LABOR

STANDARDS

Case digests
(midterms)

Submitted by:
Francesca G. Fernandez
(JD 2 - EH 407)
Submitted to:
Atty. Jefferson M. Marquez
TABLE OF CONTENTS
I. BASIC PRINCIPLES
1. Singer Sewing Machine vs. NLRC, 193 SCRA 271
2. Manila Golf Club vs. IAC, 237 SCRA 207
3. Encyclopedia Britanica vs. NLRC, 264 SCRA 4 [96]

4. Carungcong vs. Sunlife, 283 SCRA 319

5. Ramos vs. CA, 380 SCRA 467
6. Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004
7. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]
8. Phil. Global Communication vs. De Vera, 459 SCRA 260 [2005]
9. ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006
10. Francisco vs. NLRC, 500 SCRA 690 [06]
11. Nogales et al., vs. Capitol Medical Center et al., G.R. No. 142625, December 19,
2006
12. Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15, 2007
13. Calamba Medical Center vs. NLRC et al., G.R. No. 176484, Nov. 25, 2008
14. Escasinas et al., vs. Shangri-las Mactan Island Resort et al., G.R. No. 178827, March
4, 2009
15. Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc., et al., G.R. No. 167622,
January 25, 2011
16. Semblante et al., vs. Court of Appeals, et al., G.R. No. 196426, August 15, 2011
17. Bernarte vs. Phil. Basketball Association et al., G.R. No. 192084, September 14, 2011
18.Lirio vs. Genovia, G.r. No. 169757, November 23, 2011
19. Jao vs. BCC Products Sales Inc. G.R. No. 163700, April 18, 2012
20. Legend Hotel (Manila) vs. Realuyo G.R. No. 153511, July 18, 2012
21. The New Philippine Skylanders, Inc., vs. Dakila, G.r. No. 199547, Sept. 24, 2012
22. Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482, March 12,
2014
23. Royale Homes Marketing Corp., vs. Alcantara, GR No. 195190, July 28, 2014
24. Fuji Television Network Inc. vs. Espiritu, GR No. 204944-45, December 3, 2014
25. Begino et al., vs. ABS-CBN Corp., GR No. 199166, April 20, 2015
II. HIRING OF EMPLOYEE
1. Ollendorf vs. Abrahanson, 38 Phil 585
2. Del Castillo vs. Richmond, 45 Phil. 679
3. PT&T vs. NLRC, 272 SCRA 596 [1997]
4. Duncan Asso. Of Detailman-PTGWO vs. 5. Glaxo Wellcome Phils., G.R. No. 162994,
Sept. 17, 2004
6. City of Manila vs. Laguio, G.R. No. 118127, April 12, 2005
7. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006
8. Del Monte Phils vs. Velasco, G.R. No. 153477, March 6, 2007
9. Yrasuegui vs. Phil Air Lines, G.R. No. 168081, October 17, 2008
III. WAGE & THE WAGE RATIONALIZATION ACT
1. Ilaw at Buklod ng Manggagawa vs. NLRC, 198 SCRA 586 [1991]
2. Employers Confederation of the Phils., vs. NWPC, 201 SCRA 759 [1991]
3. Mabeza vs. NLRC, 271 SCRA 670
4. Joy Brothers Inc., vs. NWPC, 273 SCRA 622 [1997]
5. Prubankers Asso. Vs. Prudential Bank, 302 SCRA 74 [1999]

6. Millare vs. NLRC, 305 SCRA 501

7. International School Alliance of Educators vs. Quisumbing, 333 SCRA 13 [2000]
8. Bankard Employees Union vs. NLRC, G.R. No. 140689, Feb. 17, 2004
9. Odango vs. NLRC, G.R. No. 147420, June 10, 2004
10. C. Planas Commercial vs. NLRC, G.R. No. 144619, Nov. 11, 2005
11. EJR Crafts Corp., vs. CA, G.R. No. 154101, March 10, 2006
12. Pag Asa Steel Works vs. CA, G.R. No. 166647, March 31, 2006
13. Metropolitan Bank vs. NWPC, G.R. No. 144322, Feb. 6, 2007
14. Equitable Bank vs. Sadac, G.R. No. 164772, June 8, 2006, citing Songco vs. NLRC,
183 SCRA 618
15. S.I.P. Food House et al., vs. Batolina, GR No. 192473, Oct 11, 2010
16. SLL International Cables Specialist vs. NLRC, GR No. 172161, March 2, 2011
17. Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. G.R. No. 176985, April 1, 2013
18. Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant, G.R. No.
198783, April 15, 2013
19. The National Wages & Productivity Commission et al., vs. The Alliance of
Progressive Labor et al., GR No. 150326, March 12, 2014
20. David/Yiels Hog Dealer vs. Macasio, GR No. 195466, July 2, 2014
21. Our Haus Realty Development Corp., vs. Parian et al., GR No. 204651,
August 6, 2014
22. Milan et al., vs. NLRC GR No. 202961, February 4, 2015

IV. WAGE ENFORCEMENT AND RECOVERY

1. Rajah Humabon Hotel vs. Trajano, 226 SCRA 332
2. Guico vs. Sec of Labor, G.R. No. 131750, November 16, 1998
3. Ex-Bataan Vetrerans Security Agency vs.. Sec. Of Labor, et al., G.R. No. 152396,
November 20, 2007, citing Cireneo Bowling Plaza vs. Sensing, G.R. No. 146572, Jan. 14,
2005
4. Sapio vs. Undaloc Construction et al., G.R. No. 155034, May 22, 2008
5. Hon. Secretary of Labor vs. Panay Veterans Security and Investigation Agency, G.R.
No. 167708, August 22, 2008
6. National Mines and Allied Workers Union vs. Marcopper Mining Corp., G.R. No.
174641, Nov. 11, 2008
7. Jethro Intelligence & Security Corp., vs. SOLE, et al., GR No. 172537, Aug. 14, 2009
8. Phil Hoteliers Inc., et al., vs. National Union of Workers in Hotel, Restaurant and
Allied Industries-Dusit Hotel Nikko Chpater, GR No. 181972, Aug. 25, 2009
9. Tiger Construction and Development Corp vs. Abay et al., GR No. 164141, Feb. 26,
2010
10. Peoples Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al., GR No. 179652,
March 6, 2012 Resolution on the main Decision of May 8, 2009
11. Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10, 2012
V. WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING
WAGES

1. GAA vs. CA, 140 SCRA 304

2. Nestle Phils., vs. NLRC, 193 SCRA 504
3. Five J Taxi vs. NLRC, 235 SCRA 556
4. Phil. Veterans Bank vs. NLRC, G.R. No. 130439, Oct. 26, 1999
5. Phil Appliances Corp., vs. CA, G.R. No. 149434, June 3, 2004
6. Agabon vs. NLRC, G.R. No. 158693, Nov. 17, 2004
7. American Wire & Cable Daily Rated Employees vs. American Wire, G.R. No. 155059,
April 29, 2005
8. Honda Phils., vs. Samahang Malayang Manggagawa sa Honda, G.R. No. 145561, June
15, 2005
9. Producers Bank vs. NLRC, 355 SCRA 506
10. Jardin vs. NLRC, G.R. No. 119268, February 23,2000
11. Manila Jockeys Club Employees Labor Union vs. Manila Jockey Club, G.R. No.
167601, March 7, 2007
12. San Miguel Corp et al., vs. Layoc, Jr., et al., G.R. No. 149640, October 19, 2007
13. San Miguel Corp., vs. Pontillas, G.R. No. 155178, May 7, 2008
14. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco
Metal-NAFLU, G.R. No. 170734, May 14, 2008, citing Davao Fruits vs. Asso. Labor
Union, 225 SCRA 562 and Sevilla Trading vs. AVA Tomas Services, G.R. No. 152456,
April 28, 2004
15. Aguanza vs. Asian Terminal Inc., et al., GR No. 163505, Aug. 14, 2009
16. Genesis Transport Service Inc et al., vs. Unyon ng Malayang Manggagawa ng
Genesis Transport et al., GR No. 182114, April 5, 2010
17. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, GR
No. 188949, July 26, 2010
18. SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010
19. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No. 188169,
November 28, 2011
20. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013
21. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb
26, 2014
22. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso.,
GR No. 181806, March 12, 2014
23. Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014,
citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo
24. Netlink Computer Inc. vs. Delmo, GR No. 160827, June 18, 2014
25. PLDT vs.Estranero,GR No.192518, Oct 15, 2014
VI. PAYMENT OF WAGES
1. Congson vs. NLRC, 243 SCRA 260 [1995]
2. North Davao Mining vs. NLRC, 254 SCRA 721 [1996]
3. National Federation of Labor vs. CA, G.R. No. 149464, Oct. 19, 2004
4. Heirs of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006
VII. CONDITIONS OF EMPLOYMENT

1. San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997]
2. Simedarby vs. NLRC, 289 SCRA 86 [1998]
3. Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]
4. Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007
5. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008
VIII. MINIMUM LABOR STANDARD BENEFITS
1. Union of Filipro Employees vs. Vicar, 205 SCRA 203 [1992]
2. National Sugar Refinery Corp., vs. NLRC, 220 SCRA 452 [1993]
3. Salazar vs. NLRC, 256 SCRA 273 [1996]
4. Labor Congress of the Phils., vs. NLRC, G.R. No. 1239381, May 21, 1998
5. Mercidar Fishing Corp., vs. NLRC, G.R. No. 112574, October 8, 1998
6. San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002
7. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002
8. Lambo vs. NLRC, 317 SCRA 420
9. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004
10. Asian Transmission vs. CA, 425 SCRA 478 [2004]
11. Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005
12. San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005
13. Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006
14. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No.
1577745, October 19, 2007, citing Wellington Investment vs. Trajano, 245 SCRA 561
[1995], and Odango vs. NLRC, G.R. No. 147420, June 10, 2004
15. Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing Cagampan
vs. NLRC, 195 SCRA 533 [1998]
16. PNCC Skyway Traffic Management and Security Division Workers Organization, GR
No. 171231, Feb. 17, 2010
17. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr. G.R. No. 198662, Sept. 12, 2012

I. BASIC PRINCIPLES
Singer Sewing Machine vs. NLRC
January 24, 1991, 193 SCRA 271
Facts:
Singer Machine Collectors Union-Baguio (SIMACUB), private respondent, filed a
petition for direct certification as the sole and exclusive bargaining agent of all collectors
of the Singer Sewing Machine Company (Singer). Singer opposed the petition claiming
that the collectors are not employees but are independent contractors as evidenced by the
Collection Agency Agreement (Agreement) between them. The Med-Arbiter granted the
petition. Aggrieved, Singer appealed to the Secretary of Labor. The Secretary of Labor

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

is solidarily liable with the contractor or subcontractor.

Manila Golf Club vs. IAC

September 27, 1994, G.R. No. 64948
Facts:
Three separate proceedings, all initiated by Llamar and his fellow caddies gave rise to the present petition
for review which was originally filed with the Social Security Commission (SSC) via petition of 17 persons
who styled themselves "Caddies of Manila Golf and Country Club-PTCCEA" for coverage and availment
of benefits under the Social Security Act as amended, "PTCCEA" being the acronym of a labor
organization, the "Philippine Technical, Clerical, Commercial Employees Association," with which the
petitioners claimed to be affiliated. The petition alleged in essence that although the petitioners were
employees of the Manila Golf and Country Club, a domestic corporation, the latter had not registered them
as such with the SSS. At about the same time, two other proceedings bearing on the same question were
filed or were pending.
The respondent Club filed answer praying for the dismissal of the petition, alleging in substance that the
petitioners, caddies by occupation, were allowed into the Club premises to render services as such to the
individual members and guests playing the Club's golf course and who themselves paid for such services;
that as such caddies, the petitioners were not subject to the direction and control of the Club as regards the
manner in which they performed their work; and hence, they were not the Club's employees.
Issue: Whether or not persons rendering caddying services for members of golf clubs and their guests in
said clubs' courses or premises are the employees of such clubs and therefore within the compulsory
coverage of the Social Security System (SSS).
Ruling:
The private respondent Fermin Llamar, is not an employee of petitioner Manila Golf and Country Club and
that petitioner is under no obligation to report him for compulsory coverage to the Social Security System.
No pronouncement as to costs.
The caddies were paid by the players, not by the Club, and that they observed no definite working hours
and earned no fixed income. The Court does not agree that the facts necessarily or logically point to such an
employer-employee relationship, and to the exclusion of any form of arrangements, other than of
employment that would make the Llamars services available to the members and guest of the Manila Golf
Club. In the very nature of things, caddies must submit to some supervision of their conduct while enjoying
the privilege of pursuing their occupation within the premises and grounds of whatever club they do their
work in. For all that is made to appear, they work for the club to which they attach themselves on
sufference but, on the other hand, also without having to observe any working hours, free to leave anytime
they please, to stay away for as long they like. It is not pretended that if found remiss in the observance of
said rules, any discipline may be meted them beyond barring them from the premises which, it may be
supposed, the Club may do in any case even absent any breach of the rules, and without violating any right
to work on their part. All these considerations clash frontally with the concept of employment.
The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies
as still another indication of the latter's status as employees. It seems to the Court, however, that the
intendment of such fact is to the contrary, showing that the Club has not the measure of control over the
incidents of the caddies' work and compensation that an employer would possess.
The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer
control than an assurance that the work is fairly distributed, a caddy who is absent when his turn number is
called simply losing his turn to serve and being assigned instead the last number for the day.

Encyclopedia Britannica (Philippines), Inc. vs NLRC

November 4, 1996, G.R. No. 87098
Facts:
Limjoco, herein private respondent, was a Sales Division of Encyclopedia Britannica and
was in charge of selling the products through some sales representatives. As
compensation, he would receive commissions from the products sold by his agents. He
was also allowed to use the petitioners name, goodwill and logo. It was agreed that
office expenses would be deducted from Limjocos commissions.
In 1974, Limjoco resigned to pursue his private business and filed a complaint against
petitioner for alleged non-payment of separation pay and other benefits and also illegal
deduction from sales commissions. Petitioner alleged that Limjoco was not an employee
of the company but an independent dealer authorized to promote and sell its products and
in return, received commissions therein. Petitioner also claims that it had no control and
supervision over the complainant as to the manners and means he conducted his business
operations. Limjoco maintained otherwise. He alleged he was hired by the petitioner and
was assigned in the sales department.
The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC also
affirmed the decision and opined that there was no evidence supporting allegation that
Limjoco was an independent contractor or dealer.
Issue: Whether or not there was an employee-employer relationship between the parties.
Ruling:
There was no employee-employer relationship. In determining the relationship, the
following elements must be present: selection and engagement of the employee, payment
of wages, power of dismissal and power to control the employees conduct. The power of
control is commonly regarded as the most crucial and determinative indicator of the
presence or absence of an employee-employer relationship. Under the control test, an
employee-employer relationship exists where the person for whom the services are
performed reserves a right to control not only the end to be achieved, but also the manner
and means to be employed in reaching that end.
The issuance of guidelines by the petitioner was merely guidelines on company policies
which sales managers follow and impose on their respective agents. Limjoco was not an
employee of the company since he had the free rein in the means and methods for
conducting the marketing operations. He was merely an agent or an independent dealer of
the petitioner. He was free to conduct his work and he was free to engage in other means
of livelihood.
In ascertaining the employee-employer relationship, the factual circumstances must be
considered. The element of control is absent where a person who works for another does

so more or less at his own pleasure and is not subject to definite hours or conditions of
work, and in turn is compensated in according to the result of his efforts and not the
amount thereof. Hence, there was no employee-employer relationship.

Carungcong vs Sunlife
283 SCRA 319
Facts:
Susan Carungcong began her career as an agent of Sun Life Assurance Company of Canada by signing a
Career Agents or Unit Managers Agreement, which provided that she shall be an Independent
Contractor, that there were limitations on her authority, and that the contract may be terminated by death, or
written notice with or without cause. Later, she signed a further agreement entitled Managers
Supplementary Agreement, which provided the same provisions with that of the first agreement. Later, she
signed a third agreement entitled New Business Manager. This third contract also provided limitations on
her authority and that she should be considered as an Independent Contractor not an employee.
Due to some anomaly in the way Susan Carungcong prepared the report so that she will be reimbursed with
her expenses incurred for the purpose of gaining or producing income such that she made it appear that she
paid for the food of her agents but in fact and in truth she did not. So she was given a letter advising of the
termination of her relationship with Sunlife. So she filed a complaint before the NLRC and was adjudged to
have been illegally dismissed because there was an employer-employee relationship.
Issues: Whether or not there was an employer-employee relationship between Carungcong and Sunlife.
Ruling:
The Supreme Court ruled that there was no employer-employee relationship, which means that Carungcong
was an Independent Contractor not an Employee, because control, which was one of the elements of the
four-fold test was absent. Absence of control means that there was no employer-employee relationship
between the parties. Hence, Carungcong was not illegally dismissed.
The Supreme Court reasoned that Insurance business is imbibed with public interest and thus subject to
regulation by the State. The State, in order to protect the public, enacted the Insurance Code, which
provided for the rules and regulations to be followed by the Insurance companies. Thus, as an inevitable
consequence the Insurance Company, like Sunlife, issued rules and regulations to be followed by
Carungcong but this control was latent in the kind of business which Carungcong was into and these rules
and regulations were mainly aimed at promoting the results the parties so desired and did not necessarily
create any employer-employee relationship, where the employers controls had to interfere in the methods
and means by which the employee would like to employ to arrive at the desired result.

Ramos vs Court of Appeals

380 SCRA 467
Facts:
Petitioner Erlinda Ramos was advised to undergo an operation for the removal of her stone in the gall
bladder. She was referred to Dr. Hosaka, a surgeon, who agreed to do the operation. The operation was
scheduled on June 17, 1985 in the De los Santos Medical Center. Erlinda was admitted to the medical
center the day before the operation. On the following day, she was ready for operation as early as 7:30 am.
Around 9:30, Dr. Hosaka has not yet arrived. By 10 am, Rogelio wanted to pull out his wife from the
operating room. Dr. Hosaka finally arrived at 12:10 pm more than 3 hours of the scheduled operation.
Dr. Guiterrez tried to intubate Erlinda. The nail beds of Erlinda were bluish and there was a discoloration in
her left hand. At 3 pm, Erlinda was being wheeled to the Intensive care Unit and stayed there for a month.
Since the ill-fated operation, Erlinda remained in comatose condition until she died.
The family of Ramos sued them for damages.
Issue: Whether or not there was an employee-employer relationship that existed between the Medical
Center and Drs. Hosaka and Guiterrez.
Held:
No, employer-employee relationship between the doctors and hospital did not exist.
Private hospitals hire, fire, and exercise real control over their attending and visiting consultant staff. While
consultants are not technically employees, the control exercised, the hiring and the right to terminate
consultants fulfill the hallmarks of an employer-employee relationship with the exception of payment of
wages. The control test is determining.
In applying the four fold test, DLSMC cannot be considered an employer of the respondent doctors. It has
been consistently held that in determining whether an employer-employee relationship exists between the
parties, the following elements must be present: (1) selection and engagement of services; (2) payment of
wages; (3) the power to hire and fire; and (4) the power to control not only the end to be achieved, but the
means to be used in reaching such an end.
The hospital does not hire consultants but it accredits and grants him the privilege of maintaining a clinic
and/or admitting patients. It is the patient who pays the consultants. The hospital cannot dismiss the
consultant but he may lose his privileges granted by the hospital. The hospitals obligation is limited to
providing the patient with the preferred room accommodation and other things that will ensure that the
doctors orders are carried out.
The court finds that there is no employer-employee relationship between the doctors and the hospital.

Sonza vs. ABS-CBN

June 10, 2004, GR No. 138051
Facts:
In May 1994, ABS-CBN signed an agreement with Mel and Joey Management and Developments
Corporation (MJMDC), a television program. Referred to in the Agreement as Agent, MJMDC agreed to
provide Sonzas services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to
pay Sonzas services a monthly talent fee of P310, 000 for the first year and P317,000 for the second and
third year of the agreement.
On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President Lopez stating that he will
irrevocably resign in view of the recent events concerning his program and career, that he is waiving and
renouncing recovery of the remaining amount stipulated in the Agreement, but reserves the right to seek
recovery of the other benefits under said agreement.
On April 30, 1996, Sonza filed a complaint against ABS-CBN before the Department of Labor and
Employment, NCR alleging that ABS-CBN did not pay his salary, separation pay, service incentive leave,
13th month pay , signing bonus, travel allowance and amounts due under the Employees Stock Option Plan
(ESOP). ABS-CBN moved for the dismissal of the complaint on the ground that there was no employeremployee relationship between them. ABS-CBN insists that Sonza was an independent contractor.
Issue: Whether an employer-employee relationship exists.
Ruling:
The Court sustained ABS-CBNs contention and hence, dismissed the petition.
The Supreme Court ratiocinated that Independent contractors often present themselves to possess unique
skills, expertise, talent, to distinguish them from ordinary employees. The specific selection and hiring of
Sonza, because of his unique skills, talent, and celebrity status not possessed by an ordinary employee, is a
circumstance indicative of an independent contractual relationship. Whatever benefits Sonza enjoyed arose
from a contract and not because of an employer-employee relationship. Sonzas talent fees are so huge and
out of the ordinary that they indicate more an independent contractual relationship.
Applying the control test in the case at bar, the Court found that Sonza is not an employee but an
independent contractor. First, ABS-CBN engaged Sonzas services specifically to co-host the Mel and
Jay program. ABS-CBN did not assign any other work to Sonza. To perform his work, Sonza only needed
his skills and talent. Sonza delivered his lines appeared on the television and sounded on radio, all outside
the control of ABS-CBN. Sonza did not have to work eight hours a day. The Agreement required Sonza to
attend only rehearsals and tapings. ABS-CBN could not dictate the contents of Sonzas script. Sonza had a
free hand on what to say or discuss in his shows. Clearly, ABS-CBN did not exercise control over the
means and methods of performance of Sonzas work.

Lazaro vs. Social Security Commission

July 30, 2004, G.R. No. 138254
Facts:
Private respondent Laudato filed a petition before the SSC for social security coverage and remittance of
unpaid monthly social security contributions against her three employers. Among the respondents was
herein petitioner Angelito L. Lazaro (Lazaro), proprietor of Royal Star Marketing (Royal Star), which
is engaged in the business of selling home appliances. Petitioner states that 1) Laudato was not a sales
supervisor of Royal Star, but was a mere sales agent whom he paid purely on commission basis.2) Laudato
was not subjected to definite hours and conditions of work. As such, Laudato could not be deemed an
employee of Royal Star while respondents contended that despite her employment as sales supervisor of the
sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period,
to report her to the SSC for compulsory coverage or remit Laudatos social security contributions.
Issue: Whether or not respondent is an employee, bringing her under the coverage of the Social Security
Act.
Ruling:
Ladauto is an employee of Royal Star. It is an accepted doctrine that for the purposes of coverage under the
Social Security Act, the determination of employer-employee relationship warrants the application of the
control test, that is, whether the employer controls or has reserved the right to control the employee, not
only as to the result of the work done, but also as to the means and methods by which the same is
accomplished.
The fact that Laudato was paid by way of commission does not preclude the establishment of an employeremployee relationship. The relevant factor remains, as stated earlier, whether the"employer" controls or has
reserved the right to control the "employee" not only as to the result of the work to be done but also as to
the means and methods by which the same is to be accomplished.
Neither does it follow that a person

who does not observe normal hours of work cannot be

deemed an employee. A supervisor is exempt from the observance of normal hours of
work for his compensation is measured by the number of sales he makes. Laudato
oversaw and supervised the sales agents of the company, and thus was subject to the
control of management as to how she implements its policies and its end results.
Royal Star exercised control over its sales supervisors or agents such as Laudato as to the
means and methods through which these personnel performed their work.

Phil. Global Comm. vs. De Vera

G.R. No. 157214; June 7, 2005
Facts:
Philippine Global Communications inc. is a corporation engaged in the business of
communication services and allied activities while Ricardo de Vera is a physician by
profession whom petitioner enlisted to attend to the medical needs of its employees. The
controversy rose when petitioner terminated his engagement.
In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized
the respondents proposal in a document denominated as retainership contract which will
be for a period of one year, subject to renewal and clearly stated that respondent will
cover the retainership the company previously with Dr. Eulau. The agreement went until
1994, in the years 1995-1996, it was renewed verbally. The turning point of the parties
relationship was when petitioner, thru a letter bearing the subject TERMINATION
RETAINERSHIP CONTRACT, informed Dr. de Vera of its decision to discontinue the
latters retainer contract because the management has decided that it would be more
practical to provide medical services to its employees through accredited hospitals near
the company premises.
On January 1997, de Vera filled a complaint for illegal dismissal before the NLRC,
alleging that he had been actually employed by the company as its company physician
since 1991. The commission rendered decision in favor of Philcom and dismissed the
complaint saying that de Vera was an independent contractor. On appeal to NLRC, it
reversed the decision of the Labor Arbiter stating that de Vera is a regular employee and
directed the company to reinstate him. Philcom appealed to the CA where it rendered
decision deleting the award but reinstating de Vera. Philcom filed this petition involving
the difference of a job contracting agreements from employee-employer relationship.
Issue: Whether or not there exists an employee-employer relationship between the
parties.
Ruling:
SC ruled that there was no such relationship existing between Dr. de Vera and Phil. Com.
Upon reading the contract dated September 6, 1982, signed by the complainant himself ,
it clearly states that is a retainership contract. The retainer fee is indicated thereon and
the duration of the contract for one year is also clearly indicated in paragraph 5 of the
Retainership Contract. The complainant cannot claim that he was unaware that the
contract was good only for one year, as he signed the same without any objections. The
complainant also accepted its renewal every year thereafter until 1994. As a literate
person and educated person, the complainant cannot claim that he does not know what
contract he signed and that it was renewed on a year to year basis.The labor arbiter added
the indicia, not disputed by respondent, that from the time he started to work with

petitioner, he never was included in its payroll; was never deducted any contribution for
remittance to the Social Security System (SSS); and was in fact subjected by petitioner to
the ten (10%) percent withholding tax for his professional fee, in accordance with the
National Internal Revenue Code, matters which are simply inconsistent with an
employer-employee relationship.The elements of an employer-employee relationship are
wanting in this case. The record are replete with evidence showing that respondent had to
bill petitioner for his monthly professional fees. It simply runs against the grain of
common experience to imagine that an ordinary employee has yet to bill his employer to
receive his salary.
The power to terminate the parties relationship was mutually vested on both. Either may
terminate the arrangement at will, with or without cause. Remarkably absent is the
element of control whereby the employer has reserved the right to control the employee
not only as to the result of the work done but also as to the means and methods by which
the same is to be accomplished.
Petitioner had no control over the means and methods by which respondent went about
performing his work at the company premises. In fine, the parties themselves practically
agreed on every terms and conditions of the engagement, which thereby negates the
element of control in their relationship.
Principle of Law: Any agreement may provide that one party shall render services for
and in behalf of another, no matter how necessary for the latters business, even without
being hired as an employee. There was no employee-employer relationship in a case
where element of control of the employer over the employee is absent.

ABS-CBN vs Nazareno
(2006) G.R. 164156
Facts:
ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as
production assistants (PAs) on different dates. They were assigned at the news and public
affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly
compensation of P4,000. They were issued ABS-CBN employees identification cards
and were required to work for a minimum of eight hours a day, including Sundays and
holidays. They were made to: a) Prepare, arrange airing of commercial broadcasting
based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate,
arrange personalities for air interviews; c) Coordinate, prepare schedule of reporters for
scheduled news reporting and lead-in or incoming reports; d) Facilitate, prepare and
arrange airtime schedule for public service announcement and complaints; e) Assist,
anchor program interview, etc; and f) Record, log clerical reports, man based control
radio.
Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining
Agreement (CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999.
However, since petitioner refused to recognize PAs as part of the bargaining unit,
respondents were not included to the CBA.
Due to a memorandum assigning PAs to non-drama programs, and that the DYAB studio
operations would be handled by the studio technician. There was a revision of the
schedule and assignments and that respondent Gerzon was assigned as the full-time PA of
the TV News Department reporting directly to Leo Lastimosa.
On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment
Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive
Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the
NLRC.
Issue: WON the respondents are regular employees?
Ruling:
Respondents are considered regular employees of ABS-CBN and are entitled to the
benefits granted to all regular employees.
Where a person has rendered at least one year of service, regardless of the nature of the
activity performed, or where the work is continuous or intermittent, the employment is
considered regular as long as the activity exists. The reason being that a customary
appointment is not indispensable before one may be formally declared as having attained
regular status. Article 280 of the Labor Code provides:

REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to

the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
Any employee who has rendered at least one year of service, whether continuous or
intermittent, is deemed regular with respect to the activity performed and while such
activity actually exists.The fact that respondents received pre-agreed talent fees instead
of salaries, that they did not observe the required office hours, and that they were
permitted to join other productions during their free time are not conclusive of the nature
of their employment. They are regular employees who perform several different duties
under the control and direction of ABS-CBN executives and supervisors.
There are two kinds of regular employees under the law: (1) those engaged to perform
activities which are necessary or desirable in the usual business or trade of the
employer; and (2) those casual employees who have rendered at least one year of
service, whether continuous or broken, with respect to the activities in which they are
employed.
What determines whether a certain employment is regular or otherwise is the character
of the activities performed in relation to the particular trade or business taking into
account all the circumstances, and in some cases the length of time of its performance
and its continued existence.
The employer-employee relationship between petitioner and respondents has been proven
by the ff:
First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status
was required from them because they were merely hired through petitioners personnel department just like
any ordinary employee.
Second. The so-called talent fees of respondents correspond to wages given as a result of an employeremployee relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance
negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and
respondents are highly dependent on the petitioner for continued work.
Fourth. The degree of control and supervision exercised by petitioner over respondents through its
supervisors negates the allegation that respondents are independent contractors.

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

Francisco vs. NLRC

500 SCRA 690 (06)
Facts:
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She
was designated as Accountant and Corporate Secretary and was assigned to handle all the
accounting needs of the company. She was also designated as Liaison Officer to the City
of Makati to secure business permits, construction permits and other licenses for the
initial operation of the company. In 1996, she was designated Acting Manager, and was
able to perform the duties of such for 5 years. As of December 31, 2000 her salary was
P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei
Corporation. In January 2001, she was replaced by Liza R. Fuentes as Manager. She
alleged that she was required to sign a prepared resolution for her replacement but she
was assured that she would still be connected with Kasei Corporation. Thereafter, Kasei
Corporation reduced her salary by P2,500.00 a month beginning January up to September
2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid
her mid-year bonus allegedly because the company was not earning well. On October
2001, she did not receive her salary from the company. She made repeated follow-ups
with the company cashier but she was advised that the company was not earning well. On
October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers
but she was informed that she is no longer connected with the company. Since she was no
longer paid her salary, petitioner did not report for work and filed an action for
constructive dismissal before the labor arbiter. The Labor Arbiter ruled in favor of the
petitioner. The NLRC affirmed with modification the Decision of the Labor Arbiter. On
appeal, the Court of Appeals reversed the NLRC decision. The appellate court denied
petitioners motion for reconsideration, hence, the present recourse.
Issue: Whether there was an employer-employee relationship between petitioner and
private respondent Kasei Corporation.
Held: The determination of the relationship between employer and employee depends
upon the circumstances of the whole economic activity, such as: (1) the extent to which
the services performed are an integral part of the employers business; (2) the extent of
the workers investment in equipment and facilities; (3) the nature and degree of control
exercised by the employer; (4) the workers opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of the claimed
independent enterprise; (6) the permanency and duration of the relationship between the
worker and the employer; and (7) the degree of dependency of the worker upon the
employer for his continued employment in that line of business.The proper standard of
economic dependence is whether the worker is dependent on the alleged employer for his
continued employment in that line of business. In the United States, the touchstone of
economic reality in analyzing possible employment relationships for purposes of the
Federal Labor Standards Act is dependency. By analogy, the benchmark of economic
reality in analyzing possible employment relationships for purposes of the Labor Code
ought to be the economic dependence of the worker on his employer. Under the broader

economic reality test, the petitioner can likewise be said to be an employee of respondent
corporation because she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13 th month pay,
bonuses and allowances, as well as deductions and Social Security contributions from
August 1, 1999 to December 18, 2000. When petitioner was designated General Manager,
respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioners
membership in the SSS as manifested by a copy of the SSS specimen signature card
which was signed by the President of Kasei Corporation and the inclusion of her name in
the on-line inquiry system of the SSS evinces the existence of an employer-employee
relationship between petitioner and Respondent Corporation. It is therefore apparent that
petitioner is economically dependent on Respondent Corporation for her continued
employment in the latters line of business. The petition is GRANTED.

Nogales et. al. vs. Capitol Medical Center

G.R. No. 142625, December 19, 2006
Facts:
Pregnant Corazon Nogales ("Corazon") was under the exclusive prenatal care of Dr.
Oscar Estrada ("Dr. Estrada"). Corazon was admitted at the CMC. Dr. Estrada ordered the
injection of ten grams of magnesium sulfate. However, Dr. Ely Villaflor ("Dr. Villaflor"),
who was assisting Dr. Estrada, administered only 2.5 grams of magnesium sulfate. Dr.
Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's baby. In the
process, piece of cervical tissue was allegedly torn. The baby came out in an apnic,
cyanotic, weak and injured condition. Corazon began to manifest moderate vaginal
bleeding which rapidly became profuse. Dr. Noe Espinola ("Dr. Espinola"), head of the
Obstetrics-Gynecology Department of the CMC, was apprised of Corazon's condition by
telephone. Upon being informed that Corazon was bleeding profusely, Dr. Espinola
ordered immediate hysterectomy. Despite Dr. Espinola's efforts, Corazon died.
Petitioners filed a complaint for damages with the Regional Trial Court. Petitioners
mainly contended that defendant physicians and CMC personnel were negligent in the
treatment and management of Corazon's condition. Petitioners charged CMC with
negligence in the selection and supervision of defendant physicians and hospital staff.
Trial court rendered judgment finding Dr. Estrada solely liable for damages.
The Court of Appeals upheld the trial court's ruling, finding Dr. Estrada as an independent
contractor-physician. The Court of Appeals applied the "borrowed servant" doctrine
considering that Dr. Estrada was an independent contractor who was merely exercising
hospital privileges. This doctrine provides that once the surgeon enters the operating
room and takes charge of the proceedings, the acts or omissions of operating room
personnel, and any negligence associated with such acts or omissions, are imputable to
the surgeon.
Issues: (1.) Whether CMC is vicariously liable for the negligence of Dr. Estrada;
(2.) WON there is employer-employee relationship between Dr. Estrada and CMC
Held: Dr. Estrada is not an employee of CMC, but an independent contractor. However,
CMC is still vicariously liable.
The Court finds no single evidence pointing to CMC's exercise of control over Dr.
Estrada's treatment and management of Corazon's condition. It is undisputed that
throughout Corazon's pregnancy, she was under the exclusive prenatal care of Dr.
Estrada. Dr. Estrada is not an employee of CMC, but an independent contractor.
In general, a hospital is not liable for the negligence of an independent contractorphysician. There is, however, an exception to this principle. The hospital may be liable if
the physician is the "ostensible" agent of the hospital. This exception is also known as the

"doctrine of apparent authority." The doctrine of apparent authority essentially involves

two factors to determine the liability of an independent-contractor physician. The first
factor focuses on the hospital's manifestations and is sometimes described as an inquiry
whether the hospital acted in a manner which would lead a reasonable person to conclude
that the individual who was alleged to be negligent was an employee or agent of the
hospital. In this regard, the hospital need not make express representations to the patient
that the treating physician is an employee of the hospital; rather a representation may be
general and implied. The doctrine of apparent authority is A specie of the doctrine of
estoppel. Article 1431 of the Civil Code provides that "through estoppel, an admission or
representation is rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon." CMC impliedly held out Dr. Estrada as
a member of its medical staff.
Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading
the Spouses Nogales to believe that Dr. Estrada was an employee or agent of CMC. CMC
cannot now repudiate such authority. First, CMC granted staff privileges to Dr. Estrada.
Second, CMC made Rogelio sign consent forms printed on CMC letterhead. Third, Dr.
Estrada's referral of Corazon's profuse vaginal bleeding to Dr. Espinola, who was then the
Head of the Obstetrics and Gynecology Department of CMC, gave the impression that
Dr. Estrada as a member of CMC's medical staff was collaborating with other CMCemployed specialists in treating Corazon. WHEREFORE, the Court PARTLY GRANTS
the petition. The Court finds respondent Capitol Medical Center vicariously liable for the
negligence of Dr. Oscar Estrada.

Coca cola Bottlers vs. Dr. Climaco

GR No. 146881 February 5, 2007
Facts:
Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-cola Bottlers Phil.
(petitioner) by virtue of a Retainer Agreement. Among the terms and conditions under
their retainer agreement are:
1. That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31, 1988.
Either party may terminate the contract upon giving a 30-day written notice to the
other;
2. That petitioner shall compensate respondent a retainer fee of P3,800/month. The
DOCTOR may charge professional fee for hospital services rendered in line with
his specialization;
3. That in consideration of the retainers fee, the DOCTOR agrees to perform the
duties and obligations in the COMPREHENSIVE MEDICAL PLAN, made an
integral part of this retainer agreement;
4. That the DOCTOR shall observe clinic hours at the companys premises from
Monday to Saturday of a minimum of two (2) hours each day or a maximum of
TWO (2) hours each day or treatment from 7:30 a.m. to 8:30 a.m and 3:00pm to
4:00pm. It is further understood that the DOCTOR shall be on call at all times
during the other workshifts to attend to emergency case(s);
5. That no employee-employer relationship shall exist between the company and the
DOCTOR.
The retainer agreement expired after 1 year. However, despite the non-renewal of the
agreement, respondent continued to perform his functions as company doctor to
petitioner until he received a letter dated march 9, 1995 from the company ending their
retainership agreement.
Respondent thereafter filed a complaint before the NLRC seeking recognition as a
regular employee of petitioner and thus prayed from payment of all the benefits of a
regular employee including 13th month pay, COLA, holiday pay, service incentive leave,
and Christmas bonus.
Also, respondent filed another complaint for illegal dismissal against petitioner.
In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant complaint was
dismissed by the Labor Arbiters and subsequently affirmed by the NLRC on the ground
that no employer-employee relationship existed between petitioner company and
respondent.
However when it was elevated to CA for review, the latter ruled that employer-employee
relationship existed between the parties after applying the four-fold test: (1) power to hire
employee (2) payment of wages (3) power to dismissal (4) and power to control over the
employee with respect to the means and methods by which the work is to be
accomplished.

The CA held it in this wise:

1. First, the agreement provide the company desires to engage on a retainer basis
the services of a physician and the said DOCTOR is accepting such engagement.
This clearly shows that coca-cola company exercised its power to hire.
2. Secondly, the agreement showed that petitioner would compensate the doctor for
P3,800/month. This would represent the element of payment of wages.
3. Thirdly, it was provided in the agreement that the same shall be valid only for 1
year. the said term notwithstanding, either party may terminated the contract
upon giving 30-day written notice. This would show that petitioner had the
power to dismissal.
4. Lastly, the agreement reveal that Coca-cola control over the conduct of
respondent in the latters performance of his duties sas a doctor for the company.
Issue: Whether or not there exist an employer-employee relationship between the parties.
Ruling:
The Court agrees with the finding of the Labor Arbiter and the NLRC.The Court held that
the Labor Arbiter and the NLRC correctly found that petitioner company lacked the
power of control over the performance by respondent of his duties.
The Court citing the case of Neri vs. NLRC said, petitioner company, through the
Comprehensive Medical Plan, provided guidelines merely to ensure that the end result
was achieved. In other words, what was sought to be controlled by the petitioner
company was actually the end result of the task. The guidelines or the Comprehensive
Medical Plan were laid down merely to ensure that the desired end result was
achievedbut did not control the means and methods by which respondent performed his
assigned tasks.
The Supreme Court further held that, an employee is required to stay in the employers
workplace or proximately close thereto that he cannot utilize his time effectively and
gainfully for his own purpose. Such is not the prevailing situation here. The respondent
does not dispute that fact that outside of the two (2) hours that he is required to be at
petitioner companys premises, he is not at all further required to just sit around in the
premises and wait for an emergency to occur so as to enable him from using such hours
for his own benefit and advantage. In fact, respondent maintains his own private clinic
attending his private practice in the city, where he services his patients and bills them
accordingly.
The Court finds that the requirement to be on call for emergency cases do not amount to
such control, but are necessary incidents to the Retainership Agreement.
The Supreme Court also notes that the Agreement granted to both parties the power to
terminate their relationship upon giving a 30-day notice. Hence, petitioner company did
not wield the sole power of dismissal or termination.
Therefore, the petition was GRANTED.

Calamba mdeical center VS. NLRC, et. Al.

GR No. 176484, Nov. 28, 2008
Facts:
Calamba Medical Center, engaged the services of medical doctors-spouses Dr.
Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians.Reporting
at the hospital twice-a-week on twenty-four-hour shifts, respondents were paid a monthly
"retainer" of P4,800.00 each. Also resident physicians were also given a percentage share
out of fees charged for out-patient treatments, operating room assistance and discharge
billings, in addition to their fixed monthly retainer.
The work schedules of the members of the team of resident physicians were fixed by
petitioner's medical director Dr. Desipeda, and they were issued ID, enrolled in the SSS
and withheld tax from them.
After an incident where Dr. Trinidad overheard a phone conversation between Dr.
Ronaldo and a fellow employee Diosdado Miscala, the former was given a preventive
suspension and his wife Dr. Merceditha was not given any schedule after sending the
Memorandum. On March 1998, Dr. Ronaldo filed a complaint for illegal suspension and
Dr. Merceditha for illegal dismissal.
Issue: Whether or not there exists an employer-employee relationship between petitioner
and the spouses-respondents?
Ruling:
Drs. Lanzanas are declared employee by the petitioner hospital. Under the "control
test," an employment relationship exists between a physician and a hospital if the
hospital controls both the means and the details of the process by which the physician is
to accomplish his task.
That petitioner exercised control over respondents gains light from the undisputed fact
that in the emergency room, the operating room, or any department or ward for that
matter, respondents' work is monitored through its nursing supervisors, charge nurses and
orderlies. Without the approval or consent of petitioner or its medical director, no
operations can be undertaken in those areas. For control test to apply, it is not essential
for the employer to actually supervise the performance of duties of the employee, it being
enough that it has the right to wield the power.
With respect to respondents' sharing in some hospital fees, this scheme does not sever the
employment tie between them and petitioner as this merely mirrors additional form or
another form of compensation or incentive similar to what commission-based employees
receive as contemplated in Article 97 (f) of the Labor Code.
Moreover, respondents were made subject to petitioner-hospital's Code of Ethics,the
provisions of which cover administrative and disciplinary measures on negligence of

duties, personnel conduct and behavior, and offenses against persons, property and the
hospital's interest.
More importantly, petitioner itself provided incontrovertible proof of the employment
status of respondents, namely, the identification cards it issued them, the payslips and
BIR W-2 (now 2316) Forms which reflect their status as employees, and the classification
as "salary" of their remuneration. Moreover, it enrolled respondents in the SSS and
Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage
under the SSS Law is premised on the existence of an employer-employee
relationship, except in cases of compulsory coverage of the self-employed.

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

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

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

Tongko vs. The Manufacturers Life Insurance Co., Inc.

November 7, 2008
Facts:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life
insurance business. Renato A. Vergel De Dios was, during the period material, its President and Chief
Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977
by virtue of a Career Agent's Agreement (Agreement) he executed with Manulife.
In the Agreement, it is provided that:
It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall
be construed or interpreted as creating an employer-employee relationship between the Company and the
Agent.
The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by
the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery of
the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to terminate
this Agreement by the Company shall be construed for any previous failure to exercise its right under any
provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to
the other party fifteen (15) days notice in writing.
In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he
became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife,
consisting of commissions, persistency income, and management overrides. The problem started sometime
in 2001, when Manulife instituted manpower development programs in the regional sales management
level. Relative thereto, De Dios addressed a letter dated November 6, 2001 to Tongko regarding an October
18, 2001 Metro North Sales Managers Meeting. Stating that Tongkos Region was the lowest performer (on
a per Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards
in this area. Other issues were:"Some Managers are unhappy with their earnings and would want to revert
to the position of agents." And "Sales Managers are doing what the company asks them to do but, in the
process, they earn less." Tongko was then terminated.
Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for
illegal dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the
complaint for lack of an employer-employee relationship.
The NLRC's First Division, while finding an employer-employee relationship between Manulife and
Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an
appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the
absence of an employer-employee relationship between the parties and deeming the NLRC with no
jurisdiction over the case. Hence, Tongko filed this petition.
Issue: Wehther or not Tongko was an employee of Manulife and that he was illegally dismissed.

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

In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is
provided that:
The Agent hereby agrees to comply with all regulations and requirements of the
Company as herein provided as well as maintain a standard of knowledge and
competency in the sale of the Company's products which satisfies those set by the
Company and sufficiently meets the volume of new business required of Production Club
membership.Under this provision, an agent of Manulife must comply with three (3)
requirements: (1) compliance with the regulations and requirements of the company; (2)
maintenance of a level of knowledge of the company's products that is satisfactory to the
company; and (3) compliance with a quota of new businesses.
Among the company regulations of Manulife are the different codes of. The fact that Tongko was obliged
to obey and comply with the codes of conduct was not disowned by respondents.
Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of
Manulife may already be established. Certainly, these requirements controlled the means and methods by
which Tongko was to achieve the company's goals.

More importantly, Manulife's evidence establishes the fact that Tongko was tasked to
perform administrative duties that establishes his employment with Manulife.
Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number of
agents, in addition to his other administrative functions, leads to no other conclusion that he was an
employee of Manulife.
Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of proving
the validity of the termination of employment rests on the employer. Failure to discharge this evidential
burden would necessarily mean that the dismissal was not justified, and, therefore, illegal.

The Labor Code provides that an employer may terminate the services of an employee for
just cause and this must be supported by substantial evidence. The settled rule in
administrative and quasi-judicial proceedings is that proof beyond reasonable doubt is not
required in determining the legality of an employer's dismissal of an employee, and not
even a preponderance of evidence is necessary as substantial evidence is considered
sufficient. Substantial evidence is more than a mere scintilla of evidence or relevant
evidence as a reasonable mind might accept as adequate to support a conclusion, even if
other minds, equally reasonable, might conceivably opine otherwise.
Here, Manulife failed to overcome such burden of proof. It must be reiterated that
Manulife even failed to identify the specific acts by which Tongko's employment was
terminated much less support the same with substantial evidence. To repeat, mere
conjectures cannot work to deprive employees of their means of livelihood. Thus, it must
be concluded that Tongko was illegally dismissed.
Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that
Tongko not being its employee is not entitled to such notices. Since we have ruled that
Tongko is its employee, however, Manulife clearly failed to afford Tongko said notices.
Thus, on this ground too, Manulife is guilty of illegal dismissal.

Semblante et al., vs. Court of Appeals, et al.,

G.R. No. 196426, August 15, 2011
Facts:
Petitioners Marticio Semblante and Dubrick Pilar assert that they were hired by
respondents-spouses Vicente and Maria Luisa Loot, the owners of Gallera de Mandaue
(the cockpit), as the official masiador and sentenciador, respectively, of the cockpit
sometime in 1993.
As the masiador, Semblante calls and takes the bets from the gamecock owners and other
bettors and orders the start of the cockfight. He also distributes the winnings after
deducting the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador,
Pilar oversees the proper gaffing of fighting cocks, determines the fighting cocks
physical condition and capabilities to continue the cockfight, and eventually declares the
result of the cockfight.
For their services as masiado rand sentenciador, Semblante receives PhP 2,000 per week
or a total of PhP 8,000 per month, while Pilar gets PhP 3,500 a week or PhP 14,000 per
month. They work every Tuesday, Wednesday, Saturday, and Sunday every week,
excluding monthly derbies and cockfights held on special holidays. Their working days
start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the morning
depending on the needs of the cockpit. Petitioners had both been issued employees
identification cards that they wear every time they report for duty. They alleged never
having incurred any infraction and/or violation of the cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry into the cockpit upon the
instructions of respondents, and were informed of the termination of their services
effective that date. This prompted petitioners to file a complaint for illegal dismissal
against respondents.
Respondents denied that petitioners were their employees and alleged that they were
associates of respondents independent contractor, Tomas Vega. Respondents claimed that
petitioners have no regular working time or day and they are free to decide for themselves
whether to report for work or not on any cockfighting day. In times when there are few
cockfights in Gallera de Mandaue, petitioners go to other cockpits in the vicinity. Lastly,
petitioners, so respondents assert, were only issued identification cards to indicate that
they were free from the normal entrance fee and to differentiate them from the general
public.
In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners to
be regular employees of respondents as they performed work that was necessary and
indispensable to the usual trade or business of respondents for a number of years. The
Labor Arbiter also ruled that petitioners were illegally dismissed, and so ordered
respondents to pay petitioners their back wages and separation pay.
Respondents counsel received the Labor Arbiters Decision on September 14, 2004. And

within the 10-day appeal period, he filed the respondents appeal with the NLRC on
September 24, 2004, but without posting a cash or surety bond equivalent to the monetary
award granted by the Labor Arbiter.
The NLRC held in its Resolution of October 18, 2006 that there was no employeremployee relationship between petitioners and respondents, respondents having no part in
the selection and engagement of petitioners, and that no separate individual contract with
respondents was ever executed by petitioners.
The CA upheld the NLRC decision.
Issue: Whether or not there exists an employer/employee relationship between
Semblante, et al. and the spouses LOOT.
Ruling:
The petitioners are NOT employees of respondents, since their relationship fails to pass
muster the four-fold test of employment We have repeatedly mentioned in countless
decisions: (1) the selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the power to control the employees conduct, which is
the most important element.
As found by both the NLRC and the CA, respondents had no part in petitioners selection
and management; petitioners compensation was paid out of the arriba (which is a
percentage deducted from the total bets), not by petitioners; and petitioners performed
their functions as masiador and sentenciador free from the direction and control of
respondents. In the conduct of their work, petitioners relied mainly on their expertise
that is characteristic of the cockfight gambling, and were never given by respondents
any tool needed for the performance of their work.
Respondents, not being petitioners employers, could never have dismissed, legally or
illegally, petitioners, since respondents were without power or prerogative to do so in the
first place.

Bernarte vs. Phil. Basketball Association et al.,

GR No. 192084, September 14, 2011
Facts:
Complainants, Jose Mel Bernarte and Renato Guevarra, aver that they were invited to
join the PBA as referees. During the leadership of Commissioner Emilio Bernardino, they
were made to sign contracts on a year-to-year basis. During the term of
Commissioner Eala, however, changes were made on the terms of their employment.
Bernarte, was not made to sign a contract during the first conference of the All-Filipino
Cup, which was from February 23, 2003 to June 2003. It was only during the second
conference when he was made to sign a one and a half month contract for the period July
1 to August 5, 2003.
January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory
performance on and off the court. It was a total shock for Bernarte who was awarded
Referee of the year in 2003. He felt that the dismissal was caused by his refusal to fix a
game upon order of Ernie De Leon.
Guevarra alleges that he was invited to join the PBA pool of referees in February 2001.
On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a yearly
contract as Regular Class C referee. On May 6, 2003, respondent Martinez issued a
memorandum to Guevarra expressing dissatisfaction over his questioning on the
assignment of referees officiating out-of-town games. Beginning February 2004, he was
no longer made to sign a contract.
The Court of Appeals denied the motion for reconsideration.
Complainants entered into two contracts of retainer with the PBA in the year 2003. The
first contract was for the period January 1, 2003 to July 15, 2003; and the second was for
September 1 to December 2003. After the lapse of the latter period, PBA decided not to
renew their contracts.
Complainants were not illegally dismissed because they were not employees of the PBA.
Their respective contracts of retainer were simply not renewed. PBA had the prerogative
of whether or not to renew their contracts, which they knew were fixed.
Labor Arbiters decision, on 31 March 2005, declared petitioner an employee whose
dismissal by respondents was illegal. Accordingly, the Labor Arbiter ordered the
reinstatement of petitioner and the payment of back wages, moral and exemplary
damages and attorneys fees.
In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiters judgment.

The Court of Appeals found petitioner an independent contractor since respondents did
not exercise any form of control over the means and methods by which petitioner
performed his work as a basketball referee. The Court of Appeals held:
While the NLRC agreed that the PBA has no control over the referees acts of blowing
the whistle and making calls during basketball games, it, nevertheless, theorized that the
said acts refer to the means and methods employed by the referees in officiating
basketball games for the illogical reason that said acts refer only to the referees skills.
How could a skilled referee perform his job without blowing a whistle and making calls?
Worse, how can the PBA control the performance of work of a referee without controlling
his acts of blowing the whistle and making calls?
Issue: Whether petitioner is an employee of respondents, which in turn determines
whether petitioner was illegally dismissed
Ruling:
At any rate, the NLRC declared the issue on the finality of the Labor Arbiters decision
moot as respondents appeal was considered in the interest of substantial justice. We
agree with the NLRC. The ends of justice will be better served if we resolve the instant
case on the merits rather than allowing the substantial issue of whether petitioner is an
independent contractor or an employee linger and remain unsettled due to procedural
technicalities.
The existence of an employer-employee relationship is ultimately a question of fact. As a
general rule, factual issues are beyond the province of this Court. However, this rule
admits of exceptions, one of which is where there are conflicting findings of fact between
the Court of Appeals, on one hand, and the NLRC and Labor Arbiter, on the other, such
as in the present case.
To determine the existence of an employer-employee relationship, case law has
consistently applied the four-fold test, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employee on the means and methods by which the work is
accomplished. The so-called control test is the most important indicator of the presence
or absence of an employer-employee relationship.
We agree with respondents that once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or
decision is to be made. The referees decide whether an infraction was committed, and the
PBA cannot overrule them once the decision is made on the playing court. The referees
are the only, absolute, and final authority on the playing court. Respondents or any of the
PBA officers cannot and do not determine which calls to make or not to make and cannot
control the referee when he blows the whistle because such authority exclusively belongs
to the referees. The very nature of petitioners job of officiating a professional basketball
game undoubtedly calls for freedom of control by respondents.

Moreover, the following circumstances indicate that petitioner is an independent

contractor: (1) the referees are required to report for work only when PBA games are
scheduled, which is three times a week spread over an average of only 105 playing days a
year, and they officiate games at an average of two hours per game; and (2) the only
deductions from the fees received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight hours per
day for five days a week, petitioner is required to report for work only when PBA games
are scheduled or three times a week at two hours per game. In addition, there are no
deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which
are the usual deductions from employees salaries. These undisputed circumstances
buttress the fact that petitioner is an independent contractor, and not an employee of
respondents.
Lirio vs. Genovia
GR No. 169757, November 23, 2011
Facts: On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against
petitioner Cesar Lirio and/or Celkor Ad Sonicmix Recording Studio for illegal dismissal,
non-payment of commission and award of moral and exemplary damages.
In his Position Paper, respondent Genovia alleged, among others, that on August 15,
2001, he was hired as studio manager by petitioner Lirio, owner of Celkor Ad Sonicmix
Recording Studio (Celkor). He was employed to manage and operate Celkor and to
promote and sell the recording studio's services to music enthusiasts and other
prospective clients. He received a monthly salary of P7,000.00. They also agreed that he
was entitled to an additional commission of P100.00 per hour as recording technician
whenever a client uses the studio for recording, editing or any related work. He was made
to report for work from Monday to Friday from 9:00 a.m. to 6 p.m. On Saturdays, he was
required to work half-day only, but most of the time, he still rendered eight hours of work
or more. All the employees of petitioner, including respondent, rendered overtime work
almost every day, but petitioner never kept a daily time record to avoid paying the
employees overtime pay.
Respondent stated that a few days after he started working as a studio manager, petitioner
approached him and told him about his project to produce an album for his 15-year-old
daughter, Celine Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked
respondent to compose and arrange songs for Celine and promised that he (Lirio) would
draft a contract to assure respondent of his compensation for such services. As agreed
upon, the additional services that respondent would render included composing and
arranging musical scores only, while the technical aspect in producing the album, such as
digital editing, mixing and sound engineering would be performed by respondent in his
capacity as studio manager for which he was paid on a monthly basis. Petitioner
instructed respondent that his work on the album as composer and arranger would only be
done during his spare time, since his other work, as studio manager was the priority.
Respondent then started working on the album.

Respondent alleged that before the end of September 2001, he reminded petitioner about
his compensation as composer and arranger of the album. Petitioner verbally assured him
that he would be duly compensated. By mid-November 2001, respondent finally finished
the compositions and musical arrangements of the songs to be included in the album.
Before the month ended, the lead and back-up vocals in the ten (10) songs were finally
recorded and completed. From December 2001 to January 2002, respondent, in his
capacity as studio manager, worked on digital editing, mixing and sound engineering of
the vocal and instrumental audio files.
Thereafter, respondent was tasked by petitioner to prepare official correspondence,
establish contacts and negotiate with various radio stations, malls, publishers, record
companies and manufacturers, record bars and other outlets in preparation for the promotion of
the said album. By early February 2002, the album was in its manufacturing stage.
ELECTROMAT, manufacturer of CDs and cassette tapes, was tapped to do the job. The carrier
single of the album, which respondent composed and arranged, was finally aired over the radio on
February 22, 2002.
On February 26, 2002, respondent again reminded petitioner about the contract on his
compensation as composer and arranger of the album. Petitioner told respondent that since he was
practically a nobody and had proven nothing yet in the music industry, respondent did not deserve
a high compensation, and he should be thankful that he was given a job to feed his family.
Petitioner informed respondent that he was entitled only to 20% of the net profit, and not of the
gross sales of the album, and that the salaries he received and would continue to receive as studio
manager of Celkor would be deducted from the said 20% net profit share. Respondent objected
and insisted that he be properly compensated. On March 14, 2002, petitioner verbally terminated
respondents services, and he was instructed not to report for work.
Respondent asserts that he was illegally dismissed as he was terminated without any valid
grounds, and no hearing was conducted before he was terminated, in violation of his
constitutional right to due process. Having worked for more than six months, he was already a
regular employee. Although he was a so called studio manager, he had no managerial powers,
but was merely an ordinary employee.
Respondent prayed for his reinstatement without loss of seniority rights, or, in the alternative, that
he be paid separation pay, back wages and overtime pay; and that he be awarded unpaid
commission in the amount of P2,000.00 for services rendered as a studio technician as well as
moral and exemplary damages.
Respondents evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which
was certified correct by petitioner, and Petty Cash Vouchers evidencing receipt of payroll
payments by respondent from Celkor.
In defense, petitioner stated in his Position Paper that respondent was not hired as studio manager,
composer, technician or as an employee in any other capacity of Celkor. Respondent could not
have been hired as a studio manager, since the recording studio has no personnel except
petitioner. Petitioner further claimed that his daughter Celine Mei Lirio, a former contract artist of
ABS-CBN Star Records, failed to come up with an album as the latter aborted its project to
produce one. Thus, he decided to produce an album for his daughter and established a recording
studio, which he named Celkor Ad Sonicmix Recording Studio. He looked for a

composer/arranger who would compose the songs for the said album. In July 2001, Bob Santiago,
his son-in-law, introduced him to respondent, who claimed to be an amateur composer, an
arranger with limited experience and musician without any formal musical training. According to
petitioner, respondent had no track record as a composer, and he was not known in the field of
music. Nevertheless, after some discussion, respondent verbally agreed with petitioner to coproduce the album based on the following terms and conditions: (1) petitioner shall provide all
the financing, equipment and recording studio; (2) Celine Mei Lirio shall sing all the songs; (3)
respondent shall act as composer and arranger of all the lyrics and the music of the five songs

he already composed and the revival songs; (4) petitioner shall have exclusive right to
market the album; (5) petitioner was entitled to 60% of the net profit, while respondent
and Celine Mei Lirio were each entitled to 20% of the net profit; and (6) respondent shall
be entitled to draw advances of P7,000.00 a month, which shall be deductible from his
share of the net profits and only until such time that the album has been produced.
According to petitioner, they arrived at the foregoing sharing of profits based on the mutual
understanding that respondent was just an amateur composer with no track record whatsoever in
the music industry, had no definite source of income, had limited experience as an arranger, had
no knowledge of the use of sound mixers or digital arranger and that petitioner would help and
teach him how to use the studio equipment; that petitioner would shoulder all the expenses of
production and provide the studio and equipment as well as his knowledge in the use thereof; and
Celine Mei Lirio would sing the songs. They embarked on the production of the album on or
about the third week of August 2002.
Petitioner asserted that from the aforesaid terms and conditions, his relationship with respondent
is one of an informal partnership under Article 1767of the New Civil Code, since they agreed to
contribute money, property or industry to a common fund with the intention of dividing the
profits among themselves. Petitioner had no control over the time and manner by which
respondent composed or arranged the songs, except on the result thereof. Respondent reported to
the recording studio between 10:00 a.m. and 12:00 noon. Hence, petitioner contended that no
employer-employee relationship existed between him and the respondent, and there was no illegal
dismissal to speak of.

Issue: Whether or not employer-employee relationship exists?

Ruling:
Yes. The elements to determine the existence of an employment relationship are: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employers power to control the employees conduct. The most important element is the
employers control of the employees conduct, not only as to the result of the work to be done, but
also as to the means and methods to accomplish it.
It is settled that no particular form of evidence is required to prove the existence of an employeremployee relationship. Any competent and relevant evidence to prove the relationship may be
admitted.
In this case, the documentary evidence presented by respondent to prove that he was an employee
of petitioner are as follows: (a) a document denominated as "payroll" (dated July 31, 2001 to
March 15, 2002) certified correct by petitioner, which showed that respondent received a monthly
salary of P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the

month) with the corresponding deductions due to absences incurred by respondent; and (2) copies
of petty cash vouchers, showing the amounts he received and signed for in the payrolls.
The said documents showed that petitioner hired respondent as an employee and he was paid
monthly wages of P7, 000.00. Petitioner wielded the power to dismiss as respondent stated that
he was verbally dismissed by petitioner, and respondent, thereafter, filed an action for illegal
dismissal against petitioner. The power of control refers merely to the existence of the power. It
is not essential for the employer to actually supervise the performance of duties of the employee,
as it is sufficient that the former has a right to wield the power. Nevertheless, petitioner stated in
his Position Paper that it was agreed that he would help and teach respondent how to use the

studio equipment. In such case, petitioner certainly had the power to check on the
progress and work of respondent.

Charlie Jao vs Bcc Products Sales, Inc.

GR No. 163700, April 18, 2012
Facts:
Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President,
respondent Terrance Ty (Ty), employed him as comptroller starting from September 1995
with a monthly salary of P20,000.00 to handle the financial aspect of BCCs business;
that on October 19, 1995, the security guards of BCC, acting upon the instruction of Ty,
barred him from entering the premises of BCC where he then worked; that his attempts to
report to work in November and December 12, 1995 were frustrated because he
continued to be barred from entering the premises of BCC; and that he filed a complaint
dated December 28, 1995 for illegal dismissal, reinstatement with full back wages, nonpayment of wages, damages and attorneys fees.
Respondents countered that petitioner was not their employee but the employee of Sobien
Food Corporation (SFC), the major creditor and supplier of BCC; and that SFC had
posted him as its comptroller in BCC to oversee BCCs finances and business operations
and to look after SFCs interests or investments in BCC.; that their issuance of the ID to
petitioner was only for the purpose of facilitating his entry into the BCC premises in
relation to his work of overseeing the financial operations of BCC for SFC; that the ID
should not be considered as evidence of petitioners employment in BCC; that petitioner
executed an affidavit in March 1996, 20 stating, among others, as follows:
1. I am a CPA (Certified Public Accountant) by profession but presently associated
with, or employed by, Sobien Food Corporation with the same business address as
above stated;
2. In the course of my association with, or employment by, Sobien Food Corporation
(SFC, for short), I have been entrusted by my employer to oversee and supervise
collections on account of receivables due SFC from its customers or clients; for
instance, certain checks due and turned over by one of SFCs customers is BCC
Product Sales, Inc., operated or run by one Terrance L. Ty, (President and General
manager).
Petitioner counters, however, that the affidavit did not establish the absence of an
employer-employee relationship between him and respondents because it had been
executed in March 1996, or after his employment with respondents had been terminated
on December 12, 1995; and that the affidavit referred to his subsequent employment by
SFC following the termination of his employment by BCC.
Issue: The sole issue is whether or not an employer-employee relationship existed
between petitioner and BCC.

Ruling:
In determining the presence or absence of an employer-employee relationship, the Court
has consistently looked for the following incidents, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employers power to control the employee on the means and methods by
which the work is accomplished. The last element, the so-called control test, is the most
important element.
Petitioner presented no document setting forth the terms of his employment by BCC. The
failure to present such agreement on terms of employment may be understandable and
expected if he was a common or ordinary laborer who would not jeopardize his
employment by demanding such document from the employer, but may not square well
with his actual status as a highly educated professional.
Petitioners admission that he did not receive his salary for the three months of his
employment by BCC, as his complaint for illegal dismissal and non-payment of wages
and the criminal case for estafa he later filed against the respondents for non-payment of
wages indicated, further raised grave doubts about his assertion of employment by BCC.
If the assertion was true, we are puzzled how he could have remained in BCCs employ in
that period of time despite not being paid the first salary of P20,000.00/month. Moreover,
his name did not appear in the payroll of BCC despite him having approved the payroll as
comptroller.
Lastly, the confusion about the date of his alleged illegal dismissal provides another
indicium of the insincerity of petitioners assertion of employment by BCC. In the
petition for review on certiorari, he averred that he had been barred from entering the
premises of BCC on October 19, 1995, 27 and thus was illegally dismissed. Yet, his
complaint for illegal dismissal stated that he had been illegally dismissed on December
12, 1995 when respondents security guards barred him from entering the premises of
BCC, 28 causing him to bring his complaint only on December 29, 1995, and after BCC
had already filed the criminal complaint against him. The wide gap between October 19,
1995 and December 12, 1995 cannot be dismissed as a trivial inconsistency considering
that the several incidents affecting the veracity of his assertion of employment by BCC
earlier noted herein transpired in that interval.
With all the grave doubts thus raised against petitioners claim, we need not dwell at
length on the other proofs he presented, like the affidavits of some of the employees of
BCC, the ID, and the signed checks, bills and receipts. Suffice it to be stated that such
other proofs were easily explainable by respondents and by the aforestated circumstances
showing him to be the employee of SFC, not of BCC.

Legend Hotel vs Realuyo

(GR No. 153511, July 18, 2012)
Facts:
This labor case for illegal dismissal involves a pianist employed to perform in the
restaurant of a hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa,
filed a complaint for alleged unfair labor practice, constructive illegal dismissal, and the
underpayment/nonpayment of his premium pay for holidays, separation pay, service
incentive leave pay, and 13111 month pay.
Respondent averred that he had worked as a pianist at the Legend Hotels Tanglaw
Restaurant from September 1992 with an initial rate of P400.00/night that was given to
him after each nights performance; that his rate had increased to P750.00/night; and that
during his employment, he could not choose the time of performance, which had been
fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that the Legend
Hotels restaurant manager had required him to conform with the venues motif; that he
had been subjected to the rules on employees representation checks and chits, a privilege
granted to other employees; that on July 9, 1999, the management had notified him that
as a cost-cutting measure his services as a pianist would no longer be required effective
July 30, 1999; that he disputed the excuse, insisting that Legend Hotel had been
lucratively operating as of the filing of his complaint; and that the loss of his employment
made him bring his complaint.
Issue: Whether there exists an employer-employee relationship
Ruling:
Employer-employee relationship existed between the parties. The issue of whether or not
an employer-employee relationship existed between petitioner and respondent is
essentially a question of fact. The factors that determine the issue include who has the
power to select the employee, who pays the employees wages, who has the power to
dismiss the employee, and who exercises control of the methods and results by which the
work of the employee is accomplished. Although no particular form of evidence is
required to prove the existence of the relationship, and any competent and relevant
evidence to prove the relationship may be admitted, a finding that the relationship exists
must nonetheless rest on substantial evidence, which is that amount of relevant evidence
that a reasonable mind might accept as adequate to justify a conclusion.
A review of the circumstances reveals that respondent was, indeed, petitioners employee.
He was undeniably employed as a pianist in petitioners Madison Coffee Shop/Tanglaw
Restaurant from September 1992 until his services were terminated on July 9, 1999.
First of all, petitioner actually wielded the power of selection at the time it entered into
the service contract dated September 1, 1992 with respondent. This is true,
notwithstanding petitioners insistence that respondent had only offered his services to

provide live music at petitioners Tanglaw Restaurant, and despite petitioners position
that what had really transpired was a negotiation of his rate and time of availability. The
power of selection was firmly evidenced by, among others, the express written
recommendation dated January 12, 1998 by Christine Velazco, petitioners restaurant
manager, for the increase of his remuneration.
Secondly, petitioner argues that whatever remuneration was given to respondent were
only his talent fees that were not included in the definition of wage under the Labor Code.
Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm,
three to six nights a week. Such rate of remuneration was later increased to P750.00 upon
restaurant manager Velazcos recommendation. There is no denying that the remuneration
denominated as talent fees was fixed on the basis of his talent and skill and the quality of
the music he played during the hours of performance each night, taking into account the
prevailing rate for similar talents in the entertainment industry
Respondents remuneration, albeit denominated as talent fees, was still considered as
included in the term wage in the sense and context of the Labor Code, regardless of how
petitioner chose to designate the remuneration.
Thirdly, the power of the employer to control the work of the employee is considered the
most significant determinant of the existence of an employer-employee relationship. This
is the so-called control test, and is premised on whether the person for whom the services
are performed reserves the right to control both the end achieved and the manner and
means used to achieve that end.
A review of the records shows, however, shows that respondent performed his work as a
Pianist under petitioners supervision and control. Specifically, petitioners control of
both the end achieved and the manner and means used to achieve that end was
demonstrated by the following, to wit:
a) He could not choose the time of his performance, which petitioners had fixed
from 7:00 pm to 10:00 pm, three to six times a week;
b) He could not choose the place of his performance;
c) The restaurants manager required him at certain times to perform only Tagalog
songs or music, or to wear barong Tagalog to conform to the Filipiniana motif;
and
d) He was subjected to the rules on employees representation check and chits, a
privilege granted to other employees.

The New Philippine Skylanders, Inc., vs. Dakila

GR No. 199547, Sept. 24, 2012
Facts:
November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor
union affiliated with the Philippine Association of Free Labor Unions (PAFLU)
September (PAFLU), won in the certification election conducted among the rank and file
employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders
Employees Association-WATU (PSEA-WATU) immediately protested the result of the
election before the Secretary of Labor.
In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as
reason PAFLUs supposed deliberate and habitual dereliction of duty toward its members.
Attached to the notice was a copy of the resolution adopted and signed by the officers and
members of PSEA authorizing their local union to disaffiliate from its mother federation.
PSEA subsequently affiliated itself with the National Congress of Workers (NCW),
changed its name to Philippine Skylanders Employees Association -National Congress of
Workers (PSEA-NCW), and to maintain continuity within the organization, allowed the
former officers of PSEA-PAFLU to continue occupying their positions as elected officers
in the newly-forged PSEA-NCW.
On 17 March, 1994, PSEA-NCW entered into a collective bargaining agreement with PSI
which was immediately registered with the Department of Labor and Employment.
PAFLU requested for the accounting. PSI through its personnel manager Francisco
Dakila denied the request.
PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its
president Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that
aside from PSIs refusal to bargain collectively with its workers, the company through its
president and personnel manager, was also liable for interfering with its employees union
activities
Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against
Francisco Dakila. Through Ayroso PAFLU claimed that Dakila was present in PSEAs
organizational meeting thereby confirming his illicit participation in union activities.
Ayroso added that the members of the local union had unwittingly fallen into the
manipulative machinations of PSI and were lured into endorsing a collective bargaining
agreement, which was detrimental to their interests.
PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as
additional party respondents. PAFLU averred that the local officers of PSEA-PAFLU,
namely Macario Cabanias, Pepito Rodillas, Sharon Castillo, Danilo Carbonel, Manuel
Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel,

Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa, were equally
guilty of unfair labor practice since they brazenly allowed themselves to be manipulated
and influenced by petitioner Francisco Dakila.
Dakila moved for the dismissal of the complaint on the ground that the issue of
disaffiliation was an inter-union conflict, which lay beyond the jurisdiction of the Labor
Arbiter. PSEA was no longer affiliated with PAFLU, Ayroso or PAFLU for that matter
had no personality to file the instant complaint.
Labor Arbiter declared PSEAs disaffiliation from PAFLU invalid and held PSI, PSEAPAFLU and their respective officers guilty of unfair labor practice.
As PSEA-NCWs personality was not accorded recognition, its collective bargaining
agreement with PSI was struck down for being invalid.
PSI, PSEA and their respective officers appealed to the National Labor Relations
Commission (NLRC). But the NLRC upheld the Decision of the Labor Arbiter.
Ruling: Local unions have a right to separate from their mother federation on the ground
that as separate and voluntary associations, local unions do not owe their creation and
existence to the national federation to which they are affiliated but, instead, to the will of
their members. The sole essence of affiliation is to increase, by collective action, the
common bargaining power of local unions for the effective enhancement and protection
of their interests. Admittedly, there are times when without succor and support local
unions may find it hard, unaided by other support groups, to secure justice for them. Yet
the local unions remain the basic units of association, free to serve their own interests
subject to the restraints imposed by the constitution and by-laws of the national
federation, and free also to renounce the affiliation upon the terms laid down in the
agreement, which brought such affiliation into existence.
There is nothing shown in the records nor is it claimed by PAFLU that the local union
was expressly forbidden to disaffiliate from the federation nor were there any conditions
imposed for a valid breakaway. As such, the pendency of an election protest involving
both the mother federation and the local union did not constitute a bar to a valid
disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the 120
members of the local union, or an equivalent of 92.5% of the total union membership
supported the claim of disaffiliation and had in fact disauthorized PAFLU from instituting
any complaint in their behalf.
It was entirely reasonable then for PSI to enter into a collective bargaining agreement
with PSEA-NCW. As PSEA had validly severed itself from PAFLU, there would be no
restrictions, which could validly hinder it from subsequently affiliating with NCW and
entering into a collective bargaining agreement in behalf of its members.
The mere act of disaffiliation did not divest PSEA of its own personality; neither did it
give PAFLU the license to act independently of the local union.

Tesoro et al., vs. Metro Manila Retreaders Inc., et al.,

GR No. 171482, March 12, 2014
Facts:
This case concerns the effect on the status of employment of employees who entered into
a Service Franchise Agreement with their employer.
On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro, Pedro Ang, and
Gregorio Sharp used to work as salesmen for respondents Metro Manila Retreaders, Inc.,
Northern Luzon Retreaders, Inc., or Power Tire and Rubber Corporation. These are sister
companies collectively called Bandag. Bandag offered repair and retread services for
used tires. In 1998, however, Bandag developed a franchising scheme that would enable
others to operate tire and retreading businesses using its trade name and service system.
Petitioners quit their jobs as salesmen and entered into separate Service Franchise
Agreements (SFAs) with Bandag for the operation of their respective franchises. Under
this SFA, Bandag would provide funding with the petitioners subject to regular
liquidation of revolving funds. The expenses of these funds will be deducted from their
sale in order to determine their income. After some time, petitioners began to default on
their obligations to submit periodic liquidations of their operational expenses in relation
to the revolving funds Bandag provided them. Bandag terminated their SFA.
Aggrieved, petitioners filed a complaint for constructive dismissal, nonpayment of
wages, incentive pay, 13th month pay and damages against Bandag with the National
Labor Relations Commission (NLRC). Petitioners contend that despite the SFA, they
remained employees of Bandag. For its part, Bandag pointed out that petitioners freely
resigned from their employment and decided to avail themselves of the opportunity to be
independent entrepreneurs under the franchise scheme that Bandag had. Thus, no
employeremployee relationship existed between petitioners and Bandag.
Issue: Whether or not petitioners remained to be Bandags salesmen under the franchise
scheme it entered into with them.
Ruling:
No, petitioners were no longer employees of Bandag the moment they entered into the
SFA. Franchising is a business method of expansion that allows an individual or group of
individuals to market a product or a service and to use of the patent, trademark, trade
name and the systems prescribed by the owner.
The tests for determining employeremployee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the employers power to control the employee with respect to the means and methods
by which the work is to be accomplished. The last is called the control test, the most
important element.

When petitioners agreed to operate Bandags franchise branches in different parts of the
country, they knew that this substantially changed their former relationships. They were
to cease working as Bandags salesmen, the positions they occupied before they ventured
into running separate Bandag branches. They were to cease receiving salaries or
commissions. Their incomes were to depend on the profits they made. Yet, petitioners did
not then complain of constructive dismissal. They took their chances, ran their branches,
Gregorio Sharp in La Union for several months and Ashmor Tesoro in Baguio and Pedro
Ang in Pangasinan for over a year. Clearly, their belated claim of constructive dismissal
is quite hollow.
It is pointed out that Bandag continued, like an employer, to exercise control over
petitioners work. It points out that Bandag: (a) retained the right to adjust the price rates
of products and services; (b) imposed minimum processed tire requirement (MPR); (c)
reviewed and regulated credit applications; and (d) retained the power to suspend
petitioners services for failure to meet service standards. But uniformity in prices, quality
of services, and good business practices are the essence of all franchises. A franchisee
will damage the franchisors business if he sells at different prices, renders different or
inferior services, or engages in bad business practices. These business constraints are
needed to maintain collective responsibility for faultless and reliable service to the same
class of customers for the same prices.
This is not the control contemplated in employeremployee relationships. Control in
such relationships addresses the details of day to day work like assigning the particular
task that has to be done, monitoring the way tasks are done and their results, and
determining the time during which the employee must report for work or accomplish his
assigned task.
Petitioners cannot use the revolving funds feature of the SFAs as evidence of their
employeremployee relationship with Bandag. These funds do not represent wages. They
are more in the nature of capital advances for operations that Bandag conceptualized to
attract prospective franchisees. Petitioners incomes depended on the profits they make,
controlled by their individual abilities to increase sales and reduce operating costs.

Royale Homes Marketing Corporation vs. Alcantara

(GR No. 195190, July 28, 2014)
Facts:
Alcantara was appointed as the Marketing Director of Royale Homes, a corporation
engaged in marketing real estates. Royale Homes reappointed him for several consecutive
years, the last of which covered the period January 1 to December 31, 2003 where he
held the position of Division Vice-President-Sales. On December 17, 2003, Alcantara
filed a Complaint for Illegal Dismissal against Royale Homes and its officers.
Alcantaras contention:
- He is a regular employee of Royale Homes since he is performing tasks that are
necessary and desirable to its business
- The company gave him P1.2 million for the services he rendered to it
- The executive officers of Royale Homes told him that they were wondering why he still
had the gall to come to office and sit at his table. The acts of the executive officers of
Royale Homes amounted to his dismissal from work without any valid or just cause and
in gross disregard of the proper procedure for dismissing employees.
Royale Homes Contention:
- It vehemently denied that Alcantara is its employee.
- The appointment paper of Alcantara is clear that it engaged his services as an
independent sales contractor for a fixed term of one year only. He never received any
salary, 13th month pay, overtime pay or holiday pay from Royale Homes as he was paid
purely on commission basis.
- Royale Homes had no control on how Alcantara would accomplish his tasks and
responsibilities as he was free to solicit sales at any time and by any manner which he
may deem appropriate and necessary.
Issue: Whether or not there exists employer-employee relationship between Alcantara
and Royale Homes.
Ruling:
The juridical relationship of the parties based on their written contract. The contract, duly
signed and not disputed by the parties, conspicuously provides that "no employeremployee relationship exists between" Royale Homes and Alcantara, as well as his sales
agents. While the existence of employer-employee relationship is a matter of law, the
characterization made by the parties in their contract as to the nature of their juridical
relationship cannot be simply ignored.
The juridical relationship of the parties based on Control Test. In determining the
existence of an employer-employee relationship, this Court has generally relied on the
four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; and (4) the employer's power to control the

employee with respect to the means and methods by which the work is to be
accomplished. Among the four, the most determinative factor in ascertaining the
existence of employer- employee relationship is the "right of control test".
Not every form of control is indicative of employer-employee relationship. As long as the
level of control does not interfere with the means and methods of accomplishing the
assigned tasks, the rules imposed by the hiring party on the hired party do not amount to
the labor law concept of control that is indicative of employer-employee relationship.
In this case, the Court agrees with Royale Homes that the rules, regulations, code of
ethics, and periodic evaluation alluded to by Alcantara do not involve control over the
means and methods by which he was to perform his job. To the mind of this Court, these
do not pertain to the means and methods of how Alcantara was to perform and
accomplish his task of soliciting sales.
As the party claiming the existence of employer-employee relationship, it behoved upon
Alcantara to prove the elements thereof, particularly Royale Homes' power of control
over the means and methods of accomplishing the work. He, however, failed to discharge
such burden.
On the other hand, this case is replete with instances that negate the element of control
and the existence of employer-employee relationship. Notably, Alcantara was not
required to observe definite working hours. Except for soliciting sales, Royale Homes did
not assign other tasks to him. He had full control over the means and methods of
accomplishing his tasks as he can "solicit sales at any time and by any manner which [he
may] deem appropriate and necessary." He performed his tasks on his own account free
from the control and direction of Royale Homes in all matters connected therewith,
except as to the results thereof.
Neither does the repeated hiring of Alcantara prove the existence of employer-employee
relationship. The continuous rehiring of Alcantara simply signifies the renewal of his
contract with Royale Homes. Alcantara was not prohibited from engaging in any other
business as long as he does not sell projects of Royale Homes' competitors.
Payment of Wages
The element of payment of wages is also absent in this case. As provided in the contract,
Alcantara's remunerations consist only of commission override of 0.5%, budget
allocation, sales incentive and other forms of company support. There is no proof that he
received fixed monthly salary. No payslip or payroll was ever presented and there is no
proof that Royale Homes deducted from his supposed salary withholding tax or that it
registered him with the Social Security System, Philippine Health Insurance Corporation,
or Pag-Ibig Fund. All of these indicate an independent contractual relationship.
This Court is, therefore, convinced that Alcantara is not an employee of Royale Homes,
but a mere independent contractor.

Fuji Television Network Inc. vs. Espiritu

GR No. 204944-45, December 3, 2014
Facts:
Espiritu was employed in 2005 by Fuji as a news correspondent/producer tasked to
report Philippine news to Fuji through its Manila Bureau filed office. Her employment
contract was initially for one year, but was successively renewed on a yearly basis with
salary adjustment upon every renewal.
In 2009, Espiritu was diagnosed with lung cancer and upon informing Fuji, she was asked
to sign a non-renewal contract where it was stipulated that her employment contract
would no longer be renewed after its expiration on May 31, 2009 and that the parties
release each other from liabilities and responsibilities under the employment contract.
She received $18,050 as monthly salary from March 2009-May 2009, year-end bonus,
mid-year bonus and separation pay. Arlene affixed her signature on the non-renewal
contract with U.P. for under protest. Espiritu then filed a case for illegal and
dismissal and attorneys fees with the Metro Manila Arbitration Branch of the National
Labor Relations Commission (NLRC).
The Labor Arbiter (LA) dismissed the case for illegal dismissal filed by Espiritu against
Fuji, citing Sonza v. ABS-CBN and applying the four-fold test, it held that Espiritu was
not an employee but an independent contractor.
Upon appeal, the NLRC reversed the LAs decision and ordered Fuji to pay back wages,
computed from date of the illegal dismissal. The CA affirmed with modification the
NLRCs decision.
The CA directed Fuji to immediately reinstate Espiritu to her position as News Producer
without loss of seniority rights, and pay her back wages, 13th month pay, mid-year and
year-end bonuses, sick leave, and vacation leave with pay until reinstated, moral,
exemplary damages, attorneys fees, and legal interest of 12% per annum of the total
monetary awards.
Issue: Whether or not Espiritu can be reinstated back to work
Ruling:
The Supreme Court upheld the reinstatement of an employee of Fuji Television Network,
Inc. whose employment was terminated in 2009 by the Japan-based firm upon learning
that she was suffering from lung cancer.
Second Division denied the Petition for Review filed by Fuji Television Network Inc.
against Arlene S. Espiritu, and affirmed with modification the decision of the Court of
Appeals (CA) dated June 25, 2012. The decision in Fuji v. Espiritu, promulgated on

December 3, 2014, ordered that Espiritus backwages be computed from June 2009.
The Court said that the CA was correct in finding that the successive renewals of
Espiritus contract indicated the necessity and desirability of her work in the usual course
of Fujis business, thus making her a regular employee, with the right to security of
tenure.
The Court, citing the case of ABS-CBN Broadcasting Corporation v. Nazareno, in
determining whether an employment should be considered regular or non-regular, said
that the applicable test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer.
It noted that Espiritu had to report for work in Fujis office in Manila from Mondays to
Fridays, eight hours per day. Likewise, Espiritu, having no equipment, had to use the
facilities of Fuji to accomplish her tasks.Moreover, the Court held that Espiritus
contract indicating a fixed term did not automatically mean that she could never be a
regular employee.
Citing Philips Semiconductors, Inc. v Fadriquela, where an employees contract had
been continuously extended or renewed to the same petition, with the same duties and
remained in the employ without any interruption, then such employee is a regular
employee. The continuous renewal is a scheme to prevent regularization.
The Court agreed with the CA which held that Espiritu was entitled to security of tenure
and could be dismissed only for just or authorized causes and after the observance of due
process. The expiration of her contract does not negate the finding of illegal dismissal by
Fuji.
The Court agreed with the CA in holding that Sonza v. ABS-CBN does not apply
because, Espiritu was not contracted on account of any peculiar ability, special talent, or
skill. The fact that everything used by Arlene in her work was owned by Fuji negated the
idea of job contracting.
The Court held that Espiritu had been illegally dismissed since Fuji failed to comply with
the requirements of substantive and procedural due process necessary for her dismissal
since she was a regular employee. Espiritu did not sign the non-renewal contract
voluntarily and it was a mere subterfuge by Fuji to secure its position that it was her
choice not to renew her contract.
For disease to be a valid ground for termination under the Labor Code, two requirements
must be complied with:
(1) the employees disease cannot be cured within six months and his continued
employment is prohibited by law or prejudicial to his health as well as to the health of his
co-employees; and
(2) certification issued by a competent public health authority that even with proper
medical treatment, the disease cannot be cured within six months.
The burden of proving compliance with these requirements is on the employer. Non-

compliance leads to the conclusion that the dismissal was illegal.

In Espiritus case, the Court said that there was no evidence showing that she was given
due process considering she was not even given the chance to present medical
certificates.
Benigno et al vs. ABS-CBN Corp.
GR No. 199166, April 20, 2015
Facts:
Respondent ABS-CBN is a television and radio broadcasting company with Amalia
Villafuerte as the manager. Thru Villafuerte, ABS-CBN engaged in the services of
petitioners Benigno and Del Valle who were cameramen/editors for TV broadcasting.
Petitioners Ma. Cristina Sumayao and Llorin were likewise reporters sometime in 19962002. Their services were engaged thru talent contracts that provided terms ranging from
3 months to 1 year. They were also given Project Assignment Forms which detailed the
duration of a p[articular project as well as the budget and the daily technical requirements
thereof. Petitioners were tasked to cover news items for subsequent daily airings in
respondents TV Patrol Bicol Program.
While specifically providing that nothing therein shall be deemed or construed to
establish an employer-employee relationship between the parties, the aforesaid Talent
Contracts included, among other matters, provisions on the following matters:
(a) the Talents creation and performance of work in accordance with the ABS-CBNs
professional standards and compliance with its policies and guidelines covering
intellectual property creators, industry codes as well as the rules and regulations of the
Kapisanan ng mga Broadcasters sa Pilipinas (KBP) and other regulatory agencies;
(b) the Talents non-engagement in similar work for a person or entity directly or
indirectly in competition with or adverse to the interests of ABS-CBN and non-promotion
of any product or service without prior written consent;
(c) the results-oriented nature of the talents work which did not require them to observe
normal or fixed working hours.3 Subjected to contractors tax, petitioners remunerations
were denominated as Talent Fees which, as of last renewal, were admitted to be pegged
per airing day at P273.35 for Begino, P 302.92 for Del Valle, P 323.08 for Sumayao and P
315.39 for Llorin.
Petitioners claim for regularization, underpayment of overtime pay, holiday pay, 13th
month pay and service incentive leave pay. They also claim that their work is necessary in
the business of ABS CBN. They further allege that they were working under the direct
supervision and control of ABSCBN.
Respondent argued that, although it occasionally engages in production and generates
programs thru various means, ABS-CBN is primarily engaged in the business of
broadcasting television and radio content. Not having the full manpower complement to

produce its own program, the company had allegedly resorted to engaging independent
contractors like actors, directors, artists, anchormen, reporters, scriptwriters and various
production and technical staff, who offered their services in relation to a particular
program.
Petioners filed a 2nd complaint for the same cause of action due to the fact that ABS
CBN terminated their services during the pendency of the first case.
Issues: Whether or not petitioners may claim from ABS? Whether or not there is an
employer employee relationship?

Ruling:
To determine the existence of said relation, case law has consistently applied the four-fold
test, to wit: (a) the selection and engagement of the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the employer's power to control the employee on the
means and methods by which the work is accomplished.23 Of these criteria, the socalled control test is generally regarded as the most crucial and determinative indicator
of the presence or absence of an employer-employee relationship. Under this test, an
employer-employee relationship is said to exist where the person for whom the services
are performed reserves the right to control not only the end result but also the manner and
means utilized to achieve the same.
ART. 280. Regular and Casual Employment: The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be performed is seasonal
in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such actually exists.
The Court finds that, notwithstanding the nomenclature of their Talent Contracts and/or
Project Assignment Forms and the terms and condition embodied therein, petitioners are
regular employees of ABS-CBN. Time and again, it has been ruled that the test to
determine whether employment is regular or not is the reasonable connection between the
activity performed by the employee in relation to the business or trade of the employer.
As cameramen/editors and reporters, petitioners were undoubtedly performing functions

necessary and essential to ABS-CBNs business of broadcasting television and radio

content. It matters little that petitioners services were engaged for specified periods for
TV Patrol Bicol and that they were paid according to the budget allocated therefor. Aside
from the fact that said program is a regular weekday fare of the ABS-CBNs Regional
Network Group in Naga City, the record shows that, from their initial engagement in the
aforesaid capacities, petitioners were continuously re-hired by respondents over the years.
To the mind of the Court, respondents repeated hiring of petitioners for its long-running
news program positively indicates that the latter were ABS-CBNs regular employees.
Also, the court finds that petitioners were under the direct control and supervision of the
network. Thus, SC ruled in favor of petitioners.
II. HIRING OF EMPLOYEES
Ollendor vs. Abrahanson
38 Phil 585
Facts:
An agreement was entered into by Ollendorff and Abrahamson whereby the former
agreed to employ Abrahamson and the latter bound himself to work for him for a period
of 2yrs with a salary of P50 per week. Included in the agreement is a prohibition of
Abrahamson from engaging in a similar or competitive business to anywhere within the
Philippine Islands for a period of five years. The duties performed by the defendant were
such to make it necessary for him to be generally knowledgeable of Ollendorffs
business, moreover, he had been engaged in similar work for several years even before
his employment of the plaintiffs embroidery business.
After some months from his departure for the US, Abrahamson returned to Manila and is
now a manager of the Philippine Underwear Co. This corporation, unlike Ollendorffs,
does not maintain a factory in Phil. Islands but send material and embroidery designs
from New York to its local representative here who employs Filipino needle workers to
embroider the designs and make up the garments in their homes. The only difference
between plaintiff's business and that of the firm by which the defendant is employed, is
the method of doing the finishing work -- the manufacture of the embroidered material
into finished garments. Plaintiff commenced an action to prevent by injunction, any
further breach of that part of defendant's contract of employment by which he agreed that
he would not "enter into or engage himself directly or indirectly . . . in a similar or
competitive business to that of (plaintiff) anywhere within the Philippine Islands for a
period of five years . . ." from the date of the agreement.
Issue: WON the part of the agreement restraining the defendant from engaging into
similar business of the plaintiff is void?
Ruling:

The contract was not void as constituting an unreasonable restraint of trade.

The rule in this jurisdiction is that the obligations created by contracts have the force of
law between the contracting parties and must be enforce in accordance with their tenor.
(Civil Code, art 1091.) The only limitation upon the freedom of contractual agreement is
that the pacts established shall not be contrary to "law, morals or public order." (Civil
Code, Art. 1255.)
Following the rule in Mitchel vs. Reynolds, Court adopt the modern rule that the validity
of restraints upon trade or employment is to be determined by the intrinsic reasonableness
of restriction in each case, rather than by any fixed rule, and that such restrictions may be
upheld when not contrary to afford a fair and reasonable protection to the party in whose
favor it is imposed.
Examining the contract here in question from this stand point, it does not seem so with
respect to an employee whose duties are such as of necessity to give him an insight into
the general scope and details of his employers business. A business enterprise may and
often does depend for its success upon the owner's relations with other dealers, his skill in
establishing favorable connections, his methods of buying and selling -- a multitude of
details, none vital if considered alone, but which in the aggregate constitute the sum total
of the advantages which the result of the experience or individual aptitude and ability of
the man or men by whom the business has been built up. Failure or success may depend
upon the possession of these intangible but all-important assets, and it is natural that their
possessor should seek to keep them from falling into the hands of his competitors. It is
with this object in view that such restrictions as that now under consideration are written
into contracts of employment. Their purpose is the protection of the employer, and if they
do not go beyond what is reasonably necessary to effectuate this purpose they should be
upheld.

Del Castillo vs. Richmond

GR. No. L-21127, February 9, 1924
Facts:
The case was instituted to declare the contract of services entered into by Alfonso del Castillo as
null and void. Del Castillo alleges that the provisions and conditions contained in the third
paragraph of said contract constitute an illegal and unreasonable restriction upon his liberty to
contract, are contrary to public policy, and are unnecessary in order to constitute a just and
reasonable protection to the defendant; and asked that the same be declared null and void and of
no effect.
The said contract constituted an illegal and unreasonable restriction upon the right of the plaintiff
to contract and was contrary to public policy. It will be noted that the restrictions placed upon the
plaintiff are strictly limited (a) to a limited district or districts, and (b) during the time while the
defendant or his heirs may own or have open a drugstore, or have an interest in any other one
within said limited district.
Issue: Whether or not the said restraint is reasonable.
Ruling:
SC ruled that the restriction is reasonable and not contrary to public policy.
The law concerning contracts which tend to restrain business or trade has gone through a long
series of changes from time to time with the changing conditions of trade and commerce. With
trifling exceptions, said changes have been a continuous development of a general rule.
The early cases show plainly a disposition to avoid and annul all contracts which prohibited or
restrained any one from using lawful trade " at any time or at any place," as being against the
benefit of the state. Later, however, the rule became well established that if the restraint was
limited to "a certain time" and within "a certain place", such contracts were valid and not "against
the benefit of the state." Later cases, and we think the rule is now well established, have held that
a contract in restraint of trade is valid provided there is a limitation upon either time or place. A
contract, however, which restrains a man entering into a business or trade without either a
limitation as to time or place, will be held invalid.

As stated in the case of Ollendorf vs. Abrahamson, The public welfare of course must always be
considered, and if it be not involved and the restraint upon one party is not greater than protection
to the other requires, contracts like the one we are discussing will be sustained. The general
tendency, we believe, of modern authority, is to make the test whether the restraint is reasonably
necessary for the protection of the contracting parties. If the contract is reasonably necessary to
protect the interest of the parties, it will be upheld.
In that case we held that a contract by which an employee agrees to refrain at a given length of
time, after the expiration of the term of his employment, from engaging in business, competitive
with that of his employer, is not void as being in restraint of trade if the restraint imposed is not
greater than that which is necessary to afford a reasonable protection.

PT & T vs. NLRC

GR. No. 118978, May 23, 1997
Facts:
Grace de Guzman was initially hired by petitioner as a reliever for a fixed period from
November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity
leave. Under the Reliever Agreement, which she signed with Petitioner Company, her
employment was to be immediately terminated upon expiration of the agreed period.
Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991,
private respondents services as reliever were again engaged by petitioner, this time in
replacement of one Erlinda F. Dizon who went on leave during both periods. After August
8, 1991, and pursuant to their Reliever Agreement, her services were terminated.
It now appears that private respondent had made the a representation that she was single
even though she contracted marriage months before, in the two successive reliever
agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner
supposedly learned about the same later, its branch supervisor sent to private respondent a
memorandum requiring her to explain the discrepancy. In that memorandum, she was
reminded about the companys policy of not accepting married women for employment.
Private respondent was dismissed from the company effective January 29, 1992, which
she readily contested by initiating a complaint for illegal dismissal. Labor Arbiter handed
down a decision declaring that private respondent, who had already gained the status of a
regular employee, was illegally dismissed by petitioner. On appeal to the National Labor
Relations Commission (NLRC), said public respondent upheld the labor arbiter and it
ruled that private respondent had indeed been the subject of an unjust and unlawful
discrimination by her employer, PT&T.
Issue: Whether or not discrimination merely by reason of the marriage of a female
employee is expressly prohibited by Article 136.
Ruling:
SC ruled that the stipulation is violative of Art. 136 of the Labor Code.
An employer is free to regulate, according to his discretion and best business judgment,
all aspects of employment, from hiring to firing, except in cases of unlawful
discrimination or those which may be provided by law. Petitioners policy of not
accepting or considering as disqualified from work any woman worker who contracts
marriage runs afoul of the test of, and the right against, discrimination, afforded all
women workers by our labor laws and by no less than the Constitution.
Respondents act of concealing the true nature of her status from PT&T could not be
properly characterized as willful or in bad faith as she was moved to act the way she did
mainly because she wanted to retain a permanent job in a stable company. In other

words, she was practically forced by that very same illegal company policy into
misrepresenting her civil status for fear of being disqualified from work.
The government, to repeat, abhors any stipulation or policy in the nature of that adopted
by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:
ART. 136. Stipulation against marriage. - It shall be unlawful for an
employer to require as a condition of employment or continuation of
employment that a woman shall not get married, or to stipulate expressly
or tacitly that upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of marriage.
Under American jurisprudence, job requirements which establish employer preference or
conditions relating to the marital status of an employee are categorized as a sex-plus
discrimination where it is imposed on one sex and not on the other. Further, the same
should be evenly applied and must not inflict adverse effects on a racial or sexual group,
which is protected by federal job discrimination laws.
Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor
Code on the right of a woman to be free from any kind of stipulation against marriage in
connection with her employment, but it likewise assaults good morals and public policy,
tending as it does to deprive a woman of the freedom to choose her status, a privilege that
by all accounts inheres in the individual as an intangible and inalienable right.
Hence, while it is true that the parties to a contract may establish any agreements, terms,
and conditions that they may deem convenient, the same should not be contrary to law,
morals, good customs, public order, or public policy. Carried to its logical consequences,
it may even be said that petitioners policy against legitimate marital bonds would
encourage illicit or common-law relations and subvert the sacrament of marriage.

Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils.

GR. No. 162994, September 17, 2004
Facts:
Petitioner Pedro Tecson was hired by respondent Glaxo Wellcome Philppines (glaxo) as
medical representative on Oct.24, 1994 thereafter signed a contract of employment which
stipulates among others that he agrees to study and abide existing company rules; to
disclose to management any existing of future relationship by consanguinity or affinity
with co-employees or employees of competing drug companies and if ever that such
management find such conflict of interest, he must resign. The Employee Code of
Conduct of Glaxo similarly provides that an employee is expected to inform management
of any existing or future relationship by consanguinity or affinity with co-employees or
employees of competing drug companies. If management perceives a conflict of interest
or a potential conflict between such relationship and the employees employment with the
company, the management and the employee will explore the possibility of a transfer to
another department in a non-counterchecking position or preparation for employment
outside the company after six months.
Reminders from Tecsons district manager did not stop him from marrying. Tecson
married Bettsy, an Astras Branch Coordinatior in Albay. She supervised the district
managers and medical representatives of her company and prepared marketing strategies
for Astra in that area.
Tecson was reassigned to another place and was not given products that the Astra
company has and he was not included in products seminars and training.
Tecson requested for time in complying said policy by asking for a transfer in the Glaxos
milk division in which the other company had no counterpart. Thereafter, he bought the
matter to Grievance Committee but the parties failed to resolve such issue, Glaxo offered
Tecson a separation pay of one-half () month pay for every year of service, or a total of
P50,000.00 but he declined the offer. On November 15, 2000, the National Conciliation
and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxos policy on
relationships between its employees and persons employed with competitor companies,
and affirming Glaxos right to transfer Tecson to another sales territory.
Tecson filed for a petition for review on the CA and the CA promulgated that the NCMB
did not err in rendering its decision. A recon was filed in appellate court but it was denied,
hence this petition for certiorari. Petitioners contention it was violative of constitutional
law which is the equal protection clause and he was constructively dismissed while the
respondents contention that it is a valid exercise of it s management prerogatives.
Issue: Whether or not the policy of a pharmaceutical company prohibiting its employees
from marrying employees of another pharmaceutical company is valid?

Ruling:
This petition was denied. Glaxo has a right to guard its trade secrets, manufacturing
formulas, marketing strategies and other confidential programs and information from
competitors, especially so that it and Astra are rival companies in the highly competitive
pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxos employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying
down the assailed company policy, Glaxo only aims to protect its interests against the
possibility that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less
than the Constitution recognizes the right of enterprises to adopt and enforce such a
policy to protect its right to reasonable returns on investments and to expansion and
growth.
The challenged company policy does not violate the equal protection clause of the
Constitution as petitioners erroneously suggest. It is a settled principle that the commands
of the equal protection clause are addressed only to the state or those acting under color
of its authority.
From the wordings of the contractual provision and the policy in its employee handbook,
it is clear that Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its employees are free to
cultivate relationships with and marry persons of their own choosing. What the company
merely seeks to avoid is a conflict of interest between the employee and the company that
may arise out of such relationships.
There was no merit in Tecsons contention that he was constructively dismissed when he
was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan CitySurigao City-Agusan del Sur sales area, and when he was excluded from attending the
companys seminar on new products, which were directly competing with similar
products manufactured by Astra. Constructive dismissal is defined as a quitting, an
involuntary resignation resorted to when continued employment becomes impossible,
unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when
a clear discrimination, insensibility or disdain by an employer becomes unbearable to the
employee. The record does not show that Tecson was demoted or unduly discriminated
upon by reason of such transfer.

City of Manila vs. Laguio

GR. 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
and opened Victoria Court in Malate which was licensed as a motel although duly
accredited with the Department of Tourism as a hotel. On 28 June 1993, MTDC filed
a Petition for Declaratory Relief with Prayer for a Writ of Preliminary Injunction and/or
Temporary Restraining Order (RTC Petition) with the lower court impleading as
defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito
L. Atienza, and the members of the City Council of Manila (City Council). MTDC
prayed that the Ordinance, insofar as it includes motels and inns as among its prohibited
establishments, be declared invalid and unconstitutional.
Enacted by the City Council on 9 March 1993 and approved by petitioner City Mayor on
30 March 1993, the said Ordinance is entitled
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF
BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT,
ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE
AREA, PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR
OTHER PURPOSES.
In the RTC Petition, MTDC argued that the Ordinance erroneously and improperly
included in its enumeration of prohibited establishments, motels and inns such as
MTDCs Victoria Court considering that these were not establishments for amusement
or entertainment and they were not services or facilities for entertainment, nor did
they use women as tools for entertainment, and neither did they disturb the
community, annoy the inhabitants or adversely affect the social and moral welfare of
the community.
Issue: Whether or not Ordinance No. 7783 of City of Manila is a valid exercise of police
power.
Ruling:
It is undoubtedly one of the fundamental duties of the City of Manila to make all
reasonable regulations looking to the promotion of the moral and social values of the
community. However, the worthy aim of fostering public morals and the eradication of
the communitys social ills can be achieved through means less restrictive of private
rights; it can be attained by reasonable restrictions rather than by an absolute prohibition.
The closing down and transfer of businesses or their conversion into businesses
allowed under the Ordinance have no reasonable relation to the accomplishment of its
purposes. Otherwise stated, the prohibition of the enumerated establishments will not per

se protect and promote the social and moral welfare of the community; it will not in itself
eradicate the alluded social ills of prostitution, adultery, fornication nor will it arrest the
spread of sexual disease in Manila.
It is readily apparent that the means employed by the Ordinance for the achievement of
its purposes, the governmental interference itself, infringes on the constitutional
guarantees of a persons fundamental right to liberty and property.
Persons desirous to own, operate and patronize the enumerated establishments under
Section 1 of the Ordinance may seek autonomy for these purposes.
Motel patrons who are single and unmarried may invoke this right to autonomy to
consummate their bonds in intimate sexual conduct within the motels premisesbe it
stressed that their consensual sexual behavior does not contravene any fundamental state
policy as contained in the Constitution. Adults have a right to choose to forge such
relationships with others in the confines of their own private lives and still retain their
dignity as free persons. The liberty protected by the Constitution allows persons the right
to make this choice. Their right to liberty under the due process clause gives them the full
right to engage in their conduct without intervention of the government, as long as they
do not run afoul of the law. Liberty should be the rule and restraint the exception.
Liberty in the constitutional sense not only means freedom from unlawful government
restraint; it must include privacy as well, if it is to be a repository of freedom. The right to
be let alone is the beginning of all freedomit is the most comprehensive of rights and
the right most valued by civilized men
All considered, the Ordinance invades fundamental personal and property rights and
impairs personal privileges. It is constitutionally infirm. The Ordinance contravenes
statutes; it is discriminatory and unreasonable in its operation; it is not sufficiently
detailed and explicit that abuses may attend the enforcement of its sanctions. And not to
be forgotten, the City Council under the Code had no power to enact the Ordinance and is
therefore ultra vires, null and void.

Star Paper Corp., vs. Simbol

GR No. 164774, April 12, 2006
Facts:
Simbol was employed by the company on Oct 1993. He met Alma Dayrit, also an employee of
the company, whom he married. Prior to the marriage, Ongsitco advised the couple that should
they decide to get married, one of them should resign pursuant to a company policy to which
Simbol complied.
1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd
degree of relationship, already employed by the company.
2. In case of two of our employees (both singles [sic], one male and another female) developed a
friendly relationship during the course of their employment and then decided to get married, one
of them should resign to preserve the policy stated above.
Issue: WON the policy of the employer banning spouses from working in the same company
violates the rights of the employee under the Constitution and the Labor Code or is a valid
exercise of management prerogative?
Ruling:
Petitioners sole contention that "the company did not just want to have two or more of its
employees related between the third degree by affinity and/or consanguinity" is lame.
Article 136 of the Labor Code, which provides:
It shall be unlawful for an employer to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to stipulate expressly or tacitly that
upon getting married a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of
her marriage.
The requirement is that a company policy must be reasonable under the circumstances to qualify
as a valid exercise of management prerogative. It is significant to note that in the case at bar,
respondents were hired after they were found fit for the job, but were asked to resign when they
married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting
Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be
detrimental to its business operations. e. The policy is premised on the mere fear that employees
married to each other will be less efficient. If we uphold the questioned rule without valid
justification, the employer can create policies based on an unproven presumption of a perceived
danger at the expense of an employees right to security of tenure.
The questioned policy may not facially violate Article 136 of the Labor Code but it creates a
disproportionate effect and under the disparate impact theory, the only way it could pass judicial
scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate,
effect. The failure of petitioners to prove a legitimate business concern in imposing the
questioned policy cannot prejudice the employees right to be free from arbitrary discrimination
based upon stereotypes of married persons working together in one company.

Del Monte Phils. vs. Velasco

GR. No. 153477, March 6, 2007
Facts:
Lolita Velasco was hired by Del Monte as seasonal employee and was subsequently regularized
by Del Monte. On June 1987, petitioner warned Velasco of its absences and was repeatedly
reminded that her absence without permission may result to forfeiture of her vacation leave.
Another warning was sent due to her absences without permission, which eventually led to the
forfeiture of her vacation entitlement. On September 1994, a notice of hearing was sent to Velasco
informing her of the charges filed against her for violating the Absence without leave rule. On
January 1995, after the hearing, Del Monte terminated the services of Velasco due to excessive
absence without leave. Feeling aggrieved, Velasco filed a case for illegal dismissal. She asserted
that she was absent since she was suffering urinary tract infection and she was pregnant.
She sent an application for leave to the supervisor. Upon check up of the company doctor, Velasco
was advised to rest. On the following check-ups, she was again advised to rest where this time,
she was not able to get secure a leave.
The Labor Arbiter rendered decision that she was an incorrigible absentee. Respondent appealed
to the NLRC. NLRC vacated the decision of the Labor Arbiter. It decided that respondent was
illegally dismissed and was entitled to reinstatement. Petitioner appealed to CA where it
dismissed its claim and affirmed NLRC, thus, this petition.
Issue: Whether or not the dismissal was illegal?
Ruling:
Yes. In this case, by the measure of substantial evidence, what is controlling is the finding of the
NLRC and the CA that respondent was pregnant and suffered from related ailments. It would be
unreasonable to isolate such condition strictly to the dates stated in the Medical Certificate or the
Discharge Summary. It can be safely assumed that the absences that are not covered by, but which
nonetheless approximate, the dates stated in the Discharge Summary and Medical Certificate, are
due to the continuing condition of pregnancy and related illnesses, and, hence, are justified
absences.
The termination was illegal since it comes within the purview of the prohibited acts provided in
Article 137 of the Labor Code. Based on Article 137, it shall be unlawful for any employer (1) to
deny any woman employee the benefits provided for in this Chapter or to discharge any woman
employed by him for the purpose of preventing her from enjoying any of the benefits provided
under this Code; (2) to discharge such woman on account of her pregnancy, or while on leave
or in confinement due to her pregnancy; and (3) to discharge or refuse the admission of such
woman upon returning to her work for fear that she may again be pregnant.
The respondent was illegally dismissed by the petitioner on account of her pregnancy. The act of
the employer is unlawful, it being contrary to law.

Yrasuegui vs. Philippine Air Lines

GR No. 168081, Oct. 17, 2008
Facts:
This case portrays the peculiar story of an international flight steward who was dismissed because of
his failure to adhere to the weight standards of the airline company.
Petitioner was a former international flight steward of PAL. He had problems meeting the required
weight standards for cabin and crew. He was advised to go on leave without pay several times to
address his weight concerns, to no avail. PAL had him grounded until such time he satisfactorily
complies with the weight standards and he was directed to report every two weeks for weight checks.
On November 5, 1992, petitioner weighed 205 lbs, way beyond his ideal weight of 166 lbs. On June
15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight,
and considering the utmost leniency extended to him which spanned a period covering a total of
almost five (5) years, his services were considered terminated effective immediately
The Labor Arbiter ruled that he was illegally dismissed. The Labor Arbiter held that the weight
standards of PAL are reasonable in view of the nature of the job of petitioner. However, the weight
standards need not be complied with under pain of dismissal since his weight did not hamper the
performance of his duties. Assuming that it did, petitioner could be transferred to other positions
where his weight would not be a negative factor. NLRC affirmed the decision of the Labor Arbiter,
with modifications.
The CA, however, reversed the ruling. Contrary to the NLRC ruling, the weight standards of PAL are
meant to be a continuing qualification for an employees position. The failure to adhere to the weight
standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor
Code in relation to Article 282(a). It is not willful disobedience, as the NLRC seemed to suggest.
Issue: Whether or not the petitioner was illegally dismissed.
Ruling:
I. The obesity of petitioner is a ground for dismissal under Article 282(e) o f the Labor Code. [T]he
standards violated in this case were not mere orders of the employer; they were the prescribed weights
that a cabin crew must maintain in order to qualify for and keep his or her position in the company . In
other words, they were standards that establish continuing qualifications for an employees
position.By its nature, these qualifying standards are norms that apply prior to and after an employee
is hired. They apply prior to employment because these are the standards a job applicant must initially
meet in order to be hired. They apply after hiring because an employee must continue to meet these
standards while on the job in order to keep his job. Under this perspective, a violation is not one of the
faults for which an employee can be dismissed
II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense.
Aircrafts have constricted cabin space, and narrow aisles and exit doors. Being overweight impedes
mobility in times of emergencies where seconds are precious.
Petitioner was not, therefore, illegally dismissed. He is entitled to a separation pay, including his
regular allowances.

III. WAGE & THE WAGE RATIONALIZATION ACT

Ilaw at Buklod Manggagawa vs. NLRC

(1991, 198 SCRA 586)
Facts:
The union known as Ilaw at Buklod Ng Manggagawa (IBM) said to represent 4,500 employees of San
Miguel Corporation, more or less, working at the various plants, offices, and warehouses located at the
National Capital Region presented to the company a "demand" for correction of the significant
distortion in the workers' wages. In that demand, the Union explicitly invoked Section 4 (d) of RA
6727 which reads as follows: Where the application of the increases in the wage rates under this
Section results in distortions as defined under existing laws in the wage structure within an
establishment and gives rise to a dispute therein, such dispute shall first be settled voluntarily between
the parties and in the event of a deadlock, the same shall be finally resolved through compulsory
arbitration by the regional branches of the National Labor Relations Commission having jurisdiction
over the workplace. It shall be mandatory for the NLRC to conduct continuous hearings and decide
any dispute arising under this Section within twenty (20) calendar days from the time said dispute is
formally submitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall
not in any way delay the applicability of the increase in the wage rates prescribed under this Section.
Issue: WON the strike is legal in the resolution of wage distortion.
Ruling: Strike is not legal as a means of resolving wage distortion. The strike involving the issue of
wage distortion is illegal as a means of resolving it. The legality of these activities is usually
dependent on the legality of the purposes sought to be attained and the means employed therefore. It
goes without saying that these joint or coordinated activities may be forbidden or restricted by law or
contract. In the instance of "distortions of the wage structure within an establishment" resulting from
"the application of any prescribed wage increase by virtue of a law or wage order," Section 3 of
Republic Act No. 6727 prescribes a specific, detailed and comprehensive procedure for the correction
thereof, thereby implicitly excluding strikes or lockouts or other concerted activities as modes of
settlement of the issue.
The provision states that the employer and the union shall negotiate to correct the distortions. Any
dispute arising from wage distortions shall be resolved through the grievance procedure under their
collective bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless
otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary arbitrator or
panel of voluntary arbitrators within ten (10) calendar days from the time said dispute was referred to
voluntary arbitration. In cases where there are no collective agreements or recognized labor unions,
the employers and workers shall endeavor to correct such distortions. Any dispute arising there from
shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved
after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the National
Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous
hearings and decide the dispute within twenty (20) calendar days from the time said dispute is
submitted for compulsory arbitration. The pendency of a dispute arising from a wage distortion shall
not in any way delay the applicability of any increase in prescribed wage rates pursuant to the
provisions of law or Wage Order. The legislative intent that solution of the problem of wage
distortions shall be sought by voluntary negotiation or arbitration, and not by strikes, lockouts, or other
concerted activities of the employees or management, is made clear in the rules implementing RA
6727 issued by the Secretary of Labor and Employment pursuant to the authority granted by Section
13 of the Act. Section 16, Chapter I of these implementing rules, after reiterating the policy that wage
distortions be first settled voluntarily by the parties and eventually by compulsory arbitration, declares
that, "Any issue involving wage distortion shall not be a ground for a strike/lockout."

Employers Confederation of the Phils. vs. NWPC

(1991, 201 SCRA 759)
Facts: The Regional Tripartite Wages and Productivity Board of the National Capital Region
issued Wage Order No. NCR-01-A pursuant to the authority given by RA No. 6727, otherwise
known as the Wage Rationalization Act. Wage Order No.NCR-01-A, amending the formerly
issued WO No. NCR-1 increasing the minimum wage by Php 17.00 daily in the National Capital
Region, read as follows:
Sec.1 Upon the effectivity of this wage order, all workers and employees in the private sector in
the NCR already receiving wages above the statutory minimum wage rates up to Php 125.00 per
day shall also receive an increase of Php 17.00 per day.
Employers Confederation of the Philippines assailed the RTWPBs grant of an across the board
wage increase to workers already being paid more than the existing minimum wage rates (that is
up to Php 125.00 a day) as an alleged excess of authority, and alleged that under RA No. 6727,
the boards may only prescribe minimum wages and not determine salary ceilings. ECOP
added that RA No. 6727 was meant to promote collective bargaining as the primary mode of
settling wages, and in its opinion, the board cannot preempt collective bargaining agreements by
establishing ceilings. Another contention by ECOP was that wage is a legislative function, and
RA No. 6727 delegated to the regional boards no more than the power to grant minimum wages
and in the absence of a clear statutory authority the boards may no more than adjust floor
wages.
Issue: Whether the RTWPB-NCR has authority to determine salary ceilings.
Ruling: As provided by the NWPC, the determination of wages generally involves two methods,
the floor wage method and the salary ceiling method The "floor-wage" method involves the
fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On
the other hand, in the "salary-ceiling" method, the wage adjustment was to be applied to
employees receiving a certain denominated salary ceiling. In other words, workers already being
paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are
also to be given a wage increase.
The RTWPB, in this case, in issuing WO No. NCR-01-A fixed minimum wages according to the
salary ceiling method.
Disputes are appropriate subjects of collective bargaining and grievance procedure, but
bargaining has helped very little in correcting wage distortions. With the establishment of the
salary ceiling method as a practice in minimum wage fixing, wage distortion disputes were
minimized.
It is not disputed that wage fixing is a legislative function, nevertheless the rule is it can be
validly delegated provided that sufficient standards are set forth. What these standards are
provided for under Art. 124 of the Act (RA No. 6727).
RA No. 6727 did not intend the boards to set floor wages alone. If such be the case, the Act would
have no need for a board but an accountant to keep track of the latest consumer price index, or
better, would have Congress done it as the need arises. The Act sought a thinking group bound by
statutory standards.

Mabeza vs. NLRC

(271 SCRA 670)
Facts:
Petitioner Norma Mabeza contends that around the first week of May, 1991, she and her
co-employees at the Hotel Supreme in Baguio City were asked by the hotel's
management to sign an instrument attesting to the latter's compliance with minimum
wage and other labor standard provisions of law.||| The instrument provides among others
4. That we have no complaints against the management of the Hotel
Supreme as we are paid accordingly and that we are treated well.
5. That we are executing this affidavit voluntarily without any force or
intimidation and for the purpose of informing the authorities concerned
and to dispute the alleged report of the Labor Inspector of the
Department of Labor and Employment conducted on the said
establishment on February 2, 1991.
As gleaned from the affidavit, the same was drawn by management for the sole purpose
of refuting findings of the Labor Inspector of DOLE (in an inspection of respondent's
establishment on February 2, 1991) apparently adverse to the private respondent.
After she refused to proceed to the City Prosecutor's Office on the same day the
affidavit was submitted to the Cordillera Regional Office of DOLE petitioner avers
that she was ordered by the hotel management to turn over the keys to her living quarters
and to remove her belongings from the hotel premises.
Issue: Whether or not the dismissal by the private respondent of petitioner constitutes an
unfair labor practice.
Ruling: The pivotal question in any case where unfair labor practice on the part of the
employer is alleged is whether or not the employer has exerted pressure, in the form of
restraint, interference or coercion, against his employee's right to institute concerted
action for better terms and conditions of employment. Without doubt, the act of
compelling employees to sign an instrument indicating that the employer observed labor
standards provisions of law when he might have not, together with the act of terminating
or coercing those who refuse to cooperate with the employer's scheme constitutes unfair
labor practice. The first act clearly preempts the right of the hotel's workers to seek better
terms and conditions of employment through concerted action.
For refusing to cooperate with the private respondent's scheme, petitioner was obviously
held up as an example to all of the hotel's employees, that they could only cause trouble
to management at great personal inconvenience. Implicit in the act of petitioner's
termination and the subsequent filing of charges against her was the warning that they
would not only be deprived of their means of livelihood, but also possibly, their personal
liberty.

Joy Brothers Inc. vs. NWPC

(273 SCRA 622)
Facts:
A wage order was issued which provided for wage increase for all private sector workers
and employees in the NCR receiving 154 pesos. Petitioner applied for exemption from
said wage order on the ground that it was a distressed establishment. The RTWPB denied
petitioners application for exemption after holding that the corporation accumulated
profits amounting to 40,000 for the period under review.
Issue: Whether or not petitioner is exempted
Ruling:
The NWPC Revised Guidelines on Exemption provided that exemption from compliance
with the wage increase may be granted to distressed establishment whose paid-up capital
has been impaired by at least 25% or which registers capital deficiency or negative net
worth.
Since wage order was published on December 1, 1993 and thus became effective on
December 16, 1993, the coverage of the interim period shall be the three quarter prior to
December 16, 1993, the third quarter ending on September 30, 1993. The petitioner errs
in claiming that said interim period is up to December 15, 1993 or December 31, 1993.
Hence, petitioner is not exempted.

Prubankers Association vs. Prudential Bank

(1999, 302 SCRA 74)
Facts:
The RTWPB Region V issued Wage Order No. RB 05-03 which provided for a Cost of
Living Allowance (COLA) to workers in the private sector who had rendered service for
at least three (3) months before its effectivity, and for the same period thereafter, in the
following categories: P17.50 in the cities of Naga and Legaspi; P15.50 in the
municipalities of Tabaco, Daraga, Pili and the city of Iriga; and P10.00 for all other areas
in the Bicol Region.
On November 1993, RTWPB Region VII issued Wage Order No. RB VII-03, which
directed the integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A
into the basic pay of all workers. It also established an increase in the minimum wage
rates for all workers and employees in the private sector as follows: by Ten Pesos
(P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the
municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga
and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran. The bank
granted a COLA of P17.50 to its employees at its Naga Branch, the only branch covered
by Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into the basic
pay of its rank-and-file employees at its Cebu, Mabolo and P. del Rosario branches, the
branches covered by Wage Order No. RB VII-03.
On June 7, 1994, Prubankers Association wrote the petitioner requesting that the Labor
Management Committee be immediately convened to discuss and resolve the alleged
wage distortion created in the salary structure upon the implementation of the said wage
orders. It demanded in the Labor Management Committee meetings that the petitioner
extend the application of the wage orders to its employees outside Regions V and VII,
claiming that the regional implementation of the said orders created a wage distortion in
the wage rates of petitioner's employees nationwide. As the grievance could not be settled
in the said meetings, the parties agreed to submit the matter to voluntary arbitration.
Issue: WON a wage distortion resulted from respondent's implementation of the Wage
Orders.
Ruling:
The court ruled that there is no wage distortion since the wage order implementation
covers all the branches of the bank.
The hierarchy of positions was still preserved. The levels of different pay classes were
not eliminated. The statutory definition of wage distortion is found in Article 124 of the
Labor Code, as amended by Republic Act No. 6727, which reads: Standards/Criteria for
Minimum Wage Fixing . . ."As used herein, a wage distortion shall mean a situation
where an increase in prescribed wage results in the elimination or severe contraction of

intentional quantitative differences in wage or salary rates between and among employee
groups in an establishment as to effectively obliterate the distinctions embodied in such
wage structure based on skills, length of service, or other logical bases of differentiation."
Wage distortion involves four elements: (1) An existing hierarchy of positions with
corresponding salary rates; (2) A significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a higher one; (3)The elimination of
the distinction between the two levels and (4) The existence of the distortion in the same
region of the country.
A disparity in wages between employees holding similar positions but in different regions
does not constitute wage distortion as contemplated by law. As stated, it is the hierarchy
of positions and the disparity of their corresponding wages and other emoluments that are
sought to be preserved by the concept of wage distortion.

Millare vs. NLRC

(305 SCRA 501)
Facts: Petitioners numbering one hundred sixteen (116) occupied the positions of Technical Staff,
Unit Manager, Section Manager, Department Manager, Division Manager and Vice President in the
mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del
Sur. In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of
restrictive government regulations on logging and the economic crisis. To avert further losses, it
undertook a retrenchment program and terminated the services of petitioners.
Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for
every year of service. Believing however that the allowances they allegedly regularly received on a
monthly basis during their employment should have been included in the computation thereof they
lodged a complaint for separation pay differentials.
PICOP grants the following allowances:
Staff allowance/managers allowance to those who live in rented houses near the mill site which
ceases whenever a vacancy occurs in the companys free housing facilities.
Transportation allowance in the form of advances for actual transportation expenses subject to
liquidation is given to key officers and managers who use their own vehicles in the performance
of their duties. This privilege is discontinued when the conditions no longer obtain.
Bislig allowance is given to managers and officers on account of the hostile environment
prevailing therein. Once the recipient is transferred elsewhere, the allowance ceases.
Applying Art. 97, par. (f), of the Labor Code which defines "wage," the Executive Labor Arbiter
opined that the subject allowances, being customarily furnished by respondent PICOP and regularly
received by petitioners, formed part of the latter's wages.
On appeal, the National Labor Relations Commission (NLRC) did not view in favor of the Executive
Labor Arbiter. On 7 October 1994 it set aside the assailed decision by decreeing that the allowances
did not form part of the salary base used in computing separation pay.
Issue: Whether or not the allowances in question are considered facilities customarily furnished.
Ruling: The Staff/Manager's allowance may fall under "lodging" but the transportation and Bislig
allowances are not embraced in "facilities" on the main consideration that they are granted as well as
the Staff/Manager's allowance for respondent PICOP's benefit and convenience, i.e., to insure that
petitioners render quality performance. In determining whether a privilege is a facility, the criterion is
not so much its kind but its purpose. That the assailed allowances were for the benefit and
convenience of respondent company was supported by the circumstance that they were not subjected
to withholding tax.
In addition, the Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules
Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and
reasonable value of board, lodging and other facilities customarily furnished by an employer to his
employees." Petitioners' allowances do not represent such fair and reasonable value as determined by
the proper authority simply because the Staff/Manager's allowance and transportation allowance
were amounts given by respondent company in lieu of actual provisions for housing and
transportation needs whereas the Bislig allowance was given in consideration of being assigned to the
hostile environment then prevailing in Bislig.

International Alliance of Educators vs. Quisumbing

(2000, 333 SCRA 13)
Facts: International school, Inc., pursuant to Presidential Decree 732, is a domestic educational
institution established primarily for dependents of foreign diplomatic personnel and other temporary
residents. The decree authorizes the School to employ its teaching and management personnel selected
by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from
otherwise applicable laws and regulations attending their employment, except laws that have been or
will be enacted for the protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the
same into two: (1) foreign-hires and (2) local-hires. The School grants foreign-hires certain benefits
not accorded local-hires. These include housing, transportation, shipping costs, taxes, and home leave
allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than that of localhires. The School justifies the difference on two significant economic disadvantages that foreignhires have to endure, namely: (a) the dislocation factor and (b) limited tenure.
Petitioner union claims that the point-of-hire classification by the School is discriminatory to Filipinos
and that the grant of higher salaries to foreign-hires constitutes racial discrimination. When the CBA
negotiation reached a deadlock, the Secretary of Labor assumed jurisdiction. The Acting Secretary
upheld the point-of-hire classification for the distinction in salary rates, as he said: The principle
equal pay for equal work does not find application in the present case. The international character
of the School requires the hiring of foreign personnel to deal with different nationalities and different
cultures, among the student population.
The Acting Secretary of Labor found that the non-Filipino local-hires received the same benefits as the
Filipino local-hires. The parties CBA points to the conditions and provisions for salary and
professional compensation: The new salary schedule is deemed at equity with the Overseas Recruited
Staff (OSRS) salary schedule. The 25% differentiation is reflective of the agreed value of displacement
and contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff
(LRS).
Issue: Is the ruling of the Acting Secretary of Labor justified?
Ruling: If an employer accords employees the same position and rank, the presumption is that these
employees perform equal work. There is no evidence that foreign-hires perform 25% more efficiently
or effectively than local-hires. Both groups have similar functions and responsibilities, which they
perform under similar conditions.
While the need of the School to attract foreign-hires is recognized, salaries should not be used as an
enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires
and they ought to be paid the same salaries as the latter. For the same reason, the dislocation factor
and the foreign-hires limited tenure affecting foreign-hires are adequately compensated by certain
benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping
costs, taxes, and home leave allowances.
The State has the right and duty to regulate the relations between labor and capital. These relations are
not merely contractual but are so impressed with public interest that labor contracts, collective
bargaining agreements included, public policy, courts will not hesitate to strike down these
stipulations. We find the point-of-hire classification by employed by respondent School to justify the
distinction in the salary rates of foreign-hires and local-hires to be an invalid classification. There is no
reasonable distinction between the services rendered by foreign-hires and local-hires.

Bankard Employees Union vs. NLRC

(GR No. 140689, Feb. 17, 2004)
Facts: Bankard, Inc. classifies its employees by levels, to wit: Level I, Level II, Level III,
Level IV, Level V. On November 28, 1993, its Board of Directors approved a New
Salary Scale, made retroactive to April 1, 1993, for the purpose of making its hiring rate
competitive in the industrys labor market.
Bankards move drew the Bankard Employees Union_WATU, the duly certified exclusive
bargaining agent of the regular rank and file employees of Bankard to press for the
increase in the salary of its old, regular employees. Its request remained unheeded. So it
filed a Notice of Strike on August 26, 1993 on the ground of discrimination and other acts
of Unfair Labor Practice.
Petitioner maintains that for purposes of wage distortion, the classification is not one
based on levels or ranks but on two groups of employees, the newly hired and the
old, in each and every level, and not between and among the different ranks in the salary
structure.
Issue: Whether the unilateral adoption by an employer of an upgraded salary scale that
increased the hiring rates of new employees without increasing the salary rates of old
employees resulted in wage distortion within the contemplation of Article 124 of the
Labor Code.
Ruling: Prubankers Association v. Prudential Bank and Trust Company laid down the
four elements of wage distortion, to wit: (1) An existing hierarchy of position with
corresponding salary rates, (2) A significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a higher one; (3) The elimination of
the distinction between the two levels; (4) The existence of the distortion in the same
region of the country.
Involved in the classification of employees are various factors such as the degrees of
responsibility, the skills and knowledge required, the complexity of the job, or other
logical basis of differentiation.
To determine the existence of wage distortion, the historical classification of the
employees prior to the wage increase must be established. Likewise, it must be shown
that as between the different classification of employees, there exists a historical gap or
difference.
In the present case, the employees of private respondent have been historically
classified in levels I to IV and not on the basis of their length of service. The entry of new
employees to the company ipso facto places them under any of the level mentioned in the
new salary scale which private respondent adopted. Petition cannot make a contrary
classification of private respondents employees without encroaching upon recognized
management prerogative of formulating a wage structure. In this case, one based on level.

It is thus clear that there is no hierarchy of positions between the newly hired and regular
employees of Bankard, hence, the first element of wage distortion provided in the
Prubankers case is wanting. While seniority may be a factor in determining the wages of
employees, it cannot be made the sole basis in cases where the nature of their work
differs.
For purposes of determining the existence of wage distortion, employees cannot create
their own independent classification and use it as a basis to demand an across-the-board
increase in salary.
Even assuming that there is a decrease In the wage gap between the pay of the old
employees and the newly hired employees, to the courts mind the gap is NOT significant
as to obliterate or result in severe contraction of the intentional quantitive differences in
the salary rates between the employee group. /
Aside from that the alleged wage distortion as the increase in the wages and salaries of
new-hires was not due to a prescribed law or wage order.
If the compulsory mandate under Article 124 of the Labor Code to correct, wage
distortion is applied to voluntary and unilateral increases by the employer in fixing
hiring rates, which is inherently a business judgment prerogative, then the hands of the
employer would be completely tied even in cases where an increase in wages of a
particular group is justified.
In fine, absent any indication that the voluntary increase of salary rates by an employer
was done arbitrarily and illegally for the purpose of circumventing the laws or was
devoid of any legitimate purpose other than to discriminate against the regular
employees, this Court will not step in to interfere with this management prerogative.

Odango vs. NLRC

(GR No. 147420, June 10, 2004)
Facts:
Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday
to Friday and half of Saturday. After a routine inspection, the Regional Branch of the
Department of Labor and Employment found ANTECO liable for underpayment of the
monthly salaries of its employees. On September 1989, the DOLE directed ANTECO to
pay its employees wage differentials amounting to P1,427,412.75. ANTECO failed to
pay. On various dates in 1995, thirty-three (33) monthly-paid employees filed complaints
with the NLRC praying for payment of wage differentials, damages and attorneys fees.
On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners
granting them wage differentials amounting to P1,017,507.73 and attorneys fees of 10%.
ANTECO appealed the Decision to the NLRC where it reversed the Labor Arbiters
Decision. The NLRC denied petitioners motion for reconsideration. Petitioners then
elevated the case to CA where it dismissed the petition for failure to comply with Section
3, Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners failed to
allege the specific instances where the NLRC abused its discretion. The appellate court
denied petitioners motion for reconsideration.
Issue: Whether or not the petitioners are entitled to money claims.
Ruling:
Petitioners are not entitled to money claims or wage differentials.
The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules
and Policy Instructions No. 9 issued by the Secretary of Labor which was declared null
and void since in the guise of clarifying the Labor Codes provisions on holiday pay, they
in effect amended them by enlarging the scope of their exclusion.
Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The
basic rule in this jurisdiction is "no work, no pay." The right to be paid for un-worked
days is generally limited to the ten legal holidays in a year. Petitioners claim is based on
a mistaken notion that Section 2, Rule IV of Book III gave rise to a right to be paid for
un-worked days beyond the ten legal holidays. Petitioners line of reasoning is not only a
violation of the "no work, no pay" principle, it also gives rise to an invidious
classification, a violation of the equal protection clause.

C. Planas Commercial vs. NLRC

(G.R. 144619, 2005)
Facts: In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for
underpayment of wages, nonpayment of overtime pay, holiday pay, service incentive leave pay,
and premium pay for rest day and holiday and night shift differential against petitioners in the
Arbitration Branch of NLRC. It alleged that Cohu is engaged in the business of wholesale of
plastic products and fruits of different kinds with more than 24 employees. Respondents were
hired on January 1990, May 1990 and July 19991 as laborers and were paid below the minimum
wage for the past 3 years. They were required to work for more than 8 hours a day and never
enjoyed the minimum benefits. Petitioners filed their comment stating that the respondents were
their helpers.
The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an appeal
with the NLRC where it granted the money claims. Petitioners appealed with the CA but it was
denied. It said that the company having claimed of exemption of the coverage of the minimum
wage shall have the burden of proof to the claim.
Petitioners insist that C. Planas Commercial is a retail establishment principally engaged in the
sale of plastic products and fruits to the customers for personal use, thus exempted from the
application of the minimum wage law; that it merely leases and occupies a stall in the Divisoria
Market and the level of its business activity requires and sustains only less than ten employees at
a time. Petitioners contend that private respondents were paid over and above the minimum wage
required for a retail establishment, thus the Labor Arbiter is correct in ruling that private
respondents claim for underpayment has no factual and legal basis. Petitioners claim that since
private respondents alleged that petitioners employed 24 workers, it was incumbent upon them to
prove such allegation, which private respondents failed to do.
Issue: WON petitioner is exempted from the application of minimum wage law.
Ruling: Petitioners have not successfully shown that they had applied for the exemption.
R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage
rate of all workers and employees in the private sector. Section 4 of the Act provides for
exemption from the coverage, thus: Sec. 4. (c) Exempted from the provisions of this Act are
household or domestic helpers and persons employed in the personal service of another, including
family drivers. Also, retail/service establishments regularly employing not more than ten (10)
workers may be exempted from the applicability of this Act upon application with and as
determined by the appropriate Regional Board in accordance with the applicable rules and
regulations issued by the Commission. Whenever an application for exemption has been duly
filed with the appropriate Regional Board, action on any complaint for alleged non-compliance
with this Act shall be deferred pending resolution of the application for exemption by the
appropriate Regional Board.
In the event that applications for exemptions are not granted, employees shall receive the
appropriate compensation due them as provided for by this Act plus interest of one percent (1%)
per month retroactive to the effectivity of this Act.

EJR Crafts Co. vs. Court of Appeals

(GR. No. 154101, March 10, 2006)
Facts: On August 22, 1997, an inspection was conducted on the premises of petitioners
offices wherein it was found that certain violations of labor standards laws were
committed. On the same day, the Notice of Inspection Result was received by and
explained to, the manager, with the corresponding directive that necessary restitution be
effected within five days from said receipt.
As no restitution was made, the Regional Office conducted summary investigations.
Despite due notice, petitioner failed to appear for two consecutive scheduled hearings.
Furthermore, petitioner failed to question the findings of the Labor Inspector received by
and explained to the manager.
The inspection was prompted by the filing of respondents sometime in 1997 against
petitioner a complaint for underpayment of wages, regular holiday pay, and other
benefits.
On November 6, 1997, the Regional Director issued a ruling against petitioner, which
was appealed, but later on denied.
On the petition, petitioner argued that the Regional Director has no jurisdiction over the
case since respondents have ceased to be connected with petitioner at the time of the
filing of the complaint as well as when the inspection/investigation was conducted. Thus,
there being no ER-EE relationship, the claims of payment of monetary benefits fall
within the exclusive and original jurisdiction of the Labor Arbiter.
Issue: Whether or not the Regional Director had jurisdiction to hear the case.
Ruling: Yes, it does.
Aside from photocopies of documents entitled Release and Quitclaim, no other
evidence was adduced by the petitioner to substantiate this claim. These documents,
being mere photocopies are unreliable and incompetent without the original and deserves
little credence or weight.
As is well-settled, if doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the employee. Since it is a timehonored rule that in controversies between a laborer and his master, doubts reasonably
arising from the evidence, or in the interpretation of agreements and writings should be
resolved in the formers favor.
Considering thus that there still exists an employer-employee relationship between
petitioner and private respondents and that the case involves violations of labor standard
provisions of the Labor Code, the Regional Director has jurisdiction to hear and decide
the instant case in conformity with Article 128(b) of the Labor Code.

Pag Asa Steel Works vs. CA

(GR No. 166647, March 31, 2006)
Facts: Petitioner is a corporation duly organized and existing under Philippine laws and
is engaged in the manufacture of steel bars and wire rods. Pag-Asa Steel Workers Union
is the duly authorized bargaining agent of the rank-and-file employees of petitioner. On
Jan. 8, 1998, the Regional Tripartite Wages and Productivity Board (Wage Board) of the
NCR issued Wage Order No. NCR-06. It provided for an increase of P13.00 per day in
the salaries of employees receiving the minimum wage, and a consequent increase in the
minimum wage rate to P198.00 per day. Petitioner and the Union negotiated on how to go
about the wage adjustments. Petitioner forwarded a letter to the Union with the list of the
salary adjustments of the rank-and-file employees after the implementation of Wage
Order No. NCR-06. On Sept. 23, 1999, petitioner and the Union entered into a CBA,
effective July 1, 1999 until July 1, 2004.
On Nov. 1, 2000, W age Order No. NCR-08 9 took effect. Section 1 thereof provides:
Upon the effectivity of this Wage Order, private sector workers and employees in the
National Capital Region receiving the prescribed daily minimum wage rate of P223.50
shall receive an increase of P26.50 per day, thereby setting the new minimum wage rate
in the National Capital Region at P250.00 per day.
Then Union president requested petitioner to implement the increase under Wage Order
No. NCR-08 in favor of the company's rank-and-file employees. Petitioner rejected the
request, claiming that since none of the employees were receiving a daily salary rate
lower than P250.00 and there was no wage distortion; it was not obliged to grant the
wage increase. The Union elevated the matter to the NCMB. When the parties failed to
settle, they agreed to refer the case to voluntary arbitration.
The Union alleged that it has been the company's practice to grant a wage increase under
a government-issued wage order, aside from the yearly wage increases in the CBA. It
averred that petitioner paid the salary increases provided under the previous wage orders
in full (aside from the yearly CBA increases), regardless of whether there was a resulting
wage distortion, or whether Union members' salaries were above the minimum wage rate.
Wage Order No. NCR-06, where rank-and-file employees were given different wage
increases ranging from P10.00 to P13.00, was an exception since the adjustments were
the result of the formula agreed upon by the Union and the employer after negotiations.
The Union averred that all of their CBAs with petitioner had a "collateral agreement"
where petitioner was mandated to pay the equivalent of the wage orders across-the-board,
or at least to negotiate how much will be paid. It pointed out that an established practice
cannot be discontinued without running afoul of Article 100 of the Labor Code on nondiminution of benefits.
For its part, petitioner alleged that there is no such company practice and that it complied
with the previous wage orders (Wage Order Nos. NCR-01-05) because some of its
employees were receiving wages below the minimum prescribed under said orders. As for
Wage Order No. NCR-07, petitioner alleged that its compliance was in accordance with its

verbal commitment to the Union during the CBA negotiations that it would implement any wage
order issued in 1999. Petitioner further averred that it applied the wage distortion formula
prescribed under Wage Order Nos. NCR-06 and NCR-07 because an actual distortion occurred as
a result of their implementation. It asserted that at present, all its employees enjoy regular status
and that none receives a daily wage lower than the P250.00 minimum wage rate prescribed under
Wage Order No. NCR-08.
Issue: Whether or not the petitioner is obliged to grant an increase to its employees as a matter of
practice.
Ruling: The petition is meritorious. We rule that petitioner is not obliged to grant the wage
increase under Wage Order No. NCR-08 either by virtue of the CBA, or as a matter of company
practice. We agree with petitioner's contention that the issue on the ambiguity of the CBA and its
failure to express the true intention of the parties has not been expressly raised before the
voluntary arbitration proceedings.
It is submitted that employers (unless exempt) in Metro Manila (including the [petitioner]) are
mandated to implement the said wage order but limited to those entitled thereto. There is no legal
basis to implement the same across-the-board. A perusal of the record shows that the lowest paid
employee before the implementation of Wage Order #8 is P250.00/day and none was receiving
below P223.50 minimum. This could only mean that the union cans no longer demand for any
wage distortion adjustment. Neither could they insist for an adjustment of P26.50 increase under
Wage Order #8. The provision of wage order #8 and its implementing rules are very clear as to
who are entitled to the P26.50/day increase, i.e., "private sector workers and employees in the
National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall
receive an increase of P26.50 per day," and since the lowest paid is P250.00/day the company is
not obliged to adjust the wages of the workers.
We find no evidence to prove that the grant of a wage-order-mandated increase to all the
employees regardless of their salary rates on an agreement collateral to the CBA had ripened into
company practice before the effectivity of Wage Order No. NCR-08. Respondent Union failed to
adduce proof on the salaries of the employees prior to the issuance of each wage order to
establish its allegation that, even if the employees were receiving salaries above the minimum
wage and there was no wage distortion, they were still granted salary increase. Only the following
lists of salaries of respondent Union's members were presented in evidence: (1) before Wage
Order No. NCR-06 was issued; (2) after Wage Order No. NCR-06 was implemented; (3) after the
grant of the first year increase under the CBA; (4) after Wage Order No. NCR-07 was
implemented; and (5) after the second year increase in the CBA was implemented.
Moreover, to ripen into a company practice that is demandable as a matter of right, the giving of
the increase should not be by reason of a strict legal or contractual obligation, but by reason of an
act of liberality on the part of the employer. In this case, petitioner granted the increase under
Wage Order No. NCR-07 on its belief that it was obliged to do so under the CBA.
WHEREFORE, premises considered, the petition is GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 65171 and Resolution dated January 11, 2005 are REVERSED and
SET ASIDE. The Decision of the Voluntary Arbitrator is REINSTATED. No costs.

Metropolitan Bank vs. NWPC

(GR No. 144322, Feb. 6, 2007)
Facts: The Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao,
Cagayan, by virtue of RA No. 6727, otherwise known as the Wage Rationalization Act,
issued Wage Order No. R-02-03. Section 1 of the Order states as follows:
Sec. 1 Upon effectivity of this Wage Order, all employees/workers in the private
sector throughout Region II, regardless of the status of the employment are
granted an across the board increase of Php 15.00 daily.
The Bankers Council for Personnel Management (BCPM), on behalf of its member
banks, requested exemption from the coverage of the Wage Order since its member banks
are already paying more than the prevailing minimum wage rate in the National Capital
Region (NCR), which is their principal place of business. NWPC denied such request.
Metropolitan Bank and Trust Company later filed a petition for Certiorari and Prohibition
with the Court of Appeals seeking for the nullification of the WO on grounds that
RTWPB acted beyond its authority when it issued the WO without any ceiling or
qualification and that the implementation of the WO will cause the petitioner, and other
similarly situated employers, to incur huge financial losses and suffer labor unrest.
Issue: Whether Wage Order No. R-02-03 is valid.
Ruling: There are two ways of fixing the minimum wage: the "floor-wage" method and
the "salary-ceiling" method. The "floor-wage" method involves the fixing of a
determinate amount to be added to the prevailing statutory minimum wage rates. On the
other hand, in the "salary-ceiling" method, the wage adjustment was to be applied to
employees receiving a certain denominated salary ceiling. In other words, workers
already being paid more than the existing minimum wage (up to a certain amount stated
in the Wage Order) are also to be given a wage increase.
In the present case, the RTWPB did not determine or fix the minimum wage rate by the
"floor-wage method" or the "salary-ceiling method" in issuing the Wage Order. The
RTWPB did not set a wage level nor a range to which a wage adjustment or increase shall
be added. Instead, it granted an across-the-board wage increase of P15.00 to all
employees and workers of Region 2. In doing so, the RTWPB exceeded its authority by
extending the coverage of the Wage Order to wage earners receiving more than the
prevailing minimum wage rate, without a denominated salary ceiling. The Wage Order
granted additional benefits not contemplated by R.A. No. 6727.
The WO herein question is null and void insofar as it grants a wage increase to employees
earning more than the minimum wage rate; and pursuant to the separability clause of the
WO, Sec. 1 is declared valid with respect to employees earning the prevailing minimum
wage rate.

Equitable Bank vs. Sadac

(GR. No. 164772, June 8, 2006)
Facts:
Ricardo Sadac was appointed Vice President of the Legal Department of petitioner Bank effective 1
August 1981, and subsequently General Counsel thereof on 8 December 1981. On June 1989, nine
lawyers of petitioner Banks Legal Department, in a letter-petition to the Chairman of the Board of
Directors, accused respondent Sadac of abusive conduct and ultimately, petitioned for a change in
leadership of the department. On the ground of lack of confidence in Sadac, under the rules of client
and lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in his
custody in all cases in which the latter was appearing as its counsel of record. In reaction thereto,
Sadac requested for a full hearing and formal investigation but the same remained unheeded. On 9
November 1989, respondent Sadac filed a complaint for illegal dismissal with damages against
petitioner Bank and individual members of the Board of Directors thereof. After learning of the filing
of the complaint, petitioner Bank terminated the services of respondent Sadac. Finally, on 10 August
1989, Sadac was removed from his office
Labor Arbiter rendered decision that Sadacs termination was illegal and entitled to reinstatement and
payment of full back wages. NLRC affirmed the decision upon appeal by the Bank. Sadac filed for
execution of judgment where it gave its computation, which amounted to P 6.03 M representing his
back wages and the increases he should have received during the time he was illegally dismissed.
The Bank opposed to Sadacs computation. The Labor Arbiter favor Sadacs computation. NLRC,
upon appeal by the bank, reversed the decision. CA reversed the decision of NLRC. Hence, this
petition.
Issue: Whether or not the computation of back wages shall include the general increases.
Ruling:
To resolve the issue, the court revisits its pronouncements on the interpretation of the term back
wages. Back wages in general are granted on grounds of equity for earnings which a worker or
employee has lost due to his illegal dismissal. It is not private compensation or damages but is
awarded in furtherance and effectuation of the public objective of the Labor Code. Nor is it a redress
of a private right but rather in the nature of a command to the employer to make public reparation for
dismissing an employee either due to the formers unlawful act or bad faith.
In the case of Bustamante v. National Labor Relations Commission, It said that the Court deems it
appropriate to reconsider such earlier ruling on the computation of back wages by now holding that
conformably with the evident legislative intent as expressed in Rep. Act No. 6715, back wages to be
awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced
by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying
reason for this ruling is that the employee, while litigating the legality (illegality) of his dismissal,
must still earn a living to support himself and family, while full back wages have to be paid by the
employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear
legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than
was previously given them. Thus, a closer adherence to the legislative policy behind Rep. Act No.
6715 points to "full back wages" as meaning exactly that, i.e., without deducting from back wages
the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal.
There is no vested right to salary increases. Sadac may have received salary increases in the past only
proves fact of receipt but does not establish a degree of assuredness that is inherent in back wages.
The conclusion is that Sadacs computation of his full back wages which includes his prospective
salary increases cannot be permitted.

SIP Food House et al vs. Batolina

(GR No. 192473, October 11, 2010)
Facts:
The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the
Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to
operate a canteen in the new GSIS Building, but had no capability and expertise in this
area. Thus, it engaged the services of the petitioner S.I.P. Food House (SIP), owned by the
spouses Alejandro and Esther Pablo, as concessionaire. The respondents Restituto Batolina and
nine (9) others (the respondents) worked as waiters and waitresses in the canteen.
In February 2004, GMPC terminated SIPs contract as GMPC concessionaire. The termination
of the concession contract caused the termination of the respondents employment, prompting
them to file a complaint for illegal dismissal, with money claims, against SIP and the spouses
Pablo. NLRC ruled in favor of the petitioner and CA affirmed the ruling of NLRC.SIP seeks a
reversal of the appellate courts ruling that it was the employer of the respondents, claiming that it
was merely a labor-only contractor of GMPC
Issue: Whether or not SIP was liable to them for their statutory benefits, although it was not made
to answer for their lost employment due to the involuntary nature of the canteens closure
Ruling: The employer-employee relationship issue.
The CA ruled out SIPs claim that it was a labor-only contractor or a mere agent of GMPC. We
agree with the CA; SIP and its proprietors could not be considered as mere agents of GMPC
because they exercised the essential elements of an employment relationship with the respondents
such as hiring, payment of wages and the power of control, not to mention that SIP operated the
canteen on its own account as it paid a fee for the use of the building and for the privilege of
running the canteen. The fact that the respondents applied with GMPC in February 2004 when it
terminated its contract with SIP, is another clear indication that the two entities were separate and
distinct from each other. We thus see no reason to disturb the CAs findings.
The respondents money claims
We likewise affirm the CA ruling on the monetary award to Batolina and the other
complainants. The free board and lodging SIP furnished the employees cannot operate as a setoff for the underpayment of their wages. We held in Mabeza v. National Labor Relations
Commission that the employer cannot simply deduct from the employees wages the value of the
board and lodging without satisfying the following requirements: (1) proof that such facilities are
customarily furnished by the trade; (2) voluntary acceptance in writing by the employees of the
deductible facilities; and
(3) proof of the fair and reasonable value of the facilities charged. As
the CA aptly noted, it is clear from the records that SIP failed to comply with these requirements.
On the collateral issue of the proper computation of the monetary award, we also find the CA
ruling to be in order. Indeed, in the absence of evidence that the employees worked for 26 days a
month, no need exists to recompute the award for the respondents who were explicitly claiming
for their salaries and benefits for the services rendered from Monday to Friday or 5 days a week
or a total of 20 days a month.

SLL International Cables Specialist vs. NLRC

(GR No. 172161, March 2, 2011)
Facts:
Sometime in 1996, and January 1997, private respondents were hired by petitioner Lagon
as apprentice or trainee cable/lineman. The three were paid the full minimum wage and
other benefits but since they were only trainees, they did not report for work regularly but
came in as substitutes to the regular workers or in undertakings that needed extra workers
to expedite completion of work. Soon after they were engaged as private employees for
their Islacom project in Bohol. Private respondents started on March 15, 1997 until
December 1997. Upon the completion of their project, their employment was also
terminated. Private respondents received the amount of P145.00, the minimum prescribed
daily wage for Region VII. In July 1997, the amount of P145 was increased to P150.00
and in October of the same year, the latter was increased to P155.00.
On May 21, 1999, private respondents for the 4 th time worked with Lagon's project in
Camarin, Caloocan City with Furukawa Corporation as the general contractor. Their
contract would expire on February 28, 2000, the period of completion of the project.
From May 21, 1997-December 1999, private respondents received the wage of P145.00.
At this time, the minimum prescribed rate for Manila was P198.00. In January to
February 28, the three received the wage of P165.00. The existing rate at that time was
P213.00.
For reasons of delay on the delivery of imported materials from Furukawa Corporation,
the Camarin project was not completed on the scheduled date of completion. Face[d] with
economic problem[s], Lagon was constrained to cut down the overtime work of its
worker[s][,] including private respondents. Thus, when requested by private respondents
on February 28, 2000 to work overtime, Lagon refused and told private respondents that
if they insist, they would have to go home at their own expense and that they would not
be given anymore time nor allowed to stay in the quarters. This prompted private
respondents to leave their work and went home to Cebu. On March 3, 2000, private
respondents filed a complaint for illegal dismissal, non-payment of wages, holiday pay,
13th month pay for 1997 and 1998 and service incentive leave pay as well as damages and
attorney's fees
Issue:
Whether or not the respondent should be allowed to recover the differential due to the
failure of the petitioner to pay the minimum wage.
Whether or not value of the facilities that the private respondents enjoyed should be
included in the computation of the "wages" received by them

Ruling:
As a general rule, on payment of wages, a party who alleges payment as a defense has the burden
of proving it. Specifically with respect to labor cases, the burden of proving payment of monetary
claims rests on the employer, the rationale being that the pertinent personnel files, payrolls,
records, remittances and other similar documents -- which will show that overtime, differentials,
service incentive leave and other claims of workers have been paid -- are not in the possession of
the worker but in the custody and absolute control of the employer.
In this case, petitioners, aside from bare allegations that private respondents received wages
higher than the prescribed minimum, failed to present any evidence, such as payroll or payslips,
to support their defense of payment. Thus, petitioners utterly failed to discharge the onus
probandi.
On whether the value of the facilities should be included in the computation of the "wages"
received by private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that
an employer may provide subsidized meals and snacks to his employees provided that the subsidy
shall not be less that 30% of the fair and reasonable value of such facilities. In such cases, the
employer may deduct from the wages of the employees not more than 70% of the value of the
meals and snacks enjoyed by the latter, provided that such deduction is with the written
authorization of the employees concerned.
Moreover, before the value of facilities can be deducted from the employees' wages, the
following requisites must all be attendant: first, proof must be shown that such facilities are
customarily furnished by the trade; second, the provision of deductible facilities must be
voluntarily accepted in writing by the employee; and finally, facilities must be charged at
reasonable value. Mere availment is not sufficient to allow deductions from employees' wages.
These requirements, however, have not been met in this case. SLL failed to present any company
policy or guideline showing that provisions for meals and lodging were part of the employee's
salaries. It also failed to provide proof of the employees' written authorization, much less show
how they arrived at their valuations. At any rate, it is not even clear whether private respondents
actually enjoyed said facilities.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration
above and over his basic or ordinary earning or wage is supplement; and when said benefit or
privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the
kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it
is given. In the case at bench, the items provided were given freely by SLL for the purpose of
maintaining the efficiency and health of its workers while they were working at their respective
projects.
For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these
were cases of dismissal with just and authorized causes. The present case involves the matter of
the failure of the petitioners to comply with the payment of the prescribed minimum wage.
The Court sustains the deletion of the award of differentials with respect to respondent Roldan
Lopez. As correctly pointed out by the CA, he did not work for the project in Antipolo.

Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc.

(GR. No. 176985, April 1, 2013)
Fact:
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers
Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a District
Sales Supervisor (DSS) for Las Pias City, Metro Manila.
As stipulated in respondent's existing Retirement Plan Rules and Regulations at the time,
the Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in
the computation of retirement benefits, as follows: Basic Monthly Salary + Monthly
Average Performance Incentive (which is the total performance incentive earned
during the year immediately preceding 12 months) No. of Years in Service.
Claiming his entitlement to an additional PhP474,600.00 as Sales Management
Incentives (SMI) and to the amount of PhP496,016.67 which respondent allegedly
deducted illegally, representing the unpaid accounts of two dealers within his
jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the
payment of his "Full Retirement Benefits, Merit Increase, Commission/Incentives,
Length of Service, Actual, Moral and Exemplary Damages, and Attorney's Fees."
(Apparently, Petitioner argued that the granting of SMI to all retired DSSs regardless of
whether or not they qualify to the same had ripened into company practice. The only two
pieces of evidence that he stubbornly presented throughout the entirety of this case are
the sworn statements of Renato C. Hidalgo (Hidalgo) and Ramon V. Velazquez
(Velasquez), former DSSs of respondent who retired in 2000 and 1998, respectively. They
claimed that the SMI was included in their retirement package even if they did not meet
the sales and collection qualifiers. Therefore, the failure of employer to grant him his SMI
is a violation on the principle of non-diminution of benefits.)
Issue: WON the granting of SMI to all retired DSSs regardless of whether or not they
qualify to the same had ripened into company practice
Ruling:
Generally, employees have a vested right over existing benefits voluntarily granted to
them by their employer. Thus, any benefit and supplement being enjoyed by the
employees cannot be reduced, diminished, discontinued or eliminated by the
employer. The principle of non-diminution of benefits is actually founded on the
Constitutional mandate to protect the rights of workers, to promote their welfare, and to
afford them full protection. In turn, said mandate is the basis of Article 4 of the Labor
Code which states that "all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations, shall be rendered in favor of labor."

There is diminution of benefits when the following requisites are present:

1. the grant or benefit is founded on a policy or has ripened into a practice over a
long period of time;
2. the practice is consistent and deliberate;
3. the practice is not due to error in the construction or application of a doubtful or
difficult question of law; and
4. The diminution or discontinuance is done unilaterally by the employer.
To be considered as a regular company practice, the employee must prove by substantial
evidence that the giving of the benefit is done over a long period of time, and that it has
been made consistently and deliberately. Jurisprudence has not laid down any hard-andfast rule as to the length of time that company practice should have been exercised in
order to constitute voluntary employer practice. The common denominator in previously
decided cases appears to be the regularity and deliberateness of the grant of benefits over
a significant period of time. It requires an indubitable showing that the employer agreed
to continue giving the benefit knowing fully well that the employees are not covered by
any provision of the law or agreement requiring payment thereof. In sum, the benefit
must be characterized by regularity, voluntary and deliberate intent of the employer to
grant the benefit over a considerable period of time.
Upon review of the entire case records, We find no substantial evidence to prove that
the grant of SMI to all retired DSSs regardless of whether or not they qualify to the
same had ripened into company practice.
The granting of the SMI in the retirement package of Velazquez was an isolated incident
and could hardly be classified as a company practice that may be considered an
enforceable obligation. To repeat, the principle against diminution of benefits is
applicable only if the grant or benefit is founded on an express policy or has ripened
into a practice over a long period of time which is consistent and deliberate; it
presupposes that a company practice, policy and tradition favorable to the
employees has been clearly established; and that the payments made by the
company pursuant to it have ripened into benefits enjoyed by them. Certainly, a
practice or custom is, as a general rule, not a source of a legally demandable or
enforceable right. Company practice, just like any other fact, habits, customs, usage or
patterns of conduct, must be proven by the offering party who must allege and establish
specific, repetitive conduct that might constitute evidence of habit or company practice.

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

(GR No. 198783, April 15, 2013)
Facts:
Under the employ of each bottling plant of Coca-Cola are bottling operators. In the case of the
plant in Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there are
12-14 bottling operators who man its Bottling Line 2. All of them are male and they are members
of herein respondent Royal Plant Workers Union (ROPWU).
In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their
request. In 1988, the bottling operators of then Bottling Line 1 followed suit and asked to be
provided also with chairs. Their request was likewise granted. Sometime in September 2008, the
chairs provided for the operators were removed pursuant to a national directive of petitioner. This
directive is in line with the "I Operate, I Maintain, I Clean" program of petitioner for bottling
operators, wherein every bottling operator is given the responsibility to keep the machinery and
equipment assigned to him clean and safe. The program reinforces the task of bottling operators
to constantly move about in the performance of their duties and responsibilities.
With this task of moving constantly to check on the machinery and equipment assigned to him, a
bottling operator does not need a chair anymore, hence, petitioners directive to remove them.
Furthermore, CCBPI rationalized that the removal of the chairs is implemented so that the
bottling operators will avoid sleeping; thus, prevent injuries to their persons. As bottling operators
are working with machines which consist of moving parts, it is imperative that they should not
fall asleep as to do so would expose them to hazards and injuries. In addition, sleeping will
hamper the efficient flow of operations, as the bottling operators would be unable to perform their
duties competently.
Issue: Whether or not the removal of the bottling operators chairs was a valid exercise of
management prerogative. ---YES
Ruling: According to the Union, such removal constitutes a violation of the 1) Occupational
Health and Safety Standards which provide that every worker is entitled to be provided by the
employer with appropriate seats, among others; 2) policy of the State to assure the right of
workers to a just and humane condition of work as provided for in Article 3 of the Labor Code; 3)
Global Workplace Rights Policy of CCBPI which provides for a safe and healthy workplace by
maintaining a productive workplace and by minimizing the risk of accident, injury and exposure
to health risks; and 4) diminution of benefits provided in Article 100 of the Labor Code.
The Court has held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place, and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal
and recall of workers. The exercise of management prerogative, however, is not absolute as it
must be exercised in good faith and with due regard to the rights of labor.10
In the present controversy, it cannot be denied that CCBPI removed the operators chairs pursuant
to a national directive and in line with its "I Operate, I Maintain, I Clean" program, launched to
enable the Union to perform their duties and responsibilities more efficiently. The chairs were not
removed indiscriminately. They were carefully studied with due regard to the welfare of the
members of the Union. The removal of the chairs was compensated by: a) a reduction of the

operating hours of the bottling operators from a two-and-one-half (2 )-hour rotation period to a
one-and-a-half (1 ) hour rotation period; and b) an increase of the break period from 15 to 30
minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to
avoid instances of operators sleeping on the job while in the performance of their duties and
responsibilities and because of the fact that the chairs were not necessary considering that the
operators constantly move about while working. In short, the removal of the chairs was designed
to increase work efficiency. Hence, CCBPIs exercise of its management prerogative was made in
good faith without doing any harm to the workers rights.
The rights of the Union under any labor law were not violated. There is no law that requires
employers to provide chairs for bottling operators. There was no violation either of the Health,
Safety and Social Welfare Benefit provisions under Book IV of the Labor Code of the
Philippines. As shown in the foregoing, the removal of the chairs was compensated by the
reduction of the working hours and increase in the rest period. The directive did not expose the
bottling operators to safety and health hazards.
The Union should not complain too much about standing and moving about for one and one-half
(1 ) hours because studies show that sitting in workplaces for a long time is hazardous to ones
health. The CBA between the Union and CCBPI contains no provision whatsoever requiring the
management to provide chairs for the operators in the production/manufacturing line while
performing their duties and responsibilities.
The Court completely agrees with the CA ruling that the removal of the chairs did not violate the
general principles of justice and fair play because the bottling operators working time was
considerably reduced from two and a half (2 ) hours to just one and a half (1 ) hours and the
break period, when they could sit down, was increased to 30 minutes between rotations. The
bottling operators new work schedule is certainly advantageous to them because it greatly
increases their rest period and significantly decreases their working time. A break time of thirty
(30) minutes after working for only one and a half (1 ) hours is a just and fair work schedule.
The operators chairs cannot be considered as one of the employee benefits covered in Article
10016 of the Labor Code. In the Courts view, the term "benefits" mentioned in the nondiminution rule refers to monetary benefits or privileges given to the employee with monetary
equivalents.
Such benefits or privileges form part of the employees wage, salary or compensation making
them enforceable obligations.
This Court has already decided several cases regarding the non-diminution rule where the
benefits or privileges involved in those cases mainly concern monetary considerations or
privileges with monetary equivalents. Without a doubt, equating the provision of chairs to the
bottling operators is something within the ambit of "benefits'' in the context of Article 100 of the
Labor Code is unduly stretching the coverage of the law. The interpretations of Article 100 of the
Labor Code do not show even with the slightest hint that such provision of chairs for the bottling
operators may be sheltered under its mantle.

National Wages and Productivity Commission et al., vs The Alliance of Progressive

Labor et al.
(GR. No. 150326, March 12, 2014)
Facts:
On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages
throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the
different regions.
Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered
the NWPC to formulate policies and guidelines on wages, incomes and productivity improvement
at the enterprise, industry and national levels; to prescribe rules and guidelines for the
determination of appropriate minimum wage and productivity measures at the regional, provincial
or industry levels; and to review regional wage levels set by the RTWPBs to determine whether
the levels were in accordance with the prescribed guidelines and national development plans,
among others.
On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of Republic Act
No. 6727, tasked the RTWPBs to determine and fix minimum wage rates applicable in their
region, provinces or industries therein; and to issue the corresponding wage orders, subject to the
guidelines issued by the NWPC.
Consequently, the RTWPBNCR issued Wage Order No. NCR07 on October 14, 1999 imposing
an increase of P25.50/day on the wages of all private sector workers and employees in the NCR
and pegging the minimum wage rate in the NCR at P223.50/day.6 However, Section 2 and Section
9 of Wage Order No. NCR07 exempted certain sectors and industries from its coverage
Section 2. The adjustment in this Order does not cover the following:
A. [W]orkers in the following sectors which were granted corresponding wage
increases on January 1, 1999 as prescribed by Wage Order No. NCR06:
a.1. Agriculture workers
Plantation
P12.00
Nonplantation
P18.50
a.2. Cottage/handicraft industry

P16.00

a.3. Private hospitals with bed capacity of 100 or less

P12.00

a.4. Retail/Service establishments

Employing 1115 workers
Employing not more than 10 workers

P12.00
P19.00

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

xxxx
Section 9. Upon application with and as determined by the Board, based on

documentation and other requirements in accordance with applicable rules and

regulations issued by the Commission, the following may be exempt from the
applicability of this Order:
1. Distressed establishments as defined in the NPWC Guidelines No. 01, series of
1996;
2. Exporters including indirect exporters with at least 50% export sales and with
forward contracts with their foreign buyers/principals entered into on or twelve
(12) months before the date of publication of this Order may be exempt during
the lifetime of said contract but not to exceed twelve (12) months from the
effectivity of this Order.
Feeling aggrieved by their noncoverage by the wage adjustment, the Alliance of Progressive
Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal
with the NWPC assailing Section 2(A) and Section 9(2) of Wage Order No. NCR07. They
contended that neither the NWPC nor the RTWPBNCR had the authority to expand the non
coverage and exemptible categories under the wage order; hence, the assailed sections of the
wage order should be voided.
The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No. NCR07. It
observed that the RTWPBs power to determine exemptible categories was adjunct to its wage
fixing function conferred by Article 122(e) of the Labor Code, as amended by Republic Act
No. 6727; that such authority of the RTWPB was also recognized in NWPC Guidelines No. 01,
Series of 1996.
The APL and TNMR assailed the decisions of the NWPC on certiorari in the CA, contending that
the power of the RTWPBNCR to determine exemptible categories was not an adjunct to its wage
fixing function. CA favored the respondents and granted the petition for certiorari.
Hence, this appeal by petition for review on certiorari by the NWPC and RTWPBNCR.
Issue: Whether or not the RTWPBNCR had
Ruling: the RTWPBNCR had the authority to provide additional exemptions from the minimum
wage adjustments embodied in Wage Order No. NCR07
The NWPC promulgated NWPC Guidelines No. 00195 (Revised Rules of Procedure on
Minimum Wage Fixing) to govern the proceedings in the NWPC and the RTWPBs in the fixing of
minimum wage rates by region, province and industry. Section 1 of Rule VIII of NWPC
Guidelines No. 00195 recognized the power of the RTWPBs to issue exemptions from the
application of the wage orders subject to the guidelines issued by the NWPC
(this is the rationale behind exemption)
SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS
Exemption of establishments from compliance with the wage increases and cost of living
allowances prescribed by the Boards may be granted in order to (1) assist establishments
experiencing temporary difficulties due to losses maintain the financial viability of their
businesses and continued employment of their workers; (2) encourage the establishment of new
businesses and the creation of more jobs, particularly in areas outside the National Capital Region
and Export Processing Zones, in line with the policy on industry dispersal; and (3) ease the
burden of micro establishments, particularly in the retail and service sector, that have a limited
capacity to pay.

The following categories of establishments may be exempted upon application with and as
determined by the Board:
1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10) workers
4. Establishments adversely affected by natural calamities
Under the guidelines, the RTWPBs could issue exemptions from the application of the wage
orders as long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC
enumerated four exemptible establishments, but the list was not exclusive. The RTWPBs had the
authority to include in the wage orders establishments that belonged to, or to exclude from the
four enumerated exemptible categories.
If the exemption was outside of the four exemptible categories, like here, the exemptible category
should be: (1) in accord with the rationale for exemption; (2) reviewed/approved by the NWPC;
and (3) upon review, the RTWPB issuing the wage order must submit a strong and justifiable
reason or reasons for the inclusion of such category. It is the compliance with the second
requisite that is at issue here.
The NWPC, in arriving at its decision, weighed the arguments of the parties and ruled that the
RTWPBNCR had substantial and justifiable reasons in exempting the sectors and establishments
enumerated in Section 2(A) and Section 9(2) based on the public hearings and consultations,
meetings, socialeconomic data and informations gathered prior to the issuance of Wage Order
No. NCR07. The very fact that the validity of the assailed sections of Wage Order No.
NCR07 had been already passed upon and upheld by the NWPC meant that the NWPC
had already given the wage order its necessary legal imprimatur. Accordingly, the requisite
approval or review was complied with.
The RTWPBs are the thinking group of men and women guided by statutory standards and bound
by the rules and guidelines prescribed by the NWPC. In the nature of their functions, the
RTWPBs investigate and study all the pertinent facts to ascertain the conditions in their respective
regions. Hence, they are logically vested with the competence to determine the applicable
minimum wages to be imposed as well as the industries and sectors to exempt from the coverage
of their wage orders.
Lastly, Wage Order No. NCR07 is presumed to be regularly issued in the absence of any strong
showing of grave abuse of discretion on the part of RTWPBNCR. The presumption of validity is
made stronger by the fact that its validity was upheld by the NWPC upon review.

David/Yiels Hog Dealer vs. Macasio

(GR No. 195466, July 2, 2014)
Facts: Macasio filed a complaints with the LA against David (doing business under the
name of Yiels Hog Dealer for non-payment of: overtime pay, holiday payment, and
service incentive leave. He also asked for damages.
Macasio contends that:
He is one of 25 butchers in Yiels Hog Dealer and David exercised control over
him since David: sets the work day, reporting time and hogs to be chopped as well
as how to do the work, paid Macasios salary and approved and disapproved
latters request for leave
David on the other hand contends that:
That he only has 10 employees and hired Macasio on task basis and therefore not
entitled to overtime pay, holiday, pay and 13th month pay as per the Labor Code
IRR.
MAcasio starts his work at 10pm and ends at 2 am and receives a fixed amount of
PHP700 per engagement regardless of the number of hours worked
Macasio disputed Davids allegation contending that he had a Certificate of
employment with David and Macasio reported to work every day. But David
denies Macasio was his employee since he hired him on task basis and the
certificate was only given as per request of Macasio for overseas employment
purposes
Labor Arbiter: Ruled that Macasio is hired on task basis and not entitled to overtime,
holiday, SIL or 13th month pay
NLRC: affirmed labor arbiter since Macasio did not observe an 8 hour work schedule and
was paid a fixed amount regardless of result
CA: partly granted Macasios appeal and reversed NLRC and LA since Macasio, even if
on task basis, is only excluded from the benefits if he is a field personnel as per the ruling
in Serrano.
Issue: WON Macasio is hired on pakyaw basis and not entitled to the coverage of
holiday, SIL and 13th month pay.
Ruling: Partially grant Davids petition
Macasio is indeed Davids employee even if it be proven that he is hired on a task basis
since the latter does not negate employer-employee relationship.Even as per the
presentation of the facts, Macasio is indeed Davids employee since the 4 elements of an
employer-employee relationship is present. Macasio is engaged on task basis since time is
not considered in his work, only the results
Macasio is entitled to SIL and holiday pay since the general rule as per provisions and

Serrano, is that an employee on task basis is entitled to holiday and SIL if he does not fall
within the classification of field personal (Article 94 and 95)
Field personnel and other employees whose performance is unsupervised by
the employer including those who are engaged on task or contract basis,
purely commission basis, or those who are paid a fixed amount for performing
work irrespective of the time consumed in the performance thereof
Macasio is NOT entitled to since PD 851 section (e) expressly states that employers of
employees hired on task basis are exempted
Our Haus Realty Development Corp., vs. Parian et al.
(GR No. 204651, August 6, 2014)
Facts: Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo
Tenedero were all laborers working for petitioner Our Haus Realty Development
Corporation (Our Haus), a company engaged in the construction business.
On May 2010, Our Haus experienced financial distress. To alleviate its condition, Our
Haus suspended some of its construction projects and asked the affected workers,
including the respondents, to take vacation leaves
Respondents were asked to report back to work but instead of doing so, they filed with
the LA a complaint for underpayment of their daily wages. They claimed that except for
respondent Bernardo N. Tenedero, their wages were below the minimum rates prescribed
in the following wage orders from 2007 to 2010
The respondents also alleged that Our Haus failed to pay them their holiday, service
incentive leave (SIL), 13th month and overtime pays.
But according to Our Haus, aside from paying the monetary amount of the respondents'
wages, it also subsidized their meals (3 times a day), and gave them free lodging near the
construction project they were assigned to.
Respondents pointed out that Our Haus never presented any proof that they agreed in
writing to the inclusion of their meals' value in their wages. Also, Our Haus failed to
prove that the value of the facilities it furnished was fair and reasonable. Finally, instead
of deducting the maximum amount of 70% of the value of the meals, Our Haus actually
withheld its full value (which was Php290.00 per week for each employee)
Our Haus in its motion for reconsideration submitted new evidence (five kasunduans) to
show that they were authorized in writing to charge the values of their meals and lodging
to their wages.
CA ruled that the values of the board and lodging cannot be deducted from their wages
for failure to comply with the requirements set by law. It cannot consider the values of its
meal and housing facilities in the computation of the respondents' total wages.
Issue: Whether or not the value of their meals should be considered in determining their

wages' total amount. Whether the facility's value will be deducted or merely included in
the computation of the wages.
Ruling: No substantial distinction between deducting and charging a facility's value from
the employee's wage; the legal requirements for creditability apply to both.
Deduction and charging both operate to lessen the actual take home pay of an employee;
they are two sides of the same coin. In both, the employee receives a lessened amount
because supposedly, the facility's value, which is part of his wage, had already been paid
to him in kind.
As the CA correctly ruled, these requirements are the following:
- proof must be shown that such facilities are customarily furnished by the trade;
- the provision of deductible facilities must be voluntarily accepted in writing by the
employee
- and the facilities must be charged at fair and reasonable value
One of the badges to show that a facility is customarily furnished by the trade is the
existence of a company policy or guideline showing that provisions for a facility were
designated as part of the employees' salaries. To comply with this, Our Haus presented
the joint sinumpaang salaysay of four of its alleged employees. These employees averred
that they were recipients of free lodging, electricity and water, as well as subsidized
meals from Our Haus.
The sinumpaang salaysay statements submitted by Our Haus are self-serving. This
document did not state whether these benefits had been consistently enjoyed by the rest
of Our Haus' employees. Moreover, the records reveal that the board and lodging were
given on a per project basis. Our Haus did not show if these benefits were also provided
in its other construction projects, thus negating its claimed customary nature.
Apart from company policy, the employer may also prove compliance with the first
requirement by showing the existence of an industry-wide practice of furnishing the
benefits in question among enterprises engaged in the same line of business.
However, Our Haus could not really be expected to prove compliance with the first
requirement since the living accommodation of workers in the construction industry is
not simply a matter of business practice. Peculiar to the construction business are the
occupational safety and health (OSH) services which the law itself mandates employers
to provide to their workers. This is to ensure the humane working conditions of
construction employees despite their constant exposure to hazardous working
environments. Under Section 16 of DOLE Department Order (DO) No. 13, series of
1998, employers engaged in the construction business are required to provide the
following welfare amenities: among others Suitable living accommodation for workers,
and as may be applicable, for their families and Separate sanitary, washing and sleeping
facilities for men and women workers.

It mandates that the cost of the implementation of the requirements for the construction
safety and health of workers, shall be integrated to the overall project cost.
Lastly, even if a benefit is customarily provided by the trade, it must still pass the purpose
test set by jurisprudence. Under this test, if a benefit or privilege granted to the employee
is clearly for the employer's convenience, it will not be considered as a facility but a
supplement.
While the rules serve as the initial test in characterizing a benefit as a facility, the purpose
test additionally recognizes that the employer and the employee do not stand at the same
bargaining positions on benefits that must or must not form part of an employee's wage.
In the ultimate analysis, the purpose test seeks to prevent a circumvention of the
minimum wage law.
Under the law, only the value of the facilities may be deducted from the employees'
wages but not the value of supplements. Facilities include articles or services for the
benefit of the employee or his family but exclude tools of the trade or articles or services
primarily for the benefit of the employer or necessary to the conduct of the employer's
business. The law also prescribes that the computation of wages shall exclude whatever
benefits, supplements or allowances given to employees. Supplements are paid to
employees on top of their basic pay and are free of charge. Since it does not form part of
the wage, a supplement's value may not be included in the determination of whether an
employer complied with the prescribed minimum wage rates.
In the present case, the board and lodging provided by Our Haus cannot be categorized as
facilities but as supplements. The real difference lies not on the kind of the benefit but on
the purpose why it was given by the employer. If it is primarily for the employee's gain,
then the benefit is a facility; if its provision is mainly for the employer's advantage, then
it is a supplement.
Under the purpose test, substantial consideration must be given to the nature of the
employer's business in relation to the character or type of work performed by the
employees involved. Our Haus is engaged in the construction business, a labor-intensive
enterprise. The success of its projects is largely a function of the physical strength,
vitality and efficiency of its laborers. Thus, by ensuring that the workers are adequately
and well fed, the employer is actually investing on its business.
It will be more convenient to the employer if its workers are housed near the construction
site to ensure their ready availability during urgent or emergency circumstances. This
observation strongly bears in the present case since three of the respondents are not
residents of the National Capital Region. The board and lodging provision might have
been a substantial consideration in their acceptance of employment in a place distant from
their provincial residences.
Based on these considerations, that even under the purpose test, the subsidized meals and
free lodging provided by Our Haus are actually supplements. Accordingly, their values

cannot be considered in computing the total amount of the respondents' wages.

Under the circumstances, the daily wages paid to the respondents are clearly below the
prescribed minimum wage rates in the years 2007-2010.
The facility must be charged at a fair and reasonable value and therefore the valuation of
a facility must be supported by relevant documents such as receipts and company records
for it to be considered as fair and reasonable.
In the present case, Our Haus never explained how it came up with the values it assigned
for the benefits it provided; it merely listed its supposed expenses without any supporting
document. Since Our Haus is using these additional expenses (cook's salary, water and
LPG) to support its claim that it did not withhold the full amount of the meals' value, Our
Haus is burdened to present evidence to corroborate its claim. The records however, are
bereft of any evidence to support Our Haus' meal expense computation. Even the value it
assigned for the respondents' living accommodations was not supported by any
documentary evidence. Without any corroborative evidence, it cannot be said that Our
Haus complied with this third requisite.

Milan et al., vs NLRC

(GR No. 202961, Feb 4, 2015)
Facts:
As Solid Mills' employees, petitioners and their families were allowed to occupy SMI
Village, a property owned by Solid Mills. According to Solid Mills, this was "out of
liberality and for the convenience of its employees . . . [and] on the condition that the
employees . . . would vacate the premises anytime the Company deems fit." In
September 2003, petitioners were informed that effective October 10, 2003, Solid Mills
would cease its operations due to serious business losses. NAFLU recognized Solid Mills'
closure due to serious business losses in the memorandum of agreement dated September
1, 2003.The memorandum of agreement provided for Solid Mills' grant of separation pay
less accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th month
pay to the employees. Pertinent

portions of the agreement provide:

WHEREAS, the COMPANY has incurred substantial financial losses and is currently
experiencing further severe financial losses;
WHEREAS, in view of such irreversible financial losses, the COMPANY will cease its
operations on October 10, 2003;
WHEREAS, all employees of the COMPANY on account of irreversible financial losses,
will be dismissed from employment effective October 10, 2003;
Solid Mills filed its Department of Labor and Employment termination report on
September 2, 2003. Later, Solid Mills, through Alfredo Jingco, sent to petitioners
individual notices to vacate SMI Village.
Petitioners were no longer allowed to report for work by October 10, 2003. They were
required to sign a memorandum of agreement with release and quitclaim before their
vacation and sick leave benefits, 13th month pay, and separation pay would be released.
Employees who signed the memorandum of agreement were considered to have agreed to
vacate SMI Village, and to the demolition of the constructed houses inside as condition
for the release of their termination benefits and separation pay. Petitioners refused to sign
the documents and demanded to be paid their benefits and separation pay.
Issue: Whether or not it was valid for the employer to withhold the employees benefits?
Ruling:
Requiring clearance before the release of last payments to the employee is a standard
procedure among employers, whether public or private. Clearance procedures are
instituted to ensure that the properties, real or personal, belonging to the employer but are
in the possession of the separated employee, are returned to the employer before the
employee's departure.
As a general rule, employers are prohibited from withholding wages from employees.
The Labor Code provides: Art. 116. Withholding of wages and kickbacks prohibited. It
shall be unlawful for any person, directly or indirectly, to withhold any amount from the
wages of a worker or induce him to give up any part of his wages by force, stealth,
intimidation, threat or by any other means whatsoever without the worker's consent.
The Labor Code also prohibits the elimination or diminution of benefits. Thus: Art. 100.
Prohibition against elimination or diminution of benefits. Nothing in this Book shall
be construed to eliminate or in any way diminish supplements, or other employee benefits
being enjoyed at the time of promulgation of this Code.
However, our law supports the employers' institution of clearance procedures before the
release of wages. As an exception to the general rule that wages may not be withheld and
benefits may not be diminished, the Labor Code provides: Art. 113. Wage deduction.
No employer, in his own behalf or in behalf of any person, shall make any deduction

from the wages of his employees, except: 1. In cases where the worker is insured with his
consent by the employer, and the deduction is to recompense the employer for the amount
paid by him as premium on the insurance; 2. For union dues, in cases where the right of
the worker or his union to check-off has been recognized by the employer or authorized
in writing by the individual worker concerned; and 3. In cases where the employer is
authorized by law or regulations issued by the Secretary of Labor and Employment.
The Civil Code provides that the employer is authorized to withhold wages for debts due:
Article 1706. Withholding of the wages, except for a debt due, shall not be made by the
employer.
"Debt" in this case refers to any obligation due from the employee to the employer. It
includes any accountability that the employee may have to the employer. More
importantly, respondent Solid Mills and NAFLU, the union representing petitioners,
agreed that the release of petitioners' benefits shall be "less accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. As long as the debt or
obligation was incurred by virtue of the employer-employee relationship, generally, it
shall be included in the employee's accountabilities that are subject to clearance
procedures. It may be true that not all employees enjoyed the privilege of staying in
respondent Solid Mills' property. However, this alone does not imply that this privilege
when enjoyed was not a result of the employer-employee relationship.
Solid Mills allowed the use of its property for the benefit of petitioners as its employees.
Petitioners were merely allowed to possess and use it out of respondent Solid Mills'
liberality. The employer may, therefore, demand the property at will. The return of the
property's possession became an obligation or liability on the part of the employees when
the employer-employee relationship ceased. Thus, respondent Solid Mills has the right to
withhold petitioners' wages and benefits because of this existing debt or liability.
Withholding of payment by the employer does not mean that the employer may renege on
its obligation to pay employees their wages, termination payments, and due benefits. The
employees' benefits are also not being reduced. It is only subjected to the condition that
the employees return properties properly belonging to the employer. This is only
consistent with the equitable principle that "no one shall be unjustly enriched or benefited
at the expense of another." For these reasons, we cannot hold that petitioners are entitled
to interest of their withheld separation benefits. These benefits were properly withheld by
respondent Solid Mills because of their refusal to return its property.

IV. WAGE ENFORCEMENT AND RECOVERY

Rajah Humabon Hotel vs. Trajano

(GR. No. 100222-23, 2011)

Facts: Subsequent to the initial pleading filed by respondent-employees before the regional
director of DOLE for redress in regard to underpaid wages and non-payment of benefits,
petitioners were instructed to allow the inspection of the employment records of respondents on
April 4, 1989. However, no inspection could be done on that date on account of the picket staged
by other workers. At the re-scheduled examination after closure of petitioners' business on April
16, 1989, instead of presenting the payrolls and daily time records of private respondents,
petitioner Peter Po submitted a motion to dismiss on the supposition that the regional director has
no jurisdiction over the case because the employer-employee relationship had been served as a
result of the closure of petitioners' business, apart from the fact that each of the claims of private
respondents exceeded the jurisdictional limit of P5,000.00 pegged by Republic Act No. 6715 or
the New Labor Relations Law.
Issue: Who between the Regional Director of DOLE and the Labor Arbiter has jurisdictional
competence over the complaint of private respondents?
Ruling:
Regional Director had no jurisdiction over the case.
Section 2 of EO No. 111, promulgated on December 24, 1986, which amended Article 128(b) of
the Labor Code gives concurrent jurisdiction to both the Secretary of Labor (or the various
regional directors) and the labor arbiters over money claims among the other cases mentioned by
Article 217 of the Labor Code. This provision merely confirms/reiterates the
enforcement/adjudication authority of the Regional Director over uncontested money claims in
cases where an employer-employee relationship still exists.
However, with the enactment of Republic Act No. 6715, which took effect on March 21, 1989 or
seven days after the complaint at bar was filed on March 14, 1989, Articles 129 and 217 of the
Labor Code were amended, there is no doubt that the regional directors can try money claims
only if the following requisites concur: (1) the claim is presented by an employee or person
employed in domestic or household service, or house helper under the code; (2) the claimant, no
longer being employed, does not seek reinstatement; and (3) the aggregate money claim of the
employee or housekeeper does not exceed five thousand pesos (P5,000.00). Thus, the power to
hear and decide employees' claims arising from employer-employee relations, exceeding
P5,000.00 for each employee should be left to the Labor Arbiter as the exclusive repository of the
power to hear and decide such claims.
In the instant case, a simple examination of the labor arbiter's impugned order dated September
25, 1989 readily shows that the aggregate claims of each of the twenty-five employees of
petitioner are above the amount of P5,000.00 fixed by Republic Act No. 6715. Therefore, the
regional director had no jurisdiction over the case. Hence, the petition is granted and the public
respondent is directed to refer the workers' money claims to the appropriate Labor Arbiter for
proper disposition.

Guico vs. Sec of Labor

(GR No. 131750, November 16, 1998)
Facts: The case started when the Office of the Regional Director, Department of Labor and
Employment (DOLE), Region I, San Fernando, La Union, received a letter-complaint dated April 25,
1995, requesting for an investigation of petitioner's establishment, Copylandia Services & Trading, for
violation of labor standards laws. Pursuant to the visitorial and enforcement powers of the Secretary of
Labor and Employment or his duly authorized representative under Article 128 of the Labor Code, as
amended, inspections were conducted at Copylandia's outlets on April 27 and May 2, 1995. The
inspections yielded the following violations involving twenty-one (21) employees who are copier
operators: (1) underpayment of wages; (2) underpayment of 13th month pay; and (3) no service
incentive leave with pay.
On October 30, 1995, Regional Director Guerrero N. Cirilo issued an Orderfavorable to the 21
employees. First, he ruled that the purported Receipt, Waiver and Quitclaim dated December 21 and
22, 1994, could not cause the dismissal of the labor standards case against the petitioner since the
same were executed before the filing of the said case. Moreover, the employees repudiated said waiver
and quitclaim. Second, he held that despite the salary increase granted by the petitioner, the daily
salary of the employees was still below the minimum daily wage rate of P119.00 under Wage Order
No. RB-I-03. Thirdly, he held that the removal of the commission and incentive schemes during the
pendency of the case violated the prohibition against elimination or diminution of benefits under
Article 100 of the Labor Code, as amended. The Regional Director awarded the claimants ONE
MILLION EIGHTY ONE THOUSAND SEVEN HUNDRED FIFTY SIX PESOS AND SEVENTY
CENTAVOS (P1,081,756.70) representing their back wages, well over P5,000.
On October 24, 1997, the respondent Secretary denied the Motion for Reconsideration. He ruled that
the Regional Director has jurisdiction over the case citing Article 128 (b) of the Labor Code, as
amended. He pointed out that Republic Act No. 7730 repealed the jurisdictional limitations imposed
by Article 129 on the visitorial and enforcement powers of the Secretary of Labor and Employment or
his duly authorized representatives. In addition, he held that petitioner is now estopped from
questioning the computation made by the Regional Director as a result of the compromise agreement
he entered into with the employees. Lastly, he reiterated his ruling that the Receipt, Waiver and
Quitclaim signed by the employees was not valid.
Issue: Whether or not the Regional Director of the Department of Labor and employment can award
claims even more than P5,000.
Ruling: Yes, the Regional Director can award claims of over P5,000. The visitorial power of the
Secretary of Labor to order and enforce compliance with labor standard laws cannot be exercised
where the individual claim exceeds P5,000.00, can no longer be applied in view of the enactment of
R.A. No. 7730 amending Article 128(b) of the Labor Code, viz:
Art. 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary,
and in cases where the relationship of employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the power to issue compliance orders to
give effect to the labor standards provisions of the Code and other labor legislation based on the
findings of the labor employment and enforcement officers or industrial safety engineers made in the
course of inspection. The Secretary or his duly authorized representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in the course of inspection.

Ex-Bataan Veterans Security Agency vs. SOLE

(GR. No. 152396, November 20, 2007)
Facts Petitioner is in the business of providing security services while respondents are employees
assigned to the National Power Corporation. On February 20, 1996, respondents instituted a
complaint for underpayment of wages against petitioner before the Regional Office of the DOLE.
On March 7, 1996, the Regional Office conducted a complaint inspection of the Plant, and
violations of labor standards laws were found. On the same date, the Regional Office issued a
notice of hearing, requiring petitioner and respondents to attend.
On August 19, 1996, the Director of the Regional Office issued an order in favor of respondents.
Petitioner filed a motion for reconsideration, questioning the jurisdiction of the Regional Director,
which was denied. Petitioner appealed to the SOLE, which affirmed the Regional Directors
orders. Petitioner appealed to the CA, which dismissed the petition. In the petition, the
petitioners argue that 1) The Regional Director did not acquire jurisdiction over petitioner
because he failed to comply with section 11, Rule 14 of the 1997 Rules of Civil Procedure. The
notice of hearing was served at the Plant, not at petitioners main office, and addressed to its VP.
2) Under articles 129 and 217(b) of the Labor Code, the Labor Arbiter, not the Regional Director,
has exclusive and original jurisdiction over the case because the individual monetary claim of
respondents exceeds P5000. 3) The case falls under the exception clause in article 128(b) of the
Labor Code. The Regional Director should have certified the case to the arbitration branch of the
NLRC.
Issue: (1.) Whether or not the SOLE or his duly authorized representatives acquired jurisdiction over
petitioner. (2.) Whether or not the SOE or his duly authorized representatives have jurisdiction over
the money claims, which exceed P5000.

Ruling:
1. YES, THEY HAVE.
The Rules on the Disposition of Labor Standards Cases in the Regional Offices (rules)
specifically state that notices and copies of orders shall be served on the parties or their duly
authorized representatives at their last known address or, if they are represented by counsel,
through the latter. The rules shall be liberally construed and only in the absence of any applicable
provision will the Rules of Court apply in a suppletory character.
In this case, EBVSAI does not deny having received the notices of hearing. In fact, on 29 March
and 13 June 1996, Danilo Burgos and Edwina Manao, detachment commander and bookkeeper of
EBVSAI, respectively, appeared before the Regional Director. They claimed that the 22 March
1996 notice of hearing was received late and manifested that the notices should be sent to the
Manila office. Thereafter, the notices of hearing were sent to the Manila office. They were also
informed of EBVSAIs violations and were asked to present the employment records of the
private respondents for verification. They were, moreover, asked to submit, within 10 days, proof
of compliance or their position paper. The Regional Director validly acquired jurisdiction over
EBVSAI. EBVSAI can no longer question the jurisdiction of the Regional Director after
receiving the notices of hearing and after appearing before the Regional Director.
2. YES, THEY DO.
While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has
jurisdiction to hear and decide cases where the aggregate money claims of each employee
exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized representatives.

Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by
R.A. No. 7730) thus:
Art. 128 Visitorial and enforcement power. --- (b) Notwithstanding the provisions of Article[s]
129 and 217 of this Code to the contrary, and in cases where the relationship of employeremployee still exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give effect to [the labor
standards provisions of this Code and other] labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the course of
inspection. The Secretary or his duly authorized representatives shall issue writs of execution to
the appropriate authority for the enforcement of their orders, except in cases where the employer
contests the findings of the labor employment and enforcement officer and raises issues supported
by documentary proofs which were not considered in the course of inspection.
The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the
Labor Code by the phrase (N)otwithstanding the provisions of Articles 129 and 217of this Code
to the contrary x x x thereby retaining and further strengthening the power of the Secretary of
Labor or his duly authorized representatives to issue compliance orders to give effect to the labor
standards provisions of said Code and other labor legislation based on the findings of labor
employment and enforcement officer or industrial safety engineer made in the course of
inspection.
The visitorial and enforcement powers of the DOLE Regional Director to order and enforce
compliance with labor standard laws can be exercised even where the individual claim exceeds
P5,000.
However, if the labor standards case is covered by the exception clause in Article 128(b) of the
Labor Code, then the Regional Director will have to endorse the case to the appropriate
Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives
of jurisdiction, the following elements must be present: (a) that the employer contests the findings
of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues,
there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the
normal course of inspection. The rules also provide that the employer shall raise such objections
during the hearing of the case or at any time after receipt of the notice of inspection results.
In this case, the Regional Director validly assumed jurisdiction over the money claims of private
respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in
accordance with Article 128(b) of the Labor Code and the case does not fall under the exception
clause.
The Court notes that EBVSAI did not contest the findings of the labor regulations officer during
the hearing or after receipt of the notice of inspection results. It was only in its supplemental
motion for reconsideration before the Regional Director that EBVSAI questioned the findings of
the labor regulations officer and presented documentary evidence to controvert the claims of
private respondents. But even if this was the case, the Regional Director and the Secretary of
Labor still looked into and considered EBVSAIs documentary evidence and found that such did
not warrant the reversal of the Regional Directors order. The Secretary of Labor also doubted
the veracity and authenticity of EBVSAIs documentary evidence. Moreover, the pieces of
evidence presented by EBVSAI were verifiable in the normal course of inspection because all
employment records of the employees should be kept and maintained in or about the premises of
the workplace, which in this case is in Ambuklao Plant, the establishment where private
respondents were regularly assigned.

Sapio vs. Undaloc Construction

(GR. No. 155034, May 22, 2008)
Facts:
The controversy started with a complaint filed by petitioner against Undaloc Construction
and/or Engineer Cirilo Undaloc for illegal dismissal, underpayment of wages and
nonpayment of statutory benefits. Respondent Undaloc Construction, a single
proprietorship owned by Cirilo Undaloc, is engaged in road construction business in
Cebu City. Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998
when he was terminated on the ground that the project he was assigned to was already
finished, he being allegedly a project employee. But petitioner asserted that he was a
regular employee having been engaged to perform works which are "usually necessary or
desirable" in respondents' business.
Issue: WON the Appellate court erred in failing to dismiss respondent's petition for
certiorari brought before it on the ground that respondents failed to attach certified true
copies of the NLRC's decision and resolution denying the motion for reconsideration.
Ruling: Appellate Court was right.
In his Comment on the Petition for Certiorari with Prayer for Temporary Restraining
and/or Preliminary Injunction filed with the Court of Appeals on 22 November 2001,
petitioner did not raise this procedural issue. Neither did he do so when he moved for
reconsideration of the 8 May 2002 Decision of the Court of Appeals. It is only now
before this Court that petitioner proffered the same. This belated submission spells doom
for petitioner. More fundamentally, an examination of the Court of Appeals rollo belies
petitioner as it confirms that the alleged missing documents were in fact attached to the
petition.
To counter petitioner's assertions, respondents submitted typewritten and signed payroll
sheets from 2 September to 8 December 1996, from 26 May to 15 June 1997, and from
12 January to 31 May 1998. These payroll sheets clearly indicate that petitioner did
receive a daily salary of P141.00.
Moreover, absent any evidence to the contrary, good faith must be presumed in this case.
Entries in the payroll, being entries in the course of business, enjoy the presumption of
regularity under Rule 130, Section 43 of the Rules of Court. Hence, while as a general
rule, the burden of proving payment of monetary claims rests on the employer, when
fraud is alleged in the preparation of the payroll, the burden of evidence shifts to the
employee and it is incumbent upon him to adduce clear and convincing evidence in
support of his claim. Unfortunately, petitioner's bare assertions of fraud do not suffice to
overcome the disputable presumption of regularity.

Hon. Secretary of Labor vs. Panay Veterans Security and Investigation Agency

(GR. No. 167708, August 22, 2008)

Facts:
Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent
Panay Veterans Security and Investigation Agency, Inc. as security guards sometime in
1988. They were stationed at the plant site of Food Industries, Inc. (FII) in Sta. Rosa,
Laguna until FII terminated its contract with respondent security agency on July 6, 2000.
They were not given new assignments and their benefits (including 13th month pay,
overtime pay and holiday pay as well as wage differentials due to underpayment of
wages) were withheld by respondent security agency. This prompted them to file a
complaint for violation of labor standards in the regional office of the Department of
Labor and Employment in the National Capital Region (DOLE-NCR).
A labor inspector acted on the complaint, Manuel M. Cayabyab. He conducted an
inspection on October 3, 2000. His assessment is that the respondents should comply with
the labor standards through payment or question in it to the DOLE-NCR within 5 days.
Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned
the labor employment officers findings. Thus, in his May 10, 2001 order, the Regional
Director of the DOLE-NCR adopted the findings and computation of Cayabyab as to the
unpaid benefits due to petitioners Agapay and Alonso, Jr.
Respondents moved for reconsideration but the DOLE-NCR Regional Director denied it.
Undeterred, respondents filed an appeal (with motion to reduce cash or surety bond) to
the Secretary of Labor and Employment. In his July 9, 2002 order, the Secretary of Labor
and Employment found that respondents failed to perfect their appeal since they did not
post a cash or surety bond equivalent to the monetary award. Thus, the appeal was
dismissed and the DOLE-NCR Regional Directors May 10, 2001 order was declared
final and executory. The Secretary of Labor and Employment denied reconsideration.
Respondents elevated the case to the CA, at first the CA dismissed their appeal and
upheld the DOLEs decision. But the CA granted their reconsideration and modified
DOLEs decision, Invoking the case of Star Angel Handicraft v. National Labor
Relations Commission.
Thus, the case was appealed by the petitioner in supreme court.
Issue: whether or not the CA was right in granting the appeal.
Ruling:
No, the employers motion to reduce the appeal the bond was no in accordance with the
art. 128 of Labor code, the last paragraph of the said provision provides:an order issued
by the duly authorized representative of the Secretary of Labor and Employment under
this Article may be appealed to the latter. In case said order involves a monetary award,
an appeal by the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by the

Secretary of Labor and Employment in the amount equivalent to the monetary

award in the order appealed from
Clearly the respondents did not post bail, when they appealed the case at the DOLENCR.
The CAs amended decision also contradicted the spirit that animates all labor laws, the
promotion of social justice and the protection of workers. The posting of a cash or surety
bond to perfect an appeal of an order involving a monetary award has a two-fold purpose:
(1) to assure the employee that, if he finally prevails in the case, the monetary award will
be given to him upon dismissal of the employers appeal and (2) to discourage the
employer from using the appeal to delay or evade payment of his obligations to the
employee.[17] The CA disregarded these pro-labor objectives when it treated
respondents failure to post the required bond with undue leniency. The CA should have
resolved any doubt in the implementation and interpretation of the Labor Code and its
implementing rules in favor of labor.
Moreover, Star Angel Handicraft permitted the filing of a motion for reduction of the
appeal bond because the Court recognized the NLRCs existing practice at that time to
allow the reduction of the appeal bond upon motion of appellant and on meritorious
grounds. In fact, the practice was subsequently institutionalized in the rules of procedure
of the NLRC which now allow the reduction of the amount of the bond in justifiable
cases and upon motion of the appellant.

National Mines and Allied Workers Union vs. Marcopper Mining Corp.
(GR. No. 174641, Nov. 11, 2008 )
Facts:
DENR ordered the indefinite suspension of MARCOPPER's operations for causing
damage to the environment of the Province of Marinduque by spilling the company's
mine waste or tailings from an old underground impounding area into the Boac River, in
violation of its ECC. NAMAWU was the exclusive bargaining representative of the rankand-file workers of MARCOPPER. It filed a complaint with the NLRC against
MARCOPPER for nonpayment of wages, separation pay, damages, and attorney's fees.
NAMAWU claimed that due to the indefinite suspension of MARCOPPER's operations,
its members were not paid the wages due them for six months. It further claimed that its
members are also entitled to be paid their separation pay pursuant to their collective
bargaining agreement with MARCOPPER and under existing implementing rules of the
Labor Code. There had been an illegal strike which occurred.
Issue: Whether or not it is necessary that MARCOPPER file an appeal bond
Ruling:
In the context of the NLRC appeal bond that is directly at issue, MARCOPPER had
every reason to claim in its April 10, 2000 appeal to the NLRC that it should be excused
from filing an appeal bond with respect to the NAMAWU members who were no longer
company employees. The CA decision decreeing the termination of employment of those
involved in the illegal strike case had already been issued at that time. We subsequently
ruled on the same issue during the time the environmental incident case was pending
before the NLRC. Thus, when the NLRC dismissed MARCOPPER's appeal for failure to
file the requisite appeal bond corresponding to the 615 NAMAWU members, the
termination of employment of these NAMAWU members was already a settled matter
that the NLRC was in no position to disregard. In this light, the CA was correct in
reversing the dismissal of MARCOPPER's appeal for failure to file an appeal bond.
Pursued to its logical end, the CA conclusions should lead to the dismissal of
NAMAWU's complaint with respect to its 615 previously dismissed members.

Jethro Intelligence & Security Corporation vs. SOLE

(GR No. 172537, August 14, 2009)
Facts:
Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security service contractor
with a security service contract agreement with co-petitioner Yakult Phils. Inc. (Yakult). On the
basis of a complaint1 filed by respondent Frederick Garcia (Garcia), one of the security guards
deployed by Jethro, for underpayment of wages, legal/special holiday pay, premium pay for rest
day, 13th month pay, and night shift differential, the Department of Labor and Employment
(DOLE)-Regional Office No. IV conducted an inspection at Yakults premises in Calamba,
Laguna in the course of which several labor standards violations were noted, including keeping of
payrolls and daily time records in the main office, underpayment of wages, overtime pay and
other benefits, and non-registration with the DOLE as required under Department Order No. 1802.
By Order of September 9, 2004, the DOLE Regional Director, noting petitioners failure to rectify
the violations noted during the above-stated inspection within the period given for the purpose,
found them jointly and severally liable to herein respondents for the aggregate amount of EIGHT
HUNDRED NINE THOUSAND TWO HUNDRED TEN AND 16/100 PESOS (P809,210.16)
representing their wage differentials, regular holiday pay, special day premium pay, 13th month
pay, overtime pay, service incentive leave pay, night shift differential premium and rest day
premium.
Jethro appealed to the Secretary of Labor and Employment (SOLE), faulting the Regional
Director for, among other things, basing the computation of the judgment award on Garcias
affidavit instead of on the data reflected in the payrolls for 2001 to 2004, which was denied.
Issue: Whether or not SOLE or his duly authorized representative has jurisdiction over money
claims that exceed 5,000.
Ruling:
In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does
not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro
appealed the inspection results and there is a need to examine evidentiary matters to resolve the
issues raised, the payrolls presented by it were considered in the ordinary course of inspection.
While the employment records of the employees could not be expected to be found
in Yakults premises in Calamba, as Jethros offices are in Quezon City, the records show that
Jethro was given ample opportunity to present its payrolls and other pertinent documents during
the hearings and to rectify the violations noted during the ocular inspection. It, however, failed to
do so, more particularly to submit competent proof that it was giving its security guards the
wages and benefits mandated by law.
Jethros failure to keep payrolls and daily time records in Yakults premises was not the only labor
standard violation found to have been committed by it; it likewise failed to register as a service
contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay
the wages and benefits in accordance with the rates prescribed by law.

Phil Hoteliers Inc., vs. National Union of Workers in Hotel Restaurant & Allied
Industries Dusit Hotel Nikko Chapter
(GR No. 181972, Aug 25, 2009)
Facts:
Wage Order No. 9, approved by the Regional Tripartite Wages and Productivity Board
(RTWPB) of the National Capital Region (NCR), took effect on 5 November 2001. It
grants P30.00 ECOLA to particular employees and workers of all private sectors,
identified as follows in Section 1 thereof:
Section 1.
Upon the effectivity of this Wage Order, all private sector workers
and employees in the National Capital Region receiving daily wage rates of TWO
HUNDRED FIFTY PESOS (P250.00) up to TWO HUNDRED NINETY PESOS
(P290.00) shall receive an emergency cost of living allowance in the amount of
THIRTY PESOS (P30.00) per day payable in two tranches as follows:
Amount of ECOLA Effectivity
P15.00
5 November 2001
P15.00
1 February 2002
On 20 March 2002, respondent National Union of Workers in Hotel, Restaurant and
Allied Industries-Dusit Hotel Nikko Chapter (Union), through its President, Reynaldo C.
Rasing (Rasing), sent a letter 4 to Director Alex Maraan (Dir. Maraan) of the Department
of Labor and Employment-National Capital Region (DOLE-NCR), reporting the noncompliance of Dusit Hotel with WO No. 9, while there was an on-going compulsory
arbitration before the National Labor Relations Commission (NLRC) due to a bargaining
deadlock between the Union and Dusit Hotel; and requesting immediate assistance on
this matter. On 24 May 2002, Rasing sent Dir. Maraan another letter following-up his
previous request for assistance.
Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer Estrellita
Natividad (LSO Natividad) to conduct an inspection of Dusit Hotel premises on 24 April
2002. In the first Inspection, the report showed that Dusit Hotel is exempt from
complying with WO no. 9. Due to the Second request for inspection, DOLE
representative conducted another round of inspection and the Labor Standards Officer
noted the following in her inspection report:
* Non-presentation of records/payrolls
* Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL
NIKKO Chapter, there are one hundred forty-four (144) affected in the implementation of
Wage Order No. NCR-09-> ECOLA covering the periods from Nov. 5/01 to present.
Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel
to effect restitution and/or correction of the noted violations within five days from receipt
of the Notice, and to submit any question on the findings of the labor inspector within the
same period, otherwise, an order of compliance would be issued. The Notice of
Inspection Result was duly received by Dusit Hotel Assistant Personnel Manager Rogelio
Santos.

In the meantime, the NLRC rendered a Decision 9 dated 9 October 2002 in NLRC-NCRCC No. 000215-02 the compulsory arbitration involving the Collective Bargaining
Agreement (CBA) deadlock between Dusit Hotel and the Union granting the hotel
employees the following wage increases, in accord with the CBA:
Effective January 1, 2001 - P500.00/month
Effective January 1, 2002 - P550.00/month
Effective January 1, 2003 - P600.00/month
On 22 October 2002, based on the results of the second inspection of Dusit Hotel
premises, DOLE-NCR, through Dir. Maraan, issued the Order 10 directing Dusit Hotel to
pay 144 of its employees the total amount of P1,218,240.00, corresponding to their
unpaid ECOLA under WO No. 9; plus, the penalty of double indemnity, pursuant to
Section 12 of Republic Act No. 6727, 11 as amended by Republic Act No. 8188.
Dusit Hotel filed a Motion for Reconsideration 13 of the DOLE-NCR Order dated 22
October 2002, arguing that the NLRC Decision dated 9 October 2002, resolving the
bargaining deadlock between Dusit Hotel and the Union, and awarding salary increases
under the CBA to hotel employees retroactive to 1 January 2001, already rendered the
DOLE-NCR Order moot and academic. With the increase in the salaries of the hotel
employees ordered by the NLRC Decision of 9 October 2002, along with the hotel
employees' share in the service charges, the 144 hotel employees, covered by the DOLENCR Order of 22 October 2002, would already be receiving salaries beyond the coverage
of WO No.
Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR issued a
Resolution 14 on 27 December 2002, setting aside its earlier Order dated 22 October
2002 for being moot and academic, in consideration of the NLRC Decision dated 9
October 2002; and dismissing the complaint of the Union against Dusit Hotel, for noncompliance with WO No. 9, for lack of merit.
Issues: Whether the 144 hotel employees were still entitled to ECOLA granted by WO
No. 9 despite the increases in their salaries, retroactive to 1 January 2001, ordered by
NLRC in the latter's Decision dated 9 October 2002. Whether Dusit Hotel is liable for the
double indemnity for violation of the wage order.
Ruling:
The Court rules in the negative. It must be noted that the hotel employees have a right to
their share in the service charges collected by Dusit Hotel, pursuant to Article 96 of the
Labor Code of 1991, to wit:
Article 96.Service charges. All service charges collected by hotels, restaurants and
similar establishments shall be distributed at the rate of eighty-five percent (85%) for all
covered employees and fifteen percent (15%) for management. The share of employees
shall be equally distributed among them. In case the service charge is abolished, the share
of the covered employees shall be considered integrated in their wages.

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

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

(GR No. 181972, August 25, 2009)
The general rule is that any decision rendered without jurisdiction is a total nullity and
may be struck down at any time, the party that asserts it must be in good faith and not
evidently availing thereof simply to thwart the execution of an award that has long
become final and executory.
Facts:
On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59)
others before the Regional Office of the Department of Labor and Employment (DOLE),
an inspection was conducted by DOLE officials at the premises of petitioner TCDC.
Several labor standard violations were noted, such as deficiencies in record keeping, noncompliance with various wage orders, non-payment of holiday pay, and underpayment of
13th month pay. The case was then set for summary hearing.
Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217
of the same Code, this instant case should be referred back to the National Labor
Relations Commission (NLRC) Sub-Arbitration Branch V, Naga City, on the ground that
the aggregate money claim of each worker exceeds the jurisdictional amount of this
Office [which] is (sic) Five Thousand Pesos Only (P5,000.00).
Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas
(Secretary Sto. Tomas), in an apparent reversal of Director Manalos endorsement, issued
another inspection authority on August 2, 2002 in the same case. Pursuant to such
authority, DOLE officials conducted another investigation of petitioners premises and
the same violations were discovered.
According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the
ground of lack of jurisdiction, which dismissal had attained finality; hence, all
proceedings before the DOLE regional office after July 25, 2002 were null and void for
want of jurisdiction.
aving the case in her office once more, Director Manalo finally issued an Order dated
January 29, 2003 denying petitioners motion for reconsideration for lack of merit
Issue: Whether or not the petitioner can still assail the January 29, 2003 Order of
Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has
attained finality and is already in the execution stage.
Ruling:
The petition lacks merit. Petitioner admits that it failed to appeal the January 29, 2003
Order within the period prescribed by law. It likewise admits that the case was already in
the execution process when it resorted to a belated appeal to the DOLE Secretary.

Petitioner, however, excuses itself from the effects of the finality of the Order by arguing
that it was allegedly issued without jurisdiction and may be assailed at any time.
Director Manalos initial endorsement of the case to the NLRC, on the mistaken opinion
that the claim was within the latters jurisdiction, did not oust or deprive her of
jurisdiction over the case. She therefore retained the jurisdiction to decide the case when
it was eventually returned to her office by the DOLE Secretary. Jurisdiction or authority
to try a certain case is conferred by law and not by the interested parties, much less by
one of them, and should be exercised precisely by the person in authority or body in
whose hands it has been placed by the law.
We also cannot accept petitioners theory that Director Manalos initial endorsement of
the case to the NLRC served as a dismissal of the case, which prevented her from
subsequently assuming jurisdiction over the same. The said endorsement was evidently
not meant as a final disposition of the case; it was a mere referral to another agency, the
NLRC, on the mistaken belief that jurisdiction was lodged with the latter. It cannot
preclude the regional director from subsequently deciding the case after the mistake was
rectified and the case was returned to her by the DOLE Secretary, particularly since it
was a labor case where procedural lapses may be disregarded in the interest of substantial
justice.
In view of our ruling above that the January 29, 2003 Order was rendered with
jurisdiction and can no longer be questioned (as it is final and executory), we can no
longer entertain petitioners half-hearted and unsubstantiated arguments that the said
Order was allegedly based on erroneous computation and included non-employees.
Likewise, we find no more need to address petitioners contention that the CA erred in
dismissing its petition on the ground of its belated compliance with the requirement of
certification against forum shopping.

Peoples Broadcasting (Bombo Radyo Phils) vs. Sec of DOLE et

al.
(GR No. 17952, March 6, 2012 Resolution on the main Decision of May 8, 2009)
Facts: Jandeleon Juezan (Juezan) filed a complaint before the DOLE against Bombo
Radyo Phils. (Bombo Radyo) for illegal deduction, non-payment of service incentive
leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of
benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth.
On the basis of the complaint, the DOLE conducted a plant level inspection. The Labor
Inspector in his report wrote, Management representative informed that (Juezan)
complainant is a drama talent hired on a per drama participation basis hence no
employer-employer relationship existed between them. As proof of this, management
presented photocopies of cash vouchers, billing statement, employments of specific
undertaking, etc. The management has no control of the talent if he ventures into another
contract with other broadcasting industries.
Issue: Whether or not the Secretary of Labor has the power to determine the existence of
an employer-employee relationship.
Ruling: Yes. No limitation in the law was placed upon the power of the DOLE to
determine the existence of an employer-employee relationship. No procedure was laid
down where the DOLE would only make a preliminary finding, that the power was
primarily held by the NLRC. The law did not say that the DOLE would first seek the
NLRCs determination of the existence of an employer-employee relationship, or that
should the existence of the employer-employee relationship be disputed, the DOLE
would refer the matter to the NLRC. The DOLE must have the power to determine
whether or not an employer-employee relationship exists, and from there to decide
whether or not to issue compliance orders in accordance with Art. 128(b) of the Labor
Code, as amended by RA 7730.
The DOLE, in determining the existence of an employer-employee relationship, has a
ready set of guidelines to follow, the same guide the courts themselves use. The elements
to determine the existence of an employment relationship are: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; (4)
the employers power to control the employees conduct. The use of this test is not solely
limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize the
same test, even in the course of inspection, making use of the same evidence that would
have been presented before the NLRC.
The determination of the existence of an employer-employee relationship by the DOLE
must be respected. The expanded visitorial and enforcement power of the DOLE granted
by RA 7730 would be rendered nugatory if the alleged employer could, by the simple
expedient of disputing the employer-employee relationship, force the referral of the
matter to the NLRC. The Court issued the declaration that at least a prima facie showing
of the absence of an employer-employee relationship be made to oust the DOLE of

jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is
the DOLE that will weigh it, to see if the same does successfully refute the existence of
an employer-employee relationship.
If the DOLE makes a finding that there is an existing employer-employee relationship, it
takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no
jurisdiction only if the employer-employee relationship has already been terminated, or it
appears, upon review, that no employer-employee relationship existed in the first place.
It must also be remembered that the power of the DOLE to determine the existence of an
employer-employee relationship need not necessarily result in an affirmative
finding. The DOLE may well make the determination that no employer-employee
relationship exists, thus divesting itself of jurisdiction over the case. It must not be
precluded from being able to reach its own conclusions, not by the parties, and certainly
not by this Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully
empowered to make a determination as to the existence of an employer-employee
relationship in the exercise of its visitorial and enforcement power, subject to judicial
review, not review by the NLRC.
To recapitulate, if a complaint is brought before the DOLE to give effect to the labor
standards provisions of the Labor Code or other labor legislation, and there is a finding
by the DOLE that there is an existing employer-employee relationship, the DOLE
exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no
employer-employee relationship, the jurisdiction is properly with the NLRC. If a
complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the
jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code,
which provides that the Labor Arbiter has original and exclusive jurisdiction over those
cases involving wages, rates of pay, hours of work, and other terms and conditions of
employment, if accompanied by a claim for reinstatement. If a complaint is filed with the
NLRC, and there is still an existing employer-employee relationship, the jurisdiction is
properly with the DOLE. The findings of the DOLE, however, may still be questioned
through a petition for certiorari under Rule 65 of the Rules of Court.

Superior Packaging Corp. vs. Balagsay et al.

(GR No. 178909, October 10, 2012)
Facts:
The petitioner engaged the services of Lancer to provide reliever services to its business, which
involves the manufacture and sale of commercial and industrial corrugated boxes. According to
petitioner, the respondents were engaged for four (4) months from February to June 1998 and
their tasks included loading, unloading and segregation of corrugated boxes.
Thereafter, respondents filed complaint against the petitioner and President, Cesar Luz (Luz), for
underpayment of wages, non-payment of premium pay for worked rest, overtime pay and nonpayment of salary. Upon receipt Department of Labor and Employment (DOLE) conducted an
inspection of the petitioners premises and found several violations, to wit:
(1) Non-presentation of payrolls and daily time records;
(2) Non-submission of annual report of safety organization;
(3) Medical and accident/illness reports;
(4) Non-registration of establishment under Rule 1020 of Occupational and Health
Standards; and
(5) No trained first aide.
Due to the petitioners failure to appear in the summary investigations conducted by the DOLE,
an Order was issued on June 18, 2003 finding in favor of the respondents and adopting the
computation of the claims submitted. Petitioner and Luz were ordered, among others, to pay
respondents their total claims in the amount of Eight Hundred Forty Thousand Four Hundred
Sixty-Three Pesos and 38/100 (P 840,463.38).
Petitioner filed a motion for reconsideration on the ground that respondents are not its employees
but of Lancer and that they pay Lancer in lump sum for the services rendered. The DOLE,
however, denied its motion because petitioner failed to support its claim that the respondents are
not its employees, and even assuming that they were employed by Lancer, the petitioner still
cannot escape liability as Section 13 of the Department Order No. 10, Series of 1997, makes a
principal jointly and severally liable with the contractor to contractual employees to the extent of
the work performed when the contractor fails to pay its employees wages.
Their appeal to the Secretary of DOLE was dismissed thus, l petitioner and Luz filed a petition
for certiorari with the Court of Appeals (CA).
On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the modification in
that Luz was absolved of any personal liability under the award.
Hence, this petition for review under Rule 45 of the Rules of Court.
Issue: Whether or not DOLE has authority to determine the existence of an employer-employee
relationship? Whether Superior Packaging Corporation may be held solidarily liable with Lancer
Staffing & Services Network, Inc. (Lancer) for respondents unpaid money claims?
Ruling:
The petition is bereft of merit.

The DOLE clearly acted within its authority when it determined the existence of an employeremployee relationship between the petitioner and respondents as it falls within the purview of its
visitorial and enforcement power under Article 128(b) of the Labor Code. The determination of
the existence of an employer-employee relationship by the DOLE must be respected.
With regard to the contention that there is no evidence to support the finding that the respondents
rendered overtime work and that they worked on their rest day, the resolution of this argument
requires a review of the factual findings and the evidence presented, Court said that it is not a trier
of facts and it applies with greater force in labor cases. Hence, where the factual findings of the
labor tribunals or agencies conform to, and are affirmed by, the CA, the same are accorded
respect and finality, and are binding to Supreme Court.
It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent
contractor but was engaged in "labor-only contracting"; hence, the petitioner was considered an
indirect employer of respondents and liable to the latter for their unpaid money claims.
At the time of the respondents employment in 1998, the applicable regulation was DOLE
Department Order No. 10, Series of 1997. Under said Department Order, labor-only contracting
was defined as follows:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an
employer shall be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which are
directly related to the principal business or operations of the employer in which workers are
habitually employed.
Labor-only contracting is prohibited and the person acting as contractor shall be considered
merely as an agent or intermediary of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.
According to the CA, the totality of the facts and surrounding circumstances of this case point to
such conclusion that Lancer was, indeed, a labor-only contractor. Aside from these is the
undisputed fact that the petitioner failed to produce any written service contract that might serve
as proof of its alleged agreement with Lancer.
Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there
is an employer-employee relationship between the principal and the employees of the supposed
contractor, and the "labor only" contractor is considered as a mere agent of the principal, the real
employer. The former becomes solidarily liable for all the rightful claims of the employees.
Petitioner therefore, being the principal employer and Lancer, being the labor-only contractor, are
solidarily liable for respondents unpaid money claims.

V. WAGE PROTECTION PROVISIONS & PROHIBITION REGARDING

WAGES
GAA vs. Court of Appeals
(GR. No. L-44169, December 3, 1985)
Facts:
Rosario Gaa is occupying a managerial/ supervisory position in El Grande Hotel. A
Notice of Garnishment upon El Grande Hotel, where petitioner was then employed,
garnishing her "salary, commission and/or remuneration." Petitioner then filed with the
Court of First Instance of Manila a motion to lift said garnishment on the ground that her
"salaries, commission and, or remuneration are exempted from execution under Article
1708 of the New Civil Code.
Issue: Whether or not the remuneration of Gaa are exempted from execution or
attachment pursuant to Art. 1708 of the Civil Code.
Ruling:
SC held that, We do not think that the legislature intended the exemption in Article 1708
of the New Civil Code to operate in favor of any but those who are laboring men or
women in the sense that their work is manual. Persons belonging to this class usually
look to the reward of a day's labor for immediate or present support, and such persons are
more in need of the exemption than any others. Petitioner Rosario A. Gaa is definitely not
within that class.

Nestle Phils. vs. NLRC

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

Five J Taxi vs. NLRC

(GR. No. 111474, August 22, 1994)
Facts:
Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the
petitioners as taxi drivers. Aside from the daily "boundary", they were also required to
pay P20.00 for car washing, and to further make a P15.00 deposit to answer for any
deficiency in their "boundary," for every actual working day.
Issue: Whether or not the car wash payment is an illegal deduction as contemplated in the
Labor Code.
Ruling:
SC held that the amount doled out was paid directly to the person who washed the unit,
thus we find nothing illegal in this practice, much more to consider the amount paid by
the driver as illegal deduction in the context of the law. Consequently, private respondents
are not entitled to the refund of the P20.00 car wash payments they made. It will be noted
that there was nothing to prevent private respondents from cleaning the taxi units
themselves, if they wanted to save their P20.00.Car washing after a tour of duty is a
practice in the taxi industry, and is, in fact, dictated by fair play.

Phil. Veterans Bank vs. NLRC

(GR. No. 130439, October 26, 1999)
Facts:
Due to financial losses, the Philippine Veterans Bank was placed in receivership pursuant
to the order of the Central Bank of the Philippines. Consequently, its employees,
including private respondent Dr. Jose Teodorico V. Molina, were terminated from work
and given their respective separation pay and other benefits. Dr. Molina filed a complaint
before NLRC. He demanded the implementation of the Wage Orders No. 1 and 2. Both
the Labor Arbiter and NLRC granted the petition of Molina.
Issue: Whether or not Molina is entitled to the increase of his salary pursuant to Wage
Orders No. 1 and 2.
Ruling:
SC held that Molinas salary is within the coverage of the said wage orders. W.O. 1
expressly states that employees having a monthly salary of not more than P3,802.08 are
entitled to receive the mandated wage increase. Undeniably, MOLINA was receiving a
monthly salary of P3,754.60. This fact alone leaves no doubt that he should benefit from
said wage order. On the other hand, W.O. 2 raised the ceiling for entitlement to the wage
increase. If MOLINA was covered by the earlier wage order, with more reason should the
later wage order apply to him.

Philippine Appliances Corp. vs. CA

(GR. No. 149434, June 3, 2004)
Facts:
Petitioner is a domestic corporation engaged in the business of manufacturing
refrigerators, freezers and washing machines. Respondent United Philacor Workers
Union-NAFLU is the duly elected collective bargaining representative of the rank-andfile employees of petitioner. During the collective bargaining negotiations between
petitioner and respondent union in 1997 (for the last two years of the collective
bargaining agreement covering the period of July 1, 1997 to August 31, 1999), petitioner
offered the amount of four thousand pesos (P4,000.00) to each employee as an "early
conclusion bonus". Upon conclusion of the CBA negotiations, petitioner accordingly
gave this early signing bonus. After the expiration of the CBA, both parties negotiated for
a new CBA. However, it resulted to a deadlock. The respondent union filed before the
NCMB a notice of strike due to bargaining deadlock. The Department of Labor and
Employment took cognizance of the case and ordered, among other things, herein
petitioner to award signing bonus. Petitioner argued that the award of the signing bonus
was patently erroneous since it was not part of the employees salaries or benefits or of
the collective bargaining agreement. It is not demandable or enforceable since it is in the
nature of an incentive.
Issue: Whether or not the award of a signing bonus by the Secretary of Labor is correct.
Ruling: SC held that the signing bonus must not be awarded.
The CBA negotiation between petitioner and respondent union failed notwithstanding the
intervention of the NCMB. Respondent union went on strike for eleven days and blocked
the ingress to and egress from petitioners two work plants. The labor dispute had to be
referred to the Secretary of Labor and Employment because neither of the parties was
willing to compromise their respective positions regarding the four remaining items,
which stood unresolved. While we do not fault any one party for the failure of the
negotiations, it is apparent that there was no more goodwill between the parties and that
the CBA was clearly not signed through their mutual efforts alone. Hence, the payment of
the signing bonus is no longer justified and to order such payment would be unfair and
unreasonable for petitioner.
Furthermore, we have consistently ruled that a bonus is not a demandable and
enforceable obligation.

Agabon vs NLRC
(GR 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 Virgilio Agabon and Jenny
Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they
were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims and on December
28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private
respondent to pay the monetary claims.
Issue: WON respondents dismissal is illegal and if not, entitles them benefits.
Ruling: The dismissal is legal and entitles them of payment of benefits.
Dismissals based on just causes contemplate acts or omissions attributable to the employee while
dismissals based on authorized causes involve grounds under the Labor Code, which allow the
employer to terminate employees. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal, reinstatement and full back
wages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was
unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give
the employee two written notices and a hearing or opportunity to be heard if requested by the
employee before terminating the employment: a notice specifying the grounds for which dismissal is
sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of
the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and
284, the employer must give the employee and the Department of Labor and Employment written
notices 30 days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause
under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons
under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause
but due process was observed; (3) the dismissal is without just or authorized cause and there was no
due process; and (4) the dismissal is for just or authorized cause but due process was not observed.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be
cured, it should not invalidate the dismissal. However, the employer should be held liable for noncompliance with the procedural requirements of due process. The present case squarely falls under the
fourth situation. The dismissal should be upheld because it was established that the petitioners
abandoned their jobs to work for another company. Private respondent, however, did not follow the
notice requirements and instead argued that sending notices to the last known addresses would have
been useless because they did not reside there anymore. Unfortunately for the private respondent, this
is not a valid excuse because the law mandates the twin notice requirements to the employees last
known address. Thus, it should be held liable for non-compliance with the procedural requirements of
due process.
The Court ruled that respondent is liable for petitioners holiday pay, service incentive leave pay and
13th month pay without deductions. The evident intention of Presidential Decree No. 851 is to grant an
additional income in the form of the 13th month pay to employees not already receiving the same so as
to further protect the level of real wages from the ravages of world-wide inflation. Clearly, as
additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the
Labor Code.

American Wire & Cable Daily Rated Employees vs. American Wire
(GR No. 155059, April 29, 2005)
Facts:
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires
and cables. There are two unions in this company, the American Wire and Cable
Monthly-Rated Employees Union and the American Wire and Cable Daily-Rated
Employees Union.
On 16 February 2001, an original action was filed before the NCMB of the Department
of Labor and Employment by the two unions for voluntary arbitration. They alleged that
the private respondent, without valid cause, suddenly and unilaterally withdrew and
denied certain benefits and entitlements which they have long enjoyed. These are Service
Award, 35% premium pay of an employees basic pay for the work rendered during Holy
Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29, Christmas
Party and Promotional Increase.
Issue: WON the respondent company violated Article 100 of the Labor Code.
Ruling: The company is not guilty of violating Art. 100 of the Labor Code.
Article 100 of the Labor Code provides:
PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF
BENEFITS. Nothing in this Book shall be construed to eliminate or in any
way diminish supplements, or other employee benefits being enjoyed at the
time of promulgation of this Code.
The certain benefits and entitlements are considered bonuses. A bonus can only be
enforceable and demandable if it has ripened into a company practice. It must also be
expressly agreed by the employer and employee or it must be on a fixed amount.
The assailed benefits were never subjects of any agreement between the union and the
company. It was never incorporated in the CBA. Since all these benefits are in the form
of bonuses, it is neither enforceable nor demandable.

Honda Philippines Vs. Samahan Ng Malayang Manggagawa Sa Honda

(GR No. 145561, June 15, 2005)
Facts:
Petitioner Honda and Respondent union forged a Collective Bargaining Agreement which
averred that Honda shall maintain the present practice in the implementation of the 13 th
and 14th month pay. Such CBA is effective until 2000. In the later part of 1998, the parties
started re-negotiations.
However, when the talk between the parties did not go well, respondent union filed a
Notice to Strike on the ground of bargaining deadlock. Honda then filed a notice of
Lockout in which the DOLE ordered the party to cease and desist from committing acts.
The union filed a second Notice of Strike on ground of unfair labor, in which they went
into pocketing of the premises of Honda. DOLE then assumed jurisdiction and subjected
the issue to the NLRC for compulsory arbitration for which the employees were ordered
to return to work.
The management of Honda, on 22 Nov. 1999, then issued a memorandum announcing its
new computation of the 13th and 14th month pay to be granted to employees whereby the
31-day strike shall be considered unworked days for purposes of computing said benefits.
Thus, the union opposed the pro-rated computation of the bonuses and the matter was
brought before the Grievance Machinery. The Labor Arbiter ordered Honda to compute
each provision in full month basic pay. Ca affirmed the decision of the labor arbiter.
Issue: WON the pro-rated computation of the 13th month pay and the other bonuses in
question is valid and lawful
Ruling: Such pro-rated computation is invalid.
It is well noted that the CBA refers to the negotiated contract between a legitimate labor
organization and the employer. It is the law between the parties and compliance therewith
is mandated by express policy of the law.
Honda did not adduce evidence to show that the 13th month, 14th month and financial
assistance benefits were previously subject to pro-rating. Thus, such was an implicit
acceptance that prior to the strike, a full month basic pay computation was the present
practice intended to be maintained in the CBA.
Lastly, to allow pro-ration of the 13 th month pay is to undermine the wisdom behind the
law and the mandate that the workingmans welfare should be the primordial and
paramount consideration. DENIED.

Producers Bank vs. NLRC

(335 SCRA 506)
Facts:
Petitioner was placed by Central Bank of the Philippines (Bangko Sentral ng Pilipinas)
under a conservator for the purpose of protecting its assets. When the respondents ought
to implement the CBA (Sec. 1, Art. 11) regarding the retirement plan and pertaining to
uniform allowance, the acting conservator of the petition expressed objection resulting an
impasse between the petitioner bank and respondent union. The deadlock continued for at
least six months. The private respondent, to resolve the issue filed a case against
petitioner for unfair labor practice and flagrant violation of the CBA.
The Labor Arbiter dismissed the petition. NLRC reversed the findings and ordered the
implementation of the CBA.
Issue: WON the employees who have retired have no personality to file an action since
there is no longer an employer-employee relationship.
Ruling: Employees who have retired still have the personality to file a complaint.
Retirement results from a voluntary agreement between the employer and the employee
whereby the latter after reaching a certain age agrees to sever his employment with the
former. The very essence of retirement is the termination of employer-employee
relationship.
Retirement of the employee does not in itself affect his employment status especially
when it involves all rights and benefits due to him, since these must be protected as
though there had been no interruption of service. It must be borne in mind that the
retirement scheme was part of the employment package and the benefits to be derived
therefrom constituted as it were a continuing consideration of services rendered as well as
an effective inducement foe remaining with the corporation. It is intended to help the
employee enjoy the remaining years of his life.
When the retired employees were requesting that their retirement benefits be granted,
they were not pleading for generosity but merely demanding that their rights, embodied
in the CBA, be recognized. When an employee has retired but his benefits under the law
or CBA have not yet been given, he still retains, for the purpose of prosecuting his claims,
the status of an employee entitled to the protection of the Labor Code, one of which is the
protection of the labor union.

Jardin vs. NLRC

(GR No. 119268, February 23, 2000)
Facts: Angel Jardin, et. Al. are drivers of Philjama International Inc., a domestic
corporation engaged in the operation of Goodman Taxi. Jardin, et. al. drive Philjamas
taxicabs every other day on a 24-hour work schedule under the boundary system.
Philjama admitted that a deduction of Php 30.00 is regularly against Jardin et. al.s daily
earnings. Such fee is supposedly for the washing of the taxi units.
Believing that the imposed deductions of Php 30.00 on their daily wages is illegal, Jardin
et. al formed a labor union to protect their rights and interests. Learning about the plans
of Jardin et. al, Philjama terminated them from service. Jardin et. al believed that they
were dismissed because of the formed labor union in which they are leaders and active
members. Because of this, Jardin et. al. filed a complaint against Philjama for unfair labor
practice, illegal dismissal and illegal deduction of washing fees.
The labor arbiter dismissed the case for lack of merit. On appeal, the NLRC reversed the
labor arbiters judgment declaring that the dismissal was illegal and ordered that Jardin et.
al. be reinstated. Philjama filed its motion for reconsideration. On its second motion for
reconsideration, NLRC then reversed its prior decision saying that there exists no
employee-employer relationship between the parties; thus, it has no jurisdiction to hear
and decide the case. It held that the relationship between the parties is that of a leasehold
which is covered by the Civil Code rather than the Labor Code.
Aggrieved, Jardin et. al sought for reconsideration. Such was denied by the NLRC.
Consequently, they raised the case to the Supreme Court.
Issues: a.) Whether NLRC has jurisdiction to entertain Philjamas second motion for
reconsideration which is admittedly a pleading prohibited under NLRC rules.
b.) Whether there exists an employer-employee relationship.
Ruling: NLRC committed grave abuse of discretion for entertaining Philjamas second
motion for reconsideration. As provided for under Rule 7, Sec. 14 of its New Rules of
Procedure, only one motion for reconsideration from the same party shall be entertained
by the NLRC. When Philjama filed its first motion for reconsideration, which was
denied, the NLRC already had ample time to rectify errors/mistakes it may have
committed before recourse to courts may be had. Thus, when Philjama filed its second
motion for reconsideration, public respondent should have forthwith denied it.
There exists an employer-employee relationship between Jardin et. al and Philjama
International, Inc.
SC said, to quote:
In a number of cases decided by this Court, we ruled that the relationship between
jeepney owners/operators on one hand and jeepney drivers on the other under the
boundary system is that of employer-employee and not of lessor-lessee.

We explained that in the lease of chattels, the lessor loses complete control over the
chattel leased although the lessee cannot be reckless in the use thereof, otherwise he
would be responsible for the damages to the lessor. In the case of jeepney
owners/operators and jeepney drivers, the former exercise supervision and control over
the latter. The management of the business is in the owners hands. The owner as holder
of the certificate of public convenience must see to it that the driver follows the route
prescribed by the franchising authority and the rules promulgated as regards its operation.
Now, the fact that the drivers do not receive fixed wages but get only that in excess of the
so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the
relationship between them from that of employer and employee.
We have applied by analogy the abovestated doctrine to the relationships between bus
owner/operator and bus conductor, auto-calesa owner/operator and driver, and recently
between taxi owners/operators and taxi drivers in the case of Martinez vs. NLRC, 272
SCRA 793, 800 (1997) Hence, petitioners are undoubtedly employees of private
respondent because as taxi drivers they perform activities which are usually necessary or
desirable in the usual business or trade of their employer.
The deduction of Php 30.00 that is supposedly for the washing of taxi units is not illegal
in the context of the law. After a tour of duty, it is incumbent upon the driver to restore
the unit he has driven to the same clean condition when he took it. Car washing after
tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair play. --Hence, Jardin et.al (drivers) are not entitled to reimbursement of washing charges.

Manila Jockeys Club Employees Labor Union vs. Manila Jockey Club
(GR. No. 167601, March 7, 2007)
Facts: Manila Jockey Club, Inc., a corporation with a legislative franchise to conduct,
operate and maintain horse races, entered into a Collective Bargaining Agreement (CBA)
with Manila Jockey Club Employees Labor Union-PTGWO. Under Section 1 Article IV
of their CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon
and from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday. All work
performed in excess of seven (7) hours work schedule and on days not included within
the work week shall be considered overtime and paid as such with exception to those
monthly compensation which includes work performed during Saturday, Sunday, and
Holiday when races are held at the Club. The CBA likewise reserved in management
prerogatives including the determination of the work schedule. An inter-office
memorandum was later issued declaring that the hours of work of regular monthly-paid
employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are held, that is, every
Tuesday and Thursday. The memorandum, however, sustained the 9:00 a.m. to 5:00 p.m.
schedule for non-race days.
Before the voluntary arbitrators of the National Conciliation and Mediation Board,
petitioners questioned the memorandum as violative of the prohibition against nondiminution of wages and benefits guaranteed the CBA which specified the work schedule
of respondent's employees to be from 9:00 a.m. to 5:00 p.m. They claimed that as a result
of the memorandum, the employees are precluded from rendering their usual overtime
work from 5:00 p.m. to 9:00 p.m.
Issue: Whether or not the change in the work schedule violated Article 100 of the Labor
Code on the non-diminution of wages and benefits guaranteed under the parties CBA.
Ruling: No. It was evident that the change in work schedule was justified, it being a
management prerogative. Respondent, as employer, cited the change in the program of
horse races as reason for the adjustment of the employees work schedule. It rationalized
that when the CBA was signed, the horse races started at 10:00 a.m. When the races were
moved to 2:00 p.m., there was no other choice for management but to change the
employees' work schedule as there was no work to be done in the morning. It is true that
Section 1, Article IV of the CBA provides for a 7-hour work schedule from 9:00 a.m. to
12:00 noon and from 1:00 p.m. to 5:00 p.m. from Mondays to Saturdays. However,
Section 2, Article XI expressly reserves on respondent the prerogative to change existing
methods or facilities to change the schedules of work.
Moreover, Manila Jockey Club was not obliged to allow all its employees to render
overtime work every day for the whole year, but only those employees whose services
were needed after their regular working hours and only upon the instructions of
management. The overtime pay was not given to each employee consistently, deliberately
and unconditionally, but as a compensation for additional services rendered. Thus,
overtime pay does not fall within the definition of benefits under Article 100 of the Labor
Code on prohibition against elimination or diminution of benefits.

San Miguel Corp., vs Layoc Jr. Et al.

(GR No. 149640, October 19, 2007)
Facts: Respondents were among the "Supervisory Security Guards" of the Beer Division of San
Miguel Corporation. They started working as guards with the petitioner San Miguel Corporation
assigned to the Beer Division on different dates until such time that they were promoted as
supervising security guards. From the commencement of their employment, the private
respondents were required to punch their time cards for purposes of determining the time they
would come in and out of the company's work place. Corollary, the private respondents were
availing the benefits for overtime, holiday and night premium duty through time card punching.
However, in the early 1990's, the San Miguel Corporation embarked on a Decentralization
Program aimed at enabling the separate divisions of the San Miguel Corporation to pursue a more
efficient and effective management of their respective operations.
As a result of the Decentralization Program, the Beer Division of the San Miguel Corporation
implemented on January 1, 1993 a "no time card policy" whereby the Supervisory I and II
composing of the supervising security guards of the Beer Division were no longer required to
punch their time cards. Consequently, on January 16, 1993, without prior consultation with the
private respondents, the time cards were ordered confiscated and the latter were no longer
allowed to render overtime work. However, in lieu of the overtime pay and the premium pay, the
personnel of the Beer Division of the petitioner San Miguel Corporation affected by the "No Time
Card Policy" were given a 10% across-the-board increase on their basic pay while the supervisors
who were assigned in the night shift (6:00 p.m. to 6:00 a.m.) were given night shift allowance
ranging from P2,000.00 to P2,500.00 a month. Hence, this complaint filed for unfair labor
practice, violation of Article 100 of the Labor Code of the Philippines, and violation of the equal
protection clause and due process of law in relation to paragraphs 6 and 8 of Article 32 of the
New Civil Code of the Philippines.
Issue: Whether or not the circumstances in the present case constitute an exception to the rule
that supervisory employees are not entitled to overtime pay.
Ruling: Article 82 of the Labor Code states that the provisions of the Labor Code on working
conditions and rest periods shall not apply to managerial employees.
The other provisions in the Title include normal hours of work (Article 83), hours worked (Article
84), meal periods (Article 85), night shift differential (Article 86), overtime work (Article 87),
undertime not offset by overtime (Article 88), emergency overtime work (Article 89), and
computation of additional compensation (Article 90). It is thus clear that, generally, managerial
employees such as respondents are not entitled to overtime pay for services rendered in excess of
eight hours a day. Respondents failed to show that the circumstances of the present case constitute
an exception to this general rule.
Aside from their allegations, respondents were not able to present anything to prove that
petitioners were obliged to permit respondents to render overtime work and give them the
corresponding overtime pay. Even if petitioners did not institute a "no time card policy,"
respondents could not demand overtime pay from petitioners if respondents did not render
overtime work. The requirement of rendering additional service differentiates overtime pay from
benefits such as thirteenth month pay or yearly merit increase. These benefits do not require any
additional service from their beneficiaries. Thus, overtime pay does not fall within the definition
of benefits under Article 100 of the Labor Code.

San Miguel Corp vs. Pontillas

(GR No. 155178, May 7, 2008)
Facts: On 24 October 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas
(respondent) as a daily wage company guard. In 1984, respondent became a monthly-paid
employee, which entitled him to yearly increases in salary. On 19 October 1993, respondent filed
an action for recovery of damages due to discrimination under Article 100 of the Labor Code of
the Philippines (Labor Code), as amended, as well as for recovery of salary differential and back
wages, against petitioner. Respondent questioned the rate of salary increase given him by
petitioner.
On 6 December 1993, Ricardo F. Elizagaque (Elizagaque), petitioners Vice President and VisMin
Operations Center Manager, issued a Memorandum ordering, among others, the transfer of
responsibility of the Oro Verde Warehouse to the newly-organized VisMin Logistics Operations
effective 1 January 1994. Respondent continued to report at Oro Verde Warehouse. He alleged
that he was not properly notified of the transfer and that he did not receive any written order from
Capt. Fortich, his immediate superior.
In a letter dated 28 February 1994, petitioner informed respondent that an administrative
investigation. In a letter dated 7 April 1994, petitioner informed respondent of its decision to
terminate him for violating company rules and regulations, particularly for Insubordination or
Willful Disobedience in Carrying Out Reasonable Instructions of his superior.
Issue: WON respondents dismissal from employment is legal.
Ruling: Respondent was dismissed for a just cause.
An employer may terminate an employment for serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative in connection with his
work. Willful disobedience requires the concurrence of two elements: (1) the employees assailed
conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2)
the order violated must have been reasonable, lawful, made known to the employee, and must
pertain to the duties which he had been engaged to discharge. The records show that respondent
was not singled out for the transfer. Respondents transfer was the effect of the integration of
the functions of the Mandaue Brewery Materials Management and the Physical Distribution
group into a unified logistics organization, the VisMin Logistics Operations.
Moreover, the employer exercises the prerogative to transfer an employee for valid reasons and
according to the requirements of its business, provided the transfer does not result in demotion in
rank or diminution of the employees salary, benefits, and other privileges. In this case, we found
that the order of transfer was reasonable and lawful considering the integration of Oro Verde
Warehouse with VisMin Logistics Operations. Respondent was properly informed of the transfer
but he refused to receive the notices on the pretext that he was wary because of his pending case
against petitioner. Respondent failed to prove that petitioner was acting in bad faith in effecting
the transfer. There was no demotion involved, or even a diminution of his salary, benefits, and
other privileges. Respondents persistent refusal to obey petitioners lawful order amounts to
willful disobedience under Article 282 of the Labor Code.

Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco
Metal-NAFLU
(GR 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
December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of
three union members in amounts proportional to the service they actually rendered in a
year, which is less than a full twelve (12) months. Respondent protested the prorated
scheme, claiming that on several occasions petitioner did not prorate the payment of the
same benefits to seven (7) employees who had not served for the full 12 months.
According to respondent, the prorated payment violates the rule against diminution of
benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the
National Conciliation and Mediation Board (NCMB). The parties submitted the case for
voluntary arbitration.
The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that
the giving of the contested benefits in full, irrespective of the actual service rendered
within one year has not ripened into a practice. He also interpreted the phrase "for each
year of service" found in the pertinent CBA provisions to mean that an employee must
have rendered one year of service in order to be entitled to the full benefits provided in
the CBA.
Respondent filed a Petition for Review before the Court of Appeals. The appellate court
found that petitioner had an existing voluntary practice of paying the aforesaid benefits in
full to its employees; thereby rejecting the claim that petitioner erred in paying full
benefits to its seven employees. The appellate court noted that aside from the affidavit of
petitioner's officer, it has not presented any evidence in support of its position that it has
no voluntary practice of granting the contested benefits in full and without regard to the
service actually rendered within the year.
Issues: 1. Whether or not the petitioners should grant 13th month pay, bonus and leave
encashment in full regardless of actual service rendered.
2. Whether or not the prorated payment of the said benefits constitutes diminution
of benefits under Article 100 of the Labor Code.
Ruling:
On the first issue, according to petitioner, there is a one-year cutoff in the entitlement to
the benefits provided in the CBA, which is evident from the wording of its pertinent
provisions as well as of the existing law. There is no doubt that in order to be entitled to
the full monetization of sixteen (16) days of vacation and sick leave, one must have
rendered at least one year of service. The clear wording of the provisions does not allow
any other interpretation. Anent the 13th month pay and bonus, the CBA provisions did
not give any meaning different from that given by the law, thus it should be computed at

1/12 of the total compensation, which an employee receives for the whole calendar year.
The bonus is also equivalent to the amount of the 13th month pay given, or in proportion
to the actual service rendered by an employee within the year.
On the second issue, it is a settled rule that any benefit and supplement being enjoyed by
employees cannot be reduced, diminished, discontinued or eliminated by the employer.
The principle of non-diminution of benefits is founded on the Constitutional mandate to
"protect the rights of workers and promote their welfare," and "to afford labor full
protection." Said mandate in turn is the basis of Article 4 of the Labor Code which states
that "all doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations shall be rendered in favor of labor."
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of
freely, voluntarily and consistently granting full benefits to its employees regardless of
the length of service rendered.
Petitioner claims that its full payment of benefits regardless of the length of service to the
company does not constitute voluntary employer practice. It points out that the payments
had been erroneously made and they occurred in isolated cases in the years 1992, 1993,
1994, 1999, 2002 and 2003. According to petitioner, it was only in 2003 that the
accounting department discovered the error. Petitioner further argues that for a grant of a
benefit to be considered a practice, it should have been practiced over a long period of
time and must be shown to be consistent, deliberate and intentional, which is not what
happened in this case.
True, there were only a total of seven employees who benefited from such a practice, but
it was an established practice nonetheless. Jurisprudence has not laid down any rule
specifying a minimum number of years within which a company practice must be
exercised in order to constitute voluntary company practice. Petitioner cannot shirk away
from its responsibility by merely claiming that it was a mistake or an error, supported
only by an affidavit of its manufacturing group.
Petition denied.

Aguanza vs. Asian Terminal Inc., et al.

(GR No. 163505, Aug. 14, 2009)
Facts
: Petitioner GualbertoAguanza was employed with respondent company Asian Terminal, Inc.
from April 15, 1989 to October 1997. He was initially employed as Derickman or Crane Operator
and was assigned as such aboard Bismark IV, a floating crane barge owned by Asian Terminals,
Inc. based at the port of Manila. Aside from his basic pay, he received meal allowance, fixed
overtime pay and out-of port allowance [when the barge is assigned outside Metro Manila].
Sometime in September 1997, the Bismark IV, together with its crew, was temporarily assigned at
the Mariveles Grains Terminal in Mariveles, Bataan. Then, on October 20, 1997, respondent
James Keith issued a memo to the crew of Bismark IV stating that the barge had been
permanently transferred to the Mariveles Grains terminal beginning October 1, 1997 and because
of that, its crew would no longer be entitled to out of port benefits of 16 hours overtime and P200
a day out-of port allowance. Due to the said development, Aguanza questioned the diminution of
his benefits. Aguanza insisted on reporting to work in Manila although his barge, Bismark IV, and
its other crew were already permanently based in Mariveles, Bataan. Aguanza was not allowed to
time in in Manila because his work was in Mariveles, Bataan. He therefore was not able to render
his services, and was accordingly not paid for doing nothing. Because of private respondents
refusal to give him any work assignment and pay his salary, Aguanza filed a complaint for illegal
dismissal against respondents.
Issue: Was Aguanza constructively dismissed?
Ruling:
No. The transfer of operations is a valid exercise of management prerogative. Aguanza asserts
that his transfer constituted constructive dismissal, while ATI asserts that Aguanzas transfer was
a valid exercise of management prerogative. ATIs transfer of Bismark IVs base from Manila to
Bataan was, contrary to Aguanzas assertions, a valid exercise of management prerogative. The
transfer of employees has been traditionally among the acts identified as a management
prerogative subject only to limitations found in law, collective bargaining agreement, and general
principles of fair play and justice. Even as the law is solicitous of the welfare of employees, it
must also protect the right of an employer to exercise what are clearly management prerogatives.
The free will of management to conduct its own business affairs to achieve its purpose cannot be
denied. On the other hand, the transfer of an employee may constitute constructive dismissal
"when continued employment is rendered impossible, unreasonable or unlikely; when there is a
demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to the employee." Aguanzas situation is not within
the purview of this discussion.
When ATI transferred Bismark IVs operations to Bataan, ATI offered Aguanza similar terms:
basic pay for 40 hours of work from Monday to Friday, overtime pay for work done in excess of
eight hours per day, overtime pay for work done on Saturdays and Sundays, no additional
allowance and no transportation for working in Bataan. The circumstances of the case made no
mention of the salary structure in case Bismark IV being assigned work outside of Bataan;
however, we surmise that it would not be any different from the salary structure applied for work
done out-of-port. We, thus, agree with the NLRC and the appellate court when they stated that

the fixed overtime of 16 hours, out-of-port allowance and meal allowance previously granted to
Aguanza were merely supplements or employment benefits given on condition that Aguanzas
assignment was out-of-port. The fixed overtime and allowances were not part of Aguanzas basic
salary. Aguanzas basic salary was not reduced; hence, there was no violation of the rule against
diminution of pay.

Genesis Transport Service Inc et al., vs. Unyon ng Malayang Manggagawa ng Genesis
Transport et al.,
(GR No. 182114, April 5, 2010)
Facts: Respondent Juan Taroy was hired by petitioner Genesis Transport as driver on commission
basis at 9% of the gross revenue per trip. He, after due notice and hearing, terminated from
employment after an accident on April 20, 2002 where he was deemed to have been driving
recklessly. He then filed a complaint for illegal dismissal and payment of service incentive leave
pay, claiming that he was singled out for termination because of his union activities, other drivers
who had met accidents not having been dismissed from employment. He later amended his
complaint to implead his co-respondent union and add as grounds unfair labor practice and
reimbursement of illegal deductions on tollgate fees, and payment of service incentive leave pay.
Upon appeal, with respect to Taroys claim for refund, the Labor Arbiter ruled in his favor for if,
as contended by Genesis Transport, tollgate fees form part of overhead expense, why were not
expenses for fuel and maintenance also charged to overhead expense. The Labor Arbiter thus
concluded that it would appear that the tollgate fees are deducted from the gross revenues and
not from the salaries of drivers and conductors, but certainly the deduction thereof diminishes the
take home pay of the employees.
Issue: Whether the tollgate fee deductions which resulted to an underpayment given to Taroy is
illegal?
Ruling: The deduction is considered illegal.
The amounts representing tollgate fees were deducted from gross revenues and not directly from
Taroys commissions, the labor tribunal and the appellate court correctly held that the withholding
of those amounts reduced the amount from which Taroys 9% commission would be computed.
Such a computation not only marks a change in the method of payment of wages, resulting in a
diminution of Taroys wages in violation of Article 113 vis--vis Article 100 of the Labor Code,
as amended. It need not be underlined that without Taroys written consent or authorization, the
deduction is considered illegal.
Besides, the invocation of the rule on company practice is generally used with respect to the
grant of additional benefits to employees, not on issues involving diminution of ben efits.

Central Azucarera De Tarlac vs. Central Azucarerade Tarlac Labor Union-NLU

(GR No. 188949, July 26, 2010)
Facts:
Petitioner is a domestic corporation engaged in the business of sugar manufacturing,
while respondent is a legitimate labor organization which serves as the exclusive
bargaining representative of petitioners rank-and-file employees. The controversy stems
from the interpretation of the term basic pay, essential in the computation of the 13thmonth pay.
The facts of this case are not in dispute. In compliance with Presidential Decree (P.D.)
No. 851, petitioner granted its employees the mandatory thirteenth (13th) - month pay
since 1975. The formula used by petitioner in computing the 13th-month pay was: Total
Basic Annual Salary divided by twelve (12). Included in petitioners computation of the
Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours
overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and
sick leaves for each year. Throughout the years, petitioner used this computation until
2006.
On November 6, 2004, respondent staged a strike. During the pendency of the strike,
petitioner declared a temporary cessation of operations.
The suspension of operation was lifted on June 2006, but the rank-and-file employees
were allowed to report for work on a fifteen (15) day-per-month rotation basis that lasted
until September 2006. In December 2006, petitioner gave the employees their 13 th-month
pay based on the employees total earnings during the year divided by 12.
Respondent objected to this computation. It averred that petitioner did not adhere to the
usual computation of the 13th-month pay. NLRC ruled in favor of the respondent and CA
reversed it ruling and ruled in favor of the Unyon. Hence the petition.
Issue: Whether or not Azucarera did not adhere to the proper computation of the 13thmonth pay.
Ruling:
The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an
additional income based on wage but not part of the wage. It is equivalent to one-twelfth
(1/12) of the total basic salary earned by an employee within a calendar year. All rankand-file employees, regardless of their designation or employment status and irrespective
of the method by which their wages are paid, are entitled to this benefit, provided that
they have worked for at least one month during the calendar year. If the employee worked
for only a portion of the year, the 13th-month pay is computed pro rata.

On November 16, 1987, the Revised Guidelines on the Implementation of the 13th-Month
Pay Law was issued. Significantly, under this Revised Guidelines, it was specifically
stated that the minimum 13th-month pay required by law shall not be less than one-twelfth
(1/12) of the total basic salary earned by an employee within a calendar year.
Furthermore, the term basic salary of an employee for the purpose of computing the
13th-month pay was interpreted to include all remuneration or earnings paid by the
employer for services rendered, but does not include allowances and monetary benefits
which are not integrated as part of the regular or basic salary, such as the cash equivalent
of unused vacation and sick leave credits, overtime, premium, night differential and
holiday pay, and cost-of-living allowances. However, these salary-related benefits should
be included as part of the basic salary in the computation of the 13 th-month pay if, by
individual or collective agreement, company practice or policy, the same are treated as
part of the basic salary of the employees.
Based on the foregoing, it is clear that there could have no erroneous interpretation or
application of what is included in the term basic salary for purposes of computing the
13th-month pay of employees. From the inception of P.D. No. 851 on December 16, 1975,
clear-cut administrative guidelines have been issued to insure uniformity in the
interpretation, application, and enforcement of the provisions of P.D. No. 851 and
its implementing regulations.
Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates
that benefits given to employees cannot be taken back or reduced unilaterally by the
employer because the benefit has become part of the employment contract, written or
unwritten. The rule against diminution of benefits applies if it is shown that the grant of
the benefit is based on an express policy or has ripened into a practice over a long period
of time and that the practice is consistent and deliberate. Nevertheless, the rule will not
apply if the practice is due to error in the construction or application of a doubtful or
difficult question of law. But even in cases of error, it should be shown that the correction
is done soon after discovery of the error.
This act of petitioner in changing the formula at this time cannot be sanctioned, as it
indicates a badge of bad faith.

SHS Perforated Materials, Inc. et al., vs. Diaz

(GR No. 185814, Oct. 13, 2010)
Facts: Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized
and existing under the laws of the Republic of the Philippines and registered with the
Philippine Economic Zone Authority. Petitioner Winfried Hartmannshenn
(Hartmannshenn), a German national, is its president. Thus, the wages of SHS employees
are paid out by ECCP, through its Accounting Services Department headed by Juliet
Taguiang (Taguiang). Manuel F. Diaz (respondent) was hired by petitioner SHS as
Manager for Business Development on probationary status
During respondents employment, Hartmannshenn was often abroad and, because of
business exigencies, his instructions to respondent were either sent by electronic mail or
relayed through telephone or mobile phone. During meetings with the respondent,
Hartmannshenn expressed his dissatisfaction over respondents poor performance.
respondent acknowledged his poor performance and offered to resign from the company.
On November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on
November 22 and 24, 2005, notified respondent of his arrival through electronic mail
messages and advised him to get in touch with him. Respondent claimed that he never
received the messages. Hartmannshenn instructed Taguiang not to release respondents
salary.
Respondent served on SHS a demand letter and a resignation letter. It is precisely
because of illegal and unfair labor practices such as these that I offer my resignation with
neither regret nor remorse.
Appealing for the release of his salary respondent filed a Complaint against the
petitioners for illegal dismissal; non-payment of salaries/wages and 13th month pay with
prayer for reinstatement and full backwages; exemplary damages, and attorneys fees,
costs of suit, and legal interest.
Issue: Whether or not the temporary withholding of respondents salary/wages by
petitioners was a valid exercise of management prerogative.
Ruling: Withholding respondents salary was not a valid exercise of management
prerogative.
Management prerogative refers to the right of an employer to regulate all aspects of
employment, such as the freedom to prescribe work assignments, working methods,
processes to be followed, regulation regarding transfer of employees, supervision of their
work, lay-off and discipline, and dismissal and recall of work. Although management
prerogative refers to the right to regulate all aspects of employment, it cannot be
understood to include the right to temporarily withhold salary/wages without the consent
of the employee.
Any withholding of an employees wages by an employer may only be allowed in the

form of wage deductions under the circumstances provided in Article 113 of the Labor
Code, as set forth below:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and
the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by the employer or authorized in writing by the individual
worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain
by an employer becomes so unbearable on the part of the employee that it would
foreclose any choice by him except to forego his continued employment. It exists where
there is cessation of work because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in
pay.
In this case, the withholding of respondents salary does not fall under any of the
circumstances provided under Article 113. Neither was it established with certainty that
respondent did not work from November 16 to November 30, 2005. Hence, the Court
agrees with the LA and the CA that the unlawful withholding of respondents salary
amounts to constructive dismissal.

Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo

(G.R. No. 188169, November 28, 2011)
Facts:
Respondents were employed as goldsmiths by the petitioner Nia Jewelry Manufacturing
of Metal Arts, Inc. There were incidents of theft involving goldsmiths in Nia Jewelry's
employ:
The petitioner imposed a policy for goldsmiths, which were intended to answer for any
loss or damage which Nia Jewelry may sustain by reason of the goldsmiths' fault or
negligence in handling the gold entrusted to them, requiring them to post cash bonds or
deposits in varying amounts but in no case exceeding 15% of the latter's salaries per
week.
The petitioner alleged that the goldsmiths were given the option not to post deposits, but
to sign authorizations allowing the former to deduct from the latter's salaries amounts not
exceeding 15% of their take home pay should it be found that they lost the gold entrusted
to them. The deposits shall be returned upon completion of the goldsmiths' work and after
an accounting of the gold received.
The respondents claimed otherwise insisting that petitioner left the goldsmiths with no
option but to post the deposits. The next day after the policy was imposed, the
respondents no longer reported for work and signified their defiance against the new
policy which at that point had not even been implemented yet. The respondents alleged
that they were constructively dismissed by the petitioner as their continued employments
were made dependent on their readiness to post the required deposits. The respondents
then filed a complaint for illegal dismissal and for the award of separation pay against the
petitioner, and later filed their amended complaint which excluded their earlier prayer for
separation pay but sought reinstatement and payment of back wages, attorney's fees and
13th month pay.
Issues:
1) Whether or not Nia Jewelry Manufacturing of Metal Arts, Inc. may impose the
policy for their goldsmiths requiring them to post cash bonds or deposits; and
2) Whether or not there is constructive dismissal.
Ruling:
1) NO, the Nia Jewelry may not impose the policy. Articles 113 and 114 of the Labor
Code are clear as to what are the exceptions to the general prohibition against requiring
deposits and effecting deductions from the employees' salaries.
ART. 113. Wage Deduction No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:
a) (a)In cases where the worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the amount paid by
him as premium on the insurance;

b) (b)For union dues, in cases where the right of the worker or his union to
check-off has been recognized by the employer or authorized in writing by
the individual worker concerned; and
c) (c)In cases where the employer is authorized by law or regulations issued
by the Secretary of Labor.
Article 114.Deposits for loss or damage No employer shall require his worker
to make deposits from which deductions shall be made for the reimbursement of
loss of or damage to tools, materials, or equipment supplied by the employer,
except when the employer is engaged in such trades, occupations or business
where the practice of making deposits is a recognized one, or is necessary or
desirable as determined by the Secretary of Labor in appropriate rules and
regulations.
The petitioners should first establish that the making of deductions from the salaries is
authorized by law, or regulations issued by the Secretary of Labor. The petitioners failed
to prove that their imposition of the new policy upon the goldsmiths under Nia Jewelry's
employ falls under the exceptions specified in Articles 113 and 114 of the Labor Code.
2) There is NO constructive dismissal. Constructive dismissal occurs when there is
cessation of work because continued employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee.
The petitioners did not whimsically or arbitrarily impose the policy to post cash bonds or
make deductions from the workers' salaries. As attested to by the respondents' fellow
goldsmiths in their Joint Affidavit, the workers were convened and informed of the
reason behind the implementation of the new policy. Instead of airing their concerns, the
respondents just promptly stopped reporting for work.

Locsin II vs. Mekeni Food Corp.

(GR No. 192105, December 9, 2013)
Facts:
Petitioner Antonio Locsin II was the Regional Sales Manager of respondent Mekeni Food
Corporation. He was hired on February 2004 to oversee the NCR and Luzon operation. In
addition to his compensation and benefit package, a car was offered to him under which
one-half of the cost of the vehicle is to be paid by the company and the other half to be
deducted from petitioner's salary. The car valued at 280,000 which Locsin paid through
salary deductions of 5,000 per month.
On February 2006, Locsin resigned. A total of 112,500.00 had already been deducted
from his monthly salary and applied as part of his share in the car plan. Upon resignation,
petitioner made personal and written follow-ups regarding his unpaid salaries,
commissions, benefits, and offer to purchase his service vehicle. Mekeni replied that the
company car plan benefit applied only to employees who have been with the company for
five years; for this reason, the balance that petitioner should pay on his service vehicle
stood at P116,380.00 if he opts to purchase the same.
On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S.
Garcia, a Complaint for the recovery of monetary claims consisting of unpaid salaries,
commissions, sick/vacation leave benefits, and recovery of monthly salary deductions
which were earmarked for his cost-sharing in the car plan.
Issue: Whether or not petitioner is entitled to a refund of all the amounts applied to the
cost of the service vehicle under the car plan.
Ruling: Any benefit or privilege enjoyed by petitioner from using the service vehicle was
merely incidental and insignificant, because for the most part the vehicle was under
Mekeni's control and supervision. Free and complete disposal is given to the petitioner
only after the vehicle's cost is covered or paid in full. Until then, the vehicle remains at
the beck and call of Mekeni. Given the vast territory petitioner had to cover to be able to
perform his work effectively and generate business for his employer, the service vehicle
was an absolute necessity, or else Mekeni's business would suffer adversely. Thus, it is
clear that while petitioner was paying for half of the vehicle's value, Mekeni was reaping
the full benefits from the use thereof.
Under Article 22 of the Civil Code, every person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to him." Article
2142 of the same Code likewise clarifies that there are certain lawful, voluntary and
unilateral acts which give rise to the juridical relation of quasi-contract, to the end that no
one shall be unjustly enriched or benefited at the expense of another. In the absence of
specific terms and conditions governing the car plan arrangement between the petitioner
and Mekeni, a quasi-contractual relation was created between them. Consequently,

Mekeni may not enrich itself by charging petitioner for the use of its vehicle which is
otherwise absolutely necessary to the full and effective promotion of its business. It may
not, under the claim that petitioner's payments constitute rents for the use of the company
vehicle, refuse to refund what petitioner had paid, for the reasons that the car plan did not
carry such a condition; the subject vehicle is an old car that is substantially, if not fully,
depreciated; the car plan arrangement benefited Mekeni for the most part; and any
personal benefit obtained by petitioner from using the vehicle was merely incidental.
Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart
contribution to the cost of the vehicle; that is not property or money that belongs to him,
nor was it intended to be given to him in lieu of the car plan. Mekeni's share of the
vehicle's cost was not part of petitioner's compensation package. The vehicle is an asset
that belonged to Mekeni. Just as Mekeni is unjustly enriched by failing to refund
petitioner's payments, so should petitioner not be awarded the value of Mekeni's
counterpart contribution to the car plan, as this would unjustly enrich him at Mekeni's
expense.
Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's payments
under the car plan agreement amounting only to the extent of the contribution Locsin
made, totalling to the amount of P112,500.00.

TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union

(GR No. 191714, Feb 26, 2014)
Facts:
On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation workers union
(THS-GQ Union) filed their Complaint for Unfair Labor Practice (ULP) by way of union busting,
and Illegal Lockout, with moral and exemplary damages and attorneys fees, against T&H
Shopfitters Corporation (T&H Shopfitters) and Gin Queen Corporation before the Labor Arbiter
(LA).
1st CAUSE:
In their desire to improve their working conditions, respondents and other employees of held their
first formal meeting on November 23, 2003 to discuss the formation of a union. The following
day, seventeen (17) employees were barred from entering petitioners factory premises located in
Castillejos, Zambales, and ordered to transfer to T&H Shopfitters warehouse at Subic Bay
Freeport Zone (SBFZ) purportedly because of its expansion. Afterwards, the said seventeen (17)
employees were repeatedly ordered to go on forced leave due to the unavailability of work.
Respondents contended that the affected employees were not given regular work assignments,
while subcontractors were continuously hired to perform their functions. Respondents sought the
assistance of the National Conciliation and Mediation Board. Subsequently, an agreement
between petitioners and THS-GQ Union was reached. Petitioners agreed to give priority to
regular employees in the distribution of work assignments. Respondents averred, however, that
petitioners never complied with its commitment but instead hired contractual workers. Instead,
Respondents claimed that the work weeks of those employees in the SBFZ plant were drastically
reduced to only three (3) days in a month.
2nd CAUSE:
On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was
issued to hold the certification election in both T&H Shopfitters and Gin Queen.
On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The
officers and members of the THS-GQ Union were purportedly excluded from the field trip. On
the evening of the field trip, a certain Angel Madriaga, a sales officer of petitioners, campaigned
against the union in the forthcoming certification election.
When the certification election was scheduled on October 11, 2004, the employees were escorted
from the field trip to the polling center in Zambales to cast their votes. The remaining employees
situated at the SBFZ plant cast their votes as well. Due to the heavy pressure exerted by
petitioners, the votes for "no union" prevailed.
3rd CAUSE:
A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin Queen, informed
its employees of the expiration of the lease contract between Gin Queen and its lessor in
Castillejos, Zambales and announced the relocation of its office and workers to Cabangan,
Zambales.
When the respondents, visited the site in Cabangan, discovered that it was a "talahiban" or
grassland. The said union officers and members were made to work as grass cutters in Cabangan,
under the supervision of a certain Barangay Captain Greg Pangan. Due to these circumstances,
the employees assigned in Cabangan did not report for work. The other employees who likewise

failed to report in Cabangan were meted out with suspension.

PETITIONERS DEFENSE:
In its defense, Petitioners also stress that they cannot be held liable for ULP for the reason that
there is no employer-employee relationship between the former and respondents. Further, Gin
Queen avers that its decision to implement an enforced rotation of work assignments for
respondents was a management prerogative permitted by law, justified due to the decrease in
orders from its customers, they had to resort to cost cutting measures to avoid anticipated
financial losses. Thus, it assigned work on a rotational basis. It explains that its failure to present
concrete proof of its decreasing orders was due to the impossibility of proving a negative
assertion. It also asserts that the transfer from Castillejos to Cabangan was made in good faith and
solely because of the expiration of its lease contract in Castillejos. It was of the impression that
the employees, who opposed its economic measures, were merely motivated by spite in filing the
complaint for ULP against it.
Issue: Whether ULP acts were committed by petitioners against respondents.
Ruling: ULP were committed by petitioners against respondents.
Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly
Article 248) of the Labor Code,13 to wit:
Article 257. Unfair labor practices of employers.It shall be unlawful for an employer
to commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to selforganization;
xxxx
(c) To contract out services or functions being performed by union members when such
will interfere with, restrain, or coerce employees in the exercise of their right to selforganization;
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any labor organization.
xxx
The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its
employees, to the exclusion of union members, before the scheduled certification election; 2) the
active campaign by the sales officer of petitioners against the union prevailing as a bargaining
agent during the field trip; 3) escorting its employees after the field trip to the polling center; 4)
the continuous hiring of subcontractors performing respondents functions; 5) assigning union
members to the Cabangan site to work as grass cutters; and 6) the enforcement of work on a
rotational basis for union members, taken together, reasonably support an inference that, indeed,
such were all orchestrated to restrict respondents free exercise of their right to self-organization.
The Court is of the considered view those petitioners undisputed actions prior and immediately
before the scheduled certification election, while seemingly innocuous, unduly meddled in the
affairs of its employees in selecting their exclusive bargaining representative.

Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso.

(GR No. 181806, March 12, 2014)
Facts:
Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational
institution duly organized and existing under the laws of the Philippines. Respondent
Wesleyan University-Philippines Faculty and Staff Association, on the other hand, is a
duly registered labor organization acting as the sole and exclusive bargaining agent of all
rank-and-file faculty and staff employees of petitioner.
In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May 31,
2008.
On August 16, 2005, petitioner, through its President, Atty. Maglaya , issued a
Memorandum providing guidelines on the implementation of vacation and sick leave
credits as well as vacation leave commutation which states that vacation and sick leave
credits are not automatic as leave credits would be earned on a month-to-month and only
vacation leave is commuted or monetized to cash which is effected after the second year
of continuous service of an employee.
Respondents questioned the guidelines for being violative of existing practices and the
CBA which provide that all covered employees are entitled to 15 days sick leave and 15
days vacation leave with pay every year and that after the second year of service, all
unused vacation leave shall be converted to cash and paid to the employee at the end of
each school year, not later than August 30 of each year.
Respondent file a grievance complaint on the implementation of the vacation and sick
leave policy. Petitioner also announced its plan of implementing a one-retirement policy
which was unacceptable to respondent.
Respondent submitted affidavits to prove that there is an established practice of giving
two retirement benefits, one from the Private Education Retirement Annuity Association
(PERAA) Plan and another from the CBA Retirement Plan.
The Voluntary Arbitrator rendered a Decision declaring the one-retirement policy and the
Memorandum dated August 16, 2005 contrary to law. CA also affirmed the ruling of the
Voluntary Arbitrator.
Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and
the PERAA Plan are one and the same. It maintains that there is no established company
practice or policy of giving two retirement benefits to its employees. Respondent belies
the claims of petitioner and asserts that there are two retirement plans as the PERAA
Retirement Plan, which has been implemented for more than 30 years, is different from
the CBA Retirement Plan. Respondent further avers that it has always been a practice of
petitioner to give two retirement benefits and that this practice was established by
substantial evidence as found by both the Voluntary Arbitrator and the CA.

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

Bluer Than Blue Joint Ventures Co., vs. Esteban

(GR No. 192582, April 7, 2014)
Facts: The respondent was employed as a sales clerk and assigned at the petitioners
boutique. Her primary tasks were attending to all customer needs, ensuring efficient
inventory, coordinating orders from clients, cashiering and reporting to the accounting
department. The petitioner learned that some of their employees had access to their POS
system with the use of a universal password given to them by a certain Elmer Flores, who
in turn learned of the password from the respondent. The petitioner then conducted an
investigation and asked the petitioner to explain why she should not be disciplinarily
dealt with. During the investigation the respondent was placed under preventive
suspension. After investigation the petitioner terminated the respondent on the grounds of
loss of trust or confidence. This respondent was given her final wage and benefits less the
inventory variance incurred by the store. This urged the respondent to file a complaint for
illegal dismissal, illegal suspension, holiday pay, rest day and separation pay. The labor
arbiter ruled in her favour awarding her backwages. The petitioner appealed the decision
in the NLRC and the decision was reversed. However, upon the respondents petition for
certiorari in the court of appeals the decision was reinstated. Hence, this petition.
Issue: Whether the negative sales variance could be validly deducted from the
respondents wage?
Ruling: No, it cannot be deducted in this case.
Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf
of any person, shall make any deduction from the wages of his employees, except in
cases where the employer is authorized by law or regulations issued by the Secretary of
Labor and Employment, among others. The Omnibus Rules Implementing the Labor
Code, meanwhile, provides:
SECTION 14. Deduction for loss or damage. Where the employer is engaged
in a trade, occupation or business where the practice of making deductions or
requiring deposits is recognized to answer for the reimbursement of loss or
damage to tools, materials, or equipment supplied by the employer to the
employee, the employer may make wage deductions or require the employees to
make deposits from which deductions shall be made, subject to the following
conditions:
a) That the employee concerned is clearly shown to be responsible for the
loss or damage;
b) That the employee is given reasonable opportunity to show cause why
deduction should not be made;
c) That the amount of such deduction is fair and reasonable and shall not
exceed the actual loss or damage; and
d) That the deduction from the wages of the employee does not exceed 20
percent of the employee's wages in a week.

In this case, the petitioner failed to sufficiently establish that Esteban was responsible for
the negative variance it had in its sales for the year 2005 to 2006 and that Esteban was
given the opportunity to show cause the deduction from her last salary should not be
made.
Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v. Montecillo,
that:
[T]he petitioners should first establish that the making of deductions from the
salaries is authorized by law, or regulations issued by the Secretary of Labor.
Further, the posting of cash bonds should be proven as a recognized practice in
the jewelry manufacturing business, or alternatively, the petitioners should seek
for the determination by the Secretary of Labor through the issuance of
appropriate rules and regulations that the policy the former seeks to implement is
necessary or desirable in the conduct of business. The petitioners failed in this
respect. It bears stressing that without proofs that requiring deposits and effecting
deductions are recognized practices, or without securing the Secretary of Labor's
determination of the necessity or desirability of the same, the imposition of new
policies relative to deductions and deposits can be made subject to abuse by the
employers. This is not what the law intends.

Netlink Computer Inc. vs. Delmo

(GR No. 160827, June 18, 2014)
Facts: On November 3, 1991, Netlink Computer, Inc. Products and Services (Netlink)
hired Eric S. Delmo (Delmo) as account manager tasked to canvass and source clients
and convince them to purchase the products and services of Netlink. Delmo was able to
generate sales worth P35,000,000.00, more or less, from which he earned commissions
amounting to P993,558.89 and US$7,588.30. When requested payment of his
commissions, Netlink refused and only gave him partial cash advances chargeable to his
commissions. Later on, Netlink began to nitpick and fault find. In order to force him to
resign, Netlink issued several memoranda detailing his supposed infractions of the
company's attendance policy.
On November 28, 1996, Delmo was shocked when he was refused entry into the
company premises by the security guard pursuant to a memorandum to that effect. This
incident prompted Delmo to file a complaint for illegal dismissal.
The Labor Arbiter (LA) ruled in favor of Delmo and ordered Delmos reinstatement to his
former position without loss of seniority rights with full backwages and other benefits.
On appeal, the NLRC modified the decision of the LA by setting aside the backwages and
reinstatement decreed due to the existence of valid and just causes for the termination of
Delmo's employment. CA upheld the NLRC's ruling but found that petitioner failed to
refute by evidence that private respondent is not entitled to the commissions payable in
US dollars. CA also disagreed with the petitioner that the computation of these
commissions must be based on the value of [the] Peso in relation to a Dollar at the time
of sale.
Issues: (1) whether or not the payment of the commissions should be in US dollars; and
(2) whether or not the award of attorney's fees was warranted
Ruling: As a general rule, all obligations shall be paid in Philippine currency. However,
the contracting parties may stipulate that foreign currencies may be used for settling
obligations. This is pursuant to Republic Act No. 8183 which amended Republic Act No.
529. However, both Republic Act No. 529 and Republic Act No. 8183 did not stipulate
the applicable rate of exchange for the conversion of foreign currency-incurred
obligations to their peso equivalent. In C.F. Sharp, the Court cited Asia World
Recruitment, Inc. v. NLRC , to the effect that the real value of the foreign exchangeincurred obligation up to the date of its payment should be preserved.
There was no written contract between Netlink and Delmo stipulating that the latter's
commissions would be paid in US dollars. The absence of the contractual stipulation
notwithstanding, Netlink was still liable to pay Delmo in US dollars because the practice
of paying its sales agents in US dollars for their US dollar denominated sales had become
a company policy. This was impliedly admitted by Netlink when it did not refute the
allegation that the commissions earned by Delmo and its other sales agents had been paid
in US dollars. The principle of non-diminution of benefits, which has been incorporated

in Article 100 of the Labor Code, forbade Netlink from unilaterally reducing,
diminishing, discontinuing or eliminating the practice. Verily, the phrase "supplements, or
other employee benefits" in Article 100 is construed to mean the compensation and
privileges received by an employee aside from regular salaries or wages.
With regard to the length of time the company practice should have been observed to
constitute a voluntary employer practice that cannot be unilaterally reduced, diminished,
discontinued or eliminated by the employer, we find that jurisprudence has not laid down
any rule requiring a specific minimum number of years.
Finally, we affirm the following justification of the CA in granting attorney's fees to
Delmo, viz.:
The award of attorney's fees must, likewise, be upheld in line of (sic) the decision of the
Supreme Court in the case of Consolidated Rural Bank (Cagayan Valley), Inc. vs.
National Labor Relations Commission, 301 SCRA 223, 235, where it was held that "in
actions for recovery of wages or where an employee was forced to litigate and thus incur
expenses to protect her rights and interests, even if not so claimed, an award of attorney's
fees equivalent to ten percent (10%) of the total award is legally and morally justifiable.
WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the
decision promulgated on May 9, 2003; and ORDERS the petitioner to pay the costs of
suit.

PLDT vs. Estranero

(GR No. 192518, October 15, 2014)
Facts: Respondent was employed by PLDT on July 1, 1995 as an AutoMechanic/Electrician Helper with a monthly salary of P15,000 at the time of his
separation in 2003. In 1995, PLDT adopted a company-wide Manpower Reduction
Program (MRP) aimed at reducing its workforce. Those affected are offered redundancy
pay of 100% of their basic monthly salary for every year of service, in addition to their
retirement benefits, if entitled. If not qualified for retirement benefits, they were offered
separation or redundancy package of 200% of their basic monthly salary for every year of
service.
By virtue of MRP, a number of positions were declared redundant, including respondents
position. Attracted by the separation pay, the respondent expressed his conformity to his
inclusion in MRP. In the inter-office Memorandum dated April 1, 2003, the respondent
declared that he has no objection to be included in the redundancy program. After having
signified his intention and after approval from superior officers, respondents name was
included in the list of redundant employees and a Notice of Separation Due to
Redundancy was submitted to DOLE on April 25, 2003. He was then made to sign a deed
denominated as Receipt, Release and Quitclaim for his severance from employment.
Thereafter, PLDT proceeded to compute respondents redundancy/separation benefits.
Since his length of service was 7 years, 11 months and 15 days, which was rounded to 8
years, the respondent was not qualified for retirement pay which required at least 15 years
of service. The respondent was nonetheless entitled to 200% of his basic monthly salary
for every year of service. He was also entitled to other benefits he has earned, i.e., 2002
and 2003 SL benefits, 2002 and 2003 VL and VL premium benefits, longevity pay, midyear bonus, 13th month pay and Christmas bonus. His separation pay amounted to
P267,028.37.
However, the respondent had outstanding liabilities arising from various loans he
obtained from Home Development Mutual Fund (HDMF), PLDT Employees Credit
Cooperative, Inc., PLDT Service Cooperative, Inc., Social Security System (SSS), and
the Manggagawa ng Komunikasyon sa Pilipinas, which summed to P267,028.37. Thus,
PLDT deducted the said amount from the payment that the respondent was supposed to
receive. When respondent was made to sign the Receipt, Release and Quitclaim, it
showed that his take home pay was in the amount of "zero pesos." This prompted the
respondent to retract his availment of the separation pay package offered to him through a
letter addressed to the company dated May 8, 2003. Despite said retraction, however, the
respondent was no longer allowed to report for work. Subsequently, the respondent filed a
complaint for illegal dismissal with reinstatement.
Issue: Whether or not the petitioners can validly deduct the respondent's outstanding loan
obligation from his redundancy pay?
Ruling: PLDT has no legal right to withhold the respondent's redundancy pay and other

benefits to recompense for his outstanding loan obligations to different entities. The
respondent's entitlement to his redundancy pay is mandated by law which the petitioners
cannot unjustly deny.
It is clear in Article 113 of the Labor Code that no employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his employees, except
in cases where the employer is authorized by law or regulations issued by the Secretary of
Labor and Employment, among others. The Omnibus Rules Implementing the Labor
Code, meanwhile, provides that deductions from the wages of the employees may be
made by the employer when such deductions are authorized by law, or when the
deductions are with the written authorization of the employees for payment to a third
person. Thus, any withholding of an employee's wages by an employer may only be
allowed in the form of wage deductions under the circumstances provided in Article 113
of the Labor Code, as well as the Omnibus Rules implementing it. Further, Article 116 of
the Labor Code clearly provides that it is unlawful for any person, directly or indirectly,
to withhold any amount from the wages of a worker without the worker's consent.
In this case, the deductions made to the respondent's redundancy pay do not fall under
any of the circumstances provided under Article 113, nor was it established with certainty
that the respondent has consented to the said deductions or that the petitioners had
authority to make such deductions.
Furthermore, the petitioners may not offset the outstanding loans of the respondent
against the latter's monetary benefits. The records expressly revealed that the respondent
has obtained various loans from different entities and not with PLDT. Accordingly, set-off
or legal compensation cannot take place between PLDT and the respondent because they
are not mutually creditor and debtor of each other. Thus, there can be no valid set-off
because the respondent's creditor is not PLDT.
Moreover, petitioners cannot offset the outstanding balance of the respondent's loan
obligation with his redundancy pay because the balance on the loan does not come within
the scope of jurisdiction of the LA. The demand for payment of the said loans is not a
labor, but a civil dispute. It involves debtor-creditor relations, rather than employeeemployer relations. Evidently, the respondent's unpaid balance on his loans cannot be
offset against the redundancy pay due to him.

VI. PAYMENT OF WAGES

Congson vs. NLRC
(GR. No. 114250, April 5, 1995)
Facts: Dominico C. Congson is the registered owner of Southern Fishing Industry.
Respondents were hired as piece-rate employees uniformly paid at a rate of P1.00 per
tuna weighing thirty (30) to eighty (80) kilos per movement. They work for 7 days a
week. Due to alleged scarcity of tuna, Congson notified his proposal to reduce the rateper-tuna movement. When they reported the following day, they found out that they were
already replaced with new set of workers. They wanted to have a dialogue with the
management, but they waited in vain. Thus, they filed a case before NLRC for
underpayment of wages (violation of the minimum wage law) and non-payment of
overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)-day service
incentive leave pay; and for constructive dismissal.
Petitioner conceded that his payment of wages falls below the minimum wage law. He
averred that NLRC should have considered as forming a substantial part of private
respondents' total wages the cash value of the tuna liver and intestines private
respondents were entitled to retrieve. He argued that the combined value of the cash wage
and monetary value of the tuna liver and intestines clearly exceeded the minimum wage
fixed by law.
Both the Labor Arbiter and the NLRC ruled in favor of the respondents.
Issue: Whether or not the form of payment by Congson is valid pursuant to Article 102 of
the Labor Code.
Ruling: Petitioner's practice of paying the private respondents the minimum wage by
means of legal tender combined with tuna liver and intestines runs counter to the above
cited provision of the Labor Code. The fact that said method of paying the minimum
wage was not only agreed upon by both parties in the employment agreement but even
expressly requested by private respondents, does not shield petitioner. Article 102 of the
Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance
when an employer is permitted to pay wages informs other than legal tender, that is, by
checks or money order, is when the circumstances prescribed in the second paragraph of
Article 102 are present.

North Davao Mining vs. NLRC

(GR. No. 112546, March 13, 1996)
Facts: Due to financial losses, North Davao Mining Corporation laid off workers.
Respondent Wilfredo Guillema is one among several employees of North Davao who
were separated by reason of the companys closure on May 31, 1992. It appears that,
during the life of the petitioner corporation, from the beginning of its operations in 1981
until its closure in 1992, it had been giving separation pay equivalent to thirty (30) days
pay for every year of service. Moreover, inasmuch as the region where North Davao
operated was plagued by insurgency and other peace and order problems, the employees
had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers
from their workplace and about 2 hours travel time by public transportation; this
arrangement lasted from 1981 up to 1990.
Issue: Whether or not time spent in collecting wages in a place other than the place of
employment is compensable notwithstanding that the same is done during official time.
Ruling: SC, affirming the decision of the Labor Arbiter, finds that the hours spent by
complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be
considered compensable hours worked. Considering further the distance between
Amacan, Maco to Tagum which is 2 hours by travel and the risks in commuting all the
time in collecting complainants salaries, would justify the granting of backwages
equivalent to two (2) days in a month as prayed for. Corollary, we likewise hold
respondents liable for the transportation expenses incurred by complainants at P40.00
round trip fare during pay days.

National Federation of Labor vs. CA

(GR No. 149464, Oct. 19, 2004)
Facts: American Rubber Company, Inc. (ARCI) entered into a Farm Management
Agreement (FMA) with Sime Darby Pilipinas, Inc. (SDPI) to manage, administer,
develop, cultivate and improve the rubber plantation in Latuan, Isabela, Basilan.
However, SDPI decided to terminate the FMA with ARCI and cease operation of the
rubber plantation in Latuan, Isabela, Basilan effective January 17, 1998. Thus on
December 17, 1997, SDPI served formal notices of termination to all employees of the
plantation effective January 17, 1997. In complaince with the collective bargaining
agreement of the National Federation of Labor (NFL), which was the duly registered
bargaining agent of SDPI, and SDPI, the separation pay of the employees was computed
in accordance with the provisions of the Labor Code. On January 17, 1998, each of the
herein petitioners received their separation pay which was equivalent to one-half pay for
every year of service, and other benefits which were all lumped in one check. However,
the petitioners filed a complaint for deficiency in separation pay raising the issue of nonpayment of the exact computation of separation pay. They contended that the private
respondents is bound by its policy of granting separation pay equivalent to one-month
pay for every year of service to its retrenched employees.
Issue: Whether or not the petitioners are entitled to separation pay equivalent to one
month pay for every year of employment with private respondents.
Ruling: According to the Supreme Court, Article 283 of the Labor Code provides that
employees who are dismissed due to closures that are not due to business insolvency
should be paid separation pay equivalent to one-month pay or at least one-half month pay
for every year of service, whichever is higher. In the case at bar, the petitioners had
served the respondent SDPI for a period longer than six months. Hence, their separation
pay computed at one-half month pay per year of service is more than the minimum one
month pay. Also, the court emphasized that the collective bargaining agreement should
prevail as a contract governing the employer and the employees respecting the terms of
employment, which in this case, they agreed on the terms of termination pay should be in
accordance with the provisions of the Labor Code. Consequently, Artcle 283 of the Labor
Code, which grants separation pay equivalent to one-month pay or one-half month pay
for every year of service, whichever is higher, to the employees retrenched due to
business closures, should apply.

Heirs of Sara Lee vs. Rey

(GR No. 149013, Aug. 31, 2006)
Facts: The Heir of Sara Lee is engaged in the direct selling of a variety of product lines
for men and women, including cosmetics, intimate apparels, perfumes, ready to wear
clothes and other novelty items, through its various outlets nationwide. In the pursuit of
its business, the petitioner engages and contracts with dealers to sell the aforementioned
merchandise. These dealers, known either as Independent Business Managers (IBMs)
or Independent Group Supervisors (IGSs), depending on whether they sell individually
or through their own group, would obtain at discounted rates the merchandise from the
petitioner on credit or then sell the same products to their own customers at fixed prices
also determined by the petitioner.
In turn, the dealers are paid Services Fees, or sales commissions, the amount of which
depends on the volume and value of their sales. Under existing company policy, the
dealers must remit to the petitioner the proceeds of their sales within a designated credit
period, which would either be 38 days for IGSs or 52 days for IBMs, counted from the
day the said dealers acquired the merchandise from the petitioner. To discourage late
remittances, the petitioner imposes a Credit Administration Charge, or simply, a penalty
charge, on the value of the unremitted payment.
The dealers under this system earn income through a profit margin between the
discounted purchase price they pay on credit to the petitioner and the fixed selling price
their customers will have to pay. On top of this margin, the dealer is given the Service
Fee, a sales commission, based on the volume of sales generated by him or her. Due to
the sheer volume of sales generated by all of its outlets, the petitioner has found the need
to strictly monitor the 38- or 52-day rolling due date of each of its IBMs and IGSs
through the employment of Credit Administration Supervisors (CAS) for each branch.
The primary duty of the CAS is to strictly monitor each of these deadlines, to supervise
the credit and collection of payments and outstanding accounts due to the petitioner from
its independent dealers and various customers, and to screen prospective IBMs. To
discharge these responsibilities, the CAS is provided with a computer equipped with
control systems through which data is readily generated. Under this organizational setup,
the CAS is under the direct and immediate supervision of the Branch Operations Manager
(BOM).
Cynthia Rey at the time of her dismissal from employment, held the position of Credit
Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner.
She was first employed by the petitioner as an Accounts Receivable Clerk at its Caloocan
City branch. In November 1993, respondent was transferred to the Cagayan de Oro City
branch retaining the same position. In January 1994, respondent was elevated to the
position of CAS. At that time, the Branch Operations Manager or BOM of the Cagayan
de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent
was temporarily assigned to the Butuan City branch.

Sometime in June 1995, while respondent was still working in Butuan City, she allegedly
instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet to change the
credit term of one of the IBMs of the petitioner who happens to be respondents sister-inlaw, from the 52-day limit to an unauthorized term of 60 days. The respondent made
the instruction just before the computer data for the computation of the Service Fee
accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this
allegedly unauthorized act of respondent to her Branch Operations Manager, Mr.
Villagracia. Acting on the report, as the petitioner alleges, BOM Villagracia discreetly
verified the records and discovered that it was not only the 52-day credit term of IBM
Rey-Petilla that had been extended by the respondent, but there were several other IBMs
whose credit terms had been similarly extended beyond the periods allowed by company
policy. BOM Villagracia then summoned the respondent and required her to explain the
unauthorized credit extensions.
Issue: WON the respondent is entitled to 13th month pay.
Ruling: The award of 13th month pay must be deleted. Respondent is not a rank-and-file
employee and is, therefore, not entitled to thirteenth-month pay. However, the NLRC and
the CA are correct in refusing to award 14th and 15th month pay as well as the monthly
salary increase of 10 percent per year for two years based on her latest salary rate. The
respondent must show that these benefits are due to her as a matter of right. Mere
allegations by the respondent do not suffice in the absence of proof supporting the same.
With respect to salary increases in particular, the respondent must likewise show that she
has a vested right to the same, such that her salary increases can be made a component in
the computation of back wages. What is evident is that salary increases are a mere
expectancy. They are by nature volatile and dependent on numerous variables, including
the companys fiscal situation, the employees future performance on the job, or the
employees continued stay in a position. In short, absent any proof, there is no vested
right to salary increases.

VII. CONDITIONS OF EMPLOYMENT

San Juan De Dios Hospital vs. NLRC
(282 SCRA 316, 1997)
Facts:
Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios
Hospital Employees Association, sent a letter requesting for the expeditious
implementation and payment by respondent, San Juan De Dios Hospital, of the '40hours/5-day workweek' with compensable weekly two (2) days off provided for by Policy
Instruction No. 54 issued by the Secretary of Labor. Said policy instruction purports to
implement R.A. No. 5901, otherwise known as An Act Prescribing Forty Hours A Week
of Labor For Government and Private Hospitals Or Clinic Personnel. Respondent
hospital failed to give a favorable response; thus, petitioners filed a complaint regarding
their claims for statutory benefits under the above-cited law and policy issuance.
However, the Labor Arbiter and, subsequently, NLRC dismissed the complaint. Hence,
this petition ascribing grave abuse of discretion on the part of NLRC in concluding that
Policy Instructions No. 54 proceeds from a wrong interpretation of R.A. 5901 and Article
83 of the Labor Code.
Issue: Whether or not Policy Instruction No. 54, entitling a full weekly wage of 7 days
upon completion of 40-hour/5-day workweek, is valid based on existing labor laws.
Ruling: Policy Instruction No. 54 is void, it being inconsistent with and repugnant to the
provision of Article 83 of the Labor Code, as well as to R.A. No. 5901.
A perusal of R. A. No. 5901 reveals nothing therein that gives two days off with pay for
health personnel who complete a 40-hour work or 5-day workweek. In fact, the
Explanatory Note of House Bill No. 16630 (later passed into law as Republic Act No.
5901) explicitly states that the bill's sole purpose is to shorten the working hours of health
personnel and not to dole out a two days off with pay. Petitioners' position is also negated
by the very rules and regulations promulgated by the Bureau of Labor Standards which
implement Republic Act No. 5901. Section 15 of aforementioned implementing rules
grants specific rate of additional compensation for work performed on Sunday or for
work performed in excess of forty hours a week. Policy Instruction No. 54 unduly
extended the statute.
Article 83 merely provides: (1) the regular office hour of eight hours a day, five days per
week for health personnel, and (2) where the exigencies of service require that health
personnel work for six days or forty-eight hours then such health personnel shall be
entitled to an additional compensation of at least thirty percent of their regular wage for
work on the sixth day. There is nothing in the law that supports then Secretary of Labor
and petitioners assertion. The Secretary of Labor exceeded his authority by including a
two days off with pay in contravention of the clear mandate of the statute. Administrative

interpretation of the law is at best merely advisory, and the Court will not hesitate to
strike down an administrative interpretation that deviates from the provision of the
statute.
Simedarby vs. NLRC
(289 SCRA 86, 1998)
Facts:
Prior to the present controversy, the factory employees of Sime Darby Pilipinas, Inc.
enjoyed a 30-minute paid on call lunch break in their daily work schedule of 7:45 am to
3:45 pm. The petitioner company passed a memorandum dated Aug 12 1992 advising all
factory-based workers, except those in the Warehouse and Quality Assurance
Department, of a change in work schedule that discontinued the 30-minute paid on call
lunch break and set an uninterrupted 1 hour lunch break in lieu thereof.
Private respondents then filed a complaint for unfair labor practice, discrimination, and
evasion of liability with the Labor Arbiter who dismissed the complaint, ruling that the
elimination of the 30-minute lunch break was a valid exercise of management
prerogative. Appeal was made to respondent NLRC who reversed the decision of the
Labor Arbiter, declaring that the new work schedule deprived the employees of the
benefits of a time-honored company practice and that such change also resulted in an
unjust diminution of employee benefits.
The OSG recommended the present petition to be granted, alleging that the new
memorandum containing the work schedule was not discriminatory not did it constitute
unfair labor practice.
Issue: Whether or not the memorandum dated Aug 14 1992 discontinuing the 30-minute
paid on call lunch break constituted unfair labor practice and diminution of benefits
Ruling:
The Supreme Court sustained petitioner, holding that it is clearly a management
prerogative to fix the work schedules of company employees. Under the old schedule, the
employees are compensated during their 30-minute lunch break, but in essence it is still
working time since the workers could be called upon to work. Whereas in the new
schedule, the employees are given a longer break of 1 hour, though uncompensated, it is
uninterrupted as workers on their break are no longer on call. The change in schedule
would improve company productivity as well as enhance the comfort of workers who
could enjoy an uninterrupted break.
The Supreme Court also reiterated the policy that while social justice and the protection
of the working class is ensured by the Constitution, the same fundamental law also
protects the right of the management to regulate all aspects of employment as well as to
retain the prerogative of changing work schedules according to the exigencies of the
enterprise. So long as this prerogative is exercised in good faith, the Court upholds such

exercise.

Phil. Airlines vs. NLRC

(302 SCRA 582, 1999)
Facts:
Private respondent (Dr. Herminio A. Fabros) was employed as flight surgeon at petitioner
company (PAL). He was assigned at (PAL Medical Clinic at Nichols) and was on duty
from 4:00 in the afternoon until 12:00 midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to
have his dinner at his residence, which was about five-minute drive away. A few minutes
later, the clinic received an emergency call from the PAL Cargo Services. One of its
employees, Mr. Manuel Acosta, had suffered a heart attack. Upon receiving the call the
nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of
the emergency. The patient arrived at the clinic at 7:50 in the evening and was rushed by
Mr. Eusebio to the hospital. When private respondent reached the clinic at around 7:51 in
the evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following
day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon
ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon,
in turn, required private respondent to explain why no disciplinary sanction should be
taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-minute meal
break; that he immediately left his residence upon being informed by Mr. Eusebio about
the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked
and brought the patient to the hospital without waiting for him.
Finding private respondents explanation unacceptable, the management charged private
respondent with abandonment of post while on duty.
Petitioner argues that being a full-time employee, private respondent is obliged to stay in
the company premises for not less than eight (8) hours. Hence, he may not leave the
company premises during such time, even to take his meals.
Issue: WON being a full-time employee, private respondent is obliged to stay in the
company premises for not less than eight (8) hours.
Ruling:
NO. Employees are not prohibited from going out of the premises as long as they return
to their post on time.
Articles 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work.The normal hours of work of any employee

shall not exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one
million (1,000,000) or in hospitals and clinics with a bed capacity of at least one
hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5)
days a week, exclusive of time for meals, except where the exigencies of the
service require that such personnel work for six (6) days or forty-eight (48) hours,
in which case they shall be entitled to an additional compensation of at least thirty
per cent (30%) of their regular wage for work on the sixth day. For purposes of
this Article, health personnel shall include: resident physicians, nurses,
nutritionists, dieticians, pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants and all other
hospital or clinic personnel. (emphasis supplied)
Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor
may prescribe, it shall be the duty of every employer to give his employees not
less than sixty (60) minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further
states:
Sec. 7. Meal and Rest Periods.Every employer shall give his employees,
regardless of sex, not less than one (1) hour time-off for regular meals, except in
the following cases when a meal period of not less than twenty (20) minutes may
be given by the employer provided that such shorter meal period is credited as
compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous
physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be
performed on machineries, equipment or installations to avoid serious loss
which the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall
be considered as compensable working time.
Thus, the eight-hour work period does not include the meal break. Nowhere in the law
may it be inferred that employees must take their meals within the company premises.
Employees are not prohibited from going out of the premises as long as they return to
their posts on time. Private respondents act, therefore, of going home to take his dinner
does not constitute abandonment.

Linton Commercial Co., Inc., vs. Hellera et al.

(GR. No. 163147, October 10, 2007)
Facts:
On 17 December 1997, Linton issued a memorandum addressed to its employees informing them of
the company's decision to suspend its operations from December 18, 1997 to January 5, 1998 due to
the currency crisis that affected its business operations. Linton submitted an establishment termination
report to the Department of Labor and Employment (DOLE) regarding the temporary closure of the
establishment covering the said period. The company's operation was to resume on January 6, 1998.
On January 7, 1997, Linton issued another memorandum informing them that effective January 12,
1998, it would implement a new compressed workweek of three (3) days on a rotation basis. In other
words, each worker would be working on a rotation basis for three working days only instead for six
days a week. On the same day, Linton submitted an establishment termination report concerning the
rotation of its workers. Linton proceeded with the implementation of the new policy without waiting
for its approval by DOLE. Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal
reduction of workdays.
Issue: WON there was an illegal reduction of work when Linton implemented a compressed
workweek by reducing from six to three the number of working days with the employees working on a
rotation basis.
Ruling: The compressed workweek arrangement was unjustified and illegal.
The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in
determining when an employer can validly reduce the regular number of working days. The said
bulletin states that a reduction of the number of regular working days is valid where the arrangement
is resorted to by the employer to prevent serious losses due to causes beyond his control, such as when
there is a substantial slump in the demand for his goods or services or when there is lack of raw
materials. Although the bulletin stands more as a set of directory guidelines than a binding set of
implementing rules, it has one main consideration, consistent with the ruling in Philippine Graphic
Arts Inc., in determining the validity of reduction of working hours that the company was suffering
from losses.
Certainly, management has the prerogative to come up with measures to ensure profitability or loss
minimization. However, such privilege is not absolute. Management prerogative must be exercised in
good faith and with due regard to the rights of labor. As previously stated, financial losses must be
shown before a company can validly opt to reduce the work hours of its employees. However, to date,
no definite guidelines have yet been set to determine whether the alleged losses are sufficient to justify
the reduction of work hours. If the standards set in determining the justifiability of financial losses
under Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were
to be considered, petitioners would end up failing to meet the standards. On the one hand, Article 286
applies only when there is a bona fide suspension of the employer's operation of a business or
undertaking for a period not exceeding six (6) months.
Records show that Linton continued its business operations during the effectivity of the compressed
workweek, which spanned more than the maximum period. On the other hand, for retrenchment to be
justified, any claim of actual or potential business losses must satisfy the following standards: (1) the
losses incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent;
(3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected
losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be
forestalled, are proven by sufficient and convincing evidence. Linton failed to comply with these

standards.

Bisig Manggagawa sa Tryco vs. NLRC

(GR No. 151309, Oct. 15, 2008)
Facts:
Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its
principal office is located in Caloocan City. Petitioners are its regular employees,
occupying the positions of helper, shipment helper and factory workers, assigned to the
Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the
exclusive bargaining representative of the rank-and-file employees.
Tryco and the petitioners signed a Memorandum of Agreement (MOA), providing for a
compressed workweek schedule to be implemented in the company effective May 20,
1996. As provided, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as
the regular working hours, and no overtime pay shall be due and payable to the employee
for work rendered during those hours. The MOA specifically stated that the employee
waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m.
from Monday to Friday considering that the compressed workweek schedule is adopted
in lieu of the regular workweek schedule which also consists of 46 hours. However,
should an employee be permitted or required to work beyond 6:12 p.m., such employee
shall be entitled to overtime pay.
On a letter dated March 26, 1997, the Bureau of Animal Industry of the Department of
Agriculture reminded Tryco that its production should be conducted in San Rafael,
Bulacan, not in Caloocan City.
Accordingly, Tryco issued a Memorandum dated April 7, 1997 which directed petitioner
Aya-ay to report to the companys plant site in Bulacan. When petitioner Aya-ay refused
to obey, Tryco reiterated the order on April 18, 1997. Subsequently, through a
Memorandum dated May 9, 1997, Tryco also directed the other petitioners Egera, Lario
and Barte to report to the companys plant site in Bulacan.
BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it
constitutes unfair labor practice. In protest, BMT declared a strike on May 26, 1997.
In August 1997, petitioners filed their separate complaints for illegal dismissal,
underpayment of wages, nonpayment of overtime pay and service incentive leave, and
refusal to bargain against Tryco and its President, Wilfredo C. Rivera. Petitioners alleged
that the company acted in bad faith during the CBA negotiations because it sent
representatives without authority to bind the company, and this was the reason why the
negotiations failed. Also, the management transferred petitioners from Caloocan to San
Rafael, Bulacan to paralyze the union. They prayed for the company to pay them their
salaries from May 26 to 31, 1997, service incentive leave, and overtime pay, and to
implement Wage Order No. 4.
Issue: Whether or not the company committed Unfair Labor Practices

Ruling:
NO. Petitioners mainly contend that the transfer orders amount to a constructive
dismissal. They maintain that the letter of the Bureau of Animal Industry is not credible
because it is not authenticated; it is only a ploy, solicited by respondents to give them an
excuse to effect a massive transfer of employees. There is not proof to support this claim.
Absent any evidence, the allegation is not only highly irresponsible but is grossly unfair
to the government agency concerned.
Also, Trycos decision to transfer its production activities to San Rafael, Bulacan,
regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry,
was within the scope of its inherent right to control and manage its enterprise effectively.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee,
and it does not involve a demotion in rank or diminution of salaries, benefits, and other
privileges, the employee may not complain that it amounts to a constructive dismissal. In
this case, the transfer orders do not entail a demotion in rank or diminution of salaries,
benefits and other privileges of the petitioners. Petitioners, therefore, anchor their
objection solely on the ground that it would cause them great inconvenience since they
are all residents of Metro Manila and they would incur additional expenses to travel daily
from Manila to Bulacan. Such contention is untenable because the Court has previously
declared that mere incidental inconvenience is not sufficient to warrant a claim of
constructive dismissal. The distance from Caloocan to San Rafael, Bulacan is not
considerably great so as to compel petitioners to seek living accommodations in the area
and prevent them from commuting to Metro Manila daily to be with their families.
Finally, MOA is enforceable and binding against the petitioners. Where it is shown that
the person making the waiver did so voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is credible and reasonable, the transaction
must be recognized as a valid and binding undertaking. In addition, D.O. No. 21
sanctions the waiver of overtime pay in consideration of the benefits that the employees
will derive from the adoption of a compressed workweek scheme. Moreover, the adoption
of a compressed workweek scheme in the company will help temper any inconvenience
that will be caused the petitioners by their transfer to a farther workplace. Notably, the
MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to
protect the interest of the employees in the implementation of a compressed workweek
scheme
Considering that the MOA clearly states that the employee waives the payment of
overtime pay in exchange of a five-day workweek, there is no room for interpretation and
its terms should be implemented as they are written.

VIII. MINIMUM LABOR STANDARD BENEFITS

Union Filipro Employees vs. Vicar
(205 SCRA 203, 1992)
Facts:
Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations
Commission a petition for declaratory relief seeking a ruling on its rights and obligations respecting
claims of its monthly paid employees for holiday pay.
Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary
arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. Arbitrator Vivar
rendered a decision directing Filipro to pay its monthly paid employees holiday pay pursuant to
Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such
other legal restrictions as are provided for in the Code. However, the respondent arbitrator refused to
take cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator
because he had resigned from service effective May 1, 1986.
Issue: WON sales personnel are excluded in the payment of holiday pay.
Ruling: Field personnel are not entitled to holiday pay.
Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as
"non-agricultural employees who regularly perform their duties away from the principal place of
business or branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty."
The law requires that the actual hours of work in the field be reasonably ascertained. The company has
no way of determining whether or not these sales personnel, even if they report to the office before
8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual
field work. Moreover, the requirement that "actual hours of work in the field cannot be determined
with reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing
Rules, which provides:
"Rule IV Holidays with Pay. SECTION 1.
Coverage. This rule shall apply to
all employees except: (e) Field personnel and other employees whose time and
performance is unsupervised by the employer
The clause "whose time and performance is unsupervised by the employer" did not amplify but merely
interpreted and expounded the clause "whose actual hours of work in the field cannot be determined
with reasonable certainty." The former clause is still within the scope and purview of Article 82, which
defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the
field can be determined with reasonable certainty, query must be made as to whether or not such
employee's time and performance is constantly supervised by the employer.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales
target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good
merchandising work; (5) minimal market returns and (6) proper truck maintenance. The criteria
indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in
measuring their actual hours of fieldwork. These employees are evaluated by the result of their work
and not by the actual hours of fieldwork, which are hardly susceptible to determination.

National Sugar Refinery Corp., vs. NLRC

(220 SCRA 452, 1993)
Facts:
Petitioner owns a corporation fully owned by the government, which operates 3 sugar refineries
in the country. One day, petitioner implemented a JEP or Job Evaluation Program affecting all
employees from rank-and-file to department heads. All positions were re-evaluated and all
employees including the members of the respondent union were granted salary adjustments and
increases in benefits commensurate to their actual duties and functions. Before the JEP, the
members of the respondent union were treated in the same manner as rank-and-file employees
and entitled to overtime pay, rest day, and holiday pay. But with the implementation of the JEP,
the members of the respondent union were considered managerial staff for purposes of
compensation and benefits they enjoyed a 50% increase in their basic pay, an increased COLA
and an allowance for holiday or rest day work. Two years after JEP implementation, the members
of the union filed a case against petitioner for payment of overtime; rest day and holiday pay
invoking Article 100 on Non-diminution of Benefits.
Issue: Are they correct?
Ruling: NO. The Supreme Court found creditable merit for the petitioner. The members of the
respondent union are supervisory employees as defined in Article 212(m) of the Labor Code. But
for purposes of determining whether they are entitled to overtime pay, rest day pay and holiday
pay, said employees should be considered as officers and members of the managerial staff as
defined under Article 82, Book III of the Labor Code and amplified in Section 2 Rule I Book III of
the Rules Implementing the Labor Code. Perforce, they are not entitled to the mentioned benefits.
The distinction made by the NLRC on the basis of whether or not the union members are
managerial employees, to determine the latters entitlement to the questioned benefits, is
misplaced and inappropriate. It is admitted that that these union members are supervisory
employees and this is one instance where nomenclatures or titles of their jobs conform to the
nature of their functions. Hence, to distinguish them from a managerial employee as defined in
Article 82 or 212(m) of the Labor Code is puerile and inefficacious.
The controversy actually involved here seeks a determination of whether or not these supervisory
employees ought to be considered as officers and members of the managerial staff. The
distinction therefore should have been made along that line and its corresponding conceptual
criteria. The payment of the benefits to the employees did not ripen into a contractual obligation.
Prior to the JEP, they could not be categorically classified as officers and members of the
managerial staff considering that they were treated merely on the same level as rank-and-file.
Consequently, the payment thereof could not be constitutive of voluntary employer practice,
which cannot now be unilaterally withdrawn by the petitioner.
To be considered as such, it should have been practiced over a long period of time, and must be
shown to have been consistent and deliberate. The test requires a showing that the employer
agreed to continue giving the benefits knowing full well that said employees are not covered by
the law requiring payment thereof. In the case at bar, respondent union failed to establish that
petitioner has been motivated or is wont to give these benefits out of pure generosity.

Salazar vs. NLRC

(GR No. 109210, April 17, 1996)
Facts:
On 17 April 1990, private respondent, at a monthly salary of P4,500.00, employed petitioner as
construction/project engineer for the construction of the Monte de Piedad building in Cubao,
Quezon City. Allegedly, by virtue of an oral contract, petitioner would also receive a share in the
profits after completion of the project and that petitioner's services in excess of eight (8) hours on
regular days and services rendered on weekends and legal holidays shall be compensable
overtime at the rate of P27.85 per hour.
On 16 April 1991, petitioner received a memorandum issued by private respondent's project
manager, Engr. Nestor A. Delantar informing him of the termination of his services effective on
30 April 1991.
On 13 September 1991, petitioner filed a complaint against private respondent for illegal
dismissal, unfair labor practice, illegal deduction, non-payment of wages, overtime rendered,
service incentive leave pay, commission, allowances, profit-sharing and separation pay with the
NLRC-NCR Arbitration Branch, Manila.
Arguments
Petitioner:
1) Since he performs his duties in the project site or away from the principal place of
business of his employer (herein private respondent), he falls under the category of "field
personnel." However, his case constitutes the exception to the exception because his
actual working hours can be determined as evidenced by the disbursement vouchers
containing payments of petitioner's salaries and overtime services. Field personnel may
include managerial employees.
2) Private respondent compensated him for his overtime services as indicated in the various
disbursement vouchers he submitted as evidence. Thus, he is entitled to the benefits.
3) He is entitled to separation pay.
Issues: Whether or not petitioner may be considered as managerial employee.
Whether or not petitioner is entitled to separation pay.
Ruling:
1. NO, HE MAY NOT.
In his original complaint, petitioner stated that the nature of his work is "supervisoryengineering." Similarly, in his own petition and in other pleadings submitted to this Court,
petitioner confirmed that his job was to supervise the laborers in the construction project. Hence,
although petitioner cannot strictly be classified as a managerial employee under Art. 82 of the
Labor Code, and sec. 2(b), Rule I, Book III of the Omnibus Rules Implementing the Labor Code,
nonetheless he is still not entitled to payment of the aforestated benefits because he falls squarely
under another exempt category"officers or members of a managerial staff" as defined under sec.
2(c) of the abovementioned implementing rules.
That petitioner was paid overtime benefits does not automatically and necessarily denote that
petitioner is entitled to such benefits. Art. 82 of the Labor Code specifically delineates who are

entitled to the overtime premiums and service incentive leave pay provided under Art. 87, 93, 94
and 95 of the Labor Code and the exemptions thereto. As previously determined, petitioner falls
under the exemptions and therefore has no legal claim to the said benefits. It is well and good that
petitioner was compensated for his overtime services. However, this does not translate into a right
on the part of petitioner to demand additional payment when, under the law, petitioner is clearly
exempted therefrom.
2. NO, HE IS NOT.
The applicable provision is Article 280 of the Labor Code, which defines the term "project
employee," thus:
Art. 280. Regular and Casual Employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties,
an employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed
for a specific period or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work
or services to be performed is seasonal in nature and the employment is for the
duration of the season.
In the case at bench, it was duly established that private respondent hired petitioner as project or
construction engineer specifically for its Monte de Piedad building project.
Accordingly, as project employee, petitioner's services are deemed coterminous with the project,
that is, petitioner's services may be terminated as soon as the project for which he was hired is
completed.
Petitioner, thus, has no legal right to demand separation pay. Policy Instruction No. 20 entitled
"Stabilizing Employer-Employee Relations in the Construction Industry" explicitly mandates
that:
xxx xxx xxx
Project employees are not entitled to termination pay if they are terminated as a result of the
completion of the project or any phase thereof in which they are employed, regardless of the
number of projects in which they have been employed by a particular construction company.
Moreover, the company is not required to obtain a clearance from the Secretary of Labor in
connection with such termination. What is required of the company is a report to the nearest
Public Employment Office for statistical purposes.
xxx xxx xxx
Department Order No. 19 of the Department of Labor and Employment (DOLE) entitled
"Guidelines Governing the Employment of Workers in the Construction Industry" promulgated
on 1 April 1993, reiterates the same rule.

Labor Congress of the Phils., vs. NLRC

(GR No. 1239381, May 21, 1998)
Facts:
The 99 petitioners in this proceeding were rank-and-file employees of respondent Empire
Food Products, which hired them on various dates. Petitioners filed against private
respondents a complaint for payment of money claims and for violation of labor
standards laws
Issue: Whether or not petitioners are entitled back wages.
Ruling:
Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article
279 of the Labor Code, as amended by R.A. No. 6715. Nevertheless, the records disclose
that taking into account the number of employees involved, the length of time that has
lapsed since their dismissal, and the perceptible resentment and enmity between
petitioners and private respondents which necessarily strained their relationship,
reinstatement would be impractical and hardly promotive of the best interests of the
parties. In lieu of reinstatement then, separation pay at the rate of one month for every
year of service, with a fraction of at least six (6) months of service considered as one (1)
year, is in order.
That being said, the amount of backwages to which each petitioner is entitled, however,
cannot be fully settled at this time. Petitioners, as piece-rate workers, have been paid by
the piece. There is need to determine the varying degrees of production and days worked
by each worker.

Mercidar Fishing Corp., vs. NLRC

(GR No. 112574, October 8, 1998)
Facts:
This case originated from a complaint filed on September 20, 1990 by private respondent
Fermin Agao, Jr. against petitioner for illegal dismissal, violation of P.D. No. 851, and
non-payment of five days service incentive leave for 1990. Private respondent had been
employed as a "bodegero" or ship's quartermaster on February 12, 1998. He complained
that he had been constructively dismissed by the petitioner when the latter refused him
assignments aboard its after he had reported to work on May 28, 1990.
Private respondent alleged that he had been sick and thus allowed to go on leave without
pay for one month from April 28, 1990 but that when he reported to work at the end of
such period with a health clearance, he was told to come back another time as he could
not be reinstated immediately. Thereafter, petitioner refused to give him work. For this
reason, private respondent asked for a certificate of employment from petitioner on
September 6, 1990. However, when he came back for the certification September 10,
petitioner refused to issue the certificate unless he submitted his resignation. Since private
respondent refused to submit such letter unless he was given separation pay, petitioner
prevented him from entering the premises.
Petitioner, on the other hand, alleged that it was private respondent who actually
abandoned his work.
Issue: Whether or not the fishing crew members are considered field personnel as
classified in Art. 82 of the Labor Code.
Ruling: Art. 82 of the Labor Code provide:
"The provisions of this title [Working Conditions and Rest Periods] shall apply to
all employees in all establishments and undertakings whether to profit or not, but
not to government employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons in
personal service of another, and workers who are paid by results as determined
by the Secretary of Labor in appropriate regulations."
"Field personnel" Shall refer to non-agricultural employees who regularly perform their
duties away from the principal place of business or branch office of the employer and
whose actual hours of workin the field cannot be determined with reasonable certainty.
In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen
employed by petitioner have no choice but to remain on board its vessel. Although they
perform non-agricultural work away from petitioners business offices, the fact remains
that throughout the duration of their work they are under the effective control and
supervision of petitioner through the vessel's patron or master.

San Miguel Corp., vs. CA

(GR No. 146775, Jan. 30, 2002)
Facts:
On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan District
Office, conducted a routine inspection in the premises of San Miguel Corporation (SMC)
in Sta. Filomena, Iligan City. It was discovered that there was underpayment by SMC of
regular Muslim holiday pay to its employees. DOLE sent a copy of the inspection result
to SMC and it was received by and explained to its personnel officer Elena dela Puerta.
SMC contested the findings and DOLE conducted summary hearings on 19 November
1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit proof that it
was paying regular Muslim holiday pay to its employees. Hence, Alan M. Macaraya,
Director IV of DOLE Iligan District Office issued a compliance order, dated 17
December 1993, directing SMC to consider Muslim holidays as regular holidays and to
pay both its Muslim and non-Muslim employees holiday pay within thirty (30) days from
the receipt of the order.
SMC appealed to the DOLE main office in Manila. However, the appeal was dismissed
for lack of merit and the order of Director Macaraya was affirmed. SMC went to SC for
relief via a petition for certiorari, which the Court referred to the Court of Appeals. The
appellate court modified the order with regards the payment of Muslim holiday pay from
200% to 150% of the employee's basic salary. Its motion for reconsideration having been
denied for lack of merit, SMC filed a petition for certiorari before the SC
Issues:
(a) Whether or not public respondents seriously erred and committed grave abuse of
discretion when they granted Muslim Holiday Pay to non-Muslim employees of
SMC.
(b) Whether or not SMC was not accorded with due process of law in the issuance of
the compliance order.
(c) Whether or not regional director Macaraya, undersecretary Trajano and
undersecretary Espanol have jurisdiction in issuing the assailed compliance
orders.
Ruling: The court ruled the issues in negative.
Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential
Decree No. 1083, otherwise known as the Code of Muslim Personal Laws, which states:
Art. 169. Official Muslim holidays. - The following are hereby recognized as
legal Muslim holidays:
(a) Amun Jadd (New Year), which falls on the first day of the first lunar month
of Muharram;
(b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on the
twelfth day of the third lunar month of Rabi-ul-Awwal;
(c) Lailatul Isr Wal Mirj (Nocturnal Journey and Ascension of the Prophet

Muhammad), which falls on the twenty-seventh day of the seventh lunar

month of Rajab;
(d) d-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar
month of Shawwal, commemorating the end of the fasting season; and
(e) d-l-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar
month of Dhl-Hijja.
Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays
shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao
del Sur, Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and
Zamboanga and in such other Muslim provinces and cities as may hereafter be
created; (2) Upon proclamation by the President of the Philippines, Muslim
holidays may also be officially observed in other provinces and cities.
The foregoing provisions should be read in conjunction with Article 94 of the Labor
Code, which provides:
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than ten
(10) workers;
(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate.
Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "the
provisions of this Code shall be applicable only to Muslims." However, there should be
no distinction between Muslims and non-Muslims as regards payment of benefits for
Muslim holidays. Wages and other emoluments granted by law to the working man are
determined on the basis of the criteria laid down by laws and certainly not on the basis of
the workers faith or religion. In addition, the 1999 Handbook on Workers Statutory
Benefits, categorically stated: Considering that all private corporations, offices, agencies,
and entities or establishments operating within the designated Muslim provinces and
cities are required to observe Muslim holidays, both Muslim and Christians working
within the Muslim areas may not report for work on the days designated by law as
Muslim holidays.
On the question regarding the jurisdiction of the Regional Director Allan M. Macaraya,
Article 128, Section B of the Labor Code, as amended by Republic Act No. 7730,
provides: Article 128. Visitorial and enforcement power. (b) Notwithstanding the provisions of Article 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists,
the Secretary of Labor and Employment or his duly authorized representatives
shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the findings
of labor employment and enforcement officers or industrial safety engineers made
in the course of the inspection. The Secretary or his duly authorized representative

shall issue writs of execution to the appropriate authority for the enforcement of
their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary
proofs which were not considered in the course of inspection.
In the case before us, Regional Director Macaraya acted as the duly authorized
representative of the Secretary of Labor and Employment and it was within his power to
issue the compliance order to SMC. In addition, the Court agrees with the Solicitor
General that the petitioner did not deny that it was not paying Muslim holiday pay to its
non-Muslim employees. Indeed, petitioner merely contends that its non-Muslim
employees are not entitled to Muslim holiday pay. Hence, the issue could be resolved
even without documentary proofs. In any case, there was no indication that Regional
Director Macaraya failed to consider any documentary proof presented by SMC in the
course of the inspection.
Anent the allegation that petitioner was not accorded due process, the court finds that
SMC was furnished a copy of the inspection order and it was received by and explained
to its Personnel Officer. Further, a series of summary hearings were conducted by DOLE
on 19 November 1992, 28 May 1993 and 4 and 5 October 1993. Thus, SMC could not
claim that it was not given an opportunity to defend itself.

Tan vs. Lagrama

(GR No. 151228, August 15, 2002)
Facts:
Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general
manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo
Lagrama is a painter, making ad billboards and murals for the motion pictures shown at
the Empress, Supreme, and Crown Theaters for more than 10 years, from September 1,
1988 to October 17, 1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided:
"Nangihi na naman ka sulod sa imong drawinganan." ("You again urinated inside your
work area.") When Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang
estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas."
("Don't say anything further. I don't want you to draw anymore. From now on, no more
drawing. Get out.")
Lagrama denied the charge against him. He claimed that he was not the only one who
entered the drawing area and that, even if the charge was true, it was a minor infraction to
warrant his dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get out"),
leaving him with no other choice but to leave the premises. Lagrama filed a complaint
with the National Labor Relations Commission (NLRC) in Butuan City. He alleged that
he had been illegally dismissed and sought reinvestigation and payment of 13th month
pay, service incentive leave pay, salary differential, and damages.
As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed
the parties to file their position papers. It declared that the dismissal illegal and order the
payment of monetary benefits. Tan appealed to the NLRC and reversing the decision of
the Labor Arbiter.
Issue: Whether or not the respondent was illegally dismissed and thus entitled to payment
of benefits provided by law.
Ruling:
The respondent was illegally dismissed and entitled to benefits. The Implementing Rules
of the Labor Code provide that no worker shall be dismissed except for a just or
authorized cause provided by law and after due process. This provision has two aspects:
(1) the legality of the act of dismissal, that is, dismissal under the grounds provided for
under Article 282 of the Labor Code and (2) the legality in the manner of dismissal. The
illegality of the act of dismissal constitutes discharge without just cause, while illegality
in the manner of dismissal is dismissal without due process.
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of
his sight as the latter tried to explain his side, petitioner made it plain that Lagrama was

dismissed. Urinating in a work place other than the one designated for the purpose by the
employer constitutes violation of reasonable regulations intended to promote a healthy
environment under Art. 282(1) of the Labor Code for purposes of terminating
employment, but the same must be shown by evidence. Here there is no evidence that
Lagrama did urinate in a place other than a rest room in the premises of his work.
Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor
Arbiter found that the relationship between the employer and employee has been so
strained that the latter's reinstatement would no longer serve any purpose. The parties do
not dispute this finding. Hence, the grant of separation pay in lieu of reinstatement is
appropriate.
This is of course in addition to the payment of bac kwages which, in accordance with the
ruling in Bustamante v. NLRC should be computed from the time of Lagrama's dismissal
up to the time of the finality of this decision, without any deduction or qualification.
The Bureau of Working Conditions 32 classifies workers paid by results into two groups,
namely; (1) those whose time and performance is supervised by the employer, and (2)
those whose time and performance is unsupervised by the employer. The first involves an
element of control and supervision over the manner the work is to be performed, while
the second does not. If a piece worker is supervised, there is an employer-employee
relationship, as in this case. However, such an employee is not entitled to service
incentive leave pay since, as pointed out in Makati Haberdashery v. NLRC 33 and Mark
Roche International v. NLRC, 34 he is paid a fixed amount for work done, regardless of
the time he spent in accomplishing such work.

Lambo vs. NLRC

(GR No. 111042, October 26, 1999)
Facts:
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3,
1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays
and holidays. As in the case of the other 100 employees of private respondents,
petitioners were paid on a piece-work basis, according to the style of suits they made.
Regardless of the number of pieces they finished in a day, they were each given a daily
pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal
dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and
rest day, service incentive leave pay, separation pay, 13th month pay, and attorneys fees.
After hearing, Labor Arbiter found private respondents guilty of illegal dismissal and
accordingly ordered them to pay petitioners claims. On appeal, the NLRC reversed the
decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of work
and accordingly dismissed their claims except that for 13th month pay.
Petitioners allege that they were dismissed by private respondents as they were about to
file a petition with the Department of Labor and Employment (DOLE) for the payment of
benefits such as Social Security System (SSS) coverage, sick leave and vacation leave.
They deny that they abandoned their work.
Issue: Whether or not the petitioners are entitled to the minimum benefits provided by
law.
Ruling:
The petitioners are entitled to the minimum benefits provided by law. There is no dispute
that petitioners were employees of private respondents although they were paid not on the
basis of time spent on the job but according to the quantity and the quality of work
produced by them. There are two categories of employees paid by results: (1) those
whose time and performance are supervised by the employer. (Here, there is an element
of control and supervision over the manner as to how the work is to be performed. A
piece-rate worker belongs to this category especially if he performs his work in the
company premises.); and (2) those whose time and performance are unsupervised. (Here,
the employers control is over the result of the work. Workers on pakyao and takay basis
belong to this group.) Both classes of workers are paid per unit accomplished.
Piece-rate payment is generally practiced in garment factories where work is done in the
company premises, while payment on pakyao and takay basis is commonly observed in
the agricultural industry, such as in sugar plantations where the work is performed in bulk
or in volumes difficult to quantify. 4 Petitioners belong to the first category, i.e.,

supervised employees.
In this case, private respondents exercised control over the work of petitioners. As tailors,
petitioners worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. The mere fact that they were paid on a piece-rate basis
does not negate their status as regular employees of private respondents. The term "wage"
is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of
being expressed in terms of money whether fixed or ascertained on a time, task, piece or
commission basis. Payment by the piece is just a method of compensation and does not
define the essence of the relations. Nor does the fact that petitioners are not covered by
the SSS affect the employer-employee relationship.
As petitioners were illegally dismissed, they are entitled to reinstatement with back
wages. The Arbiter applied the rule in the Mercury Drug case, according to which the
recovery of back wages should be limited to three years without qualifications or
deductions. Any award in excess of three years is null and void as to the excess. The
Labor Arbiter correctly ordered private respondents to give separation pay.
Considerable time has elapsed since petitioners dismissal, so that reinstatement would
now be impractical and hardly in the best interest of the parties. In lieu of reinstatement,
separation pay should be awarded to petitioners at the rate of one month salary for every
year of service, with a fraction of at least six (6) months of service being considered as
one (1) year. The awards for overtime pay, holiday pay and 13th month pay are in
accordance with our finding that petitioners are regular employees, although paid on a
piece-rate basis.

R&E Transport vs. Latag

(GR No. 155214, Feb. 13, 2004)
Facts:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. However, he was
transferred to the petitioner R & E Transport, Inc. upon cessation of La Mallorcas business
operations. In January 1995, he got sick and was forced to apply for partial disability with the SSS,
which was then granted. Upon recovery, he reported back to work in September 1998 but was no
longer allowed on account of his old age. Latag asked the petitioner, through its administrative officer
for his retirement pay pursuant to Republic Act 7641 but he was ignored. Latag filed a case for
payment of his retirement pay before the NLRC.
Upon Pedro Latags death on April 30, 1999, he was substituted by his wife, the respondent Avelina
Latag. Labor Arbiter rendered a decision in favour of Latag. Petitioner filed the quitclaim and motion
to dismiss where the Labor Arbiter issued an order for Writ of Execution. Petitioners interposed an
appeal before NLRC. Appeal was dismissed for failure to post a cash or surety bond, as mandated by
law.
Issue: Whether or not Latag is entitled to retirement benefits considering she signed a waiver of
quitclaim.
Ruling: The Supreme Court ruled that the respondent is entitled to retirement benefits despite of the
waiver of quitclaims.
As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled
that the document was invalid and could not bar her from demanding the benefits legally due her
husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes
that frustrate workers' rights and benefits, and look with disfavor upon quitclaims and waivers that
bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article
287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. In the
absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixtyfive (65) years which is hereby declared the compulsory retirement age, who has served at least five
(5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being
considered as one whole year. Unless the parties provide for broader inclusions, the term one halfmonth salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of service incentive leaves.
The rules implementing the New Retirement Law similarly provide the above-mentioned formula for
computing the one-half month salary. Since Pedro was paid according to the "boundary" system, he is
not entitled to the 13th month 32 and the service incentive pay; hence, his retirement pay should be
computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the
"boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing
their benefits should be the average daily income. In this case, the CA found that Pedro was earning an
average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x
15 days x 14 years of service equals P105,000. Hence, it is clear that the late Pedro M. Latag is
entitled to retirement benefits.

Asian Transmission vs. CA

(425 SCRA 478, 2004)
Facts:
The Department of Labor and Employment (DOLE), through Undersecretary
Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993 wherein it
clarified, inter alia, that employees are entitled to 200% of their basic wage on April 9,
1993, whether unworked, which[,] apart from being Good Friday [and, therefore, a legal
holiday], is also Araw ng Kagitingan [which is also a legal holiday].
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy
Thursday and Araw ng Kagitingan.
Despite the explanatory bulletin, petitioner, Asian Transmission Corporation, opted to pay
its daily paid employees only 100% of their basic pay on April 9, 1998. Respondent Bisig
ng Asian Transmission Labor Union (BATLU) protested.
The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor Union
(BATLU), and held that Article 94 of the Labor Code provides for holiday pay for every
regular holiday, the computation of which is determined by a legal formula which is not
changed by the fact that there are two holidays falling on one day, like on April 9, 1998
when it was Araw ng Kagitingan and at the same time was Maundy Thursday.
In the assailed decision, the Court of Appeals upheld the findings of the Voluntary
Arbitrator.
Issue: Whether or not daily-paid employees are entitled to be paid for two regular
holidays which fall on the same day.
Ruling: The Court dismissed the petition and ruled that petitioners should pay its
employees 200% and not just 100% of their regular daily wages for the unworked April
9, 1998 which covers two regular holidays, namely, Araw ng Kagitingan and Maundy
Thursday.
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that
the State shall afford protection to labor. Its purpose is not merely "to prevent diminution
of the monthly income of the workers on account of work interruptions. In other words,
although the worker is forced to take a rest, he earns what he should earn, that is, his
holiday pay."
The provision is mandatory, regardless of whether an employee is paid on a monthly or
daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a
statutory benefit demandable under the law.

Autobus Transport System vs. Bautista

(GR No. 156364, May 16, 2005)
Facts:
Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc., since May 1995, as driver-conductor with travel routes Manila-Tuguegarao
via Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent
was paid on commission basis, seven percent (7%) of the total gross income per travel, on
a twice a month basis.
On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva
Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No.
124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning.
Respondent averred that the accident happened because he was compelled by the
management to go back to Roxas, Isabela, although he had not slept for almost twentyfour (24) hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the amount
of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged
buses and that despite respondent's pleas for reconsideration, the same was ignored by
management. After a month, management sent him a letter of termination. Thus, on 02
February 2000, respondent instituted a Complaint for Illegal Dismissal with Money
Claims for nonpayment of 13th month pay and service incentive leave pay against
Autobus.
On 29 September 2000, based on the pleadings and supporting evidence presented by the
parties, Labor Arbiter decided that the complaint be dismissed where the respondent must
pay to the complainant
Issue: Whether or not respondent is entitled to service incentive leave.
Ruling: The respondent is entitled to service incentive leave.
The disposition of the issue revolves around the proper interpretation of Article 95 of the
Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and
Regulations of the Labor Code which provides: RIGHT TO SERVICE INCENTIVE
LEAVE, (a) Every employee who has rendered at least one year of service shall be
entitled to a yearly service incentive leave of five days with pay.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule
shall apply to all employees except: (d) Field personnel and other employees whose
performance is unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid in a fixed amount for
performing work irrespective of the time consumed in the performance thereof;

A careful examination of said provisions of law will result in the conclusion that the grant
of service incentive leave has been delimited by the Implementing Rules and Regulations
of the Labor Code to apply only to those employees not explicitly excluded by Section 1
of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply
to employees classified as "field personnel."
The phrase "other employees whose performance is unsupervised by the employer" must
not be understood as a separate classification of employees to which service incentive
leave shall not be granted. Rather, it serves as an amplification of the interpretation of the
definition of field personnel under the Labor Code as those "whose actual hours of work
in the field cannot be determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract
basis, purely commission basis." Said phrase should be related with "field personnel,"
applying the rule on ejusdem generis that the general and unlimited terms are restrained
and limited by the particular terms that they follow. Hence, employees engaged on task or
contract basis or paid on purely commission basis are not automatically exempted from
the grant of service incentive leave, unless, they fall under the classification of field
personnel.
What must be ascertained in order to resolve the issue of propriety of the grant of service
incentive leave to respondent is whether or not he is field personnel?
According to Article 82 of the Labor Code, "field personnel" shall refer to nonagricultural employees who regularly perform their duties away from the principal place
of business or branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. This definition is further elaborated in
the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine TechnicalClerical Commercial Employees Association 10 which states that:
As a general rule, field personnel are those whose performance of their job/service
is not supervised by the employer or his representative, the workplace being away
from the principal office and whose hours and days of work cannot be determined
with reasonable certainty; hence, they are paid specific amount for rendering
specific service or performing specific work. If required to be at specific places at
specific times, employees including drivers cannot be said to be field personnel
despite the fact that they are performing work away from the principal office of
the employee.
At this point, it is necessary to stress that the definition of a "field personnel" is not
merely concerned with the location where the employee regularly performs his duties but
also with the fact that the employee's performance is unsupervised by the employer. As
discussed above, field personnel are those who regularly perform their duties away from
the principal place of business of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty. Thus, in order to conclude whether
an employee is a field employee, it is also necessary to ascertain if actual hours of work
in the field can be determined with reasonable certainty by the employer. In so doing, an

inquiry must be made as to whether or not the employee's time and performance are
constantly supervised by the employer. Respondent is not a field personnel but a regular
employee who performs tasks usually necessary and desirable to the usual trade of
petitioner's business. Accordingly, respondent is entitled to the grant of service incentive
leave.
The clear policy of the Labor Code is to grant service incentive leave pay to workers in
all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the
Implementing Rules and Regulations provides that "every employee who has rendered at
least one year of service shall be entitled to a yearly service incentive leave of five days
with pay."
Service incentive leave is a right which accrues to every employee who has served
"within 12 months, whether continuous or broken reckoned from the date the employee
started working, including authorized absences and paid regular holidays unless the
working days in the establishment as a matter of practice or policy, or that provided in the
employment contracts, is less than 12 months, in which case said period shall be
considered as one year." It is also "commutable to its money equivalent if not used or
exhausted at the end of the year." In other words, an employee who has served for one
year is entitled to it. He may use it as leave days or he may collect its monetary value. To
limit the award to three years, as the solicitor general recommends, is to unduly restrict
such right.

San Miguel Corp., vs. Del Rosario

(GR No. 168194, Dec. 13, 2005)
Facts:
On April 17, 2000, respondent was employed by petitioner as key account specialist. On
March 9, 2001, petitioner informed respondent that her probationary employment will be
severed at the close of the business hours of March 12, 2001. On March 13, 2001,
respondent was refused entry to petitioners premises. On June 24, 2002, respondent filed
a complaint against petitioner for illegal dismissal and underpayment/non-payment of
monetary benefits.
Issue: Whether or not respondent is a regular employee of petitioner.
Ruling: Affirmative. In termination cases, like the present controversy, the burden of
proving the circumstances that would justify the employees dismissal rests with the
employer. The best proof that petitioner should have presented to prove the probationary
status of respondent is her employment contract. None, having been presented, the
continuous employment of respondent as an account specialist for almost 11 months,
from April 17, 2000 to March 12, 2001, means that she was a regular employee and not a
temporary reliever or a probationary employee.
And while it is true that by way of exception, the period of probationary employment
may exceed six months when the parties so agree, such as when the same is established
by company policy, or when it is required by the nature of the work, none of these
exceptional circumstance were proven in the present case. Hence, respondent whose
employment exceeded six months is undoubtedly a regular employee of petitioner.
Moreover, even assuming that the employment of respondent from April 7, 2000 to
September 3, 2000, is only temporary, and that the reckoning period of her probationary
employment is September 4, 2000, she should still be declared a regular employee
because by the time she was dismissed on March 12, 2001, her alleged probationary
employment already exceeded six months, i.e., six months and eight days to be precise.
A worker was found to be a regular employee notwithstanding the presentation by the
employer of a Payroll Authority indicating that said employee was hired on probation,
since it was shown that he was terminated four days after the 6th month of his purported
probationary employment.
Neither will petitioners belated claim that respondent became a probationary employee
starting October 1, 2000 work against respondent. As earlier stated, the payroll authorities
indicating that respondents probationary status became effective as of such date are of
scant evidentiary value since it does not show the conformity of respondent. At any rate,
in the interpretation of employment contracts, whether oral or written, all doubts must be
resolved in favor of labor.
Hence, the contract of employment in the instant case, which appears to be an oral

agreement since no written form was presented by petitioner, should be construed as one
vesting respondent with a regular status and security of tenure.
Regarding the argument of redundancy, Redundancy, for purposes of the Labor Code,
exists where the services of an employee are in excess of what is reasonably demanded
by the actual requirements of the enterprise. Succinctly put, a position is redundant where
it is superfluous, and superfluity of a position or positions may be the outcome of a
number of factors, such as overhiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously manufactured or
undertaken by the enterprise.
The determination that the employees services are no longer necessary or sustainable
and, therefore, properly terminable is an exercise of business judgment of the employer.
The wisdom or soundness of this judgment is not subject to discretionary review of the
Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it
was prompted by an arbitrary or malicious act. In other words, it is not enough for a
company to merely declare that it has become overmanned. It must produce adequate
proof of such redundancy to justify the dismissal of the affected employees.
The following evidence may be proffered to substantiate redundancy: the new staffing
pattern, feasibility studies/proposal, on the viability of the newly created positions, job
description and the approval by the management of the restructuring.
In the case at bar, petitioner presented an affidavit of its Sales Manager and a
memorandum of the company both to the effect that there is a need to redeploy its regular
employees and terminate the employment of temporary employees, in view of an excess
in manpower. These documents, however, do not satisfy the requirement of substantial
evidence that a reasonable mind might accept as adequate to support a conclusion.
Moreover, the lingering doubt as to the existence of redundancy or of petitioners so
called restructuring, realignment or reorganization which resulted in the dismissal of
not only probationary employees but also of regular employees, is highlighted by the
non-presentation by petitioner of the required notice to the DOLE and to the separated
employees. If there was indeed a valid redundancy effected by petitioner, these notices
and the proof of payment of separation pay to the dismissed regular employees should
have been offered to establish that there was excess manpower in petitioners GMA-KAG
caused by a decline in the sales volume.
In balancing the interest between labor and capital, the prudent recourse in termination
cases is to safeguard the prized security of tenure of employees and to require employers
to present the best evidence obtainable, especially so because in most cases, the
documents or proof needed to resolve the validity of the termination, are in the possession
of employers. A contrary ruling would encourage employers to prevent the regularization
of an employee by simply invoking a feigned or unsubstantiated redundancy program.
Granting that petitioner was able to substantiate the validity of its reorganization or
restructuring, it nevertheless, failed to effect a fair and reasonable criterion in dismissing

respondent. The criteria in implementing a redundancy are: (a) less preferred status, e.g.
temporary employee; (b) efficiency; and (c) seniority.
It is evident from the foregoing that the criterion allegedly used by petitioner in
reorganizing its sales unit was the employment status of the employee. However, in the
implementation thereof, petitioner erroneously classified respondent as a probationary
employee, resulting in the dismissal of the latter. Verily, the absence of criteria and the
erroneous implementation of the criterion selected, both render invalid the redundancy
because both have the ultimate effect of illegally dismissing an employee.
Considering that respondent was illegally dismissed, she is entitled not only to
reinstatement but also to payment of full back wages, computed from the time her
compensation was actually withheld from her on March 13, 2001, up to her actual
reinstatement. As a regular employee of petitioner from the date of her employment on
April 17, 2000, she is likewise entitled to other benefits, i.e., service incentive leave pay
and 13th month pay computed from such date also up to her actual reinstatement.
Respondent is not, however, entitled to holiday pay because the records reveal that she is
a monthly paid regular employee. Under Section 2, Rule IV, Book III of the Omnibus
Rules Implementing the Labor Code, employees who are uniformly paid by the month,
irrespective of the number of working days therein, shall be presumed to be paid for all
the days in the month whether worked or not.
Anent attorneys fees, in actions for recovery of wages or where an employee was forced
to litigate and thus incurred expenses to protect his rights and interests, a maximum of
10% of the total monetary award by way of attorneys fees is justifiable under Article 111
of the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules, and
paragraph 7, Article 2208 of the Civil Code. The award of attorneys fees is proper and
there need not be any showing that the employer acted maliciously or in bad faith when it
withheld the wages. There need only be a showing that the lawful wages were not paid
accordingly, as in the instant controversy.

Penaranda vs. Baganga Plywood Corp.

(G.R. No. 159577, May 3, 2006)
Facts:
Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of Baganga
Plywood Corporation (BPC) to take charge of the operations and maintenance of its steam plant
boiler. In May 2001, Pearanda filed a Complaint for illegal dismissal with money claims against
BPC and its general manager, Hudson Chua, before the NLRC.
After the parties failed to settle amicably, the labor arbiter directed the parties to file their position
papers and submit supporting documents.
Pearanda alleges that he was employed by respondent Banganga on March 15, 1999 with a
monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally
terminated on December 19, 2000. he alleges that his services were terminated without the benefit
of due process and valid grounds in accordance with law. Furthermore, he was not paid his
overtime pay, premium pay for working during holidays/rest days, night shift differentials and
finally claimed for payment of damages and attorney's fees having been forced to litigate the
present complaint.
Respondent BPC is a domestic corporation duly organized and existing under Philippine laws and
is represented herein by its General Manager HUDSON CHUA, the individual respondent.
Respondents allege that complainant's separation from service was done pursuant to Art. 283 of
the Labor Code. The respondent BPC was on temporary closure due to repair and general
maintenance and it applied for clearance with the Department of Labor and Employment,
Regional Office No. XI, to shut down and to dismiss employees. And due to the insistence of
herein complainant he was paid his separation benefits.
Consequently, when respondent BPC partially reopened in January 2001, Pearanda failed to
reapply.
The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was
premature because he was still employed by BPC. Petitioners money claims for illegal dismissal
was also weakened by his quitclaim and admission during the clarificatory conference that he
accepted separation benefits, sick and vacation leave conversions and thirteenth month pay.
Issue: Whether or not Pearanda is a regular, common employee entitled to monetary benefits
under Art. 82 of the Labor Code and is entitled to the payment of overtime pay and other
monetary benefits.
Ruling: The petitioner is not entitled to overtime pay and other monetary benefits.
The Court disagrees with the NLRC's finding that petitioner was a managerial employee.
However, petitioner was a member of the managerial staff, which also takes him out of the
coverage of labor standards. Like managerial employees, officers and member of the managerial
staff are not entitled to the provisions of law on labor standards.
The Implementing Rules of the Labor Code define members of a managerial staff as those with
the following duties and responsibilities:

(1)
(2)
(3)

(4)

The primary duty consists of the performance of work directly related to

management policies of the employer;
Customarily and regularly exercise discretion and independent judgment;
(i) Regularly and directly assist a proprietor or a managerial employee whose
primary duty consists of the management of the establishment in which he is
employed or subdivision thereof; or (ii) execute under general supervision work
along specialized or technical lines requiring special training, experience, or
knowledge; or (iii) execute under general supervision special assignments and
tasks; and
who do not devote more than 20 percent of their hours worked in a workweek to
activities which are not directly and closely related to the performance of the
work described in paragraphs (1), (2), and (3) above."

The petitioners work involves:

1.
To supply the required and continuous steam to all consuming units at minimum
cost.
2.
To supervise, check and monitor manpower workmanship as well as operation of
boiler and accessories.
3.
To evaluate performance of machinery and manpower.
4.
To follow-up supply of waste and other materials for fuel.
5.
To train new employees for effective and safety white working.
6.
Recommend parts and suppliers purchases. acEHSI
7.
To recommend personnel actions such as: promotion, or disciplinary action.
8.
To check water from the boiler, feedwater and softener, regenerate softener if
beyond hardness limit.
9.
Implement Chemical Dosing.
10.
Perform other task as required by the superior from time to time." 34
The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a
member of the managerial staff. His duties and responsibilities conform to the definition of a
member of a managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved
overseeing the operation of the machines and the performance of the workers in the engineering
section. This work necessarily required the use of discretion and independent judgment to ensure
the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of
the managerial staff.
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that
he was the foreman responsible for the operation of the boiler. The term foreman implies that he
was the representative of management over the workers and the operation of the department.
Petitioner's evidence also showed that he was the supervisor of the steam plant. His classification
as supervisors is further evident from the manner his salary was paid. He belonged to the 10% of
respondent's 354 employees who were paid on a monthly basis; the others were paid only on a
daily basis.

Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU

(GR No. 1577745, October 19, 2007)
Facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees UnionALU (respondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rankand-file employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000,
respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner
demanding holiday pay for all employees, as provided for in the CBA. Petitioner, on the other hand, in
its Position Paper, insisted payment of the holiday pay in compliance with the CBA provisions, stating
that payment was presumed since the formula used in determining the daily rate of pay of the covered
employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12
divided by 360 days, thus with said formula, the employees are already paid their regular and special
days, the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.
Issue: Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday pay.
Held: Leyte IV Electric Cooperative is not liable for underpayment of holiday pay. The Voluntary
Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions
that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission
of respondent in its Position Paper that the employees were paid all the days of the month even if not
worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of
employees' salaries gains significance.
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43
Producers Bank of the Philippines v. National Labor Relations Commission. In this case, the monthly
salary was fixed by Wellington to provide for compensation for every working day of the year
including the holidays specified by law and excluding only Sundays. In fixing the salary,
Wellington used what it called the "314 factor"; that is, it simply deducted 51 Sundays from the 365
days normally comprising a year and used the difference, 314, as basis for determining the monthly
salary. The monthly salary thus fixed actually covered payment for 314 days of the year, including
regular and special holidays, as well as days when no work was done by reason of fortuitous cause,
such as transportation strike, riot, or typhoon or other natural calamity, or cause not attributable to the
employees.
It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the use
of a divisor that was less than 365 days cannot make the employer automatically liable for
underpayment of holiday pay. In said case, the employees were required to work only from Monday to
Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365
days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant
that the employees were deprived of their holiday pay for some or all of the ten legal holidays. The
304-day divisor used by the employer was clearly above the minimum of 287 days.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum
allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked
Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above
the minimum, indubitably, petitioner's employees are being given their holiday pay. Thus, the
Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting
respondent's claim of non-payment of holiday pay, a "double burden" was imposed upon petitioner
because it was being made to pay twice for its employees' holiday pay when payment thereof had
already been included in the computation of their monthly salaries.

Bahia Shipping Services vs. Chua,

(GR No. 162195, April 8, 2008)
Facts:
Reynaldo Chua, herein respondent, was under the employ of Bahia Shipping Services,
Inc., herein petitioner, as a restaurant waiter on board the M/S Black Watch , a luxury
cruise ship liner. His employment is pursuant to a Philippine Overseas Employment
Administration (POEA) approved employment contract dated October 9, 1996 for a
period of nine (9) months from October 18, 1996 to July 17, 1997.
On October 18, 1996, respondent, on board the cruise ship, left Manila for Heathrow,
England. About four months into his employment, or on February 15, 1997, responded
reported to work an hour and a half (1 ) late. Due to the incident, respondent was
issued a warning-termination form by the master of the cruise ship, Thor Fleten on
February 17, 1997, who likewise conducted an inquisitorial hearing to investigate the
incident on March 8, 1997.
Thereafter, on March 9, 1997, respondent was dismissed from service on the strength of
an unsigned and undated notice of dismissal. Attached to the dismissal notice is the
alleged minutes or records of the investigation and hearing.
On March 24, 1997, respondent filed a complaint for illegal dismissal and other monetary
claims. He claims that he was underpaid in the amount of US$110.00 per month for a
period of five (5) months, since he was only paid US$300.00 per month, instead of
US$410.00 per month, which was stipulated in his contract. Aside from underpayment,
he alleged that US$20.00 per month was also deducted from his salary by petitioner for
union dues.
Issue: In the computation of the award, should the guaranteed overtime pay per month
be included as part of his salary?
Ruling: There is no factual or legal basis in the inclusion of his "guaranteed overtime"
pay into his monthly salary computation for the entire unexpired period of his contract.
The Court ruled in Cagampan v. National Labor Relations Commission, that although an
overseas employment contract may guarantee the right to overtime pay, entitlement to
such benefit must first be established, otherwise the same cannot be allowed.
Petitioners contention that there is no factual or legal basis for the inclusion of said
amount since respondents repatriation is well-taken.

PNCC Skyway Traffic Management and Security Division Workers Organization

(GR No. 171231, Feb. 17, 2010)
Facts:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division
Workers' Organization (PSTMSDWO) is a labor union duly registered with the
Department of Labor and Employment (DOLE). Respondent PNCC Skyway Corporation
is a corporation duly organized and operating under and by virtue of the laws of the
Philippines. On November 15, 2002, petitioner and respondent entered into a Collective
Bargaining Agreement (CBA) incorporating the terms and conditions of their agreement
which included vacation leave and expenses for security license provisions.
A memorandum was passed by the respondents scheduling the leaves of the laborers.
Petitioner objected to the implementation of this memorandum and contended that their
union members have the preference in scheduling their vacation leave. On the other hand,
respondent argued that Article VIII, Section 1 (b) gives the management the final say
regarding the vacation leave schedule of its employees. Respondent may take into
consideration the employees' preferred schedule, but the same is not controlling.
Issue: Whether or not it is the prerogative of PNCC to schedule leaves of its employees.
Ruling:
Yes. The rule is that where the language of a contract is plain and unambiguous, its
meaning should be determined without reference to extrinsic facts or aids. The intention
of the parties must be gathered from that language, and from that language alone. Stated
differently, where the language of a written contract is clear and unambiguous, the
contract must be taken to mean that which, on its face, it purports to mean, unless some
good reason can be assigned to show that the words used should be understood in a
different sense.
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article
VIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation
leave shall be under the option of the employer. The preference requested by the
employees is not controlling because respondent retains its power and prerogative to
consider or to ignore said request. Thus, if the terms of a CBA are clear and leave no
doubt upon the intention of the contracting parties, the literal meaning of its stipulation
shall prevail. In fine, the CBA must be strictly adhered to and respected if its ends have to
be achieved, being the law between the parties.

Radio Mindanao Network, Inc. vs. Ybarola

(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.
The respondents services were terminated as a result of RMNs
reorganization/restructuring; they were given their separation pay P 631,250.00 for
Ybarola, and P 481,250.00 for Rivera. Sometime in December 2002, they executed
release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents filed separate complaints (which
were later consolidated) against RMN and its President, Eric S. Canoy, for illegal
dismissal with several money claims, including attorneys fees. They indicated that their
monthly salary rates were P 60,000.00 for Ybarola and P 40,000.00 for Rivera.
The respondents argued that the release/quitclaim they executed should not be a bar to the
recovery of the full benefits due them; while they admitted that they signed release
documents, they did so due to dire necessity.
The petitioners denied liability, contending that the amounts the respondents received
represented a fair and reasonable settlement of their claims, as attested to by the
release/quitclaim affidavits that they executed freely and voluntarily. They belied the
respondents claimed salary rates, alleging that they each received a monthly salary of P
9,177.00, as shown by the payrolls.
The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered
the payment of additional separation pay to the respondents P 490,066.00 for Ybarola
and P 429,517.55 for Rivera.
On appeal by the petitioners to the National Labor Relations Commission (NLRC), the
NLRC set aside the labor arbiters decision and dismissed the complaint for lack of merit.
It ruled that the withholding tax certificate cannot be the basis of the computation of the
respondents separation pay as the tax document included the respondents cost-of-living
allowance and commissions; as a general rule, commissions cannot be included in the
base figure for the computation of the separation pay because they have to be earned by
actual market transactions attributable to the respondents From the NLRC, the
respondents sought relief from the CA through a petition for certiorari under Rule 65 of
the Rules of Court.
The CA granted the petition and set aside the assailed NLRC dispositions. It reinstated
the labor arbiters separation pay award, rejecting the NLRCs ruling that the
respondents commissions are not included in the computation of their separation pay. It

pointed out that in the present case, the respondents earned their commissions through
actual market transactions attributable to them; these commissions, therefore, were part of
their salary.
The appellate court declared the release/quitclaim affidavits executed by the respondents
invalid for being against public policy, citing two reasons: (1) the terms of the settlement
are unconscionable; the separation pay the respondents received was deficient by at least
P 400,000.00 for each of them; and (2) the absence of voluntariness when the respondents
signed the document, it was their dire circumstances and inability to support their
families that finally drove them to accept the amount the petitioners offered.
Significantly, they dallied and it took them three months to sign the release/quitclaim
affidavits.
Issue: Whether or not the release/quitclaim affidavits are invalid for being against public
policy.
Ruling:
Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being
against public policy for two reasons: (1) the terms of the settlement are unconscionable;
the separation pay for termination due to reorganization/restructuring was deficient by
Php400,000.00 for each employee; they were given only half of the amount they were
legally entitled to; and (2) the absence of voluntariness when the employees signed the
document, it was their dire circumstances and inability to support their families that
finally drove them to accept the amount offered. Without jobs and with families to
support, they dallied in executing the quitclaim instrument, but were eventually forced to
sign given their circumstances. To be sure, a settlement under these terms is not and
cannot be a reasonable one, given especially the respondents length of service 25 years
for Ybarola and 19 years for Rivera. Radio Mindanao Network, Inc. and Eric S. Canoy
vs. Domingo Z. Ybarola, et al. G.R. No. 198662. September 12, 2012.