University of San Carlos

School of Law and Governance

LABOR STANDARDSMIDTERM CASE DIGEST COMPILATION

Submitted by:

BONGHANOY, Rei La Datsun G.

(EH405MC)

Submitted to:

Atty. Jefferson M. Marquez

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TABLE OF CONTENTS

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1) Applicable Laws4

2) Basic Principles4

3) Hiring of Employee 29

4) Wage and the Wage Rationalization Act42

5) Violation of Wage Orders 65

6) Wage Enforcement and Recovery65

7) Wage Protection Provisions and Prohibitions Regarding Wages79

8) Payment of Wages 99

9) Conditions of Employment103

10)Minimum Labor Standard Benefits108

11)Other Special Benefits134

12)2011 NLRC Rules of Procedure160

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1.APPLICABLE LAWS

2.BASIC PRINCIPLES

Singer Sewing Machine vs. NLRCG.R. No. 91307 January 24, 1991

FACTS:Singer Machine Collectors Union-Baguio (SIMACUBA), the respondent union, filed a

petition for direct certification as the sole and exclusive bargaining agent of all collectors of theSinger Sewing Machine Company, Baguio City branch (hereinafter referred to as "theCompany").

The Company opposed the petition mainly on the ground that the union members areactually not employees but are independent contractors as evidenced by the collection agencyagreement which they signed. The respondent Med-Arbiter, finding that there exists anemployer-employee relationship between the union members and the Company, granted thepetition for certification election. On appeal, Secretary of Labor Franklin M. Drilon affirmed it.

ISSUE:Whether or not there exists an employee-employer relationship between the parties.

RULING:SC ruled in favor of petitioner. Private respondents are independent contractors, not

employees. As such, they cannot enter into a collective bargaining agreement with thepetitioner.

The present case mainly calls for the application of the control test, which if not satisfied,would lead us to conclude that no employer-employee relationship exists. Hence, if the unionmembers are not employees, no right to organize for purposes of bargaining, nor to be certifiedas such bargaining agent can ever be recognized. The following elements are generallyconsidered in the determination of the employer-employee relationship; "(1) the selection andengagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) thepower to control the employee's conduct — although the latter is the most important element".

The nature of the relationship between a company and its collecting agents depends onthe circumstances of each particular relationship. Not all collecting agents are employees andneither are all collecting agents independent contractors. The collectors could fall under eithercategory depending on the facts of each case.

A thorough examination of the facts of the case leads us to the conclusion that theexistence of an employer-employee relationship between the Company and the collectionagents cannot be sustained. The plain language of the agreement reveals that the designationas collection agent does not create an employment relationship and that the applicant is to beconsidered at all times as an independent contractor.

The Court finds that since private respondents are not employees of the Company, theyare not entitled to the constitutional right to join or form a labor organization for purposes ofcollective bargaining. Accordingly, there is no constitutional and legal basis for their "union" tobe granted their petition for direct certification.

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

FACTS:This is originally filed with the Social Security Commission (SSC) via petition of 17

persons who styled themselves as “ Caddies of Manila Golf and Country Club-PTCCEA” for thecoverage and availment of benefits of the Social Security Act as amended, PTCCEA (PhilippineTechnical, Clerical, Commercial Employees Association) a labor organization where which theyclaim for membership.

The same time two other proceedings were filed and pending. These are certificationelection case filed by PTCCEA on behalf of the same caddies of Manila Golf and Country clubwhich was in favor of the caddies and compulsory arbitration case involving PTCCEA and ManilaGolf and Country Club which was dismissed and ruled that there was no employer-employeerelationship between the caddies and the club.

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 withinthe compulsory coverage of the Social Security System (SSS).

RULING:SC ruled in favor of the petitioner. Llamar is not an employee of the Manila Golf and

Country Club, Inc. The club is under no obligation to report him for compulsory coverage to theSSS.

In the very nature of things, caddies must submit to some supervision of their conductwhile enjoying the privilege of pursuing their occupation within the premises and grounds ofwhatever club they do work in. They work for the club to which they attach themselves onsufferance but, on the other hand, also without having to observe any working hours, free toleave anytime they please, to stay away for as long they like.

These considerations clash frontally with the concept of employment. It can happen thata caddy who has rendered services to a player on one day may still find sufficient time to workelsewhere. Under such circumstances, the caddy may leave the premises and to go to suchother place of work that he wishes. These are things beyond the control of the petitioner.

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Encyclopedia Britanica vs. NLRC G.R. No. 87098 November 4, 1996

FACTS:Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner

Encyclopaedia Britannica and was in charge of selling petitioner's products through some salesrepresentatives. As compensation, private respondent received commissions from the productssold by his agents. He was also allowed to use petitioner's name, goodwill and logo. It was,however, agreed upon that office expenses would be deducted from private respondent'scommissions. Petitioner would also be informed about appointments, promotions, and transfersof employees in private respondent's district.

Limjoco resigned from office to pursue his private business. Then on October 30, 1975,he filed a complaint against petitioner Encyclopaedia Britannica with the Department of Laborand Employment, claiming for non-payment of separation pay and other benefits, and alsoillegal deduction from his sales commissions.

ISSUE:Whether or not there exists an employer-employee relationship between the parties.

RULING:SC ruled that Limjoco was not an employee of the petitioner company. He was merely an

agent or an independent dealer of the petitioner.

The records of the case at bar showed that there was no such relationship. He was freeto conduct his work and he was free to engage in other means of livelihood. At the time he wasconnected with the petitioner company, private respondent was also a director and later thepresident of the Farmers' Rural Bank. Had he been an employee of the company, he could notbe employed elsewhere and he would be required to devote full time for petitioner. If privaterespondent was indeed an employee, it was rather unusual for him to wait for more than a yearfrom his separation from work before he decided to file his claims.

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Carungcong vs. Sunlife G.R. No. 118086 December 15, 1997

FACTS:

Susan Carungcong began her career in the insurance industry in 1974 as an agent of SunLife Assurance Company of Canada. She signed an Agent Agreement with Sun Life. In virtue ofwhich she was designated the latter’s agent to solicit applications for its insurance and annuitypolicies.

This contract was superseded some five years later when she signed two (2) newagreements. The first, denominated Career Agent’s or Unit Manager’s Agreement, dealt withsuch matters as the agent’s commissions, his obligations, limitations on his authority, andtermination of the agreement by death, or by written notice with or without cause. The secondwas titled, Manager’s Supplementary Agreement. It explicitly described as a “furtheragreement”. Carungcong and Sun Life executed another Agreement named New BusinessManager with the function generally to manage a New Business Office established. This latestAgreement stressed that the New Business Manager in performance of his duties defined herein,shall be considered an independent contractor and not an employee of Sun Life, and that underno circumstance shall the New Business Manager and/or his employees be consideredemployees of Sun Life.

Ms. Eleizer Sibayan, Manager of Sun Life’s Internal Audit Department, commenced aninquiry into the special fund availments of Carungcong and other New Business Managers.Respondent Lance Kemp, had been receiving reports of anomalies in relation thereto from unitmanagers and agents. Thereafter, on January 1990, Carungcong was confronted with and askedto explain the discrepancies set out in Sibayan’s report. She was given a letter signed by MetronV. Deveza, CLU, Director, Marketing, which advised of the termination of her relationship withSun Life.

Carungcong promptly instituted proceedings for vindication in the Arbitration Branch ofthe National Labor Relations Commissions on January 16, 1990. There she succeeded inobtaining a favorable judgment. Labor Arbiter found that there existed an employer-employeerelationship between her and Sun Life. On appeal, the National Labor Relations Commissionreversed the Arbiter’s judgment. It affirmed that no employment relationship existed betweenCarungcong and Sun Life.

ISSUE:Whether or not there exists an employer-employee relationship between the parties.

RULING:SC held that Carungcong is not an employee of Sun Life Co. She was an independent

contractor.

Noteworthy is that this last agreement which emphasized, like the “Career Agent’s orUnit Manager’s Agreement” first signed by her, that in performance of her duties defined herein.Carungcong would be considered an independent contractor and not an employee of Sun Life,and that under no circumstance shall the New Business Manager and/or his employees beconsidered employees of Sun Life.

Carungcong is an independent contractor. It was indicated in the very face of thecontract. The rules and regulations of the company is not sufficient to establish an employer-employee relationship. It does not necessarily create any employer-employee relationship wherethe employers’ controls have to interfere in the methods and means by which employee wouldlike employ to arrive at the desired results.

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Carungcong admitted that she was free to work as she pleases, at the place and timeshe felt convenient for her to do so. She was not paid to a fixed salary and was mainly paid bycommissions depending on the volume of her performance.

Ramos vs. CAG.R. No. 124354; April 11, 2002

FACTS:Petitioner Erlinda Ramos, after seeking professional medical help, was advised to

undergo an operation for the removal of a stone in her gall bladder (cholecystectomy). Shewas referred to Dr. Hosaka, a surgeon, who agreed to perform the operation on her. Theoperation was scheduled for June 17, 1985 at 9:00 in the morning at private respondent DeLos Santos Medical Center (DLSMC). Since neither petitioner Erlinda nor her husband,petitioner Rogelio, knew of any anesthesiologist, Dr. Hosaka recommended to them theservices of Dr. Gutierrez. On the following day, she was ready for operation as early as 7:30am. Around 9:30, Dr. Hosaka has not yet arrived. By 10 am, Rogelio wanted to pull out hiswife from the operating room. Dr. Hosaka finally arrived at 12:10 pm more than 3 hours ofthe scheduled operation.

Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluishdiscoloration in her left hand. At 3 pm, Erlinda was being wheeled to the Intensive care Unitand stayed there for a month. Since the ill-fated operation, Erlinda remained in comatosecondition until she died.

The family of Ramos sued them for damages.

ISSUE:Whether or not there exists an employer-employee relationship between the medical

center and Drs. Hosaka and Guiterrez.

RULING:SC ruled that there was no employee-employer relationship between de Los Santos

Medical Center and Drs. Hosaka and Gutierrez.

After a careful consideration of the arguments raised by DLSMC, the Court finds thatrespondent hospital’s position on this issue is meritorious. There is no employer-employeerelationship between DLSMC and Drs. Gutierrez and Hosaka which would hold DLSMC solidarilyliable for the injury suffered by petitioner Erlinda under Article 2180 of the Civil Code.

As explained by respondent hospital, that the admission of a physician to membership inDLSMC’s medical staff as active or visiting consultant is first decided upon by the CredentialsCommittee. Neither is there any showing that it is DLSMC which pays any of its consultants formedical services rendered by the latter to their respective patients. Moreover, the contractbetween the consultant in respondent hospital and his patient is separate and distinct from thecontract between respondent hospital and said patient. The first has for its object the renditionof medical services by the consultant to the patient, while the second concerns the provision bythe hospital of facilities and services by its staff such as nurses and laboratory personnelnecessary for the proper treatment of the patient.

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

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Sonza vs. ABS-CBN G.R. No. 138051; June 10, 2004

FACTS:Respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement

("Agreement") with the Mel and Jay Management and Development Corporation ("MJMDC"). ABS-CBN was represented by its corporate officers while MJMDC was represented by SONZA, asPresident and General Manager, and Carmela Tiangco ("TIANGCO"), as EVP and Treasurer.Referred to in the Agreement as "AGENT," MJMDC agreed to provide SONZA’s servicesexclusively to ABS-CBN as talent for radio and television.

ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of P310,000 for thefirst year and P317,000 for the second and third year of the Agreement. ABS-CBN would pay thetalent fees on the 10th and 25th days of the month. SONZA filed a complaint against ABS-CBNbefore the Department of Labor and Employment, National Capital Region in Quezon City.SONZA complained that ABS-CBN did not pay his salaries, separation pay, service incentiveleave pay, 13th month pay, signing bonus, travel allowance and amounts due under theEmployees Stock Option Plan ("ESOP").

ISSUE:Whether Jay Sonza is an employee of ABS-CBN or an independent contractor.

RULING:SC ruled that Sonza is an independent contractor.

Selection and Engagement of Employees. Independent contractors often presentthemselves to possess unique skills, expertise or talent to distinguish them from ordinaryemployees. The specific selection and hiring of SONZA, because of his unique skills, talent andcelebrity status not possessed by ordinary employees, is a circumstance indicative, but notconclusive, of an independent contractual relationship. If SONZA did not possess such uniqueskills, talent and celebrity status, ABS-CBN would not have entered into the Agreement withSONZA but would have hired him through its personnel department just like any otheremployee.

Payment of Wages. All the talent fees and benefits paid to SONZA were the result ofnegotiations that led to the Agreement. If SONZA were ABS-CBN’s employee, there would be noneed for the parties to stipulate on benefits such as "SSS, Medicare, x x x and 13th monthpay"20 which the law automatically incorporates into every employer-employee contract.Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship. SONZA’s talent fees, amounting to P317,000 monthly in the second andthird year, are so huge and out of the ordinary that they indicate more an independentcontractual relationship rather than an employer-employee relationship.

Power of Dismissal. During the life of the Agreement, ABS-CBN agreed to pay SONZA’stalent fees as long as "AGENT and Jay Sonza shall faithfully and completely perform eachcondition of this Agreement."24 Even if it suffered severe business losses, ABS-CBN could notretrench SONZA because ABS-CBN remained obligated to pay SONZA’s talent fees during thelife of the Agreement. This circumstance indicates an independent contractual relationshipbetween SONZA and ABS-CBN.

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Power of Control. Applying the control test to the present case, we find that SONZA is notan employee but an independent contractor. The control test is the most important test ourcourts apply in distinguishing an employee from an independent contractor.29 This test is basedon the extent of control the hirer exercises over a worker. The greater the supervision andcontrol the hirer exercises, the more likely the worker is deemed an employee. The converseholds true as well – the less control the hirer exercises, the more likely the worker is consideredan independent contractor.30

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

FACTS:Private respondent Rosalina M. Laudato ("Laudato") filed a petition before the SSC for

social security coverage and remittance of unpaid monthly social security contributions againsther three (3) employers. Among the respondents was herein petitioner Angelito L. Lazaro("Lazaro"), proprietor of Royal Star Marketing ("Royal Star"), which is engaged in the business ofselling home appliances. Laudato alleged that despite her employment as sales supervisor ofthe sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed during thesaid period, to report her to the SSC for compulsory coverage or remit Laudato's social securitycontributions.

ISSUE:Whether or not there exists an employee-employer relationship between Laudato and

Royal Star Marketing.

RULING:SC ruled that there exists such relationship between the parties.

It is an accepted doctrine that for the purposes of coverage under the Social SecurityAct, 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 theemployee, not only as to the result of the work done, but also as to the means and methods bywhich the same is accomplished.

Suffice it to say, the fact that Laudato was paid by way of commission does not precludethe establishment of an employer-employee relationship. The relevant factor remains, as statedearlier, whether the "employer" controls or has reserved the right to control the "employee" notonly as to the result of the work to be done but also as to the means and methods by which thesame is to be accomplished.

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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 professionwhom petitioner enlisted to attend to the medical needs of its employees. The controversy rosewhen petitioner terminated his engagement.

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

On January 1997, de Vera fileda complaint for illegal dismissal before the NLRC, allegingthat he had been actually employed by the company as its company physician since 1991. Thecommission rendered decision in favor of Philcom and dismissed the complaint saying that deVera was an independent contractor. On appeal to NLRC, it reversed the decision of the LaborArbiter 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 deVera. Philcom filed this petition involving the difference of a job contracting agreements fromemployee-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.

The elements of an employer-employee relationship are wanting in this case. The recordare replete with evidence showing that respondent had to bill petitioner for his monthlyprofessional fees. It simply runs against the grain of common experience to imagine that anordinary employee has yet to bill his employer to receive his salary.

The power to terminate the parties’ relationship was mutually vested on both. Either mayterminate the arrangement at will, with or without cause.

Remarkably absent is the element of control whereby the employer has reserved theright to control the employee not only as to the result of the work done but also as to the meansand methods by which the same is to be accomplished.

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Petitioner had no control over the means and methods by which respondent went aboutperforming his work at the company premises. In fine, the parties themselves practically agreedon every terms and conditions of the engagement, which thereby negates the element ofcontrol in their relationship.

ABS-CBN vs. NazarenoG.R. No. 164156; September 26, 2006

FACTS:Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting

business and owns a network of television and radio stations, whose operations revolve aroundthe broadcast, transmission, and relay of telecommunication signals. It sells and deals in orotherwise utilizes the airtime it generates from its radio and television operations. It has afranchise as a broadcasting company, and was likewise issued a license and authority tooperate by the National Telecommunications Commission.

Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan asproduction assistants (PAs) on different dates. They were assigned at the news and publicaffairs, for various radio programs in the Cebu Broadcasting Station. On December 19, 1996,petitioner and the ABS-CBN Rank-and-File Employees executed a Collective BargainingAgreement (CBA) to be effective during the period from December 11, 1996 to December 11,1999. However, since petitioner refused to recognize PAs as part of the bargaining unit,respondents were not included to the CBA.

In October 2000, respondents filed a Complaint for Recognition of Regular EmploymentStatus, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, SickLeave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. The LaborArbiter rendered judgment in favor of the respondents, and declared that they were regularemployees of petitioner as such, they were awarded monetary benefits. NLRC affirmed thedecision of the Labor Arbiter. Petitioner filed a motion for reconsideration but CA dismissed it.

ISSUE:Whether or not the respondents were considered regular employees of ABS-CBN.

RULING:SC ruled that Production Assistants (Pas) are regular workers. Thus, they are entitled to

the benefits in the CBA between ABS-CBN and its rank-and-file employees.

It was held that where a person has rendered at least one year of service, regardless ofthe nature of the activity performed, or where the work is continuous or intermittent, theemployment is considered regular as long as the activity exists, the reason being that acustomary appointment is not indispensable before one may be formally declared as havingattained regular status.

The Court states that the primary standard, therefore, of determining regularemployment is the reasonable connection between the particular activity performed by theemployee in relation to the usual trade or business of the employer. The test is whether theformer is usually necessary or desirable in the usual business or trade of the employer. Theconnection can be determined by considering the nature of work performed and its relation tothe scheme of the particular business or trade in its entirety. Also, if the employee has beenperforming the job for at least a year, even if the performance is not continuous and merely

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intermittent, the law deems repeated and continuing need for its performance as sufficientevidence of the necessity if not indispensability of that activity to the business. Hence, theemployment is considered regular, but only with respect to such activity and while such activityexists.

Additionally, respondents cannot be considered as project or program employeesbecause no evidence was presented to show that the duration and scope of the project weredetermined or specified at the time of their engagement. In the case at bar, however, theemployer-employee relationship between petitioner and respondents has been proven. In theselection and engagement of respondents, no peculiar or unique skill, talent or celebrity statuswas required from them because they were merely hired through petitioner’s personneldepartment just like any ordinary employee. Respondents did not have the power to bargain forhuge talent fees, a circumstance negating independent contractual relationship. Respondentsare highly dependent on the petitioner for continued work. The degree of control andsupervision exercised by petitioner over respondents through its supervisors negates theallegation that respondents are independent contractors.

The presumption is that when the work done is an integral part of the regular business ofthe employer and when the worker, relative to the employer, does not furnish an independentbusiness or professional service, such work is a regular employment of such employee and notan independent contractor. As regular employees, respondents are entitled to the benefitsgranted to all other regular employees of petitioner under the CBA . Besides, only talent-artistswere excluded from the CBA and not production assistants who are regular employees of therespondents. Moreover, under Article 1702 of the New Civil Code: “In case of doubt, all laborlegislation and all labor contracts shall be construed in favor of the safety and decent living ofthe laborer.”

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Francisco vs. NLRCG.R. No. 170087; August 31, 2006

FACTS:Angelina Francisco was hired by Kasei Corporation during the incorporation stage. She

was designated as accountant and corporate secretary and was assigned to handle all theaccounting needs of the company. She was also designated as Liason Officer to the City ofManila to secure permits for the operation of the company.

In 1996, Petitioner was designated as Acting Manager. She was assigned to handlerecruitment of all employees and perform management administration functions. In 2001, shewas replaced by Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 permonth which was until September. She asked for her salary but was informed that she was nolonger connected to the company. She did not anymore report to work since she was not paidfor her salary. She filed an action for constructive dismissal with the Labor Arbiter.

ISSUE:Whether or not there was an employer-employee relationship.

RULING:SC held that there was such relationship. Francisco was constructively dismissed. To

ascertain if such relationship exists, the Court used two-tiered test—control test and economicreality test.

The court held that in this jurisdiction, there has been no uniform test to determine theexistence of an employer-employee relation. Generally, courts have relied on the so-called rightof control test where the person for whom the services are performed reserves a right to controlnot only the end to be achieved but also the means to be used in reaching such end. In additionto the standard of right-of-control, the existing economic conditions prevailing between theparties, like the inclusion of the employee in the payrolls, can help in determining the existenceof an employer-employee relationship.

The better approach would therefore be to adopt a two-tiered test involving: (1) theputative employer’s power to control the employee with respect to the means and methods bywhich the work is to be accomplished; and (2) the underlying economic realities of the activityor relationship.

The court observed the need to consider the existing economic conditions prevailingbetween the parties, in addition to the standard of right-of-control like the inclusion of theemployee in the payrolls, to give a clearer picture in determining the existence of an employer-employee relationship based on an analysis of the totality of economic circumstances of theworker.

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Thus, the determination of the relationship between employer and employee dependsupon the circumstances of the whole economic activity, such as: (1) the extent to which theservices performed are an integral part of the employer’s business; (2) the extent of theworker’s investment in equipment and facilities; (3) the nature and degree of control exercisedby the employer; (4) the worker’s 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 inthat line of business. The proper standard of economic dependence is whether the worker isdependent on the alleged employer for his continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of KaseiCorporation because she was under the direct control and supervision of Seiji Kamura, thecorporation’s Technical Consultant. It is therefore apparent that petitioner is economicallydependent on respondent corporation for her continued employment in the latter’s line ofbusiness.

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

Nogales et. al. vs. Capitol Medical Center et. al.G.R. No. 142625; December 19, 2006

FACTS:Pregnant with her fourth child, Corazon Nogales ("Corazon"), who was then 37 years old,

was under the exclusive prenatal care of Dr. Oscar Estrada ("Dr. Estrada") beginning on herfourth month of pregnancy or as early as December 1975. Around midnight of 25 May 1976,Corazon started to experience mild labor pains prompting Corazon and Rogelio Nogales("Spouses Nogales") to see Dr. Estrada at his home. After examining Corazon, Dr. Estradaadvised her immediate admission to the Capitol Medical Center ("CMC"). t 6:13 a.m., Corazonstarted to experience convulsionsAt 6:22 a.m., Dr. Estrada, assisted by Dr. Villaflor, applied lowforceps to extract Corazon's baby. In the process, a 1.0 x 2.5 cm. piece of cervical tissue wasallegedly torn.At 6:27 a.m., Corazon began to manifest moderate vaginal bleeding which rapidlybecame profuse. Corazon died at 9:15 a.m. The cause of death was "hemorrhage, post partum.

ISSUE:Whether or not the Capitol Medical Center is solidarily liable.

RULING:SC held CMC solidarily liable together with Dr. Estrada. The “doctrine of apparent

authority” was used to make CMC vicariously liable even if Dr. Estrada is an independentcontractor.

Private hospitals, hire, fire and exercise real control over their attending and visiting"consultant" staff. The basis for holding an employer solidarily responsible for the negligence ofits employee is found in Article 2180 of the Civil Code which considers a person accountable notonly for his own acts but also for those of others based on the former's responsibility under arelationship of patria potestas.

In general, a hospital is not liable for the negligence of an independent contractor-

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physician. There is, however, an exception to this principle. The hospital may be liable if thephysician is the "ostensible" agent of the hospital. This exception is also known as the "doctrineof apparent authority”.

For a hospital to be liable under the doctrine of apparent authority, a plaintiff must showthat: (1) the hospital, or its agent, acted in a manner that would lead a reasonable person toconclude that the individual who was alleged to be negligent was an employee or agent of thehospital; (2) where the acts of the agent create the appearance of authority, the plaintiff mustalso prove that the hospital had knowledge of and acquiesced in them; and (3) the plaintiffacted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care andprudence. In the instant case, CMC impliedly held out Dr. Estrada as a member of its medicalstaff. Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading theSpouses Nogales to believe that Dr. Estrada was an employee or agent of CMC.

Coca-Cola Bottlers Phils. vs. Dr. Climaco G.R. No. 146881; February 5, 2007

FACTS:Dr. Climaco is a medical doctor who was hired by the petitioner by virtue of retainer

agreement. The agreement states that there is no employer-employee relationship between theparties. The retainer agreement was renewed annually. The last one expired on Dec. 31, 1993.Despite of the non-renewal of the agreement, respondent continued to perform his functions ascompany doctor until he received a letter in March 1995 concluding their retainer agreement.

Respondent filed a complaint before the NLRC seeking recognition as a regular employeeof the petitioner company and prayed for the payment of all benefits of a regular employee. Inthe decision of the Labor Arbiter, the company lacked control over the respondent’sperformance of his duties. Respondent appealed where it rendered that no employer-employeerelationship existed between the parties.

The CA ruled that an employer-employee relationship existed.

ISSUE:Whether or not there exists an employer-employee relationship between the parties.

RULING:SC ruled that there is no such relationship between the parties.

The Court, in determining the existence of an employer-employee relationship, hasinvariably adhered to the four-fold test: (1) the selection and engagement of the employee; (2)the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’sconduct, or the so-called “control test,” considered to be the most important element.

The Court agrees with the finding of the Labor Arbiter and the NLRC that thecircumstances of this case show that no employer-employee relationship exists between theparties. The Comprehensive Medical Plan, provided guidelines merely to ensure that the endresult was achieved, but did not control the means and methods by which respondentperformed his assigned tasks. In addition, the Court finds that the schedule of work and therequirement to be on call for emergency cases do not amount to such control, but are necessaryincidents to the Retainership Agreement.

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Considering that there is no employer-employee relationship between the parties, thetermination of the Retainership Agreement, which is in accordance with the provisions of theAgreement, does not constitute illegal dismissal of respondent.

Calamba Medical Center vs. NLRC et. al. G.R. No. 176484; November 25, 2008

FACTS:The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the

services of medical doctors-spouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas(Dr. Merceditha) in March 1992 and August 1995, respectively, as part of its team of residentphysicians. Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents werepaid a monthly "retainer" of P4,800.00 each. It appears that resident physicians were also givena percentage share out of fees charged for out-patient treatments, operating room assistanceand discharge billings, in addition to their fixed monthly retainer.

The work schedules of the members of the team of resident physicians were fixed bypetitioner's medical director Dr. Raul Desipeda (Dr. Desipeda). And they were issuedidentification cards by petitioner and were enrolled in the Social Security System (SSS). Incometaxes were withheld from them.

Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital, inadvertentlyoverheard a telephone conversation of respondent Dr. Lanzanas with a fellow employee,Diosdado Miscala, through an extension telephone line. Apparently, Dr. Lanzanas and Miscalawere discussing the low "census" or admission of patients to the hospital.

Dr. Trinidad issued to Dr. Lanzanas a memorandum asking her to explain within 24 hourswhy no disciplinary action should be taken against him. Pending investigation, he was placedunder a 30-day preventive suspension.

Inexplicably, petitioner did not give respondent Dr. Merceditha, who was not involved inthe said incident, any work schedule after sending her husband Dr. Lanzanas the memorandum,nor inform her the reason therefor, albeit she was later informed by the Human ResourceDepartment (HRD) officer that that was part of petitioner's cost-cutting measures.

Dr. Lanzanas filed a complaint for illegal suspension before the National Labor RelationsCommission (NLRC)-Regional Arbitration Board (RAB) IV. Dr. Merceditha subsequently filed acomplaint for illegal dismissal.

ISSUE:

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Whether or not there exists an employer-employee relationship between petitioner andthe spouses-respondents.

Whether or not the spouses-respondents were legally dismissed.

RULING:SC held that there exists such relationship. The spouses-respondents were illegally

dismissed.

On the first issueUnder 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 thephysician is to accomplish his task.

As priorly stated, private respondents maintained specific work-schedules, as determinedby petitioner through its medical director, which consisted of 24-hour shifts totaling forty-eighthours each week and which were strictly to be observed under pain of administrative sanctions.

That petitioner exercised control over respondents gains light from the undisputed factthat 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 beundertaken in those areas. For control test to apply, it is not essential for the employer toactually supervise the performance of duties of the employee, it being enough that it has theright to wield the power.

On the second issuePetitioner thus failed to observe the two requirements,before dismissal can be effected ─

notice and hearing ─ which constitute essential elements of the statutory process; the first toapprise the employee of the particular acts or omissions for which his dismissal is sought, andthe second to inform the employee of the employer's decision to dismiss him. Non-observanceof these requirements runs afoul of the procedural mandate.

The termination notice sent to and received by Dr. Lanzanas on April 25, 1998 was thefirst and only time that he was apprised of the reason for his dismissal. He was not afforded,however, even the slightest opportunity to explain his side. His was a "termination upon receipt"situation. While he was priorly made to explain on his telephone conversation with Miscala, hewas not with respect to his supposed participation in the strike and failure to heed the return-to-work order.

As for the case of Dr. Merceditha, her dismissal was worse, it having been effectedwithout any just or authorized cause and without observance of due process. In fact, petitionernever proferred any valid cause for her dismissal except its view that "her marriage to [Dr.Lanzanas] has given rise to the presumption that her sympath[y] [is] with her husband; [andthat when [Dr. Lanzanas] declared that he was going to boycott the scheduling of their workloadby the medical doctor, he was presumed to be speaking for himself [and] for his wifeMerceditha."

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Escasinas et. al. vs. Shangri-laG.R. No. 178827; March 4, 2009

FACTS:Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were

engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) towork in her clinic at respondent Shangri-la’s Mactan Island Resort (Shangri-la) in Cebu of whichshe was a retained physician.

In late 2002, petitioners filed with the NLRC a complaint for regularization, underpaymentof wages, non-payment of holiday pay, night shift differential and 13th month pay differentialagainst respondents, claiming that they are regular employees of Shangri-la. Shangri-laclaimed, however, that petitioners were not its employees but of respondent doctor whom itretained via Memorandum of Agreement (MOA) pursuant to Article 157 of the Labor Code, asamended. Respondent doctor for her part claimed that petitioners were already working for theprevious retained physicians of Shangri-la before she was retained by Shangri-la; and that shemaintained petitioners’ services upon their request.

ISSUE: Whether or not there was an employee-employer relationship between Shangri-La

and the petitioners. Whether or not Dr. Pepito is an independent contractor

RULING:SC ruled that there no such relationship. The petitioners are under the direct supervision

of Dr. Pepito, an independent contractor.

On the first issueThe resolution of the case hinges, in the main, on the correct interpretation of Art. 157

vis a vis Art. 280 and the provisions on permissible job contracting of the Labor Code, asamended. Under the foregoing provision, Shangri-la, which employs more than 200 workers, ismandated to “furnish” its employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should provide ormake available such medical and allied services to its employees, not necessarily to hire oremploy a service provider. The term “full-time” in Art. 157 cannot be construed as referring to

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the type of employment of the person engaged to provide the services, for Article 157 must notbe read alongside Art. 280[9] in order to vest employer-employee relationship on the employerand the person so engaged. The phrase “services of a full-time registered nurse” should thus betaken to refer to the kind of services that the nurse will render in the company’s premises and toits employees, not the manner of his engagement.

On the second issueThe existence of an independent and permissible contractor relationship is generally

established by considering the following determinants: whether the contractor is carrying on anindependent business; the nature and extent of the work; the skill required; the term andduration of the relationship; the right to assign the performance of a specified piece of work; thecontrol 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 supplythe premises, tools, appliances, materials and labor; and the mode, manner and terms ofpayment.

Against the above-listed determinants, the Court holds that respondent doctor is alegitimate independent contractor. That Shangri-la provides the clinic premises and medicalsupplies for use of its employees and guests do not necessarily prove that respondent doctorlacks substantial capital and investment. Besides, the maintenance of a clinic and provision ofmedical services to its employees is required under Art. 157, which are not directly related toShangri-la’s principal business – operation of hotels and restaurants.

Tongko vs. The Manufacturer’s Life Insurance Co., Inc. November 7, 2008G.R. No. 167622, November 07, 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 professionalrelationship 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 understoodand agreed that the Agent is an independent contractor and nothing contained herein shall beconstrued or interpreted as creating an employer-employee relationship between theCompany and the Agent. The Company may terminate this Agreement for any breach orviolation of any of the provisions hereof by the Agent by giving written notice to the Agentwithin fifteen (15) days from the time of the discovery of the breach. No waiver,extinguishment, abandonment, withdrawal or cancellation of the right to terminate thisAgreement by the Company shall be construed for any previous failure to exercise its rightunder any provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at any time withoutcause, by giving to the other party fifteen (15) days notice in writing. In 1983, Tongko wasnamed as a Unit Manager in Manulife's Sales Agency Organization.In 1990, he became aBranch Manager. As the CA found, Tongko's gross earnings from his work at Manulife,consisting of commissions, persistency income, and management overrides. The problemstarted sometime in 2001, when Manulife instituted manpower development programs in theregional sales management level. Relative thereto, De Dios addressed a letter datedNovember 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales ManagersMeeting. Stating that Tongko’s Region was the lowest performer (on a per Manager basis) interms of recruiting in 2000 and, as of today, continues to remain one of the laggards in thisarea.

Other issues were:"Some Managers are unhappy with their earnings and would want torevert to the position of agents." And "Sales Managers are doing what the company asks themto do but, in the process, they earn less." Tongko was then terminated. Therefrom, Tongko fileda Complaint dated November 25, 2002 with the NLRC against Manulife for illegal dismissal in

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the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the complaint forlack of an employer-employee relationship. The NLRC's First Division, while finding anemployer-employee relationship between Manulife and Tongko applying the four-fold test, heldManulife liable for illegal dismissal. Thus, Manulife filed an appeal with the CA. Thereafter, theCA 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 thecase.Hence, Tongko filed this petition.

ISSUES: WON Tongko was an employee of Manulife WON Tongko was illegally dismissed.

RULING:1. Yes

In the instant case, Manulife had the power of control over Tongko that would make himits 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 tocomply with all regulations and requirements of the Company as herein provided as well asmaintain a standard of knowledge and competency in the sale of the Company's productswhich satisfies those set by the Company and sufficiently meets the volume of new businessrequired of Production Club membership.Under this provision, an agent of Manulife mustcomply with three (3) requirements: (1) compliance with the regulations and requirements ofthe company; (2) maintenance of a level of knowledge of the company's products that issatisfactory to the company; and (3) compliance with a quota of new businesses. Among thecompany regulations of Manulife are the different codes of conduct such as the Agent Code ofConduct, Manulife Financial Code of Conduct, and Manulife Financial Code of ConductAgreement, which demonstrate the power of control exercised by the company over Tongko.The fact that Tongko was obliged to obey and comply with the codes of conduct was notdisowned by respondents. Thus, with the company regulations and requirements alone, thefact that Tongko was an employee of Manulife may already be established. Certainly, theserequirements controlled the means and methods by which Tongko was to achieve thecompany's goals.

More importantly, Manulife's evidence establishes the fact that Tongko was tasked toperform administrative duties that establishes his employment with Manulife. Additionally, itmust be pointed out that the fact that Tongko was tasked with recruiting a certain number ofagents, in addition to his other administrative functions, leads to no other conclusion that hewas an employee of Manulife.

2. Yes

In its Petition for Certiorari dated January 7, 2005[26] filed before the CA, Manulifeargued that even if Tongko is considered as its employee, his employment was validlyterminated on the ground of gross and habitual neglect of duties, inefficiency, as well as willfuldisobedience of the lawful orders of Manulife. Manulife stated: In the instant case, privaterespondent, despite the written reminder from Mr. De Dios refused to shape up and altogetherdisregarded the latter's advice resulting in his laggard performance clearly indicative of hiswillful disobedience of the lawful orders of his superior. As private respondent has patentlyfailed to perform a very fundamental duty, and that is to yield obedience to all reasonablerules, orders and instructions of the Company, as well as gross failure to reach at leastminimum quota, the termination of his engagement from Manulife is highly warranted andtherefore, there is no illegal dismissal to speak of. It is readily evident from the above-quotedportions of Manulife's petition that it failed to cite a single iota of evidence to support itsclaims. Manulife did not even point out which order or rule that Tongko disobeyed. Moreimportantly, Manulife did not point out the specific acts that Tongko was guilty of that wouldconstitute gross and habitual neglect of duty or disobedience. Manulife merely cited Tongko'salleged "laggard performance," without substantiating such claim, and equated the same to

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disobedience and neglect of duty. Apropos thereto, Art. 277(b), of the Labor Code mandates inexplicit terms that the burden of proving the validity of the termination of employment restson the employer. Failure to discharge this evidential burden would necessarily mean that thedismissal was not justified, and, therefore, illegal. The Labor Code provides that an employermay terminate the services of an employee for just cause and this must be supported bysubstantial evidence. The settled rule in administrative and quasi-judicial proceedings is thatproof beyond reasonable doubt is not required in determining the legality of an employer'sdismissal of an employee, and not even a preponderance of evidence is necessary assubstantial evidence is considered sufficient. Substantial evidence is more than a merescintilla of evidence or relevant evidence as a reasonable mind might accept as adequate tosupport a conclusion, even if other minds, equally reasonable, might conceivably opineotherwise. Here, Manulife failed to overcome such burden of proof. It must be reiterated thatManulife even failed to identify the specific acts by which Tongko's employment wasterminated much less support the same with substantial evidence. To repeat, mereconjectures cannot work to deprive employees of their means of livelihood. Thus, it must beconcluded that Tongko was illegally dismissed. Moreover, as to Manulife's failure to complywith the twin notice rule, it reasons that Tongko not being its employee is not entitled to suchnotices. Since we have ruled that Tongko is its employee, however, Manulife clearly failed toafford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal dismissal.

CAONG, JR. V. AVELINO REGUALOSGR No. 179428 January 26, 2011

FACTS:Petitioners were hired by respondent under a boundary agreement, as drivers of his

jeepneys. Consequently, petitioners were barred him from driving because of the deficiency inthe boundary payment. They pleaded with respondent but to no avail.During the mandatoryconference, respondent manifested that petitioners were not dismissed and that they coulddrive his jeepneys once they paid their arrears. Petitioners, however, refused to do so andaverred that they were illegally dismissed by respondent without just cause. They filed separatecomplaints for illegal dismissal against respondent who barred them from driving the vehiclesdue to deficiencies in their boundary payments. In his answer, respondent alleged thatpetitioners were lessees of his vehicles and not his employees; hence, the Labor Arbiter had nojurisdiction.

ISSUE:Whether or not the policy of suspending drivers pending payment of arrears in their

boundary obligations reasonable?

HELD:It is already settled that the relationship between jeepney owners/operators and jeepney

drivers under the boundary system is that of employer-employee and not of lessor-lessee. Thefact that the drivers do not receive fixed wages but only get the amount in excess of the so-called "boundary" that they pay to the owner/operator is not sufficient to negate therelationship between them as employer and employee.

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Indeed, petitioners' suspension cannot be categorized as dismissal, considering thatthere was no intent on the part of respondent to sever the employer-employee relationshipbetween him and petitioners. In fact, it was made clear that petitioners could put an end to thesuspension if they only pay their recent arrears. As it was, the suspension dragged on for yearsbecause of petitioners' stubborn refusal to pay. It would have been different if petitionerscomplied with the condition and respondent still refused to readmit them to work. Then therewould have been a clear act of dismissal.

Respondent's policy of suspending drivers who fail to remit the full amount of theboundary was fair and reasonable under the circumstances.Under a boundary scheme, thedriver remits the "boundary," which is a fixed amount, to the owner/operator and gets to earnthe amount in excess thereof. Thus, on a day when there are many passengers along the route,it is the driver who actually benefits from it. It would be unfair then if, during the times whenpassengers are scarce, the owner/operator will be made to suffer by not getting the full amountof the boundary. Unless clearly shown or explained by an event that irregularly and negativelyaffected the usual number of passengers within the route, the scarcity of passengers should notexcuse the driver from paying the full amount of the boundary.

The petition is denied for lack of merit.

ATOK BIG WEDGE COMPANY, INC. V JESUS P. GISONGR. 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 withmatters pertaining to the prosecution of cases against illegal surface occupants within the areacovered by the company's mineral claims. Respondent was likewise tasked to perform liaisonwork with several government agencies, which he said was his expertise.Petitioner did notrequire respondent to report to its office on a regular basis, except when occasionally requestedby the management to discuss matters needing his expertise as a consultant. As payment forhis services, respondent received a retainer fee of P3,000.00 a month. The said arrangementcontinued for the next eleven years.

Sometime thereafter, since respondent was getting old, he requested that petitionercause his registration with the Social Security System (SSS), but petitioner did not accede to hisrequest. He later reiterated his request but it was ignored by petitioner considering that he wasonly a retainer/consultant.

On the same date petitioner, issued a memorandum advising respondent that within 30days from receipt thereof, petitioner is terminating his retainer contract with the company sincehis services are no longer necessary. Respondent filed a complaint for illegal dismissal, unfair

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labor practice, underpayment of wages, non-payment of 13th month pay, vacation pay, and sickleave pay with the National Labor Relations Commission (NLRC).

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

and respondent.

HELD:To ascertain the existence of an employer-employee relationship jurisprudence has

invariably adhered to 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 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" iscommonly regarded as the most crucial and determinative indicator of the presence or absenceof an employer-employee relationship. Under the control test, an employer-employeerelationship exists where the person for whom the services are performed reserves the right tocontrol not only the end achieved, but also the manner and means to be used in reaching thatend.

Applying the aforementioned test, an employer-employee relationship is apparentlyabsent in the case at bar. Among other things, respondent was not required to report everydayduring regular office hours of petitioner. Respondent's monthly retainer fees were paid to himeither at his residence or a local restaurant. More importantly, petitioner did not prescribe themanner in which respondent would accomplish any of the tasks in which his expertise as aliaison officer was needed; respondent was left alone and given the freedom to accomplish thetasks using his own means and method. Respondent was assigned tasks to perform, butpetitioner 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 aconclusion that he is not an employee of the petitioner.

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SEMBLANTE V. COURT OF APPEALSGR No. 196426 August 15, 2011

FACTS:Petitioners assert that they were hired by respondents, as the official masiador and

sentenciador, respectively, of the cockpit sometime in 1993.

Amasiador calls and takes the bets from the gamecock owners and other bettors andorders the start of the cockfight. He also distributes the winnings after deducting the arriba, orthe commission for the cockpit. Meanwhile, as the sentenciador oversees the proper gaffing offighting cocks, determines the fighting cocks' physical condition and capabilities to continue thecockfight, and eventually declares the result of the cockfight.

For their services as masiador and sentenciador, Semblante receives PhP2,000 per weekor a total of PhP8,000 per month, while Pilar gets PhP3,500 a week or PhP14,000 per month.They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthlyderbies and cockfights held on special holidays. Their working days start at 1:00 p.m. and lastuntil 12:00 midnight, or until the early hours of the morning depending on the needs of thecockpit. Petitioners had both been issued employees' identification cards that they wear everytime they report for duty. They alleged never having incurred any infraction and/or violation ofthe cockpit rules and regulations.

On November 14, 2003, however, petitioners were denied entry into the cockpit upon theinstructions of respondents, and were informed of the termination of their services effective thatdate. This prompted petitioners to file a complaint for illegal dismissal against respondents.

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

and respondent.

HELD: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 ofdismissal; and (4) the power to control the employee's conduct, which is the most importantelement.

As found by both the NLRC and the CA, respondents had no part in petitioners' selectionand management; petitioners' compensation was paid out of the arriba(which is a percentagededucted from the total bets), not by petitioners; and petitioners performed their functions asmasiador and sentenciador free from the direction and control of respondents. In the conduct oftheir work, petitioners relied mainly on their "expertise that is characteristic of the cockfightgambling," and were never given by respondents any tool needed for the performance of theirwork.

Respondents, not being petitioners' employers, could never have dismissed, legally orillegally, petitioners, since respondents were without power or prerogative to do so in the firstplace. The rule on the posting of an appeal bond cannot defeat the substantive rights ofrespondents to be free from an unwarranted burden of answering for an illegal dismissal forwhich they were never responsible.

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JOSE MEL BERNARTE V. PHILIPPINE BASKETBALL ASSOCIATIONG.R. No. 192084, September 14, 2011

FACTS:Petitioner Bernarte was invited to join the Philippine Basketball Association (PBA) as a

referee. Consequently, he was made to sign contracts on a year-to-year basis. During the termof Commissioner Eala, however, changes were made on the terms of their employment. Forinstance, he was not made to sign a contract during the first conference of the All-Filipino Cupwhich was from February 23, 2003 to June 2003. It was only during the second conference whenhe was made to sign a one and a half month contract for the period July 1 to August 5, 2003.OnJanuary 15, 2004, Bernarte received a letter from the Office of the Commissioner advising himthat his contract would not be renewed citing his unsatisfactory performance on and off thecourt. It was a total shock for Bernarte who was awarded Referee of the year in2003. He feltthat the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon.Respondents aver, on the other hand, that Bernarte was not illegally dismissed because he wasnot an employee of the PBA. His contract of retainer was simply not renewed. PBA had theprerogative of whether or not to renew his contract.

ISSUE:Whether or not the repeated signing of a contract of retainer by a basketball referee is

sufficient to make him a regular employee

HELD: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 theemployee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's powerto 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.

In the case at bar, the petitioner, a basketball referee of the PBA, is an independentcontractor. There was no control over the means and methods by which petitioner performs hiswork as a referee officiating a PBA basketball game. The contractual stipulations in the retainercontracts do not pertain to, much less dictate, how and when petitioner will blow the whistleand make calls. On the contrary, they merely serve as rules of conduct or guidelines in order tomaintain the integrity of the professional basketball league.

Moreover, the following circumstances indicate that petitioner is an independentcontractor: (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 105playing days a year, and theyofficiate games a tan average of two hours per game; and (2) the only deductions from the feesreceived by the referees are withholding taxes. In other words, unlike regular employees whoordinarily report or work eight hours per day for five days a week, petitioner is required to reportfor work only when PBA games are scheduled or three times a week. In addition, there are nodeductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which are theusual deductions from employees' salaries. These undisputed circumstances buttress the factthat petitioner is an independent contractor, and not an employee of respondents. Furthermore,the applicable foreign case law declares that a referee is an independent contractor whosespecial skills and independent judgment are required specifically for such position and cannotpossibly be controlled by the hiring party.

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LIRIO V. GENOVIAGR No. 169757 November 23, 2011

FACTS:Respondent Wilmer D. Genovia was hired on Aug. 15, 2001 as studio manager by

petitioner Cesar C. Lirio, owner of Celkor Ad Sonicmix Recording Studio, to promote and sell thestudio’s services to music enthusiasts and other prospective clients. He received a monthlysalary of P7,000.00 and additional commission of P100 per hour as recording technician.

Respondent 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 renderedeight hours of work or more. All the employees of petitioner, including respondent, renderedovertime work almost everyday, but petitioner never kept a daily time record to avoid payingthe employees overtime pay.

In a complaint for illegal dismissal, petitioner invoked the defense that no employer-employee relationship exists between him and respondent. Theirs is one of an informalpartnership since they agreed to contribute money, property or industry to a common fund withthe intention of dividing the profits among themselves.

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

and respondent.

Ruling: 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 ofdismissal; and (d) the employer’s power to control the employee’s conduct. The most importantelement is the employer’s control of the employee’s conduct, not only as to the result of thework 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 anemployer-employee relationship. Any competent and relevant evidence to prove the relationshipmay be admitted.

In this case, the documentary evidence presented by respondent to prove that he was anemployee of petitioner are as follows: (a) a document denominated as “payroll” (dated July 31,2001 to March 15, 2002) certified correct by petitioner, which showed that respondent receiveda monthly salary of P7,000, with the corresponding deductions due to absences incurred byrespondent; and two copies of petty cash vouchers, showing the amounts he received andsigned for in the payrolls.

The said documents showed that petitioner hired respondent as an employee and he waspaid monthly wages of P7,000. Petitioner wielded the power to dismiss as respondent statedthat he was verbally dismissed by petitioner, and respondent, thereafter, filed an action forillegal dismissal against petitioner. The power of control refers merely to the existence of thepower. It is not essential for the employer to actually supervise the performance of duties of theemployee, as it is sufficient that the former has a right to wield the power.

On the other hand, petitioner failed to prove that his relationship with respondent wasone of partnership. Such claim was not supported by any written agreement.

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CHARLIE JAO V. 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 amonthly salary of P20,000.00 to handle the financial aspect of BCC's business; 2 that on October19, 1995, the security guards of BCC, acting upon the instruction of Ty, barred him from enteringthe premises of BCC where he then worked; that his attempts to report to work in Novemberand December 12, 1995 were frustrated because he continued to be barred from entering thepremises 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. 4

Respondents countered that petitioner was not their employee but the employee ofSobien Food Corporation (SFC), the major creditor and supplier of BCC; and that SFC had postedhim as its comptroller in BCC to oversee BCC's finances and business operations and to lookafter SFC's interests or investments in BCC.; that their issuance of the ID to petitioner was onlyfor the purpose of facilitating his entry into the BCC premises in relation to his work ofoverseeing the financial operations of BCC for SFC; that the ID should not be considered asevidence 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 asabovestated;

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 supervisecollections 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 anemployer-employee relationship between him and respondents because it had been executed inMarch 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 thetermination of his employment by BCC.

ISSUE:The sole issue is whether or not an employer-employee relationship existed between

petitioner and BCC. A finding on the existence of an employer-employee relationship willautomatically warrant a finding of illegal dismissal, considering that respondents did not stateany valid grounds to dismiss petitioner.

HELD: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 ofthe employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer'spower 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. Thefailure to present such agreement on terms of employment may be understandable andexpected if he was a common or ordinary laborer who would not jeopardize his employment by

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demanding such document from the employer, but may not square well with his actual status asa highly educated professional.

Petitioner's admission that he did not receive his salary for the three months of hisemployment by BCC, as his complaint for illegal dismissal and non-payment of wages and thecriminal case for estafa he later filed against the respondents for non-payment of wagesindicated, further raised grave doubts about his assertion of employment by BCC. If theassertion was true, we are puzzled how he could have remained in BCC's employ in that periodof time despite not being paid the first salary of P20,000.00/month. Moreover, his name did notappear 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 anotherindicium of the insincerity of petitioner's assertion of employment by BCC. In the petition forreview on certiorari, he averred that he had been barred from entering the premises of BCC onOctober 19, 1995, 27 and thus was illegally dismissed. Yet, his complaint for illegal dismissalstated that he had been illegally dismissed on December 12, 1995 when respondents' securityguards barred him from entering the premises of BCC, 28 causing him to bring his complaintonly 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 atrivial inconsistency considering that the several incidents affecting the veracity of his assertionof 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 atlength on the other proofs he presented, like the affidavits of some of the employees of BCC, theID, and the signed checks, bills and receipts. Suffice it to be stated that such other proofs wereeasily explainable by respondents and by the aforestated circumstances showing him to be theemployee of SFC, not of BCC.

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3.HIRING OF EMPLOYEES

Ollendorf vs. Abrahanson G.R. No. 13228; September 13, 1918

FACTS:The record discloses that Ollendorf is and for a long time past has been engaged in the

city of Manila and elsewhere in the Philippines in the business of manufacturing ladies'embroidered underwear for export. Ollendorf imports the material from which this underwear ismade and adopts decorative designs which are embroidered upon it by Filipino needle workersfrom patterns selected and supplied by him. Most of the embroidery work is done in the homesof the workers. The embroiderers employed by plaintiff are under contract to work for plaintiffexclusively.

On September 1915, plaintiff and defendant entered into a contract. Under the terms ofthis, agreement defendant entered the employ of plaintiff and worked for him until April 1916,when defendant, on account of ill health, left plaintiff's employ and went to the United States.While in plaintiff's employ defendant had access to all parts of plaintiff's establishment, and hadfull opportunity to acquaint himself with plaintiff's business methods and business connections.The duties performed by him were such as to make it necessary that he should have thisknowledge of plaintiff s business. Defendant had a general knowledge of the Philippineembroidery business before his employment by plaintiff, having been engaged in similar workfor several years.

Some months after his departure, defendant returned to Manila as the manager of thePhilippine Underwear Company, a corporation. This corporation does not maintain a factory inthe Philippine Islands, but sends material and embroidery designs from New York to its localrepresentative here who employs Filipino needle workers to embroider the designs and make upthe garments in their homes. The only difference between plaintiff's business and that of thefirm by which the defendant is employed, is the method of doing the finishing work — themanufacture of the embroidered material into finished garments.

Shortly after defendant's return to Manila and the commencement by him of thedischarge of the duties of his position as local manager of the Philippine Embroidery Company,plaintiff commenced this action, the principal purpose of which is to prevent, by injunction, anyfurther breach of that part of defendant's contract of employment by plaintiff, by which heagreed that he would not "enter into or engage himself directly or indirectly . . . in a similar orcompetitive business to that of (plaintiff) anywhere within the Philippine Islands for a period offive years . . ." from the date of the agreement.

ISSUE:Whether or not the contract is valid.

RULING:SC ruled that the contract is valid.

The only limitation upon the freedom of contractual agreement is that the pactsestablished shall not be contrary to "law, morals or public order." (Civil Code, art. 1255.)

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Public welfare is first considered, and if it be not involved, and the restraint upon oneparty is not greater than protection to the other party requires, the contract may be sustained.The question is whether, under the particular circumstances of the case and the nature of theparticular contract involved in it the contract is, or is not, unreasonable.

The Courts adopt the modern rule that the validity of restraints upon trade oremployment is to be determined by the intrinsic reasonableness of the restriction in each case,rather than by any fixed rule, and that such restrictions may be upheld when not contrary to thepublic welfare and not greater than is necessary to afford a fair and reasonable protection to theparty in whose favor it is imposed.

A business enterprise may and often does depend for its success upon the owner'srelations with other dealers, his skill in establishing favorable connections, his methods ofbuying and selling — a multitude of details, none vital if considered alone, but which in theaggregate constitute the sum total of the advantages which are the result of the experience orindividual 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 hiscompetitors.

It is with this object in view that such restrictions as that now under consideration arewritten into contracts of employment. Their purpose is the protection of the employer, and ifthey do not go beyond what is reasonably necessary to effectuate this purpose they should beupheld. We are of the opinion, and so hold, that in the light of the established facts the restraintimposed upon defendant by his contract is not unreasonable.

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Del Castillo vs. RichmondG.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 thethird paragraph of said contract constitute an illegal and unreasonable restriction upon hisliberty to contract, are contrary to public policy, and are unnecessary in order to constitute ajust and reasonable protection to the defendant; and asked that the same be declared null andvoid and of no effect.

The said contract constituted an illegal and unreasonable restriction upon the right of theplaintiff to contract and was contrary to public policy. It will be noted that the restrictions placedupon the plaintiff are strictly limited (a) to a limited district or districts, and (b) during the timewhile the defendant or his heirs may own or have open a drugstore, or have an interest in anyother 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 througha 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 contract whichprohibited or restrained any one from using lawful trade " at any time or at any place," as beingagainst the benefit of the state. Later, however, the rule became well established that if therestraint was limited to "a certain time" and within "a certain place", such contracts were validand not "against the benefit of the state." Later cases, and we think the rule is now wellestablished, have held that contract in restraint of trade is valid providing there is a limitationupon either time or place. A contract, however, which restrains a man entering into a businessor trade without either a limitation as to time or place, will be held in valid.

As stated in the case of Ollendorf vs. Abrahamson, The public welfare of course mustalways be considered, and if it be not involved and the restraint upon one party is not greaterthan 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 restraintis reasonably necessary for the protection of the contracting parties. If the contract isreasonably 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 refrain a given lengthof 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 restraintimposed is not greater than that which is necessary to afford a reasonable protection.

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PT & T vs. NLRCG.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 wasto 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 respondent’s services asreliever were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon whowent on leave during both periods. After August 8, 1991, and pursuant to their RelieverAgreement, her services were terminated.

It now appears that private respondent had made the s representation, that she wassingle eventhough she contracted marriage months before, in the two successive relieveragreements which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedlylearned about the same later, its branch supervisor sent to private respondent a memorandumrequiring her to explain the discrepancy. In that memorandum, she was reminded about thecompany’s policy of not accepting married women for employment.

Private respondent was dismissed from the company effective January 29, 1992, whichshe readily contested by initiating a complaint for illegal dismissal. Labor Arbiter handed down adecision declaring that private respondent, who had already gained the status of a regularemployee, was illegally dismissed by petitioner. On appeal to the National Labor RelationsCommission (NLRC), said public respondent upheld the labor arbiter and it ruled that privaterespondent had indeed been the subject of an unjust and unlawful discrimination by heremployer, 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 orthose which may be provided by law. Petitioner’s policy of not accepting or considering asdisqualified from work any woman worker who contracts marriage runs afoul of the test of, andthe right against, discrimination, afforded all women workers by our labor laws and by no lessthan the Constitution. Respondent’s act of concealing the true nature of her status from PT&T could not be properlycharacterized as willful or in bad faith as she was moved to act the way she did mainly becauseshe wanted to retain a permanent job in a stable company. In other words, she was practicallyforced by that very same illegal company policy into misrepresenting her civil status for fear ofbeing disqualified from work.

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The government, to repeat, abhors any stipulation or policy in the nature of that adoptedby petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:

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

Under American jurisprudence, job requirements which establish employer preference orconditions 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 beevenly applied and must not inflict adverse effects on a racial or sexual group which is protectedby federal job discrimination laws.

Petitioner’s policy is not only in derogation of the provisions of Article 136 of the LaborCode on the right of a woman to be free from any kind of stipulation against marriage inconnection with her employment, but it likewise assaults good morals and public policy, tendingas it does to deprive a woman of the freedom to choose her status, a privilege that by allaccounts 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 mayeven be said that petitioner’s policy against legitimate marital bonds would encourage illicit orcommon-law relations and subvert the sacrament of marriage.

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Duncan Asso. Of Detailman-PTGWO vs. GlaxoG.R. No. 162994; September 17, 2004

FACTS:Petitioner Pedro A. Tecson was hired by respondent Glaxo Wellcome Philippines, Inc.) as

medical representative on October 1995, after Tecson had undergone training and orientation.Tecson signed a contract of employment which stipulates, among others, that he agrees tostudy and abide by existing company rules; to disclose to management any existing or futurerelationship by consanguinity or affinity with co-employees or employees of competing drugcompanies and should management find that such relationship poses a possible conflict ofinterest, to resign from the company.

The Employee Code of Conduct of Glaxo similarly provides that an employee isexpected to inform management of any existing or future relationship by consanguinity oraffinity with co-employees or employees of competing drug companies. If managementperceives a conflict of interest or a potential conflict between such relationship and theemployee’s employment with the company, the management and the employee will explore thepossibility of a “transfer to another department in a non-counterchecking position” orpreparation for employment outside the company after six months.

Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines Norte sales area. Subsequently, Tecson entered into a romantic relationship withBettsy, an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astra’sBranch Coordinator in Albay. Despite of warnings, Tecson married Bettsy. The superiors of Tecsonreminded him of the company policy and suggested that either him or Bettsy shall resign fromtheir respective companies. Tecson requested more time to resolve the issue. In November of1999, Glaxo transferred Tecson to Mindanao area involving the provinces of Butuan, Surigao andAgusan del Sur. Tecson did not agree to the reassignment and referred this matter to thegrievance committee. It was resolved and was submitted to voluntary arbitration.

The NCMB rendered decision that Glaxo’s policy was a valid one. Aggrieved, Tecson fileda petition to the CA where CA held that Glaxo’s policy prohibiting its employees from havingpersonal relationships with employees of competitor companies is a valid exercise of itsmanagement prerogatives. Hence, this petition.

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

marrying employees of any competitor company is valid.

RULING:SC ruled that the prohibition is valid. It is an exercise of the company’s management

prerogative.

There is no error to the Court of Appeals when it ruled that Glaxo’s policy prohibiting anemployee from having a relationship with an employee of a competitor company is a valid

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exercise of management prerogative. Glaxo has a right to guard its trade secrets, manufacturingformulas, marketing strategies and other confidential programs and information fromcompetitors, especially so that it and Astra are rival companies in the highly competitivepharmaceutical industry.

The prohibition against personal or marital relationships with employees of competitorcompanies upon Glaxo’s employees is reasonable under the circumstances becauserelationships of that nature might compromise the interests of the company. In laying down theassailed company policy, Glaxo only aims to protect its interests against the possibility that acompetitor company will gain access to its secrets and procedures. That Glaxo possesses theright to protect its economic interests cannot be denied.

No less than the Constitution recognizes the right of enterprises to adopt and enforcesuch a policy to protect its right to reasonable returns on investments and to expansion andgrowth. Indeed, while our laws endeavor to give life to the constitutional policy on social justiceand the protection of labor, it does not mean that every labor dispute will be decided in favor ofthe workers. The law also recognizes that management has rights which are also entitled torespect and enforcement in the interest of fair play.City of Manila v. 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. It built andopened Victoria Court in Malate which was licensed as a motel although duly accredited with theDepartment of Tourism as a hotel.

On June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ ofPreliminary Injunction and/or Temporary Restraining Order with the lower court impleading asdefendants, herein petitioners City of Manila, Hon. Alfredo S. Lim, Hon. Joselito L. Atienza, andthe members of the City Council of Manila. MTDC prayed that the Ordinance, insofar as itincludes motels and inns as among its prohibited establishments, be declared invalid andunconstitutional.

Enacted by the City Council on 9 March 1993 and approved by petitioner City Mayor on30 March 1993, the said Ordinance is entitled– AN ORDINANCE PROHIBITING THEESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT,ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA, PRESCRIBINGPENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES.

MTDC argued that the Ordinance erroneously and improperly included in its enumerationof prohibited establishments, motels and inns such as MTDC’s Victoria Court considering thatthese 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 thesocial and moral welfare of the community.”

ISSUE:Whether or not the aforementioned Ordinance is valid and constitutional.

RULING:SC ruled that the ordinance is null and void. Said ordinance is ultra vires, thus,

unconstitutional.The Court is of the opinion, and so holds, that the lower court did not err in declaring the

Ordinance, as it did, ultra vires and therefore null and void. The Ordinance is so replete withconstitutional infirmities that almost every sentence thereof violates a constitutional provision.The prohibitions and sanctions therein transgress the cardinal rights of persons enshrined by the

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Constitution. The Court is called upon to shelter these rights from attempts at rendering themworthless.

A long line of decisions has held that for an ordinance to be valid, it must not only bewithin the corporate powers of the local government unit to enact and must be passedaccording to the procedure prescribed by law, it must also conform to the following substantiverequirements: (1) must not contravene the Constitution or any statute; (2) must not be unfair oroppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may regulatetrade; (5) must be general and consistent with public policy; and (6) must not be unreasonable.

Ordinances shall only be valid when they are not contrary to the Constitution and to thelaws. The Ordinance must satisfy two requirements: it must pass muster under the test ofconstitutionality and the test of consistency with the prevailing laws. That ordinances should beconstitutional uphold the principle of the supremacy of the Constitution. The requirement thatthe enactment must not violate existing law gives stress to the precept that local governmentunits are able to legislate only by virtue of their derivative legislative power, a delegation oflegislative power from the national legislature. The delegate cannot be superior to the principalor exercise powers higher than those of the latter.

The prohibition of the enumerated establishments will not per se protect and promotethe social and moral welfare of the community; it will not in itself eradicate the alluded social illsof prostitution, adultery, fornication nor will it arrest the spread of sexual disease in Manila.

Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute andestablishments of the like which the City Council may lawfully prohibit, it is baseless andinsupportable to bring within that classification sauna parlors, massage parlors, karaoke bars,night clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns. This isnot warranted under the accepted definitions of these terms. The enumerated establishmentsare lawful pursuits which are not per se offensive to the moral welfare of the community.

That these are used as arenas to consummate illicit sexual affairs and as venues tofurther the illegal prostitution is of no moment. We lay stress on the acrid truth that sexualimmorality, being a human frailty, may take place in the most innocent of places that it mayeven take place in the substitute establishments enumerated under Section 3 of the Ordinance.

The problem, it needs to be pointed out, is not the establishment, which by its naturecannot be said to be injurious to the health or comfort of the community and which in itself isamoral, but the deplorable human activity that may occur within its premises. While a motelmay be used as a venue for immoral sexual activity, it cannot for that reason alone be punished.It cannot be classified as a house of ill-repute or as a nuisance per se on a mere likelihood or anaked assumption. If that were so and if that were allowed, then the Ermita-Malate area wouldnot only be purged of its supposed social ills, it would be extinguished of its soul as well asevery human activity, reprehensible or not, in its every nook and cranny would be laid bare tothe estimation of the authorities.

The Ordinance seeks to legislate morality but fails to address the core issues of morality.Try as the Ordinance may to shape morality, it should not foster the illusion that it can make amoral man out of it because immorality is not a thing, a building or establishment; it is in thehearts of men. The City Council instead should regulate human conduct that occurs inside theestablishments, but not to the detriment of liberty and privacy which are covenants, premiumsand blessings of democracy.

In the instant case, there is a clear invasion of personal or property rights, personal inthe case of those individuals desirous of owning, operating and patronizing those motels andproperty in terms of the investments made and the salaries to be paid to those thereinemployed. If the City of Manila so desires to put an end to prostitution, fornication and othersocial ills, it can instead impose reasonable regulations such as daily inspections of theestablishments for any violation of the conditions of their licenses or permits; it may exercise its

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authority to suspend or revoke their licenses for these violations; and it may even imposeincreased license fees. In other words, there are other means to reasonably accomplish thedesired end.

Star Paper Corp. v. SimbolG.R. No. 164774; April 12, 2006

FACTS:Petitioner Star Paper Corporation is a corporation engaged in trading, principally of paper

products. Josephine Ongsitco is its Manager of the Personnel and Administration Departmentwhile Sebastian Chua is its Managing Director.

Respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella(Estrella) were all regular employees of the company. Simbol was employed by the company onOctober 1993 and met Alma Dayrit, also an employee of the company, whom he married onJune 1998. Prior to the marriage, Ongsitco advised the couple that should they decide to getmarried, one of them should resign pursuant to a company policy. Simbol resigned on June 20,1998 pursuant to the company policy.

Comia was hired by the company on February 1997. She met Howard Comia, a co-employee, whom she married on June 1, 2000. Ongsitco likewise reminded them that pursuantto company policy, one must resign should they decide to get married. Comia resigned on June30, 2000.

Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a co-worker.Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The company allegedlycould have terminated her services due to immorality but she opted to resign on December 21,1999.

The respondents signed a Release and Confirmation Agreement and stated therein thatthey have no money and property accountabilities in the company. Respondents offer adifferent version of their dismissal. Respondents later filed a complaint for unfair labor practice,constructive dismissal, separation pay and attorney’s fees. They averred that theaforementioned company policy is illegal and contravenes Article 136 of the Labor Code.

Labor Arbiter dismissed the complaint and states that the company policy was decreedpursuant to what the respondent corporation perceived as management prerogative. On appeal

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to the NLRC, the Commission affirmed the decision of the Labor Arbiter. In its assailed Decisiondated August 3, 2004, the Court of Appeals reversed the NLRC decision.

ISSUE:Whether or not the said policy is a valid exercise of the company’s management

prerogative.

RULING:SC ruled that it not a valid exercise of its management prerogative. There is no

reasonable business necessity of the policy.

The case at bar involves Article 136 of the Labor Code which provides: It shall beunlawful for an employer to require as a condition of employment or continuation ofemployment that a woman employee shall not get married, or to stipulate expressly or tacitlythat upon getting married a woman employee shall be deemed resigned or separated, or toactually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely byreason of her marriage.

With more women entering the workforce, employers are also enacting employmentpolicies specifically prohibiting spouses from working for the same company. We note that twotypes of employment policies involve spouses: policies banning only spouses from working inthe same company (no-spouse employment policies), and those banning all immediate familymembers, including spouses, from working in the same company (anti-nepotism employmentpolicies).

It utilizes two theories of employment discrimination: the disparate treatment and thedisparate impact. Under the disparate treatment analysis, the plaintiff must prove that anemployment policy is discriminatory on its face. No-spouse employment policies requiring anemployee of a particular sex to either quit, transfer, or be fired are facially discriminatory. Onthe other hand, to establish disparate impact, the complainants must prove that a faciallyneutral policy has a disproportionate effect on a particular class.

The courts that have broadly construed the term “marital status” rule that itencompassed the identity, occupation and employment of one's spouse. They hold that theabsence of such a bona fide occupational qualification invalidates a rule denying employment toone spouse due to the current employment of the other spouse in the same office. Thus, theyrule that unless the employer can prove that the reasonable demands of the business require adistinction based on marital status and there is no better available or acceptable policy whichwould better accomplish the business purpose, an employer may not discriminate against anemployee based on the identity of the employee’s spouse. This is known as the bona fideoccupational qualification exception.

We note that since the finding of a bona fide occupational qualification justifies anemployer’s no-spouse rule, the exception is interpreted strictly and narrowly by these statecourts. There must be a compelling business necessity for which no alternative exists other thanthe discriminatory practice. To justify a bona fide occupational qualification, the employer mustprove two factors: (1) that the employment qualification is reasonably related to the essentialoperation of the job involved; and, (2) that there is a factual basis for believing that all orsubstantially all persons meeting the qualification would be unable to properly perform theduties of the job.

The court does not find a reasonable business necessity in the case at bar. Theprotection given to labor in our jurisdiction is vast and extensive that we cannot prudently drawinferences from the legislature’s silence that married persons are not protected under ourConstitution and declare valid a policy based on a prejudice or stereotype. Thus, for failure ofpetitioners to present undisputed proof of a reasonable business necessity, we rule that thequestioned policy is an invalid exercise of management prerogative.

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Del Monte Phils. V. VelascoG.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 wasrepeatedly reminded that her absence without permission may result to forfeiture of hervacation leave.

Another warning was sent due to her absences without permission which eventually ledto the forfeiture of her vacation entitlement. On September 1994, a notice of hearing was sentto Velasco informing her of the charges filed against her foe violating the Absence without leaverule. On January 1995, after the hearing, Del Monte terminated the services of Velasco due toexcessive 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 waspregnant.

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

The Labor Arbiter rendered decision that she was an incorrigible absentee. Respondentappealed to the NLRC. NLRC vacated the decision of the Labor Arbiter. It decided thatrespondent was illegally dismissed and was entitled to reinstatement. Petitioner appealed to CAwhere it dismissed its claim and affirmed NLRC. Thus, this petition.

ISSUE:

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Whether or not the dismissal was legal on account of absences made due to Velasco’spregnancy.

RULING:SC ruled that the termination was illegal.

The termination was illegal since it comes within the purview of the prohibited actsprovided in Article 137 of the Labor Code. Based on Art. 137, it shall be unlawful for anyemployer (1) to deny any woman employee the benefits provided for in this Chapter or todischarge any woman employed by him for the purpose of preventing her from enjoying any ofthe benefits provided under this Code; (2) to discharge such woman on account of herpregnancy, or while on leave or in confinement due to her pregnancy; and (3) to discharge orrefuse the admission of such woman upon returning to her work for fear that she may again bepregnant.

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.

Yrasuegui vs. Philippine AirlinesG.R. No. ; October 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 Armando G. Yrasuegui was a former international flight steward of Philippine

Airlines, Inc. (PAL). He stands five feet and eight inches (5’8”) with a large body frame. Theproper weight for a man of his height and body structure is from 147 to 166 pounds, the idealweight being 166 pounds, as mandated by the Cabin and Crew Administration Manual of PAL.

The weight problem of petitioner dates back to 1984. Back then, PAL advised him to goon an extended vacation leave from December 29, 1984 to March 4, 1985 to address his weightconcerns. Apparently, petitioner failed to meet the company’s weight standards,prompting another leave without pay from March 5, 1985 to November 1985.

After meeting the required weight, petitioner was allowed to return to work. Butpetitioner’s weight problem recurred. He again went on leave without pay from October 17,1988 to February 1989.

On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. Inline with company policy, he was removed from flight duty effective May 6, 1989 to July 3, 1989. He was formally requested to trim down to his ideal weight and report for weight checks onseveral dates. He was also told that he may avail of the services of the company physicianshould he wish to do so. He was advised that his case will be evaluated on July 3, 1989.

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On February 25, 1989, petitioner underwent weight check. It was discovered that hegained, instead of losing, weight. He was overweight at 215 pounds, which is 49 poundsbeyond the limit. Consequently, his off-duty status was retained.

Despite efforts, he remained to be overweight based on the company’s weightstandards. He was served Notice of Administrative Charge for violation of company standardson weight requirements. He did not deny his being overweight. What he claimed, instead, is thathis violation, if any, had already been condoned by PAL since “no action has been taken by thecompany” regarding his case “since 1988.” He also claimed that PAL discriminated against himbecause “the company has not been fair in treating the cabin crew members who are similarlysituated.”

On June 15, 1993, petitioner was formally informed by PAL that due to his inability toattain his ideal weight, “and considering the utmost leniency” extended to him “which spanneda period covering a total of almost five (5) years,” his services were considered terminated“effective immediately.”

His motion for reconsideration having been denied, petitioner filed a complaint for illegaldismissal against PAL.

ISSUE:Whether or not the dismissal of Yrasuegui was a valid exercise of management

prerogative.

RULING: SC ruled that the dismissal of Yrasuegui was a valid exercise of managementprerogative. The weight standard is considered a continuing qualification for an employee’sposition.

The obesity of petitioner is a ground for dismissal under Article 282(e) of the Labor Code.A reading of the weight standards of PAL would lead to no other conclusion than that theyconstitute a continuing qualification of an employee in order to keep the job. Tersely put, anemployee may be dismissed the moment he is unable to comply with his ideal weight asprescribed by the weight standards. The dismissal of the employee would thus fall under Article282(e) of the Labor Code. As explained by the CA:

x x x [T]he standards violated in this case were not mere “orders” of theemployer; they were the “prescribed weights” that a cabin crew must maintain inorder to qualify for and keep his or her position in the company. In otherwords, they were standards that establish continuing qualifications for anemployee’s position. In this sense, the failure to maintain these standards doesnot fall under Article 282(a) whose express terms require the element ofwillfulness in order to be a ground for dismissal. The failure to meet theemployer’s qualifying standards is in fact a ground that does not squarely fallunder grounds (a) to (d) and is therefore one that falls under Article 282(e) – the“other causes analogous to the foregoing.” By its nature, these “qualifying standards” are norms that apply prior toand after an employee is hired. They apply prior to employment becausethese 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 thesestandards while on the job in order to keep his job. Under this perspective, aviolation is not one of the faults for which an employee can be dismissed pursuantto pars. (a) to (d) of Article 282; the employee can be dismissed simply becausehe no longer “qualifies” for his job irrespective of whether or not the failure toqualify was willful or intentional. x x x

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After a meticulous consideration of all arguments pro and con, We uphold the legality ofdismissal. Separation pay, however, should be awarded in favor of the employee as an act ofsocial justice or based on equity. This is so because his dismissal is not for serious misconduct. Neither is it reflective of his moral character.

4.WAGE & THE WAGE RATIONALIZATION ACT

Ilaw at Buklod ng Manggagawa vs. NLRCG.R. No. 91980; June 27, 1991

FACTS:The controversy at bar had its origin in the “wage distortions” affecting the employees of

respondent San Miguel Corporation allegedly caused by RA 6727, otherwise known as WageRationalization Act.

Upon the effectivity of the said Act, the union known as Ilaw at Buklod ng Mangagawa—said to represent more or less 4, 500 employees of San Miguel Corporation who are working atvarious plants, offices and warehouses located at the National Capital Region—presented to theCompany a “demand” for the correction of the “significant distortion in the worker’s wages”. Inthat “demand”, the Union invoked Section 4(d) of RA 6727. The provision provided that shouldthere be any dispute regarding wage distortions, shall first be settled “voluntarily between theparties and in the event of a deadlock, the same shall be finally resolved through compulsoryarbitration such disputes by the regional branches of the NLRC having jurisdiction over theworkplace”.

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But the “demand” according to the Union has been ignored by the company. The Unionaverred that the company offered a measly across-the board wage increase of P7.00 per day,per employee, as against the proposal of the Union of P25.00 per day, per employee. Later, theUnion reduced its proposal to P15.00 per day, per employee by way of amicable settlement.When the company rejected the reduced proposal of the Union the members thereof in theirown accord, the workers refused to render overtime services, most especially at the BeerBottling Plans at Polo. The work schedule of the workers constitutes a built-in automaticovertime. They work 10 hours for the first shift and 10 to 14 hours for the second shift, fromMondays to Fridays and on Saturdays, 8 hours for both shifts. The refusal of the workers to workmore than 8-hours caused substantial losses to the company. This led SMC to file a complaintbefore NLRC against the Union. It sought to declare the strike or slowdown illegal and toterminate the employment of the union officers and shop stewards.

ISSUE:Whether or not the partial or limited strike, with the purpose of correction of the wage

distortion, of the Union is valid.

RULING:SC ruled that the concerted activity of the Union is illegal.

The partial strike or concerted refusal by the Union members to follow the five-year-oldwork schedule which they had therefore been observing, resorted to as a means of coercingcorrection of "wage distortions," was therefore forbidden by law and contract and, on thisaccount, illegal.

Awareness by the Union of the proscribed character of its members' collective activities,is clearly connoted by its attempt to justify those activities as a means of protesting andobtaining redress against said members working overtime every day from Monday to Friday (onan average of 12 hours), and every Saturday (on 8 hour shifts), rather than as a measure tobring about rectification of the wage distortions caused by RA 6727 — which was the real causeof its differences with SMC. By concealing the real cause of their dispute with management(alleged failure of correction of wage distortion), and trying to make it appear that thecontroversy involved application of the eight-hour labor law, they obviously hoped to removetheir case from the operation of the rules implementing RA 6727 that "Any issue involving wagedistortion shall not be a ground for a strike/lockout." The stratagem cannot succeed.

In view of the foregoing factual and legal considerations, it leads to the basic conclusionthat the concerted acts of the members of petitioner Union in question are violative of the lawand their formal agreement with the employer.

Employers Confederation of the Phils. vs. NWPCG.R. No. 96169; September 24, 1991

FACTS:On October 17, 1995, the Regional Tripartite Wages and Productivity Board, Region II,

Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwiseknown as the Wage Rationalization Act, issued Wage Order No. R02-03 (Wage Order), as follows:Section 1. Upon effectivity of this Wage Order, all employees/workers in the private sectorthroughout Region II, regardless of the status of employment are granted an across-the-boardincrease of P15.00 daily.

The Wage Order was published in a newspaper of general circulation on December 2,1995 and took effect on January 1, 1996. Its Implementing Rules were approved on February 14,1996. Per Section 13 of the Wage Order, any party aggrieved by the Wage Order may file anappeal with the National Wages and Productivity Commission (NWPC) through the RTWPB within10 calendar days from the publication of the Wage Order.

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Banker’s Council in a letter inquiry to NWPC requested for ruling to seek exemption fromcoverage of the wage order since the members bank are paying more than the regular wage.NWPC replied that the member banks are covered by the wage order and does not fall with theexemptible categories.

In another letter inquiry, Metrobank asked for the interpretation of the applicability of thewage order. NWPC referred it to RTWPB. RTWPB in return clarified that establishments in Region2 are covered by the wage order. Petitioner filed a petition with the CA and denied the petition.

ISSUE:Whether or not the wage order is void thus it has no legal effect and the RTWPB acted in

excess of its jurisdiction.

RULING:SC finds that Section 1, Wage Order No. R02-03 is void insofar as it grants a wage

increase to employees earning more than the minimum wage rate; and pursuant to theseparability clause of the Wage Order, Section 1 is declared valid with respect to employeesearning the prevailing minimum wage rate.

The powers of NWPC are enumerated in ART. 121. Powers and Functions of theCommission. - The Commission shall have the following powers and functions: (d) To reviewregional wage levels set by the Regional Tripartite Wages and Productivity Boards to determineif these are in accordance with prescribed guidelines and national development plans; (f) Toreview plans and programs of the Regional Tripartite Wages and Productivity Boards todetermine whether these are consistent with national development plans; (g) To exercisetechnical and administrative supervision over the Regional Tripartite Wages and ProductivityBoards.

R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wagesand to promote productivity-improvement and gain-sharing measures to ensure a decentstandard of living for the workers and their families; to guarantee the rights of labor to its justshare in the fruits of production; to enhance employment generation in the countryside throughindustrial dispersal; and to allow business and industry reasonable returns on investment,expansion and growth.

In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power toprescribe rules and guidelines for the determination of appropriate minimum wage andproductivity measures at the regional, provincial or industry levels; and authorized the RTWPB todetermine and fix the minimum wage rates applicable in their respective regions, provinces, orindustries therein and issue the corresponding wage orders, subject to the guidelines issued bythe NWPC. Pursuant to its wage fixing authority, the RTWPB may issue wage orders which setthe daily minimum wage rates, based on the standards or criteria set by Article 124 of the LaborCode.

The Court declared that 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 adeterminate amount to be added to the prevailing statutory minimum wage rates. On the otherhand, in the "salary-ceiling" method, the wage adjustment was to be applied to employeesreceiving a certain denominated salary ceiling. In other words, workers already being paid morethan the existing minimum wage (up to a certain amount stated in the Wage Order) are also tobe 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 didnot set a wage level nor a range to which a wage adjustment or increase shall be added.Instead, it granted an across-the-board wage increase of P15.00 to all employees and workers ofRegion 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the WageOrder to wage earners receiving more than the prevailing minimum wage rate, without a

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denominated salary ceiling. As correctly pointed out by the OSG, the Wage Order grantedadditional benefits not contemplated by R.A. No. 6727.

Mabeza vs. NLRCG.R. No. 118506; April 18, 1997

FACTS:Petitioner Norma Mabeza contends that on 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 signan instrument attesting to the latter's compliance with minimum wage and other labor standardprovisions of law. Petitioner signed the affidavit but refused to go to the City Prosecutor's Officeto swear to the veracity and contents of the affidavit as instructed by management. Theaffidavit was nevertheless submitted on the same day to the Regional Office of the Departmentof Labor and Employment in Baguio City.

The affidavit was drawn by management for the sole purpose of refuting findings of theLabor Inspector of DOLE apparently adverse to the private respondent. After she refused to

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proceed to the City Prosecutor's Office, petitioner states that she was ordered by the hotelmanagement to turn over the keys to her living quarters and to remove her belongings from thehotel premises. According to her, respondent strongly chided her for refusing to proceed to theCity Prosecutor's Office to attest to the affidavit. She thereafter reluctantly filed a leave ofabsence from her job which was denied by management. When she attempted to return to workon May 1991, the hotel's cashier informed her that she should not report to work and, instead,continue with her unofficial leave of absence.

Consequently, three days after her attempt to return to work, petitioner filed a complaintfor illegal dismissal before the Arbitration Branch of the National Labor Relations Commission —CAR Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment ofwages, non-payment of holiday pay, service incentive leave pay, 13th month pay, nightdifferential and other benefits.

Responding to the allegations for illegal dismissal, private respondent Peter Ng allegedbefore Labor Arbiter that petitioner surreptitiously left her job without notice to themanagement and that she actually abandoned her work. He maintained that there was no basisfor the money claims for underpayment and other benefits as these were paid in the form offacilities to petitioner and the hotel's other employees.

Labor Arbiter dismissed the complaint. On April 1994, respondent NLRC promulgated itsassailed Resolution affirming the Labor Arbiter's decision.

ISSUE: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 andconditions of employment constitutes unfair labor practice.

RULING:SC ruled that there was unfair labor practice.

Without doubt, the act of compelling employees to sign an instrument indicating that theemployer observed labor standards provisions of law when he might have not, together with theact of terminating or coercing those who refuse to cooperate with the employer's schemeconstitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers toseek better terms and conditions of employment through concerted action. For refusing tocooperate with the private respondent's scheme, petitioner was obviously held up as anexample to all of the hotel's employees, that they could only cause trouble to management atgreat personal inconvenience. Implicit in the act of petitioner's termination and the subsequentfiling of charges against her was the warning that they would not only be deprived of theirmeans of livelihood, but also possibly, their personal liberty.

Granting that meals and lodging were provided and indeed constituted facilities, suchfacilities could not be deducted without the employer complying first with certain legalrequirements. Without satisfying these requirements, the employer simply cannot deduct thevalue from the employee's wages. First, proof must be shown that such facilities are customarilyfurnished by the trade. Second, the provision of deductible facilities must be voluntarilyaccepted in writing by the employee. Finally, facilities must be charged at fair and reasonablevalue. These requirements were not met in the instant case.

More significantly, the food and lodging, or the electricity and water consumed by thepetitioner were not facilities but supplements. A benefit or privilege granted to an employee forthe convenience of the employer is not a facility. The criterion in making a distinction betweenthe two not so much lies in the kind (food, lodging) but the purpose. Considering that hotelworkers are required to work different shifts and are expected to be available at various oddhours, their ready availability is a necessary matter in the operations of a small hotel, such asthe private respondent's hotel.

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Joy Brothers Inc. vs. NWPCG.R. No. 122932; June 17, 1991

FACTS:Wage Order No. NCR-03, providing for a twenty-seven peso wage increase for all private

sector workers and employees in the National Capital Region receiving one hundred fifty-fourpesos (P154.00) and below daily, was approved November 29, 1993.

On February 1994, petitioner applied for exemption from said wage order on the groundthat it was a distressed establishment. The RTWPB denied petitioner's application forexemption after holding that the corporation accumulated profits amounting to P38,381.80 forthe period under review. Petitioner's motion for reconsideration was likewise denied by the

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Wages and Productivity Board on January 5, 1995. On appeal to the National Wages andProductivity Commission, petitioner was again denied relief.

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

ISSUE:Whether or not Petitioner Corporation falls within the exemption for distressed

establishments.

RULING:SC ruled that petitioner company does not fall under the exemptions given to distressed

establishments.

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

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

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

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

Prubankers Assoc. vs. Prudential BankG.R. No. 131247; January 25, 1999

FACTS:On November, 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 forat least three (3) months before its effectivity, and for the same period thereafter, in thefollowing categories: P17.50 in the cities of Naga and Legaspi; P15.50 in the municipalities ofTabaco, Daraga, Pili and the city of Iriga; and P10.00 for all other areas in the Bicol Region.

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On November 1993, RTWPB Region VII issued Wage Order No. RB VII-03, which directedthe integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the basicpay of all workers. It also established an increase in the minimum wage rates for all workers andemployees in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaueand 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, theonly branch covered by Wage Order No. RB 5-03, and integrated the P150.00 per month COLAinto 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 LaborManagement Committee be immediately convened to discuss and resolve the alleged wagedistortion created in the salary structure upon the implementation of the said wage orders. Itdemanded in the Labor Management Committee meetings that the petitioner extend theapplication of the wage orders to its employees outside Regions V and VII, claiming that theregional implementation of the said orders created a wage distortion in the wage rates ofpetitioner'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:Whether or not a wage distortion resulted from respondent's implementation of the

Wage Orders.

RULING:SC ruled that there is no wage distortion since the wage order implementation covers all

the branches of the bank.

The hierarchy of positions was still preserved. The levels of different pay classes was noteliminated. 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 prescribedwage results in the elimination or severe contraction of intentional quantitative differences inwage or salary rates between and among employee groups in an establishment as to effectivelyobliterate the distinctions embodied in such wage structure based on skills, length of service, orother logical bases of differentiation."

Wage distortion involves four elements: (1) An existing hierarchy of positions withcorresponding salary rates; (2) A significant change in the salary rate of a lower pay classwithout a concomitant increase in the salary rate of a higher one; (3) The elimination of thedistinction between the two levels and (4) The existence of the distortion in the same region ofthe country.

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

Millares et. al vs. NLRCG.R. No. 122827; March 29, 1999

FACTS:Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit

Manager, Section Manager, Department Manager, Division Manager and Vice President in the

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mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigaodel Sur.

In 1992 PICOP suffered a major financial setback allegedly brought about by the jointimpact of restrictive government regulations on logging and the economic crisis. To avert furtherlosses, it undertook a retrenchment program and terminated the services of petitioners.Accordingly, petitioners received separation pay computed at the rate of one (1) month basicpay for every year of service. Believing however that the allowances they allegedly regularlyreceived on a monthly basis during their employment should have been included in thecomputation thereof they lodged a complaint for separation pay differentials.

ISSUE:Whether the allowances are included in the definition of "facilities" in Art. 97(f) of the

Labor Code being necessary and indispensable for their existence and subsistence.

RULING:SC ruled that allowances are not part of the wages of the employees.

Wage is defined in letter (f) as the remuneration or earnings, however designated,capable of being expressed in terms of money, whether fixed or ascertained on a time, task,piece, or commission basis, or other method of calculating the same, which is payable by anemployer to an employee under a written or unwritten contract of employment for work done orto be done, or for services rendered or to be rendered and includes the fair and reasonablevalue, as determined by the Secretary of Labor, of board, lodging, or other facilities customarilyfurnished by the employer to the employee.

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

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

The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the RulesImplementing the Labor Code may from time to time fix in appropriate issuances the "fair andreasonable value of board, lodging and other facilities customarily furnished by an employer tohis employees." Petitioners' allowances do not represent such fair and reasonable value asdetermined by the proper authority simply because the Staff/Manager's allowance andtransportation allowance were amounts given by respondent company in lieu of actualprovisions for housing and transportation needs whereas the Bislig allowance was given in

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consideration of being assigned to the hostile environment then prevailing in Bislig. Theinevitable conclusion is that subject allowances did not form part of petitioners' wages.

International School Alliance of Educators vs. QuisumbingG.R. No. 128845; June 1, 2000

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FACTS:International School, Inc., pursuant to Presidential Decree 732, is a domestic educational

institution established primarily for dependents of foreign diplomatic personnel and othertemporary residents. To enable the School to continue carrying out its educational program andimprove its standard of instruction, Section 2(c) of the same decree authorizes the School toemploy its own teaching and management personnel selected by it either locally or abroad,from Philippine or other nationalities, such personnel being exempt from otherwise applicablelaws and regulations attending their employment, except laws that have been or will be enactedfor the protection of employees.

The School hires both foreign and local teachers as members of its faculty, classifyingthe same into two: (1) foreign-hires and (2) local-hires. The School employs four tests todetermine whether a faculty member should be classified as a foreign-hire or a local hire: (a)What is one's domicile? (b) Where is one's home economy? (c) To which country does one oweeconomic allegiance? (d) Was the individual hired abroad specifically to work in the School andwas the School responsible for bringing that individual to the Philippines? Should the answer toany of these queries point to the Philippines, the faculty member is classified as a local hire;otherwise, he or she is deemed a foreign-hire.

The School grants foreign-hires certain benefits not accorded local- hires. These includehousing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hiresare also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifiesthe difference on two "significant economic disadvantages" foreign-hires have to endure,namely: (a) the "dislocation factor" and (b) limited tenure. The compensation scheme is simplythe School's adaptive measure to remain competitive on an international level in terms ofattracting competent professionals in the field of international education.

ISSUE:Whether or not local hire teachers should be granted the same salary as foreign hire

teachers

RULING:SC ruled that local hire teachers should be granted the same salary as that of foreign

hire teachers.

Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, inArticle 7 thereof, provides: The States Parties to the present Covenant recognize the right ofeveryone to the enjoyment of just and favorable conditions of work, which ensure, in particular:(a) Remuneration which provides all workers, as a minimum, with: (i) Fair wages and equalremuneration for work of equal value without distinction of any kind, in particular women beingguaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equalwork;

The foregoing provisions impregnably institutionalize in this jurisdiction the long honoredlegal truism of "equal pay for equal work." Persons who work with substantially equalqualifications, skill, effort and responsibility, under similar conditions, should be paid similarsalaries. This rule applies to the School.

The School contends that petitioner has not adduced evidence that local-hires performwork equal to that of foreign-hires. The Court finds this argument a little inconsiderate. If anemployer accords employees the same position and rank, the presumption is that theseemployees perform equal work. If the employer pays one employee less than the rest, it is notfor that employee to explain why he receives less or why the others receive more. The employerhas discriminated against that employee; it is for the employer to explain why the employee istreated unfairly.

In this case, the employer has failed to discharge this burden. There is no evidence herethat foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups

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have similar functions and responsibilities, which they perform under similar working conditions.Thus the employees are entitled to same salary for performance of equal work.

Bankard Employees Union vs. NLRCG.R. No. 140689; February 17, 2004

FACTS:Bankard, Inc. classifies its employees by levels: Level I, Level II, Level III, Level IV, and

Level V. On May 1993, its Board of Directors approved a New Salary Scale, made retroactive toApril 1, 1993, for the purpose of making its hiring rate competitive in the industry’s labormarket. The New Salary Scale increased the hiring rates of new employees, to wit: Levels I andV by one thousand pesos (P1,000.00), and Levels II, III and IV by nine hundred pesos (P900.00).Accordingly, the salaries of employees who fell below the new minimum rates were alsoadjusted to reach such rates under their levels.

This made Bankard Employees Union-WATU (petitioner), the duly certified exclusivebargaining agent of the regular rank and file employees of Bankard, to request for the increasein the salary of its old, regular employees. Bankard insisted that there was no obligation on thepart of the management to grant to all its employees the same increase in an across-the-boardmanner.

Petitioner filed a notice of strike. The strike was averted when the dispute was certifiedby the Secretary of Labor and Employment for compulsory arbitration. NLRC finding no wagedistortion dismissed the case for lack of merit. Petitioner’s motion for reconsideration of thedismissal of the case was denied.

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 oldemployees resulted in wage distortion within the contemplation of Article 124 of the LaborCode.

RULING:The Court will not interfere in the management prerogative of the petitioner. The

employees are not precluded to negotiate through the provisions of the CBA.

Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, amongothers, Article 124 of the Labor Code), the term "wage distortion" was explicitly defined as... asituation where an increase in prescribed wage rates results in the elimination or severecontraction of intentional quantitative differences in wage or salary rates between and amongemployee groups in an establishment as to effectively obliterate the distinctions embodied insuch wage structure based on skills, length of service, or other logical bases of differentiation.

In the case of Prubankers Association v. Prudential Bank and Trust Company, it laid downthe four elements of wage distortion, to wit: (1.) An existing hierarchy of positions withcorresponding salary rates; (2) A significant change in the salary rate of a lower pay classwithout a concomitant increase in the salary rate of a higher one; (3) The elimination of thedistinction between the two levels; and (4) The existence of the distortion in the same region ofthe country.

Normally, a company has a wage structure or method of determining the wages of itsemployees. In a problem dealing with "wage distortion," the basic assumption is that thereexists a grouping or classification of employees that establishes distinctions among them onsome relevant or legitimate bases. Involved in the classification of employees are variousfactors such as the degrees of responsibility, the skills and knowledge required, the complexityof the job, or other logical basis of differentiation. The differing wage rate for each of theexisting classes of employees reflects this classification.

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Put differently, the entry of new employees to the company ipso facto places them underany of the levels mentioned in the new salary scale which private respondent adoptedretroactive to April 1, 1993. While seniority may be a factor in determining the wages ofemployees, it cannot be made the sole basis in cases where the nature of their work differs.

Moreover, for purposes of determining the existence of wage distortion, employeescannot create their own independent classification and use it as a basis to demand an across-the-board increase in salary.

The wordings of Article 124 are clear. If it was the intention of the legislators to cover allkinds of wage adjustments, then the language of the law should have been broad, not restrictiveas it is currently phrased:

Article 124. Standards/Criteria for Minimum Wage Fixing. Where the application of anyprescribed wage increase by virtue of a law or Wage Order issued by any Regional Board resultsin distortions of the wage structure within an establishment, the employer and the union shallnegotiate to correct the distortions. Any dispute arising from the wage distortions shall beresolved through the grievance procedure under their collective bargaining agreement and, if itremains unresolved, through voluntary arbitration.

Article 124 is entitled "Standards/Criteria for Minimum Wage Fixing." It is found inCHAPTER V on "WAGE STUDIES, WAGE AGREEMENTS AND WAGE DETERMINATION" whichprincipally deals with the fixing of minimum wage. Article 124 should thus be construed andcorrelated in relation to minimum wage fixing, the intention of the law being that in the event ofan increase in minimum wage, the distinctions embodied in the wage structure based on skills,length of service, or other logical bases of differentiation will be preserved.

If the compulsory mandate under Article 124 to correct "wage distortion" is applied tovoluntary and unilateral increases by the employer in fixing hiring rates which is inherently abusiness judgment prerogative, then the hands of the employer would be completely tied evenin cases where an increase in wages of a particular group is justified due to a re-evaluation ofthe high productivity of a particular group, or as in the present case, the need to increase thecompetitiveness of Bankard’s hiring rate. An employer would be discouraged from adjusting thesalary rates of a particular group of employees for fear that it would result to a demand by allemployees for a similar increase, especially if the financial conditions of the business cannotaddress an across-the-board increase.

Wage distortion is a factual and economic condition that may be brought about bydifferent causes. The mere factual existence of wage distortion does not, however, ipso factoresult to an obligation to rectify it, absent a law or other source of obligation which requires itsrectification.

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Odango vs. NLRCG.R. No. 147420; June 10, 2004

FACTS:Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to

Friday and half of Saturday. After a routine inspection, the Regional Branch of the Department ofLabor and Employment found ANTECO liable for underpayment of the monthly salaries of itsemployees. On September 1989, the DOLE directed ANTECO to pay its employees wagedifferentials 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 ofwage differentials, damages and attorney’s fees.

On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners grantingthem wage differentials amounting to P1,017,507.73 and attorney’s fees of 10%. ANTECOappealed the Decision to the NLRC where it reversed the Labor Arbiter’s Decision. The NLRCdenied petitioners’ motion for reconsideration. Petitioners then elevated the case to CA where itdismissed the petition for failure to comply with Section 3, Rule 46 of the Rules of Court. TheCourt of Appeals explained that petitioners failed to allege the specific instances where theNLRC abused its discretion. The appellate court denied petitioners’ motion for reconsideration.Hence, this petition.

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

RULING:SC ruled that the 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 Rulesand Policy Instructions No. 9 issued by the Secretary of Labor which was declared null and voidsince in the guise of clarifying the Labor Code’s provisions on holiday pay, they in effectamended 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. Thebasic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked days isgenerally limited to the ten legal holidays in a year. Petitioners’ claim is based on a mistakennotion that Section 2, Rule IV of Book III gave rise to a right to be paid for un-worked daysbeyond the ten legal holidays. Petitioners’ line of reasoning is not only a violation of the "nowork, no pay" principle, it also gives rise to an invidious classification, a violation of the equalprotection clause.

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C. Planas Commercial vs. NLRCG.R. No. 144619; November 11, 2005

FACTS:In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for

underpayment of wages, non-payment of overtime pay, holiday pay, service incentive leavepay, and premium pay for rest day and holiday and night shift differential against petitioners inthe Arbitration Branch of NLRC. It alleged that Cohu is engaged in the business of wholesale ofplastic products and fruits of different kinds with more than 24 employees. Respondents werehired on January 1990, May 1990 and July 19991 as laborers and were paid below the minimumwage for the past 3 years. They were required to work for more than 8 hours a day and neverenjoyed the minimum benefits. Petitioners filed their comment stating that the respondentswere their helpers.

The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed anappeal with the NLRC where it granted the money claims of Ofialda, Morente and Allaguian.Petitioners appealed with the CA but it was denied. It said that the company having claimed ofexemption of the coverage of the minimum wage shall have the burden of proof to the claim.

In the present petition, the Petitioners insist that C. Planas Commercial is a retailestablishment principally engaged in the sale of plastic products and fruits to the customers forpersonal use, thus exempted from the application of the minimum wage law; that it merelyleases and occupies a stall in the Divisoria Market and the level of its business activity requiresand sustains only less than ten employees at a time. Petitioners contend that privaterespondents 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 hasno factual and legal basis. Petitioners claim that since private respondents alleged thatpetitioners employed 24 workers, it was incumbent upon them to prove such allegation whichprivate respondents failed to do.

ISSUE:Whether or not petitioner is exempted from the application of minimum wage law.

RULING:The contention of the petitioners that they are exempted by the law must be proven. The

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 minimumwage rate of all workers and employees in the private sector. Section 4 of the Act provides forexemption from the coverage, thus: Sec. 4. (c) Exempted from the provisions of this Act arehousehold or domestic helpers and persons employed in the personal service of another,including family drivers. Also, retail/service establishments regularly employing not more thanten (10) workers may be exempted from the applicability of this Act upon application with andas determined by the appropriate Regional Board in accordance with the applicable rules andregulations issued by the Commission. Whenever an application for exemption has been dulyfiled with the appropriate Regional Board, action on any complaint for alleged non-compliancewith this Act shall be deferred pending resolution of the application for exemption by theappropriate Regional Board.

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In the event that applications for exemptions are not granted, employees shall receivethe appropriate compensation due them as provided for by this Act plus interest of one percent(1%) per month retroactive to the effectivity of this Act.

Clearly, for a retail/service establishment to be exempted from the coverage of theminimum wage law, it must be shown that the establishment is regularly employing not morethan ten (10) workers and had applied for exemptions with and as determined by theappropriate Regional Board in accordance with the applicable rules and regulations issued bythe Commission.

EJR Crafts Corp. vs. CAG.R. No. 154101; March 10, 2006

FACTS:In 1997, private respondents filed a complaint for underpayment of wages, regular

holiday pay, overtime pay, nonpayment of 13th month pay and service incentive leave payagainst petitioner before the Regional Office, NCR of the Department of Labor and Employment(DOLE). Acting on the complaint, Regional Director issued an inspection authority to SeniorLabor Enforcement Officer.

On 22 August 1997, an inspection was conducted on the premises of petitioner’s officeswherein the following violations of labor standards law were discovered, to wit: non-presentationof employment records (payrolls and daily time records); underpayment of wages, regularholiday pay, and overtime pay; and nonpayment of 13th month pay and service incentive leavepay. On the same day, the Notice of Inspection Result was received by and explained to themanager of petitioner corporation Mr. Jae Kwan Lee, with the corresponding directive thatnecessary restitution be effected within five days from said receipt.

As no restitution was made, the Regional Office thereafter conducted summaryinvestigations. However, despite due notice, petitioner failed to appear for two consecutivescheduled hearings. Petitioner failed to question the findings of the Labor Inspector received byand explained to the corporation’s manager. Petitioner then filed a Motion for Reconsideration ofsaid Order arguing that the Regional Director has no jurisdiction over the case as privaterespondents were allegedly no longer connected with petitioner corporation at the time of thefiling of the complaint and when the inspection was conducted, and that private respondents’claims are within the exclusive and original jurisdiction of the Labor Arbiters.

ISSUE:Whether or not the Regional Director has jurisdiction over the claims of herein privaterespondents.

RULING:The Court favors the respondents in the money claims against the petitioner company. It

is admitted that for the Regional Director to exercise the power to order compliance, or the so-called "enforcement power" under Article 128(b) of P.D. No. 442 as amended, it is necessarythat the employer-employee relationship still exists. In support of its contention that it is theLabor Arbiter and not the Regional Director who has jurisdiction over the claims of herein privaterespondents, petitioner contends that at the time the complaint was filed, the privaterespondents were no longer its employees. Considering thus that there still exists an employer-employee relationship between petitioner and private respondents and that the case involvesviolations of labor standard provisions of the Labor Code, we agree with the Undersecretary ofLabor and the appellate court that the Regional Director has jurisdiction to hear and decide theinstant case in conformity with Article 128(b) of the Labor Code which states:

Art. 128. Visitorial and Enforcement Power. – (b) Notwithstanding the provisions ofArticles 129 and 217 of this Code to the contrary, and in cases where the relationship ofemployer-employee still exists, the Secretary of Labor and Employment or his dulyauthorized representatives shall have the power to issue compliance orders to give effectto the labor standards provisions of this Code and other labor legislation based on the

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findings of labor employment and enforcement officers or industrial safety engineersmade in the course of inspection. The Secretary or his duly authorized representativesshall issue writs of execution to the appropriate authority for the enforcement of theirorders, except in cases where the employer contests the findings of the laboremployment and enforcement officer and raises issues supported by documentary proofswhich were not considered in the course of inspection.

Pag Asa Steel Works vs. CAG.R. No. 166647; March 31, 2006

FACTS:Petitioner Pag-Asa Steel Works, Inc. is a corporation duly organized and existing under

Philippine laws and is engaged in the manufacture of steel bars and wire rods. Pag-Asa SteelWorkers Union is the duly authorized bargaining agent of the rank-and-file employees.

RTWPB of NCR issued a wage order which provided for a P 13.00 increase of the salariesreceiving minimum wages. The Petitioner and the union negotiated on the increase. Petitionerforwarded a letter to the union with the list of adjustments involving rank and file employees. InSeptember 1999, the petitioner and union entered into an collective bargaining agreementwhere it provided wage adjustments namely P15, P25, P30 for three succeeding year. On thefirst year, the increase provided were followed until RTWPB issued another wage order where itprovided for a P25.50 per day increase in the salary of employees receiving the minimum wageand increased the minimum wage to P223.50 per day. Petitioner paid the P25.50 per dayincrease to all of its rank-and-file employees.

On November 2000, Wage Order No. NCR-08 was issued where it provided the increaseof P26.50 per day. The union president asked that the wage order be implemented wherepetitioner rejected the request claiming that there was no wage distortion and it was not obligedto grant the wage increase. The union submitted the matter for voluntary arbitration where itfavored the position of the company and dismissed the complaint. The matter was elevated toCA where it favored the respondents. Hence, this petition.

ISSUE:Whether or not the company was obliged to grant the wage increase under Wage Order

No. NCR-08 as a matter of practice.

RULING:The Court favors the petitioner that wage increase shall not be granted by virtue of CBA

or matter of practice by the company. It is submitted that employers unless exempt aremandated to implement the said wage order but limited to those entitled thereto. There is nolegal basis to implement the same across-the-board. A perusal of the record shows that thelowest paid employee before the implementation of Wage Order #8 is P250.00/day and nonewas receiving below P223.50 minimum. This could only mean that the union can no longerdemand for any wage distortion adjustment. The provision of wage order #8 and itsimplementing 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 prescribeddaily minimum wage rate of P223.50 shall receive an increase of Twenty-Six Pesos and FiftyCentavos (P26.50) per day," and since the lowest paid is P250.00/day the company is notobliged to adjust the wages of the workers.

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The provision in the CBA that "Any Wage Order to be implemented by the RegionalTripartite Wage and Productivity Board shall be in addition to the wage increase adverted above"cannot be interpreted in support of an across-the-board increase. If such were the intentions ofthis provision, then the company could have simply accepted the original demand of the unionfor such across-the-board implementation, as set forth in their original proposal. The fact thatthe company rejected this proposal can only mean that it was never its intention to agree, tosuch across-the-board implementation. Wage Order No. NCR-08 clearly states that only thoseemployees receiving salaries below the prescribed minimum wage are entitled to the wageincrease provided therein, and not all employees across-the-board as respondent Union wouldwant petitioner to do. Considering therefore that none of the members of respondent Union arereceiving salaries below the P250.00 minimum wage, petitioner is not obliged to grant the wageincrease to them.

Moreover, to ripen into a company practice that is demandable as a matter of right, thegiving of the increase should not be by reason of a strict legal or contractual obligation, but byreason of an act of liberality on the part of the employer. Hence, even if the companycontinuously grants a wage increase as mandated by a wage order or pursuant to a CBA, thesame would not automatically ripen into a company practice.

Metropolitan Bank vs. NWPCG.R. No. 144322; February 6, 2007

FACTS:On October 17, 1995, the Regional Tripartite Wages and Productivity Board, Region II,

Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwiseknown as the Wage Rationalization Act, issued Wage Order No. R02-03 (Wage Order), as follows:Section 1. Upon effectivity of this Wage Order, all employees/workers in the private sectorthroughout Region II, regardless of the status of employment are granted an across-the-boardincrease of P15.00 daily.

The Wage Order was published in a newspaper of general circulation on December 2,1995 and took effect on January 1, 1996. Its Implementing Rules were approved on February 14,1996. Per Section 13 of the Wage Order, any party aggrieved by the Wage Order may file anappeal with the National Wages and Productivity Commission (NWPC) through the RTWPB within10 calendar days from the publication of the Wage Order.

Banker’s Council in a letter inquiry to NWPC requested for ruling to seek exemption fromcoverage of the wage order since the members bank are paying more than the regular wage.NWPC replied that the member banks are covered by the wage order and does not fall with theexemptible categories.

In another letter inquiry, Metrobank asked for the interpretation of the applicability of thewage order. NWPC referred it to RTWPB. RTWPB in return clarified that establishments in Region2 are covered by the wage order. Petitioner filed a petition with the CA and denied the petition.

ISSUE:Whether or not the wage order is void thus it has no legal effect and the RTWPB acted in

excess of its jurisdiction.

RULING:The Court finds that Section 1, Wage Order No. R02-03 is void insofar as it grants a wage

increase to employees earning more than the minimum wage rate; and pursuant to theseparability clause of the Wage Order, Section 1 is declared valid with respect to employeesearning the prevailing minimum wage rate.

The powers of NWPC are enumerated in ART. 121. Powers and Functions of theCommission. - The Commission shall have the following powers and functions: (d) To review

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regional wage levels set by the Regional Tripartite Wages and Productivity Boards to determineif these are in accordance with prescribed guidelines and national development plans; (f) Toreview plans and programs of the Regional Tripartite Wages and Productivity Boards todetermine whether these are consistent with national development plans; (g) To exercisetechnical and administrative supervision over the Regional Tripartite Wages and ProductivityBoards.

R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wagesand to promote productivity-improvement and gain-sharing measures to ensure a decentstandard of living for the workers and their families; to guarantee the rights of labor to its justshare in the fruits of production; to enhance employment generation in the countryside throughindustrial dispersal; and to allow business and industry reasonable returns on investment,expansion and growth.

In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power toprescribe rules and guidelines for the determination of appropriate minimum wage andproductivity measures at the regional, provincial or industry levels; and authorized the RTWPB todetermine and fix the minimum wage rates applicable in their respective regions, provinces, orindustries therein and issue the corresponding wage orders, subject to the guidelines issued bythe NWPC. Pursuant to its wage fixing authority, the RTWPB may issue wage orders which setthe daily minimum wage rates, based on the standards or criteria set by Article 124 of the LaborCode.

The Court declared that 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 adeterminate amount to be added to the prevailing statutory minimum wage rates. On the otherhand, in the "salary-ceiling" method, the wage adjustment was to be applied to employeesreceiving a certain denominated salary ceiling. In other words, workers already being paid morethan the existing minimum wage (up to a certain amount stated in the Wage Order) are also tobe 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 didnot set a wage level nor a range to which a wage adjustment or increase shall be added.Instead, it granted an across-the-board wage increase of P15.00 to all employees and workers ofRegion 2. In doing so, the RTWPB exceeded its authority by extending the coverage of the WageOrder to wage earners receiving more than the prevailing minimum wage rate, without adenominated salary ceiling. As correctly pointed out by the OSG, the Wage Order grantedadditional benefits not contemplated by R.A. No. 6727.

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Equitable Bank vs. SadacG.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. OnJune 1989, nine lawyers of petitioner Bank’s Legal Department, in a letter-petition to theChairman of the Board of Directors, accused respondent Sadac of abusive conduct andultimately, petitioned for a change in leadership of the department. On the ground of lack ofconfidence in Sadac, under the rules of client and lawyer relationship, petitioner Bank instructedrespondent Sadac to deliver all materials in his custody in all cases in which the latter wasappearing as its counsel of record. In reaction thereto, Sadac requested for a full hearing andformal investigation but the same remained unheeded. On 9 November 1989, respondent Sadacfiled a complaint for illegal dismissal with damages against petitioner Bank and individualmembers 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, Sadacwas removed from his office

Labor Arbiter rendered decision that Sadac’s termination was illegal and entitled toreinstatement and payment of full back wages. NLRC affirmed the decision upon appeal by theBank. Sadac filed for execution of judgment where it gave its computation which amounted toP 6.03 M representing his back wages and the increases he should have received during thetime he was illegally dismissed. The Bank opposed to Sadac’s computation. The Labor Arbiterfavor Sadac’s computation. NLRC, upon appeal by the bank, reversed the decision. CA reversedthe 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 backwages. Backwages in general are granted on grounds of equity for earnings which aworker or employee has lost due to his illegal dismissal. It is not private compensation ordamages but is awarded in furtherance and effectuation of the public objective of the LaborCode. Nor is it a redress of a private right but rather in the nature of a command to the

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employer to make public reparation for dismissing an employee either due to the former’sunlawful act or bad faith.

In the case of Bustamante v. National Labor Relations Commission, It said that the Courtdeems it appropriate to reconsider such earlier ruling on the computation of back wages bynow 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 generalrule, be diminished or reduced by the earnings derived by him elsewhere during the period ofhis illegal dismissal. The underlying reason for this ruling is that the employee, while litigatingthe 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 topay 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 closeradherence to the legislative policy behind Rep. Act No. 6715 points to "full backwages" asmeaning exactly that, i.e., without deducting from backwages the earnings derived elsewhereby the concerned employee during the period of his illegal dismissal.

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

S.I.P FOOD HOUSE ET. AL VS. BATOLINAGR NO. 192473 OCT. 11, 2010

FACTS:The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of

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

In February 2004, GMPC terminated SIP’s “contract as GMPC concessionaire,” becauseof GMPC’s decision “to take direct investment in and management of the GMPC canteen;” SIP’scontinued refusal to heed GMPC’s directives for service improvement; and the allegedinterference of the Pablos’ two sons with the operation of the canteen. The termination of theconcession contract caused the termination of the respondents’ employment, prompting themto file a complaint for illegal dismissal, with money claims, against SIP and the spouses Pablo.

The employer of the respondents claimed that it was merely a labor-only contractor ofGMPC. Hence, it could not be liable.

ISSUE:WON there exist an employer-employee relationship

RULING:We affirm the CA ruling that SIP was the respondents’ employer. The NLRC decision,

which the CA affirmed, states: Respondents have been the concessionaire of GMPC canteen for nine (9)years. During this period, complainants were employed at the said canteen. On February29, 2004, respondents’ concession with GMPC was terminated. When respondents wereprevented from entering the premises as a result of the termination of their concession,they sent a protest letter dated April 14, 2004 to GMPC thru their counsel. Pertinentportion of the letter:

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We write this letter in behalf of our client Mr. & Mrs.

Alejandro C. Pablo, the concessionaires who used to occupy and/orrent the area for a cafeteria/canteen at the 2nd Floor ofthe GSIS Building for the past several years.

Last March 12, 2004, without any court writ or order, and

with the aid of your armed agents, you physically barred our clients& their employees/helpers from entering the said premises andfrom performing their usual duties of serving the food requirementsof GSIS personnel and others.

Clearly, no less than respondents, thru their counsel, admitted that complainantsherein were their employees. That complainants were employees of respondents is further bolstered by thefact that respondents do not deny that they were the ones who paid complainantssalary. When complainants charged them of underpayment, respondents eveninterposed the defense of file (sic) board and lodging given to complainants.

The CA ruled out SIP’s claim that it was a labor-only contractor or a mere agent ofGMPC. We agree with the CA; SIP and its proprietors could not be considered as mere agents ofGMPC because they exercised the essential elements of an employment relationship with therespondents such as hiring, payment of wages and the power of control, not to mention that SIPoperated the canteen on its own account as it paid a fee for the use of the building and for theprivilege of running the canteen. The fact that the respondents applied with GMPC in February2004 when it terminated its contract with SIP, is another clear indication that the two entitieswere separate and distinct from each other. We thus see no reason to disturb the CA’s findings.

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SLL INTERNATIONAL CABLE SPECIALIST VS. NLRCG.R. No. 172161, March 2, 2011

FACTS:Sometime in 1996, and January 1997, private respondents Roldan Lopez (Lopez for

brevity) and Danilo Cañete (Cañete for brevity), and Edgardo Zuñiga (Zuñiga for brevity)respectively, were hired by petitioner Lagon as apprentice or trainee cable/lineman. The threewere paid the full minimum wage and other benefits but since they were only trainees, they didnot report for work regularly but came in as substitutes to the regular workers or inundertakings that needed extra workers to expedite completion of work. After their training,Zuñiga, Cañete and Lopez were engaged as project employees by the petitioners in theirIslacom project in Bohol. Private respondents started on March 15, 1997 until December 1997.Upon the completion of their project, their employment was also terminated. Privaterespondents received the amount of P145.00, the minimum prescribed daily wage for RegionVII. In July 1997, the amount of P145 was increased to P150.00 by the Regional Wage Board(RWB) and in October of the same year, the latter was increased to P155.00. Sometime in March1998, Zuñiga and Cañete were engaged again by Lagon as project employees for its PLDTAntipolo, Rizal project, which ended sometime in (sic) the late September 1998. As aconsequence, Zuñiga and Cañete's employment was terminated. For this project, Zuñigaand Cañete received only the wage of P145.00 daily. The minimum prescribed wage for Rizalat that time was P160.00.

Sometime in late November 1998, private respondents re-applied in the Racitelcomproject of Lagon in Bulacan. Zuñiga and Cañete were re-employed. Lopez was also hired forthe said specific project. For this, private respondents received the wage of P145.00. Again,after the completion of their project in March 1999, private respondents went home to CebuCity.

On May 21, 1999, private respondents for the 4th time worked with Lagon's project inCamarin, Caloocan City with Furukawa Corporation as the general contractor. Their contractwould 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 minimumprescribed rate for Manila was P198.00. In January to February 28, the three received the wageof P165.00. The existing rate at that time was P213.00.

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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] witheconomic 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, theywould have to go home at their own expense and that they would not be given anymore timenor allowed to stay in the quarters. This prompted private respondents to leave their work andwent home to Cebu. On March 3, 2000, private respondents filed a complaint for illegaldismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and 1998 and serviceincentive leave pay as well as damages and attorney's fees.

In their answers, petitioners admit employment of private respondents but claimed thatthe latter were only project employees, for their services were merely engaged for a specificproject or undertaking and the same were covered by contracts duly signed by privaterespondents. Petitioners further alleged that the food allowance of P63.00 per day as well asprivate respondents allowance for lodging house, transportation, electricity, water and snacksallowance should be added to their basic pay. With these, petitioners claimed that privaterespondents received higher wage rate than that prescribed in Rizal and Manila.

Lastly, petitioners alleged that since the workplaces of private respondents were all inManila, the complaint should be filed there. Thus, petitioners prayed for the dismissal of thecomplaint for lack of jurisdiction and utter lack of merit.

LA ruled that the respondents were regular employees and were underpaid. However,the LA found that petitioners were not liable for illegal dismissal. The LA viewed privaterespondents' act of going home as an act of indifference when petitioners decided to prohibitovertime work. These decisions of the LA were affirmed by the NLRC, and subsequently by theCA, on appeal. Hence, this petition.

ISSUE: WON respondents were underpaid WON the allowances should be added to their basic pay

HELD: The petition is bereft of merit. As a general rule, on payment of wages, a party who

alleges payment as a defense has the burden of proving it. xxx

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

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

"Supplements," therefore, constitute extra remuneration or special privileges or benefitsgiven to or received by the laborers over and above their ordinary earnings or wages."Facilities," on the other hand, are items of expense necessary for the laborer's and his family'sexistence and subsistence so that by express provision of law (Sec. 2[g]), they form part of thewage and when furnished by the employer are deductible therefrom, since if they are not sofurnished, the laborer would spend and pay for them just the same.

While the general rule is that any decision rendered without jurisdiction is a total nullityand may be struck down at any time, the party that asserts it must be in good faith and not

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evidently availing thereof simply to thwart the execution of an award that has long become finaland executory.

5.VIOLATION OF WAGE ORDERS

6.WAGE ENFORCEMENT AND RECOVERY

Rajah Humabon Hotel vs. TrajanoG.R. Nos. 100222-23 September 14, 1993

FACTS:For redress in regard to underpaid wages and non-payment of benefits, the herein

respondent-employees turned to the regional director of the Department of Labor andEmployment. The jurisdictional competence of such official is, however, disputed andchallenged by the employers in the instant petition who contend that it is the labor arbiter whomay properly entertain the grievance. The aggregate claims of each of the twenty-fiveemployees of petitioner are above the amount of P5,000.00 fixed by Republic Act No. 6715.

ISSUE:Who between the Regional Director of the Department of Labor and Employment and the

Labor Arbiter has jurisdiction over the complaint of private respondents.

RULING:The Labor Arbiter has exclusive jurisdiction over the complaint of private respondents

which involves a money claim exceeding P5,000.

The principle of continuous jurisdiction of the regional director, as applied by theSecretary of Labor to the suit filed by herein private respondents on March 14, 1989 prior to theeffectivity of Republic Act No. 6715, is therefore incorrect. To sustain otherwise would sanction asituation where all employees' claims, regardless of amount, can be heard and determined by

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the Secretary of Labor under his visitorial power. This does not, however, appear to be thelegislative intent. The Secretary of Labor should be held as possessed of his plenary visitorialpowers to order the inspection of all establishments where labor is employed, to look into allpossible violations of labor laws and regulations but the power to hear and decide employees'claims exceeding P5,000.00 for each employee should be left to the Labor Arbiter as theexclusive repository of the power to hear and decide such claims.

Regional directors under Republic Act No. 6715, can try money claims only if thefollowing requisites concur:

a) The claim is presented by an employee or person employed in domestic orhousehold service, or househelper under the code;

b) The claimant, no longer being employed, does not seek reinstatement; and,c) The aggregate money claim of the employee or housekeeper does not exceed five

thousand pesos (P5,000.00).

Guico vs. Secretary of LaborG.R. No. 131750; November 16, 1998

FACTS:The Secretary of Labor received a letter-complaint 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 orhis duly authorized representative under Article 128 of the Labor Code, as amended, inspectionswere conducted at Copylandia's outlets. The inspections yielded the following violationsinvolving 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.

Thus, the Secretary of Labor ordered petitioner to pay the respondents. Petitionerquestioned the jurisdiction of the Regional Director 6715. He argued that the Regional Directorhas no jurisdiction over the complaint of the 21 employees since their individual monetaryclaims exceed the P5,000.00 limit. On the other hand, the respondent Secretary held that thejurisdictional limitation imposed by Article 129 on his visitorial and enforcement power underArticle 128 (b) of the Labor Code, as amended, has been repealed by Republic Act No. 7730. Hepointed out that the amendment "notwithstanding the provisions of Article 129 and 217 of theLabor Code to the contrary" erased all doubts as to the amendatory nature of the new law.

ISSUE:Whether or not the Secretary of Labor has jurisdiction take cognizance of the instant

labor case.

RULING:SC ruled in favor of the Secretary of Labor. It overruled its previous ruling on the matter.

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SC sustained the jurisdiction of the respondent Secretary. As the respondent correctlypointed out, this Court's ruling in Servando — that the visitorial power of the Secretary of Laborto order and enforce compliance with labor standard laws cannot be exercised where theindividual 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.

Ex-Bataan Veterans Security Agency vs. Secretary of Labor et. al. G.R. No. 152396; January 14, 2005

FACTS:Ex-Bataan Veterans Security Agency, Inc. (EBVSAI) is in the business of providing security

services while private respondents are EBVSAI's employees assigned to the National PowerCorporation at Ambuklao Hydro Electric Plant, Bokod, Benguet (Ambuklao Plant). Privaterespondents led by Alexander Pocding (Pocding) instituted a complaint for underpayment ofwages against EBVSAI before the Regional Office of the Department of Labor and Employment(DOLE). The money claims exceeded P5,000.

ISSUE: Whether the Secretary of Labor or his duly authorized representatives acquired

jurisdiction over EBVSAI Whether or not the Director of DOLE has jurisdiction over the labor dispute o money

claims exceeding P5,000.

RULING:Anent the first issue, EBVSAI does not deny having received the notices of hearing.

Evidence shows that petitioners received notices of hearing. The notices of hearing were sent tothe petitioners’ Manila office. They were also informed of EBVSAI's violations and were asked topresent 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. TheRegional Director validly acquired jurisdiction over EBVSAI. EBVSAI can no longer question thejurisdiction of the Regional Director after receiving the notices of hearing and after appearingbefore the Regional Director.

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Anent the second issue, the Regional Director validly assumed jurisdiction over themoney claims of private respondents even if the claims exceeded P5,000 because suchjurisdiction was exercised in accordance with Article 128(b) of the Labor Code and the case doesnot fall under the exception clause.

In order to divest the Regional Director or his representatives of jurisdiction, the followingelements must be present: (a) that the employer contests the findings of the labor regulationsofficer and raises issues thereon; (b) that in order to resolve such issues, there is a need toexamine evidentiary matters; and (c) that such matters are not verifiable in the normal courseof inspection. The rules also provide that the employer shall raise such objections during thehearing of the case or at any time after receipt of the notice of inspection results.

Sapio vs. Undaloc Construction et. al.G.R. No. 155034; May 22, 2008

FACTS:The controversy started with a complaint filed by petitioner against Undaloc Construction

and/or Engineer Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment ofstatutory benefits. Respondent Undaloc Construction, a single proprietorship owned by CiriloUndaloc, is engaged in road construction business in Cebu City. Petitioner avers that he was paida daily salary way below the minimum wage provided for by law. His claim of salary differentialrepresents the difference between the daily wage he actually received and the statutoryminimum wage.

ISSUE:Whether or not petitioner is entitled to salary differential after his termination.

RULING:The total salary differential that petitioner is lawfully entitled to amounts to P6,578.00

However, pursuant to Section 12 of Republic Act (R.A.) No. 6727, as amended by R.A. No. 8188.Respondents are required to pay double the amount owed to petitioner, bringing their totalliability to P13,156.00. The employer concerned shall be ordered to pay an amount equivalent todouble the unpaid benefits owing to the employees: Provided, That payment of indemnity shallnot absolve the employer from the criminal liability imposable under this Act.

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

FACTS:Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent

Panay Veteran’s 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 FIIterminated its contract with respondent security agency on July 6, 2000. They were not givennew assignments and their benefits (including 13th month pay, overtime pay and holiday pay aswell as wage differentials due to underpayment of wages) were withheld by respondent securityagency. This prompted them to file a complaint for violation of labor standards in the regionaloffice of the Department of Labor and Employment in the National Capital Region (DOLE-NCR).

Acting on the complaint, Manuel M. Cayabyab, a labor employment officer of the DOLE-NCR, conducted an inspection of respondent security agency on October 30, 2000. During theinspection, respondent security agency failed to present its payroll as well as the daily timerecords submitted by petitioners Agapay and Alonso, Jr. Such failure was noted as a violation.

Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questionedthe labor employment officer’s findings. Thus, in his May 10, 2001 order, the Regional Directorof the DOLE-NCR adopted the findings and computation of Cayabyab as to the unpaid benefitsdue to petitioners Agapay and Alonso, Jr. Respondents filed an appeal for the reduction of thesurety/ cash bond.

ISSUE: Whether or not there has been a perfected appeal made by the respondents.

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Whether or not a motion to reduce bond is allowed in appeals to the Secretary ofLabor.

RULING:SC held that there has been no perfected appeal. SC also ruled that reduction of the

bond is not allowed in appeals before the Secretary of Labor.

On the first issue—RESPONDENTS FAILED TO PERFECT THEIR APPEAL:

The rule is that, to perfect an appeal of the Regional Director’s order involving amonetary award in cases which concern the visitorial and enforcement powers of the Secretaryof Labor and Employment, the appeal must be filed and the cash or surety bond equivalent tothe monetary award must be posted within ten calendar days from receipt of the order. Failureeither to file the appeal or post the bond within the prescribed period renders the order final andexecutory.

The legislative intent to make the bond an indispensable requisite for the perfection ofan appeal by the employer is underscored by the provision that “an appeal by the employermay be perfected only upon the posting of a cash or surety bond. The word “only” makes itclear that the lawmakers intended the posting of a cash or surety bond by the employer to bethe exclusive means by which an employer’s appeal may be perfected.

In this case, respondents admit that they failed to post the required bond when they filedtheir appeal to the Secretary of Labor and Employment. Because of such failure, the appeal wasnever perfected and the May 10, 2001 order of the DOLE-NCR Regional Director attained finality.

On the second issue—MOTION TO REDUCE APPEAL BOND IS NOT ALLOWED IN APPEALS TO THESECRETARY OF LABOR:

The jurisdiction of the NLRC is separate and distinct from that of the Secretary of Laborand Employment. In the exercise of their respective jurisdictions, each agency is governed byits own rules of procedure. In other words, the rules of procedure of the NLRC are different from(and do not apply in) cases cognizable by the Secretary of Labor and Employment.

Unlike the New Rules of Procedure of the NLRC, no provision in the Rules on theDisposition of Labor Standards Cases governs the filing of a motion for the reduction of theamount of the bond. However, on matters that are not covered by the Rules on the Dispositionof Labor Standards Cases, the suppletory application of the Rules of Court is authorized. In otherwords, the Rules on the Disposition of Labor Standards Cases does not sanction the suppletoryresort to the rules of procedure of the NLRC. By ruling that the rules of procedure of the NLRC should be applied suppletorily to respondents’appeal to the Secretary of Labor of Employment, the CA effectively amended the Rules on theDisposition of Labor Standards Cases. In the process, it encroached on the rule-making power ofthe Secretary of Labor and Employment.

The posting of a cash or surety bond to perfect an appeal of an order involving amonetary award has a two-fold purpose:

(1) to assure the employee that, if he finally prevails in the case, the monetaryaward will be given to him upon dismissal of the employer’s appeal and

(2) to discourage the employer from using the appeal to delay or evade paymentof his obligations to the employee.

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National Mines and Allied Workers Union vs. Marcopper Mining Corp. G.R. No. 174641; November 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 ortailings 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 ofMARCOPPER. 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, itsmembers were not paid the wages due them for six months. It further claimed that its membersare also entitled to be paid their separation pay pursuant to their collective bargainingagreement with MARCOPPER and under existing implementing rules of the Labor Code. Therehad 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 anappeal 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 strikecase had already been issued at that time. We subsequently ruled on the same issue during thetime the environmental incident case was pending before the NLRC. Thus, when the NLRC

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dismissed MARCOPPER's appeal for failure to file the requisite appeal bond corresponding to the615 NAMAWU members, the termination of employment of these NAMAWU members wasalready a settled matter that the NLRC was in no position to disregard. In this light, the CA wascorrect 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'scomplaint with respect to its 615 previously dismissed members.

Jethro Intelligence and Security Corp. vs. SOLEGR NO. 172537, Aug. 14, 2009

FACTS:Jethro is a security service contractor with a security service contract agreement with co-

petitioner Yakult Phils. Respondent Frederick Garcia (Garcia), one of the security guardsdeployed by Jethro, file a complaint for underpayment of wages, legal/special holiday pay,premium pay for rest day, 13th month pay, and night shift differential, the Department of Laborand Employment (DOLE)-Regional Office No. IV conducted an inspection at Yakult’s premises inCalamba, Laguna in the course of which several labor standards violations were noted, includingkeeping of payrolls and daily time records in the main office, underpayment of wages, overtimepay and other benefits, and non-registration with the DOLE as required under Department OrderNo. 18-02.

Petitioners attribute grave abuse of discretion on the part of the DOLE Regional Directorand the SOLE in this wise: (1) the SOLE has no jurisdiction over the case because, followingArticle 129 of the Labor Code, the aggregate money claim of each employee exceededP5,000.00

ISSUE: WON the SOLE has the power to determine the violations of Labor Standards.

RULING: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

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exceeds P5,000.00, said provisions do not contemplate nor cover the visitorial and enforcementpowers of the Secretary of Labor or his duly authorized representatives.

The Secretary of Labor, under Art. 106, LC, exercises quasi-judicial power, at least to theextent necessary to determine violations of labor standards provisions of the Code. He, or theregional directors, can issue compliance orders and writs of execution for the execution thereof.The Secretary or his duly authorized representatives shall issue writs of execution to theappropriate authority for the enforcement of their orders, except in cases where the employercontests the finding of the labor employment and enforcement officer and raises issuessupported by documentary proofs which were not considered in the course of inspection.

Philippine Hoteliers Inc, et al vs. National Union of Workers in Hotel, Restaurant andAllied Industries-Dusit Hotel Nikko Chapter

GR No. 181972, August 25, 2009

FACTS:Wage Order No. 9, approved by the Regional Tripartite Wages and Productivity Board

(RTWPB) of the National Capital Region (NCR), took effect on 5 November 2001. It grants P30.00ECOLA to particular employees and workers of all private sectors, identified as follows in Section1 thereof:

Section 1. Upon the effectivity of this Wage Order, all private sector workers andemployees in the National Capital Region receiving daily wage rates of TWO HUNDRED FIFTYPESOS (P250.00) up to TWO HUNDRED NINETY PESOS (P290.00) shall receive an emergencycost of living allowance in the amount of THIRTY PESOS (P30.00) per day payable in twotranches as follows:

Amount of ECOLA EffectivityP15.00 5 November 2001P15.00 1 February 2002

On 20 March 2002, respondent National Union of Workers in Hotel, Restaurant and AlliedIndustries-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 andEmployment-National Capital Region (DOLE-NCR), reporting the non-compliance of Dusit Hotelwith WO No. 9, while there was an on-going compulsory arbitration before the National Labor

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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. Maraananother letter following-up his previous request for assistance.

Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer EstrellitaNatividad (LSO Natividad) to conduct an inspection of Dusit Hotel premises on 24 April 2002. Inthe 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 ofinspection 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-DUSITHOTEL NIKKO Chapter, there are one hundred forty-four (144) affected in theimplementation of Wage Order No. NCR-09-> ECOLA covering the periods fromNov. 5/01 to present.

Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel toeffect restitution and/or correction of the noted violations within five days from receipt of theNotice, and to submit any question on the findings of the labor inspector within the sameperiod, otherwise, an order of compliance would be issued. The Notice of Inspection Result wasduly 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-CCNo. 000215-02 — the compulsory arbitration involving the Collective Bargaining Agreement(CBA) deadlock between Dusit Hotel and the Union — granting the hotel employees thefollowing wage increases, in accord with the CBA:

Effective January 1, 2001 - P500.00/monthEffective January 1, 2002 - P550.00/monthEffective January 1, 2003 - P600.00/month

On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises,DOLE-NCR, through Dir. Maraan, issued the Order 10 directing Dusit Hotel to pay 144 of itsemployees the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WONo. 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 October2002, arguing that the NLRC Decision dated 9 October 2002, resolving the bargaining deadlockbetween Dusit Hotel and the Union, and awarding salary increases under the CBA to hotelemployees retroactive to 1 January 2001, already rendered the DOLE-NCR Order moot andacademic. With the increase in the salaries of the hotel employees ordered by the NLRCDecision of 9 October 2002, along with the hotel employees' share in the service charges, the144 hotel employees, covered by the DOLE-NCR Order of 22 October 2002, would already bereceiving salaries beyond the coverage of WO No.

Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR issued a Resolution 14 on27 December 2002, setting aside its earlier Order dated 22 October 2002 for being moot andacademic, in consideration of the NLRC Decision dated 9 October 2002; and dismissing thecomplaint of the Union against Dusit Hotel, for non-compliance with WO No. 9, for lack of merit.

ISSUE: Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9

despite the increases in their salaries, retroactive to 1 January 2001, ordered by NLRC inthe latter's Decision dated 9 October 2002.

Whether Dusit Hotel is liable for the double indemnity for violation of the wage order.

RULING:

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The Court rules in the negative.

It must be noted that the hotel employees have a right to their share in the servicecharges 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 andsimilar establishments shall be distributed at the rate of eighty-five percent (85%) for allcovered employees and fifteen percent (15%) for management. The share of employeesshall be equally distributed among them. In case the service charge is abolished, theshare 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 itsemployees and management their respective shares in the service charges collected, the hotelcannot claim that payment thereof to its 82 employees constitute substantial compliance withthe payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees' right to their sharesin the service charges collected by Dusit Hotel is distinct and separate from their right toECOLA; 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. UnderSection 2 (m) of DOLE Department Order No. 10, Series of 1998, 30 the Notice of InspectionResult "shall specify the violations discovered, if any, together with the officer'srecommendation and computation of the unpaid benefits due each worker with an advice thatthe employer shall be liable for double indemnity in case of refusal or failure to correct theviolation within five calendar days from receipt of notice". A careful review of the Notice ofInspection Result dated 29 May 2002, issued herein by the DOLE-NCR to Dusit Hotel, revealsthat the said Notice did not contain such an advice. Although the Notice directed Dusit Hotel tocorrect its noted violations within five days from receipt thereof, it was not sufficiently apprisedthat failure to do so within the given period would already result in its liability for doubleindemnity. The lack of advice deprived Dusit Hotel of the opportunity to decide and actaccordingly within the five-day period, as to avoid the penalty of double indemnity. By 22October 2002, the DOLE-NCR, through Dir. Maraan, already issued its Order directing Dusit Hotelto pay 144 of its employees the total amount of P1,218,240.00, corresponding to their unpaidECOLA under WO No. 9; plus the penalty of double indemnity, pursuant to Section 12 ofRepublic Act No. 6727, as amended by Republic Act No. 8188.

Although the Court is mindful of the fact that labor embraces individuals with a weakerand unlettered position as against capital, it is equally mindful of the protection that the lawaccords to capital. While the Constitution is committed to the policy of social justice and theprotection of the working class, it should not be supposed that every labor dispute will beautomatically decided in favor of labor. Management also has its own rights which, as such, areentitled to respect and enforcement in the interest of simple fair play.

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Tiger Construction and Development Corp. vs. AbayGR NO. 164141 February 26, 2010

FACTS:On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others

before the Regional Office of the Department of Labor and Employment (DOLE), an inspectionwas conducted by DOLE officials at the premises of petitioner TCDC. Several labor standardviolations were noted, such as deficiencies in record keeping, non-compliance with various wageorders, non-payment of holiday pay, and underpayment of 13th month pay. The case was thenset for summary hearing.

However, before the hearing could take place, the Director of Regional Office No. V, Ma.Glenda A. Manalo (Director Manalo), issued an Order on July 25, 2002, which reads:

XXX in view of the foregoing, this case falls under the original and exclusive jurisdictionof the National Labor Relations Commission as provided under Article 217 of the LaborCode of the Philippines.5

On September 30, 2002, Director Manalo issued an Order directing TCDC to payP2,123,235.90 to its employees representing underpayment of salaries, 13th month pay, andunderpayment of service incentive leave pay and regular holiday pay. TCDC filed a Motion forReconsideration on October 17, 2002 and a Supplemental Pleading to the Motion for

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Reconsideration on November 21, 2002, reiterating the argument that Director Manalo had lostjurisdiction over the matter.

Apparently convinced by petitioner’s arguments, Director Manalo again endorsed thecase to the NLRC Regional Arbitration Branch V (Legaspi City). On January 27, 2003, the NLRCreturned the entire records of the case to Director Manalo on the ground that the NLRC does nothave jurisdiction over the complaint.

Having the case in her office once more, Director Manalo finally issued an Order datedJanuary 29, 2003 denying petitioner’s motion for reconsideration for lack of merit. Since TCDCdid not interpose an appeal within the prescribed period, Director Manalo issued forthwith a Writof Execution on February 12, 2003.

ISSUE: The issue in the case is whether petitioner can still assail the January 29, 2003 Order of

Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has attainedfinality 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 periodprescribed by law. It likewise admits that the case was already in the execution process when itresorted to a belated appeal to the DOLE Secretary. Petitioner, however, excuses itself from theeffects of the finality of the Order by arguing that it was allegedly issued without jurisdiction andmay be assailed at any time.

While it is true that orders issued without jurisdiction are considered null and void and, asa general rule, may be assailed at any time, the fact of the matter is that in this case, DirectorManalo acted within her jurisdiction. Under Article 128 (b) of the Labor Code,14 as amended byRepublic Act (RA) No. 7730,15 the DOLE Secretary and her representatives, the regionaldirectors, have jurisdiction over labor standards violations based on findings made in the courseof inspection of an employer’s premises. The said jurisdiction is not affected by the amount ofclaim involved, as RA 7730 had effectively removed the jurisdictional limitations found inArticles 129 and 217 of the Labor Code insofar as inspection cases, pursuant to the visitorial andenforcement powers of the DOLE Secretary, are concerned.16 The last sentence of Article 128(b)of the Labor Code recognizes an exception17 to the jurisdiction of the DOLE Secretary and herrepresentatives, but such exception is neither an issue nor applicable here.People’s Broadcasting (Bombo Radyo Phils.) vs. Secretary of DOLE, et. al.

G.R. No. 179652; May 8, 2009

FACTS:The petition traces its origins to a complaint filed by Jandeleon Juezan (respondent)

against People’s Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) for illegaldeduction, non-payment of service incentive leave, 13th month pay, premium pay for holidayand rest day and illegal diminution of benefits, delayed payment of wages and non-coverage ofSSS, PAG-IBIG and Philhealth before the Department of Labor and Employment (DOLE) Regional.On the basis of the complaint, the DOLE conducted a plant level inspection. In the findings ofthe Labor Inspector, Bombo Radyo denies that there exists an employer-employee relationshipbetween the parties. DOLE Regional Director ruled that there exists an employer-employeerelationship. Thus, Bombo Radyo is asked to pay the money claims of Juezan. On appeal to theDOLE Secretary, petitioner denied once more the existence of employer-employee relationship.In its Order, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner didnot post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit.

ISSUE:Whether or not he Secretary of Labor in the exercise of its visitorial and enforcement

powers has the power to determine the existence of an employer-employee relationship.

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RULING:SC ruled that the Secretary of Labor in the exercise of its visitorial and enforcement

powers cannot determine the existence of an employee-employer relationship.

Under Art. 128(b), the provision is quite explicit that the visitorial and enforcementpower of the DOLE comes into play only “in cases when the relationship of employer-employeestill exists.” It also underscores the avowed objective underlying the grant of power to theDOLE which is “to give effect to the labor standard provision of this Code and other laborlegislation.” Of course, a person’s entitlement to labor standard benefits under the labor lawspresupposes the existence of employer-employee relationship in the first place.

The clause “in cases where the relationship of employer-employee still exists” signifiesthat the employer-employee relationship must have existed even before the emergence of thecontroversy. Necessarily, the DOLE’s power does not apply in two instances, namely:(a) where the employer-employee relationship has ceased; and (b) where no suchrelationship has ever existed.

In the first situation, the claim has to be referred to the NLRC because it is the NLRCwhich has jurisdiction in view of the termination of the employer-employee relationship. Thesame procedure has to be followed in the second situation since it is the NLRC that hasjurisdiction in view of the absence of employer-employee relationship between the evidentiaryparties from the start.

Clearly the law accords a prerogative to the NLRC over the claim when the employer-

employee relationship has terminated or such relationship has not arisen at all. The reason isobvious. In the second situation especially, the existence of an employer-employee relationshipis a matter which is not easily determinable from an ordinary inspection, necessarily so,because the elements of such a relationship are not verifiable from a mere ocular examination.The intricacies and implications of an employer-employee relationship demand that the level ofscrutiny should be far above the cursory and the mechanical. While documents, particularlydocuments found in the employer’s office are the primary source materials, what may prove decisive are factors related to the history of the employer’s business operations, its currentstate as well as accepted contemporary practices in the industry. More often than not, thequestion of employer-employee relationship becomes a battle of evidence, the determination ofwhich should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body that is the NLRC.

It can be assumed that the DOLE in the exercise of its visitorial and

enforcement power somehow has to make a determination of the existence of anemployer-employee relationship. Such prerogatival determination, however, cannotbe co-extensive with the visitorial and enforcement power itself. Indeed, suchdetermination is merely preliminary, incidental and collateral to the DOLE’s primaryfunction of enforcing labor standards provisions. The determination of theexistence of employer-employee relationship is still primarily lodged with the NLRC.This is the meaning of the clause “in cases where the relationship of employer-employee still exists” in Art. 128 (b).

The existence of an employer-employee relationship is a statutory prerequisiteto and a limitation on the power of the Secretary of Labor, one which the legislativebranch is entitled to impose. The rationale underlying this limitation is to eliminate theprospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter fraughtwith questions of fact and law, which is best resolved by the quasi-judicial body, which is theNRLC, rather than an administrative official of the executive branch of the government. If theSecretary of Labor proceeds to exercise his visitorial and enforcement powers absent the firstrequisite, as the dissent proposes, his office confers jurisdiction on itself which it cannototherwise acquire.

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7.WAGE PROTECTION PROVISIONS AND PROHIBITIONS REGARDING WAGES

Gaa vs. CAG.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 Instanceof Manila a motion to lift said garnishment on the ground that her "salaries, commission and, orremuneration 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:

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SC held that, “We do not think that the legislature intended the exemption in Article1708 of the New Civil Code to operate in favor of any but those who are laboring men or womenin the sense that their work is manual. Persons belonging to this class usually look to the rewardof a day's labor for immediate or present support, and such persons are more in need of theexemption than any others. Petitioner Rosario A. Gaa is definitely not within that class.

Nestle Phils. vs. NLRCG.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 toavail of the company's car loan policy. Under that policy, the company advances the purchaseprice of a car to be paid back by the employee through monthly deductions from his salary, thecompany retaining the ownership of the motor vehicle until it shall have been fully paid for. Allof 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 theNotices of Dismissal, they were asked by the Company to settle the accounts payable of theircar loans or return the car for proper disposition. The Company filed a civil suit to recoverpossession of the cars. Private respondents sought a temporary restraining order in the NLRC tostop the company from cancelling their car loans and collecting their monthly amortizationspending the final resolution of their appeals in the illegal dismissal case. NLRC granted the TRO.

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ISSUE:Whether or not NLRC is correct in granting the TRO in favor of the respondents pending

the case of illegal dismissal.

RULING:Nestlé'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. TheNLRC gravely abused its discretion and exceeded its jurisdiction by issuing the writ of injunctionto stop the company from enforcing the civil obligation of the private respondents under the carloan agreements and from protecting its interest in the cars which, by the terms of thoseagreements, belong to it (the company) until their purchase price shall have been fully paid bythe employee. The terms of the car loan agreements are not in issue in the labor case. Therights and obligations of the parties under those contracts may be enforced by a separate civilaction in the regular courts, not in the NLRC.

Five J Taxi vs. NLRCG.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 payP20.00 for car washing, and to further make a P15.00 deposit to answer for any deficiency intheir "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 thedriver as illegal deduction in the context of the law. Consequently, private respondents are notentitled to the refund of the P20.00 car wash payments they made. It will be noted that therewas nothing to prevent private respondents from cleaning the taxi units themselves, if they

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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.

Phil. Veterans Bank vs. NLRCG.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, includingprivate respondent Dr. Jose Teodorico V. Molina, were terminated from work and given theirrespective separation pay and other benefits. Dr. Molina filed a complaint before NLRC. Hedemanded the implementation of the Wage Orders No. 1 and 2. Both the Labor Arbiter andNLRC 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 Molina’s 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 areentitled to receive the mandated wage increase. Undeniably, MOLINA was receiving a monthlysalary 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 wascovered by the earlier wage order, with more reason should the later wage order apply to him.

Philippine Appliances Corp. vs. CAG.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-NAFLUis the duly elected collective bargaining representative of the rank-and-file employees ofpetitioner. During the collective bargaining negotiations between petitioner and respondentunion in 1997 (for the last two years of the collective bargaining agreement covering the periodof 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 CBAnegotiations, petitioner accordingly gave this early signing bonus. After the expiration of theCBA, both parties negotiated for a new CBA. However, it resulted to a deadlock. The respondentunion filed before the NCMB a notice of strike due to bargaining deadlock. The Department ofLabor and Employment took cognizance of the case and ordered, among other things, hereinpetitioner to award signing bonus. Petitioner argued that the award of the signing bonus was

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patently erroneous since it was not part of the employees’ salaries or benefits or of thecollective bargaining agreement. It is not demandable or enforceable since it is in the nature ofan 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 theintervention of the NCMB. Respondent union went on strike for eleven days and blocked theingress to and egress from petitioner’s two work plants. The labor dispute had to be referred tothe Secretary of Labor and Employment because neither of the parties was willing tocompromise their respective positions regarding the four remaining items which stoodunresolved. While we do not fault any one party for the failure of the negotiations, it is apparentthat there was no more goodwill between the parties and that the CBA was clearly not signedthrough their mutual efforts alone. Hence, the payment of the signing bonus is no longerjustified and to order such payment would be unfair and unreasonable for petitioner.

Furthermore, we have consistently ruled that a bonus is not a demandable andenforceable obligation.

Agabon vs. NLRCG.R. No. 158693; November 17, 2004

FACTS:Private respondent Riviera Home Improvements, Inc. is engaged in the business of

selling and installing ornamental and construction materials. It employed petitioners VirgilioAgabon and Jenny Agabon as gypsum board and cornice installers. Private respondents wereterminated due to abandonment of work. Virgilio’s wage was deducted for SSS loan and thevalue of the shoes from petitioner Virgilio Agabon's 13th month pay.

ISSUE: Whether or not the employer can deduct from its employees’ wage. Who will prove payment of wages—employee or employer.

RULING:

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SC held employers cannot deduct any amount from the wage of its employees withouttheir consent. Under Article 113 of the Labor Code, employers are prohibited from making anydeductions without the employee's knowledge and consent. In the instant case, privaterespondent failed to show that the deduction of the SSS loan and the value of the shoes frompetitioner Virgilio Agabon's 13th month pay was authorized by the latter. The lack of authority todeduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as oneof his money claims against private respondent.

As a general rule, one who pleads payment has the burden of proving it. Even where theemployee must allege non-payment, the general rule is that the burden rests on the employerto prove payment, rather than on the employee to prove non-payment. The reason for the ruleis that the pertinent personnel files, payrolls, records, remittances and other similar documents– which will show that overtime, differentials, service incentive leave and other claims ofworkers have been paid – are not in the possession of the worker but in the custody andabsolute control of the employer.In the case at bar, if private respondent indeed paidpetitioners' holiday pay and service incentive leave pay, it could have easily presenteddocumentary proofs of such monetary benefits to disprove the claims of the petitioners. But itdid not, except with respect to the 13th month pay wherein it presented cash vouchers showingpayments of the benefit in the years disputed.

American Wire & Cable Daily Rated Employees vs. American WireG.R. No. 155059; April 29, 2005

FACTS:American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires

and cables. There are two unions in this company, the American Wire and Cable Monthly-RatedEmployees Union (Monthly-Rated Union) and the American Wire and Cable Daily-RatedEmployees Union (Daily-Rated Union).

An original action was filed before the NCMB of the Department of Labor andEmployment (DOLE) by the two unions for voluntary arbitration. They alleged that the privaterespondent, without valid cause, suddenly and unilaterally withdrew and denied certain benefitsand entitlements which they have long enjoyed. These are service award, 35% premium of anemployee’s basic pay rendered during special days, Christmas party and promotional increase.

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ISSUE:Whether or not the benefits/entitlements are in the nature of a bonus, and assuming

they are so, whether they are demandable and enforceable obligations.

RULING:SC held that in order to resolve the issue. The said benefits must be considered whether

these are considered “bonus” or not.

A bonus is an act of generosity granted by an enlightened employer to spur theemployee to greater efforts for the success of the business and realization of bigger profits. Thegranting of a bonus is a management prerogative, something given in addition to what isordinarily received by or strictly due the recipient. Thus, a bonus is not a demandable andenforceable obligation, except when it is made part of the wage, salary or compensation of theemployee.

Based on the foregoing pronouncement, it is obvious that the benefits/entitlementssubjects of the instant case are all bonuses which were given by the private respondent out ofits generosity and munificence. The benefits given are all in excess of what the law requireseach employer to give its employees. Since they are above what is strictly due to the membersof petitioner-union, the granting of the same was a management prerogative, which, whenevermanagement sees necessary, may be withdrawn, unless they have been made a part of thewage or salary or compensation of the employees.

For a bonus to be enforceable, it must have been promised by the employer andexpressly agreed upon by the parties, or it must have had a fixed amount and had been a longand regular practice on the part of the employer. The benefits/entitlements in question werenever subjects of any express agreement between the parties. They were never incorporated inthe Collective Bargaining Agreement (CBA).

Honda Philippines vs. Samahang Malayang Manggagawa sa HondaG.R. No. 145561; June 15, 2005

FACTS:The Collective Bargaining Agreement (CBA) of the parties contains stipulation regarding

13th and 14th month pay. The CBA which contained such stipulation is effective until 2000. In thelatter part of 1998, the parties started negotiations for the 4th and 5th year of their CBA.However, efforts failed which lead to the union’s submission of a Notice of Strike on the groundof bargaining deadlock. Thereafter, Honda filed a Notice of Lockout. It sought the intervention ofSecretary of DOLE. The Secretary ordered the striking workers to cease and desist from thestrike and to return back to work. After the strike, the Management issued a memorandumstating that the pro-rated computation of the bonuses. Its new computation of the 13th and14th month pay to be granted to all its employees whereby the thirty-one (31)-day long strike

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shall be considered unworked days for purposes of computing said benefits. As per thecompany’s new formula, the amount equivalent to 1/12 of the employees’ basic salary shall bededucted from these bonuses, with a commitment however that in the event that the strike isdeclared legal, Honda shall pay the amount deducted. Aggrieved, the union filed a complaintagainst Honda.

ISSUE:Whether the pro-rated computation of the 13th month pay and the other bonuses in

question is valid and lawful.

RULING:It is not valid and lawful because it violates Article 100 of the Labor Code. This Court held

that the grant of these benefits has ripened into company practice or policy which cannot beperemptorily withdrawn.

A cursory reading of the provisions will show that they did not state categoricallywhether the computation of the 13th month pay, 14th month pay and the financial assistancewould be based on one full month’s basic salary of the employees, or pro-rated based on thecompensation actually received. The arbitrator thus properly resolved the ambiguity in favor oflabor as mandated by Article 1702 of the Civil Code. The Court of Appeals affirmed thearbitrator’s finding and added that the computation of the 13th month pay should be based onthe length of service and not on the actual wage earned by the worker.

Producers Bank vs. NLRCG.R. No. 100701; March 28, 2001

FACTS:Private respondents charge petitioners for diminution of benefits, non-compliance with

Wage Order No. 6 and non-payment of holiday pay. It has been placed under conservatorship bythe Central Bank to recover to revitalize from its nets losses. As a result, there has been areduction and/or continuance of the said benefits to its employers.

ISSUE:Whether or not the removal/ and or discontinuance of the benefits is justified and valid.

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RULING:With regards the bonuses given to its employees, SC ruled that the bank is justified in

withdrawing the said bonus. It ratiocinated that the bank was not only experiencing a decline inits profits, but was reeling from tremendous losses triggered by a bank-run which began in1983. In such a depressed financial condition, petitioner cannot be legally compelled to continuepaying the same amount of bonuses to its employees. Thus, the conservator was justified inreducing the mid-year and Christmas bonuses of petitioner's employees. To hold otherwisewould be to defeat the reason for the conservatorship which is to preserve the assets andrestore the viability of the financially precarious bank. These bonuses credited for the mid-yearbonus and Christmas bonus as part of the 13th month pay by the bank is justified.

It is worth noting that a bonus is an amount granted and paid to an employee for hisindustry and loyalty which contributed to the success of the employer's business and madepossible the realization of profits. It is an act of generosity granted by an enlightened employerto spur the employee to greater efforts for the success of the business and realization of biggerprofits. The granting of a bonus is a management prerogative, something given in addition towhat is ordinarily received by or strictly due the recipient. Thus, a bonus is not a demandableand enforceable obligation, except when it is made part of the wage, salary or compensation ofthe employee. However, an employer cannot be forced to distribute bonuses which it can nolonger afford to pay. To hold otherwise would be to penalize the employer for his past generosity.

Jardin vs. NLRCG.R. No. 119268; February 23, 2000

FACTS:Petitioners were drivers of private respondent, Philjama International Inc., a domestic

corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive privaterespondent's taxicabs every other day on a 24-hour work schedule under the boundary system.Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless,private respondent admittedly regularly deducts from petitioners, daily earnings the amount ofP30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal,petitioners decided to form a labor union to protect their rights and interests.

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Upon learning about the plan of petitioners, private respondent refused to let petitionersdrive their taxicabs when they reported for work on August 6, 1991, and on succeeding days.Petitioners suspected that they were singled out because they were the leaders and activemembers of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaintagainst private respondent for unfair labor practice, illegal dismissal and illegal deduction ofwashing fees.

ISSUE:Whether or not the taxi drivers are considered employees of the Goodman Taxi entitling

them to full backwages.

RULING:SC ruled that the taxi drivers are employees of the company. Thus, they are entitled to

full backwages.

Applying the 4-fold test, the owner exercise supervision and control over drivers. Themanagement of the business is in the owner's hands. Hence, petitioners are undoubtedlyemployees of private respondent because as taxi drivers they perform activities which areusually necessary or desirable in the usual business or trade of their employer. With regard tothe amount deducted daily by private respondent from petitioners for washing of the taxi units,we view the same as not illegal in the context of the law. We note that after a tour of duty, it isincumbent upon the driver to restore the unit he has driven to the same clean condition whenhe took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is infact dictated by fair play. Hence, the drivers are not entitled to reimbursement of washingcharges.

Manila Jockey’s Club Employees Labor Union vs. Manila Jockey ClubG.R. No. 167601; March 7, 2007

FACTS:Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila

Jockey Club, Inc., a corporation with a legislative franchise to conduct, operate and maintainhorse races, entered into a Collective Bargaining Agreement (CBA). The CBA governed theeconomic rights and obligations of respondent’s regular monthly paid rank-and-file employees.In the CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and from

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1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday, as contained under Section 1,Article IV, of the same CBA. All work performed in excess of seven (7) hours work schedule andon days not included within the work week shall be considered overtime and paid as such.Except those monthly compensation which includes work performed during Saturday, Sunday,and Holiday when races are held at the Club. An inter-office memorandum was issued declaringthat the hours of work of regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m.when horse races are held, that is, every Tuesday and Thursday. The memorandum, however,maintained the 9:00 a.m. to 5:00 p.m. schedule for non-race days. Petitioners questioned theabove office memorandum as violative of the prohibition against non-diminution of wages andbenefits guaranteed the CBA which specified the work schedule of respondent's employees tobe from 9:00 a.m. to 5:00 p.m. Petitioner claimed that as a result of the memorandum, theemployees 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:SC held in favor of Manila Jockey Club. It stated that the work schedule is justified, it

being a management prerogative.

Respondent, as employer, cites the change in the program of horse races as reason forthe adjustment of the employees’ work schedule. It rationalizes 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 noother choice for management but to change the employees' work schedule as there was nowork to be done in the morning. Evidently, the adjustment in the work schedule of theemployees is justified. While it is true that Section 1, Article IV of the CBA provides for a 7-hourwork schedule from 9:00 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays toSaturdays, Section 2, Article XI, however, expressly reserves on respondent the prerogative tochange existing methods or facilities to change the schedules of work.

Manila Jockey Club was not obliged to allow all its employees to render overtime work everydayfor the whole year, but only those employees whose services were needed after their regularworking hours and only upon the instructions of management. The overtime pay was not givento each employee consistently, deliberately and unconditionally, but as a compensation foradditional services rendered. Thus, overtime pay does not fall within the definition of benefitsunder Article 100 of the Labor Code on prohibition against elimination or diminution of benefits.

San Miguel Corp. et. al vs. Layoc Jr. et. al. G.R. No. 149640; October 19, 2007

FACTS:Respondents were among the “Supervisory Security Guards” of the Beer Division of the

San Miguel Corporation. From the commencement of their employment, the private respondentswere required to punch their time cards for purposes of determining the time they would comein and out of the company’s work place. As such, the private respondents were availing thebenefits for overtime, holiday and night premium duty through time card punching. However, in

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the early 1990’s, the San Miguel Corporation embarked on a Decentralization Program. The BeerDivision of the San Miguel Corporation implemented “no time card policy” whereby thesupervising security guards of the Beer Division were no longer required to punch their timecards. However, in lieu of the overtime pay and the premium pay, the personnel of the BeerDivision of the petitioner San Miguel Corporation affected by the “No Time Card Policy” weregiven a 10% across-the-board increase on their basic pay while the supervisors who wereassigned in the night shift (6:00 p.m. to 6:00 a.m.) were given night shift allowance rangingfrom P2,000.00 to P2,500.00 a month. Aggrieved, respondents filed a complaint for unfair laborpractice, violation of Article 100 of the Labor Code of the Philippines, and violation of the equalprotection clause and due process of law in relation to paragraphs 6 and 8 of Article 32 of theNew Civil Code of the Philippines.

ISSUE:Whether or not the “No Time Card Policy” constitutes a violation of Article 100 of the

Labor Code.

RULING:SC ruled in favor of the petitioners. Petitioners exercised management prerogative in the

implementation of the “No Time Card Policy”.

As a general rule, managerial employees are not entitled to overtime pay for servicesrendered in excess of eight hours a day. Respondents failed to show that the circumstances ofthe present case constitute an exception to this general rule.

Respondents assert that Article 100 of the Labor Code prohibits the elimination ordiminution of benefits. However, contrary to the nature of benefits, petitioners did not freelygive the payment for overtime work to respondents. Petitioners paid respondents overtime payas compensation for services rendered in addition to the regular work hours. Respondentsrendered overtime work only when their services were needed after their regular working hoursand only upon the instructions of their superiors. Respondents even differ as to the amount ofovertime pay received on account of the difference in the additional hours of services rendered.

Aside from their allegations, respondents were not able to present anything to prove thatpetitioners were obliged to permit respondents to render overtime work and give them thecorresponding 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 renderovertime work. The requirement of rendering additional service differentiates overtime payfrom benefits such as thirteenth month pay or yearly merit increase. These benefits do notrequire any additional service from their beneficiaries. Thus, overtime pay does not fall withinthe definition of benefits under Article 100 of the Labor Code.

San Miguel Corp. vs. PontillasG.R. No. 155178; May 7, 2008

FACTS:San Miguel Corporation (petitioner) employed Angel C. Pontillas (respondent) as a daily

wage company guard. In 1984, respondent became a monthly-paid employee which entitledhim to yearly increases in salary. Respondent alleged that his yearly salary increases were only

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a percentage of what the other security guards received. On 19 October 1993, respondentfiled an action for recovery of damages due to discrimination under Article 100 of the LaborCode of the Philippines (Labor Code), as amended, as well as for recovery of salary differentialand backwages. Pending the complaint of herein petitioner, a memorandum was sent out by theManagement stating that there will be a transfer from OroVerde Warehouse, where respondentis stationed, to VisMin Logistics Operations. Claiming that he is waiting for the directive of hissupervisor, respondent continued reporting in the OroVerde Warehouse. For allegedinsubordination of the order, respondent was terminated. Thus, he filed an amended complaint.

ISSUE:Whether or not the directive of transfer was valid and reasonable.

RULING:SC held that the petitioner exercised management prerogative in its directive of transfer

from the OroVerde Warehouse to VisMin Logistics Operation.

The employer exercises the prerogative to transfer an employee for valid reasons andaccording to the requirements of its business, provided the transfer does not result in demotionin rank or diminution of the employee’s salary, benefits, and other privileges. In this case, wefound that the order of transfer was reasonable and lawful considering the integration of OroVerde Warehouse with VisMin Logistics Operations. Respondent was properly informed of thetransfer but he refused to receive the notices on the pretext that he was wary because of hispending case against petitioner. Respondent failed to prove that petitioner was acting in badfaith in effecting the transfer. There was no demotion involved, or even a diminution of hissalary, benefits, and other privileges. Respondent’s persistent refusal to obey petitioner’s lawfulorder amounts to willful disobedience under Article 282 of the Labor Code.

Arco Metal Products vs. Samahan ng Manggagawa sa Arco-Metal-NAFLUG.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 petitioner’s rank and file employees. Sometime in December2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members

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in amounts proportional to the service they actually rendered in a year, which is less than a fulltwelve (12) months. Respondent protested the prorated scheme, claiming that on severaloccasions petitioner did not prorate the payment of the same benefits to seven (7) employeeswho had not served for the full 12 months. According to respondent, the prorated paymentviolates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, theyfiled a complaint before the National Conciliation and Mediation Board (NCMB). The partiessubmitted 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 itsemployees regardless of the length of service rendered.

There is no doubt that in order to be entitled to the full monetization of sixteen (16) daysof vacation and sick leave, one must have rendered at least one year of service. The clearwording of the provisions does not allow any other interpretation. Anent the 13th month pay andbonus, we agree with the findings of Labor Arbiter Mangabat that the CBA provisions did notgive any meaning different from that given by the law, thus it should be computed at 1/12 ofthe total compensation which an employee receives for the whole calendar year. The bonus isalso equivalent to the amount of the 13th month pay given, or in proportion to the actual servicerendered 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 ofbenefits is founded on the Constitutional mandate to "protect the rights of workers and promotetheir welfare, and “to afford labor full protection. Said mandate in turn is the basis of Article 4 ofthe Labor Code which states that “all doubts in the implementation and interpretation of thisCode, 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 whichwere voluntarily given by the employer and which ripened into company practice. Thus inDavao Fruits Corporation v. Associated Labor Unions, et al. where an employer had freely andcontinuously included in the computation of the 13th month pay those items that were expresslyexcluded by the law, we held that the act which was favorable to the employees though notconforming 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 thatthe employer’s act of including non-basic benefits in the computation of the 13th month pay wasa voluntary act and had ripened into a company practice which cannot be peremptorilywithdrawn. Meanwhile in Davao Integrated Port Stevedoring Services v. Abarquez, Courtordered the payment of the cash equivalent of the unenjoyed sick leave benefits to itsintermittent workers after finding that said workers had received these benefits for almost fouryears until the grant was stopped due to a different interpretation of the CBA provisions. Weheld that the employer cannot unilaterally withdraw the existing privilege of commutation orconversion to cash given to said workers, and as also noted that the employer had in factgranted and paid said cash equivalent of the unenjoyed portion of the sick leave benefits tosome intermittent workers.

Aguanza vs. Asian Terminal Inc. GR NO. 163505 August 14, 2009

FACTS:

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Petitioner Gualberto Aguanza was employed with respondent company Asian Terminal,Inc. from April 15, 1989 to October 1997. He was initially employed as Derickman or CraneOperator and was assigned as such aboard Bismark IV, a floating crane barge owned by AsianTerminals, Inc. based at the port of Manila. Aside from his basic pay, he received mealallowance, fixed overtime pay and out-of port allowance [when the barge is assigned outsideMetro Manila].

Sometime in September 1997, the Bismark IV, together with its crew, was temporarilyassigned 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 hadbeen permanently transferred to the Mariveles Grains terminal beginning October 1, 1997 andbecause of that, its crew would no longer be entitled to out of port benefits of 16 hours overtimeand P200 a day out-of port allowance.

Because of the said development, Aguanza questioned the diminution of his benefits.Aguanza insisted on reporting to work in Manila although his barge, Bismark IV, and its othercrew were already permanently based in Mariveles, Bataan. [Aguanza] was not allowed to timein in Manila because his work was in Mariveles, Bataan. He therefore was not able to render hisservices, and was accordingly not paid for doing nothing.

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 Aguanza’stransfer was a valid exercise of management prerogative.

ATI’s transfer of Bismark IV’s base from Manila to Bataan was, contrary to Aguanza’sassertions, a valid exercise of management prerogative. The transfer of employees has beentraditionally among the acts identified as a management prerogative subject only to limitationsfound 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 anemployer to exercise what are clearly management prerogatives. The free will of managementto 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 ademotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility ordisdain by an employer becomes unbearable to the employee." Aguanza’s situation is not withinthe purview of this discussion.

Genesis Transport Service Inc. vs. Unyon ng Malatang Manggagwa ng GenesisTransport

GR No. 182114; April 5, 2010

FACTS:Respondent Juan Taroy was hired by petitioner Genesis Transport Service, Inc. (Genesis

Transport) as driver on commission basis at 9% of the gross revenue per trip.

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On May 10, 2002, Taroy was, after due notice and hearing, terminated from employmentafter an accident on April 20, 2002 where he was deemed to have been driving recklessly.

Taroy thus filed a complaint for illegal dismissal and payment of service incentive leavepay, claiming that he was singled out for termination because of his union activities, otherdrivers who had met accidents not having been dismissed from employment. Taroy lateramended his complaint to implead his herein co-respondent Unyon ng Malayang Manggagawang Genesis Transport (the union) as complainant and add as grounds of his cause of actionunfair labor practice (ULP), reimbursement of illegal deductions on tollgate fees, and payment ofservice incentive leave pay.

Respecting the claim for refund of illegal deductions, Taroy alleged that in 1997,petitioner started deducting from his weekly earnings an amount ranging from P160 to P900representing toll fees, without his consent and written authorization as required under Article113 of the Labor Code and contrary to company practice; and that deductions were also takenfrom the bus conductor’s earnings to thus result to double deduction.

Genesis Transport countered that Taroy committed several violations of company rulesfor which he was given warnings or disciplined accordingly; that those violations, the last ofwhich was the April 20, 2002 incident, included poor driving skills, tardiness, gambling insidethe premises, use of shabu, smoking while driving, insubordination and reckless driving; andthat Taroy’s dismissal was on a valid cause and after affording him due process.

The Labor Arbiter rendered dismissing instant complaint for illegal dismissal for lack ofmerit and was ordered to refund to complainant the underpayment/differential due him as aresult of the deduction of the tollgate fees from the gross receipts. The NLRC affirmed the LaborArbiter’s decision with modification. It deleted the award to Taroy of attorney’s fees.

The respondent challenged the decision on the CA questioning the Labor Arbiter’s failureto pass on the propriety of his preventive suspension, dismissal of his complaint for constructivedismissal and ULP, and failure to award him service incentive leave pay. The petitionersquestioned the order for them to refund "underpayment" and pay attorney’s fees.

ISSUE: Whether or not the respondent is entitled for a refund “underpayment” for the toll fees

deducted from his weekly earnings. Whether or not the issue of preventive suspension violated Taroy’s right to due process.

RULING:The Supreme Court affirmed CA decision with the refund of underpayment with the

modification that the award of nominal damages to respondent Juan Taroy is deleted.

First Issue:The Court take judicial notice of petitioners’ claim that the deduction of tollgate fees

from the gross earnings of drivers is an accepted and long-standing practice in thetransportation industry. Expertravel & Tours, Inc. v. Court of Appeals10 instructs:

Generally speaking, matters of judicial notice have three materialrequisites: (1) the matter must be one of common and general knowledge; (2) itmust be well and authoritatively settled and not doubtful or uncertain; and (3) itmust be known to be within the limits of the jurisdiction of the court. The principalguide in determining what facts may be assumed to be judicially known is that ofnotoriety. Hence, it can be said that judicial notice is limited to facts evidenced bypublic records and facts of general notoriety.

Moreover, a judicially noticed fact must be one not subject to a reasonabledispute in that it is either: (1) generally known within the territorial jurisdiction of

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the trial court; or (2) capable of accurate and ready determination by resorting tosources whose accuracy cannot reasonably be questionable.

None of the material requisites for the Court to take judicial notice of a particular matterwas established by petitioners.

Albeit the amounts representing tollgate fees were deducted from gross revenues andnot directly from Taroy’s commissions, the labor tribunal and the appellate court correctly heldthat the withholding of those amounts reduced the amount from which Taroy’s 9% commissionwould be computed. Such a computation not only marks a change in the method of payment ofwages, resulting in a diminution of Taroy’s wages in violation of Article 113 vis-à-vis Article 100of the Labor Code, as amended. It need not be underlined that without Taroy’s written consentor authorization, the deduction is considered illegal.

The invocation of the rule on "company practice" is generally used with respect to thegrant of additional benefits to employees, not on issues involving diminution of benefits.

Second Issue:Respecting the issue of statutory due process, the Court holds that Taroy’s right thereto

was not violated.

In any event, what the Rules require is that the employer act on the suspended worker’sstatus of employment within the 30-day period by concluding the investigation either byabsolving him of the charges, or meting the corresponding penalty if liable, or ultimatelydismissing him. If the suspension exceeds the 30-day period without any corresponding actionon the part of the employer, the employer must reinstate the employee or extend the period ofsuspension, provided the employee’s wages and benefits are paid in the interim.

In the present case, petitioner company had until May 20, 2002 to act on Taroy’s case. Itdid by terminating him through a notice dated May 10, 2002, hence, the 30-day requirementwas not violated even if the termination notice was received only on June 4, 2002, absent anyshowing that the delayed service of the notice on Taroy was attributable to Genesis Transport.Taroy’s statutory due process not having been violated, he is not entitled to the award ofnominal damages.

Central Azucarera de Tarlac vs. Central Azucarera de Tarlac Labor Union-NLUGR NO 188949 July 26, 2010

FACTS: 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

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divided by twelve (12). Included in petitioner’s computation of the Total Basic Annual Salarywere the following: basic monthly salary; first eight (8) hours overtime pay on Sunday andlegal/special holiday; night premium pay; and vacation and sick leaves for each year.Throughout the years, petitioner used this computation until 2006.

ISSUE: WON the petitioner’s computation of the 13th Month Pay use for almost thirty (30)

years has ripened into a company policy or practice.

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 to one-twelfth (1/12)of the total basic salary earned by an employee within a calendar year. All rank-and-fileemployees, regardless of their designation or employment status and irrespective of the methodby which their wages are paid, are entitled to this benefit, provided that they have worked for atleast 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.

x x x the practice of petitioner in giving 13th-month pay based on the employees’ grossannual earnings which included the basic monthly salary, premium pay for work on rest daysand special holidays, night shift differential pay and holiday pay continued for almost thirty (30)years and has ripened into a company policy or practice which cannot be unilaterally withdrawn.

SHS Perforated Materials Inc. et. al vs. Diaz GR NO. 185814 Oct. 13, 2010

FACTS: Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for Business

Development on probationary status from July 18, 2005 to January 18, 2006, with a monthlysalary of P100,000.00. Respondents duties, responsibilities, and work hours were described inthe Contract of Probationary Employment. During meetings with the respondent,

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Hartmannshenn expressed his dissatisfaction over respondents poor performance. Respondentallegedly failed to make any concrete business proposal or implement any specific measure toimprove the productivity of the SHS office and plant or deliver sales except for a meagreP2,500.00 for a sample product. In numerous electronic mail messages, respondentacknowledged his poor performance and offered to resign from the company.

On November 29, 2005, Hartmannshenn instructed Taguiang not to release respondentssalary. Later that afternoon, respondent called and inquired about his salary. Taguiang informedhim that it was being withheld and that he had to immediately communicate withHartmannshenn. Again, respondent denied having received such directive. The next day, onNovember 30, 2005, respondent served on SHS a demand letter and a resignation letter.

On December 9, 2005, respondent filed a Complaint against the petitioners for illegaldismissal; non-payment of salaries/wages and 13th month pay with prayer for reinstatementand full backwages; exemplary damages, and attorneys fees, costs of suit, and legal interest.The Labor Arbiter and the CA, on appeal, rendered a decision in favour of the respondent.Hence, this petition.

ISSUE: WON the CA erred in affirming the Labor Arbiter’s finding that respondent had been

constructively dismissed.

RULING: Petitioners contend that respondent could not have been constructively dismissed

because he voluntarily resigned as evidenced by his resignation letter. They assert thatrespondent was not forced to draft the letter and his intention to resign is clear from thecontents and terms used, and that given respondents professional and educational background,he was fully aware of the import and consequences of the said letter. They maintain thatrespondent resigned to save face and avoid disciplinary measures due to his allegedly dismalwork performance and failure to report to work.

The Court, however, agrees with the LA and the CA that respondent was forced to resignand was, thus, constructively dismissed. In Duldulao v. Court of Appeals, it was written:

There is constructive dismissal if an act of clear discrimination, insensibility, or disdain byan employer becomes so unbearable on the part of the employee that it would forecloseany choice by him except to forego his continued employment. It exists where there iscessation of work because continued employment is rendered impossible, unreasonableor unlikely, as an offer involving a demotion in rank and a diminution in pay.

NIÑA JEWELRY MANUFACTURING OF METAL ARTS, INC. vs . MONTECILLO G.R. No. 188169. November 28, 2011.

FACTS:Madeline Montecillo and Liza Trinidad were first employed as goldsmiths by the

petitioner Niña Jewelry Manufacturing of Metal Arts, Inc. in 1996 and 1994, respectively.Madeline's weekly rate was P1,500.00 while Liza's was P2,500.00. Taking into consideration the

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incidents of theft involving goldsmiths in Niña Jewelry's employ, it imposed a policy forgoldsmiths requiring them to post cash bonds or deposits in varying amounts but in no caseexceeding 15% of the latter's salaries per week. The deposits were intended to answer for anyloss or damage which Niña Jewelry may sustain by reason of the goldsmiths' fault or negligencein handling the gold entrusted to them. Niña Jewelry alleged that the goldsmiths were given theoption not to post deposits, but to sign authorizations allowing the former to deduct from thelatter's salaries amounts not exceeding 15% of their take home pay should it be found that theylost the gold entrusted to them. The respondents claimed otherwise insisting that Niña Jewelryleft the goldsmiths with no option but to post the deposits. The respondents alleged that theywere constructively dismissed by Niña Jewelry as their continued employments were madedependent on their readiness to post the required deposits. Niña Jewelry averred that on August14, 2004, the respondents no longer reported for work and signified their defiance against thenew policy which at that point had not even been implemented yet.The respondents filedagainst Niña Jewelry complaints for illegal dismissal seeking reinstatement and payment ofbackwages, attorney's fees and 13th month pay.

Labor Arbiter Jose Gutierrez (LA Gutierrez) dismissed the respondents' complaints forlack of merit but ordered Niña Jewelry to pay Madeline the sum of P3,750.00, and Liza,P6,250.00, representing their proportionate entitlements to 13th month pay for the year 2004.The respondents filed an appeal before the NLRC which affirmed LA Gutierrez's dismissal of theamended complaints but deleted the award of 13th month pay based on findings that theformer had contracted unpaid individual loans from Niña Jewelry. The respondents then filed aPetition for Certiorari before the CA where the appellate court reversed the findings of the LAand the NLRC.

ISSUE:Whether or not the petitioner’s policy of requiring its employee-goldsmiths to post cash

bonds or deposits is valid.

SC RULING:The petition is partly meritorious.

In view of the foregoing, we hold that no dismissal, constructive or otherwise, occurred.The findings of the NLRC and the LA that it was the respondents who stopped reporting for workare supported by substantial evidence. Hence, the CA erred when it re-evaluated the parties'respective evidence and granted the petition filed before it. However, we agree with the CA thatit is baseless for Niña Jewelry to impose its new policy upon the goldsmiths under its employwithout first complying with the strict requirements of the law.

It was the respondents who merely stopped reporting for work. While it is conceded thatthe new policy will impose an additional burden on the part of the respondents, it was notintended to result in their demotion.

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

While the petitioners are not absolutely precluded from imposing the new policy, theycan only do so upon compliance with the requirements of the law. In other words, thepetitioners should first establish that the making of deductions from the salaries is authorizedby law, or regulations issued by the Secretary of Labor. Further, the posting of cash bondsshould be proven as a recognized practice in the jewelry manufacturing business, or

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alternatively, the petitioners should seek for the determination by the Secretary of Laborthrough the issuance of appropriate rules and regulations that the policy the former seeks toimplement is necessary or desirable in the conduct of business. The petitioners failed in thisrespect. It bears stressing that without proofs that requiring deposits and effecting deductionsare recognized practices, or without securing the Secretary of Labor's determination of thenecessity or desirability of the same, the imposition of new policies relative to deductions anddeposits can be made subject to abuse by the employers. This is not what the law intends.

8.PAYMENT OF WAGES

Congson vs. NLRCG.R. No. 114250; April 5, 1995

FACTS:

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Dominico C. Congson is the registered owner of Southern Fishing Industry. Respondentswere 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 oftuna, Congson notified his proposal to reduce the rate-per-tuna movement. When they reportedthe following day, they found out that they were already replaced with new set of workers. Theywanted to have a dialogue with the management, but they waited in vain. Thus, they filed acase 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 serviceincentive leave pay; and for constructive dismissal.

Petitioner conceded that his payment of wages falls below the minimum wage law. Heaverred 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 toretrieve. He argued that the combined value of the cash wage and monetary value of the tunaliver 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 ofthe Labor Code. The fact that said method of paying the minimum wage was not only agreedupon by both parties in the employment agreement but even expressly requested by privaterespondents, does not shield petitioner. Article 102 of the Labor Code is clear. Wages shall bepaid only by means of legal tender. The only instance when an employer is permitted to paywages informs other than legal tender, that is, by checks or money order, is when thecircumstances prescribed in the second paragraph of Article 102 are present.

North Davao Mining vs. NLRCG.R. No. 112546; March 13, 1996

FACTS:

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Due to financial losses, North Davao Mining Corporation laid off workers. RespondentWilfredo Guillema is one among several employees of North Davao who were separated byreason of the company’s closure on May 31, 1992. It appears that, during the life of thepetitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, ithad 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 andother 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 ½hours’ travel time bypublic 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 consideredcompensable hours worked. Considering further the distance between Amacan, Maco to Tagumwhich is 2½ 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 asprayed for. Corollary, we likewise hold respondents liable for the transportation expensesincurred by complainants at P40.00 round trip fare during pay days.

National Federation of Labor vs. CAG.R. No. 149464; October 19, 2004

FACTS:

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National Federation of Labor (NFL) was the duly registered bargaining agent of the daily-and-monthly-paid rank-and-file employees of SDPI in the Latuan rubber plantation. SDPI andNFL executed a collective bargaining agreement (CBA) in which they agreed that in case ofpermanent or temporary lay-off, workers affected would be entitled to termination pay asprovided by the Labor Code. The 150 petitioners were daily-and-monthly paid employees ofSDPI in the Latuan plantation and were, likewise, members of NFL. The termination of thepetitioners’ employment was based on the closure of SDPI, Latuan rubber plantation, as aconsequence of the implementation of CARL, which set the deadline for the compulsorydistribution of agricultural, including agro-industrial lands ten years after the effectivity of thelaw. As a result, each of the petitioners received his separation pay equivalent to one-half monthpay for every year of service, and other benefits which were all lumped in one Metrobank check.The petitioners simultaneously executed individual “Released and Quitclaim” following theexplanation to them by Executive Labor Arbiter (ELA) Rhett Julius J. Plagata of the nature andlegal effects of the said quitclaims.

ISSUE:Whether or not the check is a valid form of payment for wages.

RULING:SC held that the payments of separation pay and other benefits in check are not in

violation of Article 102 of the Labor Code.

Payment by check- payment of wages by bank checks, postal checks or money orders isallowed where such manner of wage payment is customary on the date of the effectivity of theCode, where it is stipulated in a collective bargaining agreement, or where all of the followingconditions are met:

There is a bank or other facility for encashment within a radius of one (1)kilometer from the workplace;

The employer, or any of his agents or representatives, does not receive anypecuniary benefit directly or indirectly from the arrangement;

The employee are given reasonable time during banking hours to withdrawtheir wages from the bank which time shall be considered as compensablehours worked if done during the working hours; and

The payment by check is with the written consent of the employeesconcerned if there is no collective agreement authorizing the payment ofwages by bank checks.

In the present case, the petitioners’ separation pay, other benefits, and the wages fromJanuary 1 to 17 were paid in check. Strictly speaking, SDPI violated the Labor Code when itincluded wages from January 1 to 17, 1998 in the check. Considering, however, the amount ofother monetary benefits to be paid, payment in check was the most convenient form for boththe petitioners and the respondent.

Hiers of Sara Lee vs. Rey

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G.R. No. 149013; August 31, 2006

FACTS:The House of Sara Lee (petitioner) is engaged in the direct selling of a variety of product

lines for men and women, including cosmetics, intimate apparels, perfumes, ready to wearclothes and other novelty items, through its various outlets nationwide. It employs CreditAdministration Supervisors (CAS) to supervise and monitor the credit collection of theIndependent Business Managers (IBMs) and Independent Group Supervisors (IGSs). A 38- or 52-day “rolling due date” is given to each of its IBMs and IGSs. CAS is under the direct control andsupervision of Branch Operations Manager (BOM). Cynthia Rey was a CAS at the Cagayan deOro Branch of the petitioner. She was later transferred to Butuan City. While respondent was stillworking in Butuan City, she allegedly instructed the Accounts Receivable Clerk of the Cagayande Oro outlet, a certain Ms. Magi Caroline Mendoza, to change the credit term of one of the IBMsof the petitioner, a certain Ms. Mariam Rey-Petilla, who happens to be respondent’s sister-in-law,from the 52-day limit to an “unauthorized” term of 60 days. Ms. Mendoza reported the matter tothe BOM Villagracia. Villagracia discreetly investigated the matter and found out that it was notonly Ms. Petilla who was given extensions to the “rolling due dates” but other IBMs as well.

On the basis of the hearing, the alleged voluntary admissions of respondent, and thefindings of the auditor’s report, the petitioner formally dismissed the respondent for breach oftrust and confidence. The dismissal lead to respondent’s filing of her Complaint for illegaldismissal, backwages and damages, with the Labor Arbiter.

Both Labor Arbiter and the NLRC ruled in favor the respondent.

ISSUE:Whether or not respondent was dismissed for just cause.

RULING:SC held that respondent was dismissed for just cause. In the present case, the

respondent is not an ordinary rank-and-file employee. The nature of her work requires asubstantial amount of trust and confidence on the part of the employer. Being the CreditAdministration Supervisor of the Cagayan de Oro and Butuan City branches of the petitioner,respondent occupied a highly sensitive and critical position and may thus be dismissed on theground of loss of trust and confidence.

9.CONDITIONS OF EMPLOYMENT

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San Juan de Dios Hospital vs. NLRCG.R. No. 126383; November 28, 1997

FACTS:Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios

Hospital Employees Association sent a letter requesting and pleading for the expeditiousimplementation and payment by respondent Juan De Dios Hospital of the ’40 HOURS/5-DAYWORKWEEK’ with compensable weekly two (2) days off provided for by Republic Act 5901 asclarified for enforcement by the Secretary of Labor’s Policy Instructions No. 54. RA 5901 seeks toreduce the number of hospital personnel, considering the nature of their work, and at the sametime guarantee the payment to them of a full weekly wage for seven (7) days. Respondenthospital failed to give a favorable response; thus, petitioners filed a complaint regarding theirclaims for statutory benefits under the above-cited law and policy issuance. Both Labor Arbiterand NLRC dismissed the complaint.

ISSUE: Whether or not the Policy Instructions No. 54 issued by then Labor Secretary (now

Senator) Franklin M. Drilon is valid.

RULING:The interpretation of Labor Secretary Drilon is not valid.

A cursory reading of Article 83 of the Labor Code betrays petitioners’ position that“hospital employees” are entitled to “a full weekly salary with paid two (2) days’ off if they havecompleted the 40-hour/5-day workweek”.

What Article 83 merely provides are:(1) the regular office hour of eight hours a day, five days per week for

health personnel, and(2) where the exigencies of service require that health personnel work for

six days or forty-eight hours then such health personnel shall be entitled to anadditional compensation of at least thirty percent of their regular wage for workon the sixth day.

There is nothing in the law that supports then Secretary of Labor’s assertion that“personnel in subject hospitals and clinics are entitled to a full weekly wage for seven (7) days ifthey have completed the 40-hour/5-day workweek in any given workweek”. Needless to say,the Secretary of Labor exceeded his authority by including a two days off with pay incontravention of the clear mandate of the statute. Such act the Court shall not countenance. Administrative interpretation of the law, we reiterate, is at best merely advisory, and the Courtwill not hesitate to strike down an administrative interpretation that deviates from the provisionof the statute.

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Sime Darby vs. NLRCG.R. No. 119205. April 15, 1998

FACTS:Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires,

tubes and other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP),private respondent, is an association of monthly salaried employees of petitioner at its Marikinafactory. Prior to the present controversy, all company factory workers in Marikina includingmembers of private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid“on call” lunch break. Petitioner issued a memorandum to all factory-based employees advisingall its monthly salaried employees in its Marikina Tire Plant a change in work schedule andelimination of the 30 minute paid “on call” lunch break. Private respondent felt affectedadversely by the change in the work schedule and discontinuance of the 30-minute paid “oncall” lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfairlabor practice, discrimination and evasion of liability. Labor Arbiter and NLRC dismissed thecomplaint of the union ratiocinating that the actuation of Sime Derby is an exercise ofmanagement prerogative. Upon motion for reconsideration, NLRC reversed its decision anddeclared that declared that the new work schedule deprived the employees of the benefits oftime-honored company practice of providing its employees a 30-minute paid lunch breakresulting in an unjust diminution of company privileges prohibited by Art. 100 of the Labor Code.

ISSUE:Whether or not the act of management in revising the work schedule of its employees

and discarding their paid lunch break constitutive of unfair labor practice.

RULING:SC ruled in favor the of the petitioners.

The right to fix the work schedules of the employees rests principally on their employer. In the instant case petitioner, as the employer, cites as reason for the adjustment the efficientconduct of its business operations and its improved production. It rationalizes that while the oldwork schedule included a 30-minute paid lunch break, the employees could be called upon to dojobs during that period as they were “on call.” Even if denominated as lunch break, this periodcould very well be considered as working time because the factory employees were required towork if necessary and were paid accordingly for working. With the new work schedule, theemployees are now given a one-hour lunch break without any interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively use thishour not only for eating but also for their rest and comfort which are conducive to moreefficiency and better performance in their work. Since the employees are no longer required towork during this one-hour lunch break, there is no more need for them to be compensated forthis period. We agree with the Labor Arbiter that the new work schedule fully complies with thedaily work period of eight (8) hours without violating the Labor Code. Besides, the new scheduleapplies to all employees in the factory similarly situated whether they are union members ornot.

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PAL vs. NLRCG.R. No. 132805; February 2, 1999

FACTS:Dr. Herminio A. Fabros was employed as flight surgeon at petitioner company. He was

assigned at the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until12:00 midnight. While on meal break, an employee of the PAL Cargo Services died due to aheart attack. PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight Surgeon toconduct an investigation. The Chief Flight Surgeon, in turn, required private respondent toexplain why no disciplinary sanction should be taken against him. In his explanation, privaterespondent asserted that he was entitled to a thirty-minute meal break; that he immediately lefthis residence upon being informed by Mr. Eusebio, nurse, about the emergency and he arrivedat the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to thehospital without waiting for him. Finding private respondent’s explanation unacceptable, themanagement charged private respondent with abandonment of post while on duty. He wasgiven ten days to submit a written answer to the administrative charge. In his answer, privaterespondent reiterated the assertions in his previous explanation. He further denied that heabandoned his post. After evaluating the charge as well as the answer of private respondent,petitioner company decided to suspend private respondent for three months. Private respondentfiled a complaint for illegal suspension against petitioner.

Both Labor Arbiter and NLRC declared the suspension illegal.

ISSUE:Whether or not Dr. Herminio Fabros’ act of leaving the company premises during his

break constitutes abandonment of post which warrants suspension.

RULING: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 arenot prohibited from going out of the premises as long as they return to their posts on time. Private respondent’s act, therefore, of going home to take his dinner does not constituteabandonment.

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Linton Commercial Co., Inc. vs. HelleraG.R. No. 163147; October 10, 2007

FACTS:Linton is a domestic corporation engaged in the business of importation, wholesale, retail

and fabrication of steel and its by-products. Due to the Asian Financial Crisis, it decided tosuspend its operations from 18 December 1997 to 5 January 1998 and submitted it to DOLE. Itsubmitted another memorandum informing them that effective 12 January 1998, it wouldimplement 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 sixdays a week. On the same day, Linton submitted an establishment termination reportconcerning the rotation of its workers. Linton proceeded with the implementation of the newpolicy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68) workers (workers)filed a Complaint for illegal reduction of workdays with the NLRC. The workers pointed out thatLinton implemented the reduction of work hours without observing Article 283 of the LaborCode, which required submission of notice thereof to DOLE one month prior to theimplementation of reduction of personnel, since Linton filed only the establishment terminationreport enacting the compressed workweek on the very date of its implementation. Petitionerclaimed that due to the currency crisis it suffered considerable losses and the reduction of theworking hours was instituted as a cost-cutting measure.

ISSUE:Whether or not 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 theemployees working on a rotation basis.

RULING:The compressed workweek arrangement was unjustified and illegal. Petitioners

committed illegal reduction of work hours.

For the reduction of working hours to be valid, it must take into consideration thefollowing: the arrangement was temporary, it was a more humane solution instead of aretrenchment of personnel, there was notice and consultations with the workers andsupervisors, a consensus were reached on how to deal with deteriorating economic conditionsand it was sufficiently proven that the company was suffering from losses.

This case was done through a reduced workweek that resulted in an unsettlingdiminution of the periodic pay for a protracted period. Permitting reduction of work and pay atthe slightest indication of losses would be contrary to the State’s policy to afford protection tolabor and provide full employment. Certainly, management has the prerogative to come up withmeasures 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 oflabor.

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Bisig Manggagawa sa Tryco vs. NLRCG.R. No. 151309; October 15, 2008

FACTS:Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its

principal office is located in Caloocan City. Petitioners Joselito Lariño, Vivencio Barte, SaturninoEgera and Simplicio Aya-ay are its regular employees, occupying the positions of helper,shipment helper and factory workers, respectively, assigned to the Production Department.They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representativeof the rank-and-file employees. Tryco and the petitioners signed separate Memoranda ofAgreement (MOA), providing for a compressed workweek schedule to be implemented in thecompany effective May 20, 1996. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Mondayto Friday, shall be considered as the regular working hours, and no overtime pay shall be dueand payable to the employee for work rendered during those hours.

ISSUE:Whether or not the MOA is valid and enforceable.

RULING:SC held that the MOA is enforceable and valid. We do not agree with the petitioners'

assertion that the MOA is not enforceable as it is contrary to law. The MOA is enforceable andbinding against the petitioners. Where it is shown that the person making the waiver did sovoluntarily, with full understanding of what he was doing, and the consideration for thequitclaim is credible and reasonable, the transaction must be recognized as a valid and bindingundertaking.

Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, toprotect the interest of the employees in the implementation of a compressed workweekscheme:

The employees voluntarily agree to work more than eight (8) hours a day the totalin a week of which shall not exceed their normal weekly hours of work prior toadoption of the compressed workweek arrangement;

There will not be any diminution whatsoever in the weekly or monthly take-homepay and fringe benefits of the employees;

If an employee is permitted or required to work in excess of his normal weeklyhours of work prior to the adoption of the compressed workweek scheme, all suchexcess hours shall be considered overtime work and shall be compensated inaccordance with the provisions of the Labor Code or applicable CollectiveBargaining Agreement (CBA);

Appropriate waivers with respect to overtime premium pay for work performed inexcess of eight (8) hours a day may be devised by the parties to the agreement.

The effectivity and implementation of the new working time arrangement shall be byagreement of the parties.

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10. MINIMUM LABOR STANDARD BENEFITS

Union of Filipino Employees vs. VicarG.R. No. 79255; January 20, 1992

FACTS:On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the

National Labor Relations Commission a petition for declaratory relief seeking a ruling on itsrights 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 forvoluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator.Arbitrator Vivar rendered a decision directing Filipro to pay its monthly paid employees holidaypay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified inArticle 82 and such other legal restrictions as are provided for in the Code.

However, the respondent arbitrator refused to take cognizance of the case reasoningthat he had no more jurisdiction to continue as arbitrator because he had resigned from serviceeffective May 1, 1986.

ISSUE:Whether or not sales personnel are excluded in the payment of holiday pay.

RULING:The Court ruled that field personnel are not entitled to such pay.

Under Article 82, field personnel are not entitled to holiday pay. Said article defines fieldpersonnel as "non-agricultural employees who regularly perform their duties away from theprincipal place of business or branch office of the employer and whose actual hours of work inthe field cannot be determined with reasonable certainty."

The controversy centers on the interpretation of the clause "whose actual hours of workin the field cannot be determined with reasonable certainty." It is undisputed that these salespersonnel start their field work at 8:00 a.m. after having reported to the office and come back tothe office at 4:00 p.m. or 4:30 p.m. if they are Makati-based.

The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m.comprises the sales personnel's working hours which can be determined with reasonablecertainty.

The Court does not agree. The law requires that the actual hours of work in the field bereasonably ascertained. The company has no way of determining whether or not these salespersonnel, even if they report to the office before 8:00 a.m. prior to field work and come back at4:30 p.m., really spend the hours in between in actual field work.

The Court concurs with the arbitrator when it disposed that the requirement for thesalesmen and other similarly situated employees to report for work at the office at 8:00 a.m.and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Codebut an exercise of purely management prerogative of providing administrative control over suchpersonnel. This does not in any manner provide a reasonable level of determination on theactual field work of the employees which can be reasonably ascertained. Actual field workbegins after 8:00 a.m. when the sales personnel follow their field itinerary, and endsimmediately before 4:00 or 4:30 p.m. when they report back to their office. The period between

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8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scopeand result of which are subject to their individual capacity and industry and which 'cannot bedetermined with reasonable certainty.' This is the reason why effective supervision over fieldwork of salesmen and medical representatives, truck drivers and merchandisers is practically aphysical impossibility. Consequently, they are excluded from the ten holidays with pay.

Moreover, the requirement that "actual hours of work in the field cannot be determinedwith reasonable certainty" must be read in conjunction with Rule IV, Book III of theImplementing Rules which provides:

"Rule IV Holidays with Pay. SECTION 1. Coverage. — This rule shall apply to allemployees except: (e) Field personnel and other employees whose time andperformance is unsupervised by the employer.

The Court finds that the rule did not add another element to the Labor Code definition offield personnel. The clause "whose time and performance is unsupervised by the employer" didnot amplify but merely interpreted and expounded the clause "whose actual hours of work inthe field cannot be determined with reasonable certainty." The former clause is still within thescope and purview of Article 82 which defines field personnel. Hence, in deciding whether or notan 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 constantlysupervised by the employer.

The petitioner claims that the fact that these sales personnel are given incentive bonusevery quarter based on their performance is proof that their actual hours of work in the field canbe determined with reasonable certainty. The Court thinks otherwise. The criteria for grantingincentive 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 above criteria indicate that these sales personnel are given incentive bonusesprecisely because of the difficulty in measuring their actual hours of field work. Theseemployees are evaluated by the result of their work and not by the actual hours of field workwhich are hardly susceptible to determination.

In San Miguel Brewery, Inc. v. Democratic Labor Organization, the Court had occasion todiscuss the nature of the job of a salesman. It states that:

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

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National Sugar Refinery Corp. , vs. NLRCG.R. No. 101761 March 24, 1993

FACTS:Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is

fully owned and controlled by the Government, operates three (3) sugar refineries located atBukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuantto Proclamation No. 50.

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

On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting allemployees, from rank-and-file to department heads which was designed to rationalized theduties and functions of all positions, reestablish levels of responsibility, and recognize bothwage and operational structures. Jobs were ranked according to effort, responsibility, trainingand working conditions and relative worth of the job. As a result, all positions were re-evaluated,and all employees including the members of respondent union were granted salary adjustmentsand increases in benefits commensurate to their actual duties and functions.

The Courts glean from the records that for about ten years prior to the JE Program, themembers of respondent union were treated in the same manner as rank-and file employees. Assuch, they used to be paid overtime, rest day and holiday pay pursuant to the provisions ofArticles 87, 93 and 94 of the Labor Code as amended. On May 11, 1990, petitioner NASUREFCOrecognized herein respondent union, which was organized pursuant to Republic Act NO. 6715allowing supervisory employees to form their own unions, as the bargaining representative of allthe supervisory employees at the NASUREFCO Batangas Sugar Refinery. Two years after theimplementation of the JE Program, specifically on June 20, 1990, the members of hereinrespondent union filed a complainant with the executive labor arbiter for non-payment ofovertime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.

ISSUE:Whether or not the members of respondent union are entitled to overtime, rest day and

holiday pay.

RULING:The members of the union are not entitled to overtime, rest and holiday pay since they

fall within the classification of managerial employees which makes them a part of the exemptedemployees.

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

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

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

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

'Sec. 2. Exemption. — The provisions of this rule shall not apply to the followingpersons if they qualify for exemption under the condition set forth herein:

(b) Managerial employees, if they meet all of the following conditions, namely:(1) Their primary duty consists of the management of the establishment in

which they are employed or of a department or subdivision thereof:(2) They customarily and regularly direct the work of two or more employees

therein:(3) They have the authority to hire or fire other employees of lower rank; or

their suggestions and recommendations as to the hiring and firing and asto the promotion or any other change of status of other employees aregiven particular weight.

(c) Officers or members of a managerial staff if they perform the following duties andresponsibilities:(1) The primary duty consists of the performance of work directly related to

management policies of their employer;(2) Customarily and regularly exercise discretion and independent judgment;(3) (i) Regularly and directly assist a proprietor or a managerial employee

whose primary duty consists of the management of the establishment inwhich he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technicallines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks;

(4) Who do not devote more 20 percent of their hours worked in a work-weekto activities which are not directly and closely related to the performanceof the work described in paragraphs (1), (2), and above."

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

In other words, for purposes of forming and joining unions, certification elections,collective bargaining, and so forth, the union members are supervisory employees. In terms of

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working conditions and rest periods and entitlement to the questioned benefits, however, theyare officers or members of the managerial staff, hence they are not entitled thereto.

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

More specifically, their duties and functions include, among others, the followingoperations whereby the employee:

1) assists the department superintendent in the following:a) planning of systems and procedures relative to department activities;b) organizing and scheduling of work activities of the department, whichincludes employee shifting scheduled and manning complement;c) decision making by providing relevant information data and other inputs;d) attaining the company's set goals and objectives by giving his full support;e) selecting the appropriate man to handle the job in the department; andf) preparing annual departmental budget;

2) observes, follows and implements company policies at all times and recommendsdisciplinary action on erring subordinates;

3) trains and guides subordinates on how to assume responsibilities and become moreproductive;

4) conducts semi-annual performance evaluation of his subordinates and recommendsnecessary action for their development/advancement;

5) represents the superintendent or the department when appointed and authorized bythe former;

6) coordinates and communicates with other inter and intra department supervisorswhen necessary;7) recommends disciplinary actions/promotions;

8) recommends measures to improve work methods, equipment performance, quality ofservice and working conditions;

9) sees to it that safety rules and regulations and procedure and are implemented andfollowed by all NASUREFCO employees, recommends revisions or modifications to saidrules when deemed necessary, and initiates and prepares reports for any observedabnormality within the refinery;

10) supervises the activities of all personnel under him and goes to it that instructions tosubordinates are properly implemented; and

11) performs other related tasks as may be assigned by his immediate superior.

From the foregoing, it is apparent that the members of respondent union dischargeduties and responsibilities which ineluctably qualify them as officers or members of themanagerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to Implementthe Labor Code, viz.:

(1) their primary duty consists of the performance of work directly related tomanagement policies of their employer;

(2) they customarily and regularly exercise discretion and independent judgment;

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(3) they regularly and directly assist the managerial employee whose primary dutyconsist of the management of a department of the establishment in which they areemployed

(4) they execute, under general supervision, work along specialized or technical linesrequiring special training, experience, or knowledge;

(5) they execute, under general supervision, special assignments and tasks; and

(6) they do not devote more than 20% of their hours worked in a work-week to activitieswhich are not directly and clearly related to the performance of their work hereinbeforedescribed.

Under the facts obtaining in this case, The Court is constrained to agree with petitionerthat the union members should be considered as officers and members of the managerial staffand are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled toovertime, rest day and holiday.

Salazar vs. NLRCG.R. No. 109210; April 17, 1996

FACTS:On April 1990, private respondent employed petitioner as construction/project engineer

for the construction of the Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtueof an oral contract, petitioner would also receive a share in the profits after completion of theproject and that petitioner's services in excess of eight (8) hours on regular days and servicesrendered on weekends and legal holidays shall be compensable overtime at the rate of P27.85per hour.

On 16 April 1991, petitioner received a memorandum issued by private respondent'sproject manager, Engr. Nestor A. Delantar informing him of the termination of his serviceseffective on 30 April 1991.

On 13 September 1991, petitioner filed a complaint against private respondent for illegaldismissal, unfair labor practice, illegal deduction, non-payment of wages, overtime rendered,service incentive leave pay, commission, allowances, profit-sharing and separation pay with theNLRC-NCR Arbitration Branch, Manila.

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

RULING:The petitioner is not entitled to separation pay. Petitioner admitted that his job was to

supervise the laborers in the construction project. Hence, although petitioner cannot strictly beclassified as a managerial employee under Art. 82 of the Labor Code, and sec. 2(b), Rule 1, BookIII of the Omnibus Rules Implementing the Labor Code, nonetheless he is still not entitled topayment 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 abovementionedimplementing rules:

SECTION 2. Exemption. — The provisions of this Rule shall not apply to thefollowing persons if they qualify for exemption under the condition set forth herein:

(c) Officers or members of a managerial staff if they perform the following dutiesand responsibilities:

(1) The primary duty consists of the performance of work directly relatedto management policies of their employer;

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(2) Customarily and regularly exercise discretion and independentjudgment;

(3) [i] Regularly and directly assist a proprietor or a managerial employeewhose primary duty consists of the management of the establishment inwhich he is employed or subdivision thereof; or [ii] execute under generalsupervision work along specialized or technical lines requiring specialtraining, experience, or knowledge; or [iii] execute under generalsupervision special assignments and tasks; and(4) who do not devote more than 20 percent of their hours worked in awork-week to activities which are not directly and closely related to theperformance of the work described in paragraphs (1), (2), and (3) above.

The petitioner was paid overtime benefits does not automatically and necessarily denotethat petitioner is entitled to such benefits. Art. 82 of the Labor Code specifically delineates whoare 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 nolegal claim to the said benefits. It is well and good that petitioner was compensated for hisovertime services. However, this does not translate into a right on the part of petitioner todemand additional payment when, under the law, petitioner is clearly exempted there from.

Labor Congress of the Phils., vs. NLRC G.R. No. 1239381; May 21, 1998

FACTS:The 99 persons named as petitioners in this proceeding were rank-and-file employees of

respondent Empire Food Products, which hired them on various dates. Petitioners filed againstprivate respondents a complaint for payment of money claims and for violation of laborstandards laws They also filed a petition for direct certification of petitioner Labor Congress ofthe Philippines as their bargaining representative. In an Order dated October 24, 1990, MediatorArbiter approved the memorandum of agreement and certified LCP "as the sole and exclusivebargaining agent among the rank-and-file employees of Empire Food Products for purposes ofcollective bargaining with respect to wages, hours of work and other terms and conditions ofemployment".

On November 1990, petitioners through LCP President Navarro submitted to privaterespondents a proposal for collective bargaining. On January 1991, petitioners filed a complaintagainst private respondents for Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;Union busting thru Harassments [sic], threats, and interfering with the rights of employees toself-organization; Violation of the Memorandum of Agreement dated October 23, 1990;Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wagespromulgated by the Regional Wage Board; Actual, Moral and Exemplary Damages."

ISSUE:Whether or not the petitioners are entitled to labor standard benefits considering they

are paid by piece-rate worker.

RULING:The petitioners are so entitled to these benefits namely, holiday pay, premium pay, 13th

month pay and service incentive leave. Three (3) factors lead us to conclude that petitioners,although piece-rate workers, were regular employees of private respondents. First, as to thenature of petitioners' tasks were necessary or desirable in the usual business of privaterespondents, who were engaged in the manufacture and selling of such food products; second,petitioners worked for private respondents throughout the year, and third, the length of timethat petitioners worked for private respondents. Thus, while petitioners' mode of compensationwas on a "per piece basis," the status and nature of their employment was that of regularemployees.

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The Rules Implementing the Labor Code exclude certain employees from receivingbenefits such as nighttime pay, holiday pay, service incentive leave and 13th month pay, "fieldpersonnel and other employees whose time and performance is unsupervised by the employer,including those who are engaged on task or contract basis, purely commission basis, or thosewho are paid a fixed amount for performing work irrespective of the time consumed in theperformance thereof."

Plainly, petitioners as piece-rate workers do not fall within this group. As mentionedearlier, not only did petitioners labor under the control of private respondents as their employer,likewise did petitioners toil throughout the year with the fulfillment of their quota as supposedbasis for compensation.

Further, in Section 8(b), Rule IV, Book III which we quote hereunder, piece workers arespecifically mentioned as being entitled to holiday pay.

SEC. 8. Holiday pay of certain employees. — (b) Where a covered employee is paid by results or output, such as

payment on piece work, his holiday pay shall not be less than his average dailyearnings for the last seven (7) actual working days preceding the regular holiday:Provided, however, that in no case shall the holiday pay be less than theapplicable statutory minimum wage rate.

In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, inview of the modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude theemployer of piece rate workers from those exempted from paying 13th month pay, to wit:

EXEMPTED EMPLOYERSThe following employers are still not covered by P.D. No. 851:d. Employers of those who are paid on purely commission, boundary or task basis, and

those who are paid a fixed amount for performing specific work, irrespective of thetime consumed in the performance thereof, except where the workers are paid onpiece-rate basis in which case the employer shall grant the required 13th month payto such workers.

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

As to overtime pay, the rules, however, are different. According to Sec 2(e), Rule I, BookIII of the Implementing Rules, workers who are paid by results including those who are paid onpiece-work, takay, pakiao, or task basis, if their output rates are in accordance with thestandards prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rateshave been fixed by the Secretary of Labor in accordance with the aforesaid section, are notentitled to receive overtime pay. As such, petitioners are beyond the ambit of exempted personsand are therefore entitled to overtime pay.

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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 employedas a "bodegero" or ship's quartermaster on February 12, 1988. He complained that he had beenconstructively dismissed by petitioner when the latter refused him assignments aboard its boatsafter he had reported to work on May 28, 1990.

Private respondent alleged that he had been sick and thus allowed to go on leavewithout pay for one month from April 28, 1990 but that when he reported to work at the end ofsuch period with a health clearance, he was told to come back another time as he could not bereinstated immediately. Thereafter, petitioner refused to give him work. For this reason, privaterespondent asked for a certificate of employment from petitioner on September 6, 1990.However, when he came back for the certificate on September 10, petitioner refused to issuethe certificate unless he submitted his resignation. Since private respondent refused to submitsuch letter unless he was given separation pay, petitioner prevented him from entering thepremises.

Petitioner, on the other hand, alleged that it was private respondent who actuallyabandoned 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 provides: “The provisions of this title [Working Conditions and

Rest Periods] shall apply to employees in all establishments and undertakings whether for profit

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or not, but not to government employees, field personnel, members of the family of theemployer who are dependent on him for support, domestic helpers, persons in the personalservice of another, and workers who are paid by results as determined by the Secretary of Laborin appropriate regulations.”

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

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

San Miguel Corp., vs. CAG.R. No. 146775; Jan. 30, 2000

FACTS:On 17 October 1992, the Department of Labor and Employment conducted a routine

inspection in the premises of San Miguel Corporation in Sta. Filomena, Iligan City. In the courseof the inspection, it was discovered that there was underpayment by SMC of regular Muslimholiday pay to its employees. DOLE sent a copy of the inspection result to SMC and it wasreceived by and explained to its personnel officer Elena dela Puerta.

SMC contested the findings and DOLE conducted summary hearings on 19 November1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit proof that it waspaying regular Muslim holiday pay to its employees. Hence, Director IV of DOLE Iligan DistrictOffice issued a compliance order directing SMC to consider Muslim holidays as regular holidaysand to pay both its Muslim and non-Muslim employees holiday pay within thirty (30) days fromthe receipt of the order. SMC appealed but it was dismissed.

ISSUE:Whether or not the employees are entitled with regular Muslim holiday pay.

RULING:The employees are entitled to regular Muslim holiday pay. Muslim holidays are provided

under Articles 169 and 170, Title I, Book V, of Presidential Decree No. 1083, otherwise known asthe Code of Muslim Personal Laws, which states: Official Muslim holidays. — The following arehereby recognized as legal Muslim holidays:

(a) 'Amun Jadîd (New Year), which falls on the first day of the first lunar month ofMuharram;(b) Maulid-un-Nabî (Birthday of the Prophet Muhammad), which falls on the twelfth day ofthe third lunar month of Rabi-ul-Awwal,

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(c) Lailatul Isrâ Wal Mi'râj (Nocturnal Journey and Ascension of the Prophet Muhammad),which falls on the twenty-seventh day of the seventh lunar month of Rajab:(d) 'Îd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month ofShawwal, commemorating the end of the fasting season; and(e) 'Îd-ul-Adhâ (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month ofDhû'l-Hijja.

Art. 170 provides the provinces and cities where officially observed. — (1) Muslimholidays 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 otherMuslim provinces and cities as may hereafter be created; (2) Upon proclamation by thePresident of the Philippines, Muslim holidays may also be officially observed in other provincesand cities.

The foregoing provisions should be read in conjunction with Article 94 of the Labor Code,which provides: Right to holiday pay. (a) Every worker shall be paid his regular daily wageduring regular holidays, except in retail and service establishments regularly employing lessthan ten (10) workers; (b) The employer may require an employee to work on any holiday butsuch employee shall be paid a compensation equivalent to twice his regular rate.

However, there should be no distinction between Muslims and non-Muslims as regardspayment of benefits for Muslim holidays. The Court reminds the respondent-appellant thatwages and other emoluments granted by law to the working man are determined on the basis ofthe criteria laid down by laws and certainly not on the basis of the worker's faith or religion.

At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that ". . . nothingherein shall be construed to operate to the prejudice of a non-Muslim." In addition, the 1999Handbook on Workers' Statutory Benefits states considering that all private corporations,offices, agencies, and entities or establishments operating within the designated Muslimprovinces and cities are required to observe Muslim holidays, both Muslim and Christiansworking within the Muslim areas may not report for work on the days designated by law asMuslim holidays.

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Tan vs. LagramaG.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 Lagramais 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 andupbraided: "Nangihi na naman ka sulod sa imong drawinganan." ("You again urinated insideyour work area.") When Lagrama asked what Tan was saying, Tan told him, "Ayaw daghangestorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas." ("Don'tsay anything further. I don't want you to draw anymore. From now on, no more drawing. Getout.")

Lagrama denied the charge against him. He claimed that he was not the only one whoentered the drawing area and that, even if the charge was true, it was a minor infraction towarrant his dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get out"), leavinghim with no other choice but to leave the premises. Lagrama filed a complaint with the NationalLabor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegallydismissed and sought reinvestigation and payment of 13th month pay, service incentive leavepay, salary differential, and damages.

As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directedthe parties to file their position papers. It declared that the dismissal illegal and order thepayment of monetary benefits. Tan appealed to the NLRC and reversing the decision of theLabor Arbiter.

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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 authorizedcause provided by law and after due process. This provision has two aspects: (1) the legality ofthe act of dismissal, that is, dismissal under the grounds provided for under Article 282 of theLabor Code and (2) the legality in the manner of dismissal. The illegality of the act of dismissalconstitutes discharge without just cause, while illegality in the manner of dismissal is dismissalwithout due process.

In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get outof his sight as the latter tried to explain his side, petitioner made it plain that Lagrama wasdismissed. Urinating in a work place other than the one designated for the purpose by theemployer constitutes violation of reasonable regulations intended to promote a healthyenvironment under Art. 282(1) of the Labor Code for purposes of terminating employment, butthe same must be shown by evidence. Here there is no evidence that Lagrama did urinate in aplace 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, theLabor Arbiter found that the relationship between the employer and employee has been sostrained that the latter's reinstatement would no longer serve any purpose. The parties do notdispute this finding. Hence, the grant of separation pay in lieu of reinstatement is appropriate.

This is of course in addition to the payment of backwages which, in accordance with theruling in Bustamante v. NLRC should be computed from the time of Lagrama's dismissal up tothe 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) thosewhose time and performance is unsupervised by the employer. The first involves an element ofcontrol and supervision over the manner the work is to be performed, while the second doesnot. 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 outin Makati Haberdashery v. NLRC 33 and Mark Roche International v. NLRC, 34 he is paid a fixedamount for work done, regardless of the time he spent in accomplishing such work.

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Lambo vs. NLRCG.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. Asin 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 theyfinished 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 illegaldismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and restday, service incentive leave pay, separation pay, 13th month pay, and attorney’s fees. Afterhearing, Labor Arbiter found private respondents guilty of illegal dismissal and accordinglyordered them to pay petitioners’ claims. On appeal, the NLRC reversed the decision of the LaborArbiter. The NLRC held petitioners guilty of abandonment of work and accordingly dismissedtheir claims except that for 13th month pay.

Petitioners allege that they were dismissed by private respondents as they were about tofile a petition with the Department of Labor and Employment (DOLE) for the payment of benefitssuch as Social Security System (SSS) coverage, sick leave and vacation leave. They deny thatthey abandoned their work.

ISSUE:Whether or not the petitioners are entitled to the minimum benefits provided by law.

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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 thebasis of time spent on the job but according to the quantity and the quality of work produced bythem. There are two categories of employees paid by results: (1) those whose time andperformance are supervised by the employer. (Here, there is an element of control andsupervision over the manner as to how the work is to be performed. A piece-rate worker belongsto this category especially if he performs his work in the company premises.); and (2) thosewhose time and performance are unsupervised. (Here, the employer’s control is over the resultof the work. Workers on pakyao and takay basis belong to this group.) Both classes of workersare paid per unit accomplished.

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

In this case, private respondents exercised control over the work of petitioners. Astailors, petitioners worked in the company’s 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 doesnot negate their status as regular employees of private respondents. The term "wage" is broadlydefined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed interms 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 therelations. 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 backwages. The Arbiter applied the rule in the Mercury Drug case, according to which the recoveryof back wages should be limited to three years without qualifications or deductions. Any awardin excess of three years is null and void as to the excess. The Labor Arbiter correctly orderedprivate respondents to give separation pay.

Considerable time has lapsed since petitioners’ dismissal, so that reinstatement wouldnow 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 yearof 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 ourfinding that petitioners are regular employees, although paid on a piece-rate basis.

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R&E Transport vs. LatagG.R. No. 155214; Feb. 13, 2004

FACTS:Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La

Mallorca ceased from business operations, Latag transferred to R & E Transport, Inc. He wasreceiving an average daily salary of five hundred pesos (P500.00) as a taxi driver. Latag got sickin 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 tocontinue working on account of his old age. Latag thus asked Felix Fabros, the administrativeofficer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored.

Thus, on December 21, 1998, Latagfiled a case for payment of his retirement pay beforethe 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:Whether or not Latag is entitled to retirement benefits considering she signed a waiver of

quitclaim.

RULING:The respondent is entitled to retirement benefits despite of the waiver of quitclaims.

There is no dispute the fact that the late Pedro M. Latag is entitled to retirement benefits.Rather, the bone of contention is the number of years that he should be credited with in

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computing those benefits. The findings of the NLRC that Pedro must be credited only with hisservice to R & E Transport, Inc., because the evidence shows that the aforementionedcompanies are two different entities. After a careful and painstaking review of the evidence onrecord, the court supports the NLRC's findings.

As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no errorwhen it ruled that the document was invalid and could not bar her from demanding the benefitslegally 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 uponquitclaims 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 retirementbenefits 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 compulsoryretirement age, who has served at least five (5) years in said establishment, may retire andshall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for everyyear of service, a fraction of at least six (6) months being considered as one whole year. Unlessthe 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 thanfive (5) days of service incentive leaves

The rules implementing the New Retirement Law similarly provide the above-mentionedformula 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 inexcess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, thebasis for computing their benefits should be the average daily income. In this case, the CAfound that Pedro was earning an average of five hundred pesos (P500) per day. We thuscompute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000.

Asian Transmission vs. CAG.R. No. 144664; March 15, 2004

FACTS:The Department of Labor and Employment (DOLE) issued an Explanatory Bulletin dated

March 11, 1993 wherein it clarified that employees are entitled to 200% of their basic wage onApril 9, 1993, whether unworked, which apart from being Good Friday is also Araw ngKagitingan, both legal holidays.

The bulletin reads: "On the correct payment of holiday compensation on April 9, 1993which apart from being Good Friday is also Araw ng Kagitingan, i.e., two regular holidays fallingon the same day, this Department is of the view that the covered employees are entitled to atleast two hundred percent (200%) of their basic wage even if said holiday is unworked. The first100% represents the payment of holiday pay on April 9, 1993 as Good Friday and the second100% is the payment of holiday pay for the same date as Araw ng Kagitingan.

Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both MaundyThursday and Araw ng Kagitingan. Despite the explanatory bulletin, [Asian TransmissionCorporation 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.

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In accordance with Step 6 of the grievance procedure of the Collective BargainingAgreement (CBA) existing between petitioner and BATLU, the controversy was submitted forvoluntary arbitration. On July 31, 1998, the Office of the Voluntary Arbitrator rendered a decisiondirecting petitioner to pay its covered employees "200% and not just 100% of their regular dailywages for the unworked April 9, 1998 which covers two regular holidays, namely, Araw ngKagitingan and Maundy Thursday."

ISSUE:Whether or not the employees are entitled to the computation embodied in the bulletin

clarification.

RULING:The employees are entitled to the computation given in the bulletin clarification. Subject

of interpretation in the case at bar is Article 94 of the Labor Code which reads:

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 suchemployee shall be paid a compensation equivalent to twice his regular rate; and

(c) As used in this Article, "holiday" includes: New Year's Day, Maundy Thursday,Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, thethirtieth of November, the twenty-fifth and thirtieth of December and the day designatedby law for holding a general election, which was amended by Executive Order No. 203issued on June 30, 1987, such that the regular holidays are now:

1. New Year's Day January 12. Maundy Thursday Movable Date3. Good Friday Movable Date4. Araw ng Kagitingan April 9 (Bataan and Corregidor Day)5. Labor Day May 16. Independence Day June 127. National Heroes Day Last Sunday of August8. Bonifacio Day November 309. Christmas Day December 2510. Rizal Day December 30

The Court agrees with the voluntary arbitrator. The Voluntary Arbitrator held that Article94 of the Labor Code provides for holiday pay for every regular holiday, the computation ofwhich is determined by a legal formula which is not changed by the fact that there are twoholidays falling on one day, like on April 9, 1998 when it was Araw ng Kagitingan and at thesame time was Maundy Thursday; and that that the law, as amended, enumerates ten regularholidays for every year should not be interpreted as authorizing a reduction to nine the numberof paid regular holidays "just because April 9 (Araw ng Kagitingan) in certain years, like 1993and 1998, is also Holy Friday or Maundy Thursday."

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative thatthe State shall afford protection to labor. Its purpose is not merely "to prevent diminution of themonthly income of the workers on account of work interruptions. In other words, although theworker is forced to take a rest, he earns what he should earn, that is, his holiday pay." 8 It is alsointended to enable the worker to participate in the national celebrations held during the daysidentified as with great historical and cultural significance.

Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes Day (lastSunday of August), Bonifacio Day (November 30) and Rizal Day (December 30) were declarednational holidays to afford Filipinos with a recurring opportunity to commemorate the heroism ofthe Filipino people, promote national identity, and deepen the spirit of patriotism.

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Labor Day (May 1) is a day traditionally reserved to celebrate the contributions of theworking class to the development of the nation, while the religious holidays designated inExecutive Order No. 203 allow the worker to celebrate his faith with his family.

As reflected above, Art. 94 of the Labor Code, as amended, afford a worker theenjoyment of ten paid regular holidays. The provision is mandatory, regardless of whether anemployee is paid on a monthly or daily basis. Unlike a bonus, which is a managementprerogative, holiday pay is a statutory benefit demandable under the law. Since a worker isentitled to the enjoyment of ten paid regular holidays, the fact that two holidays fall on thesame date should not operate to reduce to nine the ten holiday pay benefits a worker is entitledto receive.

Autobus Transport System vs. BautistaG.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 viaBaguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid oncommission basis, seven percent (7%) of the total gross income per travel, on a twice a monthbasis.

On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, NuevaVizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as thelatter vehicle suddenly stopped at a sharp curve without giving any warning. Respondentaverred that the accident happened because he was compelled by the management to go backto Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had justarrived in Manila from Roxas, Isabela.

Respondent further alleged that he was not allowed to work until he fully paid theamount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged

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buses and that despite respondent's pleas for reconsideration, the same was ignored bymanagement. After a month, management sent him a letter of termination. Thus, on 02February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims fornonpayment of 13th month pay and service incentive leave pay against Autobus.

On 29 September 2000, based on the pleadings and supporting evidence presented bythe parties, Labor Arbiter decided that the complaint be dismissed where the respondent mustpay 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 theLabor Code vis-à-vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations ofthe Labor Code which provides: RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee whohas rendered at least one year of service shall be entitled to a yearly service incentive leave offive days with pay.

Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall applyto all employees except: (d) Field personnel and other employees whose performance isunsupervised 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 workirrespective of the time consumed in the performance thereof;

A careful examination of said provisions of law will result in the conclusion that the grantof service incentive leave has been delimited by the Implementing Rules and Regulations of theLabor 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 employeesclassified as "field personnel."

The phrase "other employees whose performance is unsupervised by the employer"must not be understood as a separate classification of employees to which service incentiveleave shall not be granted. Rather, it serves as an amplification of the interpretation of thedefinition of field personnel under the Labor Code as those "whose actual hours of work in thefield cannot be determined with reasonable certainty."

The same is true with respect to the phrase "those who are engaged on task or contractbasis, purely commission basis." Said phrase should be related with "field personnel," applyingthe rule on ejusdem generis that general and unlimited terms are restrained and limited by theparticular terms that they follow. Hence, employees engaged on task or contract basis or paidon purely commission basis are not automatically exempted from the grant of service incentiveleave, unless, they fall under the classification of field personnel.

What must be ascertained in order to resolve the issue of propriety of the grant ofservice incentive leave to respondent is whether or not he is a field personnel.

According to Article 82 of the Labor Code, "field personnel" shall refer to non-agriculturalemployees who regularly perform their duties away from the principal place of business orbranch office of the employer and whose actual hours of work in the field cannot be determinedwith reasonable certainty. This definition is further elaborated in the Bureau of WorkingConditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial EmployeesAssociation 10 which states that:

As a general rule, field personnel are those whose performance of theirjob/service is not supervised by the employer or his representative, the workplace being

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away from the principal office and whose hours and days of work cannot be determinedwith reasonable certainty; hence, they are paid specific amount for rendering specificservice 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 thatthey 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 notmerely concerned with the location where the employee regularly performs his duties but alsowith the fact that the employee's performance is unsupervised by the employer. As discussedabove, field personnel are those who regularly perform their duties away from the principalplace of business of the employer and whose actual hours of work in the field cannot bedetermined with reasonable certainty. Thus, in order to conclude whether an employee is a fieldemployee, it is also necessary to ascertain if actual hours of work in the field can be determinedwith reasonable certainty by the employer. In so doing, an inquiry must be made as to whetheror 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 usuallynecessary and desirable to the usual trade of petitioner's business. Accordingly, respondent isentitled to the grant of service incentive leave.

The clear policy of the Labor Code is to grant service incentive leave pay to workers in allestablishments, subject to a few exceptions. Section 2, Rule V, Book III of the ImplementingRules and Regulations provides that "every employee who has rendered at least one year ofservice 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 startedworking, including authorized absences and paid regular holidays unless the working days in theestablishment as a matter of practice or policy, or that provided in the employment contracts, isless 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 otherwords, an employee who has served for one year is entitled to it. He may use it as leave days orhe may collect its monetary value. To limit the award to three years, as the solicitor generalrecommends, is to unduly restrict such right.

San Miguel Corp., vs. Del RosarioG.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 besevered at the close of the business hours of March 12, 2001. On March 13, 2001, respondentwas refused entry to petitioner's premises. On June 24, 2002, respondent filed a complaintagainst petitioner for illegal dismissal and underpayment/non-payment of monetary benefits.Respondent alleged that petitioner feigned an excess in manpower because after her dismissal,it hired new recruits and re-employed two of her batch mates. On the other hand, petitionerclaimed that respondent was a probationary employee whose services were terminated as aresult of the excess manpower that could no longer be accommodated by the company.

The Labor Arbiter declared respondent a regular employee because her employmentexceeded six months and holding that she was illegally dismissed as there was no authorizedcause to terminate her employment. On appeal to NLRC, it modified the previous decision.

ISSUE:Whether or not the respondent was an employee and was illegally terminated. If so, is

she entitled to monetary benefits?

RULING:

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In termination cases, the burden of proving the circumstances that would justify theemployee's dismissal rests with the employer. The best proof that petitioner should havepresented to prove the probationary status of respondent is her employment contract. None,having been presented, the continuous employment of respondent as an account specialist foralmost 11 months, from April 17, 2000 to March 12, 2001, means that she was a regularemployee and not a temporary reliever or a probationary employee. And while it is true that byway of exception, the period of probationary employment may exceed six months when theparties so agree, such as when the same is established by company policy, or when it isrequired by the nature of the work, none of these exceptional circumstance were proven in thepresent case. Thus, respondent whose employment exceeded six months is undoubtedly aregular employee of petitioner.

Her termination from employment must be for a just or authorized cause, otherwise, herdismissal would be illegal. Petitioner tried to justify the dismissal of respondent under theauthorized cause of redundancy. It thus argued in the alternative that even assuming thatrespondent qualified for regular employment, her services still had to be terminated becausethere are no more regular positions in the company. Undoubtedly, petitioner is invoking aredundancy which allegedly resulted in the termination not only of the trainees, probationersbut also of some of its regular employees.

Redundancy, for purposes of the Labor Code, exists where the services of an employeeare 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 superfluity of a position orpositions may be the outcome of a number of factors, such as over-hiring of workers, decreasedvolume of business, or dropping of a particular product line or service activity previouslymanufactured or undertaken by the enterprise. The criteria in implementing a redundancy are:(a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. What furthermilitated against the alleged redundancy advanced by petitioner is their failure to refuterespondent's assertion that after her dismissal, it hired new recruits and re-employed two of herbatch mates. The Court finds that petitioner was not able to discharge the burden of provingthat the dismissal of respondent was valid.

Considering that respondent was illegally dismissed, she is entitled not only toreinstatement but also to payment of full back wages, computed from the time hercompensation was actually withheld from her on March 13, 2001, up to her actualreinstatement. She is likewise entitled to other benefits, i.e., service incentive leave pay and13th month pay computed from such date also up to her actual reinstatement. Respondent isnot entitled to holiday pay because the records reveal that she is a monthly paid regularemployee. Under Section 2, Rule IV, Book III of the Omnibus Rules Implementing the LaborCode, employees who are uniformly paid by the month, irrespective of the number of workingdays therein, shall be presumed to be paid for all the days in the month whether worked or not.

Penaranda vs. Baganga Plywood Corp.G.R. No. 159577; May 3, 2006

FACTS:Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee of

Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance of its

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steam plant boiler. In May 2001, Peñaranda filed a Complaint for illegal dismissal with moneyclaims 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 filetheir position papers and submit supporting documents.

Peñaranda alleges that he was employed by respondent Banganga on March 15, 1999with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegallyterminated on December 19, 2000. he alleges that his services were terminated without thebenefit of due process and valid grounds in accordance with law. Furthermore, he was not paidhis overtime pay, premium pay for working during holidays/rest days, night shift differentialsand finally claimed for payment of damages and attorney's fees having been forced to litigatethe present complaint.

Respondent BPC is a domestic corporation duly organized and existing under Philippinelaws and is represented herein by its General Manager HUDSON CHUA, the individualrespondent. Respondents allege that complainant's separation from service was done pursuantto Art. 283 of the Labor Code. The respondent BPC was on temporary closure due to repair andgeneral maintenance and it applied for clearance with the Department of Labor andEmployment, Regional Office No. XI, to shut down and to dismiss employees. And due to theinsistence of herein complainant he was paid his separation benefits. Consequently, when respondent BPC partially reopened in January 2001, Peñaranda failed toreapply.

The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaintwas premature because he was still employed by BPC. Petitioner’s money claims for illegaldismissal was also weakened by his quitclaim and admission during the clarificatory conferencethat he accepted separation benefits, sick and vacation leave conversions and thirteenth monthpay.

ISSUE:Whether or not Peñaranda 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 othermonetary 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 thecoverage of labor standards. Like managerial employees, officers and member of themanagerial 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 asthose with the following duties and responsibilities:

(1) The primary duty consists of the performance of work directly related tomanagement 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 isemployed or subdivision thereof; or (ii) execute under general supervision workalong specialized or technical lines requiring special training, experience, orknowledge; or (iii) execute under general supervision special assignments andtasks; and

(4) who do not devote more than 20 percent of their hours worked in a workweek toactivities which are not directly and closely related to the performance of thework described in paragraphs (1), (2), and (3) above."

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The petitioner’s 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. acEHSI7. 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 petitionerwas a member of the managerial staff. His duties and responsibilities conform to the definitionof a member of a managerial staff under the Implementing Rules.

Petitioner supervised the engineering section of the steam plant boiler. His work involvedoverseeing the operation of the machines and the performance of the workers in theengineering section. This work necessarily required the use of discretion and independentjudgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner isdeemed a member of the managerial staff.

Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, hestated that he was the foreman responsible for the operation of the boiler. The term foremanimplies that he was the representative of management over the workers and the operation ofthe department. Petitioner's evidence also showed that he was the supervisor of the steamplant. 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; theothers were paid only on a daily basis.

Leyte IV Electric Cooperative Inc. vs. LEYECO IV Employees Union- ALU G.R. No. 1577745; October 19, 2007

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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) coveringpetitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998. OnJune 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter topetitioner 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 incompliance with the CBA provisions, stating that payment was presumed since the formula usedin determining the daily rate of pay of the covered employees is Basic Monthly Salary divided by30 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.

RULING: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. Suchliteral interpretation ignores the admission of respondent in its Position Paper that theemployees 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 gainssignificance.

This ruling was applied in Wellington Investment and Manufacturing Corporation v.Trajano, 43 Producers Bank of the Philippines v. National Labor Relations Commission. In thiscase, the monthly salary was fixed by Wellington to provide for compensation for every workingday of the year including the holidays specified by law — and excluding only Sundays. In fixingthe salary, Wellington used what it called the "314 factor"; that is, it simply deducted 51Sundays from the 365 days normally comprising a year and used the difference, 314, as basisfor determining the monthly salary. The monthly salary thus fixed actually covered payment for314 days of the year, including regular and special holidays, as well as days when no work wasdone by reason of fortuitous cause, such as transportation strike, riot, or typhoon or othernatural calamity, or cause not attributable to the employees.

It was also applied in Odango v. National Labor Relations Commission, where Court ruledthat the use of a divisor that was less than 365 days cannot make the employer automaticallyliable for underpayment of holiday pay. In said case, the employees were required to work onlyfrom Monday to Friday and half of Saturday. Thus, the minimum allowable divisor is 287, whichis the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Anydivisor below 287 days meant that the employees were deprived of their holiday pay for someor all of the ten legal holidays. The 304-day divisor used by the employer was clearly above theminimum of 287 days.

In this case, the employees are required to work only from Monday to Friday. Thus, theminimum allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and51 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 theirholiday pay. Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner'sdivisor formula. In granting respondent's claim of non-payment of holiday pay, a "doubleburden" 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 theirmonthly salaries. Hence, the petition is granted.

Bahia Shipping Services vs. Chua

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G.R. No. 162195; April 8, 2008

FACTS:Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia

Shipping Services, Inc., as a restaurant waiter on board a luxury cruise ship liner M/S BlackWatch pursuant to a Philippine Overseas Employment Administration (POEA) approvedemployment contract dated October 9, 1996 for a period of nine (9) months from October 18,1996 to July 17, 1997. On October 18, 1996, the private respondent left Manila for Heathrow,England to board the said sea vessel where he will be assigned to work. On February 15, 1997,the private respondent reported for his working station one and one-half hours late. On February17, 1997, the master of the vessel served to the private respondent an official warning-termination form pertaining to the said incident. On March 8, 1997, the vessel's master, shipcaptain Thor Fleten conducted an inquisitorial hearing to investigate the said incident.Thereafter, on March 9, 1997, private respondent was dismissed from the service on thestrength of an unsigned and undated notice of dismissal. An alleged record or minutes of thesaid investigation was attached to the said dismissal notice.

On March 24, 1997, the private respondent filed a complaint for illegal dismissal and othermonetary claims. The private respondent alleged that he was paid only US$300.00 per month asmonthly salary for five (5) months instead of US$410.00 as stipulated in his employmentcontract. Thus, he claimed that he was underpaid in the amount of US$110.00 per month forthat same period of five (5) months. He further asserted that his salaries were also deductedUS$20.00 per month by the petitioner for alleged union dues. Private respondent argued that itwas his first offense committed on board the vessel. He adverted further that the petitioner hasno proof of being a member of the AMOSUP or the ITF to justify its claim to deduct the saidunion dues [from] his monthly salary.

ISSUE:Whether or not reporting for work one and one-half hours late and abandoning his work

are valid grounds for dismissal.

RULING:It being settled that the dismissal of respondent was illegal, it follows that the latter is

entitled to payment of his salary for the unexpired portion of his contract, as provided underRepublic Act (R.A.) No. 8042, considering that his employment was pre-terminated on March 9,1997 or four months prior to the expiration of his employment contract on July 17, 1997.

Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employeeis entitled to the twin reliefs of (a) either reinstatement or separation pay, if reinstatement is nolonger viable, and (b) backwages. Both are distinct reliefs given to alleviate the economicdamage suffered by an illegally dismissed employee and, thus, the award of one does not barthe other. Both reliefs are rights granted by substantive law which cannot be defeated by mereprocedural lapses. Substantive rights like the award of backwages resulting from illegaldismissal must not be prejudiced by a rigid and technical application of the rules. The order ofthe Court of Appeals to award backwages being a mere legal consequence of the finding thatrespondents were illegally dismissed by petitioners, there was no error in awarding the same.

The Court has consistently applied the foregoing exception to the general rule. It does soyet again in the present case. Section 10 of R.A. No. 8042, entitles an overseas worker who hasbeen illegally dismissed to "his salaries for the unexpired portion of the employment contract orfor three (3) months for every year of the unexpired term, whichever is less." The CA correctlyapplied the interpretation of the Court in Marsaman Manning Agency, Inc. v. National LaborRelations Commission that the second option which imposes a three months salary cap appliesonly when the term of the overseas contract is fixed at one year or longer; otherwise, the firstoption applies in that the overseas worker shall be entitled payment of all his salaries for theentire unexpired period of his contract.

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PNCC vs. Skyway Traffic Management and Security Division Workers OrganizationGR 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 andEmployment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly organized andoperating under and by virtue of the laws of the Philippines. They entered into CBA. Pertinentprovisions are as follows:

ARTICLE VIII VACATION LEAVE AND SICK LEAVE Section 1. Vacation Leave.

[b]The company shall schedule the vacation leave of employees during theyear taking into consideration the request of preference of the employees.

PNCC then created a schedule of leaves for their employees. Petitioner objected to theimplementation of the said memorandum. It insisted that the individual members of the unionhave the right to schedule their vacation leave. It opined that the unilateral scheduling of theemployees' vacation leave was done to avoid the monetization of their vacation leave inDecember 2004.

ISSUE: WON the PNCC has the sole discretion to schedule the vacation leaves of its employees.

HELD: PNCC has the sole discretion to schedule the vacation leaves of its employees.

The rule is that where the language of a contract is plain and unambiguous, its meaningshould be determined without reference to extrinsic facts or aids. The intention of the partiesmust be gathered from that language, and from that language alone. Stated differently, wherethe language of a written contract is clear and unambiguous, the contract must be taken tomean that which, on its face, it purports to mean, unless some good reason can be assigned toshow 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. ArticleVIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation leaves ha llbe under the option of the employer. Thus, if the terms of a CBA are clear and leave no doubtupon 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, beingthe law between the parties. In Faculty Association of Mapua Institute of Technology (FAMIT) v.Court of Appeals, this Court held that the CBA during its life time binds all the parties. Theprovisions of the CBA must be respected since its terms and conditions constitute the lawbetween the parties. The parties cannot be allowed to change the terms they agreed upon onthe ground that the same are not favorable to them.

The purpose of a vacation leave is to afford a laborer a chance to get a much-neededrest to replenish his worn-out energy and acquire a new vitality to enable him to efficientlyperform his duties, and not merely to give him additional salary and bounty. Accordingly, thevacation leave privilege was not intended to serve as additional salary, but as a non-monetarybenefit. To give the employees the option not to consume it with the aim of converting it tocash at the end of the year would defeat the very purpose of vacation leave.

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11. OTHER SPECIAL BENEFITS

Villuga vs. NLRC G.R. No. L-75038; August 23, 1993

FACTS:A basic factor underlying the exercise of rights and the filing of claims for benefits under

the Labor Code and other presidential issuances or labor legislations is the status and nature ofone's employment.

Petitioner Elias Villuga was employed as cutter in the tailoring shop owned by privaterespondent Rodolfo Zapanta and known as Broad Street Tailoring located at Shaw Boulevard,Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salary of P840.00 and amonthly transportation allowance of P40.00. In addition to his work as cutter, Villuga wasassigned the chore of distributing work to the shop's tailors or sewers when both the shop'smanager and assistant manager would be absent. He saw to it that their work conformed withthe pattern he had prepared and if not, he had them redone, repaired or re-sewn.

The other petitioners were ironers, repairmen and sewers. They were paid a fixedamount for every item ironed, repaired or sewn, regardless of the time consumed inaccomplishing the task. Petitioners did not fill up any time record since they did not observeregular or fixed hours of work. They were allowed to perform their work at home especiallywhen the volume of work, which depended on the number of job orders, could no longer becoped up with.

From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due toillness. For not properly notifying his employer, he was considered to have abandoned his work.

In a complaint filed with the Regional Office of the Department of Labor, Villuga claimedthat he was refused admittance when he reported for work after his absence, allegedly due tohis active participation in the union organized by private respondent's tailors. He furtherclaimed that he was not paid overtime pay, holiday pay, premium pay for work done on restdays and holidays, service incentive leave pay and 13th month pay.

On May 1979, Labor Arbiter rendered a decision ordering the dismissal of the complaintfor unfair labor practices, illegal dismissal and other money claims except petitioner Villuga'sclaim for 13th month pay for the years 1976, 1977 and 1980.

ISSUE:Whether or not such employment is managerial in character or that of a rank and file

employee are primordial considerations before extending labor benefits.

RULING:The Court ruled that the characterization of such employment is important in the

determination of benefits since some employees are exempted to such benefits.

Under Rule I, Section 2(c), Book III of the Implementing Rules of the Labor Code, to be amember 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 tomanagement policies; (2) that he customarily and regularly exercises discretion and independent judgment inthe 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 thosedescribed above.

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Applying the above criteria to petitioner Villuga's case, it is undisputed that his primarywork or duty is to cut or prepare patterns for items to be sewn, not to lay down or implementany of the management policies, as there is a manager and an assistant manager who performsaid functions.

It is true that in the absence of the manager and assistant manager, he distributes andassigns work to employees but such duty, though involving discretion, is occasional and notregular or customary. He had also the authority to order the repair or resewing of defectiveitems but such authority is part and parcel of his function as cutter to see to it that the items cutare sewn correctly lest the defective nature of the workmanship be attributed to his "poorcutting." Villuga does not participate in policy-making. Rather, the functions of his positioninvolve execution of approved and established policies.

In Franklin Baker Company of the Philippines v. Trajano, it was held that employees whodo not participate in policy-making but are given ready policies to execute and standardpractices to observe are not managerial employees. The test of "supervisory or managerialstatus" depends on whether a person possesses authority that is not merely routinary or clericalin nature but one that requires use of independent judgment. In other words, the functions ofthe position are not managerial in nature if they only execute approved and established policiesleaving little or no discretion at all whether to implement said policies or not.

Consequently, the exclusion of Villuga from the benefits claimed under Article 87(overtime pay and premium pay for holiday and rest day work), Article 94, (holiday pay), andArticle 95 (service incentive leave pay) of the Labor Code, on the ground that he is a managerialemployee is unwarranted. He is definitely a rank and file employee hired to perform the work ofa cutter and not hired to perform supervisory or managerial functions. The fact that he isuniformly paid by the month does not exclude him from the benefits of holiday pay. He shouldtherefore be paid in addition to the 13th month pay, his overtime pay, holiday pay, premiumpay for holiday and rest day, and service incentive leave pay.

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CJC Trading vs. NLRCG.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 filedseparate complaints on against petitioner CJC Trading, Incorporated and/or Ms. Celia J. Carlos forillegal dismissal and non-payment of premium pay for holiday and rest day, service incentiveleave pay and thirteenth month pay. These cases were consolidated.

On 22 July 1993, a decision was rendered by the Labor Arbiter dismissing the complaintsand were not entitled to the labor standards benefits claimed by them because they were paidon 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 orcollective bargaining agreement, or sanctioned by established employer practice or policy. TheLabor Code is devoid of any provision which grants separation pay to employees who voluntarilyresign. Neither was there anything in the record that shows that, in the instant case, there is acollective bargaining agreement or any other agreement or established company policyconcerning the payment of separation pay to employees who resign.

Considering that private respondents were close to the age of sixty (60) at the time theystopped working for petitioner and that they had been in the employ of petitioner for severalyears, the Court, considers that this could be deemed to be in effect a prayer for the grant ofretirement benefits.

The pertinent law is Article 287 of the Labor Code, as amended by R.A. No. 7641, whichreads:

Retirement. — Any employee may be retired upon reaching the retirementage established in the collective bargaining agreement or other applicableemployment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefitsas he may have earned under existing laws and any collective bargaining agreement and otheragreements: Provided, however, That an employee's retirement benefits under any collectivebargaining and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement benefits ofemployees in the establishment, an employee upon reaching the age of sixty (60) years ormore, but not beyond sixty-five (65) years which is hereby declared the compulsory retirementage, who has served at least five (5) years in the said establishment, may retire and shall beentitled to retirement pay equivalent to at least one-half (1/2) month salary for every year ofservice, a fraction of at least six (6) months being considered as one whole year.

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R.A. No. 7641 may be given effect where (1) the claimant for retirement benefits was stillthe employee of the employer at the time the statute took effect; and (2) the claimant was incompliance with the requirements for eligibility under the statute for such retirement benefits. Itappears that private respondents did not qualify for the benefits of R.A. No. 7641 under theterms of this law itself. Since the record does not show any retirement plan or collectivebargaining agreement providing for retirement benefits to petitioner's employees, the applicableretirement benefits to petitioner's employees, the applicable retirement age is the optionalretirement age of sixty (60) years according to Article 287, which would qualify the retiree toretirement 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 yetreached the age of sixty (60) years. The Court stresses that there is nothing to preventpetitioners from voluntarily giving private respondents some financial assistance on an ex gratiabasis.

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Pantranco North Express vs. NLRCG.R. No. 95940; July 24, 1996

FACTS:Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually

joined the Pantranco Employees Association-PTGWO. He continued in petitioner's employ untilAugust 12, 1989, when he was retired at the age of fifty-two (52) after having rendered twentyfive years' service. The basis of his retirement was the compulsory retirement provision of thecollective bargaining agreement between the petitioner and the aforenamed union. On February1990, private respondent filed a complaint for illegal dismissal against petitioner with NLRC. Thecomplaint was consolidated with two other cases of illegal dismissal having similar facts andissues, filed by other employees, non-union members.

Labor Arbiter rendered his decision finding that the three complainants were illegally andunjustly dismissed and order the respondent to reinstate them to their former or substantiallyequivalent positions without loss of seniority rights with full back wages and other benefits.Petitioner appealed to public respondent, which issued the questioned Resolution affirming thelabor arbiter's decision in toto.

ISSUE:Whether or not the CBA stipulation on compulsory retirement after twenty-five years of

service is legal and enforceable.

RULING:The Court ruled that the CBA stipulation is legal and enforceable.

The bone of contention in this case is the provision on compulsory retirement after 25years of service. Article XI, Section 1 (e) (5) of the May 2, 1989 Collective Bargaining Agreement8 between petitioner company and the union states:

Section 1. The COMPANY shall formulate a retirement plan with the following mainfeatures:

(e) The COMPANY agrees to grant the retirement benefits herein provided toregular employees who may be separated from the COMPANY for any of the followingreasons:

(5) Upon reaching the age of sixty (60) years or upon completing twenty-five (25) years of service to the COMPANY, whichever comes first, and theemployee shall be compulsory retired and paid the retirement benefits hereinprovided."

The said Code provides: Art. 287. Retirement. — Any employee may be retired uponreaching the retirement age established in the Collective Bargaining Agreement or otherapplicable employment contract. In case of retirement, the employee shall be entitled to receivesuch retirement benefits as he may have earned under existing laws and any collectivebargaining or other agreement."

The Court agrees with petitioner and the Solicitor General. Art. 287 of the Labor Code asworded permits employers and employees to fix the applicable retirement age at below 60years. Moreover, providing for early retirement does not constitute diminution of benefits. Inalmost all countries today, early retirement, i.e., before age 60, is considered a reward forservices rendered since it enables an employee to reap the fruits of his labor — particularly

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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 correspondingretirement benefits, usually consisting of a substantial cash windfall, can early on be put toproductive and profitable uses by way of income-generating investments, thereby affording amore 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 cannotbe considered a diminution of employment benefits.

Being a product of negotiation, the CBA between the petitioner and the union intendedthe 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, itcannot be said that he was illegally dismissed when the CBA provision on compulsory retirementwas applied to his case.

Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement PayLaw", which went into effect on January 7, 1993. Although passed many years after thecompulsory retirement of herein private respondent, nevertheless, the said statute sheds lighton the present discussion when it amended

Art. 287 of the Labor Code, to make it read as follows: Retirement. — Any employee maybe retired upon reaching the retirement age establish in the collective bargaining agreement orother applicable employment contract.

In the absence of a retirement plan or agreement providing for retirement benefits ofemployees in the establishment, an employee upon reaching the age of sixty (60) years ormore, but not beyond sixty-five (65) years which is hereby declared the compulsory retirementage, who has served at least five (5) years in the said establishment may retire . . ."

The aforequoted provision makes clear the intention and spirit of the law to giveemployers and employees a free hand to determine and agree upon the terms and conditions ofretirement. Providing in a CBA for compulsory retirement of employees after twenty-five (25)years of service is legal and enforceable so long as the parties agree to be governed by suchCBA. The law presumes that employees know what they want and what is good for them absentany showing that fraud or intimidation was employed to secure their consent thereto.

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R&E Transport vs. LatagG.R. No. 155214; Feb. 13, 2004

FACTS:Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La

Mallorca ceased from business operations, Latag transferred to R & E Transport, Inc. He wasreceiving 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 nolonger allowed to continue working on account of his old age. Latag thus asked Felix Fabros, theadministrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 buthe was ignored.

Thus, on December 21, 1998, Latagfiled a case for payment of his retirement pay beforethe 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:Whether or not Latag is entitled to retirement benefits considering she signed a waiver of

quitclaim.

RULING:The respondent is entitled to retirement benefits despite of the waiver of quitclaims.

There is no dispute the fact that the late Pedro M. Latag is entitled to retirement benefits.Rather, the bone of contention is the number of years that he should be credited with incomputing those benefits. The findings of the NLRC that Pedro must be credited only with hisservice to R & E Transport, Inc., because the evidence shows that the aforementionedcompanies are two different entities. After a careful and painstaking review of the evidence onrecord, the court supports the NLRC's findings.

As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no errorwhen it ruled that the document was invalid and could not bar her from demanding the benefitslegally 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 uponquitclaims 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 retirementbenefits 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 compulsoryretirement age, who has served at least five (5) years in said establishment, may retire and

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shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for everyyear of service, a fraction of at least six (6) months being considered as one whole year. Unlessthe 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 thanfive (5) days of service incentive leaves.

The rules implementing the New Retirement Law similarly provide the above-mentionedformula 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 inexcess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, thebasis for computing their benefits should be the average daily income. In this case, the CAfound that Pedro was earning an average of five hundred pesos (P500) per day. We thuscompute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000. Rufina Patis vs. Alusitain

G.R. No. 146202; July 14, 2004

FACTS:On March 1948, Alusitain was hired as a laborer at the Rufina Patis Factory owned and

operated by petitioner Lucas. After close to forty three years, Alusitain admittedly tendered hisletter of resignation. On May 22, 1991, Alusitain executed a duly notarized affidavit ofseparation from employment and submitted the same on even date to the Pensions Departmentof the Social Security System (SSS).

On January 7, 1993, Republic Act No. 7641 (R.A. 7641) Sometime in 1995, Alusitain,claiming that he retired from the company on January 31, 1995, having reached the age of 65and due to poor health, verbally demanded from petitioner Lucas for the payment of hisretirement benefits. By his computation, he claimed that he was entitled to P86,710.00.

Petitioner Lucas, however, refused to pay the retirement benefits of Alusitain, promptingthe latter to make a written demand on September 20, 1995. Lucas, however, remainedadamant in his refusal to give in to Alusitain's demands. Having failed to arrive at an amicablesettlement, Alusitain filed on November 17, 1995 a complaint before the NLRC againstpetitioners Rufina Patis Factory and Lucas for non-payment of retirement benefits.

ISSUE:Whether or not the respondent is entitled to the benefits granted by the amendment of

the law.

RULING:The respondent is entitled to the retirement benefits.

Republic Act No. 7641 (R.A. 7641), "AN ACT AMENDING ARTICLE 287 OF PRESIDENTIALDECREE NO. 442, AS AMENDED OTHERWISE KNOWN AS THE LABOR CODE OF THE PHILIPPINES,BY PROVIDING FOR RETIREMENT PAY TO QUALIFIED PRIVATE SECTOR EMPLOYEES IN THEABSENCE OF ANY RETIREMENT PLAN IN THE ESTABLISHMENT," took effect providing, amongother things, thusly:

Art. 287. Retirement. — Any employee may be retired upon reaching the retirementage established in the collective bargaining agreement or other applicable employmentcontract.

In the absence of a retirement plan or agreement providing for retirement benefits ofemployees in the establishment, an employee upon reaching the age of sixty (60) years ormore, but not beyond sixty five (65) years which is hereby declared the compulsory retirementage, who has served at least five (5) years in the said establishment, may retire and shall be

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entitled to retirement pay equivalent to at least one half (½) month salary for every year ofservice, 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 (½) month salaryshall mean fifteen (15) days plus one twelfth (1/12) of the 13th month pay and the cashequivalent of not more than five (5) days of service incentive leaves.

Violation of this provision is hereby declared unlawful and subject to the penal provisionsunder Article 288 of this Code.

The Court believes that the respondent nevertheless maintained that he continuedworking for petitioners until January 1995, the date of actual retirement, due to illness and oldage, and that he merely accomplished the foregoing documents in compliance with therequirements of the SSS in order to avail of his retirement benefits.

Sta. Catalina College vs. NLRCG.R. No. 144483; November 19, 2003

FACTS:In June 1955, Hilaria was hired as an elementary school teacher at the Sta. Catalina

College. In 1970, she applied for and was granted a one year leave of absence without pay onaccount of the illness of her mother. After the expiration in 1971 of her leave of absence, shehad not been heard from by Sta. Catalina College. In the meantime, she was employed as ateacher at the San Pedro Parochial School during school year 1980-1981 and at the Liceo de SanPedro, Biñan, Laguna during school year 1981-1982.

In 1982, she applied anew at petitioner school which hired her. On March 1997, duringthe 51st Commencement Exercises of petitioner school, Hilaria was awarded a Plaque ofAppreciation for thirty years of service and P12,000.00 as gratuity pay. On May 1997, Hilariareached the compulsory retirement age of 65. Retiring pursuant to Article 287 of the LaborCode, as amended by Republic Act 7641, petitioner school pegged her retirement benefits atP59,038.35, computed on the basis of fifteen years of service from 1982 to 1997. Her servicefrom 1955 to 1970 was excluded in the computation, petitioner school having asserted that shehad, in 1971, abandoned her employment. Hilaria insisted, that her retirement benefits shouldbe computed on the basis of her thirty years of service, inclusive of the period from 1955 to1970 and that the gratuity pay earlier given to her should not be deducted there from.

The parties having failed to agree on how the retirement benefits should be computed,Hilaria filed a complaint before the NLRC for non-payment of retirement benefits. Labor Arbiterrendered ordering the respondents to pay the complainant the amount of P18,185.26 only asthe differential of her retirement benefits.

ISSUE:Whether or not Hilaria's services for the school during the period from 1955 to 1970

should be factored in the computation of her retirement benefits.

RULING:Hilaria cannot be credited for her services in 1955-1970 in the determination of her

retirement benefits. This Court is not unmindful of Hilaria's rendition of a total of thirty years ofteaching 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.

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Retirement benefits, on the other hand, are intended to help the employee enjoy theremaining years of his life, releasing him from the burden of worrying for his financial support,and are a form of reward for his loyalty to the employer.

In Hilaria's case, her retirement pay as computed by petitioners amounts to P59,038.35,P28,853.09 of which had already been given to her under the PERAA. Since the computedamount of her retirement pay is much lower than that provided under the law, she is entitled toreceive the difference between the actual amount of her retirement benefits as required by lawand that provided for under the PERAA.

Article 287 of the Labor Code, as amended by Republic Act 7641 or the New RetirementLaw, provides: Retirement. — Any employee may be retired upon reaching the retirement ageestablished in the collective bargaining agreement or other applicable employment contract. Incase of retirement, the employee shall be entitled to receive such retirement benefits as he mayhave earned under existing laws and any collective bargaining agreement and otheragreements: Provided, however, That an employee's retirement benefits under any collectivebargaining and other agreements shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement benefits ofemployees in the establishment, an employee upon reaching the age of sixty (60) years ormore, but not beyond sixty-five (65) years which is hereby declared the compulsory retirementage, who has served at least five (5) years in the said establishment, may retire and shall beentitled to retirement pay equivalent to at least one-half (½) month salary for every year ofservice, 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 (½) month salaryshall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cashequivalent of not more than five (5) days of service incentive leaves.

Likewise, Section 3.3, Rule II of the Rules Implementing R.A. 7641 provides: 3.3. Whereboth the employer and the employee contribute to a retirement fund in accordance with anindividual or collective agreement or other applicable employment contract, the employer'stotal contribution thereto shall not be less than the total retirement benefits to which theemployee would have been entitled had there been no such retirement fund. In case theemployer's contribution is less than the retirement benefits provided under this Rule, theemployer shall pay the difference.

Hence, Hilaria is entitled to receive P98,706.45 computed as follows:One-half month salary = (15 days x latest salary per day) + (5 days leave x

latest salary per day) + (1/12 of 13th month pay) = P4,512.30 + P1,504.10 + P547.33 = P6,563.73

Retirement Pay = number of years in service x one-half month salary = 5 years x P6,580.43= P98,455.95

Since petitioner school had already paid Hilaria P28,853.09 representing employercontributions under the PERAA, the same should be deducted from the retirement pay due her,to thereby leave a balance of P69,602.86 still due her.

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Honda Phils., vs. Samahan ng mga Manggagawa sa HondaG.R. No. 145561; June 15, 2005

FACTS:The case stems from the collective bargaining agreement between Honda and the

respondent union that it granted the computation of 14th month pay as the same as 13th monthpay. Honda continues the practice of granting financial assistance covered every Decembereach year of not less than 100% of the basic salary. In the latter part of 1998, the parties startedto re-negotiate for the fourth and fifth years of the CBA. The union filed a notice of strike on theground of unfair labor practice for deadlock.

DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsoryarbitration. The striking employees were ordered to return to work and management to acceptthem back under the same terms prior to the strike staged. Honda issued a memorandum of thenew computation of the 13th month and 14th month pay to be granted to all its employeeswhereby the 31 long strikes shall be considered unworked days for purpose of computing thesaid benefits. The amount equivalent to ½ of the employees’ basic salary shall be deductedfrom these bonuses, with a commitment that in the event that the strike is declared legal,Honda shall pay the amount.

The respondent union opposed the pro-rated computation of bonuses. This issue wassubmitted to voluntary arbitration where it ruled that the company’s implementation of the pro-rated computation is invalid.

ISSUE:Whether or not the pro-rated computation of the 13th and 14th month pays and other

bonuses in question is valid and lawful.

RULING:The Court ruled that the pro-rated computation is invalid.

The pro-rated computation of Honda as a company policy has not ripened into a companypractice and it was the first time they implemented such practice.

The payment of the 13th month pay in full month payment by Honda has become anestablished practice. The length of time where it should be considered in practice is not beinglaid down by jurisprudence. The voluntary act of the employer cannot be unilaterally withdrawn

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without violating Article 100 of the Labor Code.

The court also rules that the withdrawal of the benefit of paying a full month salary for 13 th

month pay shall constitute a violation of Article 100 of the Labor Code.

Jaculbe vs. Silliman University G.R. No. 156934; March 16, 2007

FACTS:Sometime in 1958, petitioner began working for respondent’s university medical center

as a nurse. In a letter in December 1992, respondent, through its Human ResourcesDevelopment Office, informed petitioner that she was approaching her 35 th year of service withthe university and was due for automatic retirement on November 18, 1993, at which time shewould be 57 years old. This was pursuant to respondent’s retirement plan for its employeeswhich provided that its members could be automatically retired “upon reaching the age of 65 orafter 35 years of uninterrupted service to the university.” Respondent required certaindocuments in connection with petitioner’s impending retirement.

A brief exchange of letters between petitioner and respondent followed. Petitioneremphatically insisted that the compulsory retirement under the plan was tantamount to adismissal and pleaded with respondent to be allowed to work until the age of 60 because thiswas the minimum age at which she could qualify for SSS pension. But respondent stood pat onits decision to retire her, citing “company policy.”

On November 15, 1993, petitioner filed a complaint in the National Labor RelationsCommission (NLRC) for “termination of service with preliminary injunction and/or restrainingorder.” On November 18, 1993, respondent compulsorily retired petitioner. The labor arbiterrendered a decision finding respondent guilty of illegal dismissal and ordered that petitioner bereinstated and paid full back wages. On appeal, the NLRC reversed the labor arbiter’s decisionand dismissed the complaint. the CA affirmed the NLRC.

ISSUE:Whether or not the respondent’s retirement plan imposing automatic retirement after 35

years of service contravenes the security of tenure clause in the 1987 Constitution and theLabor 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 ofsecurity of tenure. Article 287 of the Labor Code provides: Retirement - Any employee may beretired upon reaching the retirement age established in the collective bargaining agreement orother applicable employment contract. By its express language, the Labor Code permitsemployers and employees to fix the applicable retirement age at below 60 years.

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The rules and regulations of the plan show that participation therein was not voluntary atall. Rule III of the plan, on membership, stated:

SECTION 1 – MEMBERSHIP, All full-time Filipino employees of the University willautomatically become members of the Plan, provided, however, that those who haveretired from the University, even if rehired, are no longer eligible for membership in thePlan. 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 aperson is hired on a full-time basis by the University.

SECTION 3 – TERMINATION OF MEMBERSHIP, Termination of membership in the Plan shallbe upon the death of the member, resignation or termination of employee’s contract bythe 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 3½% of the basic salaries of the faculty and staff. To this shall beadded 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 paywhile on leave, his leave without pay should pay his contributions to the Plan. However, amember, who has been on leave without pay should pay his contributions based on his salaryplus the University’s contributions while on leave or the full amount within one monthimmediately after the date of his reinstatement. Provided, further that if a member has nosufficient 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 workingfor respondent altogether. Furthermore, in the rule on contributions, the repeated use of theword “shall” ineluctably pointed to the conclusion that employees had no choice but tocontribute to the plan (even when they were on leave).

Retirement is the result of a bilateral act of the parties, a voluntary agreement betweenthe employer and the employee whereby the latter, after reaching a certain age agrees to severhis or her employment with the former. The truth was that petitioner had no choice but toparticipate in the plan, given that the only way she could refrain from doing so was to resign orlose her job. It is axiomatic that employer and employee do not stand on equal footing, asituation which often causes an employee to act out of need instead of any genuineacquiescence 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 theemployees’ consent. Stated conversely, employees are free to accept the employer’s offer tolower the retirement age if they feel they can get a better deal with the retirement planpresented by the employer. Thus, having terminated petitioner solely on the basis of a provisionof a retirement plan which was not freely assented to by her, respondent was guilty of illegaldismissal.

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Intercontinental Broadcasting Corp., vs. AmarillaG.R. No. 162775; October 27, 2006

FACTS:On various dates, petitioner employed the following persons at its Cebu station: Candido

C. Quiñones, Jr, Corsini R. Lagahit, as Studio Technician, Anatolio G. Otadoy, as Collector andNoemi Amarilla, as Traffic Clerk. On March 1986, the government sequestered the station,including its properties, funds and other assets, and took over its management and operationsfrom its owner, Roberto Benedicto. However, in December 1986, the government andBenedicto entered into a temporary agreement under which the latter would retain itsmanagement and operation. On November 1990, the Presidential Commission on GoodGovernment (PCGG) and Benedicto executed a Compromise Agreement, where Benedictotransferred and assigned all his rights, shares and interests in petitioner station to thegovernment.

In the meantime, the four employees retired from the company and received, onstaggered basis, their retirement benefits under the 1993 Collective Bargaining Agreementbetween petitioner and the bargaining unit of its employees. In the meantime, a P1,500.00salary increase was given to all employees of the company, current and retired, effective July1994. However, when the four retirees demanded theirs, petitioner refused and insteadinformed them via a letter that their differentials would be used to offset the tax due on theirretirement benefits in accordance with the National Internal Revenue Code (NIRC).

The four retirees filed separate complaints against IBC TV-13 Cebu and Station ManagerLouella F. Cabañero for unfair labor practice and non-payment of backwages before the NLRC.

ISSUE:Whether or not the retirement benefits of respondents are part of their gross income.

RULING:The Court agrees with petitioner that under the CBA, it is not obliged to pay for the taxes

on the respondents' retirement benefits. CBA did not provide a provision where petitionerobliged itself to pay the taxes on the retirement benefits of its employees. The Court also agrees

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with petitioner that, under the NIRC, the retirement benefits of respondents are part of theirgross income subject to taxes.

Section 28 (b) (7) (A) of the NIRC of 1986 23 provides: Gross Income. — (b) Exclusionsfrom gross income. — The following items shall not be included in gross income and shall beexempt from taxation under this Title: (7) Retirement benefits, pensions, gratuities, etc. — A.)Retirement benefits received by officials and employees of private firms whether individuals orcorporate, in accordance with a reasonable private benefit plan maintained by the employer:Provided, That the retiring official or employee has been in the service of the same employer forat least ten (10) years and is not less than fifty years of age at the time of his retirement:Provided, further, That the benefits granted under this subparagraph shall be availed of by anofficial or employee only once. For purposes of this subsection, the term "reasonable privatebenefit plan" means a pension, gratuity, stock bonus or profit-sharing plan maintained by anemployer for the benefit of some or all of his officials or employees, where contributions aremade by such employer for officials or employees, or both, for the purpose of distributing tosuch officials and employees the earnings and principal of the fund thus accumulated, andwherein it is provided in said plan that at no time shall any part of the corpus or income of thefund be used for, or be diverted to, any purpose other than for the exclusive benefit of the saidofficial and employees.

Revenue Regulation No. 12-86, the implementing rules of the foregoing provisions,provides: (b) Pensions, retirements and separation pay. — Pensions, retirement and separationpay constitute compensation subject to withholding tax, except the following: (1) Retirementbenefit received by official and employees of private firms under a reasonable private benefitplan maintained by the employer, if the following requirements are met: (i) The retirement planmust be approved by the Bureau of Internal Revenue; (ii) The retiring official or employees musthave been in the service of the same employer for at least ten (10) years and is not less thanfifty (50) years of age at the time of retirement; and (iii) The retiring official or employee shallnot have previously availed of the privilege under the retirement benefit plan of the same oranother employer.

Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer isburdened to prove the concurrence of the following elements:

(1) a reasonable private benefit plan is maintained by the employer;(2) the retiring official or employee has been in the service of the same employer for at

least 10 years; (3) the retiring official or employee is not less than 50 years of age at the time of his

retirement; and (4) the benefit had been availed of only once.

Article VIII of the 1993 CBA provides for two kinds of retirement plans - compulsory andoptional. Thus:

ARTICLE VIII RETIREMENTSection 1: Compulsory Retirement — Any employee who has reached the age ofFifty Five (55) years shall be retired from the COMPANY and shall be paid aretirement pay in accordance with the following schedule:

LENGTH OF SERVICE RETIREMENT BENEFITS=1 year-below 5 yrs. 15 days for every year of service5 years-9 years 30 days for every year of service10 years-14 years 50 days for every year of service15 years-19 years 65 days for every year of service20 years or more 80 days for every year of service

A supervisor who reached the age of Fifty (50) may at his/her option retire withthe same retirement benefits provided above.

Section 2: Optional Retirement — Any covered employee, regardless of age, whohas rendered at least five (5) years of service to the COMPANY may voluntarily

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retire and the COMPANY agrees to pay Long Service Pay to said covered employeein accordance with the following schedule:

LENGTH OF SERVICE RETIREMENT BENEFITS5-9 years 15 days for every year of service10-14 years 30 days for every year of service15-19 years 50 days for every year of service20 years or more 60 days for every year of service

Section 3: Fraction of a Year — In computing the retirement under Section 1 and 2of this Article, a fraction of at least six (6) months shall be considered as onewhole year. Moreover, the COMPANY may exercise the option of extending theemployment of an employee.

Section 4: Severance of Employment Due to Illness — When a supervisor suffersfrom disease and/or permanent disability and her/his continued employment isprohibited by law or prejudicial to her/his health of the health of his co-employees, the COMPANY shall not terminate the employment of the subjectsupervisor unless there is a certification by a competent public health authoritythat the disease is of such a nature or at such stage that it can not be curedwithin a period of six (6) months even with proper medical treatment. Thesupervisor may be separated upon payment by the COMPANY of separation paypursuant to law, unless the supervisor falls within the purview of either Sections 1or 2 hereof. In which case, the retirement benefits indicated therein shall apply,whichever is higher.

Section 5: Loyalty Recognition — The COMPANY shall recognize the services of thesupervisor/director who have reached the following number of years uponretirement by granting him/her a plaque of appreciation and any lasting gift: 10years but below 15 years (P3,000.00) worth; 15 years but below 20 year(P7,000.00) worth; 20 years and more (P10,000.00) worth.

Respondents were qualified to retire optionally from their employment with petitioner.there is no record that the 1993 CBA had been approved or was ever presented to the BIR.Hence, the retirement benefits of respondents are taxable.

Under Section 80 of the NIRC, petitioner, as employer, was obliged to withhold the taxeson said benefits and remit the same to the BIR. Section 80. Liability for Tax. — (A) Employer. —The employer shall be liable for the withholding and remittance of the correct amount of taxrequired to be deducted and withheld under this Chapter. If the employer fails to withhold andremit the correct amount of tax as required to be withheld under the provision of this Chapter,such tax shall be collected from the employer together with the penalties or additions to the taxotherwise applicable in respect to such failure to withhold and remit.

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Letran Calamba Faculty & Employees Association vs. NLRC et al.G.R. No. 156225; January 29, 2008

FACTS:On October 8, 1992, the Letran Calamba Faculty and Employees Association (petitioner)

filed with Regional Arbitration Branch No. IV of the National Labor Relations Commission (NLRC)a Complaint against Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection ofvarious monetary claims due to its members. Some of the allegations of the petitioners in itsPosition Paper are: (1) In the computation of the thirteenth month pay of its academicpersonnel, respondent does not include as basis therefor their compensation for overloads. Itonly takes into account the pay the faculty members receive for their teaching loads notexceeding eighteen (18) units; (2) respondent has not paid the wage increases required byWage Order No. 5 to its employees who qualify thereunder; (3) respondent has not also paid itsemployees the holiday pay for the ten (10) regular holidays as provided for in Article 94 of theLabor Code. Respondent has refused without justifiable reasons and despite demands to pay itsobligations.

As to the inclusion of the overloads of respondent's faculty members in the computationof their 13th-month pay, petitioner argues that under the Revised Guidelines on theImplementation of the 13th-Month Pay Law, promulgated by the Secretary of Labor onNovember 16, 1987, the basic pay of an employee includes remunerations or earnings paid byhis employer for services rendered, and that excluded therefrom are the cash equivalents ofunused vacation and sick leave credits, overtime, premium, night differential, holiday pay andcost-of-living allowances. Petitioner claims that since the pay for excess loads or overloads doesnot fall under any of the enumerated exclusions and considering that the said overloads arebeing performed within the normal working period of eight hours a day, it only follows that theoverloads should be included in the computation of the faculty members' 13th-month pay.

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ISSUE:Whether or not a teacher's overload pay should be considered in the computation of his

or her 13th-month pay.

RULING:It is a settled rule that when an administrative or executive agency renders an opinion or

issues a statement of policy, it merely interprets a pre-existing law and the administrativeinterpretation is at best advisory for it is the courts that finally determine what the law means.In the present case, while the DOLE Order may not be applicable, the Court finds that overloadpay should be excluded from the computation of the 13th-month pay of petitioner's members.

In resolving the issue of the inclusion or exclusion of overload pay in the computation ofa teacher's 13th-month pay, it is decisive to determine what "basic salary" includes andexcludes. In this respect, the Court's disquisition in San Miguel Corporation v. Inciong isinstructive, to wit: Under Presidential Decree 851 and its implementing rules, the basic salary ofan employee is used as the basis in the determination of his 13th month pay. Anycompensations or remunerations which are deemed not part of the basic pay is excluded asbasis in the computation of the mandatory bonus. Under the Rules and RegulationsImplementing Presidential Decree 851, the following compensations are deemed not part of thebasic salary: a) Cost-of-living allowances granted pursuant to Presidential Decree 525 and Letterof Instruction No. 174; b) Profit sharing payments; c) All allowances and monetary benefitswhich are not considered or integrated as part of the regular basic salary of the employee at thetime of the promulgation of the Decree on December 16, 1975.

Under a later set of Supplementary Rules and Regulations Implementing PresidentialDecree 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and otherremunerations are excluded as part of the basic salary and in the computation of the 13th-month pay. The exclusion of cost-of-living allowances under Presidential Decree 525 and Letterof Instruction No. 174 and profit sharing payments indicate the intention to strip basic salary ofother payments which are properly considered as "fringe" benefits. Likewise, the catch-allexclusionary phrase "all allowances and monetary benefits which are not considered orintegrated as part of the basic salary" shows also the intention to strip basic salary of any andall additions which may be in the form of allowances or "fringe" benefits. Moreover, theSupplementary Rules and Regulations Implementing Presidential Decree 851 is even moreemphatic in declaring that earnings and other remunerations which are not part of the basicsalary shall not be included in the computation of the 13th-month pay.

While doubt may have been created by the prior Rules and Regulations ImplementingPresidential Decree 851 which defines basic salary to include all remunerations or earnings paidby an employer to an employee, this cloud is dissipated in the later and more controllingSupplementary Rules and Regulations which categorically, exclude from the definition of basicsalary earnings and other remunerations paid by employer to an employee. A cursory perusal ofthe two sets of Rules indicates that what has hitherto been the subject of a broad inclusion isnow a subject of broad exclusion. The Supplementary Rules and Regulations cure the seemingtendency of the former rules to include all remunerations and earnings within the definition ofbasic salary.

The all-embracing phrase "earnings and other remunerations" which are deemed notpart of the basic salary includes within its meaning payments for sick, vacation, or maternityleaves, premium for works performed on rest days and special holidays, pay for regular holidaysand night differentials. As such they are deemed not part of the basic salary and shall not beconsidered in the computation of the 13th-month pay. If they were not so excluded, it is hard tofind any "earnings and other remunerations" expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose.

This conclusion finds strong support under the Labor Code of the Philippines. To cite afew provisions: “Art. 87. Overtime work. Work may be performed beyond eight (8) hours a dayprovided that the employee is paid for the overtime work, additional compensation equivalent

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to his regular wage plus at least twenty-five (25%) percent thereof”. It is clear that overtime payis an additional compensation other than and added to the regular wage or basic salary, forreason of which such is categorically excluded from the definition of basic salary under theSupplementary Rules and Regulations Implementing Presidential Decree 851. In Article 93 of thesame Code, paragraph “c.) work performed on any special holiday shall be paid an additionalcompensation of at least thirty percent (30%) of the regular wage of the employee."

It is likewise clear that premium for special holiday which is at least 30% of the regularwage is an additional compensation other than and added to the regular wage or basic salary.For similar reason it shall not be considered in the computation of the 13th-month pay. In thesame manner that payment for overtime work and work performed during special holidays isconsidered as additional compensation apart and distinct from an employee's regular wage orbasic salary, an overload pay, owing to its very nature and definition, may not be considered aspart of a teacher's regular or basic salary, because it is being paid for additional work performedin excess of the regular teaching load.

Moreover, petitioner failed to refute private respondent's contention that excess teachingload is paid by the hour, while the regular teaching load is being paid on a monthly basis; andthat the assignment of overload is subject to the availability of teaching loads. This only goes toshow that overload pay is not integrated with a teacher's basic salary for his or her regularteaching load. In addition, overload varies from one semester to another, as it is dependentupon the availability of extra teaching loads. As such, it is not legally feasible to considerpayments for such overload as part of a teacher's regular or basic salary. Verily, overload paymay not be included as basis for determining a teacher's 13th-month pay.

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 SalesDepartment-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. Insistingthat his retirement benefits and 13th month pay must be based on the average monthly salaryof P42,766.19, which consists of P10,919.22 basic salary and P31,846.97 average monthlycommission, petitioner refused to accept the check issued by private respondent in the amountof P200,322.21. Instead, he filed a complaint before the arbitration branch of the NLRC forretirement benefits, 13th month pay, tax refund, earned sick and vacation leaves, financialassistance, service incentive leave pay, damages and attorney's fees.

Petitioner contends that the commissions form part of the basic salary, citing the case ofPhilippine Duplicators, Inc. v. National Labor Relations Commission, wherein the Court held thatcommissions earned by salesmen form part of their basic salary. Private respondent countersthat petitioner knew that the overriding commission is not included in the basic salary becauseit had not been considered as such for a long time in the computation of the 13th month pay,leave commissions, absences and tardiness.

ISSUE:

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Whether or not the average monthly sales commission of thirty one thousand eighthundred forty six and 97/100 (Php31,846.97) should be included in the computation of hisretirement benefits and 13th month pay.

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 eachsalesman, were properly included in the term basic salary for purposes of computing the 13thmonth pay. The salesmen's commission are not overtime payments, nor profit-sharing paymentsnor any other fringe benefit but a portion of the salary structure which represents an automaticincrement 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 medicalrepresentatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine FujiXerox Co., were excluded from the term basic salary because these were paid to the medicalrepresentatives and rank-and-file employees as productivity bonuses, which are generally tiedto the productivity, or capacity for revenue production, of a corporation and such bonusesclosely resemble profit-sharing payments and have no clear direct or necessary relation to theamount of work actually done by each individual employee. Further, commissions paid by theBoie-Takeda Company to its medical representatives could not have been sales commissions inthe same sense that Philippine Duplicators paid the salesmen their sales commissions. Medicalrepresentatives 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 thecircumstances or conditions for its payment, which indubitably are factual in nature for they willrequire a re-examination and calibration of the evidence on record.

As to the main issue whether petitioner's commissions be considered in the computationof his retirement benefits and 13th month pay, we rule in the negative. Article 287 of the LaborCode, as amended by Republic Act No. 7641, otherwise known as The New Retirement Law, 22provides: Retirement. — Any employee may be retired upon reaching the retirement ageestablished in the collective bargaining agreement or other applicable employment contract… Inthe absence of a retirement plan or agreement providing for retirement benefits of employees inthe establishment, an employee upon reaching the age of sixty (60) years or more, but notbeyond sixty five (65) years which is hereby declared the compulsory retirement age, who hasserved at least five (5) years in the said establishment, may retire and shall be entitled toretirement pay equivalent to at least one half (1/2) month salary for every year of service, afraction of at least six (6) months being considered as one whole year. Unless the partiesprovide for broader inclusions, the term one half (1/2) month salary shall mean fifteen (15) daysplus 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 incomputing his retirement benefits is his latest salary rate of P10,919.22 as the commissions hereceived 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 retirementpay. However, sales commissions which are effectively an integral portion of the basic salarystructure of an employee, shall be included in determining the retirement pay.

At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salarycorresponding to his position as Unit Manager. Thus, as correctly ruled by public respondentNLRC, 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 salescommissions. 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 measuresthe standard or amount of work of complainant as Unit Manager. Accordingly, the additionalpayments made to petitioner were not in fact sales commissions but rather partook of the

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nature of profit-sharing business. Certainly, from the foregoing, the doctrine in Boie-TakedaChemicals and Philippine Fuji Xerox Corporation, which pronounced that commissions areadditional pay that does not form part of the basic salary, applies to the present case. Asidefrom the fact that as unit manager petitioner did not enter into actual sale transactions, butmerely supervised the salesmen under his control, the disputed commissions were not regularlyreceived by him. Only when the salesmen were able to collect from the sale transactions canpetitioner 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 petitionerreceived were not part of his salary structure but were profit-sharing payments and had noclear, direct or necessary relation to the amount of work he actually performed. The collectionmade by the salesmen from the sale transactions was the profit of private respondent fromwhich petitioner had a share in the form of a commission. Hence, petition is denied.

Arco Metal Products Co., Inc., et al. vs. Samahan ng Mga Manggagawa sa Arco MetalNAFLU

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 petitioner’s rank and file employees. Sometime in December2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union membersin amounts proportional to the service they actually rendered in a year, which is less than a fulltwelve (12) months. Respondent protested the prorated scheme, claiming that on severaloccasions petitioner did not prorate the payment of the same benefits to seven (7) employeeswho had not served for the full 12 months. According to respondent, the prorated paymentviolates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, theyfiled a complaint before the National Conciliation and Mediation Board (NCMB).

ISSUE:Whether or not the grant of 13th month pay, bonus, and leave encashment in full

regardless of actual service rendered constitutes voluntary employer practice and,consequently, whether or not the prorated payment of the said benefits constitute diminution ofbenefits under Article 100 of the Labor Code.

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RULING:Any benefit and supplement being enjoyed by employees cannot be reduced,

diminished, discontinued or eliminated by the employer. The principle of non-diminution ofbenefits is founded on the Constitutional mandate to "protect the rights of workers and promotetheir welfare and to afford labor full protection. Said mandate in turn is the basis of Article 4 ofthe Labor Code which states that all doubts in the implementation and interpretation of thisCode, 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 benefitswhich were voluntarily given by the employer and which ripened into company practice. Thus inDavaoFruits Corporation v. Associated Labor Unions, et al. where an employer had freely andcontinuously included in the computation of the 13th month pay those items that were expresslyexcluded by the law, we held that the act which was favorable to the employees though notconforming 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 thatthe employer’s act of including non-basic benefits in the computation of the 13th month pay wasa voluntary act and had ripened into a company practice which cannot be peremptorilywithdrawn.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy offreely, voluntarily and consistently granting full benefits to its employees regardless of thelength of service rendered. True, there were only a total of seven employees who benefited fromsuch a practice, but it was an established practice nonetheless. Jurisprudence has not laid downany rule specifying a minimum number of years within which a company practice must beexercised in order to constitute voluntary company practice. Thus, it can be six (6) years, three(3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibilityby merely claiming that it was a mistake or an error, supported only by an affidavit of itsmanufacturing group head. Hence, petition was denied.

Universal Robina Sugar Milling Corp. vs. CaballedaG.R. No. 156644; July 28, 2008

FACTS:Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a domestic

corporation engaged in the sugar milling business and petitioner Renato Cabati is URSUMCO'smanager. Respondent Agripino Caballeda (Agripino) worked as welder for URSUMCO from March1989 until June 23, 1997 with a salary of P124.00 per day, while respondent Alejandro Cadalin(Alejandro) worked for URSUMCO as crane operator from 1976 up to June 15, 1997 with a salaryof P209.30 per day.

On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a Memorandumestablishing the company policy on “Compulsory Retirement” (Memorandum) of itsemployees. The memorandum provides that all employees corporate-wide who attain 60 yearsof age on or before April 30, 1991 shall be considered retired on May 31, 1991.

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On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a legitimatelabor organization and the recognized sole and exclusive bargaining representative of all themonthly and daily paid employees of URSUMCO, of which Alejandro was a member, entered intoa Collective Bargaining Agreement (CBA). Article XV of the said CBA particularly provided thatthe retirement benefits of the members of the collective bargaining unit shall be in accordancewith law.

Agripino and Alejandro (respondents), having reached the age of 60, were allegedlyforced to retire by URSUMCO. Agripino averred that URSUMCO illegally dismissed him fromemployment on June 24, 1997 when he was forced to retire upon reaching the age of sixty (60)years old. Upon the termination of his employment, he accepted his separation pay and appliedfor retirement benefits with the Social Security System (SSS). Earlier, on April 15, 1997,Alejandro turned 60 years old. On May 28, 1997, he filed his application for retirement withURSUMCO, attaching his birth and baptismal certificates. On July 23, 1997, he accepted hisretirement benefits and executed a quitclaim in favor of URSUMCO.

Thereafter, on August 6, 1997, Agripino filed a Complaint for illegal dismissal, damagesand attorney’s fees before the Labor Arbiter (LA) of Dumaguete City. He alleged that hiscompulsory retirement was in violation of the provisions of Republic Act (R.A.) 7641 and, was ineffect, a form of illegal dismissal.

On August 26, 1997, Alejandro likewise filed a Complaint for illegal dismissal,underpayment of retirement benefits, damages and attorney’s fees before the LA, alleging thathe was given only 15 days per year of service by way of retirement benefits and further assails that his compulsory retirement was discriminatory considering that there were otherworkers over sixty (60) years of age who were allowed to continuously report for work.

ISSUES:Whether respondents were illegally terminated on account of compulsory retirement or thesame voluntarily retired.

RULING:SC ruled in favor of the respondents.

Retirement is the result of a bilateral act of the parties, a voluntary agreement betweenthe employer and the employee whereby the latter, after reaching a certain age, agrees tosever his or her employment with the former. The age of retirement is primarily determined bythe existing agreement between the employer and the employees. However, in the absence ofsuch agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code asamended, the legally mandated age for compulsory retirement is 65 years, while the setminimum age for optional retirement is 60 years.

In this case, it may be stressed that the CBA does not per se specifically provide for thecompulsory retirement age nor does it provide for an optional retirement plan. It merelyprovides 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 primarilydetermined by the collective bargaining agreement or other employment contract or employer'sretirement plan. In the absence of any provision on optional retirement in a collective bargainingagreement, other employment contract, or employer's retirement plan, an employee mayoptionally retire upon reaching the age of 60 years or more, but not beyond 65 years, providedhe has served at least five years in the establishment concerned. That prerogative is exclusivelylodged in the employee.

Indubitably, the voluntariness of the respondents' retirement is the meat of the instantcontroversy. Petitioners postulate that respondents voluntarily retired particularly whenAlejandro filed his application for retirement, submitted all the documentary requirements,accepted the retirement benefits and executed a quitclaim in favor of URSUMCO. Respondents

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claim otherwise, contending that they were merely forced to comply as they were no longergiven any work assignment and considering that the severance of their employment withURSUMCO is a condition precedent for them to receive their retirement benefits.

Generally, the law looks with disfavor on quitclaims and releases by employees who havebeen inveigled or pressured into signing them by unscrupulous employers seeking to evadetheir legal responsibilities and frustrate just claims of employees. They are frowned upon ascontrary to public policy. A quitclaim is ineffective in barring recovery of the full measure of aworker's rights, and the acceptance of benefits therefrom does not amount to estoppels.

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 payAlejandro the differential on his retirement benefits. On the other hand, Agripino was actuallyand totally deprived of his retirement benefit.

Moreover, the petitioners, not the respondents, have the burden of proving that thequitclaim was voluntarily entered into. In previous cases, we have considered, among others,the educational attainment of the employees concerned in upholding the validity of the quitclaims which they have executed in favor of their employers.

Cercado vs. Uniprom, Inc.GR NO. 188154 October 13, 2010

FACTS:Petitioner Lourdes A. Cercado (Cercado) started working for respondent UNIPROM, Inc.

(UNIPROM) on December 15, 1978 as a ticket seller assigned at Fiesta Carnival, Araneta Center,Quezon City. Later on, she was promoted as cashier and then as clerk typist. On April 1, 1980,UNIPROM instituted an Employees’ Non-Contributory Retirement Plan4 which provides that anyparticipant with twenty (20) years of service, regardless of age, may be retired at his option orat the option of the company. UNIPROM exercised its option under the retirement plan, anddecided to retire Cercado effective at the end of business hours on February 15, 2001. A check

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of even date in the amount of P100,811.70, representing her retirement benefits under theregular retirement package, was issued to her. Cercado refused to accept the check.

The CA, however, ruled that UNIPROM’s retirement plan was consistent with Article 287of the Labor Code, which provides that "any employee may be retired upon reaching theretirement age established in the collective bargaining agreement or other applicableemployment contract."

ISSUE: WON UNIPROM has a bona fide retirement plan.

HELD: The petition is meritorious.

x x x We reiterate the well-established meaning of retirement in this jurisdiction:Retirement is the result of a bilateral act of the parties, a voluntary agreement between theemployer and the employee whereby the latter, after reaching a certain age, agrees to sever hisor her employment with the former.

Acceptance by the employees of an early retirement age option must be explicit,voluntary, free, and uncompelled. While an employer may unilaterally retire an employee earlierthan the legally permissible ages under the Labor Code, this prerogative must be exercisedpursuant to a mutually instituted early retirement plan. In other words, only the implementationand execution of the option may be unilateral, but not the adoption and institution of theretirement plan containing such option. For the option to be valid, the retirement plancontaining it must be voluntarily assented to by the employees or at least by a majority of themthrough a bargaining representative.

The following pronouncements in Jaculbe v. Silliman University are elucidating:An employer is free to impose a retirement age less than 65 for as long as it hasthe employees’ consent. Stated conversely, employees are free to accept theemployer’s offer to lower the retirement age if they feel they can get a better dealwith the retirement plan presented by the employer.

We disagree with the CA’s conclusion that the retirement plan is part of petitioner’semployment contract with respondent. It must be underscored that petitioner was hired in 1978or 2 years before the institution of UNIPROM’s retirement plan in 1980. Logically, heremployment contract did not include the retirement plan, much less the early retirement ageoption contained therein

Radio Mindanao Network Inc, et. al., vs. Ybarola, Jr. et. al.GR 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 RMN. They eventually became account managers,soliciting advertisements and servicing various clients of RMN.

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On September 15, 2002, the respondents' services were terminated as a result of RMN'sreorganization/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/quitclaimaffidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (whichwere later consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal withseveral money claims, including attorney's fees. They indicated that their monthly salary rateswere P60,000.00 for Ybarola and P40,000.00 for Rivera.

The respondents argued that the release/quitclaim they executed should not be a bar tothe recovery of the full benefits due them; while they admitted that they signed releasedocuments, they did so due to dire necessity.

The petitioners denied liability. Labor Arbiter Patricio Libo-on dismissed the illegaldismissal complaint, but ordered the payment of additional separation pay to the respondents— P490,066.00 for Ybarola and P429,517.55 for Rivera. On appeal by the petitioners to theNLRC, the NLRC set aside the labor arbiter's decision and dismissed the complaint for lack ofmerit. 6 It ruled that the withholding tax certificate cannot be the basis of the computation ofthe respondents' separation pay as the tax document included the respondents' cost-of-livingallowance and commissions. As a general rule, commissions cannot be included in the basefigure for the computation of the separation pay because they have to be earned by actualmarket transactions attributable to the respondents.

The NLRC upheld the validity of the respondents' quitclaim affidavits as they failed toshow that they were forced to execute the documents. In its decision of February 17, 2011, theCA granted the petition and set aside the assailed NLRC dispositions.

ISSUE:Whether or not respondents' commissions were not part of their salaries to be

considered in the computation of their separation pay

RULINGThe 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 markettransactions attributable to them. They submit that the commissions are profit-sharingpayments which do not form part of their salaries.

The Supreme Court was not convinced. If these commissions had been really profit-sharing bonuses to the respondents, they should have received the same amounts, yet, as theNLRC 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 commissionssupports the CA's finding that the salary structure of the respondents was such that they onlyreceived a minimal amount as guaranteed wage; a greater part of their income was derivedfrom the commissions they get from soliciting advertisements; these advertisements are the"products" they sell. As the CA aptly noted, this kind of salary structure does not detract fromthe character of the commissions being part of the salary or wage paid to the employees forservices rendered to the company.

The petitioners' reliance on our ruling inTalam v. National Labor Relations Commission,regarding the "proper appreciation of quitclaims," as they put it, is misplaced. While Talam, inthe cited case, and Ybarola and Rivera, in this case, are not unlettered employees, theirsituations differ in all other respects.

In Talam, the employee received a valuable consideration for his less than two years ofservice 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

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deficient by at least P400,000.00; thus, they were given only half of the amount they werelegally entitled to. To be sure, a settlement under these terms is not and cannot be a reasonableone, given especially the respondents' length of service — 25 years for Ybarola and 19 years forRivera. The CA was correct when it opined that the respondents were in dire straits when theyexecuted the release/quitclaim affidavits. Without jobs and with families to support, they dalliedin executing the quitclaim instrument, but were eventually forced to sign given theircircumstances.

12. 2011 NLRC RULES OF PROCEDURE

LARKINS vs. NLRCG.R. No. 92432 February 23, 1995

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FACTS:Petitioner was a member of the US Air Force assigned to oversee the dormitories of the

Third Aircraft Generation Squadron (3 AGS) at Clark Air Base, Pampanga. 3 AGS terminated thecontract for the maintenance of the dorms with De Guzman Custodial Services. The employees,including private respondents, were allowed to continue working for 3 AGS. It was left to thenew contractor, the JAC Maintenance Services owned by Joselito Cunanan, to decide whether itwould retain their services, however, the latter chose to bring in his own workers. Privaterespondents filed a complaint with the Regional Arbitration Branch of the NLRC againstpetitioner, Lt. Col. Frankhauser, and Cunanan for illegal dismissal, underpayment of wages,claims for emergency cost of living allowance, thirteenth-month pay, service incentive leave payand holiday premiums. Cunanan was dropped as party respondent. Petitioner and Lt. Col.Frankhauser failed to answer the complaint and to appear at the hearings. They also failed tosubmit their position paper, which the Labor Arbiter deemed a waiver on their part. The casewas submitted for decision on the basis of private respondents' position paper and supportingdocuments.

On November 21, 1988, the Labor Arbiter granted all the claims of private respondentsfinding both Frankhauser and petitioner "guilty of illegal dismissal" and ordered them toreinstate private respondents with full back wages, or to pay their separation pay.

Petitioner alleges that she never received nor was served, any summons or copies of theoriginal and amended complaints, and therefore the Labor Arbiter had no jurisdiction over herperson under Article XIV of the R.P. ? U.S. Military Bases Agreement. NLRC issued a Resolutionaffirming the decision of the Labor Arbiter, while the Solicitor General disagreed.

ISSUE:Whether or not the questioned resolutions are null and void because respondent Labor

Arbiter did not acquire jurisdiction to entertain and decide the case.

HELD:The Labor Arbiter did not acquire jurisdiction over the petitioner.

The "Agreement between the Republic of the Philippines and the United States ofAmerica 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 Americannationals inside the U.S. military bases in the country. Article XIV provides that No process, civilor criminal, shall be served within any base except with the permission of the commandingofficer of such base; but should the commanding officer refuse to grant such permission he shallforthwith take the necessary steps to serve such process, and to provide the attendance of theserver of such process before the appropriate court in the Philippines or procure such server tomake 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 forUnited States Armed Forces personnel within any U.S. base in the Philippines could be servedtherein only with the permission of the Base Commander. If he withholds giving his permission,he should designate another person to serve the process, and obtain the server's affidavit forfiling with the appropriate court.

The Labor Arbiter did not follow said procedure; instead, addressed the summons to Lt.Col. Frankhauser and not the Base Commander. Respondents do not dispute petitioner's claimthat no summons was ever issued and served on her, however, they sent notices of thehearings to her. Notices of hearing are not summonses. The provisions and prevailingjurisprudence in Civil Procedure may be applied by analogy to NLRC proceedings (Revised Rulesof the NLRC, Rule I, Sec. 3). It is basic that the Labor Arbiter cannot acquire jurisdiction over theperson of the respondent without the latter being served with summons. In the absence ofservice of summons or a valid waiver thereof, the hearings and judgment rendered by the LaborArbiter are null and void.

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Petitioner appealed to the NLRC and participated in the oral argument before the saidbody, however this does not constitute a waiver of the lack of summons and a voluntarysubmission of her person to the jurisdiction of the Labor Arbiter. She may have raised groundsother than lack of jurisdiction, but these grounds were discussed in relation to and as a result ofthe issue of the lack of jurisdiction. In effect, petitioner set forth only one issue and that is theabsence of jurisdiction over her person. If an appearance before the NLRC is precisely toquestion the jurisdiction of the said agency over the person of the defendant, then thisappearance is not equivalent to service of summons.

UERM-Memorial Medical Center vs. NLRCG.R. No. 110419 March 3, 1997

FACTS:

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On 14 December 1987 Republic Act No. 6640 took effect which mandated a ten (P10.00)peso increase on the prevailing daily minimum wage of P54.00. In applying said law, thepetitioners granted salary increases to their employees based on the following computation, towit:

1. To members of the faculty who are non-union members, P304.17 per month;2. To rank-and-file employees (individual complainants who are union members), P209.17per month.

There was a difference of P95.00 in the salaries of the two classes of employees. Privaterespondents who are rank and file employees demanded payment of the difference. Before theparties could settle their dispute, Republic Act No. 6727 took effect on 1 July 1989 which againincreased the daily minimum wage in the private sector (whether agricultural or non-agricultural) by P25.00. In compliance, petitioners paid their employees using the followingcomputation, to wit:

1. To members of the faculty who are non-union members, P760.42 a month; and2. To rank-and-file employees (individual complainants who are union members), P523.00a month.

Again, there was a difference of P237.42 per month between the salaries of unionmembers and non-union members. In September 1987, petitioners increased the hiring rate ofthe new employees to P188.00 per month. Private respondents once more demanded from thepetitioners payment of the salary differential mandated by RA No. 6727 and correction of thewage distortion brought about by the increase in the hiring rate of new employees.

On 12 April 1988, Policy Instruction No. 54 was issued by the then Secretary of LaborFranklin Drilon, the pertinent provision of which reads:

. . . the personnel in subject hospitals and clinics are entitled to a full weekly wage ofseven days if they have completed the 40-hour/5-day workweek in any given workweek.

All enforcement and adjudicatory agencies of this Department shall be guided by thisissuance in the disposition of cases involving the personnel of covered hospitals andclinics.

Petitioners challenged the validity of said Policy Instruction and refused to pay thesalaries of the private respondents for Saturdays and Sundays. Consequently, a complaint wasfiled by the private respondents, represented by the Federation of Free Workers (FFW), claimingsalary differentials under Republic Act Nos. 6640 and 6727, correction of the wage distortionand the payment of salaries for Saturdays and Sundays under Policy Instruction No. 54. Withinthe reglementary period for appeal, the petitioners filed their Notice and Memorandum ofAppeal with a Real Estate Bond consisting of land and various improvements therein worthP102,345,650. The private respondents moved to dismiss the appeal on the ground that Article223 of the Labor Code, as amended, requires the posting of a cash or surety bond. The NLRCdirected petitioners to post a cash or surety bond of P17,082,448.56 with a warning that failureto do so would cause the dismissal of the appeal. The petitioners filed a Motion forReconsideration alleging it is not in a viable financial condition to post a cash bond nor to paythe annual premium of P700,000.00 for a surety bond. On 6 October 1992, the NLRC dismissedpetitioners' appeal.

The SC ruled a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC. . . 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 monetaryaward in the judgment appealed from for the appeal to be perfected, may beconsidered a jurisdictional requirement, nevertheless, adhering to the principlethat substantial justice is better served by allowing the appeal on the meritsthreshed out by the NLRC, the Court finds and so holds that the foregoingrequirement of the law should be given a liberal interpretation.

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In Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission The intention of the lawmakers to make the bond an indispensable

requisite for the perfection of an appeal by the employer is underscored by theprovision that an appeal by the employer may be perfected "only upon theposting of a cash or surety bond." The word "only" makes it perfectly clear, thatthe lawmakers intended the posting of a cash or surety bond by the employer tobe the exclusive means by which an employer's appeal may be perfected. Therequirement 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 butrather to take into account the spirit and intention of the Labor Code, it would be prudent for usto look into the merits of the case, especially since petitioner disputes the allegation thatprivate respondent was illegally dismissed.

The SC reiterates the policy which stresses the importance of deciding cases on the basisof their substantive merit and not on strict technical rules. In the case at bar, the judgmentinvolved is more than P17 million and its precipitate execution can adversely affect theexistence of petitioner medical center. Likewise, the issues involved are not insignificant andthey deserve a full discourse by our quasi-judicial and judicial authorities. We are also confidentthat the real property bond posted by the petitioners sufficiently protects the interests of privaterespondents should they finally prevail. It is not disputed that the real property offered bypetitioners is worth P102,345,650. The judgment in favor of private respondent is only a littlemore than P17 million.

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Philtranco Service Enterprises, Inc. vs. NLRCG.R. No. 124100 April 1, 1998

FACTS:Nieva was employed as a driver by petitioner assigned to the Legaspi City-Pasay City

route. Nieva sideswiped an owner-type jeep and a criminal complaint was filed against him.Philtranco posted a bail bond for Nieva. After having been suspended, he was told to wait untilhis case was settled. The case was finally settled he was requested to file a new application ashe was no longer considered an employee of Philtranco, allegedly for being absent without leavefrom October 19 to November 20, 1989.

Nieva filed a complaint for illegal dismissal and demanded for 13th month pay with theNLRC’s National Capital Region Arbitration Branch in Manila. Philtranco filed a motion to dismisson the ground of improper venue, stating that the complaint should have been lodged with theNLRC’s Regional Arbitration Branch in Legaspi City, not only because Nieva was a residentthereof, but also because the latter was hired, assigned, and based in Legaspi City.

ISSUE:Whether or not NLRC’s NCR Arbitration Branch in Manila was a proper venue for the filing

of Nieva’s complaints for illegal dismissal

HELD: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 LegaspiCity-Pasay City route. In fact, Section 1(a), Rule IV of the New Rules of Procedure of the NLRC ismerely permissive. Provisions on venue are intended to assure convenience for the employeeand his witnesses and to promote the ends of justice provided that it is not oppressive to theemployer.

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St. Martin Funeral Home vs. NLRCG.R. No. 130866 September 16, 1998

FACTS:Private respondent alleges that he started working as Operations Manager of petitioner

St. Martin Funeral Home on February 6, 1995. Petitioner on the other hand claims that privaterespondent was not its employee but only the uncle of Amelita Malabed, the owner of petitionerSt. Martin's Funeral Home. When the mother of Amelita passed away, the latter then took overthe management of the business and made some changes in the business operation and privaterespondent and his wife were no longer allowed to participate in the management thereof. As aconsequence, the latter filed a complaint charging that petitioner had illegally terminated hisemployment.

The labor arbiter rendered a decision in favor of petitioner declaring that no employer-employee relationship existed between the parties and, therefore, his office had no jurisdictionover the case.

On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decisionand remanding the case to the labor arbiter for immediate appropriate proceedings. Petitionerthen filed a motion for reconsideration which was denied by the NLRC in its resolution datedAugust 18, 1997 for lack of merit

ISSUE: Whether or not the Court has the power to review decisions of the NLRC.

HELD:When the issue was raised in an early case on the argument that this Court has no

jurisdiction to review the decisions of the NLRC, and formerly of the Secretary of Labor, sincethere is no legal provision for appellate review thereof, the Court nevertheless rejected thatthesis. It held that there is an underlying power of the courts to scrutinize the acts of suchagencies on questions of law and jurisdiction even though no right of review is given by statute;that the purpose of judicial review is to keep the administrative agency within its jurisdictionand protect the substantial rights of the parties; and that it is that part of the checks andbalances which restricts the separation of powers and forestalls arbitrary and unjustadjudications.

Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, theremedy of the aggrieved party is to timely file a motion for reconsideration as a precondition forany further or subsequent remedy, and then seasonably avail of the special civil action ofcertiorari under Rule 65, for which said Rule has now fixed the reglementary period of sixty daysfrom notice of the decision. Curiously, although the 10-day period for finality of the decision ofthe NLRC may already have lapsed as contemplated in Section 223 of the Labor Code, it hasbeen held that this Court may still take cognizance of the petition for certiorari on jurisdictionaland due process considerations if filed within the reglementary period under Rule 65.

Sec. 9. Jurisdiction. The Court of Appeals shall exercise: (3) Exclusive appellatejurisdiction over all final judgments, decisions, resolutions, orders or awards of Regional TrialCourts and quasi-judicial agencies, instrumentalities, boards or commissions, including theSecurities and Exchange Commission, the Social Security Commission, the EmployeesCompensation Commission and the Civil Service Commission, except those falling within theappellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Codeof the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, andof subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph ofSection 17 of the Judiciary Act of 1948.

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Under the foregoing premises, the instant petition for certiorari is hereby REMANDED,and all pertinent records thereof ordered to be FORWARDED, to the Court of Appeals forappropriate action and disposition consistent with the views and ruling herein set forth, withoutpronouncement as to costs.

LUDO & LUYM CORPORATION VS SAORNIDOG.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 workerswere deployed by CLAS to perform the services needed by LUDO. These arrastre workers weresubsequently hired, on different dates, as regular rank-and-file employees of LUDO every timethe latter needed additional manpower services. Said employees thereafter joined respondentunion, the LUDO Employees Union (LEU), which acted as the exclusive bargaining agent of therank-and-file employees. Respondent union entered into a collective bargaining agreement withLUDO which provides certain benefits to the employees, the amount of which vary according tothe length of service rendered by the availing employee. Thereafter, the union requested LUDOto include in its members period of service the time during which they rendered arrastreservices to LUDO through the CLAS so that they could get higher benefits. LUDO failed to act onthe request. Thus, the matter was submitted for voluntary arbitration. Voluntary Arbitrator ruledthat: (1) the respondent employees were engaged in activities necessary and desirable to thebusiness of petitioner, and (2) CLAS is a labor-only contractor of petitioner. The Court of Appealsaffirmed in toto the decision of the Voluntary Arbitrator. Petitioner contends that the appellatecourt erred when it upheld the award of benefits which were beyond the terms of submissionagreement and that the arbitrator must confine its adjudication to those issues submitted by theparties for arbitration, which in this case is the sole issue of the date of regularization of theworkers. Hence, the award of benefits by the arbitrator was done in excess of jurisdiction.

ISSUE:Whether or not the appellate court gravely erred when it upheld the award of benefits

which were beyond the terms of submission agreement.

HELD:Generally, the arbitrator is expected to decide only those questions expressly delineated

by the submission agreement. Nevertheless, the arbitrator can assume that he has thenecessary power to make a final settlement since arbitration is the final resort for theadjudication 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 questionedarbitral awards, deserves our concurrence, thus: In general, the arbitrator is expected to decidethose questions expressly stated and limited in the submission agreement. However, sincearbitration is the final resort for the adjudication of disputes, the arbitrator can assume that hehas the power to make a final settlement. Thus, assuming that the submission empowers thearbitrator to decide whether an employee was discharged for just cause, the arbitrator in thisinstance can reasonable assume that his powers extended beyond giving a yes-or-no answerand included the power to reinstate him with or without back pay.

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Hansin Engineering and Construction Co. Ltd. vs. Court of AppealsG.R. No. 165910 April 10, 2006

FACTS:Hanjin is a construction company that had been contracted by the Philippine

Government for the construction of various foreign-financed projects. Hanjin and the PhilippineGovernment entered into contracts for the construction of the Malinao Dam at Pilar, Bohol, witha projected completion period of 1,050 calendar days, including main canal and lateral projectsfor 750 days. From August 1995 to August 1996, Hanjin contracted the services of 712carpenters, 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 ofbenefits against petitioners, before the NLRC. The complainants averred that they were regularemployees of Hanjin and that they were separated from employment without any lawful or justcause. Only 521 of the complainants affixed their signatures in the complaints.

Petitioners alleged that the complainants were mere project employees in its BoholIrrigation Project and that 2 of the worekers were charged with qualified theft before the RTC.Some of the complainants had already migrated to USA or had died, while 117 of them were stillunder the employ of Hanjin. Petitioner stated that some of the complainants had voluntarilyresigned; 14 were absent without prior approved leave; 15 had signed a Motion to Withdrawfrom the complaint; and many of the complainants were separated on account of thecompletion of the project. However, petitioners failed to append any document to support theirclaim.

Labor Arbiter rendered judgment in favor of the 428 complainants, granting separationpay and attorney's fees to each of them stating that the complainants were regular employeesof petitioner and their claims for underpayment, holiday pay, premium pay for holiday and restday, 13th month pay, and service incentive leave would be computed after sufficient data weremade available.

Petitioners appealed the decision to the NLRC, which affirmed with modification theLabor Arbiter's ruling. Petitioners filed a Motion for the Reconsideration of the decision (with amotion to conduct clarificatory hearings)

Petitioners appended to their motion machine copies of some of the complainants'employment contracts, resignation letters of others who were given monetary awards in thedecision, and 11 folders consisting mostly of payrolls.

NLRC partially granted petitioners' motion. Unsatisfied, petitioners filed a Petition forCertiorari under Rule 65 of the Revised Rules of Court in the CA. CA dismissed the petition andaffirmed the NLRC's ruling that the dismissed employees were regular employees. The CAstressed that petitioners failed to refute the claim of the respondents that they were regularemployees. Petitioners moved to reconsider the decision, which the CA denied.

ISSUE:Whether or not respondents are project employees.

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HELD:While respondent alleged that "complainants all signed a contract of employment at the

time they were hired indicating therein the particular project they will be working on, the periodand other conditions provided in their contracts which complainants fully knew and understood,"nowhere in the records can the said contracts be found. Moreover, let it be stressed that underDO No. 19, Series of 1993 on project employment, six (6) indicators are enumerated therein andone of which is that:

"(T)he termination of his employment in the particular project/undertaking isreported to the Department of Labor and Employment (DOLE) Regional Officehaving jurisdiction over the workplace within 30 days following the date of hisseparation from work x x x."

In this particular case, the records do not show that a similar report was ever made byrespondent to the Department of Labor and Employment. Such failure of respondent employerto report to the nearest employment office of the Department of Labor, the termination of theworkers it claimed as project employees at the time it completed the project, is proof thatcomplainants were not project employees.

The principal test for determining whether particular employees are properlycharacterized as project employees is: whether or not the project employees were assigned tocarry out a specific project or undertaking, the duration of which were specified at the time theemployees were engaged for that project. Predetermination of the duration or period of projectemployment is essential in resolving whether one is a project employee or not. In the instantcase, the completion of the project for which the complainants were hired was not determinedat the start of their employment, there being no substantial proof thereof. The fact thatcomplainants had rendered more than one year of service at the time of their dismissal andthere being no substantial evidence to support that they were engaged to work on a specificproject or undertaking, overturns respondent’s allegation that complainants were projectemployees hired for a specific fixed project for a limited period of time.

Complainants herein were, therefore, non-project employees, but regular employees.Admittedly, being a duly licensed contractor firm in the Philippines, respondent is the awardeeof several construction projects and in many occasions it has been given the priority in theawarding of subsequent projects.

In the light of the above facts and circumstances, the respondent's main defense thatcompletion of the project worked on by the complainants constitutes a valid cause oftermination is unsustainable. To repeat, there is no substantial evidence on record to sustain thiscontention. The mere allegation of the respondents that under their employment contracts thecomplainants were made to understand that they were project employees is definitely notpersuasive or unworthy of credence. The best evidence of which would have been the allegedcontracts.

These employees signed duly notarized waivers/quitclaims and who did not recant later.In the absence of evidence showing the contrary, said quitclaims were executed voluntarily andwithout any force or intimidation.

Petitioners submitted to the NLRC dubious machine copies of only some of respondents?Contracts, including alleged employment termination reports submitted to the DOLE. The NLRCfound the contracts barren of probative weight and utterly insufficient to buttress the contentionof petitioners that respondents were only project employees.

Contrary to the representation of respondent's counsel, the original copies of the reportsmade to DOLE were never produced and submitted to this Commission. Neither were theypresented for comparison with the machine copies. These machine copies were not alsocertified as true copies by the DOLE.

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The actual continuous employment of complainants by respondent Hanjin since 1991until 1995 overcomes the piecemeal "appointments" covering for periods of six (6) months orless. From these short term but repeated "appointments," it is apparent that the periods havebeen imposed to preclude the acquisition of tenurial security by the employee and which kind ofemployment contracts should be disregarded for being contrary to public policy.

The appellate court, the NLRC and the Labor Arbiter are thus one in finding thatrespondents were not project employees, and in sustaining respondents' claim of illegaldismissal due to petitioners? failure to adduce contrary evidence. Well-settled is the rule thatfindings of fact of quasi-judicial agencies, like the NLRC, are accorded not only respect but attimes even finality if such findings are supported by substantial evidence. Such findings of factscan only be set aside upon showing of grave abuse of discretion, fraud or error of law, none ofwhich have been shown in this case.

Phil. Journalistic Inc. vs. NLRCG.R. No. 166421, September 05, 2006

FACTS:In NLRC’s 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 retrenchmentprogram.

Thereafter, the parties executed a Compromise Agreement dated July 9, 2001, where PJIundertook to reinstate the 31 complainant-employees effective July 1, 2001 without loss ofseniority rights and benefits; 17 of them who were previously retrenched were agreed to begiven full and complete payment of their respective monetary claims, while 14 others would bepaid their monetary claims minus what they received by way of separation pay.

The compromise agreement was submitted to the NLRC for approval. All the employeesmentioned in the agreement and in the NLRC Resolution affixed their signatures thereon. Theylikewise signed the Joint Manifesto and Declaration of Mutual Support and Cooperation whichhad also been submitted for the consideration of the labor tribunal.

The NLRC forthwith issued another Resolution on July 25, 2002, which among othersdeclared that Thus, the compromise agreement was approved and NCMB-NCR-NS-03-087-00was deemed closed and terminated.

In the meantime, however, the Union filed another Notice of Strike on July 1, 2002. In anOrder dated September 16, 2002, the DOLE Secretary certified the case to the Commission forcompulsory 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 notillegally dismissed. The May 31, 2001 Resolution declaring the retrenchment program illegal didnot attain finality as "it had been academically mooted by the compromise agreement enteredinto between both parties on July 9, 2001."

The Union assailed the ruling of the NLRC before the CA via petition for certiorari underRule 65.In its Decision dated August 17, 2004, the appellate court held that the NLRC gravely abused itsdiscretion in ruling for PJI. The compromise agreement referred only to the award given by theNLRC to the complainants in the said case, that is, the obligation of the employer to thecomplainants. The CA pointed out that the NLRC Resolution nevertheless declared thatrespondent failed to prove the validity of its retrenchment program, which according to it,

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stands even after the compromise agreement was executed; it was the reason why theagreement was reached in the first place.

ISSUES AND RULING:

I. Whether or not the petitioner’s petition for certiorari under Rule 65 of theRevised Rules of Civil Procedure is a proper remedy in this case.

At the outset, we note that this case was brought before us via petition for certiorariunder Rule 65 of the Revised Rules of Civil Procedure. The proper remedy, however, was to file apetition under Rule 45. It must be stressed that certiorari under Rule 65 is "a remedy narrow inscope 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 ofjurisdiction or with grave abuse of discretion.

Be that as it may, a petition for certiorari may be treated as a petition for review underRule 45. Such move is in accordance with the liberal spirit pervading the Rules of Court and inthe 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 tothe petition and treat the same as a petition for review on certiorari.II. Whether or not the the NLRC of the agreement forged between it and the

respondent Union did not render the NLRC resolution ineffectual, nor rendered it"moot and academic.”

Contrary to the allegation of petitioners, the execution and subsequent approval by theNLRC of the agreement forged between it and the respondent Union did not render the NLRCresolution ineffectual, nor rendered it "moot and academic." The agreement becomes part of thejudgment of the court or tribunal, and as a logical consequence, there is an implicit waiver ofthe right to appeal.In any event, the compromise agreement cannot bind a party who did not voluntarily take partin the settlement itself and gave specific individual consent. It must be remembered that acompromise agreement is also a contract; it requires the consent of the parties, and it is onlythen that the agreement may be considered as voluntarily entered into.

A careful perusal of the wordings of the compromise agreement will show that the partiesagreed that the only issue to be resolved was the question of the monetary claim of severalemployees.

The agreement was later approved by the NLRC. The case was considered closed andterminated and the Resolution dated May 31, 2001 fully implemented insofar as the employees"mentioned in paragraphs 2c and 2d of the compromise agreement" were concerned. Hence,the CA was correct in holding that the compromise agreement pertained only to the "monetaryobligation" of the employer to the dismissed employees, and in no way affected the Resolutionin NCMB-NCR-NS-03-087-00 dated May 31, 2001 where the NLRC made the pronouncement thatthere was no basis for the implementation of petitioners' retrenchment program.

To reiterate, the rule is that when judgment is rendered based on a compromiseagreement, the judgment becomes immediately executory, there being an implied waiver of theparties' right to appeal from the decision. The judgment having become final, the Court can nolonger reverse, much less modify it.

III. Whether or not CA can review the factual findings or legal conclusions of the labortribunal.

Petitioners' argument that the CA is not a trier of facts is likewise erroneous. In theexercise of its power to review decisions by the NLRC, the CA can review the factual findings orlegal conclusions of the labor tribunal. Thus, the CA is not proscribed from "examining evidence

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anew to determine whether the factual findings of the NLRC are supported by the evidencepresented and the conclusions derived therefrom accurately ascertained."

Balagtas Multi-Purpose Cooperative, Inc. vs. Court of AppealsG.R. No. 159268 October 27, 2006

FACTS:Balagtas Multi-Purpose Cooperative, Inc. is a duly organized and existing cooperative

under the laws of the Philippines. Sometime in April 1991, Balagtas hired Josefina G. Hipolito-Herrero, as part time manager in its office. Subsequently, Josefina made known of her intentionto take a leave of absence. Her proposal was immediately approved. However, after the lapse ofher leave of absence, Josefina did not report for work anymore. Later on, she filed herresignation.

Consequently Josefina filed a complaint with the Provincial Office of the Department ofLabor in Malolos, Bulacan for illegal dismissal, and non-payment of 13th month pay or ChristmasBonus. She also prayed for reinstatement and paid backwages as well as moral damages.

The Labor Arbiter rendered judgment in favor of complainant and against respondentsand 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 acash or surety bond as required by Article 223 of the Labor Code. They filed a manifestation andmotion instead, stating, that under Republic Act No. 6938, Article 62(7) of the Cooperative Codeof the Philippines, petitioners are exempt from putting up a bond in an appeal from the decisionof 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 waiverand non-perfection of the appeal.

Balagtas appealed to CA, which dismissed the petition holding that the exemption fromputting up a bond by a cooperative applies to cases decided by inferior courts only.

ISSUES:1. Whether cooperatives are exempted from filing a cash or surety bond required toperfect an employer’s appeal under Section 223 of Presidential Decree No. 442 (the

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Labor Code); and,2. Whether a certification issued by the Cooperative Development Authority constitutessubstantial compliance with the requirement for the posting of a bond.

HELD: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 theexemption from payment of an appeal bond, to wit:

(7)All cooperatives shall be exempt from putting up a bond for bringing an appealagainst 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 thecooperative are in excess of the amount of the bond required by the court in similarcases shall be accepted by the court as a sufficient bond.

However, it is only one among a number of such privileges which appear under thearticle entitled “Tax and Other Exemptions” of the code. The provision cited by petitionerscannot be taken in isolation and must be interpreted in relation to the Cooperative Code in itsentirety. Exceptions are to be strictly but reasonably construed; they extend only so far as theirlanguage warrants, and all doubts should be resolved in favor of the general provision ratherthan the exceptions.

2. No. Article 119 of the Cooperative Code itself expressly embodies the legislativeintention to extend the coverage of labor statutes to cooperatives. For this reason, petitionersmust comply with the requirement set forth in Article 223 of the Labor Code in order to perfecttheir 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 ifgranted or provided by statute. The law may validly provide limitations or qualifications theretoor 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 theperiod of appeal, against any occurrence that would defeat or diminish recovery by theemployee 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-judicialagencies” and that, petitioners are not exempt from posting the appeal bond required underArticle 223 of the Labor Code.

St. Martin Funeral Homes vs. National Labor Relations CommissionG.R. No. 142351 November 22, 2006

FACTS:The owner of petitioner St. Martin Funeral Homes, Inc. (St. Martin) is Amelita Malabed.

Prior to January 1996, Amelita’s mother managed the funeral parlor. In 1995, Aricayos wasgranted financial assistance by Amelita’s mother. As a sign of appreciation, respondentextended assistance in managing St. Martin without compensation and no written employmentcontract between Amelita’s mother and respondent Aricayos; furthermore, respondent Aricayoswas not even listed as an employee in the Company’s payroll.

When Amelita’s mother died in January 1996, Amelita took over as manager of St.Martin. Much to her chagrin, she found out that St. Martin had arrearages in the payment of BIRtaxes and other fees owing to the government, but company records tended to show thatpayments were made thereon. As a result, Amelita removed the authority from respondentAricayos and his wife from taking part in managing St. Martin’s operations.

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Aggrieved, respondent Aricayos accused St. Martin of his illegal dismissal as OperationsManager of the company. He believed that the cause of his termination was Amelita’s suspicionthat he pocketed PhP 38,000.00 which was set aside for payment to the BIR of St. Martin’svalued added taxes.On October 25, 1996, the Labor Arbiter rendered a Decision, in favor ofpetitioner declaring that his office had no jurisdiction over the case.

NLRC issued a Resolution annulling the Arbiter’s Decision and remanded the case to himfor appropriate proceedings, to determine the factual issue of the existence of employer-employee relationship between the parties. When its motion for reconsideration was rejected bythe NLRC, petitioner filed a petition for certiorari under Rule 65 before this Court, docketed asG.R. No. 130866.

On September 16, 1998, this Court through Justice Jose Vitug, rendered the landmarkDecision in this case then docketed as G.R. No. 130866, holding for the first time that allpetitions for certiorari under Rule 65 assailing the decisions of the NLRC should henceforth befiled with the CA

ISSUE:Whether or not a petitioner can file his petition for certiorari under Rule65 to assail the

decision of a lower court like NLRC.

HELD:A petition for certiorari under Rule 65 must first be filed at the Court of Appeals. Said

court has a concurrent jurisdiction on petitions for certiorari, mandamus, prohibitions. This is inconsonance with the hierarchy of courts.

10. DOLE PHILIPPINES vs. ESTEVAG.R. No. 161115. November 30, 2006

FACTS:Petitioner is a corporation engaged principally in the production and processing of

pineapple for the export market. Respondents are members of the Cannery Multi-PurposeCooperative (CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938,otherwise known as the Cooperative Code of the Philippines. Pursuant to the Service Contract,CAMPCO members rendered services to petitioner. The number of CAMPCO members thatreport for work and the type of service they performed depended on the needs of petitioner atany given time. Although the Service Contract specifically stated that it shall only be for aperiod of six months, i.e., from 1 July to 31 December 1993, the parties had apparentlyextended or renewed the same for the succeeding years without executing another writtencontract. It was under these circumstances that respondents came to work for petitioner. DOLEorganized a Task Force that conducted an investigation into the alleged labor-only contractingactivities of the cooperatives. The Task Force identified six cooperatives that were engaged inlabor-only contracting, one of which was CAMPCO. In this case, respondents alleged that theystarted working for petitioner at various times in the years 1993 and 1994, by virtue of theService Contract executed between CAMPCO and petitioner. All of the respondents had alreadyrendered more than one year of service to petitioner. While some of the respondents were stillworking for petitioner, others were put on “stay home status” on varying dates in the years1994, 1995, and 1996 and were no longer furnished with work thereafter. Together,respondents filed a Complaint with the NLRC for illegal dismissal, regularization, wagedifferentials, damages and attorney’s fees. Petitioner denied that respondents were itsemployees. It explained that it found the need to engage external services to augment itsregular workforce, which was affected by peaks in operation, work backlogs, absenteeism, andexcessive leaves. It used to engage the services of individual workers for definite periodsspecified in their employment contracts and never exceeding one year. However, such an

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arrangement became the subject of a labor case, in which petitioner was accused of preventingthe regularization of such workers.

ISSUES: Whether or not the court of appeals was correct when it made its own factual findings

and disregarded the factual findings of the labor arbiter and the NLRC. Whether or not CAMPCO was a mere labor-only contractor.

HELD:The Court in the exercise of its equity jurisdiction may look into the records of the case

and re-examine the questioned findings. As a corollary, this Court is clothed with ampleauthority to review matters, even if they are not assigned as errors in their appeal, if it finds thattheir consideration is necessary to arrive at a just decision of the case. The same principles arenow necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdictionover labor cases elevated through a petition for certiorari; thus, we see no error on its part whenit made anew a factual determination of the matters and on that basis reversed the ruling of theNLRC.

On the second issue, CAMPCO was a mere labor-only contractor. First, although petitionertouts the multi-million pesos assets of CAMPCO, it does well to remember that such wereamassed in the years following its establishment. In 1993, when CAMPCO was established andthe Service Contract between petitioner and CAMPCO was entered into, CAMPCO only hadP6,600.00 paid-up capital, which could hardly be considered substantial. It only managed toincrease its capitalization and assets in the succeeding years by continually and defiantlyengaging 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 preciselyestablished 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, thesewere mainly used for administrative purposes; the tools, machineries, and equipment actuallyused by CAMPCO members when rendering services to the petitioner belonged to the latter.Third, petitioner exercised control over the CAMPCO members, including respondents. Petitionerattempts to refute control by alleging the presence of a CAMPCO supervisor in the workpremises. Yet, the mere presence within the premises of a supervisor from the cooperative didnot necessarily mean that CAMPCO had control over its members. Section 8(1), Rule VIII, BookIII of the implementing rules of the Labor Code, as amended, required for permissible jobcontracting that the contractor undertakes the contract work on his account, under his ownresponsibility, according to his own manner and method, free from the control and direction ofhis employer or principal in all matters connected with the performance of the work except as tothe results thereof. As alleged by the respondents, and unrebutted by petitioner, CAMPCOmembers, before working for the petitioner, had to undergo instructions and pass the trainingprovided by petitioner’s personnel. It was petitioner who determined and prepared the workassignments of the CAMPCO members. CAMPCO members worked within petitioner’s plantationand processing plants alongside regular employees performing identical jobs, a circumstancerecognized as an indicium of a labor-only contractorship. Fourth, CAMPCO was not engaged toperform a specific and special job or service. In the Service Contract of 1993, CAMPCO agreedto assist petitioner in its daily operations, and perform odd jobs as may be assigned. CAMPCOcomplied with this venture by assigning members to petitioner. Apart from that, no otherparticular job, work or service was required from CAMPCO, and it is apparent, with such anarrangement, that CAMPCO merely acted as a recruitment agency for petitioner. Since theundertaking of CAMPCO did not involve the performance of a specific job, but rather the supplyof manpower only, CAMPCO clearly conducted itself as a labor-only contractor. Lastly, CAMPCOmembers, including respondents, performed activities directly related to the principal businessof petitioner. They worked as can processing attendant, feeder of canned pineapple andpineapple processing, nata de coco processing attendant, fruit cocktail processing attendant,and etc., functions which were, not only directly related, but were very vital to petitioner’sbusiness of production and processing of pineapple products for export.

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The declaration that CAMPCO is indeed engaged in the prohibited activities of labor-onlycontracting, then consequently, an employer-employee relationship is deemed to exist betweenpetitioner and respondents, since CAMPCO shall be considered as a mere agent or intermediaryof petitioner.

Since respondents are now recognized as employees of petitioner, this Court is tasked todetermine the nature of their employment. In consideration of all the attendant circumstancesin this case, this Court concludes that respondents are regular employees of petitioner. As such,they are entitled to security of tenure. They could only be removed based on just andauthorized causes as provided for in the Labor Code, as amended, and after they are accordedprocedural due process. Therefore, petitioner’s acts of placing some of the respondents on “stayhome status” and not giving them work assignments for more than six months were alreadytantamount to constructive and illegal dismissal.

INTERCONTINENTAL BROADCASTING CORP vs. PANGANIBANG.R. No. 151407, February 06, 2007

FACTS:Ireneo Panganiban (respondent) was employed as Assistant General Manager of the

Intercontinental Broadcasting Corporation (petitioner) from May 1986 until his preventivesuspension on August 26, 1988. Respondent resigned from his employment on September 2,1988.

On April 12, 1989, respondent filed a civil case with the RTC of Quezon City, Branch 93against the members of the Board of Administrators (BOA) of petitioner alleging, among others,non-payment of his unpaid commissions. A motion to dismiss was filed by Joselito Santiago, oneof the defendants, on the ground of lack of jurisdiction, as respondent's claim was a labormoney claim, but this was denied by the RTC. Thus, Santiago filed a petition for certiorari withthe CA which granted Santiago's petition for lack of jurisdiction and set aside the RTC's Orders.

Thereafter, respondent was elected by the BOA as Vice-President for Marketing in July1992. He resigned in April 1993. On July 24, 1996, respondent filed against petitioner acomplaint for illegal dismissal, separation pay, retirement benefits, unpaid commissions, anddamages. The Labor Arbiter (LA) ordered respondent's reinstatement with full backwages, and

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the payment of his unpaid commission, damages and attorney's fees. Petitioner appealed to theNLRC but due to petitioner's failure to post a bond, the appeal was dismissed. The decision wasdeemed final and executory.

ISSUE: Whether or not respondent's claim for unpaid commissions has already prescribed.

HELD:Yes. Respondent's claim had already prescribed as of September 1991. In addition, the

claims of private respondent for reinstatement, backwages and benefits in conjunction with hisemployment from 1986 to 1988 have prescribed.

The applicable law in this case is Article 291 of the Labor Code which provides that "allmoney claims arising from employer-employee relations accruing during the effectivity of thisCode shall be filed within three (3) years from the time the cause of action accrued; otherwisethey shall be forever barred."

The term "money claims" covers all money claims arising from an employer-employeerelation the prescription of an action is interrupted by (a) the filing of an action, (b) a writtenextrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by thedebtor.

On this point, the Court ruled that although the commencement of a civil action stopsthe running of the statute of prescription or limitations, its dismissal or voluntary abandonmentby plaintiff leaves the parties in exactly the same position as though no action had beencommenced at all. Hence, while the filing of Civil Case could have interrupted the running of thethree-year prescriptive period, its consequent dismissal by the CA due to lack of jurisdictioneffectively canceled the tolling of the prescriptive period within which to file his money claim,leaving respondent in exactly the same position as though no civil case had been filed at all.The running of the three-year prescriptive period not having been interrupted by the filing ofCivil Case respondent's cause of action had already prescribed on September 2, 1991, threeyears after his cessation of employment on September 2, 1988. Consequently, when respondentfiled his complaint for illegal dismissal, separation pay, retirement benefits, and damages in July24, 1996, his claim, clearly, had already been barred by prescription.

Far East Agricultural Supply, Inc. vs. LebatiqueG.R. No. 162813, February 12, 2007

FACTS:Petitioner Far East Agricultural Supply hired private respondent Jimmy Lebatique as truck

driver tasked to deliver animal feeds. On January 24, 2000, Lebatique complained of non-payment of overtime work particularly on January 22, 2000, when he was required to make asecond delivery in Novaliches. That same day Lebatique was suspended apparently for illegaluse of company vehicle. He reported for work the next day but was prohibited from entering thecompany premises.

On January 26, 2000, Lebatique sought assistance concerning the non-payment of hisovertime pay. According to him, two days later, he received a telegram from petitionersrequiring him to report for work. He reported for work on January 29, 2000 and was asked toexplain why he was claiming overtime pay. Later, Lebatique was terminated and was told to lookfor another job.

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On March 20, 2000, Lebatique filed a complaint for illegal dismissal and non-payment ofovertime pay.

ISSUE:What is the prescriptive period for money claims?

HELD:All money claims arising from an employer-employee relationship shall be filed within

three years from the time the cause of action accrued; otherwise, they shall be forever barred(Article 291, LC). If it is established that the benefits being claimed have been withheld from theemployee for a period longer than three years, the amount pertaining to the period beyond thethree-year prescriptive period is therefore barred by prescription. The amount that can only bedemanded by the aggrieved employee shall be limited to the amount of the benefits withheldwithin three years before the filing of the complaint.

Lebatique timely filed his claim for service incentive leave pay, considering that in thissituation, the prescriptive period commences at the time he was terminated. On the other hand,his claim regarding non-payment of overtime pay since he was hired in March 1996 is a differentmatter. In the case of overtime pay, he can only demand for the overtime pay withheld for theperiod within three years preceding the filing of the complaint on March 20, 2000. However, wefind insufficient the selected time records presented by petitioners to compute properly hisovertime pay. The Labor Arbiter should have required petitioners to present the daily timerecords, payroll, or other documents in management’s control to determine the correct paymentdue to him.

It is immaterial that Lebatique had filed a complaint for non-payment of overtime pay theday he was suspended by management’s unilateral act. What matters is that he filed thecomplaint for illegal dismissal on March 20, 2000, after he was told not to report for work, andhis filing was well within the prescriptive period allowed under the law.

Letran Calamba Faculty & Employees Association vs. NLRCG.R. No. 156225; January 29, 2008FACTS:

Three cases were consolidated involving petitioner Letran Calamba Faculty andEmployees Association and Colegio de San Juan de Letran, Calamba, for money claims and apetition to declare the subject strike illegal filed by respondent .

On September 28, 1998, the Labor Arbiter (LA) handling the consolidated cases rendereda Decision with the following dispositive portion:

WHEREFORE, premises considered, judgment is hereby rendered, as follows:1. The money claims cases (RAB-IV-10-4560-92-L and RAB-IV-11-4624-92-L) are

hereby dismissed for lack of merit;2. The petition to declare strike illegal (NLRC Case No. RAB-IV-3-6555-94-L) is hereby

dismissed, but the officers of the Union, particularly its President, Mr. Edmundo F.

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Marifosque, Sr., are hereby reprimanded and sternly warned that future conductsimilar to what was displayed in this case will warrant a more severe sanctionfrom this Office.

Both parties appealed to the NLRC. On July 28, 1999, the NLRC promulgated its Decisiondismissing both appeals. Petitioner filed a Motion for Reconsideration but the same was deniedby 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 presentlyassailed judgment dismissing the petition. Petitioner filed a Motion for Reconsideration but theCA denied it in its Resolution promulgated on November 28, 2002.

Citing Agustilo v. Court of Appeals, petitioner contends that in a special civil action forcertiorari brought before the CA, the appellate court can review the factual findings and thelegal conclusions of the NLRC. Petitioner avers that the CA, in concluding that the NLRC Decisionwas 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.

In its Comment, respondent contends that the ruling in Agustilo is an exception ratherthan the general rule; that the general rule is that in a petition for certiorari, judicial review bythis Court or by the CA in labor cases does not go so far as to evaluate the sufficiency of theevidence upon which the proper labor officer or office based his or its determination but islimited only to issues of jurisdiction or grave abuse of discretion amounting to lack ofjurisdiction; that before a party may ask that the CA or this Court review the factual findings ofthe NLRC, there must first be a convincing argument that the NLRC acted in a capricious,whimsical, arbitrary or despotic manner; and that in its petition for certiorari filed with the CA,herein petitioner failed to prove that the NLRC acted without or in excess of jurisdiction or withgrave abuse of discretion.

Respondent argues that Agustilo is not applicable to the present case because in the formercase, the findings of fact of the LA and the NLRC are at variance with each other; while in thepresent case, the findings of fact and conclusions of law of the LA and the NLRC are the same.Respondent also avers that in a special civil action for certiorari, the discretionary power toreview factual findings of the NLRC rests upon the CA; and that absent any findings by the CA ofthe need to resolve any unclear or ambiguous factual findings of the NLRC, the grant of the writof certiorari is not warranted.

ISSUE:Whether or not the Court of Appeals erred in holding that the factual findings of the NLRC

cannot be reviewed in certiorari proceedings.

HELD:In the instant case, the Court finds no error in the ruling of the CA that since nowhere in

the petition is there any acceptable demonstration that the LA or the NLRC acted either withgrave abuse of discretion or without or in excess of its jurisdiction, the appellate court has noreason to look into the correctness of the evaluation of evidence which supports the labortribunals' findings of fact.

This Court held in Odango v. National Labor Relations Commission that:The appellate court’s jurisdiction to review a decision of the NLRC in apetition for certiorari is confined to issues of jurisdiction or grave abuse ofdiscretion. An extraordinary remedy, a petition for certiorari is availableonly and restrictively in truly exceptional cases. The sole office of the writof certiorari is the correction of errors of jurisdiction including thecommission of grave abuse of discretion amounting to lack or excess ofjurisdiction. It does not include correction of the NLRC’s evaluation of theevidence or of its factual findings. Such findings are generally accorded

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not only respect but also finality. A party assailing such findings bears theburden of showing that the tribunal acted capriciously and whimsically orin total disregard of evidence material to the controversy, in order that theextraordinary writ of certiorari will lie.

Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, arebinding on the Supreme Court, unless patently erroneous. It is not the function of the SupremeCourt to analyze or weigh all over again the evidence already considered in the proceedingsbelow. In a petition for review on certiorari, this Court’s jurisdiction is limited to reviewing errorsof law in the absence of any showing that the factual findings complained of are devoid ofsupport in the records or are glaringly erroneous. Firm is the doctrine that this Court is not atrier of facts, and this applies with greater force in labor cases. Findings of fact of administrativeagencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction isconfined 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 whereit is clearly shown that they were arrived at arbitrarily or in utter disregard of the evidence onrecord. We find none of these exceptions in the present case.

In petitions for review on certiorari like the instant case, the Court invariably sustains theunanimous factual findings of the LA, the NLRC and the CA, specially when such findings aresupported by substantial evidence and there is no cogent basis to reverse the same, as in thiscase.

Metro Transit Organization vs. Piglas NFWU-KMU et al.G.R. No. 175460; April 14, 2008FACTS:

Petitioner Metro Transit Organization, Inc. (MTO) is a government owned and controlledcorporation which entered into a Management and Operations Agreement (MOA) with the LightRail Transit Authority (LRTA) for the operation of the Light Rail Transit (LRT) Baclaran-MonumentoLine. Petitioner Jose L. Cortez, Jr. was sued in his official capacity as then Undersecretary of theDepartment of Transportation and Communications and Chairman of the Board of Directors ofpetitioner MTO.

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Respondents filed with the Labor Arbiter Complaints against petitioners and the LRTA forthe following: (1) illegal dismissal; (2) unfair labor practice for union busting; (3) moral andexemplary damages; and (4) attorney's fees.

On 13 September 2004, the Labor Arbiter rendered judgment in favor ofrespondents. Petitioners appealed to the National Labor Relations Commission (NLRC). In aResolution dated 19 May 2006, the NLRC dismissed petitioners' appeal for non-perfection sinceit 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 Appealsassailing the same.

On 24 August 2006, the Court of Appeals issued a Resolution dismissing the Petition. Itruled:

The petitioners have filed this petition for certiorari against the resolution of theNLRC dated May 19, 2006 dismissing the appeal for non-perfection. They havenot, however, filed a motion for reconsideration of the ruling prior to filing thepetition. This renders the petition fatally defective. The motion forreconsideration has been held to be a condition sine qua non for certiorari, therationale being that the lower court should be given the opportunity to correct itserror before recourse to the higher court is made.

ISSUE:Whether or not petitioner can directly file the extraordinary remedy of certiorari without

filing first a motion for reconsideration with the NLRC.

HELD: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 certioraribefore the appellate court as fatally defective.

It must be primarily established that petitioners contravened the procedural rule for theextraordinary remedy of certiorari. The rule is, for the writ to issue, it must be shown that thereis 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 thefiling of a petition for certiorari. Its purpose is to grant an opportunity for the court to correctany actual or perceived error attributed to it by the re-examination of the legal and factualcircumstances of the case. The rationale of the rule rests upon the presumption that the court oradministrative body which issued the assailed order or resolution may amend the same, if giventhe chance to correct its mistake or error.

We have held that the "plain," "speedy," and "adequate remedy" referred to in Section 1, Rule65 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 itaffords the NLRC an opportunity to rectify errors or mistakes it might have committed beforeresort to the courts can be had.

In the case at bar, petitioners directly went to the Court of Appeals on certiorari withoutfiling a motion for reconsideration with the NLRC. The motion for reconsideration would haveaptly furnished a plain, speedy, and adequate remedy. As a rule, the Court of Appeals, in theexercise of its original jurisdiction, will not take cognizance of a petition for certiorari under Rule65, unless the lower court has been given the opportunity to correct the error imputed to it. TheCourt of Appeals correctly ruled that petitioners' failure to file a motion for reconsiderationagainst the assailed Resolution of the NLRC rendered its petition for certiorari before theappellate court as fatally defective.

We agree in the Court of Appeals' finding that petitioners' case does not fall under any ofthe recognized exceptions to the filing of a motion for reconsideration, to wit: (1) when the issue

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raised is purely of law; (2) when public interest is involved; (3) in case of urgency; or when thequestions raised are the same as those that have already been squarely argued andexhaustively passed upon by the lower court. As the Court of Appeals reasoned, the issue beforethe NLRC is both factual and legal at the same time, involving as it does the requirements of theproperty bond for the perfection of the appeal, as well as the finding that petitioners failed toperfect the same. Evidently, the burden is on petitioners seeking exception to the rule to showsufficient justification for dispensing with the requirement.

Certiorari cannot be resorted to as a shield from the adverse consequences ofpetitioners' 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, andproceed to review the propriety of the 19 May 2006 NLRC Resolution, we still arrive at theconclusion that the NLRC did not err in denying petitioners' appeal for its failure to file a bond inaccordance with the Rules of Procedure of the NLRC.

In cases involving a monetary award, an employer seeking to appeal the decision of theLabor Arbiter to the NLRC is unconditionally required by Article 223 of the Labor Code to post acash or surety bond equivalent to the amount of the monetary award adjudged. It should bestressed that the intention of lawmakers to make the bond an indispensable requisite for theperfection of an appeal by the employer is underscored by the provision that an appeal by theemployer may be perfected only upon the posting of a cash or surety bond. The word "only"makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by theemployer to be the exclusive means by which an employer's appeal may be perfected.Moreover, it bears stressing that the perfection of an appeal in the manner and within the periodprescribed by law is not only mandatory but jurisdictional, and failure to conform to the rules willrender the judgment sought to be reviewed final and unappeasable. It cannot beoveremphasized that the NLRC Rules, akin to the Rules of Court, promulgated by authority oflaw, have the force and effect of law.

As borne by the records, petitioners filed a property bond which was conditionallyaccepted by the NLRC subject to the following conditions specified in its 24 February 2006Order:

The conditional acceptance of petitioner's property bond was subject to the submissionof the following: 1) Certified copy of Board Resolution or a Certificate from the CorporateSecretary of Light Rail Transit Authority stating that the Corporation President is authorized by aBoard Resolution to submit title as guarantee of judgment award; 2) Certified Copy of the Titlesissued by the Registry of Deeds of Pasay City; 3) Certified Copy of the current tax declarations ofTitles; 4) Tax clearance from the City Treasurer of Pasay City; 5) Appraisal report of an accreditedappraisal company attesting to the fair market value of property within ten (10) days fromreceipt of this Order. Failure to comply therewith will result in the dismissal of the appeal fornon-perfection thereof.

In the same Order, the NLRC warned that failure of the petitioners to comply with theconditions would result in the dismissal of the appeal for non-perfection thereof. Petitionerswere directed to comply with its given conditions within 10 days from receipt of the Order with acaveat that their failure will result in the dismissal of the appeal. Subsequently, in its 19 May2006 Resolution, the NLRC finally made a factual finding that petitioners failed to comply withthe conditions attached to their posting of the property bond. Thus, the NLRC dismissedpetitioners' appeal for non-perfection thereof.

Essentially, the failure of petitioners to comply with the conditions for the posting of theproperty bond is tantamount to a failure to post the bond as required by law. What is even moresalient is the fact that the NLRC had stressed that petitioners had, for more than a month fromreceipt of its 24 February 2006 Order, to comply with the conditions set forth therein for theposting of the property bond. It cannot be gainsaid that the NLRC had given petitioners a periodof 10 days from receipt of the Order with a warning that non-compliance would result in thedismissal of their appeal for failure to perfect the same. Petitioners therefore disregarded the

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rudiments of the law in the perfection of their appeal. We are without recourse but to takepetitioners' failure against their interest.

J. K. Mercado & Sons Agricultural Enterprises, Inc., vs. Sto. TomasG.R. No. 158084, August 29, 2008

FACTS:On December 3, 1993, the Regional Tripartite Wages and Productivity Board, Region XI,

issued Wage Order No. RTWPB-XI-03, granting a Cost of Living Allowance (COLA) to coveredworkers.

On January 28, 1994, petitioner filed an application for exemption from the coverage ofthe aforesaid wage order. Thus, however, was denied by the regional wage board for lack ofmerit and ordered the petitioner to pay its covered workers the allowance prescribed under saidWage Order.

Notwithstanding the said order, private respondents were not given the benefits duethem. Thus, private respondents filed an Urgent Motion for Writ of Execution, and Writ ofGarnishment seeking the enforcement of subject wage order against several entities includingherein petitioner.

The OIC-Regional Director, Region XI, issued a Writ of Execution for the enforcement ofthe Order dated April 11, 1994 of the Regional Tripartite Wages and Productivity Board. OnNovember 17, 1998 and November 23, 1998, respectively, petitioner filed a Motion to Quashthe Writ of Execution and a Supplemental Motion to the Motion to Quash. Petitioner argued thatherein private respondents' right had already prescribed due to their failure to move for theexecution of the April 11, 1994 Order within the period provided under Article 291 of the LaborCode, as amended, or within three (3) years from the finality of the said order.

Regional Director denied the motion, thus the petitioner filed a notice of appeal whichwas thereafter denied for lack of merit. Hence a petition was filed in SC.

ISSUES: Whether or not the Article 291 of the Labor Code is not applicable to recovery of benefits

under the subject Wage Order, which entitled respondents to a cost of living allowance(COLA)?

Whether or not the claim of the private respondents for cost of living allowance (COLA)pursuant to the Wage Order has already prescribed because of the failure of therespondents to make the appropriate claim within the three (3) year prescriptive periodprovided by Article 291 of the Labor Code, as amended.

RULING:Art. 291 of the Labor Code applies to money claims in general and provides for a 3-year

prescriptive period to file them.

On the other hand, respondent employees' money claims in this case had been reducedto a judgment, in the form of a Wage Order, which has become final and executory. Theprescription applicable, therefore, is not the general one that applies to money claims, but thespecific one applying to judgments. Thus, the right to enforce the judgment, having beenexercised within five years, has not yet prescribed.

Stated otherwise, a claimant has three years to press a money claim. Once judgment isrendered in her favor, she has five years to ask for execution of the judgment, counted from itsfinality. This is consistent with the rule on statutory construction that a general provision should

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yield to a specific one and with the mandate of social justice that doubts should be resolved infavor of labor.

J-PHIL MARINE, INC. and/or JESUS CANDAVA and NORMAN SHIPPING SERVICES vs.NATIONAL LABOR RELATIONS COMMISSION and WARLITO E. DUMALAOGG.R. No. 175366 August 11, 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 forunpaid money claims, moral and exemplary damages, and attorney’s fees and thereafter filedtwo 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 enlargementof the heart and severe thyroid enlargement in the discharge of his duties as cook whichrendered him disabled.

Labor Arbiter Fe Superiaso-Cellan dismissed respondent’s complaint for lack of merit butthe NLRC reversed the Labor Arbiter’s decision and awarded US$50,000.00 disability benefit torespondent. The Court of Appeals dismissed petitioners’ petition for, inter alia, failure to attachto the petition all material documents, and for defective verification and certification.Petitioners’ Motion for Reconsideration of the appellate court’s 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 acompromise agreement with petitioners. He thereupon signed a Quitclaim and Releasesubscribed and sworn to before the Labor Arbiter. Petitioners filed before this Court aManifestation dated May 7, 2007 informing that, inter alia, they and respondent had forged anamicable settlement.

Respondent’s counsel also filed before this Court, purportedly on behalf of respondent, aComment on the present petition. The parties having forged a compromise agreement asrespondent 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, voluntarilyagreed upon by the parties with the assistance of the Department of Labor, shall be final andbinding upon the parties. The National Labor Relations Commission or any court shallnot assume jurisdiction over issues involved therein except in case of non-compliance thereof orif there is prima facie evidence that the settlement was obtained through fraud,misrepresentation, or coercion.

In Olaybar v. NLRC , he Court, recognizing the conclusiveness of compromisesettlements as a means to end labor disputes, held that Article 2037 of the Civil Code, whichprovides that “[a] compromise has upon the parties the effect and authority of resjudicata,” applies suppletorily to labor cases even if the compromise is not judiciallyapproved. That respondent was not assisted by his counsel when he entered intothe compromise does not render it null and void. Eurotech Hair Systems, Inc. v. Gooenlightens:

A compromise agreement is valid as long as the consideration is reasonableand the employee signed the waiver voluntarily, with a full understanding of

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what he was entering into. All that is required for the compromise to be deemedvoluntarily entered into is personal and specific individual consent. Thus, contraryto respondent’s contention, the employee’s counsel need not be present at the time ofthe signing of the compromise agreement.

It bears noting that, as reflected earlier, the Quitclaim and Waiver was subscribed andsworn to before the Labor Arbiter. Petition DISMISSED

SY vs ALC IndustriesGR No. 168339 October 10, 2008

FACTS:Petitioner was hired by respondent corporation ALCII as a supervisor in its purchasing

office. She was thereafter assigned to ALCII's construction project in Davao City as businessmanager and supervisor of the Administrative Division. Her Davao assignment was from May1997 to April 15, 1999.

Petitioner alleged that respondents refused to pay her salary beginning August 1998 andallowances beginning June 1998, despite her almost weekly verbal follow-up. Petitioner filed acomplaint before the labor arbiter for unpaid salaries and allowances. Despite several noticesand warnings, respondents did not file a position paper to controvert petitioner's claims. Thecase was submitted for resolution based solely on petitioner's allegations and evidence.

In his June 30, 2000 decision, the labor arbiter ordered ALCII and/or Dexter Ceriales topay petitioner P282,560 representing her unpaid salary and allowance.

Respondents filed an appeal with motion for reduction of bond in the National LaborRelations Commission (NLRC) without posting any cash or surety bond. In a resolution datedSeptember 6, 2001, the NLRC dismissed respondents' appeal. It ruled that respondents failed toadduce substantial evidence to support their arguments of non-liability. Moreover, it found nojustifiable reason to grant a reduction in the required bond.

Respondents were able to file a motion for reconsideration on time, accompanied by ajoint undertaking/declaration in lieu of the cash or surety bond. Nevertheless, respondents'motion for reconsideration was denied.

On August 2, 2002, respondents filed a motion for clarification but this was likewisedenied. Respondents questioned the NLRC's denial of their motion for clarification andreconsideration in the CA via a petition for certiorari and prohibition.

In its March 30, 2005 decision, the CA set aside the resolutions of the NLRC and thedecision of the labor arbiter and dismissed petitioner's complaint.ISSUE:

WON the decision of the Labor Arbiter has become final and executory.RULING:

Article 223. APPEAL. - Decisions, awards, or orders of the Labor Arbiter are finaland executory unless appealed to the Commission by any or both parties within tencalendar days from receipt of such decisions, awards, or orders. xxx.

In case of a judgment involving a monetary award, an appeal by the employer may beperfected only upon the posting of a cash or surety bond issued by a reputable bondingcompany duly accredited by the Commission in the amount equivalent to the monetaryaward in the judgment appealed from. (emphasis supplied)

Section 1, Rule VI of the Rules of Procedure of the NLRC, as amended, likewise providesthat the appeal must be filed within ten days from receipt of the decision, resolution or order of

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the labor arbiter. Moreover, Section 6 of the same rules provides that an appeal by the employermay be perfected only upon the posting of a cash or surety bond. As the right to appeal ismerely a statutory privilege, it must be exercised only in the manner and in accordance with theprovisions of the law. Otherwise, the right to appeal is lost.

In a long line of cases, we have ruled that the payment of the appeal bond is ajurisdictional requisite for the perfection of an appeal to the NLRC. The lawmakers intended tomake the posting of a cash or surety bond by the employer the exclusive means by which anemployer's appeal may be perfected. The rationale for this rule is:

The requirement that the employer post a cash or surety bond to perfect its/hisappeal is apparently intended to assure the workers that if they prevail in thecase, they will receive the money judgment in their favor upon the dismissal ofthe employers' appeal. It was intended to discourage employers from using anappeal to delay, or even evade, their obligation to satisfy their employee's justand lawful claims.

The explanation advanced by respondents for their failure to pay the appeal bond beliestheir claim. The NLRC found that respondents did not pay the appeal bond on the mistakennotion that they were not liable for the monetary award and had already ceased operations dueto bankruptcy. Respondents belatedly filed a bond with their motion for reconsideration of theNLRC's dismissal of their appeal. We cannot countenance such flagrant disregard of establishedrules of procedure on appeals.

Moreover, the filing of a joint undertaking/declaration, filed way beyond the ten-dayreglementary 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 ofrespondents to perfect their appeal within the reglementary period. Clearly, the CA no longerhad jurisdiction to entertain respondents' appeal from the labor arbiter's decision.

Respondents point out that we have occasionally allowed exceptions to mandatory andjurisdictional requirements in the perfection of appeals, such as disregarding unintendedlapses on the basis of strong and compelling reasons. This is true. However, the obvious motivebehind respondents' plea for liberality is to thwart petitioner's claims. This we cannot allow.Respondents' lapses were far from unintentional. They were deliberate attempts to circumventestablished rules.

Respondents' other contention that they were deprived of due process is likewise devoidof merit. Due process is satisfied when the parties are afforded fair and reasonable opportunityto explain their respective sides of the controversy. In Mariveles Shipyard Corp. v. CA, we held:

The requirements of due process in labor cases before a Labor Arbiter issatisfied when the parties are given the opportunity to submit their positionpapers to which they are supposed to attach all the supporting documents ordocumentary evidence that would prove their respective claims, in the event that theLabor Arbiter determines that no formal hearing would be conducted or that such hearingwas not necessary. (emphasis supplied).

We ruled in Times Transportation Company, Inc. v. Sotelo: To extend the period of appeal is to prolong the resolution of the case, a circumstancewhich would give the employer the opportunity to wear out the energy and meagerresources of the workers to the point that they would be constrained to give up for lessthan what they deserve in law.

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PCI Travel Corporation vs. NLRCGR No. 154379. October 31, 2008

FACTS:A complaint for unfair labor practice was filed against petitioner by respondent NUBE-

AMEXPEA/PCI Travel Employees Union with the latter claiming that the former had been filling uppositions left by regular rank-and-file with contractual employees, but were performing workwhich were usually necessary and desirable in the usual business or trade of the petitioner.Petitioner moved to dismiss the complaint on the ground that the Union was not the real party-in-interest and then they manifested their readiness to prove that said employees were providedby independent legitimate contractors and that it was not engaged in labor-only contracting inposition paper yet to be submitted, but the motion to dismiss is to be resolved first.

However, the Labor Arbiter rendered a decision in favor of the respondent ruling that amotion to dismiss was a prohibited pleading. The same was affirmed by the NLRC but withmodification deleting the awards of damages. Before the CA, the petition was dismissed forfailure to attach copies of pleadings and documents relevant and pertinent to the same and thebecause of the absence of proof that Elizabeth Legarda (petitioner’s president) was dulyauthorized to sign the verification and certification of non-forum shopping.

ISSUES:1. Whether the President of a corporation is authorized to sign the verification and

certification against non-forum shopping without need of a board resolution.2. Whether or not the appellate court has erred in dismissing the petition on a single

technicality.

RULING:While it must be borne in mind that under the Corporation Code, an individual corporate

officer cannot solely exercise any corporate power pertaining to the corporation without theauthority from the board of directors, the Supreme Court however had ruled otherwise in a longline of cases before it. Summing it up, the following officials or employees of the company cansign the verification and certification without need of a board resolution: (1) Chairperson of theBOD, (2) President, (3) General Manager or Acting GM, (4) Personnel Officer and (5) anEmployment Specialist in a labor case.

Thus, that the President of the corporation can sign the verification and certificationwithout need of a board resolution, there thus exists a compelling reason for the reinstatementof the petition before the CA.

A perusal of the petition for certiorari would reveal that petitioner intended to show thegrave abuse of discretion committed by the labor tribunals in not allowing the petitioner theample opportunity to submit its position paper on the alleged violation of the CBA. The LaborArbiter and the NLRC viewed it as a waiver on its part and hastened to rule that “since thecomplainant’s allegations remain unrebutted, they are deemed correct and valid.” Due processdictates that a person should be given the opportunity to be heard. Unfortunately, this was not

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accorded to the petitioner and such right was even foreclosed when the appellate courtdismissed the petition before it on technical grounds.

The policy of our judicial system is to encourage full adjudication of the merits of anappeal. Ends of justice are better served when both parties are heard and the controversydecided on its merits. Thus, in the exercise of its equity jurisdiction, the Court will not hesitate toreverse the dismissal of appeals that are grounded merely on technicalities.

***Remanded to the CA for resolution based on the merits.

LOPEZ VS. Q. C. SPORTS CLUBGR No. 164032 January 19, 2009

FACTS:Claiming that it is a registered independent labor organization and the incumbent

collective bargaining agent of Quezon City Sports Club (QCSC), the Kasapiang Manggagawa saQuezon City Sports Club (union) filed a complaint for unfair labor practice against QCSC on 12November 1997.

The Union averred that it was ordered to submit a new information sheet. Itimmediately wrote a letter addressed to the general manager, Angel Sadang, to inquireabout the information sheet, only to be insulted by the latter. The members of the unionwere not paid their salaries on 30 June 1997. A board member, Antonio Chua allegedlyharassed one of the employees and told him not to join the strike and even promised apromotion. On 4 July 1997, the union wrote a letter to the management for the release ofthe members’ salaries for the period 16-30 June 1997, implementation of Wage Order No.5, and granting of wage increases mandated by the Collective Bargaining Agreement(CBA). When its letter went unanswered, the union filed a notice of strike on 10 July 1997for violation of Article 248 (a)(c)(e) of the Labor Code, nonpayment of overtime pay,refusal to hear its grievances, and malicious refusal to comply with the economicprovisions of the CBA. After conducting a strike vote, it staged a strike on 12 August1997. On 16 August 1997, the QCSC placed some of its employees under temporary lay-off status due to redundancy. It appears that on 22 December 1997, QCSC also filed apetition for cancellation of registration against the union.

The Labor Arbiter (Lustria) found QCSC guilty of unfair labor practice. QCSCappealed from the labor arbiter’s decision. It also filed a motion for reduction of theappeal bond to P4,000,000.00. The NLRC ordered the posting of an additionalP6,000,000.00) .QCSC filed a supplement to its appeal, citing a decision (Dinopol decision)dated 9 October 1998 of Labor Arbiter Ernesto Dinopol declaring the strike of the unionillegal.

Meanwhile, the National Labor Relations Commission (NLRC) rendered a decisiongranting the appeal and reversing the Lustria decision.

The other complainants (petitioners) meanwhile filed a motion for reconsiderationwhich was denied by the NLRC. They filed a petition for certiorari under Rule 65 before theCourt of Appeals but was denied.

ISSUES: 1. Do the simultaneous filing of the motion to reduce the appeal bond and postingof the reduced amount of bond within the reglementary period for appeal

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constitute substantial compliance with Article 223 of the Labor Code? 2. Whether the NLRC erred in declaring them to have lost their employmentcontrary to the Dinopol decision which only affected a few of the employees whowere union members.

RULING:First issue:

Under the Rules, appeals involving monetary awards are perfected only uponcompliance with the following mandatory requisites, namely: (1) payment of the appealfees; (2) filing of the memorandum of appeal; and (3) payment of the required cash orsurety bond.

Thus, the posting of a bond is indispensable to the perfection of an appeal in casesinvolving monetary awards from the decision of the labor arbiter. The filing of the bond isnot only mandatory but also a jurisdictional requirement that must be complied with inorder to confer jurisdiction upon the NLRC. Non-compliance with the requirement rendersthe decision of the labor arbiter final and executory. This requirement is intended toassure the workers that if they prevail in the case, they will receive the money judgment intheir favor upon the dismissal of the employer's appeal. It is intended to discourageemployers from using an appeal to delay or evade their obligation to satisfy theiremployees' just and lawful claims.

However, Section 6 of the New Rules of Procedure of the NLRC also mandates,among others, that no motion to reduce bond shall be entertained except on meritoriousgrounds and upon the posting of a bond in a reasonable amount in relation to themonetary award. Hence, the NLRC has the full discretion to grant or deny the motion toreduce the amount of the appeal bond.

In the case of Nicol v. Footjoy Industrial Corporation ruled that the bondrequirement on appeals involving monetary awards had been and could be relaxed inmeritorious cases such as: (1) there was substantial compliance with the Rules; (2) thesurrounding facts and circumstances constitute meritorious grounds to reduce the bond;(3) a liberal interpretation of the requirement of an appeal bond would serve the desiredobjective of resolving controversies on the merits; or (4) the appellants, at the very least,exhibited their willingness and/or good faith by posting a partial bond during thereglementary period. Applying these jurisprudential guidelines, we find and hold that theNLRC did not err in reducing the amount of the appeal bond and considering the appeal ashaving been filed within the reglementary period.

The posting of the amount of P4,000,000.00 simultaneously with the filing of themotion to reduce the bond to that amount, as well as the filing of the memorandum ofappeal, all within the reglementary period, altogether constitute substantial compliancewith the Rules.

Second issue: We rule in favor of petitioners. The assailed Dinopol decision involves a complaint

for illegal strike filed by QCSC on the ground of a "no-strike no lockout" provision in theCBA. The challenged decision was rendered in accordance with law and is supported byfactual evidence on record. In the notice of strike, the union did not state in particular theacts which allegedly constitute unfair labor practice. Moreover, by virtue of the "no-strikeno lockout" provision in the CBA, the union was prohibited from staging an economicstrike, i.e., to force wage or other concessions from the employer which he is not requiredby law to grant. However, it should be noted that while the strike declared by the unionwas held illegal, only the union officers were declared as having lost their employmentstatus. In effect, there was a ruling only with respect to some union members while thestatus of all others had remained disputed.

There is no conflict between the Dinopol and the Lustria decisions. While both

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rulings involve the same parties and same issues, there is a distinction between theremedies sought by the parties in these two cases. In the Dinopol decision, it was QCSCwhich filed a petition to declare the illegality of the 12 August 1997 strike by the union.The consequence of the declaration of an illegal strike is termination from employment,which the Labor Arbiter did so rule in said case. However, not all union members wereterminated. In fact, only a few union officers were validly dismissed in accordance withArticle 264 of the Labor Code. Corollarily, the other union members who had merelyparticipated in the strike but had not committed any illegal acts were not dismissed fromemployment. Hence, the NLRC erred in declaring the employment status of all employeesas having been lost or forfeited by virtue of the Dinopol decision.

On the other hand, the Lustria decision involved the unfair labor practices allegedby the union with particularity. In said case, Labor Arbiter Lustria sided with the Union andfound QCSC guilty of such practices. As a consequence, the affected employees weregranted backwages and separation pay. The grant of backwages and separation payhowever was not premised on the declaration of the illegality of the strike but on thefinding that these affected employees were constructively dismissed from work, asevidenced by the layoffs effected by the company.

Therefore, with respect to petitioners and union officers Alex J. Santiago, Ma. CeciliaPangan, Ronilo E. Lee, and Genaro Bando, who apparently had been substituted by presentpetitioner Teresita Bando, the Dinopol decision declaring them as having lost theiremployment status still stands.

To recapitulate, the NLRC erred in setting aside the Lustria decision, as well as indeleting the award of backwages and separation pay, despite the finding that the affectedemployees had been constructively dismissed. Based on the foregoing, the Lustriadecision should be upheld and therefore reinstated except as regards the four petitioners.

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Lockheed Detective &Watchman AgencyGR No. 185918 April 18, 2012

FACTS:Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed) entered into a

contract for security services with respondent University of the Philippines (UP).In 1998, severalsecurity guards assigned to UP filed separate complaints against Lockheed and UP for paymentof underpaid wages, 25% overtime pay, premium pay for rest days and special holidays, holidaypay, 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 December16-31, 1998, and attorney’s fees. The Labor Arbiter then rendered a decision declaringrespondents Lockheed Detective and Watchman Agency, Inc. and UP to be solidarily liable tocomplainants for the claims of the latter which are found to be meritorious. Both Lockheed andUP appealed the Labor Arbiter’s decision.

NLRC modified the Labor Arbiter’s decision. It dismissed complainants’ claims forpremium pay for work on rest day and special holiday, and 5 days service incentive leave pay,for lack of basis while, respondent University of the Philippines is still solidarily liable withLockheed in the payment of the rest of the claims covering the period of their service contract.

The complaining security guards and UP filed their respective motions forreconsideration. NLRC denied said motions. As the parties did not appeal the NLRC decision,the same became final and executor and a writ of execution was then issued but later quashedby the Labor Arbiter on motion of UP due to disputes regarding the amount of the award. Later,however, said order quashing the writ was reversed by the NLRC and the Labor Arbiter wasdirected to issue a Writ of Execution for the satisfaction of the judgment award in favor of Third-Party complainants. UP moved to reconsider the NLRC resolution. NLRC upheld its resolution butwith modification that the satisfaction of the judgment award in favor of Lockheed will be onlyagainst the funds of UP which are not identified as public funds. The NLRC order andresolution having become final, Lockheed filed a motion for the issuance of an alias writ ofexecution. The same was granted.

A Notice of Garnishment was issued to Philippine National Bank (PNB) UP Diliman Branchfor the satisfaction of the (inclusive of execution fee). UP filed an Urgent Motion to Quash

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Garnishment. UP contended that the funds being subjected to garnishment at PNB aregovernment/public funds. UP argued that as public funds, the subject PNB account cannot bedisbursed except pursuant to an appropriation required by law. The Labor Arbiter, however,dismissed the urgent motion for lack of merit.

The amount was withdrawn by the sheriff from UP’s PNB account. So UP filed a petitionfor certiorari before the CA contending that respondents gravely abused their discretion in amanner amounting to lack or excess of jurisdiction when they, despite prior knowledge, effectedthe execution that caused paralyzation and dislocation to petitioner’s governmental functions.The CA rendered a decision dismissing UP’s petition for certiorari. On reconsideration, however,the CA issued the assailed Amended Decision. It held that without departing from its findingsthat the funds covered in the savings account sought to be garnished do not fall within theclassification of public funds, it reconsiders the dismissal of the petition in light of the ruling inthe case of National Electrification Administration v. Morales which mandates that allmoney claims against the government must first be filed with the Commissionon Audit (COA). Lockheed moved to reconsider the amended decision but the same wasdenied in the assailed CA Resolution. The CA cited Manila International Airport Authority v. Courtof Appeals which held that UP ranks with MIAA, a government instrumentality exercisingcorporate powers but not organized as a stock or non-stock corporation. While said corporationsare government instrumentalities, they are loosely called government corporate entities but notgovernment-owned and controlled corporations in the strict sense. Hence this petition byLockheed.

ISSUES:WHETHER UP IS A GOVERNMENT ENTITY, SEPARATE AND DISTINCTPERSONALITY FROM

THE NATIONAL GOVERNMENT WITH ITS OWN CHARTER GRANTING IT THE RIGHT TO SUE AND BESUED?WHETHER IT CAN AVAIL OF THE IMMUNITY FROM SUIT OF THEGOVERNMENT?

HELD:The petition has no merit.

The court agrees with UP that there was no point for Lockheed in discussing the doctrineof state immunity from suit as this was never an issue in this case. Clearly, UP consented to besued when it participated in the proceedings below. What UP questions is the hasty garnishmentof its funds in its PNB account. The Court finds that the CA correctly applied the NEA case. LikeNEA, UP is a juridical personality separate and distinct from the government and hasthe capacity to sue and be sued.

Thus, also like NEA, it cannot evade execution, and its funds may be subject togarnishment or levy. However, before execution may be had, a claim for payment of thejudgment award must first be filed with the COA. Under Commonwealth Act No.327, asamended by Section 26 of P.D. No. 1445, it is the COA which has primary jurisdiction toexamine, audit and settle "all debts and claims of any sort" due from or owing the Governmentor any of its subdivisions, agencies and instrumentalities, including government-owned orcontrolled corporations and their subsidiaries. With respect to money claims arising from theimplementation of Republic Act No. 6758, their allowance or disallowance is for COA to decide,subject only to the remedy of appeal by petition for certiorari to this Court. As to the faitaccompli argument of Lockheed, contrary to its claim that there is nothing that can be donesince the funds of UP had already been garnished, since the garnishment was erroneouslycarried out and did not go through the proper procedure (the filing of a claim with the COA), UPis entitled to reimbursement of the garnished funds plus interest of 6% per annum, to becomputed from the time of judicial demand to be reckoned from the time UP filed a petition forcertiorari before the CA which occurred right after the withdrawal of the garnished funds fromPNB. PETITION DENIED.

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Portillo vs Rudolf Lietz., Inc. et. al.GR No. 196539, October 10, 2012

FACTS:In a letter agreement dated 3 May 1991, signed by individual respondent Rudolf Lietz

(Rudolf) and conformed to by Portillo, the latter was hired by the former under the followingterms and conditions:

We acknowledge your proposal in your application specifically to the effect thatyou will not engage in any other gainful employment by yourself or with any othercompany either directly or indirectly without written consent of [Lietz Inc.], andwe hereby accept and henceforth consider your proposal an undertaking on yourpart, a breach of which will render you liable to [Lietz Inc.] for liquidateddamages.

If you are in agreement with these terms and conditions of employment, pleasesignify your conformity below.4

On her tenth (10th) year with Lietz Inc., specifically on 1 February 2002, Portillo waspromoted to Sales Representative and received a corresponding increase in basic monthlysalary and sales quota. Portillo signed another letter agreement containing a "Goodwill Clause:"

It remains understood and you agreed that, on the termination of youremployment by act of either you or [Lietz Inc.], and for a period of three (3) yearsthereafter, you shall not engage directly or indirectly as employee, manager,proprietor, or solicitor for yourself or others in a similar or competitive business orthe same character of work which you were employed by [Lietz Inc.] to do andperform. Should you breach this good will clause of this Contract, you shall pay

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[Lietz Inc.] as liquidated damages the amount of 100% of your grosscompensation over the last 12 months, it being agreed that this sum isreasonable and just.5

Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During herexit interview, Portillo declared that she intended to engage in business—a rice dealership,selling rice in wholesale.

On 15 June 2005, Lietz Inc. accepted Portillo’s resignation and reminded her of the"Goodwill Clause" in the last letter agreement she had signed. Upon receipt thereof, Portillojotted a note thereon that the latest contract she had signed in February 2004 did not containany "Goodwill Clause" referred to by Lietz Inc. In response thereto, Lietz Inc. categorically wrote:

Please be informed that the standard prescription of prohibiting employees fromengaging in business or seeking employment with organizations that directly orindirectly compete against [Lietz Inc.] for three (3) years after resignation remainsin effect.

The documentation you pertain to is an internal memorandum of your salaryincrease, not an employment contract. The absence of the three-year prohibitionclause in this document (or any document for that matter) does not cancel theprohibition itself. We did not, have not, and will not issue any cancellation of suchin the foreseeable future[.] [T]hus[,] regretfully, it is erroneous of you to believeotherwise.6

In a subsequent letter dated 21 June 2005, Lietz Inc. wrote Portillo and supposed that theexchange of correspondence between them regarding the "Goodwill Clause" in the employmentcontract was a moot exercise since Portillo’s articulated intention to go into business, sellingrice, will not compete with Lietz Inc.’s products.

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 directcompetitor of Lietz Inc.

Meanwhile, Portillo’s demands from Lietz Inc. for the payment of her remaining salariesand commissions went unheeded. Lietz Inc. gave Portillo the run around, on the pretext that hersalaries and commissions were still being computed.

On 14 September 2005, Portillo filed a complaint with the National Labor RelationsCommission (NLRC) for non-payment of 1½ months’ salary, two (2) months’ commission, 13thmonth pay, plus moral, exemplary and actual damages and attorney’s fees.

In its position paper, Lietz Inc. admitted liability for Portillo’s money claims in the totalamount of P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillo’smoney claims should be offset against her liability to Lietz Inc. for liquidated damages in theamount of ₱869,633.097 for Portillo’s alleged breach of the "Goodwill Clause" in the employmentcontract when she became employed with Ed Keller Philippines, Limited. On 25 May 2007, LaborArbiter Daniel J. Cajilig granted Portillo’s complaint.

ISSUE:Whether Portillo’s money claims for unpaid salaries may be offset against respondents’

claim for liquidated damages.

HELD:Be that as it may, on more than one occasion, to serve the ultimate purpose of all rules

of procedures—attaining substantial justice as expeditiously as possible15—we have acceptedprocedurally incorrect petitions and decided them on the merits. We do the same here.

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The Court of Appeals anchors its modified ruling on the ostensible causal connectionbetween Portillo’s money claims and Lietz Inc.’s claim for liquidated damages, both claimsapparently arising from the same employment relations. Thus, did it say:

x x x This Court will have to take cognizance of and consider the "GoodwillClause" contained [in] the employment contract signed by and between[respondents and Portillo]. There is no gainsaying the fact that such "GoodwillClause" is part and parcel of the employment contract extended to [Portillo], andsuch clause is not contrary to law, morals and public policy. There is thus a causalconnection between [Portillo’s] monetary claims against [respondents] and thelatter’s claim for liquidated damages against the former. Consequently, we shouldallow legal compensation or set-off to take place. [Respondents and Portillo] areboth bound principally and, at the same time, are creditors of each other. [Portillo]is a creditor of [respondents] in the sum of ₱110,662.16 in connection with hermonetary claims against the latter. At the same time, [respondents] are creditorsof [Portillo] insofar as their claims for liquidated damages in the sum of₱980,295.2516 against the latter is concerned.

We are not convinced.Paragraph 4 of Article 217 of the Labor Code appears to have caused the reliance by the

Court of Appeals on the "causal connection between [Portillo’s] monetary claims against[respondents] and the latter’s claim from liquidated damages against the former."

Art. 217. Jurisdiction of Labor Arbiters and the Commission. – (a) Except asotherwise provided under this code, the Arbiters shall have original and exclusive jurisdiction tohear and decide, within thirty (30) calendar days after the submission of the case by the partiesfor decision without extension, even in the absence of stenographic notes, the following caseinvolving all workers, whether agricultural or nonagricultural:

x x x x4. Claims for actual, moral, exemplary and other forms of damages arising fromthe employer-employee relations; (Underscoring supplied)

Evidently, the Court of Appeals is convinced that the claim for liquidated damagesemanates from the "Goodwill Clause of the employment contract and, therefore, is a claim fordamages arising from the employer-employee relations."

As early as Singapore Airlines Limited v. Paño,18 we established that not all disputesbetween an employer and his employee(s) fall within the jurisdiction of the labor tribunals. Wedifferentiated between abandonment per se and the manner and consequent effects of suchabandonment and ruled that the first, is a labor case, while the second, is a civil law case.

Upon the facts and issues involved, jurisdiction over the present controversy must beheld to belong to the civil Courts. While seemingly petitioner's claim for damages arises fromemployer-employee relations, and the latest amendment to Article 217 of the Labor Code underPD No. 1691 and BP Blg. 130 provides that all other claims arising from employer-employeerelationship are cognizable by Labor Arbiters [citation omitted], in essence, petitioner's claim fordamages is grounded on the "wanton failure and refusal" without just cause of privaterespondent Cruz to report for duty despite repeated notices served upon him of the disapprovalof his application for leave of absence without pay. This, coupled with the further averment thatCruz "maliciously and with bad faith" violated the terms and conditions of the conversiontraining course agreement to the damage of petitioner removes the present controversy fromthe coverage of the Labor Code and brings it within the purview of Civil Law.

Clearly, the complaint was anchored not on the abandonment per se by privaterespondent Cruz of his job—as the latter was not required in the Complaint to report back towork—but on the manner and consequent effects of such abandonment of work translated interms of the damages which petitioner had to suffer.

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Stated differently, petitioner seeks protection under the civil laws and claimsno benefits under the Labor Code. The primary relief sought is for liquidateddamages for breach of a contractual obligation. The other items demanded are notlabor benefits demanded by workers generally taken cognizance of in labor disputes,such as payment of wages, overtime compensation or separation pay. The itemsclaimed are the natural consequences flowing from breach of an obligation,intrinsically a civil dispute. The Court, therefore, believes and so holds that the"money claims of workers" referred to in paragraph 3 of Article 217 embraces moneyclaims which arise out of or in connection with the employer-employee relationship,or some aspect or incident of such relationship. Put a little differently, that moneyclaims of workers which now fall within the original and exclusive jurisdiction ofLabor Arbiters are those money claims which have some reasonable causalconnection with the employer-employee relationship.

We thereafter ruled that the "reasonable causal connection with the employer-employeerelationship" is a requirement not only in employees’ money claims against the employer but is,likewise, a condition when the claimant is the employer.

In Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr., we pronounced that anon-compete clause, as in the "Goodwill Clause" referred to in the present case, with astipulation that a violation thereof makes the employee liable to his former employer forliquidated damages, refers to post-employment relations of the parties. That the "GoodwillClause" in this case is likewise a postemployment issue should brook no argument. There is nodispute as to the cessation of Portillo’s employment with Lietz Inc.23 She simply claims herunpaid salaries and commissions, which Lietz Inc. does not contest. At that juncture, Portillo wasno longer an employee of Lietz Inc.24The "Goodwill Clause" or the "Non-Compete Clause" is acontractual undertaking effective after the cessation of the employment relationship betweenthe parties. In accordance with jurisprudence, breach of the undertaking is a civil law dispute,not a labor law case.It is clear, therefore, that while Portillo’s claim for unpaid salaries is a money claim that arisesout of or in connection with an employer-employee relationship, Lietz Inc.’s claim against Portillofor violation of the goodwill clause is a money claim based on an act done after the cessation ofthe employment relationship. And, while the jurisdiction over Portillo’s claim is vested in thelabor arbiter, the jurisdiction over Lietz Inc.’s claim rests on the regular courts.

This is, of course, to distinguish from cases of actions for damages where theemployer-employee relationship is merely incidental and the cause of actionproceeds from a different source of obligation. Thus, the jurisdiction of regularcourts was upheld where the damages, claimed for were based on tort [citationomitted], malicious prosecution [citation omitted], or breach of contract, as when theclaimant seeks to recover a debt from a former employee [citation omitted] or seeksliquidated damages in enforcement of a prior employment contract. [citation omitted]

Neither can we uphold the reasoning of respondent court that because the resolution ofthe issues presented by the complaint does not entail application of the Labor Code or otherlabor laws, the dispute is intrinsically civil. Article 217(a) of the Labor Code, as amended, clearlybestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damagesarising from employer-employee relations─in other words, the Labor Arbiter has jurisdiction toaward not only the reliefs provided by labor laws, but also damages governed by the Civil Code.In the case at bar, the difference in the nature of the credits that one has against the other,conversely, the nature of the debt one owes another, which difference in turn results in thedifference of the forum where the different credits can be enforced, prevents the application ofcompensation. Simply, the labor tribunal in an employee’s claim for unpaid wages is withoutauthority to allow the compensation of such claims against the post employment claim of theformer employer for breach of a post employment condition. The labor tribunal does not havejurisdiction over the civil case of breach of contract.

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Certainly, the present Labor Code is even more committed to the view that on policygrounds, and equally so in the interest of greater promptness in the disposition of labor matters,a court is spared the often onerous task of determining what essentially is a factual matter,namely, the damages that may be incurred by either labor or management as a result ofdisputes or controversies arising from employer-employee relations.

There is no causal connection between the petitioner employees’ claim for unpaid wagesand the respondent employers’ claim for damages for the alleged "Goodwill Clause" violation.Portillo’s claim for unpaid salaries did not have anything to do with her alleged violation of theemployment contract as, in fact, her separation from employment is not "rooted" in the allegedcontractual violation. She resigned from her employment. She was not dismissed. Portillo’sentitlement to the unpaid salaries is not even contested. Indeed, Lietz Inc.’s argument aboutlegal compensation necessarily admits that it owes the money claimed by Portillo.

The alleged contractual violation did not arise during the existence of the employer-employee relationship. It was a post-employment matter, a post-employment violation.Reminders are apt. That is provided by the fairly recent case of Yusen Air and Sea ServicesPhils., Inc. v. Villamor,31 which harked back to the previous rulings on the necessity of"reasonable causal connection" between the tortious damage and the damage arising from theemployer-employee relationship. Yusen proceeded to pronounce that the absence of theconnection results in the absence of jurisdiction of the labor arbiter. Importantly, such absenceof jurisdiction cannot be remedied by raising before the labor tribunal the tortious damage as adefense. Thus:

When, as here, the cause of action is based on a quasi-delict or tort, which has noreasonable causal connection with any of the claims provided for in Article 217,jurisdiction over the action is with the regular courts. As it is, petitioner does notask for any relief under the Labor Code. It merely seeks to recover damagesbased on the parties’ contract of employment as redress for respondent’s breachthereof. Such cause of action is within the realm of Civil Law, and jurisdiction overthe controversy belongs to the regular courts. More so must this be in the presentcase, what with the reality that the stipulation refers to the postemploymentrelations of the parties.

For sure, a plain and cursory reading of the complaint will readily reveal that the subjectmatter is one of claim for damages arising from a breach of contract, which is within the ambitof the regular court’s jurisdiction. Indeed, the application of compensation in this case iseffectively barred by Article 113 of the Labor Code which prohibits wage deductions except inthree circumstances:

(a) In cases where the worker is insured with his consent by the employer, and thededuction is to recompense the employer for the amount paid by him as premium on theinsurance;(b) For union dues, in cases where the right of the worker or his union to check-off hasbeen recognized by the employer or authorized in writing by the individual workerconcerned; and(c) In cases where the employer is authorized by law or regulations issued by theSecretary of Labor.

PETITION GRANTED.

Building Care Corp. vs MacaraegGR No. 198357 December 10, 2012

FACTS:Petitioners are in the business of providing security services to their clients. They hired

respondent as a security guard beginning August 25, 1996, assigning her at Genato Building inCaloocan City. However, on March 9, 2008, respondent was relieved of her post. She was re-

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assigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she was allegedlyno longer given any assignment. Thus, on September 9, 2008, respondent filed a complaintagainst petitioners for illegal dismissal, underpayment of salaries, non-payment of separationpay and refund of cash bond. Conciliation and mediation proceedings failed, so the parties wereordered to submit their respective position papers.

Respondent claimed that petitioners failed to give her an assignment for more than ninemonths, amounting to constructive dismissal, and this compelled her to file the complaint forillegal dismissal.

On the other hand, petitioners alleged in their position paper that respondent wasrelieved from her post as requested by the client because of her habitual tardiness, persistentborrowing of money from employees and tenants of the client, and sleeping on the job.Petitioners allegedly directed respondent to explain why she committed such infractions, butrespondent failed to heed such order. Respondent was nevertheless temporarily assigned toBayview Park Hotel from March 9-13, 2008, but she also failed to meet said client's standardsand her posting thereat was not extended.

Respondent then filed an administrative complaint for illegal dismissal with the PNP-Security Agencies and Guard Supervision Division on June 18, 2008, but she did not attend theconference hearings for said case. Petitioners brought to the conference hearings a newassignment order detailing respondent at the Ateneo de Manila University but, due to herabsence, petitioners failed to personally serve respondent said assignment order. Petitionersthen sent respondent a letter ordering her to report to headquarters for work assignment, butrespondent did not comply with said order. Instead, respondent filed a complaint for illegaldismissal with the Labor Arbiter. On May 13, 2009, the Labor Arbiter rendered a Decision,dismissing the charge of illegal dismissal as wanting in merit but ordering the RespondentsLeopard Security and Investigation Agency and Rupert Protacio to pay complainant a financialassistance 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 havingbeen filed out of time, thereby declaring that the Labor Arbiter's Decision had become final andexecutory on June 16, 2009.8

Respondent elevated the case to the CA via a petition for certiorari, and on March 24,2011, the CA promulgated its Decision, granting the petition for certiorari. Petitioners' motionfor reconsideration of the aforequoted Decision was denied per Resolution dated August 19,2011. Hence, the present petition

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 outof time.

HELD:The Court cannot sustain the CA's Decision. It should be emphasized that the resort to a

liberal application, or suspension of the application of procedural rules, must remain as theexception to the well-settled principle that rules must be complied with for the orderlyadministration of justice. In Marohomsalic v. Cole,10 the Court stated:

While procedural rules may be relaxed in the interest of justice, it is well-settledthat these are tools designed to facilitate the adjudication of cases. The relaxationof procedural rules in the interest of justice was never intended to be a license forerring litigants to violate the rules with impunity. Liberality in the interpretationand application of the rules can be invoked only in proper cases and underjustifiable causes and circumstances. While litigation is not a game of

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technicalities, every case must be prosecuted in accordance with the prescribedprocedure to ensure an orderly and speedy administration of justice.

We must stress that the bare invocation of "the interest of substantial justice" lineis not some magic want that will automatically compel this Court to suspendprocedural rules. Procedural rules are not to be belittled, let alone dismissedsimply because their non-observance may have resulted in prejudice to a party'ssubstantial rights. Utter disregard of the rules cannot be justly rationalized byharping on the policy of liberal construction.13

In this case, the justifications given by the CA for its liberality by choosing to overlookthe belated filing of the appeal are, the importance of the issue raised, i.e., whether respondentwas illegally dismissed; and the belief that respondent should be "afforded the amplestopportunity for the proper and just determination of his cause, free from the constraints oftechnicalities, considering that the belated filing of respondent's appeal before the NLRC wasthe fault of respondent's former counsel. Note, however, that neither respondent nor her formercounsel gave any explanation or reason citing extraordinary circumstances for her lawyer'sfailure to abide by the rules for filing an appeal. Respondent merely insisted that she had notbeen remiss in following up her case with said lawyer.

It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bindthe client. A departure from this rule would bring about never-ending suits, so long as lawyerscould allege their own fault or negligence to support the client’s case and obtain remedies andreliefs already lost by the operation of law.15 The only exception would be, where the lawyer'sgross negligence would result in the grave injustice of depriving his client of the due process oflaw.16 In this case, there was no such deprivation of due process. Respondent was able to fullypresent and argue her case before the Labor Arbiter. She was accorded the opportunity to beheard. Her failure to appeal the Labor Arbiter's Decision cannot, therefore, be deemed as adeprivation of her right to due process.

The right to appeal is not a natural right or part of due process; it is merely a statutoryprivilege and may be exercised only in the manner and in accordance with the provisions of law.Thus, one who seeks to avail of the right to appeal must strictly comply with the requirements ofthe rules, and failure to do so leads to the loss of the right to appeal.

It should also be borne in mind that the right of the winning party to enjoy the finality ofthe resolution of the case is also an essential part of public policy and the orderly administrationof justice. Hence, such right is just as weighty or equally important as the right of the losingparty to appeal or seek reconsideration within the prescribed period.

When the Labor Arbiter's Decision became final, petitioners attained a vested right tosaid judgment. They had the right to fully rely on the immutability of said Decision. Petition isgranted.

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