LABOR STANDARDS CASE DIGESTS

DISCUSSION NO.1

Maximo Calalang vs. A.D. Williams

GR No. 47800. December 2, 1940.
Laurel, J.:

FACTS: Calalang filed a petition for a writ of prohibition against the respondents. It is
alleged in the petition that: 1.) National Traffic Commission (NTC), in a resolution,
prohibited animal-drawn vehicles from passing along Rosario Street extending from
Plaza Calderon de la Barca to Dasmariñas Street and along Rizal Avenue extending
from the railroad crossing at Antipolo Street to Echague Street, from a period of one
year from the date of the opening of the Colgante Bridge to traffic; 2.) the Chairman of
NTC recommended to the Director of Public Works the adoption of the measure
proposed in the resolution; 3.) that on August 2, 1940, the Director of Public Works, in
his first indorsement to the Secretary of Public Works and Communications,
recommended to the latter the approval of the recommendation made by the Chairman
of the National Traffic Commission; 4.) that the Mayor of Manila and the Acting Chief of
Police of Manila have enforced and caused to be enforced the rules and regulations
thus adopted; 5.) that as a consequence of such enforcement, all animal-drawn vehicles
are not allowed to pass and pick up passengers in the places abovementioned to the
detriment not only of their owners but of the riding public as well. The petitioner finally
avers that the rules and regulations complained of infringe upon the constitutional
precept regarding the promotion of social justice to insure the well-being and economic
security of all the people.

ISSUE: WON the said resolution infringed the constitutional precept of promoting social
justice.

RULING: No. The Supreme Court ruled to deny the petition for lacking merit. The
promotion of social justice, however, is to be achieved not through a mistaken sympathy
towards any given group. Social justice is “neither communism, nor despotism, nor
atomism, nor anarchy,” but the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and objectively secular
conception may at least be approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of measures calculated to
insure economic stability of all the competent elements of society, through the
maintenance of a proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption of measures legally
justifiable, or extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est suprema
lex.

Social justice, therefore, must be founded on the recognition of the necessity of

interdependence among divers and diverse units of a society and of the protection that
should be equally and evenly extended to all groups as a combined force in our social
and economic life, consistent with the fundamental and paramount objective of the state
of promoting the health, comfort, and quiet of all persons, and of bringing about “the
greatest good to the greatest number.”

ALALAYAN vs NATIONAL POWER CORPORATION

FACTS: In 1961, Republic Act No. 3043 (An Act to Further Amend Commonwealth Act
Numbered One Hundred Twenty, as Amended by Republic Act Numbered Twenty Six
Hundred and Forwty One) was passed. This law amended the charter of NAPOCOR
(National Power Corporation). Section 3 of RA 3043 provides that:

A. Contractors being supplied by NAPOCOR shall not exceed an annual profit of 12%;
b. if they do, they shall refund such excess to their customers;
c. that NAPOCOR has the power to renew all existing contracts with franchise holders
for the supply of energy.

Santiago Alalayan and the Philippine Power and Development Company (PPDC)
assailed the said provision.They averred that Section 3 is a rider because first, it was
not included in the title of the amending law nor was it included in the amended law.
Second, the main purpose of RA 3043 was to increase the capital stock of NAPOCOR
hence Alalayan et al believed that Section 3 was not germane to RA 3043.

ISSUE: Whether or not Section 3 of RA 3043 is constitutional.

HELD: Yes. The Supreme Court simply ruled that the Constitution does not require
Congress to employ in the title of an enactment, language of such precision as to mirror,
fully index or catalogue all the contents and the minute details therein. It suffices if the
title should serve the purpose of the constitutional demand that it inform the legislators,
the persons interested in the subject of the bill, and the public, of the nature, scope and
consequences of the proposed law and its operation. And this, to lead them to inquire
into the body of the bill, study and discuss the same, take appropriate action thereon,
and, thus, prevent surprise or fraud upon the legislators.
AGABON vs. NLRC

FACTS:
Private respondent Riviera Home Improvements, Inc. is engaged in the business of
selling and installing ornamental and construction materials. It employed petitioners
Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January
2, 1992 until February 23, 1999 when they were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims.

On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners
had abandoned their work, and were not entitled to backwages and separation pay. The
other money claims awarded by the Labor Arbiter were also denied for lack of evidence.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal
because they had abandoned their employment but ordered the payment of money
claims.

Petitioners assert that they were dismissed because the private respondent refused to
give them assignments unless they agreed to work on a pakyaw basis when they
reported for duty on February 23, 1999. They did not agree on this arrangement
because it would mean losing benefits as Social Security System (SSS) members.
Petitioners also claim that private respondent did not comply with the twin requirements
of notice and hearing. Private respondent maintained that petitioners were not
dismissed but had abandoned their work. In fact, private respondent sent two letters to
the last known addresses of the petitioners advising them to report for work. Private
respondents manager even talked to petitioner Virgilio Agabon by telephone sometime
in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving
40,000 square meters of cornice installation work. Petitioners did not report for work
because they had subcontracted to perform installation work for another company.
Petitioners also demanded for an increase in their wage to P280.00 per day. When this
was not granted, petitioners stopped reporting for work and filed the illegal dismissal
case.

ISSUE:
Whether or not the petitioners were illegally dismissed.

HELD:
No. To dismiss an employee, the law requires not only the existence of a just and valid
cause but also enjoins the employer to give the employee the opportunity to be heard
and to defend himself. Article 282 of the Labor Code enumerates the just causes
for termination by the employer: (a) serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or the latters representative in connection
with the employees work; (b) gross and habitual neglect by the employee of his duties;
(c) fraud or willful breach by the employee of the trust reposed in him by his employer or
his duly authorized representative; (d) commission of a crime or offense by the
employee against the person of his employer or any immediate member of his family or
his duly authorized representative; and (e) other causes analogous to the foregoing.

Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment. It is a form of neglect of duty, hence, a just cause for termination of
employment by the employer. For a valid finding of abandonment, these two factors
should be present: (1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever employer-employee relationship,
with the second as the more determinative factor which is manifested by overt acts from
which it may be deduced that the employees has no more intention to work. The intent
to discontinue the employment must be shown by clear proof that it was deliberate and
unjustified.

In February 1999, petitioners were frequently absent having subcontracted for an

installation work for another company. Subcontracting for another company clearly
showed the intention to sever the employer-employee relationship with private
respondent. This was not the first time they did this. In January 1996, they did not report
for work because they were working for another company. Private respondent at that
time warned petitioners that they would be dismissed if this happened again. Petitioners
disregarded the warning and exhibited a clear intention to sever their employer-
employee relationship. The record of an employee is a relevant consideration in
determining the penalty that should be meted out to him.

PHILIPPINE AIRLINES vs NLRC

G.R. No. 85985 August 13, 1993

Facts:

PAL completely revised its 1966 Code of Discipline. The Code was circulated among
the employees and was immediately implemented, and some employees were forthwith
subjected to the disciplinary measures embodied therein. The Philippine Airlines
Employees Association (PALEA) filed a complaint before the National Labor Relations
Commission (NLRC). PALEA contended that PAL, by its unilateral implementation of
the Code, was guilty of unfair labor practice, specifically Paragraphs E and G of Article
249 and Article 253 of the Labor Code. PALEA alleged that copies of the Code had
been circulated in limited numbers; that being penal in nature the Code must conform
with the requirements of sufficient publication, and that the Code was arbitrary,
oppressive, and prejudicial to the rights of the employees. It prayed that implementation
of the Code be held in abeyance; that PAL should discuss the substance of the Code
with PALEA; that employees dismissed under the Code be reinstated and their cases
subjected to further hearing; and that PAL be declared guilty of unfair labor practice and
be ordered to pay damages PAL asserted its prerogative as an employer to prescribe
rules and regulations regarding employees' conduct in carrying out their duties and
functions, and alleging that by implementing the Code, it had not violated the collective
bargaining agreement (CBA) or any provision of the Labor Code. Assailing the
complaint as unsupported by evidence, PAL maintained that Article 253 of the Labor
Code cited by PALEA referred to the requirements for negotiating a CBA which was
inapplicable as indeed the current CBA had been negotiated.

Issue:

W/N the formulation of a Code of Discipline among employees is a shared responsibility

of the employer and the employees.

Ruling:

Petitioner's assertion that it needed the implementation of a new Code of Discipline

considering the nature of its business cannot be overemphasized. In fact, its being a
local monopoly in the business demands the most stringent of measures to attain safe
travel for its patrons. Nonetheless, whatever disciplinary measures are adopted cannot
be properly implemented in the absence of full cooperation of the employees. Such
cooperation cannot be attained if the employees are restive on account, of their being
left out in the determination of cardinal and fundamental matters affecting their
employment.

MANILA ELECTRIC vs SECRETARY OF LABOR QUISUMBING

FACTS: Members of the Private respondent union were dissatisfied with the terms of a
CBA with petitioner. The parties in this case were ordered by the Sec. of Labor to
execute a collective bargaining agreement (CBA) wherein.The CBA allowed for the
increase in the wages of the employees concerned. The petitioner argues that if such
increase were allowed, it would pass off such to the consumers.

ISSUE: W/N matters of salary are part of management prerogative

HELD: Yes. There is no need to consult the Secretary of Labor in cases involving
contracting out for 6 months or more as it is part of management prerogative. However,
a line must be drawn with respect to management prerogatives on business operations
per se and those which affect the rights of the workers. Employers must see to it that
that employees are properly informed of its decisions to attain harmonious labor
relations and enlighten the worker as to their rights.

The contracting out business or services is an exercise of business judgment if it is for

the promotion of efficiency and attainment of economy. Management must be motivated
by good faith and contracting out should not be done to circumvent the law. Provided
there was no malice or that it was not done arbitrarily, the courts will not interfere with
the exercise of this judgment.
PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION INC. vs NLRC
GR No. 105963
August 22, 1996

FACTS:
The respondent used to be a security guard under the employ of the petitioner
company. He works for 12 hours a day and is receiving a monthly salary plus
emergency allowance. From January 4, 1988 up to June 1990, several salary
adjustments were made by the respondent on the monthly basic salary of the
complainant. During his entire period of employment with respondent, the former was
required to perform overtime work without any additional compensation from the latter.

The respondent filed a complaint with the Labor Arbiter for the payment of his overtime
pay. The Labor Arbiter ruled that the respondent is entitled to an overtime pay. The
NLRC affirmed the decision of the Labor Arbiter. Hence, this petition.

The petitioner contends that the fact that the monthly salary of the petitioner is higher
than the minimum wage provided by law is already compensatory of the excess of 4
hours of work rendered by the said employee. It argues that the salary of the petitioner
already includes the payment for the excess of 4 hours of work rendered by the
respondent. It also contends that since there is a meeting of minds between the
respondent and the petitioner, there is already a perfected contract which means that
the parties are bound by their agreements.

ISSUE: Whether or not the respondent is entitled to an overtime pay

HELD:
The Supreme Court ruled that the respondent is entitled to an overtime pay. The
contention of the petitioner that since the respondent's monthly salary is higher than the
minimum wage, it is already commensurate of the 4 hours excess of work rendered by
the respondent. The Supreme Court held that the fact that one's salary is higher than
the minimum wage does not in any way offset the other benefits that are due to the
employees, in the absence of an agreement to the contrary. To consider the overtine
pay of the respondent included in his monthly salary would be in contravention of the
rules against non-diminution of benefits and a violation of the Labor Code since it
prescribes a certain manner on how overtime pay is included. Moreover, the Supreme
Court found that contrary to what the petitioner aver, as shown in the computation of the
petitioner itself, the monthly salary of the respondent is only a basic salary which is
exclusive of all the other benefits that the respondent is to receive.

With regard to the petitioner's second contention that there is already a perfected
contract, hence, the terms and conditions imposed therein binds the parties to the
contract, the Supreme Court held that while such condition has the weight and force of
law, it is still subject to certain exception. The general right to contract is subject to a
limitation that such terms and conditions must not be contrary to law, public order,
public policy, morals and good customs. Employment contracts are imbued with public
interest and are therefore subject to police power of the state. The subject contract in
the case at bar is contrary to labor laws. Therefore, not binding to the parties of the
case.

INNODATA PHILIPPINES INC. vs QUIJADA LOPEZ

Facts:

Innodata Philippines, Inc., is engaged in the encoding/data conversion business.

It employs encoders, indexers, formatters, programmers, quality/quantity staff, and
others, to maintain its business and do the job orders of its clients.

Estrella G. Natividad and Jocelyn L. Quejada were employed as formatters by

Innodata Philippines, Inc. They [worked] from March 4, 1997, until their separation on
March 3, 1998. They believed that their job was necessary and desirable to the usual
business of the company which is data processing/conversion and that their
employment is regular pursuant to Article 280 of the Labor Code,they filed a complaint
for illegal dismissal and for damages as well as for attorney’s fees against Innodata
Phils., Incorporated.

Innodata contended that their employment contracts expired, having a fixed

period of one (1) year. Since the period expired, their employment was likewise
terminated applying the ruling in the Brent School case.

Labor Arbiter Donato G. Quinto rendered a judgment in favor of complainants

holding complainants Estella G. Natividad and Jocelyn Quejada to have been illegally
dismissed by Innodata Philippines Incorporated and Innodata Processing Corporation
and ordering reinstatement to their former position without loss of seniority rights, or to a
substantially equivalent position, and to pay them jointly and severally, backwages
computed from the time they were illegally dismissed on March 3, 1998 up to the date of
this decision in the amount of P112,535.28 EACH, or in the total amount of P225,070.56
for the two of them; and further ordered to pay them attorney’s fees in the amount
equivalent to 10% of their respective awards.

Innodata appealed to NLRC which reversed and set aside the Labor Arbiter’s
decision declaring that the contract was for a fixed term and therefore, the dismissal at
the end of their one year term agreed upon was valid. An MR was filed but was denied.

The CA ruled that respondents were regular employees in accordance with

Section 280 of the Labor Code. It said that the fixed-term contract prepared by petitioner
was a crude attempt to circumvent respondents’ right to security of tenure.

The disputed contract reads, as follows:

“TERM/DURATION
The EMPLOYER hereby employs, engages and hires the EMPLOYEE, and the
EMPLOYEE hereby accepts such appointment as FORMATTER effective March 04,
1997 to March 03, 1998, a period of one (1) year.
xxxxxxxxx

“TERMINATION

7.1 This Contract shall automatically terminate on March 03, 1998 without need of
notice or demand.

xxxxxxxxx

7.4 The EMPLOYEE acknowledges that the EMPLOYER entered into this Contract
upon his express representation that he/she is qualified and possesses the skills
necessary and desirable for the position indicated herein. Thus, the EMPLOYER is
hereby granted the right to pre-terminate this Contract within the first three (3) months of
its duration upon failure of the EMPLOYEE to meet and pass the qualifications and
standards set by the EMPLOYER and made known to the EMPLOYEE prior to
execution hereof. Failure of the EMPLOYER to exercise its right hereunder shall be
without prejudice to the automatic termination of the EMPLOYEE’s employment upon
the expiration of this Contract or cancellation thereof for other causes provided herein
and by law.”

The contract provided two periods. Aside from the fixed one-year term set in
paragraph 1, paragraph 7.4 provides for a three-month period during which petitioner
has the right to pre-terminate the employment for the “failure of the employees to meet
and pass the qualifications and standards set by the employer and made known to the
employee prior to” their employment. In effect, the paragraph 7.4 is a probationary
period.

Innodata claims that it was constrained by the nature of its business to enter into
fixed-term employment contracts with employees assigned to job orders. It relies on the
availability of job orders or undertakings from its clients. Thus, the continuity of work
cannot be ascertained.

Hence, this petition.

Issue:
W/N the alleged fixed-term employment contracts are valid.

Ruling:

No, Innodata’s contract of employment failed to comply with the standards set by
law and by this Court. While this Court has recognized the validity of fixed-term
employment contracts in a number of cases, it has consistently emphasized that when
the circumstances of a case show that the periods were imposed to block the
acquisition of security of tenure, they should be struck down for being contrary to law,
morals, good customs, public order or public policy.

“ A contract of employment is impressed with public interest. For this reason,

provisions of applicable statutes are deemed written into the contract. Hence, the
“parties are not at liberty to insulate themselves and their relationships from the impact
of labor laws and regulations by simply contracting with each other.” Moreover, in case
of doubt, the terms office
a contract should be construed in favor of labor.”

Article 1700 of the Civil Code declares:

“Art. 1700. The relations between capital and labor are not merely contractual. They are
so impressed with public interest that labor contracts must yield to the common good.
Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor
and similar subjects.”

Indeed, a contract of employment is impressed with public interest. For this

reason, provisions of applicable statutes are deemed written into the contract. Hence,
the parties are not at liberty to insulate themselves and their relationships from the
impact of labor laws and regulations by simply contracting with each other. Moreover, in
case of doubt, the terms of a contract should be construed in favor of labor.

Petition is DENIED, and the assailed Decision and Resolution are AFFIRMED.
Costs against petitioner.

CIRTEK EMPLOYEES LABOR UNION FEDERATION OF FREE WORKERS vs

CIRTEK

FACTS: Amicable settlement of the CBA between Petitioner Cirtek Union and
respondent Cirtek company was deadlocked, Cirtek Employee labor union went on
strike. Secretary of Labor assumed jurisdiction over the controversy and issued a
Return to Work Order which was complied with. Before the Secretary of Labor could
rule on the controversy, respondent Cirtek company created a Labor Management
Council (LMC) through which it concluded with the officers of petitioner Cirtek Union a
Memorandum of Agreement (MOA) providing for daily wage increases of P6.00 per day
effective January 1, 2004 and P9.00 per day effective January 1, 2005. Petitioner Cirtek
Union submitted the MOA via Motion and Manifestation to the Secretary of Labor,
alleging that the remaining officers signed the MOA under respondents Cirtek Company
assurance that should the Secretary order a higher award of wage increase, respondent
Cirtek Company would comply. Secretary of Labor resolved the CBA deadlock by
awarding a wage increase of from P6.00 to P10.00 per day effective January 1, 2004
and from P9.00 to P15.00 per day effective January 1, 2005, and adopting all other
benefits as embodied in the MOA. Respondent Cirtek Company moved for a
reconsideration of the Decision as petitioners Cirtek Union vice-president submitted a
Muling Pagpapatibay ng Pagsang-ayon sa Kasunduan 33 na may Petsang ika-4 ng
Agosto 2005, stating that the union members were waiving their rights and benefits
under the Secretary’s Decision. Court ruled in favor of respondent Cirtek Company and
accordingly set aside the Decision of the Secretary of Labor. It held that the Secretary of
Labor gravely abused his discretion in not respecting the MOA. Petitioners Cirtek Union
filed the present petition, maintaining that the Secretary of Labors award is in order,
being in accord with the parties CBA history ─ respondent Cirtek Company having
already granted P15.00 per day for 2001, P10.00 per day for 2002, and P10.00 per day
for 2003, and that the Secretary has the power to grant awards higher than what are
stated in the CBA.

ISSUE: Whether or not the MOA entered into by the petitioner Cirtek Union and the
respondent Cirtek company constitutes CBA between them and thus restricts the
Secretary’s leeway in deciding matters before it

HELD: No. It is well-settled that the Secretary of Labor, in the exercise of his power to
assume jurisdiction under Art. 263 (g)[11] of the Labor Code, may resolve all issues
involved in the controversy including the award of wage increases and benefits. While
an arbitral award cannot per se be categorized as an agreement voluntarily entered into
by the parties because it requires the intervention and imposing power of the State thru
the Secretary of Labor when he assumes jurisdiction, the arbitral award can be
considered an approximation of a collective bargaining agreement which would
otherwise have been entered into by the parties, hence, it has the force and effect of a
valid contract obligation. Since the filing and submission of the MOA did not have the
effect of divesting the Secretary of his jurisdiction, or of automatically disposing the
controversy, then neither should the provisions of the MOA restrict the Secretary’s
leeway in deciding the matters before him.

While a contract constitutes the law between the parties, this is so in the present case
with respect to the CBA, not to the MOA in which even the unions signatories had
expressed reservations thereto. But even assuming arguendo that the MOA is treated
as a new CBA, since it is imbued with public interest, it must be construed liberally and
yield to the common good. While the terms and conditions of a CBA constitute the law
between the parties, it is not, however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA, as a labor contract within the
contemplation of Article 1700 of the Civil Code of the Philippines which governs the
relations between labor and capital, is not merely contractual in nature but impressed
with public interest, thus, it must yield to the common good. As such, it must be
construed liberally rather than narrowly and technically, and the courts must place a
practical and realistic construction upon it, giving due consideration to the context in
which it is negotiated and purpose which it is intended to serve.
MISAMIS ORIENTAL II ELECTRIC SERVICE COOPERATIVE vs VIRGILIO
CAGALAWAN

Facts:

On September 1, 1993, MORESCO II, a rural electric cooperative, hired Cagalawan as

a Disconnection Lineman on a probationary basis. On March 1, 1994 Cagalawan was
appointed to the same post this time on a permanent basis. On July 17, 2001, he was
designated as Acting Head of the disconnection crew in Area III sub-office of
MORESCO II in Balingasag sub-office. In a Memorandum dated May 9, 2002,
MORESCO II General Manager Amado B. Ke-e (Ke-e) transferred Cagalawan to Area I
sub-office in Gingoog sub-office as a member of the disconnection crew. Said
memorandum stated that the transfer was done "in the exigency of the service."

In a letter dated May 15, 2002, Cagalawan assailed his transfer claiming he was
effectively demoted from his position as head of the disconnection crew to a mere
member thereof. He also averred that his transfer to the Gingoog sub-office is
inconvenient and prejudicial to him as it would entail additional travel expenses to and
from work. He likewise sought clarification on what kind of exigency exists as to justify
his transfer and why he was the one chosen to be transferred.

In a Memorandum dated May 16, 2002, Ke-e explained that Cagalawan's transfer was
not a demotion since he was holding the position of Disconnection Head only by mere
designation and not by appointment. Ke-e did not, however, state the basis of the
transfer but instead advised Cagalawan to just comply with the order and not to
question management's legitimate prerogative to reassign him.

Issues:
Whether or not Cagalawan's transfer due to the exigency of the service was legitimate.

Held:
No. The rule is that it is within the ambit of the employer's prerogative to transfer an
employee for valid reasons and according to the requirement of its business, provided
that the transfer does not result in demotion in rank or diminution of salary, benefits and
other privileges. The Supreme Court has always considered the management's
prerogative to transfer its employees in pursuit of its legitimate interests. But this
prerogative should be exercised without grave abuse of discretion and with due regard
to the basic elements of justice and fair play, such that if there is a showing that the
transfer was unnecessary or inconvenient and prejudicial to the employee, it cannot be
upheld.

Here, while the transfer of Cagalawan neither entails any demotion in rank since he did
not have tenurial security over the position of head of the disconnection crew, nor result
to diminution in pay as this was not sufficiently proven by him, MORESCO II's evidence
is nevertheless not enough to show that said transfer was required by the exigency of
the electric cooperative's business interest. Simply stated, the evidence sought to be
admitted by MORESCO II is not substantial to prove that there was a genuine business
urgency that necessitated the transfer.

PEOPLE OF THE PHILIPPINES vs VERA REYES

67 Phil 190

Issue: Whether Act No. 2549, as amended by Act Nos. 3085 and 3958 is
unconstitutional?

FACTS: The defendant was charged with a violation of Act No. 2549, as amended by
Act Nos. 3085 and 3958. The accused in his capacity engaged the services of Severa
Velasco de Vera as stenographer with an agreed salary of Php 35.00 a month. Despite
repeated demands, accused wilfully and illegally refused to pay the salary, interposing a
demurer that the facts alleged in the information do not constitute any offense, and that
even if they did the laws penalizing it are unconstitutional. After hearing, the court
sustained the demurer, declaring the last part of Section 1 of Act No. 2549 as last
amended by Act No. 3958 violates the constitutional prohibition against imprisonment
for debt.

Held: No. The Court do not believe that the provision of Section 1(12) Article III of the
Constitution has been correctly applied. The last part of Act No. 2549 as amended will
show that its language refers only to the employer who, being able to make payment,
shall abstain or refuse to do so without justification and to the prejudice of the laborer or
employee. An employer si circumstanced is not unlike a person who defrauds another
by refusing to pay his just debt. In both cases the deceit or fraud is the essential
element constituting the offense. In either case the offender cannot certainly invoke the
constitutional prohibition against imprisonment for debt.

The last part of Section 1 of Act No. 2549 as last amended by Section 1 of Act No. 3958
is valid.
DISCUSSION NO. 2

Antonio M. Serrano vs. Gallant Maritime Services, Inc.

GR No. G.R. No. 167614. March 24, 2009
AUSTRIA-MARTINEZ, J.:

FACTS: Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation
Co., Ltd. (respondents) under a Philippine Overseas Employment Administration
(POEA)-approved Contract of Employment subjected to some terms and conditions. On
March 19, 1998, Petitioner the date of his departure, petitioner was constrained to
accept a downgraded employment contract for the position of Second Officer with a
monthly salary of US$1,000.00, upon the assurance and representation of respondents
that he would be made Chief Officer by the end of April 1998. Respondents did not
deliver on their promise to make petitioner Chief Officer. Hence, petitioner refused to
stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.
Petitioner's employment contract was for a period of 12 months or from March 19, 1998
up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served
only two (2) months and seven (7) days of his contract, leaving an unexpired portion of
nine (9) months and twenty-three (23) days. Petitioner filed with the Labor Arbiter (LA) a
Complaint against respondents for constructive dismissal and for payment of his money
claims.

The LA declared the petitioner's dismissal illegal and awarded him US$8,770,
representing his salary for three (3) months of the unexpired portion of the aforesaid
contract of employment, plus $45 for salary differential and for attorney's fees equivalent
to 10% of the total amount; however, no compensation for damages as prayed was
awarded. On appeal, the NLRC modified the LA decision and awarded Serrano
$4669.50, representing three (3) months of salary at $1400/month, plus 445 salary
differentials and 10% for attorney's fees. This decision was based on the provision of
RA 8042, which was made into law on July 15, 1995. Serrano filed a Motion for Partial
Reconsideration, but this time he questioned the constitutionality of the last clause in
the 5th paragraph of Section 10 of RA 8042, which reads: Sec. 10. Money Claims. - x x
x In case of termination of overseas employment without just, valid or authorized cause
as defined by law or contract, the workers shall be entitled to the full reimbursement of
his placement fee with interest of twelve percent (12%) per annum, plus his salaries for
the unexpired portion of his employment contract or for three (3) months for every year
of the unexpired term, whichever is less. The NLRC denied the Motion; hence, Serrano
filed a Petition for Certiorari with the Court of Appeals (CA), reiterating the constitutional
challenge against the subject clause. The CA affirmed the NLRC ruling on the reduction
of the applicable salary rate, but skirted the constitutional issue raised by herein
petitioner Serrano.

ISSUE: WON the subject clause violate Section 1, Article III of the Constitution, and
Section 18, Article II and Section 3, Article XIII on labor as a protected sector.
RULING: Yes. Under Section 10 of R.A. No. 8042, a worker dismissed from overseas
employment without just, valid or authorized cause is entitled to his salary for the
unexpired portion of his employment contract or for three (3) months for every year of
the unexpired term, whichever is less. In the case at bar, the unexpired portion of
private respondent’s employment contract is eight (8) months. Private respondent
should therefore be paid his basic salary corresponding to three (3) months or a total of
SR3,600. Prior to R.A. No. 8042, OFWs and local workers with fixed-term employment
who were illegally discharged were treated alike in terms of the computation of their
money claims: they were uniformly entitled to their salaries for the entire unexpired
portions of their contracts. But with the enactment of R.A. No. 8042, specifically the
adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of
one year or more in their employment contract have since been differently treated in
that their money claims are subject to a 3-month cap, whereas no such limitation is
imposed on local workers with fixed-term employment. The Court concludes that the
subject clause contains a suspect classification in that, in the computation of the
monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-
month cap on the claim of OFWs with an unexpired portion of one year or more in their
contracts, but none on the claims of other OFWs or local workers with fixed-term
employment. The subject clause singles out one classification of OFWs and burdens it
with a peculiar disadvantage. Thus, it is unconstitutional.

MILLARES AND LAGDA vs NLRC

Significance of the Case:

In this landmark case, the Supreme Court, citing Brent case and Coyoca case, ruled
that seafarers are considered contractual employees. They can not be considered as
regular employees under Article 280 of the Labor Code. Their employment is governed
by the contracts they sign everytime they are rehired and their employment is
terminated when the contract expires. Their employment is contractually fixed for a
certain period of time.

FACTS:
Douglas Millares was employed by ESSO International through its local manning
agency, Trans-Global, in 1968 as a machinist. In 1975, he was promoted as Chief
Engineer which position he occupied until he opted to retire in 1989.

In 1989, petitioner Millares filed a leave of absence and applied for optional retirement
plan under the Consecutive Enlistment Incentive Plan (CEIP) considering that he had
already rendered more than twenty years of continuous service.
Esso International denied Millares’ request for optional retirement on the following
grounds, to wit: (1) he was employed on a contractual basis; (2) his contract of
enlistment (COE) did not provide for retirement before the age of sixty years; and (3) he
did not comply with the requirement for claiming benefits under the CEIP, i.e., to submit
a written advice to the company of his intention to terminate his employment within thirty
days from his last disembarkation date.

Subsequently, after failing to return to work after the expiration of his leave of absence,
Millares was dropped from the roster of crew members effective September 1, 1989.

On the other hand, petitioner Lagda was employed by Esso International as wiper/oiler
in 1969. He was promoted as Chief Engineer in 1980, a position he continued to occupy
until his last COE expired in 1989.

In 1989, Lagda likewise filed a leave of absence and applied to avail of the optional
early retirement plan in view of his twenty years continuous service in the company.

Trans-global similarly denied Lagda’s request for availment of the optional early
retirement scheme on the same grounds upon which Millares request was denied.

Unable to return for contractual sea service after his leave of absence expire, Lagda
was also dropped from the roster of crew members effective September 1, 1989.

● Millares and Lagda filed a complaint-affidavit for illegal dismissal and non-
payment of employee benefits against private respondents Esso International
and Trans-Global before the POEA.

The POEA rendered a decision dismissing the complaint for lack of merit. On appeal,
NLRC affirmed the decision of the POEA dismissing the complaint.

NLRC rationcinated that Millares and Lagda, as seamen and overseas contract workers
are not covered by the term “regular employment” as defined under Article 280 of the
Labor Code. The POEA, which is tasked with protecting the rights of the Filipino
workers for overseas employment to fair and equitable recruitment and employment
practices and to ensure their welfare, prescribes a standard employment contract for
seamen on board ocean-going vessels for a fixed period but in no case to exceed
twelve months.

ISSUE:
Whethers or not seafarers are considered regular employees under Article 280 of the
Labor Code.

RULING:
Quoting Brent School Inc. v. Zamora, 1990, and Pablo Coyoca v. NLRC, 1995, the
Supreme Court ruled that seafarers are considered contractual employees. They can
not be considered as regular employees under Article 280 of the Labor Code. Their
employment is governed by the contracts they sign everytime they are rehired and their
employment is terminated when the contract expires. Their employment is contractually
fixed for a certain period of time. They fall under the exception of Article 280 whose
employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of 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.
As ruled in Brent case, there are certain forms of employment which also require the
performance of usual and desirable functions and which exceed one year but do not
necessarily attain regular employment status under Article 280. Overseas workers
including seafarers fall under this type of employment which are governed by the mutual
agreements of the parties.

And as stated in the Coyoca case, Filipino seamen are governed by the Rules and
Regulations of the POEA. The Standard Employment Contract governing the
employment of All Filipino seamen on Board Ocean-Going Vessels of the POEA,
particularly in Part I, Sec. C specifically provides that the contract of seamen shall be for
a fixed period. And in no case should the contract of seamen be longer than 12
months.Moreover, the Court held that it is an accepted maritime industry practice that
employment of seafarers are for a fixed period only. Constrained by the nature of their
employment which is quite peculiar and unique in itself, it is for the mutual interest of
both the seafarer and the employer why the employment status must be contractual
only or for a certain period of time. Seafarers spend most of their time at sea and
understandably, they can not stay for a long and an indefinite period of time at sea.
Limited access to shore society during the employment will have an adverse impact on
the seafarer. The national, cultural and lingual diversity among the crew during the COE
is a reality that necessitates the limitation of its period.

VIR-JEN SHIPPING AND MARINE SERVICES, INC. vs NLRC

G.R. No. L-58011 & L-58012 November 18, 1983

Note: See page 58 of Azucena’s Labor Standards (2016) :)

Facts: It appears that on different dates in December 1978 and January 1979, the
Seamen (private respondents) entered into separate contracts of employment with the
Company (Vir-Jen), engaging them to work on board M/T Jannu for a period of 12
months. They boarded their vessel in Japan. On 10 January 1919, the master of the
vessel complainant Rogelio H. Bisula, receved a cable from the Company advising him
of the possibility that the vessel might be directed to call at ITF-controlled ports said at
the same time informing him of the procedure to be followed in the computation of the
special or additional compensation of crew members while in said ports. ITF
(International Transport Workers Federation) is a militant international labor
organization with affiliates in different ports of the world, which reputedly can tie down a
vessel in a port by preventing its loading or unloading. This is a sanction resorted to by
ITF to enforce the payment of its wages rates for seafarers the so-called ITF rates, if the
wages of the crew members of a vessel who have affiliated with it are below its
prescribed rates. In the same cable of the Company, the expressed its regrets for not
clarifying earlier the procedure in computing the special compensation as it thought that
the vessel would trade in Caribbean ports only.

On 22 March 1979, the Company sent another cable to complainant Bisula, this time
informing him of the respective amounts each of the officers and crew members would
receive as special compensation when the vessel called at the port of Kwinana
Australia, an ITF-controlled port. This was followed by another cable on 23 March 1979,
informing him that the officers and crew members had been enrolled as members of the
ITF in Sidney, Australia, and that the membership fee for the 28 personnel complement
of the vessel had already been paid.

Complainant Bisula, in representation of the other officers and crew members, informed
the Company that the officers and crew members were not agreeable to its 'suggestion';
that they were not contented with their present salaries 'based on the volume of works,
type of ship with hazardous cargo and registered in a world wide trade': that the 'officers
and crew (were) not interested in ITF membership if not actually paid with ITF rate that
their 'demand is only 50% increase based on present basic salary and that the
proposed wage increase is the 'best and only solution to solve ITF problem' since the
Company's salary rates 'especially in tankers (are) very far in comparison with other
shipping agencies in Manila.

The Company proposed a 25% increase in the basic pay of the crew members. It was
accepted by the Seamen with certain conditions which were accepted by the Company.
Subsequently, the Company sought authority from the NSB to cancel the contracts of
employment of the Seamen, claiming that its principals had terminated their manning
agreement because of the actuations of the Seamen. The request was granted by the
NSB. The Company cabled the Seamen informing them that their contracts would be
terminated upon the vessel's arrival in Japan. They were asked to disembark from the
vessel, their contracts were terminated, and they were repatriated to Manila.

Issue: Whether or not the private respondents were illegally dismissed.

Held: Yes. The case before us does not represent any major advance in the rights of
labor and the workingmen. The private respondents merely sought rights already
established. No matter how much the petitioner-employer tries to present itself as
speaking for the entire industry, there is no evidence that it is typical of employers hiring
Filipino seamen or that it can speak for them.

The contention that manning industries in the Philippines would not survive if the instant
case is not decided in favor of the petitioner is not supported by evidence. The Wallem
case was decided on February 20, 1981. There have been no severe repercussions, no
drying up of employment opportunities for seamen, and none of the dire consequences
repeatedly emphasized by the petitioner. Why should Vir-jen be all exception?

We now hold that neither the National Seamen Board nor the National Labor Relations
Commission should, as a matter of official policy, legitimize and enforce cubious
arrangements where shipowners and seamen enter into fictitious contracts similar to the
addendum agreements or side contracts in this case whose purpose is to deceive. The
Republic of the Philippines and its ministries and agencies should present a more
honorable and proper posture in official acts to the whole world, notwithstanding our
desire to have as many job openings both here and abroad for our workers. At the very
least, such as sensitive matter involving no less than our dignity as a people and the
welfare of our workingmen must proceed from the Batasang Pambansa in the form of
policy legislation, not from administrative rule making or adjudication.

EQUI- ASIA PLACEMENT INC vs DFA AND DOLE

G.R. No. 152214 September 19, 2006

Facts:
Manny dela Rosa Razon, died of acute cardiac arrest while asleep at the dormitory of
the Samsong Textile Processing Factory in South Korea. Informed thereof, the
Philippine Overseas Labor Office (POLO) at South Korea immediately relayed the
incident to the Philippine Embassy in South Korea. Forthwith, the [Labor] Attaché of the
Philippine Embassy dispatched a letter to Eleuterio Gardiner, administrator of the
Overseas Workers Welfare Administration (OWWA), telling him about what happened
and to inform the relatives of Razon. In turn, the OWWA indorsed the matter, for
appropriate action, to Director R. Casco of the Welfare Employment Office of the
Philippine Overseas Employment Administration (WEO-POEA).
Upon verification by the WEO-POEA on its data base, it was discovered that Manny
Razon was recruited and deployed by Equi-Asia Placement, and was sent to South
Korea in April 2000 to work-train at Yeongjin Machinery, Inc.
Petitioner advanced under protest the costs for the repatriation of the remains of Razon.
CA rendered a Decision dismissing the petition.CA stated that petitioner was mainly
accusing the POEA of grave abuse of discretion when it ordered petitioner to pay, in
advance, the costs for the repatriation of the remains of Razon.CA ruled that POEA did
not commit any grave abuse of discretion as its directives to petitioner were issued
pursuant to existing laws and regulations. It likewise held that a petition for certiorari,
which was the remedy availed of by petitioner, is not the proper remedy as the same is
only available when "there is no appeal, or any plain, speedy, and adequate remedy in
the ordinary course of law." Section 62 of the Omnibus Rules and Regulations
Implementing the Migrant Workers and Overseas Filipinos Act of 1995 or Republic Act
8042 ("Omnibus Rules") states that "the Labor Arbiters of NLRC shall have the original
and exclusive jurisdiction to hear and decide all claims arising out of employer-
employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of
damages, subject to the rules and procedures of the NLRC." There is, therefore, an
adequate remedy available to petitioner.
Lastly, the Court of Appeals declared that it could not strike down as unconstitutional
Sections 52, 53, 54, and 55 of the Omnibus Rules as the unconstitutionality of a statute
or rules may not be passed upon unless the issue is directly raised in an appropriate
proceeding.

Issue: W/N CA erred in dismissing the petition.

Held: No

It bears emphasizing that administrative bodies are vested with two basic powers, the
quasi-legislative and the quasi-judicial. It is now well-settled that delegation of legislative
power to various specialized administrative agencies is allowed in the face of increasing
complexity of modern life. Hence, the need to delegate to administrative bodies, as the
principal agencies tasked to execute laws with respect to their specialized fields, the
authority to promulgate rules and regulations to implement a given statute and
effectuate its policies. All that is required for the valid exercise of this power of
subordinate legislation is that the regulation must be germane to the objects and
purposes of the law; and that the regulation be not in contradiction to, but in conformity
with, the standards prescribed by the law. Under the first test or the so-called
completeness test, the law must be complete in all its terms and conditions when it
leaves the legislature such that when it reaches the delegate, the only thing he will have
to do is to enforce it. The second test or the sufficient standard test, mandates that there
should be adequate guidelines or limitations in the law to determine the boundaries of
the delegate's authority and prevent the delegation from running riot.

FINMAN GENERAL ASSURANCE vs WILLIAM INOCENCIO

FACTS: Pan Pacific Overseas is a recruitment agency which offers jobs abroad duly
registered with the POEA. Finman General is acting as Pan Pacific’s surety (as required
by POEA rules and Art. 31 of the Labor Code). Pan Pacific was sued by William
Inocencio and 3 others for alleged violation of Article 32 and 34 of the Labor Code.
Inocencio alleged that Pan Pacific charged and collected fees but failed to provide
employment abroad.
POEA ruled in favor of Inocencio et al and had impleaded Finman (upon request of
Inocencio) in the complaint as well (Pan Pacific changed business address without prior
notice to POEA). The Labor Secretary affirmed POEA’s ruling. Finman General asserts
that it should not be impleaded in the case because it is not a party to the contract
between Pan Pacific and Inocencio et al.
ISSUE: Whether or not Finman General is solidarily liable in the case at bar.
HELD: Yes. Since Pan Pacific had thoughtfully refrained from notifying the POEA of its
new address and from responding to the complaints, petitioner Finman may well be
regarded as an indispensable party to the proceedings before the POEA. Whether
Finman was an indispensable or merely a proper party to the proceedings, the SC held
that the POEA could properly implead it as party respondent either upon the request of
Inocencio et al or motu propio. Such is the situation under the Revised Rules of Court.
Finman General is solidarily liable. Under Section 176 of the Insurance Code, as
amended, the liability of a surety in a surety bond (Finman) is joint and several with the
principal obligor (Pan Pacific).
Further, Article 31 of the Labor Code provides:
Art. 31. Bonds. — All applicants for license or authority shall post such cash and surety
bonds as determined by the Secretary of Labor to guarantee compliance with
prescribed recruitment procedures, rules and regulations, and terms and, conditions of
employment as appropriate.

The Secretary of Labor shall have the exclusive power to determine, decide, order or
direct payment from, or application of, the cash and surety bond for any claim or injury
covered and guaranteed by the bonds.

EASTERN ASSURANCE AND SURETY CORP vs. SECRETARY OF LABOR

G.R. No. L-79436-50
January 17, 1990

FACTS:
J&B Manpower is an overseas employment agency registered with the POEA and
Eastern Assurance was its surety beginning January 1985. From 1983 to December
1985, J&B recruited 33 persons but none of them were ever deployed. These 33
persons sued J&B and the POEA as well as the Secretary of Labor ruled in favor of the
33 workers and ordered J&B to refund them (with Eastern Assurance being solidarily
liable). Eastern Assurance assailed the ruling claiming that POEA and the Secretary of
Labor have no jurisdiction over non-employees (since the 33 were never employed, in
short, no employer-employee relationship).

ISSUE: Whether or not Eastern Assurance can be held liable in the case at bar.
HELD:
Yes. But only for the period covering from January 1985 when the surety took effect (as
already held by the Labor Secretary). The Secretary of Labor was given power by
Article 34 (Labor Code) and Section 35 and 36 of EO 797 (POEA Rules) to “restrict and
regulate the recruitment and placement activities of all agencies,” but also to
“promulgate rules and regulations to carry out the objectives and implement the
provisions” governing said activities.

Implicit in these powers is the award of appropriate relief to the victims of the offenses
committed by the respondent agency or contractor, specially the refund or
reimbursement of such fees as may have been fraudulently or otherwise illegally
collected, or such money, goods or services imposed and accepted in excess of what is
licitly prescribed. It would be illogical and absurd to limit the sanction on an offending
recruitment agency or contractor to suspension or cancellation of its license, without the
concomitant obligation to repair the injury caused to its victims.

Though some of the cases were filed after the expiration of the surety bond agreement
between J&B and Eastern Assurance, notice was given to J&B of such anomalies even
before said expiration. In this connection, it may be stressed that the surety bond
provides that notice to the principal is notice to the surety. Besides, it has been held that
the contract of a compensated surety like respondent Eastern Assurance is to be
interpreted liberally in the interest of the promises and beneficiaries rather than strictly in
favor of the surety.

CATAN vs. NLRC (April 15, 1988)

Facts:

Petitioner, a duly licensed recruitment agency, as agent of Ali and Fahd

Shabokshi Group, a Saudi Arabian firm, recruited private respondent to work in Saudi
Arabia as a steelman.

The term of the contract was for one year, from May 15,1981 to May 14, 1982.
However, the contract provided for its automatic renewal:

FIFTH: The validity of this Contract is for ONE YEAR commencing from the date
the SECOND PARTY assumes hill port. This Contract is renewable automatically if
neither of the PARTIES notifies the other PARTY of his wishes to terminate the Contract
by at least ONE MONTH prior to the expiration of the contractual period.

The contract was automatically renewed when private respondent was not repatriated
by his Saudi employer but instead was assigned to work as a crusher plant operator. On
March 30, 1983, while he was working as a crusher plant operator, private respondent's
right ankle was crushed under the machine he was operating.

On May 15, 1983, after the expiration of the renewed term, private respondent returned
to the Philippines. On September 9, 1983, he returned to Saudi Arabia to resume his
work. On May 15,1984, he was repatriated. Upon his return, he had his ankle treated for
which he incurred further expenses.

On the basis of the provision in the employment contract that the employer shall
compensate the employee if he is injured or permanently disabled in the course of
employment, private respondent filed a claim, docketed as POEA Case No. 84-09847,
against petitioner with respondent Philippine Overseas Employment Administration. On
April 10, 1986, the POEA rendered judgment in favor of private respondent. On appeal,
respondent NLRC affirmed the decision of the POEA.

Not satisfied with the resolution of the POEA, petitioner instituted the instant special civil
action for certiorari, alleging grave abuse of discretion on the part of the NLRC.

Issue: W/N Petitioner Agency is liable for the disability benefits of private Respondent
FRANCISCO D. REYES

Ruling:

YES. Private respondent’s contract of employment cannot be said to have expired on

May 14, 1982 as it was automatically renewed since no notice of its termination was
given by either or both of the parties at least a month before its expiration, as so
provided in the contract itself. Therefore, private respondent's injury was sustained
during the lifetime of the contract.

Even if indeed petitioner and the Saudi principal had already severed their agency
agreement at the time private respondent was injured, petitioner may still be sued for a
violation of the employment contract because no notice of the agency agreement's
termination was given to the private respondent:

Art 1921. If the agency has been entrusted for the purpose of
contra with specified persons, its revocation shall not prejudice the
latter if they were not given notice thereof. [Civil Code].

WHEREFORE, in view of the foregoing, the petition is DISMISSED for lack of merit,
with costs against petitioner.

PEOPLE OF THE PHILIPPINES vs ONG

PEOPLE VS ONG
FACTS: Complainant Noel B. Bacasnot is an optometrist by profession. In September
1993, he met accused Benzon Ong at the insurance office of Zaldy Galos at Laperal
Building in Session Road, Baguio City. Accused-appellant represented to Bacasnot that
he had contacts in Taiwan, Republic of China, who were looking for workers. Bacasnot
was charged P30,000.00 for placement fee, of which P15,000.00 was to be paid at once
and the balance of P15,000.00 to be deducted from his salary once he got a job in
Taiwan. As Bacasnot did not have enough money, he was allowed to pay P10,000.00
as downpayment for his placement and processing fee which accused Ong received on
January 31, 1994 Upon learning of job opportunities abroad, complainants Ruth A.
Eliw, Sally Kamura and Solidad Malinias also sought the assistance of accused Benzon
Ong. They were charged a higher placement fee of P40,000.00 each, and payments
were made to accused Ong at the Gallaos Optical Clinic, where Bacasnot treated
patients, at 159 Magsaysay Avenue, Baguio City. Accused Ong later accompanied
complainants to Manila purportedly for interview and medical examination at the
Steadfast Recruitment Agency with which accused Ong claimed to be connected.
However, instead of taking them to a recruitment agency, accused Ong took them to an
office in United Nations Avenue where three men, allegedly Taiwanese nationals,
interviewed them and later took them to a clinic where they were examined.
Complainants Samuel Bagni, Teofilo Gallao, Jr., Paul Esteban and David Joaquin were
likewise swindled. Accused Ong collected P25,000.00 plus 15,000 from Bagni, from
Gallao, Ong collected P25,000.00 and P15,000.00, Ong also collected various amounts
from the others, as follows: from Esteban, P7,500.00 and P30,000.00, Ong collected
from Joaquin, P7,500.00 and P7,500 and P15,000.00 on March 6, 1994. Accused Ong
failed to comply with his commitment to send complainants Bacasnot, Eliw, Kamura,
Malinias, Bagni, Gallao, Esteban and Joaquin to Taiwan as he could no longer be
located after collecting placement fees from them. Ong claims that he merely suggested
to them the opportunity to work overseas but that he never advertised himself as a
recruiter. The trial court rendered its decision convicting accused Ong of illegal
recruitment committed in large scale and of seven counts of estafa

ISSUE: Whether or not Courts decision on convicting Ong illegal recruitment committed
in larga scale and of seven counts of estafa is correct.

HELD: Yes, Ong is charged with violation of Art. 38 of the Labor Code, as amended by
Presidential Decree No. 2018, which provides that any recruitment activity, including the
prohibited practices enumerated in Art. 34 of said Code, undertaken by persons who
have no license or authority to engage in recruitment for overseas employment is illegal
and punishable under Art. 39. Under Art. 13(b) of the Labor Code, "recruitment and
placement" refer to any act of canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not; provided, that
any person or entity which, in any manner, offers or promises for a fee employment to
two or more persons, is considered engaged in recruitment and placement. On the
other hand, "referral" is defined as the act of passing along or forwarding of an applicant
for employment after an initial interview of a selected applicant for employment to a
selected employer, placement officer or bureau.
Illegal recruitment is considered an offense involving economic sabotage if any of these
qualifying circumstances exist, namely, (a) when illegal recruitment is committed by a
syndicate, i.e., if it is carried out by a group of three or more persons conspiring and/or
confederating with one another; or, (b) when illegal recruitment is committed in large
scale, i.e., if it is committed against three or more persons individually or as a group.
The essential elements of the crime of illegal recruitment in large scale are: (1) the
accused engages in acts of recruitment and placement of workers defined under Art.
13(b) or in any prohibited activities under Art. 34 of the Labor Code; (2) the accused has
not complied with the guidelines issued by the Secretary of Labor and Employment,
particularly with respect to the securing of a license or an authority to recruit and deploy
workers, either locally or overseas; and (3) the accused commits the unlawful acts
against three or more persons, individually or as a group. As defined, a "license" is that
which is issued by the Department of Labor and Employment authorizing a person or
entity to operate a private employment agency, while an "authority" is that issued by the
DOLE entitling a person or association to so engage in recruitment and placement
activities as a private recruitment agency. It is the lack of the necessary license or
authority that renders the recruitment unlawful or criminal.
In this case, the evidence shows that he made misrepresentations to them concerning
his authority to recruit for overseas employment and collected various amounts from
them for placement fees. Clearly, Ong committed acts constitutive of large scale illegal
recruitment. That Ong was engaged in illegal recruitment committed in large scale. He
was positively identified by complainants as the person who had recruited them for
employment in Taiwan. Ong succeeded in inveigling them into paying various amounts
to him for their placement fees. Their testimonies dovetail with each other in material
points. There is no showing that any of complainants had any ill-motives to testify
against Ong.
Ong’s conviction of estafa is also correct as the following elements of estafa are present
in these cases, to wit: (1) the accused has defrauded the offended party by means of
abuse of confidence or by deceit; and (2) as a result, damage or prejudice, which is
capable of pecuniary estimation, is caused to the offended party or third person. Ong
misrepresented himself to complainants as one who can make arrangements for job
placements in Taiwan, and by reason of his misrepresentations, false assurances and
deceit, complainants were induced to part with their money, thus causing them damage
and prejudice.
It is settled that a person who is convicted of illegal recruitment may be convicted of
estafa under Art. 315(2)(a) of the Revised Penal Code. There is no problem of double
jeopardy because illegal recruitment is malum prohibitum, in which the criminal intent is
not necessary, whereas estafa is malum in se in which the criminal intent of the
accused is necessary.

PEOPLE OF THE PHILIPPINES vs BULU CHOWDRY

● Facts:

Bulu Chowdury were charged before the Regional Trial Court of Manila with
the crime of illegal recruitment in large scale. He worked as an interviewer
at Craftrade from 1990 until 1994. His primary duty was to interview job
applicants for abroad. As a mere employee, he only followed the
instructions given by his superiors. Chowdury admitted that he interviewed
private complainants on different dates. Their office secretary handed him
their bio-data and thereafter he led them to his room where he conducted
the interviews. During the interviews, he had with him a form containing the
qualifications for the job and he filled out this form based on the
applicant's responses to his questions. He then submitted them to the
managing director of the company who in turn evaluated his findings.

Issue: Whether Chowdury knowingly and intentionally participated in the

commission of the crime charged.

Held: No.

Evidence shows that Chowdury interviewed private complainants in the

months of June, August and September in 1994 at Craftrade's office. At that
time, he was employed as interviewer of Craftrade which was then
operating under a temporary authority given by the POEA pending renewal
of its license. The temporary license included the authority to recruit
workers. He was convicted based on the fact that he was not registered
with the POEA as employee of Craftrade. Neither was he, in his personal
capacity, licensed to recruit overseas workers. Section 10 Rule II Book II of
the Rules and Regulation Governing Overseas Employment (1991) requires
that every change, termination or appointment of officers, representatives
and personnel of licensed agencies be registered with the POEA. Agents or
representatives appointed by a licensed recruitment agency whose
appointments are not previously approved by the POEA are considered
"non-licensee " or "non-holder of authority" and therefore not authorized to
engage in recruitment activity.

Upon examination of the records, however, the Court find that the
prosecution failed to prove that Chowdury was aware of Craftrade's failure
to register his name with the POEA and that he actively engaged in
recruitment despite this knowledge. The obligation to register its personnel
with the POEA belongs to the officers of the agency. A mere employee of
the agency cannot be expected to know the legal requirements for its
operation. The evidence at hand shows that Chowdury carried out his
duties as interviewer of Craftrade believing that the agency was duly
licensed by the POEA and he, in turn, was duly authorized by his agency to
deal with the applicants in its behalf. Chowdury in fact confined his actions
to his job description. He merely interviewed the applicants and informed
 them of the requirements for deployment but he never received money
from them. Their payments were received by the agency's cashier,
Josephine Ong. Furthermore, he performed his tasks under the supervision
of its president and managing director. Hence, the Court held that the
prosecution failed to prove beyond reasonable doubt Chowdury's
conscious and active participation in the commission of the crime of illegal
recruitment. His conviction, therefore, is without basis.

PEOPLE OF THE PHILIPPINES

VS
ROGER SEGUN AND JOSEPHINE CLAM
G.R. NO. 119076, MARCH 25, 2002

FACTS:
Roger Segun and Josephine Clam were charged before the Regional Trial Court
(RTC) of Iligan City for violating Article 38 of the Labor Code. The Information
alleged that they canvass, enlist, contract, transport and recruit for employment
for thirteen persons without any license and/or authority to engage in recruitment
and placement of workers from the Department of Labor and Employment. Iligan
RTC convicted appellants.

ISSUE: Whether Segun and Clam vilated Article 38 of the Labor Code?
RULING: Yes. The crime of illegal recruitment in large scale is committed where
three elements concur. First, the offender has no valid license or authority
required by law to enable one to lawfully engage in recruitment and placement of
workers. Second, he or she undertakes either any activity within the meaning of
recruitment and placement defined under Article 13(b), or any prohibited
practices enumerated under Article 34 of the Labor Code. Third, the offender
commits said acts against three or more persons, individually or as a group.
There is no dispute that the first element is present in this case. Based on
the certification issued by DOLE Region XII, states that the appellates were not
authorized to conduct recruitment for local and overseas employment. Both of
the appellants conceded they have no license to recruit.
Recruitment and placement refers to any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring workers, and includes
referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not. Provided, that any person or entity which, in any
manner, offers or promises for a fee employment to two or more persons shall be
deemed engaged in recruitment and placement.
Salazar vs Achacoso
GR NO. 81510 MARCH 14, 1990
SARMIENTO, J.:

FACTS: This concerns the validity of the power of the Secretary of Labor to issue
warrants of arrest and seizure under Article 38 of the Labor Code, prohibiting illegal
recruitment. On October 21, 1987, Rosalie Tesoro filed with the POEA a complaint
against petitioner. Having ascertained that the petitioner had no license to operate a
recruitment agency, public respondent Administrator Tomas D. Achacoso issued his
challenged CLOSURE AND SEIZURE ORDER.

The POEA brought a team to the premises of Salazar to implement the order. There it
was found that petitioner was operating Hannalie Dance Studio. Before entering the
place, the team served said Closure and Seizure order on a certain Mrs. Flora Salazar
who voluntarily allowed them entry into the premises. Mrs. Flora Salazar informed the
team that Hannalie Dance Studio was accredited with Moreman Development (Phil.).
However, when required to show credentials, she was unable to produce any. Inside the
studio, the team chanced upon twelve talent performers — practicing a dance number
and saw about twenty more waiting outside, The team confiscated assorted costumes
which were duly receipted for by Mrs. Asuncion Maguelan and witnessed by Mrs. Flora
Salazar.

A few days after, petitioner filed a letter with the POEA demanding the return of the
confiscated properties. They alleged lack of hearing and due process, and that since the
house the POEA raided was a private residence, it was robbery. On February 2, 1988,
the petitioner filed this suit for prohibition. Although the acts sought to be barred are
already fait accompli, thereby making prohibition too late, we consider the petition as
one for certiorari in view of the grave public interest involved.

ISSUE: May the Philippine Overseas Employment Administration (or the Secretary of
Labor) validly issue warrants of search and seizure (or arrest) under Article 38 of the
Labor Code?

HELD: PETITION GRANTED. It is only a judge who may issue warrants of search and
arrest. Neither may it be done by a mere prosecuting body. We reiterate that the
Secretary of Labor, not being a judge, may no longer issue search or arrest warrants.
Hence, the authorities must go through the judicial process. To that extent, we declare
Article 38, paragraph (c), of the Labor Code, unconstitutional and of no force and effect.
Moreover, the search and seizure order in question, assuming, ex gratia argumenti, that
it was validly issued, is clearly in the nature of a general warrant. We have held that a
warrant must identify clearly the things to be seized, otherwise, it is null and void. For
the guidance of the bench and the bar, we reaffirm the following principles:
1.) Under Article III, Section 2, of the l987 Constitution, it is only judges, and no
other, who may issue warrants of arrest and search;
2.) The exception is in cases of deportation of illegal and undesirable aliens, whom
the President or the Commissioner of Immigration may order arrested, following a final
order of deportation, for the purpose of deportation.

ISSUE: Whether the POEA or Secretary of Labor can validly issue warrants of
search and seizure or arrest under Article 38 of the Labor Code?

FACTS: Public respondent Administrator Achacoso issued a closure and seizure

order after knowing that petitioner had no license to operate a recruitment
agency.

HELD: No. Under Article III, Section 2 of the 1987 Constitution, it is only judges,
and no other, who may issue warrants of arrest and search. The exception is in
cases of deportation of illegal and undesirable aliens, whom the president or the
commissioner of immigration may order of deportation.

Article 38 of the labor code is declared unconstitutional and null and void.

MELLINE MANAGEMENT INC ETC. vs ROSLINDA

FACTS:
Petitioner Medline Management, Inc. (MMI), hired Juliano Roslinda (Juliano) to work as
a seafarer. In accordance with his contract, he boarded the vessel MV "Victory" on
October 25, 1998 as an oiler and, after several months of extension, was discharged on
January 20, 2000.

Months after his repatriation, or on March 6, 2000, Juliano consulted a doctor. He

complained about abdominal distention which is the medical term for a patient who
vomits previously ingested foods. From March 8 to August 24, 2000, Juliano visited the
hospital for a medical treatment. On August 27,2001, however, he died.
His wife Gliceria Roslinda and son Ariel Roslinda, respondents herein, filed a complaint
against MMI and GSA for payment of death compensation, reimbursement of medical
expenses, damages, and attorney's fees before the Labor Arbitration Branch of the
NLRC.

Petitioners filed a Motion to Dismiss on the grounds of prescription, lack of jurisdiction

and prematurity. Petitioners contended that the action has already prescribed because it
was filed three years, seven months and 22 days from the time the deceased seafarer
reached the point of hire. They also argued that the case should be dismissed outright
for prematurity because respondents failed to comply with a condition precedent by not
availing of the grievance machinery. Lastly, petitioners opined that the Labor Arbiter had
no jurisdiction because there exists no employer-employee relationship between the
parties.

ISSUE:
Whether or not the Labor Arbiter has jurisdiction to try and decide the case.

RULING:
YES. Section 20 of the Standard Terms and Conditions Governing the Employment of
Filipino Seafarers On-Board Ocean-Going Vessels states:

A. COMPENSATION AND BENEFITS FOR DEATH

1. In the case of work-related death of the seafarer during the term of his contract, the
employer shall pay his beneficiaries the Philippine Currency equivalent to the amount of
Fifty Thousand US dollars (US$ 50,000.00) and an additional amount of Seven
Thousand US Dollars (US$ 7,000.00) to each child under the age of twenty-one (21) but
not exceeding four (4) children, at the exchange rate prevailing during the time of
payment.

In filing the complaint for payment of death compensation, reimbursement of medical

expenses, damages and attorney's fees before the Labor Arbitration Branch of the
NLRC, respondents are actually enforcing their entitlement to the above provision of the
contract of Juliano with petitioners. They are the real parties in interest as they stand to
be benefited or injured by the judgment in this case, or the parties entitled to the avails
of the case.

PEOPLE OF THE PHILIPPINES VS ALONA BULI-E

G.R. No. 123146. June 17, 2003
AZCUNA, J.:

FACTS:
The following people namely ALONA BULI-E, JOSEFINA (JOSIE) ALOLINO and
JOSEALOLINO was accused of violating Article 38 of PD no.442 as further amended by
PD no. 2018 which is an act of economic sabotage, and by a syndicate in such a
manner that they represented themselves to have the capacity to contract, enlist and
hire and transport Filipino workers for employment abroad for a fee, recruit and promise
employment / job placement of 8 persons in Taiwan without first obtaining or securing
license or authority from the proper government agency. They were also accused of 8
counts of estafa. Upon arraignment, appellants pleaded not guilty to each of the nine
information filed against them. Buli-e contended that she was, in fact, recruiting contract
workers for Taiwan and that, although she did not have a license of her own to recruit,
her boss in Manila who was a licensed recruiter, was in the process of getting her one
which would soon be issued. Buli-e identified her superiors in Manila to be the spouses
Jose and Josefina Alolino. Further, Josefinawas connected with Rodolfo S. Ibuna
Employment Agency (RSI for brevity), a private employment agency licensed to recruit
overseas contract workers. In rendering the decision, the trial court ruled that by their
acts, Buli-e and Josefina, conspired and confederated with one another in the illegal
recruitment of complainants for overseas employment. Hence, this petition.

ISSUE:
Whether or not herein accused is guilty beyond reasonable doubt of illegal recruitment
and estafa?

HELD/Ratio:
Pursuant to the POEA rules and regulations, Josefina could recruit applicants
foroverseas employment and process their applications only at the RSI office in
Mandaluyong, Metro Manila since there was no showing that RSI had an acknowledged
branch or extension office in Baguio City or that the prior approval of the POEA for
provincial recruitment or recruitment activities outside the RSI office was obtained.
Thus, the court was not persuaded by Josefina's claim that no recruitment activity was
being done outside of the territorial permit of RSI and it was only incidental that
complainants who were referred to her by Buli-e were residents of Baguio City. As
earlier discussed, there is no indication that complainants ever set foot in the RSI office.
They were always brought by Buli-e to Las Piňas, Metro Manila where they were
entertained by one or both of the spouses Alolino who repeatedly assured them that
they would be able to fly to Taiwan in a matter of months. Josefina, who claims to have
authority to recruit applicants for overseas employment in behalf of RSI, should have
known that licensed agencies are prohibited from conducting any provincial recruitment,
job fairs or recruitment activities of any form outside of the address stated in the license,
acknowledged branch or extension office, without securing prior authority from the
POEA. Finally, the trial court did not make a mistake in finding appellants guilty of eight
(8)counts of estafa. It is settled that a person convicted of illegal recruitment under the
Labor Code can also be convicted of violation of the Revised Penal Code provisions on
estafa provided that the elements of the crime are present.

The elements for estafa are: (a) that the accused defrauded another by abuse of
confidence or by means of deceit, and (b) that damage or prejudice capable of
pecuniary estimation is caused to the offended party or third person.

Appellants deceived complainants into believing that they had the authority and
capability to send them to Taiwan for employment. By reason or on the strength of such
assurance, complainants parted with their money in payment of the placement fees.
Since there presentations of appellants proved to be false, paragraph 2(a), Article 315
of the Revised Penal Code is applicable. Buli-e's claim that she did not benefit from the
money collected from complainants since she gave the payments to Josefina is of no
moment. It was clearly established that she acted in connivance with Josefina in
defrauding complainants. As regards Josefina, the fact that she returned the payment of
some of the complainants will not exculpate her from criminal liability. Criminal liability
for estafa is not affected by compromise or novation, for it is a public offense which
must be prosecuted and punished by the government on its own motion even though
complete reparation has been made of the damage suffered by the offended party.

PEOPLE OF THE PHILIPPINES vs PANIS

Nature:
This is a petition for certiorari seeking to set aside the order of the trial
quashing the information in favor of the private respondent.

Facts:

Four informations were filed on January 9, 1981 alleging that private

respondent Serapio Abug violated Article 16 in relation to Article 39 of the Labor Code
for operating a private fee charging employment agency without first securing a license
from the Ministry of Labor.Abug filed a motion to quash on the ground that the
informations did not charge an offense because he was accused of illegally recruiting
only one person in each of the four informations. Abug claims that under the proviso in
Article 13(b), there would be illegal recruitment only "whenever two or more persons are
in any manner promised or offered any employment for a fee. " The view of the private
respondents is that to constitute recruitment and placement, all the acts mentioned in
this article should involve dealings with two or more persons as an indispensable
requirement. On the other hand, the petitioner argues that the requirement of two or
more persons is imposed only where the recruitment and placement consists of an offer
or promise of employment to such persons and always in consideration of a fee. The
other acts mentioned in the body of the article may involve even only one person and
are not necessarily for profit.
Denied at first, the motion was reconsidered and finally granted in the
Orders of the trial court. Hence a petition for certiorari was filed.
Issue:
Whether or not private respondent is correct in his interpretation of
recruitment and placement under Article 13(b) of P.D. 442, otherwise known as the
Labor Code.
Ruling:

NO. Neither interpretation is acceptable. For its part, the petitioner does not
explain why dealings with two or more persons are needed where the recruitment and
placement consists of an offer or promise of employment but not when it is done
through "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of)
workers.
The provision was intended neither to impose a condition on the basic rule
nor to provide an exception thereto but merely to create a presumption. The
presumption is that the individual or entity is engaged in recruitment and placement
whenever he or it is dealing with two or more persons to whom, in consideration of a
fee, an offer or promise of employment is made in the course of the "canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. "
The number of persons dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts mentioned in the basic rule in
Article 13(b) will constitute recruitment and placement even if only one prospective
worker is involved.

Dispositive Portion:
WHEREFORE, the Orders of June 24, 1981, and September 17, 1981, are set
aside and the four informations against the private respondent reinstated. No costs.
SO ORDERED.

RODOLFO vs PEOPLE OF THE PHILIPPINES

FACTS: Petitioner Rosa C. Rodolfo approached private complainants Necitas Ferre

and Narciso Corpus individually and invited them to apply for overseas employment in
Dubai. Rodolfo, being their neighbor, Ferre and Corpus agreed and went to the former’s
office. The office bore the business name ―Bayside Manpower Export Specialist‖. In
that office, Ferre gave P1,000.00 as processing fee and another P4,000.00. Likewise,
Corpus gave Rodolfo P7,000.00. Rodolfo then told Ferre and Corpus that they were
scheduled to leave for Dubai. However, private complainants and all the other
applicants were not able to depart on the scheduled date as their employer allegedly did
not arrive. Thus, their departure was rescheduled, but the result was the same.
Suspecting that they were being hoodwinked, Ferre and Corpus demanded of Rodolfo
to return their money. Except for the refund of P1,000.00 to Ferre, Rodolfo was not able
to return Ferre’s and Corpus’ money. Ferre, Corpus and three others then filed a case
for illegal recruitment in large scale with the Regional Trial Court (RTC) against Rodolfo.
The RTC rendered judgement against Rodolfo but in imposing the penalty, the RTC
took note of the fact that while the information reflected the commission of illegal
recruitment in large scale, only the complaint of two (Ferre and Corpus) of the five
complainants was proven. Rodolfo appealed to the Court of Appeals (CA). The CA
dismissed the petition but modified the penalty imposed by the trial court. The CA also
dismissed Rodolfo’s Motion for Reconsideration.

ISSUE: is there illegal recruitment and placement in this case as defined in article 13 of
the Labor Code?

HELD: YES. The elements of the offense of illegal recruitment, which must concur, are:
(1) that the offender has no valid license or authority required by law to lawfully engage
in recruitment and placement of workers; and (2) that the offender undertakes any
activity within the meaning of recruitment and placement under Article 13(b), or any
prohibited practices enumerated under Article 34 of the Labor Code. If another element
is present that the accused commits the act against three or more persons, individually
or as a group, it becomes an illegal recruitment in a large scale.

Article 13 (b) of the Labor Code defines ―recruitment and placement‖ as ―[a]ny act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers,
and includes referrals, contract services, promising or advertising for employment,
locally or abroad, whether for profit or not.

That the first element is present in the case at bar, there is no doubt. Jose Valeriano,
Senior Overseas Employment Officer of the Philippine Overseas Employment
Administration, testified that the records of the POEA do not show that Rodolfo is
authorized to recruit workers for overseas employment. A Certification to that effect was
in fact issued by Hermogenes C. Mateo, Chief of the Licensing Division of POEA.

The second element is doubtless also present. The act of referral, which is included in
recruitment, is ―the act of passing along or forwarding of an applicant for employment
after an initial interview of a selected applicant for employment to a selected employer,
placement officer or bureau.‖ Rodolfo’s admission that she brought private
complainants to the agency whose owner she knows and her acceptance of fees
including those for processing betrays her guilt.

Rodolfo issued provisional receipts indicating that the amounts she received from the
private complainants were turned over to Luzviminda Marcos and Florante Hinahon
does not free her from liability. For the act of recruitment may be ―for profit or not.‖ It is
sufficient that the accused ―promises or offers for a fee employment‖ to warrant
conviction for illegal recruitment. Parenthetically, why Rodolfo accepted the payment of
fees from the private complainants when, in light of her claim that she merely brought
them to the agency, she could have advised them to directly pay the same to the
agency, she proffered no explanation.
On Rodolfo’s reliance on Señoron, true, the Court held that issuance of receipts for
placement fees does not make a case for illegal recruitment. But it went on to state that
it is ―rather the undertaking of recruitment activities without the necessary license or
authority. that makes a case for illegal recruitment.

PEOPLE OF THE PHILIPPINES vs OCHOA

G.R. No. 173792
August 31, 2011

FACTS:
For a period covering the months of February 1997 up to April 1998 in Novaliches,
Quezon City, Rosario Ochoa recruited fifteen persons namely: Robert Gubat, Junior
Agustin, Cesar Aquino, Richard Luciano, Fernando Rivera, Mariano R. Mislang, Helen
B. Palogo, Joebert Decolongon, Corazon S. Austria, Cristopher A. Bermejo, Letecia D.
Londonio, Alma Borromeo, Francisco Pascual, Raymundo A. Bermejo and Rosemarie
A. Bermejo. Ochoa promised them an employment in Taiwan and Saudi Arabia for a
consideration ranging from Two Thousand Pesos (P 2,000.00) to Thirty Two Thousand
Pesos (P32,000.00). She collected a total amount of One Hundred Twenty Four
Thousand Pesos (P124,000.00) as placement fee. Ochoa received the payments even
though she does not have license or authority to do so.

Ochoa's promise of employment did not materialize thus the complainants asked for a
refund of their money. However, Ochoa was not able to give back their money, hence,
they decided to file a case of illegal recruitment in large scale and estafa against Ochoa.

Ochoa contends that she was employed by AXIL International Services and Consultant
(AXIL) as recruiter on December 20, 1997. AXIL had a temporary license to recruit
Filipino workers for overseas employment. That she remitted the money she received to
AXIL, however, AXIL failed to issue receipt.

RTC rendered a decision finding Ochoa guilty beyond reasonable doubt of the crimes of
illegal recruitment in large scale and estafa.

CA affirmed the judgment of RTC but ordered the case to be forwarded to Supreme
Court since it does not have jurisdiction over the case.

ISSUE:
1. Is Ochoa guilty of illegal recruitment ? Illegal recruitment in large scale?
2. Can Ochoa be charged and convicted separately of illegal recruitment and
estafa?

HELD:
1. Yes. Illegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring or confederating with one
another. It is deemed committed in large scale if committed against three (3) or
more persons individually or as a group.

It is well-settled that to prove illegal recruitment, it must be shown that

appellant gave complainants the distinct impression that she had the power or
ability to send complainants abroad for work such that the latter were
convinced to part with their money in order to be employed. All eight private
complainants herein consistently declared that Ochoa offered and promised
 them employment overseas. Ochoa required private complainants to submit
their bio-data, birth certificates, and passports, which private complainants did.
Private complainants also gave various amounts to Ochoa as payment for
placement and medical fees as evidenced by the receipts Ochoa issued
to Gubat, Cesar, and Agustin. Despite private complainants’ compliance
with all the requirements Ochoa specified, they were not able to leave for
work abroad. Private complainants pleaded that Ochoa return their hard-
earned money, but Ochoa failed to do so.

2. Yes. It is settled that a person may be charged and convicted

separately of illegal recruitment under Republic Act No. 8042, in relation to
the Labor Code, and estafa under Article 315, paragraph 2(a) of the
Revised Penal Code. We explicated in People v. Cortez and Yabut that:
In this jurisdiction, it is settled that a person who commits illegal
recruitment may be charged and convicted separately of illegal
recruitment under the Labor Code and estafa under par. 2(a) of Art.
315 of the Revised Penal Code. The offense of illegal recruitment is
malum prohibitum where the criminal intent of the accused is not
necessary for conviction, while estafa is malum in se where the
criminal intent of the accused is crucial for conviction. Conviction for
offenses under the Labor Code does not bar conviction for offenses punishable
by other laws. Conversely, conviction for estafa under par. 2(a) of Art. 315
of the Revised Penal Code does not bar a conviction for illegal recruitment
under the Labor Code. It follows that one’s acquittal of the crime of estafa will
not necessarily result in his acquittal of the crime of illegal recruitment in
large scale, and vice versa.

PERT/CPM MANPOWER EXPONENT CO. vs VINUYA

Facts:

Respondents were contracted by the agency for deployment to work as

aluminum fabricator/installer in Modern Metal in Dubai, UAE. The contract was for 2
years, approved by POEA, providing 9 working hours a day, a salary of 1,350 AED with
overtime pay, food allowance, free and suitable housing, free transportation, free
laundry, free medical and dental services. However, in Dubai, Modern Metals gave
them appointment letters with terms different from those they signed in the Philippines –
increasing their employment terms, reducing salaries, allowances, and benefits. The
working conditions were also not as promised. They complained to their agency but to
no avail. Due to unbearable living and working condition, they resigned from their job
and indicated personal/family problems as their reasons. (except for Era who mentioned
real reason). On March 15, 2008, respondents file a complaint for illegal dismissal
against PERT CPM. They agency alleged that they were not illegally dismissed
because they resigned voluntarily. Labor Arbiter dismissed the complaint finding that
they voluntarily resigned. Respondents appealed to NLRC which reversed the decision
of Labor Arbiter. NLRC pointed out that signing of different contract in Dubai is illegal.
NLRC ordered the payment of agency to pay the salary, placement fee, and exemplary
damages to respondents. Petitioner filed a motion for reconsideration which was denied
by NLRC, but modified their judgment adjusting the awards, particularly their salaries.

The agency insists that it is not liable for illegal dismissal, actual or constructive.
It submits that as correctly found by the labor arbiter, the respondents voluntarily
resigned from their jobs, and even executed affidavits of quitclaim and release; the
respondents stated family concerns for their resignation.

On the other hand, the respondents ask the Court to deny the petition for lack of
merit. They dispute the agency’s insistence that they resigned voluntarily. They stand
firm on their submission that because of their unbearable living and working conditions
in Dubai, they were left with no choice but to resign. Also, the agency never refuted their
detailed narration of the reasons for giving up their employment.

Issue: W/N PERT/CPM MANPOWER EXPONENT CO., INC is liable for illegal
dismissal

Ruling:

YES. We find no merit in the petition. The CA committed no reversible error and neither
did it commit grave abuse of discretion in affirming the NLRC’s illegal dismissal ruling.

The agency and Modern Metal are guilty of contract substitution. The respondents
entered into a POEA-approved two-year employment contract,31 with Modern Metal
providing among others, as earlier discussed, for a monthly salary of 1350 AED. On
April 2, 2007, Modern Metal issued to them appointment letters32 whereby the
respondents were hired for a longer three-year period and a reduced salary, from 1,100
AED to 1,200 AED, among other provisions. Then, on May 5, 2007, they were required
to sign new employment contracts33 reflecting the same terms contained in their
appointment letters, except that this time, they were hired as "ordinary laborer," no
longer aluminum fabricator/installer. The respondents complained with the agency
about the contract substitution, but the agency refused or failed to act on the matter.

The fact that the respondents’ contracts were altered or substituted at the workplace
had never been denied by the agency.1âwphi1 On the contrary, it admitted that the
contract substitution did happen when it argued, "as to their claim for underpayment of
salary, their original contract mentioned 1350 AED monthly salary, which includes
allowance while in their Appointment Letters, they were supposed to receive 1,300
AED. While there was a difference of 50 AED monthly, the same could no longer be
claimed by virtue of their Affidavits of Quitclaims and Desistance."34

Clearly, the agency and Modern Metal committed a prohibited practice and engaged in
illegal recruitment under the law. Article 34 of the Labor Code provides:
Art. 34. Prohibited Practices. It shall be unlawful for any individual, entity, licensee, or
holder of authority:

xxxx

(i) To substitute or alter employment contracts approved and verified by the Department
of Labor from the time of actual signing thereof by the parties up to and including the
periods of expiration of the same without the approval of the Secretary of Labor.

Further, Article 38 of the Labor Code, as amended by R.A. 8042,35 defined "illegal
recruitment" to include the following act:

(i) To substitute or alter to the prejudice of the worker, employment contracts approved
and verified by the Department of Labor and Employment from the time of actual
signing thereof by the parties up to and including the period of the expiration of the
same without the approval of the Department of Labor and Employment.

PEOPLE OF THE PHILIPPINES vs OCDEN

FACTS: Ocden was originally charged with illegal recruitment in large scale and six
counts of estafa by way of false pretenses executed prior to or simultaneous with the
commission of fraud. All seven cases against Ocden were consolidated and were tried
jointly after Ocden pleaded not guilty. The prosecution presented three witnesses
namely: Marilyn Mana-a and Rizalina Ferrer, complainants; and Julia Golidan, mother of
complainants Jeffries and Howard Golidan. Golidan had personal knowledge of Ocdens
illegal recruitment activities, which she could competently testify to. Golidan herself had
personal dealings with Ocden as Golidan assisted her sons, Jeffries and Howard, in
completing the requirements for their overseas job applications, and later on, in getting
back home from Zamboanga where Jeffries and Howard were stranded, and in
demanding a refund from Ocden of the placement fees paid. That Golidan is seeking a
reimbursement of the placement fees paid for the failed deployment of her sons Jeffries
and Howard strengthens the prosecution’s case. Going back to illegal recruitment under
Section 6(m) of Republic Act No. 8042, failure to reimburse the expenses incurred by
the worker when deployment does not actually take place, without the workers fault, is
illegal recruitment. Ocden asserts that she was also just an applicant for overseas
employment; and that she was receiving her co-applicants job applications and other
requirements, and accepting her co-applicants payments of placement fees, because
she was designated as the applicants leader by Ramos, the real recruiter.

ISSUE: Whether or not Ocden may be charged and convicted separately of illegal
recruitment under Republic Act No. 8042 in relation to the Labor Code, and estafa
under Article 315, paragraph 2(a) of the Revised Penal Code?
HELD: Yes, It is settled that a person may be charged and convicted separately of
illegal recruitment under Republic Act No. 8042 in relation to the Labor Code, and
estafa under Article 315, paragraph 2(a) of the Revised Penal Code. We explicated in
People v. Yabut that: In this jurisdiction, it is settled that a person who commits illegal
recruitment may be charged and convicted separately of illegal recruitment under the
Labor Code and estafa under par. 2(a) of Art. 315 of the Revised Penal Code. The
offense of illegal recruitment is malum prohibitum where the criminal intent of the
accused is not necessary for conviction, while estafa is malum in se where the criminal
intent of the accused is crucial for conviction. Conviction for offenses under the Labor
Code does not bar conviction for offenses punishable by other laws. Conversely,
conviction for estafa under par. 2(a) of Art. 315 of the Revised Penal Code does not bar
a conviction for illegal recruitment under the Labor Code. It follows that one’s acquittal
of the crime of estafa will not necessarily result in his acquittal of the crime of illegal
recruitment in large scale, and vice versa.
Article 315, paragraph 2(a) of the Revised Penal Code defines estafa as:
Art. 315. Swindling (estafa). - Any person who shall defraud another by any of the
means mentioned hereinbelow x x x:

2. By means of any of the following false pretenses or fraudulent acts executed prior to
or simultaneously with the commission of the fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence,

qualifications, property, credit, agency, business or imaginary transactions; or by means
of other similar deceits.
The elements of estafa are: (a) that the accused defrauded another by abuse of
confidence or by means of deceit, and (b) that damage or prejudice capable of
pecuniary estimation is caused to the offended party or third person.
Both these elements are present in the instant case. Ocden represented to Ferrer,
Golidan, and Golidans two sons, Jeffries and Howard, that she could provide them with
overseas jobs. Convinced by Ocden, Ferrer, Golidan, and Golidans sons paid
substantial amounts as placement fees to her. Ferrer and Golidans sons were never
able to leave for Italy, instead, they ended up in Zamboanga, where, Ocden claimed, it
would be easier to have their visas to Italy processed. Despite the fact that Golidans
sons, Jeffries and Howard, were stranded in Zamboanga for almost a month, Ocden still
assured them and their mother that they would be able to leave for Italy. There is
definitely deceit on the part of Ocden and damage on the part of Ferrer and Golidans
sons, thus, justifying Ocdens conviction for estafa.

PEOPLE OF THE PHILIPPINES vs GALLO

Facts:
Gallo, who introduced himself as a relative of MPM Agency and several others, who
were incorporators, boards members and employees of MPM, were charged with
syndicated illegal recruitment. He, along with the other accused, made false
representations and promises in assuring the victims that after they paid the required
placement fees, they will immediately be deployed as factory workers in Korea. Dela
Caza, one of the complainants, personally gave Gallo his money to which the latter
issued an official receipt.

Two weeks after paying MPM Agency, Dela Caza found that the agency changed its
name an moved to a new address. He then decided to withdraw his application and
recover the amount he paid but the other accused talked him out of it while Gallo even
denied any knowledge about the money. After two or more months of waiting in vain to
be deployed, Dela Caza and the other applicants decided to take action. The first
attempt was unsuccessfull because the agency again moved to another place.

Gallo, in his defense, denied having any part in the recruitment of Dela Caza, that he
was also an applicant for deployment to Korea as a factory worker and that to facilitate
the processing of his papers, he agreed to perform tasks assigned to him, without salary
except for some allowance.

Issue: Whether the lower court erred in holding Gallo criminally liable for illegal
recruitment when he was neither an officer nor an employee of the recruitment agency.

Held:
The Supreme Court held that the lower court was correct in holding Gallo criminally
liable for illegal recruitment even when he was neither an officer or an employee of the
recruitment agency.

Gallo, committed the acts enumerated in Sec 6 of RA 8042. Evidence presented clearly
shows that his being an active player in convincing the applicants of their immediate
deployment in Korea and receiving money for this reason constitutes that of illegal
recruitment in large scale. Gallo collected money from Dela Caza in the guise of
placement fee. Although not an employee of the agency, it was so obvious that he was
connected with the agency and was aware of its illegal transactions being present when
it was still MPM to its further changing of names and address.

PEOPLE OF THE PHILIPPINES

VS
ROSE REYES
G.R. NO. 104739-44 NOVEMBER 18, 1997
FACTS: Five Informations were filed charging the Accused for five counts of
estafa committed upon each of the five complainants. Accused Rose Reyes was
able to secure an employment for Esmeralda Concepcion in Taipei as factory
worker. After the contract ended Esmeralda went back to the Philippines and
asked her cousin’s son if he’s interested to work abroad. When the latter said he
was interested she brought them to the house of the accused. Because of the
fact that Esmeralda was able to secure a job in Taipei she no longer inquired from
the POEA if the accused was a licensed recruiter. As the transaction progressed
and the documents needed were secured the complainants paid the placement
fee. However, accused told them that they will go to Taipei through a tourist visa
since it is easier for them to leave as tourists. Anyway, the employers of the
complainants in Taipei will take care of them the moment they arrive there.
Despite the assurances of the Accused, the complainants failed to leave for
Taipei on schedule. Complainants were alarmed when they returned to the
residence of the Accused but the accused had flown the coop. The Complainants
later learned that the Accused had abandoned their residence and had
transferred somewhere else. The Complainants inquired fro m the POEA if the
Accused were licensed recruiters and they were informed that the names of the
Accude were not listed as licensed recruiters.
ISSUE: Whether Accused were guilty of violating Article 38 of the Labor Code?
RULING: Yes. The Court enumerated the elements of the crime of illegal
recruitment in large scale as follows: 1. the accused undertook any recruitment
activity defined under Article 13(b) or any prohibited practice enumerated under
Article 34 of the Labor Code. 2.) He did not have the license or the authority to
lawfully engage in the recruitment and placement of workers. 3.) He committed
the same against three or more persons, individually or as a group.
The Court was satisfied that all these three elements have been proven beyond
reasonable doubt. There were five private complaints in this case; thus, appellant
is criminally liable for illegal recruitment in large scale. All of the complainants
were promised by the Accused employment as factory workers in Taipei.

Rosita Sy vs. People of the Philippines

G.R. No. 183879. April 14, 2010
NACHURA, J.:

FACTS: In March 1997, the appellant and along with Corazon Miranda, convinced one
Felicidad Navarro to work abroad. Appellant assured Felicidad of a good salary and
entitlement to a yearly vacation if she decides to take a job in Taiwan. On top of these
perks, she shall receive compensation in the amount of Php120,000.00. Appellant
promised Felicidad that she will take care of the processing of the necessary
documents, including her passport and visa. Felicidad told appellant that she will think
about the job offer. Felicidad handed P120,000 to Rosita. In both instances, no receipt
was issued by appellant to acknowledge receipt of the total amount of Php 120,000.00
paid by Felicidad. Felicidad received a fake birth certificate that she would use in
applying for a Taiwanese passport under the name of Armida G. Lim. Subsequently,
appellant contacted Felicidad and thereafter met her at the Bureau of Immigration office.
Thereat, Felicidad, posing and affixing her signature as Armida G. Lim, filled out the
application forms for the issuance of Alien Certificate of Registration (ACR) and
Immigrant Certificate of Registration (ICR). She attached to the application forms her
own photo. Felicidad agreed to use the name of Armida Lim as her own because she
already paid to appellant the amount of Php120,000.00.
In December 1999, appellant sent to Felicidad the birth certificate of Armida Lim, the
Marriage Contract of Armida Lims parents, ACR No. E128390, and ICR No. 317614.
These documents were submitted to and eventually rejected by the Taiwanese
authorities, triggering the filing of illegal recruitment and estafa cases against appellant.
The RTC found her not guilty of the crime of illegal recruitment but was guilty of the
crime of estafa. Sy appealed for her conviction of estafa however the CA affirmed her
conviction with modifications. Hence, this petition.

ISSUE(S): WON Sy is guilty of the crime of Estafa; Illegal Recruitment vs. Estafa

RULING: Yes, Rosity Sy is guilty of the crime of Estafa. The elements of estafa by
means of deceit are the following, viz.: (a) that there must be a false pretense or
fraudulent representation as to his power, influence, qualifications, property, credit,
agency, business or imaginary transactions; (b) that such false pretense or fraudulent
representation was made or executed prior to or simultaneously with the commission of
the fraud; (c) that the offended party relied on the false pretense, fraudulent act, or
fraudulent means and was induced to part with his money or property; and (d) that, as a
result thereof, the offended party suffered damage. In the instant case, all the foregoing
elements are present. It was proven beyond reasonable doubt, as found by the RTC
and affirmed by the CA, that Sy misrepresented and falsely pretended that she had the
capacity to deploy Felicidad Navarro (Felicidad) for employment in Taiwan. The
misrepresentation was made prior to Felicidads payment to Sy of One Hundred Twenty
Thousand Pesos (P120,000.00). It was Sys misrepresentation and false pretenses that
induced Felicidad to part with her money. As a result of Sys false pretenses and
misrepresentations, Felicidad suffered damages as the promised employment abroad
never materialized and the money she paid was never recovered.

Illegal Recruitment vs. Estafa

Illegal recruitment and estafa cases may be filed simultaneously or separately. The filing
of charges for illegal recruitment does not bar the filing of estafa, and vice versa. Sys
acquittal in the illegal recruitment case does not prove that she is not guilty of estafa.
Illegal recruitment and estafa are entirely different offenses and neither one necessarily
includes or is necessarily included in the other. A person who is convicted of illegal
recruitment may, in addition, be convicted of estafa under Article 315, paragraph 2(a) of
the RPC. In the same manner, a person acquitted of illegal recruitment may be held
liable for estafa. Double jeopardy will not set in because illegal recruitment is malum
prohibitum, in which there is no necessity to prove criminal intent, whereas estafa is
malum in se, in the prosecution of which, proof of criminal intent is necessary.

PEOPLE vs. SAGAYAGA

Elmer Janer went to the office of Alvis Placement Service Corporation to apply for
overseas employment as factory worker in Taiwan. Appellant Leticia Sagayaga, after
personally receiving Elmers application, required him to submit the necessary
documents. Appellant further asked Elmer to P75,000.00 as placement fee. Thereafter,
he was told to wait for the arrival of the employer. After seven (7) months, no employer
arrived. Tired of waiting, Elmer demanded that he be refunded of his money. Despite
appellant’s promises to pay, Elmer was not refunded of his money.
Exasperated, Elmer asked appellant for a promissory note, which appellant executed,
promising to pay Elmer P75,000.00. In said promissory note, appellant designated
herself as the assistant general manager of the placement agency .When appellant
failed to refund the amount to Elmer on the date stated in the promissory note, the latter
went to the Philippine Overseas Employment Administration (POEA) and filed a sworn
complaint against appellant. The case was also similar to the cases of Eric Farol and
Elmer Ramos who also filed a complaint at POEA.
The appellant restates thew case saying that the persons who had effective and actual
control, management and direction of the business and transactions of Alvis Placement
Services Corporation were the accused-spouses Vicente So Yan Han and Alma So. As
Treasurer of the corporation, her duties were limited to receiving money or fees paid to
the agency by applicants and to deposit the same in the bank in the name and for the
account of the corporation. Although she (appellant) received money from the
complainants Elmer Janer and Eric Farol, the same was deposited by her with the bank
under the account of the corporation. And if ever she signed promissory notes in behalf
of the corporation and issued checks to the complainants, she did so upon the
instruction and assurance of accused-spouses So Yan Han and Alma So.

ISSUE: WON Sagayaga is not criminally liable for the crime charged because the she
had no direct or actual control, management or direction of the business and
recruitment activities of (APSC).

RULING:
Under Section 6 (m) of Rep. Act No. 8042, illegal recruitment may be committed by any
person, whether a non-licensee, non-holder of authority, licensee or holder of authority,
thus:
(m) Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the workers fault...
Under the last paragraph of the said section, those criminally liable are the principals,
accomplices and accessories. In case of a juridical person, the officers having control,
management or direction of the business shall be criminally liable.
In this case, the appellant, as shown by the records of the POEA, was both the APSC
Vice-President-Treasurer and the Assistant General Manager. She was a high
corporate officer who had direct participation in the management, administration,
direction and control of the business of the corporation.
Accused-appellant contends that she was not involved in recruitment but was merely an
employee of a recruitment agency. An employee of a company or corporation engaged
in illegal recruitment may be held liable as principal, together with his employer, if it is
shown that he actively and consciously participated in illegal recruitment. Recruitment is
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring
workers, and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not: Provided, That any person or
entity which, in any manner, offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and placement.
There is no dispute about the fact that the three complainants engaged (sic) the Alvis
Placement Service Corporation, a recruitment agency duly authorized by the POEA
wherein the accused was one of its top officers, to deploy them as factory workers in
Taiwan. Admittedly, they incurred expenses, designated as placement fees, in
connection with their documentation and processing for purposes of their
deploymoyment. Elmer Janer paid to the accused, who received the payment.

BECMEN SERVICE EXPORTER AND PROMOTION SOLIDARY LIABILITY W/

FOREIGN PRINCIPAL VS.SPS. CUARESMA

FACTS:
On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen Service
Exporter and Promotion, Inc. (Becmen) to serve as assistant nurse in Al-Birk Hospital in
the Kingdom of Saudi Arabia (KSA), with contract duration of 3 years.

Over a year later, on June 21, 1998 Jasmin was found dead in her dormitory room.
Based on police report and the medical report of the examining physician of the Al-Birk
Hospital, who conducted an autopsy of Jasmin's body, the likely cause of her death was
poisoning. Contrary, the autopsy report conducted by City Health Officer of Cabanatuan
City a day after Jasmin's body was repatriated to Manila in 1998 and the exhumation
report of the NBI in 1999 show that Jasmin was manhandled and was possibly raped
prior to her death.

On November 22, 1999, the Cuaresmas filed a complaint against Becmen and its
principal in the KSA, Rajab &Silsilah Company (Rajab), claiming death and insurance
benefits, as well as moral and exemplary damages for Jasmin's death which Becmen
and Rajab insists on denying.

The Labor Arbiter dismissed the complaint for lack of merit. But This was reversed by
NLRC declaring Becmen and White Falcon as solitarily liable for payment of the award
and was affirmed by the appellate court.
CA, in its amended decisionheld Becmen and White Falcon jointly and solitarily liable
with the employer for the monetary awards with Becmen Service Exporter and
Promotions, Inc. having the right of reimbursement from White Falcon Services, Inc.

Issue:
W/n Becmen and White Falcon jointly and severally liable with employer.

Held:
Yes. The Court hold that the Cuaresmas are entitled to moral damages, which Becmen
and White Falcon are jointly and solitarily liable to pay, together with exemplary
damages for wanton and oppressive behavior, and by way of example for the public
good.

RA 8042 Migrant Workers and Overseas Filipinos Act provides that the State shall at all
times uphold the dignity of its citizens, whether in the country or overseas. The rights
and interest of distressed overseas Filipinos are adequately protected and safeguarded.

Becmen and Falcon, both licensed recruitment agencies, miserably failed to abide by
RA 8042. Recruitment agencies are expected to extend assistance to deployed OFWs,
be the first to come the rescue of our distressed OFWs; and have the primary obligation
to protect the rights and ensure the welfare of our OFWs. It should have been them who
sought justice for Jasmin. Instead, it was the parents who requested an autopsy in the
Philippines to confirm the Saudi report. Court stated that the parents have done all that
was within their power to investigate Jasmin’s case on their own.

Private employment agencies are held jointly and severally liable with the foreign-bases
employer for any violation of the recruitment agreement or contract of employment.
Thus joint and solidary liability imposed by law against recruitment agencies and foreign
employers is meant to assure the aggrieved worker of immediate and sufficient payment
if what is due him. If the recruitment/placement agency is a judicial being, the corporate
officers and directors and partners are as the case may be, shall themselves be jointly
and solidarily liable with the corporation or partnership for the aforesaid claims and
damages.

White Falcons assumption of Becmens liability does not automatically result in

Becmens freedom or release from liability. Instead both Becmen and White Falcon
should be held liable solitarily, without prejudice to each having the right to be
reimbursed under the provision of the Civil Code that whoever pays for another may
demand from the debtor what he has paid.

PEOPLE OF THE PHILIPPINES vs DIAZ

GR No. 112175
26 July 1996

FACTS: Three women (Navarro, Fabricante, and Ramirez) were enrolled at the Henichi
Techno Exchange Cultural Foundation in Davao City, studying Niponggo, when they
were informed by their teacher, Mrs. Aplicador, that she knew of a Mr. Paulo Lim who
also knew of one Engineer Erwin Diaz who was recruiting applicants for Brunei.
Accompanied by Mrs. Aplicador, the three women went to Mr. Lim who told them that
his children had already applied with Engr. Diaz. The four women were then
accompanied by Mr. Lim to the CIS Detention Center where Engr. Diaz was already
being detained. After Navarro and Ramirez had already given 20k as placement fee,
Fabricante went to the office of the POEA and found out the Engr. Diaz was not
licensed. Fabricante informed the two women about her discovery and they all withdrew
their applications. Engr. Diaz refunded their payments.

The trial court held Engr. Diaz guilty of illegal recruitment in large scale.

ISSUE: WON Diaz was engaged in illegal recruitment.

HELD: YES. Diaz was neither a licensee nor a holder of authority to qualify him to
lawfully engage in recruitment and placement activity. Appellant told the three women
that he was recruiting contract workers for abroad, particularly Brunei, and promised
them job opportunities if they can produce various amounts of money for expenses and
processing of documents. He manifestly gave the impression to the three women that
he had the ability to send workers abroad. Misrepresenting himself as a recruiter of
workers for Brunei, he promised them work for a fee and convinced them to give their
money for the purpose of getting an employment overseas.

TRANS ACTION OVERSEAS CORPORATION vs THE HONORABLE SECRETARY

OF LABOR

Facts:

From July 24-Sept 9, 1987, Trans Action Overseas Corporation, private fee-charging
employment agency, scoured Iloilo for possible recruits for alleged job vacancies in
Hong Kong.

Applicants sought employment as domestic helpers, and paid placement fees ranging
from ₱ 1,000.00 to ₱ 14,000.00 but the agency failed to deploy them. They demanded
for refund but to no avail thus, they were constrained to institute complaints against the
agency for violation of Art 32 and 34 (a) of the Labor Code, as amended, resulting to the
cancellation of the license of Trans Action Overseas Corporation to participate in the
overseas placement and recruitment if workers.

On April 29, 1991, Trans Action Overseas Corp filed its motion for Temporary Lifting of
Order of Cancellation. Finding the motion to be well taken, Undersecretary Confesor
provisionally lifted the cancellation of license pending resolution of its Motion for
Reconsideration but was eventually denied for lack of merit, and the April 5, 1991, order
revoking its license was reinstated.

Trans Action Overseas Corp. contends that Secretary Confesor acted with grave abuse
of discretion in rendering the assailed orders on the ground that it is the POEA which
has the exclusive and original jurisdiction to hear and decide illegal recruitment cases.

Issue:

W/n the Secretary of Labor and Employment has jurisdiction to cancel or revoke the
license of a private fee-charging employment agency.

Held:
Yes. The power to suspend or cancel any license or authority to recruit employees for
overseas employment is vested upon the secretary of Labor and Employment under
Section 35 of the Labor Code as amended.
In the case of Eastern Assurance and Surety Corp. v. Secretary of Labor, the Secretary
of Labor has the authority conferred by Section 36, not only to restrict and regulate the
recruitment and placement of activities of all agencies, but also to promulgate rules and
regulations to carry out the objectives and implement the governing said activities.
This power conferred upon the Secretary of Labor and Employment was echoed in
People v. Diaz: A non-licensee or non-holder of authority means any person,
corporation or entity which has not been issued a valid license or authority to engage in
recruitment and placement by the Secretary of Labor, or whose license or authority has
been suspended, revoked or cancelled by the POEA or the Secretary.
DISCUSSION No. 3

BERNARDO VS NLRC AND FAR EAST BANK

BERNARDO vs. NLRC and FAR EAST BANK

GR No. 122917; July 12, 1999

FACTS:
Far East Bank (Respondent) entered into employment contracts with deaf-mutes, who
were hired as money sorters under uniform “Employment Contracts for Handicapped
Workers.” Every 6 months, these workers renewed their employment contracts. The
complainants here complain that they were regular employees and that they have been
illegally dismissed.

Respondent argued that complainants were not regular employees, but a special class
of workers who were hired because of political and civic accommodation. And that the
Bank’s corporate philosophy does not allow the hiring and regularizing handicapped
workers unless it was on a special arrangement basis. The Labor Arbiter ruled in favor
of respondent bank workers. NLRC affirmed.

ISSUE:
Whether or not petitioner workers are regular employees.

HELD:
YES, petitioners are regular employees. The fact that after the expiry of their 6 month
contract, respondent bank renewed their contracts shows that these workers were
qualified to perform the responsibilities of their positions.

The Magna Carta for Disabled Persons mandates that a qualified disabled employee
should be given the same terms of employment as a qualified able-bodied person. This
being so, petitioners are thus covered by Art. 286 of the Labor Code which defines
regular employment to be that the employee has been engaged to perform activities
usually necessary or desirable in the usual business or trade of the employer. The task
of counting and sorting bills is necessary to the business of respondent bank. Except
for sixteen of them, the petitioners performed these tasks for more than six months.
Therefore, the 27 petitioners should be deemed regular employees entitled to security
of tenure. Their services may only be terminated for a just and authorized cause.
Because respondents failed to show such cause, these 27 petitioners are deemed
illegally dismissed and hence entitled to backwages and separation pay.

DISCUSSION No. 4
TITLE I

CHAPTER I
BROTHERHOOD LABOR UNITY VS ZAMORA
G.R. No. L-48645 January 7, 1987

Facts:
● The petitioners are workers who have been employed at the San Miguel Parola
Glass Factory as “pahinantes” or “kargadors” for almost seven years. They
worked exclusively at the SMC plant, never having been assigned to other
companies or departments of San Miguel Corp, even when the volume of work
was at its minimum. Their work was neither regular nor continuous, depending on
the volume of bottles to be loaded and unloaded, as well as the business activity
of the company. However, work exceeded the eight-hour day and sometimes,
necessitated work on Sundays and holidays. -for this, they were neither paid
overtime nor compensation.

Sometime in 1969, the workers organized and affiliated themselves with Brotherhood
Labor Unity Movement (BLUM). They wanted to be paid to overtime and holiday pay.
They pressed the SMC management to hear their grievances. BLUM filed a notice of
strike with the Bureau of Labor Relations in connection with the dismissal of some of its
members. San Miguel refused to bargain with the union alleging that the workers are
not their employees but the employees of an independent labor contracting firm,
Guaranteed Labor Contractor.

The workers were then dismissed from their jobs and denied entrance to the glass
factory despite their regularly reporting for work. A complaint was filed for illegal
dismissal and unfair labor practices.

Issue:
Whether or not there was employer-employee (ER-EE)relationship between the workers
and San Miguel Corp.

HELD:
YES. In determining the existence of an employer-employee relationship, the elements
that are generally considered are the following: (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 with respect to the means and methods by which the
work is to be accomplished. It is the called "control test" that is the most important
element.

Applying the above criteria, the evidence strongly indicates the existence of an
employer-employee relationship between petitioner workers and respondent San Miguel
Corporation.

SEVILLA VS CA
PETITIONERS: DR. CARLOS L. SEVILLA and LINA O. SEVILLA
RESPONDENTS: THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC.,
ELISEO S.CANILAO, and SEGUNDINA NOGUERA

FACTS: A contract by and between Noguera and Tourist World Service (TWS),
represented by Canilao, wherein TWS leased the premises belonging to Noguera as
branch office of TWS. When the branch office was opened, it was run by appellant
Sevilla payable to TWS by any airline for any fare brought in on the efforts of Mrs.
Sevilla, 4% was to go to Sevilla and 3% was to be withheld by the TWS. Later, TWS
was informed that Sevilla was connected with a rival firm (Philippine Travel Bureau),
and since the branch office was losing, TWS considered closing down its office. On
January 3, 1962, the contract with appellee for the use of the branch office premises
was terminated and while the effectivity thereof was January 31, 1962, the appellees no
longer used it. Because of this, Canilao, the secretary of TWS, went over to the branch
office, and finding the premises locked, he padlocked the premises. When neither
appellant Sevilla nor any of his employees could enter, a complaint was filed by the
appellants against the appellees. TWS insisted that Sevilla was a mere employee, being
the “branch manager” of its branch office and that she had no say on the lease
executed with the private respondent, Noguera.

ISSUE: Whether or not employer-employee relationship exists between Sevilla and

TWS.

HELD: No. The records show that petitioner, Sevilla, was not subject to control by the
private respondent TWS. In the first place, under the contract of lease, she had bound
herself in solidum as and for rental payments, an arrangement that would belie claims of
a master-servant relationship. That does not make her an employee of TWS,since a
true employee cannot be made to part with his own money in pursuance of his
employer’s business, or otherwise, assume any liability thereof.In the second place,
when the branch office was opened, the same was run by the appellant Sevilla payable
to TWS by any airline for any fare brought in on the effort of Sevilla. Thus, it cannot be
said that Sevilla was under the control of TWS. Sevilla in pursuing the business, relied
on her own capabilities.It is further admitted that Sevilla was not in the company’s
payroll. For her efforts, she retained 4% incommissions from airline bookings, the
remaining 3% going to TWS. Unlike an employee, who earns a fixed salary,she earned
compensation in fluctuating amount depending on her booking successes. The fact that
Sevilla had been designated “branch manager” does not make her a TWS employee. It
appears that Sevilla is a bona fide travel agent herself, and she acquired an interest in
the business entrusted to her. She also had assumed personal obligation for the
operation thereof, holding herself solidary liable for thepayment of rentals.Wherefore,
TWS and Canilao are jointly and severally liable to indemnify the petitioner, Sevilla.
CONTINENTAL MARBLE CORP. and FELIPE DAVID
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC); ARBITRATOR JOSE T.
COLLADO and RODITO NASAYAO
G.R. No. L-43825 May 9, 1988

Nature of the Case

A petition for mandamus, prohibition and certiorari with preliminary injunction seeking to
annul NLRC’s decision dismissing appeal of petitioners.

FACTS:
Nasayao claims to have been employed as plant manager with a monthly income
equivalent of P 3,000 or 25% net monthly income of Continental Marble (Continental)
[whichever is greater] which he alleged to have failed his three months income
sometime in 1974, thus sought from the NLRC recovery of such unpaid salary.
Continental denies such employment status and insists that the relationship is that of a
joint venture and clarified further that the agreement to pay Nasayao’s share in the net
income is limited if there is any income, and during those three months, Continental had
no such profits to speak of to give Nasayao his share. When the matter was submitted
for voluntary arbitration, Continental challenged the capacity of the arbitrator, but
arbitrator refused and rendered judgment awarding money claims to Nasayao.
Petitioner appealed citing labor arbiter for grave abuse of discretion and that the
resulting judgment was not supported by evidence. Nasayao filed a motion to dismiss
citing that the Labor Arbiter’s decision is final [subject to exhaustion of administrative
remedies] and thereafter filed a motion for writ of execution. NLRC dismissed the
appeal and ordered petitioners to comply with the earlier decision.

Issue: (1). Can the Court review decisions of voluntary arbitrators?

(2). Is Nasayao an employee?

(1). No, subject to exceptions.

The proper venue is through NLRC, except when a question of law is involved or where
a showing of abuse of authority or discretion in their official acts is properly raised in
petitions for certiorari.

On the other hand, Nasayao’s contention on exhausting administrative remedies is

inapplicable to the case. The Court may review the decisions warrants jurisdiction or
rendered with grave abuse of discretion. Further, his contention that only questions of
law and not findings of fact are cognizable by the Court is unacceptable.

(2). No.
The Court accords respect and finality to the decisions of quasi-judicial agencies, but
when the same is not supported by
substantial evidence, the Court will intervene. In this case, the finding of Nasayao as an
employee of Continental by the Voluntary
Arbitrator is not supported by substantial evidence: (1) It was impossible for Continental
Marble to hire a plant manager on account
of its business reverses at the time; (2) he was not included in the payroll nor in the list
of employees submitted by the Continental
to SSS; (3) the element of control is wanting for: (a) Nasayao was free to conduct
performance of his work; (b) at his own time; (c)
was compensated as a result of his own efforts. And since there was no employment
relationship between Continental Marble and
Nasayao, there is no basis for the award of unpaid wages or salaries.

INSULAR LIFE ASSURANCE CO. VS NLRC

G.R. No. 84484 November 15, 1989

FACTS:

Petitioner Insular Life entered into a contract with respondent Basiao where the latter is
authorized to solicit for insurance policies. Sometime later, the parties entered into
another contract which caused Basiao to organize an agency in order to fulfill its terms.
The contract being subsequently terminated by petitioner, Basiao sued the latter which
prompted also for the termination of their engagement under the first contract. Basiao
thus filed before the Ministry of Labor seeking to recover alleged unpaid commissions.
Petitioner contends that Basiao is not an employee but an independent contractor for
which they have no obligation to pay said commissions. The Labor Arbiter found for
Basiao ruling that there exists employer-employee relationship between him and
petitioner. NLRC affirmed.

Issue:

Whether or not employer-employee relationship existed between petitioner and Basiao.

Ruling: NO.

In determining the existence of employer-employee relationship, the following elements

are generally considered, namely: (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 — although the latter is the most important element. It should,
however, be obvious that not every form of control that the hiring party reserves to
himself over the conduct of the party hired in relation to the services rendered may be
accorded the effect of establishing an employer-employee relationship between them in
the legal or technical sense of the term.

Rules and regulations governing the conduct of the business are provided for in the
Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual
and expected for an insurance company to promulgate a set of rules to guide its
commission agents in selling its policies that they may not run afoul of the law and what
it requires or prohibits. None of these really invades the agent’s contractual prerogative
to adopt his own selling methods or to sell insurance at his own time and convenience,
hence cannot justifiably be said to establish an employer-employee relationship
between him and the company.

The Court, therefore, rules that under the contract invoked by him, Basiao was not an
employee of the petitioner, but a commission agent, an independent contractor whose
claim for unpaid commissions should have been litigated in an ordinary civil action.

ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS,

LUIS DE LOS ANGELES, JOEL ORDENIZA and AMADO CENTENO
vs.
NLRC and GOODMAN TAXI (PHILJAMA INTERNATIONAL, INC.)
G.R. No. 119268
February 23, 2000

FACTS:

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

corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive
private respondent’s taxicabs every other day on a 24-hour work schedule under the
boundary system. Under this arrangement, the petitioners earned an average of
P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from
petitioners’ daily earnings the amount of P30.00 supposedly for the washing of the taxi
units. Believing that the deduction is illegal, petitioners decided to form a labor union to
protect their rights and interests.

Upon learning about the plan of petitioners, private respondent refused to let petitioners
drive their taxicabs when they reported for work on August 6, 1991, and on succeeding
days. Petitioners suspected that they were singled out because they were the leaders
and active members of the proposed union. Aggrieved, petitioners filed with the labor
arbiter a complaint against private respondent for unfair labor practice, illegal dismissal
and illegal deduction of washing fees. The labor arbiter dismissed said complaint for
lack of merit. On appeal, the NLRC reversed the decision of the labor arbiter. Private
Respondent then filed a motion for reconsideration but was denied. Private Respondent
filed another motion for reconsideration which eventually was granted dismissing the
complaint of the petitioners for lack of jurisdiction on the ground that there was no
employer-employee relationship. Petitioners sought reconsideration of the labor
tribunal’s latest decision which was denied.

ISSUE:
1. WON an employee-employer relationship exists?
2. WON the petitioners were illegally dismissed?

HELD:
1. Yes. 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. 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 owner’s 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 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. 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.

2. Yes. The termination of employment must be effectuated in accordance with law. The
just and authorized causes for termination of employment are enumerated under
Articles 282, 283 and 284 of the Labor Code. The requirement of notice and hearing is
set-out in Article 277 (b) of the said Code. Hence, petitioners, being employees of
private respondent, can be dismissed only for just and authorized cause, and after
affording them notice and hearing prior to termination. In the instant case, private
respondent had no valid cause to terminate the employment of petitioners. Neither were
there two (2) written notices sent by private respondent informing each of the petitioners
that they had been dismissed from work. These lack of valid cause and failure on the
part of private respondent to comply with the twin-notice requirement underscored the
illegality surrounding petitioners’ dismissal.

Under the law, an employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.

With regard to the amount deducted for washing of the taxi units, such was not illegal as
such is indeed a practice in the taxi industry and is dictated by fair play.

MANILA GOLF AND COUNTRY CLUB VS IAC

G.R. No. 64948 September 27, 1994

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).
FACTS:
- The issue has been involved in 3 separate proceedings, all initiated by or on
behalf of herein private respondent and his fellow caddies.
- It gave rise to a petition for review originally filed with the Social Security
Commission (SSC) via petition of seventeen (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. It was alleged 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.
- 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.
- Subsequently, all but two of the seventeen petitioners of their own accord
withdrew their claim for social security coverage, avowedly coming to realize that indeed
there was no employment relationship between them and the Club. The case continued,
and was eventually adjudicated by the SSC after protracted proceedings only as
regards the two holdouts, Fermin Llamar and Raymundo Jomok. The Commission
dismissed the petition for lack of merit stating that the caddy's fees were paid by the golf
players themselves and not by respondent club.
- From this Resolution appeal was taken to the Intermediate appellate Court by
the union representing Llamar and Jomok. After the appeal was docketed 5 and some
months before decision thereon was reached and promulgated, Raymundo Jomok's
appeal was dismissed at his instance, leaving Fermin Llamar the lone appellant.

RULING:

-NO. 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.
- (Petitioner) has no means of compelling the presence of a caddy. A caddy is not
required to exercise his occupation in the premises of petitioner. He may work with any
other golf club or he may seek employment a caddy or otherwise with any entity or
individual without restriction by petitioner.
- In the final analysis, petitioner has no was of compelling the presence of the caddies
as they are not required to render a definite number of hours of work on a single day.
Even the group rotation of caddies is not absolute because a player is at liberty to
choose a caddy of his preference regardless of the caddy's order in the rotation.
- It can happen that a caddy who has rendered services to a player on one day may still
find sufficient time to work elsewhere. Under such circumstances, he may then leave
the premises of petitioner and go to such other place of work that he wishes (sic). Or a
caddy who is on call for a particular day may deliberately absent himself if he has more
profitable caddying, or another, engagement in some other place. These are things
beyond petitioner's control and for which it imposes no direct sanctions on the caddies.

DY KEH BENG VS INTL LABOR AND UNION

G.R. No. L-32245 May 25, 1979

FACTS:
A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket
factory, for discriminatory acts within the meaning of Section 4(a), sub-paragraph (1)
and (4). Republic Act No. 875, by dismissing Carlos N. Solano and Ricardo Tudla for
their union activities. After preliminary investigation was conducted, a case was filed in
the Court of Industrial Relations for in behalf of the International Labor and Marine
Union of the Philippines and two of its members, Solano and Tudla.
An employee-employer relationship was found to have existed between Dy Keh Beng
and complainants Tudla and Solano, although Solano was admitted to have worked on
piece basis.
According to Dy Keh Beng, however, Solano was not his employee for the following
reasons:
(1) Solano never stayed long enough at Dy’s establishment;
(2) Solano had to leave as soon as he was through with the
(3) order given him by Dy;
(4) When there were no orders needing his services there was nothing for him to do;
(5) When orders came to the shop that his regular workers could not fill it was then that
Dy went to his address in Caloocan and fetched him for these orders; and
(6) Solano’s work with Dy’s establishment was not continuous.
According to petitioner, these facts show that respondents Solano and Tudla are only
piece workers, not employees under Republic Act 875, where an employee is referred
to as
“shall include any employee and shag not be limited to the employee of a particular
employer unless the Act explicitly states otherwise and shall include any individual
whose work has ceased as a consequence of, or in connection with any current labor
dispute or because of any unfair labor practice and who has not obtained any other
substantially equivalent and regular employment.”
While an employer
“includes any person acting in the interest of an employer, directly or indirectly but shall
not include any labor organization (otherwise than when acting as an employer) or
anyone acting in the capacity of officer or agent of such labor organization.”

ISSUE:
Whether there existed an employee employer relation between petitioner Dy Keh Beng
and the respondents Solano and Tudla .
RULING:
Petitioner really anchors his contention of the non-existence of employee-employer
relationship on the control test.
While this Court upholds the control test under which an employer-employee
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 means to be used in
reaching such end, ” it finds no merit with petitioner’s arguments as stated above. It
should be borne in mind that the control test calls merely for the existence of the right to
control the manner of doing the work, not the actual exercise of the right.
Considering the finding by the Hearing Examiner that the establishment of Dy Keh Beng
is “engaged in the manufacture of baskets known as kaing, it is natural to expect that
those working under Dy would have to observe, among others, Dy’s requirements of
size and quality of the kaing. Some control would necessarily be exercised by Dy as the
making of the kaing would be subject to Dy’s specifications. Parenthetically, since the
work on the baskets is done at Dy’s establishments, it can be inferred that the proprietor
Dy could easily exercise control on the men he employed.

As to the contention that Solano was not an employee because he worked on piece
basis, this Court agrees with the Hearing Examiner that circumstances must be
construed to determine indeed if payment by the piece is just a method of compensation
and does not define the essence of the relation. Units of time … and units of work are in
establishments like respondent (sic) just yardsticks whereby to determine rate of
compensation, to be applied whenever agreed upon.
We cannot construe payment by the piece where work is done in such an establishment
so as to put the worker completely at liberty to turn him out and take in another at
pleasure.

SONZA VS ABS-CBN BROADCASTING

[G.R. No. 138051. June 10, 2004]

Facts: In May 1994, ABS-CBN signed an agreement with Mel and Jay Management
and Developments Corporation (MJMDC), a television program. Referred to in the
Agreement as Agent, MJMDC agreed to provide Sonza s services exclusively to ABS-
CBN as talent for radio and television. ABS-CBN agreed to pay Sonza s 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 iincentive leave, 13th month
pay, signing bonus, travel allowance and amounts due under the Employees Stock
Option Plan (ESOP). ABS-CBN moved for the dismissal of the complaint on the ground
that there was no employer-employee relationship between them. ABS-CBN insists that
Sonza was an independent contractor.

Issue: Whether an employer-employee relationship exists.

Held: 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. Sonza’s 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 Sonza s
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 Sonza s 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 Sonza’s work.

G.R. No. L-19124 November 18, 1967

INVESTMENT PLANNING CORPORATION OF THE PHILIPPINES
vs.
SOCIAL SECURITY SYSTEM

FACTS: Petitioner is a domestic corporation engaged in business management and the

sale of securities. It has two classes of agents who sell its investment plans: (1) salaried
employees who keep definite hours and work under the control and supervision of the
company; and (2) registered representatives who work on commission basis.
On August 27, 1960 petitioner, through counsel, applied to respondent Social Security
Commission for exemption of its so-called registered representatives from the
compulsory coverage of the Social Security Act. The application was denied in a letter
signed by the Secretary to the Commission on January 16, 1961. A motion to
reconsider was filed and was also denied. The matter was thereafter elevated to this
Court for review.

ISSUE: Whether petitioner's registered representatives are employees within the

meaning of the Social Security Act (R.A. No. 1161 as amended)?

RULING: No. Section 8 (d) thereof defines the term "employee" — for purposes of the
Act — as "any person who performs services for an 'employer' in which either or both
mental and physical efforts are used and who receives compensation for such services,
where there is, employer-employee relationship." (As amended by Sec.4, R.A. No.
2658). These representatives are in reality commission agents. Of the three
requirements under Section 8 (d) of the Social Security Act it is admitted that the first is
present in respect of the agents whose status is in question. They exert both mental and
physical efforts in the performance of their services. The compensation they receive,
however, is not necessarily for those efforts but rather for the results thereof, that is, for
actual sales that they make. This point is relevant in the determination of whether or not
the third requisite is also present, namely, the existence of employer-employee
relationship. Petitioner points out that in effect such compensation is paid not by it but
by the investor, as shown by the basis on which the amount of the commission is fixed
and the manner in which it is collected. The court is convinced from the facts that the
work of petitioner's agents or registered representatives more nearly approximates that
of an independent contractor than that of an employee. The latter is paid for the labor he
performs, that is, for the acts of which such labor consists; the former is paid for the
result thereof. Even if an agent of petitioner should devote all of his time and effort trying
to sell its investment plans would not necessarily be entitled to compensation therefor.
His right to compensation depends upon and is measured by the tangible results he
produces.

The specific question of when there is "employer-employee relationship" for purposes of

the Social Security Act has not yet been settled in this jurisdiction by any decision of this
Court. But in other connections wherein the term is used the test that has been
generally applied is the so-called 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 to
be done but also as to the means and methods by which the same is to be
accomplished. The logic of the situation indeed dictates that where 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 according to the result of his efforts and not the amount thereof, we
should not find that the relationship of employer and employee exists. We have
examined the contract form between petitioner and its registered representatives and
found nothing therein which would indicate that the latter are under the control of the
former in respect of the means and methods they employ in the performance of their
work. The fact that for certain specified causes the relationship may be terminated (e.g.,
failure to meet the annual quota of sales, inability to make any sales production during a
six-month period, conduct detrimental to petitioner, etc.) does not mean that such
control exists, for the causes of termination thus specified have no relation to the means
and methods of work that are ordinarily required of or imposed upon employees. The
resolution of respondent Social Security Commission subject of this appeal is reversed
and set aside.

G.R. No. 101761. March 24, 1993.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP,
respondents.

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

which is fully owned and controlled by the Government operates in three sugar
refineries. The Batangas refinery was privatized on April 11, 1992. On June 1, 1988,
NASUREFCO implemented a Job Evaluation (JE) Program affecting all employees,
from rank-and-file to department heads. As a result, all positions were re-evaluated, and
all employees including the members of respondent union were granted salary
adjustments and increases in benefits commensurate to their actual duties and
functions. For about ten years prior to the JE Program, the members of the union were
treated in the same manner as rank-and file employees. As such, they used to be paid
overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94
of the Labor Code as amended. After the JE the following adjustments were made: (1)
the members of respondent union were re-classified under levels S-5 to S-8 which are
considered managerial staff for purposes of compensation and benefits; (2) there was
an increase in basic pay of the average of 50% of their basic pay prior to the JE
Program, with the union members now enjoying a wide gap (P1,269.00 per month) in
basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was
increased on top of alignment adjustments; (4) they were entitled to increased company
COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for rest
day/holiday work. Two years after the implementation of the JE Program, specifically on
June 20, 1990, the members of the union filed a complaint with the executive labor
arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of
Article 100 of the Labor Code. On January 7, 1991, Executive Labor Arbiter rendered a
decision, directing NASUREFCO to: 1. pay the individual members of complainant
union the usual overtime pay, rest day pay and holiday pay; 2. pay the individual
members of complainant union the difference in money value between the P100.00
special allowance and the overtime pay, rest day pay and holiday pay that they ought to
have received from June 1, 1988. On appeal, National Labor Relations Commission
(NLRC) affirmed the decision of the labor arbiter.

ISSUE: Whether the supervisors should be considered as officers or members of the

managerial staff under Article 82, Book III of the labor Code, and hence are not entitled
to overtime rest day and holiday pay?

RULING: Yes. More specifically, their duties and functions include, among others, the
following operations whereby the employee:

1) assists the department superintendent in the following:

a) planning of systems and procedures relative to department activities;

b) organizing and scheduling of work activities of the department, which includes
employee shifting scheduled and manning complement;
c) decision making by providing relevant information data and other inputs;
d) attaining the company's set goals and objectives by giving his full support;
e) selecting the appropriate man to handle the job in the department; and
f) preparing annual departmental budget;

2) observes, follows and implements company policies at all times and recommends
disciplinary action on erring subordinates;
3) trains and guides subordinates on how to assume responsibilities and become more
productive;
4) conducts semi-annual performance evaluation of his subordinates and recommends
necessary action for their development/advancement;
5) represents the superintendent or the department when appointed and authorized by
the former;
6) coordinates and communicates with other inter and intra department supervisors
when necessary;
7) recommends disciplinary actions/promotions;
8) recommends measures to improve work methods, equipment performance, quality of
service and working conditions;
9) sees to it that safety rules and regulations and procedure and are implemented and
followed by all NASUREFCO employees, recommends revisions or modifications to
said rules when deemed necessary, and initiates and prepares reports for any observed
abnormality within the refinery;
10) supervises the activities of all personnel under him and goes to it that instructions to
subordinates are properly implemented; and
11) performs other related tasks as may be assigned by his immediate superior.

From the foregoing, it is apparent that the members of respondent union discharge
duties and responsibilities which ineluctably qualify them as officers or members of the
managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to
Implement the Labor Code, viz.:
(1) their primary duty consists of the performance of work directly related to
management policies of their employer; (2) they customarily and regularly exercise
discretion and independent judgment; (3) they regularly and directly assist the
managerial employee whose primary duty consist of the management of a department
of the establishment in which they are employed (4) they execute, under general
supervision, work along specialized or technical lines requiring special training,
experience, or knowledge; (5) they execute, under general supervision, special
assignments and tasks; and (6) they do not devote more than 20% of their hours
worked in a work-week to activities which are not directly and clearly related to the
performance of their work hereinbefore described.

Under the facts obtaining in this case, we are constrained to agree with petitioner that
the union members should be considered as officers and members of the managerial
staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not
entitled to overtime, rest day and holiday.

AUTO BUS TRANSPORT SYSTEMS, INC. vs ANTONIO BAUTISTA

G.R. No. 156367 May 16 2005

FACTS:
Antonio Bautista was employed by Auto Bus Transport Systems, Inc. in May
1995. He was assigned to the Isabela-Manila route and he was paid by
commission (7% of gross income per travel for twice a month).

In January 2000, while he was driving his bus he bumped another bus owned by
Auto Bus. He claimed that he bumped the he accidentally bumped the bus as he
was so tired and that he has not slept for more than 24 hours because Auto Bus
required him to return to Isabela immediately after arriving at Manila. Damages
were computed and 30% or P75,551.50 of it was being charged to Bautista.
Bautista refused payment.

Auto Bus terminated Bautista after due hearing as part of Auto Bus’ management
prerogative. Bautista sued Auto Bus for Illegal Dismissal. The Labor Arbiter
Monroe Tabingan dismissed Bautista’s petition but ruled that Bautista is entitled
to P78,1117.87 13th month pay payments and P13,788.05 for his unpaid service
incentive leave pay.

The case was appealed before the National Labor Relations Commission. NLRC
modified the LA’s ruling. It deleted the award for 13th Month pay. The court of
Appeals affirmed the NLRC.

Auto Bus averred that Bautista is a commissioned employee and if that is not
reason enough that Bautista is also a field personnel hence he is not entitled to a
service incentive leave. They invoke:

Art. 95. 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.

Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. ' 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; . . .

ISSUE:
Whether or not Bautista is entitled to Service Incentive Leave.

If he is, Whether or not the three (3)-year prescriptive period provided under
Article 291 of the Labor Code, as amended, is applicable to respondent's claim of
service incentive leave pay.

HELD:
Yes, Bautista is entitled to Service Incentive Leave. The Supreme Court
emphasized that it does not mean that just because an employee is paid on
commission basis he is already barred to receive service incentive leave pay.

The question actually boils down to whether or not Bautista is a field employee.

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.

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.

Certainly, Bautista is not a field employee. He has a specific route to traverse as a

bus driver and that is a specific place that he needs to be at work. There are
inspectors hired by Auto Bus to constantly check him. There are inspectors in
bus stops who inspects the passengers, the punched tickets, and the driver.
Therefore he is definitely supervised though he is away from the Auto Bus main
office.

On the other hand, the 3 year prescriptive period ran but Bautista was able to file
his suit in time before the prescriptive period expired. It was only upon his filing
of a complaint for illegal dismissal, one month from the time of his dismissal, that
Bautista demanded from his former employer commutation of his accumulated
leave credits. His cause of action to claim the payment of his accumulated
service incentive leave thus accrued from the time when his employer dismissed
him and failed to pay his accumulated leave credits.

Therefore, the prescriptive period with respect to his claim for service incentive
leave pay only commenced from the time the employer failed to compensate his
accumulated service incentive leave pay at the time of his dismissal. Since
Bautista had filed his money claim after only one month from the time of his
dismissal, necessarily, his money claim was filed within the prescriptive period
provided for by Article 291 of the Labor Code.

Definition of Service Incentive Leave

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.

SAN JUAN DE DIOS VS NLRC

FACTS
Petitioners who were the rank-and-file employee-union officers and members of San
Juan De Dios Hospital Employees Association sent a letter with signatures
requesting and pleading for the expeditious implementation and payment by Juan De
Dios Hospital of the 40 hours/ 5-day workweek with compensable weekly two days off
provided for by Republic Act No. 5901 as clarified for enforcement by the Secretary of
Labor’s Policy Instructions No. 54 dated 1988. Such Policy Instruction was issued by
former Labor Secretary Franklin Drilon.

The policy instruction in question provides in full as follows:

Policy Instruction No. 54
To: All Concerned
Subject: Working Hours and Compensation of Hospital/Clinic Personnel
This issuance clarifies the enforcement policy of this Department on the
working hours and compensation of personnel employed by hospitals/clinics
with a bed capacity of 100 or more and those located in cities and
municipalities with a population of one million or more.
Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day
work week for hospital/clinic personnel. At the same time, the Act prohibits
the diminution of the compensation of these workers who would suffer a
 reduction in their weekly wage by reason of the shortened workweek
prescribed by the Act. In effect, RA 5901 requires that the covered hospital
workers who used to work seven (7) days a week should be paid for such
number of days for working only 5 days or 40 hours a week.
Respondent hospital failed to give a favorable response. Now, petitioners filed a
complaint regarding their claims for statutory benefits under the above-cited law and
policy issuance.

The Labor Arbiter dismissed the complaint.

NLRC affirmed the Labor Arbiter’s decision.

ISSUE
Whether or not the Policy Instruction No. 54 issued by then Labor Secretary Franklin
Drilon is valid

HELD
No. The policy instruction is not valid. This issuance clarifies the enforcement policy of
this Department on the working hours and compensation of personnel employed by
hospital/clinics with a bed capacity of 100 or more and those located in cities and
municipalities with a population of one million or more.

Reliance on Republic Act No. 5901 by petitioners is misplaced for the said statute, as
correctly ruled by respondent NLRC, and has long been repealed with the passage of
the Labor Code in 1974. Accordingly, only Article 83 of the Labor Code which
appears to have substantially incorporated or reproduced the basic provisions of
Republic Act No. 5901 may support Policy Instructions No. 54 on which the
latter’s validity may be gauged.

Article 83 of the Labor Code betrays petitioners’ position that “hospital employees” are
entitled to “a full weekly salary with paid two (2) days’ off if they have completed the 40-
hour/5-day workweek”. What Article 83 merely provides are: (1) the regular office hour
of eight hours a day, five days per week for health personnel, and (2) where the
exigencies of service require that health personnel work for six days or forty-eight hours
then such health personnel shall be entitled to 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”. Needless to say, 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.’
GAYONA (dili makita, gi X ni maam)

SIME DARBY VS NLRC

FACTS:

Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires,
tubes and other rubber products. Sime Darby Salaried Employees Association (ALU-
TUCP), private respondent, is an association of monthly salaried employees of
petitioner at its Marikina factory. Prior to the present controversy, all company factory
workers in Marikina including members of private respondent union worked from 7:45
a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-based employees

advising all its monthly salaried employees in its Marikina Tire Plant, except those in the
Warehouse and Quality Assurance Department working on shifts, a change in work
schedule effective 14 September 1992 thus — factory office hours was changed to 7:45
AM – 4:45 PM (Monday to Friday), 7:45 AM – 11:45 AM (Saturday), with ten minute
coffee breaks from 9:30 AM – 10:30 AM and 2:30 PM – 3:30 PM and a lunch break from
12:00 NN – 1:00 PM.

Since private respondent felt affected adversely by the change in the work schedule and
discontinuance of the 30-minute paid "on call" lunch break, it filed on behalf of its
members a complaint with the Labor Arbiter for unfair labor practice, discrimination and
evasion of liability pursuant to the resolution. The Labor Arbiter dismissed the complaint
on the ground that the change in the work schedule and the elimination of the 30-minute
paid lunch break of the factory workers constituted a valid exercise of management
prerogative and that the new work schedule, break time and one-hour lunch break did
not have the effect of diminishing the benefits granted to factory workers as the working
time did not exceed eight (8) hours.

Private respondent appealed to respondent National Labor Relations Commission

(NLRC) which sustained the Labor Arbiter and dismissed the appeal. However, upon
motion for reconsideration by private respondent, the NLRC, this time with two (2) new
commissioners replacing those who earlier retired, reversed its earlier decision of 20
April 1994 as well as the decision of the Labor Arbiter. Hence, this petition.

ISSUE:
Is the act of management in revising the work schedule of its employees and discarding
their paid lunch break constitutive of unfair labor practice?

RULING:
No. The Court ruled in favor of petitioner.

The right to fix the work schedules of the employees rests principally on their employer.
In the instant case petitioner, as the employer, cites as reason for the adjustment the
efficient conduct of its business operations and its improved production. It rationalizes
that while the old work schedule included a 30-minute paid lunch break, the employees
could be called upon to do jobs during that period as they were "on call." Even if
denominated as lunch break, this period could very well be considered as working time
because the factory employees were required to work if necessary and were paid
accordingly for working.

With the new work schedule, the employees are now given a one-hour lunch break
without any interruption from their employer. For a full one-hour undisturbed lunch
break, the employees can freely and effectively use this hour not only for eating but also
for their rest and comfort which are conducive to more efficiency and better
performance in their work. Since the employees are no longer required to work during
this one-hour lunch break, there is no more need for them to be compensated for this
period. We agree with the Labor Arbiter that the new work schedule fully complies with
the daily work period of eight (8) hours without violating the Labor Code. Besides, the
new schedule applies to all employees in the factory similarly situated whether they are
union members or not.

The case does not pertain to any controversy involving discrimination of employees but
only the issue of whether the change of work schedule, which management deems
necessary to increase production, constitutes unfair labor practice. As shown by the
records, the change effected by management with regard to working time is made to
apply to all factory employees engaged in the same line of work whether or not they are
members of private respondent union. Hence, it cannot be said that the new scheme
adopted by management prejudices the right of private respondent to self-organization.

Every business enterprise endeavors to increase its profits. In the process, it may
devise means to attain that goal. Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. Thus, 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. Further, management
retains the prerogative, whenever exigencies of the service so require, to change the
working hours of its employees. So long as such prerogative is exercised in good faith
for the advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold such exercise.

NATIONAL DEVELOPMENT CO. VS CIR

Facts:
At the National Development Co., a GOCC, there were four shifts of work. One shift was
from 8 a.m. to 4 p.m., while the three other shifts were from 6 a.m. to 2 p.m; then from 2
p.m. to 10 p.m. and,finally, from 10 p.m. to 6 a.m. In each shift, there was a one-hour
mealtime period, to wit: From (1) 11 a.m. to 12 noon for those working between 6 a.m.
and 2 p.m. and from (2) 7 p.m. to 8 p.m.for those working between 2 p.m. and 10
p.m.The records disclose that although there was a one-hourmealtime, petitioner
nevertheless credited the workers with eight hours of work for each shift and paid them
for the same number of hours. However, since 1953, whenever workers in one shift
were required to continue working until the next shift, petitioner instead of crediting them
with eight hours of overtime work, has been paying them for six hours only. Petitioner
reasoned that the two hours corresponding to the mealtime periods should not be
included in computing compensation. On the other hand, respondent National Textile
Workers Union whose members are employed at the NDC, maintained the opposite
view and asked the Court of Industrial Relations to order the payment of additional
overtime pay corresponding to the mealtime periods. CIR: Mealtime should be counted
in the determination of overtime work and accordingly ordered petitioner to pay
P101,407.96 by way of overtime compensation.

Petitioner appealed to this Court, contending that the CIR has no jurisdiction over claims
for overtime compensation and, secondary that the CIR did not make "a correct
appraisal of the facts, in the light of the evidence" in holding that mealtime periods
should be included in overtime work because workers could not leave their places of
work and rest completely during those hours.

ISSUE: Whether or not, on the basis of the evidence, the mealtime breaks should be
considered working time under the following provision of the law.

(YES)
RATIO:
The legal working day for any person employed by another shall be of not more than
eight hours daily. When the work is not continuous, the time during which the laborer is
not working and can leave his working place and can rest completely shall not be
counted.

It will be noted that, under the law, the idle time that an employee may spend for resting
and during which he may leave the spot or place of work though not the premises of his
employer, is not counted as working time only where the work is broken or is not
continuous.

The determination as to whether work is continuous or not is mainly one of fact. Indeed,
it has been said that no general rule can be laid down is to what constitutes
compensable work, rather the question is one of fact depending upon particular
circumstances, to be determined by the controverted in cases.

In this case, the CIR's finding that work in the petitioner company was continuous and
did not permit employees and laborers to rest completely is not without basis in
evidence and following our earlier rulings, shall not disturb the same.

Thus, the CIR found:

While it may be correct to say that it is well-high impossible for an employee to work
while he is eating, yet under Section 1 of Com. Act No. 444 such a time for eating can
be segregated or deducted from his work, if the same is continuous and the employee
can leave his working place rest completely. The time cards show that the work was
continuous and without interruption. There is also the evidence adduced by the
petitioner that the pertinent employees can freely leave their working place nor rest
completely. There is furthermore the aspect that during the period covered the
computation the work was on a 24-hour basis and previously stated divided into shifts.
From these facts, the CIR correctly concluded that work in petitioner company was
continuous and therefore the mealtime breaks should be counted as working time for
purposes of overtime compensation.

Petitioner gives an eight-hour credit to its employees who work a single shift say from 6
a.m. to 2 p.m. Why cannot it credit them sixteen hours should they work in two shifts?
Petitioner's motion for reconsideration having been dismissed for its failure to serve a
copy of the same on the union, there is no decision of the CIR en banc that petitioner
can bring to this Court for review. WHEREFORE, the order of March 19, 1959 and the
resolution of April 27, 1959 are hereby affirmed and the appeal is dismissed, without
pronouncement as to costs.

LUZON STEVEDORING CO., INC.

vs.
LUZON MARINE DEPARTMENT UNION and THE HON. MODESTO CASTILLO, THE
HON. JOSE S. BAUTISTA, THE HON. V. JIMENEZ YANSON and THE HON. JUAN
L. LANTING, Judges of the Court of Industrial Relations
G.R. No. L-9265
April 29, 1957

FACTS:
Luzon Marine Department Union filed a petition with the Court of Industrial Relations
against petitioner Luzon Stevedoring Co., Inc for full recognition of the right of
COLLECTIVE bargaining, close shop and check off. However, on July 18, 1948, while
the case was still pending with the CIR, said labor union declared a strike which was
ruled down as illegal by the SC. In view of said ruling, the Union filed a “Constancia”
with the Court of Industrial Relations praying that the remaining unresolved demands of
the Union presented in their original petition, be granted.
One of those claims was that the work performed in excess of eight (8) hours he paid an
overtime pay of 50 per cent the regular rate of pay, and that work performed on
Sundays and legal holidays be paid double the regular rate of pay.

TRIAL COURT:
Petitioner gave said employees 3 free meals every day and about 20 minutes rest after
each mealtime; that they worked from 6:00 am. to 6:00 p.m. every day including
Sundays and holidays, and for work performed in excess of 8 hours, the officers,
patrons and radio operators were given overtime pay in the amount of P4 each and P2
each for the rest of the crew up to March, 1947, and after said date, these payments
were increased to P5 and P2.50, respectively, until the time of their separation or the
strike of July 19, 1948; that when the tugboats underwent repairs, their personnel
worked only 8 hours a day excluding Sundays and holidays; that although there was an
effort on the part of claimants to show that some had worked beyond 6:00 p.m., the
evidence was uncertain and indefinite and that demand was, therefore, denied; that
respondent Company, by the nature of its business and as defined by law is considered
a public service operator by the Public Service Commission, and, therefore, exempt
from paying additional remuneration or compensation for work performed on Sundays
and legal holidays.

CIR:
Ruled that the 20 minutes’ rest given the claimants after mealtime should not be
deducted from the 4 hours of overtime worked performed by said claimants
The company though insists that the rules on the 8 hours work of land based jobs
should be different from their seamen counterparts.

ISSUE: WON the rest periods given to the claimants (after each meal) should be
deducted from their overtime pay.
HELD:
NO.
The SC finds no reason to set for seamen a criterion different from that applied to
laborers on land.

Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor Law,
provides:

SEC. 1. The legal working day for any person employed by another shall be of not more
than eight hours daily. When the work is not continuous, the time during which the
laborer is not working AND CAN LEAVE HIS WORKING PLACE and can rest
completely, shall not be counted.

The only thing to be done is to determine the meaning and scope of the term “working
place” used therein. As We understand this term, a laborer need not leave the
premises of the factory, shop or boat in order that his period of rest shall not be
counted, it being enough that he “cease to work”, may rest completely and leave
or may leave at his will the spot where he actually stays while working, to go
somewhere else, whether within or outside the premises of said factory, shop or
boat. If these requisites are complied with, the period of such rest shall not be
counted.

In the case at bar We do not need to look into the nature of the work of claimant
mariners to ascertain the truth of petitioners allegation that this kind of seamen have
had enough “free time”, a task of which we are relieved, for although after an ocular
inspection of the working premises of the seamen affected in this case, the TRIAL
COURT declared in his decision that the Company gave the complaining laborers 3 free
meals a day with a recess of 20 minutes after each meal, this decision was specifically
amended by the CIR, wherein it held that the claimants herein rendered services to the
Company from 6:00 a.m. to 6:00 p.m. including Sundays and holidays, which implies
either that said laborers were not given any recess at all, or that they were not
allowed to leave the spot of their working place, or that they could not rest
completely. And such resolution being on a question essentially of fact, this Court
is now precluded to review the same.

SAN MIGUEL BREWERY VS OPLE

FACTS:

- On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978

until January 31, 1981) was entered into by petitioner San Miguel Corporation Sales
Force Union (PTGWO), and the private respondent, San Miguel Corporation, Section 1,
of Article IV of which provided as follows:
Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a
basic monthly compensation plus commission based on their respective sales.
- In September 1979, the company introduced a marketing scheme known as the
"Complementary Distribution System" (CDS) whereby its beer products were offered for
sale directly to wholesalers through San Miguel's sales offices.
- The labor union (herein petitioner) filed a complaint for unfair labor practice in the
Ministry of Labor, with a notice of strike on the ground that the CDS was contrary to the
existing marketing scheme whereby the Route Salesmen were assigned specific
territories within which to sell their stocks of beer, and wholesalers had to buy beer
products from them, not from the company. It was alleged that the new marketing
scheme violates Section 1, Article IV of the collective bargaining agreement because
the introduction of the CDS would reduce the take-home pay of the salesmen and their
truck helpers for the company would be unfairly competing with them.

ISSUE: Whether or not the CDS is a valid exercise of management prerogative

HELD:
- Public respondent was correct in holding that the CDS is a valid exercise of
management prerogatives:
Except as limited by special laws, an employer is free to regulate, according to his own
discretion and judgment, all aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of work.
- Every business enterprise endeavors to increase its profits. In the process, it may
adopt or devise means designed towards that goal. In Abbott Laboratories vs. NLRC,
154 SCRA 713, We ruled:
... Even as the law is solicitous of the welfare of the 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.
- So long as a company's management prerogatives are exercised in good faith for
the advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold them (LVN Pictures Workers vs. LVN, 35 SCRA 147;
Phil. American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634; Phil.
Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer to compensate
the members of its sales force who will be adversely affected by the implementation of
the CDS by paying them a so-called "back adjustment commission" to make up for the
commissions they might lose as a result of the CDS proves the company's good faith
and lack of intention to bust their union.

MERCIDAR FISHING CORPORATION represented by its President DOMINGO B.

NAVAL,petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION and FERMIN
AGAO, JR.,respondents/1998

FACTS: Fermin Agao, a “bodegero” (or para sosy, “ship’s quartermaster”) at Mercidar
Fishing Corp., filed complaint for illegal dismissal, violation of PD 851 and non-payment
of 5-days service incentive leave; he started work there in 1988 and claims to have
been constructively dismissed in 1990 when his employer refused to give him
assignments aboard the company’s boats.
LA ordered Agao’s reinstatement with backwages and payment of 13 th month pay and
service incentive leave pay; NLRC dismissed the appeal of Mercidar Fishing which
claimed that Agao, as a “field personnel” was not entitled under the LC to such service
incentive leave pay.
Petitioner contends that Agao abandoned his work, while the latter alleges that after
having been on one-month leave following a sickness, his employer refused to give him
further assignments after he reported for work.
ISSUE: WON fishing crew members are deemed “field personnel”, as defined under
Art. 82 of LC (NO)
WON Agao had been constructively dismissed (YES).

HELD/RATIO:
Art. 82 - "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. (The provisions of the Title on Working Conditions & Rest Period)
according to par.1 of Art. 82 (Do not apply, among others, to field personnel.)
Citing Union of Pilipro Employees (UFE) v. Vicar, which sought to explain the meaning
of "whose actual hours of work in the field cannot be determined with reasonable
certainty", the Court said that, 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.
Here, the nature of the work necessarily means that the fishing crew stays on board the
vessel in the course of the fishing voyage. Although they perform non-agricultural work
away from petitioner's 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 as the NLRC correctly held.

The Court also ruled that there was constructive dismissal of Agao. Medical certificate
shows his fitness to work when he presented the same to his employer. Beside, as
already established in jurisprudence, to constitute abandonment of position, there must
be concurrence of the intention to abandon and some overt acts from which it may be
inferred that the employee concerned has no more interest in working. Here, the filing of
the complaint which asked for reinstatement plus back wages renders inconsistent the
respondents' defense of abandonment.

LARA VS DEL ROSARIO

Facts: Defendant Petronilo del Rosario, Jr., is the owner of Waval Taxi. He employed
among others three mechanics and 49 chauffeurs or drivers, the latter having worked
for periods ranging from 2 to 37 months. In September 4, 1950, del Rosario sold his 25
cabs to La Mallorca, resulting to the unemployment of the above-mentioned chauffeurs
because La Mallorca failed to continue them in their employment.

They brought this action against del Rosario to recover compensation for overtime work
rendered beyond eight hours and on Sundays and legal holidays, and one month salary
(mesada) because of the failure of their former employer to give them one month notice.
The plaintiffs as chauffeurs received no fixed compensation based on the hours or the
period or time they worked. They were paid in the commission basis, that is, each driver
received 20 percent of the gross return or earnings from the operation of his taxi cab.

Issues: 1. Whether or not plaintiffs are entitled to extra compensation for work
performed in excess of 8 hours a day, Sundays and holidays included; and
2. Whether or not there are entitled for a mesada.

Held: The defendant being engaged in the taxi or transportation business which is
public utility, came under the exception provided by the Eight-hour labor law; and
because plaintiffs did not work on a salary basis, that is to say, they had no fixed or
regular salary or remuneration other than the 20 percent of their gross earnings their
situation was therefore practically similar to piece workers and hence outside the ambit
of Article 302 of the Code of Commerce.

Moreover, if the plaintiffs herein had no fixed salary either by the day, week or the
month, then computation of the month;s salary (mesada) payable would be impossible.
Article 302 of the Code of Commerce refers to employees receiving a fixed salary.

CHAPTER II

CF: DE LEON VS PAMPANGA SUGAR DEVELOPMENT

UNIVERSITY OF PANGASINAN FACULTY UNION VS UNIVERSITY OF

PANGASINAN
[ G.R. No. L-63122, February 20, 1984 ]

FACTS: Petitioner's members are full-time professors, instructors, and teachers of the
university were employed. They taught for ten (10) months every school year, divided
into two (2) semesters of five (5) months each, due to the school calendar. Although the
two (2) months of summer vacation were excluded from their regular teaching
schedules, they were paid their salaries on a regular monthly basis, including the
months of summer.
During the semestral break of 1981, however, the full time teachers were paid their
regular monthly salary without their Emergency Cost of Living Allowances (ECOLA).
Consequently, the teachers filed suit against the university, as represented by their
labor union. The university insisted that the teachers were not entitled to ECOLA during
the semestral break of the school because the semestral break is not an integral part of
the school year. There being no actual services rendered by the teachers during said
period, the principle of “no work, no pay” applies.
ISSUE: Whether or not petitioner's members are entitled to ECOLA during the
semestral break from November 7 to December 5, 1981 of the 1981-82 school year.
(W/N semestral break is considered “hours worked”.)

HELD: The various Presidential Decrees on ECOLAs to wit: PD's 1614, 1634, 1678 and
1713, provide on "Allowances of Fulltime Employees x x x" that "Employees shall be
paid in full the required monthly allowance regardless of the number of their regular
working days if they incur no absences during the month. If they incur absences without
pay, the amounts corresponding to the absences may be deducted from the monthly
allowance x x x"; and on "Leave of Absence Without Pay", that "All covered employees
shall be entitled to the allowance provided herein when they are on leave of absence
with pay."
It is beyond dispute that the petitioner's members are full-time employees receiving their
monthly salaries irrespective of the number of working days or teaching hours in a
month. However, they find themselves in a most peculiar situation whereby they are
forced to go on leave during semestral breaks. These semestral breaks are in the
nature of work interruptions beyond the employees control. The duration of the
semestral break varies from year to year dependent on a variety of circumstances
affecting at times only the private respondent but at other times all educational
institutions in the country. As such, these breaks cannot be considered as absences
within the meaning of the law for which deductions may be made from monthly
allowances. The "No work, no pay" principle does not apply in the instant case. The
petitioner's members received their regular salaries during this period. It is clear from
the aforequoted provision of law that it contemplates a "no work" situation where the
employees voluntarily absent themselves. Petitioners, in the case at bar, certainly do
not, ad voluntatem, absent themselves during semestral breaks. Rather, they are
constrained to take mandatory leave from work. For this they cannot be faulted nor can
they be begrudged that which is due them under the law. To a certain extent, the private
respondent can specify dates when no classes would be held. Surely, it was not the
intention of the framers of the law to allow employers to withhold employee benefits by
the simple expedient of unilaterally imposing "no work" days and con-sequently avoiding
compliance with the mandate of the law for those days.
Respondent's contention that "the fact of receiving a salary alone should not be the
basis of receiving ECOLA", is, likewise, without merit. Particular attention is brought to
the Implementing Rules and Regulations of Wage Order No. 1 to wit:
SECTION 5. Allowance for Unworked Days. -
"a) All covered employees whether paid on a monthly or daily basis shall be entitled to
their daily living allowance when they are paid their basic wage."
This provision, at once refutes the above contention. It is evident that the intention of the
law is to grant ECOLA upon the payment of basic wages. Hence, we have the principle
of "No pay, no ECOLA" the converse of which finds application in the case at bar.
Petitioners cannot be considered to be on leave without pay so as not to be entitled to
ECOLA, for, as earlier stated, the petitioners were paid their wages in full for the months
of November and December of 1981, notwithstanding the intervening semestral break.
This, in itself, is a tacit recognition of the rather unusual state of affairs in which teachers
find themselves. Although said to be on forced leave, professors and teachers are,
nevertheless, burdened with the task of working during a period of time supposedly
available for rest and private matters. There are papers to correct, students to evaluate,
deadlines to meet, and periods within which to submit grading reports. Although they
may be considered by the respondent to be on leave, the semestral break could not be
used effectively for the teachers' own purposes for the nature of a teacher's job
im-poses upon him further duties which must be done during the said period of time.
Learning is a never ending process. Teachers and professors must keep abreast of
developments all the time. Teachers cannot also wait for the opening of the next
semester to begin their work. Arduous preparation is necessary for the delicate task of
educating our children. Teaching involves not only an application of skill and an
imparting of knowledge, but a responsibility which entails self dedication and sacrifice.
The task of teaching ends not with the perceptible efforts of the petitioner's members
but goes beyond the classroom: a continuum where only the visible labor is relieved by
academic intermissions. It would be most unfair for the private respondent to consider
these teachers as employees on leave without pay to suit its purposes and, yet, in the
meantime, continue availing of their services as they prepare for the next semester or
complete all of the last semester's requirements. Furthermore, we may also by analogy
apply the principle enunciated in the Omnibus Rules Implementing the Labor Code
to wit:
Sec. 4 Principles in Determining Hours Worked. - The following general principles
shall govern in determining whether the time spent by an employee is considered hours
worked for purposes of this Rule:
"(d) The time during which an Employee is inactive by reason of interruptions in his work
beyond his control shall be considered time either if the imminence of the resumption of
work requires the employee's presence at the place of work or if the interval is too brief
to be utilized effectively and gainfully in the employee's own interest."
The petitioner's members in the case at bar, are exactly in such a situation. The
semestral break scheduled is an interruption beyond petitioner's control and it
cannot be used "effectively nor gainfully in the employee's interest". Thus, the
semestral break may also be considered as "hours worked". For this, the teachers
are paid regular salaries and, for this, they should be entitled to ECOLA. Not only do the
teachers continue to work during this short recess but much less do they cease to live
for which the cost of living allowance is intended. The legal principles of "No work, no
pay; No pay, no ECOLA" must necessarily give way to the purpose of the law to
augment the income of employees to enable them to cope with the harsh living
conditions brought about by inflation, and to pro-tect employees and their wages against
the ravages brought by these conditions. Significantly, it is the commitment of the State
to protect labor and to provide means by which the difficulties faced by the working
force may best be alleviated. To submit to the respondents' interpretation of the no
work, no pay policy is to defeat this noble purpose. The Constitution and the law
mandate otherwise.

CHAPTER III

JOSE RIZAL COLLEGES VS NLRC

G.R. No. L-65482 December 1, 1987

JOSE RIZAL COLLEGE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF
TEACHERS/OFFICE WORKERS, respondents.

FACTS: Petitioner has three groups of employees categorized as follows: (a)

personnel on monthly basis, who receive their monthly salary uniformly
throughout the year, irrespective of the actual number of working days in a month
without deduction for holidays; (b) personnel on daily basis who are paid on
actual days worked and they receive unworked holiday pay and (c) collegiate
faculty who are paid on the basis of student contract hour. Before the start of the
semester they sign contracts with the college undertaking to meet their classes
as per schedule.

Private respondent National Alliance of Teachers and Office Workers (NATOW) in

behalf of the faculty and personnel of Jose Rizal College filed with the Ministry of
Labor a complaint against the college for said alleged non-payment of holiday
pay from 1975 to 1977. The Labor Arbiter rendered a decision on Feb 5, 1979 in
favor of the petitioner. On appeal, the NLRC modified the LA’s decision that
teaching personnel paid by the hour are declared to be entitled to holiday pay.
Hence, this petition.

ISSUE: Whether or not the school faculty who according to their contracts are
paid per lecture hour are entitled to unworked holiday pay.

RULING: Yes. Subject holiday pay is provided for in the Labor Code (Presidential
Decree No. 442, as amended), which reads:

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; ... "

and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:
SEC. 8. Holiday pay of certain employees. — (a) Private school teachers,
including faculty members of colleges and universities, may not be paid for the
regular holidays during semestral vacations. They shall, however, be paid for the
regular holidays during Christmas vacations. ...

Under the foregoing provisions, apparently, the petitioner, although a non-profit

institution is under obligation to give pay even on unworked regular holidays to
hourly paid faculty members subject to the terms and conditions provided for
therein.

It is readily apparent that the declared purpose of the holiday pay which is the
prevention of diminution of the monthly income of the employees on account of
work interruptions is defeated when a regular class day is cancelled on account
of a special public holiday and class hours are held on another working day to
make up for time lost in the school calendar. Otherwise stated, the faculty
member, although forced to take a rest, does not earn what he should earn on
that day. Be it noted that when a special public holiday is declared, the faculty
member paid by the hour is deprived of expected income, and it does not matter
that the school calendar is extended in view of the days or hours lost, for their
income that could be earned from other sources is lost during the extended days.
Similarly, when classes are called off or shortened on account of typhoons,
floods, rallies, and the like, these faculty members must likewise be paid, whether
or not extensions are ordered.

WELLINGTON INVESTMENT VS TRAJANO

INSULAR BANK VS INCIONG

Facts: On June 20, 1975, petitioner INSULAR BANK OF ASIA AND AMERICA
EMPLOYEES' UNION (IBAAEU) filed a complaint against the respondent INSULAR
BANK OF ASIA AND AMERICA for the payment of holiday pay before the then
Department of Labor, National Labor Relations Commission. Labor Arbiter granted
petitioner's complaint for payment of holiday pay. Respondent bank complied with the
order of Arbiter by paying their holiday pay up to and including January, 1976.

On December 16, 1975, Presidential Decree No. 850 was promulgated amending,
among others, the provisions of the Labor Code on the right to holiday pay to read as
follows:
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wages
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 and
(c) As used in this Article, "holiday" includes New Year's Day, Maundy Thursday, Good
Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the
thirtieth of November, the twenty-fifth and the thirtieth of December, and the day
designated by law for holding a general election.

Accordingly, on February 16, 1976, by authority of Article 5 of the same Code, the
Department of Labor promulgated the rules and regulations for the implementation of
holidays with pay. The controversial section thereof reads:

Sec. 2. Status of employees paid by the month. — Employees who are uniformly paid
by the month, irrespective of the number of working days therein, with a salary of not
less than the statutory or established minimum wage shall be presumed to be paid for
all days in the month whether worked or not.
For this purpose, the monthly minimum wage shall not be less than the statutory
minimum wage multiplied by 365 days divided by twelve"

On April 23, 1976, Policy Instruction No. 9 was issued by the then Secretary of Labor
interpreting the above-quoted rule, pertinent portions of which read:

The ten (10) paid legal holidays law, to start with, is intended to benefit principally daily
employees. In the case of monthly, only those whose monthly salary did not yet include
payment for the ten (10) paid legal holidays are entitled to the benefit.

Under the rules implementing P.D. 850, this policy has been fully clarified to eliminate
controversies on the entitlement of monthly paid employees, The new determining rule
is this: If the monthly paid employee is receiving not less than P240, the maximum
monthly minimum wage, and his monthly pay is uniform from January to Dexcember, he
is presumed to be already paid the ten (10) paid legal holidays. However, if deductions
are made from his monthly salary on account of holidays in months where they occur,
then he is still entitled to the ten (10) paid legal holidays. ..."

Respondent bank, by reason of the ruling laid down by the aforecited rule implementing
Article 94 of the Labor Code and by Policy Instruction No. 9, stopped the payment of
holiday pay to its employees. Petitioner filed a motion for a writ of execution to enforce
the arbiter's decision.

Issue: Whether or not the decision of a Labor Arbiter awarding payment of regular
holiday pay can still be set aside on appeal by the Deputy Minister of Labor even though
it has already become final and had been partially executed.
Ruling: No. The SC agrees with the petitioner's contention that Section 2, Rule IV,
Book III of the implementing rules and Policy Instruction No. 9 issued by the then
Secretary of Labor are null and void since in the guise of clarifying the Labor Code's
provisions on holiday pay, they in effect amended them by enlarging the scope of their
exclusion.

Article 94 of the Labor Code, as amended by P.D. 850, provides: têñ.£îhqwâ£

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. ...
The coverage and scope of exclusion of the Labor Code's holiday pay provisions is
spelled out under Article 82 thereof which reads:
têñ.£îhqw
â£
Art. 82. Coverage. — The provision of this Title shall apply to employees in all
establishments and undertakings, whether for profit or not, but not to government
employees, managerial employees, field personnel members of the family of the
employer who are dependent on him for support domestic helpers, persons in the
personal service of another, and workers who are paid by results as determined by the
Secretary of Labor in appropriate regulations.

From the above-cited provisions, it is clear that monthly paid employees are not
excluded from the benefits of holiday pay. However, the implementing rules on holiday
pay promulgated by the then Secretary of Labor excludes monthly paid employees from
the said benefits by inserting, under Rule IV, Book Ill of the implementing rules, Section
2, which provides that: "employees who are uniformly paid by the month, irrespective of
the number of working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all days in the month
whether worked or not. "

Obviously, the Secretary (Minister) of Labor had exceeded his statutory authority
granted by Article 5 of the Labor Code authorizing him to promulgate the necessary
implementing rules and regulations.

In view of the foregoing, Section 2, Rule IV, Book III of the Rules to implement the Labor
Code and Policy instruction No. 9 issued by the then Secretary of Labor must be
declared null and void. Accordingly, public respondent Deputy Minister of Labor Amado
G. Inciong had no basis at all to deny the members of petitioner union their regular
holiday pay as directed by the Labor Code.

DAVAO INTEGRATED VS ABARQUEZ

BALTAZAR VS SAN MIGUEL

GR NO. L-23076 February 27 1969

Facts:
Nicanor Baltazar was a salesman-in-charge at appellant San Miguel Brewery’s
Dagupan warehouse. In October 1956, Baltazar was recalled to appellant’s Manila
office after it was found out that Baltazar had caused a labor strike back in Dagupan
warehouse. When Baltzar reported at Manila office, the sales supervisor informed him
that he was not to return to Dagupan anymore. Thereafter, he reported for work at the
Manila office from October 16, 1956 until November 2 of the same year, apparently
without being given any specific work or assignment.

From November 3, 1956 up to December 19 of the same year, or a period of more than
one and one-half months, he absented himself from work without prior authority from his
superiors and without advising them or anybody else of the reason for his prolonged
absence. For this reason, pursuant to existing rules and regulations considering ten
unexcused or unauthorized absences within a calendar year as sufficient ground for an
outright dismissal from employment, appellant dismissed Baltazar.

In May 1957, Baltazar filed a complaint before the Court of First Instance (CFI). After
trial upon the issues arising from the parties' pleadings, the CFI ruled that Baltazar's
dismissal was justified, and, as a consequence, dismissed his complaint. For
insufficiency of evidence, the court also dismissed appellant's counterclaim. But despite
the dismissal of Baltazar's complaint and the finding that his dismissal from employment
was for cause, the trial court ordered appellant to pay him one-month separation pay,
plus the cash value of six months accumulated sick leave.

Issue:
Whether Baltazar is entitled to one-month separation pay.

Held:
Baltazar is not entitled to one-month separation pay. It is settled that one not employed
for a definite period is not entitled to one-month notice or to one-month salary in lieu
thereof if his dismissal was for cause. Moreover, it appears that while under the last
paragraph of Article 5 of appellant's Rules and Regulations of the Health, Welfare and
Retirement Plan, unused sick leave may be accumulated up to a maximum of six
months, the same is not commutable or payable in cash upon the employee's option. In
the Court’s view, the only meaning and import of said rule and regulation is that if an
employee does not choose to enjoy his yearly sick leave of thirty days, he may
accumulate such sick leave up to a maximum of six months and enjoy this six-month
sick leave at the end of the sixth year but may not commute it to cash.
TITLE II
CHAPTER I

PHILIPPINE AIRLINES VS NLRC GR NO. 55159

PHILIPPINE AIRLINES, INC. vs. NLRC and ARMANDO DOLINA
G.R. No. 55159 December 22, 1989

FACTS:
Dolina was admitted to the Philippine Airlines (PAL) Aviation School for training as a
pilot beginning 16 January 1973. The training agreement bound PAL to provide regular
and permanent employment to Dolina upon completion of the training course. However,
due to the inadequate compliance with the necessary requirements for regularization of
his employment, his appointment from temporary to permanent has been extended
thrice.

After thorough evaluation of the candidate's past records,his performance and the result
of his medical examination, the Pilot Acceptance Qualifications Board found Dolina not
qualified for regular employment in the Company. The Board recommended the
termination of Dolina pursuant to which PAL filed a clearance application for his
termination. In the meantime Dolina was placed under preventive suspension effective 1
October 1976. Dolina countered with a complaint for illegal dismissal on 6 October
1976.

The OIC of the Department of Labor Regional Office lifted the preventive suspension,
and ordered petitioner to reinstate Dolina to his former position with full backwages from
1 October 1976 up to actual reinstatement.

Petitioner appealed the order lifting Dolina's suspension to the Secretary of Labor which
issued an order finding that the propriety of the suspension had been rendered moot
and academic by the compromise agreement and referred the case for compulsory
arbitration to the Executive Labor Arbiter. This resulted to Dolina's removal from its
payroll effective 1 April 1979.

On appeal, NLRC affirmed DOLE OIC's decision in toto and ordered petitioner to
restore the complainant to its payroll and to pay his salaries from 1 April 1979 until this
case is finally resolved. Hence, this petition.

ISSUE: Whether or not private respondent Dolina was entitled to his salaries from 1
April 1979 "until this case is finally resolved."
HELD: NO.

Since the court finds the dismissal of Dolina valid. In view of the finding of valid
dismissal, the NLRC had no authority to order the continued payment of Dolina's
salaries from 1 April 1979 until the case is finally resolved. The NLRC's order would
result in compensating Dolina for services no longer rendered and when he is no longer
in PAL's employ. This is contrary to the age-old rule of "a fair day's wage for a fair day's
labor" which continues to govern the relation between labor and capital and remains a
basic factor in determining employees' wages. So that, if there is no work performed by
the employee there can be no wage or pay unless the laborer was able, willing and
ready to work but was prevented by management or was illegally locked out, suspended
or dismissed. Where the employee's dismissal was for a just cause, it would neither be
fair nor just to allow the employee to recover something he has not earned and could
not have earned.

Moreover, in ordering the continued payment of Dolina's salaries from 1 April 1979 until
the case is finally resolved, the NLRC in effect ordered the payment of backwages to
Dolina notwithstanding its finding of a valid dismissal.

INTERNATIONAL SCHOOL OF ALLIANCE OF EDUCATORS VS HON.

QUISUMBING
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) vs. HON.
LEONARDO A. QUISUMBING
G.R. No. 128845 June 1, 2000

FACTS:
Private respondent International School, Inc. (School), pursuant to PD 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 own 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.

The School grants foreign-hires certain benefits not accorded local-hires. These include
housing, transportation, shipping costs, taxes, and home leave travel allowance.
Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-
hires. The School justifies the difference on two "significant economic disadvantages"
foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure.

When negotiations for a new CBA were held on June 1995, petitioner ISAE, a legitimate
labor union and the collective bargaining representative of all faculty members of the
School, contested the difference in salary rates between foreign and local-hires. This
issue, as well as the question of whether foreign-hires should be included in the
appropriate bargaining unit, eventually caused a deadlock between the parties.
ISAE filed a notice of strike. Due to the failure to reach a compromise in the NCMB, the
matter reached the DOLE which favored the School. Hence this petition.

ISSUE: Whether or not the Union can invoke the equal protection clause to justify its
claim of parity

HELD: YES.

The Constitution also directs the State to promote "equality of employment opportunities
for all." Similarly, the Labor Code provides that the State shall "ensure equal work
opportunities regardless of sex, race or creed." It would be an affront to both the spirit
and letter of these provisions if the State, in spite of its primordial obligation to promote
and ensure equal employment opportunities, closes its eyes to unequal and
discriminatory terms and conditions of employment.

These provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of "equal pay for equal work." Persons who work with substantially equal
qualifications, skill, effort and responsibility, under similar conditions, should be paid
similar salaries. This rule applies to the School, its "international character"
notwithstanding.

If an employer accords employees the same position and rank, the presumption is that
these employees perform equal work. If the employer pays one employee less than the
rest, it is not for that employee to explain why he receives less or why the others receive
more. That would be adding insult to injury.

The employer in this case has failed to discharge this burden. There is no evidence
here that foreign-hires perform 25% more efficiently or effectively than the local-hires.
Both groups have similar functions and responsibilities, which they perform under
similar working conditions.

The School cannot invoke the need to entice foreign-hires to leave their domicile to
rationalize the distinction in salary rates without violating the principle of equal work for
equal pay.

In this case, the Court find the point-of-hire classification 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. The practice of the School of according higher
salaries to foreign-hires contravenes public policy and, certainly, does not deserve the
sympathy of this Court.

ATOK-BIG WEDGE MUTUAL BENEFIT ASSOCIATION VS ATOK-BIG WEDGE

MINING CO.
Atok Big Wedge Mutual Benefit Association v Atok Big Wedge Mining Co. Inc
(1955)

Atok Big Wedge Mutual Benefit Association v Atok Big Wedge Mining Co. Inc.
GR No. L-7349
July 19, 1955

FACTS:
On September 4, 1950, a demand was submitted to petitioner by respondent
union through its officers for various concessions, among which were:
(a) An increase of P0.50 in wages;
(b) Commutation of sick and vacation leave if not enjoyed during the year;
(c) Various privileges, such as free medical care, medicine, and hospitalization;
(d) Right to a closed shop, check off etc.;
(e) No dismissal without prior just cause and with a prior investigation, etc.

Some of the demands were granted by petitioner and the others were rejected.
Hearings were held in the Court of Industrial Relations. After the hearing, the
respondent court rendered a decision fixing the minimum wage for the laborers at
P3.20 without rice ration and 2.65 a day with rice ration, declaring that additional
compensation representing efficiency bonus should not be included as part of
the wage, and making the award effective from September 4, 1950 (the date of the
presentation of the original demand, instead of from April 5, 1951, the date of the
amended demand).

Atok Company asked the Court for authority to stop operations & lay off
employees and laborers, for the reason that due to the heavy losses, increased
taxes, high cost of materials, negligible quantity of ore deports, and the
enforcement of the Minimum Wage Law, the continued operation of the company
and the consequent lay-off of hundreds of laborers and employees.

The parties reached an agreement on October 29, 1952 after the SC decision
which states agreement that the following facilities heretofore given or actually
being given by petitioner to its workers and laborers, and which constitute as part
of their wages, be valued as follows:

Rice ration P.55 per day

Housing facility 40 per day
All other facilities at least 85 per day

It is understood that the said amount of facilities valued at the above mentioned
prices, may be charged in full or partially by the Company against laborer or
employee, as they may see fit pursuant to the exigencies of its operation.

This was approved by the Court on December 26, 1952.

Later, another case was decided involving the 2 parties giving the employees
minimum cash wage of 3.45 a day with rice ration or 4.00 without rice ration.

ISSUES:

(1) Which of the two decisions would prevail? The agreement or the subsequent
decision giving the
employees minimum case wage?, and;
WON the Agreement of October 29, 1952 from the minimum daily wage of P4
would be a waiver of the minimum wage fixed by the law and hence null and void,
since RA 602 sec. 20 provides that “no agreement or contract, oral or written, to
accept a lower wage or less than any other under this Act, shall be valid”.
(2) WON additional compensation should be paid by the Company to its workers
for work rendered on Sundays and holidays which should be based on the
minimum wage of 4.00 and not on the cash portion which is 2.20. [Currently the
company pays additional compensation of 50% based on the 2.20 wage]

HELD:
(1) The Agreement subsists.

An agreement to deduct certain facilities received by the laborers from their

employer is not a waiver of the minimum wage fixed by the law. Wage includes
the fair and reasonable value as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee
(Sec 2 of RA 602).

Thus, the law permits the deduction of such facilities from the laborer’s minimum
wage of P4, as long as their value is “fair and reasonable”
(2) NO. The Company is correct.

Section 4 of the Commonwealth Act No. 444 (Eight Hour Labor Law) provides:
No person, firm, or corporations... shall compel an employee or laborer to work
during Sundays and holidays, unless he is paid an additional sum of at least 25%
of his regular remuneration.
Thus, the Company even pays the laborers higher wage than the minimum. Thus,
no law is violated.
OTHER NOTES:

DIFFERENCE BETWEEN A SUPPLEMENT and FACILITY

(1) Supplements, defined – extra remuneration or special privileges or benefits

given to or received by the laborers over and above their ordinary earnings or
wages [vacation and holidays not worked; paid sick leave or maternity leave;
overtime rate in excess of what is required by law; sick, pension, retirement and
death benefits; profit sharing; family allowances; Christmas, war risk and cost of
living bonuses or other bonuses other than those paid as a reward for extra
output or time spent on the job].
(2) Facilities, defined – items of expense necessary for laborer’s and his family’s
existence and subsistence, so that by express provision of the law, they form part
of the wage and when furnished by the employer are deductible therefrom since if
they are not so furnished, the laborer would spend and pay for them just the
same.

Norma Mabeza vs NLRC

April 18, 1997
Labor Standards
Facilities vs Supplements

FACTS:
Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991, an
inspection was made by the DOLE at Hotel Supreme and the DOLE inspectors
discovered several violations by the hotel management. Immediately, the owner of the
hotel, Peter Ng, directed his employees to execute an affidavit which would purport that
they have no complaints whatsoever against Hotel Supreme.
But Mabeza refused to certify said affidavit with the fiscal’s office so this led to her
dismissal. She sued Peter Ng and one of her complaints against him is underpayment
because her wage was less than the minimum wage. Peter Ng argued that the reason
for such low payment was because she was being given free lodging, water, electricity
and water consumption by the hotel.

ISSUE:
Whether or not such amenities provided by the hotel be considered as facilities which
are deductible from Mabeza’s wage.

HELD:
No. There are requisites before such can be done and they are:
1. Proof must be shown that such facilities are customarily furnished by the trade.
2. The provision of deductible facilities must be voluntarily accepted in writing by the
employee.
3. Facilities must be charged at fair and reasonable value.
None of these were complied with in the case at bar. More significantly, the food
and lodging, or the electricity and water consumed by Mabeza were not facilities but
supplements. A benefit or privilege granted to an employee for the convenience of the
employer is not a facility. The criterion in making a distinction between the two not so
much lies in the kind (food, lodging) but the purpose. Considering, therefore, that hotel
workers are required to work different shifts and are expected to be available at various
odd hours, their ready availability is a necessary matter in the operations of a small
hotel, such as Hotel Supreme.
RILECO, INC., vs. MINDANAO CONGRESS OF LABOR-RAMIE UNITED FARM
WORKERS' ASSOCIATION
G.R. No. L-22243 November 29, 1968

Facts:
This case involved a petition for certification election filed by the Mindanao
Congress of Labor-Ramie, United Farm Workers' AssociationLocal, claiming
that more than 10% of the employees and laborers of the Manolita
Plantation — owned by Rileco — were its members; that no certification
election had been conducted at such plantation for the past twelve months
immediately prior to the filing of its petition, and praying that a certification
election be ordered held.

Rileco, Inc., filed a motion to dismiss the petition on the ground that a valid
and binding collective bargaining agreement already existed between it, on
the one hand, and, on the other, the Ledesma Plantation Laborers Union, a
duly registered labor union which represented a majority of the employees
of said plantation. Subsequently, Rileco filed a supplemental motion to
dismiss the petition upon the ground that the Court of Industrial Relations
did not have jurisdiction to entertain it.

Issue: Whether or not the ramie culture is an agricultural or an industrial

undertaking.

Ruling:

In connection with the above issue the relevant provisions of Section 2,

Republic Act 602 are to this effect:

"Agricultural" includes farming in all its branches and among other things
includes the cultivation and tillage of the soil, dairying, the production,
cultivation, growing, and harvesting of any agricultural or horticultural
commodities, the raising of livestock or poultry, and any practices
performed by a farmer or on a farm as an incident to or in conjunction
with some farming operations, but does not include the manufacturing or
processing of sugar, coconuts, abaca, tobacco, pineapples or other farm
products.

On the nature of ramie culture the respondent court found that the whole
process known as such and in which the Manolita plantation was engaged
consisted of the preparation of the soil, planting of ramie roots and caring
thereof for at least one-hundred days; then the ramie stalks are cut and
delivered to the stripping sheds where they are stripped with the use of
decorticating machines powered by electricity; then the wet f ibers are dried
under the sun for one day and later made to pass through the brusher to
cleanse them of impurities; that thereafter the fibers are deemed ready for
the market.

The processing did not convert the ramie into another product, and that the
mere use of modern machines as a labor saving device does not alter the
agricultural nature of the product. Since it is an agricultural in character. The
Court of Industrial Relations has jurisdiction over the case.

[ G.R. No. L-17281, March 30, 1963 ]

VICTORIAS MILLING COMPANY, INC., PETITIONER, VS. COURT OF INDUSTRIAL;
RELATIONS AND FREE VISAYAN WORKERS (NEGROS BRANCH),

FACTS: Petitioner is a corporation duly organized and existing under the laws of the
Philippines; operates a sugar central or a processing mill at Victorias, Negros
Occidental, and is the owner of sugar cane plantations, known as Haciendas "Bacayan,
Pacita, Florencia and VICMICO Nursery" all located at Victorias, and "Begonia and
Natividad", located at Mahalapa, same province. Respondent Free Visayan Workers
(Union for short), is a legitimate labor organization, some members of which are
employed by petitioner in the above-named haciendas and the VICMICO Nursery. On
May 9, 1958, the Free Visayan Workers sent to herein petitioner a set of proposals' for a
collective bargaining contract in behalf of the laborers. In reply to the said
communication, petitioner, on July 29, 1958, informed the "Union that it could not
possibly enter, into a collective bargaining contract or negotiate , alleging that the
provisions of the Industrial Peace Act (No: 875) are not applicable to agricultural
workers. A charge of Unfair Labor Practice under Sec. 4(a), subpar. 6, in relation to
Secs. 13 and 17 of said Act, was presented by the Union with the CIR. After an
investigation, the prosecutor of the respondent CIR filed a complaint for Unfair Labor
Practice with said Court, against the milling company. A motion to Dismiss was
interposed by petitioner, putting in issue the applicability of the provisions of Act No. 875
to herein petitioner,on its refusal to bargain collectively with the Union. On February 11,
1959, over the opposition of the Union, respondent CIR denied the motion to dismiss
and ordered herein petitioner to Answer the complaint. After the motion for
reconsideration presented by Victorias Milling Co., Inc., was denied, the present action
for prohibition was instituted and given due course.

ISSUE: Whether or not the Industrial Peace Act applies to agricultural workers?

RULING: "Where petitioner is a highly mechanized industrial concern with the work of
planting and harvesting clearly distinguished from that of transporting, the cane from,
the fields, first to a switch and later to the mill, all its workers are to be considered
industrial workers, except those devoted to purely agricultural work." (Pampanga Sugar
Mills vs. PASUMIL Workers Union, 98 Phil., 5BS; Feb. 29, 1966).
It is, therefore, the nature of the work which classifies a worker as" one falls under the
exemption as "agricultural labourers". The members of respondent Union are merely
agricultural labourers in petitioner’s haciendas, the principal work of which is planting
and harvesting sugar canes and other chores incidental to ordinary farming operations.
They are agricultural labourers. Being agricultural workers, and in the supposition that
the milling company had committed unfair labor practice upon them, the Court of
Agrarian Relations has jurisdiction over the case.

CHAPTER II

VICENTE S. DEL ROSARIO, CEFERINA LLAMAS VDA. DE DEL ROSARIO,

TERESITA REYES and DIOSDADO LARRAZABAL vs. THE COURT OF
INDUSTRIAL RELATIONS and THE PHILIPPINE LAND-AIR-SEA LABOR UNION
(PLASLU)

G.R. No. L-23133 July 13, 1967

BENGZON, J.P., J.:

FACTS: A 200-hectare land, known as Hacienda del Rosario owned in common by

Vicente del Rosario Ceferina Vda. de del Rosario and Teresita Reyes, and administered
by Diosdado Larrazabal, has been devoted to large-scale sugar cane planting,
processing and milling. Said co-owners also leased and applied to the same purpose a
107-hectare land owned by the Roman Catholic Church and administered by His
Excellency, Archbishop Julio Rosales.
Against the above-named person the PLASLU (Philippine Land-Air-Sea Labor Union)
filed before the Court of Industrial Relations on June 30, 1958, a charge of unfair labor
practice, for alleged violation of Section 4-A of Republic Act 875 consisting in dismissals
of 87 workers in said hacienda due to membership in petitioning union. PLASLU asked
that respondents be ordered to cease and desist from such unfair labor practice and to
reinstate the laborers, with back wages.
Respondents filed a motion to dismiss on the ground that the Court of Industrial
Relations had no jurisdiction.

In May 11, 1963, the Court of Industrial Relations, in its decision upheld PLASLU's legal
capacity to sue and ruled that it had jurisdiction over the case.

A motion for reconsideration was lodged with the Court of Industrial Relations en banc.
Resolving the same on December 13, 1963, said, Court ruled that in accordance with
the doctrine in Victorias Milling Co. vs. CIR, L-17281, March 30, 1963, the complaint
should be dismissed as to the agricultural workers such as field laborers planting and
harvesting sugar cane in the hacienda. As to those whose work is by nature industrial,
like the mill laborers, trapicheros, chemists, fuelmen, oilers, mangongogay,* tractor and
truck drivers, those undertaking or transporting the sugar cane from the field to the mill
and then to the market, it held that the same doctrine sustained its jurisdiction, thereby
affirming the decision as to said industrial workers.

ISSUE: Whether or not the Court of Industrial Relations have jurisdiction over the case.

HELD: YES. In the Pasumil case, We held that where "petitioner is a highly
mechanized industrial concern with the work of planting and harvesting clearly
distinguished from that of transporting the cane from the fields, first to a switch and later
to the mill x x x all its workers are to be considered industrial workers, except those
devoted to purely agricultural work." Reiterating this, We said in the Victorias case that
it is "the nature of the work which classifies a worker as one falling under the exemption
[from coverage of R.A. 875] as agricultural laborers."

In an hacienda, there may therefore be both agricultural and industrial workers.

Regarding the former, exclusive jurisdiction has been given to the Court of Agrarian
Relations. As to the latter, exclusive jurisdiction has been placed in the Court of
Industrial Relations.

As regards those workers who perform functions the nature of which is industrial,
therefore, suit was properly filed in the Court of Industrial Relations.

The record shows that the petitioners' undertaking is a merchanized, one, rendering
applicable the norm set forth in the Victorias and Pasumil cases: (1) Petitioners already
owned 200 hectares, yet they leased 107 hectares more. It would be very difficult for
them to profitably carry on under conditions they alleged unless the haciendas are
mechanized; (2) Petitioners had 2 mills in the haciendas — one in their own land and
another in the land leased; (3) The field workers were different from the mill workers,
showing specialization in the kind of work done; (4) The presence of a timekeeper and
inspector in the hacienda, showing that the workers had a working schedule, and
laborers were made to sign payrolls, a practice typical of industrial concerns; (5) The
positions in question, mill laborers, trapicheros, chemists, fuelmen, oilers,
mangongogay, tractor and truck drivers, those involving taking or transporting
sugar cane from the field to the mill and to the market, are positions commonly
found in industrial concerns.

Petitioners' liability for unfair labor practice is thus premised on Sec. 4-A of Republic Act
875, not under Republic Act 2263. As industrial employees, the laborers in the positions
aforementioned were already covered by Republic Act 875, even before the effectivity
of R.A. 2263, and were so covered when they were dismissed.

DE RACHO VS MUNICIPALITY OF ILAGAN

G.R. No. L-23542 January 2, 1968

JUANA T. VDA. DE RACHO, plaintiff-appellee,
vs.
MUNICIPALITY OF ILAGAN, defendant-appellant.
FACTS: On July 1, 1954, Manuel Racho was appointed as market cleaner in the
Municipality of Ilagan, Isabela until January 6, 1960 when he tendered his
resignation effective July 7, 1960. Decedent was then paid the money value of his
accumulated leaves from January 7, 1960 to May 23, 1960 at the rate of P60.00 a
month. On October 5, 1960, decedent died intestate at Ilagan. Plaintiff, the wife of
Manuel Racho, then filed on December 9, 1960 a claim for salary differentials with
the Regional Office of the Department of Labor which dropped the case later for
lack of jurisdiction. Plaintiff filed an action with the CFI and ruled that defendant
Municipality of Ilagan must pay P1,766.00 to plaintiff representing the wage
differentials and adjusted terminal leave of the decedent from December 9, 1957 1
to May 23, 1960, based on the monthly wage rate of P120.00 pursuant to the
Minimum Wage Law. Defendant municipality immediately appealed the case to
the Supreme Court on the sole submission that its shortage and lack of available
funds and expected revenue validly exempted it from complying with the
Minimum Wage Law.

ISSUE: WON defendant-municipality is exempted?

RULING: No, The appeal must be dismissed. The SC have already answered the
question posed in Rivera vs. Colago, L-12323, February 24, 1961, wherein the SC
ruled that lack of funds of a municipality does not excuse it from paying the
statutory minimum wages to its employees, which, after all, is a mandatory
statutory obligation of the municipality. To uphold such defense of lack of
available funds would render the Minimum Wage Law futile and defeat its
purpose. This also disposes of the implication appellant is trying to make that its
duty to pay minimum wages is not a statutory obligation which would command
preference in the municipal budget and appropriation ordinance.

Nasipit Lumber Company, Inc. v. National Wages and Productivity Commission,

289 SCRA 667, April 27, 1998

FACTS: The Regional Wage Board for Region X issued Wage Order No. RX-01.
Three corporations filed applications for exemption as “distressed
establishments” under Guidelines No. 3 issued by the Regional Wage Board.
Under the Regional Wage Board’s guideline, a corporation is a “distressed
establishment” if it is engaged in an industry that is “distressed due to conditions
beyond its control.” This criterion is different from the criterion laid down in the
guidelines promulgated by the National Wages and Productivity Commission.

ISSUE: Should the applications be granted pursuant to the Regional Wage

Board’s guidelines?
RULING: No, the applications should be denied. The law grants the NWPC, not
the Regional Wage Board, the power to “prescribe the rules and guidelines” for
the determination of minimum wage and productivity measures. While the
Regional Wage Board has the power to issue wage orders, such wage orders are
subject to the guidelines prescribed by the NWPC. Since the Regional Wage
Board’s Guideline No. 3 was not approved by the NWPC and is contrary to
NWPC’s guidelines, the said guideline issued by the Regional Wage Board is
inoperative and cannot be used by the latter in deciding on the applications for
exemption.

AMERICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION VS AMERICAN

WIRE AND CABLE CO., INC.

INTERNATIONAL SCHOOL OF SPEECH VS NLRC

FACTS: MAMUYAC was hired as an English teacher paid on an hourly basis from June
1989 to March 1990. She filed a complaint against INTERNATIONAL SCHOOL
charging the latter with unfair labor practice; illegal deduction; non-payment of wages,
overtime pay, legal holiday pay, premium pay for holiday and rest day; and violation of
Presidential Decrees Nos. 525, 851 and 928.1

LABOR ARBITER: After a careful evaluation, the labor arbiter found that only the
claims for illegal deduction, 13th month pay, unpaid wages, and legal holiday pay were
meritorious. It ruled that:
On the claim for 13th month pay (violation of PD 851), it appears from the
evidence submitted by the respondents that no such payment by way of
proportionate 13th month pay for 1990 and 1989 was paid to the complainant.
From July, 1989 up to December 31, 1989, the complainant received a total
compensation amounting to P7,319.00, then, from January 1, 1990 up to April,
1990, she received a total of P10,205.00. Thus, her proportionate 13th month
pay is computed, follows:
1989
6 mos. x P7,319.00 = P3,659.50
———————————
12
1990
3.5 x P10,205.00 = P2,976.46
———————————
12 —————
TOTAL 13TH MONTH PAY = P6,635.96

NLRC: affirmed the appealed decisions

ISSUE: WON the NLRC was correct in awarding 13th month pay in the amount of
P6,635.96 in favor of MAMUYAC
HELD: NO.

According to No. 4(a) of the Revised Guidelines on the implementation of the 13th
Month Pay Law (Presidential Decree No. 851) dated November 16, 1987, the 13th
month pay of an individual is (not less than) one-twelfth (1/12) of the total basic
salary earned by an employee within a calendar year. Moreover, in No. 6 thereof, it
is provided that an employee who has resigned or whose services were terminated at
any time before the time for payment of the 13th month pay is entitled to this monetary
benefit in proportion to the length of time he worked during the year, reckoned from the
time he started working during the calendar year up to the time of his resignation or
termination from the service. Thus, if he worked only from January up to September, his
proportionate 13th month pay should be equivalent to the total basic salary he earned
during that period.

Since no evidence was adduced by MAMUYAC that INTERNATIONAL SCHOOL

observe a different formula in the computation of the 13th month pay for their
employees, the aforementioned mode of computation should be applied.

Thus, considering that in 1989 MAMUYAC rendered service for only 6 months, her
13th month pay should be one-twelfth (1/12) of the total compensation she received for
that year, that is, P7,319.00. Consequently her 13th month pay for the year 1989
should be P610.00.

Following the same formula, MAMUYAC should receive a 13th month pay of P850,00
for the year 1990 for services rendered for three months wherein she received a total
compensation of P10,205.00, that is, P10,205.00 divided by 12 equals P850.00.

On this particular aspect, therefore, the Court takes exception to the rule that the
findings on technical matters by administrative bodies like respondent NLRC are
accorded respect and finality on appeal,12 since it is clear that a palpable and
demonstrable mistake has been committed and should be rectified. INTERNATIONAL
SCHOOLs should, therefore, pay MAMUYAC the total amount of P1,460,00,
instead or P6,635.96, as her 13th month pay for 1989 and 1990.

LABOR CONGRESS OF THE PHILIPPINES VS NLRC

PRODUCERS BANK OF THE PHIL. VS NLRC

GR 100701 March 28, 2001

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: The Court rules that 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.

CHAPTER III

JIMENEZ ET AL. VS NLRC AND JUANATAS

BERNARDO JIMENEZ and JOSE JIMENEZ, as operators of JJs TRUCKING vs.
NLRC, PEDRO JUANATAS and FREDELITO JUANATAS
G.R. No. 116960. April 2, 1996
FACTS:
Private respondents Pedro and Fredelito Juanatas, father and son, filed a claim for
unpaid wages/commissions, separation pay and damages against JJ s Trucking and/or
Dr. Bernardo Jimenez. Respondents alleged that they were hired by petitioner Bernardo
Jimenez as driver, mechanic and helper, respectively, in his trucking firm, JJ Trucking.
They were assigned to a ten-wheeler truck to haul soft drinks of Coca-Cola Bottling
Company and paid on commission basis and that there was an unpaid balance when
they were illegally terminated.
Petitioners contend that Fredelito Juanatas was not an employee of the firm but was
merely a helper of his father Pedro and that all commissions were duly paid and that the
truck driven by respondent Pedro Juanatas was sold to one Winston Flores in 1991
and, therefore, private respondents were not illegally dismissed.
Labor Arbiter ordered JJs Trucking and/or Dr. Bernardo Jimenez to pay jointly and
severally complainant Pedro Juanatas a separation pay plus attorneys fee.
On appeal, the NLRC modified the decision as follows:
(1)Complainant Fredelito Juanatas is hereby declared respondents employee and
shares in (the) commission and separation pay awarded to complainant Pedro
Juanatas, his father. (2)Respondent JJs Trucking and Dr. Bernardo Jimenez are jointly
and severally liable to pay complainants their unpaid commissions in the total amount of
Eighty Four Thousand Three Hundred Eighty Seven Pesos and 05/100 (P84,387.05).
(3)The award of attorneys fees is reduced accordingly to eight thousand four hundred
thirty eight pesos and 70/100 (P8,438.70). (4) The other findings stand affirmed.
ISSUE: Whether or not the respondents were not paid their commissions in full
HELD: YES
The Court found no reason to disturb the findings of NLRC that the entire amount of
commissions was not paid, this by reason of the evident failure of herein petitioners to
present evidence that full payment thereof has been made.
As a general rule, one who pleads payment has the burden of proving it. Even where
the plaintiff must allege non-payment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to prove non-payment. The
debtor has the burden of showing with legal certainty that the obligation has been
discharged by payment.
In the instant case, the right of respondent Pedro Juanatas to be paid a commission
equivalent to 17%, later increased to 20%, of the gross income is not disputed by
petitioners. Although private respondents admit receipt of partial payment, petitioners
still have to present proof of full payment. Where the defendant sued for a debt admits
that the debt was originally owed, and pleads payment in whole or in part, it is
incumbent upon him to prove such payment. That a plaintiff admits that some payments
have been made does not change the burden of proof. The defendant still has the
burden of establishing payments beyond those admitted by plaintiff.
The testimony of petitioners which merely denied the claim of private respondents,
unsupported by documentary evidence, is not sufficient to establish payment. Although
petitioners submitted a notebook showing the alleged vales of private respondents for
the year 1990, the same is inadmissible and cannot be given probative value
considering that it is not properly accomplished, is undated and unsigned, and is thus
uncertain as to its origin and authenticity.

TRIPLE EIGHT VS NLRC

Facts:

In August 1992, the Gulf Catering Company, a foreign company operating in Saudi
Arabia, recruited, through its Philippine agent, Triple Eight Integrated Services, Inc., the
services of Erlinda Osdana. Osdana was contracted to work as a waitress in Saudi
Arabia. Her employment contract was duly approved by the POEA. She was also
medically examined and was declared “fit for employment”.
But when she was in Saudi, Osdana was instead forced to work as a dishwasher with a
brutal shift which starts from 6am until 6pm and this was without overtime pay. Due to
the heavy work she was made to suffer, there were months when she was unable to
work. Eventually, she was diagnosed to be suffering from carpal tunnel syndrome. She
then underwent two separate operations to fix her hands. She showed good signs and
was recovering well. But four days after she was discharged from the hospital, her
employment was terminated and was sent home to the Philippines. The reason for the
termination was “illness”. She was not given any separation pay and apparently, her
salaries were not fully paid.
In the Philippines, she sought the help of Triple Eight but the agency refused to help her
hence she sued them.
In its defense, Triple Eight averred that Osdana’s employment was validly terminated
due to her illness. Osdana however claimed that her carpal tunnel syndrome is not a
ground for termination because it is not even a communicable disease and that under
the implementing rules of the Labor Code, there should be a certification from a
competent public authority that her illness is such that she can be validly dismissed from
employment.
On that point, Triple Eight averred that the Labor Code of the Philippines does not apply
because she works in Saudi Arabia; and that considering that she works in Saudi, it was
not possible for her Arabian employer to get a certification from a Philippine public
health authority.
The labor arbiter, as well as the NLRC, ruled in favor of Osdana

ISSUE: Whether or not the arguments of Triple Eight are correct

Ruling:

No. The Labor Code, as well as its implementing rules apply. The contract of
employment was executed in the Philippines. Thus, following the principle of lex loci
contractus, Philippine law shall apply. Further, it is the State’s policy to afford maximum
protection to labor, domestic or overseas.
Anent the issue of securing a certification from a competent public authority, the
pertinent rules are as follows:
As a general rule, an employer may dismiss an employee found to be suffering from any
disease and whose continued employment is prohibited by law or prejudicial to his
health as well as the health of his co-employees (Art. 284, Labor Code). There must be
a certification by competent public authority that the disease is of such nature or at such
a stage that it cannot be cured within a period of six 6 months with proper medical
treatment (Section 8, Rule 1, Book VI, Omnibus Rules Implementing the Labor Code);
Except: If the disease or ailment can be cured within 6 months, the employer shall not
terminate the employee but shall ask the employee to take a leave. The employer shall
reinstate such employee to his former position immediately upon the restoration of his
normal health (Section 8, Rule 1, Book VI, Omnibus Rules Implementing the Labor
Code).
Nowhere in the rule does it state that the term “competent public authority” must be a
Philippine authority. Hence, it can be a foreign competent authority, as in this case, it
could be a competent public authority in Saudi Arabia – which Triple Eight’s principal
(Gulf Catering) did not avail of.

SAN MIGUEL CORP. EMPLOYEES UNION VS HON. BERSAMIRA

FACTS
San Miguel Corporation entered into contracts for merchandising services with
Lipercon and D’Rite companies, both independent contractors duly licensed by
DOLE, to maintain its competitive position, and in keeping with the imperatives of
efficiency, business expansion and diversity of operation. In the contracts, it was
expressly agreed that the workers employed by the contractors were not to be deemed
employees or agents of San Miguel. Thus, no employer employee relationship. Later
on, San Miguel executed a CBA which specifically provides that temporary,
probationary, or contract employees and workers are excluded from the bargaining unit
and therefore, outside the scope of this Agreement.
The Union, petitioner, advised San Miguel that some of the workers of Lipercon
and D’Rite had signed up for union membership and sought regularization. The
Union alleged that some the workers have been continuously working for San Miguel for
a period ranging from 6 months to 15 years, and that the nature of their work is neither
casual nor seasonal. Strikes were held and a series of pickets were held for the reason
that the Union failed to receive any favourable response from San Miguel. Thereafter,
San Miguel filed a complaint for Injunction and Damages before the RTC of Pasig to
enjoin the Union to prevent the peaceful and normal operations of the former. The
Union filed a Motion to Dismiss but was subsequently denied by the RTC reasoning that
the absence of employer-employee relationship negates the existence of labor dispute.
Thus, the RTC issued Orders enjoining the Union from commiting acts that disrupt the
operations of San Miguel.
ISSUE/s of the CASE
Whether or not there is a labor dispute between San Miguel and the Union?

HELD:
YES. A labor dispute includes any controversy or matter concerning terms and
conditions of employment or the association or representation of persons in negotiating,
fixing, maintaining, changing, or arranging the terms and conditions or employment,
regardless of whether the disputants stand in the proximate relation of employer and
employee.

That a labor dispute, as defined by the law, does exist herein is evident. What the Union
seeks is to regularize the status of the employees contracted by Lipercon and D'Rite in
effect, that they be absorbed into the working unit of San Miguel. This matter definitely
dwells on the working relationship between said employees vis-a-vis San Miguel.
Terms, tenure and conditions of their employment and the arrangement of those terms
are thus involved bringing the matter within the purview of a labor dispute. Further, the
Union also seeks to represent those workers, who have signed up for Union
membership, for the purpose of collective bargaining.

San Miguel, for its part, resists that Union demand on the ground that there is no
employer-employee relationship between it and those workers and because the
demand violates the terms of their CBA. Obvious then is that representation and
association, for the purpose of negotiating the conditions of employment are also
involved. In fact, the injunction sought by San Miguel was precisely also to prevent such
representation. Again, the matter of representation falls within the scope of a labor
dispute. Neither can it be denied that the controversy below is directly connected with
the labor dispute already taken cognizance of by the NCMB-DOLE.

The Supreme Court recognize the proprietary right of San Miguel to exercise an
inherent management prerogative and its best business judgment to determine whether
it should contract out the performance of some of its work to independent contractors.
However, the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in
accordance with law (Section 3, Article XIII, 1987 Constitution) equally call for
recognition and protection. Those contending interests must be placed in proper
perspective and equilibrium.

MANILA ELECTRIC CO. VS SEC. QUISUMBING

Manila Electric v. Quisumbing
G.R. No. 127598 February 22, 2000

Facts:
Members of the Private respondent union were dissatisfied with the terms of a
CBA with petitioner. The parties in this case were ordered by the Sec. of Labor to
execute a collective bargaining agreement (CBA) wherein.The CBA allowed for
the increase in the wages of the employees concerned. The petitioner argues that
if such increase were allowed, it would pass off such to the consumers.

Issue: W/N matters of salary are part of management prerogative

RULING: Yes. There is no need to consult the Secretary of Labor in cases

involving contracting out for 6 months or more as it is part of management
prerogative. However, a line must be drawn with respect to management
prerogatives on business operations per se and those which affect the rights of
the workers. Employers must see to it that that employees are properly informed
of its decisions to attain harmonious labor relations and enlighten the worker as
to their rights.

The contracting out business or services is an exercise of business judgment if it

is for the promotion of efficiency and attainment of economy. Management must
be motivated by good faith and contracting out should not be done to circumvent
the law. Provided there was no malice or that it was not done arbitrarily, the
courts will not interfere with the exercise of this judgment.
SABUGUERO, SEPTEMBER 27, 1995

HEIRS OF ANIBAN VS NLRC

[G.R. No. 116354. December 4, 1997]
BELLOSILLO, J.:

FACTS: BRIGIDA P. ANIBAN representing the heirs of the late Reynaldo Aniban
assails the decision of the National Labor Relations Commission (NLRC),
reversing that of the Philippine Overseas Employment Administration (POEA)
which ruled that myocardial infarction was an occupational decease in the case
of radio operator Reynaldo Aniban and awarded, aside from attorney's fees of
US$6,700.00, a total of US$67,000.00 in death benefits to his heirs: US$13,000.00
for death benefits under the POEA Standard Employment Contract; US$30,000.00
for death benefits under the Collective Bargaining Agreement; and, US$24,000.00
as additional compensation for his three (3) children under eighteen (18) years of
age at US$8,000.00 each, as well as denying the motion for its reconsideration.

Reynaldo Aniban was employed by the Philippine Transmarine Carriers, Inc.

(TRANSMARINE) acting in behalf of its foreign principal Norwegian Ship
Management A/S (NORWEGIAN) as radio operator (R/O) on board the vessel
"Kassel" for a contract period of nine (9) to eleven (11) months. On 26 June 1992,
or during the period of his employment, R/O Aniban died due to myocardial
infarction. He was survived by a pregnant wife and three (3) minor children who
prayed for death benefits provided under par. (1) of the POEA Standard
Employment Contract.
ISSUE: Whether or not attorney’s fees be awarded to the petitioners.

HELD: On the award of attorney's fees which NLRC deleted on the ground that
there was no unlawful withholding of wages, suffice it to say that Art. 111 of the
Labor Code does not limit the award of attorney's fees to cases of unlawful
withholding of wages only. What it explicitly prohibits is the award of attorney's
fees which exceed 10% of the amount of wages recovered. Thus, under the
circumstances, attorney's fees are recoverable for the services rendered by
petitioner's counsel to compel Aniban's employer to pay its monetary obligations
under the CBA. However the amount of P50,000.00 claimed as attorney's fees in
this case is the reasonable compensation based on the records and not the
maximum 10% of the total award as granted by POEA. The reduction of
unreasonable attorney's fees is within our regulatory powers.

CHAPTER V

NASIPIT LUMBER CO. VS NATIONAL WAGES AND PRODUCTIVITY COMMISSION

CAGAYAN SUGAR VS SEC. OF LABOR AND EMPLOYMENT

METROPOLITAN BANK VS NLRC

ILAW AT BUKLOD NG MANGGAGAWA VS NLRC

PRUBANKERS ASSOCIATION VS PRUDENTIAL BANK & TRUST COMPANY

G.R. No. 131247. January 25, 1999
Facts:
On November 18, 1993, the Regional Tripartite Wages and Productivity Board of
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. Subsequently, the Regional Tripartite Wages and
Productivity Board of 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.

Respondent 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. Respondent Association then 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 petitioners employees nationwide. As the
grievance could not be settled in the said meetings, the parties agreed to submit the
matter to voluntary arbitration.

CA ruled that there was no distortion, since the variance in the salary rates of
employees in different regions of the country was justified by RA 6727. It noted that the
underlying considerations in issuing the wage orders are diverse, based on the
distinctive situations and needs existing in each region.

Issue:
Whether or not a wage distortion resulted from respondents implementation of the
aforecited Wage Orders

Held:
No. There was no wage distortion that resulted from respondents implementation of the
Wage Orders.

The statutory definition of wage distortion is found in Article 124 of the Labor Code, as
amended by Republic Act No. 6727, which reads:
Article 124. Standards/Criteria for Minimum Wage Fixing - xxx
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.

NOTE:
Elaborating on this statutory definition, this Court ruled: Wage distortion presupposes a
classification of positions and ranking of these positions at various levels. One
visualizes a hierarchy of positions with corresponding ranks basically in terms of wages
and other emoluments. Where a significant change occurs at the lowest level of
positions in terms of basic wage without a corresponding change in the other level in the
hierarchy of positions, negating as a result thereof the distinction between one level of
position from the next higher level, and resulting in a parity between the lowest level and
the next higher level or rank, between new entrants and old hires, there exists a wage
distortion. xxx.
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
4. The existence of the distortion in the same region of the country.

In the said branches, there was an increase in the salary rates of all pay classes.
Furthermore, the hierarchy of positions based on skills, length of service and other
logical bases of differentiation was preserved. In other words, the quantitative difference
in compensation between different pay classes remained the same in all branches in
the affected region.

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNION VS NLRC

BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS vs. NLRC
and BANKARD, INC.
G.R. No. 140689 February 17, 2004

FACTS:
Bankard, Inc. classifies its employees by levels, to wit: Level I, Level II, Level III, Level
IV, and Level V. On May 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 industry’s labor market. The "New Salary Scale" increased the hiring
rates of new employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and
Levels II, III and IV by nine hundred pesos (P900.00). Accordingly, the salaries of
employees who fell below the new minimum rates were also adjusted to reach such
rates under their levels.

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

Petioner filed a notice of strike. The strike was averted when the dispute was certified
by the Secretary of Labor and Employment for compulsory arbitration. NLRC finding no
wage distortion dismissed the case for lack of merit. Petitioner’s motion for
reconsideration of the dismissal of the case was denied.

ISSUE: Whether the unilateral adoption by an employer of an upgraded salary scale

that increased the hiring rates of new employees without increasing the salary rates of
old employees resulted in wage distortion within the contemplation of Article 124 of the
Labor Code

HELD:

Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending,
among others, Article 124 of the Labor Code) on June 9, 1989, the term "wage
distortion" was explicitly defined as:
... a situation where an increase in prescribed wage rates results in the elimination or
severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate
the distinctions embodied in such wage structure based on skills, length of service, or
other logical bases of differentiation.
Prubankers Association v. Prudential Bank and Trust Company5 laid down the four
elements of wage distortion, to wit: (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.

Normally, a company has a wage structure or method of determining the wages of its
employees. In a problem dealing with "wage distortion," the basic assumption is that
there exists a grouping or classification of employees that establishes distinctions
among them on some relevant or legitimate bases.

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. The differing wage rate for each of the existing classes of
employees reflects this classification.

The entry of new employees to the company ipso facto place[s] them under any of the
levels mentioned in the new salary scale which private respondent adopted retroactive
[to] April 1, 1993. Petitioner cannot make a contrary classification of private
respondent’s 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
Prubankers 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.

Moreover, 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.

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

Article 124. Standards/Criteria for Minimum Wage Fixing.

xxx
Where the application of any prescribed wage increase by virtue of a law or Wage
Order issued by any Regional Board results in distortions of the wage structure within
an establishment, the employer and the union shall negotiate to correct the distortions.
Any dispute arising from the wage distortions shall be resolved through the grievance
procedure under their collective bargaining agreement and, if it remains unresolved,
through voluntary arbitration.
x x x (Italics and emphasis supplied)
Article 124 is entitled "Standards/Criteria for Minimum Wage Fixing." It is found in
CHAPTER V on "WAGE STUDIES, WAGE AGREEMENTS AND WAGE
DETERMINATION" which principally deals with the fixing of minimum wage. Article 124
should thus be construed and correlated in relation to minimum wage fixing, the
intention of the law being that in the event of an increase in minimum wage, the
distinctions embodied in the wage structure based on skills, length of service, or other
logical bases of differentiation will be preserved.

If the compulsory mandate under Article 124 to correct "wage distortion" is applied to
voluntary and unilateral increases by the employer in fixing hiring rates which is
inherently a business judgment prerogative, then the hands of the employer would be
completely tied even in cases where an increase in wages of a particular group is
justified due to a re-evaluation of the high productivity of a particular group, or as in the
present case, the need to increase the competitiveness of Bankard’s hiring rate. An
employer would be discouraged from adjusting the salary rates of a particular group of
employees for fear that it would result to a demand by all employees for a similar
increase, especially if the financial conditions of the business cannot address an across-
the-board increase.

The Court concluded that the supervisory employees, who then (i.e., on April 17, 1989)
had, unlike the rank-and-file employees, no CBA governing the terms and conditions of
their employment, had the right to rely on the company practice of unilaterally
correcting the wage distortion effects of a salary increase given to the rank-and-file
employees, by giving the supervisory employees a corresponding salary increase plus a
premium. . . .14 (Emphasis supplied)

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

The present petition is hereby DENIED.

CHAPTER VI

ABOITIZ SHIPPING CORP. VS DELA SERNA

FACTS:

A complaint was filed by the Aboitiz Shipping Employees Association against

Aboitiz Shipping Corporation for non-compliance of the mandated minimum wage rates
and allowances pursuant to P.D. Nos. 1713, 1751, Wage Order Nos. 1, 2, 3, 4, 5 and 6.
Accordingly, the Labor Regulation Officers of the Regional Office a quo inspected the
respondent's employment records.

On December 28, 1987, the hearing officer submitted his report and
recommended for the payment to the union's members amounting to an aggregate sum
of P16,200,877.47. Subsequently, respondent Regional Director issued the now
assailed Order dated 13 October 1988, the dispositive portion of which reads:

WHEREFORE, premises considered, the Aboitiz Shipping Corporation is hereby

Ordered to pay the herein listed complainants the total amount of ONE MILLION
THREE HUNDRED FIFTY THOUSAND EIGHT HUNDRED TWENTY EIGHT and
00/100 PESOS (P1,350,828.00.) representing underpayment of daily allowance of TWO
(P2.00) PESOS per day reckoned from 16 February 1982 to 15 February 1985.
FURTHER, the Aboitiz Shipping Corporation is hereby Ordered to pay each and every
one of its employees the deficiency in allowance of two (P2.00) PESOS per day from 16
February 1985 onward until this Order is fully complied with.

On appeal to the Office of the Secretary of Labor and Employment, in which

petitioner questioned, among others, the jurisdiction of respondent Regional Director
over the instant claims, respondent Undersecretary issued the Order dated 9 February
1989 dismissing petitioner's appeal and affirming the Order dated 13 October 1988 of
the respondent Director. Petitioner contends that it is the Labor Arbiter, not the Regional
Director who has jurisdiction over money claims, citing Article 217 of the Labor Code.

Issue:

Whether or not the Regional Director has jurisdiction over money claims

Ruling:

Under the foregoing provisions of Articles 129 and 217 of the Labor Code, as amended,
the Regional Director is empowered, through summary proceeding and after due notice,
to hear and decide cases involving recovery of wages and other monetary claims and
benefits, including legal interest, provided the following requisites are present, 5 to wit:

1) the claim is presented by an employee or person employed in domestic or household

service, or househelper;

2) the claim arises from employer-employee relations;

3) the claimant does not seek reinstatement; and

4) the aggregate money claim of each employee or househelper does not exceed
P5,000.00 (Art. 129, Labor Code, as amended by R.A. 6715).
In the absence of any of the requisites above enumerated, it is the Labor Arbiter who
shall have exclusive original jurisdiction over claims arising from employer-employee
relations, except claims for employees' compensation, social security, medicare and
maternity benefits, all these pursuant to Article 217 of the Labor Code, particularly
paragraph six (6) thereof.

In the case at bar, it is noted that in the Order dated 13 October 1988 of the Regional
Director, the latter found each of the seven hundred seventeen (717) complainants
entitled to a uniform amount of P1,884.00. All the other requisites for the exercise of the
power of the Regional Director under Article 129 of the Labor Code, as amended by
R.A. 6715, are present. It follows that the respondent Regional Director properly took
cognizance of the claims, subject of this petition.

Finally, petitioner Avers: that the award of P1,350,828.00. is without factual and legal
basis; that petitioner did not commit any labor standards violation pursuant to the DOLE
inspection results and the union certification to that effect; and that 291 of the 717
complainants are non-employees of petitioner, and that the other 136 of the said 717
commenced employment only after February 1982. hence, not entitled to receive money
awards. The foregoing contentions being evidentiary in nature, we have to respect the
factual findings of public respondents regarding the above-cited petitioner's averments,
the long-settled rule being that factual findings of labor officials are, generally,
conclusive and binding on this Court when supported by substantial evidence.

PLACIDO O. URBANES, JR. v. SECRETARY OF LABOR AND EMPLOYMENT

397SCRA 531 (2003)

FACTS:
Petitioner Placido O. Urbanes agreed to provide security services to Social Security
Systems (SSS). During the pendency of their agreement, Urbanes requested SSS for
an upward adjustment on their contract rate in compliance with the mandated wage
increases. SSS ignored the request which led Urbanes to pull out his agency's services
and to subsequently file a complaint against SSS for the implementation of the wage
increase. The Regional Director of the DOLE-NCR issued an order in Favor of Urbanes.
SSS filed an appeal to the Secretary of labor who later on set aside the order of the
Regional Director. Urbanes filed an appeal by certiorari to the Supreme Court stating
that the Secretary of Labor does not have jurisdiction to review appeals from decisions
of the Regional Director over complaints for recovery of wages when it should have
been appealed to the National Labor Relations Commission. SSS, on the other hand
contends that Art. 128 and not Art. 129 of the Labor Code should be applied.

ISSUE:
Whether or not the DOLE Secretary can exercise jurisdiction over decisions of Regional
Directors involving complaints for recovery of wages
HELD:
When the relief sought is not under the Labor Code but for payment of a sum of money
and damages on a breach of contract, it is within the realm of civil law and jurisdiction
belongs to the regular courts. Neither the Ubanes' contention nor the SSS' is impressed
with merit. Lapanday Agricultural Development Corporation v. Court of Appeals instructs
so. In that case, the security agency filed a complaint before the Regional Trial Court
(RTC) against the principal or client Lapanday for the upward adjustment of the contract
rate in accordance with wage Order Nos. 5 and 6. Lapanday argued that it is the
national labor Relations Commission, not the civil courts, which has jurisdiction to
resolve the issue in the case, it involving the enforcement of wage adjustment and other
benefits due the agency's security guards as mandated by several wage orders. The
Court ruled in Lapanday that the RTC has jurisdiction over the subject matter of the
present case. It is well settled in law and jurisprudence that where no employer-
employee relationship exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any collective
bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its complaint,
private respondent is not seeking any relief under the Labor Code but seeks payment of
a sum of money and damages on account of petitioner’s alleged breach of its obligation
under their Guard Service Contract. The action is within the realm of civil law hence
jurisdiction over the case belongs to the regular courts. While the resolution of the issue
involves the application of labor laws, reference to the labor code was only for the
determination of the solidary liability of the petitioner to the respondent where no
employer-employee relation exists.
In the case at bar, even if Urbanes filed the complaint on his and also on behalf of the
security guards, the relief sought has to do with the enforcement of the contract
between him and the SSS which was deemed amended by virtue of wage Order -No.
NCR-03. The controversy subject of the case at bar is thus a civil dispute, the proper
forum for the resolution of which is the civil courts. But even assuming arguendo that
Urbanes’ complaint were filed with the proper forum, for lack of cause of action it must
be dismissed. In fine, the liability of the SSS to reimburse Urbanes' arises only if and
when Urbanes pays his employee, security guards, the increases mandated by wage
Order No. NCR-03. The Court in Lapanday Agricultural Development Corporation v.
Court of Appeals held that: it is only when the contractor pays the increases mandated
that it can claim an adjustment from the principal to cover the increases payable to the
security guards. The records do not show that Urbanes' has paid the mandated
increases to the security guards. The security guards in fact have filed a complaint with
the NLRC against Urbanes' relative to, among other things, underpayment of wages.
TITLE IV
CHAPTER I

PHILIPPINE TELEGRAPH VS NLRC

PT&T vs. NLRC
272 SCRA 596

FACTS:

PT&T (Philippine Telegraph & Telephone Company) initially hired Grace de

Guzman specifically as “Supernumerary Project Worker”, for a fixed period from
November 21, 1990 until April 20, 1991 as reliever for C.F. Tenorio who went on
maternity leave. She was again invited for employment as replacement of Erlina
F. Dizon who went on leave on 2 periods, from June 10, 1991 to July 1, 1991 and
July 19, 1991 to August 8, 1991.

On September 2, 1991, de Guzman was again asked to join PT&T as a

probationary employee where probationary period will cover 150 days. She
indicated in the portion of the job application form under civil status that she was
single although she had contracted marriage a few months earlier. When
petitioner learned later about the marriage, its branch supervisor, Delia M. Oficial,
sent de Guzman a memorandum requiring her to explain the discrepancy.
Included in the memorandum, was a reminder about the company’s policy of not
accepting married women for employment. She was dismissed from the
company effective January 29, 1992. Labor Arbiter handed down decision on
November 23, 1993 declaring that petitioner illegally dismissed De Guzman, who
had already gained the status of a regular employee. Furthermore, it was
apparent that she had been discriminated on account of her having contracted
marriage in violation of company policies.

ISSUE: Whether the alleged concealment of civil status can be grounds to

terminate the services of an employee.

HELD:
Article 134 of the Labor Code, one of the protective laws for women, explicitly
prohibits discrimination merely by reason of marriage of a female employee. It is
recognized that company is free to regulate manpower and employment from
hiring to firing, according to their discretion and best business judgment, except
in those cases of unlawful discrimination or those provided by law.

PT&T’s policy of not accepting or disqualifying from work any woman worker
who contracts marriage is afoul of the right against discrimination provided to all
women workers by our labor laws and by our Constitution. The record discloses
clearly that de Guzman’s ties with PT&T were dissolved principally because of the
company’s policy that married women are not qualified for employment in the
company, and not merely because of her supposed acts of dishonesty.

The government abhors any stipulation or policy in the nature adopted by PT&T.
As stated in the labor code:

“ART. 134. 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.”

The policy of PT&T is in derogation of the provisions stated in Art.134 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 and it likewise is contrary to
good morals and public policy, depriving a woman of her freedom to choose her
status, a privilege that is inherent in an individual as an intangible and inalienable
right. The kind of policy followed by PT&T strikes at the very essence, ideals and
purpose of marriage as an inviolable social institution and ultimately, family as
the foundation of the nation. Such policy must be prohibited in all its indirect,
disguised or dissembled forms as discriminatory conduct derogatory of the laws
of the land not only for order but also imperatively required.

VILLARAMA VS NLRC

LIBRES VS NLRC
GR No. 123737 May 28, 1999
Bellosillo, J.:

FACTS: Petitioner Carlos G. Libres, an electrical engineer, was holding a managerial

position with National Steel Corporation (NSC) as Assistant Manager. On 3 August
1993 he received a Notice of Investigation from Assistant Vice President Isidro F.
Hynson Jr., his immediate superior, requesting him to submit a written explanation
relative to the charge of sexual harassment made by Susan D. Capiral, Hynsons
secretary, allegedly committed by Libres sometime in May 1992, and subsequently to
answer clarificatory questions on the matter. The MEC concluded that petitioners acts
clearly constituted sexual harassment as charged and recommended petitioners
suspension for thirty (30) days without pay.

National Labor Relations Commission (NLRC) sustaining the Labor Arbiters finding that
petitioner was validly suspended by private respondents.
Petitioner argues that the issue of sexual harassment was not adequately considered as
he noted that the finding of the NLRC was made without proper basis in fact and in law.
He maintains that the NLRC merely adopted the conclusions of the Labor Arbiter which
in turn were simply derived from the report of the MEC. Petitioner primarily disputes the
failure of the NLRC to apply RA No. 7877, An Act Declaring Sexual Harassment
Unlawful in the Employment, Education or Training Environment and for Other
Purposes, in determining whether he actually committed sexual harassment. He asserts
that his acts did not fall within the definition and criteria of sexual harassment as laid
down in Sec. 3 of the law. Specifically, he cites public respondents failure to show that
his acts of fondling the hand and massaging the shoulders of Capiral discriminated
against her continued employment, impaired her rights and privileges under the Labor
Code, or created a hostile, intimidating or offensive environment.

ISSUE: Whether or not NLRC failed to strictly apply RA No. 7877 to the instant case.

HELD: We note however, that petitioner never raised the applicability of the law in his
appeal to the NLRC nor in his motion for reconsideration. Issues or arguments must
chiefly be raised before the court or agency concerned so as to allow it to pass upon
and correct its mistakes without the intervention of a higher court. Having failed to
indicate his effort along this line, petitioner cannot now belatedly raise its application in
this petition.

Republic Act No. 7877 was not yet in effect at the time of the occurrence of the act
complained of. It was still being deliberated upon in Congress when petitioners case
was decided by the Labor Arbiter. As a rule, laws shall have no retroactive effect unless
otherwise provided, or except in a criminal case when their application will favor the
accused.[9] Hence, the Labor Arbiter have to rely on the MEC report and the common
connotation of sexual harassment as it is generally understood by the public. Faced with
the same predicament, the NLRC had to agree with the Labor Arbiter. In so doing, the
NLRC did not commit any abuse of discretion in affirming the decision of the Labor
Arbiter.

CHAPTER III
CADIZ VS PHILIPPINE SINTER CORPORATION

Cadiz vs. Philippine Sinter Corporation and NLRC

Case No. 7-1729
*dli makita lels, TBA