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LABOR STANDARDS CASE BRIEFS

Volume I

A compilation submitted to
ATTY. JEFFERSON MARQUEZ
University of San Carlos
School of Law and Governance
Cebu City

Prepared by:
Tanya Ibanez
JD2, EH407

TABLE OF CONTENTS

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez

BASIC PRINCIPLES
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SINGER SEWING MACHINE VS. NLRC


MANILA GOLF CLUB VS. IAC
ENCYCLOPEDIA BRITANICA VS. NLRC
CARUNGCONG VS. SUNLIFE
RAMOS VS. CA
SONZA VS. ABS-CBN
LAZARO VS. SOCIAL SECURITY COMMISSION
PHIL. GLOBAL COMMUNICATION VS. DE VERA
ABS-CBN VS. NAZARENO
FRANCISCO VS. NLRC
NOGALES ET AL., VS. CAPITOL MEDICAL CENTER ET AL.
COCA-COLA BOTTLERS PHILS. VS. DR. CLIMACO
CALAMBA MEDICAL CENTER VS. NLRC ET AL.
ESCASINAS ET AL., VS. SHANGRI-LAS MACTAN ISLAND RESORT ET AL.
TONGKO VS. MANUFACTURER LIFE INSURANCE CO. (PHILS), INC., ET AL.
SEMBLANTE ET AL., VS. COURT OF APPEALS, ET AL.
BERNARTE VS. PHIL. BASKETBALL ASSOCIATION ET AL.
LIRIO VS. GENOVIA
JAO VS. BCC PRODUCTS SALES INC. G
LEGEND HOTEL (MANILA) VS. REALUYO
THE NEW PHILIPPINE SKYLANDERS, INC., VS. DAKILA
TESORO ET AL., VS. METRO MANILA RETREADERS INC.
ROYALE HOMES MARKETING CORP. VS. ALCANTARA
FUJI TELEVISION NETWORK INC. V. ESPIRITU
BEGINO ET AL V. ABS-CBN CORP

HIRING OF EMPLOYEE
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33.

OLLENDORF VS. ABRAHANSON


DEL CASTILLO VS. RICHMOND
PT&T VS. NLRC
DUNCAN ASSO. OF DETAILMAN-PTGWO VS. GLAXO WELLCOME PHILS.
CITY OF MANILA VS. LAGUIO
STAR PAPER CORP., VS. SIMBOL
DEL MONTE PHILS VS. VELASCO
YRASUEGUI VS. PHIL AIR LINES

WAGE & THE WAGE RATIONALITAZION ACT


34.
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48.
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52.

ILAW AT BUKLOD NG MANGGAGAWA VS. NLRC


EMPLOYERS CONFEDERATION OF THE PHILS, VS. NWPC
MABEZA VS. NLRC
JOY BROTHERS INC., VS. NWPC
PRUBANKERS ASSO. VS. PRUDENTIAL BANK
MILLARE VS. NLRC
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS VS. QUISUMBING
BANKARD EMPLOYEES UNION VS. NLRC
ODANGO VS. NLRC
C. PLANAS COMMERCIAL VS. NLRC
EJR CRAFTS CORP., VS. CA
PAG ASA STEEL WORKS VS. CA
METROPOLITAN BANK VS. NWPC
EQUITABLE BANK VS. SADAC, G.R. NO. 164772
S.I.P. FOOD HOUSE ET AL., VS. BATOLINA
SLL INTERNATIONAL CABLES SPECIALIST VS. NLRC
VERGARA, JR. VS. COCA-COLA BOTTLERS PHILS INC.
ROYAL PLANT WORKERS UNION VS. COCA-COLA BOTTLERS PHILS INC. -CEBU PLANT
THE NATIONAL WAGES & PRODUCTIVITY COMMISSION ET AL., VS. THE ALLIANCE OF PROGRESSIVE
LABOR ET AL.,
53. DAVID/YIELS HOG DEALER VS. MACASIO

2 | UNIVERSITY OF SAN CARLOS

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez
54. OUR HAUS REALTY DEVELOPMENT CORP. VS. PARIAN ET AL.
55. MILAN ET AL. VS. NLRC
WAGE ENFORCEMENT AND RECOVERY
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58.
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60.
61.
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66.

RAJAH HUMABON HOTEL VS. TRAJANO


GUICO VS. SEC OF LABOR
EX-BATAAN VETRERANS SECURITY AGENCY VS. SEC. OF LABOR, ET AL.
SAPIO VS. UNDALOC CONSTRUCTION ET AL.
HON. SECRETARY OF LABOR VS. PANAY VETERANS SECURITY AND INVESTIGATION AGENCY
NATIONAL MINES AND ALLIED WORKERS UNION VS. MARCOPPER MINING CORP.
JETHRO INTELLIGENCE & SECURITY CORP., VS. SOLE
PHIL HOTELIERS INC., ET AL., VS. NATIONAL UNION OF WORKERS IN HOTEL
TIGER CONSTRUCTION AND DEVELOPMENT CORP VS. ABAY ET AL.
PEOPLES BROADCASTING (BOMBO RADYO PHILS) VS. SEC. OF DOLE ET AL.
SUPERIOR PACKAGING CORP., VS. BALAGSAY ET AL.

WAGE PROTECTION PROVISION & PROHIBITIONS REGARDING WAGES


67.
68.
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GAA VS. COURT OF APPEALS


NESTLE PHILS, VS. NLRC
FIVE J TAXI VS. NLRC
PHIL. VETERANS BANK VS. NLRC
PHIL APPLIANCES CORP. VS. CA
AGABON VS. NLRC
AMERICAN WIRE & CABLE DAILY RATED EMPLOYEES VS. AMERICAN WIRE
HONDA PHILS., VS. SAMAHANG MALAYANG MANGGAGAWA SA HONDA
PRODUCERS BANK VS. NLRC
JARDIN VS. NLRC
MANILA JOCKEYS CLUB EMPLOYEES LABOR UNION VS. MANILA JOCKEY CLUB
SAN MIGUEL CORP. ET AL., VS. LAYOC, JR., ET AL.
SAN MIGUEL CORP. VS. PONTILLAS
ARCO METAL PRODUCTS CO., INC., ET AL., VS. SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL-NAFLU
AGUANZA VS. ASIAN TERMINAL INC., ET AL.
GENESIS TRANSPORT SERVICE INC ET AL., VS. UNYON NG MALAYANG MANGGAGAWA NG GENESIS
TRANSPORT
CENTRAL AZUCARERA DE TARLAC VS. CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU
SHS PERFORATED MATERIALS, INC. ET AL., VS. DIAZ
NINA JEWELRY MANUFACTURING OF METAL ARTS INC. VS. MONTECILLO
LOCSIN II VS. MEKENI FOOD CORP.
TH SHOPFITTERS CORP., ET AL., VS. T&H SHOPFITTERS CORP., UNION
WESLEYAN UNIVERSITY-PHILS., VS. WESLEYAN UNIVERSITY-PHILS., FACULTY & STAFF ASSO.
BLUER THAN BLUE JOINT VENTURES CO., VS. ESTEBAN
NETLINK COMPUTER INC. VS. DELMO
PLDT VS. ESTRANERO

PAYMENT OF WAGES
92.
93.
94.
95.

CONGSON VS. NLRC


NORTH DAVAO MINING VS. NLRC
NATIONAL FEDERATION OF LABOR VS. CA
HEIRS OF SARA LEE VS. REY, G.R. NO. 149013, AUG. 31, 2006

CONDITIONS OF EMPLOYMENT
96. SAN JUAN DE DIOS HOSPITAL VS. NLRC
97. SIMEDARBY VS. NLRC
98. PHIL. AIRLINES VS. NLRC
99. LINTON COMMERCIAL CO., INC., VS. HELLERA ET AL.
100.
BISIG MANGGAGAWA SA TRYCO VS. NLRC
MINIMUM LABOR STANDARD BENEFITS

3 | UNIVERSITY OF SAN CARLOS

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez
101.
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UNION OF FILIPRO EMPLOYEES VS. VICAR


NATIONAL SUGAR REFINERY CORP., VS. NLRC
SALAZAR VS. NLRC
LABOR CONGRESS OF THE PHILS, VS. NLRC
MERCIDAR FISHING CORP., VS. NLRC
SAN MIGUEL CORP.
TAN VS. LAGRAMA
LAMBO VS. NLRC
R&E TRANSPORT VS. LATAG
ASIAN TRANSMISSION VS. CA
AUTOBUS TRANSPORT SYSTEM VS. BAUTISTA
SAN MIGUEL CORP., VS. DEL ROSARIO
PENARANDA VS. BAGANGA PLYWOOD CORP.
LEYTE IV ELECTRIC COOPERATIVE INC VS. LEYECO IV EMPLOYEES UNION-ALU
BAHIA SHIPPING SERVICES VS. CHUA
PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS ORGANIZATION
RADIO MINDANAO NETWORK INC. ET AL., VS. YBAROLA

4 | UNIVERSITY OF SAN CARLOS

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez

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 MedArbiters 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.

5 | UNIVERSITY OF SAN CARLOS

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez

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.

6 | UNIVERSITY OF SAN CARLOS

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez

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.

7 | UNIVERSITY OF SAN CARLOS

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez

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 employeremployee 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.

8 | UNIVERSITY OF SAN CARLOS

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez

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.

9 | UNIVERSITY OF SAN CARLOS

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez

Sonza vs. ABS-CBN


June 10, 2004, GR No. 138051
Facts:
In May 1994, ABS-CBN signed an agreement with Mel and Joey Management and Developments Corporation
(MJMDC), a television program. Referred to in the Agreement as Agent, MJMDC agreed to provide Sonzas
services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay Sonzas services a
monthly talent fee of P310, 000 for the first year and P317,000 for the second and third year of the
agreement.
On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President Lopez stating that he will
irrevocably resign in view of the recent events concerning his program and career, that he is waiving and
renouncing recovery of the remaining amount stipulated in the Agreement, but reserves the right to seek
recovery of the other benefits under said agreement.
On April 30, 1996, Sonza filed a complaint against ABS-CBN before the Department of Labor and
Employment, NCR alleging that ABS-CBN did not pay his salary, separation pay, service incentive leave, 13 th
month pay , signing bonus, travel allowance and amounts due under the Employees Stock Option Plan
(ESOP). ABS-CBN moved for the dismissal of the complaint on the ground that there was no 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.

10 | U N I V E R S I T Y O F S A N C A R L O S

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez

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.

11 | U N I V E R S I T Y O F S A N C A R L O S

LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez

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.

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ABS-CBN vs Nazareno
G.R. No. 164156, September 26, 2006
Facts:
ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on
different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu
Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees
identification cards and were required to work for a minimum of eight hours a day, including Sundays and
holidays. They were made to: a) Prepare, arrange airing of commercial broadcasting based on the daily
operations log and digicart of respondent ABS-CBN; b) Coordinate, arrange personalities for air interviews;
c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports;
d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints;
e) Assist, anchor program interview, etc; and f) Record, log clerical reports, man based control radio.
Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to
be effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since petitioner refused to
recognize PAs as part of the bargaining unit, respondents were not included to the CBA.
Due to a memorandum assigning PAs to non-drama programs, and that the DYAB studio operations would be
handled by the studio technician. There was a revision of the schedule and assignments and that respondent
Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa.
On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and
13th Month Pay with Damages against the petitioner before the NLRC.
Issue:
Whether or not 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.

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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.

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Francisco vs. NLRC


500 SCRA 690 (06)
Facts:
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as
Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company.
She was also designated as Liaison Officer to the City of Makati to secure business permits, construction
permits and other licenses for the initial operation of the company. In 1996, she was designated Acting
Manager, and was able to perform the duties of such for 5 years. As of December 31, 2000 her salary was
P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. In January
2001, she was replaced by Liza R. Fuentes as Manager. She alleged that she was required to sign a prepared
resolution for her replacement but she was assured that she would still be connected with Kasei Corporation.
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September
2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus
allegedly because the company was not earning well. On October 2001, she did not receive her salary from
the company. She made repeated follow-ups with the company cashier but she was advised that the
company was not earning well. On October 15, 2001, petitioner asked for her salary from Acedo and the rest
of the officers but she was informed that she is no longer connected with the company. Since she was no
longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before
the labor arbiter. The Labor Arbiter ruled in favor of the petitioner. The NLRC affirmed with modification the
Decision of the Labor Arbiter. On appeal, the Court of Appeals reversed the NLRC decision. The appellate
court denied petitioners motion for reconsideration, hence, the present recourse.
Issue:
Whether there was an employer-employee relationship between petitioner and private respondent Kasei
Corporation.
Held:
The determination of the relationship between employer and employee depends upon the circumstances of
the whole economic activity, such as: (1) the extent to which the services performed are an integral part of
the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature
and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the
amount of initiative, skill, judgment or foresight required for the success of the claimed independent
enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued employment in that line of
business.The proper standard of economic dependence is whether the worker is dependent on the alleged
employer for his continued employment in that line of business.
In the United States, the touchstone of economic reality in analyzing possible employment relationships for
purposes of the Federal Labor Standards Act is dependency. By analogy, the benchmark of economic reality
in analyzing possible employment relationships for purposes of the Labor Code ought to be the economic
dependence of the worker on his employer. Under the broader economic reality test, the petitioner can
likewise be said to be an employee of respondent corporation because she had served the company for six
years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month
pay, bonuses and allowances, as well as deductions and Social Security contributions from August 1, 1999 to
December 18, 2000.
When petitioner was designated General Manager, respondent 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.

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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 contractorphysician. 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 contractor-physician. There is,
however, an exception to this principle. The hospital may be liable if the physician is the "ostensible" agent
of the hospital. This exception is also known as the "doctrine of apparent authority." The doctrine of apparent
authority essentially involves two factors to determine the liability of an independent-contractor physician.
The first factor focuses on the hospital's manifestations and is sometimes described as an inquiry whether
the hospital acted in a manner which would lead a reasonable person to conclude that the individual who
was alleged to be negligent was an employee or agent of the hospital. In this regard, the hospital need not
make express representations to the patient that the treating physician is an employee of the hospital;
rather a representation may be general and implied. The doctrine of apparent authority is A specie of the
doctrine of estoppel. Article 1431 of the Civil Code provides that "through estoppel, an admission or
representation is rendered conclusive upon the person making it, and cannot be denied or disproved as
against the person relying thereon." CMC impliedly held out Dr. Estrada as a member of its medical staff.
Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales
to believe that Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate such authority.
First, CMC granted staff privileges to Dr. Estrada. Second, CMC made Rogelio sign consent forms printed on
CMC letterhead. Third, Dr. Estrada's referral of Corazon's profuse vaginal bleeding to Dr. Espinola, who was

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then the Head of the Obstetrics and Gynecology Department of CMC, gave the impression that Dr. Estrada as
a member of CMC's medical staff was collaborating with other CMC-employed specialists in treating Corazon.
WHEREFORE, the Court PARTLY GRANTS the petition. The Court finds respondent Capitol Medical Center
vicariously liable for the negligence of Dr. Oscar Estrada.

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:

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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.

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Calamba Medical 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 spousesrespondents?
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.

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

G.R. No. 178827, March 4, 2009


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

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

G.R. No. 167622, January 25, 2011


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
dismissal. In 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:
Whether 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.

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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.

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


G.R. No. 196426, August 15, 2011
Facts:
Petitioners Marticio Semblante and Dubrick Pilar assert that they were hired by respondents-spouses Vicente
and Maria Luisa Loot, the owners of Gallera de Mandaue (the cockpit), as the official masiador and
sentenciador, respectively, of the cockpit sometime in 1993.
As the masiador, Semblante calls and takes the bets from the gamecock owners and other bettors and
orders the start of the cockfight. He also distributes the winnings after deducting the arriba, or the
commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing of fighting
cocks, determines the fighting cocks physical condition and capabilities to continue the cockfight, and
eventually declares the result of the cockfight.
For their services as masiado rand sentenciador, Semblante receives PhP 2,000 per week or a total of PhP
8,000 per month, while Pilar gets PhP 3,500 a week or PhP 14,000 per month. They work every Tuesday,
Wednesday, Saturday, and Sunday every week, excluding monthly derbies and cockfights held on special
holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the
morning depending on the needs of the cockpit. Petitioners had both been issued employees identification
cards that they wear every time they report for duty. They alleged never having incurred any infraction
and/or violation of the cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of
respondents, and were informed of the termination of their services effective that date. This prompted
petitioners to file a complaint for illegal dismissal against respondents. Respondents denied that petitioners
were their employees and alleged that they were associates of respondents independent contractor, Tomas
Vega. Respondents claimed that petitioners have no regular working time or day and they are free to decide
for themselves whether to report for work or not on any cockfighting day. In times when there are few
cockfights in Gallera de Mandaue, petitioners go to other cockpits in the vicinity. Lastly, petitioners, so
respondents assert, were only issued identification cards to indicate that they were free from the normal
entrance fee and to differentiate them from the general public.
In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners to be regular employees
of respondents as they performed work that was necessary and indispensable to the usual trade or business
of respondents for a number of years. The Labor Arbiter also ruled that petitioners were illegally dismissed,
and so ordered respondents to pay petitioners their back wages and separation pay.
Respondents counsel received the Labor Arbiters Decision on September 14, 2004. And within the 10-day
appeal period, he filed the respondents appeal with the NLRC on September 24, 2004, but without posting a
cash or surety bond equivalent to the monetary award granted by the Labor Arbiter.
The NLRC held in its Resolution of October 18, 2006 that there was no employer-employee relationship
between petitioners and respondents, respondents having no part in the selection and engagement of
petitioners, and that no separate individual contract with respondents was ever executed by petitioners.
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

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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.,
G.R. No. 192084, September 14, 2011
Facts:
Complainants, Jose Mel Bernarte and Renato Guevarra, aver that they were invited to join the PBA as
referees. During the leadership of Commissioner Emilio Bernardino, they were made to sign contracts on a
year-to-year basis. During the term of Commissioner Eala, however, changes were made on the terms of
their employment.
Bernarte, was not made to sign a contract during the first conference of the All-Filipino Cup which was from
February 23, 2003 to June 2003. It was only during the second conference when he was made to sign a one
and a half month contract for the period July 1 to August 5, 2003.
January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising him that his
contract would not be renewed citing his unsatisfactory performance on and off the court. It was a total
shock for Bernarte who was awarded Referee of the year in 2003. He felt that the dismissal was caused by
his refusal to fix a game upon order of Ernie De Leon.
Guevarra alleges that he was invited to join the PBA pool of referees in February 2001. On March 1, 2001, he
signed a contract as trainee. Beginning 2002, he signed a yearly contract as Regular Class C referee. On May
6, 2003, respondent Martinez issued a memorandum to Guevarra expressing dissatisfaction over his
questioning on the assignment of referees officiating out-of-town games. Beginning February 2004, he was
no longer made to sign a contract.
The Court of Appeals denied the motion for reconsideration.
Complainants entered into two contracts of retainer with the PBA in the year 2003. The first contract was for
the period January 1, 2003 to July 15, 2003; and the second was for September 1 to December 2003. After
the lapse of the latter period, PBA decided not to renew their contracts.
Complainants were not illegally dismissed because they were not employees of the PBA. Their respective
contracts of retainer were simply not renewed. PBA had the prerogative of whether or not to renew their
contracts, which they knew were fixed.
Labor Arbiters decision, on 31 March 2005, declared petitioner an employee whose dismissal by respondents
was illegal. Accordingly, the Labor Arbiter ordered the reinstatement of petitioner and the payment of back
wages, moral and exemplary damages and attorneys fees.
In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiters judgment. The dispositive portion of
the NLRCs decision reads:
WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor Arbiter Teresita D. Castillon-Lora dated
March 31, 2005 is AFFIRMED.
The Court of Appeals found petitioner an independent contractor since respondents did not exercise any form
of control over the means and methods by which petitioner performed his work as a basketball referee. The
Court of Appeals held:
While the NLRC agreed that the PBA has no control over the referees acts of blowing the whistle and making
calls during basketball games, it, nevertheless, theorized that the said acts refer to the means and methods
employed by the referees in officiating basketball games for the illogical reason that said acts refer only to
the referees skills. How could a skilled referee perform his job without blowing a whistle and making calls?
Worse, how can the PBA control the performance of work of a referee without controlling his acts of blowing
the whistle and making calls?
Issues:

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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 fourfold 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.

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Lirio vs Genovia
G.R. No. 169757, NOVEMBER 23, 2011
Facts:
On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or Celkor
Ad Sonicmix Recording Studio for illegal dismissal, non-payment of commission and award of moral and
exemplary damages.
In his Position Paper, respondent Genovia alleged, among others, that on August 15, 2001, he was hired as
studio manager by petitioner Lirio, owner of Celkor Ad Sonicmix Recording Studio (Celkor). He was employed
to manage and operate Celkor and to promote and sell the recording studio's services to music enthusiasts
and other prospective clients. He received a monthly salary of P7,000.00. They also agreed that he was
entitled to an additional commission of P100.00 per hour as recording technician whenever a client uses the
studio for recording, editing or any related work. He was made to report for work from Monday to Friday from
9:00 a.m. to 6 p.m. On Saturdays, he was required to work half-day only, but most of the time, he still
rendered eight hours of work or more. All the employees of petitioner, including respondent, rendered
overtime work almost every day, but petitioner never kept a daily time record to avoid paying the employees
overtime pay.
Respondent stated that a few days after he started working as a studio manager, petitioner approached him
and told him about his project to produce an album for his 15-year-old daughter, Celine Mei Lirio, a former
talent of ABS-CBN Star Records. Petitioner asked respondent to compose and arrange songs for Celine and
promised that he (Lirio) would draft a contract to assure respondent of his compensation for such services.
As agreed upon, the additional services that respondent would render included composing and arranging
musical scores only, while the technical aspect in producing the album, such as digital editing, mixing and
sound engineering would be performed by respondent in his capacity as studio manager for which he was
paid on a monthly basis. Petitioner instructed respondent that his work on the album as composer and
arranger would only be done during his spare time, since his other work as studio manager was the priority.
Respondent then started working on the album.
Respondent alleged that before the end of September 2001, he reminded petitioner about his compensation
as composer and arranger of the album. Petitioner verbally assured him that he would be duly compensated.
By mid-November 2001, respondent finally finished the compositions and musical arrangements of the songs
to be included in the album. Before the month ended, the lead and back-up vocals in the ten (10) songs were
finally recorded and completed. From December 2001 to January 2002, respondent, 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%

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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 co-produce the album based on the
following terms and conditions: (1) petitioner shall provide all the financing, equipment and recording
studio; (2) Celine Mei Lirio shall sing all the songs; (3) respondent shall act as composer and arranger of all
the lyrics and the music of the five songs he already composed and the revival songs; (4) petitioner shall
have exclusive right to market the album; (5) petitioner was entitled to 60% of the net profit, while
respondent and Celine Mei Lirio were each entitled to 20% of the net profit; and (6) respondent shall be
entitled to draw advances of P7,000.00 a month, which shall be deductible from his share of the net profits
and only until such time that the album has been produced.
According to petitioner, they arrived at the foregoing sharing of profits based on the mutual understanding
that respondent was just an amateur composer with no track record whatsoever in the music industry, had
no definite source of income, had limited experience as an arranger, had no knowledge of the use of sound
mixers or digital arranger and that petitioner would help and teach him how to use the studio equipment;
that petitioner would shoulder all the expenses of production and provide the studio and equipment as well
as his knowledge in the use thereof; and Celine Mei Lirio would sing the songs. They embarked on the
production of the album on or about the third week of August 2002.
Petitioner asserted that from the aforesaid terms and conditions, his relationship with respondent is one of an
informal partnership under Article 1767of the New Civil Code, since they agreed to contribute money,
property or industry to a common fund with the intention of dividing the profits among themselves. Petitioner
had no control over the time and manner by which respondent composed or arranged the songs, except on
the result thereof. Respondent reported to the recording studio between 10:00 a.m. and 12:00 noon. Hence,
petitioner contended that no employer-employee relationship existed between him and the respondent, and
there was no illegal dismissal to speak of.
Issue:
Whether or not employer-employee relationship exists?
Ruling:
Yes. The elements to determine the existence of an employment relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employees conduct. The most important element is the employers control of the
employees conduct, not only as to the result of the work to be done, but also as to the means and methods
to accomplish it.
It is settled that no particular form of evidence is required to prove the existence of an employer-employee
relationship. Any competent and relevant evidence to prove the relationship may be admitted.

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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.

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Charlie Jao vs Bcc Products Sales, Inc.


GR No. 163700, April 18, 2012
Facts:
Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President, respondent Terrance
Ty (Ty), employed him as comptroller starting from September 1995 with a monthly salary of P20,000.00 to
handle the financial aspect of BCC's business; that on October 19, 1995, the security guards of BCC, acting
upon the instruction of Ty, barred him from entering the premises of BCC where he then worked; that his
attempts to report to work in November and December 12, 1995 were frustrated because he continued to be
barred from entering the premises of BCC; and that he filed a complaint dated December 28, 1995 for illegal
dismissal, reinstatement with full backwages, non-payment of wages, damages and attorney's fees.
Respondents countered that petitioner was not their employee but the employee of Sobien Food Corporation
(SFC), the major creditor and supplier of BCC; and that SFC had posted him as its comptroller in BCC to
oversee BCC's finances and business operations and to look after SFC's interests or investments in BCC.; that
their issuance of the ID to petitioner was only for the purpose of facilitating his entry into the BCC premises
in relation to his work of overseeing the financial operations of BCC for SFC; that the ID should not be
considered as evidence of petitioner's employment in BCC; that petitioner executed an affidavit in March
1996, 20 stating, among others, as follows:
1.
2.

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

Petitioner counters, however, that the affidavit did not establish the absence of an employer-employee
relationship between him and respondents because it had been executed in March 1996, or after his
employment with respondents had been terminated on December 12, 1995; and that the affidavit referred to
his subsequent employment by SFC following the termination of his employment by BCC.
Issue:
The sole issue is whether or not an employer-employee relationship existed between petitioner and BCC.
Ruling:
In determining the presence or absence of an employer-employee relationship, the Court has consistently
looked for the following incidents, to wit: (a) the selection and engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d) the employer's power to control the employee on the means
and methods by which the work is accomplished. The last element, the so-called control test, is the most
important element.
Petitioner presented no document setting forth the terms of his employment by BCC. The failure to present
such agreement on terms of employment may be understandable and expected if he was a common or
ordinary laborer who would not jeopardize his employment by demanding such document from the
employer, but may not square well with his actual status as a highly educated professional.
Petitioner's admission that he did not receive his salary for the three months of his employment by BCC, as
his complaint for illegal dismissal and non-payment of wages and the criminal case for estafa he later filed
against the respondents for non-payment of wages indicated, further raised grave doubts about his assertion
of employment by BCC. If the assertion was true, we are puzzled how he could have remained in BCC's
employ in that period of time despite not being paid the first salary of P20,000.00/month. Moreover, his
name did not appear in the payroll of BCC despite him having approved the payroll as comptroller.
Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of the
insincerity of petitioner's assertion of employment by BCC. In the petition for review on certiorari, he averred
that he had been barred from entering the premises of BCC on October 19, 1995, 27 and thus was illegally
dismissed. Yet, his complaint for illegal dismissal stated that he had been illegally dismissed on December
12, 1995 when respondents' security guards barred him from entering the premises of BCC, 28 causing him
to bring his complaint only on December 29, 1995, and after BCC had already filed the criminal complaint

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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.

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Legend Hotel vs Realuyo


GR 153511, July 18, 2012
Facts:
This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel. On
August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for alleged unfair labor
practice, constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for holidays,
separation pay, service incentive leave pay, and 13111 month pay.
Respondent averred that he had worked as a pianist at the Legend Hotels Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night that was given to him after each nights performance;
that his rate had increased to P750.00/night; and that during his employment, he could not choose the time
of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that
the Legend Hotels restaurant manager had required him to conform with the venues motif; that he had
been subjected to the rules on employees representation checks and chits, a privilege granted to other
employees; that on July 9, 1999, the management had notified him that as a cost-cutting measure his
services as a pianist would no longer be required effective July 30, 1999; that he disputed the excuse,
insisting that Legend Hotel had been lucratively operating as of the filing of his complaint; and that the loss
of his employment made him bring his complaint. 2
Issue:
Whether there exists an employer-employee relationship
Ruling:
Employer-employee relationship existed between the parties. The issue of whether or not an employeremployee relationship existed between petitioner and respondent is essentially a question of fact. The
factors that determine the issue include who has the power to select the employee, who pays the
employees wages, who has the power to dismiss the employee, and who exercises control of the methods
and results by which the work of the employee is accomplished. 10 Although no particular form of evidence is
required to prove the existence of the relationship, and any competent and relevant evidence to prove the
relationship may be admitted, a finding that the relationship exists must nonetheless rest on substantial
evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to
justify a conclusion.
A review of the circumstances reveals that respondent was, indeed, petitioners employee. He was
undeniably employed as a pianist in petitioners Madison Coffee Shop/Tanglaw Restaurant from September
1992 until his services were terminated on July 9, 1999.
First of all, petitioner actually wielded the power of selection at the time it entered into the service contract
dated September 1, 1992 with respondent. This is true, notwithstanding petitioners insistence that
respondent had only offered his services to provide live music at petitioners Tanglaw Restaurant, and
despite petitioners position that what had really transpired was a negotiation of his rate and time of
availability. The power of selection was firmly evidenced by, among others, the express written
recommendation dated January 12, 1998 by Christine Velazco, petitioners restaurant manager, for the
increase of his remuneration.
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

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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)
b)
c)
d)

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;
He could not choose the place of his performance;
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
He was subjected to the rules on employees representation check and chits, a privilege granted to
other employees.

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The New Philippine Skylanders, Inc., vs. Dakila


G.R. No. 199547, Sept. 24, 2012
Facts:
November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with
the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the certification election
conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine
Skylanders Employees Association-WATU (PSEA-WATU) immediately protested the result of the election
before the Secretary of Labor.
In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLUs supposed
deliberate and habitual dereliction of duty toward its members. Attached to the notice was a copy of the
resolution adopted and signed by the officers and members of PSEA authorizing their local union to
disaffiliate from its mother federation.
PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to
Philippine Skylanders Employees Association -National Congress of Workers (PSEA-NCW), and to maintain
continuity within the organization, allowed the former officers of PSEA-PAFLU to continue occupying their
positions as elected officers in the newly-forged PSEA-NCW.
On 17 March, 1994, PSEA-NCW entered into a collective bargaining agreement with PSI which was
immediately registered with the Department of Labor and Employment.
PAFLU requested for the accounting. PSI through its personnel manager Francisco Dakila denied the request.
PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president Mariles
Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from PSIs refusal to bargain
collectively with its workers, the company through its president and personnel manager, was also liable for
interfering with its employees union activities
Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco Dakila. Through
Ayroso PAFLU claimed that Dakila was present in PSEAs organizational meeting thereby confirming his illicit
participation in union activities. Ayroso added that the members of the local union had unwittingly fallen into
the manipulative machinations of PSI and were lured into endorsing a collective bargaining agreement which
was detrimental to their interests.
PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional party
respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito Rodillas,
Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol,
Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa, were equally guilty of
unfair labor practice since they brazenly allowed themselves to be manipulated and influenced by petitioner
Francisco Dakila.
Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an interunion 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, PSEA-PAFLU and their respective
officers guilty of unfair labor practice.
As PSEA-NCWs personality was not accorded recognition, its collective bargaining agreement with PSI was
struck down for being invalid.
PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC). But the
NLRC upheld the Decision ofthe Labor Arbiter.
Ruling:
Local unions have a right to separate from their mother federation on the ground that as separate and
voluntary associations, local unions do not owe their creation and existence to the national federation to
which they are affiliated but, instead, to the will of their members. The sole essence of affiliation is to
increase, by collective action, the common bargaining power of local unions for the effective enhancement

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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.

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


GR No. 171482, March 12, 2014
This case concerns the effect on the status of employment of employees who entered into a Service
Franchise Agreement with their employer.
Facts:
On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro, Pedro Ang, and Gregorio Sharp
used to work as salesmen for respondents Metro Manila Retreaders, Inc., Northern Luzon Retreaders, Inc., or
Power Tire and Rubber Corporation. These are sister companies collectively called Bandag. Bandag offered
repair and retread services for used tires. In 1998, however, Bandag developed a franchising scheme that
would enable others to operate tire and retreading businesses using its trade name and service system.
Petitioners quit their jobs as salesmen and entered into separate Service Franchise Agreements (SFAs) with
Bandag for the operation of their respective franchises. Under this SFA, Bandag would provide funding with
the petitioners subject to regular liquidation of revolving funds. The expenses of these funds will be deducted
from their sale in order to determine their income. After some time, petitioners began to default on their
obligations to submit periodic liquidations of their operational expenses in relation to the revolving funds
Bandag provided them. Bandag terminated their SFA.
Aggrieved, petitioners filed a complaint for constructive dismissal, 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

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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 employer-employee 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 employeremployee 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 employeremployee 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.

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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.

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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 nonrenewal 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.

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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.

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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 1996-2002. 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 employeremployee 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. 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?

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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 so-called 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.

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HIRING OF EMPLOYEE
Ollendor vs Abrahanson
38 Phil 585
Facts:
An agreement was entered into by Ollendorff and Abrahamson whereby theformer agreed to employ
Abrahamson and the latter bound himself to work for him for a period of 2yrs with a salary of P50 per week.
Included in the agreement is a prohibition of Abrahamson from engaging in a similar or competitive business
to anywhere within the Philippine Islands for a period of five years. The duties performed by the defendant
were such to make it necessary for him to be generally knowledgeable of Ollendorffs business, moreover, he
had been engaged in similar work for several years even before his employment of the plaintiffs embroidery
business.
After some months from his departure for the US, Abrahamson returned to Manila and is now a manager of
the Philippine Underwear Co. This corporation, unlike Ollendorffs, does not maintain a factory in Phil. Islands
but send material and embroidery designs from New York to its local representative here who employs
Filipino needle workers to embroider the designs and make up the garments in their homes. The only
difference between plaintiff's business and that of the firm by which the defendant is employed, is the
method of doing the finishing work -- the manufacture of the embroidered material into finished garments.
Plaintiff commenced an action to prevent by injunction, any further breach of that part of defendant's
contract of employment by which he agreed that he would not "enter into or engage himself directly or
indirectly . . . in a similar or competitive business to that of (plaintiff) anywhere within the Philippine Islands
for a period of five years . . ." from the date of the agreement.
Issue:
Whether the part of the agreement restraining the defendant from engaging into similar business of the
plaintiff is void?
Ruling:
The contract was not void as constituting an unreasonable restraint of trade. The rule in this jurisdiction is
that the obligations created by contracts have the force of law between the contracting parties and must be
enforce in accordance with their tenor. (Civil Code, art 1091.) The only limitation upon the freedom of
contractual agreement is that the pacts established shall not be contrary to "law, morals or public order."
(Civil Code, Art. 1255.)
Following the rule in Mitchel vs. Reynolds, Court adopt the modern rule that the validity of restraints upon
trade or employment is to be determined by the intrinsinc reasonableness of restriction in each case, rather

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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.

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Del Castillo vs. Richmond


G.R. No. L-21127, February 9, 1924
Facts:
The case was instituted to declare the contract of services entered into by Alfonso del Castillo as null and
void. Del Castillo alleges that the provisions and conditions contained in the third paragraph of said contract
constitute an illegal and unreasonable restriction upon his liberty to contract, are contrary to public policy,
and are unnecessary in order to constitute a just and reasonable protection to the defendant; and asked that
the same be declared null and void and of no effect.
The said contract constituted an illegal and unreasonable restriction upon the right of the plaintiff to contract
and was contrary to public policy. It will be noted that the restrictions placed upon the plaintiff are strictly
limited (a) to a limited district or districts, and (b) during the time while the defendant or his heirs may own
or have open a drugstore, or have an interest in any other one within said limited district.
Issue:
Whether or not the said restraint is reasonable.
Ruling:
Supreme Court 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.

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PT & T vs. NLRC


G.R. No. 118978; May 23, 1997
Facts:
Grace de Guzman was initially hired by petitioner as a reliever for a fixed period from November 21, 1990
until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under the Reliever Agreement which
she signed with Petitioner Company, her employment was to be immediately terminated upon expiration of
the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991,
private respondents services as reliever were again engaged by petitioner, this time in replacement of one
Erlinda F. Dizon who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever
Agreement, her services were terminated.
It now appears that private respondent had made the a representation that she was single even though she
contracted marriage months before, in the two successive reliever agreements which she signed on June 10,
1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor sent
to private respondent a memorandum requiring her to explain the discrepancy. In that memorandum, she
was reminded about the companys policy of not accepting married women for employment.
Private respondent was dismissed from the company effective January 29, 1992, which she readily contested
by initiating a complaint for illegal dismissal. Labor Arbiter handed down a decision declaring that private
respondent, who had already gained the status of a regular employee, was illegally dismissed by petitioner.
On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld the labor
arbiter and it ruled that private respondent had indeed been the subject of an unjust and unlawful
discrimination by her employer, PT&T.
Issue:
Whether or not discrimination merely by reason of the marriage of a female employee is expressly prohibited
by Article 136.
Ruling:
Supreme Court 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.
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

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legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of
marriage.

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


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

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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.

City of Manila vs. Laguio


G.R. No. 118127, April 12, 2005
Facts:
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the business
of operating hotels, motels, hostels and lodging houses. 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.

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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.

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Star Paper Corp., vs Simbol (2006)


G.R. No. 164774
Facts:
Simbol was employed by the company on Oct 1993. He met Alma Dayrit, also an employee of the company,
whom he married. Prior to the marriage, Ongsitco advised the couple that should they decide to get married,
one of them should resign pursuant to a company policy to which Simbol complied.
1.
2.

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.
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:
Whether or not 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.

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Del Monte Phils. V. Velasco


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

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YRASUEGUI V. PHIL. AIRLINE


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. [15] However, the weight standards need not
be complied with under pain of dismissal since his weight did not hamper the performance of his duties. [16]
Assuming that it did, petitioner could be transferred to other positions where his weight would not be a
negative factor. NLRC affirmed the decision of the Labor Arbiter, with modifications.
The CA, however, reversed the ruling. Contrary to the NLRC ruling, the weight standards of PAL are meant to
be a continuing qualification for an employees position. The failure to adhere to the weight standards is an
analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in relation to Article
282(a). It is not willful disobedience as the NLRC seemed to suggest.
Issue:
Whether or not the petitioner was illegally dismissed.
Ruling:
The obesity of petitioner is a ground for dismissal under Article 282(e) of the Labor Code. The 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.

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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:
Whether or not 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."

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Employers Confederation of the Phils.vs. NWPC

201 SCRA 759 [1991]


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 "salaryceiling" 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.

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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.

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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.

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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:

Whether a wage distortion resulted from respondent's implementation of the Wage Orders.

Ruling:

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

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

Wage distortion involves four elements: (1) An existing hierarchy of positions with corresponding salary
rates; (2) A significant change in the salary rate of a lower pay class without a concomitant increase in the
salary rate of a higher one; (3)The elimination of the distinction between the two levels and (4) The existence
of the distortion in the same region of the country.
A disparity in wages between employees holding similar positions but in different regions does not constitute
wage distortion as contemplated by law. As stated, it is the hierarchy of positions and the disparity of their
corresponding wages and other emoluments that are sought to be preserved by the concept of wage
distortion.

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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.

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International Alliance of Educators vs. Quisumbing


333 SCRA 13 [2000]
Facts:
International school, Inc., pursuant to Presidential Decree 732, is a domestic educational institution
established primarily for dependents of foreign diplomatic personnel and other temporary residents. The
decree authorizes the School to employ its teaching and management personnel selected by it either locally
or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws
and regulations attending their employment, except laws that have been or will be enacted for the protection
of employees.
Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same
into two: (1) foreign-hires and (2) local-hires. The School grants foreign-hires certain benefits not accorded
local-hires. These include housing, transportation, shipping costs, taxes, and home leave allowance. Foreignhires are also paid a salary rate twenty-five percent (25%) more than that of local-hires. The School justifies
the difference on two significant economic disadvantages that foreign-hires have to endure, namely: (a)
the dislocation factor and (b) limited tenure.
Petitioner union claims that the point-of-hire classification by the School is discriminatory to Filipinos and that
the grant of higher salaries to foreign-hires constitutes racial discrimination. When the CBA negotiation
reached a deadlock, the Secretary of Labor assumed jurisdiction. The Acting Secretary upheld the point-ofhire 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.

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BANKARD EMPLOYEES UNION v. NLRC


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

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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 (2005)
G.R. No. 147420
Facts:
Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday and half of
Saturday. After a routine inspection, the Regional Branch of the Department of Labor and Employment found
ANTECO liable for underpayment of the monthly salaries of its employees. On September 1989, the DOLE
directed ANTECO to pay its employees wage differentials amounting to P1,427,412.75. ANTECO failed to pay.
On various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with the NLRC praying
for payment of wage differentials, damages and attorneys fees.
On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting them wage
differentials amounting to P1,017,507.73 and attorneys fees of 10%. ANTECO appealed the Decision to the
NLRC where it reversed the Labor Arbiters Decision. The NLRC denied petitioners motion for
reconsideration. Petitioners then elevated the case to CA where it dismissed the petition for failure to comply
with Section 3, Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners failed to allege
the specific instances where the NLRC abused its discretion. The appellate court denied petitioners motion
for reconsideration.
Issue:
Whether or not the petitioners are entitled to money claims.
Ruling:
Petitioners are not entitled to money claims or wage differentials.
The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules and Policy
Instructions No. 9 issued by the Secretary of Labor which was declared null and void since in the guise of
clarifying the Labor Codes provisions on holiday pay, they in effect amended them by enlarging the scope of
their exclusion.
Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The basic rule in this
jurisdiction is "no work, no pay." The right to be paid for un-worked days is generally limited to the ten legal
holidays in a year. Petitioners claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise
to a right to be paid for un-worked days beyond the ten legal holidays. Petitioners line of reasoning is not
only a violation of the "no work, no pay" principle, it also gives rise to an invidious classification, a violation
of the equal protection clause.

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C. Planas Commercial vs NLRC


(2005) G.R. 144619
Facts:
In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for underpayment of wages,
nonpayment of overtime pay, holiday pay, service incentive leave pay, and premium pay for rest day and
holiday and night shift differential against petitioners in the Arbitration Branch of NLRC. It alleged that Cohu
is engaged in the business of wholesale of plastic products and fruits of different kinds with more than 24
employees. Respondents were hired on January 1990, May 1990 and July 19991 as laborers and were paid
below the minimum wage for the past 3 years. They were required to work for more than 8 hours a day and
never enjoyed the minimum benefits. Petitioners filed their comment stating that the respondents were their
helpers.
The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an appeal with the
NLRC where it granted the money claims. Petitioners appealed with the CA but it was denied. It said that the
company having claimed of exemption of the coverage of the minimum wage shall have the burden of proof
to the claim.
Petitioners insist that C. Planas Commercial is a retail establishment principally engaged in the sale of plastic
products and fruits to the customers for personal use, thus exempted from the application of the minimum
wage law; that it merely leases and occupies a stall in the Divisoria Market and the level of its business
activity requires and sustains only less than ten employees at a time. Petitioners contend that private
respondents were paid over and above the minimum wage required for a retail establishment, thus the Labor
Arbiter is correct in ruling that private respondents claim for underpayment has no factual and legal basis.
Petitioners claim that since private respondents alleged that petitioners employed 24 workers, it was
incumbent upon them to prove such allegation which private respondents failed to do.
Issue:
Whether or not 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.

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EJR CRAFTS CO. VS. CA


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

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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 rankand-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 governmentissued 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 can no longer demand for any wage distortion adjustment. Neither could

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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
increase should not be
liberality on the part of
NCR-07 on its belief that

a company practice that is demandable as a matter of right, the giving of the


by reason of a strict legal or contractual obligation, but by reason of an act of
the employer. In this case, petitioner granted the increase under Wage Order No.
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.

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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.

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Equitable Bank vs. Sadac


G.R. No. 164772; June 8, 2006
Facts:
Ricardo Sadac was appointed Vice President of the Legal Department of petitioner Bank effective 1 August
1981, and subsequently General Counsel thereof on 8 December 1981. On June 1989, nine lawyers of
petitioner Banks Legal Department, in a letter-petition to the Chairman of the Board of Directors, accused
respondent Sadac of abusive conduct and ultimately, petitioned for a change in leadership of the
department. On the ground of lack of confidence in Sadac, under the rules of client and lawyer relationship,
petitioner Bank instructed respondent Sadac to deliver all materials in his custody in all cases in which the
latter was appearing as its counsel of record. In reaction thereto, Sadac requested for a full hearing and
formal investigation but the same remained unheeded. On 9 November 1989, respondent Sadac filed a
complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of
Directors thereof. After learning of the filing of the complaint, petitioner Bank terminated the services of
respondent Sadac. Finally, on 10 August 1989, Sadac was removed from his office

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

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

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

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

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SIP Food House et al vs. Batolina


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

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SLL INTERNATIONAL CABLES SPECIALIST vs. NLRC

GR No. 192473, Oct 11, 2010


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, 13 th month pay for 1997 and 1998 and service incentive leave pay as
well as damages and attorney's fees
Issue:
1.
2.

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.

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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.

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


G.R. No. 176985, April 1, 2013

Fact:

Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc. from May
1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Pias City, Metro
Manila.

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

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

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

Issue:

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

Ruling:

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

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


1.

the grant or benefit is founded on a policy or has ripened into a practice over a long period of time;

2.

the practice is consistent and deliberate;

3.

the practice is not due to error in the construction or application of a doubtful or difficult question of
law; and

4.

The diminution or discontinuance is done unilaterally by the employer.

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

Upon review of the entire case records, We find no substantial evidence to prove that the grant
of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into
company practice.

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.

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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

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

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-andone-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.

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The operators chairs cannot be considered as one of the employee benefits covered in Article 10016 of the
Labor Code. In the Courts view, the term "benefits" mentioned in the non-diminution rule refers to monetary
benefits or privileges given to the employee with monetary equivalents.

Such benefits or privileges form part of the employees wage, salary or compensation making them
enforceable obligations.

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

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

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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.
2.
3.
4.

Distressed establishments
New business enterprises (NBEs)
Retail/Service establishments employing not more than ten (10) workers
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

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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:
Whether Macasio is hired on pakyaw basis and not entitled to the coverage of holiday, SIL and 13th month
pay.
Ruling:
Partially granted 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. Also, 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

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Our Haus Realty Development Corp., vs. Parian et al.


GR No. 204651, August 6, 2014
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:
(a) Proof must be shown that such facilities are customarily furnished by the trade;
(b) The provision of deductible facilities must be voluntarily accepted in writing by the employee
(c) 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.

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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.

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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., v. 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.

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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.

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WAGE ENFORCEMENT AND RECOVERY


Rajah Humabon Hotel vs Trajano
(1993) G.R. 100222-23
Facts:
Subsequent to the initial pleading filed by respondent-employees before the regional director of DOLE for
redress in regard to underpaid wages and non-payment of benefits, petitioners were instructed to allow the
inspection of the employment records of respondents on April 4, 1989. However, no inspection could be done
on that date on account of the picket staged by other workers. At the re-scheduled examination after closure
of petitioners' business on April 16, 1989, instead of presenting the payrolls and daily time records of private
respondents, petitioner Peter Po submitted a motion to dismiss on the supposition that the regional director
has no jurisdiction over the case because the employer-employee relationship had been served as a result of
the closure of petitioners' business, apart from the fact that each of the claims of private respondents
exceeded the jurisdictional limit of P5,000.00 pegged by Republic Act No. 6715 or the New Labor Relations
Law.
Issue:
Who between the Regional Director of DOLE and the Labor Arbiter has jurisdictional competence over the
complaint of private respondents?
Ruling:
Regional Director had no jurisdiction over the case.
Section 2 of EO No. 111, promulgated on December 24, 1986, which amended Article 128(b) of the Labor
Code gives concurrent jurisdiction to both the Secretary of Labor (or the various regional directors) and the
labor arbiters over money claims among the other cases mentioned by Article 217 of the Labor Code. This
provision merely confirms/reiterates the enforcement/adjudication authority of the Regional Director over
uncontested money claims in cases where an employer-employee relationship still exists.
However, with the enactment of Republic Act No. 6715, which took effect on March 21, 1989 or seven days
after the complaint at bar was filed on March 14, 1989, Articles 129 and 217 of the Labor Code were
amended, there is no doubt that the regional directors can try money claims only if the following requisites
concur: (1) the claim is presented by an employee or person employed in domestic or household service, or
house helper under the code; (2) the claimant, no longer being employed, does not seek reinstatement; and
(3) the aggregate money claim of the employee or housekeeper does not exceed five thousand pesos
(P5,000.00). Thus, the power to hear and decide employees' claims arising from employer-employee

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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.

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Guico vs. Sec of Labor


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

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Ex-Bataan Veterans Security Agency vs. SOLE


G.R. No. 152396; November 20, 2007
Facts:
Petitioner is in the business of providing security services while respondents are employees assigned to the
National Power Corporation. On February 20, 1996, respondents instituted a complaint for underpayment of
wages against petitioner before the Regional Office of the DOLE. On March 7, 1996, the Regional Office
conducted a complaint inspection of the Plant, and violations of labor standards laws were found. On the
same date, the Regional Office issued a notice of hearing, requiring petitioner and respondents to attend.
On August 19, 1996, the Director of the Regional Office issued an order in favor of respondents. Petitioner
filed a motion for reconsideration, questioning the jurisdiction of the Regional Director, which was denied.
Petitioner appealed to the SOLE, which affirmed the Regional Directors orders. Petitioner appealed to the
CA, which dismissed the petition. In the petition, the petitioners argue that 1) The Regional Director did not
acquire jurisdiction over petitioner because he failed to comply with section 11, Rule 14 of the 1997 Rules of
Civil Procedure. The notice of hearing was served at the Plant, not at petitioners main office, and addressed
to its VP. 2) Under articles 129 and 217(b) of the Labor Code, the Labor Arbiter, not the Regional Director,
has exclusive and original jurisdiction over the case because the individual monetary claim of respondents
exceeds P5000. 3) The case falls under the exception clause in article 128(b) of the Labor Code. The
Regional Director should have certified the case to the arbitration branch of the NLRC.
Issue:
1.) Whether or not the SOLE or his duly authorized representatives acquired jurisdiction over petitioner.
2.) Whether or not the SOE or his duly authorized representatives have jurisdiction over the money
claims which exceed P5000.
Ruling:
1. YES, THEY HAVE.
The Rules on the Disposition of Labor Standards Cases in the Regional Offices (rules) specifically state that
notices and copies of orders shall be served on the parties or their duly authorized representatives at their
last known address or, if they are represented by counsel, through the latter. The rules shall be liberally
construedand only in the absence of any applicable provision will the Rules of Court apply in a suppletory
character.
In this case, EBVSAI does not deny having received the notices of hearing. In fact, on 29 March and 13 June
1996, Danilo Burgos and Edwina Manao, detachment commander and bookkeeper of EBVSAI, respectively,
appeared before the Regional Director. They claimed that the 22 March 1996 notice of hearing was received
late and manifested that the notices should be sent to the Manila office. Thereafter, the notices of hearing
were sent to the Manila office. They were also informed of EBVSAIs violations and were asked to present the
employment records of the private respondents for verification. They were, moreover, asked to submit,
within 10 days, proof of compliance or their position paper. The Regional Director validly acquired
jurisdiction over EBVSAI. EBVSAI can no longer question the jurisdiction of the Regional Director after
receiving the notices of hearing and after appearing before the Regional Director.
2. YES, THEY DO.
While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear
and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions
of law do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his
duly authorized representatives.
Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730)
thus:
Art. 128 Visitorial and enforcement power. --- (b) Notwithstanding the provisions of Article[s] 129 and 217 of
this Code to the contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue
compliance orders to give effect to [the labor standards provisions of this Code and other] labor legislation
based on the findings of labor employment and enforcement officers or industrial safety engineers made in
the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution
to the appropriate authority for the enforcement of their orders, except in cases where the employer

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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.

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Sapio vs Undaloc Construction


(2008) G.R. 155034
Facts:
The controversy started with a complaint filed by petitioner against Undaloc Construction and/or Engineer
Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory benefits.
Respondent Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in road
construction business in Cebu City. Petitioner had been employed as watchman from 1 May 1995 to 30 May
1998 when he was terminated on the ground that the project he was assigned to was already finished, he
being allegedly a project employee. But petitioner asserted that he was a regular employee having been
engaged to perform works which are "usually necessary or desirable" in respondents' business.
Issue:
Whether or not the Appellate court erred in failing to dismiss respondent's petition for certiorari brought
before it on the ground that respondents failed to attach certified true copies of the NLRC's decision and
resolution denying the motion for reconsideration.
Ruling:
Appellate Court was right.
In his Comment on the Petition for Certiorari with Prayer for Temporary Restraining and/or Preliminary
Injunctionfiled with the Court of Appeals on 22 November 2001, petitioner did not raise this procedural issue.
Neither did he do so when he moved for reconsideration of the 8 May 2002 Decision of the Court of Appeals.
It is only now before this Court that petitioner proffered the same. This belated submission spells doom for
petitioner. More fundamentally, an examination of the Court of Appeals rollo belies petitioner as it confirms
that the alleged missing documents were in fact attached to the petition.
To counter petitioner's assertions, respondents submitted typewritten and signed payroll sheets from 2
September to 8 December 1996, from 26 May to 15 June 1997, and from 12 January to 31 May 1998. These
payroll sheets clearly indicate that petitioner did receive a daily salary of P141.00.
Moreover, absent any evidence to the contrary, good faith must be presumed in this case. Entries in the
payroll, being entries in the course of business, enjoy the presumption of regularity under Rule 130, Section
43 of the Rules of Court. Hence, while as a general rule, the burden of proving payment of monetary claims
rests on the employer, when fraud is alleged in the preparation of the payroll, the burden of evidence shifts
to the employee and it is incumbent upon him to adduce clear and convincing evidence in support of his
claim. Unfortunately, petitioner's bare assertions of fraud do not suffice to overcome the disputable
presumption of regularity.

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Hon. Secretary of Labor vs. Panay Veterans Security and Investigation Agency,
G.R. No. 167708, August 22, 2008
Facts:
Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent Panay Veterans
Security and Investigation Agency, Inc. as security guards sometime in 1988. They were stationed at the
plant site of Food Industries, Inc. (FII) in Sta. Rosa, Laguna until FII terminated its contract with respondent
security agency on July 6, 2000. They were not given new assignments and their benefits (including 13th
month pay, overtime pay and holiday pay as well as wage differentials due to underpayment of wages) were
withheld by respondent security agency. This prompted them to file a complaint for violation of labor
standards in the regional office of the Department of Labor and Employment in the National Capital Region
(DOLE-NCR).
A labor inspector acted on the complaint, Manuel M. Cayabyab. He conducted an inspection on October 3,
2000. His assessment is that the respondents should comply with the labor standards through payment or
question in it to the DOLE-NCR within 5 days.
Respondents neither paid the claims of petitioners Agapay and Alonso, Jr. nor questioned the labor
employment officers findings. Thus, in his May 10, 2001 order, the Regional Director of the DOLE-NCR
adopted the findings and computation of Cayabyab as to the unpaid benefits due to petitioners Agapay and
Alonso, Jr.
Respondents moved for reconsideration but the DOLE-NCR Regional Director denied it. Undeterred,
respondents filed an appeal (with motion to reduce cash or surety bond) to the Secretary of Labor and
Employment. In his July 9, 2002 order, the Secretary of Labor and Employment found that respondents failed
to perfect their appeal since they did not post a cash or surety bond equivalent to the monetary award. Thus,
the appeal was dismissed and the DOLE-NCR Regional Directors May 10, 2001 order was declared final and
executory. The Secretary of Labor and Employment denied reconsideration.
Respondents elevated the case to the CA, at first the CA dismissed their appeal and upheld the DOLEs
decision. But the CA granted their reconsideration and modified DOLEs decision, Invoking the case of Star
Angel Handicraft v. National Labor Relations Commission.
Thus, the case was appealed by the petitioner in supreme court.
Issue:
Whether or not the CA was right in granting the appeal.
Ruling:
No, the employers motion to reduce the appeal the bond was no in accordance with the art. 128 of Labor
code, the last paragraph of the said provision provides:an order issued by the duly authorized
representative of the Secretary of Labor and Employment under this Article may be appealed to the latter. In
case said order involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly accredited by
the Secretary of Labor and Employment in the amount equivalent to the monetary award in the
order appealed from
Clearly the respondents did not post bail, when they appealed the case at the DOLE-NCR. 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

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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.

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

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Jethro Intelligence & Security Corp. vs. Secretary of Labor


GR No. 172537, Aug. 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 complaint 1 filed by
respondent Frederick Garcia (Garcia), one of the security guards deployed by Jethro, for underpayment of
wages, legal/special holiday pay, premium pay for rest day, 13th month pay, and night shift differential, the
Department of Labor and Employment (DOLE)-Regional Office No. IV conducted an inspection at Yakults
premises in Calamba, Laguna in the course of which several labor standards violations were noted, including
keeping of payrolls and daily time records in the main office, underpayment of wages, overtime pay and
other benefits, and non-registration with the DOLE as required under Department Order No. 18-02.
By Order3 of September 9, 2004, the DOLE Regional Director, noting petitioners failure to rectify the
violations noted during the above-stated inspection within the period given for the purpose, found them
jointly and severally liable to herein respondents for the aggregate amount of EIGHT HUNDRED NINE
THOUSAND TWO HUNDRED TEN AND 16/100 PESOS (P809,210.16) representing their wage differentials,
regular holiday pay, special day premium pay, 13th month pay, overtime pay, service incentive leave pay,
night shift differential premium and rest day premium.
Jethro appealed to the Secretary of Labor and Employment (SOLE), faulting the Regional Director for, among
other things, basing the computation of the judgment award on Garcias affidavit instead of on the data
reflected in the payrolls for 2001 to 2004 which was denied.
Issue:
Whether or not SOLE or his duly authorized representative has jurisdiction over money claims that exceed
5,000.
Ruling:
In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not come
under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed the inspection
results and there is a need to examine evidentiary matters to resolve the issues raised, the payrolls
presented by it were considered in the ordinary course of inspection. While the employment records of the
employees could not be expected to be found in Yakults premises in Calamba, as Jethros offices are in
Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other
pertinent documents during the hearings and to rectify the violations noted during the ocular inspection. It,
however, failed to do so, more particularly to submit competent proof that it was giving its security guards
the wages and benefits mandated by law.
Jethros failure to keep payrolls and daily time records in Yakults premises was not the only labor standard
violation found to have been committed by it; it likewise failed to register as a service contractor with the
DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and benefits in
accordance with the rates prescribed by law.

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Phil Hoteliers Inc., vs National Union of Workers in Hotel Restaurant & Allied Industries
(2009) G.R. 181972
Facts:
Wage Order No. 9, approved by the Regional Tripartite Wages and Productivity Board (RTWPB) of the National
Capital Region (NCR), took effect on 5 November 2001. It grants P30.00 ECOLA to particular employees and
workers of all private sectors, identified as follows in Section 1 thereof:
Section 1. Upon the effectivity of this Wage Order, all private sector workers and employees in the
National Capital Region receiving daily wage rates of TWO HUNDRED FIFTY PESOS (P250.00) up to
TWO HUNDRED NINETY PESOS (P290.00) shall receive an emergency cost of living allowance in the
amount of THIRTY PESOS (P30.00) per day payable in two tranches as follows:
Amount of ECOLA
P15.00
P15.00

Effectivity
5 November 2001
1 February 2002

On 20 March 2002, respondent National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit
Hotel Nikko Chapter (Union), through its President, Reynaldo C. Rasing (Rasing), sent a letter 4 to Director
Alex Maraan (Dir. Maraan) of the Department of Labor and Employment-National Capital Region (DOLE-NCR),
reporting the non-compliance of Dusit Hotel with WO No. 9, while there was an on-going compulsory
arbitration before the National Labor Relations Commission (NLRC) due to a bargaining deadlock between the
Union and Dusit Hotel; and requesting immediate assistance on this matter. On 24 May 2002, Rasing sent
Dir. Maraan another letter following-up his previous request for assistance.
Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO Natividad) to
conduct an inspection of Dusit Hotel premises on 24 April 2002. In the first Inspection, the report showed
that Dusit Hotel is exempt from complying with WO no. 9. Due to the Second request for inspection, DOLE
representative conducted another round of inspection and the Labor Standards Officer noted the following in
her inspection report:

Non-presentation of records/payrolls
Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO Chapter,
there are one hundred forty-four (144) affected in the implementation of Wage Order No. NCR-09->
ECOLA covering the periods from Nov. 5/01 to present.

Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect restitution
and/or correction of the noted violations within five days from receipt of the Notice, and to submit any
question on the findings of the labor inspector within the same period, otherwise, an order of compliance
would be issued. The Notice of Inspection Result was duly received by Dusit Hotel Assistant Personnel
Manager Rogelio Santos.
In the meantime, the NLRC rendered a Decision 9 dated 9 October 2002 in NLRC-NCR-CC No. 000215-02
the compulsory arbitration involving the Collective Bargaining Agreement (CBA) deadlock between Dusit
Hotel and the Union granting the hotel employees the following wage increases, in accord with the CBA:
Effective January 1, 2001 - P500.00/month
Effective January 1, 2002 - P550.00/month
Effective January 1, 2003 - P600.00/month
On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises, DOLE-NCR,
through Dir. Maraan, issued the Order 10 directing Dusit Hotel to pay 144 of its employees the total amount
of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus, the penalty of double
indemnity, pursuant to Section 12 of Republic Act No. 6727, 11 as amended by Republic Act No. 8188.
Dusit Hotel filed a Motion for Reconsideration 13 of the DOLE-NCR Order dated 22 October 2002, arguing
that the NLRC Decision dated 9 October 2002, resolving the bargaining deadlock between Dusit Hotel and
the Union, and awarding salary increases under the CBA to hotel employees retroactive to 1 January 2001,
already rendered the DOLE-NCR Order moot and academic. With the increase in the salaries of the hotel
employees ordered by the NLRC Decision of 9 October 2002, along with the hotel employees' share in the
service charges, the 144 hotel employees, covered by the DOLE-NCR Order of 22 October 2002, would
already be receiving salaries beyond the coverage of WO No.

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Acting on the Motion for Reconsideration of Dusit Hotel, DOLE-NCR issued a Resolution 14 on 27 December
2002, setting aside its earlier Order dated 22 October 2002 for being moot and academic, in consideration of
the NLRC Decision dated 9 October 2002; and dismissing the complaint of the Union against Dusit Hotel, for
non-compliance with WO No. 9, for lack of merit.
Issues:
Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite the increases in
their salaries, retroactive to 1 January 2001, ordered by NLRC in the latter's Decision dated 9 October 2002.
Whether Dusit Hotel is liable for the double indemnity for violation of the wage order.
Ruling:
The Court rules in the negative. It must be noted that the hotel employees have a right to their share in the
service charges collected by Dusit Hotel, pursuant to Article 96 of the Labor Code of 1991, to wit:
Article 96.Service charges. All service charges collected by hotels, restaurants and similar establishments
shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent
(15%) for management. The share of employees shall be equally distributed among them. In case the service
charge is abolished, the share of the covered employees shall be considered integrated in their wages.
Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and
management their respective shares in the service charges collected, the hotel cannot claim that payment
thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9.
Undoubtedly, the hotel employees' right to their shares in the service charges collected by Dusit Hotel is
distinct and separate from their right to ECOLA; gratification by the hotel of one does not result in the
satisfaction of the other.
The Court, however, finds no basis to hold Dusit Hotel liable for double indemnity. Under Section 2 (m) of
DOLE Department Order No. 10, Series of 1998, 30 the Notice of Inspection Result "shall specify the
violations discovered, if any, together with the officer's recommendation and computation of the unpaid
benefits due each worker with an advice that the employer shall be liable for double indemnity in case of
refusal or failure to correct the violation within five calendar days from receipt of notice". A careful review of
the Notice of Inspection Result dated 29 May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals
that the said Notice did not contain such an advice.
Although the Notice directed Dusit Hotel to correct its noted violations within five days from receipt thereof,
it was not sufficiently apprised that failure to do so within the given period would already result in its liability
for double indemnity. The lack of advice deprived Dusit Hotel of the opportunity to decide and act
accordingly within the five-day period, as to avoid the penalty of double indemnity. By 22 October 2002, the
DOLE-NCR, through Dir. Maraan, already issued its Order directing Dusit Hotel to pay 144 of its employees
the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus the penalty of
double indemnity, pursuant to Section 12 of Republic Act No. 6727, as amended by Republic Act No. 8188.
Although the Court is mindful of the fact that labor embraces individuals with a weaker and unlettered
position as against capital, it is equally mindful of the protection that the law accords to capital. While the
Constitution is committed to the policy of social justice and the protection of the working class, it should not
be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its
own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play.

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


GR No. 164141, Feb. 26, 2010
The general rule is that any decision rendered without jurisdiction is a total nullity and may be struck down
at any time, the party that asserts it must be in good faith and not evidently availing thereof simply to thwart
the execution of an award that has long become final and executory.
Facts:
On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before the Regional
Office of the Department of Labor and Employment (DOLE), an inspection was conducted by DOLE officials at
the premises of petitioner TCDC. Several labor standard violations were noted, such as deficiencies in record
keeping, non-compliance with various wage orders, non-payment of holiday pay, and underpayment of 13 th
month pay. The case was then set for summary hearing.
Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217 of the same Code,
this instant case should be referred back to the National Labor Relations Commission (NLRC) Sub-Arbitration
Branch V, Naga City, on the ground that the aggregate money claim of each worker exceeds the
jurisdictional amount of this Office [which] is (sic) Five Thousand Pesos Only (P5,000.00).
Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas (Secretary Sto. Tomas), in an
apparent reversal of Director Manalos endorsement, issued another inspection authority on August 2, 2002
in the same case. Pursuant to such authority, DOLE officials conducted another investigation of petitioners
premises and the same violations were discovered.
According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground of lack of
jurisdiction, which dismissal had attained finality; hence, all proceedings before the DOLE regional office after
July 25, 2002 were null and void for want of jurisdiction.
aving the case in her office once more, Director Manalo finally issued an Order dated January 29, 2003
denying petitioners motion for reconsideration for lack of merit
Issue:
Whether or not the petitioner can still assail the January 29, 2003 Order of Director Manalo allegedly on the
ground of lack of jurisdiction, after said Order has attained finality and is already in the execution stage.
Ruling:
The petition lacks merit. Petitioner admits that it failed to appeal the January 29, 2003 Order within the
period prescribed by law. It likewise admits that the case was already in the execution process when it
resorted to a belated appeal to the DOLE Secretary. Petitioner, however, excuses itself from the effects of the
finality of the Order by arguing that it was allegedly issued without jurisdiction and may be assailed at any
time.
Director Manalos initial endorsement of the case to the NLRC, on the mistaken opinion that the claim was
within the latters jurisdiction, did not oust or deprive her of jurisdiction over the case. She therefore retained
the jurisdiction to decide the case when it was eventually returned to her office by the DOLE Secretary.
Jurisdiction or authority to try a certain case is conferred by law and not by the interested parties, much less
by one of them, and should be exercised precisely by the person in authority or body in whose hands it has
been placed by the law.
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

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dismissing its petition on the ground of its belated compliance with the requirement of certification against
forum-shopping.

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


March 6, 2012 Resolution on the main Decision of May 8, 2009
Facts:
Jandeleon Juezan 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.
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 employeremployee 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 employeremployee 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 employeremployee 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.

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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.
G.R. No. 178909, October 10, 2012

Facts:

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

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

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


(2) Non-submission of annual report of safety organization;
(3) Medical and accident/illness reports;
(4) Non-registration of establishment under Rule 1020 of Occupational and Health Standards; and
(5) No trained first aide.

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

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

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

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

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

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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.

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WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES

GAA vs. Court of Appeals


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

Nestle Phils. vs. NLRC


G.R. No. 85197 March 18, 1991
Facts:
The private respondents were employed by the petitioner either as sales representatives or medical
representatives. By reason of the nature of their work they were each allowed to avail of the company's car
loan policy. Under that policy, the company advances the purchase price of a car to be paid back by the
employee through monthly deductions from his salary, the company retaining the ownership of the motor
vehicle until it shall have been fully paid for. All of the private respondents availed of the petitioner's car loan
policy.
Respondents were dismissed from service because of their participation in the strike/ certain irregularities. As
such, they filed a case of illegal dismissal before the NLRC. In the Notices of Dismissal, they were asked by
the Company to settle the accounts payable of their car loans or return the car for proper disposition. The
Company filed a civil suit to recover possession of the cars. Private respondents sought a temporary
restraining order in the NLRC to stop the company from cancelling their car loans and collecting their
monthly amortizations pending the final resolution of their appeals in the illegal dismissal case. NLRC
granted the TRO.
Issue:
Whether or not NLRC is correct in granting the TRO in favor of the respondents pending the case of illegal
dismissal.
Ruling:
Nestl's demand for payment of the private respondents' amortizations on their car loans, or, in the
alternative, the return of the cars to the company, is not a labor, but a civil, dispute. It involves debtorcreditor 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

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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


G.R. No. 111474 August 22, 1994
Facts:
Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi drivers.
Aside from the daily "boundary", they were also required to pay P20.00 for car washing, and to further make
a P15.00 deposit to answer for any deficiency in their "boundary," for every actual working day.
Issue:
Whether or not the car wash payment is an illegal deduction as contemplated in the Labor Code.
Ruling:
Supreme Court 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
G.R. No. 130439 October 26, 1999
Facts:
Due to financial losses, the Philippine Veterans Bank was placed in receivership pursuant to the order of the
Central Bank of the Philippines. Consequently, its employees, including private respondent Dr. Jose Teodorico
V. Molina, were terminated from work and given their respective separation pay and other benefits. Dr.
Molina filed a complaint before NLRC. He demanded the implementation of the Wage Orders No. 1 and 2.
Both the Labor Arbiter and NLRC granted the petition of Molina.
Issue:
Whether or not Molina is entitled to the increase of his salary pursuant to Wage Orders No. 1 and 2.
Ruling:
Supreme Court 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.

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Philippine Appliances Corp. vs. CA


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

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Agabon vs NLRC (2004)


G.R. 158693
Facts:
Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing
ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as
gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they were dismissed
for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claimsand on December 28,
1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent
to pay the monetary claims.
Issue:
Whether or not respondents dismissal is illegal and if not, entitles them benefits.
Ruling:
The dismissal is legal and entitles them of payment of benefits. Dismissals based on just causes contemplate
acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds
under the Labor Code which allow the employer to terminate employees. A termination for an authorized
cause requires payment of separation pay. When the termination of employment is declared illegal,
reinstatement and full back wages are mandated under Article 279. If reinstatement is no longer possible
where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the
employee two written notices and a hearing or opportunity to be heard if requested by the employee before
terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and
(2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the
employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of
his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under
Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article
284, and due process was observed; (2) the dismissal is without just or authorized cause but due process
was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the
dismissal is for just or authorized cause but due process was not observed.
In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it
should not invalidate the dismissal. However, the employer should be held liable for non-compliance with
the procedural requirements of due process. The present case squarely falls under the fourth situation. The
dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for
another company. Private respondent, however, did not follow the notice requirements and instead argued
that sending notices to the last known addresses would have been useless because they did not reside there
anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the
twin notice requirements to the employees last known address. Thus, it should be held liable for noncompliance with the procedural requirements of due process.
The Court ruled that respondent is liable for petitioners holiday pay, service incentive leave pay and 13 th
month pay without deductions. The evident intention of Presidential Decree No. 851 is to grant an additional
income in the form of the 13th month pay to employees not already receiving the same so as to further
protect the level of real wages from the ravages of world-wide inflation. Clearly, as additional income, the
13th month pay is included in the definition of wage under Article 97(f) of the Labor Code.

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American Wire & Cable Daily Rated Employees vs American Wire


G.R. No. 155059, April 29, 2005
Facts:
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables. There
are two unions in this company, the American Wire and Cable Monthly-Rated Employees Union 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:
Whether or not 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.

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Honda Philippines vs. Samahan Ng Malayang Manggagawa Sa Honda


G.R. 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:
Whether or not the pro-rated computation of the 13 th month pay and the other bonuses in question is valid
and lawful
Ruling:
Such pro-rated computation is invalid.
It is well noted that the CBA refers to the negotiated contract between a legitimate labor organization and
the employer. It is the law between the parties and compliance therewith is mandated by express policy of
the law.
Honda did not adduce evidence to show that the 13 th month, 14th month and financial assistance benefits
were previously subject to pro-rating. Thus, such was an implicit acceptance that prior to the strike, a full
month basic pay computation was the present practice intended to be maintained in the CBA.
Lastly, to allow pro-ration of the 13 th month pay is to undermine the wisdom behind the law and the mandate
that the workingmans welfare should be the primordial and paramount consideration. DENIED.

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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:
Whether or not 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.

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Jardin vs. NLRC


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

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

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


G.R. 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.

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San Miguel Corp vs Pontillas


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

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Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU
G.R. No. 170734, May 14, 2008, citing Davao Fruits vs. Asso. Labor Union, 225 SCRA 562 and Sevilla Trading
vs. AVA Tomas Services, G.R. No. 152456, April 28, 2004
Facts:
Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor
union of petitioner's rank and file employees. Sometime in December 2003, petitioner paid the 13th month
pay, bonus, and leave encashment of three union members in amounts proportional to the service they
actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated
scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to
seven (7) employees who had not served for the full 12 months. According to respondent, the prorated
payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed
a complaint before the National Conciliation and Mediation Board (NCMB). The parties submitted the case for
voluntary arbitration.
The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that the giving of the
contested benefits in full, irrespective of the actual service rendered within one year has not ripened into a
practice. He also interpreted the phrase "for each year of service" found in the pertinent CBA provisions to
mean that an employee must have rendered one year of service in order to be entitled to the full benefits
provided in the CBA.
Respondent filed a Petition for Review before the Court of Appeals. The appellate court found that petitioner
had an existing voluntary practice of paying the aforesaid benefits in full to its employees; thereby rejecting
the claim that petitioner erred in paying full benefits to its seven employees. The appellate court noted that
aside from the affidavit of petitioner's officer, it has not presented any evidence in support of its position that
it has no voluntary practice of granting the contested benefits in full and without regard to the service
actually rendered within the year.
Issues:
1.
2.

Whether or not the petitioners should grant 13th month pay, bonus and leave encashment in full
regardless of actual service rendered.
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.

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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.

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

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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 rankand-file employees. The controversy stems from the interpretation of the term basic pay, essential in the
computation of the 13th-month pay.
The facts of this case are not in dispute. In compliance with Presidential Decree (P.D.) No. 851, petitioner
granted its employees the mandatory thirteenth (13th) - month pay since 1975. The formula used by
petitioner in computing the 13th-month pay was: Total Basic Annual Salary divided by twelve (12). Included
in petitioners computation of the Total Basic Annual Salary were the following: basic monthly salary; first
eight (8) hours overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and sick
leaves for each year. Throughout the years, petitioner used this computation until 2006.
On November 6, 2004, respondent staged a strike. During the pendency of the strike, petitioner declared a
temporary cessation of operations.
The suspension of operation was lifted on June 2006, but the rank-and-file employees were allowed to report
for work on a fifteen (15) day-per-month rotation basis that lasted until September 2006. In December 2006,
petitioner gave the employees their 13 th-month pay based on the employees total earnings during the year
divided by 12.
Respondent objected to this computation. It averred that petitioner did not adhere to the usual computation
of the 13th-month pay. NLRC ruled in favor of the respondent and CA reversed itd ruling and ruled in favor of
the Unyon. Hence the petition.
Issue:
Whether or not Azucarera did not adhere to the proper computation of the 13th-month pay.
Ruling:
The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an additional income based
on wage but not part of the wage. It is equivalent toone-twelfth (1/12) of the total basic salary earned by an
employee within a calendar year. All rank-and-file employees, regardless of their designation or employment
status and irrespective of the method by which their wages are paid, are entitled to this benefit, provided
that they have worked for at least one month during the calendar year. If the employee worked for only a
portion of the year, the 13th-month pay is computed pro rata.
On November 16, 1987, the Revised Guidelines on the Implementation of the 13 th-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 13 th-month pay was
interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not
include allowances and monetary benefits which are not integrated as part of the regular or basic salary,
such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential
and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as
part of the basic salary in the computation of the 13 th-month pay if, by individual or collective agreement,
company practice or policy, the same are treated as part of the basic salary of the employees.
Based on the foregoing, it is clear that there could have no erroneous interpretation or application of what is
included in the term basic salary for purposes of computing the 13 th-month pay of employees. From the
inception of P.D. No. 851 on December 16, 1975, clear-cut administrative guidelines have been issued to
insure uniformity in the interpretation, application, and enforcement of the provisions of P.D. No. 851 and
its implementing regulations.
Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to
employees cannot be taken back or reduced unilaterally by the employer because the benefit has become
part of the employment contract, written or unwritten. The rule against diminution of benefits applies if it is
shown that the grant of the benefit is based on an express policy or has ripened into a practice over a long

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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.
Issues:
Whether or not the temporary withholding of respondents salary/wages by petitioners was a valid exercise
of management prerogative.
Ruling:
Withholding respondents salary was not a valid exercise of management prerogative.
Management prerogative refers to the right of an employer to regulate all aspects of employment, such as
the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding
transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work.
Although management prerogative refers to the right to regulate all aspects of employment, it cannot be
understood to include the right to temporarily withhold salary/wages without the consent of the employee.
Any withholding of an employees wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor.

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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)
2)

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
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)
b)
c)

In cases where the worker is insured with his consent by the employer, and the deduction is
to recompense the employer for the amount paid by him as premium on the insurance;
For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor.

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.

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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.

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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
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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.
Issues:
Whether ULP acts were committed by petitioners against respondents.

Ruling:
ULP were committed by petitioners against respondents.
Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly Article 248)
of the Labor Code,13 to wit:
Article 257. Unfair labor practices of employers.It shall be unlawful for an employer to commit any
of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
xxxx
(c) To contract out services or functions being performed by union members when such will interfere
with, restrain, or coerce employees in the exercise of their right to self-organization;
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment
in order to encourage or discourage membership in any labor organization. x x x
The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to the
exclusion of union members, before the scheduled certification election; 2) the active campaign by the sales
officer of petitioners against the union prevailing as a bargaining agent during the field trip; 3) escorting its
employees after the field trip to the polling center; 4) the continuous hiring of subcontractors performing
respondents functions; 5) assigning union members to the Cabangan site to work as grass cutters; and 6)
the enforcement of work on a rotational basis for union members, taken together, reasonably support an
inference that, indeed, such were all orchestrated to restrict respondents free exercise of their right to selforganization.
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.

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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.

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Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014,
Citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo
Facts:
The respondent was employed as a sales clerk and assigned at the petitioners boutique. Her primary tasks
were attending to all customer needs, ensuring efficient inventory, coordinating orders from clients,
cashiering and reporting to the accounting department. The petitioner learned that some of their employees
had access to their POS system with the use of a universal password given to them by a certain Elmer Flores,
who in turn learned of the password from the respondent. The petitioner then conducted an investigation and
asked the petitioner to explain why she should not be disciplinarily dealt with. During the investigation the
respondent was placed under preventive suspension.
After investigation the petitioner terminated the respondent on the grounds of loss of trust or confidence.
This respondent was given her final wage and benefits less the inventory variance incurred by the store. This
urged the respondent to file a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and
separation pay. The labor arbiter ruled in her favour awarding her backwages. The petitioner appealed the
decision in the NLRC and the decision was reversed. However, upon the respondents petition for certiorari in
the court of appeals the decision was reinstated. Hence, this petition.
Issue:
Whether the negative sales variance could be validly deducted from the respondents wage?
Ruling:
No, it cannot be deducted in this case.
Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any person, shall
make any deduction from the wages of his employees, except in cases where the employer is authorized by
law or regulations issued by the Secretary of Labor and Employment, among others. The Omnibus Rules
Implementing the Labor Code, meanwhile, provides:
SECTION 14. Deduction for loss or damage. Where the employer is engaged in a trade, occupation
or business where the practice of making deductions or requiring deposits is recognized to answer
for the reimbursement of loss or damage to tools, materials, or equipment supplied by the employer
to the employee, the employer may make wage deductions or require the employees to make
deposits from which deductions shall be made, subject to the following conditions:
a)
b)
c)
d)

That the employee concerned is clearly shown to be responsible for the loss or damage;
That the employee is given reasonable opportunity to show cause why deduction should not
be made;
That the amount of such deduction is fair and reasonable and shall not exceed the actual
loss or damage; and
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.

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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
(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 exchange-incurred 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

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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 Auto-Mechanic/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, mid-year 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

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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 workers 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 employee-employer relations. Evidently, the respondent's unpaid balance on his loans
cannot be offset against the redundancy pay due to him.

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

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North Davao Mining vs. NLRC


G.R. No. 112546; March 13, 1996
Facts:
Due to financial losses, North Davao Mining Corporation laid off workers. Respondent Wilfredo Guillema is
one among several employees of North Davao who were separated by reason of the companys closure on
May 31, 1992. It appears that, during the life of the petitioner corporation, from the beginning of its
operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty (30) days
pay for every year of service. Moreover, inasmuch as the region where North Davao operated was plagued
by insurgency and other peace and order problems, the employees had to collect their salaries at a bank in
Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 hours travel time by public
transportation; this arrangement lasted from 1981 up to 1990.
Issue:
Whether or not time spent in collecting wages in a place other than the place of employment is compensable
notwithstanding that the same is done during official time.
Ruling:
Supreme Court, 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.

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National Federation of Labor vs. CA


G.R. No. 149464, Oct. 19, 2004
Facts:
American Rubber Company, Inc. (ARCI) entered into a Farm Management Agreement (FMA) with Sime Darby
Pilipinas, Inc. (SDPI) to manage, administer, develop, cultivate and improve the rubber plantation in Latuan,
Isabela, Basilan. However, SDPI decided to terminate the FMA with ARCI and cease operation of the rubber
plantation in Latuan, Isabela, Basilan effective January 17, 1998. Thus on December 17, 1997, SDPI served
formal notices of termination to all employees of the plantation effective January 17, 1997. In complaince
with the collective bargaining agreement of the National Federation of Labor (NFL), which was the duly
registered bargaining agent of SDPI, and SDPI, the separation pay of the employees was computed in
accordance with the provisions of the Labor Code.
On January 17, 1998, each of the herein petitioners received their separation pay which was equivalent to
one-half pay for every year of service, and other benefits which were all lumped in one check. However, the
petitioners filed a complaint for deficiency in separation pay raising the issue of non-payment of the exact
computation of separation pay. They contended that the private respondents is bound by its policy of
granting separation pay equivalent to one-month pay for every year of service to its retrenched employees.
Issue:
Whether or not the petitioners are entitled to separation pay equivalent to one month pay for every year of
employment with private respondents.
Ruling:
According to the Supreme Court, Article 283 of the Labor Code provides that employees who are dismissed
due to closures that are not due to business insolvency should be paid separation pay equivalent to onemonth 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.

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Heirs of Sara Lee vs. Rey


G.R. No. 149013, Aug. 31, 2006
Facts:
The Heir of Sara Lee is engaged in the direct selling of a variety of product lines for men and women,
including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items, through its
various outlets nationwide. In the pursuit of its business, the petitioner engages and contracts with dealers
to sell the aforementioned merchandise. These dealers, known either as Independent Business Managers
(IBMs) or Independent Group Supervisors (IGSs), depending on whether they sell individually or through
their own group, would obtain at discounted rates the merchandise from the petitioner on credit or then sell
the same products to their own customers at fixed prices also determined by the petitioner.
In turn, the dealers are paid Services Fees, or sales commissions, the amount of which depends on the
volume and value of their sales. Under existing company policy, the dealers must remit to the petitioner the
proceeds of their sales within a designated credit period, which would either be 38 days for IGSs or 52 days
for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner. To discourage
late remittances, the petitioner imposes a Credit Administration Charge, or simply, a penalty charge, on
the value of the unremitted payment.
The dealers under this system earn income through a profit margin between the discounted purchase price
they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On top of this
margin, the dealer is given the Service Fee, a sales commission, based on the volume of sales generated by
him or her. Due to the sheer volume of sales generated by all of its outlets, the petitioner has found the
need to strictly monitor the 38- or 52-day rolling due date of each of its IBMs and IGSs through the
employment of Credit Administration Supervisors (CAS) for each branch. The primary duty of the CAS is to
strictly monitor each of these deadlines, to supervise the credit and collection of payments and outstanding
accounts due to the petitioner from its independent dealers and various customers, and to screen
prospective IBMs. To discharge these responsibilities, the CAS is provided with a computer equipped with
control systems through which data is readily generated. Under this organizational setup, the CAS is under
the direct and immediate supervision of the Branch Operations Manager (BOM).
Cynthia Rey at the time of her dismissal from employment, held the position of Credit Administration
Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first employed by the
petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent was
transferred to the Cagayan de Oro City branch retaining the same position. In January 1994, respondent was
elevated to the position of CAS. At that time, the Branch Operations Manager or BOM of the Cagayan de Oro
City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent was temporarily assigned to
the Butuan City branch.
Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed the
Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one of the IBMs of the
petitioner who happens to be respondents sister-in-law, from the 52-day limit to an unauthorized term of
60 days. The respondent made the instruction just before the computer data for the computation of the
Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this 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:
Whether or not 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

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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.

CONDITIONS OF EMPLOYMENT
San Juan De Dios Hospital vs. NLRC
282 SCRA 316 [1997]
Facts:
Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees
Association, sent a letter requesting for the expeditious implementation and payment by respondent, San
Juan De Dios Hospital, of the '40-hours/5-day workweek' with compensable weekly two (2) days off provided
for by Policy Instruction No. 54 issued by the Secretary of Labor. Said policy instruction purports to
implement R.A. No. 5901, otherwise known as An Act Prescribing Forty Hours A Week of Labor For
Government and Private Hospitals Or Clinic Personnel. Respondent hospital failed to give a favorable
response; thus, petitioners filed a complaint regarding their claims for statutory benefits under the abovecited 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/5day 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 fortyeight 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.

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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 30minute 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.

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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:
Whether or not 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

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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.
(e) 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.

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


G.R. No. 163147, October 10, 2007
Facts:
On 17 December 1997, Linton issued a memorandum addressed to its employees informing them of the
company's decision to suspend its operations from December 18, 1997 to January 5, 1998 due to the
currency crisis that affected its business operations. Linton submitted an establishment termination report to
the Department of Labor and Employment (DOLE) regarding the temporary closure of the establishment
covering the said period. The company's operation was to resume on January 6, 1998. On January 7, 1997,
Linton issued another memorandum informing them that effective January 12, 1998, it would implement a
new compressed workweek of three (3) days on a rotation basis. In other words, each worker would be
working on a rotation basis for three working days only instead for six days a week. On the same day, Linton
submitted an establishment termination report concerning the rotation of its workers. Linton proceeded with
the implementation of the new policy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68)
workers (workers) filed a Complaint for illegal reduction of workdays.
Issue:
Whether or not there was an illegal reduction of work when Linton implemented a compressed workweek by
reducing from six to three the number of working days with 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.

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Bisig Manggagawa sa Tryco vs. NLRC


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

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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.

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MINIMUM LABOR STANDARD BENEFITS


Union Filipro Employees vs Vivar
(1992) 205 SCRA 203
Facts:
Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission a
petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly
paid employees for holiday pay.
Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary arbitration and
appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. Arbitrator Vivar rendered a decision directing
Filipro to pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the
exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the
Code. However, the respondent arbitrator refused to take cognizance of the case reasoning that he had no
more jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986.
Issue:
Whether or not 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 "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."
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
field work. These employees are evaluated by the result of their work and not by the actual hours of field
work which are hardly susceptible to determination.

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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 rankand-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 Nondiminution 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.

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Salazar vs. NLRC,


G.R. No. 109210, April 17, 1996
Facts:
On 17 April 1990, private respondent, at a monthly salary of P4,500.00, employed petitioner as
construction/project engineer for the construction of the Monte de Piedad building in Cubao, Quezon City.
Allegedly, by virtue of an oral contract, petitioner would also receive a share in the profits after completion of
the project and that petitioner's services in excess of eight (8) hours on regular days and services rendered
on weekends and legal holidays shall be compensable overtime at the rate of P27.85 per hour.
On 16 April 1991, petitioner received a memorandum issued by private respondent's project manager, Engr.
Nestor A. Delantar informing him of the termination of his services effective on 30 April 1991.
On 13 September 1991, petitioner filed a complaint against private respondent for illegal dismissal, unfair
labor practice, illegal deduction, non-payment of wages, overtime rendered, service incentive leave pay,
commission, allowances, profit-sharing and separation pay with the NLRC-NCR Arbitration Branch, Manila.
Arguments
Petitioner:
1) Since he performs his duties in the project site or away from the principal place of business of his
employer (herein private respondent), he falls under the category of "field personnel." However, his
case constitutes the exception to the exception because his actual working hours can be determined
as evidenced by the disbursement vouchers containing payments of petitioner's salaries and
overtime services. Field personnel may include managerial employees.
2) Private respondent compensated him for his overtime services as indicated in the various
disbursement vouchers he submitted as evidence. Thus, he is entitled to the benefits.
3) He is entitled to separation pay.
Issue:
1.
2.

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 "supervisory-engineering." Similarly,
in his own petition and in other pleadings submitted to this Court, petitioner confirmed that his job was to
supervise the laborers in the construction project. Hence, although petitioner cannot strictly be classified as
a managerial employee under Art. 82 of the Labor Code, and sec. 2(b), Rule I, Book III of the Omnibus Rules
Implementing the Labor Code, nonetheless he is still not entitled to payment of the aforestated benefits
because he falls squarely under another exempt category"officers or members of a managerial staff" as
defined under sec. 2(c) of the abovementioned implementing rules.
That petitioner was paid overtime benefits does not automatically and necessarily denote that petitioner is
entitled to such benefits. Art. 82 of the Labor Code specifically delineates who are entitled to the overtime
premiums and service incentive leave pay provided under Art. 87, 93, 94 and 95 of the Labor Code and the
exemptions thereto. As previously determined, petitioner falls under the exemptions and therefore has no
legal claim to the said benefits. It is well and good that petitioner was compensated for his overtime
services. However, this does not translate into a right on the part of petitioner to demand additional payment
when, under the law, petitioner is clearly exempted therefrom.
2.

NO, HE IS NOT.

The applicable provision is Article 280 of the Labor Code which defines the term "project employee," thus:

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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.

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Labor Congress of the Phils. vs. NLRC


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

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Mercidar Fishing Corp., vs. NLRC


G.R. No. 112574, October 8, 1998
Facts:
This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr.
against petitioner for illegal dismissal, violation of P.D. No. 851, and non-payment of five days service
incentive leave for 1990. Private respondent had been 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.

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San Miguel Corp., vs. CA


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

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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.

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Tan vs. Lagrama


G.R. No. 151228; August 15, 2002
Facts:
Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of Crown
and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter, making ad billboards
and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than 10
years, from September 1, 1988 to October 17, 1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi na naman
ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When Lagrama asked what
Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon,
wala nay drawing. Gawas." ("Don't say anything further. I don't want you to draw anymore. From now on, no
more drawing. Get out.")
Lagrama denied the charge against him. He claimed that he was not the only one who entered the drawing
area and that, even if the charge was true, it was a minor infraction to warrant his dismissal. However,
everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no other choice but to leave the
premises. Lagrama filed a complaint with the National Labor Relations Commission (NLRC) in Butuan City. He
alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay,
service incentive leave pay, salary differential, and damages.
As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to file
their position papers. It declared that the dismissal illegal and order the payment of monetary benefits. Tan
appealed to the NLRC and reversing the decision of the Labor Arbiter.
Issue:
Whether or not the respondent was illegally dismissed and thus entitled to payment of benefits provided by
law.
Ruling:
The respondent was illegally dismissed and entitled to benefits. The Implementing Rules of the Labor Code
provide that no worker shall be dismissed except for a just or authorized cause provided by law and after due
process. This provision has two aspects: (1) the legality of the act of dismissal, that is, dismissal under the
grounds provided for under Article 282 of the Labor Code and (2) the legality in the manner of dismissal. The
illegality of the act of dismissal constitutes discharge without just cause, while illegality in the manner of
dismissal is dismissal without due process.
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as the
latter tried to explain his side, petitioner made it plain that Lagrama was dismissed. Urinating in a work place
other than the one designated for the purpose by the employer constitutes violation of reasonable
regulations intended to promote a healthy environment under Art. 282(1) of the Labor Code for purposes of
terminating employment, but the same must be shown by evidence. Here there is no evidence that Lagrama
did urinate in a place other than a rest room in the premises of his work.
Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter found that
the relationship between the employer and employee has been so strained that the latter's reinstatement
would no 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 employeremployee 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.

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Lambo vs. NLRC


G.R. No. 111042; October 26, 1999
Facts:
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor
Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m.
to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private
respondents, petitioners were paid on a piece-work basis, according to the style of suits they made.
Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least
P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and
sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave
pay, separation pay, 13th month pay, and attorneys fees. After hearing, Labor Arbiter found private
respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners claims. On appeal,
the NLRC reversed the decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of
work and accordingly dismissed their claims except that for 13th month pay.
Petitioners allege that they were dismissed by private respondents as they were about to file a petition with
the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System
(SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work.
Issue:
Whether or not the petitioners are entitled to the minimum benefits provided by law.
Ruling:
The petitioners are entitled to the minimum benefits provided by law. There is no dispute that petitioners
were employees of private respondents although they were paid not on the basis of time spent on the job
but according to the quantity and the quality of work produced by them. There are two categories of
employees paid by results: (1) those whose time and performance are supervised by the employer. (Here,
there is an element of control and supervision over the manner as to how the work is to be performed. A
piece-rate worker belongs to this category especially if he performs his work in the company premises.); and
(2) those whose time and performance are unsupervised. (Here, the employers control is over the result of
the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit
accomplished.
Piece-rate payment is generally practiced in garment factories where work is done in the company premises,
while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in
sugar plantations where the work is performed in bulk or in volumes difficult to quantify. 4 Petitioners belong
to the first category, i.e., supervised employees.
In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked
in the companys premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact
that they were paid on a piece-rate basis does not negate their status as regular employees of private
respondents. The term "wage" is broadly defined in Art. 97 of the Labor Code as remuneration or earnings,
capable of 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

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are in accordance with our finding that petitioners are regular employees, although paid on a piece-rate
basis.

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R&E Transport vs. Latag


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

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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.

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Atty. Jefferson Marquez

Autobus Transport System vs. Bautista


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

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According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is
further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine 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.

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Atty. Jefferson Marquez

San Miguel Corp., vs. Del Rosario


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

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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.

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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;
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."

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

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


G.R. No. 1577745, October 19, 2007, citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995],
and Odango vs. NLRC, G.R. No. 147420, June 10, 2004
Facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU
(respondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rank-and-file
employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000, respondent, through its
Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all
employees, as provided for in the CBA. Petitioner, on the other hand, in its Position Paper, insisted payment
of the holiday pay in compliance with the CBA provisions, stating that payment was presumed since the
formula used in determining the daily rate of pay of the covered employees is Basic Monthly Salary divided
by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the
employees are already paid their regular and special days, the days when no work is done, the 51 un-worked
Sundays and the 51 un-worked Saturdays.
Issue:
Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday pay.
Held:
Leyte IV Electric Cooperative is not liable for underpayment of holiday pay. The Voluntary Arbitrator gravely
abused its discretion in giving a strict or literal interpretation of the CBA provisions that the holiday pay be
reflected in the payroll slips. Such literal interpretation ignores the admission of respondent in its Position
Paper that the employees were paid all the days of the month even if not worked. In light of such admission,
petitioner's submission of its 360 divisor in the computation of employees' salaries gains significance.
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43 Producers
Bank of the Philippines v. National Labor Relations Commission. In this case, the monthly salary was fixed by
Wellington to provide for compensation for every working day of the year including the holidays specified by
law and excluding only Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that
is, it simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference,
314, as basis for determining the monthly salary. The monthly salary thus fixed actually covered payment for
314 days of the year, including regular and special holidays, as well as days when no work was done by
reason of fortuitous cause, such as transportation strike, riot, or typhoon or other natural calamity, or cause
not attributable to the employees.
It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the use of a
divisor that was less than 365 days cannot make the employer automatically liable for underpayment of
holiday pay. In said case, the employees were required to work only from Monday to Friday and half of
Saturday. Thus, the minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and
less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant that the employees were
deprived of their holiday pay for some or all of the ten legal holidays. The 304-day divisor used by the
employer was clearly above the minimum of 287 days.
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.

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Bahia Shipping Services vs. Chua,


G.R. No. 162195, April 8, 2008, citing Cagampan vs. NLRC, 195 SCRA 533 [1998]
Facts:
Reynaldo Chua, herein respondent, was under the employ of Bahia Shipping Services, Inc., herein petitioner,
as a restaurant waiter on board the M/S Black Watch , a luxury cruise ship liner. His employment is pursuant
to a Philippine Overseas Employment Administration (POEA) approved employment contract dated October
9, 1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997.
On October 18, 1996, respondent, on board the cruise ship, left Manila for Heathrow, England. About four
months into his employment, or on February 15, 1997, responded reported to work an hour and a half (1 )
late. Due to the incident, respondent was issued a warning-termination form by the master of the cruise
ship, Thor Fleten on February 17, 1997, who likewise conducted an inquisitorial hearing to investigate the
incident on March 8, 1997.
Thereafter, on March 9, 1997, respondent was dismissed from service on the strength of an unsigned and
undated notice of dismissal. Attached to the dismissal notice is the alleged minutes or records of the
investigation and hearing.
On March 24, 1997, respondent filed a complaint for illegal dismissal and other monetary claims. He claims
that he was underpaid in the amount of US$110.00 per month for a period of five (5) months, since he was
only paid US$300.00 per month, instead of US$410.00 per month, which was stipulated in his contract.
Aside from underpayment, he alleged that US$20.00 per month was also deducted from his salary by
petitioner for union dues.
Issue:
In the computation of the award, should the guaranteed overtime pay per month be included as part of his
salary?
Ruling:
There is no factual or legal basis in the inclusion of his "guaranteed overtime" pay into his monthly salary
computation for the entire unexpired period of his contract.
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.

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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.

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LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez

Radio Mindanao Network, Inc. vs. Ybarola


G.R. No. 198662, Sept. 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 which they executed
freely and voluntarily. They belied the respondents claimed salary rates, alleging that they each received a
monthly salary of P 9,177.00, as shown by the payrolls.
The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the payment of
additional separation pay to the respondents P 490,066.00 for Ybarola and P 429,517.55 for Rivera.
On appeal by the petitioners to the National Labor Relations Commission (NLRC), the NLRC set aside the
labor arbiters decision and dismissed the complaint for lack of merit. It ruled that the withholding tax
certificate cannot be the basis of the computation of the respondents separation pay as the tax document
included the respondents cost-of-living allowance and commissions; as a general rule, commissions cannot
be included in the base figure for the computation of the separation pay because they have to be earned by
actual market transactions attributable to the respondents From the NLRC, the respondents sought relief
from the CA through a petition for certiorari under Rule 65 of the Rules of Court.
The CA granted the petition and set aside the assailed NLRC dispositions. It reinstated the labor arbiters
separation pay award, rejecting the NLRCs ruling that the respondents commissions are not included in the
computation of their separation pay. It pointed out that in the present case, the respondents earned their
commissions through actual market transactions attributable to them; these commissions, therefore, were
part of their salary.
The appellate court declared the release/quitclaim affidavits executed by the respondents invalid for being
against public policy, citing two reasons: (1) the terms of the settlement are unconscionable; the separation
pay the respondents received was deficient by at least P 400,000.00 for each of them; and (2) the absence
of voluntariness when the respondents signed the 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

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LABOR STANDARDS LAW CASE BRIEFS VOLUME 1


Atty. Jefferson Marquez
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.

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