordered the implementation of the CBA.

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

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

Retirement results from a voluntary agreement between the employer and


the employee whereby the latter after reaching a certain age agrees to sever
his employment with the former. The very essence of retirement is the
termination of employer-employee relationship.

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

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

Garcy Kate D. Go LLB2 EH306 Page 136


Jardin vs. NLRC

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

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

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

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

Issues: a.) Whether NLRC has jurisdiction to entertain Philjamas second


motion for reconsideration which is admittedly a pleading prohibited
under NLRC rules.
b.) Whether there exists an employer-employee relationship.

Ruling: NLRC committed grave abuse of discretion for entertaining


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

There exists an employer-employee relationship between Jardin et. al and


Philjama International, Inc.

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

Garcy Kate D. Go LLB2 EH306 Page 137


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

We have applied by analogy the abovestated doctrine to the relationships


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

The deduction of Php 30.00 that is supposedly for the washing of taxi units is
not illegal in the context of the law. After a tour of duty, it is incumbent upon
the driver to restore the unit he has driven to the same clean condition when
he took it. Car washing after tour of duty is indeed a practice in the taxi
industry and is in fact dictated by fair play. --- Hence, Jardin et.al (drivers) are
not entitled to reimbursement of washing charges.

Garcy Kate D. Go LLB2 EH306 Page 138


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

Facts: Manila Jockey Club, Inc., a corporation with a legislative franchise to


conduct, operate and maintain horse races, entered into a Collective
Bargaining Agreement (CBA) with Manila Jockey Club Employees Labor
Union-PTGWO. Under Section 1 Article IV of their CBA, the parties agreed to a
7-hour work schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to
5:00 p.m. on a work week of Monday to Saturday. All work performed in
excess of seven (7) hours work schedule and on days not included within the
work week shall be considered overtime and paid as such with exception to
those monthly compensation which includes work performed during
Saturday, Sunday, and Holiday when races are held at the Club. The CBA
likewise reserved in management prerogatives including the determination
of the work schedule. An inter-office memorandum was later issued declaring
that the hours of work of regular monthly-paid employees shall be from 1:00
p.m. to 8:00 p.m. when horse races are held, that is, every Tuesday and
Thursday. The memorandum, however, sustained the 9:00 a.m. to 5:00 p.m.
schedule for non-race days.

Before the voluntary arbitrators of the National Conciliation and Mediation


Board, petitioners questioned the memorandum as violative of the
prohibition against non-diminution of wages and benefits guaranteed the
CBA which specified the work schedule of respondent's employees to be from
9:00 a.m. to 5:00 p.m. They claimed that as a result of the memorandum,
the employees are precluded from rendering their usual overtime work from
5:00 p.m. to 9:00 p.m.

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

Ruling: No. It was evident that the change in work schedule was justified, it
being a management prerogative. Respondent, as employer, cited the
change in the program of horse races as reason for the adjustment of the
employees work schedule. It rationalized that when the CBA was signed, the
horse races started at 10:00 a.m. When the races were moved to 2:00 p.m.,
there was no other choice for management but to change the employees'
work schedule as there was no work to be done in the morning. It is true that
Section 1, Article IV of the CBA provides for a 7-hour work schedule from
9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to
Saturdays. However, Section 2, Article XI expressly reserves on respondent
the prerogative to change existing methods or facilities to change the
schedules of work.

Moreover, Manila Jockey Club was not obliged to allow all its employees to
render overtime work every day for the whole year, but only those
employees whose services were needed after their regular working hours
and only upon the instructions of management. The overtime pay was not
given to each employee consistently, deliberately and unconditionally, but as
a compensation for additional services rendered. Thus, overtime pay does
not fall within the definition of benefits under Article 100 of the Labor Code
on prohibition against elimination or diminution of benefits.

Garcy Kate D. Go LLB2 EH306 Page 139


San Miguel Corp., vs Layoc Jr. Et al., (2007) G.R. 149640

Facts: Respondents were among the "Supervisory Security Guards" of the


Beer Division of San Miguel Corporation. They started working as guards with
the petitioner San Miguel Corporation assigned to the Beer Division on
different dates until such time that they were promoted as supervising
security guards. From the commencement of their employment, the private
respondents were required to punch their time cards for purposes of
determining the time they would come in and out of the company's work
place. Corollary, the private respondents were availing the benefits for
overtime, holiday and night premium duty through time card punching.
However, in the early 1990's, the San Miguel Corporation embarked on a
Decentralization Program aimed at enabling the separate divisions of the San
Miguel Corporation to pursue a more efficient and effective management of
their respective operations.

As a result of the Decentralization Program, the Beer Division of the San


Miguel Corporation implemented on January 1, 1993 a "no time card policy"
whereby the Supervisory I and II composing of the supervising security
guards of the Beer Division were no longer required to punch their time
cards. Consequently, on January 16, 1993, without prior consultation with the
private respondents, the time cards were ordered confiscated and the latter
were no longer allowed to render overtime work. However, in lieu of the
overtime pay and the premium pay, the personnel of the Beer Division of the
petitioner San Miguel Corporation affected by the "No Time Card Policy" were
given a 10% across-the-board increase on their basic pay while the
supervisors who were assigned in the night shift (6:00 p.m. to 6:00 a.m.)
were given night shift allowance ranging from P2,000.00 to P2,500.00 a
month. Hence, this complaint filed for unfair labor practice, violation of
Article 100 of the Labor Code of the Philippines, and violation of the equal
protection clause and due process of law in relation to paragraphs 6 and 8 of
Article 32 of the New Civil Code of the Philippines.

Issue: Whether or not the circumstances in the present case constitute an


exception to the rule that supervisory employees are not entitled to overtime
pay.

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

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

Aside from their allegations, respondents were not able to present anything
to prove that petitioners were obliged to permit respondents to render
overtime work and give them the corresponding overtime pay. Even if
petitioners did not institute a "no time card policy," respondents could not
demand overtime pay from petitioners if respondents did not render

Garcy Kate D. Go LLB2 EH306 Page 140


overtime work. The requirement of rendering additional service differentiates
overtime pay from benefits such as thirteenth month pay or yearly merit
increase. These benefits do not require any additional service from their
beneficiaries. Thus, overtime pay does not fall within the definition of
benefits under Article 100 of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 141


San Miguel Corp vs Pontillas (2008) G.R. 155178

Facts: On 24 October 1980, San Miguel Corporation (petitioner) employed


Angel C. Pontillas (respondent) as a daily wage company guard. In 1984,
respondent became a monthly-paid employee which entitled him to yearly
increases in salary. On 19 October 1993, respondent filed an action for
recovery of damages due to discrimination under Article 100 of the Labor
Code of the Philippines (Labor Code), as amended, as well as for recovery of
salary differential and backwages, against petitioner. Respondent questioned
the rate of salary increase given him by petitioner.

On 6 December 1993, Ricardo F. Elizagaque (Elizagaque), petitioners Vice


President and VisMin Operations Center Manager, issued a Memorandum
ordering, among others, the transfer of responsibility of the Oro Verde
Warehouse to the newly-organized VisMin Logistics Operations effective 1
January 1994. Respondent continued to report at Oro Verde Warehouse. He
alleged that he was not properly notified of the transfer and that he did not
receive any written order from Capt. Fortich, his immediate superior.

In a letter dated 28 February 1994, petitioner informed respondent that an


administrative investigation.In a letter dated 7 April 1994, petitioner
informed respondent of its decision to terminate him for violating company
rules and regulations, particularly for Insubordination or Willful Disobedience
in Carrying Out Reasonable Instructions of his superior.

Issue: WON respondents dismissal from employment is legal.

Ruling: Respondent was dismissed for a just cause.

An employer may terminate an employment for serious misconduct or willful


disobedience by the employee of the lawful orders of his employer or
representative in connection with his work. Willful disobedience requires the
concurrence of two elements: (1) the employees assailed conduct must
have been willful, that is, characterized by a wrongful and perverse attitude;
and (2) the order violated must have been reasonable, lawful, made known
to the employee, and must pertain to the duties which he had been engaged
to discharge. The records show that respondent was not singled out for the
transfer. Respondents transfer was the effect of the integration of the
functions of the Mandaue Brewery Materials Management and the Physical
Distribution group into a unified logistics organization, the VisMin Logistics
Operations.

Moreover, the employer exercises the prerogative to transfer an employee


for valid reasons and according to the requirements of its business, provided
the transfer does not result in demotion in rank or diminution of the
employees salary, benefits, and other privileges. In this case, we found that
the order of transfer was reasonable and lawful considering the integration of
Oro Verde Warehouse with VisMin Logistics Operations. Respondent was
properly informed of the transfer but he refused to receive the notices on the
pretext that he was wary because of his pending case against petitioner.
Respondent failed to prove that petitioner was acting in bad faith in effecting
the transfer. There was no demotion involved, or even a diminution of his
salary, benefits, and other privileges. Respondents persistent refusal to
obey petitioners lawful order amounts to wilful disobedience under Article
282 of the Labor Code.

Garcy Kate D. Go LLB2 EH306 Page 142


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

Facts: Petitioner is a company engaged in the manufacture of metal


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

The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and


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

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

Ruling: On the first issue, according to petitioner, there is a one-year cutoff


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

On the second issue, it is a settled rule that any benefit and supplement
being enjoyed by employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is
founded on the Constitutional mandate to "protect the rights of workers and
promote their welfare," and "to afford labor full protection." Said mandate in

Garcy Kate D. Go LLB2 EH306 Page 143


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."

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted
a policy of freely, voluntarily and consistently granting full benefits to its
employees regardless of the length of service rendered.

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

True, there were only a total of seven employees who benefited from such a
practice, but it was an established practice nonetheless. Jurisprudence has
not laid down any rule specifying a minimum number of years within which a
company practice must be exercised in order to constitute voluntary
company practice. Petitioner cannot shirk away from its responsibility by
merely claiming that it was a mistake or an error, supported only by an
affidavit of its manufacturing group.
Petition denied.

Garcy Kate D. Go LLB2 EH306 Page 144


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

Facts: Petitioner GualbertoAguanza was employed with respondent


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

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

Issue: Was Aguanza constructively dismissed?

Ruling: No. The transfer of operations is a valid exercise of management


prerogative. Aguanza asserts that his transfer constituted constructive
dismissal, while ATI asserts that Aguanzas transfer was a valid exercise of
management prerogative.

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

When ATI transferred Bismark IVs operations to Bataan, ATI offered Aguanza
similar terms: basic pay for 40 hours of work from Monday to Friday,
overtime pay for work done in excess of eight hours per day, overtime pay
for work done on Saturdays and Sundays, no additional allowance and no
transportation for working in Bataan. The circumstances of the case made
no mention of the salary structure in case Bismark IV being assigned work

Garcy Kate D. Go LLB2 EH306 Page 145


outside of Bataan; however, we surmise that it would not be any different
from the salary structure applied for work done out-of-port. We, thus, agree
with the NLRC and the appellate court when they stated that the fixed
overtime of 16 hours, out-of-port allowance and meal allowance previously
granted to Aguanza were merely supplements or employment benefits given
on condition that Aguanzas assignment was out-of-port. The fixed overtime
and allowances were not part of Aguanzas basic salary. Aguanzas basic
salary was not reduced; hence, there was no violation of the rule against
diminution of pay.
Genesis Transport Service Inc et al., vs. Unyon ng Malayang
Manggagawa ng Genesis Transport et al., GR No. 182114, April 5,
2010

Facts: Respondent Juan Taroy was hired by petitioner Genesis Transport as


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

Upon appeal, with respect to Taroys claim for refund, the Labor Arbiter ruled
in his favor for if, as contended by Genesis Transport, tollgate fees form part
of overhead expense, why were not expenses for fuel and maintenance also
charged to overhead expense. The Labor Arbiter thus concluded that it
would appear that the tollgate fees are deducted from the gross revenues
and not from the salaries of drivers and conductors, but certainly the
deduction thereof diminishes the take home pay of the employees.

Issue: Whether the tollgate fee deductions which resulted to an


underpayment given to Taroy is illegal?

Ruling: The deduction is considered illegal.

The amounts representing tollgate fees were deducted from gross revenues
and not directly from Taroys commissions, the labor tribunal and the
appellate court correctly held that the withholding of those amounts reduced
the amount from which Taroys 9% commission would be computed. Such a
computation not only marks a change in the method of payment of wages,
resulting in a diminution of Taroys wages in violation of Article 113 vis--vis
Article 100 of the Labor Code, as amended. It need not be underlined that
without Taroys written consent or authorization, the deduction is considered
illegal.

Besides, the invocation of the rule on company practice is generally used


with respect to the grant of additional benefits to employees, not on issues
involving diminution of benefits.

Garcy Kate D. Go LLB2 EH306 Page 146


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

Facts: Petitioner is a domestic corporation engaged in the business of sugar


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

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

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

Ruling: The 13th-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 13th-month pay is
computed pro rata.

On November 16, 1987, the Revised Guidelines on the Implementation of the


13th-Month Pay Law was issued. Significantly, under this Revised Guidelines,
it was specifically stated that the minimum 13th-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 13th-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

Garcy Kate D. Go LLB2 EH306 Page 147


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 13th-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.

Garcy Kate D. Go LLB2 EH306 Page 148


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

Facts: Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up


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

During respondents employment, Hartmannshenn was often abroad and,


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

On November 18, 2005, Hartmannshenn arrived in the Philippines from


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

Respondent served on SHS a demand letter and a resignation letter. It is


precisely because of illegal and unfair labor practices such as these that I
offer my resignation with neither regret nor remorse.

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

Issues: Whether or not the temporary withholding of respondents


salary/wages by petitioners was a valid exercise of management prerogative.

Ruling: Withholding respondents salary was not a valid exercise of


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

Any withholding of an employees wages by an employer may only be


allowed in the form of wage deductions under the circumstances provided in
Article 113 of the Labor Code, as set forth below:
ART. 113. Wage Deduction. No employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his
employees, except:

Garcy Kate D. Go LLB2 EH306 Page 149


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

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

Garcy Kate D. Go LLB2 EH306 Page 150


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

Facts: Respondents were employed as goldsmiths by the petitioner Nia


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

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

The respondents claimed otherwise insisting that petitioner left the


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

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

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

ART. 113. Wage Deduction No employer, in his own behalf or in


behalf of any person, shall make any deduction from the wages of his
employees, except:
a) (a)In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for
the amount paid by him as premium on the insurance;
b) (b)For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and
c) (c)In cases where the employer is authorized by law or
regulations issued by the Secretary of Labor.
Article 114.Deposits for loss or damage No employer shall require
his worker to make deposits from which deductions shall be made for

Garcy Kate D. Go LLB2 EH306 Page 151


the reimbursement of loss of or damage to tools, materials, or
equipment supplied by the employer, except when the employer is
engaged in such trades, occupations or business where the practice of
making deposits is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate rules and
regulations.

The petitioners should first establish that the making of deductions from the
salaries is authorized by law, or regulations issued by the Secretary of Labor.
The petitioners failed to prove that their imposition of the new policy upon
the goldsmiths under Nia Jewelry's employ falls under the exceptions
specified in Articles 113 and 114 of the Labor Code.

2) There is NO constructive dismissal. Constructive dismissal occurs when


there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely; when there is a demotion in rank or
diminution in pay or both; or when a clear discrimination, insensibility, or
disdain by an employer becomes unbearable to the employee.

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

Garcy Kate D. Go LLB2 EH306 Page 152


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

Facts: Petitioner Antonio Locsin II was the Regional Sales Manager of


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

On February 2006, Locsin resigned. A total of 112,500.00 had already been


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

On May 3, 2007, petitioner filed against Mekeni and/or its President,


Prudencio S. Garcia, a Complaint for the recovery of monetary claims
consisting of unpaid salaries, commissions, sick/vacation leave benefits, and
recovery of monthly salary deductions which were earmarked for his cost-
sharing in the car plan.

Issue: Whether or not petitioner is entitled to a refund of all the amounts


applied to the cost of the service vehicle under the car plan.

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

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

Garcy Kate D. Go LLB2 EH306 Page 153


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.

Garcy Kate D. Go LLB2 EH306 Page 154


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

Facts: On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen


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

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

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

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

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

When the respondents, visited the site in Cabangan, discovered that it was a
"talahiban" or grassland. The said union officers and members were made to
work as grass cutters in Cabangan, under the supervision of a certain
Barangay Captain Greg Pangan. Due to these circumstances, the employees

Garcy Kate D. Go LLB2 EH306 Page 155


assigned in Cabangan did not report for work. The other employees who
likewise failed to report in Cabangan were meted out with suspension.

PETITIONERS DEFENSE:
In its defense, Petitioners also stress that they cannot be held liable for ULP
for the reason that there is no employer-employee relationship between the
former and respondents. Further, Gin Queen avers that its decision to
implement an enforced rotation of work assignments for respondents was a
management prerogative permitted by law, justified due to the decrease in
orders from its customers, they had to resort to cost cutting measures to
avoid anticipated financial losses. Thus, it assigned work on a rotational
basis. It explains that its failure to present concrete proof of its decreasing
orders was due to the impossibility of proving a negative assertion. It also
asserts that the transfer from Castillejos to Cabangan was made in good faith
and solely because of the expiration of its lease contract in Castillejos. It was
of the impression that the employees, who opposed its economic measures,
were merely motivated by spite in filing the complaint for ULP against it.

Issues: Whether ULP acts were committed by petitioners against


respondents.

Ruling: ULP were committed by petitioners against respondents.

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

The questioned acts of petitioners, namely: 1) sponsoring a field trip to


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

The Court is of the considered view those petitioners undisputed actions


prior and immediately before the scheduled certification election, while
seemingly innocuous, unduly meddled in the affairs of its employees in
selecting their exclusive bargaining representative.

Garcy Kate D. Go LLB2 EH306 Page 156


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

Garcy Kate D. Go LLB2 EH306 Page 157


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.

Garcy Kate D. Go LLB2 EH306 Page 158


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

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

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

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

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

SECTION 14. Deduction for loss or damage. Where the employer is


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

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

Garcy Kate D. Go LLB2 EH306 Page 159


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

[T]he petitioners should first establish that the making of deductions


from the salaries is authorized by law, or regulations issued by the
Secretary of Labor. Further, the posting of cash bonds should be proven
as a recognized practice in the jewelry manufacturing business, or
alternatively, the petitioners should seek for the determination by the
Secretary of Labor through the issuance of appropriate rules and
regulations that the policy the former seeks to implement is necessary
or desirable in the conduct of business. The petitioners failed in this
respect. It bears stressing that without proofs that requiring deposits
and effecting deductions are recognized practices, or without securing
the Secretary of Labor's determination of the necessity or desirability
of the same, the imposition of new policies relative to deductions and
deposits can be made subject to abuse by the employers. This is not
what the law intends.

Garcy Kate D. Go LLB2 EH306 Page 160


PAYMENT OF WAGES

Congson vs. NLRC


G.R. No. 114250; April 5, 1995

Facts: Dominico C. Congson is the registered owner of Southern Fishing


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

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

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

Issue: Whether or not the form of payment by Congson is valid pursuant to


Article 102 of the Labor Code.

Ruling: Petitioner's practice of paying the private respondents the minimum


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

Garcy Kate D. Go LLB2 EH306 Page 161


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

Facts: Due to financial losses, North Davao Mining Corporation laid off
workers. Respondent Wilfredo Guillema is one among several employees of
North Davao who were separated by reason of the companys closure on May
31, 1992. It appears that, during the life of the petitioner corporation, from
the beginning of its operations in 1981 until its closure in 1992, it had been
giving separation pay equivalent to thirty (30) days pay for every year of
service. Moreover, inasmuch as the region where North Davao operated was
plagued by insurgency and other peace and order problems, the employees
had to collect their salaries at a bank in Tagum, Davao del Norte, some 58
kilometers from their workplace and about 2 hours travel time by public
transportation; this arrangement lasted from 1981 up to 1990.

Issue: Whether or not time spent in collecting wages in a place other than
the place of employment is compensable notwithstanding that the same is
done during official time.

Ruling: SC, affirming the decision of the Labor Arbiter, finds that the hours
spent by complainants in collecting salaries at a bank in Tagum, Davao del
Norte shall be considered compensable hours worked. Considering further
the distance between Amacan, Maco to Tagum which is 2 hours by travel
and the risks in commuting all the time in collecting complainants salaries,
would justify the granting of backwages equivalent to two (2) days in a
month as prayed for. Corollary, we likewise hold respondents liable for the
transportation expenses incurred by complainants at P40.00 round trip fare
during pay days.

Garcy Kate D. Go LLB2 EH306 Page 162


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

Facts: American Rubber Company, Inc. (ARCI) entered into a Farm


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

Issue: Whether or not the petitioners are entitled to separation pay


equivalent to one month pay for every year of employment with private
respondents.

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

Garcy Kate D. Go LLB2 EH306 Page 163


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

Facts: The Heir of Sara Lee is engaged in the direct selling of a variety of
product lines for men and women, including cosmetics, intimate apparels,
perfumes, ready to wear clothes and other novelty items, through its various
outlets nationwide. In the pursuit of its business, the petitioner engages and
contracts with dealers to sell the aforementioned merchandise. These
dealers, known either as Independent Business Managers (IBMs) or
Independent Group Supervisors (IGSs), depending on whether they sell
individually or through their own group, would obtain at discounted rates the
merchandise from the petitioner on credit or then sell the same products to
their own customers at fixed prices also determined by the petitioner.

In turn, the dealers are paid Services Fees, or sales commissions, the
amount of which depends on the volume and value of their sales. Under
existing company policy, the dealers must remit to the petitioner the
proceeds of their sales within a designated credit period, which would either
be 38 days for IGSs or 52 days for IBMs, counted from the day the said
dealers acquired the merchandise from the petitioner. To discourage late
remittances, the petitioner imposes a Credit Administration Charge, or
simply, a penalty charge, on the value of the unremitted payment.

The dealers under this system earn income through a profit margin between
the discounted purchase price they pay on credit to the petitioner and the
fixed selling price their customers will have to pay. On top of this margin, the
dealer is given the Service Fee, a sales commission, based on the volume of
sales generated by him or her. Due to the sheer volume of sales generated
by all of its outlets, the petitioner has found the need to strictly monitor the
38- or 52-day rolling due date of each of its IBMs and IGSs through the
employment of Credit Administration Supervisors (CAS) for each branch.
The primary duty of the CAS is to strictly monitor each of these deadlines, to
supervise the credit and collection of payments and outstanding accounts
due to the petitioner from its independent dealers and various customers,
and to screen prospective IBMs. To discharge these responsibilities, the CAS
is provided with a computer equipped with control systems through which
data is readily generated. Under this organizational setup, the CAS is under
the direct and immediate supervision of the Branch Operations Manager
(BOM).

Cynthia Rey at the time of her dismissal from employment, held the position
of Credit Administration Supervisor or CAS at the Cagayan de Oro City
branch of the petitioner. She was first employed by the petitioner as an
Accounts Receivable Clerk at its Caloocan City branch. In November 1993,
respondent was transferred to the Cagayan de Oro City branch retaining the
same position. In January 1994, respondent was elevated to the position of
CAS. At that time, the Branch Operations Manager or BOM of the Cagayan
de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995,
respondent was temporarily assigned to the Butuan City branch.

Sometime in June 1995, while respondent was still working in Butuan City,
she allegedly instructed the Accounts Receivable Clerk of the Cagayan de
Oro outlet to change the credit term of one of the IBMs of the petitioner who
happens to be respondents sister-in-law, from the 52-day limit to an
unauthorized term of 60 days. The respondent made the instruction just
before the computer data for the computation of the Service Fee accruing to
Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this

Garcy Kate D. Go LLB2 EH306 Page 164


allegedly unauthorized act of respondent to her Branch Operations Manager,
Mr. Villagracia. Acting on the report, as the petitioner alleges, BOM
Villagracia discreetly verified the records and discovered that it was not only
the 52-day credit term of IBM Rey-Petilla that had been extended by the
respondent, but there were several other IBMs whose credit terms had been
similarly extended beyond the periods allowed by company policy. BOM
Villagracia then summoned the respondent and required her to explain the
unauthorized credit extensions.
Issue: WON the respondent is entitled to 13th month pay.

Ruling: The award of 13th month pay must be deleted. Respondent is not a
rank-and-file employee and is, therefore, not entitled to thirteenth-month
pay. However, the NLRC and the CA are correct in refusing to award 14th and
15th month pay as well as the monthly salary increase of 10 percent per
year for two years based on her latest salary rate. The respondent must
show that these benefits are due to her as a matter of right. Mere allegations
by the respondent do not suffice in the absence of proof supporting the
same. With respect to salary increases in particular, the respondent must
likewise show that she has a vested right to the same, such that her salary
increases can be made a component in the computation of back wages.
What is evident is that salary increases are a mere expectancy. They are by
nature volatile and dependent on numerous variables, including the
companys fiscal situation, the employees future performance on the job, or
the employees continued stay in a position. In short, absent any proof,
there is no vested right to salary increases.

Garcy Kate D. Go LLB2 EH306 Page 165


CONDITIONS OF EMPLOYMENT

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

Facts: Petitioners, the rank-and-file employee-union officers and members of


San Juan De Dios Hospital Employees Association, sent a letter requesting for
the expeditious implementation and payment by respondent, San Juan De
Dios Hospital, of the '40-hours/5-day workweek' with compensable weekly
two (2) days off provided for by Policy Instruction No. 54 issued by the
Secretary of Labor. Said policy instruction purports to implement R.A. No.
5901, otherwise known as An Act Prescribing Forty Hours A Week of Labor
For Government and Private Hospitals Or Clinic Personnel. Respondent
hospital failed to give a favorable response; thus, petitioners filed a
complaint regarding their claims for statutory benefits under the above-cited
law and policy issuance. However, the Labor Arbiter and, subsequently, NLRC
dismissed the complaint. Hence, this petition ascribing grave abuse of
discretion on the part of NLRC in concluding that Policy Instructions No. 54
proceeds from a wrong interpretation of R.A. 5901 and Article 83 of the Labor
Code.

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

Ruling: Policy Instruction No. 54 is void, it being inconsistent with and


repugnant to the provision of Article 83 of the Labor Code, as well as to R.A.
No. 5901.

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

Article 83 merely provides: (1) the regular office hour of eight hours a day,
five days per week for health personnel, and (2) where the exigencies of
service require that health personnel work for six days or forty-eight hours
then such health personnel shall be entitled to an additional compensation of
at least thirty percent of their regular wage for work on the sixth day. There
is nothing in the law that supports then Secretary of Labor and petitioners
assertion. The Secretary of Labor exceeded his authority by including a two
days off with pay in contravention of the clear mandate of the statute.
Administrative interpretation of the law is at best merely advisory, and the
Court will not hesitate to strike down an administrative interpretation that
deviates from the provision of the statute.

Garcy Kate D. Go LLB2 EH306 Page 166


Simedarby vs. NLRC, 289 SCRA 86 [1998]

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

Private respondents then filed a complaint for unfair labor practice,


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

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

Issue: Whether or not the memorandum dated Aug 14 1992 discontinuing


the 30-minute paid on call lunch break constituted unfair labor practice and
diminution of benefits

Ruling: The Supreme Court sustained petitioner, holding that it is clearly a


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

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

Garcy Kate D. Go LLB2 EH306 Page 167


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

Facts: Private respondent (Dr. Herminio A. Fabros) was employed as flight


surgeon at petitioner company (PAL). He was assigned at (PAL Medical Clinic
at Nichols) and was on duty from 4:00 in the afternoon until 12:00 midnight.

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

Upon learning about the incident, PAL Medical Director Dr. Godofredo B.
Banzon ordered the Chief Flight Surgeon to conduct an investigation. The
Chief Flight Surgeon, in turn, required private respondent to explain why no
disciplinary sanction should be taken against him.

In his explanation, private respondent asserted that he was entitled to a


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

Finding private respondents explanation unacceptable, the management


charged private respondent with abandonment of post while on duty.

Petitioner argues that being a full-time employee, private respondent is


obliged to stay in the company premises for not less than eight (8) hours.
Hence, he may not leave the company premises during such time, even to
take his meals.

Issue: WON being a full-time employee, private respondent is obliged to


stay in the company premises for not less than eight (8) hours.

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

Articles 83 and 85 of the Labor Code read:


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

Garcy Kate D. Go LLB2 EH306 Page 168


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.

Garcy Kate D. Go LLB2 EH306 Page 169


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

Facts: On 17 December 1997, Linton issued a memorandum addressed to


its employees informing them of the company's decision to suspend its
operations from December 18, 1997 to January 5, 1998 due to the currency
crisis that affected its business operations. Linton submitted an
establishment termination report to the Department of Labor and
Employment (DOLE) regarding the temporary closure of the establishment
covering the said period. The company's operation was to resume on
January 6, 1998. On January 7, 1997, Linton issued another memorandum
informing them that effective January 12, 1998, it would implement a new
compressed workweek of three (3) days on a rotation basis. In other words,
each worker would be working on a rotation basis for three working days only
instead for six days a week. On the same day, Linton submitted an
establishment termination report concerning the rotation of its workers.
Linton proceeded with the implementation of the new policy without waiting
for its approval by DOLE. Aggrieved, sixty-eight (68) workers (workers) filed a
Complaint for illegal reduction of workdays.

Issue: WON there was an illegal reduction of work when Linton implemented
a compressed workweek by reducing from six to three the number of working
days with the employees working on a rotation basis.

Ruling: The compressed workweek arrangement was unjustified and illegal.

The Bureau of Working Conditions of the DOLE, moreover, released a bulletin


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

Certainly, management has the prerogative to come up with measures to


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

Records show that Linton continued its business operations during the
effectivity of the compressed workweek, which spanned more than the
maximum period. On the other hand, for retrenchment to be justified, any
claim of actual or potential business losses must satisfy the following

Garcy Kate D. Go LLB2 EH306 Page 170


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 Pharma Corporation (Tryco) is a manufacturer of veterinary


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

Tryco and the petitioners signed a Memorandum of Agreement (MOA),


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

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

Accordingly, Tryco issued a Memorandum dated April 7, 1997 which directed


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

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

In August 1997, petitioners filed their separate complaints for illegal


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

Issue: Whether or not the company committed Unfair Labor Practices

Garcy Kate D. Go LLB2 EH306 Page 171


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

Also, Trycos decision to transfer its production activities to San Rafael,


Bulacan, regardless of whether it was made pursuant to the letter of the
Bureau of Animal Industry, was within the scope of its inherent right to
control and manage its enterprise effectively.

When the transfer is not unreasonable, or inconvenient, or prejudicial to the


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

Finally, MOA is enforceable and binding against the petitioners. Where it is


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

Considering that the MOA clearly states that the employee waives the
payment of overtime pay in exchange of a five-day workweek, there is no
room for interpretation and its terms should be implemented as they are
written.

Garcy Kate D. Go LLB2 EH306 Page 172


MINIMUM LABOR STANDARD BENEFITS

Union Filipro Employees vs Vivar (1992) 205 SCRA 203

Facts: Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the
National Labor Relations Commission a petition for declaratory relief seeking
a ruling on its rights and obligations respecting claims of its monthly paid
employees for holiday pay.

Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the
case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as
voluntary arbitrator. Arbitrator Vivar rendered a decision directing Filipro to
pay its monthly paid employees holiday pay pursuant to Article 94 of the
Code, subject only to the exclusions and limitations specified in Article 82
and such other legal restrictions as are provided for in the Code. However,
the respondent arbitrator refused to take cognizance of the case reasoning
that he had no more jurisdiction to continue as arbitrator because he had
resigned from service effective May 1, 1986.

Issue: WON sales personnel are excluded in the payment of holiday pay.

Ruling: Field personnel are not entitled to holiday pay.

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

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

"Rule IV Holidays with Pay. SECTION 1. Coverage. This rule


shall apply to all employees except: (e) Field personnel and other
employees whose time and performance is unsupervised by the
employer

The clause "whose time and performance is unsupervised by the employer"


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

The criteria for granting incentive bonus are: (1) attaining or exceeding sales
volume based on sales target; (2) good collection performance; (3) proper
compliance with good market hygiene; (4) good merchandising work; (5)
minimal market returns and (6) proper truck maintenance. The criteria
indicate that these sales personnel are given incentive bonuses precisely

Garcy Kate D. Go LLB2 EH306 Page 173


because of the difficulty in measuring their actual hours of field work. These
employees are evaluated by the result of their work and not by the actual
hours of field work which are hardly susceptible to determination.

National Sugar Refinery Corp., vs. NLRC

Facts: Petitioner owns a corporation fully owned by the government which


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

Issue: Are they correct?

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

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

The controversy actually involved here seeks a determination of whether or


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

To be considered as such, it should have been practiced over a long period of


time, and must be shown to have been consistent and deliberate. The test

Garcy Kate D. Go LLB2 EH306 Page 174


requires a showing that the employer agreed to continue giving the benefits
knowing full well that said employees are not covered by the law requiring
payment thereof. In the case at bar, respondent union failed to establish that
petitioner has been motivated or is wont to give these benefits out of pure
generosity.

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

Facts: On 17 April 1990, private respondent, at a monthly salary of


P4,500.00, employed petitioner as construction/project engineer for the
construction of the Monte de Piedad building in Cubao, Quezon City.
Allegedly, by virtue of an oral contract, petitioner would also receive a share
in the profits after completion of the project and that petitioner's services in
excess of eight (8) hours on regular days and services rendered on weekends
and legal holidays shall be compensable overtime at the rate of P27.85 per
hour.

On 16 April 1991, petitioner received a memorandum issued by private


respondent's project manager, Engr. Nestor A. Delantar informing him of the
termination of his services effective on 30 April 1991.

On 13 September 1991, petitioner filed a complaint against private


respondent for illegal dismissal, unfair labor practice, illegal deduction, non-
payment of wages, overtime rendered, service incentive leave pay,
commission, allowances, profit-sharing and separation pay with the NLRC-
NCR Arbitration Branch, Manila.
Arguments

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

Issue: Whether or not petitioner may be considered as managerial


employee.
Whether or not petitioner is entitled to separation pay.

Ruling:
1. NO, HE MAY NOT.

Garcy Kate D. Go LLB2 EH306 Page 175


In his original complaint, petitioner stated that the nature of his work is
"supervisory-engineering." Similarly, in his own petition and in other
pleadings submitted to this Court, petitioner confirmed that his job was to
supervise the laborers in the construction project. Hence, although petitioner
cannot strictly be classified as a managerial employee under Art. 82 of the
Labor Code, and sec. 2(b), Rule I, Book III of the Omnibus Rules Implementing
the Labor Code, nonetheless he is still not entitled to payment of the
aforestated benefits because he falls squarely under another exempt
category"officers or members of a managerial staff" as defined under sec.
2(c) of the abovementioned implementing rules.

That petitioner was paid overtime benefits does not automatically and
necessarily denote that petitioner is entitled to such benefits. Art. 82 of the
Labor Code specifically delineates who are entitled to the overtime premiums
and service incentive leave pay provided under Art. 87, 93, 94 and 95 of the
Labor Code and the exemptions thereto. As previously determined, petitioner
falls under the exemptions and therefore has no legal claim to the said
benefits. It is well and good that petitioner was compensated for his overtime
services. However, this does not translate into a right on the part of
petitioner to demand additional payment when, under the law, petitioner is
clearly exempted therefrom.

2. NO, HE IS NOT.

The applicable provision is Article 280 of the Labor Code which defines the
term "project employee," thus:
Art. 280. Regular and Casual Employment. The provisions of
written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the
employment has been fixed for a specific period or undertaking
the completion or termination of which has been determined at
the time of the engagement of the employee or where the work
or services to be performed is seasonal in nature and the
employment is for the duration of the season.

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

Petitioner, thus, has no legal right to demand separation pay. Policy


Instruction No. 20 entitled "Stabilizing Employer-Employee Relations in the
Construction Industry" explicitly mandates that:
xxx xxx xxx
Project employees are not entitled to termination pay if they are terminated
as a result of the completion of the project or any phase thereof in which
they are employed, regardless of the number of projects in which they have
been employed by a particular construction company. Moreover, the
company is not required to obtain a clearance from the Secretary of Labor in
connection with such termination. What is required of the company is a
report to the nearest Public Employment Office for statistical purposes.

Garcy Kate D. Go LLB2 EH306 Page 176


xxx xxx xxx
Department Order No. 19 of the Department of Labor and Employment
(DOLE) entitled "Guidelines Governing the Employment of Workers in the
Construction Industry" promulgated on 1 April 1993, reiterates the same
rule.

Garcy Kate D. Go LLB2 EH306 Page 177


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

Facts: The 99 petitioners in this proceeding were rank-and-file employees of


respondent Empire Food Products, which hired them on various dates.
Petitioners filed against private respondents a complaint for payment of
money claims and for violation of labor standards laws

Issue: Whether or not petitioners are entitled back wages.

Ruling: Petitioners are therefore entitled to reinstatement with full back


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

That being said, the amount of backwages to which each petitioner is


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

Garcy Kate D. Go LLB2 EH306 Page 178


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

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

Private respondent alleged that he had been sick and thus allowed to go on
leave without pay for one month from April 28, 1990 but that when he
reported to work at the end of such period with a health clearance, he was
told to come back another time as he could not be reinstated immediately.
Thereafter, petitioner refused to give him work. For this reason, private
respondent asked for a certificate of employment from petitioner on
September 6, 1990. However, when he came back for the certification
September 10, petitioner refused to issue the certificate unless he submitted
his resignation. Since private respondent refused to submit such letter unless
he was given separation pay, petitioner prevented him from entering the
premises.

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

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

Ruling: Art. 82 of the Labor Code provide:


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

"Field personnel" Shall refer to non-agricultural employees who regularly


perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of workin the field cannot be
determined with reasonable certainty.

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

Garcy Kate D. Go LLB2 EH306 Page 179


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

Facts: On 17 October 1992, the Department of Labor and Employment


(DOLE), Iligan District Office, conducted a routine inspection in the premises
of San Miguel Corporation (SMC) in Sta. Filomena, Iligan City. It was
discovered that there was underpayment by SMC of regular Muslim holiday
pay to its employees. DOLE sent a copy of the inspection result to SMC and it
was received by and explained to its personnel officer Elena dela Puerta.
SMC contested the findings and DOLE conducted summary hearings on 19
November 1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to
submit proof that it was paying regular Muslim holiday pay to its employees.
Hence, Alan M. Macaraya, Director IV of DOLE Iligan District Office issued a
compliance order, dated 17 December 1993, directing SMC to consider
Muslim holidays as regular holidays and to pay both its Muslim and non-
Muslim employees holiday pay within thirty (30) days from the receipt of the
order.

SMC appealed to the DOLE main office in Manila. However, the appeal was
dismissed for lack of merit and the order of Director Macaraya was affirmed.
SMC went to SC for relief via a petition for certiorari, which the Court referred
to the Court of Appeals. The appellate court modified the order with regards
the payment of Muslim holiday pay from 200% to 150% of the employee's
basic salary. Its motion for reconsideration having been denied for lack of
merit, SMC filed a petition for certiorari before the SC

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

Ruling: The court ruled the issues in negative.


Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of
Presidential Decree No. 1083, otherwise known as the Code of Muslim
Personal Laws, which states:

Art. 169. Official Muslim holidays. - The following are hereby


recognized as legal Muslim holidays:
(a) Amun Jadd (New Year), which falls on the first day of the first lunar
month of Muharram;
(b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on
the twelfth day of the third lunar month of Rabi-ul-Awwal;
(c) Lailatul Isr Wal Mirj (Nocturnal Journey and Ascension of the
Prophet Muhammad), which falls on the twenty-seventh day of the
seventh lunar month of Rajab;
(d) d-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth
lunar month of Shawwal, commemorating the end of the fasting
season; and
(e) d-l-Adh (Hari Raya Haji),which falls on the tenth day of the
twelfth lunar month of Dhl-Hijja.

Garcy Kate D. Go LLB2 EH306 Page 180


Art. 170. Provinces and cities where officially observed. - (1) Muslim
holidays shall be officially observed in the Provinces of Basilan, Lanao
del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan, Marawi,
Pagadian, and Zamboanga and in such other Muslim provinces and
cities as may hereafter be created; (2) Upon proclamation by the
President of the Philippines, Muslim holidays may also be officially
observed in other provinces and cities.

The foregoing provisions should be read in conjunction with Article 94 of the


Labor Code, which provides:
Art. 94. Right to holiday pay. -
(a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly
employing less than ten (10) workers;
(b)The employer may require an employee to work on any holiday but
such employee shall be paid a compensation equivalent to twice his
regular rate.

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

On the question regarding the jurisdiction of the Regional Director Allan M.


Macaraya, Article 128, Section B of the Labor Code, as amended by Republic
Act No. 7730, provides: Article 128. Visitorial and enforcement power. -

(b) Notwithstanding the provisions of Article 129 and 217 of this Code
to the contrary, and in cases where the relationship of employer-
employee still exists, the Secretary of Labor and Employment or his
duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of
this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers
made in the course of the inspection. The Secretary or his duly
authorized representative shall issue writs of execution to the
appropriate authority for the enforcement of their orders, except in
cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of
inspection.

In the case before us, Regional Director Macaraya acted as the duly
authorized representative of the Secretary of Labor and Employment and it
was within his power to issue the compliance order to SMC. In addition, the
Court agrees with the Solicitor General that the petitioner did not deny that it
was not paying Muslim holiday pay to its non-Muslim employees. Indeed,
petitioner merely contends that its non-Muslim employees are not entitled to

Garcy Kate D. Go LLB2 EH306 Page 181


Muslim holiday pay. Hence, the issue could be resolved even without
documentary proofs. In any case, there was no indication that Regional
Director Macaraya failed to consider any documentary proof presented by
SMC in the course of the inspection.

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

Garcy Kate D. Go LLB2 EH306 Page 182


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

Facts: Petitioner Rolando Tan is the president of Supreme Theater


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

On October 17, 1998, private respondent Lagrama was summoned by Tan


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

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

As no amicable settlement had been reached, Labor Arbiter Rogelio P.


Legaspi directed the parties to file their position papers. It declared that the
dismissal illegal and order the payment of monetary benefits. Tan appealed
to the NLRC and reversing the decision of the Labor Arbiter.

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

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

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

Instead of ordering his reinstatement as provided in Art. 279 of the Labor


Code, the Labor Arbiter found that the relationship between the employer
and employee has been so strained that the latter's reinstatement would no

Garcy Kate D. Go LLB2 EH306 Page 183


longer serve any purpose. The parties do not dispute this finding. Hence, the
grant of separation pay in lieu of reinstatement is appropriate.

This is of course in addition to the payment of bac kwages which, in


accordance with the ruling in Bustamante v. NLRC should be computed from
the time of Lagrama's dismissal up to the time of the finality of this decision,
without any deduction or qualification.
The Bureau of Working Conditions 32 classifies workers paid by results into
two groups, namely; (1) those whose time and performance is supervised by
the employer, and (2) those whose time and performance is unsupervised by
the employer. The first involves an element of control and supervision over
the manner the work is to be performed, while the second does not. If a
piece worker is supervised, there is an employer-employee relationship, as in
this case. However, such an employee is not entitled to service incentive
leave pay since, as pointed out in Makati Haberdashery v. NLRC 33 and Mark
Roche International v. NLRC, 34 he is paid a fixed amount for work done,
regardless of the time he spent in accomplishing such work.

Garcy Kate D. Go LLB2 EH306 Page 184


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

Facts: Petitioners Avelino Lambo and Vicente Belocura were employed as


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

On January 17, 1989, petitioners filed a complaint against private


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

Petitioners allege that they were dismissed by private respondents as they


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

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

Ruling: The petitioners are entitled to the minimum benefits provided by


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

Piece-rate payment is generally practiced in garment factories where work is


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

In this case, private respondents exercised control over the work of


petitioners. As tailors, petitioners worked in the companys premises from
8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact
that they were paid on a piece-rate basis does not negate their status as
regular employees of private respondents. The term "wage" is broadly
defined in Art. 97 of the Labor Code as remuneration or earnings, capable of

Garcy Kate D. Go LLB2 EH306 Page 185


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.

Considerable time has elapsed since petitioners dismissal, so that


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

Garcy Kate D. Go LLB2 EH306 Page 186


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

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

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

Issue: Whether or not Latag is entitled to retirement benefits considering


she signed a waiver of quitclaim.

Ruling: The Supreme Court ruled that the respondent is entitled to


retirement benefits despite of the waiver of quitclaims.

As to the Quitclaim and Waiver signed by Respondent Latag, the CA


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

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

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

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

Garcy Kate D. Go LLB2 EH306 Page 187


was earning an average of five hundred pesos (P500) per day. We thus
compute his retirement pay as follows: P500 x 15 days x 14 years of service
equals P105,000. Hence, it is clear that the late Pedro M. Latag is entitled to
retirement benefits.

Garcy Kate D. Go LLB2 EH306 Page 188


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

Facts: The Department of Labor and Employment (DOLE), through


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

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

Despite the explanatory bulletin, petitioner, Asian Transmission Corporation,


opted to pay its daily paid employees only 100% of their basic pay on April 9,
1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU)
protested.

The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor Union
(BATLU), and held that Article 94 of the Labor Code provides for holiday pay
for every regular holiday, the computation of which is determined by a legal
formula which is not changed by the fact that there are two holidays falling
on one day, like on April 9, 1998 when it was Araw ng Kagitingan and at the
same time was Maundy Thursday.

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

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

Ruling: The Court dismissed the petition and ruled that petitioners should
pay its employees 200% and not just 100% of their regular daily wages for
the unworked April 9, 1998 which covers two regular holidays, namely, Araw
ng Kagitingan and Maundy Thursday.

Holiday pay is a legislated benefit enacted as part of the Constitutional


imperative that the State shall afford protection to labor. Its purpose is not
merely "to prevent diminution of the monthly income of the workers on
account of work interruptions. In other words, although the worker is forced
to take a rest, he earns what he should earn, that is, his holiday pay."

The provision is mandatory, regardless of whether an employee is paid on a


monthly or daily basis. Unlike a bonus, which is a management prerogative,
holiday pay is a statutory benefit demandable under the law.

Garcy Kate D. Go LLB2 EH306 Page 189


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

Facts: Respondent Antonio Bautista has been employed by petitioner Auto


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

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

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

On 29 September 2000, based on the pleadings and supporting evidence


presented by the parties, Labor Arbiter decided that the complaint be
dismissed where the respondent must pay to the complainant

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

Ruling: The respondent is entitled to service incentive leave.

The disposition of the issue revolves around the proper interpretation of


Article 95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the
Implementing Rules and Regulations of the Labor Code which provides:
RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has rendered
at least one year of service shall be entitled to a yearly service incentive
leave of five days with pay.

Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this
rule shall apply to all employees except: (d) Field personnel and other
employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis,
or those who are paid in a fixed amount for performing work irrespective of
the time consumed in the performance thereof;

A careful examination of said provisions of law will result in the conclusion


that the grant of service incentive leave has been delimited by the
Implementing Rules and Regulations of the Labor Code to apply only to those
employees not explicitly excluded by Section 1 of Rule V. According to the
Implementing Rules, Service Incentive Leave shall not apply to employees
classified as "field personnel."

Garcy Kate D. Go LLB2 EH306 Page 190


The phrase "other employees whose performance is unsupervised by the
employer" must not be understood as a separate classification of employees
to which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under
the Labor Code as those "whose actual hours of work in the field cannot be
determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task
or contract basis, purely commission basis." Said phrase should be related
with "field personnel," applying the rule on ejusdem generis that the general
and unlimited terms are restrained and limited by the particular terms that
they follow. Hence, employees engaged on task or contract basis or paid on
purely commission basis are not automatically exempted from the grant of
service incentive leave, unless, they fall under the classification of field
personnel.

What must be ascertained in order to resolve the issue of propriety of the


grant of service incentive leave to respondent is whether or not he is field
personnel?

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

As a general rule, field personnel are those whose performance of their


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

At this point, it is necessary to stress that the definition of a "field personnel"


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

The clear policy of the Labor Code is to grant service incentive leave pay to
workers in all establishments, subject to a few exceptions. Section 2, Rule V,
Book III of the Implementing Rules and Regulations provides that "every

Garcy Kate D. Go LLB2 EH306 Page 191


employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay."

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

Garcy Kate D. Go LLB2 EH306 Page 192


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

Facts: On April 17, 2000, respondent was employed by petitioner as key


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

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

Ruling: Affirmative. In termination cases, like the present controversy, the


burden of proving the circumstances that would justify the employees
dismissal rests with the employer. The best proof that petitioner should have
presented to prove the probationary status of respondent is her employment
contract. None, having been presented, the continuous employment of
respondent as an account specialist for almost 11 months, from April 17,
2000 to March 12, 2001, means that she was a regular employee and not a
temporary reliever or a probationary employee.

And while it is true that by way of exception, the period of probationary


employment may exceed six months when the parties so agree, such as
when the same is established by company policy, or when it is required by
the nature of the work, none of these exceptional circumstance were proven
in the present case. Hence, respondent whose employment exceeded six
months is undoubtedly a regular employee of petitioner.

Moreover, even assuming that the employment of respondent from April 7,


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

Neither will petitioners belated claim that respondent became a


probationary employee starting October 1, 2000 work against respondent.
As earlier stated, the payroll authorities indicating that respondents
probationary status became effective as of such date are of scant evidentiary
value since it does not show the conformity of respondent. At any rate, in
the interpretation of employment contracts, whether oral or written, all
doubts must be resolved in favor of labor.

Hence, the contract of employment in the instant case, which appears to be


an oral agreement since no written form was presented by petitioner, should
be construed as one vesting respondent with a regular status and security of
tenure.

Regarding the argument of redundancy, Redundancy, for purposes of the


Labor Code, exists where the services of an employee are in excess of what
is reasonably demanded by the actual requirements of the enterprise.
Succinctly put, a position is redundant where it is superfluous, and

Garcy Kate D. Go LLB2 EH306 Page 193


superfluity of a position or positions may be the outcome of a number of
factors, such as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise.

The determination that the employees services are no longer necessary or


sustainable and, therefore, properly terminable is an exercise of business
judgment of the employer. The wisdom or soundness of this judgment is not
subject to discretionary review of the Labor Arbiter and the NLRC, provided
there is no violation of law and no showing that it was prompted by an
arbitrary or malicious act. In other words, it is not enough for a company to
merely declare that it has become overmanned. It must produce adequate
proof of such redundancy to justify the dismissal of the affected employees.

The following evidence may be proffered to substantiate redundancy: the


new staffing pattern, feasibility studies/proposal, on the viability of the newly
created positions, job description and the approval by the management of
the restructuring.

In the case at bar, petitioner presented an affidavit of its Sales Manager and
a memorandum of the company both to the effect that there is a need to
redeploy its regular employees and terminate the employment of temporary
employees, in view of an excess in manpower. These documents, however,
do not satisfy the requirement of substantial evidence that a reasonable
mind might accept as adequate to support a conclusion.

Moreover, the lingering doubt as to the existence of redundancy or of


petitioners so called restructuring, realignment or reorganization which
resulted in the dismissal of not only probationary employees but also of
regular employees, is highlighted by the non-presentation by petitioner of
the required notice to the DOLE and to the separated employees. If there
was indeed a valid redundancy effected by petitioner, these notices and the
proof of payment of separation pay to the dismissed regular employees
should have been offered to establish that there was excess manpower in
petitioners GMA-KAG caused by a decline in the sales volume.
In balancing the interest between labor and capital, the prudent recourse in
termination cases is to safeguard the prized security of tenure of employees
and to require employers to present the best evidence obtainable, especially
so because in most cases, the documents or proof needed to resolve the
validity of the termination, are in the possession of employers. A contrary
ruling would encourage employers to prevent the regularization of an
employee by simply invoking a feigned or unsubstantiated redundancy
program.

Granting that petitioner was able to substantiate the validity of its


reorganization or restructuring, it nevertheless, failed to effect a fair and
reasonable criterion in dismissing respondent. The criteria in implementing a
redundancy are: (a) less preferred status, e.g. temporary employee; (b)
efficiency; and (c) seniority.

It is evident from the foregoing that the criterion allegedly used by petitioner
in reorganizing its sales unit was the employment status of the employee.
However, in the implementation thereof, petitioner erroneously classified
respondent as a probationary employee, resulting in the dismissal of the
latter. Verily, the absence of criteria and the erroneous implementation of the

Garcy Kate D. Go LLB2 EH306 Page 194


criterion selected, both render invalid the redundancy because both have the
ultimate effect of illegally dismissing an employee.

Considering that respondent was illegally dismissed, she is entitled not only
to reinstatement but also to payment of full back wages, computed from the
time her compensation was actually withheld from her on March 13, 2001, up
to her actual reinstatement. As a regular employee of petitioner from the
date of her employment on April 17, 2000, she is likewise entitled to other
benefits, i.e., service incentive leave pay and 13th month pay computed
from such date also up to her actual reinstatement.

Respondent is not, however, entitled to holiday pay because the records


reveal that she is a monthly paid regular employee. Under Section 2, Rule
IV, Book III of the Omnibus Rules Implementing the Labor Code, employees
who are uniformly paid by the month, irrespective of the number of working
days therein, shall be presumed to be paid for all the days in the month
whether worked or not.
Anent attorneys fees, in actions for recovery of wages or where an employee
was forced to litigate and thus incurred expenses to protect his rights and
interests, a maximum of 10% of the total monetary award by way of
attorneys fees is justifiable under Article 111 of the Labor Code, Section 8,
Rule VIII, Book III of its Implementing Rules, and paragraph 7, Article 2208 of
the Civil Code. The award of attorneys fees is proper and there need not be
any showing that the employer acted maliciously or in bad faith when it
withheld the wages. There need only be a showing that the lawful wages
were not paid accordingly, as in the instant controversy.

Garcy Kate D. Go LLB2 EH306 Page 195


Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3,
2006

Facts: Sometime in June 1999, Petitioner Charlito Pearanda was hired as an


employee of Baganga Plywood Corporation (BPC) to take charge of the
operations and maintenance of its steam plant boiler. In May 2001,
Pearanda filed a Complaint for illegal dismissal with money claims against
BPC and its general manager, Hudson Chua, before the NLRC.

After the parties failed to settle amicably, the labor arbiter directed the
parties to file their position papers and submit supporting documents.

Pearanda alleges that he was employed by respondent Banganga on March


15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift
Engineer until he was illegally terminated on December 19, 2000. he alleges
that his services were terminated without the benefit of due process and
valid grounds in accordance with law. Furthermore, he was not paid his
overtime pay, premium pay for working during holidays/rest days, night shift
differentials and finally claimed for payment of damages and attorney's fees
having been forced to litigate the present complaint.

Respondent BPC is a domestic corporation duly organized and existing under


Philippine laws and is represented herein by its General Manager HUDSON
CHUA, the individual respondent. Respondents allege that complainant's
separation from service was done pursuant to Art. 283 of the Labor Code.
The respondent BPC was on temporary closure due to repair and general
maintenance and it applied for clearance with the Department of Labor and
Employment, Regional Office No. XI, to shut down and to dismiss employees.
And due to the insistence of herein complainant he was paid his separation
benefits.

Consequently, when respondent BPC partially reopened in January 2001,


Pearanda failed to reapply.

The labor arbiter ruled that there was no illegal dismissal and that
petitioner's Complaint was premature because he was still employed by BPC.
Petitioners money claims for illegal dismissal was also weakened by his
quitclaim and admission during the clarificatory conference that he accepted
separation benefits, sick and vacation leave conversions and thirteenth
month pay.

Issue: Whether or not Pearanda is a regular, common employee entitled to


monetary benefits under Art. 82 of the Labor Code and is entitled to the
payment of overtime pay and other monetary benefits.

Ruling: The petitioner is not entitled to overtime pay and other monetary
benefits.

The Court disagrees with the NLRC's finding that petitioner was a managerial
employee. However, petitioner was a member of the managerial staff, which
also takes him out of the coverage of labor standards. Like managerial
employees, officers and member of the managerial staff are not entitled to
the provisions of law on labor standards.

The Implementing Rules of the Labor Code define members of a managerial


staff as those with the following duties and responsibilities:

Garcy Kate D. Go LLB2 EH306 Page 196


(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." 34

The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that


petitioner was a member of the managerial staff. His duties and
responsibilities conform to the definition of a member of a managerial staff
under the Implementing Rules.

Petitioner supervised the engineering section of the steam plant boiler. His
work involved overseeing the operation of the machines and the
performance of the workers in the engineering section. This work necessarily
required the use of discretion and independent judgment to ensure the
proper functioning of the steam plant boiler. As supervisor, petitioner is
deemed a member of the managerial staff.

Noteworthy, even petitioner admitted that he was a supervisor. In his


Position Paper, he stated that he was the foreman responsible for the
operation of the boiler. The term foreman implies that he was the
representative of management over the workers and the operation of the
department. Petitioner's evidence also showed that he was the supervisor of
the steam plant. His classification as supervisors is further evident from the
manner his salary was paid. He belonged to the 10% of respondent's 354
employees who were paid on a monthly basis; the others were paid only on a
daily basis.

Garcy Kate D. Go LLB2 EH306 Page 197


Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-
ALU, G.R. No. 1577745, October 19, 2007, citing Wellington Investment vs.
Trajano, 245 SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420, June
10, 2004

Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and


Leyeco IV Employees Union-ALU (respondent) entered into a Collective
Bargaining Agreement (CBA) covering petitioner rank-and-file employees, for
a period of five (5) years effective January 1, 1998. On June 7, 2000,
respondent, through its Regional Vice-President, Vicente P. Casilan, sent a
letter to petitioner demanding holiday pay for all employees, as provided for
in the CBA. Petitioner, on the other hand, in its Position Paper, insisted
payment of the holiday pay in compliance with the CBA provisions, stating
that payment was presumed since the formula used in determining the daily
rate of pay of the covered employees is Basic Monthly Salary divided by 30
days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with
said formula, the employees are already paid their regular and special days,
the days when no work is done, the 51 un-worked Sundays and the 51 un-
worked Saturdays.

Issue: Whether or not Leyte IV Electric Cooperative is liable for


underpayment of holiday pay.

Held: Leyte IV Electric Cooperative is not liable for underpayment of holiday


pay. The Voluntary Arbitrator gravely abused its discretion in giving a strict or
literal interpretation of the CBA provisions that the holiday pay be reflected
in the payroll slips. Such literal interpretation ignores the admission of
respondent in its Position Paper that the employees were paid all the days of
the month even if not worked. In light of such admission, petitioner's
submission of its 360 divisor in the computation of employees' salaries gains
significance.

This ruling was applied in Wellington Investment and Manufacturing


Corporation v. Trajano, 43 Producers Bank of the Philippines v. National Labor
Relations Commission. In this case, the monthly salary was fixed by
Wellington to provide for compensation for every working day of the year
including the holidays specified by law and excluding only Sundays. In
fixing the salary, Wellington used what it called the "314 factor"; that is, it
simply deducted 51 Sundays from the 365 days normally comprising a year
and used the difference, 314, as basis for determining the monthly salary.
The monthly salary thus fixed actually covered payment for 314 days of the
year, including regular and special holidays, as well as days when no work
was done by reason of fortuitous cause, such as transportation strike, riot, or
typhoon or other natural calamity, or cause not attributable to the
employees.

It was also applied in Odango v. National Labor Relations Commission, where


Court ruled that the use of a divisor that was less than 365 days cannot
make the employer automatically liable for underpayment of holiday pay. In
said case, the employees were required to work only from Monday to Friday
and half of Saturday. Thus, the minimum allowable divisor is 287, which is
the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half
Saturdays). Any divisor below 287 days meant that the employees were
deprived of their holiday pay for some or all of the ten legal holidays. The
304-day divisor used by the employer was clearly above the minimum of 287
days.

Garcy Kate D. Go LLB2 EH306 Page 198


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: Reynaldo Chua, herein respondent, was under the employ of Bahia
Shipping Services, Inc., herein petitioner, as a restaurant waiter on board
the M/S Black Watch , a luxury cruise ship liner. His employment is pursuant
to a Philippine Overseas Employment Administration (POEA) approved
employment contract dated October 9, 1996 for a period of nine (9) months
from October 18, 1996 to July 17, 1997.

On October 18, 1996, respondent, on board the cruise ship, left Manila for
Heathrow, England. About four months into his employment, or on February
15, 1997, responded reported to work an hour and a half (1 ) late. Due to
the incident, respondent was issued a warning-termination form by the
master of the cruise ship, Thor Fleten on February 17, 1997, who likewise
conducted an inquisitorial hearing to investigate the incident on March 8,
1997.

Thereafter, on March 9, 1997, respondent was dismissed from service on the


strength of an unsigned and undated notice of dismissal. Attached to the
dismissal notice is the alleged minutes or records of the investigation and
hearing.

On March 24, 1997, respondent filed a complaint for illegal dismissal and
other monetary claims. He claims that he was underpaid in the amount of
US$110.00 per month for a period of five (5) months, since he was only paid
US$300.00 per month, instead of US$410.00 per month, which was
stipulated in his contract. Aside from underpayment, he alleged that
US$20.00 per month was also deducted from his salary by petitioner for
union dues.

Issue: In the computation of the award, should the guaranteed overtime


pay per month be included as part of his salary?

Ruling: There is no factual or legal basis in the inclusion of his "guaranteed


overtime" pay into his monthly salary computation for the entire unexpired
period of his contract.

Garcy Kate D. Go LLB2 EH306 Page 199


The Court ruled in Cagampan v. National Labor Relations Commission, that
although an overseas employment contract may guarantee the right to
overtime pay, entitlement to such benefit must first be established,
otherwise the same cannot be allowed.

Petitioners contention that there is no factual or legal basis for the inclusion
of said amount since respondents repatriation is well-taken.

Garcy Kate D. Go LLB2 EH306 Page 200


PNCC Skyway Traffic Management and Security Division Workers
Organization,
GR No. 171231, Feb. 17, 2010

Facts: Petitioner PNCC Skyway Corporation Traffic Management and Security


Division Workers' Organization (PSTMSDWO) is a labor union duly registered
with the Department of Labor and Employment (DOLE). Respondent PNCC
Skyway Corporation is a corporation duly organized and operating under and
by virtue of the laws of the Philippines. On November 15, 2002, petitioner
and respondent entered into a Collective Bargaining Agreement (CBA)
incorporating the terms and conditions of their agreement which included
vacation leave and expenses for security license provisions.

A memorandum was passed by the respondents scheduling the leaves of the


laborers. Petitioner objected to the implementation of this memorandum and
contended that their union members have the preference in scheduling their
vacation leave. On the other hand, respondent argued that Article VIII,
Section 1 (b) gives the management the final say regarding the vacation
leave schedule of its employees. Respondent may take into consideration the
employees' preferred schedule, but the same is not controlling.

Issue: Whether or not it is the prerogative of PNCC to schedule leaves of its


employees.

Ruling: Yes. The rule is that where the language of a contract is plain and
unambiguous, its meaning should be determined without reference to
extrinsic facts or aids. The intention of the parties must be gathered from
that language, and from that language alone. Stated differently, where the
language of a written contract is clear and unambiguous, the contract must
be taken to mean that which, on its face, it purports to mean, unless some
good reason can be assigned to show that the words used should be
understood in a different sense.

In the case at bar, the contested provision of the CBA is clear and
unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that
the scheduling of vacation leave shall be under the option of the employer.
The preference requested by the employees is not controlling because
respondent retains its power and prerogative to consider or to ignore said
request. Thus, if the terms of a CBA are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulation shall
prevail. In fine, the CBA must be strictly adhered to and respected if its ends
have to be achieved, being the law between the parties.

Garcy Kate D. Go LLB2 EH306 Page 201


Radio Mindanao Network, Inc. vs. Ybarola

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were
hired on June 15, 1977 and June 1, 1983, respectively, by RMN. They
eventually became account managers, soliciting advertisements and
servicing various clients of RMN.

The respondents services were terminated as a result of RMNs


reorganization/restructuring; they were given their separation pay P
631,250.00 for Ybarola, and P 481,250.00 for Rivera. Sometime in December
2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate


complaints (which were later consolidated) against RMN and its President,
Eric S. Canoy, for illegal dismissal with several money claims, including
attorneys fees. They indicated that their monthly salary rates were P
60,000.00 for Ybarola and P 40,000.00 for Rivera.

The respondents argued that the release/quitclaim they executed should not
be a bar to the recovery of the full benefits due them; while they admitted
that they signed release documents, they did so due to dire necessity.

The petitioners denied liability, contending that the amounts the respondents
received represented a fair and reasonable settlement of their claims, as
attested to by the release/quitclaim affidavits which they executed freely and
voluntarily. They belied the respondents claimed salary rates, alleging that
they each received a monthly salary of P 9,177.00, as shown by the payrolls.

The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint,
but ordered the payment of additional separation pay to the respondents P
490,066.00 for Ybarola and P 429,517.55 for Rivera.

On appeal by the petitioners to the National Labor Relations Commission


(NLRC), the NLRC set aside the labor arbiters decision and dismissed the
complaint for lack of merit. It ruled that the withholding tax certificate cannot
be the basis of the computation of the respondents separation pay as the
tax document included the respondents cost-of-living allowance and
commissions; as a general rule, commissions cannot be included in the base
figure for the computation of the separation pay because they have to be
earned by actual market transactions attributable to the respondents From
the NLRC, the respondents sought relief from the CA through a petition for
certiorari under Rule 65 of the Rules of Court.

The CA granted the petition and set aside the assailed NLRC dispositions. It
reinstated the labor arbiters separation pay award, rejecting the NLRCs
ruling that the respondents commissions are not included in the
computation of their separation pay. It pointed out that in the present case,
the respondents earned their commissions through actual market
transactions attributable to them; these commissions, therefore, were part of
their salary.

The appellate court declared the release/quitclaim affidavits executed by the


respondents invalid for being against public policy, citing two reasons: (1)
the terms of the settlement are unconscionable; the separation pay the
respondents received was deficient by at least P 400,000.00 for each of
them; and (2) the absence of voluntariness when the respondents signed the

Garcy Kate D. Go LLB2 EH306 Page 202


document, it was their dire circumstances and inability to support their
families that finally drove them to accept the amount the petitioners offered.
Significantly, they dallied and it took them three months to sign the
release/quitclaim affidavits.

Issue:Whether or not the release/quitclaim affidavits are invalid for being


against public policy.

Ruling: Release/Quitclaim; Separation pay. The release/quitclaim affidavits


are invalid for being against public policy for two reasons: (1) the terms of
the settlement are unconscionable; the separation pay for termination due to
reorganization/restructuring was deficient by Php400,000.00 for each
employee; they were given only half of the amount they were legally entitled
to; and (2) the absence of voluntariness when the employees signed the
document, it was their dire circumstances and inability to support their
families that finally drove them to accept the amount offered. Without jobs
and with families to support, they dallied in executing the quitclaim
instrument, but were eventually forced to sign given their circumstances. To
be sure, a settlement under these terms is not and cannot be a reasonable
one, given especially the respondents length of service 25 years for
Ybarola and 19 years for Rivera. Radio Mindanao Network, Inc. and Eric S.
Canoy vs. Domingo Z. Ybarola, et al. G.R. No. 198662. September 12, 2012.

Garcy Kate D. Go LLB2 EH306 Page 203


Villuga vs. NLRC

Facts: Petitioner Elias Villuga was employed as cutter in the Broad Street
Tailoring owned by privaterespondent Rodolfo Zapanta. He was paid a fixed
monthly salary of P840.00 and a monthly transportation allowance of P40.00.
In addition, Villuga was assigned the chore of distributing work to the shop's
tailors or sewers when both the shop's manager and assistant manager
would be absent. The other petitioners were either ironers, repairmen and
sewers. They were paid a fixed amount for every item ironed, repaired or
sewn, regardless of the time consumed in accomplishing the task. Petitioners
did not fill up any time record since they did not observe regular or fixed
hours of work.

From February 17 to 22, 1978, Villuga failed to report for work allegedly due
to illness. For not properly notifying his employer, he was considered to have
abandoned his work. Villuga claimed that he was refused admittance when
he reported for work after his absence, allegedly due to his active
participation in the union organized by private respondent's tailors. He
further claimed that he was not paid overtime pay, holiday pay, premium
pay for work done on rest days and holidays, service incentive leave pay and
13th month pay. Petitioners Abistado, Mendoza, Brizuela and Oro also
claimed that they were dismissed from their employment because they
joined the Philippine Social Security Labor Union (PSSLU). The other
petitioners claimed that they stopped working because private respondents
gave them few pieces of work to do after learning of their membership with
PSSLU.

The Labor Arbiter rendered a decision ordering the dismissal of the complaint
for unfair labor practices, illegal dismissal and other money claims except
petitioner Villuga's claim for 13th month pay for the years 1976, 1977 and
1980. The NLRC affirmed the questioned decision.

Issue: Whether an employer-employee relationship exists and whether such


employment is managerial in character or that of a rank and file employee
are primordial considerations before extending labor benefits.

Ruling: Under Rule I, Section 2(c), Book III of the Implementing Rules of the
Labor Code, to be a
member of a managerial staff, the following elements must concur or co-
exist, to wit: (1) that his primary duty consists of the performance of work
directly related to management policies; (2) that he customarily and
regularly exercises discretion and independent judgment in the performance
of his functions; (3) that he regularly and directly assists in the management
of the establishment; and (4) that he does not devote twenty per cent of his
time to work other than those described above.

Garcy Kate D. Go LLB2 EH306 Page 204


CJC Trading vs. NLRC
G.R. No. 115884; July 20, 1995

Facts: Private respondents Ricardo Ausan, Jr. and Ernesto Alanan were
employed by petitioner since 1983 and 1978 as truck drivers and were paid
on a "per trip or task basis." They filed separate complaints on against
petitioner CJC Trading, Incorporated and/or Ms. Celia J. Carlos for illegal
dismissal and non-payment of premium pay for holiday and rest day, service
incentive leave pay and thirteenth month pay. These cases were
consolidated.

On 22 July 1993, a decision was rendered by the Labor Arbiter dismissing the
complaints and were not entitled to the labor standards benefits claimed by
them because they were paid on a "per trip or per task basis.

On appeal, NLRC affirmed in toto the decision of the Labor Arbiter.

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

Ruling: The employees are granted to retirement benefits. An employee


who voluntarily resigns is not entitled to separation pay unless otherwise
stipulated in an employment contract or collective bargaining agreement, or
sanctioned by established employer practice or policy. The Labor Code is
devoid of any provision which grants separation pay to employees who
voluntarily resign. Neither was there anything in the record that shows that,
in the instant case, there is a collective bargaining agreement or any other
agreement or established company policy concerning the payment of
separation pay to employees who resign.

Considering that private respondents were close to the age of sixty (60) at
the time they stopped working for petitioner and that they had been in the
employ of petitioner for several years, the Court, considers that this could be
deemed to be in effect a prayer for the grant of retirement benefits.

The pertinent law is Article 287 of the Labor Code, as amended by R.A. No.
7641, which reads: Retirement. Any employee may be retired upon
reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such


retirement benefits as he may have earned under existing laws and any
collective bargaining agreement and other agreements: Provided, however,
That an employee's retirement benefits under any collective bargaining and
other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement


benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65) years which is
hereby declared the compulsory retirement age, who has served at least five
(5) years in the said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for every
year of service, a fraction of at least six (6) months being considered as one
whole year.

Garcy Kate D. Go LLB2 EH306 Page 205


R.A. No. 7641 may be given effect where (1) the claimant for retirement
benefits was still the employee of the employer at the time the statute took
effect; and (2) the claimant was in compliance with the requirements for
eligibility under the statute for such retirement benefits. It appears that
private respondents did not qualify for the benefits of R.A. No. 7641 under
the terms of this law itself. Since the record does not show any retirement
plan or collective bargaining agreement providing for retirement benefits to
petitioner's employees, the applicable retirement benefits to petitioner's
employees, the applicable retirement age is the optional retirement age of
sixty (60) years according to Article 287, which would qualify the retiree to
retirement benefits equivalent to one-half (1/2) month's salary for every year
of service. Unfortunately, at the time private respondent stopped working for
petitioner, they had not yet reached the age of sixty (60) years. The Court
stresses that there is nothing to prevent petitioners from voluntarily giving
private respondents some financial assistance on an ex gratia basis.

Garcy Kate D. Go LLB2 EH306 Page 206


Pantranco North Express, Inc., vs. National Labor Relations
Commission And Urbano Suiga

Facts: Urbano Suiga was hired by Pantranco North Express Inc. in 1964 as
a bus conductor. He eventually joined the Pantranco Employees Association-
PTGWO. He continued in petitioner's employ until August 12, 1989, when he
was retired at the age of fifty-two (52) after having rendered twenty five
years' service. The basis of his retirement was the compulsory retirement
provision of the collective bargaining agreement between the petitioner and
the aforenamed union. Private respondent received P49,300.00 as
retirement pay.

On February 15, 1990, private respondent filed a complaint for illegal


dismissal against petitioner with the Sub-Regional Arbitration Branch of the
respondent Commission in Dagupan City. The complaint was consolidated
with two other cases of illegal dismissal having similar facts and issues, filed
by other employees, non-union members.

Collective Bargaining Agreement between petitioner company and the union


states:

"Upon reaching the age of sixty (60) years or upon


completing twenty-five (25) years of service to the
COMPANY, whichever comes first, and the employee
shall be compulsory retired and paid the retirement
benefits herein provided.

After hearings were held and position papers submitted, on March 26, 1990,
Labor Arbiter Olairez rendered his decision that the three complainants
illegally and unjustly dismissed and ordered the respondent to reinstate
them to their former or substantially equivalent positions without loss of
seniority rights with full backwages and other benefits with a total of
P31,618.12 plus additional backwages and other benefits but not to exceed 3
years and the corresponding attorney's fees. The amounts already received
by complainants shall be considered as advanced payment of their
retirement pay which shall be deducted when they shall actually retire or
(be) separated from the service. The order of reinstatement is immediately
executory even pending appeal. Petitioner appealed to public respondent,
which issued the questioned Resolution affirming the labor arbiter's decision
in toto. Hence, this petition.

Issues:
(1) The National Labor Relations Commission gravely abused its
discretion in holding that the Labor Arbiter has jurisdiction over
the case.
(2) The National Labor Relations Commission gravely abused its
discretion in affirming the Labor Arbiter's decision that private
respondent Urbano Zuiga (sic) was illegally dismissed."

Ruling: The petition is meritorious thus warranting reversal of the


questioned Resolution.

Jurisdiction of Labor Arbiter

Article 261 of the Labor Code provides that violations of a Collective


Bargaining Agreement, except those which are gross in character, shall no

Garcy Kate D. Go LLB2 EH306 Page 207


longer be treated as unfair labor practice and shall be resolved as grievances
under the Collective Bargaining Agreement. For purposes of the Article,
gross violations of a Collective Bargaining agreement shall mean flagrant
and/or malicious refusal to comply with the economic provisions of such
agreement. The Commission, its Regional Offices and the Regional Directors
of the Department of Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive and original jurisdiction of the
Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately
dispose and refer the same to the Grievance Machinery or Voluntary
Arbitration provided in the Collective Bargaining Agreement."

The complaint of illegal dismissal of which original and exclusive jurisdiction


under Article 217 has been conferred to the Labor Arbiters. The
interpretation of the CBA or enforcement of the company policy is only
corollary to the complaint of illegal dismissal. Otherwise, an employee who
was on AWOL, or who committed offenses contrary to the personnel polices
can no longer file a case of illegal dismissal because the discharge is
premised on the interpretation or enforcement of the company polices.

Respondent voluntarily submitted the case to the jurisdiction of this labor


tribunal. It adduced arguments to the legality of its act, whether such act
may be retirement and/or dismissal, and prayed for reliefs on the merits of
the case. A litigant cannot pray for reliefs on the merits and at the same
time attacks the jurisdiction of the tribunal.
The Court agrees with the public respondent's affirmance of the arbiter's
decision in respect of the question of jurisdiction.

In Sanyo Philippines Workers Union PSSLU vs. Caizares, the petitioner,


the court ruled:

Only disputes involving the union and the company shall be referred to
the grievance machinery or voluntary arbitrators.In the instant case,
both the union and the company are united or have come to an
agreement regarding the dismissal of private respondents. No
grievance between them exists which could be brought to a grievance
machinery. The dispute has to be settled before an impartial body.
The grievance machinery with members designated by the union and
the company cannot be expected to be impartial against the dismissed
employees. Due process demands that the dismissed workers
grievances be ventilated before an impartial body. Since there has
already been an actual termination, the matter falls within the
jurisdiction of the Labor Arbiter."

Applying the same rationale to the case at bar, it cannot be said that the
"dispute" is between the union and petitioner company because both have
previously agreed upon the provision on "compulsory retirement" as
embodied in the CBA. Also, it was only private respondent on his own who
questioned the compulsory retirement. Thus, the case is properly
denominated as a "termination dispute" which comes under the jurisdiction
of labor arbiters.
Therefore, public respondent did not commit a grave abuse of discretion in
upholding the jurisdiction of the labor arbiter over this case.

Private Respondent's Compulsory Retirement Is Not Illegal Dismissal

Garcy Kate D. Go LLB2 EH306 Page 208


"Retirement. -- In the absence of any collective bargaining agreement or
other applicable agreement concerning terms and condition of employment
which provides for retirement at an older age, an employee may be retired
upon reaching the age of sixty (60) years."

Art. 287 of the Labor Code as worded permits employers and


employees to fix the applicable retirement age at below 60 years. Moreover,
providing for early retirement does not constitute diminution of benefits. In
almost all countries today, early retirement, i.e., before age 60, is considered
a reward for services rendered since it enables an employee to reap the
fruits of his labor particularly retirement benefits, whether lump-sum or
otherwise at an earlier age, when said employee, in presumably better
physical and mental condition, can enjoy them better and longer. As a
matter of fact, one of the advantages of early retirement is that the
corresponding retirement benefits, usually consisting of a substantial cash
windfall, can early on be put to productive and profitable uses by way of
income-generating investments, thereby affording a more significant
measure of financial security and independence for the retiree who, up till
then, had to contend with life's vicissitudes within the parameters of his
fortnightly or weekly wages. Thus we are now seeing many CBAs with such
early retirement provisions. And the same cannot be considered a
diminution of employment benefits.

A CBA incorporates the agreement reached after negotiations between


employer and bargaining agent with respect to terms and conditions of
employment. A CBA is not an ordinary contract. It is a labor contract within
the contemplation of Article 1700 of the Civil Code of the Philippines which
governs the relations between labor and capital, it is not merely contractual
in nature but impressed with public interest, thus it must yield to the
common good. As such, it must be construed liberally rather than narrowly
and technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve.

Being a product of negotiation, the CBA between the petitioner and the union
intended the provision on compulsory retirement to be beneficial to the
employees-union members, including herein private respondent. When
private respondent ratified the CBA with the union, he not only agreed to the
CBA but also agreed to conform to and abide by its provisions. Thus, it
cannot be said that he was illegally dismissed when the CBA provision on
compulsory retirement was applied to his case.

Incidentally, The Retirement Pay Law," said statute sheds light on the present
discussion when it amended Art. 287 of the Labor Code worded that "Any
employee may be retired upon reaching the retirement age establish in the
collective bargaining agreement or other applicable employment contract."

In the absence of a retirement plan or agreement providing for retirement


benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65) years which is
hereby declared the compulsory retirement age, who has served at least five
(5) years in the said establishment may retire."

The provision makes clear the intention and spirit of the law to give
employers and employees a free hand to determine and agree upon the
terms and conditions of retirement. Providing in a CBA for compulsory

Garcy Kate D. Go LLB2 EH306 Page 209


retirement of employees after twenty-five (25) years of service is legal and
enforceable so long as the parties agree to be governed by such CBA. Public
respondent committed a grave abuse of discretion in affirming the decision
of the labor arbiter. The compulsory retirement of private respondent
effected in accordance with the CBA is legal and binding.

Garcy Kate D. Go LLB2 EH306 Page 210


R&E Transport , Inc., And Honorio Enriquez, vs. Avelina Latag
(February 13, 2004)
G.R. 155214

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

On December 21, 1998, Latag filed a case for payment of his retirement pay
before the NLRC. Latag however died on April 30, 1999. Subsequently, his
wife, Avelina Latag, substituted him. On January 10, 2000, the Labor Arbiter
rendered a decision in favor of Latag.

Issue: WON Latag is entitled to retirement benefits considering she signed a


waiver of quitclaim.

Ruling: YES, the respondent is entitled to retirement benefits despite of the


waiver of quitclaims.

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

Undisputably, Pedro M. Latag was credited with 14 years of service with R &
E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act
No. 7641, 30 provides:

Art. 287. Retirement. xxx xxx xxx In the absence of a


retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age,
who has served at least five (5) years in said establishment, may
retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole
year. Unless the parties provide for broader inclusions, the term
one half-month salary shall mean fifteen (15) days plus one-
twelfth (1/12) of the 13th month pay and the cash equivalent of
not more than five (5) days of service incentive leaves. xxx xxx
xxx

The rules implementing the New Retirement Law similarly provide the above-
mentioned formula for computing the one-half month salary. Since Pedro was
paid according to the "boundary" system, he is not entitled to the 13th

Garcy Kate D. Go LLB2 EH306 Page 211


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.

Rufina Patis Factory v. Alusitain

Facts: In March 1948, respondent Alusitain was hired as a laborer at the


Rufina Patis Factory owned and operated by petitioner Lucas. On February
19, 1991, respondent, then 63 years of age, tendered his letter of
resignation, and also executed a duly notarized affidavit of separation from
employment and submitted the same to the Pensions Department of the
SSS. Meanwhile, R.A. 7641 took effect in January 1993 providing, among
others, that In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not beyond sixty five (65)
years which is hereby declared the compulsory retirement age, who has
served at least five (5) years in the said establishment, may retire and shall
be entitled to retirement pay equivalent to at least one half (1/2) month
salary for every year of service, a fraction of at least six (6) months being
considered as one whole year.

In 1995, respondent, claiming that he retired from the company on January


31, 1995, having reached the age of 65 and due to poor health, demanded
from petitioner the payment of his retirement benefits in the amount of
P86,710.00, which petitioner refused to pay. Respondent filed a complaint
before the NLRC against petitioners for non-payment of retirement benefits.
Petitioners maintained that respondent resigned from the company in 1991.
On the other hand, respondent maintained that he continued working for
petitioners until January 1995, the date of actual retirement, due to illness
and old age, and that he merely accomplished the documents in compliance
with the requirements of the SSS in order to avail of his retirement benefits.
The Labor Arbiter upheld respondents position. The Court of Appeals upheld
the NLRC decision. Petitioners assert that the appellate court erred in
applying retroactively R.A. 7641 as said law does not expressly provide for
such retroactive application and to do so would defeat the clear intent of
Congress. Hence, this petition.

Issue: Whether or not respondent is entitled to his claim for retirement


benefits.

Ruling: No. R.A. 7641 is a social legislation and may be given retroactive
effect where (1) the claimant for retirement benefits was still the employee
of the employer at the time the statute took effect; and (2) the claimant had
complied with the requirements for eligibility under the statute for such
retirement benefits. It is thus clear that in order for respondent to claim
retirement benefits from petitioner, he has to prove that he was its employee
at the time R.A. 7641 took effect. In the case at bar, it was incumbent on
respondent to prove that he retired on January 31, 1995 and not on February
20, 1991 as indicated on his letter of resignation. Respondent failed to prove
that he was an employee of petitioner at the time R.A. 7641 took effect.
Thus, his claim for retirement benefits must be disallowed.

Garcy Kate D. Go LLB2 EH306 Page 212


Garcy Kate D. Go LLB2 EH306 Page 213
Sta. Catalina College v. NLRC; G.R. No. 144483; November 19, 2003

Facts: Hilaria was hired as an elementary school teacher at the Sta. Catalina
College (petitioner school) in San Antonio, Bian, Laguna. In 1970, she
applied for and was granted a one year leave of absence without pay on
account of the illness of her mother. After the expiration in 1971 of her leave
of absence, she had not been heard from by petitioner school.

In the meantime, she was employed as a teacher at the San Pedro Parochial
School during school year 1980-1981 and at the Liceo de San Pedro, Bian,
Laguna during school year 1981-1982.

In 1982, she applied anew at petitioner school which hired her with a
monthly salary of Php 6,567.95.

On March 22, 1997, during the 51st Commencement Exercises of petitioner


school, Hilaria was awarded a Plaque of Appreciation for thirty years of
service and Php 12,000.00 as gratuity pay.
On May 31, 1997, Hilaria reached the compulsory retirement age of 65.
Retiring pursuant to Article 287 of the Labor Code, as amended by Republic
Act 7641, petitioner school pegged her retirement benefits at Php 59,038.35,
computed on the basis of fifteen years of service from 1982 to 1997. Her
service from 1955 to 1970 was excluded in the computation, petitioner
school having asserted that she had, in 1971, abandoned her employment.

From the Php 59,038.35 retirement benefits was deducted the amount of Php
28,853.09 representing reimbursement of the employers contribution to her
retirement benefits under the Private Education Retirement Annuity
Association (PERAA) which Hilaria had already received.

Issue: Whether or not the separation pay should be computed based on the
length of continuous service or merely years of service not being continuous.

Ruling: Hilaria was considered a new employee when she rejoined petitioner
school upon re-applying in 1982, her retirement benefits should thus be
computed only on the basis of her years of service from 1982 to 1997. The
Court is not unmindful of Hilarias rendition of a total of thirty years of
teaching in petitioner school and should be accorded ample support in her
twilight years. Petitioner school in fact acknowledges her dedicated service
to its students. She can, however, only be awarded with what she is
rightfully entitled to under the law.

Garcy Kate D. Go LLB2 EH306 Page 214


Honda Philippines vs. Samahan ng Malayang Manggagawa sa Honda
G.R. No. 145561, June 15, 2005

Facts: Honda Phils, Inc (company) and Samahan ng Malayang Manggagawa


sa Honda (union) started renegotiations of their CBA. When there was a
bargaining deadlock, the union filed a notice of strike. The company likewise
filed a notice of lockout. SOLE assumed jurisdiction and ordered both parties
to desist from their strike and lockout.

However, the union subsequently filed a second notice of strike onthe


ground of unfair labor practice, alleging that the company illegally
contracted out work to the detriment of the workers. The union went on
strike. SOLE assumed jurisdiction and certified the case to NLRC for
compulsory arbitration. The striking employees were ordered to return to
work and management accepted them back.

Honda then issued a memorandum announcing its new computationof the


13th and 14th month pay whereby the 31-day strike shall be considered
unworked days for the purpose of computing said benefits. The amount
equivalent to 1/12 of the employees basic salary shall be deducted from the
bonuses (because they did not work for 1 month). Furthermore, Honda
wanted a pro-rata payment of the 13th month pay.

The union opposed said computation because it was contrary to the Sections
3 and 6 in their current CBA which mandates that the company shall
maintain the present practice in the implementation of the 13th month pay
and that the 14th month pay shall be computed in the same way as the
former.

The Bureau of Working Conditions (BWC) sided with the company. But the
issue was unresolved by the grievance machinery, so it wassubmitted
for voluntary arbitration. The Voluntary Arbiter invalidated
Hondas computation and ordered the computation of the benefits based on
the full month basic pay.

CA affirmed, hence this petition.

Issues:
(1) Whether or not there is ambiguity in the CBA provisions concerning the
13th and 14th month pay
(2) Whether or not the proposed computation of Honda deducting 1/12 of the
employees basic salary from the 13th and 14th month pay and its pro-rata
payment are valid

Ruling:
(1) YES. A collective bargaining agreement refers to the negotiated contract
between a legitimate labor organization and the employer concerning wages,
hours of work and all other terms and conditions of employment in a
bargaining unit. The parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient as long as they
are not contrary to law, morals, good customs, public order or public policy.
Where the CBA is clear and unambiguous, it becomes the law between the
parties.

However, there are times when the CBA provisions may become contentious.
In this case, Honda wanted to implement a pro-ratedcomputation based on

Garcy Kate D. Go LLB2 EH306 Page 215


the no work, no pay rule. Honda argues that the phrase present practice
in the CBA refers to the manner of payment of the bonuses (50% in May and
50% in December). The union, on the other hand, insists that the CBA
provisions necessarily relate to the computation of the benefits.

As the voluntary arbitrator has correctly observed, there is ambiguity in the


assailed CBA provisions because they did not categorically state whether
the computation of the 13th and 14th month pay would be based on a one
full months basic salary of the employees, or pro-rated based on the
compensation actually received.

(2) NO. The ambiguity in the CBA provisions was correctly resolved by the
arbitrator by relying on Article 1702 of the Civil Code, which provides that in
case of doubt, all labor legislation and all labor contracts shall be construed
in favor of the safety and decent living of the laborer. CA is also correct in
ruling that the computation of the 13th month pay should be based on the
length of service and not on the actual wage earned by the worker.

PD 851 or the 13th Month Pay Law was issued to protect the level of wages
of workers from worldwide inflation. Under the IRR of said law, the minimum
13th month pay shall not be less than 1/12 of the total basic salary earned
by an employee within a calendar year.The Court has interpreted basic
salary to mean, NOT the amount actually received by an employee, but
1/12 of their standard monthly wage multiplied by their length of service
within a given calendar year.

The IRR also provide for a pro-ration of this benefit ONLY in cases of
resignation or separation from work. In the present case, there being no
resignation/separation, the computation of the 13th month pay should not be
pro-rated but should be given in full.

Moreover, it has not been proven that Honda has been implementing pro-
rating of the 13th month pay before the present case. It is not a company
practice. In fact, there was an implicit acceptance that prior to the strike, a
full month basic pay computation was the present practice intended in the
CBA. It was the second strike that prompted the company to adopt the pro-
rata computation.

Garcy Kate D. Go LLB2 EH306 Page 216


Jaculbe vs. Silliman University
G.R. No. 156934; March 16, 2007

Facts: Sometime in 1958, petitioner began working for respondents


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

A brief exchange of letters between petitioner and respondent followed.


Petitioner emphatically insisted that the compulsory retirement under the
plan was tantamount to a dismissal and pleaded with respondent to be
allowed to work until the age of 60 because this was the minimum age at
which she could qualify for SSS pension. But respondent stood pat on its
decision to retire her, citing company policy.

On November 15, 1993, petitioner filed a complaint in the National Labor


Relations Commission (NLRC) for termination of service with preliminary
injunction and/or restraining order. On November 18, 1993, respondent
compulsorily retired petitioner. The labor arbiter rendered a decision finding
respondent guilty of illegal dismissal and ordered that petitioner be
reinstated and paid full back wages. On appeal, the NLRC reversed the labor
arbiters decision and dismissed the complaint. the CA affirmed the NLRC.

Issue: Whether or not the respondents retirement plan imposing automatic


retirement after 35 years of service contravenes the security of tenure
clause in the 1987 Constitution and the Labor Code.

Ruling: Retirement plans allowing employers to retire employees who are


less than the compulsory retirement age of 65 are not per se repugnant to
the constitutional guaranty of security of tenure. Article 287 of the Labor
Code provides: Retirement - Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract. By its express language, the Labor Code
permits employers and employees to fix the applicable retirement age at
below 60 years.

The rules and regulations of the plan show that participation therein was not
voluntary at all. Rule III of the plan, on membership, stated:

SECTION 1 MEMBERSHIP, All full-time Filipino employees of the


University will automatically become members of the Plan, provided,
however, that those who have retired from the University, even if
rehired, are no longer eligible for membership in the Plan. A member
who continues to serve the University cannot withdraw from the Plan.
SECTION 2 EFFECTIVITY OF MEMBERSHIP, Membership in the Plan
starts on the day a person is hired on a full-time basis by the
University.
SECTION 3 TERMINATION OF MEMBERSHIP, Termination of
membership in the Plan shall be upon the death of the member,

Garcy Kate D. Go LLB2 EH306 Page 217


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.

Garcy Kate D. Go LLB2 EH306 Page 218


eInrctoialBdsgCp.vPbn
G.RNo154e07ub,Fary62

Facts:IrenoPgib(pd)wmlyasAntGeMrgofhIcilBadnstpCr(eo)fmMy1986usilhvntpeoAg2,198s.RdtrnifmheopylSb2,198.

OnApril12,98esodtfivachwRTCfQuzniy,Br93agsetmbofhdAnir(BO)petalg,mohsn-yfiupdco.AmntswaefibylJiSgo,hftdnserulackjio,pndstmwalbreyc,ihudntRTC.saSgoefilpifrchwtCAagnedSsopifrlckjutadehsRTCO.

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Isue:WONprondactimlf sherypbd.

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TheacpbliwnstAr291ofLaCdecwhpivstlmnyarogfep- tilnsucdhgreffvyofCalbfinwith3r)(sem cauofntidrh;wesylbva.

Thetrmonyclasiv gfrmnoepyl-atihscfnoerupdaby)(tigfilc,wxnrejudambythio,c)(wnkedglmfthbyor.

Osnthpoie,Curdlagcmntofvishpuergaofctinlms,durvaybnoetpffilhsrxacymeopnitugh dbceatl.Hn,whigfiofCvsdcuaetprhnigof-ysctverd,qunmiahlbyCAoectksfjdrffvianhlgotepscrdwihfilmoneay,vgrspdxtichmeonaugvlsdbfit.Thenrigof-yapscvdthingbeuryfilofCvaspndetcuihylrbsoeSpmt2,19arhfcisnoempyltSbr2,198.Csqunwhepodtfilciamrfgs,eptonyifibadmgeuslJ24,196hicyradbenpsoit.

Letran Calamba Faculty & Employees Association vs NLRC (2008)


G.R. 156225

Facts: Three cases were consolidated involving petitioner Letran Calamba


Faculty and Employees Association and Colegio de San Juan de Letran,
Calamba, for money claims and a petition to declare the subject strike illegal
filed by respondent.

On July 28, 1999, the NLRC promulgated its Decision dismissing both
appeals. Petitioner filed a Motion for Reconsideration but the same was
denied by the NLRC in its Resolution dated June 21, 2000.Petitioner then filed
a special civil action for certiorari with the CA assailing the above-mentioned
NLRC Decision and Resolution.

On May 14, 2002, the CA rendered the presently assailed judgment


dismissing the petition. Petitioner filed a Motion for Reconsideration but the
CA denied it in its Resolution promulgated on November 28, 2002. Citing
Agustilo v. Court of Appeals, petitioner contends that in a special civil action
for certiorari brought before the CA, the appellate court can review the
factual findings and the legal conclusions of the NLRC.

Petitioner avers that the CA, in concluding that the NLRC Decision was
supported by substantial evidence, failed to specify what constituted said
evidence. Thus, petitioner asserts that the CA acted arbitrarily in affirming
the Decision of the NLRC.

Issue: WON the Court of Appeals erred in holding that the factual findings of
the NLRC cannot be reviewed in certiorari proceedings.

Ruling: Court finds no error in the ruling of the CA that since nowhere in the
petition is there any acceptable demonstration that the LA or the NLRC acted
either with grave abuse of discretion or without or in excess of its
jurisdiction, the appellate court has no reason to look into the correctness of
the evaluation of evidence which supports the labor tribunals' findings of
fact.

Garcy Kate D. Go LLB2 EH306 Page 219


Settled is the rule that the findings of the LA, when affirmed by the NLRC and
the CA, are binding on the Supreme Court, unless patently erroneous. It is
not the function of the Supreme Court to analyze or weigh all over again the
evidence already considered in the proceedings below. In a petition for
review on certiorari, this Courts jurisdiction is limited to reviewing errors of
law in the absence of any showing that the factual findings complained of are
devoid of support in the records or are glaringly erroneous. Firm is the
doctrine that this Court is not a trier of facts, and this applies with greater
force in labor cases. Findings of fact of administrative agencies and quasi-
judicial bodies, which have acquired expertise because their jurisdiction is
confined to specific matters, are generally accorded not only great respect
but even finality. They are binding upon this Court unless there is a showing
of grave abuse of discretion or where it is clearly shown that they were
arrived at arbitrarily or in utter disregard of the evidence on record. We find
none of these exceptions in the present case.

In petitions for review on certiorari like the instant case, the Court invariably
sustains the unanimous factual findings of the LA, the NLRC and the CA,
especially when such findings are supported by substantial evidence and
there is no cogent basis to reverse the same, as in this case.

Reyes vs. NLRC et al.


G.R. No. 160233; August 8, 2007

Facts: Petitioner was employed as a salesman at private respondent's


Grocery Division in Davao City on August 12, 1977. He was eventually
appointed as unit manager of Sales Department-South Mindanao District, a
position he held until his retirement on November 30, 1997. Thereafter, he
received a letter regarding the computation of his separation pay. Insisting
that his retirement benefits and 13th month pay must be based on the
average monthly salary of P42,766.19, which consists of P10,919.22 basic
salary and P31,846.97 average monthly commission, petitioner refused to
accept the check issued by private respondent in the amount of
P200,322.21. Instead, he filed a complaint before the arbitration branch of
the NLRC for retirement benefits, 13th month pay, tax refund, earned sick
and vacation leaves, financial assistance, service incentive leave pay,
damages and attorney's fees.

Petitioner contends that the commissions form part of the basic salary, citing
the case of Philippine Duplicators, Inc. v. National Labor Relations
Commission, wherein the Court held that commissions earned by salesmen
form part of their basic salary. Private respondent counters that petitioner
knew that the overriding commission is not included in the basic salary
because it had not been considered as such for a long time in the
computation of the 13th month pay, leave commissions, absences and
tardiness.

Issue: Whether or not the average monthly sales commission of thirty one
thousand eight hundred forty six and 97/100 (Php31,846.97) should be
included in the computation of his retirement benefits and 13th month pay.

Garcy Kate D. Go LLB2 EH306 Page 220


Ruling: This Court has held, in Philippine Duplicators that, the salesmen's
commissions, comprising a pre-determined percentage of the selling price of
the goods sold by each salesman, were properly included in the term basic
salary for purposes of computing the 13th month pay. The salesmen's
commission are not overtime payments, nor profit-sharing payments nor any
other fringe benefit but a portion of the salary structure which represents an
automatic increment to the monetary value initially assigned to each unit of
work rendered by a salesman.

Contrarily, in Boie-Takeda, the so-called commissions paid to or received by


medical representatives of Boie-Takeda Chemicals or by the rank and file
employees of Philippine Fuji Xerox Co., were excluded from the term basic
salary because these were paid to the medical representatives and rank-and-
file employees as productivity bonuses, which are generally tied to the
productivity, or capacity for revenue production, of a corporation and such
bonuses closely resemble profit-sharing payments and have no clear direct
or necessary relation to the amount of work actually done by each individual
employee. Further, commissions paid by the Boie-Takeda Company to its
medical representatives could not have been sales commissions in the same
sense that Philippine Duplicators paid the salesmen their sales commissions.
Medical representatives are not salesmen; they do not effect any sale of any
article at all.

In fine, whether or not a commission forms part of the basic salary depends
upon the circumstances or conditions for its payment, which indubitably are
factual in nature for they will require a re-examination and calibration of the
evidence on record.

As to the main issue whether petitioner's commissions be considered in the


computation of his retirement benefits and 13th month pay, we rule in the
negative. Article 287 of the Labor Code, as amended by Republic Act No.
7641, otherwise known as The New Retirement Law, 22 provides:
Retirement. Any employee may be retired upon reaching the retirement
age established in the collective bargaining agreement or other applicable
employment contract In the absence of a retirement plan or agreement
providing for retirement benefits of 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.

Garcy Kate D. Go LLB2 EH306 Page 221


At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of
P10,919.22 as salary corresponding to his position as Unit Manager. Thus, as
correctly ruled by public respondent NLRC, the "overriding commissions" paid
to him by Universal Robina Corp. could not have been 'sales commissions' in
the same sense that Philippine Duplicators paid its salesmen sales
commissions. Unit Managers are not salesmen; they do not effect any sale of
article at all. Therefore, any commission which they receive is certainly not
the basic salary which measures the standard or amount of work of
complainant as Unit Manager. Accordingly, the additional payments made to
petitioner were not in fact sales commissions but rather partook of the
nature of profit-sharing business. Certainly, from the foregoing, the doctrine
in Boie-Takeda Chemicals and Philippine Fuji Xerox Corporation, which
pronounced that commissions are additional pay that does not form part of
the basic salary, applies to the present case. Aside from the fact that as unit
manager petitioner did not enter into actual sale transactions, but merely
supervised the salesmen under his control, the disputed commissions were
not regularly received by him. Only when the salesmen were able to collect
from the sale transactions can petitioner receive the commissions.
Conversely, if no collections were made by the salesmen, then petitioner
would receive no commissions at all. In fine, the commissions which
petitioner received were not part of his salary structure but were profit-
sharing payments and had no clear, direct or necessary relation to the
amount of work he actually performed. The collection made by the salesmen
from the sale transactions was the profit of private respondent from which
petitioner had a share in the form of a commission. Hence, petition is denied.

Arco Metal Products vs. Samahan ng Manggagawa sa Arco-Metal-


NAFLU
G.R. No. 170734; May 14, 2008

Facts: Petitioner is a company engaged in the manufacture of metal


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

Garcy Kate D. Go LLB2 EH306 Page 222


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 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 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.

Universal Robina Sugar Milling Corp., vs Caballeda


[G.R. 156644. July 28, 2008]

Facts: Agripino Caballeda worked as welder for URSUMCO from March 1989
until June 23, 1997 while Alejandro Cadalin worked for URSUMCO as crane

Garcy Kate D. Go LLB2 EH306 Page 223


operation from 1976 up to June 15, 1997.

John Gokongwei, Jr. President of URSUMCO issued a memorandum


establishing the company policy on Compulsory Retirement. All employees
corporate-wide who attain 60 years of age on or before April 30, 1991 shall
be considered retired on May 31, 1991. Subsequently, on December 9, 1992,
Republic Act No. 7641 was enacted into law and it took effect on January 7,
1993, amending Article 287 of the Labor Code.

Agripino and Alejandro having reached the age of 60, were allegedly forced
to retire by URSUMCO. They both accepted their retirement benefits. Later
on, Agripino filed a complaint for illegal dismissal because his compulsory
retirement was in violation of the provisions of RA 7641 and, was in effect, a
form of illegal dismissal.

Issues:

(1) Whether RA 7641 can be given retroactive effect?


(2) Whether or not Agripino Caballeda and Alejandro Cadalin
voluntarily retired from the service?

Ruling: The issue of retroactivity has long been settled in the case of
Enriquez Security Services, Inc. vs. Cabotaje.

RA 7641 is undoubtedly a social legislation. The law has been enacted as


a labor protection measure and as a curative statute that absent a
retirement plan devised by, an agreement with, or a voluntary grant
from, an employer can respond, in part at least, to the financial wellbeing
of workers during their twilight years soon following their life of labor.
There should be little doubt about the fact that the law can apply
to labor contracts still existing at the time the statute has taken
effect, and that its benefits can be reckoned not only from the
date of the law's enactment but retroactively to the time said
employment contracts have started.

This doctrine has been repeatedly upheld and clarified in several cases.
Pursuant thereto, this Court imposed two (2) essential requisites in order that
R.A. 7641 may be given retroactive effect: (1) the claimant for retirement
benefits was still in the employ of the employer at the time the statute took
effect; and (2) the claimant had complied with the requirements for eligibility
for such retirement benefits under the statute.

When respondents were compulsorily retired from the service, RA 7641 was
already in full force and effect. The petitioners failed to prove that the
respondents did not comply with the requirements for eligibility under the
law for such retirement benefits. In sum, the aforementioned requisites were
adequately satisfied, thus, warranting the retroactive application of R.A. 7641
in this case.

Retirement is the result of a bilateral act of the parties, a voluntary


agreement between the employer and the employee whereby the latter,
after reaching a certain age, agrees to sever his or her employment with the
former. The age of retirement is primarily determined by the existing
agreement between the employer and the employees. However, in the
absence of such agreement, the retirement age shall be fixed by law. Under
Art. 287 of the Labor Code as amended, the legally mandated age for
compulsory retirement is 65 years, while the set minimum age for optional

Garcy Kate D. Go LLB2 EH306 Page 224


retirement is 60 years.

In this case, it may be stressed that the CBA does not per se specifically
provide for the compulsory retirement age nor does it provide for an optional
retirement plan. It merely provides that the retirement benefits accorded to
an employee shall be in accordance with law. Thus, we must apply Art. 287
of the Labor Code which provides for two types of retirement: (a) compulsory
and (b) optional. The first takes place at age 65, while the second is primarily
determined by the collective bargaining agreement or other employment
contract or employer's retirement plan. In the absence of any provision on
optional retirement in a collective bargaining agreement, other employment
contract, or employer's retirement plan, an employee may optionally retire
upon reaching the age of 60 years or more, but not beyond 65 years,
provided he has served at least five years in the establishment concerned.
That prerogative is exclusively lodged in the employee.

Indubitably, the voluntariness of the respondents' retirement is the meat of


the instant controversy. Generally, the law looks with disfavor on quitclaims
and releases by employees who have been inveigled or pressured into
signing them by unscrupulous employers seeking to evade their legal
responsibilities and frustrate just claims of employees. They are frowned
upon as contrary to public policy. A quitclaim is ineffective in barring
recovery of the full measure of a worker's rights, and the acceptance of
benefits therefrom does not amount to estoppel.

In exceptional cases, the Court has accepted the validity of quitclaims


executed by employees if the employer is able to prove the following
requisites: (1) the employee executes a deed of quitclaim voluntarily; (2)
there is no fraud or deceit on the part of any of the parties; (3) the
consideration of the quitclaim is credible and reasonable; and (4) the
contract is not contrary to law, public order, public policy, morals or good
customs or prejudicial to a third person with a right recognized by law. In this
case, petitioners failed to establish all the foregoing requisites.

To be precise, only Alejandro was able to claim a partial amount of his


retirement benefit. Thus, it is clear from the decisions of the LA, NLRC and CA
that petitioners are still liable to pay Alejandro the differential on his
retirement benefits. On the other hand, Agripino was actually and totally
deprived of his retirement benefit. In Becton Dickinson Phils., Inc. v. National
Labor Relations Commission, we held:

There is no nexus between intelligence, or even the position which the


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

Garcy Kate D. Go LLB2 EH306 Page 225


or by law.

Absent any convincing proof of voluntariness in the submission of the


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

Lourdes Cercado vs Uniprom Inc.


G.R. NO. 188154 October 13, 2010

Fact: Petitioner Lourdes cerdaco was an employee of UNIPROM Inc. for 22


years since December 15, 1978. When respondent came up with a
retirement plan, sometime in 1980 and then amended in 2001, which
provides that any employee with a minimum of 20 years of service,
regardless of age, may be retired at the option of the employer. In December
2000, UNIPROM implemented a company-wide retirement program, including
herein petitioner. She was offered an early retirement package amounting to
P171, 982.90 but Cercado rejected the offer. UNIPROM exercised its option
under the retirement plan and decided to retire petitioner effective February
15, 2001 so she was no longer given any work assignment after the said
date. This prompted the petitioner to file a complaint for illegal dismissal
before the Labor Arbiter, alleging that UNIPROM did not have abona fide
retirement plan, and even if there was, she didnt consent thereto.
Respondent averred that Cercado was automatically covered by the
retirement plan when she agreed to the companys rules and regulations,
and that her retirement was an exercise of management prerogative.

Issues:
1. Whether or not UNIPROM has a bona fide retirement plan
2. Whether or not petitioner was validly retired pursuant thereto

Ruline: Petition is meritorious.

Retirement is the result of a bilateral act of the parties, a voluntary


agreement between the employer and the employee whereby the latter,
after reaching a certain age, agrees to sever his or her employment with the
former.
1. Yes, UNIPROM had a bona fide retirement plan. Article 287 of the Labor
Code, as amended by R.A 7641, pegs the age for compulsory
retirement at 65 years old, while the minimum age for optional
retirement is set at 60 years. However, an employer is free to impose a
retirement age earlier than the foregoing mandates. This has been
upheld in numerous cases as a valid exercise of management
prerogative.
In this case, petitioner was retired by UNIPROM at the age of 47, after
having served the company for 22 years, pursuant to the companys

Garcy Kate D. Go LLB2 EH306 Page 226


retirement plan, which provides that employees who have rendered at
least 20 years of service can be retired at the option of the copany.
Respondents retirement plan can be expediently stamped with validity
and justified under the all encompassing phrase management
prerogative.
2. No, petitioner was not validly retired. Jurisprudence has upheld that it
is axiomatic that a retirement plan giving the employer the option to
retire its employees below below the ages provided by law must be
assented to and accepted by the latter, otherwise its adhesive
imposition will amount to a deprivation of property without due
process. In decided cases, the retirement plans were either embodied
in the CBA, or established after consultations and negotiations with the
emplyees bargaining representative. The cnsent of the employees to
be retired even before the statutory retirement age of 65 years was
thus clear and unequivocal. Acceptance by the employees of an early
retirement age must be explicit, voluntary, free and uncompelled.

WhHEREFORE, petition is granted.

Radio Mindanao Network, Inc. And Eric S. Canoy , vs.


Domingo Z. Ybarola, Jr. And Alfonso E. Rivera, Jr. , [G.R.
No. 198662. September 12, 2012.]

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were
hired on June 15, 1977 and June 1, 1983, respectively, by Radio Mindanao
Network (RMN). They eventually became account managers, soliciting
advertisements and servicing various clients of RMN.
On September 15, 2002, the respondents' services were terminated as a
result of RMN's reorganization/restructuring; they were given their separation
pay P631,250.00 for Ybarola, and P481,250.00 for Rivera. Sometime in
December 2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate


complaints (which were later consolidated) against RMN and its President,
Eric S. Canoy, for illegal dismissal with several money claims, including
attorney's fees. They indicated that their monthly salary rates were
P60,000.00 for Ybarola and P40,000.00 for Rivera.

Issue: Whether the amounts the respondents received represented a fair


and reasonable settlement of their claims

Ruling: The petitioners insist that the respondents' commissions were not
part of their salaries, because they failed to present proof that they earned
the commission due to actual market transactions attributable to them. They
submit that the commissions are profit-sharing payments which do not form
part of their salaries. We are not convinced. If these commissions had
been really profit-sharing bonuses to the respondents, they should have
received the same amounts, yet, as the NLRC itself noted, Ybarola and Rivera
received P372,173.11 and P586,998.50 commissions, respectively, in
2002. The variance in amounts the respondents received as commissions
supports the CA's finding that the salary structure of the respondents was
such that they only received a minimal amount as guaranteed wage; a
greater part of their income was derived from the commissions they get from
soliciting advertisements; these advertisements are the "products" they sell.

Garcy Kate D. Go LLB2 EH306 Page 227


As the CA aptly noted, this kind of salary structure does not detract from the
character of the commissions being part of the salary or wage paid to the
employees for services rendered to the company, as the Court held
in Philippine Duplicators, Inc. v. NLRC.

The petitioners' reliance on our ruling in Talam v. National Labor Relations


Commission, regarding the "proper appreciation of quitclaims," as they put it,
is misplaced. While Talam, in the cited case, and Ybarola and Rivera, in this
case, are not unlettered employees, their situations differ in all other
respects.

In Talam, the employee received a valuable consideration for his less than
two years of service with the company; he was not shortchanged and no
essential unfairness took place. In this case, as the CA noted, the separation
pay the respondents each received was deficient by at least P400,000.00;
thus, they were given only half of the amount they were legally entitled to. To
be sure, a settlement under these terms is not and cannot be a reasonable
one, given especially the respondents' length of service 25 years for
Ybarola and 19 years for Rivera. The CA was correct when it opined that the
respondents were in dire straits when they executed the release/quitclaim
affidavits. Without jobs and with families to support, they dallied in executing
the quitclaim instrument, but were eventually forced to sign given their
circumstances.

Eleazar S. Padillo, Vs. Rural Bank Of Nabunturan, Inc. And Mark S.


Oropeza
G.R. No. 199338. January 21, 2013

Facts: On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was
employed by respondent Rural Bank of Nabunturan, Inc. (Bank) as its SA
Bookkeeper. Due to liquidity problems which arose sometime in 2003, the
Bank took out retirement/insurance plans with Philippine American Life and
General Insurance Company (Philam Life) for all its employees in anticipation
of its possible closure and the concomitant severance of its personnel. In this
regard, the Bank procured Philam Plan Certificate of Full Payment No. 88204,
Plan Type 02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in favor
of Padillo for a benefit amount of P100,000.00 and which was set to mature
on July 11, 2009. .During the latter part of 2007, Padillo suffered a mild
stroke due to hypertension which consequently impaired his ability to
effectively pursue his work. On September 10, 2007, he wrote a letter
addressed to respondent Oropeza, the president of the bank, expressing his
intention to avail of an early retirement package. Despite several follow-ups,
his request remained unheeded. On October 3, 2007, Padillo was separated
from employment due to his poor and failing health as reflected in a
Certification dated December 4, 2007 issued by the Bank. Not having
received his claimed retirement benefits, Padillo filed with the NLRC a
complaint for the recovery of unpaid retirement benefits.

Ruling: The Labor Code provision on termination on the ground of disease


under Article 297 does not apply in this case, considering that it was the
petitioner and not the Bank who severed the employment relations. It was
Padillo who voluntarily retired and that he was not terminated by the Bank.

Garcy Kate D. Go LLB2 EH306 Page 228


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.

T/SGP Larkins vs. NLRC


G.R. No. 92432; February 23, 1995

Facts: Petitioner was a member of the United States Air Force (USAF)
assigned to oversee the dormitories of the Third Aircraft Generation
Squadron (3 AGS) at Clark Air Base, Pampanga.
On August 10, 1988, 3 AGS terminated the contract for the maintenance and
upkeep of the dormitories with the De Guzman Custodial Services. The
employees thereof, including private respondents, were allowed to continue
working for 3 AGS. It was left to the new contractor, the JAC Maintenance
Services owned by Joselito Cunanan, to decide whether it would retain their
services. Joselito Cunanan, however, chose to bring in his own workers. As a
result, the workers of the De Guzman Custodial Services were requested to
surrender their base passes to Lt. Col. Frankhauser or to petitioner.

It is petitioners contention that the questioned resolutions are null and void
because respondent Labor Arbiter did not acquire jurisdiction to entertain
and decide the case. Petitioner alleges that she never received nor was
served, any summons or copies of the original and amended complaints, and
therefore the Labor Arbiter had no jurisdiction over her person under Article
XIV of the R.P. ? U.S. Military Bases Agreement.

Issue: WON the Labor Arbiter acquires jurisdiction over the respondent.

Garcy Kate D. Go LLB2 EH306 Page 229


Ruling: The Agreement Between the Republic of the Philippines and the
United States of America Concerning Military Bases, otherwise known as the
R.P. ? U.S. Military Bases Agreement, governed the rights, duties, authority,
and the exercise thereof by Philippine and American nationals inside the U.S.
military bases in the country.

Article XIV thereof, governing the procedure for service of summons on


persons inside U.S. military bases, provides that:

. . . [N]o process, civil or criminal, shall be served within any base except
with the permission of the commanding officer of such base; but should the
commanding officer refuse to grant such permission he shall forthwith take
the necessary steps . . . . to serve such process, as the case may be, and to
provide the attendance of the server of such process before the appropriate
court in the Philippines or procure such server to make the necessary
affidavit or declaration to prove such service as the case may require.

Summonses and other processes issued by Philippine courts and


administrative agencies for United States Armed Forces personnel within any
U.S. base in the Philippines could be served therein only with the permission
of the Base Commander. If he withholds giving his permission, he should
instead designate another person to serve the process, and obtain the
servers affidavit for filing with the appropriate court.

Respondent Labor Arbiter did not follow said procedure. He instead,


addressed the summons to Lt. Col. Frankhauser and not the Base
Commander (Rollo, p. 11).

Respondents do not dispute petitioners claim that no summons was ever


issued and served on her. They contend, however, that they sent notices of
the hearings to her (Rollo, pp. 12-13).

Notices of hearing are not summonses. The provisions and prevailing


jurisprudence in Civil Procedure may be applied by analogy to NLRC
proceedings (Revised Rules of the NLRC, Rule I, Sec. 3). It is basic that the
Labor Arbiter cannot acquire jurisdiction over the person of the respondent
without the latter being served with summons (cf. Vda. de Macoy v. Court of
Appeals, 206 SCRA 244 [1992]; Filmerco Commercial Co., Inc. v. Intermediate
Appellate Court, 149 SCRA 193 [1987]). In the absence of service of
summons or a valid waiver thereof, the 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).

Garcy Kate D. Go LLB2 EH306 Page 230


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: On December 14, 1987, RA 6640 took effect mandating a 10-peso


increase on the prevailing daily minimum wage (DMW) resulting to a 95-peso
difference in the salaries of rank-and-file employees (union members) and
faculty members (non-union). On July 1, 1989, RA 6727 took effect again
increasing the DMW by 25 pesos resulting in a difference of P237.42 between
the salaries of the 2 employee groups. In September 1987, petitioners
increased the hiring rate to P188.00 per month. On 12 April 1988, Policy
Instruction No. 54 was issued by the then Secretary of Labor Franklin Drilon
providing that the personnel in subject hospitals and clinics are entitled to a
full weekly wage of seven days if they have completed the 40-hour/5-day
workweek in any given workweek.

Garcy Kate D. Go LLB2 EH306 Page 231


Consequently, a complaint was filed by the private respondents, represented
by the Federation of Free Workers (FFW), claiming salary differentials under
Republic Act Nos. 6640 and 6727, correction of the wage distortion and the
payment of salaries for Saturdays and Sundays under Policy Instruction No.
54.

Labor Arbiter Nieves de Castro sustained the private respondents except for
their claim of wage distortion and directed petitioner to pay P17,082,448.56
as salary differentials and P2,000.00 each as exemplary damages. Within the
reglementary period for appeal, the petitioners filed their Notice and
Memorandum of Appeal with a Real Estate Bond consisting of land and
various improvements therein worth P102,345,650.

The private respondents moved to dismiss the appeal on the ground that
Article 223 of the Labor Code, as amended, requires the posting of a cash or
surety bond. The NLRC directed petitioners to post a cash or surety bond of
P17,082,448.56 with a warning that failure to do so would cause the
dismissal of the appeal.

The petitioners filed a Motion for Reconsideration alleging it is not in a viable


financial condition to post a cash bond nor to pay the annual premium of
P700,000.00 for a surety bond. On 6 October 1992, the NLRC dismissed
petitioners' appeal. Petitioners' MR was also denied by the NLRC in a
resolution dated 7 June 1993.

Issue: WON in perfecting an appeal to the National Labor Relations


Commission (NLRC) a property bond is excluded by the two forms of appeal
bond cash or surety as enumerated in Article 223 of the Labor Code.

Ruling: The applicable law is Article 223 of the Labor Code, as amended by
Republic Act No. 6715, which provides:

"In case of a judgment involving a monetary award, an appeal by the


employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the
judgment appealed from."

We have given a liberal interpretation to this provision. In YBL (Your Bus Line)
v. NLRC we ruled:

"x x x that while Article 223 of the Labor Code, as amended by


Republic Act No. 6715, requiring a cash or surety bond in the amount
equivalent to the monetary award in the judgment appealed from for
the appeal to be perfected, may be considered a jurisdictional
requirement, nevertheless, adhering to the principle that substantial
justice is better served by allowing the appeal on the merits threshed
out by the NLRC, the Court finds and so holds that the foregoing
requirement of the law should be given a liberal interpretation."
Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor
Relations Commission we held:

"The intention of the lawmakers to make the bond an indispensable


requisite for the perfection of an appeal by the employer is
underscored by the provision that an appeal by the employer may be

Garcy Kate D. Go LLB2 EH306 Page 232


perfected "only upon the posting of a cash or surety bond." The word
"only" makes it perfectly clear, that the lawmakers intended the
posting of a cash or surety bond by the employer to be the exclusive
means by which an employer's appeal may be perfected. The
requirement is intended to discourage employers from using an appeal
to delay, or even evade, their obligation to satisfy their employees' just
and lawful claims.
Considering, however, that the current policy is not to strictly follow
technical rules but rather to take into account the spirit and intention
of the Labor Code, it would be prudent for us to look into the merits of
the case, especially since petitioner disputes the allegation that private
respondent was illegally dismissed."

We reiterate this policy which stresses the importance of deciding cases on


the basis of their substantive merit and not on strict technical rules. In the
case at bar, the judgment involved is more than P17 million and its
precipitate execution can adversely affect the existence of petitioner medical
center. Likewise, the issues involved are not insignificant and they deserve a
full discourse by our quasi-judicial and judicial authorities. We are also
confident that the real property bond posted by the petitioners sufficiently
protects the interests of private respondents should they finally prevail. It is
not disputed that the real property offered by petitioners is worth
P102,345,650. The judgment in favor of private respondents is only a little
more than P17 million.

Case remanded to NLRC for continuation of proceedings.

PHIL TRANCO SERVICES v. NLRC


G.R. No. 124100, April 1, 1998

Garcy Kate D. Go LLB2 EH306 Page 233


Facts: Nieva was employed as a driver by petitioner assigned to the Legaspi
City-Pasay City route. Nieva sideswiped an owner-type jeep and a criminal
complaint was filed against him. Philtranco posted a bail bond for Nieva.
After having been suspended for thirty days, he tried to report to work but
was told to wait until his case was settled. The case was finally settled, he
again reported to work but was requested to file a new application as he was
no longer considered an employee of Philtranco, allegedly for being absent
without leave from October 19 to November 20, 1989.

Nieva filed a complaint for illegal dismissal and demanded for Thirteenth-
Month Pay with the NLRCs National Capital Region Arbitration Branch in
Manila. Philtranco filed a motion to dismiss on the ground of improper venue,
stating that the complaint should have been lodged with the NLRCs Regional
Arbitration Branch in Legaspi City, not only because Nieva was a resident
thereof, but also because the latter was hired, assigned, and based in
Legaspi City.

Issue: Whether or not NLRCs NCR Arbitration Branch in Manila was the
proper venue for the filing of Nievas complaint for illegal dismissal?

Ruling: Yes, the NLRCs NCR Arbitration Branch was the proper venue for the
filing of the complaint. The question of venue essentially pertains to the trial
and relates more to the convenience of the parties rather than upon the
substance and merits of the case. Provisions on venue are intended to assure
convenience for the plaintiff and his witnesses and to promote the ends of
justice. In fact, Section 1 (a), Rule IV of the New Rules of Procedure of the
NLRC, cited by Philtranco in support of its contention that venue of the illegal
dismissal case filed by Nieva is improperly laid, speaks of the
complainant/petitioner's workplace, evidently showing that the rule is
intended for the exclusive benefit of the worker. This being the case, the
worker may waive said benefit. Furthermore, the aforesaid Section has been
declared by this Court to be merely permissive. Moreover, Nieva, as a driver
of Philtranco, was assigned to the Legazpi City-Pasay City route. Sulpicio
Lines, Inc. vs. NLRC is exactly in point. In said case, we held that: "Section 1,
Rule IV of the 1990 NLRC Rules additionally provides that, for purposes of
venue, workplace shall be understood as the place or locality where the
employer is regularly assigned when the cause of action arose." From the
foregoing, it is obvious that the filing of the complaint with the National
Capital Region Arbitration Branch was proper, Manila being considered as
part of Nieva's workplace by reason of his plying the Legazpi City-Pasay City
route.

Garcy Kate D. Go LLB2 EH306 Page 234


St. Martin Funeral Homes vs. NLRC,
G.R. No. 130866, September 16, 1998

Facts: Respondent Aricayos filed a complaint for illegal dismissal to the labor
arbiter. There being no employer-employee relationship between the two,
petition was dismissed for lack of jurisdiction. Arcayos appealed to NLRC
contending errors of the labor arbiter.

Issue: Whether or not the Supreme Court has jurisdiction over NLRC
appeals?

Ruling: First established in 1972, decisions of NLRC were declared to be


appealable to the Secretary of labor and, ultimately to the President. But
under the present state law, there is no provision for appeals from NLRC
decisions. The court held that there is an underlying power of the courts to
scrutinize the acts of such agencies on questions of law and jurisdiction even
though not right of review is given by statute, that the purpose of jurisdiction
review is to keep the administrative agency within its jurisdiction and protect
the substantial rights of the parties; and that is part of the checks and
balances which restricts the separation of powers and forestalls arbitrary and
unjust jurisdictions.

Subsequently under RA 7902, effective March 1995, the mode for judicial
review over NLRC decisions in that of a petition for Certiorari under Rule 65.
The same confuses by declaring that the CA has no appellate jurisdiction
over decisions falling within the appellate jurisdiction of SC, including the
NLRC decisions.

Therefore, all references in the amended Section 9 of BP 129 to supposed


appeals from NLRC to SC are interpreted and hereby declared to mean and
refer to petitions for certiorari under Rule 65. All such petitions should
henceforth be initially filed in the doctrine on the hierarchy of courts as
appropriate forum for the relief desired.

Case remanded to CA.

Garcy Kate D. Go LLB2 EH306 Page 235


Ludo & Luym Corp. vs. Soarnido
G.R. No. 140960, January 20, 2003

Facts: LUDO engaged the arrastre services of Cresencio Lu Arrastre


Services (CLAS) for the loading and unloading of its finished products at the
wharf. Accordingly, several arrastre workers were deployed by CLAS to
perform the services needed by LUDO. These arrastre workers were
subsequently hired, on different dates, as regular rank-and-file employees of
LUDO every time the latter needed additional manpower services. Said
employees thereafter joined respondent union, the LUDO Employees Union
(LEU), which acted as the exclusive bargaining agent of the rank-and-file
employees. Respondent union entered into a collective bargaining
agreement with LUDO which provides certain benefits to the employees, the
amount of which vary according to the length of service rendered by the
availing employee.

Thereafter, the union requested LUDO to include in its members period of


service the time during which they rendered arrastre services to LUDO
through the CLAS so that they could get higher benefits. LUDO failed to act
on the request. Thus, the matter was submitted for voluntary arbitration.
Voluntary Arbitrator ruled that: (1) the respondent employees were engaged
in activities necessary and desirable to the business of petitioner, and (2)
CLAS is a labor-only contractor of petitioner.

The Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator.
Petitioner contends that the appellate court erred when it upheld the award
of benefits which were beyond the terms of submission agreement and that
the arbitrator must confine its adjudication to those issues submitted by the
parties for arbitration, which in this case is the sole issue of the date of
regularization of the workers. Hence, the award of benefits by the arbitrator
was done in excess of jurisdiction.

Issue: WON the appellate court gravely erred when it upheld the award of
benefits which were beyond the terms of submission agreement.

Ruling: Generally, the arbitrator is expected to decide only those


questions expressly delineated by the submission agreement. Nevertheless,
the arbitrator can assume that he has the necessary power to make a final
settlement since arbitration is the final resort for the adjudication of
disputes.13 The succinct reasoning enunciated by the CA in support of its
holding, that the Voluntary Arbitrator in a labor controversy has jurisdiction
to render the questioned arbitral awards, deserves our concurrence, thus: In
general, the arbitrator is expected to decide those questions expressly stated
and limited in the submission agreement. However, since arbitration is the
final resort for the adjudication of disputes, the arbitrator can assume that he
has the power to make a final settlement. Thus, assuming that the
submission empowers the arbitrator to decide whether an employee was
discharged for just cause, the arbitrator in this instance can reasonable
assume that his powers extended beyond giving a yes-or-no answer and
included the power to reinstate him with or without back pay.

Garcy Kate D. Go LLB2 EH306 Page 236


HANJIN ENGINEERING & CONSTRUCTION v. CA
GR No. 165910

Facts: On October 18, 1991 and August 21, 1992, Hanjin and the Philippine
Government, through the National Irrigation Administration (NIA), executed
contracts for the construction of the Malinao Dam at Pilar, Bohol, with a
projected completion period of 1,050 calendar days, including main canal
and lateral projects for 750 days. From August 1995 to August 1996, Hanjin
contracted the services of 712 carpenters, masons, truck drivers, helpers,
laborers, heavy equipment operators, leadmen, engineers, steelmen,
mechanics, electricians and others.

In April 1998, 712 employees filed complaints for illegal dismissal and for
payment of benefits against Hanjin and Nam Hyun Kim, the officer-in-charge
of the project (herein petitioners), before the National Labor Relations
Commission (NLRC). The complainants averred that they were regular
employees of Hanjin and that they were separated from employment without
any lawful or just cause. Only 521 of the complainants affixed their
signatures in the complaints.

Petitioners alleged that the complainants were mere project employees in its
Bohol Irrigation Project.

On May 12, 1998, the Labor Arbiter rendered judgment in favor of the 428
complainants, granting separation pay and attorneys fees to each of them.
According to the Labor Arbiter, the complainants were regular employees of
petitioner Hanjin, and their claims for underpayment, holiday pay, premium
pay for holiday and rest day, 13th month pay, and service incentive leave
would be computed after sufficient data were made available.
Petitioners appealed the decision to the NLRC, which affirmed with
modification the Labor Arbiters ruling on January 28, 2000.

Petitioners filed a Motion for the Reconsideration of the decision (with a


motion to conduct clarificatory hearings). On July 20, 2001, the NLRC issued
a Resolution partially granting petitioners motion. Unsatisfied, petitioners
filed a Petition for Certiorari under Rule 65 of the Revised Rules of Court in
the CA. On March 18, 2004, the CA dismissed the petition and affirmed the
NLRCs ruling that the dismissed employees (respondents) were regular
employees. The CA stressed that petitioners failed to refute the claim of the
respondents that they were regular employees. Petitioners moved to
reconsider the decision, which the CA denied.

Issue: WON respondents regular employees entitled to their moneys.

Ruling: The CA, for its part, affirmed the findings of the Labor Arbiter and
the NLRC, and held that respondents were regular employees of petitioner
Hanjin:

Garcy Kate D. Go LLB2 EH306 Page 237


In the instant case, petitioners belatedly submitted copies of Appointment(s)
as Contract Worker(s) allegedly signed by private respondents at the time
they commenced work, and which provided for an employment of six (6)
months only, a period applicable for probationary employment. While it may
be allowed that in the instant case the workers were initially hired for specific
projects or undertakings for a period of six (6) months or less, the repeated
re-hiring and the continuing need for their services over a long span of time
(from 1991 to 1995) have undeniably made them regular employees. Thus,
we held that where the employment of project employees is extended long
after the supposed appointments has been finished, the employees are
removed from the scope of project employees and considered regular
employees. How can one properly explain private respondents continuous
employment from 1991 to 1996 when their appointment was for a measly
period of six months? It is clear, therefore, that as aptly established by the
NLRC, these piecemeal appointments have been imposed to preclude the
acquisition of tenurial security. While length of time may not be a controlling
test for project employment, it can be a strong factor in determining whether
the employee was hired for a specific undertaking or in fact tasked to
perform functions which are vital, necessary and indispensable to the usual
business or trade of the employer.

Furthermore, it is noteworthy to emphasize that these appointments were


submitted only as attachments to petitioners motion for reconsideration. As
borne out by the records and even mentioned in the decision of the Labor
Arbiter, petitioners were already required during the initial hearings before
the Labor Arbiter to submit additional documents in their possession
necessary to support their case. Instead of complying, petitioners still had
to wait for the adverse decision of the NLRC before they submitted the same.
Likewise, in the NLRCs assailed decision, petitioners failure to present these
appointments were adverted to, thus, the NLRC ruled that nowhere in the
records can the said contracts be found. Despite sufficient time, from the
time they were required by the Labor Arbiter to present additional evidence
up to the time the appeal was resolved by the NLRC, petitioners were not
able to present said employment contracts. Petitioners hesitation to submit
the same is well-founded. It is a well-settled rule that when the evidence
tends to prove a material fact which imposes a liability on a party, and he
has it in his power to produce evidence which from its very nature must
overthrow the case made against him if it is not founded on fact, and he
refuses to produce such evidence, the presumption arises that the evidence,
if produced, would operate to his prejudice, and support the case of his
adversary.

Moreover, it is required under Policy Instruction No. 20, Series of 1993, that
in case of project employees, the termination of their employment in the
particular project or undertaking must be reported to the Department of
Labor and Employment (DOLE) Regional Office having jurisdiction over the
workplace within thirty (30) days following the date of his separation from
work. In Ochoco v. National Labor Relations Commission, the failure of the
employer to report to the nearest employment office the termination of
employment of workers everytime it completed a project was considered by
this Court as proof that the dismissed employees were not project employees
but regular employees. On this requirement, petitioners were silent, until the
Decision of the NLRC reminded them. To prove that petitioners allegedly
complied with said requirement, they again belatedly submitted machine
copies of reports allegedly made to the DOLE of Bohol. To explain away their
failure to produce certified true copies of the same, petitioners allege that

Garcy Kate D. Go LLB2 EH306 Page 238


the NLRC should have given evidentiary weight to the machine copies which
are for all legal intents and purposes already public records in the custody of
the DOLE duly recorded in a public office. The same argument can be taken
against herein petitioners in that, for all the time it took them to produce said
machine copies, it would have been more prudent for them to have it
certified by the DOLE in Bohol. Under the Rules of Evidence, and as stated by
petitioners, the original document need not be produced when the same is a
public record in the custody of a public office or is recorded in a public office.
Thus, proof of such documents may be made by a duly authenticated copy of
the original document or record. It is essential, furthermore, that the copies
be made in the manner provided by the rules and that all requirements in
connection therewith be complied with before such copy be properly
admissible in evidence. Considering that the documents submitted by
petitioners are mere machine copies, the NLRC cannot be compelled to give
them evidentiary weight.

The appellate court, the NLRC and the Labor Arbiter are thus one in finding
that respondents were not project employees, and in sustaining respondents
claim of illegal dismissal due to petitioners failure to adduce contrary
evidence. Well-settled is the rule that findings of fact of quasi-judicial
agencies, like the NLRC, are accorded not only respect but at times even
finality if such findings are supported by substantial evidence. Such findings
of facts can only be set aside upon showing of grave abuse of discretion,
fraud or error of law,none of which have been shown in this case.

Garcy Kate D. Go LLB2 EH306 Page 239


Phil. Journalistic Inc., vs NLRC G.R. 166421 September 5, 2006

Facts: In NLRCs Resolution dated May 31, 2001, petitioner Philippine


Journalists, Inc. (PJI) was adjudged liable in the total amount of
P6,447,008.57 for illegally dismissing 31 complainants-employees and that
there was no basis for the implementation of petitioner's retrenchment
program. Thereafter, the parties executed a Compromise Agreement dated
July 9, 2001, where PJI undertook to reinstate the 31 complainant-employees
effective July 1, 2001 without loss of seniority rights and benefits; 17 of them
who were previously retrenched were agreed to be given full and complete
payment of their respective monetary claims, while 14 others would be paid
their monetary claims minus what they received by way of separation pay.

The compromise agreement was submitted to the NLRC for approval. All the
employees mentioned in the agreement and in the NLRC Resolution affixed
their signatures thereon. They likewise signed the Joint Manifesto and
Declaration of Mutual Support and Cooperation which had also been
submitted for the consideration of the labor tribunal. The NLRC forthwith
issued another Resolution on July 25, 2002, which among others declared
that the compromise agreement was approved and NCMB-NCR-NS-03-087-00
was deemed closed and terminated.

In the meantime, however, the Union filed another Notice of Strike on July 1,
2002. In an Order dated September 16, 2002, the DOLE Secretary certified
the case to the Commission for compulsory arbitration. The case was
docketed as NCMB-NCR- NS-07-251-02. In its Resolution dated July 31, 2003,
the NLRC ruled that the complainants were not illegally dismissed. The May
31, 2001 Resolution declaring the retrenchment program illegal did not
attain finality as "it had been academically mooted by the compromise
agreement entered into between both parties on July 9, 2001." The Union
assailed the ruling of the NLRC before the CA via petition for certiorari under
Rule 65. In its Decision dated August 17, 2004, the appellate court held that
the NLRC gravely abused its discretion in ruling for PJI. The compromise
agreement referred only to the award given by the NLRC to the complainants
in the said case, that is, the obligation of the employer to the complainants.

Issue: WON the petitioners petition for certiorari under Rule 65 of the
Revised Rules of Civil Procedure is a proper remedy in this case.

Ruling: At the outset, we note that this case was brought before us via
petition for certiorari under Rule 65 of the Revised Rules of Civil Procedure.
The proper remedy, however, was to file a petition under Rule 45. It must be
stressed that certiorari under Rule 65 is "a remedy narrow in scope and
inflexible in character. It is not a general utility tool in the legal workshop."
Moreover, the special civil action for certiorari will lie only when a court has
acted without or in excess of jurisdiction or with grave abuse of discretion.

Be that as it may, a petition for certiorari may be treated as a petition for


review under Rule 45. Such move is in accordance with the liberal spirit
pervading the Rules of Court and in the interest of substantial justice. As the
instant petition was filed within the prescribed fifteen-day period, and in view
of the substantial issues raised, the Court resolves to give due course to the
petition and treat the same as a petition for review on certiorari.

Garcy Kate D. Go LLB2 EH306 Page 240


Balagtas Multi-purpose Coop. v. CA

Facts: Balagtas Multi-Purpose Cooperative, Inc. is a duly organized and


existing cooperative under the laws of the Philippines. Sometime in April
1991, Balagtas hired Josefina G. Hipolito-Herrero, as part time manager in its
office. Subsequently, Josefina made known of her intention to take a leave of
absence. Her proposal was immediately approved. However, after the lapse
of her leave of absence, Josefina did not report for work anymore. Later on,
she filed her resignation.

Consequently Josefina filed a complaint with the Provincial Office of the


Department of Labor in Malolos, Bulacan for illegal dismissal, and non-
payment of 13th month pay or Christmas Bonus. She also prayed for
reinstatement and paid backwages as well as moral damages.

The Labor Arbiter rendered judgment in favor of complainant and against


respondents and ordered the latter to pay the former 13th month pay,
backwages and separation pay. Aggrieved, herein petitioners appealed the
decision to NLRC but failed to post either a cash or surety bond as required
by Article 223 of the Labor Code. They filed a manifestation and motion
instead, stating, that under Republic Act No. 6938, Article 62(7) of the
Cooperative Code of the Philippines, petitioners are exempt from putting up
a bond in an appeal from the decision of the inferior court. NLRC ordered
respondents to post a cash or surety bond in the amount of P218,000.00,
within 10 inextendible days from receipt of the Order, failure of which shall
constitute a waiver and non-perfection of the appeal. Balagtas appealed to
CA, which dismissed the petition holding that the exemption from putting up
a bond by a cooperative applies to cases decided by inferior courts only.

Issues:
(1) WON cooperatives are exempted from filing a cash or surety
bond required to perfect an employers appeal under Section 223
of Presidential Decree No. 442 (the Labor Code);
(2) WON a certification issued by the Cooperative Development
Authority constitutes substantial compliance with the
requirement for the posting of a bond.

Ruling:
(1) No. Petitioners argue that there are certain benefits and privileges
expressly granted to cooperative under the Cooperative Code. It
invoked the provision on Article 62 regarding the exemption from
payment of an appeal bond, to wit: (7)All cooperatives shall be exempt
from putting up a bond for bringing an appeal against the decision of
an inferior court or for seeking to set aside any third party claim:
Provided, That a certification of the Authority showing that the net
assets of the cooperative are in excess of the amount of the bond
required by the court in similar cases shall be accepted by the court as
a sufficient bond.

However, it is only one among a number of such privileges which appear


under the article entitled Tax and Other Exemptions of the code. The
provision cited by petitioners cannot be taken in isolation and must be
interpreted in relation to the Cooperative Code in its entirety. Exceptions are
to be strictly but reasonably construed; they extend only so far as their
language warrants, and all doubts should be resolved in favor of the general
provision rather than the exceptions.

Garcy Kate D. Go LLB2 EH306 Page 241


(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.

Garcy Kate D. Go LLB2 EH306 Page 242


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

Facts: On September 16, 1998, the Supreme Court rendered the landmark
decision in G.R. No. 130866, holding for the first time that all petitions for
certiorari under Rule 65 assailing the decisions of the NLRC should
henceforth be filed with the CA, thus all references in the amended section 9
of B.P. No. 129 to supposed appeals from the NLRC to the Supreme Court are
interpreted and refer to petitions for certiorari under Rule 65. Consequently,
all such petitions should henceforth be initially filed in the Court of Appeals in
strict observance of the doctrine on the hierarchy of courts as the
appropriate forum for the relief desired.

Thus, the petition was remanded to the CA and redocketed as CA-G.R. SP No.
49183. Subsequently, the CA rendered the assailed September 30, 1999
Decision, dismissing petitioner's appeal for lack of merit with the finding that
respondent NLRC did not commit grave abuse of discretion, in its
pronouncement that the Labor Arbiter did not make any finding on the
alleged employer-employee relationship between the parties, reasoning this
way:

Actually the Labor Arbiter did not determine whether there is an employer-
employee relation between the parties because according to him, such issue
should be resolved by the regular court pursuant to the ruling of the
Supreme Court in De la Salle University vs. NLRC (135 SCRA 674, 677
(1988)).

For its part, respondent NLRC, is remanding the case to the Labor Arbiter,
reminded the latter that he is authorized by the NLRC Rules to determine, in
an appropriate proceeding the existence of an employer-employee
relationship.

Issue: WON the Labor Arbiter made a determination of the presence of an


employer-employee relationship.

Ruling: At the outset, it is clear that the issue submitted for resolution is a
question of fact which is proscribed by the rule disallowing factual issues in
appeal by certiorari to the Supreme Court under Rule 45. This is explicit in
Rule 45, Section 1 that petitions of this nature "shall raise only questions of
law which must be distinctly set forth." Petitioner St. Martin would like the
Court to examine the pleadings and documentary evidence extant on the
records of the Labor Arbiter to determine if said official indeed made a
finding on the existence of the alleged employer-employee nexus between
the parties based on the facts contained in said pleadings and evidence.
Evidently this issue is embraced by the circumscription.

Even if we would like to relax the rule and allow the examination of the
documentary evidence as an exception to the general rule, we are precluded
by the abject failure of petitioner to attach to the petition important and
material portions of the records as would support the petition prescribed by
Rule 45, Section 4. St. Martin asks us to find out if the Labor Arbiter was
correct in concluding that respondent Aricayos was not in its employ; but
committed the blunder of not attaching to the petition even the Decision of
the Labor Arbiter sought to be reviewed, the NLRC Decision, the position
papers and memoranda of the parties filed with the Labor Arbiter, the
affidavits of petitioner's employees, and other pieces of evidence that we

Garcy Kate D. Go LLB2 EH306 Page 243


can consider in resolving the factual issue on employment. Without these
vital documents, petitioner cannot be given the relief prayed for.

DOLE Phils. vs. Esteva, G.R. No. 161115, November 30, 2006

Facts: Petitioner is a corporation duly recognized and existing in accordance


with Philippine laws, engaged principally in the production and processing of
pineapple for the export market. Its plantation is located in Polomolok, South
Cotabato .

Respondents are members of the Cannery Multi-Purpose Cooperative


(CAMPCO). CAMPCO was organized in accordance with R.A. No. 6938,
otherwise known as the Cooperative Code of the Philippines , and duly
registered with the Cooperative Development Authority (CDA) on 6 January
1993. Members of CAMPCO live in communities surrounding petitioners
plantation and are relatives of petitioners employees.

On 17 August 1993, petitioner and CAMPCO entered into a Service Contract.


The Service Contract referred to petitioner as the Company, while CAMPCO
was the Contractor. The said contract was good for six months.

Pursuant to the contract, CAMPCO members rendered services to petitioner.


The parties apparently extended or renewed the same for the succeeding
years without executing another written contract.

However, due to investigations and reliable information, the Regional


Director of DOLE exercised his visitorial and enforcement power and found
out that CAMPCO is engaged in labor-only contracting together with two
other cooperatives.

The Law cited was Section 9, Rule VIII, Book III of the Omnibus Rules
Implementing the Labor Code. (pertaining to Labor-only contracting 1. no
substantial capital; 2. work is directly related to the principal business of the
principal b. in such case, the one who alleges as contractor is deemed an
agent of the principal while the latter will latter is considered the indirect
employer for purposes of enforcement of the labor rights.)

Before the NLRC, respondents contended that they have been working more
than one year too petitioner. While some of the respondents were still
working for petitioner, others were put on stay home status on varying
dates in the years 1994, 1995, and 1996 and were no longer furnished with
work thereafter. They, then, filed a case before the NLRC for illegal dismissal,
regularization, wage differentials, damages and attorneys fees.

Respondents argued that they should be considered regular employees of


petitioner given that: 1. they were performing jobs that were usually
necessary and desirable in the usual business of petitioner; 2. petitioner
exercised control over respondents, not only as to the results, but also as to
the manner by which they performed their assigned tasks; and 3. CAMPCO, a
labor-only contractor, was merely a conduit of petitioner. As regular
employees of petitioner, respondents asserted that they were entitled to

Garcy Kate D. Go LLB2 EH306 Page 244


security of tenure and those placed on stay home status for more than six
months had been constructively and illegally dismissed. Respondents further
claimed entitlement to wage differential, moral damages, and attorneys
fees.

NLRC affirmed the Labor Arbiters decision. CA also affirmed.

Issues: Whether the lower courts were correct in ruling that Petitioner is the
employer of respondents and that CAMPCO be considered merely as agent of
the company

Ruling: In summary, this Court finds that CAMPCO was a labor-only


contractor and, thus, petitioner is the real employer of the respondents, with
CAMPCO acting only as the agent or intermediary of petitioner. Due to the
nature of their work and length of their service, respondents should be
considered as regular employees of petitioner. Petitioner constructively
dismissed a number of the respondents by placing them on "stay home
status" for over six months, and was therefore guilty of illegal dismissal.
Petitioner must accord respondents the status of regular employees, and
reinstate the respondents who it constructively and illegally dismissed, to
their previous positions, without loss of seniority rights and other benefits,
and pay these respondents backwages from the date of filing of the
Complaint with the NLRC on 19 December 1996 up to actual reinstatement.

CRITERIA TO ESTABLISH THE EXISTENCE OF AN INDEPENDENT AND


PERMISSIBLE CONTRACTOR RELATIONSHIP

generally established by the following criteria: whether or not the contractor


is carrying on an independent business; the nature and extent of the work;
the skill required; the term and duration of the relationship; the right to
assign the performance of a specified piece of work; the control and
supervision of the work to another; the employer's power with respect to the
hiring, firing and payment of the contractor's workers; the control of the
premises; the duty to supply the premises tools, appliances, materials and
labor; and the mode, manner and terms of payment

SEVERAL FACTORS ARE PRESENT IN THE CASE TO ESTABLISH A LABOR- ONLY


CONTRACTING ARRANGEMENT BY BETWEEN THE MANAGEMENT AND
CAMPCO

While there is present in the relationship of petitioner and CAMPCO some


factors suggestive of an independent contractor relationship (i.e., CAMPCO
chose who among its members should be sent to work for petitioner;
petitioner paid CAMPCO the wages of the members, plus a percentage
thereof as administrative charge; CAMPCO paid the wages of the members
who rendered service to petitioner), many other factors are present which
would indicate a labor-only contracting arrangement between petitioner and
CAMPCO.

First, although petitioner touts the multi-million pesos assets of CAMPCO, it


does well to remember that such were amassed in the years following its
establishment. In 1993, when CAMPCO was established and the Service
Contract between petitioner and CAMPCO was entered into, CAMPCO only
had P6,600.00 paid-up capital, which could hardly be considered substantial.
It only managed to increase its capitalization and assets in the succeeding

Garcy Kate D. Go LLB2 EH306 Page 245


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 findings enumerated in the preceding paragraphs only support what


DOLE Regional Director Parel and DOLE Undersecretary Trajano had long
before conclusively established, that CAMPCO was a mere labor-only
contractor

EMPLOYER- EMPLOYEE RELATIONSHIP EXIST BETWEEN THE PETITIONER AND


THE RESPONDENT WITH THE DECLARATION THAT CAMPCO WAS ENGAGED IN
THE PROHIBITED ACTS OF LABOR-ONLY CONTRACTING

Garcy Kate D. Go LLB2 EH306 Page 246


The declaration that CAMPCO is indeed engaged in the prohibited activities
of labor-only contracting, then consequently, an employer-employee
relationship is deemed to exist between petitioner and respondents, since
CAMPCO shall be considered as a mere agent or intermediary of petitioner

RESPONDENTS ARE CONSIDERED REGULAR EMPLOYEES FOR THEY


PERFORMED ACTIVITIES THAT ARE NECESSARY OR DESIRABLE TO THE USUAL
BUSINESS OF THE PETITIONER

Since respondents are now recognized as employees of petitioner, this Court


is tasked to determine the nature of their employment. In consideration of all
the attendant circumstances in this case, this Court concludes that
respondents are regular employees of petitioner.

In the instant Petition, petitioner is engaged in the manufacture and


production of pineapple products for export. Respondents rendered services
as processing attendant, feeder of canned pineapple and pineapple
processing, nata de coco processing attendant, fruit cocktail processing
attendant, and etc., functions they performed alongside regular employees
of the petitioner. There is no doubt that the activities performed by
respondents are necessary or desirable to the usual business of petitioner.

Petitioner likewise want this Court to believe that respondents employment


was dependent on the peaks in operation, work backlogs, absenteeism, and
excessive leaves. However, bearing in mind that respondents all claimed to
have worked for petitioner for over a year, a claim which petitioner failed to
rebut, then respondents continued employment clearly demonstrates the
continuing necessity and indispensability of respondents employment to the
business of petitioner.

THE COMPANYS ACT OF PLACING SOME OF THE RESPONDENTS ON "STAY


HOME STATUS" AND NOT GIVING THEM WORK ASSIGNMENTS FOR MORE
THAN SIX MONTHS WERE ALREADY TANTAMOUNT TO CONSTRUCTIVE AND
ILLEGAL DISMISSAL

Respondents, as regular employees of petitioner, are entitled to security of


tenure. They could only be removed based on just and authorized causes as
provided for in the Labor Code, as amended, and after they are accorded
procedural due process. Therefore, petitioners acts of placing some of the
respondents on "stay home status" and not giving them work assignments
for more than six months were already tantamount to constructive and illegal
dismissal

Garcy Kate D. Go LLB2 EH306 Page 247


eInrctoialBdsgCp.vPbn
G.RNo154e07ub,Fary62

Facts:IrenoPgib(pd)wmlyasAntGeMrgofhIcilBadnstpCr(eo)fmMy1986usilhvntpeoAg2,198s.RdtrnifmheopylSb2,198.

OnApril12,98esodtfivachwRTCfQuzniy,Br93agsetmbofhdAnir(BO)petalg,mohsn-yfiupdco.AmntswaefibylJiSgo,hftdnserulackjio,pndstmwalbreyc,ihudntRTC.saSgoefilpifrchwtCAagnedSsopifrlckjutadehsRTCO.

Theraft,spondwclbyBOAVi-PretMfakngulJ192.HsdAipr3Oy4,6eontfildagsiprcmef l,oantipyrmfibseudc ,ang.ThLboerAit()dspnamwhfulbckges,ndtpyoiamgesndtyrf.PioaplhCNLbuRtdensfroipah,lwdmse.Tocinafiuxtry

Isue:WONprondactimlf sherypbd.

Ruling:Yes.podtmachrybsfSep19na.Iodhit,mclvrespfnat,bkwgfidescoijunhmpyltfr1986avebscdi.

TheacpbliwnstAr291ofLaCdecwhpivstlmnyarogfep- tilnsucdhgreffvyofCalbfinwith3r)(sem cauofntidrh;wesylbva.

Thetrmonyclasiv gfrmnoepyl-atihscfnoerupdaby)(tigfilc,wxnrejudambythio,c)(wnkedglmfthbyor.

Osnthpoie,Curdlagcmntofvishpuergaofctinlms,durvaybnoetpffilhsrxacymeopnitugh dbceatl.Hn,whigfiofCvsdcuaetprhnigof-ysctverd,qunmiahlbyCAoectksfjdrffvianhlgotepscrdwihfilmoneay,vgrspdxtichmeonaugvlsdbfit.Thenrigof-yapscvdthingbeuryfilofCvaspndetcuihylrbsoeSpmt2,19arhfcisnoempyltSbr2,198.Csqunwhepodtfilciamrfgs,eptonyifibadmgeuslJ24,196hicyradbenpsoit.

Far East Agricultural Supply, Inc. Vs. Jimmy Lebatique And The
Honorable Court Of Appeals

G.R. No. 162813 February 12, 2007

Facts: On March 4, 1996, Far East hired Jimmy Lebatique as truck driver to
animal feeds to the companys clients. He had a daily wage of P223.50. On
January 24, 2000, Lebatique complained of nonpayment of overtime work
particularly on January 22, 2000, when he was required to make a second
delivery in Novaliches, Quezon City. That same day Lebatique was suspended
apparently for illegal use of company vehicle. Even so, Lebatique reported
for work the next day but he was prohibited from entering the company
premises.

On January 26, 2000, Lebatique sought the assistance of DOLE Public


Assistance and Complaints Unit concerning the nonpayment of his overtime
pay. Lebatique explained that he had never been paid for overtime work
since he started working for the company. He also told Alexander (general
manager) that Manuel (Alexanders brother) had fired him. After talking to
Manuel, Alexander terminated Lebatique and told him to look for another job.

On March 20, 2000, Lebatique filed a complaint for illegal dismissal and
nonpayment of overtime pay. The Labor Arbiter found that Lebatique was

Garcy Kate D. Go LLB2 EH306 Page 248


illegally dismissed, and ordered his reinstatement and the payment of his full
back wages, 13th month pay, service incentive leave pay, and overtime pay.

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint
for lack of merit. The NLRC held that there was no dismissal to speak of since
Lebatique was merely suspended. Further, it found that Lebatique was a field
personnel, hence, not entitled to overtime pay and service incentive leave
pay. Lebatique sought reconsideration but was denied.

The Court of Appeals, in reversing the NLRC decision, reasoned that


Lebatique was suspended on January 24, 2000 but was illegally dismissed on
January 29, 2000 when Alexander told him to look for another job. It also
found that Lebatique was not a field personnel and therefore entitled to
payment of overtime pay, service incentive leave pay, and 13th month pay.

Issues

1) WON Lebatique was illegally dismissed

2) WON Lebatique was a field personnel, not entitled to overtime pay

Ruling:

1) YES. It is well settled that in cases of illegal dismissal, the burden is on the
employer to prove that the termination was for a valid cause. In this case,
petitioners failed to discharge such burden. Petitioners aver that
Lebatique was merely suspended for one day but he abandoned his work
thereafter. To constitute abandonment as a just cause for dismissal, there
must be: (a) absence without justifiable reason; and (b) a clear intention,
as manifested by some overt act, to sever the employer-employee
relationship.

When Lebatique was verbally told by Alexander Uy, the companys


General Manager, to look for another job, Lebatique was in effect
dismissed. Even assuming earlier he was merely suspended for illegal use
of company vehicle, the records do not show that he was afforded the
opportunity to explain his side. It is clear also from the sequence of the
events leading to Lebatiques dismissal that it was Lebatiques complaint
for nonpayment of his overtime pay that provoked the management to
dismiss him, on the erroneous premise that a truck driver is a field
personnel not entitled to overtime pay.
Garcy Kate D. Go LLB2 EH306 Page 249
2) NO. Lebatique is not a field personnel. Article 82 of the Labor Code is
decisive on the question of who are referred to by the term "field
personnel

"Field personnel" shall refer to non-agricultural employees who regularly


perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty.

The definition of a "field personnel" is not merely concerned with the


location where the employee regularly performs his duties but also with
the fact that the employees performance is unsupervised by the
employer.

Lebatique is not a field personnel as defined above for the following


reasons: (1) company drivers, including Lebatique, are directed to deliver
the goods at a specified time and place; (2) they are not given the
discretion to solicit, select and contact prospective clients; and (3) Far
East issued a directive that company drivers should stay at the clients
premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00
to 9:00 p.m. Lebatique, therefore, is a regular employee whose tasks are
usually necessary and desirable to the usual trade and business of the
company. Thus, he is entitled to the benefits accorded to regular
employees of Far East, including overtime pay and service incentive leave
pay.

Note that all money claims arising from an employer-employee


relationship shall be filed within three years from the time the cause of
action accrued; otherwise, they shall be forever barred. Further, if it is
established that the benefits being claimed have been withheld from the
employee for a period longer than three years, the amount pertaining to
the period beyond the three-year prescriptive period is therefore barred
by prescription. The amount that can only be demanded by the aggrieved
employee shall be limited to the amount of the benefits withheld within
three years before the filing of the complaint.

Lebatique timely filed his claim for service incentive leave pay,
considering that in this situation, the prescriptive period commences at

Garcy Kate D. Go LLB2 EH306 Page 250


the time he was terminated. On the other hand, his claim regarding
nonpayment of overtime pay since he was hired in March 1996 is a
different matter. In the case of overtime pay, he can only demand for the
overtime pay withheld for the period within three years preceding the
filing of the complaint on March 20, 2000. However, we find insufficient
the selected time records presented by petitioners to compute properly
his overtime pay. The Labor Arbiter should have required petitioners to
present the daily time records, payroll, or other documents in
managements control to determine the correct overtime pay due
Lebatique.

Garcy Kate D. Go LLB2 EH306 Page 251


Letran Calamba Faculty & Employees Association vs NLRC (2008)
G.R. 156225

Facts: Three cases were consolidated involving petitioner Letran Calamba


Faculty and Employees Association and Colegio de San Juan de Letran,
Calamba, for money claims and a petition to declare the subject strike illegal
filed by respondent.

On July 28, 1999, the NLRC promulgated its Decision dismissing both
appeals. Petitioner filed a Motion for Reconsideration but the same was
denied by the NLRC in its Resolution dated June 21, 2000.Petitioner then filed
a special civil action for certiorari with the CA assailing the above-mentioned
NLRC Decision and Resolution.

On May 14, 2002, the CA rendered the presently assailed judgment


dismissing the petition. Petitioner filed a Motion for Reconsideration but the
CA denied it in its Resolution promulgated on November 28, 2002. Citing
Agustilo v. Court of Appeals, petitioner contends that in a special civil action
for certiorari brought before the CA, the appellate court can review the
factual findings and the legal conclusions of the NLRC.

Petitioner avers that the CA, in concluding that the NLRC Decision was
supported by substantial evidence, failed to specify what constituted said
evidence. Thus, petitioner asserts that the CA acted arbitrarily in affirming
the Decision of the NLRC.

Issue: WON the Court of Appeals erred in holding that the factual findings of
the NLRC cannot be reviewed in certiorari proceedings.

Ruling: Court finds no error in the ruling of the CA that since nowhere in the
petition is there any acceptable demonstration that the LA or the NLRC acted
either with grave abuse of discretion or without or in excess of its
jurisdiction, the appellate court has no reason to look into the correctness of
the evaluation of evidence which supports the labor tribunals' findings of
fact.

Settled is the rule that the findings of the LA, when affirmed by the NLRC and
the CA, are binding on the Supreme Court, unless patently erroneous. It is
not the function of the Supreme Court to analyze or weigh all over again the
evidence already considered in the proceedings below. In a petition for
review on certiorari, this Courts jurisdiction is limited to reviewing errors of
law in the absence of any showing that the factual findings complained of are
devoid of support in the records or are glaringly erroneous. Firm is the
doctrine that this Court is not a trier of facts, and this applies with greater
force in labor cases. Findings of fact of administrative agencies and quasi-
judicial bodies, which have acquired expertise because their jurisdiction is
confined to specific matters, are generally accorded not only great respect
but even finality. They are binding upon this Court unless there is a showing
of grave abuse of discretion or where it is clearly shown that they were
arrived at arbitrarily or in utter disregard of the evidence on record. We find
none of these exceptions in the present case.

In petitions for review on certiorari like the instant case, the Court invariably
sustains the unanimous factual findings of the LA, the NLRC and the CA,
specially when such findings are supported by substantial evidence and
there is no cogent basis to reverse the same, as in this case.

Garcy Kate D. Go LLB2 EH306 Page 252


Garcy Kate D. Go LLB2 EH306 Page 253
Metro Transit Organization vs Piglas NFWU-KMU et al., (2008) G.R.
175460

Facts: Petitioner MTO is a government owned and controlled corporation


which entered into a Management and Operations Agreement (MOA) with the
Light Rail Transit Authority (LRTA) for the operation of the Light Rail Transit
(LRT) Baclaran-Monumento Line. Petitioner Jose L. Cortez, Jr. was sued in his
official capacity as then Undersecretary of the Department of Transportation
and Communications and Chairman of the Board of Directors of petitioner
MTO.
Respondents filed with the Labor Arbiter Complaints against petitioners and
the LRTA for the following: (1) illegal dismissal; (2) unfair labor practice for
union busting; (3) moral and exemplary damages; and (4) attorney's fees.

On 13 September 2004, the Labor Arbiter rendered judgment in favor of


respondents. Petitioners appealed to the National Labor Relations
Commission (NLRC). In a Resolution dated 19 May 2006, the NLRC dismissed
petitioners' appeal for non-perfection since it failed to post the required
bond. Without filing a Motion for Reconsideration of the afore-quoted NLRC
Resolution, petitioners filed a Petition for Certiorari with the Court of Appeals
assailing the same. On 24 August 2006, the Court of Appeals issued a
Resolution dismissing the Petition.

Issue: WON petitioner can directly file the extraordinary remedy of certiorari
without filing first a motion for reconsideration with the NLRC.

Ruling: Petitioners' failure to file a motion for reconsideration against the


assailed Resolution of the NLRC rendered its petition for certiorari before the
appellate court as fatally defective.

It must be primarily established that petitioners contravened the procedural


rule for the extraordinary remedy of certiorari. The rule is, for the writ to
issue, it must be shown that there is no appeal, nor any plain, speedy and
adequate remedy in the ordinary course of law.

The settled rule is that a motion for reconsideration is a condition sine qua
non for the filing of a petition for certiorari. Its purpose is to grant an
opportunity for the court to correct any actual or perceived error attributed
to it by the re-examination of the legal and factual circumstances of the
case. The rationale of the rule rests upon the presumption that the court or
administrative body which issued the assailed order or resolution may
amend the same, if given the chance to correct its mistake or error.

We have held that the "plain," "speedy," and "adequate remedy" referred to
in Section 1, Rule 65 of the Rules of Court is a motion for reconsideration of
the questioned Order or Resolution. As we consistently held in numerous
cases, a motion for reconsideration is indispensable for it affords the NLRC an
opportunity to rectify errors or mistakes it might have committed before
resort to the courts can be had.

In the case at bar, petitioners directly went to the Court of Appeals on


certiorari without filing a motion for reconsideration with the NLRC. The
motion for reconsideration would have aptly furnished a plain, speedy, and
adequate remedy. As a rule, the Court of Appeals, in the exercise of its
original jurisdiction, will not take cognizance of a petition for certiorari under
Rule 65, unless the lower court has been given the opportunity to correct the

Garcy Kate D. Go LLB2 EH306 Page 254


error imputed to it. The Court of Appeals correctly ruled that petitioners'
failure to file a motion for reconsideration against the assailed Resolution of
the NLRC rendered its petition for certiorari before the appellate court as
fatally defective.

We agree in the Court of Appeals' finding that petitioners' case does not fall
under any of the recognized exceptions to the filing of a motion for
reconsideration, to wit: (1) when the issue raised is purely of law; (2) when
public interest is involved; (3) in case of urgency; or when the questions
raised are the same as those that have already been squarely argued and
exhaustively passed upon by the lower court. As the Court of Appeals
reasoned, the issue before the NLRC is both factual and legal at the same
time, involving as it does the requirements of the property bond for the
perfection of the appeal, as well as the finding that petitioners failed to
perfect the same. Evidently, the burden is on petitioners seeking exception
to the rule to show sufficient justification for dispensing with the
requirement.

Certiorari cannot be resorted to as a shield from the adverse consequences


of petitioners' own omission of the filing of the required motion for
reconsideration.

Nonetheless, even if we are to disregard the petitioners' procedural faux pas


with the Court of Appeals, and proceed to review the propriety of the 19 May
2006 NLRC Resolution, we still arrive at the conclusion that the NLRC did not
err in denying petitioners' appeal for its failure to file a bond in accordance
with the Rules of Procedure of the NLRC.

Garcy Kate D. Go LLB2 EH306 Page 255


J.K. Mercado & Sons Agricultural Enterprises, Inc., vs. Sto. Tomas,
G.R. No. 158084, August 29, 2008

Facts: On December 3, 1993, the RTWPB of Region IX issued Wage Order No.
3 granting a Cost of Living Allowance to covered workers. J.K. Mercado &
Sons Agricultural Enterprises, Inc., petitioner, filed for an exemption from the
coverage of such order. Said application was denied by the regional wage
board for lack of merit.

Despite denial of such application, private respondents were still not given
benefits due them from said wage order. Private respondents filed a Writ of
Execution and Writ of Garnishment seeking for its enforcement. Petitioner
filed a motion to Quash the Writ of Execution arguing that the rights of the
respondents already prescribed as per stated in Article 291 of the Labor
Code regarding any issue concerning a wage order.

Ruling of the Regional Director: The Motion to Quash was denied and held
that unpaid benefits have not prescribed and that the private respondents
need not file a claim to be entitled thereto. Petitioner filed a Notice of Appeal
alleging that the Regional Director abused his discretion in issuing the writ of
execution in the absence of any motion filed by private respondents. Appeal
was then denied which prompted the petiotioner to file a Motion for
Reconsideration. Ruling of the Court of Appeals: The Motion for
Reconsideration was also denied due to lack of merit. Hence, present
petition.

Issues:
1. Whether or not the Honorable Court of Appeals committed an
error in holding that Article 291 of the Labor Code is not
applicable to recovery of benefits under the subject Wage Order
No. RTWPB-XI-03, which entitled respondents to a cost of living
allowance (COLA).
2. Whether or not the Court of Appeals committed an error in
holding that the cost of living allowance (COLA) granted by Wage
Order No. RTWPB-XI-03 can be enforced without the appropriate
case having been filed by herein private respondents within the
three (3) year prescriptive period.
3. Whether or not the claim of the private respondents for cost of
living allowance (COLA) pursuant to Wage Order No. RTWPB-XI-03
has already prescribed because of the failure of the respondents
to make the appropriate claim within the three (3) year
prescriptive period provided by Article 291 of the Labor Code, as
amended.

Ruling: The Court sees no error on the part of the Court of


Appeals. Art. 291 of the Labor Code applies to money claims in general
and provides for a 3-year prescriptive period to file them.

On the other hand, respondent employees money claims in this case had
been reduced to a judgment, in the form of a Wage Order, which has become
final and executory. The prescription applicable, therefore, is not the general
one that applies to money claims, but the specific one applying to
judgments. Thus, the right to enforce the judgment, having been exercised
within five years, has not yet prescribed.

Garcy Kate D. Go LLB2 EH306 Page 256


Stated otherwise, a claimant has three years to press a money claim. Once
judgment is rendered in her favor, she has five years to ask for execution of
the judgment, counted from its finality. This is consistent with the rule on
statutory construction that a general provision should yield to a specific one
and with the mandate of social justice that doubts should be resolved in
favor of labor.

WHEREFORE, the petition is DENIED.

Garcy Kate D. Go LLB2 EH306 Page 257


J. Phil. Marine Inc. vs. NLRC
G.R. No. 168339, October 10, 2008

Facts: The herein respondent, was a cook aboard vessels plying overseas,
filed before the National Labor Relations Commission (NLRC) a pro-forma
complaint against petitioners for unpaid money claims, moral and exemplary
damages, and attorneys fees and thereafter filed two amended pro forma
complaints praying for the award of overtime pay, vacation leave pay, sick
leave pay, and disability/medical benefits, he having, by his claim,
contracted enlargement of the heart and severe thyroid enlargement in the
discharge of his duties as cook which rendered him disabled.

Labor Arbiter Fe Superiaso-Cellan dismissed respondents complaint for lack


of merit but the NLRC reversed the Labor Arbiters decision and awarded
US$50,000.00 disability benefit to respondent. The Court of Appeals
dismissed petitioners petition for, inter alia, failure to attach to the petition
all material documents, and for defective verification and certification.
Petitioners Motion for Reconsideration of the appellate courts Resolution
was denied; hence, they filed the present Petition for Review on Certiorari.

During the pendency of the case, against the advice of his counsel, entered
into a compromise agreement with petitioners, he thereupon signed a
Quitclaim and Release subscribed and sworn to before the Labor Arbiter.
Petitioners filed before this Court a Manifestation dated May 7, 2007
informing that, inter alia, they and respondent had forged an amicable
settlement.

Respondents counsel also filed before this Court, purportedly on behalf of


respondent, a Comment on the present petition. The parties having forged a
compromise agreement as respondent in fact has executed a Quitclaim and
Release, the Court dismisses the petition.

Issue: WON the compromise agreement/deed of quit claim entered by the


parties is valid?

Ruling: Article 227 of the Labor Code provides:

Any compromise settlement, including those involving labor standard laws,


voluntarily agreed upon by the parties with the assistance of the Department
of Labor, shall be final and binding upon the parties. The National Labor
Relations Commission or any court shall not assume jurisdiction over issues
involved therein except in case of non-compliance thereof or if there is prima
facie evidence that the settlement was obtained through fraud,
misrepresentation, or coercion.

In Olaybar v. NLRC , the Court, recognizing the conclusiveness of


compromise settlements as a means to end labor disputes, held that Article
2037 of the Civil Code, which provides that [a] compromise has upon the
parties the effect and authority of res judicata, applies suppletorily to labor
cases even if the compromise is not judicially approved.

That respondent was not assisted by his counsel when he entered into the
compromise does not render it null and void. Eurotech Hair Systems, Inc. v.
Go so enlightens:
A compromise agreement is valid as long as the consideration is reasonable
and the employee signed the waiver voluntarily, with a full understanding of

Garcy Kate D. Go LLB2 EH306 Page 258


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: Ma. Gregorietta Leila C. Sy (Sy) was hired by ALC Industries, Inc.
(ALCII) as a supervisor in its purchasing office. She was thereafter assigned
to ALCII's construction project in Davao City as business manager and
supervisor of the Administrative Division from May 1997 to April 15, 1999. Sy
filed a complaint before the labor arbiter alleging that ALCII refused to pay
her salary beginning August 1998 and allowances beginning June 1998.
Despite several notices and warnings, ALCII did not file a position paper to
controvert Sy's claims.

The labor arbiter ordered ALCII and/or Dexter Ceriales to pay petitioner
P282,560 representing her unpaid salary and allowance. ALCII filed an appeal
with the NLRC without posting any cash or surety bond. NLRC dismissed
respondents' appeal. Thereafter ALCII filed a motion for reconsideration
which was also denied by NLRC. ALCII questioned the NLRC's denial of their
motion for clarification and reconsideration in the CA via a petition
for certiorari. The CA set aside the resolutions of the NLRC and the decision
of the labor arbiter. Sy filed a Rule 45 petition in the Supreme Court
questioning the CA decision and resolution on the ground that the decision of
the labor arbiter had become final and executory.

Issues: (1) Can the employer file an appeal with the NLRC without posting a
cash bond? (2) Did the CA acquire jurisdiction over the labor case?

Rulings: (1) Article 223. Appeal. Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by any or
both parties within ten calendar days from receipt of such decisions, awards,
or orders In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or surety
bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the
judgment appealed from.
As the right to appeal is merely a statutory privilege, it must be exercised
only in the manner and in accordance with the provisions of the law.
Otherwise, the right to appeal is lost.

Liberal construction of the NLRC rules is allowed only in meritorious cases,


where there is substantial compliance with the NLRC Rules of Procedure or
where the party involved demonstrates a willingness to abide by the rules by
posting a partial bond. Failure to post an appeal bond during the
reglementary period was directly violative of Article 223 of the Labor Code.

The payment of the appeal bond is a jurisdictional requisite for the perfection
of an appeal to the NLRC. The lawmakers intended to make the posting of a
cash or surety bond by the employer the exclusive means by which an
employer's appeal may be perfected. It is intended to assure the workers
that if they prevail in the case, they will receive the money judgment in their

Garcy Kate D. Go LLB2 EH306 Page 259


favor upon the dismissal of the employers' appeal. It was intended to
discourage employers from using an appeal to delay, or even evade, their
obligation to satisfy their employee's just and lawful claims.

(2) The filing of a joint undertaking/declaration, filed way beyond the ten-day
reglementary period for perfecting an appeal and as a substitute for the cash
or surety bond, did not operate to validate the lost appeal. The decision of
the labor arbiter therefore became final and executory for failure of
respondents to perfect their appeal within the reglementary period. Clearly,
the CA no longer had jurisdiction to entertain respondents' appeal from the
labor arbiter's decision.

Garcy Kate D. Go LLB2 EH306 Page 260


PCI Travel Corp vs NLRC
GR no. 154379

Facts: Sometime in 1994, respondent PCI Travel Employees Union filed a


Complaint for unfair labor practice against petitioner PCI Travel
Corporation. It claimed that petitioner had been filling up positions left by
regular rank-and-file with contractual employees, but were performing work
which were usually necessary and desirable in the usual business or trade of
the petitioner. Respondent prayed that the Labor Arbiter order the petitioner
to pay the contractual employees the differentials between the
wages/benefits of regular employees and the actual wages/benefits paid to
them from the first day of their employment, plus moral and exemplary
damages, and attorneys fees of not less than P300,000.00 per employee.

Petitioner manifested that while it was ready and willing to prove that said
employees were provided by independent legitimate contractors and that it
was not engaged in labor-only contracting in a position paper yet to be
submitted, petitioner prayed that the Labor Arbiter first resolve the issues
raised in their motion to dismiss.

Labor Arbiter rendered a decision on the merits dated October 16, 1998, in
favor of the respondent.

Appeal, the NLRC affirmed with modification the decision of the Labor
Arbiter deleting the awards of damages for lack of sufficient basis.

Appeal, the CA issued the assailed Resolution dismissing the petition outright
for petitioners failure to attach copies of pleadings and documents relevant
and pertinent to the petition. More importantly, the verification and
certification of non-forum shopping was signed by Elizabeth Legarda,
President of the petitioner-corporation, without submitting any proof
that she was duly authorized to sign for, and bind the petitioner-corporation
in these proceedings.

Issue: Whether or not the president of the PCI Travel was not an authorized
representative of the petitioner to sign the verification and certification
against forum shopping, without need of a board resolution.

Ruling: It must be borne in mind that Sec. 23, in relation to Sec. 25, of the
Corporation Code, clearly enunciates that all corporate powers are exercised,
all business conducted, and all properties controlled by the board of
directors. A corporation has a separate and distinct personality from its
directors and officers and can only exercise its corporate powers through the
board of directors. Thus, it is clear that an individual corporate officer cannot
solely exercise any corporate power pertaining to the corporation without
authority from the board of directors. This has been our constant holding in
cases instituted by a corporation.

In a slew of cases, however, we have recognized the authority of some


corporate officers to sign the verification and certification against forum
shopping. The SC has held that the following officials or employees of the
company can sign the verification and certification without need of a board
resolution: (1) the Chairperson of the Board of Directors, (2) the
President of a corporation, (3) the General Manager or Acting
General Manager, (4) Personnel Officer, and (5) an Employment
Specialist in a labor case.

Garcy Kate D. Go LLB2 EH306 Page 261


With this issue settled, that the President of the corporation can sign the
verification and certification without need of a board resolution, there thus
exists a compelling reason for the reinstatement of the petition before the
Court of Appeals.

LopezvsC.QSrutbl,GRN16403a2nJy9

Facts:CnimlhgerdpabotznihecumlvargntofQzCiySpslub(),heKangMwQzoCitysSpurbl(ne)fidacmfoiprtgsQCSn12Nvemb97.

TheUnioavrdtws ubmfionhet.Iadywlr sohgenma,AlSdtquirbohenmfsy,ltdear.Thmsbofuniwdtpealr30J197.Abom,ntCihualegdyrsofmpanthlijesrkdvopmatin.Ou4lyJ19h7,eowr mangtfleshobripd16u-30neJ97,mlatofWgOrN.5ndiwecasmtbyhColvgBnrieA().Whstlwnuaedr,oificfstku10lyJ97rvoanieA248)(cfthLbCd,opaymnverifuslthgc,andmoire plyhwt csvonfeCBA.rdugtiak,seon12Aut97.O6gs,heQCSplacdomfityunr -ffsaodetcy.Iphrn2Dmb197,QCSalsoefidptirfcn gahseou.i

TheLaborAit(usn)fdQCSgly ocrpaeti.dfmhblsocni.Itaefimrdfuhplbont0P4,.TeNLRCrdhpsgiofant0lP6,.)QCSfiedsupmntoial,cg (Dsden)t9Oobr18fLaAEiesnDpldcgthrkofuia.Tespvtnd:

WHERFO,invewhoftUsagdl-rikncoutpvfheCgBaAmrnt,sikedou1298hbyracligndosequt,pAr264hfLabCodenviuspl,tmy:RONILC.EADUVST, NGPROME.ACBDNLXJSTGIO,whoademnitprg1fshaeyffico/mrbftpnilgUeahydcorvstimplenua.

Meanwh,tilNoLbrRsCm()endaciogrhtplsvneLuiadoc.Itr:

Bethasimy,WrofvwDcnNLRCASEO.0-9637mustperfovailh dDcnteoryli.Imusadbfnwhgetliocrmpaydfinfesi.Itbrghucj,aeskonfbpithNLRC.0-9637employantsufhirvdc wealyostrfdiAug12,9h8eaylstrkwd.Fomnhe,cabplysfordntSCu.Thei ompylnatscrwhexifgodmanrbetlhcifisaodmbywlhnxetgCBA.Fr,sucipmdoafteyln.


Theotrcampinls()wfidoterfcnsiah byNLRC.Tefildaptionrcfu65ebhCoApalstwdni.

sIue:
1.Dothemsulanigfif dcrpealbonstighfumdwnerlaytopifcusbnlamhewAitr23ofLCd?
2.WhetrNLRCdinacglomvstherpynaDioldcswhyffetafmpowruniebs.

Ruling:
Firstue:
UnhdertRus,lapvoigmywercfdtnlupoiahwgmytreqsu,nl:(1)paofh 2;igfietmandruofpl3)(yhetqicasrubond.

Thuse,tnpogifabd lctronpeaisvgmydwfrohtecinabl.TfigofdsnytmaburlijoceqhntamspdlwiorecjuftnhCNL.R-ompliawerquntsdhociflaberfinxuy.tsThqmidoearwkthfypvnilcse,rmoyjudgnhtifavpeslomyra.nItidescugplomfrantdeyvhioblgsaftrempyjundwlci.

Howevr,Sctin6fhNRulsPdeCLaomnt,hgsrieducbonaltpxmeriusgndoth fabiresmlunothyawrd.Hec,CNLRsutlfiongardeyhmuctonfapelbd.

hInetcasofNilv.FyjdurCpnethaboqimsvlngaerytdwhbcoulnxmiersah:(1)twubnlicompeR2sh);(trdagfncumieosrtgdchb3n);(alierptofqumnealbdwshrvtiocjfenlgshtmri4;o)(apenl,yvstxhbdirwgean/ofypstilbdurghemano.Apyistjurdelgn,wfiahotCNLdRiernucgamhoftplbdnsiegrahvfildnwtemryopi.

Thepnosgtifamu0P4,.leyshwtifingofmrducbhatn,sweligfiofmdruap,hwnteglyodri csutabnlmphewiR.

eScondisu:
Weruinlfavopts.

TheasdilDnopcv mrtfegalsikfidbyQCShonu-trelckpvishCBA.Tangedowrcihatlsndupoebyfvicrh.Itnoske,udiacprthlswegyoniufabrpct.Mve,yhon-sikluptreCBA,nowasbhidfmgtecrk,.owahtcnesifrmpyl otqudbawgrn.Hev,ishlot rkdcabyeuniwshlg,otfficerdashvinglompyutff.Iec,rwaslinghpotmuesbwrilafothdmnespu.

ThsernifloctbwDpladLusriecon.Whbtgvlampriesndhu,tcobwemrdisughtypanwoce.IDilds,taQCScwhfieponlrigyatf12Aus97kehbon.iTcqftdalregsiknmofplyt,whceLabrAidsoun .Hwve,talmbrsind.Icfy,oewuffirsvalidmncohewtAr264fLabCd.ily,hoetrunmswadpictherkbunomdayilgscewt frompn.H,hCNLeRdiclagrtmpoynsufeahvgbilotrdyuefnDpsci.

Ontheorad,Lusicvlnbforpategdyhuiwcln.saIe,LborAutidwhUnafQCSgltyosucprie.Anq,haffdtmloysewgrbcknaptiy.Thofwgesdnrpavotmihedclnrfgyaotsikbuhefid ffcmployswrntuivedfk,achbytofflsed mpan.

Thoerf,wsitpcnaduffirAlexJ.Sgoti,MCcPnaRELdGeBro,whpynatlbsuidreoTBtan,hDpilsdcegrmvohtipylnusad.

eTocarpitul,hNLRCndsg triaeco,wlndghfbakesporntiy,dhfigaffecomplsdbnuvtryie.

Basedhontrgf,iLuclbephdantforsixgeupn.r

Garcy Kate D. Go LLB2 EH306 Page 262


Lockheed Detective and Watchman Agency, Inc. vs. University Of
The Philippines
G.R. No. 185918, April 18, 2012

Facts: The petition is for review on certiorari under Rule 45. Petitioner
Lockheed entered into a contract of security with the University of the
Philippines. On 1998, several of the guards assigned to UP filed a complaint
for unpaid wages, 25% overtime pay, premium pay for rest days and special
holidays, holiday pay, service incentive leave pay, night shift differentials,
13th month pay, refund of cash bond, refund of deductions for the Mutual
Benefits Aids System (MBAS), unpaid wages from December 16-31, 1998,
and attorney's fees.

The Labor Arbiter declared UP solidarily liable. The decision was appealed
but sustained by the NLCR, albeit a few modifications. The parties motion to
reconsider were likewise denied. On July 25, 2005, a Notice of Garnishment
10 was issued to Philippine National Bank (PNB) UP Diliman Branch for the
satisfaction of the award of P12,142,522.69 (inclusive of execution fee).
On August 16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP
contended that the funds being subjected to garnishment at PNB are
government/public funds. However, the execution of the garnishment was
carried out. UP elevated their case to the court of appeals. On
reconsideration, however, the CA issued the assailed Amended Decision. It
held that without departing from its findings that the funds covered in the
savings account sought to be garnished do not fall within the classification of
public funds, it reconsiders the dismissal of the petition in light of the ruling
in the case of National Electrification Administration v. Morales which
mandates that all money claims against the government must first be filed
with the Commission on Audit (COA).

Lockheed appealed this decision to the Supreme Court. Arguing mainly that
the NEA case should not apply and that UP could be both sued and held
liable. And that the quashal of garnishment sought was moot because it had
already become fait accompli.

Issues: Whether or not the NEA Case applies and the funds be garnished
directly bypassing the COA. Whether or not the previous garnishment and
withdrawal of funds was fait accompli.

Ruling: YES. This Court finds that the CA correctly applied the NEA case.
Like NEA, UP is a juridical personality separate and distinct from the
government and has the capacity to sue and be sued. Thus, also like NEA, it
cannot evade execution, and its funds may be subject to garnishment or
levy. However, before execution may be had, a claim for payment of the
judgment award must first be filed with the COA. (suability does not
immediately mean liability).

NO. As to the fait accompli argument of Lockheed, contrary to its claim that
there is nothing that can be done since the funds of UP had already been
garnished, since the garnishment was erroneously carried out and did not go
through the proper procedure (the filing of a claim with the COA), UP is
entitled to reimbursement of the garnished funds plus interest of 6% per
annum, to be computed from the time of judicial demand to be reckoned
from the time UP filed a petition for certiorari before the CA which occurred
right after the withdrawal of the garnished funds from PNB.

Garcy Kate D. Go LLB2 EH306 Page 263


Garcy Kate D. Go LLB2 EH306 Page 264
Portillo v. Rudolf Lietz

Facts: Potillo was hired by Rudolf in Lietz Co. under the condition that Potillo
will not engage in any other gainful employment by himself or with any other
company either directly or indirectly without written consent of Lietz Inc.,
otherwise Potillo will be liable for liquidated damages.

Upon his promotion, Potillo signed another letter agreement containing a


Goodwill Clause stating that:
on the termination of his employment and for a period
of three (3) years thereafter, he shall not engage directly or
indirectly as employee, manager, proprietor, or solicitor for
himself or others in a similar or competitive business or the
same character of work which he was employed by Lietz
Inc. to do and perform. Should he breach this good will
clause of this Contract, he shall pay Lietz Inc. as liquidated
damages the amount of 100% of his gross compensation
over the last 12 months.

Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc.
During her exit interview, Portillo declared that she intended to engage in
businessa rice dealership, selling rice in wholesale.

On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her
of the "Goodwill Clause" in the last letter agreement she had signed.

Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller
Philippines, Limited to head its Pharma Raw Material Department. Ed Keller
Limited is purportedly a direct competitor of Lietz Inc.

Meanwhile, Portillos demands from Lietz Inc. for the payment of her
remaining salaries and commissions went unheeded. Lietz Inc. gave Portillo
the run around, on the pretext that her salaries and commissions were still
being computed.

Subsequently, Portillo filed a complaint with the National Labor Relations


Commission (NLRC) for non-payment of 1 months salary, two (2) months
commission, 13th month pay, plus moral, exemplary and actual damages
and attorneys fees.

In its position paper, Lietz Inc. admitted liability for Portillos money claims in
the total amount of P110,662.16. However, Lietz Inc. raised the defense of
legal compensation: Portillos money claims should be offset against her
liability to Lietz Inc. for liquidated damages for Portillos alleged breach of the
"Goodwill Clause" in the employment contract when she became employed
with Ed Keller Philippines, Limited.

Issue:
1. Who has jurisdiction over the present controversy?
2. Whether Portillos money claims for unpaid salaries may be offset
against respondents claim for liquidated damages.

Ruling:
1. Jurisdiction belongs to the Civil Courts.

Garcy Kate D. Go LLB2 EH306 Page 265


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. More so must this be in the
present case, what with the reality that the stipulation refers to the
postemployment relations of the parties.

2. No, it may not be.

Indeed, the application of compensation in this case is effectively


barred by Article 113 of the Labor Code which prohibits wage
deductions except in three circumstances:

ART. 113. Wage Deduction. No employer, in his own behalf or in


behalf of any person, shall make any deduction from wages of his
employees, except:

(a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer
for the amount paid by him as premium on the insurance;

(b)For union dues, in cases where the right of the worker or his
union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and

(c) In cases where the employer is authorized by law or


regulations issued by the Secretary of Labor.

Garcy Kate D. Go LLB2 EH306 Page 266


Building Care Corp. / Leopard Security and Investigation Agency v.
Macaraeg

Facts: Petitioners are in the business of providing security services to their


clients.

They hired respondent as a security guard beginning August 25, 1996,


assigning her at Genato Building in Caloocan City. However, on March 9,
2008, respondent was relieved of her post. She was re-assigned to Bayview
Park Hotel from March 9-13, 2008, but after said period, she was allegedly no
longer given any assignment.

Thus, on September 9, 2008, respondent filed a complaint against petitioners


for illegal dismissal, underpayment of salaries, non-payment of separation
pay and refund of cash bond. Respondent claimed that petitioners failed to
give her an assignment for more than nine months, amounting to
constructive dismissal, and this compelled her to file the complaint for illegal
dismissal.

On the other hand, petitioners alleged in their position paper that respondent
was relieved from her post as requested by the client because of her habitual
tardiness, persistent borrowing of money from employees and tenants of the
client, and sleeping on the job.

On May 13, 2009, the Labor Arbiter rendered a Decision dismissing the
charge of illegal dismissal as wanting in merit but ordering the Respondents
Leopard Security and Investigation Agency and Rupert Protacio to pay
complainant a financial assistance in the amount of P5,000.00.

Respondent then filed a Notice of Appeal with the National Labor Relations
Commission (NLRC), but in a Decision dated October 23, 2009, the NLRC
dismissed the appeal for having been filed out of time, thereby declaring that
the Labor Arbiter's Decision had become final and executory on June 16,
2009.

Upon elevating to the CA via a petition for certiorari, the court reversed and
set aside the Decision of the NLRC and in lieu thereof, a new judgment is
entered declaring petitioner to have been illegally dismissed.

Issue: Whether the CA erred in liberally applying the rules of procedure and
ruling that respondent's appeal should be allowed and resolved on the merits
despite having been filed out of time.

Ruling: Yes, it erred.

It should be emphasized that the resort to a liberal application, or suspension


of the application of procedural rules, must remain as the exception to the
well-settled principle that rules must be complied with for the orderly
administration of justice.

The relaxation of procedural rules in the interest of justice was never


intended to be a license for erring litigants to violate the rules with impunity.
Liberality in the interpretation and application of the rules can be invoked
only in proper cases and under justifiable causes and circumstances.

Garcy Kate D. Go LLB2 EH306 Page 267


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.

Garcy Kate D. Go LLB2 EH306 Page 268

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