ART.

1-6 LABOR LAW IN GENERAL

LABOR LAW DEFINED
#1

SOCIAL JUSTICE AS THE AIM OF LABOR LAWS

#2 CALALANG VS. WILLIAMS

POLICE POWER AS THE BASIS OF LABOR LAWS

#3
People vs. Vera Reyes
G..R. No. L-45748

Facts:
Defendant was charged in the Court of First Instance of Manila by the assistant city fiscal with a
violation of Act No. 2549, as amended by Acts Nos. 3085 and 3958. The information alleged that from
September 9 to October 28, 1936, the accused, in his capacity as president and general manager of
the Consolidated Mines, having engaged the services of Severa Velasco de Vera as stenographer, at an
agreed salary of P35 a month willfully and illegally refused to pay the salary of said stenographer
corresponding to the above-mentioned period of time, which was long due and payable, in spite of her
repeated demands.
After the hearing, the court sustained the demurrer, declaring unconstitutional the last part of section
1 of Act No. 2549 as last amended by Act No. 3958, which considers as an offense the facts alleged in
the information, for the reason that it violates the constitutional prohibition against imprisonment for
debt, and dismissed the case, with costs de oficio. The fiscal appealed from said order. In the appeal,
the Solicitor-General contends that the court erred in declaring Act No. 3958 unconstitutional, and in
dismissing the cause. The last part of section 1 of Act No. 2549, as last amended by section 1 of Act
No. 3958 considers as illegal the refusal of an employer to pay, when he can do so, the salaries of his
employees or laborers on the fifteenth or last day of every month or on Saturday of every week, with
only two days extension, and the nonpayment of the salary within the periods specified is considered
as a violation of the law. The same Act exempts from criminal responsibility the employer who, having
failed to pay the salary, should prove satisfactorily that it was impossible to make such payment.
Issue:
Whether the last part of section 1 of Act No. 2549 as last amended by Act No. 3958 is constitutional
and valid.
Held:
The court held that this provision is null because it violates the provision of section 1 (12), Article III, of
the Constitution, which provides that no person shall be imprisoned for debt. We do not believe that
this constitutional provision has been correctly applied in this case. A close perusal of the last part of
section 1 of Act No. 2549, as amended by section 1 of Act No. 3958, will show that its language refers
only to the employer who, being able to make payment, shall abstain or refuse to do so, without
justification and to the prejudice of the laborer or employee. An employer so circumstanced is not
unlike a person who defrauds another, by refusing to pay his just debt. In both cases the deceit or
fraud is the essential element constituting the offense. The first case is a violation of Act No. 3958, and
the second is estafa punished by the Revised Penal Code. In either case the offender cannot certainly
invoke the constitutional prohibition against imprisonment for debt.
The Court of Appeal held that the last part of section 1 of Act No. 2549, as last amended by section 1
of Act No. 3958, is valid, and reversed the appealed order with instructions to the lower court to

proceed with the trial of the criminal case until it is terminated, without special pronouncement as to
costs in this instance.

#4
People vs Pomar

FACTS
Julio Pomar, manager and person-in-charge of a tobacco factory, employed Macaria Fajardo as cigarmaker. She was granted vacation leave beginning July 16, 1923 by reason of pregnancy. On October
26, 1923, a case was filed against defendant Pomar for failing to pay Fajardo her regular wages
corresponding to 30 days before and 30 days after her delivery and confinement, in accordance with
Act 3071. Defendant Pomar contended that his act does not constitute any offense because Act No.
3071 unconstitutional.

ISSUE
WON Act 3071 is valid and constitutional

HELD
No. Act 3071 is unconstitutional. While it is contended that the Act is within the police power of the
State, it cannot be exercised in contravention of the constitution.
The right to enter into lawful contracts constitutes one of the liberties of the people of the State. If that
right be struck down or arbitrarily interfered with, there is substantial imprisonment of the people
under the Constitution. The right to enter into lawful contracts is as essential to the laborer as it is to
the capitalist. A citizen cannot be compelled to give employment to another citizen nor can anyone be
employed against his will. Liberty includes the right to labor but also to refuse to labor and
consequently the right to labor or for labor and to terminate such contracts and to refuse to make such
contracts.

#5
Phil. Association of Service Exporters Inc vs Drilon
FACTS:
The Philippine Association of Service Exporters, Inc. (PASEI) challenges the Constitutional validity of
Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the character
of "GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC
AND HOUSEHOLD WORKERS," in this petition for certiorari and prohibition. Specifically, the measure is
assailed for "discrimination against males or females;" that it "does not apply to all Filipino workers but
only to domestic helpers and females with similar skills;" and that it is violative of the right to travel. It
is held likewise to be an invalid exercise of the lawmaking power, police power being legislative, and
not executive, in character.
In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing
for worker participation "in policy and decision-making processes affecting their rights and benefits as
may be provided by law." Department Order No. 1, it is contended, was passed in the absence of prior
consultations. It is claimed, finally, to be in violation of the Charter's non-impairment clause, in
addition to the "great and irreparable injury" that PASEI members face should the Order be further
enforced.
ISSUE: Whether or not the Department Order No. 1 in nature of the police power is valid under the
Constitution?
HELD:
In the light of the foregoing, the petition must be dismissed.
As a general rule, official acts enjoy a presumed validity. In the absence of clear and convincing
evidence to the contrary, the presumption logically stands.
The petitioner has shown no satisfactory reason why the contested measure should be nullified. There
is no question that Department Order No. 1 applies only to "female contract workers," but it does not
thereby make an undue discrimination between the sexes. It is well-settled that "equality before the
law" under the Constitution does not import a perfect Identity of rights among all men and women. It
admits of classifications, provided that (1) such classifications rest on substantial distinctions; (2) they
are germane to the purposes of the law; (3) they are not confined to existing conditions; and (4) they
apply equally to all members of the same class.
The Court is well aware of the unhappy plight that has befallen our female labor force abroad,
especially domestic servants, amid exploitative working conditions marked by physical and personal
abuse. As precisely the caretaker of Constitutional rights, the Court is called upon to protect victims of
exploitation. In fulfilling that duty, the Court sustains the Government's efforts.
The same, however, cannot be said of our male workers. In the first place, there is no evidence that,
except perhaps for isolated instances, our men abroad have been afflicted with an identical
predicament. Suffice it to state, then, that insofar as classifications are concerned, this Court is content
that distinctions are borne by the evidence. Discrimination in this case is justified.
There is likewise no doubt that such a classification is germane to the purpose behind the measure.
Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the protection for
Filipino female overseas workers" this Court has no quarrel that in the midst of the terrible

mistreatment Filipina workers have suffered abroad, a ban on deployment will be for their own good
and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely so
long as those conditions exist. This is clear from the Order itself ("Pending review of the administrative
and legal measures, in the Philippines and in the host countries . . ."), meaning to say that should the
authorities arrive at a means impressed with a greater degree of permanency, the ban shall be lifted.
It is incorrect to say that Department Order No. 1 prescribes a total ban on overseas deployment. From
scattered provisions of the Order, it is evident that such a total ban has not been contemplated.
The consequence the deployment ban has on the right to travel does not impair the right. The right to
travel is subject, among other things, to the requirements of "public safety," "as may be provided by
law. Neither is there merit in the contention that Department Order No. 1 constitutes an invalid
exercise of legislative power. It is true that police power is the domain of the legislature, but it does not
mean that such an authority may not be lawfully delegated. As we have mentioned, the Labor Code
itself vests the Department of Labor and Employment with rule-making powers in the enforcement
whereof.
The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier
purposes targeted by the Government. Freedom of contract and enterprise, like all other freedoms, is
not free from restrictions, more so in this jurisdiction, where laissez faire has never been fully accepted
as a controlling economic way of life.
This Court understands the grave implications the questioned Order has on the business of
recruitment. The concern of the Government, however, is not necessarily to maintain profits of
business firms. In the ordinary sequence of events, it is profits that suffer as a result of Government
regulation. The interest of the State is to provide a decent living to its citizens. The Government has
convinced the Court in this case that this is its intent. We do not find the impugned Order to be tainted
with a grave abuse of discretion to warrant the extraordinary relief prayed for.

SIGNIFICANCE OF FOREIGN DECISIONS

#6 CEREZO VS. ATLANTIC GULF AND PACIFIC Co.
LABORERs WELFARE; LIBERAL APPROACH
#7
ABELLA VS NLRC
G.R. No. 71813
Date: July 20, 1987
Petitioners: Rosalina Perez Abella/Hda. Danao-Ramona
Respondents: The Honorable National Labor Relations Commission, Romeo Quitco and RicardoDionele, Sr.,
Ponente: Paras, J
.
FACTS:
On June 27, 1960 the petioner, Rosalina Perez Abella leased a farm land known as Hacienda Danao-Ramona, for
a period of ten (10) years. She opted to extend the leased contract for another ten(10) years. During the existence of the
lease, she employed the private respondents Ricardo Dionele, Sr.,and Romeo Quitco. Upon the expiration of her leasehold
rights, petitioner dismissed private respondents and turned over the hacienda to the owners thereof on October 5, 1981,
who continued the management, cultivation and operation of the farm.

On November 20, 1981, private respondents filed a complaint against the petitioner at the Ministry of Labor and
Employment, Bacolod City District Office, for overtime pay, illegal dismissal and reinstatement with backwages. After the
parties had presented their respective evidence, Labor Arbiter Manuel M. Lucas, Jr., in a Decision dated July 16, 1982, ruled
that the dismissal is warranted by the cessation of business, but granted the private respondents separation pay. Petitioner
appealed, the National Labor Relations Commission, in a Resolution affirmed the decision and dismissed the appeal for lack
of merit. Petitioner filed a Motion for Reconsideration, but the same was denied. Hence, the present petition.
ISSUE:
Whether or not private respondents are entitled to separation pay?
HELD:
The petition is devoid of merit. Article 284 of the Labor Code as amended by BP 130 is the law applicable in this
case. The purpose of Article 284 as amended is obvious-the protection of the workers whose employment is terminated
because of the closure of establishment and reduction of personnel. Without said law, employees like private respondents
in the case at bar will lose the benefits to which they are entitled
for the thirty three years of service in the case of Dionele and fourteen years in the case of Quitco. Although they were
absorbed by the new management of the hacienda, in the absence of any showing that the latter has assumed the
responsibilities of the former employer, they will be considered as new employees and the years of service behind them
would amount to nothing.
It is well-settled that in the implementation and interpretation of the provisions of the Labor Codeand its
implementing regulations, the workingman's welfare should be the primordial and paramount consideration.
The instant petition is hereby dismissed and Decision of the Labor Arbiter and the resolution of the ministry of
labor and employment are hereby affirmed.

#8
Euro-Linea Phil, Inc. vs. NLRC
Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie
xie!
Euro-Linea Phil, Inc. vs. NLRC
G.R. No. 78782
December 1 , 1987
Laborers Welfare: Liberal Approach
Facts:
Petitioner Euro-Linea Phil, Inc hired private respondent Pastoral as shipping expediter on a
probationary basis for a period of six months. Prior to hiring by petitioner, Pastoral had been employed
by Fitscher Manufacturing Corporation also as shipping expediter. On 4 February 1984, Pastoral
received a memorandum terminating his probationary employment in view of his failure to meet the
performance standards set by the company. Pastoral filed a complaint for illegal dismissal against
petitioner. On 19 July 1985, the Labor Arbiter found petitioner guilty of illegal dismissal. Petitioner
appealed the decision to the NLRC on 5 August 1985 but the appeal was dismissed. Hence the petition
for review seeking to reverse and set aside the resolution of public respondent NLRC, affirming the
decision of the Labor Arbiter, which ordered the reinstatement of complainant with six months
backwages.
Issue:
Whether or not the National Labor Relations Commission acted with grave abuse of discretion
amounting to excess of jurisdiction in ruling against the dismissal of the respondent, a temporary or
probationary employee, by his employer.

Ruling:
Although a probationary or temporary employee has a limited tenure, he still enjoys the constitutional
protection of security of tenure.
Furthermore, what makes the dismissal highly suspicious is the fact that while petitioner claims that
respondent was inefficient, it retained his services until the last remaining two weeks of the six months
probationary employment. No less important is the fact that private respondent had been a shipping
expediter for more than one and a half years before he was absorbed by petitioner. It therefore
appears that the dismissal in question is without sufficient justification.
It must be emphasized that the prerogative of management to dismiss or lay-off an employee must be
done without abuse of discretion, for what is at stake is not only petitioner's position but also his
means of livelihood. The right of an employer to freely select or discharge his employees is subject to
regulation by the State, basically in the exercise of its paramount police power.
Petition dismissed for lack of merit and decision by the NLRC is affirmed.

#9
G.R. No. 78763 July 12,1989
MANILA ELECTRIC COMPANY, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, and APOLINARIO M. SIGNO, respondents.

FACTS: Apolinario Signo was employed in Meralco as supervisor-leadman since Jan 1963. In 1981, he
supervised the installation of electricity in de Laras house in Antipolo. De Laras house was not yet
within the required 30-meter distance from the Meralco facility hence he is not yet within the service
scope of Meralco. As a workaround, Signo had it be declared that a certain sarisari store nearer the
facility be declared as de Laras so as to facilitate the installation. Evertything would have been
smooth thereafter but due to fault of the Power Sales Division of Meralco, de Lara was not billed for a
year. Investigation was conducted and Meralco found out the irregularity in Signos work on de Laras
electricity installation. Signo was dismissed on May 18, 1983. Signo filed a case for illegal dismissal
and for backwages. The Lanor Arbiter ruled that though there is a breach of trust in the actuations of
Signo dismissal is a harsh penalty as Signo has been employed for more than 20 years by Meralco and
has been commended twice before for honesty. The NLRC affirmed the Labor Arbiter. Meralco
appealed.

ISSUE: Whether or not there has been due process in the dismissal of Signo.

HELD: The SC sustained the decision of the NLRC. Well-established is the principle that findings of
administrative agencies which have acquired expertise because their jurisdiction is confined to specific

matters are generally accorded not only respect but even finality. Judicial review by this Court on labor
cases does not go so far as to evaluate the sufficiency of the evidence upon which the proper labor
officer or office based his or its determination but is limited to issues of jurisdiction or grave abuse of
discretion. Notwithstanding the existence of a valid cause for dismissal, such as breach of trust by an
employee, nevertheless, dismissal should not be imposed, as it is too severe a penalty if the latter has
been employed for a considerable length of time in the service of his employer. Reinstatement of
respondent Signo is proper in the instant case, but without the award of backwages, considering the
good faith of the employer in dismissing the respondent.

MANAGEMENT RIGHTS
#10
G.R. No. L-48926 December 14, 1987
MANUEL SOSITO, petitioner, vs. AGUINALDO DEVELOPMENT CORPORATION, respondent.
Facts: Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company,
and was in charge of logging importation, with a monthly salary of P675.00, when he went on
indefinite leave with the consent of the company on January 16, 1976. On July 20, 1976, the private
respondent, through its president, announced a retrenchment program and offered separation pay to
employees in the active service as of June 30, 1976, who would tender their resignations not later than
July 31, 1976. The petitioner decided to accept this offer and so submitted his resignation on July 29,
1976, "to avail himself of the gratuity benefits" promised. However, his resignation was not acted upon
and he was never given the separation pay he expected. The petitioner complained to the Department
of Labor, where he was sustained by the labor arbiter. The company was ordered to pay Sosito the sum
of P 4,387.50, representing his salary for six and a half months. On appeal to the National Labor
Relations Commission, this decision was reversed and it was held that the petitioner was not covered
by the retrenchment program.
Issue: whether or not the petitioner is entitled to separation pay under the retrenchment program of
the private respondent.
Held: The petitioner is not one of those entitled for separation pay under the retrenchment program. It
is clear from the memorandum that the offer of separation pay was extended only to those who were
in the active service of the company as of June 30, 1976. It is equally clear that the petitioner was not
eligible for the promised gratuity as he was not actually working with the company as of the said date.
Being on indefinite leave, he was not in the active service of the private respondent although, if one
were to be technical, he was still in its employ. Even so, during the period of indefinite leave, he was
not entitled to receive any salary or to enjoy any other benefits available to those in the active service.

#11
COLGATE PALMOLIVE PHILIPPINES, Inc., petitioners,
vs.
HON. BLAS F. OPLE, COLGATE PALMOLIVE SALES UNION, respondents.

Facts: On March 1, 1985, the respondent Union filed a Notice of Strike with the Bureau of Labor
Relations (BLR) on ground of unfair labor practice consisting of alleged refusal to bargain, dismissal of
union officers/members; and coercing employees to retract their membership with the union and
restraining non-union members from joining the union. MOLE declared that the union is not
authorized.Union reiterated the issue in its Notice to Strike, alleging that it was duly registered with
the Bureau of Labor Relations under Registry No. 10312-LC with a total membership of 87 regular
salesmen (nationwide) out of 117 regular salesmen presently employed by the company as of
November 30, 1985 and that since the registration of the Union up to the present, more than 2/3 of the
total salesmen employed are already members of the Union, leaving no doubt that the true sentiment
of the salesmen was to form and organize the Colgate-Palmolive Salesmen Union. The Minister directly
certified the respondent Union as the collective bargaining agent for the sales force in petitioner
company and ordered the reinstatement of the three salesmen to the company on the ground that the
employees were first offenders.
Issue: Whether the Minister of Labor correctly certified the respondent as the petitioners union.
Held: No.
Petitioner concedes that respondent Minister has the power to decide a labor dispute in a case
assumed by him under Art. 264 (g) of the Labor Code but this power was exceeded when he certified
respondent Union as the exclusive bargaining agent of the company's salesmen since this is not a
representation proceeding as described under the Labor Code. Moreover the Union did not pray for
certification but merely for a finding of unfair labor practice imputed to petitioner-company.
The procedure for a representation case is outlined in Arts. 257-260 of the Labor Code, in relation to
the provisions on cancellation of a Union registration under Arts.239-240 thereof, the main purpose of
which is to aid in ascertaining majority representation. Contrary to the respondent Minister's
observation, the holding of a certification election at the proper time is not necessarily a mere
formality as there was a compelling legal reason not to directly and unilaterally certify a union whose
legitimacy is precisely the object of litigation in a pending cancellation case filed by certain "concerned
salesmen," who also claim majority status. Even in a case where a union has filed a petition for
certification elections, the mere fact that no opposition is made does not warrant a direct certification.
More so as in the case at bar, when the records of the suit show that the required proof was not
presented in an appropriate proceeding and that the basis of the direct certification was the Union's
mere allegation in its position paper that it has 87 out of 117 regular salesmen. In other words,
respondent Minister merely relied on the self-serving assertion of the respondent Union that it enjoyed
the support of the majority of the salesmen, without subjecting such assertion to the test of competing
claims.
The order of the respondent Minister to reinstate the employees despite a clear finding of guilt on their
part is not in conformity with law. Reinstatement is simply incompatible with a finding of guilt. Where
the totality of the evidence was sufficient to warrant the dismissal of the employees the law warrants
their dismissal without making any distinction between a first offender and a habitual delinquent.
Under the law, respondent Minister is duly mandated to equally protect and respect not only the labor
or workers' side but also the management and/or employers' side. The law, in protecting the rights of
the laborer, authorizes neither oppression nor self-destruction of the employer. To order the
reinstatement of the erring would in effect encourage unequal protection of the laws as a managerial
employee of petitioner company involved in the same incident was already dismissed and was not
ordered to be reinstated.

#12
ELMER M. MENDOZA, petitioner,
vs.
RURAL BANK OF LUCBAN, respondent

G.R. No. 155421

July 7, 2004
Facts:
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53, that in line with the policy of the bank to familiarize bank
employees with the various phases of bank operations and further strengthen the existing internal
control system[,] all officers and employees are subject to reshuffle of assignments. Moreover, this
resolution does not preclude the transfer of assignment of bank officers and employees from the
branch office to the head office and vice-versa." Petitioner filed a Complaint before Arbitration Branch
No. IV of the National Labor Relations Commission (NLRC). The Complaint -- for illegal dismissal,
underpayment, separation pay and damages. Petitioner argues that he was compelled to file an action
for constructive dismissal, because he had been demoted from appraiser to clerk and not given any
work to do, while his table had been placed near the toilet and eventually removed.
He adds that the reshuffling of employees was done in bad faith, because it was designed
primarily to force him to resign.After the NLRC denied his Motion for Reconsideration, petitioner
brought before the CA a Petition for Certiorari assailing the foregoing Resolution. The Court of appeals
Find that no grave abuse of discretion could be attributed to the NLRC.
Hence, this Petition.
Issue:
Whether the petitioner was constructively dismissed from his employment?
Held:
The Petition has no merit.
Constructive dismissal is defined as an involuntary resignation resorted to when
continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in
rank or a diminution of pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee. Jurisprudence recognizes the exercise of management
prerogatives. For this reason, courts often decline to interfere in legitimate business decisions of
employers. Indeed, labor laws discourage interference in employers' judgments concerning the
conduct of their business. The law must protect not only the welfare of employees, but also the right of
employers.

The law protects both the welfare of employees and the prerogatives of management.
Courts will not interfere with business judgments of employers, provided they do not violate the law,
collective bargaining agreements, and general principles of fair play and justice. The transfer of
personnel from one area of operation to another is inherently a managerial prerogative that shall be
upheld if exercised in good faith -- for the purpose of advancing business interests, not of defeating or
circumventing the rights of employees.

RIGHT TO RETURN OF INVESTMENT

#13
GELMART INDUSTRIES PHILS., INC., petitioner, vs.
THE HON. NATIONAL LABOR RELATIONS COMMISSION AND FELIX FRANCIS, respondents.
G.R. No. 85668
August 10, 1989
Facts: Private respondent Felix Francis started working as an auto-mechanic for petitioner Gelmart
Industries Phils., Inc. (hereinafter referred to as GELMART) sometime in 1971 As such, his work
consisted of the repair of engines and under chassis, as well as trouble shooting and overhauling of
company vehicles. He is likewise entrusted with some tools and spare parts in furtherance of the work
assigned to him.
On April 11, 1987, private respondent was caught by the security guards taking out of GELMART's
premises one (1) plastic container filled with about 16 ounces of "used' motor oil, without the
necessary gate pass to cover the same as required under GELMART's rules and regulations. By reason
thereof, petitioner, on April 13, 1987, was placed under preventive suspension pending investigation
for violation of company rules and regulations. Under the said rules, theft and/or pilferage of company
property merits an outright termination from employment.
After due investigation, or on May 20, 1987, private respondent was found guilty of theft of company
property. As a consequence, his services were severed.
Thereafter, private respondent filed a complaint for illegal dismissal before the NLRC. In a decision
dated February 26, 1988, Labor Arbiter Ceferina J. Diosana ruled that private respondent was illegally
dismissed and, accordingly, ordered the latter's reinstatement with full backwages from April 13, 1987
up to the time of actual reinstatement.
Issue:
Whether or not the National Labor Relations Commission (NLRC) committed a grave abuse of discretion
amounting to lack or excess of jurisdiction in ordering the reinstatement of private respondent to his
former position with payment of backwages equivalent to six (6) months.

Held:
Consistent with the policy of the State to bridge the gap between the underprivileged workingmen and
the more affluent employers, the NLRC rightfully tilted the balance in favor of the workingmen and
this was done without being blind to the concomitant right of the employer to the protection of his
property.
Thus, without being too harsh to the employer, on the one hand, and naively liberal to labor, on the
other, the NLRC correctly pointed out that private respondent cannot totally escape liability for what is
patently a violation of company rules and regulations.
Considering that private respondent herein has no previous derogatory record in his fifteen (15) years
of service with petitioner GELMART the value of the property pilfered (16 ounces of used motor oil) is
very minimal, plus the fact that petitioner failed to reasonably establish that non-dismissal of private
respondent would work undue prejudice to the viability of their operation or is patently inimical to the
company's interest, it is more in consonance with the policy

RIGHT TO PRESCRIBE RULES

#14
LAGATIC vs. NLRC
G.R. No. 121004 January 28, 1998
THIRD DIVISION: ROMERO, J.:

FACTS:
Cityland employed Petitioner, Romeo Lagatic, as a marketing specialist in May 1986. He was tasked
with with soliciting sales for the company as well as accepting call-ins, referrals, and making client
calls and cold calls. It was believed by Cityland that cold calls is an effective and cost-efficient method
of finding clients and required all marketing specialist to make the same but requires submissions of
daily progress reports on cold calls for assessment and to determine its results. Petitioner was
suspended for 3 days on November 1992, for his failure to submit cold call reports on different days of
September and October 1992 despite a written reprimand for infractions of the same committed a year
earlier and a warning that if he continues to not comply with the requirement it will result in
termination.
Petitioner failed again to submit cold call reports for 5 days of February 1993 despite the aforesaid
suspension and warning. He was then verbally reminded to submit the reports and was given an
extension up to Feb. 17, 1993. Petitioner still did not comply and instead wrote a note with the words,
TO HELL WITH COLD CALLS! WHO CARES?, and exhibiting it to his co-employees. He left the note
lying on top of his desk where everyone could see it to worsen the matter.
On Feb. 23, 1993, a memorandum was received by the Petitioner requiring him to explain why Cityland
should not implement their previous warning for his failure to submit cold call reports, as well as, for
the written statement he exhibited. The petitioner replied through a letter that his not complying with
the submission of cold call reports must not be deemed as gross insubordination and he denied having
knowledge about the damaging statement that was being accused of him.
Cityland found the petitioner of guilty of gross insubordination and then served upon him a notice of
dismissal on Feb. 26, 1993. The petitioner then felt wronged by the dismissal and filed a complaint
against Cityland for illegal dismissal, illegal deduction, underpayment, overtime and rest day pay,
damages and attorneys fees. The labor arbiter dismissed it but it was appealed and affirmed by the

NLRC.

ISSUE:
Whether or not the respondent NLRC gravely abused its discretion in not finding the petitioner illegally
dismissed.

HELD:
The petition lacks merit.
To constitute a valid dismissal from employment, two requisites must be met, namely: (1) the
employee must be afforded due process, and (2) the dismissal must be for a valid cause.
Petitioner loses sight of the fact that except as provided for, or limited by, special laws, an employer is
free to regulate, according to his discretion and judgment, all aspects of employment. Employers may,
thus, make reasonable rules and regulations for the government of their employees, and when
employees, with knowledge of an established rule, enter the service, the rule becomes a part of the
contract of employment. It is also generally recognized that company policies and regulations, unless
shown to be grossly oppressive or contrary to law, are generally valid and binding on the parties and
must be complied with.
Corollarily, an employee may be validly dismissed for violation of a reasonable company rule
or regulation adopted for the conduct of the company business. An employer cannot rationally be
expected to retain the employment of a person whose x x x lack of regard for his employers rules x x x
has so plainly and completely been bared. Petitioners continued infraction of company policy requiring
cold call reports, as evidenced by the 28 instances of non-submission of aforesaid reports, justifies his
dismissal. He cannot be allowed to arrogate unto himself the privilege of setting company policy on the
effectivity of solicitation methods. To do so would be to sanction oppression and the self-destruction of
the employer.
More than that, his written statement shows his open defiance and disobedience to lawful rules and
regulations of the company. Likewise, said company policy of requiring cold calls and the concomitant
reports thereon is clearly reasonable and lawful, sufficiently known to petitioner, and in connection
with the duties which he had been engaged to discharge. There is, thus, just cause for his dismissal.

#15
China Banking Corporation v. Borromeo October 19, 2004 G.R. no. 156515

#15

Facts:
Respondent Mariano Borromeo was Assistant Vice-President of the Branch Banking Group of China
Banking Corporation for the Mindanao Area. Without authority from the Executive Committee or Board
of Directors of the bank, he approved several DAUD/BP (Drawn Against Uncollected Deposits/Bills
Purhcased) accommodations amounting to P2,441,375 in favour of Joel Maniwan. Such checks, which
are not sufficiently funded by cash, are generally not honoured by banks. This came to the knowledge
of the bank authorities. A memorandum was issued to the Mariano seeking clarification relative15 to

the matter. The respondent accepted full responsibility for committing an error in judgment and abuse
of discretion.
Mariano resigned from the Bank and apologized for all the trouble I have caused because of the
Maniwan case. The respondent, however, vehemently denied benefitting therefrom. His acts having
constituted violation of the Banks Code of Ethics, the respondent was directed to restitute the amount
of P1,507,736.79 representing 90% of the total loss of P1,675,263.10 incurred by the Bank. However,
in view of his resignation and considering the years of service in the Bank, the management
earmarked only P836,637.08 from the respondents total separation benefits or pay. The said amount
would be released upon recovery of the sums demanded from Maniwan in a civil case filed against him
by the bank with the RTC in Cagayan de Oro City.
The respondent made a demand on the bank for the payment of his separation pay and other benefits,
but the bank maintained its position to withhold the sum of P836,637.08. Thus, Mariano filed with the
NLRC a complaint for payment of separation pay, mid-year bonus, profit share and damages against
the bank.
The Labor Arbiter ruled in favour of the bank. Respondent appealed to the NLRC but it affirmed in toto
the findings of the Labor Arbiter. The CA, however, alleging that respondent was denied his right to due
process, set aside the NLRC decision and ordered that the records of the case be remanded to the
Labor Arbiter for further hearings on the factual issues involved. The bank filed a motion for
reconsidered but denied the same. Hence, this petition.
Issue:
Whether or not the bank has the prerogative/right to impose on the respondent what it considered the
appropriate penalty under the circumstances pursuant to its company rules and regulations.
Held:
The petition is meritorious.The bank was left with no other course but to impose the ancillary penalty
of restitution. It was certainly within the banks prerogative to impose on the respondent what it
considered the appropriate penalty under the circumstances pursuant to its company rules and
regulations.
The petitioners bank business is essentially imbued with public interest and owes great fidelity to the
public it deals with. It is expected to exercise the highest degree of diligence in the selection and
supervision of their employees. As a corollary, and like all other business enterprises, its prerogative to
discipline its employees and to impose appropriate penalties on erring workers pursuant to company
rules and regulations must be respected. The law, in protecting the rights of labor, authorized neither
oppression nor self-destruction of an employer company which itself is possessed of rights that must
be entitled to recognition and respect.
Significantly, the respondent is not wholly deprived of his separation benefits. As the Labor Arbiter
stressed in his decision, the separation benefits due the complainant were merely withheld. Even the
petitioner bank itself gives the assurance that as soon as the bank has satisfied a judgment in the
civil case, the earmarked portion of his benefits will be released without delay.
WHEREFORE, the petition is granted. The decision of the CA is reversed and set aside. The Resolution
of the NLRC is reinstated.

#16
G.R. No. L 14120
February 29, 1960
Associated Watchmen and Security Union (PWTO), petitioner
versus
The Hon. Judges Juan Lanting, Arsenio Martinez, Emiliano Tabinge, of the Court of Industrial
Relations and Macondray and Company, Inc., respondents

Facts:
Petitioner and its members declared a strike against respondent-company and other shipping
firms. Subsequently, through the Court of Industrial Relations (CIR), the strikers expressed their
willingness to return to work. However, the respondent-company stated that it would re-instate the
said strikers if the petitioner would file a bond of Php 5, 000.00. Petitioner did not comply with said
condition, thus, their members were not re-instated by the respondent-company. Eventually,
petitioners filed a case against the respondent-company for allegedly committing unfair labor practice.
The trial court decided in favor of the petitioners on the basis that the bond hinders the re-employment
of the union members. The CIR, however, reversed the trial courts decision.

Issue:
1.

Is the respondent company guilty of unfair labor practice when it asked the petitioner to file a
bond of Php 5, 000.00 in order for the latters members to be re-instated?

Ruling:
No, the Supreme Court finds no merit in the petitioners contention that the respondentcompany committed unfair labor practice. As embodied in the Labor Code, the employers are vested
with certain rights that they may exercise so as to protect their interests and capital.

In the present case, the Court ruled in favor of the respondents due to the following reasons:
1.

2.
3.

The law gives respondent company the right to protect its interest, especially, when in this
case, the union members abandoned their posts without notice when they joined the
strike. Consequently, the acts of the union members exposed the company to possible
dangers such as theft and pilferage.
It was obvious that the bond asked by the respondent company was not demanded from
the petitioner. The agreement between the two parties was plain and simple reinstatement shall be applied to those agencies who are willing to file the bond.
There is no existing contract between the two parties and that the union members were
not direct employees of the respondent company. Said union members were merely casual
guards of the said company.

Therefore, the Court affirms the decision of the CIR and costs are imposed against the
petitioner.

RIGHT TO SELECT EMPLOYEES

#17 PAMPANGA BUS COMPANY VS. PAMBUSCO EMPLOYEES UNION

RIGHT TO TRANSFER OR DISCHARGE EMPLOYEES

#18
G.R. No. L-6846

July 20, 1955

GREGORIO ARANETA EMPLOYEES UNION, ETC., ET AL., petitioners,

vs.
ARSENIO C. ROLDAN, ET AL., respondents.
A petition for certiorari to review the Resolution of the Court of Industrial Relations dated March 31,
1953.
FACTS OF THE CASE:
The Agricultural Division of the Gregorio Araneta, Inc., was established in 1947 with a capital of
P200,000. The total investment in that Division in 1953 was about P3,000,000. To reduce this
overcapitalization, the Board of Directors felt that it was necessary either to invite fresh capital from
outside or to adopt a retrenchment policy. When Heacock and Company refused the invitation to invest
in the enterprise, the Board took the alternative of retrenchment.
The Board decided not to import as much merchandise as usual. It also reduced credits. All these plans
required a reduction in the volume of business necessitating likewise a reduction of personnel and
caused the laying off of 17 employees. The selection of those to be laid off was made by a technical
man and approved by the Board. These employees were given one month separation pay, except
Nicolas Gonzalez who refused to receive it.

The reorganization of the Agricultural Division was adopted by unanimous resolution of the Board of
Directors as a consequence of the retrenchment policy. This was adopted even before the petitioner,
"Gregorio Araneta Employees' Union", was organized and; consequently, it was never directed against
the union. Judge Bautista adds: ". . . Considering this fact, and taking into account all the
circumstances of this case, especially the actual reduction of business of said Division, the court fails
to find sufficient justification for altering the action of the Board of Directors regarding those
employees, who received their severance pay".
Judge Bautista, however, believed that Gonzales should not have been separated because his work
was shifted to another employee by the name of Augusto Achacoso, who was thus overburdened.
Both parties filed their respective motions for reconsideration with the court en banc. The latter
modified the decision of Associate Judge Bautista in its resolution of March 31, 1953, prepared by the
Presiding Judge Arsenio C. Roldan and concurred in by Associate Judges Modesto Castillo and Juan L.
Lantin. The modification consists only in holding that the laying off of Gonzalez was also legal. Judge
Bautista dissented with regard to the separation of Gonzalez, giving the same reasons he gave in his
original opinion.
ISSUE:
Whether or not the company engaged in unfair labor practice by adopting a policy of retrenchment
aimed at the Union or any of its members.
HELD:
We find no reason for disturbing the decision of the Court of Industrial Relations, en banc. The laying
off of the 17 employees was due to the retrenchment policy which the Company had to adopt in order
to reduce the overcapitalization and minimize expenses. The volume of business was considerably
reduced.
It should be noted that the retrenchment policy was adopted before even the organization of the
petitioning union. It was not, therefore, aimed at the Union or any of its members for union or labor
activities. It was not an unfair labor practice.
In view of the foregoing, the petition is denied, without pronouncement as to costs. It is so ordered.

#19
Case #19: Philippine Sheet Metal Workers Union v. CIR {G.R. No. L-2028, April 28, 1949}

Facts:

This is a petition for certiorari to review an order of the Court of Industrial Relations on the ground that
the same was rendered in excess of jurisdiction and with grave abuse of discretion.
On March 1, 1985, the respondent Union filed a Notice of Strike with the Bureau of Labor Relations

(BLR) on ground of unfair labor practice consisting of alleged refusal to bargain, dismissal of union
officers/members; and coercing employees to retract their membership with the union and restraining
non-union
members
from
joining
the
union.
The said order was issued of said court involving an industrial dispute between the respondent
company (a corporation engaged in the manufacture of tin plates, aluminum sheets, etc.) and its
laborers some of whom belong to the Philippine Sheet Metal Workers' Union (CLO) and some to the
Liberal
Labor
Union.
The dispute was over certain demands made upon the company by the laborers, one of the demands,
being for the recall of eleven workers who had been laid off. Temporarily taken back on certain
conditions pending final determination of the controversy, these eleven workers were in the end
ordered retained in the decision handed down by the court on February 19, 1947.
The petitioner tried to prove that the 11 laborers were laid off by the respondent company due to their
union
activities.
On February 10, 1947, that is, nine days before the decision came down, filed a motion in the case,
asking for authority to lay off at least 15 workers in its can department on the ground that the
installation and operation of nine new labor-saving machines in said department had rendered the
services
of
the
said
workers
unnecessary.

Issue:
W/N

the

firing

of

the

laborers

due

to

their

union

activities

is

valid?

Ruling:
Yes. The right to reduce personnel should, of course, not be abused. It should not be made a pretext
for easing out laborers on account of their union activities. But neither should it be denied when it is
shows that they are not discharging their duties in a manner consistent with good discipline and the
efficient
operation
of
an
industrial
enterprise.
The petitioner contends that the order complained of was made with grave abuse of discretion and in
excess of jurisdiction in that it is contrary to the pronouncement made by the lower court in its
decision in the main case where it disapproved of the dismissal of eleven workers "with whom the
management is displeased due to their union activities." It appears, however, that the pronouncement
was made upon a distinct set of facts, which are different from those found by the court in connection
with the present incident, and that very decision, in ordering the reinstatement of the eleven laborers,
qualifies the order by saying that those laborers are to be retained only "until the occurrence of facts
that may give rise to a just cause of their laying off or dismissal, or there is evidence of sufficient
weight
to
convince
the
Court
that
their
conduct
is
not
satisfactory."
After a careful review of the record, we find that the Court of Industrial Relations has neither exceeded
its jurisdiction nor committed grave abuse of discretion in rendering the order complained of. The
petition for certiorari is, therefore, denied, but without costs against the petitioner for the reasons
stated in its motion to litigate as pauper.

#20
G.R. No. L-3587 December 21, 1951
TIONG KING, petitioner,
vs.
Court of Industrial Relations and The National Tailor's Association, respondents.
J. Paras,ponente.
FACTS: Gaw Pun So owned and operated a tailor shop known as the Army Shirt Factory, located in his
own house at Nos. 231-245 Soler Street, Manila. In January, 1948, he had a labor dispute with his
personnel and, pending the case in the Court of Industrial Relations, Gaw Pun So, irked and worried by
the incidents of litigation, thought of dissolving the business and selling the sewing machines. Tiong
King offered to take over the business by leasing the place and the sewing machines. The transfer was
put in writing. Tiong King continued the Army Shirt Factory from the month of February with the same
employees had by Gaw Pun So. This transfer was known to the personnel, so much so that the latter,
as petitioner in the pending dispute in the Court of Industrial Relations, prayed that Tiong King be
included as a respondent. In due time, the National Tailors Association entered that all cases were
terminated against the respondents. This agreement was duly approved by the Court of Industrial
Relations. On April 27, 1948, Tiong King filed a petition in the Court of Industrial Relations Case No.
117-V-3, alleging that since he operated his shop in February, 1948, he had continually suffered losses;
that as there remained only very little of the capital originally invested, and that he was definitely
closing the shop on May 30, 1948. Tiong King accordingly prayed that he be allowed to close his tailor
shop and business from six o'clock in the afternoon of May 29, 1948. On May 29, 1948, Presiding Judge
Arsenio C. Roldan of the Court of Industrial Relations issued an order enjoining Tiong King not to close
his factory and not to dismiss, suspend or lay off any laborer or employee without previous authority of
said court. Upon petitioner for reconsideration filed by counsel for Tiong King, the Court of Industrial
Relations promulgated a resolution dated May 27, 1949, allowing Tiong King to close his business and
shop, subject to the condition that, upon reopening the same, his former personnel would be taken
back. Upon motion for reconsideration filed by counsel for the National Tailor's Association, the Court of
Industrial Relations, promulgated a resolution dated October 31, 1949, reaffirming their stand on there
solution of the Court of Industrial Relations under date of July 1, 1949.The present appeal by certiorari
was taken by Tiong King against the last resolution of the Court of Industrial Relations.
ISSUE: Whether or not he was the owner or operator thereof and had the right to file the petition in
the Court of Industrial Relations to close the tailors shop.
HELD: Upon this point, it is only sufficient to recall that the National Tailors Association entered into a
stipulation with Tiong King alone whereby they agreed that all cases against the former owners of the
business were terminated. That Tiong King was conceded to be the owner and operator of the army
shirt factory at the time his petition to close it was filed, is conclusively borne out by the fact that
Presiding Judge Roldan in his decision of January 13, 1949, ordered Tiong King, and not Gaw Pun So, to
pay the salaries and wages of the personnel. It is contended, however, that "If at all the court has

approved of the agreement between the National Tailors' Association and Mr. Tiong King it was because
'this arrangement is a very good solution to the present conflict as it is advantageous not only to the
union but also the management, and,is in consonance with the contract entered into between the
management and the new workers." This contention is followed with the remark that the approval of
said agreement did not include a finding that Tiong King was either the owner or the lessee of the
Army Shirt Factory. We are unable to agree. In entering into the agreement with the National Tailors
Association, Tiong King acted in his own behalf, regardless of the former owners of the business.
Indeed, it was covenanted that all the cases against the latter were deemed terminated.
Considerations of fair play and justice demand that Tiong King be given the full legal effect of said
agreement which before the sanction of the Court of Industrial Relations. There being no question that
Tiong King's capital invested in the Army Shirt Factory was almost exhausted at the time of the filing of
his petition to close it, said petition must necessity be granted. It is admitted by all the Judges of the
Court of Industrial Relations that an employer may close his business, provided the same is done in
good faith and is due beyond his control. To rule otherwise, would be oppressive and inhuman. The
court reversed the resolution of the Court of Industrial Relations dated October 31, 1949, and affirmed
the resolution of said court dated May 27, 1949.

#21 ROLDAN VS. CEBU PORTLAND CEMENT CO.

ART. 5. RULES AND REGULATIONS

#22 RIZAL EMPIRE INSURANCE GROUP VS. NLRC

#23

PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS VS. DRILON

#24
CBTC Employers Union vs. Clave
141 SCRA 9
Facts:
Commercial Bank and Trust Company Employees' Union lodged a complaint with the Department of
Labor, against Commercial trust Bank for non-payment of the holiday pay benefits provided for under
Art 95 of the Labor Code in relation to Rule X, Book III of the Rules and Regulations Implementing the

Labor Code. Failing to arrive at an amicable settlement at conciliation level, the parties opted to submit
their dispute for voluntary arbitration. The issue presented was, whether the permanent employees of
the Bank within the collective bargaining unit paid on a monthly basis are entitled to holiday pay
effective November 1, 1974, pursuant to Article 94 of the Labor Code. In addition, the disputants
signed a Submission Agreement stipulating as final, unappealable and executory the decision of the
Arbitrator, including subsequent issuances for clarificatory and/or relief purposes, notwithstanding
Article 262 of the Labor Code.The Union filed a Manifestation stating that in the event that said
Interpretative Bulletin regarding holiday pay would be adverse to the present claim union respectfully
reserves the right to take such action as may be appropriate to protect its interests, a question of law
being involved. An Interpretative Bulletin which was inexistent at the time they said commitment was
made and which maybe contrary to the law itself should not bar the right of the union to claim for its
holiday pay benefits.Voluntary Arbitrator stated that, there is more reason to believe that, if the Bank
has never made any deduction from its monthly-paid employees for unworked Saturdays, Sundays,
legal and special holidays, it is because there is really nothing to deduct properly since the monthly
salary never really included pay for such unworked days-and which give credence to the conclusion
that the divisor '250' is the proper one to use in computing the equivalent daily rate of the monthlypaid employees that both the decree itself and the Rules mentioned enumerated the excepted
workers. It is a basic rule of statutory construction that putting an exception limits or modifies the
enumeration or meaning made in the law. It is thus easy to see that a mere reading of the Decree and
of the Rules would show that the monthly-paid employees of the Bank are not expressly included in the
enumeration of the exception.Voluntary Arbitrator directed the bank to pay its monthly paid employees
their legal holidaypay. The next day, the Department of Labor released Policy Instructions No. 9
which clarifies controversies on the entitlement of monthly paid employees. The new determining rule
is this: If themonthly paid employee is receiving not less than P 240, the maximum monthly minimum
wage, and his monthly pay is uniform from January to December, he is presumed to be already paid
the ten (10) paid legal holidays. However, if deductions are made from his monthly salary on account
of holidays in months where they occur, then he is still entitled to the ten (10) paid legal holidays.
Issue:
Whether the permanent employees of the bank are entitled to holiday pay
Held:
Yes. They are entitled to holiday pay. In excluding the union members of herein petitioner from the
benefits of the holiday pay law, public respondent predicated his ruling on Section 2, Rule IV, Book IIIof
the Rules to implement Article 94 of the labor Code promulgated by the then Secretary of labor and
Policy Instructions No. 9. The questioned Section 2, Rule IV, Book III of the Integrated Rules and the
Secretary's Policy Instruction No. 9 add another excluded group, namely, 'employees who are uniformly
paid by the month'. While the additional exclusion is only in the form of a presumption that all monthly
paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation
towards the employee.

ART. 6 APPLICABILITY
GOVERNMENT CORPORATIONS

#25
National Housing Corp. v. Juco

FACTS: Juco was an employee of the NHA. He filed a complaint for illegal dismissal w/ MOLE but his
case was dismissed by the labor arbiter on the ground that the NHA is a govt-owned corp. and
jurisdiction over its employees is vested in the CSC. On appeal, the NLRC reversed the decision and
remanded the case to the labor arbiter for further proceedings. NHA in turn appealed to the SC

ISSUE: Are employees of the National Housing Corporation, a GOCC without original charter, covered
by the Labor Code or by laws and regulations governing the civil service?

HELD: Sec. 11, Art XII-B of the Constitution specifically provides: "The Civil Service embraces every
branch, agency, subdivision and instrumentality of the Government, including every government
owned and controlled corporation.
The inclusion of GOCC within the embrace of the civil service shows a deliberate effort at the framers
to plug an earlier loophole which allowed GOCC to avoid the full consequences of the civil service
system. All offices and firms of the government are covered.
This consti provision has been implemented by statute PD 807 is unequivocal that personnel of GOCC
belong to the civil service and subject to civil service requirements.
"Every" means each one of a group, without exception. This case refers to a GOCC. It does not cover
cases involving private firms taken over by the government in foreclosure or similar proceedings.

#26
National Service Corporation vs NLRC
Facts:
Eugenio Credo was an employee of the National Service Corporation. She claims she was illegally
dismissed. NLRC ruled orderingher reinstatement. NASECO argues that NLRC has no jurisdiction to
order her reinstatement. NASECO as a government corporation byvirtue of its being a subsidiary of the
NIDC, which is wholly owned by the Phil. National Bank which is in turn a GOCC, the terms
andconditions of employment of its employees are governed by the Civil Service Law citing National
Housing v Juco.
Issue:
W/N employees of NASECO, a GOCC without original charter, are governed by the Civil Service Law.

Ruling:
NO. The holding in NHC v Juco should not be given retroactive effect, that is to cases that arose
before its promulgation of Jan 17, 1985. To do otherwise would be oppressive to Credo and other
employees similarly situated because under the 1973 Constibut prior to the ruling in NHC v Juco, this
court recognized the applicability of the Labor jurisdiction over disputes involving terms andconditions
of employment in GOCC's, among them NASECO.In the matter of coverage by the civil service of
GOCC, the 1987 Consti starkly differs from the 1973 consti where NHC v Juco wasbased. It provides
that the "civil service embraces all branches, subdivisions, instrumentalities, and agencies of the
Government,including government owned or controlled corporation with original charter." Therefore
by clear implication, the civil service doesnot include GOCC which are organized as subsidiaries of
GOCC under the general corporation law.

NON-APPLICABILITY TO GOVERNMENT AGENCIES

#27
REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL PARKS DEVELOPMENT
COMMITTEE,petitioner,
vs.
THE HON. COURT OF APPEALS and THE NATIONAL PARKS DEVELOPMENT SUPERVISORY
ASSOCIATION & THEIR MEMBERS, respondents.
FACTS
NPDC was originally created in 1963 under Executive Order No. 30, as the Executive Committee for the
development of the Quezon Memorial, Luneta and other national parks, and later renamed as the
National Parks Development Committee under Executive Order No. 68, on September 21, 1967, it was
registered in the Securities and Exchange Commission (SEC) as a non-stock and non-profit corporation,
known as "The National Parks Development Committee, Inc.
On March 20, 1988, NPDCEA (TUPAS local Chapter No. 967) and NPDCSA (TUPAS Chapter No. 1206),
labor unions of employees of National Parks Development Committee ,staged a stake at the Rizal Park,
Fort Santiago, Paco Park, and Pook ni Mariang Makiling at Los Banos, Laguna, alleging unfair labor
practices.
On March 21, 1988, NPDC filed in the Regional Trial Court in Manila, Branch III, a complaint against the
union to declare the strike illegal and to restrain it on the ground that the strikers, being government
employees, have no right to strike although they may form a union.
Lower court dismissed the case for lack of jurisdiction as the case should be under the jurisdiction of
Department of Labor as there exist an Employer- Employee Relationship.
Court of appeals affirmed the order of the trial court, hence, this petition for review.
Issue
whether the petitioner, National Parks Development Committee (NPDC), is a government agency, or a
private corporation, for on this issue depends the right of its employees to strike.

Ruling
Since NPDC is a government agency, its employees are covered by civil service rules and regulations
(Sec. 2, Article IX, 1987 Constitution). Its employees are civil service employees (Sec. 14, Executive
Order No. 180).
While NPDC employees are allowed under the 1987 Constitution to organize and join unions of their
choice, there is as yet no law permitting them to strike. In case of a labor dispute between the
employees and the government, Section 15 of Executive Order No. 180 dated June 1, 1987 provides
that the Public Sector Labor- Management Council, not the Department of Labor and Employment, shall
hear the dispute. Clearly, the Court of Appeals and the lower court erred in holding that the labor
dispute between the NPDC and the members of the NPDSA is cognizable by the Department of Labor
and Employment.
WHEREFORE, the petition for review is granted. The decision of the Court of Appeals in CA-G.R. SP No.
14204 is hereby set aside. The private respondents' complaint should be filed in the Public Sector
Labor-Management Council as provided in Section 15 of Executive Order No. 180. Costs against the
private respondents.

#28
LUZON DEVELOPMENT BANK VS. ASSOCIATION OF LUZON DEVELOPMENT BANK, ET AL.
G.R. No. 120319October 6, 1995
Petitioner: Luzon Development Bank
Respondent: Association of Luzon Development Bank Employees and Atty. Ester S. Garcia in hercapacity as VOLUNTARY
ARBITRATOR
Ponente: J. Romero
Facts:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon Development
Bank Employees (ALDBE) arose an arbitration case to resolve the following issue: whether or not the company has violated
the Collective Bargaining Agreement provision and the Memorandum of Agreement dated April1994, on promotion. At a
conference, the parties agreed on the submission of their respective Position Papers on December 1-15, 1994. Atty. Ester S.
Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's Position Paper on January 18, 1995. LDB, on the other
hand, failed to submit its Position Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May
23, 1995 no Position Paper had been filed by LDB. On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator
rendered a decision disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the CollectiveBargaining Agreement
provision nor the Memorandum of Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary Arbitrator
and to prohibit her from enforcing the same.
Issue:
Which court has the jurisdiction for the appellate review of adjudications of all quasi-judicial entities
Held:
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of Appeals shall
exercise:
(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders
or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions ,including the Securities and Exchange Commission, the Employees Compensation
Commission and the Civil Service Commission, except those falling within the appellate jurisdiction of
the Supreme Court in accordance with the Constitution, the Labor Code of the Philippines under

Presidential Decree No. 442,as amended, the provisions of this Act, and of subparagraph (1) of the
third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of
1948.
The voluntary arbitrator no less performs a state function pursuant to a governmental power delegated to him
under the provisions there for in the Labor Code and he falls, therefore, within the contemplation of the term
"instrumentality" in the afore quoted Sec. 9 of B.P. 129. The fact that his functions and powers are provided for in the Labor
Code does not place him within the exceptions to said Sec. 9 since he is a quasi-judicial instrumentality as contemplated
therein A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable to
the Court of Appeals, in line with the procedure outlined in Revised Administrative Circular No. 1-95, just like those of the
quasi-judicial agencies, boards and commissions enumerated therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to provide a uniform
procedure for the appellate review of adjudications of all quasi-judicial entities not expressly excepted from the coverage of
Sec. 9 of B.P. 129 by either the Constitution or another statute In the same vein, it is worth mentioning that under Section
22 of Republic Act No. 876, also known as the Arbitration Law, arbitration is deemed a special proceeding of which the
court specified in the contract , or if none be specified, the Regional Trial Court for the province or city in which one of the
parties resides or is doing business, or in which the arbitration is held, shall have jurisdiction. A party to the controversy
may, at any time within one (1) month after an award is made, apply to the court having jurisdiction for an order
confirming the award and the court must grant such order unless the award is vacated, modified or
corrected.
In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial court.
Consequently, in a petition for certiorari from that award or decision, ACCORDINGLY, the Court resolved to REFER this case
to the Court of Appeals

#29
SSS Employees Association v Court of Appeals
Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie
xie!
SOCIAL SECURITY SYSTEM EMPLOYEES ASSOCIATION (SSSEA), DIONISION T. BAYLON,
RAMON MODESTO, JUANITO MADURA, REUBEN ZAMORA, VIRGILIO DE ALDAY, SERGIO
ARANETA, PLACIDO AGUSTIN, VIRGILIO MAGPAYO, petitioner,
vs.
THE COURT OF APPEALS, SOCIAL SECURITY SYSTEM (SSS), HON. CEZAR C. PERALEJO, RTC,
BRANCH 98, QUEZON CITY, respondents.
G.R. No. 85279
July 28, 1989
Facts:
On June 11, 1987, the SSS filed with the Regional Trial Court of Quezon City a complaint for damages
with a prayer for a writ of preliminary injunction against petitioners, alleging that on June 9, 1987, the
officers and members of SSSEA staged an illegal strike and baricaded the entrances to the SSS
Building, preventing non-striking employees from reporting for work and SSS members from
transacting business with the SSS; that the strike was reported to the Public Sector Labor Management Council, which ordered the strikers to return to work; that the strikers refused to return to
work; and that the SSS suffered damages as a result of the strike. The complaint prayed that a writ of
preliminary injunction be issued to enjoin the strike and that the strikers be ordered to return to work;
that the defendants (petitioners herein) be ordered to pay damages; and that the strike be declared
illegal.

It appears that the SSSEA went on strike after the SSS failed to act on the union's demands, which
included: implementation of the provisions of the old SSS-SSSEA collective bargaining agreement
(CBA) on check-off of union dues; payment of accrued overtime pay, night differential pay and holiday
pay; conversion of temporary or contractual employees with six (6) months or more of service into
regular and permanent employees and their entitlement to the same salaries, allowances and benefits
given to other regular employees of the SSS; and payment of the children's allowance of P30.00, and
after the SSS deducted certain amounts from the salaries of the employees and allegedly committed
acts of discrimination and unfair labor practices.
Issue:
Whether or not employees of the Social Security System (SSS) have the right to strike.
Held:
The 1987 Constitution, in the Article on Social Justice and Human Rights, provides that the State "shall
guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law" [Art. XIII, Sec. 31].
Resort to the intent of the framers of the organic law becomes helpful in understanding the meaning of
these provisions. A reading of the proceedings of the Constitutional Commission that drafted the 1987
Constitution would show that in recognizing the right of government employees to organize, the
commissioners intended to limit the right to the formation of unions or associations only, without
including the right to strike.
Considering that under the 1987 Constitution "the civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the Government, including government-owned or controlled
corporations with original charters" [Art. IX(B), Sec. .2(l) see also Sec. 1 of E.O. No. 180 where the
employees in the civil service are denominated as "government employees"] and that the SSS is one
such government-controlled corporation with an original charter, having been created under R.A. No.
1161, its employees are part of the civil service [NASECO v. NLRC, G.R. Nos. 69870 & 70295,
November 24,1988] and are covered by the Civil Service Commission's memorandum prohibiting
strikes. This being the case, the strike staged by the employees of the SSS was illegal.
Acknowledgement: Peter De Guzman

ART. 82. EXCLUDED EMPLOYEES

#30
G.R. No. 101761. March 24, 1993.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents.
Facts: Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully
owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon,
Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation
No. 50.
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.
The Courts glean from the records that for about ten years prior to the JE Program, the members of
respondent union were treated in the same manner as rank-and file employees. As such, they used to
be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the
Labor Code as amended. On May 11, 1990, petitioner NASUREFCO recognized herein respondent
union, which was organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form
their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO
Batangas Sugar Refinery. 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: Whether or not the members of respondent union are entitled to overtime, rest day and holiday
pay.
Ruling: 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 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.

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.
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.
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. Perforce, they are not entitled to overtime, rest day and
holiday.

#31
G.R. No. 159577
May 3, 2006
CHARLITO PEARANDA, Petitioner, vs. BAGANGA PLYWOOD CORPORATION and HUDSON
CHUA, Respondents.
Facts: 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. Due to the fact that the parties failed to settle amicably, the
labor arbiter directed the parties to file their position papers.
"[Pearanda] through counsel in his position paper alleges that he was employed by respondent
[Baganga] 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. Further, [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 claims for payment of damages and attorneys fees having been
forced to litigate the present complaint.
"Upon the other hand, respondent [BPC] is a domestic corporation duly organized and existing under
Philippine laws and is represented herein by its General Manager HUDSON CHUA, [the] individual
respondent. Respondents thru counsel allege that complainants separation from service was done
pursuant to Art. 283 of the Labor Code. The respondent [BPC] was on temporary closure due to repair
and general maintenance and it applied for clearance with the Department of Labor and Employment,
Regional Office No. XI to shut down and to dismiss employees (par. 2 position paper). And due to the
insistence of herein complainant he was paid his separation benefits (Annexes C and D, ibid).
Consequently, when respondent [BPC] partially reopened in January 2001, [Pearanda] failed to
reapply. Hence, he was not terminated from employment much less illegally. He opted to severe
employment when he insisted payment of his separation benefits. Furthermore, being a managerial
employee he is not entitled to overtime pay and if ever he rendered services beyond the normal hours
of work, [there] was no office order/or authorization for him to do so. Finally, respondents allege that
the claim for damages has no legal and factual basis and that the instant complaint must necessarily
fail for lack of merit."
Ruling of the NLRC: Respondents filed an appeal to the NLRC, which deleted the award of overtime pay
and premium pay for working on rest days. According to the Commission, petitioner was not entitled to
these awards because he was a managerial employee.
Ruling of the Court of Appeals: In its Resolution dated January 27, 2003, the CA dismissed Pearandas
Petition for Certiorari. The appellate court held that he failed to: 1) attach copies of the pleadings
submitted before the labor arbiter and NLRC; and 2) explain why the filing and service of the Petition
was not done by personal service.
In its later Resolution dated July 4, 2003, the CA denied reconsideration on the ground that petitioner
still failed to submit the pleadings filed before the NLRC.

Issue: Whether or not Penaranda is entitled to overtime pay and premium pay for working on rest
days.
Held: Article 82 of the Labor Code exempts managerial employees from the coverage of labor
standards. Labor standards provide the working conditions of employees, including entitlement to
overtime pay and premium pay for working on rest days.29 Under this provision, managerial
employees are "those whose primary duty consists of the management of the establishment in which
they are employed or of a department or subdivision."
The Court disagrees with the NLRCs 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 members of the managerial staff are not entitled
to the provisions of law on labor standards. 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. Petitioners evidence also showed that he was the supervisor of the steam plant. His

classification as supervisor is further evident from the manner his salary was paid. He belonged to the
10% of respondents 354 employees who were paid on a monthly basis; the others were paid only on a
daily basis. On the basis of the foregoing, the Court finds no justification to award overtime pay and
premium pay for rest days to petitioner. Wherefore, the petition is denied. costs against petitioner.
#32
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner,
vs.
ANTONIO BAUTISTA, respondent.
Facts: Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. (Autobus),
as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila
and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the
total gross income per travel, on a twice a month basis.On 03 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 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 respondents pleas for reconsideration, the same was ignored by management. After a month,
management sent him a letter of termination. Respondent instituted a Complaint for Illegal Dismissal
with Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus.
Issue: Whether the private respondent is considered as field personel in which case, he is exempted
from incentive leave pay under Book III, Rule V, Section 1(d).
Held: No.
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."8
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.9 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.
Therefore, petitioners contention that respondent is not entitled to the grant of service incentive leave
just because he was paid on purely commission basis is misplaced. 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.
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.

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 employees performance is unsupervised
by the employer. 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 employees
time and performance are constantly supervised by the employer.

#33
Union of Filipino Employees vs Vivar

G..R. No. 79255

January 20, 1992

Facts:
This labor dispute stems from the exclusion of sales personnel from the holiday pay award
and the change of the divisor in the computation of benefits from 251 to 261 days. On November 8,
1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations
Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations
respecting claims of its monthly paid employees for holiday pay in the light of the Court's decision in
Chartered Bank Employees Association v. Ople (138 SCRA 273 [1985]). Both Filipro and the Union of
Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent
Benigno Vivar, Jr. as voluntary arbitrator.
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years,
(2) the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical
representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and (3)
deduction from the holiday pay award of overpayment for overtime, night differential, vacation and
sick leave benefits due to the use of 251 divisor. Petitioner UFE answered that the award should be
made effective from the date of effectivity of the Labor Code, that their sales personnel are not field
personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an established
employee benefit which cannot be diminished.
Issue:
WON the respondent's sales personnel are not field personnel under Article 82 of the Labor
Code?
Held:
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 Court thereby resolves that the grant of holiday pay be effective, not from the date of
promulgation of the Chartered Bank case or from the date of effectivity of the Labor Code, but from
October 23, 1984, the date of promulgation of the IBAA case.

#34
SAN MIGUEL BREWERY V. DEMOCRATIC LABOR ORGANIZATION 8 SCRA 613
FACTS: The Democratic Labor Association filed a complaint against the San Miguel Brewery, Inc.,
embodying 12 demands for the betterment of the conditions of employment of its members. The
company filed its answer to the complaint specifically denying its material averments and answering
the demands point by point. The company asked for the dismissal of the complaint. During the
hearing, the union manifested its desire to confine its claim to its demands for overtime, night-shift
differential pay, and attorney's fees, although it was allowed to present evidence on service rendered
during Sundays and holidays, or on its claim for additional separation pay and sick and vacation leave
compensation.
After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was
commissioned to receive the evidence, rendered decision expressing his disposition with regard to the
points embodied in the complaint on which evidence, was presented. The demands for the application
of the Minimum Wage Law to workers paid on"pakiao" basis, payment of accumulated vacation and
sick leave and attorney's fees, as well as the award of additional separation pay, were either
dismissed, denied, or set aside. Its motion for reconsideration having been denied by the industrial
court en bane, which affirmed the decision of the court a quo with few exceptions, the San Miguel
Brewery, Inc. interposed the present petition for review.
ISSUE: Whether or not outside or field sales personnel are entitled to the benefits of the Eight-Hour
Labor Law.
HELD: NO. After the morning roll call, the employees leave the plant of the company to go on their
respective sales routes and they do not have a daily time record but the sales routes are so planned
that they can be completed within 8 hours at most, and they receive monthly salaries and sales
commission in variable amounts, so that they are made to work beyond the required eight hours
similar to piecework, "pakiao", or commission basis regardless of the time employed, and the
employees' participation depends on their industry, it is held that the Eight-Hour Labor Law has no
application to said outside or field sales personnel and that they are not entitled to overtime pay.
The Court is in the opinion that the Eight-Hour Labor Law only has application where an
employee or laborer is paid in a monthly or daily basis, or is paid a monthly or daily compensation, in
which case, if he is made to work beyond the requisite period of 8 hours, he should be paid the
additional compensation prescribed by law. This law has no application when the employee or laborer
is paid on a piece-work, "pakiao", or commission basis, regardless of the time employed. The
philosophy behind this exemption is that his earnings are in the form of commission based on the gross
receipts of the day. His participation depends upon his industry so that the more hours he employs in
the work the greater are his gross returns and the higher his commission. This philosophy is better
explained in Jewel Tea Co. vs. Willams , C.C.A. Okl., 118 F. 2d 202, as follows:"The reasons for excluding
an outside salesman are fairly apparent. Such salesman, to a great 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."

#35 ABUNDIO CADIZ ET. AL. VS. PHILIPPINES SINTER CORPORATION

#36 ROSALES VS. TAN QUE
#37 ADRIANO QUINTOS VS. D.D. TRANSPORT CO, INC.
#38 LARA VS. DEL ROSARIO

ART. 83. HOURS OF WORK

#39
G.R. No. L-4148

July 16, 1952

MANILA TERMINAL COMPANY, INC., petitioner,

vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND MUTUAL AID
ASSOCIATION,respondents.
On September 1, 1945, the Manila Terminal Company, Inc. hereinafter to be referred as to the
petitioner, undertook the arrastre service in some of the piers in Manila's Port Area at the request and
under the control of the United States Army. The petitioner hired some thirty men as watchmen on
twelve-hour shifts at a compensation of P3 per day for the day shift and P6 per day for the night shift.
On February 1, 1946, the petitioner began the postwar operation of the arrastre service at the present
at the request and under the control of the Bureau of Customs, by virtue of a contract entered into
with the Philippine Government. The watchmen of the petitioner continued in the service with a
number of substitutions and additions, their salaries having been raised during the month of February
to P4 per day for the day shift and P6.25 per day for the nightshift. On March 28, 1947, Dominador
Jimenez, a member of the Manila Terminal Relief and Mutual Aid Association, sent a letter to the
Department of Labor, requesting that the matter of overtime pay be investigated, but nothing was
done by the Department. On April 29, 1947, Victorino Magno Cruz and five other employees, also
member of the Manila Transit Mutual Aid Association, filed a 5-point demand with the Department of
Labor, including overtime pay, but the Department again filed to do anything about the matter. On
May 27, 1947, the petitioner instituted the system of strict eight-hour shifts. On June 19, 1947, the
Manila Port Terminal Police Association, not registered in accordance with the provisions of
Commonwealth Act No. 213, filed a petition with the Court of Industrial Relations. On July 16, 1947, the
Manila Terminal Relief and Mutual Aid Association was organized for the first time, having been granted
certificate No. 375 by the Department of Labor. On July 28, 1947, Manila Terminal Relief and Mutual Aid
Association filed an amended petition with the Court of Industrial Relations praying, among others, that
the petitioner be ordered to pay its watchmen or police force overtime pay from the commencement of
their employment. On May 9, 1949, by virtue of Customs Administrative Order No. 81 and Executive
Order No. 228 of the President of the Philippines, the entire police force of the petitioner was
consolidated with the Manila Harvor Police of the Customs Patrol Service, a Government agency under

the exclusive control of the Commissioner of Customs and the Secretary of Finance The Manila
Terminal Relief and Mutual Aid Association will hereafter be referred to as the Association.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision of April 1, 1950, as amended
on April 18, 1950, while dismissing other demands of the Association for lack of jurisdiction, ordered
the petitioner to pay to its police force
(a) Regular or base pay corresponding to four hours' overtime plus 25 per cent thereof as additional
overtime compensation for the period from September 1, 1945 to May 24, 1947;
(b) Additional compensation of 25 per cent to those who worked from 6:00 p.m. to 6:00 a.m. during the
same period:
(c) Additional compensation of 50 per cent for work performed on Sundays and legal holidays during
the same period;
(d) Additional compensation of 50 per cent for work performed on Sundays and legal holidays from
May 24, 1947 to May 9, 1949; and
(e) Additional compensation of 25 per cent for work performed at night from May 29, 1947 to May 9,
1949.
With reference to the pay for overtime service after the watchmen had been integrated into the Manila
Harbor Police, Judge Yanson ruled that the court has no jurisdiction because it affects the Bureau of
Customs, an instrumentality of the Government having no independent personality and which cannot
be sued without the consent of the State. (Metran vs. Paredes, 45. Off. Gaz., 2835.)
The petitioner find a motion for reconsideration. The Association also filed a motion for reconsideration
in so far its other demands were dismissed. Judge Yanson, concurred in by Judge Jose S. Bautista,
promulgated on July 13, 1950, a resolution denying both motions for reconsideration. Presiding Judge
Arsenio C. Roldan, in a separate opinion concurred in by Judge Modesto Castillo, agreed with the
decision of Judge Yanson of April 1, 1950, as to the dismissal of other demands of the Association, but
dissented therefrom as to the granting of overtime pay. In a separate decisive opinion, Judge Juan S.
Lanting concurred in the dismissal of other demands of the Association. With respect to overtime
compensation, Judge Lanting ruled:
1. The decision under review should be affirmed in so far it grants compensation for overtime on
regular days (not Sunday and legal holidays)during the period from the date of entrance to duty to May
24, 1947, such compensation to consists of the amount corresponding to the four hours' overtime at
the regular rate and an additional amount of 25 per cent thereof.
2. As to the compensation for work on Sundays and legal holidays, the petitioner should pay to its
watchmen the compensation that corresponds to the overtime (in excess of 8 hours) at the regular
rate only, that is, without any additional amount, thus modifying the decision under review accordingly.
3. The watchmen are not entitled to night differential pay for past services, and therefore the decision
should be reversed with the respect thereto.
The petitioner has filed a present petition for certiorari.
ISSUE:

Whether or not he petitioner's watchmen is entitled to extra compensation for past overtime work.
HELD:
Sections 3 and 5 of Commonwealth Act 444 expressly provides for the payment of extra compensation
in cases where overtime services are required, with the result that the employees or laborers are
entitled to collect such extra compensation for past overtime work.

#40
Interphil Laboratories Employees Union- FFW, et. al vs. Interphil Laboratories{G.R. No.
142824, December 19, 2001}

Facts:

Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the
rank-and-file employees of Interphil Laboratories, Inc., a company engaged in the business of
manufacturing and packaging pharmaceutical products. They had a Collective Bargaining Agreement
(CBA) effective from 01 August 1990 to 31 July 1993.

Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar,1VicePresident-Human Resources Department of respondent company, was approached by Nestor Ocampo,
the union president, and Hernando Clemente, a union director. The two union officers inquired about
the stand of the company regarding the duration of the CBA which was set to expire in a few months.
Salazar told the union officers that the matter could be best discussed during the formal negotiations
which would start soon.

In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more
about the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested for a
meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting was held on
15 April 1993 where the union officers asked whether Salazar would be amenable to make the new
CBA effective for two (2) years, starting 01 August 1993. Salazar, however, declared that it would still
be premature to discuss the matter and that the company could not make a decision at the moment.
The very next day, or on 16 April 1993, all the rank-and-file employees of the company refused to
follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00
a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left their workplace
without sealing the containers and securing the raw materials they were working on When Salazar
inquired about the reason for their refusal to follow their normal work schedule, the employees told
him to "ask the union officers." To minimize the damage the overtime boycott was causing the
company, Salazar immediately asked for a meeting with the union officers. In the meeting, Enrico
Gonzales, a union director, told Salazar that the employees would only return to their normal work
schedule if the company would agree to their demands as to the effectivity and duration of the new
CBA. Salazar again told the union officers that the matter could be better discussed during the formal
renegotiations of the CBA. Since the union was apparently unsatisfied with the answer of the company,

the overtime boycott continued. In addition, the employees started to engage in a work slowdown
campaign during the time they were working, thus substantially delaying the production of the
company.

On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and
the latter filed its counter-proposal. On 03 September 1993, respondent company filed with the
National Labor Relations Commission (NLRC) a petition to declare illegal petitioner union's "overtime
boycott" and "work slowdown" which, according to respondent company, amounted to illegal strike.
The case, docketed NLRC-NCR Case No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R.
Caday. On 22 October 1993, respondent company filed with the National Conciliation and Mediation
Board (NCMB) an urgent request for preventive mediation aimed to help the parties in their
CBAnegotiations.3The parties, however, failed to arrive at an agreement and on 15 November 1993,
respondent company filed with the Office of the Secretary of Labor and Employment a petition for
assumption of jurisdiction.

On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair
labor practice allegedly committed by respondent company. On 12 February 1994, the union staged a
strike.

On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption

order 4over the labor dispute. On 02 March 1994, Secretary Confesor issued an order directing
respondent company to "immediately accept all striking workers, including the fifty-three (53)
terminated union officers, shop stewards and union members back to work under the same terms and
conditions prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its
employees in 1993.

"On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then
Secretary of Labor Leonardo A. Quisumbing.8Then Secretary Quisumbing approved and adopted the
report in his Order, dated 13 August 1997.

Hence, the present recourse where petitioner alleged

Issue:

Whether or not the Honorable Fifth Division of Court of Appeals committed grave abuse?

Ruling:

On the matter of the authority and jurisdiction of the Secretary of Labor and Employment to
rule on the illegal strike committed by petitioner union, it is undisputed that the petition to declare the
strike illegal before Labor Arbiter Caday was filed long before the Secretary of Labor and Employment
issued the assumption order on 14 February 1994.However, it cannot be denied that the issues of
"overtime boycott" and "work slowdown" amounting to illegal strike before Labor Arbiter Caday are
intertwined with the labor dispute before the Labor Secretary. In fact, on 16 March 1994, petitioner
union even asked Labor Arbiter Caday to suspend the proceedings before him and consolidate the
same with the case before the Secretary of Labor.

The appellate court also correctly held that the question of the Secretary of Labor and
Employment's jurisdiction over labor and labor-related disputes was already settled in International
Pharmaceutical, Inc. vs. Hon. Secretary of Labor and Associated Labor Union (ALU).

Anent the alleged misappreciation of the evidence proffered by the parties, it is axiomatic that
the factual findings of the Labor Arbiter, when sufficiently supported by the evidence on record, must
be accorded due respect by the Supreme Court.12Here, the report and recommendation of Labor
Arbiter Caday was not only adopted by then Secretary of Labor Quisumbing but was likewise affirmed
by the Court of Appeals. We see no reason to depart from their findings.

WHEREFORE, the petition is DENIED DUE COURSE and the 29 December 1999 decision of the
Court of Appeals is AFFIRMED.SO ORDERED.

ART. 84. HOURS WORKED

#41
G.R. No.:L 16275 February 23, 1961
PAN AMERICAN WOLRD AIRWAYS SYSTEM (PHIL.), petitioner,
V.
PAN AMERICANEMPLOYEES ASSOCIATION, respondent.
J. Reyes, J.B.L., ponente.
FACTS: Appeal by certiorari from the decision of the Court of Industrial Relations in case No. 1055 V
dated October 10, 1959, and its resolution en banc denying the motion for reconsideration by the
petitioner herein. The Court orders to compute the overtime compensation due the aforesaid fourteen
(14) aircraft mechanic and the 2 employees from the Communication Department based on the time
sheet of said employees from February 23, 1952 July 15, 1958 and to submit his report within 30
days for further disposition by the court. Petitioner contends that the finding of that the 1 hour meal
period should be considered work(deducting 15 minutes as time allowed for eating) is not supported
by substantial evidence.
ISSUE: Whether or not the 1 hour meal period should be considered as overtime work (after deducting
15minutes)?
HELD: Yes. The Court ruled that during the so called meal period, the mechanics were required to
standby for emergency work; that if they happened not to be available when called, they were
reprimanded by the lead man; that as in fact it happened on many occasions, the mechanics had been

called from their meals or told to hurry Employees Association up eating to perform work during this
period. Judgment appealed from is affirmed. Cost against appellant.

#42 JOSE GAYONA VS. GOOD EARTH EMPORIUM AND SUPERMARKET

#43

#44 LUZON STEVEDORING CO. INC VS. LUZON MARINE DEPARTMENT UNION
#45
Cagampan, et. al. vs. NLRC
G.R. Nos. 85122-24

Facts:
On April 17 and 18,1985, petitioners, all seamen, entered into separate contracts of employment with
the Golden Light Ocean Transport, Ltd., through its local agency, private respondent ACE MARITIME
AGENCIES, INC. Thereafter, petitioners collectively and/or individually filed complaints for non-payment
of overtime pay, vacation pay and terminal pay against private respondent. In addition, they claimed
that they were made to sign their contracts in blank. Likewise, petitioners averred that although they
agreed to render services on board the vessel Rio Colorado managed by Golden Light Ocean Transport,
Ltd., the vessel they actually boarded was MV "SOIC I" managed by Columbus Navigation. Two (2)
petitioners, Jorge de Castro and Juanito de Jesus, charged that although they were employed as
ordinary seamen (OS), they actually performed the work and duties of Able Seamen (AB). Private
respondent was furnished with copies of petitioners' complaints and summons, but it failed to file its
answer within the reglementary period. Thus, on January 12, 1987, an Order was issued declaring that
private respondent has waived its right to present evidence in its behalf and that the cases are
submitted for decision the Philippine Overseas Employment Administration (POEA) rendered a Decision
dismissing petitioners' claim for terminal pay but granted their prayer for leave pay and overtime pay.
Issue:
Whether Cagampan even without sufficient evidence of actual rendition of overtime work, would
automatically be entitled to overtime pay.
Held:
No. The NLRC ruling on the disallowance of overtime pay is ably supported by the fact that petitioners
never produced any proof of actual performance of overtime work. The contract provision means that
the fixed overtime pay of 30% would be the basis for computing the overtime pay if and when
overtime work would be rendered. Simply, stated, the rendition of overtime work and the submission
of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman
could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly
salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such
benefit must first be established.
Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond
the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours
when he might be sleeping or attending to his personal chores or even just lulling away his time would
be extremely unfair and unreasonable.

#46
NATIONAL DEVELOPMENT COMPANY
vs.
COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS UNION

FACTS:
At the National Development Co., a government-owned and controlled corporation, there were four
shifts of work. One shift was from 8 a.m. to 4 p.m., while the three other shifts were from 6 a.m. to 2
p.m; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In each shift, there was a onehour mealtime period, to wit: From (1) 11 a.m. to 12 noon for those working between 6 a.m. and 2 p.m.
and from (2) 7 p.m. to 8 p.m. for those working between 2 p.m. and 10 p.m.
The records disclose that although there was a one-hour mealtime, petitioner nevertheless credited
the workers with eight hours of work for each shift and paid them for the same number of hours.
However, since 1953, whenever workers in one shift were required to continue working until the next
shift, petitioner instead of crediting them with eight hours of overtime work, has been paying them for
six hours only, petitioner that the two hours corresponding to the mealtime periods should not be
included in computing compensation.
ISSUE:
Whether or not the mealtime breaks should be considered working time
RULING:
The CIR correctly concluded that work in petitioner company was continuous and therefore the
mealtime breaks should be counted as working time for purposes of overtime compensation.
Petitioner gives an eight-hour credit to its employees who work a single shift say from 6 a.m. to 2 p.m.
Why cannot it credit them sixteen hours should they work in two shifts?
There is another reason why this appeal should dismissed and that is that there is no decision by the
CIR en bancfrom which petitioner can appeal to this Court. As already indicated above, the records
show that petitioner's motion for reconsideration of the order of March 19, 1959 was dismissed by the
CIR en banc because of petitioner's failure to serve a copy of the same on the union.

#47
Sime Darby Pilipinas Inc. vs NLRC

Facts:
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and
other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is
an association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present
controversy, all company factory workers in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid on call lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its
monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality
Assurance Department working on shifts, a change in work schedule effective 14 September 1992 thus

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: Whether or not the act of management in revising the work schedule of its employees and
discarding their paid lunch break constitutive of unfair labor practice?
Ruling: The Court ruled that 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 very well be considered as working time because the factory employees were
required to work if necessary and were paid accordingly for working.
With the new work schedule, the employees are now given a one-hour lunch break without any
interruption from their employer. For a full one-hour undisturbed lunch break, the employees can freely
and effectively use this hour not only for eating but also for their rest and comfort which are conducive
to more efficiency and better performance in their work.
Since the employees are no longer required to work during this one-hour lunch break, there is no more
need for them to be compensated for this period. 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.

#48
MERCURY DRUG CO., INC., petitioner,
vs.
NARDO DAYAO, ET AL., respondents
FACTS
This is a verified petition dated March 17, 1964 which was subsequently amended on July 31, 1964
filed by Nardo Dayao and 70 others against Mercury Drug Co., Inc.,and/or Mariano Que, President &
General Manager, and Mercury Drug Co., Inc.2.Employees Association praying, with respect to
respondent corporation and its president and general manager: 1) payment of their unpaid back wages
for work done on Sundays and legal holidays plus 25 % additional compensation from date of their
employment up to June 30, 1962; 2) payment of extra compensation on work done at night; 3)
reinstatement of Januario Referente and Oscar Echalar to their former positions with back salaries; and,
as against the respondent union, for its disestablishment and the refund of the money it had collected
from petitioners. The CIR sustained the claim of the petitioners for payment of back wages
corresponding to the first four hours work rendered on every other Sunday and first four hours on legal
holidays should be denied for lack of merit. The motion for reconsideration was denied. Thus, the
instant petition contending that private respondents' claims for 25%Sunday and Legal Holiday
premiums are not supported by substantial evidence, thus infringing upon the cardinal rights of the
petitioner, and that assuming it is, such premiums are already included in the salary of private
respondents.
ISSUE
Whether or not private respondents are entitled to the 25% Sunday and Legal Holiday premiums.
Ruling
The contention is without merit. While an employer may compel his employees to perform service on
such days, the law nevertheless imposes upon him the obligation to pay his employees at least 25%
additional of their basic or regular salaries. Under Section 4 of C. A. No. 444, no person, firm or
corporation, business establishment or place of center of labor shall compel an employee or laborer to
work during Sundays and legal holidays unless he is paid an additional sum of at least twenty-five per
centum of his regular remuneration :Provided, However, That this prohibition shall not apply to public
utilities performing some public service such as supplying gas, electricity, power, water, or providing
means of transportation or communication. Although a service enterprise, respondent company's
employees are within the coverage of C. A. No. 444, as amended known as the Eight Hour Labor Law,
for they do not fall within the category or class of employees or labourers excluded from its provisions.
In not giving weight to the evidence of the petitioner company, the respondent court sustained the
private respondents' evidence to the effect that their 25%additional compensation for work done on
Sundays and Legal Holidays were not included in their respective monthly salaries. The private
respondents presented evidence through the testimonies of Nardo, Dayao, Ernesto Talampas, and
Josias Federico who are themselves among the employees who filed the case for unfair labor practice
in the respondent court and are private respondents herein. The petitioner- company's contention that
the respondent court's conclusion on the issue of the 25% additional compensation for work done on
Sundays and legal holidays during the first four hours that the private respondents had to work under
their respective contracts of employment was not supported by substantial evidence is, therefore,
unfounded

#49
Case Title: NATIONAL SHIPYARDS AND STEEL CORPORATION VS. COURT OF INDUSTRIALRELATIONS
G.R. No.: L-17068
Date: December 30, 1961
Petitioner: National Shipyards And Steel Corporation
Respondent: Court Of Industrial Relations
Ponente: J. Reyes
Facts:
Petition for review by certiorari of the orders of the Court of Industrial relations requiring it to pay its bargeman,
Malondras, an overtime service of 16 hours a day for a period from January 1, 1954 -December 31, 1956, and from January
1, 1957 to April 30, 1957, inclusive.
NASSOO, engaged in the business of ship building and repair that needs a service of a bargeman. Bargeman are
required to stay in their barges for on call duty, so they are given living quarters and subsistence allowance of P1.50 per
day during the time they are on board. However, Malondras filed with the Industrial Court a complaint for the payment of
overtime compensation because of his exclusion from the second report of the examiner. The examiner then submitted an
amended report giving Malondras an average of 16 overtime hours a day, and recommending the payment to him of P15,
242.15as overtime compensation during the period covered by the report. Hence, this petition.
Issue:
Whether or not respondent Malondras is entitled to 16 hours a day overtime pay?
Held:
No. The Court ruled that the correct criterions in determining whether or not sailors are entitled to overtime pay is
not whether they were on board and cannot leave ship beyond the regular eight working hours a day, but whether they
actually rendered service in excess of said number of hours; In such much as the parties show that the subsistence
allowance is independent of and has nothing to do with whatever additional compensation for overtime work was due the
petitioner, the same should not be deducted from his overtime compensation. Respondent Malondras should be credited
(5) overtime hours instead of (16)
hours a day for the periods covered by the examiners report. Order appealed is affirmed with
modifications.

#50
SECOND DIVISION
G.R. No. L-27761 September 30, 1981BISIG NG MANGGAGAWA NG PHILIPPINE REFINING CO., INC.,
plaintiff-appellants,vs.
PHILIPPINE REFINING CO., INC.,

defendant-appellee.
FACTS:
This is an appeal from the decision of the Court of First Instance of Manila dated December 8, 1966,
inC i v i l C a s e N o . 6 5 0 8 2 , h o l d i n g t h a t C h r i s t m a s b o n u s a n d o t h e r f r i n g e b e n e fi t s
a r e e x c l u d e d i n t h e computation of the overtime pay of the members of the appellant union
under Section 6, Article VI of the1965 collective bargaining agreement which reads as follows:Overtime pay at
the rate of regular base pay plus 50% thereof shag be paid for allwork performed in excess of eight
hours on ordinary days within the work week(that is to say, Monday to Friday).On April 15,1966, the Bisig ng
Manggagawa ng Philippine Refining Company, Inc., as the representativeunion of the rank and fi le
employees of the Philippine Refi ning Co., Inc., fi led with the Court of First Instance of Manila a
petition for declaratory relief praying, among others That a declaratory judgment be rendered declaring
and adjudicating the rights andduties of petitioner and respondent under the above quoted
provision of their Collective 13 - agreements and further declaring that the Christmas bonus of
onemonth or thirty days pay and other de determinable benefits should be included for the purpose
of computation of the overtime pay spread throughout the twelve months period of each
year from August, 1963 up to the present and subsequentlyhereafter; and that respondent be
therefore directed to pay such differential in theovertime pay of all the employees of the herein
respondent ;Petitioner union contended that the respondent company was under obligation to include
the employees'Christmas bonus and other fringe benefits in the computation of their overtime pay by virtue of the
ruling of this Court in the case of NAWASA vs. NAWASA Consolidated Unions, et all G.R. No. L-18938, August 31,1964, 11
SCRA 766.On May 3, 1966, the Philippine Refining Co.. Inc. filed its answer to the petition alleging that
never did theparties intend, in the 1965 CBA and in prior agreements, to include the employees'
Christmas bonus andother fringe benefits in the computation of the overtime pay and that the
company precisely agreed to arate of 50%, which is much higher than the 25% required by the EightHour Labor Law (Commonwealth Act No. 444, as amended), on the condition that in computing the
overtime pay only the "regular base pay"would be considered. After the requisite pre-trial
was held, the CFI of Manila issued an order limiting the issues to the proper interpretation of the above
quoted provision of the 1965 CBA and to the applicability to the case of theNAWASA ruling and
requiring the parties to submit evidence as to the circumstances under which thequestioned provision had
been included in the agreement of 1965. After presentations of respective witnesses, the CFI of Manila
rendered a decision on December 8, 1966,.Said court held that while the NAWASA ruling concerning
the meaning of the phrase "regular pay" of theEight-Hour Labor Law could be applied to employees of
private corporations like the Philippine RefiningCompany, the same was, nevertheless, inapplicable to
the case at bar which involved the interpretation of the phrase "regular base pay which was different
from "regular pay". It declared that "regular base
pay"r e f e r r e d o n l y t o t h e b a s i c o r m o n t h l y p a y e x c l u s i v e o f C h r i s t m a s b o n u s a n
d o t h e r f r i n g e b e n e fi t s . Furthermore, the validity of the provision of the 1965
collective bargaining agreement concerning the computation of the employees' overtime pay
on the basis of their "regular base pay" was upheld by thecourt for the reason that the same was even
higher than the overtime pay prescribed by law. The court

#51
G.R. No. L-30279 July 30, 1982
PHILIPPINE NATIONAL BANK, petitioner,
vs.
PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION (PEMA) and COURT OF INDUSTRIAL
RELATIONS,respondents.

FACTS: PNB and PNB Employees Association (PEMA) had a dispute regarding the proper computation
of overtime pay. PEMA wanted the cost of living allowance (granted in 1958) and longevity pay
(granted in 1961) to be included in the computation. PNB disagreed and the 2 parties later went before
the CIR to resolve the dispute. CIR decided in favor of PEMA and held that PNB should compute the
overtime pay of its employees on the basis of the sum total of the employees basic salary or wage
plus cost of living allowance and longevity pay. The CIR relied on the ruling in NAWASA v NAWASA
Consolidated Unions, which held that for purposes of computing overtime compensation, regular
wage includes all payments which the parties have agreed shall be received during the work week,
including differentiated payments for working at undesirable times, such as at night and the board and
lodging customarily furnished the employee. This prompted PNB to appeal, hence this case.
ISSUE: WON the cost of living allowance and longevity pay should be included in the computation of
overtime pay as held by the CIR
HELD: NO, Overtime pay is for extra effort beyond that contemplated in the employment contract;
additional pay given for any other purpose cannot be included in the basis for the computation of
overtime pay. Absent a specific provision in the CBA, the bases for the computation of overtime pay
are 2 computations, namely:
1. WON the additional pay is for extra work done or service rendered
2. WON the same is intended to be permanent and regular, not contingent nor temporary as a given
only to remedy a situation which can change any time.
Longevity pay cannot be included in the computation of overtime pay for the very simple reason that
the contrary is expressly stipulated in the CBA, which constitutes the law between the parties.
As regards cost of living allowance, there is nothing in Commonwealth Act 444 [or the 8-hour Labor
Law, now Art. 87 Labor Code] that could justify PEMAs posture that it should be added to the regular
wage in computing overtime pay. C.A. 444 prescribes that overtime work shall be paid at the same
rate as their regular wages or salary, plus at least 25% additional. The law did not define what is a
regular wage or salary. What the law emphasized is that in addition to regular wage, there must be
paid an additional 25% of that regular wage to constitute overtime rate of pay. Parties were thus
allowed to agree on what shall be mutually considered regular pay from or upon which a 25% premium
shall be based and added to makeup overtime compensation.
No rule of universal application to other cases may be justifiably extracted from the NAWASA case. CIR
relies on the part of the NAWASA decision where the SC cited American decisions whose legislation on
overtime is at variance with the law in this jurisdiction. The US legislation considers work in excess of
forty hours a week as overtime; whereas, what is generally considered overtime in the Philippines is
work in excess of the regular 8 hours a day. It is understandably material to refer to precedents in the
US for purposes of computing weekly wages under a 40-hour week rule, since the particular issue
involved in NAWASA is the conversion of prior weekly regular earnings into daily rates without allowing
diminution or addition.
To apply the NAWASA computation would require a different formula for each and every employee. It
would require reference to and continued use of individual earnings in the past, thus multiplying the

administrative difficulties of the Company. It would be cumbersome and tedious a process to compute
overtime pay and this may again cause delays in payments, which in turn could lead to serious
disputes. To apply this mode of computation would retard and stifle the growth of unions themselves
as Companies would be irresistibly drawn into denying, new and additional fringe benefits, if not those
already existing, for fear of bloating their overhead expenses through overtime which, by reason of
being unfixed, becomes instead a veritable source of irritant in labor relations.
**Overtime Pay Rationale Why is a laborer or employee who works beyond the regular hours of work
entitled to extra compensation called, in this enlightened time, overtime pay?
Verily, there can be no other reason than that he is made to work longer than what is commensurate
with his agreed compensation for the statutorily fixed or voluntarily agreed hours of labor he is
supposed to do. When he thus spends additional time to his work, the effect upon him is multifaceted; he puts in more effort, physical and/or mental; he is delayed in going home to his family to
enjoy the comforts thereof; he might have no time for relaxation, amusement or sports; he might miss
important pre-arranged engagements; etc. It is thus the additional work, labor or service employed
and the adverse effects just mentioned of his longer stay in his place of work that justify and are the
real reasons for the extra compensation that is called overtime pay.
**Overtime Pay Definition The additional pay for service or work rendered or performed in excess of 8
hours a day by employees or laborers in employment covered by the 8 hour Labor Law [C.A. 444, now
Art. 87 Labor Code] and not exempt from its requirements. It is computed by multiplying the overtime
hourly rate by the number of hours worked in excess of eight.
Disposition decision appealed from is REVERSED

QUITCLAIM
#52 PAMPANGA SUGAR DEVELOPMENT Co. VS. CIR
ART. 87-88. OFFSET OVERTIME
#53
NATIONAL WATERWORKS & SEWERAGE AUTHORITY, petitioner,
vs.
NWSA CONSOLIDATED UNION, JESUS CENTENO, ET AL., and THE COURT OF INDUSTRIAL
RELATIONS,respondents.
Facts: Domingo, discharged the function of a supervisor. Likewise, coordinating engineer, Zurban since
September 13, 1955 until the date of his retirement was corporate legal counsel, and Fabregas, was
the chief of the administrative division during the period of his claim were concerned. They were
required to work overtime but was not paid overtime pay, the peititioer contending that the fall within
the category managerial employee which is exempted from being paid of overtime pay. The Court of
Industrial Relations decided the case in their favour.
Issue: Whether the private respondents fall within the category of managerial employees.
Held: No. "The most obvious distinction of a 'managerial employee' is his participation in formulating
company policies. Another is his power to hire or fire employees, and under Rep. Act No. 2377, his
exemption from the rigid observance of regular office hours. The Court fails to find any indication that
their primary duties bear any direct relation with the [Nawasa] management or that they help
formulate its policies. Neither is there any indication that the three movants have the power to hire or
fire employees of the [Nawasa]. On the contrary, the very exhibits presented by the [Nawasa] ... show
that the power to hire and fire, and to formulate policies exclusively belong to the Board of Directors
and the General Manager. What is more, all the three movants were required to observe official time,
so much so that any undertime or absence incurred by them were deducted from their accrued
vacation or sick leave. They had to accomplish their daily time records in Civil Service Form No. 48,
wherein they had to record their time of arrivals and departures, hence lack the freedom to come and
go to their offices, or move about at their own pleasure, which is the unmistakable mark of a
'managerial employee'." 6
It was the conclusion of respondent Court then: "For the purpose of Rep. Act No. 2377, therefore,
the movants do not fall within the category of 'managerial employees', hence are not barred from
claiming overtime." 7

#54 RODRIGO STO. DOMINGO VS. PHIL ROCK PRODUCTS

ART. 91-91 REST DAYS

#55
De Leon v Pampanga Sugar Development Co. 20 SCRA 628
Facts: The respondent Pampanga Sugar Development Company (PASUDECO) operates a sugar central
at San Fernando, Pampanga. The petitioners, 21 all told, were its security guards required to work eight
hours a day, seven days a week. On November 28, 1961 the petitioners filed with the CIR a complaint
seeking payment to them of premium or differential pay in the total amount P49,581.79, plus
attorney's fees of P3,000 and costs of suit. Upon the finding that the "petitioners were paid their
monthly salaries plus 25% additional compensation for work on Sundays and Holidays as provided for
by law and that work on said days is one of the terms and conditions of their employment as security
guards." The Court of Industrial Relations dismissed the case. The petitioners' claim, in essence, is that
under the authority of section 4 of Commonwealth Act 444 as amended (Eight-Hour Labor Law), for a
Sunday or legal holiday work of not more than eight hours, each of them is entitled to his monthly
salary and his premium or differential compensation.
Issue: Whether or not the petitioners are entitled to the 25% premium pay who worked on Sunday or
legal holiday??
Held: Yes, The import of the law and the decision in Manalo is that for work on Sundays and legal
holidays, the employer must pay the employee: (1) his regular remuneration, or 100%; and (2) an
additional sum of at least 25% of the regular remuneration, which is called the "premium pay." In other
words, the pay for Sundays and legal holidays is 125% of the pay for ordinary days, but only the
excess of 25% is premium pay. With respect to employees paid on a monthly basis, the first 100% (of
the 125%), corresponding to the regular remuneration, may or may not be included in the monthly
salary. If it is, then the employee is entitled to collect only the premium of 25%. If it is not, then the
employee has a right to receive the entire 125%. The court en banc affirmed the decision of Court of
Industrial relations, there is a finding that the "petitioners were paid their monthly salaries plus 25%
additional compensation for work on Sundays and holidays."

ART. 94. HOLIDAY AND HOLIDAY PAYS

#56
JOSE RIZAL COLLEGE vs. NLRC and NATOW
G.R. No. L-65482 December 1, 1987
Ponente: J. Paras

FACTS:
Petitioner is a non-stock, non-profit educational institution duly organized and existing under the laws
of the Philippines. It has three groups of employees categorized as follows: (a) personnel on monthly
basis, who receive their monthly salary uniformly throughout the year, irrespective of the actual
number of working days in a month without deduction for holidays; (b) personnel on daily basis who
are paid on actual days worked and they receive unworked holiday pay and (c) collegiate faculty who
are paid on the basis of student contract hour. Before the start of the semester they sign contracts
with the college undertaking to meet their classes as per schedule. Unable to receive their
corresponding holiday pay, as claimed, from 1975 to 1977.

ISSUE:
The sole issue in this case is whether or not the school faculty who according to their contracts are
paid per lecture hour and are entitled to unworked holiday pay.

HELD:
Petitioner maintains the position among others, that it is not covered by Book V of the Labor Code on
Labor Relations considering that it is a non- profit institution and that its hourly paid faculty members
are paid on a "contract" basis because they are required to hold classes for a particular number of
hours. if a regular week day is declared a holiday, the school calendar is extended to compensate for
that day. Thus petitioner argues that the advent of any of the legal holidays within the semester will
not affect the faculty's salary because this day is not included in their schedule while the calendar is
extended to compensate for special holidays.
Regular holidays specified as such by law are known to both school and faculty members as no class
days;" certainly the latter do not expect payment for said unworked days, and this was clearly in their
minds when they entered into the teaching contracts.
On the other hand, both the law and the Implementing Rules governing holiday pay are silent as to
payment on Special Public Holidays.
Declared purpose of the holiday pay which is the prevention of diminution of the monthly income of
the employees on account of work interruptions is defeated when a regular class day is cancelled on
account of a special public holiday and class hours are held on another working day to make up for

time lost in the school calendar.

PREMISES CONSIDERED, the decision of respondent National Labor Relations Commission is hereby set
aside, and a new one is hereby RENDERED: (a) exempting petitioner from paying hourly paid faculty
members their pay for regular holidays, whether the same be during the regular semesters of the
school year or during semestral, Christmas, or Holy Week vacations; (b) but ordering petitioner to pay
said faculty members their regular hourly rate on days declared as special holidays or for some reason
classes are called off or shortened for the hours they are supposed to have taught, whether extensions
of class days be ordered or not; in case of extensions said faculty members shall likewise be paid their
hourly rates should they teach during said extensions.

#57
San Miguel Corporation v. Court of Appeals et al January 30, 2002 G.R. no. 146775

Facts:
The Department of Labor and Employment conducted a routine inspection in San Miguel Corporation,
Iligan City and it was discovered that there was underpayment by SMC of regular Muslim holiday pay
to its employees. DOLE sent a copy of inspection result to SMC which the latter contested the findings.
SMC failed to submit proof and hence the Director of DOLE of Iligan District Office issued a compliance
order to pay both its Muslim and non-Muslim employees the Muslim Holidays. SMC appealed to DOLE
main office but dismissed for having been filed late but later on reconsidered because it is within
reglementary period but still dismissed for lack of merit. Hence, this present petition for certiorari.
Issue:
Whether or not non-Muslim employees working in Muslim areas is entitled to Muslim Holiday Pay.
Held:
The Supreme Court dismissed the petition and ordered the petitioner to pay its non-Muslim employees.
The basis for this decision were Articles 169 and 170 of P.D. No. 1083 Code of Muslim Personal Laws
which listed all official Muslim holidays and provincies and cities where officially observed. In this case,
SMC is located in Iligan which is covered in the those provisions. Also Article 169 and 170 of PD No.
1083 should be read in conjunction with Article 94 of Labor Code which provides for the right of every
worker to be paid of holiday pay.
Petitioner asserts Art.3(3) of PD No. 1083 provides that it shall be applicable only to Muslims. However,
the Court said that said article declares that nothing herein shall be construed to operate to the
prejudice of a non-Muslim. There should be no distinction between Muslims and non-Muslims as
regards payment of benefits for Muslim holidays.
It was said also that the The Court of Appeals did not err in sustaining Undersecretary Espaol who
stated: Assuming arguendo that the respondents position is correct, then by the same token, Muslims
throughout the Philippines are also not entitled to holiday pays on Christian holidays declared by law
as regular holidays. We must remind the respondent-appellant that wages and other emoluments
granted by law to the working man are determined on the basis of the criteria laid down by laws and
certainly not on the basis of the workers faith or religion.

#58
G.R. No. L 52415
October 23, 1984
Insular Bank of Asia and America Employees Union, petitioner,
versus
Hon. Amado G. Inciong, Deputy Minister, Ministry of Labor and Insular Bank of Asia and
America

Facts:
Petitioners, who work for respondent-bank, filed a complaint against the latter because of noncompliance with the holiday pay as required by Article 208 of the Labor Code. Eventually, Labor Arbiter
Soriano (Soriano) granted petitioners claim for the holiday pay. Without making any appeal,
respondent-bank complied with Sorianos orders. However, the Labor Code was amended which was
subsequently followed by the Secretary of Labors issuance of Policy Instruction No. 9 which states that
if the employee is receiving the maximum monthly minimum and the said monthly pay is uniform for
the whole year, it would be presumed that the said holiday pay has already been paid. With this, the
respondent-bank stopped paying its employees holiday in contradiction with Sorianos instruction. As
a result, petitioner motioned for a writ of execution to enforce Sorianos decision. Respondent-bank
contended that it has been repealed by the subsequent laws herein mentioned. As a reply, Soriano
contended that his decision is already final and that the said decision was the law between the two
parties. Further, he contends that the respondent-bank has already complied with the said decision so
an appeal would not be a proper action for this instance. Respondent-bank then appealed to the NLRC
but to no avail. It was then filed to the Labor Ministry for decision. However, Deputy Minister Inciong
issued an order which sets aside the NLRCs decision and released a new judgment which dismisses
the case for lack of merit. Thus, the case is not before the Court.

Issue(s):
1.
2.

Whether or not is Policy Instruction No. 9, which states that monthly paid employees are
excluded from holiday pay, a valid reason for respondent-banks actions?
Can the Deputy Labor Minister set aside the decision made by Labor Arbiter despite the latters
decision being final and partially executed?

Ruling:
As to the first issue, Policy Instruction No.9 has been found null and void because it runs
contradictory to Article 82 of the Labor Code which states the coverage of the holiday pay. The said
article never mentioned any exclusions of monthly paid employees from the holiday pay benefits.
As to the second issue, the Court rules that the Deputy Labor Minister and the said law which
his office implemented cannot affect nor change the Labor Arbiters decision which was already final
and partially executed. Setting aside the Labor Arbiters decision would result to divesting from the

petitioner their rights acquired by virtue of final judgment which is also tantamount to deprivation of
property without due process of the law.
Thus, the Court grants the petition, sets aside the Deputy Labor Ministers orders, and
reinstated the Labor Arbiters decision.

#59 THE CHARTERED BANK EMPLOYEES ASSOCIATION VS. HON. BLAS OPLE
#60
G.R. No. 147420

June 10, 2004

CEZAR ODANGO in his behalf and in behalf of 32 complainants, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTIQUE ELECTRIC COOPERATIVE,
INC., respondents.
A petition for review1 assailing the Court of Appeals Resolutions of 27 September 2000 2 and 7
February 2001. The Court of Appeals upheld the Decision 3 dated 27 November 1997 and the Resolution
dated 30 April 1998 of the National Labor Relations Commission ("NLRC") in NLRC Case No. V-0048-97.
The NLRC reversed the Labor Arbiters Decision of 29 November 1996, which found respondent Antique
Electric Cooperative ("ANTECO") liable for petitioners wage differentials amounting to P1,017,507.73
plus attorneys fees of 10%.
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 ("DOLE") found ANTECO liable for underpayment of the monthly salaries of its employees.
On 10 September 1989, the DOLE directed ANTECO to pay its employees wage differentials amounting
to P1,427,412.75. ANTECO failed to pay.
Thus, on various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with the
NLRC Sub-Regional Branch VI, Iloilo City, praying for payment of wage differentials, damages and
attorneys fees. Labor Arbiter Rodolfo G. Lagoc ("Labor Arbiter") heard the consolidated complaints.
On 29 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%. Florentino Tongson, whose
case the Labor Arbiter dismissed, was the sole exception.
ANTECO appealed the Decision to the NLRC on 24 December 1996. On 27 November 1997, the NLRC
reversed the Labor Arbiters Decision. The NLRC denied petitioners motion for reconsideration in its
Resolution dated 30 April 1998. Petitioners then elevated the case to this Court through a petition for
certiorari, which the Court dismissed for petitioners failure to comply with Section 11, Rule 13 of the
Rules of Court. On petitioners motion for reconsideration, the Court on 13 January 1999 set aside the
dismissal. Following the doctrine in St. Martin Funeral Home v. NLRC,4 the Court referred the case
to the Court of Appeals.
On 27 September 2000, the Court of Appeals issued a Resolution dismissing the petition for failure to
comply with Section 3, Rule 46 of the Rules of Court. The Court of Appeals explained that petitioners

failed to allege the specific instances where the NLRC abused its discretion. The appellate court denied
petitioners motion for reconsideration on 7 February 2001.
Hence, this petition.
ISSUES:
Whether or not the petitioners were underpaid and this entitle them to their money claim.

HELD:
The use of a divisor less than 365 days cannot make ANTECO automatically liable for underpayment.
The facts show that petitioners are 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 means that ANTECOs workers are
deprived of their holiday pay for some or all of the ten legal holidays. The 304 days divisor used by
ANTECO is clearly above the minimum of 287 days.
Even assuming that Section 2, Rule IV of Book III is valid, petitioners 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. 15 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. In effect,
petitioners demand that ANTECO should pay them on Sundays, the un-worked half of Saturdays and
other days that they do not work at all. 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. Sustaining petitioners argument will make monthly-paid employees a privileged
class who are paid even if they do not work.
We have long ago declared void Section 2, Rule IV of Book III of the Omnibus Rules Implementing the
Labor Code. In Insular Bank of Asia v. Inciong,14 we ruled as follows:
Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9 issued by
the Secretary (then Minister) of Labor are 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.
The Labor Code is clear that monthly-paid employees are not excluded from the benefits of
holiday pay. However, the implementing rules on holiday pay promulgated by the then
Secretary of Labor excludes monthly-paid employees from the said benefits by inserting, under
Rule IV, Book III of the implementing rules, Section 2 which provides that monthly-paid
employees are presumed to be paid for all days in the month whether worked or not.
Thus, Section 2 cannot serve as basis of any right or claim. Absent any other legal basis, petitioners
claim for wage differentials must fail.

#61
UNION OF FILIPRO EMPLOYEES v. BENIGNO VIVAR, JR.G.R. No. 79255 January 20, 1992

Facts:

On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the
National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its
rights and obligations respecting claims of its monthly paid employees for holiday pay in the light of
the Court's decision in
Chartered Bank Employees Association v Ople.

Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary
arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On January 2, 1980,
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.

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years,(2)
the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical
representatives from the award of the holiday pay, and (3) deduction from the holiday pay award of
overpayment for overtime, night differential, vacation and sick leave benefits due to the use of 251
divisor. Petitioner UFE answered that the award should be made effective from the date of effectivity of
the Labor Code, that their sales personnel are not field personnel and are therefore entitled to holiday
pay, and that the use of 251 as divisor is an established employee benefit which cannot be diminished.

Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent
Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which issued a
resolution remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to
review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code. However, in a
letter 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.

Issue:

Whether or not Nestle's sales personnel are entitled to holiday pay.

Ruling:

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 Court finds that 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 respondent arbitrator's order to change the divisor from 251 to 261 days would result in a
lower daily rate which is violative of the prohibition on non-diminution of benefits found in Article 100
of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the
dividend, which represents the employee's annual salary, should correspondingly be increased to
incorporate the holiday pay. There is thus no merit in respondent Nestle's claim of overpayment of
overtime and night differential pay and sick and vacation leave benefits, the computation of which are
all based on the daily rate, since the daily rate is still the same before and after the grant of holiday
pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251
days as divisor must fail in light of the Labor Code mandate that "all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations, shall be resolved in favor
of labor." (Article 4). Nevertheless, in order to fully settle the issues, the Court resolved to take up the
matter of effectivity of the holiday pay award raised by Nestle.

Applying the operative fact aforementioned doctrine to the case at bar, it is not far-fetched
that Nestle, relying on the implicit validity of the implementing rule and policy instruction before this
Court nullified them, and thinking that it was not obliged to give holiday pay benefits to its monthly
paid employees, may have been moved to grant other concessions to its employees, especially in the
collective bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's
employees are among the highest paid in the industry. With this consideration, it would be unfair to
impose additional burdens on Nestle when the non-payment of the holiday benefits up to 1984 was not
in any way attributed to Nestle's fault.

The Court thereby resolves that the grant of holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code, but from
the date of promulgation of the IBAA case.
#62
G.R. No. 114698 July 3, 1995
WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION, petitioner,
VS.
CRESENCIANO B. TRAJANO, ELMER ABADILLA AND 34 OTHERS, respondents,
Narvasa, C.J.ponente.
FACTS: By virtue of the routine inspection conducted by a Labor Enforcement Officer, Wellington Flour
Mills owned by the petitioner-company was found non-payment of regular holidays falling on a Sunday
for monthly-paid employees. Wellington argued that the monthly-paid employees already includes
holiday pay for all regular holidays and there is no legal basis for the finding of alleged non-payment of
regular holidays falling on a Sunday. It further contends that it pays its monthly paid employees a fixed
monthly compensation using the 314 factor which undeniably covers and already includes payment
for all the working days in a month as well as all the 10 un-worked regular holidays within a year. The
Regional Director ordered the petitioner to pay the employees additional compensation corresponding
to 4 extra working days. However, the petitioner argued that the company, using the 314 factor
already gave complete payment of all compensation due to its workers. Petitioner appealed and was
acted on by the respondent Undersecretary. But still, Regional Directors decision was affirmed. Hence,
this petition.
ISSUE: Whether or not a monthly-paid employees, receiving a fixed monthly compensation, is entitled
to an additional pay aside from his usual holiday pay whenever a regular holiday falls on a Sunday.
HELD: Regional Directors decision, affirmed by the Undersecretary, is nullified and set aside. Every
worker should be paid his regular daily wage during regular holidays; except in retail and service
establishments regularly employing less than 10 workers, even if the worker does not work on these
regular holidays. The Wellington had been paying its employees a salary of not less than the statutory
minimum wage and that the monthly salary, thus, paid was not less than the statutory minimum wage
multiplied by 365 days divided by 12. Apparently the monthly salary was fixed by Wellington to provide
for compensation for every working day of the year including holidays specified by law and excluding
only Sundays. Wellington leaves no day unaccounted for, it is paying for all the days of a year with the
exception only of 51 Sundays.

#63
G.R. No. L-65482 December 1, 1987
JOSE RIZAL COLLEGE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF TEACHERS/OFFICE
WORKERS,respondents.
FACTS
Petitioner is a non-stock, non-profit educational institution duly organized and existing under the laws
of the Philippines. It has three groups of employees categorized as follows: (a) personnel on monthly
basis, who receive their monthly salary uniformly throughout the year, irrespective of the actual
number of working days in a month without deduction for holidays; (b) personnel on daily basis who
are paid on actual days worked and they receive unworked holiday pay and (c) collegiate faculty who

are paid on the basis of student contract hour. Before the start of the semester they sign contracts
with the college undertaking to meet their classes as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977, private respondent
National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty and personnel of Jose
Rizal College filed with the Ministry of Labor a complaint against the college for said alleged nonpayment of holiday pay, docketed as Case No. R04-10-81-72. Due to the failure of the parties to settle
their differences on conciliation, the case was certified for compulsory arbitration.
The Labor Arbiter rendered a decision that the faculty who are paid per student compensation per
student contract hour are not entitled to unworked regular holiday pay. On appeal, respondent National
Labor Relations Commission in a decision promulgated on June 2, 1982, modified the decision
appealed from, in the sense that teaching personnel paid by the hour are declared to be entitled to
holiday pay.
ISSUE
Whether or not the school faculty who according to their contracts are paid per lecture hour are
entitled to unworked holiday pay.
RULING
Regular holidays specified as such by law are known to both school and faculty members as no class
days;" certainly the latter do not expect payment for said unworked days, and this was clearly in their
minds when they entered into the teaching contracts. On the other hand, both the law and the
Implementing Rules governing holiday pay are silent as to payment on Special Public Holidays.
It is readily apparent that the declared purpose of the holiday pay which is the prevention of
diminution of the monthly income of the employees on account of work interruptions is defeated when
a regular class day is cancelled on account of a special public holiday and class hours are held on
another working day to make up for time lost in the school calendar. Otherwise stated, the faculty
member, although forced to take a rest, does not earn what he should earn on that day. Be it noted
that when a special public holiday is declared, the faculty member paid by the hour is deprived of
expected income, and it does not matter that the school calendar is extended in view of the days or
hours lost, for their income that could be earned from other sources is lost during the extended days.
Similarly, when classes are called off or shortened on account of typhoons, floods, rallies, and the like,
these faculty members must likewise be paid, whether or not extensions are ordered.

SICK LEAVE
#64

#65

DAVAO INTEGRATED PORT STEVEDORING SERVICES VS. ABARQUEZ

#66
Kwok vs. Philippine Carpet Manufacturing Corporation
G.R. No. 149252

Facts:
Petitioner filed a complaint against the respondent corporation for the recovery of accumulated
vacation and sick leave credits before the NLRC. Petitioner clung to the verbal contract with Mr. Lim,
the President of the respondent corporation and his father-in-law for his claims. Petitioner obtained
favorable judgment. In their appeal, respondent averred that the position the petition held was not
entitled cash conversions of vacation and sick leave credits. The decision of the Labor Arbiter was
reversed. The Court of Appeals affirmed the reversed decision.
Issue:
Whether the verbal contract in favor of petitioner is valid.
Held:
No. It is true that for a contract to be binding on the parties thereto, it need not be in writing unless
the law requires that such contract be in some form in order that it may be valid or enforceable or that
it be executed in a certain way, in which case that requirement is absolute and independent. (Art.
1356, NCC) But the court disbelieved petitioners testimony and gave credence and probative weight
to the collective testimonies of the employees and officers of the respondent corporation, including Mr.
Lim, whom the petitioner presented as a hostile witness. Even assuming that the petitioner was
entitled of such benefits, there was no record to show the record of absences to arrive at the actual
number of leave credits. There was no conformity of such agreement with the Board and if so, such
claim was already barred by prescription under Article 291 of the Labor Code.

ART. 97. WAGES AND SALARY

WAGES AND SALARY

#67 Songco, et al. vs. National Labor Relations Commission
FACTS: Zuelig filed an application for clearance to terminate the services of Songco, and others, on
the ground of retrenchment due to financial losses. During the hearing, the parties agreed that the
sole issue to be resolved was the basis of the separation pay due. The salesmen received monthly
salaries of at least P400.00 and commission for every sale they made.
The Collective Bargaining Agreements between Zuelig and the union of which Songco, et al. were
members contained the following provision: "Any employee who is separated from employment due to
old age, sickness, death or permanent lay-off, not due to the fault of said employee, shall receive from
the company a retirement gratuity in an amount equivalent to one (1) month's salary per year of
service."
The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent to their one month
salary (exclusive of commissions, allowances, etc.) for every year of service with the company.
The National Labor Relations Commission sustained the Arbiter.
ISSUE: Whether or not earned sales commissions and allowances should be included in the monthly
salary of Songco, et al. for the purpose of computing their separation pay.
RULING:
In the computation of backwages and separation pay, account must be taken not only of the basic
salary of the employee, but also of the transportation and emergency living allowances.
Even if the commissions were in the form of incentives or encouragement, so that the salesman would
be inspired to put a little more industry on jobs particularly assigned to them, still these commissions
are direct remunerations for services rendered which contributed to the increase of income of the
employee. Commission is the recompense compensation or reward of an agent, salesman, executor,
trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount
of his transactions or on the profit to the principal. The nature of the work of a salesman and the
reason for such type of remuneration for services rendered demonstrate that commissions are part of
Songco, et al's wage or salary.
The Court takes judicial notice of the fact that some salesmen do not receive any basic salary, but
depend on commissions and allowances or commissions alone, although an employer-employee
relationship exists.

#68
Ruga et al vs NLRC
Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned
and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the
fishing business with port and office at Camaligan, Camarines Sur. Petitioners rendered service aboard
said fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio
Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin, master fisherman; Nicanor
Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin, fishermen.
For services rendered in the conduct of private respondent's regular business of "trawl" fishing,
petitioners were paid on percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of

private respondent. As agreed upon, they received thirteen percent (13%) of the proceeds of the sale
of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during the fishing trip,
otherwise, they received ten percent (10%) of the total proceeds of the sale. The patron/pilot, chief
engineer and master fisherman received a minimum income of P350.00 per week while the assistant
engineer, second fisherman, and fisherman-winchman received a minimum income of P260.00 per
week.
On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman,
president of private respondent, to proceed to the police station at Camaligan, Camarines Sur, for
investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private
respondent. Petitioners denied the charge claiming that the same was a countermove to their having
formed a labor union and becoming members of Defender of Industrial Agricultural Labor
Organizations and General Workers Union (DIALOGWU) on September 3, 1983.
During the investigation, no witnesses were presented to prove the charge against petitioners, and no
criminal charges were formally filed against them.
Notwithstanding, private respondent refused to allow petitioners to return to the fishing vessel to
resume their work on the same day, September 11, 1983.
On September 22, 1983, petitioners individually filed their complaints for illegal dismissal and nonpayment of 13th month pay, emergency cost of living allowance and service incentive pay, with the
then Ministry (now Department) of Labor and Employment, Regional Arbitration Branch No. V, Legaspi
City, Albay. They uniformly contended that they were arbitrarily dismissed without being given ample
time to look for a new job.
Issue:
Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are
employees of its owner-operator, De Guzman Fishing Enterprises.

Ruling:
Disputing the finding of public respondent that a "joint fishing venture" exists between private
respondent and petitioners, petitioners claim that public respondent exceeded its jurisdiction and/or
abused its discretion when it added facts not contained in the records when it stated that the pilotcrew members do not receive compensation from the boat-owners except their share in the catch
produced by their own efforts; that public respondent ignored the evidence of petitioners that private
respondent controlled the fishing operations; that public respondent did not take into account
established jurisprudence that the relationship between the fishing boat operators and their crew is
one of direct employer and employee.
We have consistently ruled that in determining the existence of an employer-employee relationship,
the elements that are generally considered are the following (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to
control the employee with respect to the means and methods by which the work is to be
accomplished. 8 The employment relation arises from contract of hire, express or implied. 9 In the
absence of hiring, no actual employer-employee relation could exist.
From the four (4) elements mentioned, we have generally 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. The test calls merely for the
existence of the right to control the manner of doing the work, not the actual exercise of the right.

The petition is GRANTED. The questioned resolution of the National Labor Relations Commission dated
May 30,1985 is hereby REVERSED and SET ASIDE. Private respondent is ordered to reinstate
petitioners to their former positions or any equivalent positions with 3-year backwages and other
monetary benefits under the law. No pronouncement as to costs.

FACILITIES DISTNGUISED FROM SUPPLEMENT

#69
STATES MARINE CORPORATION and ROYAL LINE, INC., petitioners,
vs.
CEBU SEAMEN'S ASSOCIATION, INC., respondent.
Petitioners States Marine Corporation and Royal Line, Inc. were engaged in the business of marine
coastwise transportation, employing therein several steamships of Philippine registry. They had a
collective bargaining contract with the respondent Cebu Seamen's Association, Inc. On September 12,
1952, the respondent union filed with the Court of Industrial Relations (CIR), a petition (Case No. 740-V)
against the States Marine Corporation, later amended on May 4, 1953, by including as party
respondent, the petitioner Royal Line, Inc. The Union alleged unfair labor practices which includes nonpayment of overtime pay, sick leave, vacation leave, reduction of salaries, requirement of payment of
P.40 per meal when employees are on board their vessels and illegal dismissal for Captain Asensi.
Petitioner claim that very much below 30 members were members of the said union and they cannot
be held liable as there is no law which provides for the payment of sick leave or vacation leave to
employees or workers of private firms. With the payment of meals, they claimed that the Congress had
in mind that the amount of P.40 per meal, furnished the employees should be deducted from the daily
wages. And no illegal dismissal happened to Captain Asensi as such had his working contract ended. A
decision was rendered on February 21, 1957 in favor of the respondent union. The motion for
reconsideration thereof, having been denied, the companies filed the present writ of certiorari, to
resolve legal question involved.
Issue
Whether or not States Marine Corporation and Royal Line, Inc is liable for the following unfair labor
practices against the respondent union
Ruling
"Supplements", constitute extra remuneration or special privileges or benefits given to or received by
the laborers over and above their ordinary earnings or wages. "Facilities", on the other hand, are items
of expense necessary for the laborer's and his family's existence and subsistence so that by express
provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer are
deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just
the same. Meals were freely given to crew members prior to August 4, 1951, while they were on the
high seas "not as part of their wages but as a necessary matter in the maintenance of the health and
efficiency of the crew personnel during the voyage", the deductions therein made for the meals given
after August 4, 1951, should be returned to them, and the operator of the coastwise vessels affected
should continue giving the same benefit..

When the work is not continuous, the time during which the laborer is not working and can leave his
working place and can rest completely shall not be counted", find no application in his case. Petitioner
should be bound to pay overtime pay for hours beyond 8 hours of work
Considering, however, that Captain Asensi had been laid-off for a long time and that his failure to
report for work is not sufficient cause for his absolute dismissal, respondents are hereby ordered to
reinstate him to his former job without back salary but under the same terms and conditions of
employment existing prior to his lay-off, without loss of seniority and other benefits already acquired
by him prior to March 20, 1952.

#70
Case title: NORMA MABEZA VS. NLRC
G.R. No. 118506
Date:April 18, 1997
Petitioner:Norma Mabeza
Respondent:National Labor Relations Commission and Peter Ng/Hotel Supreme
Ponente: Kapunan, J
Facts:
Petitioner Norma Mabeza and her co-employees at the Hotel Supreme in Baguio City were asked by the hotels
management to sign an instrument attesting to the latters compliance with minimum wage and other labor standard
provision. The instrument provides that they have no complaints against the management of the Hotel Supreme as they
are paid accordingly and that they are treated well. The petitioner signed the affidavit but refused to go to the Citys
Prosecutors Office to confirm the veracity and contents of the affidavit as instructed by management. That same day, as
she refused to go to the City Prosecutors Office, she was ordered by the hotel management to turn over the keys to her
living quarter sand to remove her belongings to the hotels premises. She then filed a leave of absence which was denied
by her employer. She attempted to return to work but the hotels cashier told her that she should not report to work and
instead continue with her unofficial leave of absence. Three days after her attempt to return to work, she filed a complaint
against the management for illegal dismissal before the Arbitration Branch of the NLRC in Baguio City. In addition to that,
she alleged underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13thmonth pay, night
differential and other benefits. Peter Ng, in their Answer, argued that her unauthorized leave of absence from work is the
ground for her dismissal. He even maintained that her alleged of underpayment and non-payment of benefits had no legal
basis.He raises a new ground of loss of confidence, which was supported by his filing of criminal case for the alleged
qualified theft of the petitioner. The Labor Arbiter ruled in favor of the hotel management on the
ground of loss of confidence. She appealed to the NLRC which affirmed the Labor Arbiters decision.
hence, this petition.
Issue:
Whether or not the dismissal by the private respondent of petitioner constitutes an unfair labor practice.
Held:
The NLRCs decision is reversed. The pivotal question in any case where unfair labor practice onthe part of the employer is
alleged is whether or not the employer has exerted pressure, in the form of restraint, interference or coercion, against his
employees right to institute concerted action for better
terms and conditions of employment. Without doubt, the act of compelling employees to sign an instrument indicating
that the employer observed labor standard provisions of the law when he might not have, together with the act of
terminating or coercing those who refuse to cooperate with the employees scheme constitutes unfair labor practice. The
labor arbiters contention that the reason for the monetary benefits received by the petitioner between 1981 to 1987 were
less than the minimum wage was because petitioner did not factor in the meals, lodging, electric consumption and water
she received during the period of computations. 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 employees ages. First,
proof must be shown that such facilities are customarily furnished by the trade. Second, the provision of deductible facilities
must be voluntary accepted in writing by the employee. Finally, facilitiesmust be charged at fair and reasonable value.
These requirements were not met in the instant case. Private respondent failed to present any company policy to show
that the meal and lodging are part of the salary. He also failed to provide proof of the employees written authorization and
he failed to show how he arrived at the valuations. More significantly, the food and lodging, or 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 but the purpose. Considering, therefore, that hotel workers are required to work on 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 respondents hotel.

FAIR DAYS WAGE FOR FAIR DAYS LABOR

#71 PHILIPPINE AIRLINES VS. NLRC
#72
G.R. No. L-31832 October 23, 1982
SOCIAL SECURITY SYSTEM, petitioner,
vs.
SSS SUPERVISORS' UNION-CUGCO and COURT OF INDUSTRIAL RELATIONS, respondents.
Facts: The members of the respondent Union did not work during the 17-day strike declared in 1968 by the rank and file
Union (the Philippine Association of Free Labor Unions <PALFU>). The SSS and the PALFU had a disagreement concerning
the interpretation of the provisions of their CBA. The PALFUs
decision to strike is the effect of the CIR Order of August 29, 1968 enjoining the parties, for the sake of industrial peace.. To
maintain the status quo- the Union not to declare any strike and the Management not to dismiss nor suspend any of its
employees nor to declare any lock out. The SSS, in that same case, filed an Urgent Petition to declare the strike illegal. The
respondent Union filed a Motion for Intervention in the said case alleging that it had not participated in the strike; that its
members wanted to report for work but were prevented by the picketers from entering the work premises; that under the
circumstances, they were entitled to their salaries corresponding to the duration of the strike, which could be deducted
from the accrued leave credits of their members.
Issue: Whether or not the members of the respondent Union who admittedly did not work during the 17-day strike
conducted by the PALFU is entitled to their salaries.
Held: According to the doctrine of Fair days wage for a Fair days labor, if there is no w ork performed
by the employee there can be no wage or pay, unless of course the laborer was able, willing and ready to work but was
illegally locked out, dismissed nor suspended. It is hardly fair or just for an employee or laborer to fight or litigate against his
employer on the employers time. In this case, the failure to work on the part of the members of the respondent Union was
due to circumstances not attributable to themselves. But neither should the burden of the economic loss suffered by them
be shifted to their employer, the SSS, which was equally faultless, considering that the situation was not a direct
consequence of the employers lockout or unfair practice. With this, it is fair that they wont be receiving their salary for
those days they did not work.

#73
G.R. No. 76746
July 27, 1987
DURABUILT RECAPPING PLANT & COMPANY and EDUARDO LAO, GENERAL MANAGER,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. COMM. RICARDO C.
CASTRO, HON. ARBITER AMELIA M. GULOY, KAPISANAN NG MGA MANGGAGAWA SA
DURABUILT and REYNALDO BODEGAS, respondents.
Facts: This is a petition to review the May 16, 1986 resolution of respondent National Labor Relations
Commission (NLRC) affirming the Labor Arbiter's order in NLRC Case No. NCR-73162083.
On July 11, 1983, a complaint for illegal dismissal was filed by respondent Reynaldo Bodegas, against
petitioner Durabuilt, a tire recapping company.
In a decision rendered by the Labor Arbiter on February 13, 1984, the private respondent was ordered
reinstated to his former position with full back wages, from the time he was terminated up to the time
he is actually reinstated, without loss of seniority rights and benefits accruing to him.
The petitioners failed to file a seasonable appeal and entry of final judgment was made on July 8,
1985.
On August 8, 1985, the Acting Chief of Research and Information and the Corporation Auditing
Examiner of the then Ministry of Labor and Employment submitted a computation of back wages,
ECOLA, 13th month pay, sick and vacation leave benefits in favor of Reynaldo Bodegas in the total
amount of P24,316.38.
The petitioner filed its opposition to the computation on the ground that it contemplated a straight
computation of twenty six (26) working days in one month when the period covered by the
computation was intermittently interrupted due to frequent brownouts and machine trouble and that
respondent Bodegas had only a total of 250.75 days of attendance in 1982 due to absences. According
to the petitioner, Bodegas is entitled only to the amount of P3,834.05 broken down as follows: salaries
P1,993.00; ECOLA P1,433.50, and 13th month pay P407.55.
On October 23, 1985, the Labor Arbiter denied the opposition to the computation. The petitioner
appealed to the NLRC which, in an order dated May 16, 1986, affirmed the order of the Labor Arbiter
and dismissed the appeal.
Claiming grave abuse of discretion on the part of the public respondents, Durabuilt filed the instant
petition.
Issue: What is the proper basis for the computation of backwages in favor of an illegally dismissed
employee.
Held: The age-old rule governing the relation between labor and capital, or management and
employee of a "fair day's wage for a fair day's labor" remains as the basic factor in determining
employees' wages, and for that matter backwages. If there is no work performed by the employee
there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was
illegally locked out, or suspended. The illegal dismissal of the private respondent is approved by the
petitioner. It is willing to pay backwages. However, the petitioner argues that for days where no work
was required and could be done by its employees, no wages could have been earned and, thereafter,
lost by said employees to justify an award of backwages. It also appears that petitioners have valid
reasons to claim that certain days should not be considered days worked for purposes of computing
private respondent's backwages since their business was not in actual operation due to brownouts or

power interruption and the retrenchment of workers they had during the period of private respondent's
dismissal.
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The order of the Labor Arbiter,
AmeliaM. Guloy in NLRC Case No. NCR-7-3162083, dated October 23, 1985, as affirmed by the NLRC is
SET ASIDE. The petitioner is ordered to pay private respondent his backwages from the time he was
terminated up to the time he was actually reinstated computed on the basis of the number of days
when petitioner's business was in actual operation. The number of days where no work was required
and could be done by petitioner's employees on account of shutdowns due to electrical power
interruptions, machine repair, and lack of raw materials are not considered hours worked for purposes
of computing the petitioner's obligation to respondent employee. In no case shall the award exceed
three year's backpay as above computed.

EQUAL PAY FOR EQUAL WORK

#74
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner,
vs.
HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and Employment; HON.
CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of Labor and Employment; DR. BRIAN
MACCAULEY in his capacity as the Superintendent of International School-Manila; and INTERNATIONAL
SCHOOL, INC., respondents.
Facts: Private respondent International School, Inc. (the School, for short), pursuant to Presidential
Decree 732, is a domestic educational institution established primarily for dependents of foreign
diplomatic personnel and other temporary residents.1 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.
Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the
same into two: (1) foreign-hires and (2) local-hires.
The School grants foreign-hires certain benefits not accorded local-hires includeing 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 School explains:
When negotiations for a new collective bargaining agreement were held on June 1995, petitioner
International School Alliance of Educators, "a legitimate labor union and the collective bargaining
representative of all faculty members"4 of the School, contested the difference in salary rates between
foreign and local-hires.
On September 7, 1995, petitioner filed a notice of strike. DOLE Acting Secretary, Crescenciano B.
Trajano, issued an Order resolving the parity and representation issues in favor of the School. Then
DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's motion for reconsideration
in an Order dated March 19, 1997. Petitioner now seeks relief in this Court.
Issue: Whether the principle of equal pay for equal work shall be applied in the case at bar.

Held: Yes.
School contends that petitioner has not adduced evidence that local-hires perform work equal to that
of foreign-hires. 23 The Court finds this argument a little cavalier. If an employer accords employees the
same position and rank, the presumption is that these employees perform equal work. This
presumption is borne by logic and human experience. If the employer pays one employee less than the
rest, it is not for that employee to explain why he receives less or why the others receive more. That
would be adding insult to injury. The employer has discriminated against that employee; it is for the
employer to explain why the employee is treated unfairly. The employer in this case has failed to
discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or
effectively than the local-hires. Both groups have similar functions and responsibilities, which they
perform under similar working conditions. The School cannot invoke the need to entice foreign-hires to
leave their domicile to rationalize the distinction in salary rates without violating the principle of equal
work for equal pay. Salary means a recompense or consideration made to a person for his pains or
industry in another man's 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. While we recognize the need of the School to attract foreign-hires, salaries should not be
used as an enticement to the prejudice of local-hires. The local-hires perform the same services as
foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the
"dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the
distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are
adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such
as housing, transportation, shipping costs, taxes and home leave travel allowances. The Constitution
enjoins the State to "protect the rights of workers and promote their welfare," "to afford labor full
protection." http://www.lawphil.net/judjuris/juri2000/jun2000/gr_128845_2000.html - fnt26 The State,
therefore, has the right and duty to regulate the relations between labor and capital.
SALARY EXCLUDES ALLOWANCES
#75
CEBU INSTITUTE OF TECHNOLOGY (CIT), petitioner,
vs.
HON. BLAS OPLE, in his capacity as Minister, Ministry of Labor and Employment, et
al.,respondent
G.R. No. L-58870 December 18, 1987

Facts:
The case was originated from a complaint filed with the Regional Office No. VII of the Ministry
of Labor on February 11, 1981 against petitioner Cebu Institute of Technology (CIT) by private
respondents, Panfilo Canete, et al., teachers of CIT, for non-payment of: a) cost of living allowances
(COLA) under Pres. Dec. Nos. 525, 1123, 1614, 1678 and 1713, b) thirteenth (13th) month pay
differentials and c) service incentive leave. By virtue of an Order issued by the then Deputy Minister of
Labor Carmelo C. Noriel, a labor-management committee composed of one representative each from

the Ministry of Labor and Employment (MOLE), the Minister of Education, Culture and Sports (MECS),
and two representatives each from CIT and from the teachers was created. Said committee was to
ascertain compliance with the legal requirements for the payment of COLA, thirteenth (13th) month
pay and service incentive leave.
On September 29, 1981 the Ministry of labor and employment ordered the CIT pay its teaching
staff their COLA and Service incentive leave and further directed to integrate into the basic salaries of
its teachers.
Issue:
WON the claimed of the petitioner that the payment of COLA by way of salary increases is in
line with Pres. Dec. No. 451 and that the payment of the thirteenth month pay to its employees was
exempt from the payment of service incentive leave to its teachers who were employed on contract
basis.
Ruling:
The Order of respondent Minister of Labor and Employment dated September 29, 1981 is
sustained insofar as it ordered petitioner Cebu Institute of Technology to pay its teaching staff the
following:
(1) Cost of living allowance under Pres. Dec.Nos.525 and 1123 from February 1978 up
to 1981;
(2) Cost of living allowance under Pres. Dec. Nos. 1614, 1634, 1678 and 1713; and
(3) Service incentive leave due them from 1978.

ART. 99-101. MINIMUM WAGE

MINIMUM WAGE
#76
Asok Big Wedge Mining Co. Inc v Asok Big Wedge Mutual Benefit Association G.R. L-3276
March 3, 1953
Facts: On September 4, 1950, 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.

Issue: Whether or not additional compensation representing efficiency bonus should not be part of the
minimum wage, and the wage increase is valid?
Held: Yes, that the P3 minimum wage fixed in the law is still far below what is considered a fair and
just minimum is shown by the fact that this amount is only for the year after the law takes effect, as
thereafter the law fixes it at P4. Neither may it be correctly contended that the demand for increase is
due to an alleged pernicious practice. Frequent demands for increase are indicative of a healthy spirit
of wakefulness to the demands of a progressing and an increasingly more expensive world. We,
therefore, find no reason or ground for disturbing the finding contained in the decision fixing the
amount of P3.20 as the minimum wage. if it is an additional compensation which the employer
promised and agreed to give without any conditions imposed for its payment, such as success of
business or greater production or output, then it is part of the wage. But if it is paid only if profits are
realized or a certain amount of productivity achieved, it cannot be considered part of the wages. In the
case at bar, it is not payable to all but to laborers only. It is also paid on the basis of actual production
or actual work accomplished. If the desired goal of production is not obtained or the amount of actual
work accomplished, the bonus does not accrue. It is evidence that under the circumstances it is paid
only when the labor becomes more efficient or more productive. It is only an inducement for efficiency,
a prize there for, not a part of the wage.

#77
DE RACHO VS. MUNICIPALITY OF ILIGAN
G.R. No. L-23542 January 2, 1968
Ponente: Bengzon, J.P., J.

FACTS:
Plaintiff Juana T. Vda. de Racho and the decedent, Manuel Racho, were spouses and had five minor
children. On July 1, 1954 the decedent was appointed as market cleaner in the Municipality of Ilagan,
Isabela, at the rate of P660.00 per annum (P55.00 monthly) which amount he received up to June 30,
1958. On July 1, 1958, decedent's salary was increased to P720.00 per annum (P60.00 monthly) by
virtue of a promotional appointment extended to him by the Municipal Mayor. Decedent was then paid
the money value of his accumulated leaves. Decedent died intestate at Ilagan. Plaintiff then filed on
December 9, 1960 a claim for salary differentials with the Regional Office of the Department of Labor,
which dropped the case later for lack of jurisdiction. Based on the foregoing facts, the Court of First
Instance of Isabela ruled that defendant Municipality of Ilagan must pay P1,766.00 to plaintiff
representing the wage differentials and adjusted terminal leave of the decedent from December 9,
1957 to May 23, 1960, based on the monthly wage rate of P120.00 pursuant to the Minimum Wage
Law.

ISSUE:
Whether or not the shortage and lack of available funds and expected revenue of a municipality validly
exempt from complying with the Minimum Wage Law.

HELD:
The appealed judgment is affirmed. Lack of funds of a municipality does not excuse it from paying the
statutory minimum wages to its employees, which, after all, is a mandatory statutory obligation of the
municipality. To uphold such defense of lack of available funds would render the Minimum Wage Law
futile and defeat its purpose. This also disposes of the implication appellant is trying to make that its
duty to pay minimum wages is not a statutory obligation which would command preference in the
municipal budget and appropriation ordinance.
Moreover, we cannot sanction appellant's proposition that it would eventually and gradually implement
the Minimum Wage Law, "if and when its revenues can afford." The law insofar as it affects
government employees took effect in 1952. It should have been implemented or at least steps to
implement it should have been taken right then. To excuse the defendant municipality now would be
to permit it to benefit from its non-feasance. It would also make the effectivity of the law dependent
upon the will and initiative of said municipality without statutory sanction. Defendant's remedy,
therefore, is not to seek an excuse from implementing the law but, as the lower court suggested, to
upgrade and improve its tax collection machinery with a view towards realizing more revenues. Or, it
could for the present forego all non-essential expenditures.

#78
C. Planas Commercial v. NLRC, A. Ofialda, et al Nov. 11, 2005 G.R. no. 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 of Ofialda, Morente and Allaguian. 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. In the present petition, the Petitioners insist that C. Planas Commercial is
a retail establishment principally engaged in the sale of plastic products and fruits to the customers for
personal use, thus exempted from the application of the minimum wage law; that it merely leases and
occupies a stall in the Divisoria Market and the level of its business activity requires and sustains only
less than ten employees at a time. Petitioners contend that private respondents were paid over and
above the minimum wage required for a retail establishment, thus the Labor Arbiter is correct in ruling
that private respondents claim for underpayment has no factual and legal basis. Petitioners claim that
since private respondents alleged that petitioners employed 24 workers, it was incumbent upon them
to prove such allegation which private respondents failed to do.
Issue:
Whether or not petitioner is exempted from the application of minimum wage law
Held:

The contention of the petitioners that they are exempted by the law must be proven. The 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 noncompliance 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. Clearly, for a retail/service
establishment to be exempted from the coverage of the minimum wage law, it must be shown that the
establishment is regularly employing not more than ten (10) workers and had applied for exemptions
with and as determined by the appropriate Regional Board in accordance with the applicable rules and
regulations issued by the Commission.

ART. 100. ELIMINATION OR DIMINUTION OF BENEFITS

#79
G.R. No. 102132
March 19, 1993
Davao Integrated Port Stevedoring Services, petitioner
versus
Ruben V. Abarquez, in his capacity as an accredited Voluntary Arbitrator and the
Association of Trade Unions (ATU-TUCP), respondents

Facts:
Petitioner-company and respondent-union entered into a collective bargaining agreement
which includes provisions on sick leave with pay benefits each year to employees who have rendered
at least one year of service with the former. Unused sick leaves shall then be converted into cash by
the end of the year. Said CBA provision covers both intermittent and non-intermittent employees but
with differences in the manner of computing the pay. Upon renewing the CBA, the petitionercompanys new assistant manager discontinued the intermittent employees unused sick leave cash
conversion on the basis that the last sentence of the CBA disqualifies them to enjoy such benefits.
Further, said assistant manager stated that his predecessor committed a wrongfully understood and
applied the said CBA. Eventually, Voluntary Arbitrator Ruben Abarquez decided on the matter and ruled
in favor of the respondent-union. Petitioner-company disagreed with Abarquez.

Issue:

1.

Whether or not petitioner-company has the right to remove the existing benefits of the
employees?

Ruling:
No. The Supreme Court finds two applicable legal basis: (1) the essence of the terms and
conditions of a CBA which is more than regular contract but which is the law that regulates the
relationship between labor and capital. It is impressed with public interest which requires it to yield to
the common good; (2) Article 100 of the Labor Code which prohibits the construction of labor provision
which would lead to the elimination, or in any way diminution of the supplements or other employee
benefits.
In the instant case, and after careful scrutiny of the CBA between the parties, it was clarified
that the cash conversion of the unused sick leaves are applicable to employees who have complied
with the following requirements: (1) the employee should be regular and at least rendered one year of
service with the company; and (2) said claim should be certified by a company-designated physician.
From the said requirements, it is quite obvious that both intermittent and non-intermittent employees
could qualify to receive the unused sick leaves as long as they have met the requirements of the CBA.
The contention of the petitioner-company, as to the last sentence of the CBA, only applies to those
employees who have not successfully satisfied the said provisions above.
Therefore, the Court dismissed the petition and affirmed the decision of Abarquez.

FOOD OR MEAL ALLOWANCE

#80 CEBU AUTOBUS COMPANY VS. UNITED CEBU AUTOBUS EMPLOYESS ASSN.
NON-CONTRIBUTORY RETIREMENT PLAN
#81
G.R. No. 91231 February 4, 1991
NESTL PHILIPPINES, INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and UNION OF FILIPRO
EMPLOYEES, respondents.
Nestl Philippines, Inc., by this petition for certiorari, seeks to annul, on the ground of grave abuse of
discretion, the decision dated August 8, 1989 of the National Labor Relations Commission (NLRC),
Second Division, in Cert. Case No. 0522 entitled, "In Re: Labor Dispute of Nestl Philippines, Inc."
insofar as it modified the petitioner's existing non-contributory Retirement Plan.
Four (4) collective bargaining agreements separately covering the petitioner's employees in its:
1. Alabang/Cabuyao factories;
2. Makati Administration Office. (Both Alabang/Cabuyao factories and
Makati office were represented by the respondent, Union of Filipro
Employees [UFE]);

3. Cagayan de Oro Factory represented by WATU; and

4. Cebu/Davao Sales Offices represented by the Trade Union of the
Philippines and Allied Services (TUPAS),
all expired on June 30, 1987.
Thereafter, 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 2, 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 National Conciliation and Mediation Board (NCMB) yielded negative
results, the dispute was certified to the NLRC by the Secretary of Labor on October 28, 1988.
After the parties had filed their pleadings, 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, provides as follows:
xxx xxx xxx
7. Retirement Plan
The company shall continue implementing its retirement plan modified as follows:
a) for fifteen years of service or less an amount equal to 100% of the employee's
monthly salary for every year of service;
b) more than 15 but less than 20 years 125% of the employee's monthly salary for
every year of service;
c) 20 years or more 150% of the employee's monthly salary for every year of
service. (pp. 58-59,Rollo.)
Both parties separately moved for reconsideration of the decision.

On August 8, 1989, the NLRC issued a resolution denying the motions for reconsideration. With regard
to the Retirement Plan, the NLRC held:
Anent management's objection to the modification of its Retirement Plan, We find no
cogent reason to alter our previous decision on this matter.
While it is not disputed that the plan is non-contributory on the part of the workers, tills
does not automatically remove it from the ambit of collective bargaining negotiations.
On the contrary, the plan is specifically mentioned in the previous bargaining
agreements (Exhibits "R-1" and "R-4"), 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.
However, We need to clarify Our resolution on this issue. When we increased the
emoluments in the plan, the conditions for the availment of the benefits set forth
therein remain the same. (p. 32, Rollo.)
On December 14, 1989, the petitioner filed this petition for certiorari,
ISSUE:
1 Whether or not the retirement plan being non-contributory,a non-issue in the CBA negotiations?
2 Whether or not there was a grave abuse of discretion on the part of the NLRC in resolving the issue?
HELD:
1 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 deadlock between
the company and the union on this issue was resolvable by the Secretary of Labor, or the NLRC, after
the Secretary had assumed jurisdiction over the labor dispute (Art. 263, subparagraph [i] of the Labor
Code).
2 The NLRC's resolution of the bargaining deadlock between Nestl and its employees is neither
arbitrary, capricious, nor whimsical. The benefits and concessions given to the employees were based
on the NLRC's evaluation of the union's demands, the evidence adduced by the parties, the financial
capacity of the Company to grant the demands, its longterm viability, the economic conditions
prevailing in the country as they affect the purchasing power of the employees as well as its
concommitant effect on the other factors of production, and the recent trends in the industry to which
the Company belongs (p. 57, Rollo). Its decision is not vitiated by abuse of discretion.

MONTHLY EMERGENCY ALLOWANCE

#82
R. Tiangco and V. Tiangco v. Hon. Vicente Leogardo, Jr. {G.R. No. L-57636, May 16, 1983}
Facts:
Petitioner R. Tiangco was a fishing operator engaged in deep-sea fishing while V. Tiangco was a
fishbroker.

Mr. Ilustrisimo and 26 others were batillios engaged by petitioners to unload fishcatch from the
vessels and take them to the fish stall. The work of these batillios was limited to days of arrival of the
fishing vessels, hence, they work only a few days in a month averaging 4 hours a day.

In April 1980, Mr. Illustrisimo, and others filed a complaint against the Tiangcos for (1)
nonpayment of legal holiday pay, (2) service incentive leave pay, as well as (3) underpayment of
emergency cost-of-living allowances [ECOLA] which used to be paid in full irrespective of their work
days.

The Tiangcos denied the laborers; contentions. But as regards the claim for emergency
allowance differentials, they admitted that they discontinued their practice of paying a fixed monthly
allowance, and allowances for nonworking days. They invoked the principle of No work, no pay.

Ruling:

The workers claim is valid. Since the Tiangcos had been paying the workers a fixed monthly
emergency allowance since November 1976 to February 1980, as a matter of practice and/or verbal
agreement between the parties, the discontinuance of the practice and/or verbal agreement between
the petitioners and the private respondents contravened the provisions of the Labor Code, particularly
Article 100. It prohibits the elimination or diminution of existing benefits such as the ECOLA. [Note that
the monthly allowance was initiated in November 1976, two years after the Labor Code was
promulgated in 1974.]

Section 15 of the rules on P.D. No. 525 and Sec. 16 of the rules on P.D. No. 1123 also prohibit
the diminution of any benefit granted to the employees under existing laws, agreements and voluntary
employer practice.

EXCEPTIONS
#83
G.R. NO. 74156 June 29, 1988
GLOBE MACKAY CABLE AND RADIO CORPORATION,petitioner,
VS.
NLRC,FFW, respondent.
MELENCIO-HERRERA, J., ponente.
FACTS: Wage Order No. 6 increased the cost-of -living allowance of non- Agricultural workers in the
private sector. Petitioner corporation (GMCR) complied with the said Wage Order by paying its monthlypaid employees the mandated P3.00 per day COLA. However, in computing said COLA, GMCR
multiplied the P3.00 daily COLA by 22days, which is the number of working days in the company.

Respondent Union disagreed with the computation of the monthly COLA claiming that the daily COLA
rate of P3.00 should be multiplied by 30 days to arrive at the monthly COLA rate. The union alleged
furthermore that prior to the effectivity of Wage Order No. 6, GMCR had been computing and paying
the monthly COLA on the basis of thirty (30) days per month and that this constituted an employer
practice, which should not be unilaterally withdrawn.

ISSUE: Whether or not petitioner, in computing COLA based on the number of working days of the
company , violated Article100 of the Labor Code of the Philippines
HELD: There is no violation of Article 100 of the Labor Code on prohibition of wage diminution. The
primordial consideration for entitlement to COLA is that basic wage is being paid. In other words, the
payment of COLA is mandated only for the days that the employees are paid their basic wage, even if
said days are un worked. So that, on the days that employees are not paid their basic wage, the
payment of COLA is not mandated. Peculiar to this case, however, is the circumstance that pursuant to
the Collective Bargaining Agreement (CBA) between Petitioner and Respondent Union, the monthly
basic pay is computed on the basis of five (5) days a week, or twenty two(22) days a month. In
determining the hourly rate of monthly paid employees for purposes of computing overtime pay, the
monthly wage is divided by the number of actual work days in a month and then, by eight (8) working
hours. If a monthly-paid employee renders overtime work, he is paid his basic salary rate plus one-half
thereof. Thus, where the company observes a 5-day work week, it will have to be held that the COLA
should be computed on the basis of twenty two (22) days, which is the period during which the
employees of petitioner receive their basic wage. The CBA is the law between the parties and, if not
acceptable, can be the subject of future re-negotiation.
Payment in full by petitioner of the COLA before the execution of the CBA incompliance with Wage
Orders Nos. 1 to 5, should not be construed as constitutive of voluntary employer practice, which
cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should have been
practiced over a long period of time, and must be shown to have been consistent and deliberate.
Adequate proof is wanting in this respect. The test of long practice has been enunciated in Oceanic
Pharmaceutical Employees Union vs. Inciong such that respondent company agreed to continue
giving holiday pay knowing fully well that said employees are not covered by the law requiring
payment of holiday pay."Absent clear administrative guidelines, petitioner cannot be faulted for
erroneous application of the law. Payment may be said to have been made by reason of a mistake in
the construction or application of a "doubtful or difficult question of law."Since it is a past error that is
being corrected, no vested right may be said to have arisen nor any diminution of benefit under Article
100 of the Labor Code may be said to have resulted by virtue of the correction.
#84
G.R. No. 113856 September 7, 1998
SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING UNITED WORKERS OF THE
PHILIPPINES (SMTFM-UWP), its officers and members, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. JOSE G. DE VERA and TOP FORM
MANUFACTURING PHIL., INC., respondents.
FACTS
Petitioner Samahang Manggagawa sa Top Form Manufacturing United Workers of the Philippines
(SMTFM) was the certified collective bargaining representative of all regular rank and file employees of
private respondent Top Form Manufacturing Philippines, Inc.
he charge arose from the employer's refusal to grant across-the-board increases to its employees in
implementing Wage Orders Nos. 01 and 02 of the Regional Tripartite Wages and Productivity Board of
the National Capital Region (RTWPB-NCR). Such refusal was aggravated by the fact that prior to the

issuance of said wage orders, the employer allegedly promised at the collective bargaining
conferences to implement any government-mandated wage increases on an across-the-board basis.
ISSUE
Whether or not the employer committed unfair labor practice by bargaining in bad faith and
discriminating against its employees.
RULING
The basic premise of this argument is definitely untenable. To start with, if there was indeed a promise
or undertaking on the part of private respondent to obligate itself to grant an automatic across-theboard wage increase, petitioner union should have requested or demanded that such "promise or
undertaking" be incorporated in the CBA. After all, petitioner union has the means under the law to
compel private respondent to incorporate this specific economic proposal in the CBA. It could have
invoked Article 252 of the Labor Code defining "duty to bargain," thus, the duty includes "executing a
contract incorporating such agreements if requested by either party." Petitioner union's assertion that
it had insisted on the incorporation of the same proposal may have a factual basis considering the
allegations in the aforementioned joint affidavit of its members. However, Article 252 also states that
the duty to bargain "does not compel any party to agree to a proposal or make any concession." Thus,
petitioner union may not validly claim that the proposal embodied in the Minutes of the negotiation
forms part of the CBA that it finally entered into with private respondent.
The Court likewise finds unmeritorious petitioner union's contention that by its failure to grant acrossthe-board wage increases, private respondent violated the provisions of Section 5, Article VII of the
existing CBA as well as Article 100 of the Labor Code.
We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously enjoyed by
petitioner union and the other employees were withdrawn as a result of the manner by which private
respondent implemented the wage orders. Granted that private respondent had granted an across-theboard increase pursuant to Republic Act No. 6727, that single instance may not be considered an
established company practice. Petitioner union's argument in this regard is actually tied up with its
claim that the implementation of Wage Orders Nos. 01 and 02 by private respondent resulted in wage
distortion.

#85

#86 LEXAL LABORATORIES VS. COURT OF INDUSTRIAL RELATIONS

#87
National Sugar Refineries Corp v. NLRC
G.R. No. 101761
Facts:
Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and
controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and
Batangas. Private respondent union represents the former supervisors of the NASUREFCO Batangas
Sugar Refinery. In 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees,
from rank-and-file to department heads. We glean from the records that for about ten years prior to
the JE Program, the members of respondent union were treated in the same manner as rank-and file
employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the
provisions of Articles 87, 93 and 94 of the Labor Code as amended with the implementation of the JE
Program, members of respondent union were re-classified under levels S-5 to S-8 which are considered
managerial staff for purposes of compensation and benefits.
In June 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.
In 1991, Executive Labor Arbiter Pido directed NASUREFCO to pay for the wages complained of. On
appeal, in a decision promulgated on July 1991, respondent National Labor Relations Commission
(NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union
are not managerial employees, and, therefore, they are entitled to overtime, rest day and holiday pay.
Respondent NLRC declared that these supervisory employees are merely exercising recommendatory
powers subject to the evaluation, review and final action by their department heads.
Issue:

Whether the Supervisors are considered Managerial Employees and should no longer receive overtime,
rest day and holiday pay.
Held:
Yes. Under Art. 82 Coverage. 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 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. 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. It is the submission of petitioner that while the members
of respondent union, as supervisors, may not be occupying managerial positions, 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.
Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits
which attach and pertain exclusively to their positions. Entitlement to the benefits provided for by law
requires prior compliance with the conditions set forth therein. With the promotion of the members of
respondent union, they occupied positions which no longer met the requirements imposed by law.
Their assumption of these positions removed them from the coverage of the law, ergo, their exemption
there from. As correctly pointed out by petitioner, if the union members really wanted to continue
receiving the benefits which attach to their former positions, there was nothing to prevent them from
refusing to accept their promotions and their corresponding benefits. As the saying goes by, they could
not, as a simple matter of law and fairness, get the best of both worlds at the expense of NASUREFCO.
Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of
management, provided it is done in good faith. In the case at bar, private respondent union has
miserably failed to convince this Court that the petitioner acted implementing the JE Program. There is
no showing that the JE Program was intended to circumvent the law and deprive the members of
respondent union of the benefits they used to receive.

#88
American Wire and Cable Daily Rated Employees Union vs. Amercan Wire and Cable Co. Inc.
and CA
American Wire & Cable Daily Rated Employees Union vs. Amercan Wire & Cable Co., Inc., &
the Court of Appeals (case no. 88)
Facts: American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and
cables. There are two unions in this company, the American Wire and Cable Monthly-Rated Employees
Union and the American Wire and Cable Daily-Rated Employees Union.
On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and
Employment by the two unions for voluntary arbitration. They alleged that the private respondent,
without valid cause, suddenly and unilaterally withdrew and denied certain benefits and entitlements
which they have long enjoyed. These are Service Award, 35% premium pay of an employees basic pay
for the work rendered during Holy Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28
and 29, Christmas Party and Promotional Increase.
Issue: Whether or not the respondent company violated Article 100 of the Labor Code.

Ruling: The Court ruled that 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.
#89 L. G. MARCOS ET. AL VS. NLRC AND INSULAR LIFE ASSURANCE CO., LTD.
#90
TRADERS ROYAL BANK, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION & TRADERS ROYAL BANK EMPLOYEES
UNION, respondents.

FACTS
On November 1986, TRB employees union filed a complaint with the NLRC for diminution of benefits
regarding holiday pay, mid-year and year-end bonuses.2.NLRC ordered the Bank to pay the employees
holiday pay differentials for 1983-1986, as well as mid-year and year-end bonus differential for 1986.
ISSUE
Did the NLRC abuse its discretion in ordering the payment of mid-year and year-end bonus
differentials?
HELD
YES. A bonus is a gratuity or an act of liberality of the giver which the recipient has no right to demand
as a matter of right. The granting of bonus is basically a management prerogative which cannot be
forced upon the employer. In the case at bar, the matter of giving bonuses over and above lawful
salaries and allowances is entirely on the profits realized by the Bank. In 1986, the Bank weakened
considerably due to suspicions that it was a Marcos-owned and controlled bank, and was placed under
sequestration by the PCGG.The union contention that the granting of bonuses has ripened into a
company practice that may not be adjusted to the prevailing financial condition of the Bank, has no
legal or moral bases. Its fiscal condition having declined, the Bank may not be forced to give bonuses it
cannot pay, and in effect, be penalized for its past generosity to its employees. There can be no
diminution of benefits because bonuses are not part of labor standards in the same class as salaries,
cost of living allowances, holiday pay and leave benefits. The NLRC is modified by deleting the award
for bonus differentials for 1986

THIRTEENTH MONTH PAY

#91
NATIONAL FEDERATION OF SUGAR WORKERS (NFSW), petitioner,
vs.
ETHELWOLDO R.OVEJERA, CENTRAL AZUCARERA DE LA CARLOTA (CAC), COL. ROGELIO DEINLA,
asProvincial Commander, 3311st P.C. Command, Negros Occidental, respondents.
FACTS:
In 1981, NFSW struck allegedly to compel the payment of the 13th month pay under PD 851, in addition to the Christmas,
milling and amelioration bonuses being enjoyed by CAC workers. The decision having become final and executory entry of
judgment was made. After the Marcopper decision had become final, NFSW renewed its demand that CAC give the 13th
month pay. CAC refused, NFSW filed with the Ministry of Labor and Employment (MOLE) Regional Office in Bacolod City a
notice to strike based on non-payment of the 13th month pay. Six days after, NFSW struck.
ISSUE:
Whether or not under Presidential Decree 851 (13th Month Pay Law), CAC is obliged to give its workers a 13th month
salary in addition to Christmas, milling and amelioration bonuses, the aggregate of which admittedly exceeds by far the
disputed 13th month pay?
HELD:
CAC is obliged to give its workers a 13th month salary in addition to Christmas, milling and amelioration bonuses stipulated
in a collective bargaining agreement amounting to more than a months pay. When this agreement was forged on
November 30,1981, the original decision dismissing the petition in the aforecited Marcopper case had already been
promulgated by this Court. On the votes of only 7Justices, including the distinguished Chief Justice, the petition of
Marcopper Mining Corp. seeking to annul the decision of Labor Deputy Minister Amado Inciong granting a 13th month pay
to Marcopper employees (in addition to mid- year and Christmas bonuses under a CBA) had been dismissed. But amotion
for reconsideration filed by Marcopper was pending as of November 30, 1981. In December 1981,the original decision was
affirmed when this Court finally denied the motion for reconsideration. But theresolution of denial was supported by the
votes of only 5 Justices. The Marcopper decision is therefore a Court decision but without the necessary eight votes to be
doctrinal. This being so, it cannot be said that the Marcopper decision "clearly held" that "the employer is liable to pay a
13th month pay separate and distinct from the bonuses already given," within the meaning of the NFSW-CAC compromise
agreement. At any rate, in view of the rulings made herein, NFSW cannot insist on its claim that its members are entitled to
a 13th month pay in addition to the bonuses already paid by CAC. WHEREFORE, the petitionis dismissed for lack of merit.
No costs.

#92
Universal Corn Products vs. NLRC
(G.R. No.60337, Aug. 21, 1987)
FACTS:
In 1972, the petitioner and the Universal Corn Products Workers Union entered into a collective
bargaining agreement. The COMPANYagrees to grant all regular workers within the bargaining unit
with at least one (1) year of continuous service, a Christmas bonusequivalent to the regular wages
for seven (7) working days. The agreement had a duration of three years. On account
however of differences between the parties with respect to certain economic issues, the collective
bargaining agreement in question expired withoutbeing renewed. In 1979, the parties entered into
an "addendum" stipulating certain wage increases covering the years from 1974
to1977.Simultaneously, they entered into a collective bargaining agreement for the years from 1979 to
1981. Like the "addendum," the newcollective bargaining agreement did not refer to the "Christmas
bonus" theretofore paid but dealt only with salary adjustments.According to the petitioner, the new
agreements deliberately excluded the grant of Christmas bonus with the enactment of
PresidentialDecree No. 851.It further claims that since 1975, it had been paying its employees 13thmonth pay pursuant to the Decree. For failure of the petitioner topay the seven-day Christmas bonus
for 1975 to 1978 inclusive, in accordance with the 1972 CBA, the union went to the labor arbiter
forrelief. In his decision, the labor arbiter ruled that the payment of the 13
th

month pay precluded the payment of further Christmas bonus.The union appealed to NLRC. The NLRC
set aside the decision of the labor arbiter appealed from and entered another one,
"directingrespondent company now the petitioner to pay the members concerned of complainants
union their 7-day wage bonus in accordancewith the 1972 CBA from 1975 to 1978.
ISSUE:
Whether or not the Christmas bonus can be considered as 13
th
month pay
HELD:
The collective bargaining agreement accords a reward, in this case, for loyalty, to certain employees.
This is evident from the stipulationgranting the bonus in question to workers "with at least one (1) year
of continuous service is a purpose not found in P.D. 851. It isclaimed, however, that as a consequence
of the impasse between the parties beginning 1974 through 1979, no collective bargainingagreement
was in force during those intervening years. Hence, there is allegedly no basis for the money award
granted by therespondent labor body.The fact, therefore, that the new agreements are silent on the
seven-day bonus demanded should not preclude the private respondents'claims thereon. The 1972
agreement is basis enough for such claims for the whole writing is instinct with an obligation,
imperfectlyexpress.WHEREFORE, premises considered, the petition is hereby DISMISSED. The Decision
of the public respondent NLRC promulgated onFebruary 11, 1982, and its Resolution dated March 23,
1982, are hereby AFFIRMED. The temporary restraining order issued on May 19,1982 is LIFTED
#93
G.R. No. 114280 July 26, 1996
PHILIPPINE AIRLINES, INC. (PAL), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and AIRLINE PILOTS ASSOCIATION OF THE
PHILIPPINES (ALPAP), respondents.
FACTS: Refusing to pay its pilots their thirteenth month pay for unfair labor practice was filed against Philippine Airlines by
the Airline Pilots Association of the Philippines. The Labor Arbiter ruled in favor of ALPAP and ordered PAL to pay its pilots
belonging to ALPAP their thirteenth month pay from 1988 to1990. Disputing PAL's contention, ALPAP argued that the
payment of the year-end bonus cannot be equated within the thirteenth month pay since the payment of the former is
conditional in character andnot fixed in its amount, while that of the thirteenth month pay is mandatory in character and
definite in its. Both parties appealed to the National Labor Relations Commission which in turn affirmed with modifications
the decision of the Labor Arbiter.
ISSUE: Whether or not PAL can claim the exception provided under the law by equation the year-endbonus with the
payment of the thirteenth month pay deserves a very close scrutiny in this case?
HELD: It appears that the rationale for the grant of the year-end bonus by PAL coincides with the natureof the bonus
which can be equated with the payment of a thirteenth month pay. However, notwithstandingthe above disquisitions, the
peculiar circumstances in this case wavers against the outright application ofthe rule preventing the imposition of a double
burden against the employer who is already paying theequivalent of the thirteenth month pay, and hereby exempt PAL
from granting both benefits of a year-endbonus and a thirteenth month pay to its pilots. The inclusion of a provision for the
continued payment ofthe year-end bonus in the 1988-1991 CBA of ALPAP and PAL belies the latter contention that the
grant ofthe year-end bonus was intended to be credited as compliance with the mandate to pay the pilots athirteenth
month pay.As early as said date, PAL was therefore fully aware that it was legally obliged togrant all its rank and file
employees a thirteenth month pay. Moreover, there is no rational basis forwithholding from the members of ALPAP the
benefit of a year-end bonus is addition to the thirteenthmonth pay, while the same being granted to the other rank and
field employees of PAL. WHEREFORE,finding no merit in the petitions, the same are hereby DENIED and the Resolutions of
public respondentNLRC promulgated on November 23, 1993 and February 28, 1994 are hereby AFFIRMED.

#94 FRAMANLIS FARMS INC. VS. MINISTER OF LABOR

#95
SAN MIGUEL CORPORATION (CAGAYAN COCA-COLA PLANT), petitioner,
vs.
Hon. AMADO G. INCIONG, Deputy Minister of Labor and CAGAYAN COCA-COLA FREE WORKERS
UNION,respondents.
Facts: On January 3, 1977, Cagayan Coca-Cola Free Workers Union, private respondent herein, filed a
complaint against San Miguel Corporation (Cagayan Coca-Cola Plant), petitioner herein, alleging failure
or refusal of the latter to include in the computation of 13th- month pay such items as sick, vacation or
maternity leaves, premium for work done on rest days and special holidays, including pay for regular
holidays and night differentials.
An Order 3 dated February 15, 1977 was issued by Regional Office No. X where the complaint was filed
requiring herein petitioner San Miguel Corporation (Cagayan Coca-Cola Plant) "to pay the difference of
whatever earnings and the amount actually received as 13th month pay excluding overtime premium
and emergency cost of living allowance. "
Herein petitioner appealed from that Order to the Minister of Labor in whose behalf the Deputy
Minister of Labor Amado G. Inciong issued an Order 4 dated June 7, 1978 affirming the Order of
Regional Office No. X and dismissing the appeal for lack of merit. Petitioner's motion for
reconsideration having been denied, it filed the instant petition.
Issue: Whether in the computation of the 13th-month pay under Presidential Decree 851, payments for
sick, vacation or maternity leaves, premium for work done on rest days and special holidays, including
pay for regular holidays and night differentials should be considered.
Held: No.
The provision in dispute is Section 1 of Presidential Decree 851 and provides: All employers are hereby
required to pay all their employees receiving a basic salary of not more than Pl,000 a month,

regardless of the nature of the employment, a 13th-month pay not later than December 24 of every
year.
Section 2 of the Rules and Regulations for the implementation of Presidential Decree 851 provides:
b) Basic salary shall include all remunerations on earnings paid by an employer to an
employee for services rendered but may not include cost-of-living allowances granted
pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit sharing
payments and all allowances and monetary benefits which are not considered or
integrated as part of the regular or basic salary of the employee at the time of the
promulgation of the Decree on December 16, 1975.
Under Presidential Decree 851 and its implementing rules, the basic salary of an employee is used as
the basis in the determination of his 13th-month pay. Any compensations or remunerations which are
deemed not part of the basic pay is excluded as basis in the computation of the mandatory bonus.
Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 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 renumeration" which are deemed not part of the basic
salary includes within its meaning payments for sick, vacation, or maternity leaves. Maternity premium
for works performed on rest days and special holidays pays 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 they, were not so excluded, it is hard to find any "earnings and other remunerations"
expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would
prove to be Idle and with no purpose.

#96
G.R. No. 110068 February 15, 1995
PHILIPPINE DUPLICATORS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, et al.,respondent
Facts:
On 11 November 1993, this Court, through its Third Division, rendered a decision dismissing
the petition for certiorari filed by petitioner Philippine Duplicators, Inc. (Duplicators) in G.R. No.
110068. The Court upheld the decision of public respondent National Labor Relations Commission
(NLRC), which affirmed the order of Labor Arbiter Felipe T. Garduque II directing petitioner to pay 13th
month pay to private respondent employees computed on the basis of their fixed wages plus sales
commissions.
The Third Division also denied with finality on 15 December 1993 the Motion for
Reconsideration filed (on 12 December 1993) by petitioner. On 17 January 1994, petitioner Duplicators
filed (a) a Motion for Leave to Admit Second Motion for Reconsideration and (b) a Second Motion for
Reconsideration to set aside the rendered decision to them.

Issue:
Is the Motion for Leave to Admit Second Motion for Reconsideration and Second Motion for
Reconsideration filed by the petitioner is valid and has a merit to set aside the rendered decision in
Duplicators?
Ruling:
The Motions for Leave to File a Second Motion for Reconsideration and the aforesaid Second
Reconsideration are denied by the court for lack of merit.

#97
Isalama Machine Works v NLRC et al G.R. No. 100167 March 2, 1995
Facts: On 25 March 1987, petitioner Isalama Machine Works Corporation and private respondent
Isalama Machine Works Corporation Labor Union-Workers Alliance Trade Union entered into a collective
bargaining agreement ("CBA") covering the period from 01 November 1986 to 03 October 1989.
Following the signing of the CBA, the union made repeated demands on the corporation, allegedly to
no avail, for it to comply with the CBA provisions. On 21 December 1987, the corporation paid the
workers the 13th month pay based on the average number of days actually worked during the year.
The union, through its president, private respondent Henry Baygan, demanded that the 13th month
pay should, instead, be made on the basis of a full one month basic salary. The corporation countered
that its own computation of the 13th month pay accorded with the CBA provisions and Presidential
Decree No. 851. On 05 January 1988, the union filed a notice of strike with the Department of Labor
and Employment, Region X, Cagayan de Oro, alleging the commission of unfair labor practice and CBA
violation by the corporation. On 16 May 1988, the Executive Labor Arbiter rendered a decision holding
the strike to be illegal and declaring Baygan and the "participating" union members to have thereby
lost their employment status. After several conferences, the National Conciliation and Mediation Board
("NCMB") succeeded in having the dispute amicably settled except for the 13th month pay differential
which remained in contention. The union insisted that the failure of the corporation to implement fully
the 13th month pay provision of the CBA amounted to unfair labor practice.
Issue: Whether or not the workers should have a 13th month pay???
Held: Yes, In this case, the real reason for the strike is clearly traceable to the unresolved dispute
between the parties on 13th month pay differentials under Presidential Decree No. 851, the proper
manner of its application and computation. The Court does not see this issue, given the quoted
provisions of the law and its implementing rules, to be constitutive of unfair labor practice. Section 9 of
Rules and Regulations Implementing Presidential Decree No. 851, in fact, specifically states that
"nonpayment of the thirteenth-month pay provided by the Decree and (the) rules shall be treated as

money claims cases and shall be processed in accordance with the Rules Implementing the Labor Code
of the Philippines and the Rules of the National Labor Relations Commission." Private respondents,
indeed, showed little prudence, if at all, in their precipitate and ill-considered strike.
The NLRC likewise found private respondents to have violated Art. 264 of the Labor Code when
they blocked and barricaded the entrance of petitioner's premises preventing free ingress and egress.
Unfortunately for petitioner, however, the identity of those who committed those illegal acts during the
strike, except for Baygan, had not been adequately established. Specifically, the NLRC said that no
sufficient evidence could be found "to pin down the afore-named 16 respondents as having committed
illegal acts during the strike," that could warrant a loss of their employment status. The dismissal of
Baygan, however, was warranted. Being the union president and leader of the strike, his liability was
greater than that of mere members, and he had the responsibility to ensure that his followers
respected the law. Article 248 of the Labor Code, in turn, provides: Unfair labor practices of employers.
It shall be unlawful for an employer to commit any of the following unfair labor practice: (i) To violate
a collective bargaining agreement. This case arose in 1988 or prior to the effectivity of Republic Act No.
6715; accordingly, the back salaries of the dismissed employee should be limited to three years,
without deduction or qualification, following the rule in Maranaw Hotels and Resorts Corporation vs.
Court of Appeals.

#98
ALLIANCE OF GOVERNMENT WORKERS et. al. vs MINISTER OF LABOR and EMPLOYMENT
G.R. No. L-60403
August 3, 1983

FACTS:
The Philippine Government Employees Association (PGEA) filed a motion pursuant to P.D. No. 851 in
1983. P.D. No. 851 requires all employers to pay 13th month pay to their employees with a single
exception that is found in Sec. 2 which provides that employers who are already paying their
employees 13th month pay or its equivalent are not covered by this Decree. It is contended by the
petitioners that the Sec. 3 of the IRR of P.D. 851 also includes other types of employers who are not
exempted by the decree. They aver that the secretary, now Minister of Labor and Employment, is not
included in the decree or is not given authority by the decree to exempt from the requirement other
types of employers.

ISSUE:
Whether or not the private sectors or of government-owned and controlled corporations and
government agencies, are thereunder obligated to pay their employees, receiving a basic salary of not

more than P1,000 a month, a 13th-month pay not later than December 24th of every year?

HELD:
It is the legislature or, in proper cases, the administrative heads of government and not the collective
bargaining process nor the concessions wrung by labor unions from management that determine how
much the workers in government-owned or controlled corporations may receive in terms of salaries,
13th month pay, and other conditions or terms of employment. There are government institutions,
which can afford to pay two weeks, three weeks, or even 13th-month salaries to their personnel from
their budgetary appropriations. Here as in other countries, government salaries and wages have
always been lower than salaries, wages, and bonuses in the private sector. However, civil servants
have no cause for despair. Service in the government may at times be a sacrifice but it is also a
welcome privilege. Section
3 of the Rules and Regulations Implementing Presidential Decree No. 851 is, therefore, a correct
interpretation of the decree. It has been implemented and enforced from December 22, 1975 to the
present; the petitioners have shown no valid reason why it should be nullified because of their petition
filed six and a half years after the issuance and implementation of the rule. WHEREFORE, the petition
is hereby DISMISSED for lack of merit.

ART. 101. PAYMENT BY RESULTS

#99
Tan v.Lagrama August 15, 2002 G.R. no. 151228

Facts: Lagrama works for Tan as painter of billboards and murals for the motion pictures shown at the
theaters managed by Tan for more than 10years. He was dismissed for having urinated in his working
area. Aggrieved, Lagrama filed a complaint for illegal dismissal and non payment of benefits. Tan
asserted that Lagrama was an independent contractor as he was paid in piece-work basis

Issue:
Whether or not Lagrama is an independent contractor or an employee of Tan?
Held:
Lagrama is an employee, not an independent contractor
Four Fold Test
A. Power of Control - Evidence shows that the Lagrama performed his work as painter and under the
supervision and control of Tan.

Lagrama worked in a designated work area inside the theater of Tan for the use of which petitioner
prescribed rules, which rules included the observance of cleanliness and hygeine and prohibition
against urinating in the work area and any other place other than rest rooms and Tan's control over
Lagrama's work extended not only the use of work area but also the result of Lagrama;s work and the
manner and means by which the work was to be accomplished. Lagrama is not an independent
contractor because he did not enjoy independence and freedom from the control and supervision of
Tan and he was subjected to Tan's control over the means and methods by which his work is to be
performed and accomplished

B. Payment of Wages - Lagrama worked for Tan on a fixed piece work basis is of no moment. Payment
by result is a method of compensation and does not define the essence of the relation. Tat Lagrama
was not reported as an employee to the SSS is not conclusive, on the question whether he was an
employee, otherwise Tan would be rewarded for his failure or even neglect to perform his obligation.
C. Power of Dismissal By Tan stating that he had the right to fire Lagrama, Tan in effect acknowledged
Lagrama to be his employee
D. Power of Selection and Engagement of Employees Tan engaged the services of Lagrama without
the intervention of third party.

#100
G.R. No. 111042
October 26, 1999
Avelino Lambo and Vicente Belocura, petitioners
versus
National Labor Relations Commission and J.C. Tailor Shop and/or Johnny Co, respondents

Facts:
Petitioners were employed as tailors by private respondents. They worked from 8AM to 7PM
daily with a regular income of Php 64.00. Eventually, petitioners filed a complaint against private
respondents for illegal dismissal. Petitioners sought to recover overtime pay, holiday pay, premium pay
on holidays and rest days, service incentive leave pay, separation pay, 13 th month pay, and attorneys
fees. Adter hearing the case, the Labor Arbiter decided in favor of the petitioners. However, upon
appeal with NLRC, it was found out that petitioners were not actually dismissed but were threatened
with a closure of the business if they insisted to demand their straight payment of minimum wage.
Afterwards, the petitioners walked-out from the meeting. Thus, NLRC set aside the Labor Arbiters
decision and instead held the petitioners guilty of abandonment of work which resulted to the
dismissal of the said monetary claims.

Issue:
1.

Are petitioners entitled to the monetary claims and benefits?

Ruling:
Yes. The Court finds merit in the contentions of the petitioners that they were illegally
dismissed and, therefore, should be entitled to all the monetary benefits that they are claiming for.
Such decision is based on the following grounds:
1.

2.

There is an existing employer-employee relationship between the two parties because of the
capacity of the private respondents to control the employees work conduct. It is established
that the petitioners were required to regularly report for work within the premises on the
private-respondents establishment at a specific schedule for more than a year.
Due to the establishment of the employer-employee relationship, and that it was further seen
that the employees were illegally dismissed, it is just right to award them the said pays.

Therefore, the Court decided in favor of the petitioners and affirmed the Labor Arbiters decision with
the exception of including the attorneys fees in the computation.

PRICE RATE WORKERS

#101 MAKATI HABERDASHERY VS. NLRC
#102
G.R. No. 123938 May 21, 1998
LABOR CONGRESS OF THE PHILIPPINES (LCP)
vs.
NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its
Proprietor/President & Manager, MR. GONZALO KEHYENG and MRS. EVELYN
KEHYENG, respondents.
In this special civil action for certiorari under Rule 65, petitioners seek to reverse the 29 March 1995
resolution 1of the National Labor Relations Commission (NLRC) in NLRC RAB III Case No. 01-1964-91
which affirmed the Decision 2 of Labor Arbiter Ariel C. Santos dismissing their complaint for utter lack
of merit.
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 (Paragraph 1,
Annex "A" of Petition, Annex "B;" Page 2, Annex "F" of Petition).
Petitioners filed against private respondents a complaint for payment of money
claim[s] and for violation of labor standard[s] laws (NLRC Case No. RAB-111-10-1817-

90). They also filed a petition for direct certification of petitioner Labor Congress of the
Philippines as their bargaining representative (Case No. R0300-9010-RU-005).
On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr.
and private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire
Food Products, Inc. entered into a Memorandum of Agreement which provided, among
others, the following:
1. That in connection with the pending Petition for Direct Certification filed by the Labor
Congress with the DOLE, Management of the Empire Food Products has no objection
[to] the direct certification of the LCP Labor Congress and is now recognizing the Labor
Congress of the Philippines (LCP) and its Local Chapter as the SOLE and EXCLUSIVE
Bargaining Agent and Representative for all rank and file employees of the Empire
Food Products regarding "WAGES, HOURS Of WORK, AND OTHER TERMS AND
CONDITIONS OF EMPLOYMENT;"
2. That with regards [sic] to NLRC CASE NO. RAB-III-10-1817-90 pending with the NLRC
parties jointly and mutually agreed that the issues thereof, shall be discussed by the
parties and resolve[d] during the negotiation of the Collective Bargaining Agreement;
3. That Management of the Empire Food Products shall make the proper adjustment of
the Employees Wages within fifteen (15) days from the signing of this Agreement and
further agreed to register all the employees with the SSS;
4. That Employer, Empire Food Products thru its Management agreed to deduct thru
payroll deduction UNION DUES and other Assessment[s] upon submission by the LCP
Labor Congress individual Check-Off Authorization[s] signed by the Union Members
indicating the amount to be deducted and further agreed all deduction[s] made
representing Union Dues and Assessment[s] shall be remitted immediately to the LCP
Labor Congress Treasurer or authorized representative within three (3) or five (5) days
upon deductions [sic], Union dues not deducted during the period due, shall be
refunded or reimbursed by the Employer/Management. Employer/Management further
agreed to deduct Union dues from non-union members the same amount deducted
from union members without need of individual Check-Off Authorizations [for] Agency
Fee;
5. That in consideration [of] the foregoing covenant, parties jointly and mutually
agreed that NLRC CASE NO. RAB-III-10-1817-90 shall be considered provisionally
withdrawn from the Calendar of the National Labor Relations Commission (NLRC), while
the Petition for direct certification of the LCP Labor Congress parties jointly move for
the direct certification of the LCP Labor Congress;
6. That parties jointly and mutually agreed that upon signing of this Agreement, no
Harassments [sic], Threats, Interferences [sic] of their respective rights under the law,
no Vengeance or Revenge by each partner nor any act of ULP which might disrupt the
operations of the business;
7. Parties jointly and mutually agreed that pending negotiations or formalization of the
propose[d] CBA, this Memorandum of Agreement shall govern the parties in the
exercise of their respective rights involving the Management of the business and the
terms and condition[s] of employment, and whatever problems and grievances may
arise by and between the parties shall be resolved by them, thru the most cordial and

good harmonious relationship by communicating the other party in writing indicating

said grievances before taking any action to another forum or government agencies;
8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to
respect, abide and comply with all the terms and conditions hereof. Further agreed that
violation by the parties of any provision herein shall constitute an act of ULP. (Annex
"A" of Petition).
In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the
memorandum of agreement and certified LCP "as the sole and exclusive bargaining
agent among the rank-and-file employee of Empire Food Products for purposes of
collective bargaining with respect to wages, hours of work and other terms and
conditions of employment" (Annex "B" of Petition).
On November 9, 1990, petitioners through LCP President Navarro submitted to private
respondents a proposal for collective bargaining (Annex "C" of Petition).
On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III01-1964-91 against private respondents for:
a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;
b. Union busting thru Harassments [sic], threats, and interfering with the rights of
employees to self-organization;
c. Violation of the Memorandum of Agreement dated October 23, 1990;
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as
Wages promulgated by the Regional Wage Board;
e. Actual, Moral and Exemplary Damages. (Annex "D" of Petition)
After the submission by the parties of their respective position papers and presentation
of testimonial evidence, Labor Arbiter Ariel C. Santos absolved private respondents of
the charges of unfair labor practice, union busting, violation of the memorandum of
agreement, underpayment of wages and denied petitioners' prayer for actual, moral
and exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of
the individual complainants:
The undersigned Labor Arbiter is not oblivious to the fact that
respondents have violated a cardinal rule in every establishment that a
payroll and other papers evidencing hours of work, payments, etc.
shall always be maintained and subjected to inspection and visitation
by personnel of the Department of Labor and Employment. As such
penalty, respondents should not escape liability for this technicality,
hence, it is proper that all individual complainants except those who
resigned and executed quitclaim[s] and releases prior to the filing of
this complaint should be reinstated to their former position[s] with the
admonition to respondents that any harassment, intimidation, coercion
or any form of threat as a result of this immediately executory
reinstatement shall be dealt with accordingly.

SO ORDERED. (Annex "G" of petition)

On appeal, the National Labor Relations Commission vacated the Decision dated April 14, 1972 [sic]
and remanded the case to the Labor Arbiter for further proceedings for the following reasons:
The Labor Arbiter, through his decision, noted that ". . . complainant did not present
any single witness while respondent presented four (4) witnesses in the persons of
Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan . . ." (p. 183,
Records), that ". . . complainant before the National Labor Relations Commission must
prove with definiteness and clarity the offense charged. . . ." (Record, p. 183); that ". . .
complainant failed to specify under what provision of the Labor Code particularly Art.
248 did respondents violate so as to constitute unfair labor practice . . ." (Record, p.
183); that "complainants failed to present any witness who may describe in what
manner respondents have committed unfair labor practice . . ." (Record, p. 185); that ".
. . complainant LCP failed to present anyone of the so-called 99 complainants in order
to testify who committed the threats and intimidation . . ." (Record, p. 185).
Upon review of the minutes of the proceedings on record, however, it appears that
complainant presented witnesses, namely, BENIGNO NAVARRO, JR. (28 February 1991,
RECORD, p. 91; 8 March 1991, RECORD, p. 92, who adopted its POSITION PAPER AND
CONSOLIDATED AFFIDAVIT, as Exhibit "A" and the annexes thereto as Exhibit "B", "B-1"
to "B-9", inclusive. Minutes of the proceedings on record show that complainant further
presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD,
p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA (16 April 1991, Record,
p. 96, see back portion thereof ; 2 May 1991, Record, p. 102; 16 May 1991, Record,
p. 103, 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial
Evidence was made by complainant on June 24, 1991 (Record, p. 106-109)
The Labor Arbiter must have overlooked the testimonies of some of the individual
complainants which are now on record. Other individual complainants should have
been summoned with the end in view of receiving their testimonies. The complainants
should be afforded the time and opportunity to fully substantiate their claims against
the respondents. Judgment should be rendered only based on the conflicting positions
of the parties. The Labor Arbiter is called upon to consider and pass upon the issues of
fact and law raised by the parties.
Toward this end, therefore, it is Our considered view [that] the case should be
remanded to the Labor Arbiter of origin for further proceedings. (Annex "H" of Petition)
In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination:
Complainants failed to present with definiteness and clarity the particular act or acts
constitutive of unfair labor practice.
It is to be borne in mind that a declaration of unfair labor practice connotes a finding
of prima facieevidence of probability that a criminal offense may have been committed
so as to warrant the filing of a criminal information before the regular court. Hence,
evidence which is more than a scintilla is required in order to declare
respondents/employers guilty of unfair labor practice. Failing in this regard is fatal to
the cause of complainants. Besides, even the charge of illegal lockout has no leg to
stand on because of the testimony of respondents through their guard Orlando Cairo
(TSN, July 31, 1991 hearing; p. 5-35) that on January 21, 1991, complainants refused

and failed to report for work, hence guilty of abandoning their post without permission
from respondents. As a result of complainants['] failure to report for work, the cheese
curls ready for repacking were all spoiled to the prejudice of respondents. Under crossexamination, complainants failed to rebut the authenticity of respondents' witness
testimony.
As regards the issue of harassments [sic], threats and interference with the rights of
employees to self-organization which is actually an ingredient of unfair labor practice,
complainants failed to specify what type of threats or intimidation was committed and
who committed the same. What are the acts or utterances constitutive of harassments
[sic] being complained of? These are the specifics which should have been proven with
definiteness and clarity by complainants who chose to rely heavily on its position paper
through generalizations to prove their case.
Insofar as violation of [the] Memorandum of Agreement dated October 23, 1990 is
concerned, both parties agreed that:
2 That with regards [sic] to the NLRC Case No. RAB III-10-1817-90
pending with the NLRC, parties jointly and mutually agreed that the
issues thereof shall be discussed by the parties and resolve[d] during
the negotiation of the CBA.
The aforequoted provision does not speak of [an] obligation on the part of respondents
but on a resolutory condition that may occur or may not happen. This cannot be made
the basis of an imposition of an obligation over which the National Labor Relations
Commission has exclusive jurisdiction thereof.
Anent the charge that there was underpayment of wages, the evidence points to the
contrary. The enumeration of complainants' wages in their consolidated Affidavits of
merit and position paper which implies underpayment has no leg to stand on in the
light of the fact that complainants' admission that they are piece workers or paid on
a pakiao [basis] i.e. a certain amount for every thousand pieces of cheese curls or
other products repacked. The only limitation for piece workers or pakiao workers is that
they should receive compensation no less than the minimum wage for an eight (8)
hour work [sic]. And compliance therewith was satisfactorily explained by respondent
Gonzalo Kehyeng in his testimony (TSN, p. 12-30) during the July 31, 1991 hearing. On
cross-examination, complainants failed to rebut or deny Gonzalo Kehyeng's testimony
that complainants have been even receiving more than the minimum wage for an
average workers [sic]. Certainly, a lazy worker earns less than the minimum wage but
the same cannot be attributable to respondents but to the lazy workers.
Finally, the claim for moral and exemplary damages has no leg to stand on when no
malice, bad faith or fraud was ever proven to have been perpetuated by respondents.
WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter lack of
merit. (Annex "I" of Petition). 4
On appeal, the NLRC, in its Resolution dated 29 March 1995, 5 affirmed in toto the decision of Labor
Arbiter Santos. In so doing, the NLRC sustained the Labor Arbiter's findings that: (a) there was a dearth
of evidence to prove the existence of unfair labor practice and union busting on the part of private
respondents; (b) the agreement of 23 October 1990 could not be made the basis of an obligation
within the ambit of the NLRC's jurisdiction, as the provisions thereof, particularly Section 2, spoke of a

resolutory condition which could or could not happen; (c) the claims for underpayment of wages were
without basis as complainants were admittedly"pakiao" workers and paid on the basis of their output
subject to the lone limitation that the payment conformed to the minimum wage rate for an eight-hour
workday; and (d) petitioners were not underpaid.
Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October
1995, 6petitioners filed the instant special civil action for certiorari.
ISSUES:
1 Whether or not the petitioners have been illegally dismissed by private respondents.
2. Whether or not the petitioners are entitled to full back wages and other privileges, and separation
pay in lieu of reinstatement.
HELD:
1 Private respondents, moreover, in considering petitioners' employment to have been terminated by
abandonment, violated their rights to security of tenure and constitutional right to due process in not
even serving them with a written notice of such termination. 12 Section 2, Rule XIV, Book V of the
Omnibus Rules Implementing the Labor Code provides:
Sec. 2. Notice of Dismissal Any employer who seeks to dismiss a worker shall furnish
him a written notice stating the particular acts or omission constituting the grounds for
his dismissal. In cases of abandonment of work, the notice shall be served at the
worker's last known address.
2 Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the
Labor Code, as amended by R.A. No. 6715. Nevertheless, the records disclose that taking into account
the number of employees involved, the length of time that has lapsed since their dismissal, and the
perceptible resentment and enmity between petitioners and private respondents which necessarily
strained their relationship, reinstatement would be impractical and hardly promotive of the best
interests of the parties. In lieu of reinstatement then, separation pay at the rate of one month for every
year of service, with
a fraction of at least six (6) months of service considered as one (1) year, is in order. 13
That being said, the amount of back wages to which each petitioner is entitled, however, cannot be
fully settled at this time. Petitioners, as piece-rate workers having been paid by the piece, 14 there is
need to determine the varying degrees of production and days worked by each worker. Clearly, this
issue is best left to the National Labor Relations Commission.
As to the other benefits, namely, holiday pay, premium pay, 13th month pay and service incentive
leave which the labor arbiter failed to rule on but which petitioners prayed for in their complaint, 15 we
hold that petitioners are so entitled to these benefits. 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, their job of repacking snack food was 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, their employment
not having been dependent on a specific project or season; and third, the length of time 16that
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 17 and 13th month pay, 18 inter alia, "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. Further,
in Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned
as being entitled to holiday pay.
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 piecerate basis in which case the employer shall grant the
required 13th month pay to such workers. (emphasis
supplied)
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. 20
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 piecework, 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.
Here, private respondents did not allege adherence to the standards set forth in Sec. 8 nor with the
rates prescribed by the Secretary of Labor. As such, petitioners are beyond the ambit of exempted
persons and are therefore entitled to overtime pay. Once more, the National Labor Relations
Commission would be in a better position to determine the exact amounts owed petitioners, if any.

ART. 102. PAYMENT OF WAGES

PROOF OF WAGE PAYMENT
#103
Jimenez et. al. v. NLRC and Juanatas {G.R. No. 116960. April 2, 1996}

Facts:

On June 29, 1990, private respondents Pedro and Fredelito Juanatas, father and son, filed
aclaim for unpaid wages/commissions, separation pay and damages against JJ's Trucking and/or Dr.
Bernardo Jimenez. Said respondents, as complainants therein, alleged that in December,1987, they
were hired by herein petitioner Bernardo Jimenez as driver/mechanic and helper,respectively, in his
trucking firm, JJ Trucking. They were assigned to a ten-wheeler truck to haulsoft drinks of Coca-Cola
Bottling Company and paid on commission basis, initially fixed at 17%but later increased to 20% in
1988.

Private respondents further alleged that for the years 1988 and 1989 they received only a
partialcommission of P84,000.00 from petitioners' total gross income of almost P1,000,000.00 for
thesaid two years. Consequently, with their commission for that period being computed at 20% of said
income, there was an unpaid balance to them of P106,211.86; that until March, 1990 whentheir
services were illegally terminated, they were further entitled to P8,050.00 which added upto a grand
total of P114,261.86 due and payable to them.

Disputing the complaint, petitioners contend that respondent Fredelito Juanatas was not
anemployee of the firm but was merely a helper of his father Pedro; that all commissions for 1988and
1989, as well as those up to March, 1990, were duly paid; and that the truck driven byrespondent
Pedro Juanatas was sold to one Winston Flores in 1991 and, therefore, privaterespondents were not
illegally dismissed.

After
hearings
duly
conducted,
and
with
the
submission
of
the
parties'
position/supportingpapers, Labor Arbiter Rogue B. de Guzman rendered a decision ordering
respondents JJ'sTrucking and/or Dr. Bernardo Jimenez to pay jointly and severally complainant Pedro
Juanatasa separation pay of P15,050.00, plus attorney's fee equivalent to 10% of the award.
Thecomplaint of Fredelito Juanatas is hereby dismissed for lack of merit.On appeal filed by private
respondents, the NLRC modified the decision of the labor arbiter declaring Fredelito Juanatas as
respondents' employee and shares in the commission andseparation pay awarded to complainant

Pedro Juanatas, his father. Further, respondent JJ'sTrucking and Dr. Bernardo Jimenez are jointly and
severally liable to pay complainants their unpaid commissions in the total amount of P84,387.05.
Hence, this petition for certiorari, seeking the annulment of the decision of respondent NLRCdenying
petitioners' motion for reconsideration.

Issue:

Whether or not respondent NLRC committed grave abuse of discretion in ruling (a) that private
respondents were not paid their commissions in full, and (b) that respondent Fredelito Juanatas was an
employee of JJ's Trucking.

Ruling:

On the first issue, there is no reason to disturb the findings of respondent NLRC that the entire
amount of commissions was not paid, because of the evident failure of petitioners to present evidence
that full payment thereof has been made.

As a general rule, one who pleads payment has the burden of proving it. Even where the
plaintiff (herein private respondent) must allege non-payment, the burden of evidence rests on the
defendant (herein petitioners) to prove payment, rather than on the plaintiff to prove non-payment.

In the instant case, the right of respondent Pedro Juanatas to be paid a commission equivalent
to 17%, later increased to 20%, of the gross income is not disputed by petitioners. Although private
respondents admit receipt of partial payment, petitioners still have to present proof of full payment.

The testimony of petitioners which merely denied the claim of private respondents,
unsupported by documentary evidence, is not sufficient to establish payment. Although petitioners
submitted a notebook showing the alleged vales of private respondents for the year 1990, the same is
inadmissible and cannot be given probative value considering that it is not properly accomplished, is
undated and unsigned, and is thus uncertain as to its origin and authenticity.

Hence, for failure to present evidence to prove payment, petitioners defaulted in their
defenseand in effect admitted the allegations of private respondents.With respect to the second issue,
NLRC erred in holding that the son, Fredelito, was an employee of petitioners. In the case at bar, the
elements of an employer-employee relationship, are not present. The agreement was between

petitioner JJ's Trucking and respondent Pedro Juanatas. The hiring of a helper was discretionary on the
part of Pedro. Hence, Fredelito was not an employee of petitioners.

WHEREFORE, the judgment of respondent National Labor Relations Commission is AFFIRMED,

with the MODIFICATION that declaring Fredelito Juanatas is not an employee of petitioners and not
entitled to share in the award for commission and separation pay.

ART. 106. LABOR-ONLY CONTRACTING

#104
224 SCRA 717 July 23, 1993
VIRGINIA G. NERI, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, respondent.
FACTS: Petitioners instituted complaints against FEBTC and BCC to compel the bank to accept them as
regular employeesand for it to pay the differential between the wages being paid them by BCC and
those received by FEBTC employeeswith similar length of service. They contended that BCC in
engaged in labor-only contracting because it failed toadduce evidence purporting to show that it
invested in the form of tools, equipment, machineries, work premisesand other materials which are
necessary in the conduct of its business. Moreover, petitioners argue that they performduties which
are directly related to the principal business or operation of FEBTC.
ISSUE: Whether or not BCC was engaged in labor-only contracting.
HELD: It is well-settled that there is labor-only contracting where: (a) 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, (b) the workers recruited and placed by such person
are performing activities which are directly related o the principal business of the employer.BCC need
not prove that it made investments in the form of tools, equipment, machineries, work premises,
among others, because it has established that it has sufficient capitalization. This fact was both
determined by the Labor Arbiter and the NLRC as BCC had a capital stock of P1 million fully subscribed
and paid for. BCC is therefore a highly capitalized venture and cannot be deemed engaged in laboronly contracting.
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. The law does not require both substantial capital and investment in
the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or"
instead of and. Having established that it has substantial capital, it was no longer necessary for BCC
to further adduce evidence to prove that it does not fall within the purview of "labor-only" contracting.
There is even no need for it to refute petitioners' contention that the activities they perform are
directly related to the principal business of respondent bank. On the other hand, the Court has already
taken judicial notice of the general practice adopted in several government and private institutions and
industries of hiring independent contractors to perform special services. These services range from
janitorial, security and even technical or other specific services such as those performed by petitioners

Neri and Cabelin. While these services may be considered directly related to the principal business of
the employer, nevertheless, they are not necessary in the conduct of the principal business of the
employer.

#105
G.R. No. 158255

July 8, 2004

MANILA WATER COMPANY, INC., petitioner,

vs.
HERMINIO D. PENA, ESTEBAN B. BALDOZA, JORGE D. CANONIGO, JR., IKE S. DELFIN,
RIZALINO M. INTAL, REY T. MANLEGRO, JOHN L. MARTEJA, MARLON B. MORADA, ALLAN D.
ESPINA, EDUARDO ONG, AGNESIO D. QUEBRAL, EDMUNDO B. VICTA, VICTOR C. ZAFARALLA,
EDILBERTO C. PINGUL and FEDERICO M. RIVERA, respondents.
FACTS
Petitioner Manila Water Company, Inc. is one of the two private concessionaires contracted by the
Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in
the East Zone of Metro Manila, pursuant to Republic Act No. 8041, otherwise known as the National
Water Crisis Act of 1995. Under the Concession Agreement, petitioner undertook to absorb former
employees of the MWSS whose names and positions were in the list furnished by the latter, while the
employment of those not in the list was terminated on the day petitioner took over the operation of the
East Zone, which was on August 1, 1997. Private respondents, being contractual collectors of the
MWSS, were among the 121 employees not included in the list; nevertheless, petitioner engaged their
services without written contract from August 1, 1997 to August 31, 1997. Thereafter, on September 1,
1997, they signed a three-month contract to perform collection services for eight branches of
petitioner in the East Zone.
Before the end of the three-month contract, the 121 collectors incorporated the Association Collectors
Group, Inc. (ACGI), which was contracted by petitioner to collect charges for the Balara Branch.
Subsequently, most of the 121 collectors were asked by the petitioner to transfer to the First Classic
Courier Services, a newly registered corporation. Only private respondents herein remained with ACGI.
Petitioner continued to transact with ACGI to do its collection needs until February 8, 1999, when
petitioner terminated its contract with ACGI.
Private respondents filed a complaint for illegal dismissal and money claims against petitioner,
contending that they were petitioners employees as all the methods and procedures of their
collections were controlled by the latter. On the other hand, petitioner asserts that private respondents
were employees of ACGI, an independent contractor. It maintained that it had no control and
supervision over private respondents manner of performing their work except as to the results. Thus,
petitioner did not have an employer-employee relationship with the private respondents, but only a
service contractor-client relationship with ACGI.
ISSUE
Whether or not there exists an employer-employee relationship between petitioner and private
respondents.
RULING
We agree with the Labor Arbiter that ACGI was not an independent contractor.

First, ACGI does not have substantial capitalization or investment in the form of tools, equipment,
machineries, work premises, and other materials, to qualify as an independent contractor. While it has
an authorized capital stock of P1,000,000.00, only P62,500.00 is actually paid-in, which cannot be
considered substantial capitalization. The 121 collectors subscribed to four shares each and paid only
the amount of P625.00 in order to comply with the incorporation requirements. Further, private
respondents reported daily to the branch office of the petitioner because ACGI has no office or work
premises. In fact, the corporate address of ACGI was the residence of its president, Mr. Herminio D.
Pea. Moreover, in dealing with the consumers, private respondents used the receipts and
identification cards issued by petitioner. Second, the work of the private respondents was directly
related to the principal business or operation of the petitioner. Lastly, ACGI 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, petitioner. Prior to private
respondents alleged employment with ACGI, they were already working for petitioner, subject to its
rules and regulations in regard to the manner and method of performing their tasks. This form of
control and supervision never changed although they were already under the seeming employ of
ACGI. These are indications that ACGI was not left alone in the supervision and control of its alleged
employees. Consequently, it can be concluded that ACGI was not an independent contractor since it
did not carry a distinct business free from the control and supervision of petitioner.
Under this factual milieu, there is no doubt that ACGI was engaged in labor-only contracting, and as
such, is considered merely an agent of the petitioner. 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. Since ACGI is only a labor-only contractor, the workers it supplied
should be considered as employees of the petitioner.

#106

#107 PHILIPPINES BANK OF COMMUNICATIONS VS. NLRC

#108

Tabas vs. California Manufacturing Co.

GR no. 80680

Facts:
Petitioners filed a petition in the NLRC for reinstatement and payment of various benefits against
California Manufacturing Company. The respondent company then denied the existence of an
employer-employee relationship between the company and the petitioners. Pursuant to a manpower
supply agreement, it appears that the petitioners prior their involvement with California Manufacturing
Company were employees of Livi Manpower service, an independent contractor, which assigned them
to work as promotional merchandisers. The agreement provides that:
California has no control or supervisions whatsoever over Livi's workers with respect to how they
accomplish their work or perform, Californias obligation It was further expressly stipulated that the
assignment of workers to California shall be on a seasonal and contractual basis that cost of living
allowance and the 10 legal holidays will be charged directly to California at cost and that payroll for
the preceding week shall be delivered by Livi at California's premises.
Issue:
Whether principal employer is liable.

Held:
Yes. The existence of an employer-employee relation cannot be made the subject of an agreement.
Based on Article 106, labor-only contractor is considered merely as an agent of the employer, and
the liability must be shouldered by either one or shared by both. There is no doubt that in the case at
bar, Livi performs manpower services, meaning to say, it contracts out labor in favor of clients. We
hold that it is one notwithstanding its vehement claims to the contrary, and notwithstanding the
provision of the contract that it is an independent contractor. The nature of ones business is not
determined by self-serving appellations one attaches thereto but by the tests provided by statute and
prevailing case law. The bare fact that Livi maintains a separate line of business does not extinguish
the equal fact that it has provided California with workers to pursue the latters own business. In this
connection, we do not agree that the petitioners had been made to perform activities which are not
directly related to the general business of manufacturing, Californias purported principal operation
activity. Livi, as a placement agency, had simply supplied California with the manpower necessary to
carry out its California merchandising activities, using its California premises and equipment.

INDEPENDENT CONTRACTOR
#109
Mafinco Trading Corp. vs. Ople (case no. 109)

FACTS:
Cosmos Aerated Water Factory, a firm based at Malabon, Rizal, appointed petitioner Mafinco as its sole
distributor of Cosmos soft drinks in Manila. Rodrigo Repomanta and Mafinco executed a peddling
contract whereby Repomanta agreed to buy and sell Cosmos soft drinks. Rey Moralde entered into a
similar contract. Months later, Mafinco terminated the peddling contract with Repomanta and Moralde.
Consequently, Repomanta and Moralde, through their union, filed a complaint with the NLRC, charging
the general manager of Mafinco for illegally dismissing them.4.Mafinco filed a motion to dismiss the
complaint on the ground that the NLRC had no jurisdiction because Repomanta and Moralde were not
its employees but were independent contractors. It stressed that there was termination of the contract
not a dismissal of an employee.

ISSUE:
Whether or not there exist an employer-employee relationship between petitioner Mafinco and private
respondents Repomanta and Moralde.

HELD:
The Supreme Court held that under the peddling contracts, Repomanta and Moralde were not
employees of Mafinco but were independent contractors as found by the NLC and its fact finder and by
the committee appointed by the Secretary of Labor to look into the status of Cosmos and Mafinco
peddlers. A contract whereby one engages to purchase and sell soft drinks on trucks supplied by the
manufacturer but providing that the other party (peddler) shall have the right to employ his own
workers, shall post a bond to protect the manufacturer against losses, shall be responsible for
damages caused to third persons, shall obtain the necessary licenses and permits and bear the
expenses incurred in the sale of the soft drinks is not a contract of employment.

#110
Insular Life Insurance Co. Ltd vs NLRC
FACTS:

Insular Life (company) and Basiao entered into a contract by which Basiao was authorized to solicit
forinsurance in accordance with the rules of the company. He would also receive compensation, in the
form of commissions. The contract also contained the relations of the parties, duties of the agent and
the acts prohibited tohim including the modes of termination.After 4 years, the parties entered into
another contract an Agency Managers Contact and to implementhis end of it, Basiao organized an
agency while concurrently fulfilling his commitment under the first contract. The company terminated
the Agency Managers Contract. Basiao sued the company in a civil action. Thus,the company
terminated Basiaos engagement under the first contract and stopped payment of his commissions.
ISSUE:
W/N Basiao had become the companys employee by virtue of the contract, thereby placing his claim
forunpaid commissions
HELD:
No.Rules and regulations governing the conduct of the business are provided for in the Insurance Code.
Theserules merely serve as guidelines towards the achievement of the mutually desired result without
dictating themeans or methods to be employed in attaining it. Its aim is only to promote the result,
thereby creating noemployer-employee relationship. It is usual and expected for an insurance company
to promulgate a set of rules toguide its commission agents in selling its policies which prescribe the
qualifications of persons who may be insured.None of these really invades the agents contractual
prerogative to adopt his own selling methods or to sellinsurance at his own time and convenience,
hence cannot justifiable be said to establish an employer-employeerelationship between Basiao and
the company. The respondents limit themselves to pointing out that Basiaos contract with the
company bound him toobserve and conform to such rules. No showing that such rules were in fact
promulgated which effectivelycontrolled or restricted his choice of methods of selling insurance.
Therefore, Basiao was not an employee of the petitioner, but a commission agent, an independent
contractwhose claim for unpaid commissions should have been litigated in an ordinary civil
action.Wherefore, the complain of Basiao is dismissed.

#111

RHONE-POULENC AGROCHEMICALS PHILIPPINES, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, URCISIO A. ORAIN, and PAULINO G.
ROMAN, respondents.

FACTS
The petitioner is a domestic corporation engaged in the manufacture of agro-chemicals. Its business
operations involve the formulation, production, distributionand sale in the local market of its agrochemical products.On January 1, 1988, as a consequence of the sale by Union Carbide, Inc. of all
itsagricultural-chemical divisions worldwide in favor of Rhone-Poulenc Agrochemie,France, the
petitioner's mother corporation, the petitioner acquired from UnionCarbide Philippines Far East, Inc. the
latter's agro-chemical formulation plant inNamayan, Mandaluyong, Metro Manila.In 1987, prior to the
sale, Union Carbide had entered into a contract with CSI for thelatter's supply of janitorial services.
During the transition period, Union Carbidecontinued to avail itself of CSI's janitorial services. Thus,
petitioner Rhone-Poulencfound itself sharing the Namayan plant with Union Carbide while the factory
wasbeing serviced and maintained by janitors supplied by CSI.Midway through the transition period,
Union Carbide instructed CSI to reduce thenumber of janitors working at the plant from eight (8) to
seven (7).Private respondent Paulino Roman, one of the janitors, was recalled by CSI onFebruary 15,
l988 for reassignment. However, Roman refused to acknowledgereceipt of the recall memorandum.On
March 9, 1988, Union Carbide formally notified CSI of the termination of their janitorial service
agreement, effective April 1, 1988, citing as reason the global buy-out by Rhone-Poulenc, Agrochemie,
France of Union Carbides Inc.'s agro-chemicalbusiness.CSI thereafter issued a memorandum dated
March 20, 1988 to the seven remaining janitors assigned to the Namayan plant, including respondent
Urcisio Orain, recallingand advising them to report to the CSI office for reassignment. Like Roman, the
janitors refused to acknowledge receipt of the recall memorandum.Meanwhile, in anticipation of the
March 31, 1988 pull-out by Union Carbide, thepetitioner started screening proposals by prospective
service contractors. Rhone-Poulenc likewise invited CSI to submit to its Bidding Committee a cost
quotation ofits janitorial services. However, another contractor, the Marilag Business andIndustrial
Services, Inc. passed the bidding committee's standards and obtained the janitorial services
contract.On April 1, 1988, the eight janitors reported for work at the Namayan plant but wererefused
admission and were told that another group of janitors had replaced them.These janitors then filed
separate complaints for illegal dismissal, payment of 13thmonth salary, service leave and overtime
pay against Union Carbide, Rhone-Poulenc and CSI.
ISSUES
1.Whether or not the janitors were employees of Union Carbide
2.Whether or not the CSI is a labor only contractor
3.Whether or not petitioner absorbed the janitors in its workforce
RULING
The court held that the petition is meritorious. In determining the existence of employer-employee
relationship, the following elements are generally considered, namely: (1) the selection and
engagement of employees (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employee's conduct although the latter is the most important element. There is no
employer-employee relationship between Union Carbide and the respondent janitors. The respondents
themselves admitted that they were selected and hired by CSI and were assigned to Union Carbide.
CSI likewise acknowledged that the two janitors were its employees. The janitors drew their salaries
from CSI and not from Union Carbide. CSI exercised control over these janitors through Richard

Barroga, also a CSI employee, who gave orders and instructions to CSI janitors assigned to the
Namayan

#112
ESCARIO ET.AL. VS. NLRC
G.R. No. 124055
June 8, 2000
Petitioners: ROLANDO E. ESCARIO, NESTOR ANDRES, CESAR AMPER, LORETO BALDEMOR,EDUARDO
BOLONIA, ROMEO E. BOLONIA, ANICETO CADESIM, JOEL CATAPANG,NESTOR DELA CRUZ, EDUARDO
DUNGO ESCARIO REY, ELIZALDE ESTASIO,CAROLINO M. FABIAN, RENATO JANER, EMER B. LIQUIGAN,
ALEJANDROMABAWAD, FERNANDO M. MAGTIBAY, DOMINADOR B. MALLILLIN, NOEL B.MANILA, VIRGILIO
A. MANIO, ROMEO M. MENDOZA, TIMOTEO NOTARION,FREDERICK RAMOS, JOSEPH REYES, JESSIE
SEVILLA, NOEL STO. DOMINGO,DODJIE TAJONERA, JOSELITO TIONLOC, ARNEL UMALI, MAURLIE C.
VIBAR,ROLANDO ZALDUA, RODOLFO TUAZON, TEODORO LUGADA, MAURING MANUEL,MARCIANO
VERGARA, JR., ARMANDO IBASCO, CAYETANO IBASCO, LEONILOMEDINA, JOSELITO ODO, MELCHOR BUELA,
GOMER GOMEZ, HENRY PONCE,RAMON ORTIZ, JR., ANTONIO MIJARES, JR., MARIO DIZER, REYNANTE
PEJO,ARNALDO RAFAEL, NELSON BERUELA, AUGUSTO RAMOS, RODOLFO VALENTIN,ANTONIO CACAM,
VERNON VELASQUEZ, NORMAN VALLO, ALEJANDRO ORTIZ,ROSANO VALLO, ANDREW ESPINOSA, EDGAR
CABARDO, FIDELES REYES,EDGARDO FRANCISCO, FERNANDO VILLARUEL, LEOPOLDO OLEGARIO,
OSCARSORIANO, GARY RELOS, DANTE IRANZO, RONALDO BACOLOR, RONALDESGUERA, VICTOR
ALVAREZ, JOSE MARCELO, DANTE ESTRELLADO,MELQUIADES ANGELES, GREGORIO TALABONG, ALBERT
BALAO, ALBERTCANLAS, CAMILO VELASCO, PONTINO CHRISTOPHER, WELFREDO RAMOS,REYNALDO
RODRIGUEZ, RAZ GARIZALDE, MIGUEL TUAZON, ROBERTO SANTOS,AND RICARDO MORTEL
Respondent: EMPLOYEES' COMPENSATION COMMISSION
Ponente: J.GUTTIERREZ, JR.
Facts:
Petitioners are merchandisers of respondent company. They withdraw stocks from the warehouse, fix the prices, pricetagging, displaying the products and inventory. They were paid by the company through an agent to avoid liability. They
claim that they were under the control and supervision of the company. They asked for regularization of their status. They
were then given notice of their termination. The company denied any employer-employee relationship. They claim that
they used an agent or independent contractors to sell the merchandise. The Labor Arbiter ruled that there was an
employer-employee relationship. The NLRC set aside the decision and said that there was no such relationship. The agent
was a legitimate independent contractor.
Issue:
Whether or not the petitioners are employees of the company.
Held:
The Court ruled that there is no employer-employee relationship and that petitioners are employees of the agent. The
agent is a legitimate independent contractor. Labor-only contractor occurs only when the contractor merely recruits,
supplies or places workers to perform a job for a principal. The labor-only
contractor doesnt have substantial capital or investment and the workers recruited perform activities
directly related to the principal business of the employer. There is permissible contracting only when the contractor carries
an independent business and undertakes the contract in his own manner and method, free from the control of the
principal and the contractor has substantial capital or investment. The agent ,and not the company, also exercises control
over the petitioners. No documents were submitted to prove that the company exercised control over them. The agent
hired the petitioners. The agent also pays the petitioners, no evidence was submitted showing that it was the company
paying them and not the agent. It was also the agent who terminated their services. By petitioning for regularization, the
petitioners concede that they are not regular employees.

ART. 119. PROHIBITION REGARDING WAGES

WAGE DEDUCTION
#113

Radio Communication of the Philippines Inc. vs. Secretary of Labor, [G.R. No. 77959 January
9, 1989]
Post under case digests, labor law at Friday, March 02, 2012 Posted by Schizophrenic Mind
Facts: On May 4, 1981, petitioner, a domestic corporation engaged in the telecommunications
business, filed with the National Wages Council an application for exemption from the coverage of
Wage Order No. 1. The application was opposed by respondent United RCPI Communications Labor
Association (URCPICLA-FUR), a labor organization affiliated with the Federation of Unions of Rizal
(FUR).

On May 22, 1981, the National Wages Council disapproved saidapplication and ordered petitioner to
pay its covered employees the mandatory living allowance of P2.00 daily effective March 22, 1981.

As early as March 13, 1985, before the aforesaid case was elevated to this Court, respondent union
filed a motion for the issuance of a writ of execution, asserting therein its claim to 15% of the total
backpay due to all its members as "union service fee" for having successfully prosecuted the latter's
claim for payment of wages and for reimbursement of expenses incurred by FUR and prayed for the
segregation and remittance of said amount to FUR thru its NationalPresident.

On October 24, 1985, without the knowledge and consent of respondent union, petitioner entered into
a compromise agreementwith Buklod ng Manggagawa sa RCPI-NFL (BMRCPI-NFL) as the new
bargaining agent of oppositors RCPI employees. Thereupon, the parties filed a joint motion praying for
the dismissal of the decision of the National Wages Council for it had already been novated by
the Compromise Agreement re-defining the rights and obligations of the parties. Respondent Union on
November 7, 1985, countered by opposing the motion and alleging that one of the signatories thereof BMRCPI-NFL is not a party in interest in the case but that it was respondent Union which represented
oppositors RCPI employees all the way from the level of the National Wages Council up the Supreme
Court. Respondent Union, therefore, claimed that the Compromise Agreement is irregular and invalid,
apart from the fact that there was nothing to compromise in the face of a final and executory decision.

Director Severo M. Pucan issued an Order dated November 25, 1985 awarding to URCPICLA-FUR and
FUR 15% of the total backpay of RCPI employees as their union service fees, and directing RCPI to
deposit said amount with the cashier of the Regional Office for proper disposition to said awardees.
Despite said order, petitioner paid in full the covered employees on November 29, 1985, without
deducting the union service fee of 15%. In an order dated May 7, 1986, NCR officer-in-charge found

petitioner RCPI and its employees jointly and severally liable for the payment of the 15% union service
fee amounting to P427,845.60 to private respondent URCPICLA-FUR and consequently ordered the
garnishment of petitioner's bank account to enforce said claim.

Secretary of Labor and Employment issued an order on August 18, 1986 modifying the order appealed
from by holding petitioner solely liable to respondent union for 10% of the awarded amounts as
attorney's fees.

Issue: Whether or not public respondents acted with grave abuse of discretion amounting to lack of
jurisdiction in holding the petitioner solely liable for "union service fee to respondent URCPICLA-FUR.

Held: No. Attorney's fee due the oppositor is chargeable against RCPI. The defaulting employer or
government agency remains liable for attorney's fees because it compelled the complainant to employ
the services of counsel by unjustly refusing to recognize the validity of the claim. (Cristobal vs. ECC)

It is undisputed that oppositor (private respondent herein) was the counsel on record of the
RCPI employees in their claim for EC0LA under Wage Order No. 1 since the inception of the
proceedings at the National Wages Council up to the Supreme Court. It had, therefore, a valid claim for
attorney's fee which it called union service fee.

As is evident in the compromise agreement, petitioner was bound to pay only 30% of the amount due
each employee on November 30, 1985, while the balance of 70% would still be the subject of
renegotiation by the parties. Yet, despite such conditions beneficial to it, petitioner paid in full the
backpay of its employees on November 29, 1985, ignoring the service fee due the private respondent.
Worse, petitioner supposedly paid to one Atty. Rodolfo M. Capocyan the 10% fee that properly
pertained to herein private respondent, an unjustified and baffling diversion of funds.

Finally, petitioner cannot invoke the lack of an individual written authorization from the employees as a
shield for its fraudulent refusal to pay the service fee of private respondent. Be that as it may, the lack
thereof was remedied and supplied by the execution of thecompromise agreement whereby
the employees, expressly approved the 10% deduction and held petitioner RCPI free from any claim,
suit or complaint arising from the deduction thereof. When petitioner was thereafter again ordered to

pay the 10% fees to respondent union, it no longer had any legal basis or subterfuge for refusing to
pay the latter.

We agree that the Labor Code in requiring an individual written authorization as a prerequisite to wage
deductions seeks to protect the employee against unwarranted practices that would diminish his
compensation without his knowledge and consent. However, for all intents and purposes, the
deductions required of the petitioner and the employees do not run counter to the express mandate of
the law since the same are not unwarranted or without their knowledge and consent. Also, the
deductions for the union service fee in question are authorized by law and do not require individual
check-off authorizations

#114
G.R. No. 80039 April 18, 1989
ERNESTO M. APODACA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS PHILS.,
INC., respondents.
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 priv
a t e 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 setoff 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
N L RC h a s j u r i s d i c t i o n
to resolve a claim for
nonpayment of stock subscriptions to a corporation. (2) If so, whether or not
an
obligation arising there from be offset against a money claim of an employee against the employer.
RULING:
(1)
NLRC
has
no
jurisdiction
to
determine
such
intra-corporate
disputeb e t w e e n t h e s t o c k h o l d e r a n d t h e c o r p o r a t i o n a s i n t h e m a
t t e r o f u n p a i d 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
ad e d u c t i o n f r o m t h e w a g e s o f t h e e m p l o y e e s b y t h e e m p l o y e r , o n l y i n
t h r e e instances

WAGE DISTORTION
#115 METROPOLITAN BANK AND TRUST COMPANY EMPLOYEES VS. NLRC
#116
G.R. No. 103586 July 21, 1994
NATIONAL FEDERATION OF LABOR, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FRANKLIN BAKER COMPANY OF THE PHILIPPINES
(DAVAO PLANT), respondents.
Facts: Several Wage Orders were promulgated by the then President Ferdinand E. Marcos. This
allegedly resulted to a wage distortion between the regular and the casual employees. Grievance
meetings were held by petitioner National Federation of Labor ("NFL") and private respondent
Company addressing the impact which implementation of the various Wage Orders had on the wage
structure of the Company. On 21 June 1984, all the casual or non-regular employees of private
respondent Company (at least in its Davao Plant) were "regularized," or converted into regular
employees, pursuant to the request of petitioner NFL. On 1 July 1984, the effectivity date of the 1984
Collective Bargaining Agreement between NFL and the Company, all regular employees of the
Company received an increase of P1.84 in their daily wage; the regular daily wage of the regular
employees thus became P35.84 as against P34.00 per day for non-regular employees. As a result of
the implementation of Wage Order No. 6, casual employees received an increase of their daily wage
from P34.00 to P36.00. At the same time, the Company unilaterally granted an across-the-board
increase of P2.00 in the daily rate of all regular employees, thus increasing their daily wage from
P35.84 to P37.84. Further, on 1 July 1985, the anniversary date of the increases under the CBA, all
regular employees who were members of the collective bargaining unit got a raise of P1.76 in their
basic daily wage, which pushed that daily wage from P37.84 to P39.60, as against the non-regular's
basic wage of P36.00 per day. Finally, by November 1987, the lowest paid regular employee had a
basic daily rate of P64.64, or P10.64 more than the statutory minimum wage paid to a non-regular
employee. On 11 November 1987, the NLRC En Banc rendered a decision which in effect found the
existence of wage distortion and required the Company to pay a P1.00 wage increase effective 1 May
1984. In the computation submitted by the Union, there is a need to restore the P2.56 gap between
non-regulars or "casuals" and "regular workers." This difference in the basic wage of these workers was
existing at the time of the conclusion of the collective bargaining agreement and before the
implementation of Wage Orders No. 4 & 5. The imprecise claim of respondent that there is P3.60 gap
between non-regular and regulars may not be sustained because as aforestated, this amount
represents negotiated wage increase which should not be considered covered and in compliance with
the wage orders. Considering, however, the present economic conditions and the outlay involved in
correcting the distortion in the wages of respondent's workers, this Commission, in the exercise of its

arbitral powers, feels that an increase of P1.00 on the present basic wage of regular workers would
significantly rectify or minimize the distortion in the wage structure of respondent company caused by
the implementation of the various wage orders. Respondent is, therefore, required to implement the
P1.00 wage increase effective May 1, 1984 when Wage Order 4 took effect. On motion for partial
reconsideration filed by the Company, the above quoted portion of the NLRC En Banc'sdecision was
reconsidered and set aside by the NLRC Fifth Division. 3 The Fifth Division of the NLRC in effect found
that while a wage distortion did exist commencing 16 June 1984, the distortion persisted only for a
total of fifteen (15) days and accordingly required private respondent company to pay "a wage
increase of P2.00 per day to all regular workers effective June 16, 1984 up to June 30, 1984 or a total of
fifteen (15) days." 4 The rest of the decision of 11 November 1987 was left untouched.
Issue: Whether there existed a wage distortion
Held: Yes.
As used in Article 124 of the Labor Code, a wage distortion shall mean 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. The concept of wage distortion
assumes an existing grouping or classification of employees which establishes distinctions among such
employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate
for each of the existing classes of employees. The wage distortion anticipated in Wage Orders Nos. 3,
4, 5 and 6 was a "distortion" (or "compression") which ensued from the impact of those Wage Orders
upon the different wage rates of the several classes of employees. Thus distortion ensued where the
result of implementation of one or another of the several Wage Orders was the total elimination or the
severe reduction of the differential or gap existing between the wage rates of the differing classes of
employees. There did exist a two-fold classification of employees within the private respondent
Company: regular employees on the one hand and casual (or non-regular) employees on the other. As
can be seen from the figures referred to earlier, the differential between these two (2) classes of
employees existing before Wage Order No. 3 was reduced to zero upon the effectivity of Wage Order
No. 5 on 16 June 1984. Obviously, distortion consisting of complete elimination of the wage rate
differential had occurred. It is equally clear, however, that fifteen (15) days later, on 1 July 1984,
upon effectivity of the wage increase stipulated in the collective bargaining agreement between the
parties, a gap or differential of P1.84 was re-created. This restored differential persisted after the
effectivity of Wage Order No. 6 on 1 November 1984. By operation of the same CBA, by 1 July 1985,
the wage differential had grown to P3.60.

#117
MANILA MANDARIN EMPLOYEES UNION, petitioner
vs.
NLRC, respondent

GR 108556 NOVEMBER 19, 1996

FACTS:

The union filed with the NLRC arbitration branch a complaint on wage distortion. The labor
arbiter ruled in favor of the Union while the NRLC Commissioner Zapanta reversed the same. The
Union contends that the Mandarin Hotel filed its appeal three days beyond the prescribed period.

ISSUES:

Whether or not NLRC acquired jurisdiction to take cognizance of Mandarins appeal from Labor
Arbiter
.
RULING:

The Court ruled that the Commission acted correctly in accepting and acting on Mandarins
appeal. The employee who was authorized to receive payment was not around so the respondent was
allowed to pay docketing fee on the next business day which was February 4, 1991. In view of the
considerations and in the interest of justice was quite served when Mandarins appeal was given due
course despite delayed payment of fees the reglamentary period confers a directory, not a
mandatory, power to dismiss an appeal.

ART. 120-127. WAGE STUDIES, WAGE AGREEMENTS, AND WAGE DETERMINATION

WAGE FIXING
#118
Cagayan Sugar Milling Co., v Secretary of Labor et al., G.R. No. 128399, January 15, 1998
Facts: On November 16, 1993, Regional Wage Order No. RO2-02 was issued by the Regional Tripartite
Wage and Productivity Board, Regional Office No. II of the Department of Labor and Employment
(DOLE). It provided, inter alia, that: Sec. 1. Upon effectivity of this Wage Order, the statutory minimum
wage rates applicable to workers and employees in the private sector in Region II shall be increased as
follows: P 14.00 per day . . . Cagayan. 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.
Issue: Whether or not the petitioner violates the Wage Oder that mandates the increase of minimum
wage, and Regional Wage Order No. RO2-02 is valid, and violates Article 123 of the Labor Code?
Held: No, Article 123 of the Labor Code provides: 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. In the performance of its wage-determining functions,
the Regional Board shall conduct public hearings/consultations giving notices to employees' and
employers' groups and other interested parties. In sum, we hold that RO2-02-A is invalid for lack of
public consultations and hearings and non-publication 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. Decision of the Secretary of Labor, dated October 8,
1996, is set aside for lack of merit.

#119
ECOP vs. NWPC
G.R. No. 96169
September 24, 1991
Ponente: J. SARMIENTO

FACTS:
Petitioners 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:
Whether or not the wage order issues by RTWPB dated October 23, 1990 is valid.

HELD:
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.

The Commission noted that the increasing trend is toward the salary-cap method, which has reduced
disputes arising from wage distortions (brought about, apparently, by the floor-wage method).
Precisely, Republic Act No. 6727 was intended to rationalize wages, first, by providing for full-time
boards to police wages round-the-clock, and second, by giving the boards enough powers to achieve
this objective. The Court is of the opinion that Congress meant the boards to be creative in resolving
the annual question of wages without labor and management knocking on the legislature's door at
every turn. The petition is DENIED.

ADMINISTRATION AND ENFORCEMENT

SUBJECTS OF ENFORCEMENT
STATUTORY BENEFITS ARE APART FROM CONTRACTUAL BENEFITS
#120
Meycauayan college v. Drilon may 7, 1990 G.R. no. 81122

Facts: Petitioner is a private educational institution operating in Meycauayan, Bulacan. On January 16,
1987, its board of trustees recognized the Meycauayan College Faculty and Personnel Association as
the employees' union in the Meycauayan College. Prior to said recognition or on July 17, 1983,
petitioner and the union, then headed by Mrs. Teresita V. Lim, entered into a collective bargaining
agreement for 1983-1986. Article IV thereof provided the salary scale for teachers. Later on the union
discovered that provisions of said article were not implemented. Consequently, on March 27, 1987, the
union filed with the Department of Labor and Employment, Regional Office No. III in San Fernando,
Pampanga, a notice of strike on the ground of unfair labor practice. Petitioner's contention is that an
agreement on a salary scale should be distinguished from an agreement on a salary increase. Thus, it
argues in fine that an agreement on a salary scale should be considered as an addition to the salary
increase imposed by law and viceversa.
Issue:

Whether or not increases in employees' salaries resulting from the implementation of presidential
decrees and wage orders, which are over and above the agreed salary scale contracted for between
the employer and the employees in a collective bargaining agreement, preclude the employees from
claiming the difference between their old salaries and those provided for under said salary scale.
Held:
Increments to the laborers financial gratification, be they in the form of salary increases or changes in
the salary scale are aimed at one thing - improvement of the economic predicament of the laborers.
As such they should be viewed in the light of the States avowed policy to protect labor. Thus, having
entered into an agreement with its employees, an employer may not be allowed to renege on its
obligation under a collective bargaining agreement should, at the same time, the law grant the

employees the same or better terms and conditions of employment. Employee benefits derived from
law are exclusive of benefits arrived at through negotiation and agreement unless otherwise provided
by the agreement itself or by law.

The one-year prescriptive period is inapplicable in this case because of peculiar factual circumstances
which petitioner has not denied. Although the collective bargaining agreement covers school years
1983 to 1986, a copy of the agreement was only made available to the union in 1987. Immediately
thereafter, the union sought its implementation. The union members might have been aware of the
existence of the collective bargaining agreement but that fact that their president was actually a
management employee being petitioner's registrar, they must have been deterred from demanding its
implementation earlier. Hence, to apply the provisions of Article 290 (Art. 291) would be unfair and
prejudicial to the union members particularly those who have served petitioner for a number of years
who stand to benefit most from the salary scale.

TEACHERS SHARE IN TUITION FEE INCREASE

#121
G.R. No. 155609
January 9, 2005
St. Josephs College, petitioner,
versus
St. Josephs College Workers Association (SAMAHAN), respondent

Facts:
Petitioner and respondent has discrepancies in computing the incremental proceeds of the
tuition fee that is to be used for the payment in payment of personnel benefits. Respondents figures
are higher than that of the petitioners. The discrepancy was due to the differences in the income
received by the school in the previous year and the present year. Petitioner avers that the base figure
for computing the previous years income should be based on the previous school years number of
enrollees. Further, petitioner defends that it could not give the amount computed by the respondent
because for them the school has not gained income but losses caused by the drop in the enrollment
rate. On the other hand, respondents contend that petitioners computations would result in to a sharp
reduction of incremental proceeds. Thus, a small share of the proceeds shall be given to the
respondents. Eventually, this leads both parties to undergo voluntary arbitration. The Voluntary
Arbiters decided in favor of the respondents and ordered the petitioner to pay the respondents back
wages, allowance and other benefits retroactively. The Court of Appeals likewise sided with the
petitioners.

Issue:
1.

Whether or not the petitioners computations of incremental proceeds are with merit and in
accordance with the law?

Ruling:
No, the Court ruled in accordance with Section 5(2) of Republic Act 6728 which allows tuition
fee increases in private school given that 70% of the said increase should be disbursed as salaries,
wages, allowances, and other benefits for the teaching and non-teaching personnel. Thus, despite the
petitioners contention that it could not grant the computation of the respondent due to losses, the
former should comply with this said rule. The Court could not change what the legislature has laid
down. Moreover, as to the contention of the school that it has incurred losses, the petitioner has failed
to actually show the actual losses it has suffered.
Therefore, the Court denies the petition and affirms the decisions rendered by the lower courts.

CASES ON ENFORCEMENT
#122 COCOFED ET. AL. VS.HON. CRESENCIANO B. TRAJANO ET.AL.
#123 CEBU OXYGEN AND ACETYLENE CO., INC. VS. DRILON
#124
Odin Security Agency v. Hon. Dionisio dela Serna et. al, {G.R. No. 87439, Feb. 21, 1990}

Facts:

The private respondents (employees) filed with the DOLE a complaint charging the petitioner
(employer) with underpayment of wages, illegal deductions, non payment of night shift differential,
overtime pay, etc. When conciliation efforts failed, the parties were required to submit their position
papers. Based on the position papers, the Regional Director issued an order directing the employer to
pay the employees the benefits prayed for.

Claiming that he was denied due process, the petitioner filed a motion for reconsideration
which was treated as an appeal. The Undersecretary affirmed with modification the order of the
Regional Director.

Hence, this petition for certiorari and prohibition

Ruling:

1.) Requirement of the process is satisfied when the parties are given an opportunity to
submit position papers; what the fundamental law abhors is not absence of previous
notice but the absolute lack of opportunity to be heard. The petitioner was not denied
due process, for several hearings were in fact conducted by the hearing officer of the
Regional Office of the DOLE and the parties submitted position papers upon which the
Regional Director based his decision in the case. The requirements of due process are
satisfied when the parties are given an opportunity to submit position papers.
2.) Principle of jurisdiction by estoppel. The petitioner is estopped from questioning the
alleged lack of jurisdiction of the Regional Director over the private respondents claims.
Petitioner submitted to the jurisdiction of the Regional Director by taking part in the
hearings before him and by submitting a position paper. This act of participation amounts
to estoppel, [that is, action speaks louder than words: the law does not allow a person to
speak against his own act or deed.]

#125
GR No. 122791, February 19, 2003
URBANES, Jr. petitioner,
vs.
Sec. of Labor, respondent.
FACTS: Petitioner Placido O. Urbanes, Jr., doing business under the name and style of Catalina Security
Agency, entered into an agreement to provide security services to respondent Social Security System
(SSS). During the effectivity of the agreement, petitioner, by letter of May 16, 1994, requested the SSS
for the upward adjustment of their contract rate in view of Wage Order No. NCR-03 which was issued
by the Regional Tripartite Wages and Productivity Board-NCR pursuant to Republic Act 6727 otherwise
known as the Wage Rationalization Act .On June 24, 1994, petitioner pulled out his agency's services
from the premises of the SSS and another security agency, Jaguar, took over. On June 29, 1994,
petitioner filed a complaint with the DOLE-NCR against the SSS seeking the implementation of Wage
Order No. NCR-03.The Regional Director of the DOLE-NCR rendered judgment in favor of the petitioner.
SSS appealed to the Secretary of Labor. The Secretary of Labor set aside the order of the Regional
Director and the Secretary held petitioner's security agency "JOINTLY AND SEVERALLY liable for wage
differentials, the amount of which should be paid DIRECTLY to the security guards concerned.
ISSUE: Whether or not the Secretary of Labor have jurisdiction to review appeals from decisions of the
Regional Directors in complaints filed under Article 129 of the Labor Code.
RULING: In the case at bar, even if petitioner filed the complaint on his and also on behalf of the
security guards, the relief sought has to do with the enforcement of the contract between him and the
SSS which was deemed amended by virtue of Wage Order No. NCR-03. The controversy subject of the
case at bar is thus a civil dispute, the proper forum for the resolution of which is the civil courts. But
even assuming arguendo that petitioner's complaints were filed with the proper forum, for lack of
cause of action it must be dismissed. Articles 106, 107 and 109 of the Labor Code provide:
ART. 106. CONTRACTOR OR SUBCONTRACTOR. Whenever an employer enters into
contract with another person for the performance of the former's work, the employees of the
contractor and of the latter's subcontractor, if any, shall be paid in accordance with the
provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wage of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work performed under the contract, in
the same manner and extent that he is liable to employees directly employed by him.
xxx xxx xxx (Emphasis and underscoring)
ART. 107.INDIRECT EMPLOYER. The provisions of the immediately preceding Article shall
likewise apply to any person, partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the performance of any work, task, job
or project.
ART. 109.SOLIDARY LIABILITY. The provisions of existing laws to the contrary notwithstanding, every
employer or indirect employer shall be held responsible with his contractor or subcontractor for any

violation of any provision of this Code. For purposes of determining the extent of their civil liability
under this Chapter, they shall be considered as direct employers. In fine, the liability of the SSS to
reimburse petitioner arises only if and when petitioner pays his employee-security guards "the
increases" mandated by Wage Order No. NCR-03. The records do not show that petitioner has paid the
mandated increases to the security guards. The security guards in fact have filed a complaint with the
NLRC against petitioner relative to, among other things, underpayment of wages.

ART. 128. VISITORIAL AND ENFORCEMENT POWER

#126
G.R. No. 82488 February 28, 1990
VICENTE ATILANO/ROSE SHIPPING LINES, petitioner,
vs.
HON. DIONISIO C. DE LA SERNA, Undersecretary Department of Labor and Employment,
HON. ADRIAN LOMUNTAD, Regional Director, Department of Labor and Employment,
Regional Office No. 7, MAMINTAS O. SANDALAN, CESAR PETALCORIN, JONATHAN SARADOR,
BONIFACIO LASOLA, NILO CLAROS, GODOPREDO GRANADA, CRISTITUTO DAQUEL,
LEONARDO LARGO, TOMAS OTADOY, LUIS GONZALES, PAULINO SIDO, GILBERT OSABEL,
WILLIAM RONDOVIO, RUEL ORGE, NOLASCO P. AUSTERO, WILFREDO FLORES and
BERNARDITO P. MANALO, respondents.
FACTS
On 20 May 1985, private respondents filed a letter-complaint in the Regional Office of the then Ministry
of Labor and Employment, Cebu City, against petitioner Rose Shipping Lines and its Proprietor/Manager
Vicente Atilano docketed as LSED Case No. 055-85. The letter-complaint alleged violations by
petitioner of labor standard laws on minimum wages, allowances, 13th month pay and overtime pay.
Acting on the letter-complaint, the Office of the Regional Director ordered a Labor Standards and
Welfare Officer (LSW officer, hereinafter) to conduct a complaint inspection on 22 July 1985 at the
establishment of petitioner in Cebu City.
Several conciliation conferences on the motion to dismiss were subsequently held and both parties
agreed that they would submit their respective position papers after which petitioner's motion to
dismiss would be deemed submitted for resolution.
On 24 April 1986, public respondent Regional Director denied petitioner's motion to amiss for lack of
merit. A motion for reconsideration or appeal was filed with the Secretary of the Department of Labor
and Employment on 19 May 1986. Petitioner more than a year later filed a Manifestation and Motion
with the Secretary dated 23 July 1987, enclosing therein a different set of quitclaims and/or a also
prepared by petitioner but allegedly signed by private respondents dated 9 July 1986 (i.e., different
from those earlier referred to by petitioner in his ex-partemotion to dismiss filed with the Regional
Director On 3 March 1988, public respondent Under of Labor rendered the questioned order dismissing
petitioner's motion for reconsideration or appeal for lack of merit.
ISSUE
Whether or not the public respondents, Regional Director and Undersecretary of Labor, have
jurisdiction over the subject matter of the case.
RULING

We do not find petitioner's argument persuasive. We believe that the question of the authenticity or
genuineness of the quitclaims, releases and waivers supposedly signed by private respondents, but
vehemently denied by the latter, could be verified by the Regional Director in the course of, and in
connection with, examination of the petitioner's books and records of which such supposed quitclaims,
etc. (if at all genuine) must have fanned part. We note also that after petitioner on 19 May 1986 filed a
motion for reconsideration or appeal from the Regional Director's order of 16 January 1986, with the
Secretary of Labor, the Secretary of Labor requested the Regional Director to conduct conferences or
hearings for the purpose of verifying the genuineness and authenticity of private respondents'
signatures on the quitclaim papers submitted by petitioner.The quitclaim papers which petitioner
alleges embodied a compromise or settlement agreement were in any case not duly executed, that is,
they were not signed in the presence of the Regional Director or his duly authorized representative, in
disregard of the requirements of Section 8, Rule II of the Rules on the Disposition of Labor Standards
Cases in the Regional Offices. We note that petitioner did not submit any rebuttal evidence before the
Regional Director or his representatives. Thus, the lack of inspection was cured when the Regional
Director called the parties to several conferences, at which conferences, petitioner could have
presented whatever he had in his books and records to refute the claims of private respondents;
petitioner did not do so and his failure must be deemed a waiver of his right to contest the conclusions
of the Regional Director on the basis of the evidence and records actually made available to him.

#127 SERVANDOS INC. VS. THE SECRETARY OF LABOR

#128 MATERNITY CHILDRENS HOSPITAL VS. SECREATARY OF LABOR
#129
Brokenshire Memorial Hospital vs. Hon. Minister of Labor and Employment
G.R. No. 74621

Facts:
This case originated from a complaint filed by private respondents against petitioner on September 21,
1984 with the Regional Office of the MOLE, Region XI, Davao City for non-compliance with the
provisions of Wage Order No. 5. After due healing the Regional Director rendered a decision dated
November 16, 1984 in favor of private respondents. Judgment having become final and executory, the
Regional Director issued a Writ of Execution whereby some movable properties of the hospital
(petitioner herein) were levied upon and its operating expenses kept with the bank were garnished.
The levy and garnishment were lifted when petitioner hospital paid the claim of the private
respondents (281 hospital employees) directly, in the total amount of P163,047.50 covering the period
from June 16 to October 15, 1984. After making said payment, petitioner hospital failed to continue to
comply with Wage Order No. 5 and likewise, failed to comply with the new Wage Order No. 6 which
took effect on November 1, 1984, prompting private respondents to file against petitioner another
complaint docketed as ROXI-LSED-14-85, which is now the case at bar.
Issue:
Whether the Regional Director has jurisdiction over money claims of workers concurrent with the Labor
Arbiter.
Held:

Regional Director has no jurisdiction over workers' money claims, the Court in the three (3) cases
above-mentioned ruled that in view of the promulgation of Executive Order No. 111, the ruling in the
earlier case of Zambales Base Metals is already abandoned. In accordance with the rulings in Briad
Agro, L.M. Camus, and Maternity Children's Hospital, the Regional Director exercises concurrent
jurisdiction with the Labor Arbiter over money claims. Thus, Executive Order No. 111 is in the character
of a curative law, that is to say, it was intended to remedy a defect that, in the opinion of the
legislative (the incumbent Chief Executive in this case, in the exercise of her lawmaking power under
the Freedom Constitution) had attached to the provision subject of the amendment. This is clear from
the proviso: "The provisions of Article 217 to the contrary notwithstanding . . ." Plainly, the amendment
was meant to make both the Secretary of Labor (or the various Regional Directors) and the Labor
Arbiter share jurisdiction.
RA 6715 amended Art. 129 and Art. 217 of the Labor Code, to read as follows:
ART. 129.Recovery of wages, simple money claims and other benefits.Upon complaint of any
interested party, the Regional Director of the Department of Labor and Employment or any of the duly
authorized hearing officers of the Department is empowered, through summary proceeding and after
due notice, to hear and decide any matter involving the recovery of wages and other monetary claims
and benefits, including legal interest, owing to an employee or person employed in domestic or
household service or househelper under this code, arising from employer-employee relations, Provided,
That such complaint does not include a claim for reinstatement; Provided, further, That the aggregate
money claims of each employee or househelper do not exceed five thousand pesos (P5,000.00). The
Regional Director or hearing officer shall decide or resolve the complaint within thirty (30) calendar
days from the date of the filing of the same.
Viewed in the light of RA 6715 and read in consonance with the case of Briad Agro Development Corp.,
as reconsidered, We hold that the instant case falls under the exclusive original jurisdiction of the
Labor Arbiter RA 6715 is in the nature of a curative statute. Curative statutes have long been
considered valid in our jurisdiction, as long as they do not affect vested rights. In this case, We do not
see any vested right that will be impaired by the application of RA 6715. Inasmuch as petitioner had
already paid the claims of private respondents in the amount of P163,047.50 pursuant to the decision
rendered in the first complaint, the only claim that should be deliberated upon by the Labor Arbiter
should be limited to the second amount given by the Regional Director in the second complaint
together with the proposal to offset the obligations.

#130
SEAFDEC AQD v. NLRC

Facts:
Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is a
department of an international organization, the Southeast Asian Fisheries Development Center,
organized through an agreement entered into in Bangkok, Thailand. Juvenal Lazaga was employed as a
Research Associate. Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to
private respondent informing him that due to the financial constraints being experienced by the
department, his services shall be terminated. SEAFDEC-AQD's failure to pay Lazaga his separation pay
forced him to file a case with the NLRC. The LA and NLRC ruled in favor of Lazaga. SEAFDEC-AQD
claimed that the NLRC has no jurisdiction over the case.

Issue: W/N NLRC has jurisdiction over the case? NO

Held:
Petition Granted. Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDECAQD) is an international agency beyond the jurisdiction of public respondent NLRC. Being an
intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional
independence and freedom from control of the state in whose territory its office is located.
ART. 130-138. EMPLOYMENT OF WOMEN

EMPLOYMENT

#131
Zialcita, et al. v. PAL, RO4-3-3398-76, 20 February 1977
Facts:
Complainant Zialcita, an international flight stewardess of PAL, wasdischarged from the service on
account of her marriage. In separating Zialcita, PALinvoked its policy which stated that flight
attendants must be single, and shall beautomatically separated from employment in the event they
subsequently getmarried. They claimed that this policy was in accordance with Article 132 of theLabor
Code. On the other hand, Zialcita questioned her termination on account of her marriage, invoking
Article 136 of the same law.
Issue:
W/N Zialcita was validly terminated on account of her marriage.

Ruling
NO. When Presidential Decree No. 148, otherwise known as theWomen and Child Labor Law, was
promulgated in 13 March 1973, PALs policy hadmet its doom. However, since no one challenged its
validity, the said policy wasable to obtain a momentary reprieve. Section 8 of PD148 is exactly the
same provision reproduced verbatim in Article 136 of the Labor Code, which waspromulgated on 1 May
1974 and took effect six months later.Although Article 132 enjoins the Secretary of Labor to establish
standardsthat will ensure the safety and health of women employees and in appropriatecases shall by
regulation require employers to determine appropriate minimumstandards for termination in special
occupations, such as those of flight attendants,it is logical to presume that, in the absence of said
standards or regulations whichare yet to be established, the policy of PAL against marriage is patently
illegal.
Article 136 is not intended to apply only to women employed in ordinaryoccupations, or it should have
categorically expressed so. The sweepingintendment of the law, be it on special or ordinary
occupations, is reflected inthe whole text and supported by Article 135 that speaks of nondiscriminationon the employment of women.

Zialcita, et al. v. PAL, RO4-3-3398-76, 20 February 1977

Facts
Complainant Zialcita, an international flight stewardess of PAL, was discharged from the service on
account of her marriage. In separating Zialcita, PAL invoked its policy which stated that flight
attendants must be single, and shall be automatically separated from employment in the event they
subsequently get married. They claimed that this policy was in accordance with Article 132 of the
Labor Code. On the other hand, Zialcita questioned her termination on account of her marriage,
invoking Article 136 of the same law.
Issue
Whether or not Zialcita was validly terminated on account of her marriage.
Ruling
NO. When Presidential Decree No. 148, otherwise known as the Women and Child Labor Law, was
promulgated in 13 March 1973, PALs policy had met its doom. However, since no one challenged its
validity, the said policy was able to obtain a momentary reprieve. Section 8 of PD148 is exactly the
same
Article 132 enjoins the Secretary of Labor to establish standards that will ensure the safety and health
of women employees and in appropriate cases shall by regulation require employers to determine
appropriate minimum standards for termination in special occupations, such as those of flight
attendants, it is logical to presume that, in the absence of said standards or regulations which are yet
to be established, the policy of PAL against marriage is patently illegal.
Article 136 is not intended to apply only to women employed in ordinary occupations, or it should have
categorically expressed so. The sweeping intendment of the law, be it on special or ordinary
occupations, is reflected in the whole text and supported by Article 135 that speaks of nondiscrimination on the employment of women.

#132 OLYMPIA GUALBERTO VS. MARINDUQUE MINING INDUSTRIAL CORP.

ART. 143. MINIMUM WAGE

#133 APEX MINING CO., INC. VS. NLRC

ART. 155-161. HEALTHY, SAFETY AND SOCIAL WELFARE BENEFITS

MEDICAL, DENTAL AND OCCUPATIONAL SAFETY

#134
[G.R. No. 157214. June 7, 2005]
PHILIPPINE

GLOBAL

COMMUNICATIONS,

INC.,

petitioner,

vs.

RICARDO

DE

VERA,

respondent.
FACTS: De Vera and petitioner company entered into a contract where respondent was to attend to
the medical needs of petitioners employees while being paid a retainer fee of P4,000 per month.
Later, De Vera was informed y petitioner that the retainership will be discontinued. Respondent filed a
case for illegal dismissal.
ISSUE: Whether or not de Vera is an employee of PhilComm or an independent contractor.
HELD: Applying the four fold test, de Vera is not an employee. There are several indicators apart from
the fact that the power to terminate the arrangement lay on both parties:

from the time he started to work with petitioner, he never was included in its payroll; was
never deducted any contribution for remittance to the Social Security System (SSS);

he was subjected by petitioner to the ten (10%) percent withholding tax for his professional
fee, in accordance with the National Internal Revenue Code, matters which are simply
inconsistent with an employer-employee relationship;

the records are replete with evidence showing that respondent had to bill petitioner for his
monthly professional fees. It simply runs against the grain of common experience to imagine
that an ordinary employee has yet to bill his employer to receive his salary.

Finally, the element of control s absent. Petition granted