Davao Fruits Corporation vs Associated Labor Unions, G.R. No.

85073, August 24, 1993; 225

SCRA 562
ponente:
(Labor Standards Fringe benefits not included in 13th month pay)
Facts: Respondent ALU for and in behalf of all the rank-and-file workers and employees of
petitioner sought to recover from the latter the 13th month pay differential for 1982 of said
employees, equivalent to their sick, vacation and maternity leaves, premium for work done on
rest days and special holidays, and pay for regular holidays which petitioner, allegedly in
disregard of company practice since 1975, excluded from the computation of the 13th month pay
for 1982.
Issue: WON in the computation of the 13th month pay under PD No. 851, payments for sick,
vacation and maternity leaves, premiums for work done on rest days and special holidays, and
pay for regular holidays may be excluded in the computation and payment thereof.
Held: Yes. Basic salary does not merely exclude the benefits expressly mentioned but all
payments which may be in the form of fringe benefits or allowances.
Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851 provides that
overtime pay, earnings and other remunerations which are not part of the basic salary shall not
be included in the computation of the 13th month pay.
Whatever compensation an employee receives for an 8 hour work daily or the daily wage rate is
the basic salary. Any compensation or remuneration other than the daily wage rate is excluded. It
follows therefore, that payments for sick, vacation and maternity leaves, premiums for work
done on rest days and special holidays, as well as pay for regular holidays, are likewise excluded
in computing the basic salary for the purpose of determining the 13th month pay.
PONENTE NG DAVAO: QUIASON

SAN MIGUEL CORPORATION v. PROSPERO ABALLA

G.R. No. 149011 June 28, 2005
Ponente: CARPIO-MORALES, J.:
FACTS: Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative
(Sunflower) entered into a one-year Contract of Service and such contract is renewed on a
monthly basis until terminated. Pursuant to this, respondent Prospero Aballa rendered services to
SMC.
After one year of service, Aballa filed a complaint before NLRC praying that they be declared as
regular employees of SMC. On the other hand, SMC filed before the DOLE a Notice of Closure
due to serious business losses. Hence, the labor arbiter dismissed the complaint and ruled in
favor of SMC. Aballa then appealed before the NLRC. The NLRC dismissed the appeal finding
that Sunflower is an independent contractor.
On appeal, the Court of Appeals reversed NLRCs decision on the ground that the agreement
between SMC and Sunflower showed a clear intent to abstain from establishing an employeremployee relationship.

ISSUE: Whether or not Aballa and other employees of Sunflower are employees of SMC?
HELD: The test to determine the existence of independent contractorship is whether one
claiming to be an independent contractor has contracted to do the work according to his own
methods and without being subject to the control of the employer, except only as to the results of
the work. In legitimate labor contracting, the law creates an employer-employee relationship for
a limited purpose, to ensure that the employees are paid their wages. The principal employer
becomes jointly and severally liable with the job contractor, only for the payment of the
employees wages whenever the contractor fails to pay the same. Other than that, the principal
employer is not responsible for any claim made by the employees. In labor-only contracting, the
statute creates an employer-employee relationship for a comprehensive purpose: to prevent a
circumvention of labor laws. The contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer.
The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed
the existence of an employer-employee relationship between SMC and private respondents. The
language of a contract is not, however, determinative of the parties relationship; rather it is the
totality of the facts and surrounding circumstances of the case. A party cannot dictate, by the
mere expedient of a unilateral declaration in a contract, the character of its business, whether as
labor-only contractor or job contractor, it being crucial that its character be measured in terms of
and determined by the criteria set by statute. What appears is that Sunflower does not have
substantial capitalization or investment in the form of tools, equipment, machineries, work
premises and other materials to qualify it as an independent contractor. On the other hand, it is
gathered that the lot, building, machineries and all other working tools utilized by Aballa et al. in
carrying out their tasks were owned and provided by SMC.
And from the job description provided by SMC itself, the work assigned to Aballa et al. was
directly related to the aquaculture operations of SMC. As for janitorial and messengerial
services, that they are considered directly related to the principal business of the employer has
been jurisprudentially recognized. Furthermore, Sunflower did not carry on an independent
business or undertake the performance of its service contract according to its own manner and
method, free from the control and supervision of its principal, SMC, its apparent role having
been merely to recruit persons to work for SMC.
All the foregoing considerations affirm by more than substantial evidence the existence of an
employer- employee relationship between SMC and Aballa. Since Aballa who were engaged in
shrimp processing performed tasks usually necessary or desirable in the aquaculture business of
SMC, they should be deemed regular employees of the latter and as such are entitled to all the
benefits and rights appurtenant to regular employment. They should thus be awarded differential
pay corresponding to the difference between the wages and benefits given them and those
accorded SMCs other regular employees.

ATOK-BIG WEDGE MINING CO., INC., vs. ATOK-BIG WEDGE MUTUAL BENEFIT
ASSOCIATION,
G.R. No. L-5276 March 3, 1953
FACTS:
Demand was submitted to petitioner by respondent union through its officers for various
concession, among which were (a) an increase of P0.50 in wages, (b) commutation of sick and
vacation leave if not enjoyed during the year, (c) various privileges, such as free medical care,
medicine, and hospitalization, (d) right to a closed shop, check off, etc., (e) no dismissal without
prior just cause and with a prior investigation, etc. Some of the demands, were granted by the
petitioner, and the other were rejected, and so hearings were held and evidence submitted on the
latter. After the hearing the respondent court rendered a decision, the most important provisions
of which were those fixing the minimum wage for the laborers at P3.20, declaring that additional
compensation representing efficiency bonus should not be included as part of the wage, and
making the award effective from September 4, 1950. It is against these portion of the decision
that this appeal is taken.
On the issue of the wage, it is contended by petitioner that as the respondent court found that the
laborer and his family at least need the amount of P2.58 for food, this should be the basis for the
determination of his wage, not what he actually spends; that it is not justifiable to fix a wage
higher than that provided by Republic Act No. 602; and that respondent union made the demand
in accordance with a pernicious practice of claiming more after an original demand is granted.
The respondent court found that P2.58 is the minimum amount actually needed by the laborer
and his family
ISSUE:
What will be the basis to determine the minimum wage.
RULING:
A person's needs increase as his means increase. This is true not only as to food but as to
everything else education, clothing, entertainment, etc. The law guarantees the laborer a fair
and just wage. The minimum must be fair and just. The "minimum wage" can by no means
imply only the actual minimum. Some margin or leeway must be provided, over and above the
minimum, to take care of contingencies such as increase of prices of commodities and desirable
improvement in his mode of living.

DOLE Phils. vs. Esteva, G.R. No. 161115, November 30, 2006
FACTS:
Petitioner is a corporation duly recognized and existing in accordance with Philippine laws,
engaged principally in the production and processing of pineapple for the export market. Its
plantation is located in Polomolok, South Cotabato .
Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO
was organized in accordance with R.A. No. 6938, otherwise known as the Cooperative Code of
the Philippines , and duly registered with the Cooperative Development Authority (CDA) on 6
January 1993. Members of CAMPCO live in communities surrounding petitioners plantation
and are relatives of petitioners employees.
On 17 August 1993, petitioner and CAMPCO entered into a Service Contract. The Service
Contract referred to petitioner as the Company, while CAMPCO was the Contractor. The
said contract was good for six months.
Pursuant to the contract, CAMPCO members rendered services to petitioner. The parties
apparently extended or renewed the same for the succeeding years without executing another
written contract.
However, due to investigations and reliable information, the Regional Director of DOLE
exercised his visitorial and enforcement power and found out that CAMPCO is engaged in laboronly contracting together with two other cooperatives.
The Law cited was Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor
Code. (pertaining to Labor-only contracting 1. no substantial capital; 2. work is directly
related to the principal business of the principal b. in such case, the one who alleges as contractor
is deemed an agent of the principal while the latter will latter is considered the indirect employer
for purposes of enforcement of the labor rights.)
Before the NLRC, respondents contended that they have been working more than one year too
petitioner. While some of the respondents were still working for petitioner, others were put on
stay home status on varying dates in the years 1994, 1995, and 1996 and were no longer
furnished with work thereafter. They, then, filed a case before the NLRC for illegal dismissal,
regularization, wage differentials, damages and attorneys fees.
Respondents argued that they should be considered regular employees of petitioner given that: 1.
they were performing jobs that were usually necessary and desirable in the usual business of
petitioner; 2. petitioner exercised control over respondents, not only as to the results, but also as
to the manner by which they performed their assigned tasks; and 3. CAMPCO, a labor-only
contractor, was merely a conduit of petitioner. As regular employees of petitioner, respondents
asserted that they were entitled to security of tenure and those placed on stay home status for
more than six months had been constructively and illegally dismissed. Respondents further
claimed entitlement to wage differential, moral damages, and attorneys fees.

NLRC affirmed the Labor Arbiters decision. CA also affirmed.

ISSUES: Whether the lower courts were correct in ruling that Petitioner is the employer of
respondents and that CAMPCO be considered merely as agent of the company
HELD:
In summary, this Court finds that CAMPCO was a labor-only contractor and, thus, petitioner is
the real employer of the respondents, with CAMPCO acting only as the agent or intermediary of
petitioner. Due to the nature of their work and length of their service, respondents should be
considered as regular employees of petitioner. Petitioner constructively dismissed a number of
the respondents by placing them on "stay home status" for over six months, and was therefore
guilty of illegal dismissal. Petitioner must accord respondents the status of regular employees,
and reinstate the respondents who it constructively and illegally dismissed, to their previous
positions, without loss of seniority rights and other benefits, and pay these respondents
backwages from the date of filing of the Complaint with the NLRC on 19 December 1996 up to
actual reinstatement.
CRITERIA TO ESTABLISH THE EXISTENCE OF AN INDEPENDENT AND
PERMISSIBLE CONTRACTOR RELATIONSHIP
generally established by the following criteria: whether or not the contractor is carrying on an
independent business; the nature and extent of the work; the skill required; the term and duration
of the relationship; the right to assign the performance of a specified piece of work; the control
and supervision of the work to another; the employer's power with respect to the hiring, firing
and payment of the contractor's workers; the control of the premises; the duty to supply the
premises tools, appliances, materials and labor; and the mode, manner and terms of payment
SEVERAL FACTORS ARE PRESENT IN THE CASE TO ESTABLISH A LABOR- ONLY
CONTRACTING ARRANGEMENT BY BETWEEN THE MANAGEMENT AND CAMPCO
While there is present in the relationship of petitioner and CAMPCO some factors suggestive of
an independent contractor relationship (i.e., CAMPCO chose who among its members should be
sent to work for petitioner; petitioner paid CAMPCO the wages of the members, plus a
percentage thereof as administrative charge; CAMPCO paid the wages of the members who
rendered service to petitioner), many other factors are present which would indicate a labor-only
contracting arrangement between petitioner and CAMPCO.
First, although petitioner touts the multi-million pesos assets of CAMPCO, it does well to
remember that such were amassed in the years following its establishment. In 1993, when
CAMPCO was established and the Service Contract between petitioner and CAMPCO was
entered into, CAMPCO only had P6,600.00 paid-up capital, which could hardly be considered
substantial. It only managed to increase its capitalization and assets in the succeeding years by
continually and defiantly engaging in what had been declared by authorized DOLE officials as
labor-only contracting.

Second, CAMPCO did not carry out an independent business from petitioner. It was precisely
established to render services to petitioner to augment its workforce during peak seasons.
Petitioner was its only client. Even as CAMPCO had its own office and office equipment, these
were mainly used for administrative purposes; the tools, machineries, and equipment actually
used by CAMPCO members when rendering services to the petitioner belonged to the latter.
Third, petitioner exercised control over the CAMPCO members, including respondents.
Petitioner attempts to refute control by alleging the presence of a CAMPCO supervisor in the
work premises. Yet, the mere presence within the premises of a supervisor from the cooperative
did not necessarily mean that CAMPCO had control over its members. Section 8(1), Rule VIII,
Book III of the implementing rules of the Labor Code, as amended, required for permissible job
contracting that the contractor undertakes the contract work on his account, under his own
responsibility, according to his own manner and method, free from the control and direction of
his employer or principal in all matters connected with the performance of the work except as to
the results thereof. As alleged by the respondents, and unrebutted by petitioner, CAMPCO
members, before working for the petitioner, had to undergo instructions and pass the training
provided by petitioners personnel. It was petitioner who determined and prepared the work
assignments of the CAMPCO members. CAMPCO members worked within petitioners
plantation and processing plants alongside regular employees performing identical jobs, a
circumstance recognized as an indicium of a labor-only contractorship.
Fourth, CAMPCO was not engaged to perform a specific and special job or service. In the
Service Contract of 1993, CAMPCO agreed to assist petitioner in its daily operations, and
perform odd jobs as may be assigned. CAMPCO complied with this venture by assigning
members to petitioner. Apart from that, no other particular job, work or service was required
from CAMPCO, and it is apparent, with such an arrangement, that CAMPCO merely acted as a
recruitment agency for petitioner. Since the undertaking of CAMPCO did not involve the
performance of a specific job, but rather the supply of manpower only, CAMPCO clearly
conducted itself as a labor-only contractor.
Lastly, CAMPCO members, including respondents, performed activities directly related to the
principal business of petitioner. They worked as can processing attendant, feeder of canned
pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing
attendant, and etc., functions which were, not only directly related, but were very vital to
petitioners business of production and processing of pineapple products for export.
The findings enumerated in the preceding paragraphs only support what DOLE Regional
Director Parel and DOLE Undersecretary Trajano had long before conclusively established, that
CAMPCO was a mere labor-only contractor

EMPLOYER- EMPLOYEE RELATIONSHIP EXIST BETWEEN THE PETITIONER AND

THE RESPONDENT WITH THE DECLARATION THAT CAMPCO WAS ENGAGED IN
THE PROHIBITED ACTS OF LABOR-ONLY CONTRACTING

The declaration that CAMPCO is indeed engaged in the prohibited activities of labor-only
contracting, then consequently, an employer-employee relationship is deemed to exist between
petitioner and respondents, since CAMPCO shall be considered as a mere agent or intermediary
of petitioner
RESPONDENTS ARE CONSIDERED REGULAR EMPLOYEES FOR THEY PERFORMED
ACTIVITIES THAT ARE NECESSARY OR DESIRABLE TO THE USUAL BUSINESS OF
THE PETITIONER
Since respondents are now recognized as employees of petitioner, this Court is tasked to
determine the nature of their employment. In consideration of all the attendant circumstances in
this case, this Court concludes that respondents are regular employees of petitioner.
In the instant Petition, petitioner is engaged in the manufacture and production of pineapple
products for export. Respondents rendered services as processing attendant, feeder of canned
pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing
attendant, and etc., functions they performed alongside regular employees of the petitioner.
There is no doubt that the activities performed by respondents are necessary or desirable to the
usual business of petitioner.
Petitioner likewise want this Court to believe that respondents employment was dependent on
the peaks in operation, work backlogs, absenteeism, and excessive leaves. However, bearing in
mind that respondents all claimed to have worked for petitioner for over a year, a claim which
petitioner failed to rebut, then respondents continued employment clearly demonstrates the
continuing necessity and indispensability of respondents employment to the business of
petitioner.
THE COMPANYS ACT OF PLACING SOME OF THE RESPONDENTS ON "STAY HOME
STATUS" AND NOT GIVING THEM WORK ASSIGNMENTS FOR MORE THAN SIX
MONTHS WERE ALREADY TANTAMOUNT TO CONSTRUCTIVE AND ILLEGAL
DISMISSAL
Respondents, as regular employees of petitioner, are entitled to security of tenure. They could
only be removed based on just and authorized causes as provided for in the Labor Code, as
amended, and after they are accorded procedural due process. Therefore, petitioners acts of
placing some of the respondents on "stay home status" and not giving them work assignments for
more than six months were already tantamount to constructive and illegal dismissal

VIRGINIA G. NERI and JOSE CABELIN, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION FAR EAST BANK & TRUST COMPANY
(FEBTC) and BUILDING CARE CORPORATION, respondents
GR nos. 97008-09
FACTS:
Building Care Corporation (BCC, for brevity), in the proceedings below, established that it had
substantial capitalization of P1 Million or a stockholders equity of P1.5 Million. Thus the Labor
Arbiter ruled that BCC was only job contracting and that consequently its employees were not
employees of Far East Bank and Trust Company (FEBTC, for brevity). on appeal, this factual
finding was affirmed by respondent National Labor Relations Commission (NLRC, for brevity).
Nevertheless, petitioners insist before us that BCC is engaged in "labor-only" contracting hence,
they conclude, they are employees of respondent FEBTC.
Petitioners Virginia G. Neri and Jose Cabelin applied for positions with, and were hired by,
respondent BCC, a corporation engaged in providing technical, maintenance, engineering,
housekeeping, security and other specific services to its clientele. They were assigned to work in
the Cagayan de Oro City Branch of respondent FEBTC on 1 May 1979 and 1 August 1980,
respectively, Neri an radio/telex operator and Cabelin as janitor, before being promoted to
messenger on 1 April 1989.
On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional
Arbitration Branch No. 10 of the Department of Labor and Employment to compel the bank to
accept them as regular employees and for it to pay the differential between the wages being paid
them by BCC and those received by FEBTC employees with similar length of service.
On 16 November 1989, the Labor Arbiter dismissed the complaint for lack of merit. Respondent
BCC was considered an independent contractor because it proved it had substantial capital. Thus,
petitioners were held to be regular employees of BCC, not FEBTC. The dismissal was appealed
to NLRC which on 28 September 1990 affirmed the decision on appeal. On 22 October 1990,
NLRC denied reconsideration of its affirmance, prompting petitioners to seek redress from this
Court.
Petitioners vehemently contend that BCC in engaged in "labor-only" contracting because it failed
to adduce evidence purporting to show that it invested in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the conduct of its
business. Moreover, petitioners argue that they perform duties which are directly related to the
principal business or operation of FEBTC. If the definition of "labor-only" contracting is to be
read in conjunction with job contracting, then the only logical conclusion is that BCC is a "labor
only" contractor. Consequently, they must be deemed employees of respondent bank by
operation of law since BCC is merely an agent of FEBTC following the doctrine laid down in
Philippine Bank of Communications v. National Labor Relations Commission where we ruled
that where "labor-only" contracting exists, the Labor Code itself establishes an employeremployee relationship between the employer and the employees of the "labor-only" contractor;
hence, FEBTC should be considered the employer of petitioners who are deemed its employees
through its agent, "labor-only" contractor BCC.
ISSUE:
Whether or not FEBTC should be considered the employer of petitioners who are deemed its
employees through its agent, labor-only BCC.
HELD:

Article 106 of the Labor Code defines "labor-only" contracting thus

Art. 106. Contractor or subcontractor. . . . . There is "labor-only" contracting where the person
supplying workers to an employer does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others, and the workers recruited by such
persons are performing activities which are directly related to the principal business of such
employer . . . . (emphasis supplied).
Based on the foregoing, BCC cannot be considered a "labor-only" contractor because it has
substantial capital. While there may be no evidence that it has investment in the form of tools,
equipment, machineries, work premises, among others, it is enough that it has substantial capital,
as was established before the Labor Arbiter as well as the NLRC.
Even assuming ex argumenti that petitioners were performing activities directly related to the
principal business of the bank, under the "right of control" test they must still be considered
employees of BCC. In the case of petitioner Neri, it is admitted that FEBTC issued a job
description which detailed her functions as a radio/telex operator. However, a cursory reading of
the job description shows that what was sought to be controlled by FEBTC was actually the endresult of the task, e.g., that the daily incoming and outgoing telegraphic transfer of funds
received and relayed by her, respectively, tallies with that of the register. The guidelines were
laid down merely to ensure that the desired end-result was achieved. It did not, however, tell
Neri how the radio/telex machine should be operated.
Besides, petitioners do not deny that they were selected and hired by BCC before being assigned
to work in the Cagayan de Oro Branch of FFBTC. BCC likewise acknowledges that petitioners
are its employees. The record is replete with evidence disclosing that BCC maintained
supervision and control over petitioners through its Housekeeping and Special Services Division:
petitioners reported for work wearing the prescribed uniform of BCC; leaves
of absence were filed directly with BCC; and, salaries were drawn only from BCC.
The determination of employer-employee relationship involves factual findings. Absent any
grave abuse of discretion, and we find none in the case before us, we are bound by the findings
of the Labor Arbiter as affirmed by respondent NLRC.

. FILIPINAS SYNTHETIC FIBER CORPORATION (FILSYN), petitioner, vs. NATIONAL

LABOR RELATIONS COMMISSION, LABOR ARBITER VOLTAIRE A. BALITAAN,
FELIPE LOTERTE and DE LIMA TRADING & GENERAL SERVICES, respondents. [G.R.
No. 113347. June 14, 1996
De Lima Trading was found to be engaged in an independent job contracting since it is a highly
capitalized venture and the janitorial services performed by Loterte although may be considered
directly related to the business of FILSYN is nevertheless necessary in its operation, without
which production and company sales will not suffer.
However, with respect to liability, notwithstanding the lack of a direct employer-employee
relationship between FILSYN and Felipe Loterte, the FILSYN is still jointly and severally liable

with respondent DE LIMA for Lotertes monetary claims under Art. 109 of the Labor Code
without prejudice to the right of FILSYN to seek reimbursement from DE LIMA for whatever
amount it will have to pay Loterte.

ERNESTO M. APODACA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS
PHILS., INC., respondents.
G.R. No. 80039 April 18, 1989
GANCAYCO, J.:
FACTS: Petitioner was employed in respondent corporation. He was persuaded by respondent
Mirasol to subscribe to 1,500 shares or for a total of P150,000.00. He paid P37,500.00. On
September 1, 1975, petitioner was appointed President and General Manager of the respondent
corporation. However, on January 2, 1986, he resigned. petitioner instituted with the NLRC a
complaint against private respondents for the payment of his unpaid wages, his cost of living
allowance, the balance of his gasoline and representation expenses and his bonus compensation
for 1986. Private respondents admitted that there is due to petitioner the amount of P17,060.07
but this was applied to the unpaid balance of his subscription in the amount of P95,439.93.
Petitioner questioned the set-off alleging that there was no call or notice for the payment of the
unpaid subscription and that, accordingly, the alleged obligation is not enforceable.
ISSUES: (1) Whether or not NLRC has jurisdiction to resolve a claim for non-payment of stock
subscriptions to a corporation. (2) If so, whether or not an obligation arising therefrom be offset
against a money claim of an employee against the employer.
RULING: (1) NLRC has no jurisdiction to determine such intra-corporate dispute between the
stockholder and the corporation as in the matter of unpaid subscriptions. This controversy is
within the exclusive jurisdiction of the Securities and Exchange Commission.
(2) No. the unpaid subscriptions are not due and payable until a call is made by the corporation
for payment. Private respondents have not presented a resolution of the board of directors of
respondent corporation calling for the payment of the unpaid subscriptions. It does not even
appear that a notice of such call has been sent to petitioner by the respondent corporation. As
there was no notice or call for the payment of unpaid subscriptions, the same is not yet due and
payable.
Even if there was a call for payment, the NLRC cannot validly set it off against the wages and
other benefits due petitioner. Article 113 of the Labor Code allows such a deduction from the
wages of the employees by the employer, only in three instances.

Aklan Electric Cooperative Incorporated (AKELCO) v. NLRC [G.R. 121439, January 25, 2000]
PONENTE: GONZAGA-REYES
FACTS: On January 22, the Board of AKELCO allowed the temporarytransfer holding of office
at Kalibo, Aklan. Nevertheless, majority of the employees continued to work at Lezo Aklan and
were paid of their salaries. An unnumbered resolution was passed by AKELCO withdrawing
thetemporary designation of office at kalibo, Aklan and that daily operation be held again at the
main office of Lezo, Aklan. From June 1992 to March 1993, complainants who reported at Lezo
were not paid their salaries. From March up to the present, complainants were allowed to draw
their salaries, with the exception of a few who were not paid their salaries for April and May
1993. The respondents allege that the complainants voluntarily abandoned their work
assignments and that they defied the lawful orders by the General manager and thus the Board of
Directors passed aresolution resisting and denying the claims of these complainants under the
principle of no work, no pay. NLRC held that private respondents areentitled to unpaid wages
from June 1992 up to march 1993.
ISSUE: Whether or not private respondents are covered by the no work, no pay principle and
thus not entitled to the claim for unpaid wages from June 1992 to March 1993.

HELD: Yes. Petitioner was able to show that the private respondents did not render services
during the stated period. Also, private respondents in their position paper admitted that they did
not report at the Kalibo office, as Lezo remained to be their office where they continuously
reported. Their excuse that the transfer to Kalibo was illegal; however it was not for private
respondents to declare the managements act of transferring the AKELCO office to Kalibo as an
illegal act as there was no allegation of proof that such was made in bad faith or with malice. The
unnumbered resolution returning the office from Kalibo to Lezo was not a valid act of
petitioners legitimate board and was never implemented. Private respondents were dismissed by
petitioner effective January 1992 and were accepted back, subject to the condition of no work,
no pay effective March 1993 which is they were allowed to draw their salaries again. Since the
burden of evidence lies withthe party who asserts the affirmative allegation, the plaintiff or
complainant has to prove his allegations in the complaint.

CAGAYAN SUGAR MILLING COMPANY, petitioner

vs.
SECRETARY OF LABOR AND EMPLOYMENT, DIRECTOR RICARDO S. MARTINEZ,
SR., and CARSUMCO EMPLOYEES UNION, respondents.
G.R. No. 128399 January 15, 1998

PUNO, J.:
Facts:
On September 12 and 13, 1994, labor inspectors from the DOLE Regional Office examined the
books of petitioner to determine its compliance with the wage order. They found that petitioner
violated the wage order as it did not implement an across the board increase in the salary of its
employees.
At the hearing at the DOLE Regional Office for the alleged violation, petitioner maintained that
it complied with Wage Order No. RO2-02 as it paid the mandated increase in the minimum
wage.
In an Order dated December 16, 1994, public respondent Regional Director Ricardo S. Martinez,
Sr. ruled that petitioner violated Wage Order RO2-02 by failing to implement an across the board
increase in the salary of its employees. He ordered petitioner to pay the deficiency in the salary
of its employees in the total amount of P555,133.41.
On January 6, 1995, petitioner appealed to public respondent Labor Secretary Leonardo A.
Quisumbing. On the same date, the Regional Wage Board issued Wage Order No. RO2-02-A, 2
amending the earlier wage order,

On October 8, 1996, the Secretary of Labor dismissed petitioner's appeal and affirmed the Order
of Regional Director Martinez, Sr. Petitioner's motion for reconsideration was likewise denied. 3
On February 12, 1997, private respondent CARSUMCO EMPLOYEES UNION moved for
execution of the December 16, 1994 Order. Regional Director Martinet, Sr. granted the motion
and issued the writ of execution. On March 4, 1997, petitioner moved for reconsideration to set
aside the writ of execution. On March 5, the DOLE regional sheriff served on petitioner a notice
of garnishment of its account with the Far East Bank and Trust Company. On March 10, the
sheriff seized petitioner's dump truck and scheduled its public sale on March 20, 1997.
Hence, this petition, with a prayer for the issuance of a temporary restraining order (TRO).
On April 3, 1997, this Court issued a TRO enjoining respondents from enforcing the writ of
execution. 4 On July 16, upon petitioner's motion, we amended the TRO by also enjoining
respondents from enforcing the Decision of the Secretary of Labor and conducting further
proceedings until further orders from this Court. 5

In the case at bar, petitioner contends that:

Issue:
WAGE ORDER RO2-02 IS NULL AND VOID FOR HAVING BEEN ISSUED IN
VIOLATION OF THE PROCEDURE PROVIDED BY LAW AND IN VIOLATION OF
PETITIONER'S RIGHT TO DUE PROCESS OF LAW.
Art. 123. Wage Order. Whenever conditions in the region so warrant, the Regional Board
shall investigate and study all pertinent facts, and, based on the standards and criteria herein
prescribed, shall proceed to determine whether a Wage Order should be issued. Any such Wage
Order shall take effect after (15) days from its complete publication in at least one (1) newspaper
of general circulation in the region.

The record shows that there was no prior public consultation or hearings and newspaper
publication insofar as Wage Order No. RO2-02-A is concerned. In fact, these allegations were
not denied by public respondents in their Comment. Public respondents' position is that there was
no need to comply with the legal requirements of consultation and newspaper publication as
Wage order No. RO2-02-A merely clarified the ambiguous provision of the original wage order.

Public respondents insist that despite the wording of Wage Order RO2-02 providing for a
statutory increase in minimum wage, the real intention of the Regional Board was to provide for
an across the board increase. Hence, they urge that petitioner is liable for merely providing an
increase in the statutory minimum wage rates of its employees.
The contention is absurd. Petitioner clearly complied with Wage Order RO2-02 which provided
for an increase in statutory minimum wage rates for employees in Region II. It is not just to
expect petitioner to interpret Wage RO2-02 to mean that it granted an across the board increase
as such interpretation is not sustained by its text. Indeed, the Regional Wage Board had to amend
Wage Order RO2-02 to clarify this alleged intent.
In sum, we hold that RO2-02-A is invalid for lack of public consultations and hearings and nonpublication in a newspaper of general circulation, in violation of Article 123 of the Labor Code.
We likewise find that public respondent Secretary of Labor committed grave abuse of discretion
in upholding the findings of Regional Director Ricardo S. Martinez, Sr. that petitioner violated
Wage Order RO2-02.
Held:
the petition is GRANTED. The Decision of the Secretary of Labor, dated October 8, 1996, is set
aside for lack of merit.
SO ORDERED.

Metrobank Union vs NLRC

G.R. No. 102636
VITUG, J.
Facts:
Metrobank entered into a CBA with Petitioner, granting a P900 increase in wages. Subsequently,
a law was passed increasing the minimum wage. Metrobank classified employees into those
receiving less than 100 per day and those receiving more. Those receiving more were not
covered by the implementation of the new law but only the increase as agreed upon in the CBA.
Petitioners argue that the method of implementation created a wage distortion within the
employees of Metrobank because the differences in the salaries of the employee classifications
were substantially reduced.
Issue:
Whether or not there was wage distortion?
Held:
There was wage distortion.
Ratio Decidendi:
Wage Distortion means a situation where an increase in prescribed wage rates results in the
elimination or severe contradiction 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.

Maternity Childrens Hospital vs. Secretary of Labor

G.R. No. 78909 June 30, 1989
EN BANC: MEDIALDEA, J.:
Facts:
Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de
Oro Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as holdover
President. The hospital derives its finances from the club itself as well as from paying patients,
averaging 130 per month. It is also partly subsidized by the Philippine Charity Sweepstakes
Office and the Cagayan De Oro City government.
Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees
are given food, but the amount spent therefor is deducted from their respective salaries
On May 23, 1986, ten (10) employees of the petitioner employed in different capacities/positions
filed a complaint with the Office of the Regional Director of Labor and Employment, Region X,
for underpayment of their salaries and ECOLAS, which was docketed as ROX Case No. CW-7186.

On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare
Officers to inspect the records of the petitioner to ascertain the truth of the allegations in the
complaints. Based on their inspection report and recommendation, the Regional Director issued
an Order dated August 4, 1986, directing the payment of P723,888.58, representing
underpayment of wages and ECOLAs to all the petitioner's employees.
Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S.
Sanchez, who rendered a Decision on September 24, 1986, modifying the said Order in that
deficiency wages and ECOLAs should be computed only from May 23, 1983 to May 23, 1986,
On October 24, 1986, the petitioner filed a motion for reconsideration which was denied by the
Secretary of Labor in his Order dated May 13, 1987, for lack of merit.
Issue:
Whether or not the Regional Director had jurisdiction over the case and if so, the extent of
coverage of any award that should be forthcoming, arising from his visitorial and enforcement
powers under Article 128 of the Labor Code.
Held:
This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by
E.O. No. 111. Under the present rules, a Regional Director exercises both visitorial and
enforcement power over labor standards cases, and is therefore empowered to adjudicate money
claims, provided there still exists an employer-employee relationship, and the findings of the
regional office is not contested by the employer concerned.
Labor standards refer to the minimum requirements prescribed by existing laws, rules, and
regulations relating to wages, hours of work, cost of living allowance and other monetary and
welfare benefits, including occupational, safety, and health standards (Section 7, Rule I, Rules on
the Disposition of Labor Standards Cases in the Regional Office, dated September 16, 1987).
Decision:
ACCORDINGLY, this petition should be dismissed, as it is hereby DISMISSED, as regards all
persons still employed in the Hospital at the time of the filing of the complaint, but GRANTED
as regards those employees no longer employed at that time. SO ORDERED.
Fernan, C.J., Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin, Cortes,
Grio-Aquino and Regalado, JJ., concur

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:
Deposits for loss or damage. No employer shall require his worker to make deposits from
which deductions shall be made for the reimbursement of loss of or damage to tools, materials,
or equipment supplied by the employer, except when the employer is engaged in such trades,
occupations or business where the practice of making deposits is a recognized one, or is
necessary or desirable as determined by the Secretary of Labor in appropriate rules and
regulations.
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.
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 results from a voluntary agreement between the employer and the employee whereby
the latter after reaching a certain age agrees to sever his employment with the former. The very
essence of retirement is the termination of employer-employee relationship.
Retirement of the employee does not in itself affect his employment status especially when it
involves all rights and benefits due to him, since these must be protected as though there had
been no interruption of service. It must be borne in mind that the retirement scheme was part of
the employment package and the benefits to be derived therefrom constituted as it were a
continuing consideration of services rendered as well as an effective inducement foe remaining
with the corporation. It is intended to help the employee enjoy the remaining years of his life.
When the retired employees were requesting that their retirement benefits be granted, they were
not pleading for generosity but merely demanding that their rights, embodied in the CBA, be
recognized. When an employee has retired but his benefits under the law or CBA have not yet
been given, he still retains, for the purpose of prosecuting his claims, the status of an employee
entitled to the protection of the Labor Code, one of which is the protection of the labor union.
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
availed of because there is no provision on appellate review of NLRC decisions in the Labor
Code, as amended.
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 factual assessments of lower courts and agencies exercising adjudicative functions,
such as the 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.
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.