Labor Case Digest

University of San Carlos - College of Law
Midterm Case
Digests
Atty. Jefferson M. Marquez
Compiled by: Ma. Cecelia Timbal LlB-2 Rm 402
Labor Standards
University of San Carlos College of Law
Ma. Cecelia Timbal

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Labor Standards
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Midterm Case Digests
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Labor Standards
Contents
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PASEI vs Torres (1992) G.R. 101279 ........................................................................8

San Juan de Dios Hospital vs NLRC (1997) G.R. 126383 ................................................9
ABS-CBN vs Nazareno (2006) G.R. 164156 ..............................................................19
Francisco vs NLRC (2006) 500 SCRA 690 ................................................................22
Nogales et al., vs Capitol Medical Center (2006) G.R. 142625 ......................................24
Coca-Cola Bottlers Phils., vs Dr. Climaco (2007) G.R. 146881 .......................................25
Calamba Medical Center vs NLRC (2008) G.R. 176484 ................................................26
Ollendorff vs Abrahamson (1918) G.R. 13228 ..........................................................28
Del Castillo vs Richmond (1924) G.R. L-21127 .........................................................30
Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978 .................................30
Star Paper Corp., vs Simbol (2006) G.R. 164774 .......................................................32
Rivera vs Solidbank (2006) G.R. 163269 .................................................................33
Employers Confederation of the Phils vs NWPC (1991) 201 SCRA 759 ..............................38
Mabeza vs NLRC () 271 SCRA 670 .........................................................................40
Joy Brothers Inc., vs NWPC (1997) 273 SCRA 622 ......................................................42
Millares et al., vs NLRC () 305 SCRA 501 ................................................................44
International School Alliance of Educators vs Quisumbing (2000) 333 SCRA 13 ...................46
Bankard Employees Union vs NLRC (2004) G.R. 140689 ..............................................48
EJR Crafts Corp., vs CA (2006) ............................................................................52
Sapio vs Undaloc Construction (2008) G.R. 155034 ...................................................63
Hon. Secretary of Labor vs Panay Veterans Security and Investigation Agency (2008) G.R.
167708 ........................................................................................................64
Peoples Broadcasting vs Secretary of DOLE (2009) G.R. 179652 ...................................66
Phil Hoteliers Inc., vs National Union of Workers in Hotel Restaurant & Allied Industries Dusit
Hotel Nikko Chapter (2009) G.R. 181972 ...............................................................68
Gaa vs Court of Appeals (1985) 140 SCRA 304 ..........................................................73
Nestle Phils Inc., vs NLRC (1991) 193 SCRA 504 ........................................................74
Five J Taxi vs NLRC (1992) 235 SCRA 556 ................................................................76
Manila Electric Co vs Sec of Labor (1999) G.R. 127598 ...............................................78
Philippine Veterans Bank vs NLRC (1999) G.R. 130439 ................................................79
Philippine Appliance Corp., vs Court of Appeals (2004) G.R. 149434 ...............................81
Special Steel Products vs Villareal (2004) G.R. 143304 ...............................................82
Agabon vs NLRC (2004) G.R. 158693 .....................................................................83
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4 0 2 & Cable Daily Rated Employees vs American Wire (2005) G.R. 155059 .........84
American Wire
Honda Philippines Inc., vs Samahang Manggagawa sa Honda (2005) G.R. 145561 ................84
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Producers Bank vs NLRC () 335 SCRA 506 ...............................................................85

Jardin vs NLRC (2000) G.R. 119268 ......................................................................86
Manila Jockey Club Employees Labor Union vs Manila Jockey Club (2007) G.R. 167601 ........86
San Miguel Corp., vs Layoc Jr. Et al., (2007) G.R. 149640 ...........................................87
San Miguel Corp vs Pontillas (2008) G.R. 155178 ......................................................88
Arco Metal Products Co. Inc., et al., vs Samahan ng mga Manggagawa sa Arco Metal NAFLU
(2008) G.R. 170734 .........................................................................................89
Genesis Transport Service et al., vs UMM Genesis Transport (2010) G.R. 182114 ................90
Congson vs NLRC (1995) 243 SCRA 260 ..................................................................93
North Davao Mining vs NLRC (1996) 254 SCRA 721 .....................................................94
Sime Darby Pilipinas Inc., vs NLRC (1998) 289 SCRA 86 ...............................................99
Philippine Airlines vs NLRC (1999) 302 SCRA 582 .....................................................100
Linton Commercial Co., vs Hellera (2007) G.R. 163147 .............................................102
Bisig Manggagawa sa Tryco vs NLRC (2008) G.R. 151309 ............................................103
Union Filipro Employees vs Vivar (1992) 205 SCRA 203 ..............................................106
National Sugar Refinery Corp vs NLRC (1993) 220 SCRA 452 ........................................108
Salazar vs NLRC (1996) 256 SCRA 273 ..................................................................110
Labor Congress of the Philippines vs NLRC (1998) G.R. 123938 ....................................112
Mercidar Fishing Corp., vs NLRC (1998) G.R. 112574 ................................................114
San Miguel Corp., vs Court of Appeals (2002) G.R. 146775 .........................................115
Tan vs Lagarama (2002) G.R. 151228 ...................................................................116
Lambo vs NLRC (1999) 317 SCRA 420 ...................................................................117
R&E Transport vs Latag (2004) G.R. 155214 ...........................................................118
Asian Transmission vs Court of Appeals (2004) 425 SCRA 478.......................................119
Autobus Transport System vs Bautista (2005) G.R. 156364 .........................................121
San Miguel Corp., vs Del Rosario (2005) G.R. 168194 ................................................123
Penaranda vs Baganga Plywood Corp (2006) G.R. 159577 ..........................................125
House of Sara Lee vs Rey (2006) G.R. 149013 ........................................................127
Leyte IV Electric Cooperative Inc., vs LEYECO IV Employees Union ALU (2007) G.R. 157775....
129
San Miguel Corp., et al., vs Layoc, Jr., et al., (2007) G.R. 149640................................131
Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195 ..........................................132
PNCC Skyway Traffic Management & Security Division Workers Organization vs PNCC Skyway
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Corp., (2010)
171231 ...............................................................................133
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Pantranco North Express vs NLRC (1996) 259 SCRA 161 .............................................136
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R&E Transport vs Latag (2004) G.R. 155214 ...........................................................138

Gerlach vs Reuters Ltd., Phils., (2005) G.R. 148542 .................................................139
Honda Phils., Inc., vs Samahan ng Malayang Manggagawa sa Honda (2005) G.R. 145561 ......141
Jaculbe vs Siliman University (2007) G.R. 156934 ...................................................142
Intercontinental Broadcasting Corp., vs Amarilla (2006) G.R. 162775 ............................144
Reyes vs NLRC (2007) G.R. 160233 .....................................................................147
Philippine Airlines Inc. vs Phil. Airlines Employees Association (2008) G.R. 142399 ............150
(2008) G.R. 170734 .......................................................................................151
Universal Sugar Milling Corp., vs Caballeda (2009) G.R. 156644...................................152
T/Sgt. Larkins vs NLRC (1995) G.R. 92432 ............................................................155
UERM Memorial Medical Center vs NLRC (1997) G.R. 1104419 .....................................157
Philtranco Services vs NLRC (1998) G.R. 124100 .....................................................160
St. Martin Funeral Homes vs NLRC (1998) G.R. 130866 .............................................161
Ludo & Luym Corp., vs Saornido (2003) G.R. 140690 ................................................162
Hanjin Engineering and Construction Co. Ltd. vs Court of Appeals (2006) G.R. 165910 .......165
Phil. Journalistic Inc., vs NLRC (2006) G.R. 166421 .................................................169
Balagtas Multi-Purpose Coop vs Court of Appeals (2006) G.R. 159268 ............................170
St. Martin Funeral Homes vs NLRC (2006) G.R. 142351 .............................................172
DOLE Phils. vs Esteva (2006) G.R. 161115 .............................................................173
Intercontinental Broadcasting Corp., vs Panganiban (2007) G.R. 151407 ........................175
Far East Agricultural Supply vs Lebatigue (2007) G.R. 162813 .....................................177
Letran Calamba Faculty & Employees Association vs NLRC (2008) G.R. 156225 ................178
Metro Transit Organization vs Piglas NFWU-KMU et al., (2008) G.R. 175460 .....................179
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I
THE APPLICABLE LAWS
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PASEI vs Torres (1992) G.R. 101279

Facts:
PASIE is the largest national organization of private employment and recruitment agencies duly
licensed and authorized by the POEA, to engage in the business of obtaining overseas employment
for Filipino land-based workers, including domestic helpers.
On June 1991, as a result of published stories regarding the abuses suffered by Filipino housemaids
employed in Hong Kong, DOLE Secretary Ruben Torres issued Department Order No. 16, Series of
1991, temporarily suspending the recruitment by private employment agencies of "Filipino
domestic helpers going to Hong Kong". The DOLE itself, through the POEA took over the business of
deploying such Hong Kong-bound workers.
Pursuant to the above DOLE circular, the POEA issued Memorandum Circular No. 30, Series of 1991,
providing GUIDELINES on the Government processing and deployment of Filipino domestic helpers
to Hong Kong and the accreditation of Hong Kong recruitment agencies intending to hire Filipino
domestic helpers.
Pursuant to the previous issuances, the POEA Administrator also issued Memorandum Circular No.
37, Series of 1991, on the processing of employment contracts of domestic workers for Hong Kong.
Issues:
1. WON respondents acted with grave abuse of discretion and/or in excess of their rulemaking authority in issuing said circulars?
2. WON that the assailed DOLE and POEA circulars are contrary to the Constitution, are
unreasonable, unfair and oppressive?
Held: They are in accordance but legally invalid, defective and unenforceable for lack of power
publication and filing in the Office of the National Administrative Register as required in Art 2 of
CC, Art 5 of the Labor Code and Sec 3(1) and 4, Chap 2, Book VII of the Administrative Code of
1987.
1. Article 36 of the Labor Code grants the Labor Secretary the power to restrict and regulate
recruitment and placement activities. On the other hand, the scope of the regulatory
authority of the POEA, which was created by Executive Order No. 797 on May 1, 1982 to
take over the functions of the Overseas Employment Development Board, the National
Seamen Board, and the overseas employment functions of the Bureau of Employment
Services, is broad and far-ranging as provided by Articles 15, 17 and 20 of the Labor Code.
2. The vesture of quasi-legislative and quasi-judicial powers in administrative bodies is not
unconstitutional, unreasonable and oppressive. It has been necessitated by "the growing
complexity of the modern society" (Solid Homes, Inc. vs. Payawal). More and more
administrative bodies are necessary to help in the regulation of society's ramified
activities. It is noteworthy that the assailed circulars do not prohibit the petitioner from
engaging
deployment of Filipino
workers for overseas
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employment. The power to "restrict and regulate conferred by Article 36 of the Labor
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Code involves a grant of police power. The questioned circulars are therefore a valid
exercise of the police power as delegated to the executive branch of Government.
San Juan de Dios Hospital vs NLRC (1997) G.R. 126383
Facts:
Petitioners, rank-and-file employees and members of San Juan de Dios Hospital Employees
Association sent a 4 page letter requesting and pleading for the expeditious implementation and
payment by the respondent Hospital of the 40 HOURS/5-DAY WORKWEEK with compensable
weekly two (2) days off provided for by Republic Act 5901 as clarified for enforcement by the
Secretary of Labors Policy Instructions No. 54 dated April 12, 1988. Respondent hospital failed to
give a favourable response; thus, petitioners filed a complaint regarding their claims for
statutory benefits under the above-cited law and policy issuance. The Labor Arbiter dismissed the
complaint which was also confirmed by NLRC, hence the petition under Rule 65 of the Rules of
Court.
Issue: WON Policy Instructions No. 54 issued by then Labor Secretary Franklin Drilon is valid?
Held: It is invalid.
The Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901, otherwise
known as An Act Prescribing Forty Hours A Week Of Labor For Government and Private Hospitals
Or Clinic Personnel, but reliance to this RA is misplaced since it has long been repealed with the
passage of the Labor Code. 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 latters validity may be gauged.
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 Labors 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.
Further, petitioners' position is also negated by the very rules and regulations promulgated by the
Bureau of Labor Standards which implement Republic Act No. 5901. Pertinent portions of the
implementing rules provided in Sections 1,7, and 15 of the said Act.
If petitioners are entitled to two days off with pay, then there appears to be no sense at all why
Section 15 of the implementing rules grants additional compensation equivalent to the regular
rate plus at least twenty-five percent thereof for work performed on Sunday to health personnel,
or an additional straight-time pay which must be equivalent at least to the regular rate [f]or
work performed in excess of forty hours a week xxx. Policy Instructions No. 54 to our mind unduly
extended the statute. The Secretary of Labor moreover erred in invoking the spirit and intent
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of Republic 4Act
0 2 No. 5901 and Article 83 of the Labor Code for it is an elementary rule of statutory
construction that when the language of the law is clear and unequivocal, the law must be taken to
mean exactly what it says.
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Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R. 156225
Facts:
The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint against
Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary
claims due its members. The Labor Arbiter (LA) handling the consolidated cases, denied and
dismissed the respective complaints.
Issue: WON the pay of the faculty members for teaching overloads should be included as basis in
the computation of their 13th month pay?
Held: Teaching overload may not be considered part of basic salary.
Under the Rules and Regulations Implementing PD 851, the following compensations are deemed
not part of the basic salary: a) cost-of-living allowances granted pursuant to PD 525 and Letter of
Instruction No. 174; b) profit sharing payments; c) all allowances and monetary benefits which are
not considered or integrated as part of the regular basic salary of the employee at the time of the
promulgation of the Decree on Dec 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued by the then
Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of
the basic salary and in the computation of the 13th-month pay.
The all-embracing phrase "earnings and other remunerations" which are deemed not part of the
basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium
for works performed on rest days and special holidays, pay for regular holidays and night
differentials. As such they are deemed not part of the basic salary and shall not be considered in
the computation of the 13th-month pay.
As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional
compensation other than and added to the regular wage or basic salary, for reason of which such
is categorically excluded from the definition of basic salary under the Supplementary Rules and
Regulations Implementing PD 851.
In the same manner that payment for overtime work and work performed during special holidays is
considered as additional compensation apart and distinct from an employee's regular wage or
basic salary, an overload pay, owing to its very nature and definition, may not be considered as
part of a teacher's regular or basic salary, because it is being paid for additional work performed in
excess of the regular teaching load.
Asuncion vs NLRC (2001) G.R. 129329

Facts:
On Aug 1993, Asuncion was employed as an accountant/bookkeeper by the respondent (Mabini
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Medical Clinic).
4 0 2 After the inspection conducted in the respondents company premises for a
violation of the lbor standards for non-coverage, on Aug 1994, private respondent, Medical
Director Wifrido Juco issued a memorandum to petitioner charging her with chronic absenteeism,
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habitual tardiness, loitering and wasting of company time, getting salary of an absent employee
without acknowledging or signing for it, and disobedience and insubordination for continued
refusal of signing memos given to her. Petitioner was then required to explain within 2 days why
she will not be terminated.
Three days later, petitioner submitted her response to the memo but was also dismissed on ground
of disobedience of lawful orders and failure to submit her reply in 2 days. This prompted
petitioner to file for a case of illegal termination which was judged by the Labor Arbiter to be
true.
Issue: WON NLRC erred in finding that the petitioner was dismissed by the private respondent for
a just or authorized cause?
Held: Petitioner has been illegally terminated; she is necessarily entitled to reinstatement to her
former previous position without loss of seniority and the payment of backwages.
It bears stressing that a workers employment is property in the constitutional sense. He cannot
be deprived of his work without due process. In order for the dismissal to be valid, not only must
it be based on just cause supported by clear and convincing evidence, the employee must also be
given an opportunity to be heard and defend himself. It is the employer who has the burden of
proving that the dismissal was with just or authorized cause. The failure of the employer to
discharge this burden means that the dismissal is not justified and that the employee is entitled to
reinstatement and back wages.
In the case at bar, both the handwritten listing and computer print-outs being unsigned, the
authenticity thereof is highly suspect and devoid of any rational probative value especially in the
light of the existence of the official record book of the petitioners alleged absences and tardiness
in the possession of the employer company. In the memorandum charging petitioner and notice of
termination, private respondents referred to the record book as its basis for petitioners alleged
absenteeism and tardiness. Interestingly, however, the record book was never presented in
evidence. Private respondents had possession thereof and the opportunity to present the
same. Thus, private respondents unexplained and unjustified non-presentation of the record
book, which is the best evidence in its possession and control of the charges against the
petitioner, casts serious doubts on the factual basis of the charges of absenteeism and tardiness.
Private respondents claimed that they sent several notices to the petitioner warning her of her
absences, however, petitioner refused to receive the same. The Court, likewise, takes note of the
fact that the two-day period given to petitioner to explain and answer the charges against her was
most unreasonable, considering that she was charged with several offenses and infractions (35
absences, 23 half-days and 108 tardiness), some of which were allegedly committed almost a year
before, not to mention the fact that the charges levelled against her lacked particularity.
The law mandates that every opportunity and assistance must be accorded to the employee by the
management to enable him to prepare adequately for his defense. In Ruffy v. NLRC, the Court
held that what would qualify as sufficient or ample opportunity, as required by law, would be
every kind of assistance that management must accord to the employee to enable him to prepare
adequately for his defense.
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II
BASIC PRINCIPLES
Singer Sewing Machine vs NLRC () 193 SCRA 271

Facts:
Singer Machine Collectors Union-Baguio filed a petition for direct certification as the sole and
exclusive bargaining agent of all collectors of Singer Sewing Machine. The company opposed the
petition mainly because the union members are not employees but independent contractors as
evidenced by the collection agency agreement which they signed.
Med-Arbiter ruled that there exists an employee-employer relationship and granted the
certification election which was affirmed by Sec. Drilon. The company files the present petition
on the determination of the relationship. The union insist that the provisions of the Collection
Agreement belie the companys position that the union members are independent contractors.
Issue: WON there exists an employer-employee relationship between the parties.
Held: Respondents are not employees of the company.
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The present4 case

0 2 calls for the application of the control test, which if not satisfied, would lead to
the conclusion that no employee-employer relationship exists. If the union members are not
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employees, no right to organize for the purpose of bargaining or as a bargaining agent cannot be
recognized.
The following elements are generally considered in the determination of the relationship: the
selection and engagement of the employee, payment of wages, power of dismissal and the power
to control the employees conduct which is the most important element.
The nature of the relationship between a company and its collecting agents depends on the
circumstances of each particular relationship. Not all collecting agents are employees and neither
are all collecting agents independent contractors. The agreement confirms the status of the
collecting agents as independent contractor. The requirement that collection agents utilize only
receipt forms and report forms issued by the company and that reports shall be submitted at least
once a week is not necessarily an indication of control over the means by which the job collection
is to be performed. Even if report requirements are to be called control measures, any control is
only with respect to the end result of the collection since the requirements regulate the things to
be done after the performance of the collection job or the rendition of service.
The plain language of the agreement reveals that the designation as collection agent does not
create an employment relationship and that the applicant is to be considered at all times as an
independent contractor.
The court finds that since private respondents are not employees of the company, they are not
entitled to the constitutional right to form or join a labor organization for the purposes of
collective bargaining. There is no constitutional and legal basis for their union to be granted their
petition for direct certification.
Manila Golf & Country Club, Inc., vs IAC and Fermin Llamar (1994) G.R. 64948
Facts:
Respondents were caddies and employees of Manila Golf & Country Club who originally filed a
petition with the Social Security Commission (SSC) for coverage and availment of benefits under
the Social Security Act. They 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.
In the case before the SSC, the respondent Club alleged that the petitioners, caddies by
occupation, were allowed into the Club premises to render services as such to the individual
members and guests playing the Club's golf course and who themselves paid for such services; that
as such caddies, the petitioners were not subject to the direction and control of the Club as
regards the manner in which they performed their work; and hence, they were not the Club's
employees.
Issue: WON there exist an employer-employee relationship between the cadies and the Golf Club?
Held: No
relationship.
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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
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club they do their work in. For all that is made to appear, they work for the club to which they
attach themselves on sufferance 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. Court agree that the group rotation system so-called, is less a measure of employer
control than an assurance that the work is fairly distributed, a caddy who is absent when his turn
number is called simply losing his turn to serve and being assigned instead the last number for the
day.
Moreover, as pointed out by petitioner which was never refuted that: 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.
Encyclopaedia Britannica (Phil) Inc., vs NLRC (1996) G.R. 87098

Facts:
Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia
Britannica and was in charge of selling petitioners products through some sales representatives.
As compensation, private respondent received commissions from the products sold by his agents.
He was also allowed to use petitioners name, goodwill and logo. It was, however, agreed upon
that office expenses would be deducted from private respondents commissions. Petitioner would
also be informed about appointments, promotions, and transfers of employees in private
respondents district.
On June 1974, Limjoco resigned from office to pursue his private business. He then filed a
complaint against petitioner Encyclopaedia Britannica with DOLE, claiming for non-payment of
separation pay and other benefits, and also illegal deduction from his sales commissions.
Petitioner alleged that Limjoco was not its employee but an independent dealer authorized to
promote and sell its products and in return, received commissions there from. Limjoco did not
have any salary and his income from the company was dependent on the volume of sales
accomplished. He also had his own separate office, financed the business expenses, and
maintained his own workforce. The salaries of his secretary, utility man, and sales representatives
were chargeable to his commissions. Thus, petitioner argued that it had no control and
supervision over the complainant as to the manner and means he conducted his business
operations, moreover, the latter did not even report to the office of the petitioner and did not
observe fixed office hours
Issue: WON there exist an employer-employee relationship and necessarily entitles Limjoco of his
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Held: Private respondent was merely an agent or an independent dealer of the petitioner.
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In ascertaining whether the relationship is that of employer-employee or one of independent

contractor, each case must be determined by its own facts and all features of the relationship are
to be considered.
Respondent was free to conduct his work and he was free to engage in other means of livelihood.
At the time he was connected with the petitioner company, private respondent was also a director
and later the president of the Farmers Rural Bank. Had he been an employee of the company, he
could not be employed elsewhere and he would be required to devote full time for petitioner. If
private respondent was indeed an employee, it was rather unusual for him to wait for more than a
year from his separation from work before he decided to file his claims. As he pointed out in his
resignation letter, Limjoco was aware of conflict with other interests which xxx have increasingly
required my personal attention. At the very least, it would indicate that petitioner has no
effective control over the personal activities of Limjoco, who as admitted by the latter had other
conflict of interest requiring his personal attention.
As pointed out 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.
Carungcong vs NLRC, Sun Life Assurance Co. of Canada (1997) G.R. 118086
Facts:
Susan Carungcong began as an agent of Sun Life in 1974, she signed an Agents Agreement and
was designated to solicit applications for insurance and annuity services. The contract set out in
detail the terms and conditions particularly those concerning the commissions payable to her
under which her relationship with the company would be governed. Five years later, said contract
was superseded by 2 new agreements: first, is the "Career Agent's (or Unit Manager's) Agreement,"
dealt with such matters as the agent's commissions, his obligations, limitations on his authority,
and termination of the agreement by death, or by written notice "with or without cause." It
declared that the "Agent shall be an independent contractor and none of the terms of agreement
shall be construed as creating an employer-employee relationship; second, was titled, "MANAGER'S
Supplementary Agreement." Making explicit reference to the first agreement "which became
effective on the 1st day of July, 1979" said second contract explicitly described as a "further
agreement" contained provisions regarding remuneration (overriding commissions in accordance
with a fixed schedule), limitation of authority, and termination of the agreement inter alia by
written notice "without cause."
Subsequently, Carungcong and Sun Life executed another Agreement - by which the former was
named New Business Manager with the function generally "to manage a New Business Office
established by her and to obtain applications for life insurance policies and other products offered
by or distributed through Sun Life and to perform such other duties in connection therewith as Sun
Life may require from time to time." This latest Agreement stressed that the "New Business
Manager in performance of his duties defined herein, shall be considered an independent
contractor and not . . an employee of Sun Life," and that "under no circumstance shall the New
Business Manager and/or his employees be considered employees of Sun Life."
After receiving reports of anomalies in relation thereto from unit managers and agents by the
companys VP, the Manager of Sun Life's Internal Audit Department, commenced an inquiry into the
special fund availments of Carungcong and other New Business Managers which later prompted the
petitioners termination. She then instituted proceedings for vindication in the Arbitration Branch
of the 15
National
where she succeeded
M a . CLabor
e c e lRelations
i a T i m bCommission
al
L l B 2 in obtaining a favorable
Rm
4 0 2 that there existed an employer-employee relationship between her and Sun Life;
judgment finding
ruled that she had been illegally dismissed, thus entitled to reinstatement without loss of seniority
rights and other benefits.
Labor Standards
Issue: WON there existed an employer-employee relationship between Caruncong and Sunlife?
Held: Carungcong was an independent contractor and not an employee of Sun Life.
The contracts she had willingly and knowingly signed with Sun Life repeatedly and clearly provided
that said agreements were terminable by either party by written notice with or without cause.
Noteworthy is that this last agreement, it was emphasized, like the "Career Agent's (or Unit
Manager's) Agreement" first signed by her, that in the performance of her duties defined herein.
Carungcong would be considered an independent contractor and not . . an employee of Sun Life,"
and that "(u)nder no circumstance shall the New Business Manager and/or his employees be
considered employees of Sun Life."
Ramos vs Court of Appeals () 380 SCRA 467

Facts:
Petitioner Erlinda Ramos was advised to undergo an operation for the removal of her stone in
the gall bladder. She was referred to Dr. Hosaka, a surgeon, who agreed to do the operation.
The operation was scheduled on June 17, 1985 in the De los Santos Medical Center. Erlinda
was admitted to the medical center the day before the operation. On the following day, she
was ready for operation as early as 7:30 am. Around 9:30, Dr. Hosaka has not yet arrived. By
10 am, Rogelio wanted to pull out his wife from the operating room. Dr. Hosaka finally arrived
at 12:10 pm more than 3 hours of the scheduled operation.
Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluish discoloration in
her left hand. At 3 pm, Erlinda was being wheeled to the Intensive care Unit and stayed there
for a month. Since the ill-fated operation, Erlinda remained in comatose condition until she
died.
The family of Ramos sued them for damages.
Issue: WON there was an employee-employer relationship that existed between the Medical
Center and Drs. Hosaka and Guiterrez.
Held: No employer-employee between the doctors and hospital.
Private Hospitals hire, fire and exercise real control over their attending and visiting
consultant staff. While consultants are not technically employees, the control exercised, the
hiring and the right to terminate consultants fulfill the hallmarks of an employer-employee
relationship with the exception of payment of wages. The control test is determining.
In applying the four fold test, DLSMC cannot be considered an employer of the respondent
doctors. It has been consistently held that in determining whether an employer-employee
relationship exists between the parties, the following elements must be present: (1) selection
and engagement of services; (2) payment of wages; (3) the power to hire and fire; and (4) the
power to control not only the end to be achieved, but the means to be used in reaching such
an end.
The hospital does not hire consultants but it accredits and grants him the privilege of
16 Maaclinic
. C eand/or
c e l i aadmitting
T i m b a lpatients. It is the patient
L lwho
B pays
2 the consultants. The R m
maintaining
402
hospital cannot dismiss the consultant but he may lose his privileges granted by the hospital.
Labor Standards
The hospitals obligation is limited to providing the patient with the preferred room
accommodation and other things that will ensure that the doctors orders are carried out.
The court finds that there is no employer-employee relationship between the doctors and the
hospital.
Sonza vs ABS-CBN (2004) G.R. 138051

Facts:
In May 1994, ABS-CBN signed an agreement with Mel & Jay Management and Development Corp for
a radio and television program. ABS-CBN agreed to pay for SONZAs services a monthly talent fee
of P310,000 for the first year and P317,000 for the second and third year of the Agreement. ABSCBN would pay the talent fees on the 10th and 25th days of the month.
On April 1996, Sonza wrote a letter to ABS-CBN President Eugenio Lopez III about a recent event
concerning his programs and career, and that the said violation of the company has breached the
agreement, thus, the notice of rescission of Agreement was sent.
At the end of the same month, Sonza filed a complaint against ABS-CBN before the DOLE for nonpayment of salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus,
travel allowance and amounts due under the Employees Stock Option Plan (ESOP) which was
opposed by ABS-CBN on the ground there was no employer-employee relationship existed between
the parties.
Issue: WON Sonza was an employee or independent contractor?
Held: There was no employer-employee relationship that existed, but that of an independent
contractor.
Case law has consistently held that the elements of an employer-employee relationship are:
(a) The selection and engagement of the employee - ABS-CBN engaged SONZAs services to cohost its television and radio programs because of SONZAs peculiar skills, talent and celebrity
status. The specific selection and hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a circumstance indicative, but
not conclusive, of an independent contractual relationship.
(b) The payment of wages - ABS-CBN directly paid SONZA his monthly talent fees with no part of
his fees going to MJMDC. All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. If SONZA were ABS-CBNs employee, there would be
no need for the parties to stipulate on benefits such as "SSS, Medicare, x x x and 13th month
pay" which the law automatically incorporates into every employer-employee contract.
(c) The power of dismissal - For violation of any provision of the Agreement, either party may
terminate their relationship. During the life of the Agreement, ABS-CBN agreed to pay
SONZAs talent fees as long as "AGENT and Jay Sonza shall faithfully and completely perform
each condition of this Agreement." Even if it suffered severe business losses, ABS-CBN could
not retrench SONZA because ABS-CBN remained obligated to pay SONZAs talent fees during
the life of the Agreement.
17 employers
M a . C e c power
e l i a to
Tim
b a l the employee on theL means
l B 2and methods by which Rthe
m
(d) The
control
402
work is accomplished - The control test is the most important test. This test is based on the
extent of control the hirer exercises over a worker. The greater the supervision and control
Labor Standards
the hirer exercises, the more likely the worker is deemed an employee. The converse holds
true as well the less control the hirer exercises, the more likely the worker is considered an
independent contractor.
First, ABS-CBN engaged SONZAs services specifically to co-host the "Mel & Jay" programs.
ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only needed his
skills and talent. How SONZA delivered his lines, appeared on television, and sounded on
radio were outside ABS-CBNs control. SONZA did not have to render eight hours of work per
day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as
well as pre- and post-production staff meetings. ABS-CBN could not dictate the contents of
SONZAs script. However, the Agreement prohibited SONZA from criticizing in his shows ABSCBN or its interests. The clear implication is that SONZA had a free hand on what to say or
discuss in his shows provided he did not attack ABS-CBN or its interests.
Second, The Agreement stipulates that SONZA shall abide with the rules and standards of
performance "covering talents" of ABS-CBN. The Agreement does not require SONZA to
comply with the rules and standards of performance prescribed for employees of ABS-CBN.
The code of conduct imposed on SONZA under the Agreement refers to the "Television and
Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted
by the COMPANY (ABS-CBN) as its Code of Ethics." The KBP code applies to broadcasters, not
to employees of radio and television stations. Broadcasters are not necessarily employees of
radio and television stations. Clearly, the rules and standards of performance referred to in
the Agreement are those applicable to talents and not to employees of ABS-CBN.
Lastly, being an exclusive talent does not by itself mean that SONZA is an employee of ABSCBN. Even an independent contractor can validly provide his services exclusively to the hiring
party. In the broadcast industry, exclusivity is not necessarily the same as control. The hiring
of exclusive talents is a widespread and accepted practice in the entertainment industry. This
practice is not designed to control the means and methods of work of the talent, but simply
to protect the investment of the broadcast station. The broadcast station normally spends
substantial amounts of money, time and effort "in building up its talents as well as the
programs they appear in and thus expects that said talents remain exclusive with the station
for a commensurate period of time." Normally, a much higher fee is paid to talents who agree
to work exclusively for a particular radio or television station. In short, the huge talent fees
partially compensates for exclusivity.
18
Ma. Cecelia Timbal
4 0 2 Security Commission (2004) G.R. 138254

Lazaro vs Social
Facts:
LlB 2
Rm
Labor Standards
Rosalina Laudato filed a petition before the SSC for social security coverage and remittance of
unpaid monthly social security contributions against her three (3) employers. Among them was
Angelito Lazaro, proprietor of Royal Star, which is engaged in the business of selling home
appliances. Laudato alleged that despite her employment as sales supervisor of the sales agents
for Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period, to
report her to the SSC for compulsory coverage or remit Laudatos social security contributions.
Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a
m e r e s a l e s a g e n t w h o m h e p a i d p u r e l y o n c o m m i s s i o n b a s i s . L a z a r o
alsomaintainedthatLaudato was not subjected todefinite hours and conditions of work. As
such, she could not be deemed an employee of Royal Star.
Issue: WON Laudato is considered employee of Royal Star Marketing?
Held: Laudato is an employee of Royal Star and as such is entitled to the coverage of Social
Security Law.
It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the
determination of employer-employee relationship warrants the application of the control test,
that is, whether the employer controls or has reserved the right to control the employee, not only
as to the result of the work done, but also as to the means and methods by which the same is
accomplished.
The fact that Laudato was paid by way of commission does not preclude the establishment of an
employer-employee relationship. In Grepalife v. Judico, the Court upheld the existence of an
employer-employee relationship between the insurance company and its agents, despite the fact
that the compensation that the agents on commission received was not paid by the company but
by the investor or the person insured.The relevant factor remains, as stated earlier, whether the
"employer" controls or has reserved the right to control the "employee" not only as to the result of
the work to be done but also as to the means and methods by which the same is to be
accomplished. It should also be emphasized that the SSC, also as upheld by the Court of Appeals,
found that Laudato was a sales supervisor and not a mere agent. As such, Laudato oversaw and
supervised the sales agents of the company, and thus was subject to the control of management as
to how she implements its policies and its end results.
The finding of the SSC that Laudato was an employee of Royal Star is supported by substantial
evidence. The SSC examined the cash vouchers issued by Royal Star to Laudato, calling cards of
Royal Star denominating Laudato as a Sales Supervisor of the company, and Certificates of
Appreciation issued by Royal Star to Laudato in recognition of her unselfish and loyal efforts in
promoting the company.
A piece of documentary evidence appreciated by the SSC is Memorandum dated 3 May 1980 of
Teresita Lazaro, General Manager of Royal Star, directing that no commissions were to be given on
all main office sales from walk-in customers and enjoining salesmen and sales supervisors to
observe this new policy. The Memorandum evinces the fact that Royal Star exercised control over
its sales supervisors or agents such as Laudato as to the means and methods through which these
personnel performed their work.
ABS-CBN vs Nazareno (2006) G.R. 164156

19
Facts:
Ma. Cecelia Timbal

402
LlB 2
Rm
Labor Standards
ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants
(PAs) on different dates. They were assigned at the news and public affairs, for various radio
programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were
issued ABS-CBN employees identification cards and were required to work for a minimum of eight
hours a day, including Sundays and holidays. They were made to: a) Prepare, arrange airing of
commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN; b)
Coordinate, arrange personalities for air interviews; c)Coordinate, prepare schedule of reporters
for scheduled news reporting and lead-in or incoming reports; d)Facilitate, prepare and arrange
airtime schedule for public service announcement and complaints; e) Assist, anchor program
interview, etc; and f)Record, log clerical reports, man based control radio.
Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement
(CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since
petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included
to the CBA.
Due to a memorandum assigning PAs to non-drama programs, and that the DYAB studio operations
would be handled by the studio technician. There was a revision of the schedule and assignments
and that respondent Gerzon was assigned as the full-time PA of the TV News Department reporting
directly to Leo Lastimosa.
On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay,
and 13thMonth Pay with Damages against the petitioner before the NLRC.
Issue: WON the respondents are regular employees?
Held: Respondents are considered regular employees of ABS-CBN and are entitled to the benefits
granted to all regular employees.
Where a person has rendered at least one year of service, regardless of the nature of the activity
performed, or where the work is continuous or intermittent, the employment is considered regular
as long as the activity exists. The reason being that a customary appointment is not indispensable
before one may be formally declared as having attained regular status. Article 280 of the Labor
Code provides:
REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer except where the
employment has been fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment is for the duration
of the season.
Any employee who has rendered at least one year of service, whether continuous or intermittent,
is deemed regular with respect to the activity performed and while such activity actually exists.
The fact that respondents received pre-agreed talent fees instead of salaries, that they did not
observe the required office hours, and that they were permitted to join other productions during
their free time are not conclusive of the nature of their employment. They are regular employees
who perform several different duties under the control and direction of ABS-CBN executives and
supervisors.
20
Ma. Cecelia Timbal

402
LlB 2
Rm
There are two kinds of regular employees under the law: (1) those engaged to perform
activities which arenecessary or desirablein the usual business or trade of the employer; and (2)
Labor Standards
those casual employees who haverendered at least one year of service, whether continuousor
broken, with respect to the activities in which they are employed.
What determines whether a certain employment is regular or otherwise is the character of the
activities performed in relation to the particular trade or business taking into account all the
circumstances, and in some cases the length of time of its performance and its continued
existence.
The employer-employee relationship between petitioner and respondents has been proven by the
ff:
First.In the selection and engagement of respondents, no peculiar or unique skill, talent
or celebrity status was required from them because they were merely hired through
petitioners personnel department just like any ordinary employee.
Second.The so-called talent fees of respondents correspond to wages given as a result

of an employer-employee relationship. Respondents did not have the power to bargain for
huge talent fees, a circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work
unsatisfactory, and respondents are highly dependent on the petitioner for continued
work.
Fourth. The degree of control and supervision exercised by petitioner over respondents
through its supervisors negates the allegation that respondents are independent
contractors.
The presumption is that when the work done is an integral part of the regular business of the
employer and when the worker, relative to the employer, does not furnish an independent
business or professional service, such work is a regular employment of such employee and
not an independent contractor.
21
Ma. Cecelia Timbal

402
LlB 2
Rm
Labor Standards
Francisco vs NLRC (2006) 500 SCRA 690

Facts:
Petitoner was hired by Kasei Corporation during the incorporation stage. She was designated as
accountant and corporate secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liason Officer to the City of Manila to secure permits for the
operation of the company.
In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment of
all employees and perform management administration functions. In 2001, she was replaced by
Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month which was
until September. She asked for her salary but was informed that she was no longer connected to
the company. She did not anymore report to work since she was not paid for her salary. She filed
an action for constructive dismissal with the Labor Arbiter.
The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision
while CA reversed it.
Issue: WON there was an employer-employee relationship.
Held: Petitioner is an employee of Kasei Corporation.
The court held that in this jurisdiction, there has been no uniform test to determine the existence
of an employer-employee relation. Generally, courts have relied on the so-called right of control
test 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. In addition to the
standard of right-of-control, the existing economic conditions prevailing between the parties, like
the inclusion of the employee in the payrolls, can help in determining the existence of an
employer-employee relationship.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employers power to control the employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.
In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic
conditions prevailing between the parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of
an employer-employee relationship based on an analysis of the totality of economic circumstances
of the worker.
Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services
performed are an integral part of the employers business; (2) the extent of the workers
investment in equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill,
LlB 2
Rm
judgment or4 0foresight
required for the success of the claimed independent enterprise; (6) the
2
permanency and duration of the relationship between the worker and the employer; and (7) the
degree of dependency of the worker upon the employer for his continued employment in that line
Labor Standards
of business. The proper standard of economic dependence is whether the worker is dependent on
the alleged employer for his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporations
Technical Consultant. It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latters line of business.
There can be no other conclusion that petitioner is an employee of respondent Kasei Corporation.
She was selected and engaged by the company for compensation, and is economically dependent
upon respondent for her continued employment in that line of business. Her main job function
involved accounting and tax services rendered to Respondent Corporation on a regular basis over
an indefinite period of engagement. Respondent Corporation hired and engaged petitioner for
compensation, with the power to dismiss her for cause. More importantly, Respondent Corporation
had the power to control petitioner with the means and methods by which the work is to be
accomplished.
23
Ma. Cecelia Timbal

402
LlB 2
Rm
Labor Standards
Nogales et al., vs Capitol Medical Center (2006) G.R. 142625

Facts:
Corazon was under the exclusive care of Dr Oscar Estrada beginning the fourth month of her
pregnancy. While on her last trimester of pregnancy, Dr Estrada noted an increase of her blood
pressure and development of leg edema indicating preeclampsia which is a dangerous
complication of pregnancy.
Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting
Spouses Nogales to see Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her
immediate admission to the Capitol Medical Center. Eventually, Corazon died after giving birth to
the child, which prompted the petitioners to file a complaint for damages against CMC, Dr. Estrada
and other physicians and a certain nurse for Corazons death. Petitioners mainly contended that
defendant physicians and CMC personnel were negligent in the treatment and management of
Corazon's condition. Petitioners charged CMC with negligence in the selection and supervision of
defendant physicians and hospital staff.
Issue: WON CMC is vicariously liable for the negligence of Dr. Estrada?
Held: CMC is vicariously liable.
In Ramos v. Court of Appeals, Court had the occasion to determine the relationship between a
hospital and a consultant or visiting physician and the liability of such hospital for that physician's
negligence:
While "consultants" are not, technically employees, a point which respondent hospital asserts in
denying all responsibility for the patient's condition, the control exercised, the hiring, and the
right to terminate consultants all fulfill the important hallmarks of an employer-employee
relationship, with the exception of the payment of wages. In assessing whether such a
relationship in fact exists, the control test is determining. Accordingly, on the basis of the
foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases,
an employer-employee relationship in effect exists between hospitals and their attending and
visiting physicians.
While the Court in Ramos did not expound on the control test, such test essentially determines
whether an employment relationship exists between a physician and a hospital based on the
exercise of control over the physician as to details. Specifically, the employer (or the hospital)
must have the right to control both the means and the details of the process by which the
employee (or the physician) is to accomplish his task
In the present case, the Court finds no single evidence pointing to CMC's exercise of control over
Dr. Estrada's treatment and management of Corazon's condition. It is undisputed that throughout
Corazon's pregnancy, she was under the exclusive prenatal care of Dr. Estrada. At the time of
Corazon's admission at CMC and during her delivery, it was Dr. Estrada, assisted by Dr. Villaflor,
who attended to Corazon. There was no showing that CMC had a part in diagnosing Corazon's
condition. While Dr. Estrada enjoyed staff privileges at CMC, such fact alone did not make him an
employee of CMC. CMC merely allowed Dr. Estrada to use its facilities when Corazon was about to
give birth, which CMC considered an emergency. Considering these circumstances, Dr. Estrada is
not an employee of CMC, but an independent contractor.
In general, a hospital is not liable for the negligence of an independent contractor-physician.
24 however,
M a . C an
e c exception
elia Tim
a l principle. The hospitalLmay
l B be2liable if the physician isRthe
m
There is,
tobthis
4
0
2
"ostensible" agent of the hospital. This exception is also known as the "doctrine of apparent
authority." In Gilbert v. Sycamore Municipal Hospital, the Illinois Supreme Court explained the
doctrine of apparent authority in this wise:
Labor Standards
Under the doctrine of apparent authority a hospital can be held vicariously liable for the
negligent acts of a physician providing care at the hospital, regardless of whether the physician
is an independent contractor, unless the patient knows, or should have known, that the
physician is an independent contractor. The elements of the action have been set out as
follows:
"For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that:
(1) the hospital, or its agent, acted in a manner that would lead a reasonable person to
conclude that the individual who was alleged to be negligent was an employee or agent of the
hospital; (2) where the acts of the agent create the appearance of authority, the plaintiff must
also prove that the hospital had knowledge of and acquiesced in them; and (3) the plaintiff
acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care
and prudence."
The element of "holding out" on the part of the hospital does not require an express
representation by the hospital that the person alleged to be negligent is an employee.
Rather, the element is satisfied if the hospital holds itself out as a provider of emergency
room care without informing the patient that the care is provided by independent
contractors.
The doctrine of apparent authority essentially involves two factors to determine the liability of an
independent-contractor physician.
The first factor focuses on the hospital's manifestations and is sometimes described as an
inquiry whether the hospital acted in a manner which would lead a reasonable person to conclude
that the individual who was alleged to be negligent was an employee or agent of the hospital.In
this regard, the hospital need not make express representations to the patient that the
treating physician is an employee of the hospital; rather a representation may be general and
implied. In the instant case, CMC impliedly held out Dr. Estrada as a member of its medical staff.
Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses
Nogales to believe that Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate
such authority.
The second factor focuses on the patient's reliance. It is sometimes characterized as an inquiry
on whether the plaintiff acted in reliance upon the conduct of the hospital or itsagent, consistent
with ordinary care and prudence.
The records show that the Spouses Nogales relied upon a perceived employment relationship with
CMC in accepting Dr. Estrada's services. Rogelio testified that he and his wife specifically chose Dr.
Estrada to handle Corazon's delivery not only because of their friend's recommendation, but more
importantly because of Dr. Estrada's "connection with a reputable hospital, the [CMC]." In other
words, Dr. Estrada's relationship with CMC played a significant role in the Spouses Nogales' decision
in accepting Dr. Estrada's services as the obstetrician-gynecologist for Corazon's delivery. Moreover,
as earlier stated, there is no showing that before and during Corazon's confinement at CMC, the
Spouses Nogales knew or should have known that Dr. Estrada was not an employee of CMC.
Even simple negligence is not subject to blanket release in favor of establishments like hospitals
but may only mitigate liability depending on the circumstances. When a person needing urgent
medical attention rushes to a hospital, he cannot bargain on equal footing with the hospital on the
terms of admission and operation. Such a person is literally at the mercy of the hospital. There
can be no clearer example of a contract of adhesion than one arising from such a dire situation.
Thus, the release forms of CMC cannot relieve CMC from liability for the negligent medical
treatment of Corazon.
25 Bottlers
M a . C ePhils.,
c e l i avs T
i mClimaco
bal
Coca-Cola
Dr.
(2007) G.R. 146881L l B 2
402
Facts:
Rm
Labor Standards
Dr. Dean Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc. by
virtue of a Retainer Agreement for a period of 1 year with a monthly salary of Three Thousand
Eight Hundred (P3,800.00).
The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one
expired on December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent
continued to perform his functions as company doctor to Coca-Cola until he received a letterfrom
petitioner company concluding their retainership agreement effective 30 days from receipt
thereof.
Petitioner was already making inquiries regarding his status with the company. First, he wrote a
letter addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee on
Membership, Philippine College of Occupational Medicine. In response, Dr. Sy wrote a letterto the
Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City, stating that respondent should be
considered as a regular part-time physician, having served the company continuously for four (4)
years. He likewise stated that respondent must receive all the benefits and privileges of an
employee under Article 157 (b)of the Labor Code.
Issue: WON there exists an employer-employee relationship between Coca-Cola and Dr. Climaco?
Held: No employer-employee relationship exists between the parties.
The Court, in determining the existence of an employer-employee relationship, has invariably
adhered to the four-fold test: (1) the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; and (4) the power to control the employees conduct, or
the so-called "control test," considered to be the most important element.
The Labor Arbiter and the NLRC correctly found that Coca-Cola lacked the power of control over
the performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive
Medical Plan, which contains the respondents objectives, duties and obligations, does not tell
respondent "how to conduct his physical examination, how to immunize, or how to diagnose and
treat his patients, employees of Coca-Cola, in each case."
The Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was
achieved, but did not control the means and methods by which respondent performed his assigned
tasks. It is precisely because the company lacks the power of control that the contract provides
that respondent shall be directly responsible to the employee concerned and their dependents for
any injury, harm or damage caused through professional negligence, incompetence or other valid
causes of action.
Complainant does not dispute the fact that outside of the two (2) hours that he is required to be
at respondent companys premises, he is not at all further required to just sit around in the
premises and wait for an emergency to occur so as to enable him from using such hours for his
own benefit and advantage. In fact, complainant maintains his own private clinic attending to his
private practice in the city, where he services his patients, bills them accordingly -- and if it is an
employee of respondent company who is attended to by him for special treatment that needs
hospitalization or operation, this is subject to a special billing. More often than not, an employee
is required to stay in the employers workplace or proximately close thereto that he cannot utilize
his time effectively and gainfully for his own purpose.
Calamba Medical Center vs NLRC (2008) G.R. 176484
Facts:
Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr.
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MercedithaLanzanasas
part of its team of resident physicians. Reporting at the hospital twice-a402
week on twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00
each. Also resident physicians were also given a percentage share out of fees charged for out-
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patient treatments, operating room assistance and discharge billings, in addition to their fixed
monthly retainer.
The work schedules of the members of the team of resident physicians were fixed by petitioner's
medical director Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax from
them.
After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and a
fellow employee Diosdado Miscala, the former was given a preventive suspension and his wife Dr.
Merceditha was not given any schedule after sending the Memorandum. On March 1998, Dr.
Ronaldo filed a complaint for illegal suspension and Dr. Merceditha for illegal dismissal.
Issue: WON there exists an employer-employee relationship between petitioner and the spousesrespondents?
Held: Drs. Lanzanas are declared employee by the petitioner hospital.
Under the "control test," an employment relationship exists between a physician and a hospital if
the hospital controls both the means and the details of the process by which the physician is to
accomplish his task.
That petitioner exercised control over respondents gains light from the undisputed fact that in the
emergency room, the operating room, or any department or ward for that matter, respondents'
work is monitored through its nursing supervisors, charge nurses and orderlies. Without the
approval or consent of petitioner or its medical director, no operations can be undertaken in those
areas. For control test to apply, it is not essential for the employer to actually supervise the
performance of duties of the employee, it being enough that it has the right to wield the power.
With respect to respondents' sharing in some hospital fees, this scheme does not sever the
employment tie between them and petitioner as this merely mirrors additional form or another
form of compensation or incentive similar to what commission-based employees receive as
contemplated in Article 97 (f) of the Labor Code.
Moreover, respondents were made subject to petitioner-hospital's Code of Ethics, the provisions of
which cover administrative and disciplinary measures on negligence of duties, personnel conduct
and behavior, and offenses against persons, property and the hospital's interest.
More importantly, petitioner itself provided incontrovertible proof of the employment status of
respondents, namely, the identification cards it issued them, the payslipsand BIR W-2 (now 2316)
Forms which reflect their status as employees, and the classification as "salary" of their
remuneration. Moreover, it enrolled respondents in the SSS and Medicare (Philhealth) program. It
bears noting at this juncture that mandatory coverage under the SSS Law is premised on the
existence of an employer-employee relationship, except in cases of compulsory coverage of the
self-employed.
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III
RIGHT TO HIRE
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Ollendorff vs Abrahamson (1918) G.R. 13228
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Facts:
An agreement was entered into by Ollendorff and Abrahamson whereby theformer agreed to
employ Abrahamson and the latter bound himself to work for him for a period of 2yrs with a salary
of P50 per week. Included in the agreement is a prohibition of Abrahamson from engaging in a
similar or competitive business toanywhere within the Philippine Islands for a period of five years.
The duties performed by the defendant were such to make it necessary for him to be generally
knowledgeable of Ollendorffs business, moreover, he had been engaged in similar work for several
years even before his employment of the plaintiffs embroidery business.
After some months from his departure for the US, Abrahamson returned to Manila and is now a
manager of the Philippine Underwear Co. This corporation, unlike Ollendorffs, does not maintain
a factory in Phil. Islands but send material and embroidery designs from New York to its local
representative here who employs Filipino needle workers to embroider the designs and make up
the garments in their homes. The only difference between plaintiff's business and that of the firm
by which the defendant is employed, is the method of doing the finishing work -- the manufacture
of the embroidered material into finished garments. Plaintiff commenced an action to prevent by
injunction, any further breach of that part of defendant's contract of employment by which he
agreed that he would not "enter into or engage himself directly or indirectly . . . in a similar or
competitive business to that of (plaintiff) anywhere within the Philippine Islands for a period of
five years . . ." from the date of the agreement.
Issue: WON the part of the agreement restraining the defendant from engaging into similar
business of the plaintiff is void?
Held: The contract was not void as constituting an unreasonable restraint of trade.
The rule in this jurisdiction is that the obligations created by contracts have the force of
law between the contracting parties and must be enforce in accordance with their tenor. (Civil
Code, art 1091.) The only limitation upon the freedom of contractual agreement is that the pacts
established shall not be contrary to "law, morals or public order." (Civil Code, Art. 1255.)
Following the rule in Mitchel vs. Reynolds, Court adopt the modern rule that the validity of
restraints upon trade or employment is to be determined by the intrinsinc reasonableness of
restriction in each case, rather than by any fixed rule, and that such restrictions may be upheld
when not contrary to afford a fair and reasonable protection to the party in whose favor it is
imposed.
Examining the contract here in question from this stand point, it does not seem so with respect to
an employee whose duties are such as of necessity to give him an insight into the general scope
and details of his employers business. A business enterprise may and often does depend for its
success upon the owner's relations with other dealers, his skill in establishing favorable
connections, his methods of buying and selling -- a multitude of details, none vital if considered
alone, but which in the aggregate constitute the sum total of the advantages which the result of
the experience or individual aptitude and ability of the man or men by whom the business has
been built up. Failure or success may depend upon the possession of these intangible but all
important assets, and it is natural that their possessor should seek to keep them from falling into
the hands of his competitors. It is with this object in view that such restrictions as that now under
consideration are written into contracts of employment. Their purpose is the protection of the
employer, and if they do not go beyond what is reasonably necessary to effectuate this purpose
they should be upheld.
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Del Castillo vs Richmond (1924) G.R. L-21127

Facts:
Shannon Richmond and Alfonso del Castillo entered into a Contract of Rendering Services,
whereby del Castillo agrees to enter the employ of Richmond as a pharmacist with a monthly
remuneration of P125 each month.
Paragraph 3 of the said contract read as follows:
3. That in consideration of the fact that the said Alfonso del Castillo has just graduated as a
pharmacist and up to the present time has not been employed in the capacity of a pharmacist
and in consideration of this employment and the monthly salary mentioned in this contract,
the said Alfonso del Castillo also agrees not to open, nor own nor have any interest directly or
indirectly in any other drugstore either in his own name or in the name of another; nor have
any connection with or be employed by any other drugstore situated within a radius of our
miles from the district of Legaspi, municipality and Province of Albay, while the said Shannon
Richmond or his heirs may own or have open a drugstore, or have an interest in any other one
within the limits of the districts of Legaspi, Albay, and Daraga of the municipality of Albay,
Province of Albay.
The plaintiff alleges that the provisions and conditions contained in the third paragraph of said
contract constitute an illegal and unreasonable restriction upon his liberty to contract, are
contrary to public policy, and are unnecessary in order to constitute a just and reasonable
protection to the defendant; and asked that the same be declared null and void and of no effect.
Issue: WON the provisions and conditions contained in the 3rd paragraph of said contract
constitute an illegal and unreasonable restriction upon plaintiffs liberty to contract?
Held: The contract the annulment of which is sought by the plaintiff is neither oppressive to him,
nor unreasonably necessary to protect the defendant's business, nor prejudicial to the public
interest.
The law concerning contracts which tend to restrain business or trade has gone through a long
series of changes from time to time with the changing conditions of trade and commerce. With
trifling exceptions, said changes have been a continuous development of a general rule. Later, the
rule became well established that if the restraint was limited to "a certain time" and within "a
certain place," such contracts were valid and not "against the benefit of the state." Later cases,
and we think the rule is now well established, have held that a contract in restraint of trade is
valid providing there is a limitation upon either time or place. A contract, however, which
restrains a man from entering into a business or trade without either a limitation as to time or
place, will be held invalid.
If the contract is reasonably necessary to protect the interest of the parties, it will be upheld.
(Ollendorffvs.Abrahamson, 38 Phil., 585.)
In that case we held that a contract by which an employee agrees to refrain for a given length of
time, after the expiration of the term of his employment, from engaging in a business,
competitive with that of his employer, is not void as being in restraint of trade if the restraint
imposed is not greater than that which is necessary to afford a reasonable protection. In all cases
like the present, the question is whether, under the particular circumstances of the case and the
nature of the particular contract involved in it, the contract is, or is not, unreasonable
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Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978
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Facts:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and
Telephone Company (hereafter, PT&T) invokes the alleged concealment of civil status and
defalcation of company funds as grounds to terminate the services of an employee. That
employee, herein private respondent Grace de Guzman, contrarily argues that what really
motivated PT&T to terminate her services was her having contracted marriage during her
employment, which is prohibited by petitioner in its company policies. She thus claims that she
was discriminated against in gross violation of law, such a proscription by an employer being
outlawed by Article 136 of the Labor Code.
Issue: WON the policy of not accepting or considering as disqualified from work any woman worker
who contracts marriage is valid?
Held: Petitioners policy of not accepting or considering as disqualified from work any woman
worker who contracts marriage runs afoul of the test of, and the right against, discrimination,
afforded all women workers by our labor laws and by no less than the Constitution.
The Constitution, cognizant of the disparity in rights between men and women in almost all phases
of social and political life, provides a gamut of protective provisions. Acknowledged as paramount
in the due process scheme is the constitutional guarantee of protection to labor and security of
tenure. Thus, an employer is required, as a condition sine qua non prior to severance of the
employment ties of an individual under his employ, to convincingly establish, through substantial
evidence, the existence of a valid and just cause in dispensing with the services of such employee,
ones labor being regarded as constitutionally protected property. The government, to repeat,
abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code
states, in no uncertain terms, as follows:
ART. 136.Stipulation against marriage. - It shall be unlawful for an employer to require as a
condition of employment or continuation of employment that a woman shall not get married,
or to stipulate expressly or tacitly that upon getting married, a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of marriage.
In the case at bar, it can easily be seen from the memorandum sent to private respondent by the
branch supervisor of the company, with the reminder, that youre fully aware that the company is
not accepting married women employee (sic), as it was verbally instructed to you. Again, in the
termination notice sent to her by the same branch supervisor, private respondent was made to
understand that her severance from the service was not only by reason of her concealment of her
married status but, over and on top of that, was her violation of the companys policy against
marriage (and even told you that married women employees are not applicable [sic] or accepted
in our company.
Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on
the right of a woman to be free from any kind of stipulation against marriage in connection with
her employment, but it likewise assaults good morals and public policy, tending as it does to
deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in
the individual as an intangible and inalienable right.Hence, while it is true that the parties to a
contract may establish any agreements, terms, and conditions that they may deem convenient,
the same should not be contrary to law, morals, good customs, public order, or public
policy. Carried to its logical consequences, it may even be said that petitioners policy against
legitimate marital bonds would encourage illicit or common-law relations and subvert the
sacrament of marriage.
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Asso.
Of Detailman-PTGWO vs Glaxo Wellcome Phils.,
(2004) G.R. 162994
402
Facts:
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Petitioner Pedro Tecson was hired by respondent Glaxo as medical representative, after Tecson
had undergone training and orientation. Thereafter, Tecson signed a contract of employment
which stipulates, among others, that he agrees to study and abide by existing company rules; to
disclose to management any existing or future relationship by consanguinity or affinity with coemployees or employees of competing drug companies and should management find that such
relationship poses a possible conflict of interest, to resign from the company. The Employee Code
of Conduct of Glaxo similarly provides that an employee is expected to inform management of any
existing or future relationship by consanguinity or affinity with co-employees or employees of
competing drug companies.
Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte
sales area. Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of
Astra, a competitor of Glaxo. She was Astras Branch Coordinator in Albay and supervised the
district managers and medical representatives of her company and prepared marketing strategies
for Astra in that area. The two married even with the several reminders given by the District
Manager to Tecson. In January 1999, Tecsons superiors informed him that his marriage to Bettsy
gave rise to a conflict of interest. Tecsons superiors reminded him that he and Bettsy should
decide which one of them would resign from their jobs, although they told him that they wanted
to retain him as much as possible because he was performing his job well. This situation
eventually led to his constructive dismissal.
Issue: WON Glaxos policy prohibiting its employees from marrying an employee of a competitor
company isvalid?
Held: Glaxos policy prohibiting an employee from having a relationship with an employee of a
competitor company is a valid exercise of management prerogative.
Tecsons contract of employment with Glaxo being questioned, stipulates that Tescon agrees to
abide by the existing company rules of Glaxo, and to study and become acquainted with such
policies. In this regard, the Employee Handbook of Glaxo expressly informs its employees of its
rules regarding conflict of interest. No reversible error can be ascribed to the Court of Appeals
when it ruled that Glaxos policy prohibiting an employee from having a relationship with an
employee of a competitor company is a valid exercise of management prerogative. Glaxo has a
right to guard its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information from competitors, especially so that it and Astra are rival
companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor companies
upon Glaxos employees is reasonable under the circumstances because relationships of that
nature might compromise the interests of the company. In laying down the assailed company
policy, Glaxo only aims to protect its interests against the possibility that a competitor company
will gain access to its secrets and procedures. That Glaxo possesses the right to protect its
economic interests cannot be denied. No less than the Constitution recognizes the right of
enterprises to adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth. Indeed, while our laws endeavor to give life to the
constitutional policy on social justice and the protection of labor, it does not mean that every
labor dispute will be decided in favor of the workers. The law also recognizes that management
has rights which are also entitled to respect and enforcement in the interest of fair play.
Star Paper Corp., vs Simbol (2006) G.R. 164774
Facts:
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Simbol was 4employed

by the company on Oct 1993. He met Alma Dayrit, also an employee of the
02
company, whom he married. Prior to the marriage, Ongsitco advised the couple that should they
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decide to get married, one of them should resign pursuant to a company policy to which Simbol
complied.
1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the]
3rd degree of relationship, already employed by the company.
2. In case of two of our employees (both singles [sic], one male and another female) developed
a friendly relationship during the course of their employment and then decided to get married,
one of them should resign to preserve the policy stated above.
Issue: WON the policy of the employer banning spouses from working in the same company
violates the rights of the employee under the Constitution and the Labor Code or is a valid
exercise of management prerogative?
Held: Petitioners sole contention that "the company did not just want to have two or more of its
employees related between the third degree by affinity and/or consanguinity" is lame.
Article 136 of the Labor Code which provides:
It shall be unlawful for an employer to require as a condition of employment or continuation of
employment that a woman employee shall not get married, or to stipulate expressly or tacitly
that upon getting married a woman employee shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by
reason of her marriage.
The requirement that a company policy must bereasonableunder the circumstances to qualify as
a valid exercise of management prerogative. It is significant to note that in the case at bar,
respondents were hired after they were found fit for the job, but were asked to resign when they
married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting
Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be
detrimental to its business operations.e. The policy is premised on the mere fear that employees
married to each other will be less efficient. If we uphold the questioned rule without valid
justification, the employer can create policies based on an unproven presumption of a perceived
danger at the expense of an employees right to security of tenure.
The questioned policy may not facially violate Article 136 of the Labor Code but it creates a
disproportionate effect and under the disparate impact theory, the only way it could pass judicial
scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate,
effect. The failure of petitioners to prove a legitimate business concern in imposing the
questioned policy cannot prejudice the employees right to be free from arbitrary discrimination
based upon stereotypes of married persons working together in one company.
Rivera vs Solidbank (2006) G.R. 163269

Facts:
Rivera had been working for the Solidbank since 1977. In Dec 1994, deciding to devote his time
and attention to his poultry business in Cavite, Rivera applied for retirement. Subsequently,
Solidbank required Rivera to sign an undated Release, Waiver and Quitclaim, Rivera acknowledged
receipt of the net proceeds of his separation and retirement benefits and promised that "[he]
would not, at any time, in any manner whatsoever, directly or indirectly engage in any unlawful
activity prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary companies, their
stockholders,
or employees, and Ltheir
and Rwill
33 M aofficers,
. C e c edirectors,
l i a T i m agents
bal
l B successors-in-interest
2
m
0 2 information concerning the business of Solidbank, its manner or operation, its
not disclose4 any
plans, processes, or data of any kind."
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On May 1995, the Equitable employed Rivera as Manager of its Credit Investigation and Appraisal
Division of its Consumers Banking Group.Upon discovering this, Solidbank First Vice-President for
HRD Celia Villarosa wrote a letter informing Rivera that he had violated the Undertaking. She
likewise demanded the return of all the monetary benefits he received in consideration of the SRP
within five (5) days from receipt; otherwise, appropriate legal action would be taken against him,
when Rivera refused, Solidbank filed complaint.
Issue: WON the one year employment ban imposed by Solidbank upon Rivera is null and void for
being unreasonable and oppressive and for constituting restraint of trade?
Held: The post-retirement competitive employment ban is unreasonable because it has no
geographical limits.
Article 1306 of the NCC provides that the contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not contrary to
law, morals, good customs, public order or public policy. On the face of the Undertaking, the postretirement competitive employment ban is unreasonable because it has no geographical limits;
respondent is barred from accepting any kind of employment in any competitive bank within the
proscribed period. Although the period of one year may appear reasonable, the matter of whether
the restriction is reasonable or unreasonable cannot be ascertained with finality solely from the
terms and conditions of the Undertaking, or even in tandem with the Release, Waiver and
Quitclaim.
Employer is burdened to establish that a restrictive covenant barring an employee from accepting
a competitive employment after retirement or resignation is not an unreasonable or oppressive, or
in undue or unreasonable restraint of trade, thus, unenforceable for being repugnant to public
policy. As the Court stated in Ferrazzini v. Gsell,cases involving contracts in restraint of trade are
to be judged according to their circumstances, to wit: x x x There are two principal grounds on
which the doctrine is founded that a contract in restraint of trade is void as against public policy. One
is, the injury to the public by being deprived of the restricted partys industry; and the other is, the
injury to the party himself by being precluded from pursuing his occupation, and thus being prevented
from supporting himself and his family.
In cases where an employee assails a contract containing a provision prohibiting him or her from
accepting competitive employment as against public policy, the employer has to adduce evidence
to prove that the restriction is reasonable and not greater than necessary to protect the
employers legitimate business interests. The restraint may not be unduly harsh or oppressive in
curtailing the employees legitimate efforts to earn a livelihood and must be reasonable in light of
sound public policy.
Yrasuegui vs Philippine Airlines (2008) G.R. 168081
Facts:
Petitioner Yrasuegui, an international flight steward of Philippine Airlines Inc. (PAL) was dismissed
because of his failure to adhere to the weight standards of the airline company.
In consequence thereof, petitioner filed a complaint for illegal dismissal against PAL before the
Labor Arbiter (LA). Te Labor Arbiter ruled that the petitioner was illegally dismissed. It also issued
a writ of execution directing the reinstatement of the petitioner without loss of seniority and
other benefits, and also the payment of backwages. Respondent PAL appealed to the NLRC which
affirmed the LAs decision. Respondent PAL appealed to the Court of Appeals. CA reversed the
NLRC case.
Issue: Whether the dismissal of the petitioner valid.
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Separation pay, however, should be awarded in favor of the employee as an act of social justice or
based on equity. This is so because his dismissal is not serious misconduct. Neither is it reflective
of his moral character.
The obesity of petitioner, when placed in the context of his work as flight attendant, becomes an
analogous cause under Article 282 (e) of the Labor ode. His obesity may not be unintended, but is
nonetheless voluntary. Voluntariness basically means that the just cause is solely attributable to
the employee without any external force influencing or controlling his actions. This element runs
through all just causes under Art. 282, whether they be in nature of a wrongful action or omission.
Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the
element of intent found in Art. 282 (a), (c), and (d).
Employment in particular jobs may not be limited to persons of a particular sex, religion, or
national origin unless the employer can show that sex, religion, or national origin is an actual
qualification for performing the job. The qualification is called a bona fide occupational
qualification (BFOQ). In the United States, there are a few federal and many state job
discrimination laws that contain an exception allowing an employer to engage in an otherwise
unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the
normal operation of a business or enterprise.
IV
WAGE & WAGE
RATIONALIZATION ACT
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Ilaw at Buklod Manggagawa vs NLRC (1991) 198 SCRA 586

Facts:
The union known as Ilaw at Buklod Ng Manggagawa (IBM) said to represent 4,500 employees of
San Miguel Corporation, more or less, working at the various plants, offices, and warehouses
located at the National Capital Region presented to the company a "demand" for correction of
the significant distortion in the workers' wages.
In that demand, the Union explicitly invoked Section 4 (d) of RA 6727 which reads as follows:
Where the application of the increases in the wage rates under this Section results in distortions
as defined under existing laws in the wage structure within an establishment and gives rise to a
dispute therein, such dispute shall first be settled voluntarily between the parties and in the
event of a deadlock, the same shall be finally resolved through compulsory arbitration by the
regional branches of the National Labor Relations Commission having jurisdiction over the
workplace. It shall be mandatory for the NLRC to conduct continuous hearings and decide any
dispute arising under this Section within twenty (20) calendar days from the time said dispute is
formally submitted to it for arbitration. The pendency of a dispute arising from a wage distortion
shall not in any way delay the applicability of the increase in the wage rates prescribed under this
Section.
Issue: WON the strike is legal in the resolution of wage distortion.
Held: Strike is not legal as a means of resolving wage distortion.
The strike involving the issue of wage distortion is illegal as a means of resolving it. The legality of
these activities is usually dependent on the legality of the purposes sought to be attained and the
means employed therefore. It goes without saying that these joint or coordinated activities may
be forbidden or restricted by law or contract. In the instance of "distortions of the wage structure
within an establishment" resulting from "the application of any prescribed wage increase by virtue
of a law or wage order," Section 3 of Republic Act No. 6727 prescribes a specific, detailed and
comprehensive procedure for the correction thereof, thereby implicitly excluding strikes or
lockouts or other concerted activities as modes of settlement of the issue.
36 M astates
. C e cthat
e l i the
a Temployer
i m b a l and the union shall negotiate
L l B 2 to correct the distortions.
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Any dispute arising from wage distortions shall be resolved through the grievance procedure under
their collective bargaining agreement and, if it remains unresolved, through voluntary arbitration.
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Unless otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary
arbitrator or panel of voluntary arbitrators within ten (10) calendar days from the time said
dispute was referred to voluntary arbitration. In cases where there are no collective agreements
or recognized labor unions, the employers and workers shall endeavor to correct such distortions.
Any dispute arising there from shall be settled through the National Conciliation and Mediation
Board and, if it remains unresolved after ten (10) calendar days of conciliation, shall be referred
to the appropriate branch of the National Labor Relations Commission (NLRC). It shall be
mandatory for the NLRC to conduct continuous hearings and decide the dispute within twenty (20)
calendar days from the time said dispute is submitted for compulsory arbitration. The pendency of
a dispute arising from a wage distortion shall not in any way delay the applicability of any increase
in prescribed wage rates pursuant to the provisions of law or Wage Order.
The legislative intent that solution of the problem of wage distortions shall be sought by voluntary
negotiation or arbitration, and not by strikes, lockouts, or other concerted activities of the
employees or management, is made clear in the rules implementing RA 6727 issued by the
Secretary of Labor and Employment pursuant to the authority granted by Section 13 of the Act.
Section 16, Chapter I of these implementing rules, after reiterating the policy that wage
distortions be first settled voluntarily by the parties and eventually by compulsory arbitration,
declares that, "Any issue involving wage distortion shall not be a ground for a strike/lockout."
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Employers Confederation of the Phils vs NWPC (1991) 201 SCRA 759

Facts:
ECOP questioned the validity of the wage order issued by the RTWPB dated October 23, 1990
pursuant to the authority granted by RA 6727. The wage order increased the minimum wage by
P17.00 daily in the National Capital Region.
The wage order is applied to all workers and employees in the private sector of an increase of P
17.00 including those who are paid above the statutory wage rate. ECOP appealed with the NWPC
but dismissed the petition.
The Solicitor General in its comment posits that the Board upon the issuance of the wage order
fixed minimum wages according to the salary method. Petitioners insist that the power of RTWPB
was delegated, through RA 6727, to grant minimum wage adjustments and in the absence of
authority, it can only adjust floor wages.
Issue: WON the wage order issues by RTWPB dated October 23, 1990 is valid.
Held: Wage order is valid.
The Court agrees with the Solicitor General. It noted that there are two ways in the determination
of wage, these are floor wage method and salary ceiling method. The floor wage method involves
the fixing of determinate amount that would be added to the prevailing statutory minimum wage
while the salary ceiling method involves where the wage adjustment is applied to employees
receiving a certain denominated salary ceiling.
RA 6727 gave statutory standards for fixing the minimum wage.
ART. 124. Standards/Criteria for Minimum Wage Fixing The regional minimum wages to be
established by the Regional Board shall be as nearly adequate as is economically feasible to
maintain the minimum standards of living necessary for the health, efficiency and general wellbeing of the employees within the framework of the national economic and social development
program. In the determination of such regional minimum wages, the Regional Board shall,
among other relevant factors, consider the following:
(a)
The demand for living wages;
(b) M a .Wage
38
C e adjustment
c e l i a T i vis-a-vis
m b a l the consumer price index;
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(c)
The cost of living and changes or increases therein;
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(d)
The needs of workers and their families;
(e)
The need to induce industries to invest in the countryside;
(f)
Improvements in standards of living;
(g)
The prevailing wage levels;
(h)
Fair return of the capital invested and capacity to pay of employers;
(i)
Effects of employment generation and family income; and
(j)
The equitable distribution of income and wealth along the imperatives of economic and
social development."
The wage order was not acted in excess of boards authority. The law gave reasonable limitations
to the delegated power of the board.
39
Ma. Cecelia Timbal

402
LlB 2
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Labor Standards
Mabeza vs NLRC () 271 SCRA 670

Facts:
Petitioner Norma Mabeza contends that on the first week of May 1991, she and her co-employees
at the Hotel Supreme in Baguio City were asked by the hotel's management to sign an instrument
attesting to the latter's compliance with minimum wage and other labor standard provisions of
law. Petitioner signed the affidavit but refused to go to the City Prosecutor's Office to swear to the
veracity and contents of the affidavit as instructed by management. The affidavit was
nevertheless submitted on the same day to the Regional Office of the Department of Labor and
Employment in Baguio City.
The affidavit was drawn by management for the sole purpose of refuting findings of the Labor
Inspector of DOLE apparently adverse to the private respondent. After she refused to proceed to
the City Prosecutor's Office, petitioner states that she was ordered by the hotel management to
turn over the keys to her living quarters and to remove her belongings from the hotel premises.
According to her, respondent strongly chided her for refusing to proceed to the City Prosecutor's
Office to attest to the affidavit. She thereafter reluctantly filed a leave of absence from her job
which was denied by management. When she attempted to return to work on May 1991, the
hotel's cashier informed her that she should not report to work and, instead, continue with her
unofficial leave of absence.
Consequently, three days after her attempt to return to work, petitioner filed a complaint for
illegal dismissal before the Arbitration Branch of the National Labor Relations Commission CAR
Baguio City. In addition to her complaint for illegal dismissal, she alleged underpayment of wages,
non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and
other benefits.
Responding to the allegations for illegal dismissal, private respondent Peter Ng alleged before
Labor Arbiter that petitioner surreptitiously left her job without notice to the management and
that she actually abandoned her work. He maintained that there was no basis for the money
claims for underpayment and other benefits as these were paid in the form of facilities to
petitioner and the hotel's other employees.
Labor Arbiter dismissed the complaint. On April 1994, respondent NLRC promulgated its assailed
Resolution affirming the Labor Arbiter's decision.
Issue: WON the employers exerted pressure, in the form of restraint, interference or coercion,
against his employee's right to institute concerted action for better terms and conditions of
employment constitutes unfair labor practice.
Held: The Court ruled that there was unfair labor practice.
Without doubt, the act of compelling employees to sign an instrument indicating that the
employer observed labor standards provisions of law when he might have not, together with the
act of terminating or coercing those who refuse to cooperate with the employer's scheme
constitutes unfair labor practice. The first act clearly preempts the right of the hotel's workers to
40 M terms
a . C eand
c e l conditions
i a T i m b aof
l employment through L concerted
lB 2
seek better
action. For refusingR m
to
402
cooperate with the private respondent's scheme, petitioner was obviously held up as an example
to all of the hotel's employees, that they could only cause trouble to management at great
Labor Standards
personal inconvenience. Implicit in the act of petitioner's termination and the subsequent filing of
charges against her was the warning that they would not only be deprived of their means of
livelihood, but also possibly, their personal liberty.
Granting that meals and lodging were provided and indeed constituted facilities, such facilities
could not be deducted without the employer complying first with certain legal requirements.
Without satisfying these requirements, the employer simply cannot deduct the value from the
employee's wages. First, proof must be shown that such facilities are customarily furnished by the
trade. Second, the provision of deductible facilities must be voluntarily accepted in writing by the
employee. Finally, facilities must be charged at fair and reasonable value. These requirements
were not met in the instant case.
More significantly, the food and lodging, or the electricity and water consumed by the petitioner
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 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 the private
respondent's hotel.
41
Ma. Cecelia Timbal

402
LlB 2
Rm
Labor Standards
Joy Brothers Inc., vs NWPC (1997) 273 SCRA 622

Facts:
Wage Order No. NCR-03, providing for a twenty-seven peso wage increase for all private sector
workers and employees in the National Capital Region receiving one hundred fifty-four pesos
(P154.00) and below daily, was approved November 29, 1993.
On February 1994, petitioner applied for exemption from said wage order on the ground that it
was a distressed establishment. The RTWPB denied petitioner's application for exemption after
holding that the corporation accumulated profits amounting to P38,381.80 for the period under
review. Petitioner's motion for reconsideration was likewise denied by the Wages and Productivity
Board on January 5, 1995. On appeal to the National Wages and Productivity Commission,
petitioner was again denied relief.
More specifically, petitioner contends that the interim period to be reckoned with is from January
1, 1993 to December 15, 1993 and not merely up to September 30, 1993 as held by respondent
Commission. Significantly, the period up to December 31, 1993 will reflect losses in petitioner
corporation's books, but not if the covered interim period is only up to September 30, 1993.
Issue: WON petitioner Corporation falls within the exemption for distressed establishments.
Held: The petitioner company is not entitled to exemption of the wage order since it is not a
distressed establishment.
Under Section 5 of Wage Order No. NCR-03, distressed firms may be exempted from the
provisions of the Order upon application with and due determination of the Board. NWPC
Guidelines No. 01, Series of 1992, providing for the Revised Guidelines on Exemption indicate the
criteria to qualify for exemption as follows:
For Distressed Establishments: In the case of a stock corporation, partnership, single
proprietorship, non-stock, non-profit organization or cooperative engaged in a business activity or
charging fees for its services When accumulated losses for the last 2 full accounting periods and
interim period, if any, immediately preceding the effectivity of the Order have impaired by at
least 25 percent the: Paid-up capital at the end of the last full accounting period preceding the
effectivity of the Order, in the case of corporations: Total invested capital at the beginning of the
last full accounting period preceding the effectivity of the Order in the case of partnerships and
single proprietorships. Establishments operating for less than two (2) years may be granted
exemption when accumulated losses for said period have impaired by at least 25% the paid-up
capital or total invested capital, as the case may be."
Section 8, paragraph a, of the Rules Implementing Wage Order No. NCR-03 provides that
exemption from compliance with the wage increase may be granted to distressed establishments
whose paid-up capital has been impaired by at least twenty-five percent (25%) or which registers
capital deficiency or negative net worth.
42
Ma. Cecelia Timbal
LlB 2
Rm
4 0 2 expressly require interim quarterly financial statements for the period

The Guidelines
immediately preceding December 16, 1993. The last two full accounting periods here are 1991
Labor Standards
and 1992, for which years petitioner incurred net profits of P53,607.00 and P60,188.00,
respectively.
Prubankers Association vs Prudential Bank (1999) 302 SCRA 74
Facts:
The RTWPB Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living
Allowance (COLA) to workers in the private sector who had rendered service for at least three (3)
months before its effectivity, and for the same period thereafter, in the following categories:
P17.50 in the cities of Naga and Legaspi; P15.50 in the municipalities of Tabaco, Daraga, Pili and
the city of Iriga; and P10.00 for all other areas in the Bicol Region.
On November 1993, RTWPB Region VII issued Wage Order No. RB VII-03, which directed the
integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the basic pay of all
workers. It also established an increase in the minimum wage rates for all workers and employees
in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and
Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova,
Talisay, Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and
Tagbilaran. The bank granted a COLA of P17.50 to its employees at its Naga Branch, the only
branch covered by Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into the
basic pay of its rank-and-file employees at its Cebu, Mabolo and P. del Rosario branches, the
branches covered by Wage Order No. RB VII-03.
On June 7, 1994, Prubankers Association wrote the petitioner requesting that the Labor
Management Committee be immediately convened to discuss and resolve the alleged wage
distortion created in the salary structure upon the implementation of the said wage orders. It
demanded in the Labor Management Committee meetings that the petitioner extend the
application of the wage orders to its employees outside Regions V and VII, claiming that the
regional implementation of the said orders created a wage distortion in the wage rates of
petitioner's employees nationwide. As the grievance could not be settled in the said meetings, the
parties agreed to submit the matter to voluntary arbitration.
Issue: WON a wage distortion resulted from respondent's implementation of the Wage Orders.
Held: The court ruled that there is no wage distortion since the wage order implementation
covers all the branches of the bank.
The hierarchy of positions was still preserved. The levels of different pay classes was not
eliminated. The statutory definition of wage distortion is found in Article 124 of the Labor Code,
as amended by Republic Act No. 6727, which reads: Standards/Criteria for Minimum Wage Fixing
. . ."As used herein, a wage distortion shall mean a situation where an increase in prescribed
wage results in the elimination or severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills, length of service, or
other logical bases of differentiation."
Wage distortion involves four elements: (1) An existing hierarchy of positions with corresponding
salary rates; (2) A significant change in the salary rate of a lower pay class without a concomitant
increase in the salary rate of a higher one; (3)The elimination of the distinction between the two
levels and (4) The existence of the distortion in the same region of the country.
43
Ma. Cecelia Timbal
LlB 2
Rm
A disparity in
between employees holding similar positions but in different regions does not
4 0wages
2
constitute wage distortion as contemplated by law. As stated, it is the hierarchy of positions and
Labor Standards
the disparity of their corresponding wages and other emoluments that are sought to be preserved
by the concept of wage distortion.
M a .vsCNLRC
e c e l()i a
m b a501
l
Millares44et al.,
305T iSCRA
Facts:
402
LlB 2
Rm
Labor Standards
Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit
Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill
site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur.
In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of
restrictive government regulations on logging and the economic crisis. To avert further losses, it
undertook a retrenchment program and terminated the services of petitioners. Accordingly,
petitioners received separation pay computed at the rate of one (1) month basic pay for every
year of service. Believing however that the allowances they allegedly regularly received on a
monthly basis during their employment should have been included in the computation thereof
they lodged a complaint for separation pay differentials.
Issue: Whether the allowances are included in the definition of "facilities" in Art. 97, par. (f), of
the Labor Code, being necessary and indispensable for their existence and subsistence.
Held: The allowances are not part of the wages of the employees.
Wage is defined in letter (f) as the remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or
for services rendered or to be rendered and 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.
When an employer customarily furnishes his employee board, lodging or other facilities, the fair
and reasonable value thereof, as determined by the Secretary of Labor and Employment, is
included in "wage." Customary is founded on long-established and constant practice connoting
regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as
regular and forming part of salary because the nature of the grant is a factor worth considering.
The court agrees with the observation of the Office of the Solicitor General that the subject
allowances were temporarily, not regularly, received by petitioners. Although it is quite easy to
comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of
the Rules Implementing the Labor Code gives meaning to the term as including articles or services
for the benefit of the employee or his family but excluding tools of the trade or articles or service
primarily for the benefit of the employer or necessary to the conduct of the employer's business.
In determining whether a privilege is a facility, the criterion is not so much its kind but its
purpose. Revenue Audit Memo Order No. 1-87 pertinently provides 3.2 transportation,
representation or entertainment expenses shall not constitute taxable compensation if: (a) I t i s
for necessary travelling and representation or entertainment expenses paid or incurred by the
employee in the pursuit of the trade or business of the employer, and (b) The employee is
required to, and does, make an accounting/liquidation for such expense in accordance with the
specific requirements of substantiation for such category or expense.Board and lodging allowances
furnished to an employee not in excess of the latter's needs and given free of charge, constitute
income to the latter except if such allowances or benefits are furnished to the employee for the
convenience
of his dutiesR m
in
45 M of
a . the
C e employer
c e l i a T and
i m bas
a l necessary incident to proper
L l B performance
2
which case such
4 0 2 benefits or allowances do not constitute taxable income.
Labor Standards
The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing
the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value
of board, lodging and other facilities customarily furnished by an employer to his employees."
Petitioners' allowances do not represent such fair and reasonable value as determined by the
proper authority simply because the Staff/Manager's allowance and transportation allowance were
amounts given by respondent company in lieu of actual provisions for housing and transportation
needs whereas the Bislig allowance was given in consideration of being assigned to the hostile
environment then prevailing in Bislig. The inevitable conclusion is that subject allowances did not
form part of petitioners' wages.
46 M aSchool
. C e cAlliance
e l i a Tof
i mEducators
bal
L l B 333
2 SCRA 13
International
vs Quisumbing (2000)
402
Facts:
Rm
Labor Standards
International School, Inc., pursuant to PD 732, is a domestic educational institution established

primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable
the School to continue carrying out its educational program and improve its standard of
instruction, Section 2(c) of the same 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 hires both foreign and local teachers as members of its faculty, classifying the same
into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine whether
a faculty member should be classified as a foreign-hire or a local hire: (a) What is one's domicile?
(b) Where is one's home economy? (c) To which country does one owe economic allegiance? (d)
Was the individual hired abroad specifically to work in the School and was the School responsible
for bringing that individual to the Philippines? Should the answer to any of these queries point to
the Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a
foreign-hire.
The School grants foreign-hires certain benefits not accorded local- hires. These 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. The compensation scheme is simply the School's
adaptive measure to remain competitive on an international level in terms of attracting
competent professionals in the field of international education.
Issue: WON local hire teachers shall enjoy same salary as foreign hire teachers where they
perform the same work.
Held: Employees are entitled to same salary for performance of equal work.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7
thereof, provides: The States Parties to the present Covenant recognize the right of everyone to
the enjoyment of just and favorable conditions of work, which ensure, in particular: ( a)
Remuneration which provides all workers, as a minimum, with: (i) F a i r w a g e s a n d e q u a l
remuneration for work of equal value without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal
work; The foregoing 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.
The School contends that petitioner has not adduced evidence that local-hires perform work equal
to that of foreign-hires. The Court finds this argument a little inconsiderate. If an employer
accords employees the same position and rank, the presumption is that these employees perform
47 MIfa the
. C employer
e c e l i a pays
T i m one
b a l employee less than theL rest,
l B it2is not for that employee
Rm
equal work.
to
402
explain why he receives less or why the others receive more. The employer has discriminated
against that employee; it is for the employer to explain why the employee is treated unfairly.
Labor Standards
In this case, the employer 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.
Bankard Employees Union vs NLRC (2004) G.R. 140689

Facts:
48
Ma. Cecelia Timbal
LlB 2
Rm
Bankard, Inc.
classifies its employees by levels: Level I, Level II, Level III, Level IV, and Level V. On
402
May 1993, its Board of Directors approved a New Salary Scale, made retroactive to April 1, 1993,
for the purpose of making its hiring rate competitive in the industrys labor market. The New
Labor Standards
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. Petitioners motion for reconsideration of the dismissal of the
case was denied.
Issue: Whether the unilateral adoption by an employer of an upgraded salary resulted in wage
distortion within the contemplation of Article 124 of the Labor Code.
Held: There exists a wage distortion but the Court will not interfere in the management
prerogative of the petitioner.
Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending, among others,
Article 124 of the Labor Code), 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.
In the case of Prubankers Association v. Prudential Bank and Trust Company, it 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.
Put differently, the entry of new employees to the company ipso facto places them under any of
the levels mentioned in the new salary scale which private respondent adopted retroactive to
April 1, 1993. 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. Where the application of any
49
M a . Cwage
e c e increase
lia Tim
al
L l issued
B 2by any Regional Board results
Rm
prescribed
bybvirtue
of a law or Wage Order
402
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
Labor Standards
resolved through the grievance procedure under their collective bargaining agreement and, if it
remains unresolved, through voluntary arbitration.
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 Bankards 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.
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.
Odango vs NLRC (2005) G.R. 147420

Facts:
Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday
and half of Saturday. After a routine inspection, the Regional Branch of the Department of Labor
and Employment found ANTECO liable for underpayment of the monthly salaries of its employees.
On September 1989, the DOLE directed ANTECO to pay its employees wage differentials amounting
to P1,427,412.75. ANTECO failed to pay. On various dates in 1995, thirty-three (33) monthly-paid
employees filed complaints with the NLRC praying for payment of wage differentials, damages and
attorneys fees.
On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting them
wage differentials amounting to P1,017,507.73 and attorneys fees of 10%. ANTECO appealed the
Decision to the NLRC where it reversed the Labor Arbiters Decision. The NLRC denied petitioners
motion for reconsideration. Petitioners then elevated the case to CA where it dismissed the
petition for failure to comply with Section 3, Rule 46 of the Rules of Court. The Court of Appeals
explained
the NLRC abusedR its
50 that
M a . petitioners
C e c e l i a failed
T i m bto
a l allege the specific instances
L l B where
2
m
discretion. The
appellate
court
denied
petitioners
motion
for
reconsideration.
402
Issue: Whether or not the petitioners are entitled to money claims.
Labor Standards
Held: Petitioners are not entitled to money claims or wage differentials.

The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules and Policy
Instructions No. 9 issued by the Secretary of Labor which was declared null and void since in the
guise of clarifying the Labor Codes provisions on holiday pay, they in effect amended them by
enlarging the scope of their exclusion.
Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The basic rule in
this jurisdiction is "no work, no pay." The right to be paid for un-worked days is generally limited
to the ten legal holidays in a year. Petitioners claim is based on a mistaken notion that Section 2,
Rule IV of Book III gave rise to a right to be paid for un-worked days beyond the ten legal holidays.
Petitioners line of reasoning is not only a violation of the "no work, no pay" principle, it also gives
rise to an invidious classification, a violation of the equal protection clause.
C. Planas Commercial vs NLRC (2005) G.R. 144619

Facts:
In September 1993, Morente, Allauigan and Ofialda and others filed a complaint for underpayment
of wages, non payment of overtime pay, holiday pay, service incentive leave pay, and premium pay
for rest day and holiday and night shift differential against petitioners in the Arbitration Branch of
NLRC. It alleged that Cohu is engaged in the business of wholesale of plastic products and fruits of
different kinds with more than 24 employees. Respondents were hired on January 1990, May 1990
and July 19991 as laborers and were paid below the minimum wage for the past 3 years. They
were required to work for more than 8 hours a day and never enjoyed the minimum benefits.
Petitioners filed their comment stating that the respondents were their helpers.
The Labor Arbiter rendered a decision dismissing the money claims. Respondents filed an appeal
with the NLRC where it granted the money claims. Petitioners appealed with the CA but it was
denied. It said that the company having claimed of exemption of the coverage of the minimum
wage shall have the burden of proof to the claim.
Petitioners insist that C. Planas Commercial is a retail establishment principally engaged in the
sale of plastic products and fruits to the customers for personal use, thus exempted from the
application of the minimum wage law; that it merely leases and occupies a stall in the Divisoria
Market and the level of its business activity requires and sustains only less than ten employees at a
time. Petitioners contend that private respondents were paid over and above the minimum wage
required for a retail establishment, thus the Labor Arbiter is correct in ruling that private
respondents claim for underpayment has no factual and legal basis. Petitioners claim that since
private respondents alleged that petitioners employed 24 workers, it was incumbent upon them to
51 allegation
M a . C e cwhich
e l i a private
T i m b respondents
al
Rm
prove such
failed to do.L l B 2
402
Issue: WON petitioner is exempted from the application of minimum wage law.
Labor Standards
Held: Petitioners have not successfully shown that they had applied for the exemption.
R.A. No. 6727 known as the Wage Rationalization Act provides for the statutory minimum wage
rate of all workers and employees in the private sector. Section 4 of the Act provides for
exemption from the coverage, thus: Sec. 4. (c) Exempted from the provisions of this Act are
household or domestic helpers and persons employed in the personal service of another, including
family drivers. Also, retail/service establishments regularly employing not more than ten (10)
workers may be exempted from the applicability of this Act upon application with and as
determined by the appropriate Regional Board in accordance with the applicable rules and
regulations issued by the Commission. Whenever an application for exemption has been duly filed
with the appropriate Regional Board, action on any complaint for alleged non-compliance with this
Act shall be deferred pending resolution of the application for exemption by the appropriate
Regional Board.
In the event that applications for exemptions are not granted, employees shall receive the
appropriate compensation due them as provided for by this Act plus interest of one percent (1%)
per month retroactive to the effectivity of this Act.
EJR Crafts Corp., vs CA (2006)
Facts:
In 1997, private respondents filed a complaint for underpayment of wages, regular holiday pay,
overtime pay, non-payment of 13th month pay and service incentive leave pay against petitioner
before the Regional Office, NCR of the Department of Labor and Employment (DOLE). Acting on
the complaint, Regional Director issued an inspection authority to Senior Labor Enforcement
Officer.
On August 1997, an inspection was conducted on the premises of petitioners offices wherein the
following violations of labor standards law were discovered, to wit: non-presentation of
employment records (payrolls and daily time records); underpayment of wages, regular holiday
pay, and overtime pay; and non-payment of 13th month pay and service incentive leave pay. On
the same day, the Notice of Inspection Result was received by and explained to the manager of
petitioner corporation Mr. Jae Kwan Lee, with the corresponding directive that necessary
restitution be effected within five days from said receipt.
As no restitution was made, the Regional Office thereafter conducted summary investigations.
However, despite due notice, petitioner failed to appear for two consecutive scheduled hearings.
Petitioner failed to question the findings of the Labor Inspector received by and explained to the
corporations manager. Petitioner then filed a Motion for Reconsideration of said Order arguing
that the Regional Director has no jurisdiction over the case as private respondents were allegedly
no longer connected with petitioner corporation at the time of the filing of the complaint and
when the inspection was conducted, and that private respondents claims are within the exclusive
and original jurisdiction of the Labor Arbiters.
Issue: WON the Regional Director has jurisdiction over the claims of the private respondents.
Held: Regional Director has jurisdiction to hear and decide the instant case.
The Court favors the respondents in the money claims against the petitioner company. It is
admitted
Director
to exercise the power
compliance, or theRso52 that
M a .forC the
e c eRegional
lia Tim
bal
L l Bto order
2
m
402
called "enforcement
power" under Article 128(b) of P.D. No. 442 as amended, it is necessary that
the employer-employee relationship still exists.
Labor Standards
In support of its contention that it is the Labor Arbiter and not the Regional Director who has
jurisdiction over the claims of herein private respondents, petitioner contends that at the time
the complaint was filed, the private respondents were no longer its employees. Considering thus
that there still exists an employer-employee relationship between petitioner and private
respondents and that the case involves violations of labor standard provisions of the Labor Code,
we agree with the Undersecretary of Labor and the appellate court that the Regional Director has
jurisdiction to hear and decide the instant case in conformity with Article 128(b) of the Labor
Code which states:
Art. 128. Visitorial and Enforcement Power. (b) Notwithstanding the provisions of Articles 129
and 217 of this Code to the contrary, and in cases where the relationship of employer-employee
still exists, the Secretary of Labor and Employment or his duly authorized representatives shall
have the power to issue compliance orders to give effect to the labor standards provisions of
this Code and other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue writs of execution to the
appropriate authority for the enforcement of their orders, except in cases where the employer
contests the findings of the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in the course of inspection.
Pag Asa Steel Works vs CA (2006) G.R. 166647

Facts:
Petitioner is engaged in the manufacture of steel bars and wire rods while Pag-Asa Steel Workers
Union is the duly authorized bargaining agent of the rank-and-file employees.
RTWPB of NCR issued a wage order which provided for a P 13.00 increase of the salaries receiving
minimum wages. The Petitioner and the union negotiated on the increase. Petitioner forwarded a
letter to the union with the list of adjustments involving rank and file employees. In September
1999, the petitioner and union entered into an collective bargaining agreement where it provided
wage adjustments namely P15, P25, P30 for three succeeding year. On the first year, the increase
provided were followed until RTWPB issued another wage order where it provided for a P25.50 per
day increase in the salary of employees receiving the minimum wage and increased the minimum
wage to P223.50 per day. Petitioner paid the P25.50 per day increase to all of its rank-and-file
employees.
On November 2000, Wage Order No. NCR-08 was issued where it provided the increase of P26.50
per day. The union president asked that the wage order be implemented where petitioner
rejected the request claiming that there was no wage distortion and it was not obliged to grant
the wage increase. The union submitted the matter for voluntary arbitration where it favored the
position of the company and dismissed the complaint. The matter was elevated to CA where it
favored the respondents.
Issue: WON the company was obliged to grant the wage increase under the Wage Order as a
matter of practice.
Held: Company is not obliged to grant the wage increase.
It is submitted that employers unless exempt are mandated to implement the said wage order but
limited to those entitled thereto. A perusal of the record shows that the lowest paid employee
before the implementation of Wage Order #8 is P250.00/day and none was receiving below
P223.5053minimum.
that the union can
no longer
demand for any wage
M a . C eThis
c e l could
i a T i only
m b amean
l
LlB
2
Rm
402
distortion adjustment.
The provision of wage order #8 and its implementing rules are very clear as
to who are entitled to the P26.50/day increase, i.e., "private sector workers and employees in the
National Capital Region receiving the prescribed daily minimum wage rate of P223.50 shall receive
Labor Standards
an increase of Twenty-Six Pesos and Fifty Centavos (P26.50) per day," and since the lowest paid is
P250.00/day the company is not obliged to adjust the wages of the workers.
The provision in the CBA that "Any Wage Order to be implemented by the Regional Tripartite Wage
and Productivity Board shall be in addition to the wage increase adverted above" cannot be
interpreted in support of an across-the-board increase. Wage Order No. NCR-08 clearly states that
only those employees receiving salaries below the prescribed minimum wage are entitled to the
wage increase provided therein, and not all employees across-the-board as respondent Union
would want petitioner to do. Considering therefore that none of the members of respondent Union
are receiving salaries below the P250.00 minimum wage, petitioner is not obliged to grant the
wage increase to them. Moreover, to ripen into a company practice that is demandable as a
matter of right, the giving of the increase should not be by reason of a strict legal or contractual
obligation, but by reason of an act of liberality on the part of the employer. Hence, even if the
company continuously grants a wage increase as mandated by a wage order or pursuant to a CBA,
the same would not automatically ripen into a company practice.
Equitable PCI Bank vs Sadac (2006) G.R. 164772
Facts:
Ricardo Sadac was appointed VP of the Legal Department of petitioner Bank effective August
1981, and subsequently General Counsel thereof on December 1981. On June 1989, nine lawyers of
petitioner Banks Legal Department, in a letter-petition to the Chairman of the Board of Directors,
accused respondent Sadac of abusive conduct and ultimately, petitioned for a change in leadership
of the department. On the ground of lack of confidence in Sadac, under the rules of client and
lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in his
custody in all cases in which the latter was appearing as its counsel of record. In reaction thereto,
Sadac requested for a full hearing and formal investigation but the same remained unheeded. On
November 1989, respondent Sadac filed a complaint for illegal dismissal with damages against
petitioner Bank and individual members of the Board of Directors thereof. After learning of the
filing of the complaint, petitioner Bank terminated the services of respondent Sadac. Finally, on
August 1989, Sadac was removed from his office
Labor Arbiter rendered decision that Sadacs termination was illegal and entitled to
reinstatement and payment of full back wages. NLRC affirmed the decision upon appeal by the
Bank. Sadac filed for execution of judgment where it gave its computation which amounted to P
6.03 M representing his back wages and the increases he should have received during the time he
was illegally dismissed. The Bank opposed to Sadacs computation. The Labor Arbiter favor
Sadacs computation. NLRC, upon appeal by the bank, reversed the decision. CA reversed the
decision of NLRC.
Issue: WON the computation of back wages shall include the general increases.
Held: Respondent Sadac cannot take exception by arguing that jurisprudence speaks only of wage
and not salary, and therefore, the rule is inapplicable to him. It is respondent Sadacs stance that
he was not paid at the wage rate nor was he engaged in some form of manual or physical labor as
he was hired as Vice President of petitioner Bank. He cites Gaa v. Court of Appeals where the
Court distinguished between wage and salary.
The reliance is misplaced. The distinction between salary and wage in Gaa was for the purpose of
Article 1708 of the Civil Code which mandates that, "[t]he laborers wage shall not be subject to
execution or attachment, except for debts incurred for food, shelter, clothing and medical
attendance."
distinction appears Ltol Bbe merely
semantics. Paramount
54 M aIn. labor
C e c law,
e l i ahowever,
T i m b a the
l
2
Rm
and Evangelista
4 0 2 may have involved wage earners, but the petitioner in Espejo was a General
Manager with a monthly salary of P9,000.00 plus privileges. That wage and salary are synonymous
has been settled in Songco v. National Labor Relations Commission.We said:
Labor Standards
Broadly, the word "salary" means a recompense or consideration made to a person for his pains
or industry in another mans business. Whether it be derived from "salarium," or more fancifully
from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of
compensation for services rendered. Indeed, there is eminent authority for holding that the
words "wages" and "salary" are in essence synonymous (Words and Phrases, Vol. 38 Permanent
Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S.839, 841, 89 App. Div. 481; 38 Am. Jur.
496). "Salary," the etymology of which is the Latin word "salarium," is often used
interchangeably with "wage", the etymology of which is the Middle English word "wagen". Both
words generally refer to one and the same meaning, that is, a reward or recompense for
services performed. Likewise, "pay" is the synonym of "wages" and "salary" (Blacks Law
Dictionary, 5th Ed). x x x (Italics supplied.)
Metropolitan Bank vs NWPC (2007) G.R. 144322

Facts:
On October 1995, the Regional Tripartite Wages and Productivity Board, Region II, Tuguegarao,
Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727), otherwise known as the
Wage Rationalization Act, issued Wage Order No. R02-03 (Wage Order), as follows: Section 1. Upon
effectivity of this Wage Order, all employees/workers in the private sector throughout Region II,
regardless of the status of employment are granted an across-the-board increase of P15.00 daily.
The Wage Order was published in a newspaper of general circulation on December 2, 1995 and
took effect on January 1, 1996. Its Implementing Rules were approved on February 14, 1996. Per
Section 13 of the Wage Order, any party aggrieved by the Wage Order may file an appeal with the
National Wages and Productivity Commission (NWPC) through the RTWPB within 10 calendar days
from the publication of the Wage Order.
Bankers Council in a letter inquiry to NWPC requested for ruling to seek exemption from coverage
of the wage order since the members bank are paying more than the regular wage. NWPC replied
that the member banks are covered by the wage order and does not fall with the exemptible
categories. In another letter inquiry, Metrobank asked for the interpretation of the applicability of
the wage order. NWPC referred it to RTWPB. RTWPB in return clarified that establishments in
Region 2 are
Issue: WON the wage order is void thus it has no legal effect and the RTWPB acted in excess of its
jurisdiction.
Held: Section 1, Wage Order No. R02-03 is void insofar as it grants a wage increase to employees
earning more than the minimum wage rate; and pursuant to the separability clause of the Wage
Order, Section 1 is declared valid with respect to employees earning the prevailing minimum wage
rate.
The powers of NWPC are enumerated in ART. 121. Powers and Functions of the Commission. - The
Commission shall have the following powers and functions: (d) To review regional wage levels set
by the Regional Tripartite Wages and Productivity Boards to determine if these are in accordance
with prescribed guidelines and national development plans; (f) To review plans and programs of
the Regional Tripartite Wages and Productivity Boards to determine whether these are consistent
with national development plans; (g) To exercise technical and administrative supervision over the
Regional Tripartite Wages and Productivity Boards.
R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum wages and to
promote productivity-improvement and gain-sharing measures to ensure a decent standard of
living for the workers and their families; to guarantee the rights of labor to its just share in the
M a . C e c to
e l enhance
i a T i m bemployment
al
l B countryside
2
Rm
fruits of55 production;
generation inL the
through industrial
402
dispersal; and to allow business and industry reasonable returns on investment, expansion and
growth.
Labor Standards
In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the power to
prescribe rules and guidelines for the determination of appropriate minimum wage and
productivity measures at the regional, provincial or industry levels; and authorized the RTWPB to
determine and fix the minimum wage rates applicable in their respective regions, provinces, or
industries therein and issue the corresponding wage orders, subject to the guidelines issued by the
NWPC. Pursuant to its wage fixing authority, the RTWPB may issue wage orders which set the daily
minimum wage rates, based on the standards or criteria set by Article 124 of the Labor Code.
The Court declared that there are two ways of fixing the minimum wage: the "floor-wage" method
and the "salary-ceiling" method. The "floor-wage" method involves the fixing of a determinate
amount to be added to the prevailing statutory minimum wage rates. On the other hand, in the
"salary-ceiling" method, the wage adjustment was to be applied to employees receiving a
certain denominated salary ceiling. In other words, workers already being paid more than the
existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a
wage increase.
In the present case, the RTWPB did not determine or fix the minimum wage rate by the "floorwage method" or the "salary-ceiling method" in issuing the Wage Order. The RTWPB did not set a
wage level nor a range to which a wage adjustment or increase shall be added. Instead, it granted
an across-the-board wage increase of P15.00 to all employees and workers of Region 2. In doing
so, the RTWPB exceeded its authority by extending the coverage of the Wage Order to wage
earners receiving more than the prevailing minimum wage rate, without a denominated salary
ceiling. As correctly pointed out by the OSG, the Wage Order granted additional benefits not
contemplated by R.A. No. 6727.
56
Ma. Cecelia Timbal

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Labor Standards
V
VIOLATION OF WAGE
ORDERS
VI
WAGE ENFORCEMENT
& RECOVERY
Rajah Humabon Hotel vs Trajano (1993) G.R. 100222-23

Facts:
Subsequent to the initial pleading filed by respondent-employees before the regional director of
DOLE for redress in regard to underpaid wages and non-payment of benefits, petitioners were
instructed to allow the inspection of the employment records of respondents on April 4, 1989.
57 no
M ainspection
. C e c e l could
i a T ibe
m bdone
a l on that date on account
L l B of
2the picket staged by other
Rm
However,
0 2 re-scheduled examination after closure of petitioners' business on April 16, 1989,
workers. At 4the
instead of presenting the payrolls and daily time records of private respondents, petitioner Peter
Po submitted a motion to dismiss on the supposition that the regional director has no jurisdiction
Labor Standards
over the case because the employer-employee relationship had been served as a result of the
closure of petitioners' business, apart from the fact that each of the claims of private respondents
exceeded the jurisdictional limit of P5,000.00 pegged by Republic Act No. 6715 or the New Labor
Relations Law.
Issue: Who between the Regional Director of DOLE and the Labor Arbiter has jurisdictional
competence over the complaint of private respondents?
Held: Regional Director had no jurisdiction over the case.
Section 2 of EO No. 111, promulgated on December 24, 1986, which amended Article 128(b) of the
Labor Code gives concurrent jurisdiction to both the Secretary of Labor (or the various regional
directors) and the labor arbiters over money claims among the other cases mentioned by Article
217 of the Labor Code. This provision merely confirms/reiterates the enforcement/adjudication
authority of the Regional Director over uncontested money claims in cases where an employeremployee relationship still exists.
However, with the enactment of Republic Act No. 6715, which took effect on March 21, 1989 or
seven days after the complaint at bar was filed on March 14, 1989, Articles 129 and 217 of the
Labor Code were amended, there is no doubt that the regional directors can try money claims only
if the following requisites concur: (1) the claim is presented by an employee or person employed
in domestic or household service, or househelper under the code; (2) the claimant, no longer
being employed, does not seek reinstatement; and (3) the aggregate money claim of the employee
or housekeeper does not exceed five thousand pesos (P5,000.00). Thus, the power to hear and
decide employees' claims arising from employer-employee relations, exceeding P5,000.00 for each
employee should be left to the Labor Arbiter as the exclusive repository of the power to hear and
decide such claims.
In the instant case, a simple examination of the labor arbiter's impugned order dated September
25, 1989 readily shows that the aggregate claims of each of the twenty-five employees of
petitioner are above the amount of P5,000.00 fixed by Republic Act No. 6715. Therefore, the
regional director had no jurisdiction over the case. Hence, the petition is granted and the public
respondent is directed to refer the workers' money claims to the appropriate Labor Arbiter for
proper disposition.
Guico vs Sec of Labor (1998) G.R. 131750

Facts:
The case started when the Office of the Regional Director, Department of Labor and Employment
(DOLE), Region I, San Fernando, La Union, received a letter-complaint dated April 25, 1995,
requesting for an investigation of petitioner's establishment, Copylandia Services & Trading, for
violation of labor standards laws. Pursuant to the visitorial and enforcement powers of the
Secretary of Labor and Employment or his duly authorized representative under Article 128 of the
Labor Code, as amended, inspections were conducted at Copylandia's outlets on April 27 and May
2, 1995. The inspections yielded the following violations involving twenty-one (21) employees who
are copier operators: (1) underpayment of wages; (2) underpayment of 13th month pay; and (3) no
service incentive leave with pay.
58
Ma. Cecelia Timbal

402
LlB 2
Issue: WON the Regional Director has jurisdiction over the labor standards case.
Rm
Labor Standards
Held: Regional Director has jurisdiction over the case citing Article 128 (b) of the Labor Code, as
amended.
We sustain the jurisdiction of the respondent Secretary. As the respondent correctly pointed out,
this Court's ruling in Servando that the visitorial power of the Secretary of Labor to order and
enforce compliance with labor standard laws cannot be exercised where the individual claim
exceeds P5,000.00, can no longer be applied in view of the enactment of R.A. No. 7730 amending
Article 128(b) of the Labor Code,viz:
Art. 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists, the Secretary
of Labor and Employment or his duly authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards provisions of the Code and other labor
legislation based on the findings of the labor employment and enforcement officers or
industrial safety engineers made in the course of inspection. The Secretary or his duly
authorized representatives shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the findings of the
labor employment and enforcement officer and raises issues supported by documentary proofs
which were not considered in the course of inspection.
An order issued by the duly authorized representative of the Secretary of Labor and
Employment under this article may be appealed to the latter. In case said order involves a
monetary award, an appeal by the employer may be perfected only upon the posting of a cash
or surety bond issued by a reputable bonding company duly accredited by the Secretary of
Labor and Employment in the amount equivalent to the monetary award in the order appealed
from. (Emphasis supplied.)
The records of the House of Representativesshow that Congressmen Alberto S. Veloso and Eriberto
V. Loreto sponsored the law. In his sponsorship speech, Congressman Veloso categorically declared
that "this bill seeks to do away with the jurisdictional limitations imposed through said ruling
(referring to Servando) and to finally settle any lingering doubts on the visitorial and enforcement
powers of the Secretary of Labor and Employment."Petitioner's reliance on Servando is thus
untenable.
EJR Crafts Corp., vs Court of Appeals (2006) G.R. 154101

Facts:
Sometime in 1997, private respondents filed a complaint for underpayment of wages, regular
holiday pay, overtime pay, nonpayment of 13th month pay and service incentive leave pay against
petitioner before the Regional Office, NCR of the DOLE. Acting on the complaint, an inspection
was conducted on the premises of petitioners offices on August 22, 1997 wherein violations of
labor standards law were discovered. Petitioner argued that the Regional Director has no
jurisdiction over the case as private respondents were allegedly no longer connected with
petitioner corporation at the time of the filing of the complaint and when the inspection was
conducted, and that private respondents claims are within the exclusive and original jurisdiction
of the Labor Arbiters.
Issue: WON public respondent Regional Director has jurisdiction over the case.
Held: The Regional Director has jurisdiction over the case.
59
Ma. Cecelia Timbal
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As found by4both
0 2 Undersecretary of Labor and the Court of Appeals, the said quitclaim and release
forms are unreliable and do not correspond to other documents on record which would prove that
private respondents were working for the petitioner up to August 1997.
Labor Standards
Considering thus that there still exists an employer-employee relationship between petitioner and
private respondents and that the case involves violations of labor standard provisions of the Labor
Code, this Court rules with the Undersecretary of Labor and the appellate court that the Regional
Director has jurisdiction to hear and decide the instant case in conformity with Article 128(b) of
the Labor Code which states that: Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall have the power to
issue compliance orders to give effect to the labor standards provisions of this Code and other
labor legislation based on the findings of labor employment and enforcement officers or industrial
safety engineers made in the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate authority for the enforcement of
their orders, except in cases where the employer contests the findings of the labor employment
and enforcement officer and raises issues supported by documentary proofs which were not
considered in the course of inspection.
Ex Bataan Veterans Security Agency vs Sec of Labor (2007) G.R. 152396

Facts:
Ex-Bataan Veterans Security Agency, Inc. is in the business of providing security services while
private respondents are EBVSAI's employees assigned to the National Power Corporation at
Ambuklao Hydro Electric Plant, Bokod, Benguet (Ambuklao Plant). On 20 February 1996, private
respondents led by Alexander Pocding (Pocding) instituted a complaint for underpayment of wages
against EBVSAI before the Regional Office of the Department of Labor and Employment (DOLE). On
7 March 1996, the Regional Office conducted a complaint inspection at the Ambuklao Plant where
some violations were noted.
Issue: WON the Regional Director has jurisdiction over the money claims.
Held: The Regional Director has jurisdiction over the claim.
Art. 128 Visitorial and enforcement power. --- x x x
(b)Notwithstanding the provisions of Article[s] 129 and 217 of this Code to the contrary, and
in cases
60
M a .where
C e c the
e l i relationship
a T i m b a l of employer-employee still
L l Bexists,
2 the Secretary of Labor Rand
m
Employment
or
his
duly
authorized
representatives
shall
have
the power to issue compliance
402
orders to give effect to [the labor standards provisions of this Code and other] labor
legislation based on the findings of labor employment and enforcement officers or industrial
Labor Standards
safety engineers made in the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate authority for the enforcement
of their orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary proofs which
were not considered in the course of inspection. x x x x
The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor
Code.
This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v. Sensing, where we
sustained the jurisdiction of the DOLE Regional Director and held that "the visitorial and
enforcement powers of the DOLE Regional Director to order and enforce compliance with
labor standard laws can be exercised even where the individual claim exceedsP5,000."
However, if the labor standards case is covered by the exception clause in Article 128(b) of the
Labor Code, then the Regional Director will have to endorse the case to the appropriate
Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of
jurisdiction, the following elements must be present: (a) that the employer contests the findings
of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues,
there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the
normal course of inspection.The rules also provide that the employer shall raise such objections
during the hearing of the case or at any time after receipt of the notice of inspection results.
In this case, the Regional Director validly assumed jurisdiction over the money claims of private
respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in
accordance with Article 128(b) of the Labor Code and the case does not fall under the exception
clause.
Catholic Vicariate Baguio City vs Hon. Sto. Tomas (2008) G.R.167334

Facts:
Petitioner contracted KUNHWA to construct the retaining wall of the Baguio Cathedral. KUNWHA,
in turn, subcontracted CEREBA Builders (CEREBA) to do the formworks of the church. The contract
between KUNWHA and CEREBA lasted up to the completion of the project or on 8 September 2000,
KUNWHA failed to pay CEREBA. Consequently, the latter failed to pay its employees.
Agbucay, along with 81 other employees, lodged a complaint against CEREBA, KUNWHA and
petitioner before the DOLE-CAR Regional Office for nonpayment of wages, special and legal
holiday premium pay. An inspection of the premises resulted in the discovery of violations of labor
standards law, such as nonpayment of wages and holiday pay from 28 June 2000 to 5 September
2000, non-presentation of employment records, and others.Petitioner, KUNWHA and CEREBA were
given five (5) days from receipt of the notice of inspection results to rectify its violations. Despite
the notice, the parties failed to comply. A hearing was set wherein CEREBA manifested its
willingness to pay the affected employees on the condition that KUNWHA would pay its obligation
to CEREBA. Petitioner meanwhile manifested that the retention fee due to KUNWHA was sufficient
to pay the deficiencies due the affected employees.
On March 2001, the DOLE-CAR Regional Director issued an Order holding CEREBA, KUNWHA and
petitioner jointly and severally liable to the 82 affected workers in the amount ofP1,029,952.80
orP12,560.40
the pendency of its motion
61 M afor
. Ceach
e c eemployee.During
lia Timbal
L l B for
2 reconsideration, KUNWHA
Rm
voluntarily settled
the deficiencies due the 23 affected workers amounting toP84,544.00
402
Labor Standards
The Regional Director dismissed the complaint by reason of the said settlement. He also advised
the other employees to ventilate their claims in an appropriate forum considering that no
employer-employee relationship exists between the parties.
Issue: Whether the Secretary of Labor acquired jurisdiction over the appeal considering that this
case falls within the exception stated in Article 128(b) of the Labor Code.
Held: Secretary of Labor acquired jurisdiction over the appeal and petitioner is barred by estoppel
from raising the issue of jurisdiction.
In resolving this jurisdictional issue, the Secretary of Labor relied on the limitations set forth in
Article 128(b)of the Labor Code and ruled, thus:
It is worthy to note that as regards the power granted to Regional Director by Article 128 of the
Labor Code, as amended, only two (2) limitations are set forth: first, where the employer
contests the findings of the labor regulations officer, and raises issues which cannot be resolved
without considering evidentiary matters that are not verifiable in the normal course of
inspection, and second, where the employer-employee relationship no longer exists.
x x x Both of the above-stated limitations are wanting in this case. Records show that, when
this case was filed on August 29, 2000, complainants were still employed with the respondent
CEREBA working for KUNWHAs project with the Vicariate. There was no proof that the
subcontracting agreement between KUNWHA LUZON CONSTRUCTION and CEREBA Builders was
terminated as of July 2000. The letters showing the poor performance of CEREBA Builders
cannot be considered as a notice of termination of the Subcontracting Agreement for the same
do not state so.x x x
Succinctly put, since no written notice was served to respondent CEREBA Builders terminating
the Subcontracting Agreement, the employer-employee relationship between KUNWHA and
complainants existed until the completion of the subcontracting agreement on September 18,
2000. Considering this, when the complainants filed this case on August 29, 2000, the Regional
Director validly acquired jurisdiction over the case. And, jurisdiction once acquired is not lost
upon the instance of the parties but continues until the case is terminated.x x x
It is also equally important to note that, during the initial hearing of this case at the Regional
Office, the respondents failed to contest the findings of the Labor Employment and
Enforcement Officer. The respondents failed to present employment records and any evidence
to controvert the findings despite the reasonable period of time afforded them. It was only
when respondent KUNWHA filed its Motion for Reconsideration from the Order dated March 12,
2001 of the Regional Director that it submitted documents which the Vicariate now alleged to
be not verifiable in the summary nature of the labor inspection
Moreover, the issue of jurisdiction is clearly intertwined with the existence of employer-employee
relationship. It is undisputed that the existence of an employer-employee relationship is
ultimately a question of fact.
Assuming arguendo the absence of an employer-employee relationship between the parties, the
Secretary of Labor, invoking Odin Security Agency v. De la Serna, correctly declared that
petitioner is now estopped from questioning the jurisdiction of the Regional Director when it
actively participated in the proceedings held therein. In said case, petitioner also submitted to
the jurisdiction of the Regional Director by taking part in the hearings before him and by
submitting a position paper. Similarly, it was only when the order of the Regional Director was
modified did petitioner question the formers jurisdiction to hear and decide the case.
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Labor Standards
Sapio vs Undaloc Construction (2008) G.R. 155034

Facts:
The controversy started with a complaint filed by petitioner against Undaloc Construction and/or
Engineer Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory
benefits. Respondent Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is
engaged in road construction business in Cebu City. Petitioner had been employed as watchman
from 1 May 1995 to 30 May 1998 when he was terminated on the ground that the project he was
assigned to was already finished, he being allegedly a project employee. But petitioner asserted
that he was a regular employee having been engaged to perform works which are "usually
necessary or desirable" in respondents' business.
Issue: WON the Appellate court erred in failing to dismiss respondent's petition for certiorari
brought before it on the ground that respondents failed to attach certified true copies of the
NLRC's decision and resolution denying the motion for reconsideration.
Held: Appellate Court was right.
In his Comment on the Petition for Certiorari with Prayer for Temporary Restraining and/or
Preliminary Injunction filed with the Court of Appeals on 22 November 2001, petitioner did not
raise this procedural issue. Neither did he do so when he moved for reconsideration of the 8 May
2002 Decision of the Court of Appeals. It is only now before this Court that petitioner proffered
the same. This belated submission spells doom for petitioner. More fundamentally, an examination
of the Court of Appealsrollobelies petitioner as it confirms that the alleged missing documents
were in fact attached to the petition.
To counter petitioner's assertions, respondents submitted typewritten and signed payroll sheets
from 2 September to 8 December 1996, from 26 May to 15 June 1997, and from 12 January to 31
May 1998. These payroll sheets clearly indicate that petitioner did receive a daily salary of
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P141.00.
402
Labor Standards
Moreover, absent any evidence to the contrary, good faith must be presumed in this case. Entries
in the payroll, being entries in the course of business, enjoy the presumption of regularity under
Rule 130, Section 43 of the Rules of Court. Hence, while as a general rule, the burden of proving
payment of monetary claims rests on the employer, when fraud is alleged in the preparation of the
payroll, the burden of evidence shifts to the employee and it is incumbent upon him to adduce
clear and convincing evidence in support of his claim. Unfortunately, petitioner's bare assertions
of fraud do not suffice to overcome the disputable presumption of regularity.
Hon. Secretary of Labor vs Panay Veterans Security and Investigation Agency (2008) G.R.
167708
Facts:
Petitioners Edgardo M. Agapay and Samillano A. Alonso, Jr. were hired by respondent Panay
Veterans Security and Investigation Agency, Inc. They were stationed at the plant site of Food
Industries, Inc. (FII) in Sta. Rosa, Laguna until FII terminated its contract with respondent security
agency. They were not given new assignments and their benefits (including 13th month pay,
overtime pay and holiday pay as well as wage differentials due to underpayment of wages) were
withheld by respondent security agency. In consequence, they filed a complaint for violation of
labor standards in the regional office of the (DOLE-NCR). The latter conducted an inspection of
the respondent security agency. During such inspection, respondent was not able to present its
payroll as well as the daily time records submitted by the petitioners. Hence, with such violation,
DOLE inspector issued a notice of inspection and concomitantly explained to the respondents that
they have to comply with labor standards by paying the claims of the petitioners or otherwise,
they can question the notice to the DOLE-NCR within 5 days. Since respondents did not do either
of the aforementioned things, the Regional Director of DOLE-NCR adopted the findings of the
inspector. Respondents moved for reconsideration but it was denied. Respondents filed an appeal
(with motion to reduce cash or surety bond) to the SOLE. The SOLE found that respondents failed
to perfect their appeal since they did not post a cash or surety bond equivalent to the monetary
award. Thus, the appeal was dismissed and the DOLE-NCR Regional Directors order was declared
final and executory. The SOLE denied reconsideration. Respondents appealed to the Court of
Appeals.
Issues: WON there was a perfected appeal; whether motion to reduce appeal bond allowed in
appeals to the Secretary of Labor.
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Ma. Cecelia Timbal

402
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Held:
1.) Respondents failed to perfect their appeal in the manner prescribed by the Labor
Code. The rule is that, to perfect an appeal of the Regional Directors order involving a monetary
Labor Standards
award in cases which concern the visitorial and enforcement powers of the Secretary of Labor and
Employment, the appeal must be filed and the cash or surety bond equivalent to the monetary
award must be posted within ten calendar days from receipt of the order. Failure either to file the
appeal or post the bond within the prescribed period renders the order final and executory. The
legislative intent to make the bond an indispensable requisite for the perfection of an appeal by
the employer is underscored by the provision that an appeal by the employer may be perfected
only upon the posting of a cash or surety bond. The word only makes it clear that the
lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive
means by which an employers appeal may be perfected
2.) No. The jurisdiction of the NLRC is separate and distinct from that of the Secretary of Labor
and Employment.In the exercise of their respective jurisdictions, each agency is governed by its
own rules of procedure. In other words, the rules of procedure of the NLRC are different from
(and do not apply in) cases cognizable by the Secretary of Labor and Employment. Unlike the New
Rules of Procedure of the NLRC,]no provision in the Rules on the Disposition of Labor Standards
Cases governs the filing of a motion for the reduction of the amount of the bond. However, on
matters that are not covered by the Rules on the Disposition of Labor Standards Cases, the
suppletory application of the Rules of Court is authorized. In other words, the Rules on the
Disposition of Labor Standards Cases does not sanction the suppletory resort to the rules of
procedure of the NLRC. By ruling that the rules of procedure of the NLRC should be applied
suppletorily to respondents appeal to the Secretary of Labor of Employment, the CA effectively
amended the Rules on the Disposition of Labor Standards Cases. In the process, it encroached on
the rule-making power of the Secretary of Labor and Employment.
National Mines and Workers Union vs Marcopper Mining Corp (2008) G.R. 174641
Facts:
On April 1996, the Department of Environment and Natural Resources (DENR) ordered the
indefinite suspension of MARCOPPERs operations for causing damage to the environment of
the Province of Marinduque by spilling the companys mine waste or tailings from an old
underground impounding area into the Boac River, in violation of its Environmental Compliance
Certificate (ECC).
NAMAWU was the exclusive bargaining representative of the rank-and-file workers of MARCOPPER.
On April 10, 1996, it filed a complaint with the Regional Arbitration Branch No. IV of the NLRC
against MARCOPPER for nonpayment of wages, separation pay, damages, and attorneys fees; the
case is hereinafter referred to as theenvironmental incident case. NAMAWU claimed that due to
the indefinite suspension of MARCOPPERs operations, its members were not paid the wages due
them for six months (fromApril 12, 1996toOctober 12, 1996) under Rule X, Book III, Section 3(b)
of the Implementing Rules and Regulations of the Labor Code.[8] It further claimed that its
members are also entitled to be paid their separation pay pursuant to their collective bargaining
agreement with MARCOPPER and pursuant to Book IV, Rule I, 4(b) of the Labor Codes
implementing rules.
MARCOPPER denied liability, contending that NAMAWU had not been authorized by the individual
employees the real parties-in-interest to file the complaint; and that the complaint should be
dismissed for lack of certification of non-forum shopping, for the pendency of another action
between the same parties, and for lack of factual and legal basis.
65
Ma. Cecelia Timbal
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MARCOPPER4 appealed
the decision to the NLRC.In this appeal, it also moved that it be allowed
02
not to post an appeal bond for 615 NAMAWU members former MARCOPPER employees who had
been dismissed effectiveMarch 7, 1995due to an earlier illegal strike. MARCOPPER,however,
Labor Standards
posted the required bond for three non-striking employees, namely: Apollo V. Saet, Rogelio
Regencia and Jose Romasanta.
Issue: Whether CA erred in ruling that there was no need for MARCOPPER to post an appeal bond.
Held: The CA was correct in reversing the dismissal of MARCOPPERs appeal for failure to file an
appeal bond.
The employment of the NAMAWU officers and members had beendeclared terminated onMarch 7,
1995 as a result of their failure to return to work after their strike of February 27,
1995. Thereafter, the illegal strike litigation commenced, resulting in a decision by the NLRC
onNovember 11, 1996declaring the strike illegal.
In the context of the NLRC appeal bond that is directly at issue, MARCOPPER had every reason to
claim in its April 10, 2000 appeal to the NLRC that it should be excused from filing an appeal bond
with respect to the NAMAWU members who were no longer company employees.The CA decision
decreeing the termination of employment of those involved in the illegal strike case had already
been issued at that time. We subsequently ruled on the same issue during the time the
environmental incident case was pending before the NLRC. Thus, when the NLRC dismissed
MARCOPPERs appeal for failure to file the requisite appeal bond corresponding to the 615
NAMAWU members, the termination of employment of these NAMAWU members was already a
settled matter that the NLRC was in no position to disregard.
Peoples Broadcasting vs Secretary of DOLE (2009) G.R. 179652

Facts:
Jandeleon Juezan filed a complaint against Peoples Broadcasting Service, Inc. (Bombo Radyo
Phils., Inc) for illegal deduction, non-payment of service incentive leave, 13thmonth pay, premium
pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and
non-coverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and Employment
(DOLE) RegionalOffice No. VII,CebuCity.
On the basis of the complaint, the DOLE conducted a plant level inspection on23 September 2003.
In the Inspection Report Form, the Labor Inspector wrote under the heading Findings/
Recommendations non-diminution of benefits and Note: Respondent deny employer-employee
relationship with the complainant- see Notice of Inspection results.
Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No
rectification was effected by petitioner; thus, summary investigations were conducted, with the
parties eventually ordered to submit their respective position papers.
In his Order dated 27 February 2004, DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional
Director) ruled that respondent is an employee ofpetitioner, and that the former is entitled to his
66 M aamounting
. C e c e l toP203,
i a T i m 726.30.
bal
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money claims
Petitioner sought reconsideration
of the Order, claiming
402
that the Regional Director gave credence to the documents offered by respondent
without examining the originals, but at the same time he missed or failed to consider
Labor Standards
petitioners evidence. Petitioners motion for reconsideration was denied.[ On appeal to the
DOLE Secretary, petitioner denied once more the existence of employer-employee relationship. In
its Order dated 27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground
that petitioner did not post a cash or surety bond and instead submitted a Deed of Assignment of
Bank Deposit. Petitioner maintained that there is no employer-employee relationship had ever
existed between it and respondent because it was the drama directors and producers who paid,
supervised and disciplined respondent. It also added that the case was beyond the jurisdiction of
the DOLE and should have been considered by the labor arbiter because respondents claim
exceededP5,000.00.
Issue: Whether the Secretary of Labor has the power to determine the existence of an employeremployee relationship.
Held: Secretary of Labor has the power to determine the existence of an employer-employee
relationship.
Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee
relationship has terminated or such relationship has not arisen at all. The reason is obvious. In
the second situation especially, the existence of an employer-employee relationship is a matter
which is not easily determinable from an ordinary inspection, necessarily so, because the
elements of such a relationship are not verifiable from a mere ocular examination. The intricacies
and implications of an employer-employee relationship demand that the level of scrutiny should
be
far
above
the
cursory
and
the
mechanical.Whiledocuments,particularlydocumentsfoundintheemployers office are
the primary source materials, what may prove decisive are factors related to the history of the
employers business operations, its current state as well as accepted contemporary practices in
the industry. More often than not, the question of employer-employee relationship becomes a
battle of evidence, the determination of which should be comprehensive and intensive and
therefore best leftto the specialized quasi-judicial body that isthe NLRC.
It can be assumed that the DOLE in the exercise of its visitorial and enforcement power
somehow has to make a determination of the existence of an employer-employee
relationship. Such prerogatival determination, however, cannot be coextensive with the
visitorial and enforcement power itself. Indeed, such determination is merely preliminary,
incidental and collateral to the DOLEs primary function of enforcing labor standards
provisions. The determination of the existence of employer-employee relationship is still
primarily lodged with the NLRC. This is the meaning of the clause in cases where the
relationship of employer-employee still exists in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Article 128, two important questions must
be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there
ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor
Code or of any labor law?
The existence of an employer-employee relationship is a statutory prerequisite to and
a limitation on the power of the Secretary of Labor, one which the legislative branch is
entitled to impose. The rationale underlying this limitation is to eliminate the prospect of
competing conclusions of the Secretary of Labor and the NLRC, on a matter fraught with
questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC,
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rather than4 an
0 2 administrative official of the executive branch of the government. If the
Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first
Labor Standards
requisite, as the dissent proposes, his office confers jurisdiction on itself which it cannot
otherwise acquire.
Reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized
representatives was granted visitorial and enforcement powers for the purpose
of determining violations of, and enforcing, the Labor Code and any labor law, wage order, or
rules and regulations issued pursuant thereto. Necessarily, the actual existence of an employeremployee relationship affects the complexion of the putative findings that the Secretary of Labor
may determine, since employees are entitled to a different set of rights under the Labor Code
from the employer as opposed to non-employees. Among these differentiated rights are those
accorded by the labor standards provisionsof the Labor Code, which theSecretary of Laboris
mandated to enforce.If there is no employer-employee relationship in the first place, the duty of
the employer to adhere to those labor standards with respect to the non-employees is
questionable.
At least a prima facie showing of such absence of relationship, as in this case, is needed to
preclude the DOLE from the exercise of its power. The Secretary of Labor would not have been
precluded from exercising the powers under Article 128 (b) over petitioner if another person
with better-grounded claim of employment than that which respondent had. Respondent,
especially if he were an employee, could have very well enjoined other employees to complain
with the DOLE, and, at the same time, petitioner could ill-afford to disclaim an employment
relationship with all of the people under its aegis.
The most important consideration for the allowance of the instant petition is the opportunity
for the Court not only to set the demarcation between the NLRCs jurisdiction and the DOLEs
prerogative but also the procedure whenthe case involves the fundamental challengeon the
DOLEs prerogative based on lack of employer-employee relationship. As exhaustively
discussed here, the DOLEs prerogative hinges on the existence of employer-employee
relationship, the issue is which is at the very heart of this case. And the evidence clearly
indicates private respondent has never been petitioners employee.
Phil Hoteliers Inc., vs National Union of Workers in Hotel Restaurant & Allied Industries Dusit
Hotel Nikko Chapter (2009) G.R. 181972
Facts:
Wage Order No. 9, approved by the Regional Tripartite Wages and Productivity Board (RTWPB) of
the National Capital Region (NCR), took effect on 5 November 2001. It grants P30.00 ECOLA to
particular employees and workers of all private sectors, identified as follows in Section 1 thereof:
Section 1.
Upon the effectivity of this Wage Order, all private sector workers and
employees in the National Capital Region receiving daily wage rates of TWO HUNDRED FIFTY PESOS
(P250.00) up to TWO HUNDRED NINETY PESOS (P290.00) shall receive an emergency cost of living
allowance in the amount of THIRTY PESOS (P30.00) per day payable in two tranches as follows:
Amount of ECOLA
Effectivity
P15.00
5 November 2001
P15.00
1 February 2002
On 20 68
March
Union of Workers
in Hotel,
Restaurant and Allied
M a .2002,
C e c respondent
e l i a T i m bNational
al
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Industries-Dusit
4 0 2 Hotel Nikko Chapter (Union), through its President, Reynaldo C. Rasing (Rasing),
sent a letter 4 to Director Alex Maraan (Dir. Maraan) of the Department of Labor and EmploymentNational Capital Region (DOLE-NCR), reporting the non-compliance of Dusit Hotel with WO No. 9,
Labor Standards
while there was an on-going compulsory arbitration before the National Labor Relations
Commission (NLRC) due to a bargaining deadlock between the Union and Dusit Hotel; and
requesting immediate assistance on this matter. On 24 May 2002, Rasing sent Dir. Maraan another
letter following-up his previous request for assistance.
Acting on Rasing's letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO
Natividad) to conduct an inspection of Dusit Hotel premises on 24 April 2002. In the first
Inspection, the report showed that Dusit Hotel is exempt from complying with WO no. 9. Due to
the Second request for inspection, DOLE representative conducted another round of inspection
and the Labor Standards Officer noted the following in her inspection report:
* Non-presentation of records/payrolls
* Based on submitted payrolls & list of union members by NUWHRAIN-DUSIT HOTEL NIKKO
Chapter, there are one hundred forty-four (144) affected in the implementation of Wage
Order No. NCR-09-> ECOLA covering the periods from Nov. 5/01 to present.
Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect
restitution and/or correction of the noted violations within five days from receipt of the Notice,
and to submit any question on the findings of the labor inspector within the same period,
otherwise, an order of compliance would be issued. The Notice of Inspection Result was duly
received by Dusit Hotel Assistant Personnel Manager Rogelio Santos.
In the meantime, the NLRC rendered a Decision 9 dated 9 October 2002 in NLRC-NCR-CC No.
000215-02 the compulsory arbitration involving the Collective Bargaining Agreement (CBA)
deadlock between Dusit Hotel and the Union granting the hotel employees the following wage
increases, in accord with the CBA:
Effective January 1, 2001 - P500.00/month
On 22 October 2002, based on the results of the second inspection of Dusit Hotel premises, DOLENCR, through Dir. Maraan, issued the Order 10 directing Dusit Hotel to pay 144 of its employees
the total amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus,
the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, 11 as amended
by Republic Act No. 8188.
Dusit Hotel filed a Motion for Reconsideration 13 of the DOLE-NCR Order dated 22 October 2002,
arguing that the NLRC Decision dated 9 October 2002, resolving the bargaining deadlock between
Dusit Hotel and the Union, and awarding salary increases under the CBA to hotel employees
retroactive to 1 January 2001, already rendered the DOLE-NCR Order moot and academic. With
the increase in the salaries of the hotel employees ordered by the NLRC Decision of 9 October
2002, along with the hotel employees' share in the service charges, the 144 hotel employees,
covered by the DOLE-NCR Order of 22 October 2002, would already be receiving salaries beyond
the coverage of WO No.
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Ma. Cecelia Timbal
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Acting on the
for Reconsideration of Dusit Hotel, DOLE-NCR issued a Resolution 14 on 27
4 0 Motion
2
December 2002, setting aside its earlier Order dated 22 October 2002 for being moot and
Labor Standards
academic, in consideration of the NLRC Decision dated 9 October 2002; and dismissing the
complaint of the Union against Dusit Hotel, for non-compliance with WO No. 9, for lack of merit.
Issues: Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite
the increases in their salaries, retroactive to 1 January 2001, ordered by NLRC in the latter's
Decision dated 9 October 2002. Whether Dusit Hotel is liable for the double indemnity for
violation of the wage order.
Held: The Court rules in the negative.
It must be noted that the hotel employees have a right to their share in the service charges
collected by Dusit Hotel, pursuant to Article 96 of the Labor Code of 1991, to wit:
Article 96. Service charges. All service charges collected by hotels, restaurants and similar
establishments shall be distributed at the rate of eighty-five percent (85%) for all covered
employees and fifteen percent (15%) for management. The share of employees shall be equally
distributed among them. In case the service charge is abolished, the share of the covered
employees shall be considered integrated in their wages.
Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its
employees and management their respective shares in the service charges collected, the hotel
cannot claim that payment thereof to its 82 employees constitute substantial compliance with the
payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees' right to their shares in the
service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA;
gratification by the hotel of one does not result in the satisfaction of the other.
The Court, however, finds no basis to hold Dusit Hotel liable for double indemnity. Under Section 2
(m) of DOLE Department Order No. 10, Series of 1998, 30 the Notice of Inspection Result "shall
specify the violations discovered, if any, together with the officer's recommendation and
computation of the unpaid benefits due each worker with an advice that the employer shall be
liable for double indemnity in case of refusal or failure to correct the violation within five
calendar days from receipt of notice". A careful review of the Notice of Inspection Result dated 29
May 2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals that the said Notice did not
contain such an advice. Although the Notice directed Dusit Hotel to correct its noted violations
within five days from receipt thereof, it was not sufficiently apprised that failure to do so within
the given period would already result in its liability for double indemnity. The lack of advice
deprived Dusit Hotel of the opportunity to decide and act accordingly within the five-day period,
as to avoid the penalty of double indemnity. By 22 October 2002, the DOLE-NCR, through Dir.
Maraan, already issued its Order directing Dusit Hotel to pay 144 of its employees the total
amount of P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9; plus the penalty
of double indemnity, pursuant to Section 12 of Republic Act No. 6727, as amended by Republic Act
No. 8188.
Although the Court is mindful of the fact that labor embraces individuals with a weaker and
unlettered position as against capital, it is equally mindful of the protection that the law accords
to capital. While the Constitution is committed to the policy of social justice and the protection of
70 M aclass,
. C eitc eshould
l i a T not
i m bbe
a l supposed that every labor
L l B dispute
2
Rm
the working
will be automatically
402
decided in favor of labor. Management also has its own rights which, as such, are entitled to
respect and enforcement in the interest of simple fair play.
71
Ma. Cecelia Timbal

402
Labor Standards
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Labor Standards
VII
WAGE PROTECTION
PROVISIONS
&
PROHIBITIONS
REGARDING WAGES
72
Ma. Cecelia Timbal

402
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Labor Standards
Gaa vs Court of Appeals (1985) 140 SCRA 304

Facts:
It appears that respondent Europhil Industries Corporation was formerly one of the tenants in
Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the building
administrator.
On December 12, 1973, Europhil Industries commenced an action (in the Court of First Instance of
Manila for damages against petitioner for having perpetrated certain acts that Europhil Industries
considered a trespass upon its rights, namely, cutting of its electricity, and removing its name
from the building directory and gate passes of its officials and employees", On June 28, 1974, said
court rendered judgment in favor of respondent Europhil Industries, ordering petitioner to pay the
former the sum of P10,000.00 as actual damages, P5,000.00 as moral damages, P5,000.00 as
exemplary damages and to pay the costs.
The said decision having become final and executory, a writ of garnishment was issued pursuant to
which Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon El
Grande Hotel, where petitioner was then employed, garnishing her "salary, commission and/or
remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift said
garnishment on the ground that her "salaries, commission and or remuneration" are exempted
from execution under Article 1708 of the New Civil Code. Said motion was denied by the lower
Court.
Court of Appeals dismissed the petition. In dismissing the petition, the Court of Appeals held that
petitioner is not a mere laborer as contemplated under Article 1708 as the term laborer does not
apply to one who holds a managerial or supervisory position like that of petitioner, but only to
those laborers occupying the lower strata.
Issue: WON the Petitioner is covered by Article 1708 of the New Civil Code.
Held: Petitioner is not covered by Article 1708 since she does not fall within the criteria of
laborer.
Article 1708 of the Civil Code provides: The laborer's wage shall not be subject to execution or
attachment, except for debts incurred for food, shelter, clothing and medical attendance."
It is beyond dispute that petitioner is not an ordinary or rank and file laborer but a responsibly
place employee, of El Grande Hotel, responsible for planning, directing, controlling, and
coordinating the activities of all housekeeping personnel so as to ensure the cleanliness,
maintenance and orderliness of all guest rooms, function rooms, public areas, and the
surroundings of the hotel. Considering the importance of petitioner's function in El Grande Hotel,
it is undeniable that petitioner is occupying a position equivalent to that of a managerial or
supervisory position.
We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code
to operate in favor of any but those who are laboring men or women in the sense that their work
is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate
73 Msupport,
a . C e cand
e l i such
a Tim
b a l are more in need of
L l the
B exemption
2
Rm
or present
persons
than any others.
02
Petitioner is4 definitely
not within that class.
Labor Standards
Nestle Phils Inc., vs NLRC (1991) 193 SCRA 504

Facts:
Four CBAs separately covering the petitioner's employees in its Alabang/Cabuyao factories; Makati
Administration Office. (Both Alabang/Cabuyao factories and Makati office were represented by the
respondent, Union of Filipro Employees [UFE]);Cagayan de Oro Factory represented by WATU; and
Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services
(TUPAS), all expired on June 30, 1987. UFE was certified as the sole and exclusive bargaining
agent for all regular rank-and-file employees at the petitioner's Cagayan de Oro factory, as well as
its Cebu/Davao Sales Office.
In August 1987, while the parties were negotiating, the employees at Cabuyao resorted to a
"slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon collective
bargaining negotiations between the parties ensued. On September 1987, the UFE declared a
bargaining deadlock. On September 8, 1987, the Secretary of Labor assumed jurisdiction and
issued a return to work order. In spite of that order, the union struck, without notice, at the
Alabang/Cabuyao factory, the Makati office and Cagayan de Oro factory on September 11, 1987 up
to December 8, 1987. The company retaliated by dismissing the union officers and members of the
negotiating panel who participated in the illegal strike. The NLRC affirmed the dismissals on
November 2, 1988. On January 26, 1988, UFE filed a notice of strike on the same ground of CBA
deadlock and unfair labor practices.
However, on March 30, 1988, the company was able to conclude a CBA with the union at the Cebu/
Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory workers. The union
assailed the validity of those agreements and filed a case of unfair labor practice against the
company on November 16, 1988. After conciliation efforts of the NCMB yielded negative results,
the dispute was certified to the NLRC. The NLRC issued a resolution on June 5, 1989, whose
pertinent disposition regarding the union's demand for liberalization of the company's retirement
plan for its workers. the NLRC issued a resolution denying the motions for reconsideration. With
regard to the Retirement Plan, the NLRC held that anent management's objection to the
modification of its Retirement Plan, the plan is specifically mentioned in the previous bargaining
agreements thereby integrating or incorporating the provisions thereof to the agreement. By
reason of its incorporation, the plan assumes a consensual character which cannot be terminated
or modified at will by either party. Consequently, it becomes part and parcel of CBA negotiations.
Petitioner alleged that since its retirement plan is non-contributory, Nestle has the sole and
exclusive prerogative to define the terms of the plan because the workers have no vested and
demandable rights, the grant thereof being not a contractual obligation but merely gratuitous. At
most the company can only be directed to maintain the same but not to change its terms. It
should be left to the discretion of the company on how to improve or modify the same.
Issue: WON the workers have vested and demandable rights over the retirement plan.
74
Ma. Cecelia Timbal
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402
Held: The employees
have a vested and demandable right over the retirement plan.
Rm
Labor Standards
The inclusion of the retirement plan in the collective bargaining agreement as part of the package
of economic benefits extended by the company to its employees to provide them a measure of
financial security after they shall have ceased to be employed in the company, reward their
loyalty, boost their morale and efficiency and promote industrial peace, gives "a consensual
character" to the plan so that it may not be terminated or modified at will by either party.
The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing
to the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of
fact, almost all of the benefits that the petitioner has granted to its employees under the CBA
salary increases, rice allowances, midyear bonuses, 13th and 14th month pay, seniority pay,
medical and hospitalization plans, health and dental services, vacation, sick & other leaves with
pay are non-contributory benefits. Since the retirement plan has been an integral part of the
CBA since 1972, the Union's demand to increase the benefits due the employees under said plan, is
a valid CBA issue.
The petitioner's contention, that employees have no vested or demandable right to a noncontributory retirement plan, has no merit for employees do have a vested and demandable right
over existing benefits voluntarily granted to them by their employer. The latter may not
unilaterally withdraw, eliminate or diminish such benefits.
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Five J Taxi vs NLRC (1992) 235 SCRA 556

Facts:
Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi
drivers and, as such, they worked for 4 days weekly on a 24-hour shifting schedule. Aside from the
daily boundary of P700.00 for air-conditioned taxi or P450.00 for non-air-conditioned taxi, they
were also required to pay P20.00 for car washing, and to further make a P15.00 deposit to answer
for any deficiency in their boundary, for every actual working day.
In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already
failed to report for work for unknown reasons. Petitioners learned that he was working for Mine of
Gold Taxi Company. With respect to Sabsalon, while driving a taxicab of petitioners on September
1983, he was held up by his armed passenger who took all his money and thereafter stabbed him.
He was hospitalized and after his discharge, he went to this home province to recuperate.
In January, 1987, Sabsalon was re-admitted by petitioners as a taxi driver under the same terms
and conditions as when he was first employed, but his working schedule was made on an
alternative basis where he drove only every other day. However, on several occasions, he failed to
report for work during his schedule. On September 22, 1991, Sabsalon failed to remit his
boundary of P700.00 for the previous day. Also, he abandoned his taxicab in Makati without fuel
refill worth P300.00. Despite repeated requests of petitioners for him to report for work, he
adamantly refused. Afterwards it was revealed that he was driving a taxi for Bulaklak Company.
Sometime in 1989, Maldigan requested petitioners for the reimbursement of his daily cash deposits
for 2 years, but herein petitioners told him that not a single centavo was left of his deposits as
these were not even enough to cover the amount spent for the repairs of the taxi he was driving.
This was allegedly the practice adopted by petitioners to recoup the expenses incurred in the
repair of their taxicab units. When Maldigan insisted on the refund of his deposit, petitioners
terminated his services. Sabsalon, on his part, claimed that his termination from employment was
effected when he refused to pay for the washing of his taxi seat covers.
On November 27, 1991, private respondents filed a complaint with the manila Arbitration Office of
the National Labor Relations Commission charging petitioners with illegal dismissal and illegal
deductions.
Issue: WON the deductions made were illegal and if illegal, considered a prohibition regarding
wages.
Held: The Court declares that the deposits made, amounts to the prohibition provided by law. The
deposits made were illegal and the respondents must be refunded.
Article 114 of the Labor Code provides as follows:
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Deposits for loss or damage. No employer shall require his worker to make deposits from
which deductions shall be made for the reimbursement of loss of or damage to tools, materials,
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or equipment supplied by the employer, except when the employer is engaged in such trades,
occupations or business where the practice of making deposits is a recognized one, or is
necessary or desirable as determined by the Secretary of Labor in appropriate rules and
regulations.
It can be deduced that the said article provides the rule on deposits for loss or damage to tools,
materials or equipments supplied by the employer. Clearly, the same does not apply to or permit
deposits to defray any deficiency which the taxi driver may incur in the remittance of his
boundary.
On the matter of the car wash payments, the labor arbiter had this to say in his decision: "Anent
the issue of illegal deductions, there is no dispute that as a matter of practice in the taxi industry,
after a tour of duty, it is incumbent upon the driver to restore the unit he has given to the same
clean condition when he took it out, and as claimed by the respondents (petitioners in the present
case), complainant(s) (private respondents herein) were made to shoulder the expenses for
washing, the amount doled out was paid directly to the person who washed the unit, thus we find
nothing illegal in this practice, much more (sic) to consider the amount paid by the driver as
illegal deduction in the context of the law."
Consequently, private respondents are not entitled to the refund of the P20.00 car wash payments
they made. It will be noted that there was nothing to prevent private respondents from cleaning
the taxi units themselves, if they wanted to save their P20.00. Also, as the Solicitor General
correctly noted, car washing after a tour of duty is a practice in the taxi industry, and is, in fact,
dictated by fair play.
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Manila Electric Co vs Sec of Labor (1999) G.R. 127598

Facts:
MEWA is the duly recognized labor organization of the rank-and-file employees of MERALCO. On
September 7, 1995, MEWA informed MERALCO of its intention to re-negotiate the terms and
conditions of their existing 1992-1997 Collective Bargaining Agreement (CBA) covering the
remaining period of two years starting from December 1, 1995 to November 30, 1997. MERALCO
signified its willingness to re-negotiate through its letter dated October 17, 1995 and formed a CBA
negotiating panel for the purpose. On November 10, 1995, MEWA submitted its proposal to
MERALCO, which, in turn, presented a counter-proposal.
Thereafter, collective bargaining
negotiations proceeded. However, despite the series of meetings between the negotiating panels
of MERALCO and MEWA, the parties failed to arrive at terms and conditions acceptable to both of
them.
On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch of the
National Conciliation and Mediation Board (NCMB) of the Department of Labor and Employment
(DOLE) which was docketed as NCMB-NCR-NS-04-152-96, on the grounds of bargaining deadlock
and unfair labor practices. The NCMB then conducted a series of conciliation meetings but the
parties failed to reach an amicable settlement. MERALCO filed a petition to let the Secretary of
DOLE to assume jurisdiction over the case which was granted.
Issue: Whether the members of MEWA are entitled to benefits given as bonuses, being negotiated
in the CBA.
Held: The members of MEWA are entitled to the benefits although in the form of benefits which is
a subject of the negotiation of CBA.
As a rule, a bonus is not a demandable and enforceable obligation; it may nevertheless be granted
on equitable consideration as when the giving of such bonus has been the companys long and
regular practice. To be considered a regular practice, the giving of the bonus should have been
done over a long period of time, and must be shown to have been consistent and deliberate.
The ruling in National Sugar Refineries Corporation vs. NLRC: The test or rationale of this rule
on long practice requires an indubitable showing that the employer agreed to continue giving the
benefits knowing fully well that said employees are not covered by the law requiring payment
thereof.
In this case, the record shows the MERALCO, aside from complying with the regular 13th month
bonus, has further been giving its employees an additional Christmas bonus at the tail-end of the
year since 1988. While the special bonuses differed in amount and bore different titles, it can not
be denied
voluntarily
and continuously on
78 that
M a .these
C e cwere
e l i agiven
Tim
bal
L l or
B about
2 Christmas time.
Rm
402
The considerable length of time MERALCO has been giving the special grants to its employees
indicates a unilateral and voluntary act on its part, to continue giving said benefits knowing that
Labor Standards
such act was not required by law.

Indeed, a company practice favorable to the employees has been established and the payments
made by MERALCO pursuant thereto ripened into benefits enjoyed by the employees.
Consequently, the giving of the special bonus can no longer be withdrawn by the company as this
would amount to a diminution of the employees existing benefits.
Philippine Veterans Bank vs NLRC (1999) G.R. 130439

Facts:
In 1983, petitioner Philippine Veterans Bank was placed under receivership by the Central Bank
(now Bangko Sentral). Petitioner was subsequently placed under liquidation on 15 June 1985.
Consequently, its employees, including private respondent Dr. Jose Teodorico V. Molina, were
terminated from work and given their respective separation pay and other benefits. To assist in
the liquidation, some of petitioners former employees were rehired, among them Molina, whose
re-employment commenced on 15 June 1985. On 11 May 1991, MOLINA filed a complaint against
members of the liquidation team. The complaint demanded the implementation of Wage Orders
Nos. NCR-01 and NCR-02 (hereafter W.O. 1 and W.O. 2) as well as moral damages and attorneys
fees in the amount of P300,000.
Meanwhile, W.O. 1 took effect on November 1990, prescribing a P17-increase in the daily wage of
employees whose monthly salary did not exceed P3,802.08. On the other hand, W.O. 2 became
mandated a P12-increase in the daily wage of employees whose monthly salary did not exceed
P4,319.16. Molina claimed that his salary should have been adjusted in compliance with said wage
orders. The liquidation team countered that MOLINA was not entitled to any salary increase
because he was already receiving a monthly salary of P6,654.60.
Labor Arbiter rejected the 26.16 factor used by the liquidators in computing the daily wage of
MOLINA, adopting instead the factor of 365 days. Consequently, they were ordered to pay
Molina the wage differentials due him under W.O. 1 and W.O. 2. On appeal, the NLRC sustained
the labor arbiters ruling after concluding that Molina was a regular employee of petitioner with a
basic monthly salary of P3,754.60 at the time of his dismissal on 31 January 1992. He was,
therefore, entitled to the wage increases mandated by the aforesaid wage orders.
Issue: Whether Molina is entitled to wage increase computation that used the 365 days factor.
Held: Molina is entitled to the wage increase computation using the 365 days as factor.
The documents attached show that the Bank has been consistently using the factor of 365 days in
computing your equivalent monthly salary prior to its being placed under receivership by the
Central Bank. This is evident in the wage and allowance increases granted under previous
Presidential Decrees and Wage Orders, which were given by the Bank on monthly basis, i.e., where
the rest days are unworked but paid. This is also indicated in the appointment and service records
of bank personnel who started out as daily paid employees and were eventually promoted as
79 employees
Ma. Cece
l i a fixed
T i mmonthly
bal
l B R.A.
2 6640 went into force, Rthe
m
permanent
with
salaries. However, Lwhen
402
Bank unilaterally reduced the factor to 262 instead of maintaining factor 365 as was the practice/
policy long before the effectivity of the Act. And when R.A 6727 took effect, the Bank reverted to
Labor Standards
the old practice/policy of using factor 365 days in computing your equivalent monthly rate salary.
May we add that the old practice of the bank in using factor 365 days in a year in determining
equivalent monthly salary cannot unilaterally be changed by your employer without the consent of
the employees, such practice being now a part of the terms and conditions of your employment.
An employment agreement, whether written or unwritten, is a bilateral contract and as such
either party thereto cannot change or amend the terms thereof without the consent of the other
party thereto.
It is clear that respondent is entitled to the wage increase under R.A. 6440 computed on the basis
of 365 paid days and to the corresponding salary differentials as a result of the application of this
factor. Evidently, the use of the 365 factor is binding and conclusive, forming as it did part of the
employment contract. To abandon such policy and revert to its old practice of using the 26.16
factor would be a diminution of a labor benefit, which is prohibited by the Labor Code. It cannot
be doubted that the 365 factor favors petitioners employees because it results in a higher
determination of their monthly salary.
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Philippine Appliance Corp., vs Court of Appeals (2004) G.R. 149434
Facts:
During the collective bargaining negotiations between petitioner and respondent union in 1997,
petitioner offered the amount of P4, 000.00 to each employee as an early conclusion bonus.
Petitioner claims that this bonus was promised as a unilateral incentive for the speeding up of
negotiations between the parties and to encourage respondent union to exert their best efforts to
conclude a CBA. Upon conclusion of the CBA negotiations, petitioner accordingly gave this early
signing bonus.
In view of the expiration of this CBA, respondent union sent notice to petitioner of its desire to
negotiate a new CBA. Petitioner and respondent union began their negotiations. On October 22,
1999, after eleven meetings, respondent union expressed dissatisfaction at the outcome of the
negotiations and declared a deadlock. A few days later, on October 26, 1999, respondent union
filed a Notice of Strike with the NCMB, Region IV in Calamba, Laguna, due to the bargaining
deadlock.
The conciliation meetings started with eighteen unresolved items between petitioner and
respondent union. At the meeting, respondent union accepted petitioners proposals on fourteen
items, leaving the following items unresolved: wages, rice subsidy, signing, and retroactive bonus.
Petitioner and respondent union failed to arrive at an agreement concerning these four remaining
items. On January 2000, respondent union went on strike at the petitioners plant. The strike
lasted for eleven days and resulted in the stoppage of manufacturing operations as well as losses
for petitioner, which constrained it to file a petition before the Department of Labor and
Employment. Labor Secretary assumed jurisdiction over the dispute and, on January 2000, ordered
the striking workers to return to work within twenty-four hours from notice and directed
petitioner to accept back the said employees. It rendered decision fixing the amount of wage
increase and directed to conclude a CBA to include the items granted in the conference.
Petitioner contested on the awarding of signing bonus.
Issue: Whether the signing bonus is covered under the maintenance of existing benefits.
Held: The payment of signing bonus is not covered under the existing benefits.
The Court has consistently ruled that a bonus is not a demandable and enforceable obligation.
True, it may nevertheless be granted on equitable considerations as when the giving of such bonus
has been the companys long and regular practice.
To be considered
practice,
should have been done
81 M a . Ca eregular
celia T
i m b a l however, the giving of
L l the
B bonus
2
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over a long 4period
of time, and must be shown to have been consistent and deliberate. The test or
02
rationale of this rule on long practice requires an indubitable showing that the employer agreed to
continue giving the benefits knowing fully well that said employees are not covered by the law
Labor Standards
requiring payment thereof.

Respondent does not contest the fact that petitioner initially offered a signing bonus only during
the previous CBA negotiation. Previous to that, there is no evidence on record that petitioner
ever offered the same or that the parties included a signing bonus among the items to be resolved
in the CBA negotiation. Hence, the giving of such bonus cannot be deemed as an established
practice considering that the same was given only once, that is, during the 1997 CBA negotiation.
Special Steel Products vs Villareal (2004) G.R. 143304

Facts:
Special Steel Products, Inc., is a domestic corporation engaged in the principal business of
importation, sale, and marketing of BOHLER steel products. Respondents worked for petitioner as
assistant manager and salesman. Villareal obtained a car loan from Bank of Commerce with
petitioner as surety wherein they are jointly and severally agreed to pay the bank in installment
basis. In January 1997, Villareal resigned and joined Hi-Grade Industrial and Technical Products as
Executive vice-president.
Respondent So was sponsored by petitioner to attend a training course in Kapfenberg, Austria
conducted by BOHLER. It rewarded Sos outstanding sales performance. When So returned, the
petitioner asked respondent So to sign a memorandum to work for the company for three years.
After 2 years and 4 months, So resigned from the company. Petitioner ordered respondents an
accounting of the various Christmas giveaways they received. In return, respondents also
demanded payment of their separation benefits, commissions, monetary benefits but petitioner
refused and withheld the 13th month pay and other benefits.
Issue: WON the employer can withhold its employees wages and benefits as lien to protect its
interest as surety in the car loan and for expenses in the training abroad.
Held: The employer cannot withhold respondents 13th month pay and other monetary benefits.
Article 116 of the Labor Code, as amended, provides:
Withholding of wages and kickbacks prohibited. It shall be unlawful for any person,
directly or indirectly, to withhold any amount from the wages (and benefits) of a worker
or induce him to give up any part of his wages by force, stealth, intimidation, threat or by
any other means whatsoever without the workers consent.
The above provision is clear and needs no further elucidation. Indeed, petitioner has no legal
authority to withhold respondents 13th month pay and other benefits. What an employee has
worked for, his employer must pay. Thus, an employer cannot simply refuse to pay the wages or
benefits of its employee because he has either defaulted in paying a loan guaranteed by his
employer; or violated their memorandum of agreement; or failed to render an accounting of his
employers property.
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Agabon vs NLRC (2004) G.R. 158693

Facts:
Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and
installing ornamental and construction materials. It employed petitioners Virgilio Agabon and
Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999
when they were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of money claims and on
December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and
ordered private respondent to pay the monetary claims.
Issue: WON respondents dismissal is illegal and if not, entitles them benefits.
Held: The dismissal is legal and entitles them of payment of benefits.
Dismissals based on just causes contemplate acts or omissions attributable to the employee while
dismissals based on authorized causes involve grounds under the Labor Code which allow the
employer to terminate employees. A termination for an authorized cause requires payment of
separation pay. When the termination of employment is declared illegal, reinstatement and full
back wages are mandated under Article 279. If reinstatement is no longer possible where the
dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must
give the employee two written notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes
under Articles 283 and 284, the employer must give the employee and the Department of Labor
and Employment written notices 30 days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just
cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health
reasons under Article 284, and due process was observed; (2) the dismissal is without just or
authorized cause but due process was observed; (3) the dismissal is without just or authorized
cause and there was no due process; and (4) the dismissal is for just or authorized cause but due
process was not observed.
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2
In the fourth
the dismissal should be upheld. While the procedural infirmity cannot be
cured, it should not invalidate the dismissal. However, the employer should be held liable for
non-compliance with the procedural requirements of due process. The present case squarely falls
Labor Standards
under the fourth situation. The dismissal should be upheld because it was established that the
petitioners abandoned their jobs to work for another company. Private respondent, however, did
not follow the notice requirements and instead argued that sending notices to the last known
addresses would have been useless because they did not reside there anymore. Unfortunately for
the private respondent, this is not a valid excuse because the law mandates the twin notice
requirements to the employees last known address. Thus, it should be held liable for noncompliance with the procedural requirements of due process.
The Court ruled that respondent is liable for petitioners holiday pay, service incentive leave pay
and 13th month pay without deductions. The evident intention of Presidential Decree No. 851 is to
grant an additional income in the form of the 13th month pay to employees not already receiving
the same so as to further protect the level of real wages from the ravages of world-wide
inflation. Clearly, as additional income, the 13th month pay is included in the definition of wage
under Article 97(f) of the Labor Code.
American Wire & Cable Daily Rated Employees vs American Wire (2005) G.R. 155059
Facts:
On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and
Employment by the two unions for voluntary arbitration. They alleged that the private
respondent, without valid cause, suddenly and unilaterally withdrew and denied certain benefits
and entitlements which they have long enjoyed.These are Service Award, 35% premium pay of an
employees basic pay for the work rendered during Holy Monday, Holy Tuesday, Holy Wednesday,
December 23, 26, 27, 28 and 29, Christmas Party and Promotional Increase.
Issue: WON the respondent company violated Article 100 of the Labor Code.
Held: The company is not guilty of violating Art. 100 of the Labor Code.
Article 100 of the Labor Code provides:
PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. Nothing in this Book
shall be construed to eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.
The certain benefits and entitlements are considered bonuses. A bonus can only be enforceable
and demandable if it has ripened into a company practice. It must also be expressly agreed by the
employer and employee or it must be on a fixed amount.
The assailed benefits were never subjects of any agreement between the union and the company.
It was never incorporated in the CBA. Since all these benefits are in the form of bonuses, it is
neither enforceable nor demandable.
Honda Philippines Inc., vs Samahang Manggagawa sa Honda (2005) G.R. 145561
Facts:
The case stems from the collective bargaining agreement between Honda and the respondent
84 it
M agranted
. C e c the
e l i computation
a T i m b a l of 14th month pay as Lthe
l B same
2 as 13th month pay. Honda
Rm
union that
4
0
2
continues the practice of granting financial assistance covered every December each year of not
less than 100% of the basic salary. In the latter part of 1998, the parties started to re-negotiate for
Labor Standards
the fourth and fifth years of the CBA. The union filed a notice of strike on the ground of unfair
labor practice for deadlock.
DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration.
The striking employees were ordered to return to work and management to accept them back
under the same terms prior to the strike staged. Honda issued a memorandum of the new
computation of the 13th month and 14th month pay to be granted to all its employees whereby the
31 long strikes shall be considered unworked days for purpose of computing the said benefits. The
amount equivalent to of the employees basic salary shall be deducted from these bonuses, with
a commitment that in the event that the strike is declared legal, Honda shall pay the amount.
Issue: WON the pro-rated computation of the 13th and 14th month pays and other bonuses in
question is valid and lawful.
Held: The pro-rated computation is invalid.
The pro-rated computation of Honda as a company policy has not ripened into a company practice
and it was the first time they implemented such practice.The payment of the 13th month pay in
full month payment by Honda has become an established practice. The length of time where it
should be considered in practice is not being laid down by jurisprudence. The voluntary act of the
employer cannot be unilaterally withdrawn without violating Article 100 of the Labor Code.The
court also rules that the withdrawal of the benefit of paying a full month salary for 13th month pay
shall constitute a violation of Article 100 of the Labor Code.
Producers Bank vs NLRC () 335 SCRA 506
Facts:
Petitioner was placed by Central Bank of the Philippines (Bangko Sentral ng Pilipinas) under a
conservator for the purpose of protecting its assets. When the respondents ought to implement
the CBA (Sec. 1, Art. 11) regarding the retirement plan and pertaining to uniform allowance, the
acting conservator of the petition expressed objection resulting an impasse between the
petitioner bank and respondent union. The deadlock continued for at least six months. The private
respondent, to resolve the issue filed a case against petitioner for unfair labor practice and
flagrant violation of the CBA.
The Labor Arbiter dismissed the petition. NLRC reversed the findings and ordered the
implementation of the CBA.
Issue: WON the employees who have retired have no personality to file an action since there is no
longer an employer-employee relationship.
Held: Employees who have retired still have the personality to file a complaint.
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
to be derived therefrom
85 M a . Cpackage
e c e l i aand
T i the
m b abenefits
l
L l B 2 constituted as it were
R ma
402
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.
Labor Standards
When an employee has retired but his benefits under the law or CBA have not yet been given, he
still retains, for the purpose of prosecuting his claims, the status of an employee entitled to the
protection of the Labor Code, one of which is the protection of the labor union.
Jardin vs NLRC (2000) G.R. 119268
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 respondents
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. In a
dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit.
Issue: WON the deduction for the washing of taxi units is illegal.
Held: The deduction made for the car wash is not illegal.
In Five J Taxi vs. NLRC, the court views that it is not illegal in the context of the law. We note that
after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same
clean condition when he took it out. Car washing after a tour of duty is indeed a practice in the
taxi industry and is in fact dictated by fair play. Hence, the drivers are not entitled to
reimbursement of washing charges.
Manila Jockey Club Employees Labor Union vs Manila Jockey Club (2007) G.R. 167601
Facts:
Petitioner Manila Jockey Club Employees Labor Union-PTGWO and respondent Manila Jockey Club,
Inc., a corporation with a legislative franchise to conduct, operate and maintain horse races,
entered into a Collective Bargaining Agreement (CBA) effective January 1, 1996 to December 31,
2000. In the CBA, the parties agreed to a 7-hour work schedule from 9:00 a.m. to 12:00 noon and
from 1:00 p.m. to 5:00 p.m. on a work week of Monday to Saturday. On April 3, 1999, respondent
issued an inter-office memorandum declaring that, effective April 20, 1999, the hours of work of
regular monthly-paid employees shall be from 1:00 p.m. to 8:00 p.m. when horse races are held,
that is, every Tuesday and Thursday. The memorandum, however, maintained the 9:00 a.m. to
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5:00 p.m.
schedule for non-race days.
402
Labor Standards
On October 12, 1999, petitioner and respondent entered into an Amended and Supplemental CBA
retaining Section 1 of Article IV and Section 2 of Article XI, supra, and clarified that any conflict
arising therefrom shall be referred to a voluntary arbitrator for resolution. Subsequently, before a
panel of voluntary arbitrators of the National Conciliation and Mediation Board (NCMB), petitioner
questioned the above office memorandum as violative of the prohibition against non-diminution
of wages and benefits guaranteed under Section 1, Article IV, of the CBA which specified the work
schedule of respondent's employees to be from 9:00 a.m. to 5:00 p.m. The NCMBs panel of
voluntary arbitrators, in a decision dated October 18, 2001, upheld respondent's prerogative to
change the work schedule of regular monthly-paid employees under Section 2, Article XI, of the
CBA. Petitioner moved for reconsideration but the panel denied the motion.
Issue: WON the respondent violated the non-diminution of benefits under Article 100 of the Labor
Code.
Held: The respondent did not violate the principle of non-diminution of benefits.
The provision of the CBA also grants respondent the prerogative to relieve employees from duty
because of lack of work. Petitioners argument, therefore, that the change in work schedule
violates Article 100 of the Labor Code because it resulted in the diminution of the benefit enjoyed
by regular monthly-paid employees of rendering overtime work with pay, is untenable.
Section 1, Article IV, of the CBA does not guarantee overtime work for all the employees but
merely provides that "all work performed in excess of seven (7) hours work schedule and on days
not included within the work week shall be considered overtime and paid as such." Respondent
was not obliged to allow all its employees to render overtime work everyday for the whole
year, but only those employees whose services were needed after their regular working
hours and only upon the instructions of management. Thus, overtime pay does not fall
within the definition of benefits under Article 100 of the Labor Code on prohibition against
elimination or diminution of benefits.
San Miguel Corp., vs Layoc Jr. Et al., (2007) G.R. 149640
Facts:
Respondents were among the "Supervisory Security Guards" of the Beer Division of San Miguel
Corporation. From the commencement of their employment, the private respondents were
required to punch their time. Corollary, the private respondents were availing the benefits for
overtime, holiday and night premium duty through time card punching. However, in the early
1990's, the San Miguel Corporation embarked on a Decentralization Program. The Beer Division of
the San Miguel Corporation implemented on January 1, 1993 a "no time card policy" were no
longer required to punch their time cards. Consequently, on January 16, 1993, without prior
consultation with the private respondents, the time cards were ordered confiscated and the latter
were no longer allowed to render overtime work. However, in lieu of the overtime pay and the
premium pay, the personnel of the Beer Division of the petitioner San Miguel Corporation affected
by the "No Time Card Policy" were given a 10% across-the-board increase on their basic pay while
the supervisors
were assigned in the night shift (6:00 p.m.
to 6:00 a.m.) were given night
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shift allowance
4 0 2 ranging from P2,000.00 to P2,500.00 a month. Hence, this complaint filed for
unfair labor practice, violation of Article 100 of the Labor Code of the Philippines, and violation of
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the equal protection clause and due process of law in relation to paragraphs 6 and 8 of Article 32
of the New Civil Code of the Philippines.
Issue: Whether the circumstances in the present case constitute an exception to the rule that
supervisory employees are not entitled to overtime pay.
Held: Article 82 of the Labor Code states that the provisions of the Labor Code on working
conditions and rest periods shall not apply to managerial employees
Generally, managerial employees such as respondents are not entitled to overtime pay for services
rendered in excess of eight hours a day. Respondents failed to show that the circumstances of the
present case constitute an exception to this general rule. Aside from their allegations,
respondents were not able to present anything to prove that petitioners were obliged to permit
respondents to render overtime work and give them the corresponding overtime pay. Even if
petitioners did not institute a "no time card policy," respondents could not demand overtime pay
from petitioners if respondents did not render overtime work. The requirement of rendering
additional service differentiates overtime pay from benefits such as thirteenth month pay or
yearly merit increase. These benefits do not require any additional service from their
beneficiaries. Thus, overtime pay does not fall within the definition of benefits under Article 100
of the Labor Code.
San Miguel Corp vs Pontillas (2008) G.R. 155178
Facts:
On 24 October 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas (respondent)
as a daily wage company guard. In 1984, respondent became a monthly-paid employee which
entitled him to yearly increases in salary. On 19 October 1993, respondent filed an action for
recovery of damages due to discrimination under Article 100 of the Labor Code of the Philippines
(Labor Code), as amended, as well as for recovery of salary differential and backwages, against
petitioner. Respondent questioned the rate of salary increase given him by petitioner.
On 6 December 1993, Ricardo F. Elizagaque (Elizagaque), petitioners Vice President and VisMin
Operations Center Manager, issued a Memorandum ordering, among others, the transfer of
responsibility of the Oro Verde Warehouse to the newly-organized VisMin Logistics Operations
effective 1 January 1994. Respondent continued to report at Oro Verde Warehouse. He alleged
that he was not properly notified of the transfer and that he did not receive any written order
from Capt. Fortich, his immediate superior.
In a letter dated 28 February 1994, petitioner informed respondent that an administrative
investigation.In a letter dated 7 April 1994, petitioner informed respondent of its decision to
terminate him for violating company rules and regulations, particularly for Insubordination or
Willful Disobedience in Carrying Out Reasonable Instructions of his superior.
Issue: WON respondents dismissal from employment is legal.
Held: Respondent was dismissed for a just cause.
88 M may
a . Cterminate
e c e l i a an
T i employment
mbal
L l B or2 willful disobedience by Rthe
m
An employer
for serious misconduct
402
employee of the lawful orders of his employer or representative in connection with his
work.Willful disobedience requires the concurrence of two elements: (1) the employees assailed
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conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and
(2) the order violated must have been reasonable, lawful, made known to the employee, and must
pertain to the duties which he had been engaged to discharge. The records show that respondent
was not singled out for the transfer. Respondents transfer was the effect of the integration of
the functions of the Mandaue Brewery Materials Management and the Physical Distribution group
into a unified logistics organization, the VisMin Logistics Operations.
Moreover, the employer exercises the prerogative to transfer an employee for valid reasons and
according to the requirements of its business, provided the transfer does not result in demotion in
rank or diminution of the employees salary, benefits, and other privileges. In this case, we found
that the order of transfer was reasonable and lawful considering the integration of Oro Verde
Warehouse with VisMin Logistics Operations. Respondent was properly informed of the transfer
but he refused to receive the notices on the pretext that he was wary because of his pending case
against petitioner. Respondent failed to prove that petitioner was acting in bad faith in effecting
the transfer. There was no demotion involved, or even a diminution of his salary, benefits, and
other privileges. Respondents persistent refusal to obey petitioners lawful order amounts to
wilful disobedience under Article 282 of the Labor Code.
(2008) G.R. 170734
Facts:
Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the
labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid
the 13th month pay, bonus, and leave encashment of three union members in amounts proportional
to the service they actually rendered in a year, which is less than a full twelve (12) months.
Respondent protested the prorated scheme, claiming that on several occasions petitioner did not
prorate the payment of the same benefits to seven (7) employees who had not served for the full
12 months. According to respondent, the prorated payment violates the rule against diminution of
benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National
Conciliation and Mediation Board (NCMB).
Issue: WON the grant of 13th month pay, bonus, and leave encashment in full regardless of actual
service rendered constitutes voluntary employer practice and, consequently, whether or not the
prorated payment of the said benefits constitute diminution of benefits under Article 100 of the
Labor Code.
Held: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished,
discontinued or eliminated by the employer.
The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect
89 ofM workers
a . C e cand
e l ipromote
a T i m btheir
a l welfare and to affordL labor
l B full
2 protection. Said mandate
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the rights
402
in turn is the basis of Article 4 of the Labor Code which states that all doubts in the
implementation and interpretation of this Code, including its implementing rules and regulations
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shall be rendered in favor of labor. Jurisprudence is replete with cases which recognize the right
of employees to benefits which were voluntarily given by the employer and which ripened into
company practice.
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely,
voluntarily and consistently granting full benefits to its employees regardless of the length of
service rendered. True, there were only a total of seven employees who benefited from such a
practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule
specifying a minimum number of years within which a company practice must be exercised in
order to constitute voluntary company practice. Thus, it can be six (6) years, three (3) years, or
even as short as two (2) years. Petitioner cannot shirk away from its responsibility by merely
claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing
group head.
Genesis Transport Service et al., vs UMM Genesis Transport (2010) G.R. 182114
Facts:
Respondent Juan Taroy was hired by petitioner Genesis Transport as driver on commission basis at
9% of the gross revenue per trip. He, terminated from employment after an accident on April 20,
2002 where he was deemed to have been driving recklessly.He then filed a complaint for illegal
dismissal and payment of service incentive leave pay, claiming that he was singled out for
termination because of his union activities, other drivers who had met accidents not having been
dismissed from employment. He later amended his complaint to implead his co-respondent union
and add as grounds unfair labor practice and reimbursement of illegal deductions on tollgate fees,
and payment of service incentive leave pay.
Upon appeal, with respect to Taroys claim for refund, the Labor Arbiter ruled in his favor for if, as
contended by Genesis Transport, tollgate fees form part of overhead expense. The Labor Arbiter
thus concluded that it would appear that the tollgate fees are deducted from the gross revenues
and not from the salaries of drivers and conductors, but certainly the deduction thereof
diminishes the take home pay of the employees.
Issue: Whether the tollgate fee deductions which resulted to an underpayment given to Taroy is
illegal?
Held: The deduction is considered illegal.
The amounts representing tollgate fees were deducted from gross revenues and not directly from
Taroys commissions, the labor tribunal and the appellate court correctly held that the
withholding of those amounts reduced the amount from which Taroys 9% commission would be
computed. Such a computation not only marks a change in the method of payment of wages,
resulting in a diminution of Taroys wages in violation of Article 113 vis--vis Article 100 of the
Labor Code, as amended. It need not be underlined that without Taroys written consent or
authorization, the deduction is considered illegal. Besides, the invocation of the rule on company
practice
to employees, notR on
90 isMgenerally
a . C e c used
e l i a with
T i mrespect
b a l to the grant ofadditionalbenefits
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issues involvingdiminution
of benefits.
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Congson vs NLRC (1995) 243 SCRA 260

Facts:
Private respondents were hired on various dates 3 by petitioner as regular piece-rate workers.
They were uniformly paid at a rate of P1.00 per tuna weighing thirty (30) to eighty (80) kilos per
movement. They worked seven (7) days a week.
During the first week of June 1990, petitioner notified his workers of his proposal to reduce the
rate-per-tuna movement due to the scarcity of tuna. Private respondents resisted petitioner's
proposed rate reduction. When they reported for work the next day, they were informed that they
had been replaced by a new set of workers.
On June 1990, private respondents filed a case against petitioner before the NLRC for
underpayment of wages (non-compliance with Rep. Act Nos. 6640 and 6727) and non-payment of
overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)-day service incentive leave
pay; and for constructive dismissal. With respect to their monetary claims, private respondents
charged petitioner with violation of the minimum wage law, alleging that with petitioner's rates
and the scarcity of tuna catches, private respondents' average monthly earnings each did not
exceed ONE THOUSAND PESOS (P1,000.00).
In addition to the amount of P1.00 per 'bariles' per movement herein complainants get the
intestines and liver of the tuna as part of their salary. That for every tuna delivered, herein
complainants extract at least three (3) kilos of intestines and liver. That the minimum prevailing
price of tuna intestine and liver in 1986 to 1990 range from P15.00 to P20.00/kilo. The value of
the tuna intestine and liver should be computed in arriving at the daily wage of herein
complainants because the very essence of the agreement between complainants and respondent
is: complainants shall be paid only P1.00 per tuna per movement BUT the intestines and liver of
the tuna delivered shall go to the herein complainants. It should be noted that tuna intestines and
liver are easily disposed of in any public market. What they are after, in truth and in fact is the
tuna intestines and liver which they can easily convert into cash." Quite clearly, petitioner admits
that the P1.00-per-tuna movement is the actual wage rate applied to private respondents as
expressly agreed upon by both parties. Petitioner further admits that private respondents were
entitled to retrieve the tuna intestines and liver as part of their compensation.
Issue: WON the means of payment of the wage is valid.
Held: The means of payment of wage is invalid.
The Labor Code expressly provides:
"Article 102.
Forms of Payment. No employer shall pay the wages of an employee by
means of, promissory notes vouchers, coupons, tokens, tickets, chits, or any object other than
legal tender, even when expressly requested by the employee. Payment of wages by check or
money order shall be allowed when such manner of payment is customary on the date of
effectivity of this Code, or is necessary because as specified in appropriate regulations to be
issued by the Secretary of Labor or as stipulated in a collective bargaining agreement."
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4 0petitioner's
2
Undoubtedly,
practice of paying the private respondents the minimum wage by means
of legal tender combined with tuna liver and intestines runs counter to the above cited provision
of the Labor Code. The fact that said method of paying the minimum wage was not only agreed
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upon by both parties in the employment agreement but even expressly requested by private
respondents, does not shield petitioner. Article 102 of the Labor Code is clear. Wages shall be paid
only by means of legal tender. The only instance when an employer is permitted to pay wages in
forms other than legal tender, that is, by checks or money order, is when the circumstances
prescribed in the second paragraph of Article 102 are present.
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North Davao Mining vs NLRC (1996) 254 SCRA 721

Facts:
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Respondent Wilfredo Guillema is one among several employees of North Davao who were
separated by reason of the companys closure on May 31, 1992, and who were the complainants in
the cases before the respondent labor arbiter. On May 31, 1992, petitioner North Davao
completely ceased operations due to serious business reverses. From 1988 until its closure in
1992, North Davao suffered net losses averaging three billion pesos per year, for each of the five
years prior to its closure. All told five months prior to its closure, its total liabilities had exceeded
its assets by 20.392 billion pesos. When it ceased operations, its remaining employees were
separated and given the equivalent of 12.5 days pay for every year of service, computed on their
basic monthly pay, in addition to the commutation to cash of their unused vacation and sick
leaves. However, it appears that, during the life of the petitioner corporation, from the beginning
of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to
thirty days pay for every year of service. Moreover, the employees had to collect their salaries at
a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 hours
travel time by public transportation; this arrangement lasted from 1981 up to 1990.
Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo
Guillema and 271 other seperated employees for additional separation pay; back wages;
transportation allowance; hazard pay; etc., amounting to P58,022,878.31.
Issue: WON the time spent in collecting wages in a place other than the place of employment is
compensable notwithstanding that the same is done during official time.
Held: Hours spent by complainants in collecting salaries shall be considered compensable hours
worked.
It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC
maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually
took the workers about two and a half (2 1/2) hours of travel from the place of work and such
travel time is not official. Records also show that on February 12,1992, when an inspection was
conducted by the Department of Labor and Employment at the premises of petitioner NDMC at
Amacan, Maco, Davao del Norte, it was found out that petitioners had violated labor standards
law, one of which is the place of payment of wages.
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that:
Place of payment. - (a) As a general rule, the place of payment shall be at or near the place of
undertaking. Payment in a place other than the workplace shall be permissible only under the
following circumstances: (1) When payment cannot be effected at or near the place of work by
reason of the deterioration of peace and order conditions, or by reason of actual or impending
emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat
impossible; (2) When the employer provides free transportation to the employees back and
forth; and (3) Under any analogous circumstances; provided that the time spent by the
employees in collecting their wages shall be considered as compensable hours worked.
Considering further the distance between Amacan, Maco to Tagum which is 2 hours by travel and
the risks in commuting all the time in collecting complainants salaries, would justify the granting
of backwages equivalent to 2 days in a month.
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San Juan de Dios Hospital vs NLRC (1997) 282 SCRA 316

Facts:
Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital
Employees Association sent a four (4)-page letter with attached support signatures requesting and
pleading for the expeditious implementation and payment by respondent Juan De Dios Hospital of
the 40 HOURS/5-DAY WORKWEEK with compensable weekly two (2) days off provided for by
Republic Act 5901 as clarified for enforcement by the Secretary of Labors Policy Instructions No.
54 dated April 12, 1988.
Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint
regarding their claims for statutory benefits under the above-cited law and policy issuance. On
February 26, 1992, the Labor Arbiter dismissed the complaint. Petitioners appealed before public
respondent National Labor Relations Commission which affirmed the Labor Arbiters decision.
Issue: Whether Policy Instructions No. 54 issued by then Labor Secretary (now Senator) Franklin M.
Drilon is valid or not.
Held: 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 has long been repealed with the passage of the Labor Code on
May 1, 1974. Article 302 of which explicitly provide:
All labor laws not adopted as part of this Code either directly or by reference are hereby
repealed. All provisions of existing laws, orders, decrees, rules and regulations inconsistent
herewith are likewise repealed.
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 latters validity may be gauged. Article 83 of the Labor Code states: Normal Hours of
Work. -- The normal hours of work of any employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000)
or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular
office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except
where the exigencies of the service require that such personnel work for six (6) days or forty-eight
(48) hours, in which case they shall be entitled to an additional compensation of at least thirty per
cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, health
personnel
shall include: resident physicians, nurses, nutritionists,
dietitians, pharmacists, social
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workers, laboratory
technicians, paramedical technicians, psychologists, midwives, attendants and
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all other hospital or clinic personnel.
Labor Standards
A cursory reading of Article 83 of the Labor Code betrays petitioners position that hospital
employees are entitled to a full weekly salary with paid two (2) days off if they 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
Labors 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.
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Sime Darby Pilipinas Inc., vs NLRC (1998) 289 SCRA 86

Facts:
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
7:45 A.M. 4:45 P.M. (Mon to Fri) 7:45 A.M. 11:45 P.M. (Sat).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. 10:30 A.M. and 2:30 P.M. 3:30 P.M.
Lunch break will be between: 12:00 NN 1:00 P.M. (Mon to Fri).
Excluded from the above schedule are the Warehouse and QA employees who are on shifting.
Their work and break time schedules will be maintained as it is now.
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 of this Court 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.
Issue: WON the act of management in revising the work schedule of its employees and discarding
their paid lunch break constitutive of unfair labor practice.
Held: The revision of work schedule is a management prerogative and does not amount to unfair
labor practice in discarding the paid lunch break.
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
99 beM considered
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i aworking
T i m b time
al
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R mif
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402
necessary and were paid accordingly for working.
With the new work schedule, the employees are now given a one-hour lunch break without any
Labor Standards
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. The Court agrees 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.
Philippine Airlines vs NLRC (1999) 302 SCRA 582
Facts:
Private respondent was employed as flight surgeon at petitioner company. He was assigned at the
PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight. On
February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his
dinner at his residence, which was about five-minute drive away. A few minutes later, the clinic
received an emergency call from the PAL Cargo Services.
One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr.
Merlino Eusebio, called private respondent at home to inform him of the emergency. The patient
arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately rushed him to the
hospital. When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio
had already left with the patient. Mr. Acosta died the following day. Upon learning about the
incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight Surgeon to
conduct an investigation. The Chief Flight Surgeon required private respondent to explain why no
disciplinary sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a thirty-minute meal
break; that he immediately left his residence upon being informed by Mr. Eusebio about the
emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought
the patient to the hospital without waiting for him. Finding private respondents explanation
unacceptable, the management charged private respondent with abandonment of post while on
duty. He was given ten days to submit a written answer to the administrative charge.
In his answer, private respondent reiterated the assertions in his previous explanation. He further
denied that he abandoned his post on February 17, 1994. He said that he only left the clinic to
have his dinner at home. In fact, he returned to the clinic at 7:51 in the evening upon being
informed of the emergency.
Issue: WON being a full-time employee is obliged to stay in the company premises for not less
than eight (8) hours.
Held: Employees are not prohibited from going out of the premises as long as they return to their
posts on time.
Articles
83 and 85 of the Labor Code read: Normal hours of workThe normal hours of work of
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any employee
not exceed eight (8) hours a day.
4 0 shall
2
Health personnel in cities and municipalities with a population of at least one million (1,000,000)
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or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular
office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals,
except where the exigencies of the service require that such personnel work for six (6) days or
forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at
least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this
Article, health personnel shall include: resident physicians, nurses, nutritionists, dieticians,
pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists,
midwives, attendants and all other hospital or clinic personnel.
Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may prescribe, it
shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off
for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless of sex, not
less than one (1) hour time-off for regular meals, except in the following cases when a meal
period of not less than twenty (20) minutes may be given by the employer provided that such
shorter meal period is credited as compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be performed on
machineries, equipment or installations to avoid serious loss which the employer would otherwise
suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as
compensable working time.
Thus, the eight-hour work period does not include the meal break. Nowhere in the law may it be
inferred that employees must take their meals within the company premises. Employees are not
prohibited from going out of the premises as long as they return to their posts on time. Private
respondents act of going home to take his dinner does not constitute abandonment.
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Linton Commercial Co., vs Hellera (2007) G.R. 163147

Facts:
On 17 December 1997, Linton issued a memorandum addressed to its employees informing them of
the company's decision to suspend its operations from 18 December 1997 to 5 January 1998 due to
the currency crisis that affected its business operations. Linton submitted an establishment
termination report to the Department of Labor and Employment (DOLE) regarding the temporary
closure of the establishment covering the said period. The company's operation was to resume on
6 January 1998. On 7 January 1997, Linton issued another memorandum informing them that
effective 12 January 1998, it would implement a new compressed workweek of three (3) days on a
rotation basis. In other words, each worker would be working on a rotation basis for three working
days only instead for six days a week. On the same day, Linton submitted an establishment
termination report concerning the rotation of its workers. Linton proceeded with the
implementation of the new policy without waiting for its approval by DOLE. Aggrieved, sixty-eight
(68) workers (workers) filed a Complaint for illegal reduction of workdays.
Issue: WON there was an illegal reduction of work when Linton implemented a compressed
workweek by reducing from six to three the number of working days with the employees working
on a rotation basis.
Held: The compressed workweek arrangement was unjustified and illegal.
The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in
determining when an employer can validly reduce the regular number of working days. The said
bulletin states that a reduction of the number of regular working days is valid where the
arrangement is resorted to by the employer to prevent serious losses due to causes beyond his
control, such as when there is a substantial slump in the demand for his goods or services or when
there is lack of raw materials. Although the bulletin stands more as a set of directory guidelines
than a binding set of implementing rules, it has one main consideration, consistent with the ruling
in Philippine
the validity of reduction
102 M Graphic
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a T in
i mdetermining
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4 0suffering
2
company was
from losses.
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Certainly, management has the prerogative to come up with measures to ensure profitability or
loss minimization. However, such privilege is not absolute. Management prerogative must be
exercised in good faith and with due regard to the rights of labor. As previously stated, financial
losses must be shown before a company can validly opt to reduce the work hours of its employees.
However, to date, no definite guidelines have yet been set to determine whether the alleged
losses are sufficient to justify the reduction of work hours. If the standards set in determining the
justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e.,
suspension of work) of the Labor Code were to be considered, petitioners would end up failing to
meet the standards. On the one hand, Article 286 applies only when there is a bona fide
suspension of the employer's operation of a business or undertaking for a period not exceeding six
(6) months. Records show that Linton continued its business operations during the effectivity of
the compressed workweek, which spanned more than the maximum period. On the other hand, for
retrenchment to be justified, any claim of actual or potential business losses must satisfy the
following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses are
actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be
effective in preventing the expected losses; and (4) the alleged losses, if already incurred, or the
expected imminent losses sought to be forestalled, are proven by sufficient and convincing
evidence. Linton failed to comply with these standards.
Bisig Manggagawa sa Tryco vs NLRC (2008) G.R. 151309
Facts:
Tryco and the petitioners signed separate Memoranda of Agreement (MOA), providing for a
compressed workweek schedule to be implemented in the company effective May 20, 1996. The
MOA was entered into pursuant to Department of Labor and Employment Department Order (D.O.)
No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek. As provided in
the MOA, 8:00a.m. to 6:12p.m., from Monday to Friday, shall be considered as the regular working
hours, and no overtime pay shall be due and payable to the employee for work rendered during
those hours. The MOA specifically stated that the employee waives the right to overtime pay for
work rendered after 5p.m. until 6:12p.m. from Monday to Friday considering that the compressed
workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46
hours. However, should an employee be permitted or required to work beyond 6:12p.m., such
employee shall be entitled to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of
the implementation of a compressed workweek in the company. In January 1997, BMT and Tryco
negotiated for the renewal of their collective bargaining agreement (CBA) but failed to arrive at a
new agreement.
Issue: WON the MOA providing for compressed workweek is unenforceable as it is contrary to law.
Held: The MOA is enforceable and binding against the petitioner.
Where it is shown that the person making the waiver did so voluntarily, with full understanding of
what he
for the quitclaim
and reasonable, Rthe
103 was
M a doing,
. C e c and
e l i atheT iconsideration
mbal
L l Bis credible
2
m
0 2 be recognized as a valid and binding undertaking. Notably, the MOA complied
transaction 4must
with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the
employees in the implementation of a compressed workweek scheme:

1.
2.
3.
4.
5.
Labor Standards
The employees voluntarily agree to work more than eight (8) hours a day the total in a week of
which shall not exceed their normal weekly hours of work prior to adoption of the compressed
workweek arrangement.
There will not be any diminution whatsoever in the weekly or monthly take-home pay and
fringe benefits of the employees.
If an employee is permitted or required to work in excess of his normal weekly hours of work
prior to the adoption of the compressed workweek scheme, all such excess hours shall be
considered overtime work and shall be compensated in accordance with the provisions of the
Labor Code or applicable CBA.
Appropriate waivers with respect to overtime premium pay for work performed in excess of
eight (8) hours a day may be devised by the parties to the agreement.
The effectivity and implementation of the new working time arrangement shall be by
agreement of the parties.
Considering that the MOA clearly states that the employee waives the payment of overtime pay in
exchange of a five-day workweek, there is no room for interpretation and its terms should be
implemented as they are written.
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X
MINIMUM LABOR
STANDARD
BENEFITS
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Union Filipro Employees vs Vivar (1992) 205 SCRA 203

Facts:
Respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations
Commission a petition for declaratory relief seeking a ruling on its rights and obligations
respecting claims of its monthly paid employees for holiday pay.
Both Filipro and the Union of Filipro Employees (UFE) agreed to submit the case for voluntary
arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. Arbitrator Vivar
rendered a decision directing Filipro to pay its monthly paid employees holiday pay pursuant to
Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and
such other legal restrictions as are provided for in the Code. However, the respondent arbitrator
refused to take cognizance of the case reasoning that he had no more jurisdiction to continue as
arbitrator because he had resigned from service effective May 1, 1986.
Issue: WON sales personnel are excluded in the payment of holiday pay.
Held: Field personnel are not entitled to holiday pay.
Under Article 82, field personnel are not entitled to holiday pay. Said article defines field
personnel as "non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty."
The law requires that the actual hours of work in the field be reasonably ascertained. The
company has no way of determining whether or not these sales personnel, even if they report to
the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours
in between in actual field work. Moreover, the requirement that "actual hours of work in the field
cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III
of the Implementing Rules which provides:
"Rule IV Holidays with Pay. SECTION 1. Coverage. This rule shall apply to all employees
except: (e) Field personnel and other employees whose time and performance is unsupervised
by the employer
The clause "whose time and performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours of work in the field cannot be
determined with reasonable certainty." The former clause is still within the scope and purview of
Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual
working hours in the field can be determined with reasonable certainty, query must be made as to
whether or not such employee's time and performance is constantly supervised by the employer.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on
sales target; (2) good collection performance; (3) proper compliance with good market hygiene;
(4) good merchandising work; (5) minimal market returns and (6) proper truck maintenance. The
criteria indicate that these sales personnel are given incentive bonuses precisely because of the
difficulty
of field work. These
are evaluated by Rthe
106 inMmeasuring
a . C e c e their
l i a Tactual
i m b ahours
l
L l Bemployees
2
m
4
0
2
result of their work and not by the actual hours of field work which are hardly susceptible to
determination.
Labor Standards
In San Miguel Brewery, Inc. v. Democratic Labor Organization, the Court had occasion to discuss
the nature of the job of a salesman. It states that : "The reasons for excluding an outside salesman
are fairly apparent. Such a salesman, to a greater extent, works individually. There are no
restrictions respecting the time he shall work and he can earn as much or as little, within the
range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions
as extra compensation. He works away from his employer's place of business, is not subject to the
personal supervision of his employer, and his employer has no way of knowing the number of hours
he works per day."
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National Sugar Refinery Corp vs NLRC (1993) 220 SCRA 452

Facts:
Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar
Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar
Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant,
Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations
Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor,
Community Development Officer, Employment and Training Supervisor, Assistant Safety and
Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head
of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool
Supervisor.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees,
from rank-and-file to department heads which was designed to rationalized the duties and
functions of all positions, reestablish levels of responsibility, and recognize both wage and
operational structures. Jobs were ranked according to effort, responsibility, training and working
conditions and relative worth of the job. As a result, all positions were re-evaluated, and all
employees including the members of respondent union were granted salary adjustments and
increases in benefits commensurate to their actual duties and functions. Two years after the
implementation of the JE Program, specifically on June 20, 1990, the members of herein
respondent union filed a complainant 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.
Issue: WON the members of respondent union are entitled to overtime, rest day and holiday pay.
Held: The members of the union are not entitled to overtime, rest and holiday pay since they fall
within the classification of managerial employees which makes them a part of the exempted
employees.
It must of necessity be ascertained first whether or not the union members, as supervisory
employees, are to be considered as officers or members of the managerial staff who are exempt
from the coverage of Article 82 of the Labor Code.
It is not disputed that the members of respondent union are supervisory employees, as defined
employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which
reads: 'Managerial employee' is one who is vested with powers or prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign
or discipline employees. Supervisory employees are those who, in the interest of the employer
effectively recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. All employees not
falling within any of those above definitions are considered rank-and-file employees of this Book."
Article 82 of the Labor Code states: The provisions of this title shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government employees,
managerial
members of the Lfamily
108 Memployees,
a . C e c e l field
i a T ipersonnel,
mbal
l B 2of the employer who Rare
m
4 0 him
2
dependent on
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.
Labor Standards
As used herein, 'managerial employees' refer to those whose primary duty consists of the
management of the establishment in which they are employed or of a department or subdivision
thereof, and to other officers or members of the managerial staff.
Sec. 2. Exemption. The provisions of this rule shall not apply to the following persons if they
qualify for exemption under the condition set forth herein:
(b)
Managerial employees, if they meet all of the following conditions, namely:
(1)
Their primary duty consists of the management of the establishment in which they are
employed or of a department or subdivision thereof:
(2)
They customarily and regularly direct the work of two or more employees therein:
(3)
They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to the hiring and firing and as to the promotion or
any other change of status of other employees are given particular weight.
(c)
Officers or members of a managerial staff if they perform the following duties
and responsibilities:
(1)
The primary duty consists of the performance of work directly related to management
policies of their employer;
(2)
Customarily and regularly exercise discretion and independent judgment;
(3)
(i) Regularly and directly assist a proprietor or a managerial employee whose primary
duty consists of the management of the establishment in which he is employed or
subdivision thereof; or
(ii) execute under general supervision work along specialized or technical lines
requiring special training, experience, or knowledge; or
(iii) execute under general supervision special assignments and tasks;
(4)
Who do not devote more 20 percent of their hours worked in a work-week to activities
which are not directly and closely related to the performance of the work described in
paragraphs (1), (2), and above."
They are clearly officers or members of the managerial staff because they meet all the conditions
prescribed by law and, hence, they are not entitled to overtime, rest day and supervisory
employees under Article 212 (m) should be made to apply only to the provisions on Labor
Relations, while the right of said employees to the questioned benefits should be considered in
the light of the meaning of a managerial employee and of the officers or members of the
managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I Book III of
the implementing rules.
In other words, for purposes of forming and joining unions, certification elections, collective
bargaining, and so forth, the union members are supervisory employees. In terms of working
conditions and rest periods and entitlement to the questioned benefits, however, they are officers
or members of the managerial staff, hence they are not entitled thereto.
The union members will readily show that these supervisory employees are under the direct
supervision of their respective department superintendents and that generally they assist the
latter in planning, organizing, staffing, directing, controlling communicating and in making
decisions in attaining the company's set goals and objectives. These supervisory employees are
likewise responsible for the effective and efficient operation of their respective departments.
More specifically, their duties and functions include, among others, the following operations
whereby the employee:
1) assists the department superintendent in the following:
Ma. Cecelia Timbal
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a) planning of systems and procedures relative to department activities;
402
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;
109
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Labor Standards
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
(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, The Court is 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.
110
Ma. Cecelia Timbal
Salazar vs NLRC
(1996) 256 SCRA 273
402
Facts:
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On April 1990, private respondent employed petitioner as construction/project engineer for the
construction of the Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtue of an oral
contract, petitioner would also receive a share in the profits after completion of the project and
that petitioner's services in excess of eight (8) hours on regular days and services rendered on
weekends and legal holidays shall be compensable overtime at the rate of P27.85 per hour.
On 16 April 1991, petitioner received a memorandum issued by private respondent's project
manager, Engr. Nestor A. Delantar informing him of the termination of his services effective on 30
April 1991.
On 13 September 1991, petitioner filed a complaint against private respondent for illegal
dismissal, unfair labor practice, illegal deduction, non-payment of wages, overtime rendered,
service incentive leave pay, commission, allowances, profit-sharing and separation pay with the
NLRC-NCR Arbitration Branch, Manila.
Issue: WON petitioner is entitled to separation pay.
Held: The petitioner is not entitled to separation pay.
Petitioner admitted that his job was to supervise the laborers in the construction project. Hence,
although petitioner cannot strictly be classified as a managerial employee under Art. 82 of the
Labor Code, and sec. 2(b), Rule 1, Book III of the Omnibus Rules Implementing the Labor Code,
nonetheless he is still not entitled to payment of the aforestated benefits because he falls
squarely under another exempt category "officers or members of a managerial staff" as defined
under sec. 2(c) of the abovementioned implementing rules:
SECTION 2.
Exemption. The provisions of this Rule shall not apply to the following
persons if they qualify for exemption under the condition set forth herein:
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to management
(2) Customarily and regularly exercise discretion and independent judgment;
(3)
[i] Regularly and directly assist a proprietor or a managerial employee whose primary
duty consists of the management of the establishment in which he is employed or subdivision
thereof; or
[ii] execute under general supervision work along specialized or technical lines
requiring special training, experience, or knowledge; or
[iii] execute under general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a work-week to activities
which are not directly and closely related to the performance of the work described in
paragraphs (1), (2), and (3) above.
The petitioner was paid overtime benefits does not automatically and necessarily denote that
petitioner is entitled to such benefits. Art. 82 of the Labor Code specifically delineates who are
entitled to the overtime premiums and service incentive leave pay provided under Art. 87, 93, 94
and 95 of the Labor Code and the exemptions thereto. As previously determined petitioner falls
under the exemptions and therefore has no legal claim to the said benefits. It is well and good
that petitioner was compensated for his overtime services. However, this does not translate into a
right on
demand
additional paymentL lwhen,
111theM part
a . Cofe petitioner
c e l i a T ito
mb
al
B 2under the law, petitioner
R mis
4 0 2 there from.
clearly exempted
Labor Standards
Labor Congress of the Philippines vs NLRC (1998) G.R. 123938

Facts:
The 99 persons named as petitioners in this proceeding were rank-and-file employees of
respondent Empire Food Products, which hired them on various dates. Petitioners filed against
private respondents a complaint for payment of money claims and for violation of labor standards
laws They also filed a petition for direct certification of petitioner Labor Congress of the
Philippines as their bargaining representative. In an Order dated October 24, 1990, Mediator
Arbiter approved the memorandum of agreement and certified LCP "as the sole and exclusive
bargaining agent among the rank-and-file employees of Empire Food Products for purposes of
collective bargaining with respect to wages, hours of work and other terms and conditions of
employment".
On November 1990, petitioners through LCP President Navarro submitted to private respondents a
proposal for collective bargaining. On January 1991, petitioners filed a complaint against private
respondents for Unfair Labor Practice by way of Illegal Lockout and/or Dismissal; Union busting
thru Harassments [sic], threats, and interfering with the rights of employees to self-organization;
Violation of the Memorandum of Agreement dated October 23, 1990; Underpayment of Wages in
violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated by the Regional Wage
Board; Actual, Moral and Exemplary Damages."
Issue: WON the petitioners are entitled to labor standard benefits considering they are paid by
piece rate worker.
Held: The petitioners are so entitled to these benefits namely, holiday pay, premium pay, 13th
month pay and service incentive leave.
Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were regular
employees of private respondents. First, as to the nature of petitioners' tasks were necessary or
desirable in the usual business of private respondents, who were engaged in the manufacture and
selling of such food products; second, petitioners worked for private respondents throughout the
year, and third, the length of time that petitioners worked for private respondents. Thus, while
petitioners' mode of compensation was on a "per piece basis," the status and nature of their
employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as
nighttime pay, holiday pay, service incentive leave and 13th month pay, "field personnel and other
employees whose time and performance is unsupervised by the employer, including those who are
engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount
for performing work irrespective of the time consumed in the performance thereof."
Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not
only did petitioners labor under the control of private respondents as their employer, likewise did
petitioners toil throughout the year with the fulfillment of their quota as supposed basis for
compensation.
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Further, in Section
8(b), Rule IV, Book III which we quote hereunder, piece workers are specifically
402
mentioned as being entitled to holiday pay.
Labor Standards
SEC. 8. Holiday pay of certain employees.

(b) Where a covered employee is paid by results or output, such as payment on piece
work, his holiday pay shall not be less than his average daily earnings for the last seven (7)
actual working days preceding the regular holiday: Provided, however, that in no case shall the
holiday pay be less than the applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of
the modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer
of piece rate workers from those exempted from paying 13th month pay, to wit:
2.
EXEMPTED EMPLOYERS
The following employers are still not covered by P.D. No. 851:
d.
Employers of those who are paid on purely commission, boundary or task basis, and those
who are paid a fixed amount for performing specific work, irrespective of the time
consumed in the performance thereof, except where the workers are paid on piece-rate
basis in which case the employer shall grant the required 13th month pay to such workers.
The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under
the piece-rate category as those who are paid a standard amount for every piece or unit of work
produced that is more or less regularly replicated, without regard to the time spent in producing
the same.
As to overtime pay, the rules, however, are different. According to Sec 2(e), Rule I, Book III of the
Implementing Rules, workers who are paid by results including those who are paid on piece-work,
takay, pakiao, or task basis, if their output rates are in accordance with the standards prescribed
under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been fixed by the
Secretary of Labor in accordance with the aforesaid section, are not entitled to receive overtime
pay. As such, petitioners are beyond the ambit of exempted persons and are therefore entitled to
overtime pay.
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Mercidar Fishing Corp., vs NLRC (1998) G.R. 112574

Facts:
Private respondent had been employed as a "bodegero" or ship's quartermaster on February 12,
1988. He complained that he had been constructively dismissed by petitioner when the latter
refused him assignments aboard its boats after he had reported to work on May 28, 1990.
Private respondent alleged that he had been sick and thus allowed to go on leave without pay for
one month from April 28, 1990 but that when he reported to work at the end of such period with a
health clearance, he was told to come back another time as he could not be reinstated
immediately. Thereafter, petitioner refused to give him work. For this reason, private respondent
asked for a certificate of employment from petitioner on September 6, 1990. However, when he
came back for the certificate on September 10, petitioner refused to issue the certificate unless
he submitted his resignation. Since private respondent refused to submit such letter unless he was
given separation pay, petitioner prevented him from entering the premises.
Issue: WON the fishing crew members are considered field personnel who have no statutory right
to service incentive leave pay.
Held: Fishing crew are still entitled to service incentive leave.
Art. 82 of the Labor Code provides: The provisions of this title [Working Conditions and Rest
Periods] shall apply to employees in all establishments and undertakings whether for profit or
not, but not to government employees, field personnel, members of the family of the employer
who are dependent on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the Secretary of Labor in
appropriate regulations.
"Field personnel" shall refer to non-agricultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable certainty.
In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen
employed by petitioner have no choice but to remain on board its vessel. 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.
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San Miguel Corp., vs Court of Appeals (2002) G.R. 146775

Facts:
The Department of Labor and Employment conducted a routine inspection in the premises of San
Miguel Corporation in Sta. Filomena, Iligan City. In the course of the inspection, it was discovered
that there was underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a
copy of the inspection result to SMC and it was received by and explained to its personnel officer
Elena dela Puerta.
SMC contested the findings and DOLE conducted summary hearings on 19 November 1992, 28 May
1993 and 4 and 5 October 1993. Still, SMC failed to submit proof that it was paying regular Muslim
holiday pay to its employees. Hence, Director IV of DOLE Iligan District Office issued a compliance
order directing SMC to consider Muslim holidays as regular holidays and to pay both its Muslim and
non-Muslim employees holiday pay within thirty (30) days from the receipt of the order. SMC
appealed but it was dismissed.
Issue: WON the employees are entitled with regular Muslim holiday pay.
Held: The employees are entitled to regular Muslim holiday pay.
Muslim holidays are provided under Articles 169 and 170, Title I, Book V, of Presidential Decree No.
1083, otherwise known as the Code of Muslim Personal Laws, which states: Official Muslim
holidays. The following are hereby recognized as legal Muslim holidays:
(a) 'Amun Jadd (New Year), which falls on the first day of the first lunar month of
Muharram;
(b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on the twelfth day of
the third lunar month of Rabi-ul-Awwal,
(c) Lailatul Isr Wal Mi'rj (Nocturnal Journey and Ascension of the Prophet Muhammad),
which falls on the twenty-seventh day of the seventh lunar month of Rajab:
(d) 'd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of
Shawwal, commemorating the end of the fasting season; and
(e) 'd-ul-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of
Dh'l-Hijja.
Art. 170 provides the provinces and cities where officially observed. (1) Muslim holidays shall be
officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North
Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities
as may hereafter be created; (2)
Upon proclamation by the President of the Philippines,
Muslim holidays may also be officially observed in other provinces and cities.
The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which
provides: 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
paidM aa compensation
115
. C e c e l i a equivalent
T i m b a l to twice his regular rate;
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However, there should be no distinction between Muslims and non-Muslims as regards payment of
benefits for Muslim holidays. The Court reminds the respondent-appellant that wages and other
Labor Standards
emoluments granted by law to the working man are determined on the basis of the criteria laid
down by laws and certainly not on the basis of the worker's faith or religion.
Tan vs Lagarama (2002) G.R. 151228

Facts:
On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: "Nangihi
na naman ka sulod sa imong drawinganan." ("You again urinated inside your work area.") When
Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga modrawing ka pa. Guikan karon, wala nay drawing. Gawas." ("Don't say anything further. I don't want
you to draw anymore. From now on, no more drawing. Get out.")
Lagrama denied the charge against him. He claimed that he was not the only one who entered the
drawing area and that, even if the charge was true, it was a minor infraction to warrant his
dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get out"), leaving him with no
other choice but to leave the premises. Lagrama filed a complaint with the National Labor
Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and
sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary
differential, and damages.
Issue: WON the respondent was illegally dismissed and thus entitled to payment of benefits
provided by law.
Held: The respondent was illegally dismissed and entitled to benefits.
The Implementing Rules of the Labor Code provide that no worker shall be dismissed except for a
just or authorized cause provided by law and after due process. This provision has two aspects:
(1) the legality of the act of dismissal, that is, dismissal under the grounds provided for under
Article 282 of the Labor Code and (2) the legality in the manner of dismissal. The illegality of the
act of dismissal constitutes discharge without just cause, while illegality in the manner of
dismissal is dismissal without due process.
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight
as the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed.
Urinating in a work place other than the one designated for the purpose by the employer
constitutes violation of reasonable regulations intended to promote a healthy environment under
Art. 282(1) of the Labor Code for purposes of terminating employment, but the same must be
shown by evidence. Here there is no evidence that Lagrama did urinate in a place other than a
rest room in the premises of his work.
Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter
found that the relationship between the employer and employee has been so strained that the
latter's reinstatement would no longer serve any purpose. The parties do not dispute this finding.
a . Cof
e cseparation
elia Tim
b a in
l lieu of reinstatementLisl Bappropriate.
2
Rm
Hence,116
the Mgrant
pay
This is of course
in
402
addition to the payment of backwages which, in accordance with the ruling in Bustamante v. NLRC
Labor Standards
should be computed from the time of Lagrama's dismissal up to the time of the finality of this
decision, without any deduction or qualification.
The Bureau of Working Conditions 32 classifies workers paid by results into two groups, namely;
(1) those whose time and performance is supervised by the employer, and (2) those whose time
and performance is unsupervised by the employer.
Lambo vs NLRC (1999) 317 SCRA 420

Facts:
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents
J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They
worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the
other 100 employees of private respondents, petitioners were paid on a piece-work basis,
according to the style of suits they made. Regardless of the number of pieces they finished in a
day, they were each given a daily pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal
and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service
incentive leave pay, separation pay, 13th month pay, and attorneys fees. After hearing, Labor
Arbiter found private respondents guilty of illegal dismissal and accordingly ordered them to pay
petitioners claims. On appeal, the NLRC reversed the decision of the Labor Arbiter. The NLRC held
petitioners guilty of abandonment of work and accordingly dismissed their claims except that for
13th month pay.
Issue: WON the petitioners are entitled to the minimum benefits provided by law.
Held: The petitioners are entitled to the minimum benefits provided by law. There is no dispute
that petitioners were employees of private respondents although they were paid not on the basis
of time spent on the job but according to the quantity and the quality of work produced by them.
There are two categories of employees paid by results: (1) those whose time and performance are
supervised by the employer. (Here, there is an element of control and supervision over the manner
as to how the work is to be performed. A piece-rate worker belongs to this category especially if
he performs his work in the company premises.); and (2) those whose time and performance are
unsupervised. (Here, the employers control is over the result of the work. Workers on pakyao and
takay basis belong to this group.) Both classes of workers are paid per unit accomplished.
Piece-rate payment is generally practiced in garment factories where work is done in the company
premises, while payment on pakyao and takay basis is commonly observed in the agricultural
industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult
to quantify. 4 Petitioners belong to the first category, i.e., supervised employees.
In this case, private respondents exercised control over the work of petitioners. As tailors,
117 worked
M a . C in
e cthe
e l icompanys
a T i m b apremises
l
p.m.
2
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petitioners
from 8:00 a.m. Ltol B7:00
daily, including Sundays
402
and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status
as regular employees of private respondents. The term "wage" is broadly defined in Art. 97 of the
Labor Standards
Labor Code as remuneration or earnings, capable of being expressed in terms of money whether
fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a
method of compensation and does not define the essence of the relations. Nor does the fact that
petitioners are not covered by the SSS affect the employer-employee relationship. As petitioners
were illegally dismissed, they are entitled to reinstatement with back wages. The Arbiter applied
the rule in the Mercury Drug case, according to which the recovery of back wages should be
limited to three years without qualifications or deductions. Any award in excess of three years is
null and void as to the excess. The Labor Arbiter correctly ordered private respondents to give
separation pay.
R&E Transport vs Latag (2004) G.R. 155214
Facts:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca
ceased from business operations, Latag transferred to R & E Transport, Inc. He was receiving an
average daily salary of five hundred pesos (P500.00) as a taxi driver. Latag got sick in January 1995
and was forced to apply for partial disability with the SSS, which was granted. When he recovered,
he reported for work in September 1998 but was no longer allowed to continue working on
account of his old age. Latag thus asked Felix Fabros, the administrative officer of [petitioners],
for his retirement pay pursuant to Republic Act 7641 but he was ignored.
On December 21, 1998, Latagfiled a case for payment of his retirement pay before the NLRC.
Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On
January 10, 2000, the Labor Arbiter rendered a decision in favor of Latag.
Issue: WON Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.
Held: The respondent is entitled to retirement benefits despite of the waiver of quitclaims.
The Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled
that the document was invalid and could not bar her from demanding the benefits legally due her
husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of
schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims and
waivers that bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc.
Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement.
In the absence of a retirement plan or agreement providing for retirement benefits of employees
in the establishment, an employee upon reaching the age of sixty (60) years or more, but not
beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has
served at least five (5) years in said establishment, may retire and shall be entitled to retirement
pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at
least six (6) months being considered as one whole year. Unless the parties provide for broader
inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of
the 13th
of not more than
118 month
M a . pay
C e cand
e l ithe
a Tcash
i m bequivalent
al
L l Bfive
(5)
2 days of service incentive
Rm
402
leaves
Labor Standards
The rules implementing the New Retirement Law similarly provide the above-mentioned formula
for computing the one-half month salary. Since Pedro was paid according to the "boundary"
system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his
retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of
the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for
computing their benefits should be the average daily income.
Asian Transmission vs Court of Appeals (2004) 425 SCRA 478

Facts:
The Department of Labor and Employment (DOLE) issued an Explanatory Bulletin dated March 11,
1993 wherein it clarified that employees are entitled to 200% of their basic wage on April 9, 1993,
whether unworked, which apart from being Good Friday is also Araw ng Kagitingan, both legal
holidays.
The bulletin reads: "On the correct payment of holiday compensation on April 9, 1993 which apart
from being Good Friday is also Araw ng Kagitingan, i.e., two regular holidays falling on the same
day, this Department is of the view that the covered employees are entitled to at least two
hundred percent (200%) of their basic wage even if said holiday is unworked. The first 100%
represents the payment of holiday pay on April 9, 1993 as Good Friday and the second 100% is the
payment of holiday pay for the same date as Araw ng Kagitingan.
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday
and Araw ng Kagitingan. Despite the explanatory bulletin, [Asian Transmission Corporation opted
to pay its daily paid employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng
Asian Transmission Labor Union (BATLU) protested.
In accordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement
(CBA) existing between petitioner and BATLU, the controversy was submitted for voluntary
arbitration. On July 31, 1998, the Office of the Voluntary Arbitrator rendered a decision directing
petitioner to pay its covered employees "200% and not just 100% of their regular daily wages for
the unworked April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitingan and
Maundy Thursday."
Issue: WON the employees are entitled to the computation embodied in the bulletin clarification.
Held: The employees are entitled to the computation given in the bulletin clarification.
Subject of interpretation in the case at bar is Article 94 of the Labor Code which reads: Right to
holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than ten (10) workers; (b) The
employer
119 may
M a .require
C e c ean
l i aemployee
T i m b a to
l work on any holiday Lbut
l B such
2 employee shall be paid
R ma
4
0
2
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
Labor Standards
twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of
December and the day designated by law for holding a general election, which was amended by
Executive Order No. 203 issued on June 30, 1987, such that the regular holidays are now:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
New Year's Day January 1

Maundy Thursday
Movable Date
Good Friday
Movable Date
Araw ng Kagitingan
April 9 (Bataan and Corregidor Day)
Labor Day
May 1
Independence Day
June 12
National Heroes Day
Last Sunday of August
Bonifacio Day
November 30
Christmas Day
December 25
Rizal Day
December 30
The Court agrees with the voluntary arbitrator. The Voluntary Arbitrator held that Article 94 of
the Labor Code provides for holiday pay for every regular holiday, the computation of which is
determined by a legal formula which is not changed by the fact that there are two holidays falling
on one day, like on April 9, 1998 when it was Araw ng Kagitingan and at the same time was Maundy
Thursday; and that that the law, as amended, enumerates ten regular holidays for every year
should not be interpreted as authorizing a reduction to nine the number of paid regular holidays
"just because April 9 (Araw ng Kagitingan) in certain years, like 1993 and 1998, is also Holy Friday
or Maundy Thursday."
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State
shall afford protection to labor. Its purpose is not merely "to prevent diminution of the monthly
income of the workers on account of work interruptions. In other words, although the worker is
forced to take a rest, he earns what he should earn, that is, his holiday pay." 8 It is also intended
to enable the worker to participate in the national celebrations held during the days identified as
with great historical and cultural significance.
Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes Day (last Sunday of
August), Bonifacio Day (November 30) and Rizal Day (December 30) were declared national
holidays to afford Filipinos with a recurring opportunity to commemorate the heroism of the
Filipino people, promote national identity, and deepen the spirit of patriotism.
Labor Day (May 1) is a day traditionally reserved to celebrate the contributions of the working
class to the development of the nation, while the religious holidays designated in Executive Order
No. 203 allow the worker to celebrate his faith with his family.
As reflected above, Art. 94 of the Labor Code, as amended, afford a worker the enjoyment of ten
paid regular holidays. The provision is mandatory, regardless of whether an employee is paid on a
monthly or daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a
statutory benefit demandable under the law. Since a worker is entitled to the enjoyment of ten
paid regular holidays, the fact that two holidays fall on the same date should not operate to
reduce to nine the ten holiday pay benefits a worker is entitled to receive.
120
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Autobus Transport System vs Bautista (2005) G.R. 156364

Facts:
Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc.,
since May 1995, as driver-conductor with travel routes Manila-Tuguegarao via Baguio, BaguioTuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis,
seven percent (7%) of the total gross income per travel, on a twice a month basis.
On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the
bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle
suddenly stopped at a sharp curve without giving any warning. Respondent averred that the
accident happened because he was compelled by the management to go back to Roxas, Isabela,
although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from
Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the amount of
P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that
despite respondent's pleas for reconsideration, the same was ignored by management. After a
month, management sent him a letter of termination. Thus, on 02 February 2000, respondent
instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay
and service incentive leave pay against Autobus.
Issue: WON respondent is entitled to service incentive leave.
Held: The respondent is entitled to service incentive leave.
The disposition of the issue revolves around the proper interpretation of Article 95 of the Labor
Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor
Code which provides: RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has rendered
at least one year of service shall be entitled to a yearly service incentive leave of five days with
pay.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall apply to all
employees except: (d) Field personnel and other employees whose performance is unsupervised by
121 M aincluding
. C e c ethose
l i a Twho
i m bare
a l engaged on task or contract
L l B basis,
2 purely commission basis,
Rm
the employer
402
or those who are paid in a fixed amount for performing work irrespective of the time consumed in
the performance thereof;
Labor Standards
A careful examination of said provisions of law will result in the conclusion that the grant of
service incentive leave has been delimited by the Implementing Rules and Regulations of the
Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V.
According to the Implementing Rules, Service Incentive Leave shall not apply to employees
classified as "field personnel."
The phrase "other employees whose performance is unsupervised by the employer" must not be
understood as a separate classification of employees to which service incentive leave shall not be
granted. Rather, it serves as an amplification of the interpretation of the definition of field
personnel under the Labor Code as those "whose actual hours of work in the field cannot be
determined with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or contract basis,
purely commission basis." Said phrase should be related with "field personnel," applying the rule
on ejusdem generis that general and unlimited terms are restrained and limited by the particular
terms that they follow. Hence, employees engaged on task or contract basis or paid on purely
commission basis are not automatically exempted from the grant of service incentive leave,
unless, they fall under the classification of field personnel.
What must be ascertained in order to resolve the issue of propriety of the grant of service
incentive leave to respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural
employees who regularly perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions
(BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association 10
which states that:
As a general rule, field personnel are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the principal
office and whose hours and days of work cannot be determined with reasonable certainty; hence,
they are paid specific amount for rendering specific service or performing specific work. If
required to be at specific places at specific times, employees including drivers cannot be said to
be field personnel despite the fact that they are performing work away from the principal office
of the employee.
At this point, it is necessary to stress that the definition of a "field personnel" is not merely
concerned with the location where the employee regularly performs his duties but also with the
fact that the employee's performance is unsupervised by the employer. As discussed above, field
personnel are those who regularly perform their duties away from the principal place of business
of the employer and whose actual hours of work in the field cannot be determined with
reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is
also necessary to ascertain if actual hours of work in the field can be determined with reasonable
certainty by the employer. In so doing, an inquiry must be made as to whether or not the
122 M
a . and
C e cperformance
e l i a T i m bare
a l constantly supervised by
L l the
B employer.
2
R ma
employee's
time
Respondent is not
402
field personnel but a regular employee who performs tasks usually necessary and desirable to the
Labor Standards
usual trade of petitioner's business. Accordingly, respondent is entitled to the grant of service
incentive leave.
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all
establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules
and Regulations provides that "every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of five days with pay."
Service incentive leave is a right which accrues to every employee who has served "within 12
months, whether continuous or broken reckoned from the date the employee started working,
including authorized absences and paid regular holidays unless the working days in the
establishment as a matter of practice or policy, or that provided in the employment contracts, is
less than 12 months, in which case said period shall be considered as one year." It is also
"commutable to its money equivalent if not used or exhausted at the end of the year." In other
words, an employee who has served for one year is entitled to it. He may use it as leave days or
he may collect its monetary value. To limit the award to three years, as the solicitor general
recommends, is to unduly restrict such right.
San Miguel Corp., vs Del Rosario (2005) G.R. 168194
Facts:
Respondent was employed by petitioner as key account specialist. On March 9, 2001, petitioner
informed respondent that her probationary employment will be severed at the close of the
business hours of March 12, 2001. On March 13, 2001, respondent was refused entry to petitioner's
premises. On June 24, 2002, respondent filed a complaint against petitioner for illegal dismissal
and underpayment/non-payment of monetary benefits. Respondent alleged that petitioner feigned
an excess in manpower because after her dismissal, it hired new recruits and re-employed two of
her batch mates. On the other hand, petitioner claimed that respondent was a probationary
employee whose services were terminated as a result of the excess manpower that could no
longer be accommodated by the company.
The Labor Arbiter declared respondent a regular employee because her employment exceeded six
months and holding that she was illegally dismissed as there was no authorized cause to terminate
her employment. On appeal to NLRC, it modified the previous decision.
Issue: WON the respondent was an employee and was illegally terminated. If so, is she entitled to
monetary benefits.
Held: Respondent was illegally dismissed and is thus entitled to monetary benefits.
In termination cases, the burden of proving the circumstances that would justify the employee's
dismissal rests with the employer. The best proof that petitioner should have presented to prove
the probationary status of respondent is her employment contract. None, having been presented,
the continuous employment of respondent as an account specialist for almost 11 months, from
April 17, 2000 to March 12, 2001, means that she was a regular employee and not a temporary
LlB 2
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reliever or a4 0probationary
employee. And while it is true that by way of exception, the period of
2
probationary employment may exceed six months when the parties so agree, such as when the
same is established by company policy, or when it is required by the nature of the work, none of
Labor Standards
these exceptional circumstance were proven in the present case. Thus, respondent whose
employment exceeded six months is undoubtedly a regular employee of petitioner.
Her termination from employment must be for a just or authorized cause, otherwise, her dismissal
would be illegal. Petitioner tried to justify the dismissal of respondent under the authorized cause
of redundancy. It thus argued in the alternative that even assuming that respondent qualified for
regular employment, her services still had to be terminated because there are no more regular
positions in the company. Undoubtedly, petitioner is invoking a redundancy which allegedly
resulted in the termination not only of the trainees, probationers but also of some of its regular
employees.
Redundancy, for purposes of the Labor Code, exists where the services of an employee are in
excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly
put, a position is redundant where it is superfluous, and superfluity of a position or positions may
be the outcome of a number of factors, such as overhiring of workers, decreased volume of
business, or dropping of a particular product line or service activity previously manufactured or
undertaken by the enterprise. The criteria in implementing a redundancy are: (a) less preferred
status, e.g. temporary employee; (b) efficiency; and (c) seniority. What further militated against
the alleged redundancy advanced by petitioner is their failure to refute respondent's assertion
that after her dismissal, it hired new recruits and re-employed two of her batch mates. The Court
finds that petitioner was not able to discharge the burden of proving that the dismissal of
respondent was valid.
Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but
also to payment of full back wages, computed from the time her compensation was actually
withheld from her on March 13, 2001, up to her actual reinstatement. She is likewise entitled to
other benefits, i.e., service incentive leave pay and 13th month pay computed from such date also
up to her actual reinstatement. Respondent is not entitled to holiday pay because the records
reveal that she is a monthly paid regular employee. Under Section 2, Rule IV, Book III of the
Omnibus Rules Implementing the Labor Code, employees who are uniformly paid by the month,
irrespective of the number of working days therein, shall be presumed to be paid for all the days
in the month whether worked or not.
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Labor Standards
Penaranda vs Baganga Plywood Corp (2006) G.R. 159577

Facts:
Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee of Baganga
Plywood Corporation (BPC) to take charge of the operations and maintenance of its steam plant
boiler. In May 2001, Pearanda filed a Complaint for illegal dismissal with money claims against
BPC and its general manager, Hudson Chua, before the NLRC.
After the parties failed to settle amicably, the labor arbiter directed the parties to file their
position papers and submit supporting documents.
Pearanda alleges that he was employed by respondent Banganga on March 15, 1999 with a
monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally
terminated on December 19, 2000. he alleges that his services were terminated without the
benefit of due process and valid grounds in accordance with law. Furthermore, he was not paid his
overtime pay, premium pay for working during holidays/rest days, night shift differentials and
finally claimed for payment of damages and attorney's fees having been forced to litigate the
present complaint.
Issue: WON Pearanda is a regular, common employee entitled to monetary benefits under Art. 82
of the Labor Code and is entitled to the payment of overtime pay and other monetary benefits.
Held: Petitioner is not entitled to overtime pay and other monetary benefits.
The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However,
petitioner was a member of the managerial staff, which also takes him out of the coverage of
labor standards. Like managerial employees, officers and member of the managerial staff are not
125to the
M a .provisions
C e c e l iof
a law
Tim
al
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entitled
onblabor
standards.
402
Labor Standards
The Implementing Rules of the Labor Code define members of a managerial staff as those with the
following duties and responsibilities:
(1)
(2)
(3)
(4)
The primary duty consists of the performance of work directly related to management
policies of the employer;
Customarily and regularly exercise discretion and independent judgment;
(i) Regularly and directly assist a proprietor or a managerial employee whose primary
duty consists of the management of the establishment in which he is employed or
subdivision thereof; or (ii) execute under general supervision work along specialized or
technical lines requiring special training, experience, or knowledge; or (iii) execute
under general supervision special assignments and tasks; and
who do not devote more than 20 percent of their hours worked in a workweek to
activities which are not directly and closely related to the performance of the work
described in paragraphs (1), (2), and (3) above."
The petitioners work involves:

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
To supply the required and continuous steam to all consuming units at minimum cost.
To supervise, check and monitor manpower workmanship as well as operation of boiler
and accessories.
To evaluate performance of machinery and manpower.
To follow-up supply of waste and other materials for fuel.
To train new employees for effective and safety white working.
Recommend parts and suppliers purchases. acEHSI
To recommend personnel actions such as: promotion, or disciplinary action.
To check water from the boiler, feedwater and softener, regenerate softener if beyond
hardness limit.
Implement Chemical Dosing.
Perform other task as required by the superior from time to time."
The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a
member of the managerial staff. His duties and responsibilities conform to the definition of a
member of a managerial staff under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved
overseeing the operation of the machines and the performance of the workers in the engineering
section. This work necessarily required the use of discretion and independent judgment to ensure
the proper functioning of the steam plant boiler. As supervisor, petitioner is deemed a member of
the managerial staff.
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated
that he was the foreman responsible for the operation of the boiler. The term foreman implies
that he was the representative of management over the workers and the operation of the
department. Petitioner's evidence also showed that he was the supervisor of the steam plant. His
classification as supervisors is further evident from the manner his salary was paid. He belonged to
the 10% of respondent's 354 employees who were paid on a monthly basis; the others were paid
only on a daily basis.
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Labor Standards
House of Sara Lee vs Rey (2006) G.R. 149013

Facts:
The House of Sara Lee is engaged in the direct selling of a variety of product lines for men and
women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other
novelty items, through its various outlets nationwide. In the pursuit of its business, the petitioner
engages and contracts with dealers to sell the aforementioned merchandise. These dealers,
known either as Independent Business Managers (IBMs) or Independent Group
Supervisors (IGSs), depending on whether they sell individually or through their own group, would
obtain at discounted rates the merchandise from the petitioner on credit or then sell the same
products to their own customers at fixed prices also determined by the petitioner.
In turn, the dealers are paid Services Fees, or sales commissions, the amount of which depends
on the volume and value of their sales. Under existing company policy, the dealers must remit to
the petitioner the proceeds of their sales within a designated credit period, which would either be
38 days for IGSs or 52 days for IBMs, counted from the day the said dealers acquired the
merchandise from the petitioner. To discourage late remittances, the petitioner imposes a Credit
Administration Charge, or simply, a penalty charge, on the value of the unremitted payment.
The dealers under this system earn income through a profit margin between the discounted
purchase price they pay on credit to the petitioner and the fixed selling price their customers will
have to pay. On top of this margin, the dealer is given the Service Fee, a sales commission, based
on the volume of sales generated by him or her. Due to the sheer volume of sales generated by all
of its outlets, the petitioner has found the need to strictly monitor the 38- or 52-day rolling due
date of each of its IBMs and IGSs through the employment of Credit Administration
Supervisors (CAS) for each branch. The primary duty of the CAS is to strictly monitor each of
these deadlines, to supervise the credit and collection of payments and outstanding accounts due
to the petitioner from its independent dealers and various customers, and to screen prospective
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IBMs. To discharge
these responsibilities, the CAS is provided with a computer equipped with
402
control systems through which data is readily generated. Under this organizational setup, the CAS
is under the direct and immediate supervision of the Branch Operations Manager (BOM).
Labor Standards
Cynthia Rey at the time of her dismissal from employment, held the position of Credit
Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first
employed by the petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In
November 1993, respondent was transferred to the Cagayan de Oro City branch retaining the same
position. In January 1994, respondent was elevated to the position of CAS. At that time, the
Branch Operations Manager or BOM of the Cagayan de Oro City branch was a certain Mr. Jeremiah
Villagracia. In March 1995, respondent was temporarily assigned to the Butuan City branch.
Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed
the Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one of
the IBMs of the petitioner who happens to be respondents sister-in-law, from the 52-day limit to
an unauthorized term of 60 days. The respondent made the instruction just before the
computer data for the computation of the Service Fee accruing to Ms. Rey-Petilla was about to be
generated. Ms. Mendoza then reported this allegedly unauthorized act of respondent to her
Branch Operations Manager, Mr. Villagracia. Acting on the report, as the petitioner alleges, BOM
Villagracia discreetly verified the records and discovered that it was not only the 52-day credit
term of IBM Rey-Petilla that had been extended by the respondent, but there were several other
IBMs whose credit terms had been similarly extended beyond the periods allowed by company
policy.
BOM Villagracia then summoned the respondent and required her to explain the
unauthorized credit extensions.
Issue: WON the respondent is entitled to 13th month pay.
Held: The award of 13th month pay must be deleted.
Respondent is not a rank-and-file employee and is, therefore, not entitled to thirteenth-month
pay. However, the NLRC and the CA are correct in refusing to award 14th and 15th month pay as
well as the monthly salary increase of 10 percent per year for two years based on her latest
salary rate. The respondent must show that these benefits are due to her as a matter of right.
Mere allegations by the respondent do not suffice in the absence of proof supporting the same.
With respect to salary increases in particular, the respondent must likewise show that she has a
vested right to the same, such that her salary increases can be made a component in the
computation of backwages. What is evident is that salary increases are a mere expectancy. They
are by nature volatile and dependent on numerous variables, including the companys fiscal
situation, the employees future performance on the job, or the employees continued stay in a
position. In short, absent any proof, there is no vested right to salary increases.
128
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Labor Standards
Leyte IV Electric Cooperative Inc., vs LEYECO IV Employees Union ALU (2007) G.R. 157775
Facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees UnionALU (respondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rankand-file employees, for a period of five (5) years effective January 1, 1998. On June 7, 2000,
respondent, through its Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner
demanding holiday pay for all employees, as provided for in the CBA.
Petitioner, on the other hand, in its Position Paper, insisted payment of the holiday pay in
compliance with the CBA provisions, stating that payment was presumed since the formula used in
determining the daily rate of pay of the covered employees is Basic Monthly Salary divided by 30
days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the
employees are already paid their regular and special days, the days when no work is done, the 51
un-worked Sundays and the 51 un-worked Saturdays.
Issue: WON Leyte IV Electric Cooperative is liable for underpayment of holiday pay.
Held: Leyte IV Electric Cooperative is not liable for underpayment of holiday pay.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of
the CBA provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation
ignores the admission of respondent in its Position Paper that the employees were paid all the
days of the month even if not worked. In light of such admission, petitioner's submission of its 360
divisor in the computation of employees' salaries gains significance.
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43
Producers Bank of the Philippines v. National Labor Relations Commission. In this case, the monthly
salary was fixed by Wellington to provide for compensation for every working day of the year
including the holidays specified by law and excluding only Sundays. In fixing the salary,
Wellington
51 Sundays from Rthe
129 used
M a . what
C e c it
e l called
i a T i the
m b "314
a l factor"; that is, it simply
L l B deducted
2
m
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365 days normally
comprising a year and used the difference, 314, as basis for determining the
monthly salary. The monthly salary thus fixed actually covered payment for 314 days of the year,
Labor Standards
including regular and special holidays, as well as days when no work was done by reason of
fortuitous cause, such as transportation strike, riot, or typhoon or other natural calamity, or cause
not attributable to the employees.
It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the
use of a divisor that was less than 365 days cannot make the employer automatically liable for
underpayment of holiday pay. In said case, the employees were required to work only from
Monday to Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the
result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Saturdays). Any divisor below
287 days meant that the employees were deprived of their holiday pay for some or all of the ten
legal holidays. The 304-day divisor used by the employer was clearly above the minimum of 287
days.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum
allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked
Saturdays from 365 days. Considering that petitioner used the 360-day divisor, which is clearly
above the minimum, indubitably, petitioner's employees are being given their holiday pay. Thus,
the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In
granting respondent's claim of non-payment of holiday pay, a "double burden" was imposed upon
petitioner because it was being made to pay twice for its employees' holiday pay when payment
thereof had already been included in the computation of their monthly salaries.
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Labor Standards
San Miguel Corp., et al., vs Layoc, Jr., et al., (2007) G.R. 149640
Facts:
Respondents were among the "Supervisory Security Guards" of the Beer Division of San Miguel
Corporation. They started working as guards with the petitioner San Miguel Corporation assigned
to the Beer Division on different dates until such time that they were promoted as supervising
security guards. From the commencement of their employment, the private respondents were
required to punch their time cards for purposes of determining the time they would come in and
out of the company's work place. Corollary, the private respondents were availing the benefits for
overtime, holiday and night premium duty through time card punching. However, in the early
1990's, the San Miguel Corporation embarked on a Decentralization Program aimed at enabling the
separate divisions of the San Miguel Corporation to pursue a more efficient and effective
management of their respective operations.
As a result of the Decentralization Program, the Beer Division of the San Miguel Corporation
implemented on January 1, 1993 a "no time card policy" whereby the Supervisory I and II
composing of the supervising security guards of the Beer Division were no longer required to punch
their time cards. Consequently, on January 16, 1993, without prior consultation with the private
respondents, the time cards were ordered confiscated and the latter were no longer allowed to
render overtime work. However, in lieu of the overtime pay and the premium pay, the personnel
of the Beer Division of the petitioner San Miguel Corporation affected by the "No Time Card Policy"
were given a 10% across-the-board increase on their basic pay while the supervisors who were
assigned in the night shift (6:00 p.m. to 6:00 a.m.) were given night shift allowance ranging from
P2,000.00 to P2,500.00 a month.
Issue: Whether the circumstances in the present case constitute an exception to the rule that
supervisory employees are not entitled to overtime pay.
Held: The present case does not constitute an exception to the general rule.
Article 82 of the Labor Code states that the provisions of the Labor Code on working conditions
and rest periods shall not apply to managerial employees. The other provisions in the Title include
normal hours of work (Article 83), hours worked (Article 84), meal periods (Article 85), night shift
differential (Article 86), overtime work (Article 87), undertime not offset by overtime (Article 88),
emergency overtime work (Article 89), and computation of additional compensation (Article 90). It
is thus131clear
employees such as
are not entitledR m
to
M a that,
. C e generally,
c e l i a T i managerial
mbal
L l Brespondents
2
4
0
2
overtime pay for services rendered in excess of eight hours a day. Respondents failed to show that
the circumstances of the present case constitute an exception to this general rule.
Labor Standards
Aside from their allegations, respondents were not able to present anything to prove that
petitioners were obliged to permit respondents to render overtime work and give them the
corresponding overtime pay. Even if petitioners did not institute a "no time card policy,"
respondents could not demand overtime pay from petitioners if respondents did not render
overtime work. The requirement of rendering additional service differentiates overtime pay from
benefits such as thirteenth month pay or yearly merit increase. These benefits do not require any
additional service from their beneficiaries. Thus, overtime pay does not fall within the definition
of benefits under Article 100 of the Labor Code.
Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195
Facts:
Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia
Shipping Services, Inc., as a restaurant waiter on board a luxury cruise ship liner M/S Black
Watch pursuant to a Philippine Overseas Employment Administration (POEA) approved
employment contract dated October 9, 1996 for a period of nine (9) months from October 18,
1996 to July 17, 1997. On October 18, 1996, the private respondent left Manila for Heathrow,
England to board the said sea vessel where he will be assigned to work. On February 15, 1997,
the private respondent reported for his working station one and one-half hours late. On
February 17, 1997, the master of the vessel served to the private respondent an official
warning-termination form pertaining to the said incident. On March 8, 1997, the vessel's
master, ship captain Thor Fleten conducted an inquisitorial hearing to investigate the said
incident. Thereafter, on March 9, 1997, private respondent was dismissed from the service on
the strength of an unsigned and undated notice of dismissal. An alleged record or minutes of
the said investigation was attached to the said dismissal notice.
On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other
monetary claims. The private respondent alleged that he was paid only US$300.00 per month
as monthly salary for five (5) months instead of US$410.00 as stipulated in his employment
contract. Thus, he claimed that he was underpaid in the amount of US$110.00 per month for
that same period of five (5) months. He further asserted that his salaries were also deducted
US$20.00 per month by the petitioner for alleged union dues.
Issue: WON respondent is entitled to overtime pay which was incorporated in his award for the
unexpired portion of the contract despite the fact that he did not render overtime work.
Held: The inclusion of his "guaranteed overtime" pay into his monthly salary as basis in the
computation of his salaries for the entire unexpired period of his contract has no factual or legal
basis and the same should have been disallowed.
Petitioner contends that there is no factual or legal basis for the inclusion of said amount because,
after respondent's repatriation, he could not have rendered any overtime work. This time,
petitioner's contention is well-taken.
132
Ma. Cecelia Timbal
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The Court had

occasion to rule on a similar issue inStolt-Nielsen Marine Services (Phils.), Inc. v.
402
National Labor Relations Commission, where the NLRC was questioned for awarding to an illegally
dismissed overseas worker fixed overtime pay equivalent to the unexpired portion of the latter's
Labor Standards
contract. In resolving the question, the Court, citingCagampan v. National Labor Relations
Commission, held that although an overseas employment contract may guarantee the right to
overtime pay, entitlement to such benefit must first be established, otherwise the same cannot be
allowed.
PNCC Skyway Traffic Management & Security Division Workers Organization vs PNCC Skyway
Corp., (2010) G.R. 171231
Facts:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers'
Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor
and Employment (DOLE). Respondent PNCC Skyway Corporation is a corporation duly
organized and operating under and by virtue of the laws of the Philippines. They entered
into CBA. Pertinent provisions are as follows:
ARTICLE VIII VACATION LEAVE AND SICK LEAVE
Section 1. Vacation Leave.
[b]The company shall schedule the vacation leave of employees during the year taking
into consideration the request of preference of the employees.
PNCC then created a schedule of leaves for their employees. Petitioner objected to the
implementation of the said memorandum. It insisted that the individual members of the union
have the right to schedule their vacation leave. It opined that the unilateral scheduling of the
employees' vacation leave was done to avoid the monetization of their vacation leave in December
2004.
Issue: WON the PNCC has the sole discretion to schedule the vacation leaves of its employees.
Held: PNCC has the sole discretion to schedule the vacation leaves of its employees.
The rule is that where the language of a contract is plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or aids. The intention of the parties must be
gathered from that language, and from that language alone. Stated differently, where the
language of a written contract is clear and unambiguous, the contract must be taken to mean that
which, on its face, it purports to mean, unless some good reason can be assigned to show that the
words used should be understood in a different sense.
In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII,
Section 1 (b) of the CBA categorically provides that the scheduling of vacation leaves ha ll
be under the option of the employer. Thus, if the terms of a CBA are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. In
fine, the CBA must be strictly adhered to and respected if its ends have to be achieved, being the
law between the parties. In Faculty Association of Mapua Institute of Technology (FAMIT) v. Court
of Appeals, this Court held that the CBA during its life time binds all the parties. The provisions of
the CBA must be respected since its terms and conditions constitute the law between the parties.
The parties cannot be allowed to change the terms they agreed upon on the ground that the same
are not favorable to them.
The purpose of a vacation leave is to afford a laborer a chance to get a much-needed rest to
133 his
M worn-out
a . C e c eenergy
l i a T and
i m bacquire
al
L l B him
2 to efficiently performR his
m
replenish
a new vitality to enable
402
duties, and not merely to give him additional salary and bounty. Accordingly, the vacation leave
privilege was not intended to serve as additional salary, but as a non-monetary benefit. To give the
Labor Standards
employees the option not to consume it with the aim of converting it to cash at the end of the
year would defeat the very purpose of vacation leave.
134
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Labor Standards
XI
OTHER SPECIAL
BENEFITS
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Labor Standards
Pantranco North Express vs NLRC (1996) 259 SCRA 161

Facts:
Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the
Pantranco Employees Association-PTGWO. He continued in petitioner's employ until August 12,
1989, when he was retired at the age of fifty-two (52) after having rendered twenty five years'
service. The basis of his retirement was the compulsory retirement provision of the collective
bargaining agreement between the petitioner and the aforenamed union. On February 1990,
private respondent filed a complaint for illegal dismissal against petitioner with NLRC. The
complaint was consolidated with two other cases of illegal dismissal having similar facts and
issues, filed by other employees, non-union members.
Issue: WON the CBA stipulation on compulsory retirement after twenty-five years of service is
legal and enforceable.
Held: The CBA stipulation is legal and enforceable.
The bone of contention in this case is the provision on compulsory retirement after 25 years of
service.
Article XI, Section 1 (e) (5) of the May 2, 1989 Collective Bargaining Agreement 8 between
petitioner company and the union states:
Section 1. The COMPANY shall formulate a retirement plan with the following main features:
(e) The COMPANY agrees to grant the retirement benefits herein provided to regular
employees who may be separated from the COMPANY for any of the following reasons:
(5) Upon reaching the age of sixty (60) years or upon completing twenty-five
(25) years of service to the COMPANY, whichever comes first, and the employee shall be
compulsory retired and paid the retirement benefits herein provided."
The said Code provides: Art. 287.

Retirement. Any employee may be retired upon reaching
the retirement age established in the Collective Bargaining Agreement or other applicable
employment contract. In case of retirement, the employee shall be entitled to receive such
retirement benefits as he may have earned under existing laws and any collective bargaining or
other agreement."
The Court agrees with petitioner and the Solicitor General. Art. 287 of the Labor Code as worded
permits employers and employees to fix the applicable retirement age at below 60 years.
Moreover, providing for early retirement does not constitute diminution of benefits. In almost all
countries today, early retirement, i.e., before age 60, is considered a reward for services
rendered since it enables an employee to reap the fruits of his labor particularly retirement
benefits, whether lump-sum or otherwise at an earlier age, when said employee, in presumably
better physical and mental condition, can enjoy them better and longer.
As a matter of fact, one of the advantages of early retirement is that the corresponding
136 Mbenefits,
a . C e cusually
e l i a Tconsisting
i m b a l of a substantial cashL lwindfall,
B 2
retirement
can early on be putR m
to
402
productive and profitable uses by way of income-generating investments, thereby affording a
more significant measure of financial security and independence for the retiree who, up till then,
Labor Standards
had to contend with life's vicissitudes within the parameters of his fortnightly or weekly wages.
Thus we are now seeing many CBAs with such early retirement provisions. And the same cannot be
considered a diminution of employment benefits.
Being a product of negotiation, the CBA between the petitioner and the union intended the
provision on compulsory retirement to be beneficial to the employees-union members, including
herein private respondent. When private respondent ratified the CBA with the union, he not only
agreed to the CBA but also agreed to conform to and abide by its provisions. Thus, it cannot be
said that he was illegally dismissed when the CBA provision on compulsory retirement was applied
to his case.
Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay Law",
which went into effect on January 7, 1993. Although passed many years after the compulsory
retirement of herein private respondent, nevertheless, the said statute sheds light on the present
discussion when it amended
Art. 287 of the Labor Code, to make it read as follows: Retirement. Any employee may be
retired upon reaching the retirement age establish in the collective bargaining agreement or other
applicable employment contract.
served at least five (5) years in the said establishment may retire . . ."
The aforequoted provision makes clear the intention and spirit of the law to give employers and
employees a free hand to determine and agree upon the terms and conditions of retirement.
Providing in a CBA for compulsory retirement of employees after twenty-five (25) years of service
is legal and enforceable so long as the parties agree to be governed by such CBA. The law
presumes that employees know what they want and what is good for them absent any showing
that fraud or intimidation was employed to secure their consent thereto.
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Labor Standards
R&E Transport vs Latag (2004) G.R. 155214

Facts:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca
ceased from business operations, Latag transferred to R & E Transport, Inc. He was receiving an
average daily salary of five hundred pesos (P500.00) as a taxi driver.
Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which
was granted. When he recovered, he reported for work in September 1998 but was no longer
allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the
administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he
was ignored.
Issue: WON Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.
Held: The respondent is entitled to retirement benefits despite of the waiver of quitclaims.
There is no dispute the fact that the late Pedro M. Latag is entitled to retirement benefits. Rather,
the bone of contention is the number of years that he should be credited with in computing those
benefits. As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error
when it ruled that the document was invalid and could not bar her from demanding the benefits
legally due her husband. This is not say that all quitclaims are invalid per se. Courts, however, are
wary of schemes that frustrate workers' rights and benefits, and look with disfavor upon quitclaims
and waivers that bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc.
Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement.
served at least five (5) years in said establishment, may retire and shall be entitled to retirement
pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at
least six (6) months being considered as one whole year. Unless the parties provide for broader
inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of
the 13th month pay and the cash equivalent of not more than five (5) days of service incentive
leaves
The rules implementing the New Retirement Law similarly provide the above-mentioned formula
for computing the one-half month salary. Since Pedro was paid according to the "boundary"
system, he is not entitled to the 13th month 32 and the service incentive pay; hence, his
retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of
the "boundary" or fee they pay to the owners or operators of their vehicles. Thus, the basis for
computing their benefits should be the average daily income. In this case, the CA found that Pedro
was earning an average of five hundred pesos (P500) per day. We thus compute his retirement pay
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as follows: P500
4 0 2 x 15 days x 14 years of service equals P105,000.
Labor Standards
Gerlach vs Reuters Ltd., Phils., (2005) G.R. 148542

Facts:
Reuters Limited, Phils. (Reuters), a company engaged in news dissemination with offices
worldwide, hired Marilyn Odchimar Gerlach as its local correspondent. On October 1983,
respondent Reuters implemented a local Retirement Benefit Plan (Plan) for its Philippine-hired
employees. The Plan is funded by the company, but an employee-participant may volunteer to
contribute a percentage of his basic monthly salary to the fund. Petitioner was automatically
covered by the Plan by reason of her age and length of service. However, she opted not to
contribute to the fund. She worked in Reuters Philippines up to December 23, 1983. On October
12, 1988, she was directed to return to Manila and resume her post by December 15, 1988.
Petitioner received her retirement benefits under the Plan in the amount of P79,228.04, which
amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the
provisions of the Plan. The computation was based on her notional salary. However, she questioned
the amount she received as well as her entitlement to a disturbance grant, contending that her
retirement benefits must be computed on the basis of her actual salary abroad, not on her
notional salary.
Issue: WON petitioner is allowed to claim for additional retirement benefits.
Held: The petitioner is not entitled to the additional retirement benefits.
There are three kinds of retirement schemes. The first type is compulsory and contributory in
character. The second type is one set up by agreement between the employer and the employees
in collective bargaining agreements or other agreements between them. The third type is one that
is voluntarily given by the employer, expressly as in an announced company policy or impliedly as
in a failure to contest the employee's claim for retirement benefits. 28 It is this third type of
retirement scheme which covers respondent's Plan.
Article 287 of the Labor Code reads:
Article 287.
Retirement.
Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he
may have earned under existing laws and any collective bargaining agreement and other
agreements."
The first paragraph of the above provisions deals with the retirement age of an employee
established in (a) a collective bargaining agreement or (b) other applicable employment contract.
The second paragraph deals with the retirement benefits to be received by a retiring employee
which he may have earned under (a) an existing law, (b) a collective bargaining or (c) other
agreements.
139 M Section
a . C e c14(a),
e l i a Rule
T i m1 bofa the
l
L lImplementing
B 2
Rm
Nonetheless,
Rules and Regulations
Book VI of the Labor
402
Code, provides:
Labor Standards
"Sec. 14. Retirement benefits. (a) An employee who is retired pursuant to a bona fide
retirement plan or in accordance with the applicable individual or collective agreement or
established employer policy shall be entitled to all the retirement benefits provided therein . "
Thus, in the instant case, respondent based petitioner's retirement benefits on its Plan and
established policy, which is in accord with the above provision. Consequently, petitioner's theory
that the computation of her retirement benefits should be based on her basic annual salary while
stationed abroad is untenable.
The Court ruled that petitioner's retirement benefits must be based on her notional Philippine
salary. It is very clear that from the very start of her first assignment overseas, respondent
apprised her that the company's contribution to the Plan is based on her notional Philippine salary.
In fact, under the Plan, the company's contribution to the fund is 10% of the basic monthly salary
of each participant. Respondent also informed petitioner of the amount of her notional Philippine
salary whenever she was transferred to her next overseas assignment or when there were
increases in her salary, both actual and notional. Significantly, respondent was able to prove that
it has been its practice worldwide that the notional salary of an employee is its basis in computing
its contribution to the retirement plan for a local employee detailed abroad. It follows that the
amount of retirement benefits of a retiring employee assigned abroad is based on his notional
salary.
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Labor Standards
Honda Phils., Inc., vs Samahan ng Malayang Manggagawa sa Honda (2005) G.R. 145561
Facts:
The case stems from the collective bargaining agreement between Honda and the respondent
union that it granted the computation of 14th month pay as the same as 13th month pay. Honda
continues the practice of granting financial assistance covered every December each year of not
less than 100% of the basic salary. In the latter part of 1998, the parties started to re-negotiate for
the fourth and fifth years of the CBA. The union filed a notice of strike on the ground of unfair
labor practice for deadlock.
DOLE assumed jurisdiction over the case and certified it to the NLRC for compulsory arbitration.
The striking employees were ordered to return to work and management to accept them back
under the same terms prior to the strike staged. Honda issued a memorandum of the new
computation of the 13th month and 14th month pay to be granted to all its employees whereby the
31 long strikes shall be considered unworked days for purpose of computing the said benefits. The
amount equivalent to of the employees basic salary shall be deducted from these bonuses, with
a commitment that in the event that the strike is declared legal, Honda shall pay the amount.
The respondent union opposed the pro-rated computation of bonuses. This issue was submitted to
voluntary arbitration where it ruled that the companys implementation of the pro-rated
computation is invalid.
Issue: WON the pro-rated computation of the 13th and 14th month pays and other bonuses in
question is valid and lawful.
Held: The pro-rated computation is invalid.
The pro-rated computation of Honda as a company policy has not ripened into a company practice
and it was the first time they implemented such practice.
The payment of the 13th month pay in full month payment by Honda has become an established
practice. The length of time where it should be considered in practice is not being laid down by
jurisprudence. The voluntary act of the employer cannot be unilaterally withdrawn without
violating Article 100 of the Labor Code.
The court also rules that the withdrawal of the benefit of paying a full month salary for 13th month
pay shall constitute a violation of Article 100 of the Labor Code.
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Labor Standards
Jaculbe vs Siliman University (2007) G.R. 156934

Facts:
Sometime in 1958, petitioner began working for respondents university medical center as a nurse.
In a letter in December 1992, respondent, through its Human Resources Development Office,
informed petitioner that she was approaching her 35th year of service with the university and was
due for automatic retirement on November 18, 1993, at which time she would be 57 years old.
This was pursuant to respondents retirement plan for its employees which provided that its
members could be automatically retired upon reaching the age of 65 or after 35 years of
uninterrupted service to the university. Respondent required certain documents in connection
with petitioners impending retirement.
A brief exchange of letters between petitioner and respondent followed. Petitioner emphatically
insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded
with respondent to be allowed to work until the age of 60 because this was the minimum age at
which she could qualify for SSS pension. But respondent stood pat on its decision to retire her,
citing company policy.
On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission
(NLRC) for termination of service with preliminary injunction and/or restraining order.
Issue: WON the respondents retirement plan imposing automatic retirement after 35 years of
service contravenes the security of tenure clause in the 1987 Constitution and the Labor Code.
Held: Retirement plans allowing employers to retire employees who are less than the compulsory
retirement age of 65 are not per se repugnant to the constitutional guaranty of security of tenure.
Article 287 of the Labor Code provides: Retirement - Any employee may be retired upon reaching
the retirement age established in the collective bargaining agreement or other applicable
employment contract. By its express language, the Labor Code permits employers and employees
to fix the applicable retirement age at below 60 years.
The rules and regulations of the plan show that participation therein was not voluntary at all.
Rule III of the plan, on membership, stated:
SECTION 1 MEMBERSHIP, All full-time Filipino employees of the University will automatically
become members of the Plan, provided, however, that those who have retired from the
University, even if rehired, are no longer eligible for membership in the Plan. A member who
continues to serve the University cannot withdraw from the Plan.
SECTION 2 EFFECTIVITY OF MEMBERSHIP, Membership in the Plan starts on the day a person is
hired on a full-time basis by the University.
142
Ma. Cecelia Timbal
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4 0 2 3 TERMINATION OF MEMBERSHIP, Termination of membership in the Plan shall be upon

SECTION
the death of the member, resignation or termination of employees contract by the University,
or retirement from the University.
Labor Standards
Meanwhile, Rule IV, on contributions, stated:

The Plan is contributory. The University shall set aside an amount equivalent to 3% of the
basic salaries of the faculty and staff. To this shall be added a 5% deduction from the basic
salaries of the faculty and staff.
A member on leave with the University approval shall continue paying, based on his pay
while on leave, his leave without pay should pay his contributions to the Plan. However, a
member, who has been on leave without pay should pay his contributions based on his
salary plus the Universitys contributions while on leave or the full amount within one
month immediately after the date of his reinstatement. Provided[,] further that if a
member has no sufficient source of income while on leave may pay within six months after
his reinstatement.
It was through no voluntary act of her own that petitioner became a member of the plan. In fact,
the only way she could have ceased to be a member thereof was if she stopped working for
respondent altogether. Furthermore, in the rule on contributions, the repeated use of the word
shall ineluctably pointed to the conclusion that employees had no choice but to contribute to
the plan (even when they were on leave).
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age agrees to sever his or
her employment with the former. The truth was that petitioner had no choice but to participate in
the plan, given that the only way she could refrain from doing so was to resign or lose her job. It
is axiomatic that employer and employee do not stand on equal footing, a situation which often
causes an employee to act out of need instead of any genuine acquiescence to the employer. This
was clearly just such an instance.
An employer is free to impose a retirement age less than 65 for as long as it has the employees
consent. Stated conversely, employees are free to accept the employers offer to lower the
retirement age if they feel they can get a better deal with the retirement plan presented by the
employer. Thus, having terminated petitioner solely on the basis of a provision of a retirement
plan which was not freely assented to by her, respondent was guilty of illegal dismissal.
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Labor Standards
Intercontinental Broadcasting Corp., vs Amarilla (2006) G.R. 162775

Facts:
On various dates, petitioner employed the following persons at its Cebu station: Candido C.
Quiones, Jr, Corsini R. Lagahit, as Studio Technician, Anatolio G. Otadoy, as Collector and Noemi
Amarilla, as Traffic Clerk. On March 1986, the government sequestered the station, including its
properties, funds and other assets, and took over its management and operations from its owner,
Roberto Benedicto. However, in December 1986, the government and Benedicto entered into a
temporary agreement under which the latter would retain its management and operation. On
November 1990, the Presidential Commission on Good Government (PCGG) and Benedicto
executed a Compromise Agreement, where Benedicto transferred and assigned all his rights,
shares and interests in petitioner station to the government.
In the meantime, the four employees retired from the company and received, on staggered basis,
their retirement benefits under the 1993 Collective Bargaining Agreement between petitioner and
the bargaining unit of its employees. In the meantime, a P1,500.00 salary increase was given to all
employees of the company, current and retired, effective July 1994. However, when the four
retirees demanded theirs, petitioner refused and instead informed them via a letter that their
differentials would be used to offset the tax due on their retirement benefits in accordance with
the National Internal Revenue Code (NIRC).
Issue: WON the retirement benefits of respondents are part of their gross income.
Held: The retirement benefits of respondents are part of their gross income subject to taxes.
Section 28 (b) (7) (A) of the NIRC of 1986 23 provides: Gross Income. (b) Exclusions from gross
income. The following items shall not be included in gross income and shall be exempt from
taxation under this Title: (7) Retirement benefits, pensions, gratuities, etc. A.) Retirement
benefits received by officials and employees of private firms whether individuals or corporate, in
accordance with a reasonable private benefit plan maintained by the employer: Provided, That
the retiring official or employee has been in the service of the same employer for at least ten (10)
years and is not less than fifty years of age at the time of his retirement: Provided, further, That
the benefits granted under this subparagraph shall be availed of by an official or employee only
once. For purposes of this subsection, the term "reasonable private benefit plan" means a pension,
gratuity, stock bonus or profit-sharing plan maintained by an employer for the benefit of some or
all of his officials or employees, where contributions are made by such employer for officials or
employees, or both, for the purpose of distributing to such officials and employees the earnings
and principal of the fund thus accumulated, and wherein it is provided in said plan that at no time
shall any part of the corpus or income of the fund be used for, or be diverted to, any purpose
other than for the exclusive benefit of the said official and employees.
Revenue Regulation No. 12-86, the implementing rules of the foregoing provisions, provides: (b)
Pensions,
and
144 retirements
Ma. Cece
l i aseparation
T i m b a l pay. Pensions, retirement
L l B and
2 separation pay constitute
Rm
4 0 subject
2
compensation
to withholding tax, except the following: (1) Retirement benefit received by
official and employees of private firms under a reasonable private benefit plan maintained by the
employer, if the following requirements are met: (i) The retirement plan must be approved by the
Labor Standards
Bureau of Internal Revenue; (ii) The retiring official or employees must have been in the service of
the same employer for at least ten (10) years and is not less than fifty (50) years of age at the
time of retirement; and (iii) The retiring official or employee shall not have previously availed of
the privilege under the retirement benefit plan of the same or another employer.
Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is
burdened to prove the concurrence of the following elements: (1) a reasonable private benefit
plan is maintained by the employer; (2) the retiring official or employee has been in the service of
the same employer for at least 10 years; (3) the retiring official or employee is not less than 50
years of age at the time of his retirement; and (4) the benefit had been availed of only once.
Article VIII of the 1993 CBA provides for two kinds of retirement plans - compulsory and optional.
Thus: ARTICLE VIII RETIREMENT
Section 1: Compulsory Retirement Any employee who has reached the age of Fifty Five (55)
years shall be retired from the COMPANY and shall be paid a retirement pay in accordance with
the following schedule:
LENGTH OF SERVICE
RETIREMENT BENEFITS=
1 year-below 5 yrs.
15 days for every year of
5 years-9 years 30 days for every year of service
10 years-14 years
15 years-19 years
20 years or more
service
service
service
service
A supervisor who reached the age of Fifty (50) may at his/her option retire with the same
retirement benefits provided above.
Section 2: Optional Retirement Any covered employee, regardless of age, who has rendered at
least five (5) years of service to the COMPANY may voluntarily retire and the COMPANY agrees to
pay Long Service Pay to said covered employee in accordance with the following schedule:
LENGTH OF SERVICE
5-9 years
10-14 years
15-19 years
20 years or more
RETIREMENT BENEFITS
15 days for every year of service
Section 3: Fraction of a Year In computing the retirement under Section 1 and 2 of this Article, a
fraction of at least six (6) months shall be considered as one whole year. Moreover, the COMPANY
may exercise the option of extending the employment of an employee.
Section 4: Severance of Employment Due to Illness When a supervisor suffers from disease and/
or permanent disability and her/his continued employment is prohibited by law or prejudicial to
her/his health of the health of his co-employees, the COMPANY shall not terminate the
employment of the subject supervisor unless there is a certification by a competent public health
authority that the disease is of such a nature or at such stage that it can not be cured within a
period of six (6) months even with proper medical treatment. The supervisor may be separated
upon payment by the COMPANY of separation pay pursuant to law, unless the supervisor falls
within the purview of either Sections 1 or 2 hereof. In which case, the retirement benefits
LlB 2
Rm
indicated therein
4 0 2 shall apply, whichever is higher.
Labor Standards
Section 5: Loyalty Recognition The COMPANY shall recognize the services of the supervisor/
director who have reached the following number of years upon retirement by granting him/her a
plaque of appreciation and any lasting gift: 10 years but below 15 years (P3,000.00) worth; 15
years but below 20 year (P7,000.00) worth; 20 years and more (P10,000.00) worth.
Respondents were qualified to retire optionally from their employment with petitioner. there is no
record that the 1993 CBA had been approved or was ever presented to the BIR. Hence, the
retirement benefits of respondents are taxable.
Under Section 80 of the NIRC, petitioner, as employer, was obliged to withhold the taxes on said
benefits and remit the same to the BIR. Section 80. Liability for Tax. (A) Employer. The
employer shall be liable for the withholding and remittance of the correct amount of tax required
to be deducted and withheld under this Chapter. If the employer fails to withhold and remit the
correct amount of tax as required to be withheld under the provision of this Chapter, such tax
shall be collected from the employer together with the penalties or additions to the tax otherwise
applicable in respect to such failure to withhold and remit.
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Labor Standards
Reyes vs NLRC (2007) G.R. 160233

Facts:
Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City on
August 12, 1977. He was eventually appointed as unit manager of Sales Department-South
Mindanao District, a position he held until his retirement on November 30, 1997. Thereafter, he
received a letter regarding the computation of his separation pay. Insisting that his retirement
benefits and 13th month pay must be based on the average monthly salary of P42,766.19, which
consists of P10,919.22 basic salary and P31,846.97 average monthly commission, petitioner
refused to accept the check issued by private respondent in the amount of P200,322.21. Instead,
he filed a complaint before the arbitration branch of the NLRC for retirement benefits, 13th
month pay, tax refund, earned sick and vacation leaves, financial assistance, service incentive
leave pay, damages and attorney's fees.
Petitioner contends that the commissions form part of the basic salary, citing the case of
Philippine Duplicators, Inc. v. National Labor Relations Commission, wherein the Court held that
commissions earned by salesmen form part of their basic salary. Private respondent counters that
petitioner knew that the overriding commission is not included in the basic salary because it had
not been considered as such for a long time in the computation of the 13th month pay, leave
commissions, absences and tardiness.
Issue: WON the average monthly sales commission should be included in the computation of his
retirement benefits and 13th month pay.
Held: Average monthly sales commission should not be included in the computation of his
retirement benefits and 13th month pay.
This Court has held, in Philippine Duplicators that, the salesmen's commissions, comprising a predetermined percentage of the selling price of the goods sold by each salesman, were properly
included in the term basic salary for purposes of computing the 13th month pay. The salesmen's
commission are not overtime payments, nor profit-sharing payments nor any other fringe benefit
but a portion of the salary structure which represents an automatic increment to the monetary
value initially assigned to each unit of work rendered by a salesman.
Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical
representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine Fuji
Xerox Co., were excluded from the term basic salary because these were paid to the medical
representatives and rank-and-file employees as productivity bonuses, which are generally tied to
the productivity, or capacity for revenue production, of a corporation and such bonuses closely
resemble profit-sharing payments and have no clear direct or necessary relation to the amount of
work actually done by each individual employee. Further, commissions paid by the Boie-Takeda
Company to its medical representatives could not have been sales commissions in the same sense
that Philippine
salesmen
their sales commissions.
147 M a .Duplicators
C e c e l i apaid
T i the
mba
l
L l B 2Medical representativesRare
m
4 0 they
2
not salesmen;
do not effect any sale of any article at all.
Labor Standards
In fine, whether or not a commission forms part of the basic salary depends upon the
circumstances or conditions for its payment, which indubitably are factual in nature for they will
require a re-examination and calibration of the evidence on record.
As to the main issue whether petitioner's commissions be considered in the computation of his
retirement benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code, as
amended by Republic Act No. 7641, otherwise known as The New Retirement Law, 22 provides:
Retirement. Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract In the absence of a
retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond
sixty five (65) years which is hereby declared the compulsory retirement age, who has served at
least five (5) years in the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one half (1/2) month salary for every year of service, a fraction of at least
six (6) months being considered as one whole year. Unless the parties provide for broader
inclusions, the term one half (1/2) month salary shall mean fifteen (15) days plus one twelfth
(1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves.
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in
computing his retirement benefits is his latest salary rate of P10,919.22 as the commissions he
received are in the form of profit-sharing payments specifically excluded by the foregoing rules.
Case law has it that when these earnings and remuneration are closely akin to fringe benefits,
overtime pay or profit-sharing statements, they are properly excluded in computing retirement
pay. However, sales commissions which are effectively an integral portion of the basic salary
structure of an employee, shall be included in determining the retirement pay.
At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary
corresponding to his position as Unit Manager. Thus, as correctly ruled by public respondent NLRC,
the "overriding commissions" paid to him by Universal Robina Corp. could not have been 'sales
commissions' in the same sense that Philippine Duplicators paid its salesmen sales commissions.
Unit Managers are not salesmen; they do not effect any sale of article at all. Therefore, any
commission which they receive is certainly not the basic salary which measures the standard or
amount of work of complainant as Unit Manager. Accordingly, the additional payments made to
petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing
business. Certainly, from the foregoing, the doctrine in Boie-Takeda Chemicals and Philippine Fuji
Xerox Corporation, which pronounced that commissions are additional pay that does not form part
of the basic salary, applies to the present case. Aside from the fact that as unit manager
petitioner did not enter into actual sale transactions, but merely supervised the salesmen under
his control, the disputed commissions were not regularly received by him. Only when the salesmen
were able to collect from the sale transactions can petitioner receive the commissions.
Conversely, if no collections were made by the salesmen, then petitioner would receive no
commissions at all. In fine, the commissions which petitioner received were not part of his salary
structure but were profit-sharing payments and had no clear, direct or necessary relation to the
amount148of Mwork
The collection made
sale
a . Che
e cactually
e l i a T performed.
imbal
L l B by the
2 salesmen from the R
m
0 2 the profit of private respondent from which petitioner had a share in the form of
transactions4 was
a commission.
Labor Standards
Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R. 156225
Facts:
The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint against
Colegio de San Juan de Letran, Calamba, Inc. (respondent) for collection of various monetary
claims due its members. The Labor Arbiter (LA) handling the consolidated cases, denied and
dismissed the respective complaints.
Issue: WON the pay of the faculty members for teaching overloads should be included as basis in
the computation of their 13th month pay?
Held: Teaching overload may not be considered part of basic salary.
Under the Rules and Regulations Implementing PD 851, the following compensations are deemed
not part of the basic salary: a) cost-of-living allowances granted pursuant to PD 525 and Letter of
Instruction No. 174; b) profit sharing payments; c) all allowances and monetary benefits which are
not considered or integrated as part of the regular basic salary of the employee at the time of the
promulgation of the Decree on Dec 16, 1975.
Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued by the then
Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of
the basic salary and in the computation of the 13th-month pay.
The all-embracing phrase "earnings and other remunerations" which are deemed not part of the
basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium
for works performed on rest days and special holidays, pay for regular holidays and night
differentials. As such they are deemed not part of the basic salary and shall not be considered in
the computation of the 13th-month pay.
As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional
compensation other than and added to the regular wage or basic salary, for reason of which such
is categorically excluded from the definition of basic salary under the Supplementary Rules and
Regulations Implementing PD 851.
In the same manner that payment for overtime work and work performed during special holidays is
considered as additional compensation apart and distinct from an employee's regular wage or
basic salary, an overload pay, owing to its very nature and definition, may not be considered as
part of a teacher's regular or basic salary, because it is being paid for additional work performed in
excess of the regular teaching load.
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Labor Standards
Philippine Airlines Inc. vs Phil. Airlines Employees Association (2008) G.R. 142399
Facts:
In 1987, petitioner PAL and respondent and PALEA entered into a CBA covering the period of
1986-1989. Part of said agreement required PAL to pay its rank-and-file employees 13th month pay
and Christmas bonus. The 13th month pay, equivalent to one month current basic pay, shall be paid
in advance in May consistent with the existing practice while the Christmas bonus, equivalent to
one month current basic pay as of November 30, shall be paid in December.
In 1988, prior to the payment of the 13th month pay, PAL released a guideline stating that the only
employees eligible for payment of 13th month pay are those ground employees in the general
payroll who are regular as of April 30, 1988. Others not falling in said category shall receive their
13th month pay on or before December 24, 1988.
Respondent PALEA assailed the implementation of the said guideline on the ground that all
employees of PAL, regular or non-regular, must be paid their 13th month pay. In response thereto,
PAL informed PALEA that rank-and-file employees who were regularized after 30th of April 1988
were not entitled to the 13th month pay as they were already given their Christmas bonuses on
December 9, 1988 per the Implementing Rules of PD 851.
Issue: Whether the 13thmonth pay or mid-year bonus can be equated to the Christmas bonus.
Held: The 13thmonth pay or mid-year bonus can be equated to the Christmas bonus.
In the case under consideration, the provision for the payment of the Christmas bonus, apart from
the 13th month pay, was incorporated into the 1986-1989 CBA between respondent PALEA and
petitioner PAL without any condition.The Christmas bonus, payable in December of every year, is
distinguished from the 13thmonth pay, due yearly in May, for which reason it was denominated as
the mid-year bonus. Such being the case, the only logical inference that could be derived
therefrom is that petitioner PAL intended to give the members of the bargaining unit, represented
by respondent PALEA, a Christmas bonus over and above its legally mandated obligation to grant
the 13thmonth pay.
InUnited CMC Textile Workers Union v.The Labor Arbiter,one of the issues passed upon by the
Court was whether or not anemployerwho was already paying Christmas bonus pursuant to a CBA,
was still bound to pay the 13thmonth pay pursuant to Presidential Decree No. 851 which provides
that A bonus under the CBA is an obligation created by the contract between the management
and workers while the 13thmonth pay is mandated by the law.Finding that the intention of the
parties to the CBA was that the Christmas bonus was meant to be on top of the 13thmonth pay,
the Court ordered the employer to pay the employees both.
It must be stressed that in the 1986-1989 CBA, petitioner PAL agreed to pay its employees 1) the
13th month pay or the mid-year bonus, and 2) the Christmas bonus. The 13th month pay,
guaranteed by Presidential Decree No. 851, is explicitly covered or provided for as the mid-year
bonus in the CBA, while the Christmas bonus is evidently and distinctly a separate
benefit. Petitioner PAL may not be allowed to brush off said distinction, and unilaterally and
arbitrarily declare that for non-regular employees, their Christmas bonus is the same as or
th
equivalent
to under the terms
of
150 to
M athe
. C13e cmonth
e l i a pay.
T i mAs
b aitl had willfully and intentionally
L l B agreed
2
Rm
402
the CBA, petitioner
PAL must pay its regular and non-regular employees who are members of the
Labor Standards
bargaining unit represented by respondent PALEA their 13th month pay or mid-year bonus
separately from and in addition to their Christmas bonus.
(2008) G.R. 170734
Facts:
Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the
labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid
the 13th month pay, bonus, and leave encashment of three union members in amounts proportional
to the service they actually rendered in a year, which is less than a full twelve (12) months.
Respondent protested the prorated scheme, claiming that on several occasions petitioner did not
prorate the payment of the same benefits to seven (7) employees who had not served for the full
12 months. According to respondent, the prorated payment violates the rule against diminution of
benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National
Conciliation and Mediation Board (NCMB).
Issue: WON the grant of 13th month pay, bonus, and leave encashment in full regardless of actual
service rendered constitutes voluntary employer practice and, consequently, whether or not the
prorated payment of the said benefits constitute diminution of benefits under Article 100 of the
Labor Code.
Held: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished,
discontinued or eliminated by the employer.
The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect
the rights of workers and promote their welfare and to afford labor full protection. Said mandate
in turn is the basis of Article 4 of the Labor Code which states that all doubts in the
implementation and interpretation of this Code, including its implementing rules and regulations
shall be rendered in favor of labor.
Jurisprudence is replete with cases which recognize the right of employees to benefits which were
voluntarily given by the employer and which ripened into company practice. Thus in DavaoFruits
Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously
included in the computation of the 13th month pay those items that were expressly excluded by
the law, we held that the act which was favorable to the employees though not conforming to law
had thus ripened into a practice and could not be withdrawn, reduced, diminished, discontinued
or eliminated. In Sevilla Trading Company v. Semana, we ruled that the employers act of
including non-basic benefits in the computation of the 13th month pay was a voluntary act and had
ripened into a company practice which cannot be peremptorily withdrawn.
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely,
voluntarily and consistently granting full benefits to its employees regardless of the length of
service151
rendered.
a total of seven employees
M a . CTrue,
e c e lthere
i a T were
i m b aonly
l
L l B 2who benefited from such
R ma
4 0it2 was an established practice nonetheless. Jurisprudence has not laid down any rule
practice, but
specifying a minimum number of years within which a company practice must be exercised in
Labor Standards
order to constitute voluntary company practice. Thus, it can be six (6) years, three (3) years, or
even as short as two (2) years. Petitioner cannot shirk away from its responsibility by merely
claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing
group head.
Universal Sugar Milling Corp., vs Caballeda (2009) G.R. 156644

Facts:
Agripino Caballeda worked as welder for URSUMCO from March 1989 until June 23, 1997 while
Alejandro Cadalin worked for URSUMCO as crane operation from 1976 up to June 15, 1997.
John Gokongwei, Jr. President of URSUMCO issued a memorandum establishing the company policy
on Compulsory Retirement. All employees corporate-wide who attain 60 years of age on or
before April 30, 1991 shall be considered retired on May 31, 1991. Subsequently, on December 9,
1992, Republic Act No. 7641 was enacted into law and it took effect on January 7, 1993, amending
Article 287 of the Labor Code.
Agripino and Alejandro having reached the age of 60, were allegedly forced to retire by URSUMCO.
They both accepted their retirement benefits. Later on, Agripino filed a complaint for illegal
dismissal because his compulsory retirement was in violation of the provisions of RA 7641 and, was
in effect, a form of illegal dismissal.
Issues: RA 7641 can be given retroactive effect; whether or not Agripino Caballeda and Alejandro
Cadalin voluntarily retired from the service.
Held:
The issue of retroactivity has long been settled in the case of Enriquez Security Services, Inc. vs.
Cabotaje.
RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor
protection measure and as a curative statute that absent a retirement plan devised
by, an agreement with, or a voluntary grant from, an employer can respond, in part
at least, to the financial well-being of workers during their twilight years soon
following their life of labor. There should be little doubt about the fact that the law
can apply to labor contracts still existing at the time the statute has taken effect,
and that its benefits can be reckoned not only from the date of the law's enactment
but retroactively to the time said employment contracts have started.
This doctrine has been repeatedly upheld and clarified in several cases. Pursuant thereto, this
Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect:
(1) the claimant for retirement benefits was still in the employ of the employer at the time the
statute took effect; and (2) the claimant had complied with the requirements for eligibility for
such retirement benefits under the statute.
When respondents were compulsorily retired from the service, RA 7641 was already in full force
and effect.
152 M The
a . Cpetitioners
e c e l i a Tfailed
i m b a to
l prove that the respondents
L l B 2 did not comply with Rthe
m
requirements
In sum, the
4 0 2for eligibility under the law for such retirement benefits.
aforementioned requisites were adequately satisfied, thus, warranting the retroactive application
of R.A. 7641 in this case.
Labor Standards
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age, agrees to sever his
or her employment with the former. The age of retirement is primarily determined by the existing
agreement between the employer and the employees. However, in the absence of such
agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code as
amended, the legally mandated age for compulsory retirement is 65 years, while the set minimum
age for optional retirement is 60 years.
In this case, it may be stressed that the CBA does not per se specifically provide for the
compulsory retirement age nor does it provide for an optional retirement plan. It merely provides
that the retirement benefits accorded to an employee shall be in accordance with law. Thus, we
must apply Art. 287 of the Labor Code which provides for two types of retirement: (a) compulsory
and (b) optional. The first takes place at age 65, while the second is primarily determined by the
collective bargaining agreement or other employment contract or employer's retirement plan. In
the absence of any provision on optional retirement in a collective bargaining agreement, other
employment contract, or employer's retirement plan, an employee may optionally retire upon
reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least
five years in the establishment concerned. That prerogative is exclusively lodged in the employee.
Indubitably, the voluntariness of the respondents' retirement is the meat of the instant
controversy. Generally, the law looks with disfavor on quitclaims and releases by employees who
have been inveigled or pressured into signing them by unscrupulous employers seeking to evade
their legal responsibilities and frustrate just claims of employees. They are frowned upon as
contrary to public policy. A quitclaim is ineffective in barring recovery of the full measure of a
worker's rights, and the acceptance of benefits therefrom does not amount to estoppel.
In exceptional cases, the Court has accepted the validity of quitclaims executed by employees if
the employer is able to prove the following requisites: (1) the employee executes a deed of
quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the
consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to
law, public order, public policy, morals or good customs or prejudicial to a third person with a
right recognized by law. In this case, petitioners failed to establish all the foregoing requisites.
To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it
is clear from the decisions of the LA, NLRC and CA that petitioners are still liable to pay Alejandro
the differential on his retirement benefits. On the other hand, Agripino was actually and totally
deprived of his retirement benefit. In Becton Dickinson Phils., Inc. v. National Labor Relations
Commission, we held:
There is no nexus between intelligence, or even the position which the employee held in the
company when it concerns the pressure which the employer may exert upon the free will of the
employee who is asked to sign a release and quitclaim. The employee is confronted with the
same dilemma of whether signing a release and quitclaim and accept what the company offers
them, or refusing to sign and walk out without receiving anything, may do succumb to the same
pressure, being very well aware that it is going to take quite a while before he can recover
whatever he is entitled to, because it is only after a protracted legal battle starting from the
labor arbiter level, all the way to this Court, can he receive anything at all. The Court
153
M a . C ethat
c e such
l i a aT risk
i m bofa not
l
L l B 2 coupled with the probability
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understands
receiving anything whatsoever,
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of not immediately getting any gainful employment or means of livelihood in the meantime,
constitutes enough pressure upon anyone who is asked to sign a release and quitclaim in
Labor Standards
exchange of some amount of money which may be way below what he may be entitled to based
on company practice and policy or by law.
Absent any convincing proof of voluntariness in the submission of the documentary requirements
and the execution of the quitclaim, we cannot simply assume that respondents were not
subjected to the very same pressure. Respondents vigorously pursued this case all the way up to
the Supreme Court. Without doubt, this is a manifestation that respondents had no intention of
relinquishing their employment, wholly incompatible to petitioners' assertion that respondents
voluntarily retired. Respondents did not voluntarily retire but were forced to retire, tantamount
to illegal dismissal.
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Labor Standards
XII
2005 REVISED RULES
OF THE NLRC (2006)
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T/Sgt. Larkins vs NLRC (1995) G.R. 92432
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Labor Standards
Facts:
On August 12, 1988, private respondents filed a complaint with the Regional Arbitration Branch
No. III of the NLRC, San Fernando, Pampanga, against petitioner Larkins, a member of the United
States Air Force (USAF) assigned to oversee the dormitories of the Third Aircraft Generation
Squadron (3 AGS) at Clark Air Base, Pampanga., Lt. Col. Frankhauser, and Cunanan (the new
contractor ) for illegal dismissal and underpayment of wages. Petitioner and Lt. Col. Frankhauser
failed to answer the complaint and to appear at the hearings. They, likewise, failed to submit
their position paper, which the Labor Arbiter deemed a waiver on their part to do so.
On the basis of private respondents' position paper and supporting documents, the Labor Arbiter
rendered a decision granting all the claims of private respondents. He found both Lt. Col.
Frankhauser and petitioner "guilty of illegal dismissal" and ordered them to reinstate private
respondents with full back wages, or if that is no longer possible, to pay private respondents'
separation pay.
Petitioner appealed to the NLRC claiming that the Labor Arbiter never acquired jurisdiction over
her person because no summons or copies of the complaints, both original and amended, were
ever served on her. In her "Supplemental Memorandum to Memorandum of Appeal," petitioner
argued that the attempts to serve her with notices of hearing were not in accordance with the
provisions of the RP-US Military Bases Agreement of 1947.
Issue: WON the questioned resolutions are null and void.
Held: No jurisdiction was ever acquired by the Labor Arbiter over the case and the person of
petitioner and the judgment rendered is null and void.
Summonses and other processes issued by Philippine courts and administrative agencies for United
States Armed Forces personnel within any U.S. base in the Philippines could be served therein only
with the permission of the Base Commander. If he withholds giving his permission, he should
instead designate another person to serve the process, and obtain the server's affidavit for filing
with the appropriate court. Respondent Labor Arbiter did not follow said procedure. He instead,
addressed the summons to Lt. Col. Frankhauser and not the Base Commander.
Respondents do not dispute petitioner's claim that no summons was ever issued and served on her.
They contend, however, that they sent notices of the hearings to her Notices of hearing are not
summonses. The provisions and prevailing jurisprudence in Civil Procedure may be applied by
analogy to NLRC proceedings (Revised Rules of the NLRC, Rule I, Sec. 3). It is basic that the Labor
Arbiter cannot acquire jurisdiction over the person of the respondent without the latter being
served with summons. In the absence of service of summons or a valid waiver thereof, the
hearings and judgment rendered by the Labor Arbiter are null and void.
Petitioner, in the case at bench, appealed to the NLRC and participated in the oral argument
before the said body. This, however, does not constitute a waiver of the lack of summons and a
voluntary submission of her person to the jurisdiction of the Labor Arbiter. She may have raised in
her pleadings grounds other than lack of jurisdiction, but these grounds were discussed in relation
to and156
as a Mresult
of the issue of the lack of jurisdiction. In Leffect,
petitioner set forth only Rone
a. Cecelia Timbal
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m
issue and that
is
the
absence
of
jurisdiction
over
her
person.
If
an
appearance
before the NLRC is
402
precisely to question the jurisdiction of the said agency over the person of the defendant, then
this appearance is not equivalent to service of summons.
Labor Standards
Be that as it may, on the assumption that petitioner validly waived service of summons on her, still
the case could not prosper. There is no allegation from the pleadings filed that Lt. Col.
Frankhauser and petitioner were being sued in their personal capacities for tortious acts.
However, private respondents named 3 AGS as one of the respondents in their complaint.
Private respondents were dismissed from their employment by Lt. Col. Frankhauser acting for and
in behalf of the U.S. Government. The employer of private respondents was neither Lt. Col.
Frankhauser nor petitioner. The employer of private respondents, as found by NLRC, was the U.S.
Government which, by right of sovereign power, operated and maintained the dormitories at Clark
Air Base for members of the USAF.
Indeed, assuming that jurisdiction was acquired over the United States Government and the
monetary claims of private respondents proved, such awards will have to be satisfied not by Lt.
Col. Frankhauser and petitioner in their personal capacities, but by the United States government.
157
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4 0 2 Medical Center vs NLRC (1997) G.R. 1104419

UERM Memorial
Facts:
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Labor Standards
Consequently, a complaint was filed by the private respondents, represented by the Federation of
Free Workers (FFW), claiming salary differentials under Republic Act Nos. 6640 and 6727,
correction of the wage distortion and the payment of salaries for Saturdays and Sundays under
Policy Instruction No. 54.
Labor Arbiter Nieves de Castro sustained the private respondents except for their claim of wage
distortion. Within the reglementary period for appeal, the petitioners filed their Notice and
Memorandum of Appeal with a Real Estate Bond consisting of land and various improvements
therein worth P102,345,650.
The private respondents moved to dismiss the appeal on the ground that Article 223 of the Labor
Code, as amended, requires the posting of a cash or surety bond. The NLRC directed petitioners to
post a cash or surety bond of P17,082,448.56 with a warning that failure to do so would cause the
dismissal of the appeal.
The petitioners filed a Motion for Reconsideration alleging it is not in a viable financial condition
to post a cash bond nor to pay the annual premium of P700,000.00 for a surety bond. On 6
October 1992, the NLRC dismissed petitioners' appeal. Petitioners' Motion for Reconsideration was
also denied by the NLRC in a resolution dated 7 June 1993.
Issue: WON in perfecting an appeal to the National Labor Relations Commission (NLRC) a property
bond is excluded by the two forms of appeal bond cash or surety as enumerated in Article 223
of the Labor Code.
Held: Yes. The applicable law is Article 223 of the Labor Code, as amended by Republic Act No.
6715, which provides:
"In case of a judgment involving a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary award
in the judgment appealed from."
We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC we ruled:
"x x x that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring
a cash or surety bond in the amount equivalent to the monetary award in the judgment
appealed from for the appeal to be perfected, may be considered a jurisdictional requirement,
nevertheless, adhering to the principle that substantial justice is better served by allowing the
appeal on the merits threshed out by the NLRC, the Court finds and so holds that the foregoing
requirement of the law should be given a liberal interpretation."
Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission we
held: "The intention of the lawmakers to make the bond an indispensable requisite for the
perfection of an appeal by the employer is underscored by the provision that an appeal by the
employer may be perfected "only upon the posting of a cash or surety bond." The word "only"
makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the
employer to be the exclusive means by which an employer's appeal may be perfected. The
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requirement4 0is2intended to discourage employers from using an appeal to delay, or even evade,
their obligation to satisfy their employees' just and lawful claims.
Labor Standards
Considering, however, that the current policy is not to strictly follow technical rules but rather to
take into account the spirit and intention of the Labor Code, it would be prudent for us to look
into the merits of the case, especially since petitioner disputes the allegation that private
respondent was illegally dismissed."
We reiterate this policy which stresses the importance of deciding cases on the basis of their
substantive merit and not on strict technical rules. In the case at bar, the judgment involved is
more than P17 million and its precipitate execution can adversely affect the existence of
petitioner medical center. Likewise, the issues involved are not insignificant and they deserve a
full discourse by our quasi-judicial and judicial authorities. We are also confident that the real
property bond posted by the petitioners sufficiently protects the interests of private respondents
should they finally prevail. It is not disputed that the real property offered by petitioners is worth
P102,345,650. The judgment in favor of private respondent is only a little more than P17 million.
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Philtranco Services vs NLRC (1998) G.R. 124100

Facts:
Private respondent Roberto Nieva filed a complaint for illegal dismissal and 13th month pay with
the NLRCs National Capital Region Arbitration Branch in Manila. The case was subsequently
assigned to Labor Arbiter Cornelio L. Linsangan. On August 28, 1992, petitioner and employer
Philtranco filed a position paper with motion to dismiss, stating, among other things, that the
complaint should have been lodged with the NLRCs Regional Arbitration Branch in Legaspi City,
not only because Nieva was a resident thereof, but also because the latter was hired, assigned,
and based in Legaspi City.
The motion to dismiss was denied by the labor arbiter, and so with the subsequent motions filed
having the same argument. Thereafter, Philtranco presented its evidence to prove that Nieva had
abandoned his work, having been absent without leave from October 19 to November 20, 1989.
Issue: WON the NLRC committed grave abuse of discretion amounting to lack of jurisdiction when
it denied the motion of Philtranco to dismiss complaint based on improper venue.
Held: The petition lacks merit. As regards the first issue, this Court has previously declared that
the question of venue essentially pertains to the trial and relates more to the convenience of the
parties rather than upon the substance and merits of the case. Provisions on venue are intended to
assure convenience for the plaintiff and his witnesses and to promote the ends of justice. In fact,
Section 1(a), Rule IV of the New Rules of Procedure of the NLRC, cited by Philtranco in support of
its contention that venue of the illegal dismissal case filed by Nieva is improperly laid, speaks of
the complainant/petitioners workplace, evidently showing that the rule is intended for the
exclusive benefit of the worker. This being the case, the worker may waive said benefit.
Furthermore, the aforesaid Section has been declared by this Court to be merely permissive. In
Dayag vs. NLRC, this Court held that: This provision is obviously permissive, for the said section
uses the word may, allowing a different venue when the interests of substantial justice demand a
different one. In any case, as stated earlier, the Constitutional protection accorded to labor is a
paramount and compelling factor, provided the venue chosen is not altogether oppressive to the
employer. Moreover, Nieva, as a driver of Philtranco, was assigned to the Legaspi City-Pasay City
route. Sulpicio Lines, Inc. vs. NLRC is exactly in point. In said case, we held that:
Section 1, Rule IV of the 1990 NLRC Rules additionally provides that, for purposes of venue,
workplace shall be understood as the place or locality where the employee is regularly assigned
when the cause of action arose. Since the private respondents regular place of assignment is
the vessel MV Cotabato Princess which plies the Manila-Estancia-Iloilo-Zamboanga-Cotabato
route, we are of the opinion that Labor Arbiter Arthur L. Amansec was correct in concluding
that Manila could be considered part of the complainants territorial workplace.
From the foregoing, it is obvious that the filing of the complaint with the National Capital Region
Arbitration Branch was proper, Manila being considered as part of Nievas workplace by reason of
his plying the Legaspi City-Pasay City route.
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Labor Standards
St. Martin Funeral Homes vs NLRC (1998) G.R. 130866

Facts:
Private respondent alleges that he started working as Operations Manager of petitioner St. Martin
Funeral Home on February 6, 1995. However, there was no contract of employment executed
between him and petitioner nor was his name included in the semi-monthly payroll. On January
22, 1996, he was dismissed from his employment for allegedly misappropriating P38,000.00.
Petitioner on the other hand claims that private respondent was not its employee but only the
uncle of Amelita Malabed, the owner of petitioner St. Martins Funeral Home and in January 1996,
the mother of Amelita passed away, so the latter took over the management of the business.
Amelita made some changes in the business operation and private respondent and his wife were
no longer allowed to participate in the management thereof. As a consequence, the latter filed a
complaint charging that petitioner had illegally terminated his employment. The labor arbiter
rendered a decision in favor of petitioner declaring that no employer-employee relationship
existed between the parties and therefore his office had no jurisdiction over the case.
Issue: WON the decision of the NLRC are appealable to the Court of Appeals.
Held: NLRC decisions are appealable to the Court of Appeals.
In view of the increasing number of labor disputes that find their way to the Supreme Court, the
legislative changes introduced over the years into the provisions of P.D. 442 (Labor Code of the
Philippines) and B.P. 129 (Judiciary Reorganization Act of 1980) and the present state of the law
where there is no provision for appeals from the decision of the NLRC, the Court saw the need for
reassessment of this procedural aspect.
The Court noted that there may have been an oversight in the course of the deliberations on R.A.
7902, amending B.P. 129, or an imprecision in the terminology used therein as from the records,
Congress had intended to provide for judicial review of the adjudication of the NLRC in labor cases
by the Supreme Court, but there was an inaccuracy in the term used for the intended mode of
review.
The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the SC
were eliminated, the legislative intendment was that the special civil action for certiorari was and
still is the proper vehicle for judicial review of decisions of the NLRC. The use of the word
appeal in relation thereto and in the instances we have noted could have been a lapsus plumae
because appeals by certiorari and the original action for certiorari are both modes of judicial
review addressed to the appellate courts. The important distinction between them, however, and
with which the Court is particularly concerned here is that the special civil action for certiorari is
within the concurrent original jurisdiction of this Court and the Court of Appeals; whereas to
indulge in the assumption that appeals by certiorari to the SC are allowed would not subserve, but
would subvert, the intention of the Congress as expressed in the sponsorship speech on Senate Bill
No. 1495.
Therefore, all references in the amended Section 9 of B.P No. 129 to supposed appeals from the
161theM Supreme
a. Cece
l i a are
T i minterpreted
bal
L l B to
2mean and refer to petitions
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NLRC to
Court
and hereby declared
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for certiorari under Rule 65. Consequently, all such petitions should henceforth be initially filed in
Labor Standards
the Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the
appropriate forum for the relief desired.
Ludo & Luym Corp., vs Saornido (2003) G.R. 140690
Facts:
On April 1992, respondent union entered into a collective bargaining agreement with LUDO which
provides certain benefits to the employees, the amount of which vary according to the length of
service rendered by the availing employee.
Thereafter, the union requested LUDO to include in its members period of service the time during
which they rendered arrastre services to LUDO through the CLAS when they were not yet hired as
regular rank-and-file employees so that they could get higher benefits. LUDO failed to act on the
request. Thus, the matter was submitted for voluntary arbitration.
The parties accordingly executed a submission agreement raising the sole issue of the date of
regularization of the workers for resolution by the Voluntary Arbitrator.
In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the respondent
employees were engaged in activities necessary and desirable to the business of petitioner, and (2)
CLAS is a labor-only contractor of petitioner. It disposed of the case thus: WHEREFORE, in view of
the foregoing, this Voluntary Arbitrator finds the claims of the complainants meritorious and so
hold that:
a. the 214 complainants, as listed in the Annex A, shall be considered regular employees of the
respondents six (6) months from the first day of service at CLAS;
b. the said complainants, being entitled to the CBA benefits during the regular employment,
are awarded a) sick leave, b) vacation leave & c) annual wage and salary increases during such
period in the amount of FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO HUNDRED SIXTY
ONE PESOS AND SIXTY ONE CENTAVOS (P5,707,261.61) as computed in "Annex A";
c. the respondents shall pay attorneys fees of ten (10) percent of the total award;
d. an interest of twelve (12) percent per annum or one (1) percent per month shall be imposed
to the award from the date of promulgation until fully paid if only to speed up the payment of
these long over due CBA benefits deprived of the complaining workers.
Accordingly, all separation and/or retirement benefits shall be construed from the date of
regularization aforementioned subject only to the appropriate government laws and other social
legislation. In due time, LUDO filed a motion for reconsideration, which was denied. On appeal,
the Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator.
Petitioner contends that the appellate court gravely erred when it upheld the award of benefits
which were beyond the terms of submission agreement. Petitioner asserts that the arbitrator must
confine its adjudication to those issues submitted by the parties for arbitration, which in this case
is the sole
of the workers. LHence,
162 issue
M a . ofC the
e c edate
l i a of
T iregularization
mbal
l B the
2 award of benefits by Rthe
m
4 0 2done in excess of jurisdiction. On the matter of the benefits, respondents argue
arbitrator was
that the arbitrator is empowered to award the assailed benefits because notwithstanding the sole
Labor Standards
issue of the date of regularization, standard companion issues on reliefs and remedies are deemed
incorporated. Otherwise, the whole arbitration process would be rendered purely academic and
the law creating it inutile.
Issue: WON a Voluntary Arbitrator can award benefits not claimed in the submission agreement.
Held: Arbitrator can award benefits not claimed in the submission agreement.
The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators and Labor Arbiters is
clearly defined and specifically delineated in the Labor Code. The pertinent provisions of the
Labor Code, read:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. --- (a) Except as otherwise
provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic notes, the following
cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases:
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wage, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relations;
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The Voluntary
Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear
and decide all unresolved grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the interpretation or enforcement of
company personnel policies referred to in the immediately preceding article. Accordingly,
violations of a Collective Bargaining Agreement, except those which are gross in character,
shall no longer be treated as unfair labor practice and shall be resolved as grievances under the
Collective Bargaining Agreement. For purposes of this article, gross violations of Collective
Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the
economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and
Employment shall not entertain disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately
dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the
Collective Bargaining Agreement.
Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes
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including
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Labor Standards
In construing the above provisions, we held in San Jose vs. NLRC, that the jurisdiction of the Labor
Arbiter and the Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in
the Labor Code, Articles 217, 261 and 262, can possibly include money claims in one form or
another. Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC, compulsory arbitration has
been defined both as "the process of settlement of labor disputes by a government agency which
has the authority to investigate and to make an award which is binding on all the parties, and as a
mode of arbitration where the parties are compelled to accept the resolution of their dispute
through arbitration by a third party.
While a voluntary arbitrator is not part of the governmental unit or labor departments personnel,
said arbitrator renders arbitration services provided for under labor laws. Generally, the arbitrator
is expected to decide only those questions expressly delineated by the submission agreement.
Nevertheless, the arbitrator can assume that he has the necessary power to make a final
settlement since arbitration is the final resort for the adjudication of disputes. The succinct
reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a labor
controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence,
thus:
In general, the arbitrator is expected to decide those questions expressly stated and limited in the
submission agreement. However, since arbitration is the final resort for the adjudication of
disputes, the arbitrator can assume that he has the power to make a final settlement. Thus,
assuming that the submission empowers the arbitrator to decide whether an employee was
discharged for just cause, the arbitrator in this instance can reasonable assume that his powers
extended beyond giving a yes-or-no answer and included the power to reinstate him with or
without back pay.
In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary jurisdiction
and authority to interpret the agreement to arbitrate and to determine the scope of his own
authority subject only, in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator,
as already indicated, viewed his authority as embracing not merely the determination of the
abstract question of whether or not a performance bonus was to be granted but also, in the
affirmative case, the amount thereof.
By the same token, the issue of regularization should be viewed as two-tiered issue. While the
submission agreement mentioned only the determination of the date or regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate
prerogative to accomplish the reason for which the law on voluntary arbitration was created speedy labor justice. It bears stressing that the underlying reason why this case arose is to settle,
once and for all, the ultimate question of whether respondent employees are entitled to higher
benefits. To require them to file another action for payment of such benefits would certainly
undermine labor proceedings and contravene the constitutional mandate providing full protection
to labor.
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Hanjin Engineering and Construction Co. Ltd. vs Court of Appeals (2006) G.R. 165910
Facts:
In April 1998, 712 employees filed complaints for illegal dismissal and for payment of benefits
against Hanjin and Nam Hyun Kim, the officer-in-charge of the project (herein petitioners), before
the National Labor Relations Commission (NLRC). The complainants averred that they were regular
employees of Hanjin and that they were separated from employment without any lawful or just
cause.
On May 12, 1998, the Labor Arbiter rendered judgment in favor of the 428 complainants, granting
separation pay and attorneys fees to each of them. According to the Labor Arbiter, the
complainants were regular employees of petitioner Hanjin, and their claims for underpayment,
holiday pay, premium pay for holiday and rest day, 13th month pay, and service incentive leave
would be computed after sufficient data were made available.
Petitioners appealed the decision to the NLRC, which affirmed with modification the Labor
Arbiters ruling on January 28, 2000. The NLRC dismissed the complaints of 34 complainants and
awarded monetary benefits to the others.
Petitioners filed a Motion for the Reconsideration of the decision (with a motion to conduct
clarificatory hearings). Petitioners appended to their motion machine copies of some of the
complainants employment contracts, as well as resignation letters of others who were given
monetary awards in the decision, it appearing that their names appeared twice in the list.
Petitioners also submitted to the NLRC folders consisting mostly of payrolls.
On July 20, 2001, the NLRC issued a Resolution partially granting petitioners motion.Unsatisfied,
petitioners filed a Petition for Certiorari under Rule 65 of the Revised Rules of Court in the CA.
On March 18, 2004, the CA dismissed the petition and affirmed the NLRCs ruling that the
dismissed employees (respondents) were regular employees. The CA stressed that petitioners
failed to refute the claim of the respondents that they were regular employees. Petitioners moved
to reconsider the decision, which the CA denied.
Petitioner then filed in the SC a petition for Certiorari under Rule 65 of the Revised Rules of Court,
as amended, with prayer for temporary restraining order/preliminary injunction, seeking the
annulment of the Decision of the Court of Appeals (CA) in CA-G.R. SP No. 67601 as well as the
Resolution denying the motion for reconsideration thereof.
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Issue: WON 4petitioners

appeal under Rule 65 of the Revised Rules of Court is proper.
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Labor Standards
Held: Petitioners recourse to this Court via Rule 65 of the Revised Rules of Court was
inappropriate.
Section 1, Article VIII, of the Constitution provides that judicial power shall be vested in one
Supreme Court and in such other courts as may be established by law. Judicial power includes the
duty of the courts of justice to determine whether or not there has been grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of bench or instrumentality of the
government. The Court has original jurisdiction over petitions for certiorari, prohibitions and
mandamus, and may review on appeal or certiorari as the law on the Rules of Court may provide
final judgment and orders of lower courts, and cases in which only questions of law is involved.
However, if a petition for certiorari involves the acts or omissions of a quasi-judicial agency and
unless otherwise provided by law or the Rules of Court, the petition for certiorari shall be final
and is cognizable only by the Court of Appeals. One such quasi-judicial agency is the NLRC.
Inasmuch as the appellate court has exclusive appellate jurisdiction over quasi-judicial agencies
under Rule 43, petitions for review on certiorari should be filed only with the CA, unless otherwise
provided by law or the Rules. Moreover, under Rule 45, a party appealing from judgments or final
orders or resolutions of the CA, the Sandiganbayan, the Regional Trial Court or any other court,
unless authorized by law, may file with the Supreme Court a verified petition for review on
certiorari, raising only questions of law which must be distinctly set forth.
Thus, under the Constitution and the Revised Rules of Court, judicial review of the decisions or
final orders of the NLRC should be filed with the CA under Section 5 of Rule 65, on the ground that
the NLRC has committed grave abuse of discretion amounting to excess or lack of jurisdiction. The
remedy of the aggrieved party from the CA decision, in turn, shall be by petition for review on
certiorari with this Court under Rule 45.
The aggrieved party is proscribed from assailing a decision or final order of the CA via Rule 65
because such recourse is proper only if the party has no plain, speedy and adequate remedy in the
course of law. In this case, petitioners have an adequate remedy, namely, a petition for review on
certiorari under Rule 45 of the Rules of Court. It must be stressed that the remedies of appeal
under Rule 45 and an original action for certiorari under Rule 65 are mutually exclusive.
The general rule is that a cert writ will not issue where the remedy of appeal is available to the
aggrieved party. The remedies of appeal in the ordinary course of law and that of certiorari under
Rule 65 of the Revised Rules of Court are mutually exclusive and not alternative or cumulative.
Hence, the special civil action for certiorari under Rule 65 is not and cannot be a substitute for an
appeal, where the latter remedy is available.
The proper recourse of the aggrieved party from a decision of the CA is a petition for review on
certiorari under Rule 45 of the Revised Rules of Court. On the other hand, if the error subject of
the recourse is one of jurisdiction, or the act complained of was perpetrated by a quasi-judicial
officer or agency with grave abuse of discretion amounting to lack or excess of jurisdiction, the
proper remedy available to the aggrieved party is a petition for certiorari under Rule 65 of the
said Rules.
M a .issue,
C e cine order
l i a Tto
im
bal
L l B of petitioners
2
R mit
Anent 166
the first
determine
whether the recourse
is proper or not,
402
is necessary to draw a line between an error of judgment and an error of jurisdiction. An error of
judgment is one which the court may commit in the exercise of its jurisdiction, and which error is
Labor Standards
reviewable only by an appeal. On the other hand, an error of jurisdiction is one where the act
complained of was issued by the court, officer or a quasi-judicial body without or in excess of
jurisdiction, or with grave abuse of discretion which is tantamount to lack or in excess of
jurisdiction. This error is correctible only by the extraordinary writ of certiorari.
The supervisory jurisdiction of the court to issue a cert writ cannot be exercised in order to review
the judgment of the lower court as to its intrinsic correctness, either upon the law or the facts of
the case.
The general rule is that questions or findings of facts in the lower court, board or tribunal, and
the probative weight and sufficiency of the evidence upon which the said findings were based are
not reviewable by certiorari under Rule 65 of the Revised Rules of Court. However, the sufficiency
of the evidence may be inquired into in order to determine whether jurisdictional facts were or
were not proved or whether the lower court had exceeded its jurisdiction. This exception arises
out of the most important office and function of the writ - the keeping of the lower court and
tribunal within their jurisdiction. If the decision of the lower court as to the sufficiency of the
evidence to establish jurisdictional facts were not reviewable, certiorari would be of no avail as a
remedy against an assumption of jurisdiction. For the purpose of enabling the reviewing court to
determine whether jurisdictional facts were established, it may delve into and review the
evidence on which such facts were based.
Concededly, there were occasions when this Court treated a petition for certiorari under Rule 65
of the Revised Rules of Court as one filed under Rule 45, provided the petition is filed within the
prescribed period, and that there are special circumstances alleged therein. The circumstances
prevailing in the instant case do not justify a deviation from the general rule. For one thing, the
petition was filed way beyond the reglementary period allowed under Rule 45 without any
justifiable reason therefor; for another, petitioners did not proffer any reasonable explanation
which would warrant a deviation from the general rule.
As gleaned from the records, petitioners received a copy of the assailed CA decision on March 24,
2004 and filed its motion for reconsideration on April 6, 2004. Petitioners received a copy of the
Order dated October 11, 2004 denying their Motion for Reconsideration on October 20, 2004.
Instead of filing a petition under Rule 45, they filed on November 23, 2004 the instant Petition for
Certiorari under Rule 65.
Petitioners had until November 4, 2004 within which to file a petition for review on certiorari on
pure questions of law. However, as already stated, petitioners filed their petition in this Court only
on November 23, 2004; indubitably, the decision of the CA had by then already become final and
executory, beyond the purview of this Court to act upon.
Since the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors
committed by it in the exercise of its jurisdiction would be errors of judgment which are
reviewable by timely appeal and not by a special civil action of certiorari. If the aggrieved party
fails to do so within the reglementary period, and the decision accordingly becomes final and
executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of his
167 inaction.
Ma. Cecelia Timbal
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deliberate
402
The appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45
and not a special civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule 65,
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respectively, of the 1997 Rules of Civil Procedure. Rule 45 is clear that the decisions, final orders
or resolutions of the Court of Appeals in any case, i.e., regardless of the nature of the action or
proceeding involved, may be appealed to this Court by filing a petition for review, which would be
but a continuation of the appellate process over the original case. Under Rule 45, the
reglementary period to appeal is fifteen (15) days from notice of judgment or denial of motion for
reconsideration.
For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner must show that
he has no plain, speedy and adequate remedy in the ordinary course of law against its perceived
grievance. A remedy is considered "plain, speedy and adequate" if it will promptly relieve the
petitioner from the injurious effects of the judgment and the acts of the lower court or agency. In
this case, appeal was not only available but also a speedy and adequate remedy.
Clearly, petitioners interposed the present special civil action of certiorari under Rule 65 as an
alternative to their petition not because it is the speedy and adequate remedy but to make up for
the loss of their right of an ordinary appeal. It is elementary that the special civil action of
certiorari is not and cannot be a substitute for an appeal, where the latter remedy is available, as
it was in this case. A special civil action under Rule 65 of the Rules of Court cannot cure a partys
failure to timely file a petition for review on certiorari under Rule 45 of the Revised Rules of
Court. Rule 65 is an independent action that cannot be availed of as a substitute for the lost
remedy of an ordinary appeal, including that under Rule 45, especially if such loss or lapse was
occasioned by a partys neglect or error in the choice of remedies. There are exceptions to this
rule: (a) when public welfare and the advancement of public policy dictates; (b) when the broader
interest of justice so requires; (c) when the writs issued are null and void; or (d) when the
questioned order amounts to an oppressive exercise of judicial authority. None of these
recognized exceptions, however, is present in the case at bar. Petitioners failed to show
circumstances that would justify a deviation from the general rule as to make available a petition
for certiorari in lieu of taking an appeal.
Whether or not respondents were project employees or regular employees is a question of fact. To
arrive at a conclusion, the Court will have to delve into and weigh and calibrate the documentary
and testimonial evidence of the parties. However, the Court is proscribed from re-examining the
evidence on record and weighing the same in a petition for certiorari under Rule 65 of the Revised
Rules of Court. It must be stressed that the only issue before the Court in a petition for certiorari
under Rule 65 is whether the CA committed grave abuse of discretion amounting to excess or lack
of jurisdiction in its decision. In this case, the CA aptly stated, thus:
What is before us is a petition for certiorari under Rule 65 of the Rules of Court which will lie only
in cases where a grave abuse of discretion or an act without or in excess of jurisdiction is clearly
shown to have been committed by the respondent Commission, and the Courts jurisdiction to
review decisions or resolutions of the respondent NLRC does not include a correction of its
evaluation of the evidence. Moreover, it is a fundamental rule that the factual findings of quasijudicial agencies like the respondent NLRC, if supported by substantial evidence, are generally
accorded not only great respect but even finality, and are binding upon this Court, unless the
petitioner is able to clearly demonstrate that respondent Commission had arbitrarily disregarded
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evidence before
4 0 2 it or had misapprehended evidence to such an extent as to compel a contrary
conclusion if such evidence had been properly appreciated, or if the findings of the Labor Arbiter
and the NLRC are contrary to each other.
Labor Standards
Phil. Journalistic Inc., vs NLRC (2006) G.R. 166421

Facts:
In NLRCs Resolution dated May 31, 2001, petitioner Philippine Journalists, Inc. (PJI) was adjudged
liable in the total amount of P6,447,008.57 for illegally dismissing 31 complainants-employees
and that there was no basis for the implementation of petitioner's retrenchment program.
Thereafter, the parties executed a Compromise Agreement dated July 9, 2001, where PJI
undertook to reinstate the 31 complainant-employees effective July 1, 2001 without loss of
seniority rights and benefits; 17 of them who were previously retrenched were agreed to be given
full and complete payment of their respective monetary claims, while 14 others would be paid
their monetary claims minus what they received by way of separation pay.
The compromise agreement was submitted to the NLRC for approval. All the employees mentioned
in the agreement and in the NLRC Resolution affixed their signatures thereon. They likewise
signed the Joint Manifesto and Declaration of Mutual Support and Cooperation which had also been
submitted for the consideration of the labor tribunal. The NLRC forthwith issued another
Resolution on July 25, 2002, which among others declared that Thus, the compromise agreement
was approved and NCMB-NCR-NS-03-087-00 was deemed closed and terminated.
In the meantime, however, the Union filed another Notice of Strike on July 1, 2002. In an Order
dated September 16, 2002, the DOLE Secretary certified the case to the Commission for
compulsory arbitration. The case was docketed as NCMB-NCR- NS-07-251-02. In its Resolution
dated July 31, 2003, the NLRC ruled that the complainants were not illegally dismissed. The May
31, 2001 Resolution declaring the retrenchment program illegal did not attain finality as "it had
been academically mooted by the compromise agreement entered into between both parties on
July 9, 2001."
The Union assailed the ruling of the NLRC before the CA via petition for certiorari under Rule 65.
In its Decision dated August 17, 2004, the appellate court held that the NLRC gravely abused its
discretion in ruling for PJI. The compromise agreement referred only to the award given by the
NLRC to the complainants in the said case, that is, the obligation of the employer to the
complainants.
Issue: WON the petitioners petition for certiorari under Rule 65 of the Revised Rules of Civil
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Procedure is4 a0 proper
remedy in this case.
2
Labor Standards
Held: At the outset, we note that this case was brought before us via petition for certiorari under
Rule 65 of the Revised Rules of Civil Procedure. The proper remedy, however, was to file a petition
under Rule 45. It must be stressed that certiorari under Rule 65 is "a remedy narrow in scope and
inflexible in character. It is not a general utility tool in the legal workshop." Moreover, the special
civil action for certiorari will lie only when a court has acted without or in excess of jurisdiction or
with grave abuse of discretion.
Be that as it may, a petition for certiorari may be treated as a petition for review under Rule 45.
Such move is in accordance with the liberal spirit pervading the Rules of Court and in the interest
of substantial justice. As the instant petition was filed within the prescribed fifteen-day period,
and in view of the substantial issues raised, the Court resolves to give due course to the petition
and treat the same as a petition for review on certiorari.
Balagtas Multi-Purpose Coop vs Court of Appeals (2006) G.R. 159268

Facts:
Petitioner Josefina G. Hipolito-Herrero filed a complaint with the Provincial Office of the
Department of Labor in Malolos, Bulacan for illegal dismissal, and non-payment of 13th month pay
or Christmas Bonus against "Balagtas Multi-Purpose Cooperative, Inc. She pray(ed) that she be
reinstated and paid backwages as well as moral damages.
The case was referred to a Labor Arbiter. When the parties failed to settle their differences, they
were required to submit their respective position papers. Trial ensued. On March 23, 1998, the
Labor Arbiter rendered his decision favoring Josefina and ordering petitioner to pay backwages
and other money judgment.
Aggrieved, Balagtas appealed the decision to the National Labor Relations Commission (NLRC) but
failed to post either a cash or surety bond as required by Article 223 of the Labor Code. Instead,
petitioners filed a manifestation and motion, stating, among others, that under Republic Act No.
6938, Article 62(7) of the Cooperative Code of the Philippines, petitioners are exempt from
putting up a bond in an appeal from the decision of the inferior court.
On July 20, 1998, the NLRC rendered the assailed order denying petitioners prayer and on
September 28, 1998, the LRC struck down petitioners' Motion for Reconsideration.
Petitioners then filed a petition for certiorari with the CA, alleging that the NLRC acted with grave
abuse of discretion amounting to excess or lack of jurisdiction in directing them to post an appeal
bond despite the clear mandate of Article 62, paragraph (7) of Republic Act No. 6938 (Cooperative
Code) which dispensed with such requirement.
After the parties submitted their respective pleadings, the CA resolved to dismiss the petition in
the assailed decision dated September 27, 2002 holding that the exemption from putting up a
bond by a cooperative applies to cases decided by inferior courts only.
170
Ma. Cecelia Timbal
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4 0 2 cooperatives are exempted from filing a cash or surety bond required to perfect
Issue: Whether
an employer's appeal under Section 223 of Presidential Decree No. 442 (the Labor Code).
Labor Standards
Held: Petitioners are not exempt from posting the appeal bond required under Article 223 of the
Labor Code.
The provision cited by petitioners cannot be taken in isolation and must be interpreted in relation
to the Cooperative Code in its entirety. It must be kept in mind that the enactment of the
Cooperative Code is pursuant to the State's declared policy of fostering the "creation and growth
of cooperatives as a practical vehicle for prompting self-reliance and harnessing people power
towards the attainment of economic development and social justice." Towards this end, the
government has been mandated to "ensure the provision of technical guidance, financial
assistance and other services to enable said cooperatives to develop into viable and responsive
economic enterprises and thereby bring about a strong cooperative movement that is free from
any conditions that might infringe upon the autonomy or organizational integrity of cooperatives."
In line with this, certain benefits and privileges were expressly granted to cooperative entities
under the statute. The provision invoked by petitioners regarding the exemption from payment of
an appeal bond is only one among a number of such privileges which appear under the article
entitled "Tax and Other Exemptions" of the code.
Considering that the above provision relates to "tax and other exemptions," the same must be
strictly construed. This follows the well-settled principle that exceptions are to be strictly but
reasonably construed; they extend only so far as their language warrants, and all doubts should be
resolved in favor of the general provision rather than the exceptions.
An express exception, exemption, or saving clause excludes other exceptions. Express exceptions
constitute the only limitations on the operation of a statute and no other exception will be
implied. The rule proceeds from the premise that the legislative body would not have made
specific enumerations in a statute, if it had the intention not to restrict its meaning and confine
its terms to those expressly mentioned. Consequently, where a general rule is established by a
statute with exceptions, the Court will not curtail the former nor add to the latter by implication.
Courts may not, in the guise of interpretation, enlarge the scope of a statute and include therein
situations not provided nor intended by the lawmakers. Statutes which are plain and specific
should be applied without attempted construction and interpretation. Thus, where a provision of
law expressly limits its application to certain transactions, it cannot be extended to other
transactions by interpretation.
The term "court" has a settled meaning in this jurisdiction which cannot be reasonably interpreted
as extending to quasi-judicial bodies like the NLRC unless otherwise clearly and expressly
indicated in the wording of the statute. Simply because these tribunals or agencies exercise quasijudicial functions does not convert them into courts of law.
In any event, Article 119 of the Cooperative Code itself expressly embodies the legislative
intention to extend the coverage of labor statutes to cooperatives, to wit:
Art. 119. Compliance with Other Laws. (1) The Labor Code and all other labor laws shall apply
to all cooperatives.
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For this
reason, petitioners must comply with the requirementL set
forth in Article 223 of the Labor
402
Code in order to perfect their appeal to the NLRC. It must be pointed out that the right to appeal
is not a constitutional, natural or inherent right. It is a privilege of statutory origin and, therefore,
Labor Standards
available only if granted or provided by statute. The law may validly provide limitations or
qualifications thereto or relief to the prevailing party in the event an appeal is interposed by the
losing party.
In this case, the obvious and logical purpose of an appeal bond is to insure, during the period of
appeal, against any occurrence that would defeat or diminish recovery by the employee under the
judgment if the latter is subsequently affirmed. This is consistent with the State's constitutional
mandate to afford full protection to labor in order to forcefully and meaningfully underscore labor
as a primary social and economic force.
St. Martin Funeral Homes vs NLRC (2006) G.R. 142351

Facts:
On September 16, 1998, this Court through Justice Jose Vitug, rendered the landmark Decision in
this case then docketed as G.R. No. 130866, holding for the first time that all petitions for
certiorari under Rule 65 assailing the decisions of the NLRC should henceforth be filed with the
CA, thus:
Therefore, all references in the amended section 9 of B.P. No. 129 to supposed appeals from the
NLRC to the Supreme Court are interpreted and refer to petitions for certiorari under Rule 65.
Consequently, all such petitions should henceforth be initially filed in the Court of Appeals in strict
observance of the doctrine on the hierarchy of courts as the appropriate forum for the relief
desired.
Thus, the petition was remanded to the CA and redocketed as CA-G.R. SP No. 49183.
Subsequently, the CA rendered the assailed September 30, 1999 Decision, dismissing petitioner's
appeal for lack of merit with the finding that respondent NLRC did not commit grave abuse of
discretion, in its pronouncement that the Labor Arbiter did not make any finding on the alleged
employer-employee relationship between the parties, reasoning this way:
Actually the Labor Arbiter did not determine whether there is an employer-employee relation
between the parties because according to him, such issue should be resolved by the regular court
pursuant to the ruling of the Supreme Court in De la Salle University vs. NLRC (135 SCRA 674, 677
(1988)).
For its part, respondent NLRC, is remanding the case to the Labor Arbiter, reminded the latter
that he is authorized by the NLRC Rules to determine, in an appropriate proceeding the existence
of an employer-employee relationship.
Issue: WON the Labor Arbiter made a determination of the presence of an employer-employee
relationship.
172
Ma. Cecelia Timbal
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Held: At the4 outset,

it is clear that the issue submitted for resolution is a question of fact which is
02
proscribed by the rule disallowing factual issues in appeal by certiorari to the Supreme Court
under Rule 45. This is explicit in Rule 45, Section 1 that petitions of this nature "shall raise only
Labor Standards
questions of law which must be distinctly set forth." Petitioner St. Martin would like the Court to
examine the pleadings and documentary evidence extant on the records of the Labor Arbiter to
determine if said official indeed made a finding on the existence of the alleged employeremployee nexus between the parties based on the facts contained in said pleadings and evidence.
Evidently this issue is embraced by the circumscription.
Even if we would like to relax the rule and allow the examination of the documentary evidence as
an exception to the general rule, we are precluded by the abject failure of petitioner to attach to
the petition important and material portions of the records as would support the petition
prescribed by Rule 45, Section 4. St. Martin asks us to find out if the Labor Arbiter was correct in
concluding that respondent Aricayos was not in its employ; but committed the blunder of not
attaching to the petition even the Decision of the Labor Arbiter sought to be reviewed, the NLRC
Decision, the position papers and memoranda of the parties filed with the Labor Arbiter, the
affidavits of petitioner's employees, and other pieces of evidence that we can consider in
resolving the factual issue on employment. Without these vital documents, petitioner cannot be
given the relief prayed for.
DOLE Phils. vs Esteva (2006) G.R. 161115
Facts:
Anent the first assignment of error, petitioner argues that judicial review under Rule 65 of the
revised Rules of Civil Procedure is limited only to issues concerning want or excess or jurisdiction
or grave abuse of discretion. The special civil action for certiorari is a remedy designed to correct
errors of jurisdiction and not mere errors of judgment.
It is the contention of petitioner that the NLRC properly assumed jurisdiction over the parties and
subject matter of the instant case. The errors assigned by the respondents in their Petition for
Certiorari before the Court of Appeals do not pertain to the jurisdiction of the NLRC; they are
rather errors of judgment supposedly committed by the the NLRC, in its Resolution, dated 29
February 2000, and are thus not the proper subject of a petition for certiorari.
Petitioner also posits that the Petition for Certiorari filed by respondents with the Court of
Appeals raised questions of fact that would necessitate a review by the appellate court of the
evidence presented by the parties before the Labor Arbiter and the NLRC, and that questions of
fact are not a fit subject for a special civil action for certiorari.
Issue: WON questions of fact are not a fit subject for a special civil action for certiorari.
Held: There is no error on the CAs part when it made anew a factual determination of the
matters.
It has long been settled in the landmark case of St. Martin Funeral Home v. NLRC, that the mode
for judicial review over decisions of the NLRC is by a petition for certiorari under Rule 65 of the
revised Rules of Civil Procedure. The different modes of appeal, namely, writ of error (Rule 41),
petition for review (Rules 42 and 43), and petition for review on certiorari (Rule 45), cannot be
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availed of because
there is no provision on appellate review of NLRC decisions in the Labor Code,
402
as amended.
Labor Standards
Although the same case recognizes that both the Court of Appeals and the Supreme Court have
original jurisdiction over such petitions, it has chosen to impose the strict observance of the
hierarchy of courts. Hence, a petition for certiorari of a decision or resolution of the NLRC should
first be filed with the Court of Appeals; direct resort to the Supreme Court shall not be allowed
unless the redress desired cannot be obtained in the appropriate courts or where exceptional and
compelling circumstances justify an availment of a remedy within and calling for the exercise by
the Supreme Court of its primary jurisdiction. The rule is settled that the original and exclusive
jurisdiction of this Court to review a decision of respondent NLRC (or Executive Labor Arbiter as in
this case) in a petition for certiorari under Rule 65 does not normally include an inquiry into the
correctness of its evaluation of the evidence. Errors of judgment, as distinguished from errors of
jurisdiction, are not within the province of a special civil action for certiorari, which is merely
confined to issues of jurisdiction or grave abuse of discretion. It is thus incumbent upon petitioner
to satisfactorily establish that respondent Commission or executive labor arbiter acted
capriciously and whimsically in total disregard of evidence material to or even decisive of the
controversy, in order that the extraordinary writ of certiorari will lie. By grave abuse of discretion
is meant such capricious and whimsical exercise of judgment as is equivalent to lack of
jurisdiction, and it must be shown that the discretion was exercised arbitrarily or despotically. For
certiorari to lie, there must be capricious, arbitrary and whimsical exercise of power, the very
antithesis of the judicial prerogative in accordance with centuries of both civil law and common
law traditions.
The Court of Appeals, therefore, can grant the Petition for Certiorari if it finds that the NLRC, in
its assailed decision or resolution, committed grave abuse of discretion by capriciously,
whimsically, or arbitrarily disregarding evidence which is material or decisive of the controversy;
and the Court of Appeals cannot make this determination without looking into the evidence
presented by the parties. Necessarily, the appellate court can only evaluate the materiality or
significance of the evidence, which is alleged to have been capriciously, whimsically, or arbitrarily
disregarded by the NLRC, in relation to all other evidence on record.
As this Court elucidated in Garcia v. National Labor Relations Commission: In Ong v. People, we
ruled that certiorari can be properly resorted to where the factual findings complained of are not
supported by the evidence on record. Earlier, in Gutib v. Court of Appeals, we emphasized thus:
It has been said that a wide breadth of discretion is granted a court of justice in certiorari
proceedings. The cases in which certiorari will issue cannot be defined, because to do so would be
to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that
authority is not wanting to show that certiorari is more discretionary than either prohibition or
mandamus. In the exercise of our superintending control over inferior courts, we are to be guided
by all the circumstances of each particular case "as the ends of justice may require." So it is that
the writ will be granted where necessary to prevent a substantial wrong or to do substantial
justice.
And in another case of recent vintage, we further held: In the review of an NLRC decision through
a special civil action for certiorari, resolution is confined only to issues of jurisdiction and grave
abuse of discretion on the part of the labor tribunal. Hence, the Court refrains from reviewing
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factual assessments
of lower courts and agencies exercising adjudicative functions, such as the
402
NLRC. Occasionally, however, the Court is constrained to delve into factual matters where, as in
the instant case, the findings of the NLRC contradict those of the Labor Arbiter.
Labor Standards
In this instance, the Court in the exercise of its equity jurisdiction may look into the records of
the case and re-examine the questioned findings. As a corollary, this Court is clothed with ample
authority to review matters, even if they are not assigned as errors in their appeal, if it finds that
their consideration is necessary to arrive at a just decision of the case. The same principles are
now necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction
over labor cases elevated through a petition for certiorari; thus, we see no error on its part when
it made anew a factual determination of the matters and on that basis reversed the ruling of the
NLRC.
Intercontinental Broadcasting Corp., vs Panganiban (2007) G.R. 151407

Facts:
Ireneo Panganiban was employed as Assistant General Manager of the Intercontinental
Broadcasting Corporation (petitioner) from May 1986 until his preventive suspension on August 26,
1988. Respondent resigned from his employment on September 2, 1988. On April 12, 1989,
respondent filed with the Regional Trial Court of Quezon City, Branch 93, Civil Case No. Q-89-2244
against the members of the Board of Administrators (BOA) of petitioner alleging, among others,
non-payment of his unpaid commissions.
A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of lack of
jurisdiction, as respondent's claim was a labor money claim, but this was denied by the RTC per
Orders dated October 19, 1990 and November 23, 1990. Thus, Santiago filed a petition for
certiorari with the CA, docketed as CA-G.R. SP No. 23821, and in a Decision dated October 29,
1991, the CA granted Santiago's petition for lack of jurisdiction and set aside the RTC's Orders
dated October 19, 1990 and November 23, 1990.
Express acknowledgment of debt by petitioners in a letter sent by Pio S. Kaimo, Jr., Audit Group
Head addressed to IBC Gen. Manager Ceferino M. Basilio (Annex A of Motion for Reconsideration) January 21, 1993.Thereafter, respondent was elected by the BOA as Vice-President for Marketing
in July 1992. He resigned in April 1993. On July 24, 1996, respondent filed against petitioner a
complaint for illegal dismissal, separation pay, retirement benefits, unpaid commissions, and
damages. From date of dismissal of CA-G.R. SP No. 23821 up to the date of express
acknowledgment of debt, only a period of 1 year and 3 months has passed by.
The CA ruled that respondent's money claim had not yet prescribed, as it was interrupted in two
instances:
No. Q-89-2244 by respondent
175 first,
M a . by
C the
e c efiling
l i a of
T i Civil
m b aCase
l
L l B 2 with the RTC; and second,
Rm
4
0
2
by the express acknowledgment of the debt by petitioners.
Issue: WON respondent's claim for unpaid commissions in the amount has already prescribed.
Labor Standards
Held: Respondent's claim had already prescribed as of September 1991.

The applicable law in this case is Article 291 of the Labor Code which provides that "all money
claims arising from employer-employee relations accruing during the effectivity of this Code shall
be filed within three (3) years from the time the cause of action accrued; otherwise they shall be
forever barred." The term "money claims" covers all money claims arising from an employeremployee relation.
Like other causes of action, the prescriptive period for money claims is subject to interruption,
and in the absence of an equivalent Labor Code provision for determining whether the said period
may be interrupted, Article 1155 of the Civil Code may be applied, to wit: ART. 1155. The
prescription of actions is interrupted when they are filed before the Court, when there is a
written extrajudicial demand by the creditors, and when there is any written acknowledgment of
the debt by the debtor.
Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written
extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the
debtor. On this point, the Court ruled that although the commencement of a civil action stops the
running of the statute of prescription or limitations, its dismissal or voluntary abandonment by
plaintiff leaves the parties in exactly the same position as though no action had been commenced
at all.
Hence, while the filing of Civil Case No. Q-89-2244 could have interrupted the running of the
three-year prescriptive period, its consequent dismissal by the CA in CA-G.R. SP No. 23821 due to
lack of jurisdiction effectively canceled the tolling of the prescriptive period within which to file
his money claim, leaving respondent in exactly the same position as though no civil case had been
filed at all. The running of the three-year prescriptive period not having been interrupted by the
filing of Civil Case No. Q-89-2244, respondent's cause of action had already prescribed on
September 2, 1991, three years after his cessation of employment on September 2, 1988.
Consequently, when respondent filed his complaint for illegal dismissal, separation pay, retirement
benefits, and damages in July 24, 1996, his claim, clearly, had already been barred by
prescription.
176
Ma. Cecelia Timbal

402
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Labor Standards
Far East Agricultural Supply vs Lebatigue (2007) G.R. 162813

Facts:
Far East hired on March 1996 private respondent Jimmy Lebatique as truck driver with a daily
wage of P223.50. He delivered animal feeds to the company's clients. On January 26, 2000,
Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public
Assistance and Complaints Unit concerning the nonpayment of his overtime pay.
On January 2000, Alexander asked him why he was claiming overtime pay. Lebatique explained
that he had never been paid for overtime work since he started working for the company. He also
told Alexander that Manuel had fired him. After talking to Manuel, Alexander terminated
Lebatique and told him to look for another job.
On March 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay.
The Labor Arbiter found that Lebatique was illegally dismissed, and ordered his reinstatement and
the payment of his full back wages, 13th month pay, service incentive leave pay, and overtime
pay.
Issue: WON respondent is entltled to all money claims prayed for covering since he worked with
the petitioner.
Held: He can only demand for the overtime pay withheld for the period within three years
preceding the filing of the complaint on March 20, 2000.
The case is hereby REMANDED to the Labor Arbiter for further proceedings to determine the exact
amount of overtime pay and other monetary benefits due Jimmy Lebatique which herein
petitioners should pay without further delay.
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Ma. Cecelia Timbal

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2
Note that all money claims arising from an employer-employee relationship shall be filed within
three years from the time the cause of action accrued; otherwise, they shall be forever barred.
Labor Standards
Further, if it is established that the benefits being claimed have been withheld from the employee
for a period longer than three years, the amount pertaining to the period beyond the three-year
prescriptive period is therefore barred by prescription. The amount that can only be demanded
by the aggrieved employee shall be limited to the amount of the benefits withheld within three
years before the filing of the complaint.
Lebatique timely filed his claim for service incentive leave pay, considering that in this situation,
the prescriptive period commences at the time he was terminated. On the other hand, his claim
regarding nonpayment of overtime pay since he was hired in March 1996 is a different matter. In
the case of overtime pay, he can only demand for the overtime pay withheld for the period within
three years preceding the filing of the complaint on March 20, 2000. However, we find insufficient
the selected time records presented by petitioners to compute properly his overtime pay. The
Labor Arbiter should have required petitioners to present the daily time records, payroll, or other
documents in management's control to determine the correct overtime pay due Lebatique.
Letran Calamba Faculty & Employees Association vs NLRC (2008) G.R. 156225
Facts:
Three cases were consolidated involving petitioner Letran Calamba Faculty and Employees
Association and Colegio de San Juan de Letran, Calamba, for money claims and a petition to
declare the subject strike illegal filed by respondent.
On July 28, 1999, the NLRC promulgated its Decision dismissing both appeals. Petitioner filed a
Motion for Reconsideration but the same was denied by the NLRC in its Resolution dated June 21,
2000.Petitioner then filed a special civil action for certiorari with the CA assailing the abovementioned NLRC Decision and Resolution.
On May 14, 2002, the CA rendered the presently assailed judgment dismissing the petition.
Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution promulgated on
November 28, 2002. Citing Agustilo v. Court of Appeals, petitioner contends that in a special civil
action for certiorari brought before the CA, the appellate court can review the factual findings
and the legal conclusions of the NLRC.
Petitioner avers that the CA, in concluding that the NLRC Decision was supported by substantial
evidence, failed to specify what constituted said evidence. Thus, petitioner asserts that the CA
acted arbitrarily in affirming the Decision of the NLRC.
Issue: WON the Court of Appeals erred in holding that the factual findings of the NLRC cannot be
reviewed in certiorari proceedings.
Held: Court finds no error in the ruling of the CA that since nowhere in the petition is there any
acceptable
demonstration
or
178 M
a . C e c e l i athat
T i the
m b LA
a l or the NLRC acted either
L l Bwith
2grave abuse of discretion
Rm
without or 4in0 2excess of its jurisdiction, the appellate court has no reason to look into the
correctness of the evaluation of evidence which supports the labor tribunals' findings of fact.
Labor Standards
Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding
on the Supreme Court, unless patently erroneous. It is not the function of the Supreme Court to
analyze or weigh all over again the evidence already considered in the proceedings below. In a
petition for review on certiorari, this Courts jurisdiction is limited to reviewing errors of law in
the absence of any showing that the factual findings complained of are devoid of support in the
records or are glaringly erroneous. Firm is the doctrine that this Court is not a trier of facts, and
this applies with greater force in labor cases. Findings of fact of administrative agencies and
quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to
specific matters, are generally accorded not only great respect but even finality. They are binding
upon this Court unless there is a showing of grave abuse of discretion or where it is clearly shown
that they were arrived at arbitrarily or in utter disregard of the evidence on record. We find none
of these exceptions in the present case.
In petitions for review on certiorari like the instant case, the Court invariably sustains the
unanimous factual findings of the LA, the NLRC and the CA, specially when such findings are
supported by substantial evidence and there is no cogent basis to reverse the same, as in this
case.
Metro Transit Organization vs Piglas NFWU-KMU et al., (2008) G.R. 175460

Facts:
Petitioner MTO is a government owned and controlled corporation which entered into a
Management and Operations Agreement (MOA) with the Light Rail Transit Authority (LRTA) for the
operation of the Light Rail Transit (LRT) Baclaran-Monumento Line. Petitioner Jose L. Cortez, Jr.
was sued in his official capacity as then Undersecretary of the Department of Transportation and
Communications and Chairman of the Board of Directors of petitioner MTO.
Respondents filed with the Labor Arbiter Complaints against petitioners and the LRTA for the
following: (1) illegal dismissal; (2) unfair labor practice for union busting; (3) moral and exemplary
damages; and (4) attorney's fees.
On 13 September 2004, the Labor Arbiter rendered judgment in favor of respondents. Petitioners
appealed to the National Labor Relations Commission (NLRC). In a Resolution dated 19 May 2006,
the NLRC dismissed petitioners' appeal for non-perfection since it failed to post the required bond.
Without filing a Motion for Reconsideration of the afore-quoted NLRC Resolution, petitioners filed
a Petition for Certiorari with the Court of Appeals assailing the same. On 24 August 2006, the
Court of Appeals issued a Resolution dismissing the Petition.
Issue: WON petitioner can directly file the extraordinary remedy of certiorari without filing first a
motion for reconsideration with the NLRC.
Held: Petitioners' failure to file a motion for reconsideration against the assailed Resolution of the
NLRC rendered its petition for certiorari before the appellate court as fatally defective.
179
Ma. Cecelia Timbal

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Labor Standards
It must be primarily established that petitioners contravened the procedural rule for the
extraordinary remedy of certiorari. The rule is, for the writ to issue, it must be shown that there
is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law.
The settled rule is that a motion for reconsideration is a condition sine qua non for the filing of a
petition for certiorari. Its purpose is to grant an opportunity for the court to correct any actual or
perceived error attributed to it by the re-examination of the legal and factual circumstances of
the case. The rationale of the rule rests upon the presumption that the court or administrative
body which issued the assailed order or resolution may amend the same, if given the chance to
correct its mistake or error.
We have held that the "plain," "speedy," and "adequate remedy" referred to in Section 1, Rule 65 of
the Rules of Court is a motion for reconsideration of the questioned Order or Resolution. As we
consistently held in numerous cases, a motion for reconsideration is indispensable for it affords
the NLRC an opportunity to rectify errors or mistakes it might have committed before resort to
the courts can be had.
In the case at bar, petitioners directly went to the Court of Appeals on certiorari without filing a
motion for reconsideration with the NLRC. The motion for reconsideration would have aptly
furnished a plain, speedy, and adequate remedy. As a rule, the Court of Appeals, in the exercise
of its original jurisdiction, will not take cognizance of a petition for certiorari under Rule 65,
unless the lower court has been given the opportunity to correct the error imputed to it. The
Court of Appeals correctly ruled that petitioners' failure to file a motion for reconsideration
against the assailed Resolution of the NLRC rendered its petition for certiorari before the
appellate court as fatally defective.
We agree in the Court of Appeals' finding that petitioners' case does not fall under any of the
recognized exceptions to the filing of a motion for reconsideration, to wit: (1) when the issue
raised is purely of law; (2) when public interest is involved; (3) in case of urgency; or when the
questions raised are the same as those that have already been squarely argued and exhaustively
passed upon by the lower court. As the Court of Appeals reasoned, the issue before the NLRC is
both factual and legal at the same time, involving as it does the requirements of the property
bond for the perfection of the appeal, as well as the finding that petitioners failed to perfect the
same. Evidently, the burden is on petitioners seeking exception to the rule to show sufficient
justification for dispensing with the requirement.
Certiorari cannot be resorted to as a shield from the adverse consequences of petitioners' own
omission of the filing of the required motion for reconsideration.
Nonetheless, even if we are to disregard the petitioners' procedural faux pas with the Court of
Appeals, and proceed to review the propriety of the 19 May 2006 NLRC Resolution, we still arrive
at the conclusion that the NLRC did not err in denying petitioners' appeal for its failure to file a
bond in accordance with the Rules of Procedure of the NLRC.
180
Ma. Cecelia Timbal

402
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Ma. Cecelia Timbal

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