MERALCO vs.

QUISUMBING
G.R. No. 127598, January 27, 1999

FACTS: On September 7, 1995, Meralco Employees and Workers Association (MEWA)

informed MERALCO of its intention to re-negotiate the terms and conditions of their existing
1992-1997 Collective Bargaining Agreement (CBA) covering the remaining period of two years
starting from December 1, 1995 to November 30, 1997. However, despite the series of meetings
between the negotiating panels of MERALCO and MEWA, the parties failed to arrive at terms
and conditions acceptable to both of them.

On April 23, 1996, MEWA filed a Notice of Strike with the NCMB. The NCMB then conducted
a series of conciliation meetings but the parties failed to reach an amicable settlement.
The Secretary assumed jurisdiction and made a Return-To-Work Order. The Secretary resolved
and awarded to respondents an alleged grossly exorbitant package and others, and also making the
CBA effective not on the time the Secretary resolved such matter exercising its discretion.

ISSUE: Whether or not the retroactivity of arbitral awards shall commence at such time as granted
by Secretary.

HELD: Article 253-A serves as the guide in determining when the effectivity of the CBA at bar
is to take effect. It provides that the representation aspect of the CBA is to be for a term of 5 years,
while x x x All other provisions of the Collective Bargaining Agreement shall be re-negotiated
not later than 3 years after its execution. Any agreement on such other provisions of the
Collective Bargaining Agreement entered into within 6 months from the date of expiry of the
term of such other provisions as fixed in such Collective Bargaining Agreement shall retroact
to the day immediately following such date. If such agreement is entered into beyond 6 months,
the parties shall agree on the duration of the effectivity thereof. x x x.
Under these terms, it is clear that the 5-year term requirement is specific to the
representation aspect. What the law additionally requires is that a CBA must be re-negotiated
within 3 years after its execution. It is in this re-negotiation that gives rise to the present CBA
deadlock. If no agreement is reached within 6 months from the expiry date of the 3 years that
follow the CBA execution, the law expressly gives the parties - not anybody else - the discretion
to fix the effectivity of the agreement.
Significantly, the law does not specifically cover the situation where 6 months have elapsed
but no agreement has been reached with respect to effectivity. In this eventuality, we hold that any
provision of law should then apply for the law abhors a vacuum.
One such provision is the principle of hold over, i.e., that in the absence of a new CBA, the
parties must maintain the status quo and must continue in full force and effect the terms and
conditions of the existing agreement until a new agreement is reached. In this manner, the law
prevents the existence of a gap in the relationship between the collective bargaining parties.
Another legal principle that should apply is that in the absence of an agreement between the parties,
then, an arbitrated CBA takes on the nature of any judicial or quasi-judicial award; it operates and
may be executed only respectively unless there are legal justifications for its retroactive
application.
Wherefore, the arbitral award shall retroact from December 1, 1995 to November 30, 1997.
 PHILIPPINE VETERANS BANK vs. NLRC
G.R. No. 130439, October 26, 1999

FACTS: In 1983, petitioner Philippine Veterans Bank was placed under receivership by the
Central Bank (now Bangko Sentral). Petitioner was subsequently placed under liquidation on 15
June 1985. Consequently, its employees, including private respondent Dr. Jose Teodorico V.
Molina, were terminated from work and given their respective separation pay and other benefits.
To assist in the liquidation, some of petitioner’s former employees were rehired, among them
Molina, whose re-employment commenced on 15 June 1985. On 11 May 1991, MOLINA filed a
complaint against members of the liquidation team. The complaint demanded the implementation
of Wage Orders Nos. NCR-01 and NCR-02 (hereafter W.O. 1 and W.O. 2) as well as moral
damages and attorney’s fees in the amount of P300,000. Meanwhile, W.O. 1 took effect on
November 1990, prescribing a P17-increase in the daily wage of employees whose monthly salary
did not exceed P3,802.08. On the other hand, W.O. 2 became mandated a P12-increase in the daily
wage of employees whose monthly salary did not exceed P4,319.16. Molina claimed that his salary
should have been adjusted in compliance with said wage orders. The liquidation team countered
that MOLINA was not entitled to any salary increase because he was already receiving a monthly
salary of P6,654.60. Labor Arbiter rejected the 26.16 factor used by the liquidators in computing
the daily wage of MOLINA, adopting instead the factor of “365 days.” On appeal, the NLRC
sustained the labor arbiter’s ruling after concluding that Molina was a regular employee of
petitioner with a basic monthly salary of P3,754.60 at the time of his dismissal on 31 January 1992.
ISSUE: Are W.O. 1 and W.O. 2 applicable to MOLINA?
HELD: Yes. 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. It is clear that respondent is entitled
to the wage increase under R.A. 6440 computed on the basis of 365 paid days and to the
corresponding salary differentials as a result of the application of this factor. Evidently, the use of
the 365 factor is binding and conclusive, forming as it did part of the employment contract. To
abandon such policy and revert to its old practice of using the 26.16 factor would be a diminution
of a labor benefit, which is prohibited by the Labor Code. It cannot be doubted that the 365 factor
favors petitioner’s employees because it results in a higher determination of their monthly salary.
MOLINAs monthly salary of P3,754.60 was never at issue. What was in dispute was the
computation of his daily wage.
May we add that the old practice of the bank in using factor 365 days in a year in
determining equivalent monthly salary cannot unilaterally be changed by your employer without
the consent of the employees, such practice being now a part of the terms and conditions of your
employment. An employment agreement, whether written or unwritten, is a bilateral contract and
as such either party thereto cannot change or amend the terms thereof without the consent of the
other party thereto.
 CONGSON vs. NLRC
G.R. No. 114250, April 5, 1995

FACTS: Private respondents were hired as piece-rate employees of Southern Fishing Industry
owned by petitioner Congson. They were uniformly paid at a rate of P1.00 per tuna weighing thirty
(30) to eighty (80) kilos per movement and worked 7 days a week.
Due to alleged scarcity of tuna, Congson notified the private respondents his proposal to
reduce the rate-per-tuna movement. Private respondents resisted the proposed rate reduction.
When they reported back to work, 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.
Private respondents 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: WON the form of payment by Congson is valid pursuant to Article 102 of the Labor Code.

HELD: Wage shall be paid only by means of legal tender – Undoubtedly, 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 Article 102 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.
Wages shall be paid only by means of legal tender. The only instance when an employer is
permitted to pay wages informs other than legal tender, that is, by checks or money order, is when
the circumstances prescribed in the second paragraph of Article 102 are present.
 NORTH DAVAO MINING CORPORATION vs. NLRC
G.R. No. 112546, March 13, 1996

FACTS: North Davao Mining Corporation was incorporated in 1974 as a 100% privately-owned
company. As of December 31, 1990 the national government held 81.8% of the common stock
and 100% of the preferred stock of said company. In May 1992, North Davao completely ceased
operations due to serious business reverses. When it ceased operations, its remaining employees
were separated and given the equivalent of 12.5 days’ pay for every year of service, computed on
their basic monthly pay. However, 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 30 days’ pay for every year of service. Subsequently, a complaint was filed with
respondent LA by respondent Guillema and 271 other separated employees for additional
separation pay of 17.5 days for every year of service, among others.

ISSUE: WON an employer whose business operations ceased due to serious business losses or
financial reverses is obliged to pay separation pay to its employees separated by reason of such
closure.

HELD: Art. 283 of the Labor Code does not obligate an employer to pay separation benefits when
the closure is due to losses. In the case before us, the basis for the claim of the additional separation
benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of employees, which is
proscribed as an unfair labor practice by Art. 248 (e) of said Code. Under the facts and
circumstances of the present case, the grant of a lesser amount of separation pay to private
respondent was done, not by reason of discrimination, but rather, out of sheer financial bankruptcy
– a fact that is not controlled by management prerogatives. Stated differently, the total cessation
of operation due to mindboggling losses was a supervening fact that prevented the company from
continuing to grant the more generous amount of separation pay. The fact that North Davao at the
point of its forced closure voluntarily pain any separation benefits at all – although not required by
law – and 12.5 days’ worth at that, should have elicited admiration instead of condemnation. But
to require it to continue being generous when it is no longer in a position to do so would certainly
be unduly oppressive, unfair and most revolting to the conscience.
 SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION vs. NLRC
G.R. No. 126383, November 28, 1997

FACTS: Then Labor Secretary Franklin M. Drilon issued Policy Instruction No. 4 in line with
R.A. 5901 which “requires that the covered hospital workers who used to work 7 days a week
should be paid for such number of days for working only 5 days or 40 hours a week”. Petitioners
filed a complaint for the expeditious implementation and payment by respondent” Juan De Dios
Hospital “. The Labor Arbiter and NLRC both dismissed their complaints and MR was also denied.
Hence, this petition. In said Policy Instruction, it was provided that: “The Labor Code in its Article
83 adopts and incorporates the basic provisions of RA 5901 and retains its spirit and intent which
is to shorten the workweek of covered hospital personnel and at the same time assure them of a
full weekly wage.”

ISSUE: WON the intent of Art. 83, LCP, is that persons in subject hospitals and clinics who have
completed the 40-hour/5-day workweek in any given workweek are entitled to a full weekly wage
for seven days.

HELD: No. What Article 83 merely provides are: (1) the regular office hour of eight hours a day,
five days per week for health personnel, and (2) where the exigencies of service require that health
personnel work for six days or forty-eight hours then such health personnel shall be entitled to 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’s assertion that “personnel in
subject hospitals and clinics are entitled to a full weekly wage for seven (7) days if they have
completed the 40-hour/5-day workweek in any given workweek”.

Also, if petitioners are entitled to two days off with pay, then there appears to be no sense at all
why Section 15 of the implementing rules grants additional compensation equivalent to the regular
rate plus at least twenty-five percent thereof for work performed on Sunday to health personnel,
or an “additional straight-time pay which must be equivalent at least to the regular rate” ” for work
performed in excess of forty hours a week.
 PHILIPPINE AIRLINES vs. NLRC
G.R. No. 132805, February 2, 1999

FACTS: Private respondent Dr. Fabros was employed as flight surgeon at petitioner’s company.
He was assigned at the PAL Medical Clinic and was on duty from 4:00 in the afternoon until 12:00
midnight. On Feb.17, 1994, at around 7:00 in the evening, Dr. FAbros left the clinic to have his
dinner at his residence, which was abou t5-minute drive away. A few minutes later, the clinic
received an emergency call from the PAL Cargo Services. One of its employeeshad suffered a
heart attack. The nurse on duty, Mr. 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 Mr. Eusebio immediately
rushed him to the hospital. When Dr. Fabros reached the clinic at around 7:51 in the evening, Mr.
Eusebio had already left with the patient to the hospital. The patient died the following day. Upon
learning about the incident, PAL Medical Director ordered the Chief Flight Surgeon to conduct an
investigation. In his explanation, Dr. Fabros 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. Labor Arbiter and NLRC held that private
respondent was illegally suspended.

ISSUE: WON private respondent who is illegally suspended is entitled to damages.

HELD: Not every employee who is illegally dismissed or suspended is entitled to damages. As a
rule, moral damages are recoverable only where the dismissal or suspension of the employee was
attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs or public policy. Bad faith does not simply mean negligence or
bad judgment. It involves a state of mind dominated by ill will or motive. It implies a conscious
and intentional design to do a wrongful act for a dishonest purpose or some moral obliquity. The
person claiming moral damages must prove the existence of bad faith by clear and convincing
evidence for the law always presumes good faith.

In the case at bar, there is no showing that the management of petitioner’s company was moved
by some evil motive in suspending private respondent. It suspended private respondent on an
honest, albeit erroneous, belief that private respondents act of leaving the company premises to
take his meal at home constituted abandonment of post which warrants the penalty of suspension.
Also, it is evident from the facts that petitioner gave private respondent all the opportunity to refute
the charge against him and to defend himself. These negate the existence of bad faith on the part
of petitioner. Under the circumstances, we hold that private respondent is not entitled to moral
damages.
 LAGATIC vs. NLRC
G.R. No. 121004, January 28, 1998

FACTS: Petitioner Lagatic was employed by Cityland, first as a probationary sales agent, and
later on as a marketing specialist. He was tasked with soliciting sales for the company, with the
corresponding duties of accepting call-ins, referrals, and making client calls and cold calls.
Cityland issued a written reprimand to petitioner for his failure to submit cold call reports for some
time. This notwithstanding, petitioner again failed to submit cold call reports. Petitioner was
required to explain his inaction, with a warning that further non-compliance would result in his
termination from the company. In a reply, petitioner claimed that the same was an honest omission
brought about by his concentration on other aspects of his job. Cityland found said excuse
inadequate and suspended him for three days, with a similar warning. Notwithstanding the
aforesaid suspension and warning, petitioner again failed to submit cold call reports. He was
verbally reminded to submit the same and was even given up a due date to do so. Instead of
complying with said directive, petitioner wrote a note, "TO HELL WITH COLD CALLS! WHO
CARES?" and exhibited the same to his co-employees. Finding petitioner guilty of gross
insubordination, Cityland served a notice of dismissal upon him on February 26, 1993.

ISSUE: WON employers have the right to make reasonable rules and regulations for the
government of their employees.

HELD: Petitioner loses sight of the fact that "except as provided for, or limited by, special laws,
an employer is free to regulate, according to his discretion and judgment, all aspects of
employment." Employers may, thus, make reasonable rules and regulations for the government of
their employees, and when employees, with knowledge of an established rule, enter the service,
the rule becomes a part of the contract of employment. It is also generally recognized that company
policies and regulations, unless shown to be grossly oppressive or contrary to law, are generally
valid and binding on the parties and must be complied with. "Corollarily, an employee may be
validly dismissed for violation of a reasonable company rule or regulation adopted for the conduct
of the company business. An employer cannot rationally be expected to retain the employment of
a person whose . . . lack of regard for his employer's rules . . . has so plainly and completely been
bared." Petitioner's continued infraction of company policy requiring cold call reports, as
evidenced by the 28 instances of non-submission of aforesaid reports, justifies his dismissal.
Based on the foregoing, we find petitioner guilty of willful disobedience. Willful
disobedience requires the concurrence of at least two requisites: a.) the employee's assailed
conduct must have been willful or intentional, the willfulness being characterized by a wrongful
and perverse attitude; and b.) 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.
 CAGAMPAN vs. NLRC
G.R. No. 85122-24, March 22, 1991

FACTS: On April 17 and 18, 1985, petitioners, all seamen, entered into separate contracts of
employment with the Golden Light Ocean Transport, Ltd., through its local agency, private
respondent ACE MARITIME AGENCIES, INC. with their respective ratings and monthly salary
rates. Petitioners were deployed on May 7, 1985, and discharged on July 12, 1986. Thereafter,
petitioners collectively and/or individually filed complaints for non-payment of overtime pay,
vacation pay and terminal pay against private respondent. On August 5, 1987, the Philippine
Overseas Employment Administration (POEA) rendered a Decision DISMISSING petitioners'
claim for terminal pay but GRANTED their prayer for leave pay and overtime pay. Private
respondent appealed from the POEA's Decision to the NLRC on August 24, 1987. On March 16,
1988, the NLRC promulgated a Decision, REVERSING and SETTING ASIDE and another one
entered dismissing the cases for lack of merit.

ISSUE: WON the petitioners are entitled for overtime pay?

HELD: No. Entitlement to overtime pay must first be established by proof that said overtime work
was actually performed, before an employee may avail of said benefit. Realistically speaking, a
seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour
work schedule. For the employer to give him overtime pay for the extra hours when he might be
sleeping or attending to his personal chores or even just lulling away his time would be extremely
unfair and unreasonable.
The criterion in determining whether or not seaman are entitled to overtime pay is not,
whether they were on board and cannot leave the ship beyond the regular 8-working hours a day,
but whether they actually rendered service in excess of said number of hours.