LABOR LAW I CASES for FINALS

Art. 87 Overtime Work

Computation of Overtime Work
Premium Pay v. Overtime Pay
Stipulation on overtime rate
Built-in Overtime Pay
Engineering Equipment, Inc. v. Minister of Labor, G.R. No. L-64967, September 23, 1985
PAL Employees Savings and Loan Association v. NLRC, August 22, 1996
Bisig Manggagawa sa Tryco v. NLRC, October 15, 2008
Overtime Work of Seamen
Stolt Nielsen Marine Services v. NLRC, 1996
PCL Shipping, Inc. v. NLRC, G.R. No. 153031, December 14, 2006
Waiver of Overtime Pay
Mercader v. Manila Polo Club, Inc., G.R. No. L-8373, September 28, 1956
PAL Employees Savings and Loan Association v. NLRC, August 22, 1996
Damasco v. NLRC, G.R. No. 115755, December 4, 2000
Compressed Workweek (CWW) Dole Advisory No. 02-04
Undertime Not Offset by Overtime
Rationale
NWSA v. NWSA Consolidated Unions, 11 SCRA 766
Emergency Overtime Work
Computation of Additional Compensation
III. Rest Periods (Arts. 91 93)
IV. Holidays, Service Incentive Leaves and Service Charges
Right to Holiday Pay (Holiday Pay of Certain Employees)
Workers paid by Results
Tan v. Lagrama, G.R. No. 151228, August 15, 2002
Seasonal Employees
Manila Hotel Company v. CIR, G.R. No. L-188373, September 30, 1963
Service Incentive Leave
Commutable Nature of Benefit
Autobus Transport System, Inc. v. Bautista, G.R. No. 156367, May 16, 2005
Duterte v. Kingswood Trading, Co., Inc. G.R. No. 160325, October 4, 2007
Labor Congress of the Philippines v. NLRC, G.R. No. 123938, May 21, 1998
Fernandez v. NLRC, G.R. No. 105892, January 28, 1998
Ricardo G. Paloma v. PAL, G.R. No. 148415, July 14, 2008
Texon Manufacturing and Betty Chua v. Millena, G.R. No. 141380, April 14, 2004
V. Wages
Preliminary Matters
Concept of Facilities and Supplements
Mabeza v. NLRC, 271 SRCA 670
Millares v. NLRC, 305 SCRA 670
Article 106 110 Contractor or Subcontractor (DO 18-A, Series of 2011)
Requirements
Philippine Airlines v. Ligan, 547 SCRA 181 (2008)
Labor Only Contracting
Mandaue Galleon v. Andales, 548 SCRA 17
Proof of Employer
Oregas v. NLRC, 559 SCRA 153 (2008)
Joint and Solidary Liability
Meralco v. NLRC, 548 SCRA 315
Jaguar Security and Investigation v. Sales, 552 SCRA 295
Articles 106, 107 and 109
Meralco v. NLRC, 548 SCRA 315 (2008)
Prohibition Regarding Wages
Wage deductions
Special Steel Products v. Villaruel, G.R. No. 143304
Agabon v. NLRC, November 17, 2004
Principle of Non Diminution of Benefits (Art. 100)
Davao Integrated Ports Stevedoring Services v. Abarquez, March 19, 1993
Sevilla Trading Co v. Semana, G.R. No. 152456, April 28, 2004
Globe Mackay Cable v. NLRC, G.R. No. 74156, June 29, 1988
Acro Metal Products et. al. v. Samahan ng mga Mangagawa sa Acro Metal, G.R. No.
170734, May 14, 2008
Insular Hotel Employees Union v. Waterfront Insular Hotel Davao, September 22, 2010
Protacio v. Laya Mananghaya and Co., G.R. No. 168654, March 25, 2009
Producers Bank of the Philippines v. NLRC, G.R. No. 100701, March 28, 2001
Manila Banking Corporation v. NLRC, G.R. No. 107487, September 29, 1997
Article 127
RA 6677: Section 3
 TSPIC Corporation v. TSPIC Employees Union, G.R. No. 163419, February 13, 2008
American Wire and Cable Union v. American Wire and Cable Co., April 29, 2005

Attorneys Fees
NPC Drivers and Mechanics Association v. NPC, G.R. No. 156208, September 17, 2008

Wage Distortion (Art. 124)

Elements
P.I. Manufacturing Inc. v. P.I. Manufacturing Supervisors, G.R. No. 167217, February 4,
2008
FACTS:
- Petitioner P.I. Manufacturing, Incorporated is a domestic corporation
engaged in the manufacture and sale of household appliances. On the other hand, respondent P.I. Manufacturing
Supervisors and Foremen Association (PIMASUFA) is an organization of petitioners supervisors and foremen, joined
in this case by its federation, the National Labor Union (NLU).
- On December 10, 1987, the President signed into law Republic Act (R.A.) No. 6640[2] providing, among others, an
increase in the statutory minimum wage and salary rates of employees and workers in the private sector.
- Section 2 provides:
SEC. 2. The statutory minimum wage rates of workers and employees in the
private sector, whether agricultural or non-agricultural, shall be increased by ten
pesos (P10.00) per day, except non-agricultural workers and employees outside Metro
Manila who shall receive an increase of eleven pesos (P11.00) per
day: Provided, That those already receiving above the minimum wage up to one
hundred pesos (P100.00) shall receive an increase of ten pesos (P10.00)
per day. Excepted from the provisions of this Act are domestic helpers
and persons employed in the personal service of another.
- Thereafter, on December 18, 1987, petitioner and respondent PIMASUFA entered into a new Collective
Bargaining Agreement (1987 CBA) whereby the supervisors were granted an increase of P625.00 per
month and the foremen, P475.00 per month. The increases were made retroactive to May 12, 1987, or
prior to the passage of R.A. No. 6640, and every year thereafter until July 26, 1989.
- On January 26, 1989, respondents PIMASUFA and NLU filed a complaint with the Arbitration Branch of the
National Labor Relations Commission (NLRC), docketed as NLRC-NCR Case No. 00-01-00584, charging
petitioner with violation of R.A. No. 6640.[3] Respondents attached to their complaint a numerical illustration of
wage distortion resulting from the implementation of R.A. No. 6640.
- On March 19, 1990, the Labor Arbiter rendered his Decision in favor of respondents. Petitioner was
ordered to give the members of respondent PIMASUFA wage increases equivalent to 13.5% of their basic
pay they were receiving prior to December 14, 1987.
- On appeal by petitioner, the NLRC, in its Resolution dated January 8, 1991, affirmed the Labor Arbiters judgment.
- On July 21, 2004, the appellate court rendered its Decision affirming the Decision of the NLRC with
modification by raising the 13.5% wage increase to 18.5%.
- We quote the pertinent portions of the Court of Appeals Decision, thus:
Anent the fourth issue, petitioner asseverates that the wage distortion issue is already
barred by Sec. 2 Article IV of the Contract denominated as The Company and Supervisors
and Foremen Contract dated December 18, 1987 declaring that it absolves, quit claims
and releases the COMPANY for any monetary claim they have, if any there might be
or there might have been previous to the signing of this agreement. Petitioner
interprets this as absolving it from any wage distortion brought about by the implementation
of the new minimum wage law. Since the contract was signed on December 17, 1987, or
after the effectivity of Republic Act No. 6640, petitioner claims that private respondent is
deemed to have waived any benefit it may have under the new law.

- Petitioner filed a motion for reconsideration but it was denied by the appellate court in its Resolution dated February
18, 2005.
- In a Minute Resolution dated April 18, 2005, we denied the petition for petitioners failure to show that the Court of
Appeals committed a reversible error.
- Hence, this motion for reconsideration.
- We grant the motion.

ISSUE:
- Whether the implementation of R.A. No. 6640 resulted in a wage distortion and whether such distortion was
cured or remedied by the 1987 CBA.

RULING:
- R.A. No. 6727, otherwise known as the Wage Rationalization Act, explicitly defines wage distortion as:

x x x a situation where an increase in prescribed wage rates 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.

- Otherwise stated, wage distortion means the disappearance or virtual disappearance of pay differentials between
lower and higher positions in an enterprise because of compliance with a wage order.[6]

- In this case, the Court of Appeals correctly ruled that a wage distortion occurred due to the implementation of
R.A. No. 6640.

- However, while we find the presence of wage distortions, we are convinced that the same were cured or
remedied when respondent PIMASUFA entered into the 1987 CBA with petitioner after the effectivity of R.A. No.
6640. The 1987 CBA increased the monthly salaries of the supervisors by P625.00 and
the foremen, by P475.00, effective May 12, 1987. These increases re-established and broadened the gap, not
only between the supervisors and the foremen, but also between them and the rank-and-file employees.

- Significantly, the 1987 CBA wage increases almost doubled that of the P10.00 increase under R.A. No.
6640. The P625.00/month means P24.03 increase per day for the
supervisors, while the P475.00/month means P18.26 increase per day for the foremen. These increases were to be
observed every year, starting May 12, 1987 until July 26, 1989. Clearly, the gap between the wage rates of the
supervisors and those of the foremen was inevitably re-established. It continued to broaden through the years.

- Interestingly, such gap as re-established by virtue of the CBA is more than a substantial compliance with R.A. No.
6640.

- As the numerical illustration shows, almost all of the members of respondent PIMASUFA have been receiving wage
rates above P100.00 and, therefore, not entitled to the P10.00 increase. Only three (3) of them are receiving wage
rates below P100.00, thus, entitled to such increase. Now, to direct petitioner to grant an across-the-board increase
to all of them, regardless of the amount of wages they are already receiving, would be harsh and unfair to the
former.

- WHEREFORE, we GRANT petitioners motion for reconsideration and REINSTATE the petition we
likewise GRANT. The assailed Decision of the Court of Appeals in CA-G.R. SP No. 54379 is REVERSED.

A wage distortion happens when a wage order increasing the rates of wages removes or
significantly reduces the pay advantage of one position of employees over another. This
change has to be corrected. The following are the essential elements of a wage distortion:

1. The company has a hierarchy of positions with corresponding salary rates.

2. A wage order significantly changes or increases the salaries of the employees in the lower level
but doesn't have a corresponding increase for the salaries of the employees in the higher level.
3. The distinction between the positions/groups of employees is eliminated.
4. The distortion exists in the same region of the country.

Corrections of Wage Distortion

National Federation of Labor v. NLRC, 234 SCRA 311

In National Federation of Labor v. NLRC,[8] we held:

We believe and so hold that the re-establishment of a significant gap or differential between regular
employees and casual employees by operation of the CBA was more than substantial compliance with the
requirements of the several Wage Orders (and of Article 124 of the Labor Code). That this re-
establishment of a significant differential was the result of collective bargaining negotiations, rather
than of a special grievance procedure, is not a legal basis for ignoring it. The NLRC En Banc was in
serious error when it disregarded the differential of P3.60 which had been restored by 1 July 1985 upon the
ground that such differential represent[ed] negotiated wage increase[s] which should not be considered covered
and in compliance with the Wage Orders. x x x

- Between 1 November 1983 and 1 November 1984, Wage Orders Nos. 3, 4, 5 and 6 were promulgated by the then
President Ferdinand E. Marcos.
- All these Wage Orders increased the statutory minimum wages of workers with differing increases being
specified for agricultural plantation and non-agricultural workers.
 - Before the effectivity of Wage Order No. 3, the wage rates of regular employees and of casual (or non-regular)
employees of private respondent Franklin Baker Company of the Philippines (Davao Plant) ("Company") were such
that there was a positive differential between the two (2) in the amount of P4.56.
- Upon the effectivity of Wage Order No. 5, grievance meetings were held by petitioner National Federation of Labor
("NFL") and private respondent Company sometime in June 1984, addressing the impact which implementation of
the various Wage Orders had on the wage structure of the Company.
- On 1 July 1984, the effectivity date of the 1984 Collective Bargaining Agreement between NFL and the
Company, all regular employees of the Company received an increase of P1.84 in their daily wage; the regular
daily wage of the regular employees thus became P35.84 as against P34.00 per day for non-regular employees.
- As a result of the implementation of Wage Order No. 6, casual employees received an increase of their daily
wage from P34.00 to P36.00. At the same time, the Company unilaterally granted an across-the-board increase of
P2.00 in the daily rate of all regular employees, thus increasing their daily wage from P35.84 to P37.84. Further, on 1
July 1985, the anniversary date of the increases under the CBA, all regular employees who were members of the
collective bargaining unit got a raise of P1.76 in their basic daily wage, which pushed that daily wage from P37.84 to
P39.60, as against the non-regular's basic wage of P36.00 per day. Finally, by November 1987, the lowest paid
regular employee had a basic daily rate of P64.64, or P10.64 more than the statutory minimum wage paid to a non-
regular employee.
- Meantime, while the above wage developments were unfolding, the Company experienced a work output
slow down. The Company directed some 205 workers to explain the reduction in their work output. The workers
failed to comply and they were accordingly issued notices of dismissal by the Company. As a response to its
decreasing productivity levels, the Company suspended operations on 16 August 1984. Operations were resumed
on 14 September 1984; the Company, however, refused to take back the 205 dismissed employees. Petitioner
Union then went on strike alleging a lock-out on the part of the Company and demanding rectification of the
wage distortion.
- On 11 November 1987, the NLRC En Banc rendered a decision which in effect found the existence of wage
distortion and required the Company to pay a P1.00 wage increase effective 1 May 1984:
- On motion for partial reconsideration filed by the Company, the above quoted portion of the NLRC En Banc's
decision was reconsidered and set aside by the NLRC Fifth Division. 3 The Fifth Division of the NLRC in effect found
that while a wage distortion did exist commencing 16 June 1984, the distortion persisted only for a total of fifteen (15)
days and accordingly required private respondent company to pay "a wage increase of P2.00 per day to all regular
workers effective June 16, 1984 up to June 30, 1984 or a total of fifteen (15) days." 4

RULING:

- We note that neither the Wage Orders noted above, nor the Implementing Rules promulgated by the Department of
Labor and Employment, set forth a clear and specific notion of "wage distortion." What the Wage Orders and the
Implementing Rules did was simply to recognize that implementation of the Wage Orders could result in a
"distortion of the wage structure" of an employer, and to direct the employer and the union to negotiate with
each other to correct the distortion.
- A statutory definition of "wage distortion" is now found in Article 124 of the Labor Code as amended by
Republic Act. No. 6727 (dated 9 June 1989) which reads as follows:
- Article 124. Standards/Criteria for Minimum Wage Fixing . . .

xxx xxx xxx

As used herein, a wage distortion shall mean a situation where an increase in prescribed wage
rates 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. 9 (Emphasis supplied)

- From the above quoted material, it will be seen that the concept of wage distortion assumes an existing grouping
or classification of employees which establishes distinctions among such employees on some relevant or
legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees.
The wage distortion anticipated in Wage Orders Nos. 3, 4, 5 and 6 was a "distortion" (or "compression") which
ensued from the impact of those Wage Orders upon the different wage rates of the several classes of employees.
Thus distortion ensued where the result of implementation of one or another of the several Wage Orders was
the total elimination or the severe reduction of the differential or gap existing between the wage rates of the
differing classes of employees. 10
- It is important to note that the remedy contemplated in the Wage Orders, and now in Article 124 of the Labor
Code, for a wage distortion consisted of negotiations between employer and employees for the rectification
of the distortion by re-adjusting the wage rates of the differing classes of employees. As a practical matter,
this ordinarily meant a wage increase for one or more of the affected classes of employees so that some gap
or differential would be re-established. There was no legal requirement that the historical gap which existed
before the implementation of the Wage Orders be restored in precisely the same form or amount.
- We believe and so hold that the re-establishment of a significant gap or differential between regular
employees and casual employees by operation of the CBA was more than substantial compliance with the
 requirements of the several Wage Orders (and of Article 124 of the Labor Code). That this re-establishment
of a significant differential was the result of collective bargaining negotiations, rather than of a special
grievance procedure, is not a legal basis for ignoring it. The NLRC En Banc was in serious error when it
disregarded the differential of P3.60 which had been restored by 1 July 1985 upon the ground that such differential
"represent[ed] negotiated wage increase[s] which should not be considered covered and in compliance with the
Wage Orders." 11 The Wage Orders referred to above had provided for the crediting of increases in wages or
allowances granted or paid by employers within a specified time against the statutorily prescribed increases in
minimum wages. 12 A similar provision recognizing crediting of increases in daily basic wage rates granted by
employers pursuant to collective bargaining agreements, is set out in Section 4(d) of R.A. No. 6727, a statute which
sought to "rationalize wage policy determination by establishing the mechanism and proper standards therefor ."
- We believe that the same public policy requires recognition and validation, as it were, of wage increases given
by employers either unilaterally or as a result of collective bargaining negotiations, in the effort to correct
wage distortions.
- WHEREFORE, the Petition for Certiorari is hereby DISMISSED for lack of merit. No pronouncement as to
costs.

Administration and Enforcement

DOLE Regional Directors Jurisdiction
Peoples Broadcasting Service (Bombo Radyo) v. Secretary of Labor, G.R. No. 179652,
March 6, 2012

- Private respondent Jandeleon Juezan filed a complaint against petitioner with the Department of Labor and
Employment (DOLE) Regional Office No. VII, Cebu City, for illegal deduction, nonpayment of service
incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits,
delayed payment of wages and noncoverage of SSS, PAG-IBIG and Philhealth.[1]
- The DOLE Regional Director found that private respondent was an employee of petitioner, and was entitled
to his money claims.[2]
- When the matter was brought before the CA, where petitioner claimed that it had been denied due process, it
was held that petitioner was accorded due process as it had been given the opportunity to be heard, and
that the DOLE Secretary had jurisdiction over the matter, as the jurisdictional limitation imposed by Article
129 of the Labor Code on the power of the DOLE Secretary under Art. 128(b) of the Code had been repealed
by Republic Act No. (RA) 7730.[3]
- In the Decision of this Court, the CA Decision was reversed and set aside, and the complaint against
petitioner was dismissed.
- The Court found that there was no employer-employee relationship between petitioner and private
respondent. It was held that while the DOLE may make a determination of the existence of an employer-
employee relationship, this function could not be co-extensive with the visitorial and enforcement power
provided in Art. 128(b) of the Labor Code, as amended by RA 7730. The National Labor Relations
Commission (NLRC) was held to be the primary agency in determining the existence of an employer-
employee relationship. This was the interpretation of the Court of the clause in cases where the relationship
of employer-employee still exists in Art. 128(b).[5]
- It is conceded that if there is no employer-employee relationship, whether it has been terminated or it has not existed
from the start, the DOLE has no jurisdiction. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the first
sentence reads, 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 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. It is clear and beyond debate that an
employer-employee relationship must exist for the exercise of the visitorial and enforcement power of the DOLE. The
question now arises, may the DOLE make a determination of whether or not an employer-employee
relationship exists, and if so, to what extent?

RULING:

- The first portion of the question must be answered in the affirmative.

- The prior decision of this Court in the present case accepts such answer, but places a limitation upon the power of
the DOLE, that is, the determination of the existence of an employer-employee relationship cannot be co-extensive
with the visitorial and enforcement power of the DOLE. But even in conceding the power of the DOLE to determine
the existence of an employer-employee relationship, the Court held that the determination of the existence of an
employer-employee relationship is still primarily within the power of the NLRC, that any finding by the DOLE is
merely preliminary.
- This conclusion must be revisited.
- 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 determination of the existence of an employer-employee relationship by the DOLE must be
respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered
nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship,
force the referral of the matter to the NLRC. The Court issued the declaration that at least a prima facie showing of
the absence of an employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the
DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully
refute the existence of an employer-employee relationship.
- If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of
the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employer-employee
relationship has already been terminated, or it appears, upon review, that no employer-employee
relationship existed in the first place.
- The Court, in limiting the power of the DOLE, gave the rationale that such limitation would eliminate the prospect of
competing conclusions between the DOLE and the NLRC. The prospect of competing conclusions could just as well
have been eliminated by according respect to the DOLE findings, to the exclusion of the NLRC, and this We believe
is the more prudent course of action to take.
- 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.
- 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.
- There is a view that despite Art. 128(b) of the Labor Code, as amended by RA 7730, there is still a threshold amount
set by Arts. 129 and 217 of the Labor Code when money claims are involved, i.e., that if it is for PhP 5,000 and
below, the jurisdiction is with the regional director of the DOLE, under Art. 129, and if the amount involved exceeds
PhP 5,000, the jurisdiction is with the labor arbiter, under Art. 217.
- 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.
- In the present case, The DOLE had no jurisdiction over the case, as there was no employer-employee relationship
present.

Visitorial and Enforcement Power

Meteoro v. Creative Creatures, G.R. No. 171275, July 13, 2009

- Respondent is a domestic corporation engaged in the business of producing, providing, or procuring the
production of set designs and set construction services for television exhibitions, concerts, theatrical
performances, motion pictures and the like. It primarily caters to the production design requirements of ABS-CBN
Broadcasting Corporation in Metro Manila and nationwide.[3] On the other hand, petitioners were hired by
respondent on various dates as artists, carpenters and welders. They were tasked to design, create,
assemble, set-up and dismantle props, and provide sound effects to respondents various TV programs and
movies.[4]
- Sometime in February and March 1999, petitioners filed their respective complaints for non-payment of night
shift differential pay, overtime pay, holiday pay, 13th month pay, premium pay for Sundays and/or rest days,
service incentive leave pay, paternity leave pay, educational assistance, rice benefits, and illegal and/or
unauthorized deductions from salaries against respondent, before the Department of Labor and Employment
(DOLE), National Capital Region (NCR).
- In its position paper, respondent argued that the DOLE-NCR had no jurisdiction over the complaint of the
petitioners because of the absence of an employer-employee relationship. It added that petitioners were free-
 lance individuals, performing special services with skills and expertise inherently exclusive to them like actors,
actresses, directors, producers, and script writers, such that they were treated as special types of workers. [7]
- Petitioners, on the other hand, averred that they were employees of respondent, as the elements of an employer-
employee relationship existed.
- On October 11, 1999, DOLE Regional Director Maximo Baguyot Lim issued an Order [9] directing respondent to pay
petitioners the total amount of P2,694,709.00.
- The Regional Director sustained petitioners claim on the existence of an employer-employee relationship
xxx. Lastly, he upheld the DOLE-NCRs jurisdiction to hear and determine cases in violation of labor
standards law.[11]
- On appeal, then DOLE Secretary Patricia A. Sto. Tomas affirmed the findings of the DOLE Regional
Director.[12] In upholding the jurisdiction of the DOLE-NCR, she explained that the Secretary of Labor or his duly
authorized representative is allowed to use his visitorial and enforcement powers to give effect to labor legislation,
regardless of the amount involved, pursuant to Article 128 of the Labor Code, as amended by Republic Act (R.A.)
No. 7730.

ISSUE:

- Whether or not the Court of Appeals committed an error when it ruled that the instant case falls
within the exception clause of Article 128 (b) of the Labor Code, as amended, and in annulling and
setting aside the Orders of the Secretary of Labor which affirmed the Order of the Regional
Director of DOLE-NCR awarding the claims of the petitioners for benefits under the Labor
Standards laws, namely, 13th month benefit, overtime pay, night shift differentials, premium on rest
days, vacation and sick leave and other benefits accorded to employees of the responden[t] in the
exercise of its visitorial powers pursuant to Article 128 (b) of the Labor Code as amended. [14]
- determine which body/tribunal has jurisdiction over petitioners money claims --- the DOLE Secretary or his
duly authorized representative, or the NLRC.

RULING:

- We sustain the appellate courts conclusion that the instant case falls within the exclusive jurisdiction of the NLRC.
- The DOLE Secretary and her authorized representatives, such as the DOLE-NCR Regional Director, have
jurisdiction to enforce compliance with labor standards laws under the broad visitorial and enforcement
powers conferred by Article 128 of the Labor Code, and expanded by Republic Act (R.A.) No. 7730,[15]
- As it is now worded, and as consistently held in a number of cases, [17] the visitorial and enforcement powers of
the Secretary, exercised through his representatives, encompass compliance with all labor standards laws
and other labor legislation, regardless of the amount of the claims filed by workers.
- This notwithstanding, the power of the Regional Director to hear and decide the monetary claims of
employees is not absolute. The last sentence of Article 128 (b) of the Labor Code, otherwise known as the
exception clause, provides an instance when the Regional Director or his representatives may be divested of
jurisdiction over a labor standards case.
- Under prevailing jurisprudence, the so-called exception clause has the following elements, all of which must
concur:
(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.[24]
- In sum, respondent contested the findings of the labor inspector during and after the inspection and raised issues the
resolution of which necessitated the examination of evidentiary matters not verifiable in the normal course of
inspection. Hence, the Regional Director was divested of jurisdiction and should have endorsed the case to
the appropriate Arbitration Branch of the NLRC.[33] Considering, however, that an illegal dismissal case had been
filed by petitioners wherein the existence or absence of an employer-employee relationship was also raised, the CA
correctly ruled that such endorsement was no longer necessary.
- WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Decision dated
May 31, 2005 and its Resolution dated January 27, 2006 in CA-G.R. SP No. 76942, are AFFIRMED.

Bay Haven, Inc. v. Abuan, G.R. No. 160589, July 30, 2008
VI. 13th Month Pay
San Miguel v. Inciong, 103 SCRA 139 (1981)
Honda Philippines v. Samahan Ng Malalayang Manggagawa sa Honda, G.R. No. 145561,
June 15, 2005
 Philippine Airline Incorporated v. PALEA, G.R. No. 142399, March 12, 2008
R & E Transports v. Latag, G.R. No. 155214, February 13, 2004
Petroleum Shipping Limited v. NLRC, G.R. No. 148130, June 16, 2006
VII. Working Conditions for Special Group of Employees
Women Workers
Del Monte Philippines, Inc. v. Velasco, G.R. No. 153477, March 6, 2007
PT & T v. NLRC, 272 SCRA 596
Lakpue Drug, Inc. v. Belga, G.R. No. 166379, October 20, 2005
Star Paper Corp. v. Simbol, April 12, 2006, G.R. No. 164774
- supra.
Duncan Association v. Glaxo Welcome Philippines, G.R. No. 162994, September 17, 2004
- supra.
Domingo v. Rayala, 546 SCRA 90
Bacsin v. Wahiman, April 30, 2008, G.R. No. 146053

BOOK FOUR
Health, Safety and Social Welfare
I. Medical and Dental Services
Escasinas, et. al. v. Shangri-las Mactan Island Resort